Enhancing Land-based Adaptation and Resilient Green Economies in Makueni, , and Counties in

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Kenya

24 March 2020 Enhancing Land-based Adaptation and Resilient Green Economies Project/Programme Title: in Makueni, Kajiado, Machakos and Kitui Counties in Kenya

Country(ies): KENYA

National Designated The National Treasury Authority(ies) (NDA):

Accredited Entity(ies) (AE): ______

Date of first submission/ [2019-MM-DD] [V.0] version number:

Date of current submission/ [YYYY-MM-DD] [V.0] version number

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

PROJECT / PROGRAMME CONCEPT NOTE Template V.2.2

Notes • The maximum number of pages should not exceed 12 pages, excluding annexes. Proposals exceeding the prescribed length will not be assessed within the indicative service standard time of 30 days. • As per the Information Disclosure Policy, the concept note, and additional documents provided to the Secretariat can be disclosed unless marked by the Accredited Entity(ies) (or NDAs) as confidential. • The relevant National Designated Authority(ies) will be informed by the Secretariat of the concept note upon receipt. • NDA can also submit the concept note directly with or without an identified accredited entity at this stage. In this case, they can leave blank the section related to the accredited entity. The Secretariat will inform the accredited entity(ies) nominated by the NDA, if any. • Accredited Entities and/or NDAs are encouraged to submit a Concept Note before making a request for project preparation support from the Project Preparation Facility (PPF). • Further information on GCF concept note preparation can be found on GCF website Funding Projects Fine Print.

PROJECT / PROGRAMME CONCEPT NOTE Template V.2.2 GREEN CLIMATE FUND | PAGE 1 OF 4

A. Project/Programme Summary (max. 1 page) ☒ Project A.2. Public or private ☒ Public sector A.1. Project or programme ☐ Programme sector ☐ Private sector Yes ☐ No ☒ A.3. Is the CN submitted in ☐ Confidential If yes, specify the RFP: A.4. Confidentiality1 response to an RFP? ☒ Not confidential ______Mitigation: Reduced emissions from: ☐ Energy access and power generation ☐ Low emission transport ☐ Buildings, cities and industries and appliances A.5. Indicate the result ☒ Forestry and land use areas for the Adaptation: Increased resilience of: project/programme ☒ Most vulnerable people and communities ☒ Health and well-being, and food and water security ☐ Infrastructure and built environment ☒ Ecosystem and ecosystem services A.7. Estimated Direct beneficiaries A.6. Estimated mitigation adaptation impact 57,250 (1.9% of rural impact (tCO2eq over 7,145,128 tCO2eq (number of direct population within the lifespan) beneficiaries and % of four counties) population) A.8. Indicative total project Amount: USD 45 Million A.9. Indicative GCF Amount: USD 40 cost (GCF + co-finance) funding requested Million A.10. Mark the type of financial instrument ☒ Grant ☐ Reimbursable grant ☐ Guarantees ☐ Equity requested for the GCF ☐ Subordinated loan ☐ Senior Loan ☐ Other: specify______funding A.12. Estimated A.11. Estimated duration a) disbursement period: 5 years project/ Programme 5 years of project/ programme: b) repayment period, if applicable: lifespan A.13. Is funding from the Yes ☒ No ☐ ☐ A or I-1 Project Preparation Other support received ☐ If so, by A.14. ESS category3 ☐ B or I-2 Facility requested?2 who: ☒ C or I-3 A.15. Is the CN aligned A.16. Has the CN been with your accreditation Yes ☒ No ☐ Yes ☒ No ☐ shared with the NDA? standard?

Yes ☐ No ☒ A.18. Is the CN A.17. AMA signed (if If no, specify the status of AMA included in the Entity Yes ☐ No ☒ submitted by AE) negotiations and expected date of Work Programme? signing:

Brief summary of the problem statement and climate rationale, objective and selected implementation approach, including the executing entity(ies) and other implementing partners. A.19. Project/Programme Kenya’s dryland populations experience environmental degradation and poverty. rationale, objectives and Climate variability and change exacerbate these problems, as increasing approach of droughts, floods and water stress impact rainfed agriculture and livestock. This programme/project (max project aims to build climate, economic and environmental resilience through 100 words) large-scale agroecosystems-based adaptation. Through restoration of 50,648ha of degraded lands and supporting land-based enterprises we aim to impact adaptation and resilience for 57,250 people directly and 500,000 indirectly. With 7 Million TC02eq in emissions reductions, USD 156 Million in public and private

1 Concept notes (or sections of) not marked as confidential may be published in accordance with the Information Disclosure Policy (Decision B.12/35) and the Review of the Initial Proposal Approval Process (Decision B.17/18). 2 See here for access to project preparation support request template and guidelines 3 Refer to the Fund’s environmental and social safeguards (Decision B.07/02)

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revenue benefits. County governments and communities will lead implementation with technical support from the World Agroforestry Centre (ICRAF) and others.

B. Project/Programme Information (max. 8 pages) B.1. Context and baseline (max. 2 pages) Describe the climate vulnerabilities and impacts, GHG emissions profile, and mitigation and adaptation needs that the prospective intervention is envisaged to address. South eastern Kenya, the location of the four counties, is characterized by an equatorial summer and dry climate with a characteristic ASAL agroecology (30%-84% Aridity)4. In this area, with fragile ecosystems, the long and short season regime supports farming which is highly dependent on rainfall. Increased variability of rainfall is currently being experienced and the variability is expected to grow5 resulting in more (and intense) spells of floods and droughts, which threaten the sustainability of rainfed agriculture, upon which the population of these counties relies. Projections tend to reflect uncertainty where current variation is expected in south eastern Kenya with overall annual rise in short seasonal rainfall (October to December) unlike the much-relied long rain season (March to May). Nationally maximum and minimum temperatures5 have depicted a rising trend since the 1960s: 0.7 to 2.00C and 0.2 to 1.30C respectively. Locally, crop and livestock farming together provides roughly 87% of household income in and offers substantial employment67. In the county however, climate change (CC) manifests through impacts on crop productivity and is worsened by challenges in post-harvest handling e.g. appropriate storage and minimal value addition. In the neighboring , where agriculture is economically vital, the staple maize yields have declined since 1994. Drought, heat stress, increased precipitation, diminishing water resources and moisture stress and increased temperatures are the most problematic climatic hazards in the County8.In Machakos, agricultural farming is similarly the principal livelihood employing 73% of the population and contributing 70% of household incomes9. The major challenge posed by CC is inconsistent rainfall which contributes to water scarcity. Though remarkable success has been achieved with adaptation strategies, adoption rates for improved farming methods are still low, and most of the underlying vulnerabilities on key livelihoods could not been addressed yet. Kajiado, a largely semi-arid county where Agro-pastoralism is practiced, has not been spared from the devastating impacts of climate change associated with changes in onset and cessation of rains10. With declining rainfall and impacting of crop quality and quantity, income for farming households and groups is affected since in some cases total crop failure occurs. Effects on livestock range from poor livestock health resulting from insufficient feeds and water and reduction in herd numbers per household due to mortality with negative implications on the local economy9. CC impacts in each of the counties are also compounded by profound environmental degradation. In the four counties there is rampant illegal extraction of natural resources primarily through sand harvesting and wanton tree felling for charcoal production and unsustainable farming practices 1112 . Large tracts of forest and potentially useful agricultural land are therefore degraded adding to declining crop yields. Climatic pressures on crop farming and livestock keeping have forced communities to engage in alternatives largely attached to extraction of natural resources. Although agricultural and LULUCF (land use, land-use change and forestry) are the largest sectors associated with larger emissions in Kenya, the emissions are minimal compared to global figures. For example, Kenya’s per capita emissions are estimated at 1.38 tCO₂e per capita against the worlds: 6.31 tCO₂e13. However, with change in GHG emissions (1990–2013) at +24.07 MtCO₂e (+67%), the proposed project intends to contribute towards reducing of emissions as per targets and mechanisms identified in the NDC14. From grassroot and administrative level consultations and sub-county level authoritative literature (See Annex 3), there is overwhelming evidence and recognition of the prevailing climate change impacts on livelihoods and human impacts on ecosystems and subsequent urgency to develop effective interventions and incentives. The proposed project will develop interventions that concurrently promote alternative income sources to build the resilience of households and restoration of the health of agro(ecosystems). These include agroforestry 15 (potential to abate 4.2 MtCO2e by 2030 in Kenya and a large opportunity for restoration in Makueni ) through growing of high value trees, revegetation of riparian areas, improved management of grazing systems and

4 http://www.devolutionasals.go.ke/county-information/ 5 http://www.environment.go.ke/wp-content/uploads/2018/08/nationalclimatechangeactionplan2013-2017.pdf 6 http://www.nafis.go.ke/wp-content/uploads/2018/01/Kitui-HH.pdf2_.pdf 7 Omollo, E.O., Wasonga, O.V., Elhadi, M.Y. et al. Pastoralism (2018) 8: 9. https://doi.org/10.1186/s13570-018-0113-9 8 Draft county environment action plan( CEAP) 9 https://cgspace.cgiar.org/bitstream/handle/10568/96283/Machakosf_Climate_Risk_Profile_Final.pdf?sequence=1&isAllowed=y 10 https://ccafs.cgiar.org/publications/climate-risk-profile-kajiado-county-kenya-county-climate-risk-profile-series#.XJDaVdUzbIU 11 http://www.kpda.or.ke/documents/CIDP/Machakos.pdf 12 https://www.iucn.org/sites/dev/files/content/documents/5-_policy_brief_3_press.pdf 13https://www.climatelinks.org/sites/default/files/asset/document/2017_USAID_GHG%20Emissions%20Factsheet_Kenya.pdf 14 https://www4.unfccc.int/sites/ndcstaging/PublishedDocuments/Kenya%20First/Kenya_NDC_20150723.pdf 15 Forest Landscape Restoration Opportunities Assessment for Makueni County report

PROJECT / PROGRAMME CONCEPT NOTE Template V.2.2 GREEN CLIMATE FUND | PAGE 3 OF 4 other climate smart farming and agroforestry practices to enhance land-based adaptation. The project will further engage in activities aiming at large scale implementation of forest cover restoration. In addition, promotion of economically viable and environmentally friendly enterprise activities from on farm and off farm timber and non-timber products to economically benefit households. Further value addition of high value fruit trees e.g. Baobab and mango, Cereals e.g. sorghum, green grams, through community-based enterprises will target to enhance household income. With prevailing post-harvest losses, the project targets enhancing post- harvest management and build market linkages for highly valued commodities. In the counties sectoral policies, a framework that integrates climate information services (CIS) will be developed such that climate information dissemination is elaborately embedded in extension. Please indicate how the project fits in with the country’s national priorities and its full ownership of the concept. Is the project/programme directly contributing to the country’s INDC/NDC or national climate strategies or other plans such as NAMAs, NAPs or equivalent? If so, please describe which priorities identified in these documents the proposed project is aiming to address and/or improve. Globally, Kenya is a party to the United Nations Framework Convention on Climate Change, the Kyoto Protocol, and the Paris Agreement. Considerable efforts have been made to integrate climate change considerations into the country’s policies and programmes. The proposed project is well aligned with the national policy, legal and institutional frameworks on climate change mainly the National Climate Change Action Plan (NCCAP) subcomponents, the National Adaptation Plan (NAP) and the National Policy on Climate Finance among sectoral policies. Kenya’s NCCAP (2018-2022) aims at achieving a low carbon climate resilient development pathway through mitigation and adaptation strategies16. The NCCAP provides a range of actions to reduce GHGs emissions within the agriculture sector, including agroforestry, sustainable land management, and efficiency in livestock management. The NCCAP further calls for adaptation strategies including increased water harvesting, sustainable land management and reduction in post-harvest losses which are adequately captured within the proposed project. The Kenya National Adaptation plan (NAP) also emphasizes the urgency of adapting to climate change in Kenya as well as the need for increasing adaptation financing in Kenya. In addition to the set-apart Kenya Climate Fund, NAP proposes accessing additional climate funds through the Green Climate Fund (GCF) to meet the country’s adaptation needs17. The proposed interventions also contribute to the Kenya’s Nationally Determined Contribution (NDC) whose commitment is to reduce emissions of 30% against business as usual scenario by 2030 and implement adaptation actions in key sectors. Additionally, with Kenya being a member of the AFR100 (African Forest Landscapes restoration Initiative), the proposed project is in line with the national forest and landscape restoration program which has a significant commitment to restore 5.1 million hectares of land by 2030 (nearly 9% of Kenya’s total landmass). Describe the main root causes and barriers (social, gender, fiscal, regulatory, technological, financial, ecological, institutional, etc.) that need to be addressed. The root causes of environmental / land degradation and associated poverty among the rural communities in the four counties and barriers that need to be addressed include prolonged drought (due to climate change), undeveloped infrastructure, overreliance on rain-fed agriculture, limited employment opportunities, inaccessibility to credit facilities for Agriculture and natural resources (ANR), low use of improved technologies, poorly developed inputs and output markets and poor agricultural practices18192021 where a large proportion of the population undertakes subsistence farming. There is also a lack of land title deeds that limits access to resources such as loans consequently limiting investment on land. Further, land tenure remains an impediment since Women in the four counties play a limited role in decision making with their limited land ownership. The ANR sector lacks adequate and integrated policy, legal and institutional framework which has contributed to destruction, degradation, inequitable distribution and underutilization of arable land and inefficient utilization of water resource for agricultural production. Currently there is lack of alternative, climate-resilient livelihood options and limited availability of knowledge, technical expertise and financial resources to support the development of alternative livelihoods and adoption of appropriate local practices in the four counties. The agricultural sector, largely affected by inconsistent rainfall, is an integral component of the four counties economies. Value addition of agricultural commodities such as fruits however remains underexploited hence the need for a large-scale intervention to enhance adoption nature-based of enterprises. Inconsistent rainfall effects livestock keeping in Kajiado area, e.g. poor livestock health resulting from insufficient pasture and water and reduction in herd numbers with implications on the local economy. Additionally, conflict over resources (Kajiado and Makueni) and human-wildlife conflict (Kajiado) presents a barrier to livelihood activities22.

16 http://www.kenyamarkets.org/wp-content/uploads/2019/02/NCCAP-2018-2022-Online-.pdf 17https://www4.unfccc.int/sites/NAPC/Documents%20NAP/Kenya_NAP_Final.pdf 18http://www.kitui.go.ke/phocadownload/COUNTY_TREASURY/CGoK_COUNTY_INTEGRATED_DEVELOPMENT_PLAN_(CIDP)2018_2022.pdf 19 https://www.kajiado.go.ke/media-centre/downloads/# 20 CIDP 2018-2022 21 https://makueni.go.ke/documents/cidp-2018-2022/# 22 County level discussions included in section B.4 and annexes.

PROJECT / PROGRAMME CONCEPT NOTE Template V.2.2 GREEN CLIMATE FUND | PAGE 4 OF 4

Where relevant, and particularly for private sector project/programme, please describe the key characteristics and dynamics of the sector or market in which the project/programme will operate. The project will be aligned to the public sector and implemented by the county governments of Makueni, Kitui, Machakos and Kajiado through the nominated ministries linked to ANR. In addition, the national government will be involved on a need basis through the relevant agencies such as the Kenya Forest Service. B.2. Project/Programme description (max. 3 pages) Describe the expected set of components/outputs and subcomponents/activities to address the above barriers identified that will lead to the expected outcomes. Component 1: Enhancing climate smart land-based practices In this component, the project will focus on identifying and implementing viable sustainable forest and agroforestry and water management practices for restoration and sustainable land management interventions and establish the suitable enabling environment to support these interventions. The project will develop participatory plans for identifying priority areas for tree-based restoration 23 , integration of economically important trees into farms, identification and implementation of sustainable land management practices and enhance protection of adjacent natural ecosystems with high economic, environmental and social values together with the communities in the four targeted counties. Candidate restoration and sustainable land management options in the selected counties include: i) Establish woodlots and plantations in degraded areas using ecologically suitable and economically attractive species particularly bamboo, ii) Grow high value trees (e.g. fruit trees and nitrogen fixing trees species) in the farms and develop sustainable tree-based intensification of agricultural crops, iii) Revegetation of riparian areas to stabilize river banks and adjacent land areas using a mosaic of vetiver grass and selected riverine based shrubs/trees, iv) Afforestation and reforestation of degraded forest and woody vegetation areas to promote provision of ecosystem services, v) Assisted/Farmer assisted natural regeneration of degraded forest and woodland areas, Vi) sustainable rangeland management practices; Vii) establishment of fodder bank systems using fodder trees; Viii) developing compost and organic manure production schemes in the four countries; Activities to support the restoration options, which will be fully designed and implemented with the communities, encompass: i) Establishment of planting material production systems by developing new nurseries and supporting existing government nurseries in the four counties and involving institutions such as schools and churches, ii) Establishment and renovation of carbon-neutral, cost effective and innovative rain water harvesting, conveyance and irrigation systems (household farm pond technology, water pans, small earth dams, shallow wells and sand dams, etc.) to provide water for the restoration areas on a sustainable basis, iii) Establishment of a functional Rural Resource Centre (RRC) network to facilitate access to training, quality knowledge products, quality and affordable inputs and services, iv) Vocational training through CTTIs and ATCs24 on measures to enhance, sustainable use of land resources and promote adoption of improved climate smart production technologies. v) land health assessment to inform soil nutrients status, soil pH and physical characteristics in lieu of soil moisture regime and vi) improved agricultural extension for improved farming. Component 2: Transforming rural livelihoods through climate smart land-based enterprises In this component, the project will support development of enterprise and product value chains based on the benefits realized from activities in Component 1 such as the sustainable forest and agroforestry practices and other sustainable land management practices established in component 1. This component of the project encompasses these main activities. i) Develop economically viable and environmentally friendly enterprise activities including sustainable timber production, eco-charcoal, beekeeping, tree nurseries, fruit tree farming, vegetable gardens, agroforestry-based value chains (e.g. fodder bank based zero-grazing farming), non- timber forest products collection, processing, and marketing etc.; ii) establish value addition to tree and farm products e.g. gums and resins and agro-processing of fruits, vegetables, milk products etc. iii) Develop post- harvest loss management practices and induce reduced-food waste designs for agriculture i.e. establishing solar cooling systems and cold store infrastructure, etc. iv) establish market linkages by creating forums for producers and consumers of tree and farm products (such as producer community groups and saccos), v) develop farm products aggregation models for ease of access to cooperative modes of operation that eases access to public and private finances, vi) Capacity building on: inclusive (gender and youth) cooperative development and developing of an integrated participatory forum towards ecosystem-based adaptation, vii) promote green business enterprise development through enriching tertiary business school curricula on green business opportunities in the area, viii) produce state of the art publications on the process of developing land- based sustainable enterprises that could be operated by local communities ix) Develop public-private partnership models that boost investment in green and climate smart enterprises, x) Develop and implement

23 With dominant or high priority species such as Adansonia digitata, Terminalia brownii, Comiphora baluensis, Acacia tortilis and Acacia mellifera 24 County technical institutes (CTTIs) and agricultural training centers (ATCs) have the requisite facilities and support of the county governments.

PROJECT / PROGRAMME CONCEPT NOTE Template V.2.2 GREEN CLIMATE FUND | PAGE 5 OF 4 performance-based incentives to catalyze sustainable management of land based resources in the four counties. Component 3: Enhancing policies and climate information systems for adaptation and resilience building In this component, the proposed project will focus on enhancing policies and governance frameworks and enabling tools that support adaptation to climate change. Activities will encompass: i) Identify and support policy processes and dialogues required to support sustainable land management at county and national level, ii) Enhance governance frameworks such as the local climate change wards committees, community forest associations etc. that are already established in the counties but require support iii) Improve the climate information services (CIS) developed by the meteorological department so as to deliver localized climate information services including climate analysis and monitoring, assessment of impacts and attribution, prediction (monthly, seasonal, decadal) downscaling and projection (centennial scale) to various end-users at different levels in Makueni, Kitui, Machakos and Kajiado. iv) capacity building of departments (e.g. Water and Agriculture) on receiving, modification and delivery (e.g. Incorporation of CIS into extension services), v) develop a course for extension agencies on resilient agricultural/agroforestry practices and alternate extension systems, vi) explore policy options for supporting such community enterprises through country development funds in the form of small and medium sized enterprises, vii) create public awareness through workshops and media dissemination of the acquired knowledge and experience. In terms of rationale, please describe the theory of change and provide information on how it serves to shift the development pathway toward a more low-emissions and/or climate resilient direction, in line with the Fund’s goals and objectives. Prevailing climate change and variability impacts on farming, water shortages, high poverty rates and poor land management practices in Makueni, Kitui, Machakos and Kajiado counties have forced rural communities to farm on hilltops, encroach on forests and riparian areas, undertake charcoal burning and sand harvesting. These dynamics have led to severe deforestation, land degradation and resultant emissions, and degrading vital ecosystem goods and services. To address these challenges, we propose large-scale agroecosystems- based adaptation powered by accompanying performance-based land enterprises development and climate information systems as low risk and cost-effective approach to enabling climate resilient green economies in the five counties. Specifically, we propose interventions aimed at altering the current land use practices to more sustainable land use practices, restoration of previously degraded lands and establishment of carbon- neutral, cost effective and innovative rain water harvesting, conveyance and irrigation systems. This is expected to result in a reduction in emissions, sustainable water supply and increased levels of ecosystem goods and services as well as address poverty. We also propose to upscale climate smart land-based enterprises which in addition to generating environmental benefits will also generate sustainable job opportunities and higher revenues among the rural population through a shift from largely subsistence production to processing and retail. Consequently, this will result in improved household incomes and nutrition and will ultimately lead to improved livelihoods and reduction in poverty levels among the rural population within these counties. The comprehensive theory of change is presented under supporting documents. Describe how activities in the proposal are consistent with national regulatory and legal framework, if applicable. The proposed activities e.g. landscape restoration and establishment and intensification of nature based enterprises and CIS are aligned with a wide range of Kenyan policies, strategies and programmes directly or indirectly associated with climate change including: the minimum 10% national tree cover target set by the Kenyan Constitution and stressed in the country’s economic blueprint, Vision 2030; the Climate Change Act 2016 and the National Policy on Climate Finance among sectoral policies), Green Economic strategy and implementation plan(GESIP); and the Kenya’s Nationally Determined Contribution (NDC) with the commitment to reduce emissions of 30% against business as usual scenario by 2030 and implement adaptation actions in key sectors. The proposed project is also well aligned with the Environmental Management and Coordination Act, 1999 (EMCA) which provides institutional framework for the coordination of environment management including establishment of National Environment Management Authority (NEMA). The proposed activities are also aligned with Kenya’s Forest Act, 2005 which underscores the importance of sustainable forest management in recognition of the role forests play in poverty reduction and development.

Describe in what way the Accredited Entity(ies) is well placed to undertake the planned activities and what will be the implementation arrangements with the executing entity(ies) and implementing partners. UNEP has been identified as a potential AE. Discussions are ongoing between the technical support institution (ICRAF) currently leading CN and proposal development, and the AE with support from the NDA. UNEP and ICRAF are currently working as AE and technical support agencies, respectively, in the implementation of the GCF EbA funded project in the Gambia (FP011). The project will be implemented over a five-year period and

PROJECT / PROGRAMME CONCEPT NOTE Template V.2.2 GREEN CLIMATE FUND | PAGE 6 OF 4 executed by Makueni, Kitui, Machakos and Governments through ministries leading ANR and the Kenya Forest Service (KFS) in coordination with ICRAF, the GCF Accredited Entity (AE) and the NDA. KFS is mandated to oversee the achievement of the restoration ambition in Kenya and provides policy guidelines. At the concept stage only key implementing agencies are identified, nevertheless during development of the full proposal an elaborate framework will be provided. Please provide a brief overview of the key financial and operational risks and any mitigation measures identified at this stage. Financial risks: With the new devolved structure in Kenya, county governments now play the primary role of delivering agriculture and forestry services. Counties however experience inadequacy of financial management capacity and internal control systems for procurement with a few exceptions such as Makueni county where open contracting has been instituted. Therefore, capacity building activities will need to be built into the project. Mechanisms for financial accountability at the community level will also be implemented. Operational risks: Conflict in various contexts, limitations in county government capacity (such as limitation in technical capacity to carry out project activities, staff turnover due to regime change), a lag in willingness to adopt new ways of thinking as opposed to business as usual at household, community and county government level, anticipated ecological risks which may affect the proposed enterprises. Mitigation measure will include documentation of decisions, best practices and lessons learned throughout the project to support institutional memory; training provided for government authorities, local communities and extension staff that will be involved in project activities; development of long-term plans for the monitoring and maintenance of equipment procured to support natural resource-based enterprises.

B.3. Expected project results aligned with the GCF investment criteria (max. 3 pages) The GCF is directed to make a significant and ambitious contribution to the global efforts towards attaining the goals set by the international community to combat climate change, and promoting the paradigm shift towards low-emission and climate-resilient development pathways by limiting or reducing greenhouse gas emissions and adapting to the impacts of climate change. Provide an estimate of the expected impacts aligned with the GCF investment criteria: Impact potential, paradigm shift The proposed land-based adaptation project targets implementation of large scale agricultural and natural land restoration and conservation agriculture activities in approximately 50,648 ha distributed as follows: 7,230 ha in Makueni, 22,830 ha in Kitui, 6,200 ha in Machakos and 14,388 ha in Kajiado over a period of 5years. The project intends to promote tree-based restoration, integration of economically important trees into farms, identification and implementation of sustainable land management practices. Specific proposed land use changes include; converting croplands into agroforestry systems (34,332 ha), converting grasslands into agroforestry (15,640 ha) and converting bare lands into agroforestry (340 ha) and forests (340 ha). Land use changes will also include restoration of riparian areas. From these proposed land use changes, we estimate 25 a reduction in greenhouse gases of approximately 7,145,128 tCO2eq over the project's life span. The project further targets efforts to institute restoration activities around farm ponds, water pans, shallow wells, earth and sand dams and upscaling of community-based runoff water harvesting techniques that often use soil bunds for water buffering. From these interventions, we project an increase in harvested rain water estimated at 10 million M3. Harvested water will furthermore support tree growing activities. Implementation and uptake of custom-made weather services will be established to equip decision makers and small holder farmers with tools for enhancing current and proposed adaptation through effective use of forecasts. The land-based adaptation project also intends to promote the adoption of ecosystem-based sustainable enterprises in the four counties that will contribute to economic development through green enterprises, provide ecological benefits and contribute to climate change adaptation through provision of alternative income. The project intends to benefit the local community financially through expanding forest and tree products from nature-based enterprises and through establishment of agro-processing industries for value addition of some of these products. These enterprises will contribute to the local economy through improving household income levels form product sales and employment. At the county level, the project will also contribute to an increase in counties’ revenue generated from single business permits and levies. Currently, forest and trees products produced in Makueni, Kitui and Machakos counties include honey, timber, poles, posts, charcoal, seedlings, fruit trees products, firewood and fodder. The project will involve promotion of existing forest-based enterprises associated with forest products and establishment of new ones. Projected increase in income from proposed enterprises over a 15-year period is estimated at a present value of

25 The emissions are computed by estimating the conversion of various dominant land cover types area e.g. Crop lands, Grasslands, Bare land and shrubs to forests and/or agroforestry. Data on carbon estimates from the various data sources was sourced from the 2006 IPCC guidelines on land use. The carbon estimates used are for the dry tropics and only include above ground biomass carbon and not soil carbon. Conversion factor from tonnes of dry matter biomass per ha to tonnes C per ha used is 0.5.

PROJECT / PROGRAMME CONCEPT NOTE Template V.2.2 GREEN CLIMATE FUND | PAGE 7 OF 4 approximately USD 156 Million26 for the four counties. This will largely comprise of revenue generated from the enterprises: honey production, timber and poles, tree seedlings, firewood, briquettes, fodder production, fruits trees and spices and from value addition of fruits and honey. We expect the returns to increase with time due to the multiplier effect and later a decrease in returns after the project’s timeline (after year 5). Additionally, we also project an increase in incomes from employment in the established agro-processing industries. We expect creation of approximately 25,000 jobs within the four counties. Creation of these jobs is expected to lure people away from unsustainable activities such as sand harvesting which currently employs approximately 10,000 people in Kajiado county. Based on the total land area we expect to cover and the population density in the respective areas direct beneficiaries are estimated at 57,250 persons (1.9% of the rural population within the 4 counties). Indirect beneficiaries are estimated to be about 500,000 persons. Expansion of charcoal production as an enterprise is not an objective of the proposed project due to the high environmental cost involved in charcoal burning and existing national and devolved units’ efforts to curb the currently clandestine activity through banning. Kitui and Kajiado counties are charcoal burning hotspots in Kenya and are working towards reducing and controlling charcoal burning and encouraging other environmentally friendly sources of energy such as briquettes and bamboo feedstock. The increase in revenues is also expected to result in an increase in county government revenue through appropriate levies. An increase in government revenue estimated at USD 47 million26 (present value) over a 15-year period is expected. In addition, a green enterprise fund is to be established with counties which will be a proportion of the revenue collected by the county government. The aim of the enterprise fund is to ensure a proportion of the government revenues is ploughed back to finance these enterprises to ensure continuity. Furthermore, the project will adopt a performance-based enterprise financing model.

Sustainable development: We expect several economic, environmental and gender-sensitive transformative benefits. In terms of economic benefits, the proposed project will aim at substantially improved income from land-based commercial activities for up to 57,250 direct beneficiaries and will create up to 25,000 jobs through rural nature-based enterprises. We will also target at least 150,000 women and 150,000 youths (50%male and 50% female) so that women and the youths are equipped with better and relevant skills to enable them to engage in income generating activities. In terms of environmental co-benefits, the proposed GCF project targets restoration of natural ecosystems and biodiversity across at least 50,000 hectares of both previously degraded land and/or agricultural land effectively facilitating availability of ecosystem goods and services. The project will also contribute to claim the change mitigation objectives of Kenya by contributing to 7,145,128 tCO2eq of emission reduction. Needs of recipients; The poverty index rate in Makueni, Kitui, Machakos and Kajiado Counties stands at 64.1%, 63.1%, 42.6% and 47%, respectively which is higher than the national average of 45.2%27Error! Bookmark not defined.Error! Bookmark not defined.Error! Bookmark not defined.. Most inhabitants in these counties rely largely on livelihoods based on rain-fed, subsistence farming and natural resources such as forests and are extremely vulnerable to climate change effects and uncontrolled extraction that impacts the functionality of agricultural landscapes and natural ecosystems negatively. Increasingly climate vulnerability is becoming more apparent and is manifested by the reducing contribution of agriculture production to community livelihoods as the overall quantity and quality of food crops and livestock products are affected by unstable climatic conditions. In the four counties, the semi-arid nature of the terrain, and their farming systems are such that the changes and variation in climate tend to affect the agricultural productivity implying the principal source of livelihood is severely impacted. Uncontrolled sand harvesting and tree felling largely disturbs the natural flow of local rivers which are essential for domestic water supply. As an LDC, Kenya has limited financial allocations for climate change response at local levels due to factors such as competing budgetary allocation from essential sectors such as health, infrastructure and education. Therefore, donor support to financially and technically support the implementation of large-scale landscape restoration and develop value chains to respond to climate impacts through support of natural resource-based livelihoods is necessary. At a local level, rural communities in the four counties also have inadequate financial resources (due to competing budgetary demands), knowledge base, or technical capacity to counteract the effects of climate change and land degradation. Therefore, sourcing for funds to address these challenges; which ultimately aims at bettering the lives of the local people is very key. With the availability of the fund, the local community’s knowledge base and the technical capacity against climate change shall be boosted. Country ownership; The tree-based restoration component of the project is well-aligned with national priorities related to the national tree cover target and the national forest and landscape restoration programError! Bookmark

26 Financial projection attached under section D. 27 https://nacc.or.ke/?mdocs-file=3529&mdocs-url=false

PROJECT / PROGRAMME CONCEPT NOTE Template V.2.2 GREEN CLIMATE FUND | PAGE 8 OF 4 not defined.: the minimum 10% national tree cover target set by the Kenyan Constitution and stressed in the country’s economic blueprint, Vision 2030; the Agriculture Sector Development Strategy (ASDP) that prioritizes intensification and expansion of irrigation and improvement of rainwater harvesting and storage for agriculture; The programme is also aligned with the country’s Climate-Smart Agriculture Programme (CSAP, 2015–2030) that specifically aims to enhance adaptive capacity and resilience of farmers to the adverse impacts of climate change and develop mechanisms that minimize GHG emissions from agricultural production systems. The proposed project will also align with Kenya’s National Voluntary Targets for Land Degradation Neutrality under the United Nations Convention to Combat Desertification, as well as Aichi Target 15 (on ecosystem restoration). Efficiency and effectiveness; The proposed GCF project will primarily achieve cost-effectiveness by restoring natural capital. In a recent in-depth review of strategies for sustainability, restoration of natural capital was deemed the most cost-effective approach when compared to both technology change and social behavioural change. Analyses of the potential enterprises to be developed will include consideration of overall financial, social and technical feasibility including cost-effectiveness and potential return on investment. Interventions and activities which are cost-effective and commercially viable, following assessment, will be prioritized for inclusion in the project’s activities. This will help maximise the cost-effectiveness of the project interventions. At household level, there already exist quite a good number of excavated ponds that lack other amenities such as pond liners, pumps and irrigation equipment; rather that dig new ponds, it makes economic sense to revamp the existing ones using the Household Pond Protocol Application (HoPPA) under the Billion Dollar Business Alliance for rainwater harvesting - developed by ICRAF. However, Kajiado will need introduction of new ponds as it has very good runoff buffering potential. The project will also increase cost-effectiveness by building on the capacities, information and infrastructure established by past and ongoing initiatives. B.4. Engagement among the NDA, AE, and/or other relevant stakeholders in the country (max ½ page) Please describe how engagement among the NDA, AE and/or other relevant stakeholders in the country has taken place and what further engagement will be undertaken as the concept is developed into a funding proposal. The development of this concept note found its origin in a meeting in Bonn, Germany during the UN Climate Change Conference/COP23, 6-17 November 2017 between the Governor of Makueni County and the team from KFS and ICRAF who held discussions on how to green Makueni County and address climate change issues identified. The project design team had its first consultative meeting on Forest and Landscape Restoration in Makueni County on 5th January 2018 gathering stakeholders at Makueni County level. In attendance were participants from the county and national governments and those from organizations; ICRAF, KFS and WRI. It was felt that the proposed project would be even more impactful in two other neighboring counties. Kitui and Kajiado were therefore brought on board since they face similar climate change effects. The initial project was then transformed into a project on land-based adaptation in the three counties. On 28th March 2019 a consultative meeting was held at the NDA offices in . After deliberations on the concept in the current state, the NDA proposed that a fourth county was to be added. Machakos county was therefore proposed effectively bringing the south eastern economic block of Kenya on board. Follow-up communication was taken up by Makueni county to inform and establish contact with the now highly interested Machakos county. Several key stakeholders on natural resource management have been identified in previous consultation forums in the region such as civil society development partners, educational institutions, communities, political leaders, the private sector, religious Organizations and vulnerable Groups, and shall be engaged in the development of the proposal and implementation of the project. Finally, on the 3rd of June 2019 a high-level consultative meeting including the NDA and the four governors was held in Machakos to further discuss and stamp the concept. Annex 4 presents details of meetings held to date. C. Indicative Financing/Cost Information (max. 3 pages) C.1. Financing by components (max ½ page) Please provide an estimate of the total cost per component/output and disaggregate by source of financing. Component/Output Indicative GCF financing Co-financing cost Amount Financial Amount Financial Name of (USD) (USD) Instrument (USD) Instrument Institutions Climate smart land- 16,000,000 14,000,000 Grant 2,000,000 Public County based practices funding Governments

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Climate smart 13,750,000 12,000,000 Grant 1,750,000 Public County enterprises funding Governments Policies and Climate 11,650,000 10,400,000 Grant 1,250,000 Public County information systems funding Governments Project management 3,600,000 3,600,000 Grant - - - Indicative total cost 45,000,000 40,000,000 5,000,000 For private sector proposal, provide an overview (diagram) of the proposed financing structure. The project is designed on a public sector model as described in section C1 and C3. C.2. Justification of GCF funding request (max. 1 page) Explain why the Project/ Programme requires GCF funding, i.e. explaining why this is not financed by the public and/ or private sector(s) of the country. Kenya’s economic backbone is the agriculture sector which has been deteriorating with time due to land degradation. Due to this stagnation, agriculture and manufacturing have not been able to create enough jobs for Kenya’s growing working population. This has greatly affected the national economy hence making it unable to finance all the required projects aimed at bettering livelihoods. In 2018, the Kenya public debt was 50,472 million USD which is equivalent to 57.1% of Kenya GDP and increased by 14% from 201728 and hence making funding critical projects impossible. The private sector has not been widely engaged in specific projects targeting landscape restoration through ecosystems-based adaptation approaches which for example integrate nature-based enterprises. This is perhaps informed by availability of ready markets for goods and services for specific sectors. Further there are strategies on climate information services and conservation of water towers and wetlands targeting improved water catchment management which involve key activities such as tree planting. While these are noble efforts, private sector engagement to provide technical and financial backstopping is absent. For example, the Makueni CIDP mentions grants and loans as principal instruments for fundraising to finance the significant cumulative 37% revenue shortfall ($301m). The proposed project recognizes the importance of the private sector in agribusiness particularly market dynamics29. Describe alternative funding options for the same activities being proposed in the Concept Note, including an analysis of the barriers for the potential beneficiaries to access to finance and the constraints of public and private sources of funding. The only promising alternative funding to support proposed activities is contribution by the four counties from exchequer allocations. The allocations are however shared competitively with financially demanding sectors such as health, education and infrastructure implying the contribution feasible is limited. Individual county rev enue collections remain limited and are largely allocated to fill budget holes in development and recurrent ex penditure. Access to credit and loans is limited by the risk averse financial institutions that foresee risks in pr oviding credit facilities to ANR related activities. Available microfinance institutions while associated with agri culture, will only provide loans and credit to members who in several instances need to provide collateral whi ch in most cases is essential assets such as land. The private sector investment in natural resource-based pr ojects is limited. The private sector in the counties foresees less or no returns and therefore avoids investme nt in nature-based enterprises. The focus is provision of funds for small scale corporate social responsibility p rojects partly aimed at raising the reputation such as urban area beatification and classroom building. Justify the rationale and level of concessionality of the GCF financial instrument(s) as well as how this will be passed on to the end-users and beneficiaries. Justify why this is the minimum required to make the investment viable and most effi cient considering the incremental cost or risk premium of the Project/ Programme (refer to Decisions B.12/17; B.10/03; and B.09/04 for more details). The justification for grants and reimbursable grants is mandatory. Over the project life, a total of 40 Million USD is sought from GCF. The county governments of Machakos, M akueni, Kajiado and Kitui will contribute 5 Million USD. The grant of 40 Million sought from GCF will complem ent modest investments by county governments into climate change adaptation as well as relevant ANR acti vities. Most counties have pledged a modest 2% of their budgets to climate change and are investing in clim ate- smart agriculture and natural resource. The funding incentivise private sector financing in the medium te rm by de-risking and readying ANR enterprises that often do not receive regular banking or private finance in the early years when trees are growing and not yet in production30. In the case of private sector proposal, concessional terms should be minimized and justified as per the Guiding principle s applicable to the private sector operations (Decision B.05/07). N/A C.3. Sustainability and replicability of the project (exit strategy) (max. 1 page)

28 http://treasury.go.ke/economy/category/157-annual-debt-management.html?download=873:annual-public-debt-report-2017-2018 29 http://www.kilimo.go.ke/wp-content/uploads/2019/01/Download-here.pdf 30 This will be achieved through funding nature-based enterprises described under component 2 with an intention to promote private enterprises.

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Please explain how the project/programme sustainability will be ensured in the long run and how this will be monitored, after the project/programme is implemented with support from the GCF and other sources. Sustainability would be built into the project architecture in several ways. First, in terms of political sustainability, the project is led by Makueni, Kitui, Machakos and Kajiado county governments and project activities will therefore be embedded in their routine activities. From our consultations, there is strong political willingness in the four counties to support climate change adaptation and mitigation activities. For example, the three counties are eagerly welcoming and adopting largescale projects in the south eastern economic block that constitutes the three economies3132 with neighbouring Kajiado county expressing overwhelming support. We will also build the counties capacity to manage the technical and financial deliveries and keep monitoring the project impacts after project completion. This project also provides the opportunity for national entities, e.g. KFS, to collaborate closely with the local level, the county governments in this instance, and hence facilitating feedback mechanisms between the local and national level. Second, in terms of social sustainability, participatory approaches will be at the heart of the design and implementation phase to enable ownership at community, local and sub national levels. Local NGOs and community-based organizations as main scaling- up partners will be engaged. For all the identified areas, the relevant actors (e.g. local farmers, local leaders, the county government, KFS and other entities working on ecosystem) will take the responsibility of managing the planted trees and enterprises on a long-term basis. We will ensure that groups such as youths and women are specifically engaged effectively. Third, in terms of financial / economic sustainability, the performance- based financing schemes that will be developed will generate enterprises that will be able to attract green investments. Partnerships will be sought with the private sector- e.g. out-grower schemes for fruits crops with larger companies, microfinance institutions (MFIs) and commercial banks to enable green, and low interest loans with conditions necessary for land-based activities. Eventually, in terms of environmental sustainability, the project will ensure that environmental criteria are embedded in performance approaches for both implementers and beneficiaries of the project. All these ways will help to ensure that the interventions become sustainable initiatives with a clear exit strategy leading to lasting impacts in the future. For non-grant instruments, explain how the capital invested will be repaid and over what duration of time. The project requests a grant as the funding instrument. Funding framework elaborated in section C2 and C3. D. Supporting documents submitted (OPTIONAL) ☒ Map indicating the location of the project/programme ☒ Diagram of the theory of change ☒ Economic and financial model with key assumptions and potential stressed scenarios ☒ Pre-feasibility study ☐ Evaluation report of previous project ☐ Results of environmental and social risk screening

Self-awareness check boxes Are you aware that the full Funding Proposal and Annexes will require these documents? Yes ☒ No ☐ • Feasibility Study • Environmental and social impact assessment or environmental and social management framework • Stakeholder consultations at national and project level implementation including with indigenous people if relevant • Gender assessment and action plan • Operations and maintenance plan if relevant • Loan or grant operation manual as appropriate • Co-financing commitment letters Are you aware that a funding proposal from an accredited entity without a signed AMA will be reviewed but not sent to the Board for consideration? Yes ☒ No ☐

31 http://www.devolutionasals.go.ke/regional-blocks/ 32https://makueni.go.ke/development/south-eastern-kenya-leaders-meet-for-economic-bloc-policy-formulation/