World Bank Document

POVERTY ALLEVIATION FUND (PAF) / THE WORLD BANK E865 Public Disclosure Authorized

ENVIRONMENTAL ASSESSMENT FOR POVERTY ALLEVIATION FUND ACTIVITIES Public Disclosure Authorized

FINAL REPORT Public Disclosure Authorized

Nawa Raj Khatiwada, Dr. Eng. (PrincipalInvestigator)

122 Janakalyan Galli Koteshwor, Kathmandu Public Disclosure Authorized

FEBRUARY 2004

FILE COP

ACKNOWLEDGEMENT

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

The co-operation and support extended by Dr. Mohan Man Sainju, Vice Chairman, PAF; Mr Shankar Raj Joshi, Executive Director, PAF; Mr. Rabi Sainju, the Executive Officer of PAF and 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 in conceptualization of the study, preparation and finalization of the study.

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

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

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

TABLE OF CONTENTS

Chapter Title Pages Title Page i Acknowledgement ii Table of Contents iii List of Tables vi List of Figures vii List of Abbreviations viii Executive Summary ix

I INTRODUCTION 1.1 General 1 1.2 Justification of the Study 2 1.3 Objective and Scope of the Environmental Assessment 2 1.4 Methodology and Activities 3 1.5 Organization of the Study Team 3 1.6 Reporting 3

II PROJECT DESCRIPTION 2.1 Introduction 4 2.2 Project Development Objective 4 2.3 Types of Sub-project 5 2.4 Category of the Project 6 2.5 Location and Size of the Project 7 2.6 Description of the Project Components 7

III BASELINE ENVIRONMENTAL STATUS 3.1 General Information 10 3.2 Physical Information 10 3.2.1 Topography 10 3.2.2 Soil and Geology 11 3.2.3 Mining and Extraction 12 3.2.4 Land Use 12 3.2.5 Climate and Meteorology 14 3.2.6 Water Pollution Issues 15 3.3 Biological Environment 16 3.3.1 Inventory of Floral Species 16 3.3.2 Inventory of Faunal Species 17 3.3.3 Protected Areas 18 3.4 Forest Resources of Nepal 22 3.5 Socio-economic Condition 24 3.6 Tradition and Culture 26 3.6.1 Ethnic Groups, Languages and Religion 26 3.6.2 Festivals 27 3.6.3 Marriage and Family 27 3.7 General Information of Selected Districts 27

IV POLICY, LEGISLATION AND REGULATION 4.1 World's Bank EA Requirements 31

-iii- 4.2 National Guideline Related to Environment 33 4.3 Decentralization Policy and Environment 34 4.4 National Policies and Planning Practices 36 4.5 Institutional Involvement at Local Level 38 4.6 International Obligations 40

V POTENTIAL ENVIRONMENTAL IMPACTS 5.1 Introduction 41 5.2 Environmental and Social Impact Associated with the Income 42 Generating Activities 5.2.1 Impact Associated Planning and Location 43 5.2.2 Impact Associated with Implementation, Operation and 43 Maintenance Phase 5.3 Environmental and Social Impact Associated with Infrastructure 43 Project 5.3.1 Impact Related to Project Planning and Location 45 5.3.2 Impact Associated with Construction and Implementation 46 Phase 5.3.3 Impact during Operation and Maintenance Phase 46 5.4 Environmental and Social Impact Associated with Capacity 46 Building 5.4.1 Impact due to Planning and Implementation 47 5.4.2 Impact due to Operation and Management 47 5.5 Cumulative Environmental Impact 48

VI ALTERNATIVE ANALYSIS 6.1 Introduction 49 6.2 Without Project Scenario 49 6.3 Comparison of Alternative 49 6.4 Alternatives for Project Components 50

VII ENVIRONMENTAL MANAGEMENT FRAMEWORK 7.1 Mitigation Measures 54 7.2 Environmental Management Plan 54 7.3 Enviromnental Management Action Plan 61 7.4 Institutional Strengthening and Training 62 7.5 Monitoring and Evaluation 63 7.6 Independent Monitoring Agency 64 7.7 Capacity Building Program 64

VIII INDIGENOUS PEOPLES DEVELOPMENT PLAN 8.1 Introduction 66 8.2 Legal Framework 67 8.3 Baseline Data 67 8.4 Land Acquisition and Resettlement 70 8.5 Strategy for Local Participation 71 8.6 Technical Identification of Development or Mitigation Activities 71 8.7 Institutional Capacity 72 8.8 Implementation Schedule 73 8.9 Monitoring and Evaluation 73 8.10 Cost Estimates and Financial Plan 73

-iv- References 74

Annex I: Checklist of the Environmental Sensitive Areas in a District 76 Annex II: Feed Back Slip for Technical Session 77 Annex III: Proposals Requiring Initial Environmental Examination 78 Annex IV: Summary of the Response to the Feedback Provided on the 83 Draft Report Annex V: Development Activities in Selected Six Districts 85 Annex VI: Human Development Index 87 Annex VII: Summary of Discussions with Different Stakeholders 88 LIST OF TABLES

Table Title Page

1.1 Details of the Study Team 3 3.1 Soil type and Geology of the Geographic Region 12 3.2 Boulder, Gravel and Sand Reserve in Siraha and Kapilbastu 12 3.3 Land use Pattern of Nepal 14 3.4 Nepal's Share in Global Plant Species 16 3.5 Inventory of Faunal Species 17 3.6 Number of Species Included in CITES and IUCN list 17 3.7 List of National Parks in Nepal 19 3.8 List of Wildlife Reserve in Nepal 21 3.9 Hunting Reserve in Nepal 22 3.10 Conservation Areas of Nepal 22 3.11 Area, Population and Number of Districts by Geographic Region 25 3.12 The Demographic Feature of Selected Six Districts 29 3.13 The Land Use Pattern of Selected Six Districts 29 4.1 Major Socio-economic Goals 37 4.2 Environmental Related Provisions in Some Contemporary Acts 38 4.3 Laws and Relevant Regulation for Maintaining Sound Enviromnent 39 5.1 Summary of Environmental and Social Impacts of PAF Activities 44 5.2 Sub-project Classification 45 6.1 Institutions Involved in the Development of Rural Areas 50 6.2 Comparative Analysis of Alternatives 51 7.1 Matrix of Environmental Impacts and Mitigation Measures 55 7.2 Summary of Activities Included in EMP 61 8.1 Percentage of Population Distribution 68 8.2 Percentage of Population Distribution by Mother Tongue 68 8.3 Population Distribution by Religion of Six Selected Districts 69 8.4 Distribution of Ethnic Groups in Selected Six Districts 69 8.5 Traditional Skills Inherited by Dalit Women in Terai Region 72

IV.A Summary of the Response to the Feedback Provided on the Draft 83 Report V.A Present Level of Irrigation Development, 1997 85 V.B Drinking Water Project, 1999/2000 85 V.C Number of Industries Registered and Skilled Trainees in Selected 85 Districts (1999/2000) V.D Total Number of Schools, Students and Teachers, 2000 86 V.E Health Services in the Districts (1999/2000) 86 VI.A Human Development Index 87 LIST OF FIGURES

Figure Title Page

2.1 Organizational Structure of the PAF 5 3.1 Land Use of Nepal 13 3.2 Protected Areas of Nepal 23 3.3 Map of Selected Six Districts 30 4.1 Environmental Assessment Process in Nepal 35

-vii- LIST OF ABBREVIATIONS

BOD Biological Oxygen Demand CBS Central Bureau of Statistics CITES Convention on Intemational Tread in Endangered species CO Community Organization DDC District Development Committee DFO District Forest Officer DFRS Department of Forest Research and Survey DNPWC Department of National Park and Wildlife Conservation DWSS Department of Water Supply and Sewerage EA Environment Assessment EIA Environmental Impact Assessment EMAP Environmental Management Action Plan EMP Environmental Management Plan EPA Environment Protection Act EPR Environment Protection Rules FD Forest Department FMIS Farmers Managed Irrigation System GDP Gross Domestic Product HDI Human Development Index HMG His Majesty's Govemment IDA Intemational Development Association IEE Initial Environmental Examination IPDP Indigenous People's Development Plan IUCN The World Conservation Union LSGA Local self Governance Act MFSC Ministry of Forest and Soil Conservation MOPE Ministry of Population and Environment NARC Nepal Agricultural Research Council NDI National Development Institute NHRC National Health Research Center NPC National Planning Commission NWSC Nepal Water Supply Corporation OG Operational Guideline PAF Poverty Alleviation Fund PD Plan Department PI Principle Investigator PO Partner Organization RWSSFDB Rural Water Supply Sanitation Fund Development Board RWSSP Rural Water Supply and Sanitation Project SA Service Agency SO Social Organization UNDP United Nation Development Program UNEP United Nation Environment Program VDC Village Development Committee WHO World Health Organization WHS World Heritage Sites WUC Water User Committee WUG Water User Group

-viii- EXECUTIVE SUMMARY

The concept of the Poverty Alleviation (PAF) Project is based on the principles that appropriate income generation activities, small-scale infrastructure development and capacity building programs improve the livelihoods of the nrral poor and socially excluded groups in rural community of Nepal. The project is based on the integrated approach 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 project activities. The mitigation measures addressing these issues need to be incorporatedin the life cycle of the sub-projects in order to attain the environmentally sound and sustainable delivery of the services.

Introduction

The objective of the Poverty Alleviation Fund (PAF) project is to improve the livelihoods of the rural poor and socially excluded groups by implementing the income generation activities, small-scale infrastructure development programs and sustaining these programs in rural community of Nepal through capacity building and training. The project will receive financial assistance from World Bank. PAF plans to implement the rural development activities in one hand, while on the other hand, it intends to empower the rural poor communities for the enhancement of socio-economy. The project aims at socio-economic development of deprived rural 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 the project. Community participation at project planning, implementation and operation has been identified as the pre-requisite for the development of the schemes under PAF. Targeting the poor, deprive groups and ensuring the equity and gender balance would be the basic principles of 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 by providing employment opportunity through development programs in Nepal. The proposed project 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 and sustaining the positive environmental benefits of the project by identifying the external and intemal, direct and indirect, and immediate and long-term impacts and by formulating the mitigation measures and a plan to incorporate the measures in the life cycle of the project components.

The Proposed Project

The PAF Board was created by His Majesty's Govemment of Nepal in 2004. Poverty Alleviation Fund ordinance 2004, provides authority to plan, implement and monitor the activities under the umbrella of PAF. His Majesty's Government has adopted and promulgated 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

- ix - infrastructures and providing funds for employment and income generation in one hand, while on 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 poverty alleviation 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 percent population of the project areas.

The working principles of the PAF include: a demand lead or responsive participatory approach, ensuring the sustainability of the project components by increasing the community capacity, considering marginalized and socially excluded groups as primary actors of process and enhancing their role in the project and decision making through active participation. The PAF Board signs MOUs with POs for mobilizing COs. COs with the assistance from POs develop 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 private sector agencies. The community with a support from PAF manages the planning, implementation and operation of the project components focusing particularly on community awareness, planning and training aspects. The concept and approach of PAF is expected to be sound and yield successful results on the ground with indications of strong community ownership 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 Pilot Phase, will be spanned for a maximum duration of 3-4 years. However, the successful implementation and results may shorten the span of phase I. Depending upon the outcomes and lesson learned, phase II will be initiated. The results of phase I decide the launching time for 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 selected POs in these districts will mobilize the COs, and PAF Board will screen the sub-projects submitted by COs. Siraha has been chosen from Eastern Development Region and lies on the Terai 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. Mugu and Pyuthan have been selected representing Mid Western Development Region. Mugu represents the district located in Mountains region whereas Pyuthan is located in the Churia range. Finally, Darchula belongs to the Far Western Development Region and is located in the mid hills. This modality has been termned as first window of the pilot phase. This modality will be expanded to the rest of the districts during PAF phase II. A slightly different modality has been decided for the second window. Any social or other organization can propose a project, probably innovative and typical, located in any of the seventy-five districts. The later window might include poverty alleviation programs to disadvantaged communities/groups such as the Kamaia in the Westem region or conflict victims in the country etc. The selection is 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 other relevant 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. The altitude of Terai ranges from 60 m to 300 m. The Churia range constitutes the southem Hill region 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 the population 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 not only 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 geographic region. The soil in Terai and Churia region consists mainly of alluvial deposits derived from the erosion of sediments from the Himalaya. This region is highly fertile and intensely cultivated. The Churia region comprises of north dipping sedimentary rocks of tertiary age characterized by low elevation strike ridges. The Mid-Hills consist mainly of low-grade metamorphic 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 indicated that 84% of the total households are located in rural settings. Thus it is very clear that majority of the population to be covered under PAF will be farmers located throughout the 75 districts of Nepal.

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

Nepal shares a less than three percent on non-flowering species and slightly over two percent on flowering plant species in comparison to the whole world. About 60 non-endemic and 47 endemic 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, I is endangered, 7 are vulnerable, and the remaining 31 species are documented as rare species.

Nepal is equally rich in faunal diversity. Various types of ecosystems provide habitat to various wild species. At present, in situ conservation of wild species are ensured in 9 national parks, 3 wild life reserves, I hunting reserves and 3 conservation areas. Nepal shares 4.27 and 8.57 percentage of the total world's mammals and birds respectively.

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

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

- xi - 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 as 0.378, 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 less productive economic activities there. Nearly four-fifths of the total population depends upon agriculture 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 2.3 percent during the last two decades.

Tradition and Culture: Nepal's population consists of two major groups: the Indo-Nepalese and the Tibeto-Nepalese. These groups are further represented by various ethnic communities having diverse culture, traditions and languages. The Nepalese society has a tradition of maintaining the harmony and peace among various ethnic communities. The family and kinship networks providing the individuals with wide ranging personnel relations as well as social security in difficult times. People continue diverse ritual and religious practices, which give meaning to their life resulting in to stability in the society. Crisis management is a very regular 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 help ensure that they are environmentally sound and sustainable and thus to improve decision making.

As per the Bank's policy and requirement, EA is initiated as early as possible in project processing and is integrated closely with the economic, financial, institutional, social and technical 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 they provide 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 population and the environment. In fact and in a broad sense, the objective of PAF is to enhance the environmental quality and quality of life by reducing the traditional environmental risks and poverty. 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 and incorporate easily so as to improve the environmental performance. Thus as per the Word Bank's criteria, PAF project has been classified as Category B. The projects falling under this category require a limited environmental review to determine potential negative impacts, identify the appropriate mitigation measures and recognize the identification of opportunities for 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

- vii - requires that an EA either in the form of an Initial Environmental Assessment (IEE) or an Environmental Impact Assessment (EIA) shall be carried out for all proposed projects, which meet the criteria listed in Schedules 1 and 2 in the EPR. While EIA has been described as a detailed study or evaluation of the adverse environmental impacts, IEE has been mentioned as a report on analytical study or evaluation. The EPA clearly outlines the concerned agency or the 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 accompanied by either IEE or EIA studies for the approval.

Local Self-Govemance Act, 2055 (1999) (LSGA) aims at having institutional development of local bodies capable of bearing responsibility. By providing such responsibility and power at the local level, the local bodies are able to make decisions on the matters affecting the day to day needs and lives of the people. LSGA has specific provisions in relation to the infrastructure 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 Mahendra Trust for Nature Conservation Act (1982), Tourism Act (1978), and National Parks and Wildlife Conservation Act (1973). Article 7 of Environment Protection Act 2053 (1997) has made 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 the commitment 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 and utilization 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

-xiii- * Provide basic water supply services to 85 percent of rural and 95 percent of urban population. * Prepare physical development plans for small towns and market centers ensure better provision of infrastructure

Nepal government has established number of districts level offices, which directly or indirectly involve for maintaining environmentally sound and sustainable delivery of services at local level. These offices are responsible to implement rules and regulations and have right to 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 and climatological variations and the demand responsive nature of the schemes, the environmental impacts identified and listed in this study are not specific but of general in nature. Most of the sub-projects to be financed under the village and community infrastructure component are expected 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 the World 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 this project primarily due to small-scale intervention. The income generation, small-scale infrastructure development and capacity building programs are expected to reduce the poverty and maintain sound environmental condition in the rural community.

The income generation activity is of small scale. The examples of these activities include animal husbandry such as cattle raising, enhancing the land productivity for example through cash crops such as tea, cardamom, and vegetables. Micro enterprises will also include water mill, ceramic industry, garments or hand loom, tannery etc. Proposed individual interventions are so small that in most cases the target would be normally of few households or individual households in specific case. Looking at the size of the project components, the coverage of affected 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 activity primarily. As such, no issue of human settlement is anticipated in the project area. Because of these facts, the project is not expected to generate any adverse environmental or social impacts in the community. Thus, there could be minor environmental and social impacts related 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 and city area, providing health and educational benefits and creating awareness through prompt communication and access. The examples of these activities include water supply and sanitation schemes, small scale irrigation, engineering trail, bridges, school building, health post/clinic facilities and development of trade center or market. Although the project size seems to be big in terms of coverage, the individual physical infrastructures proposed under PAF are of small scale. Proposed individual interventions are targeted to cover only a few hundred households. The project component will disturb only a small portion of land. This is also spatially distributed in a distance of few kilometers. Therefore, no major environmental impacts are expected due to this project primarily due to small-scale intervention. No significant human resettlement or property damage is expected. Nonetheless, there will be

- xiv- 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 skilled men/women to manage and sustain the development activities in the community. These programs will enable them to select and plan their activities in certain areas with enviromnental consideration. There are no major environmental and social impacts expected due to this project activity in the community. But it is generally difficult to select specific training activities targeted to selected beneficiaries. This is because of the potential conflicts which may arise between social organization vis-a-vis local people. Some social abuse might appear 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. In order 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 activities was developed and included.

Alternative Analysis

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

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

There are a number of institutions working in the rural areas in the field of infrastructure and community development. The projects undertaken with the help of various agencies follow different modalities. The level of community participation and sense of ownership also vary significantly. The past experience indicated that the projects implemented under central agency model poorly addressed the issues of community participation and sustainability of delivered services. In contrast, the project based on community approaches were marked by much 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 physical environment but also the negative perception of development projects among the beneficiaries.

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

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

Environmental Management Framework

Environmental Management Framework (EMF) outlined in this chapter focuses on three generic areas: mitigation measures, institutional strengthening and training, and monitoring and evaluation. The framework defines the means for incorporating the mitigation 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 taken during implementation and operation to eliminate adverse environmental and social impacts and reduce them to acceptable level. The framework also includes the actions needed to implement these measures. The EMF identifies feasible and cost effective measures that may reduce 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 Environmental Management 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 the jurisdiction of the PAF Board. Where as the POs and SOs have to play a major role in implementing the project component activities. They need to take the leading role for the training and capacity building. A typical scheme under consideration may not have all the impacts identified. Therefore, it will be essential to sort out from the list, the specific activities to 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 forest resources, solid waste generation and water pollution problems if carried out in a large scale in a community or a group of communities in a district. Attention should be paid to ensure the fodder or grass while planning such activities. Similarly, composting could be planned to minimize the solid wastes problems and water sources should be protected to minimize the pollution problems.

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

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

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

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

The local authorities have to play effective role particularly during operation and maintenance of the sub-projects. VDC, DDC and other line agencies working on the district need a strong support 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 an anthropologist to look after the relevant issues.

Monitoring and evaluation of sub-project gives existing trend of environmental condition prevailing in the area and proximity and performance of the anticipated services. For this, it is necessary to consider the three types of monitoring indicators in the sub-project area i.e. base line monitoring, impact monitoring and compliance monitoring. An independent professional staff or an agency should monitor the contractors activity on site, activity of the beneficiaries and quality and quantity of delivered services. This practice ensures that the proposed mitigation measures are effectively followed during the constructional and operational phase.

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

Indigenous Peoples Development Plan

Indigenous People Development Plan (IPDP) identifies the issues associated with indigenous peoples and suggests a plan including various aspects. Legal provisions on IPs are in place in Nepal. 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 monitoring and evaluation of the delivered services in areas where indigenous peoples are located. Any activities addressing IP issues must be incorporated in the sub-project documents.

-xvii-

EXECUTIVE SUMMARY

The concept of the Poverty Alleviation (PAF) Project is based on the principles that appropriate inconme generation activities, small-scale infrastructure development and capacity building programs improve the livelihoods of the rural poor and socially e-xcluded groups in nrral community of Nepal. The project is based on the integrated approach in which emphasis is given on both hardwarecomponents and software aspects. This study has identified a few environmental issues related to income generation, infrastructure development and capacity building components under PAF project activities. The mitigation measures addressing these issues need to be incorporatedin the life cycle of the sub-projects in order to attain the environmentally sound and sustainable delivery of the services.

Introduction

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 by providing employment opportunity through development programs in Nepal. The proposed project 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 and sustaining the positive environmental benefits of the project by identifying the external and internal, direct and indirect, and immediate and long-term impacts and by formulating the mitigation measures and a plan to incorporate the measures in the life cycle of the project components.

The Proposed Project

The PAF Board was created by His Majesty's Government of Nepal in 2004. Poverty Alleviation Fund ordinance 2004, provides authority to plan, implement and monitor the activities under the umbrella of PAM. His Majesty's Government has adopted and promulgated 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

PAF activities are anticipated to be implemented in two phases. Phase I, also termed as Pilot Phase, will be spanned for a maximum duration of 3-4 years. However, the successful implementation and results may shorten the span of phase I. Depending upon the outcomes and lesson leamed, phase II will be initiated. The results of phase I decide the launching time for 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 selected POs in these districts will mobilize the COs, and PAF Board will screen the sub-projects submitted by COs. Siraha has been chosen from Eastern Development Region and lies on the Terai 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. Mugu and Pyuthan have been selected representing Mid Westem Development Region. Mugu represents the district located in Mountains region whereas Pyuthan is located in the Churia range. Finally, Darchula belongs to the Far Western Development Region and is located in the mid hills. This modality has been termed as first window of the pilot phase. This modality will be expanded to the rest of the districts during PAF phase II. A slightly different modality has been decided for the second window. Any social or other organization can propose a project, probably innovative and typical, located in any of the seventy-five districts. The later window might include poverty alleviation programs to disadvantaged communities/groups such as the Kamaia in the Western region or conflict victims in the country etc. The selection is 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 other relevant 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. The altitude of Terai ranges from 60 m to 300 m. The Churia range constitutes the southern Hill region 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 the population 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 not only 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 geographic region. The soil in Terai and Churia region consists mainly of alluvial deposits derived from the erosion of sediments from the Himalaya. This region is highly fertile and intensely cultivated. The Churia region comprises of north dipping sedimentary rocks of tertiary age characterized by low elevation strike ridges. The Mid-Hills consist mainly of low-grade metamorphic and meta-sedimentary rocks such as phyllite, quartzite, limestone and dolomite.

Nepal shares a less than three percent on non-flowering species and slightly over two percent on flowering plant species in comparison to the whole world. About 60 non-endemic and 47 endemic 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 are vulnerable, and the remaining 31 species are documented as rare species.

Nepal is equally rich in faunal diversity. Various types of ecosystems provide habitat to various wild species. At present, in situ conservation of wild species are ensured in 9 national parks, 3 wild life reserves, 1 hunting reserves and 3 conservation areas. Nepal shares 4.27 and 8.57 percentage of the total world's mammals and birds respectively.

Policy, Legislation and Regulation

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

The proposed project of PAF is expected to have a net positive impact on human population and the environment. In fact and in a broad sense, the objective of PAF is to enhance the environmental quality and quality of life by reducing the traditional environmental risks and poverty. 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 and incorporate easily so as to improve the environmental performance. Thus as per the Word Bank's criteria, PAF project has been classified as Category B. The projects falling under this category require a limited environmental review to determine potential negative impacts, identify the appropriate mitigation measures and recognize the identification of opportunities for 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

- Nil - requires that an EA either in the form of an Initial Environmental Assessment (IEE) or an Environmental Impact Assessment (EIA) shall be carried out for all proposed projects, which meet the criteria listed in Schedules 1 and 2 in the EPR. While EIA has been described as a detailed study or evaluation of the adverse environmental impacts, IEE has been mentioned as a report on analytical study or evaluation. The EPA clearly outlines the concemed agency or the 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 accompanied by either IEE or EIA studies for the approval.

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

-xii'- * Provide basic water supply services to 85 percent of rural and 95 percent of urban population. * Prepare physical development plans for small towns and market centers ensure better provision of infrastructure

Potential Environmental and Social Impacts

- xiv- 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 skilled men/women to manage and sustain the development activities in the community. These programs will enable them to select and plan their activities in certain areas with environmental consideration. There are no major environmental and social impacts expected due to this project activity in the community. But it is generally difficult to select specific training activities targeted to selected beneficiaries. This is because of the potential conflicts which may arise between social organization vis-a-vis local people. Some social abuse might appear 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. In order 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 activities was developed and included.

Alternative Analysis

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

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

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

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

Environmental Management Framework

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

The local authorities have to play effective role particularly during operation and maintenance of the sub-projects. VDC, DDC and other line agencies working on the district need a strong support 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 an anthropologist to look after the relevant issues.

Indigenous Peoples Development Plan

-xvii-

CHAPTER I

INTRODUCTION

1.1 General

With the objectives of empowering the marginalized group of people and facilitating the poverty alleviation process, a project named Poverty Alleviation Fund (PAF) has been proposed in the Kingdom of Nepal. Poverty Alleviation Fund ordinance 2060 B.S. provides authority to plan, implement and monitor the activities under the umbrella of PAF. His Majesty's Government has adopted and promulgated the Poverty Alleviation Fund Rules 2060 under the section 31 of the ordinance. The project will receive financial assistance from the World Bank. PAF Project is planned to promote the development process by developing some physical infrastructures and providing funds for employment and income generation in one hand, while on the other hand to empower the rural communities essential for the enhancement of socio-economy. The project aims at socio-economic development of deprived rural communities through the development of basic infrastructures and capacity building. Social mobilization and organization of the communities is defined as the starting point in the project. Community participation at all levels of project planning, implementation and operation 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 would be the underlying principles of this project.

The proposed project is within the framework of the national policy on poverty alleviation and sustainable development in Nepal. The proponent of the project, PAF Board is expected to be a 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 proposed project activities under PAF are expected to have a significant contribution to achieve the goals set by tenth national plan.

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

The objectives of the Board activities are to: - establish infrastructures and create employment and income generating opportunities in the most depressed villages and habitations; - Enhance the capacity of local govemment, particularly VDCs to provide and sustain services for poor and socially excluded groups; and - Create an instrument where donors can come together in a coordinated manner and support govemment programs targeted on the rural poor.

The working principles of the Board include: demand lead or responsive participatory approach, ensuring the sustainability of the project components by increasing the community capacity, considering marginalized and socially excluded groups as primary actors of process and 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 the underlying situation of poverty, unemployment and conflict and empower the socially excluded group of people. The main benefits of these services lie in the improvement of the socio-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 the hardware 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. Rural people will have better access to the services and facilities. For example, a water supply project saves their time of collecting the water, which they can use in a productive way in other activities. While developing such projects, a demand driven participatory approach has been practiced in Nepal in recent years. This community based approach has helped in empowering the rural communities which has been proved successful in community water supply and sanitation projects, community forestry and micro-financing projects. These participatory projects and activities have significantly contributed in raising the per capita income and the quality of life of the rural people.

On this background and following the results obtained by other similar projects, the anticipated outputs of PAF project components are the positive socio-economic and environment benefits. However, a number of significant negative impacts could occur, if the project components are not properly planned, located, designed, constructed, operated and maintained. 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 at policy or implementation level. This is because of the fact that some of the issues are very specific and not noticeable at the time of planning or implementation but crop-up later. The environmental risks associated could be avoided or minimized with careful planning and design.

Thus in order to ensure the environmental sustainability of the project components, it is essential to address these issues and identify potential mitigating measures. Environment Assessment 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 for enhancing and sustaining the positive environmental benefits of the project activities. Appropriate measures to mitigate any identified adverse environmental impacts will be integrated as part of the overall project design.

- 2 - Specific objectives of the EA are: 1. describe environmental condition and issues related to PAF activities; 2. identify environmental impacts related to PAF activities; and 3. 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 of minutes and meeting outputs)

1.5 Organisation of the Study Team

With an aim of contributing to the environmental sustainability of the activities under the umbrella 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 the starting of the assigmnent. Comments and feedback (refer Annex IV for the details) on the draft report were received. Additions and appropriate modifications were made on the final report. The final report of the study was submitted during 8th week of the starting of the assignment.

CHAPTER II

PROJECT DESCRIPTION

2.1 Introduction

Small community-based projects featuring high levels of local participation have been successful in Nepal in recent years. Such project having participatory investment approach on community organizations and local government institutions performed better than traditional model of public investment and service delivery. In particular, modalities of investment and service provision which incorporate social mobilization, usually by NGOs, with the inclusion of community organizations, Village Development Committees (VDCs) and District Development 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 term sustainability. When there is greater local ownership of project outputs, then there will be greater 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 based approach 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 and financing projects in communities where the best conditions for project success exit in developing countries. But decentralization and the spread of the institutions of local governance throughout a country will tend to reduce the tension between efficiency and poverty-targeting by redressing the organizational disadvantage of poorer communities and giving them voice and political power. Decentralization thus marks a two-fold stimulus to pro-poor institutions: the first directly through local government, which is responsive to its constituency, the majority of which in developing countries will likely be poor; and the second indirectly by providing an incentive for the poor to organize themselves to take better advantage of local government's resources (demand effect). However, Nepal is still far from achieving 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, on capacity building and on empowering constituents.

In order to address these challenges specially in reducing the poverty through short-termn but efficient interactions efforts are to be made. Initiatives related to PAF have been envisioned on this line. In order to ensure the smooth functioning, the administrative structure of PAF is organized 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 and disadvantaged group by providing access to resources for their productive self-employment, and to encourage them to undertake activities of income generation for poverty alleviation. To this 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;

-4 - 5. Mobilize and coordinate internal and extemal resources to finance poverty alleviation programs; 6. Develop a system of poverty monitoring and evaluation; and 7. Suggest the government on effective policy/program for poverty alleviation.

Development of infrastructure and creation of the employment and income generating opportunities in the village will assist to uplift the economic condition of most deprived and poor people in the community. Capacity building of local government will play vital role to sustain the services for poor and socially excluded groups that will also assist to achieve desire goal of PAF. Donors have to come together in close coordination with government programs to support the rural poor that give effective positive result to strengthen the living standard of the community.

[Management Board

Vice Chairman

Executive Director

Administration/Finance Program Monitoring/Evaluation Procurement Unit 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 is expected that PAF can support the NGOs, VDCs, community organizations, and DDC to improve 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 of the most socially excluded rural people (specifically women, occupational castes and tribal peoples). The process of participation of local communities and government continuously throughout project leads to the development of responsibility and ownership towards the project, which sustains the poverty reduction process in Nepal.

PAF will co-ordinate with selected POs like VDCs, DDCs, local NGOs and private sector to mobilize community organisation. Community organisation with the assistance from POs develops a sub-project proposal and submits it to PAF Board. After approval from PAF Board, 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 local community 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 involves indiscriminate 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 districts from 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 provide opportunity 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 other organization from 75 districts can apply innovative and typical proposals to the PAF Board for possible funding. The modality of this window might include poverty alleviation programs to 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 approach is 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 divide entire seventy-five districts in three classes A, B and C. While A and C represent good and bad situation of the districts, respectively, whereas B comprises the districts that fall under the medium category. Each of the class contains twenty-five districts under its head. Kathmandu has been ranked as top district scoring one point while Mugu stood last securing no points. As the PAF gains experience and the community capacity is enhanced, it will expand its operation in other districts subsequently. The programs of phase I implemented in six districts will 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 Local Body Projects (HMG, 2002). In general the physical infrastructure projects executed in the kingdom of Nepal have been classified by PWD in three categories: Central level, district level and local level projects. Projects included in the Integrated District Development Plan may be implemented either as a district level project by the sectoral agency or as a local body project by the DDC or VDC. This PWD categorization puts PAF activities straight away in

-6 - local level projects in which the major stake of project planning, implementation and operation lies with the local communities.

The World Bank's "Environmental Assessment" policy was established in 1991. It indicates the 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 are expected to fall under Category B and C because PAF sub-project's activities cover only limited area in the communities and have minor negative environmental impact as shown in Table 5.1. The policy aspects of the project as per the Bank's regulations are mentioned in Chapter IV.

2.5 Location and Size of the Project

PAF activities will be implemented in two phases. Phase I will cover selected six districts under the major project activity. Depending upon the outcomes and lesson learned, phase II will be initiated. The results of phase I decide the launching time for phase II. The project implementing districts in the first phase are the representative of different geographical and administrative zone, areas that have been seriously under the category of poverty alleviation in 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 Terai region and represents Eastern and Western Development region respectively. Mugu and Pyuthan are selected representing Mid Western Development region located in Mountainous and Churia range respectively. Ramechhap and Darchula lie in the Mid Hills and belongs to the Mid and Far Western Development region respectively. This modality will be expanded to the rest of the districts during PAF phase II. A slightly different modality has been decided for the second window. Any social or other organization can propose a project, probably innovative and typical, located in any of the seventy five districts. The later window might include poverty alleviation programs to disadvantaged communities/groups such as the Kamaia in the Western region or conflict victims in the country etc. directly based on the eligibility 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 four components: a) administration; b) income generation project targeted to the poorest and excluded groups; c) small scale village and community infrastructure; and d) capacity building. 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-projects for the selected communities. It should be necessary to carry out planning exercises in close consultation with local community and stakeholders during the preliminary stages of the sub- project preparation. These consultations must also address the project's environmental impact on project-affected groups and take their views, and those of local nongovernmental organizations (NGOs), into account. So, it will be easy to maintain the environmental condition and sustainable development in the area when we maintain the practice of consultation with local community and stakeholders throughout project implementation

-7 - phase. However, the PAF sub-projects will have the following four components to meet the project goals.

Activities Which Lead to Income Generation

Beneficiary eligibility will be determined at the village level by the villagers themselves based on objective criteria including ethnicity, gender, accessibility to services and indicators of poverty such as level of assets and income. This sub-project includes micro-irrigation, micro- enterprises, land productivity, animal husbandry, and others. Social organizations will be recruited 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 generated relative 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 infrastructure of small scale that can be managed by community groups or VDCs. Preference will be given to infrastructure in VDC development plans where they exist and where the VDC is willing to contribute 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 to health, 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 beneficiaries including women and disadvantaged. f. Preference will be given to rehabilitation, extension or modernization / upgrading of schemes rather than building new ones. g. Partner Organization will do survey and cost estimates in consultation with the community. h. The beneficiary community will contribute labor, local material, cash towards scheme cost and its operation and maintenance. The minimum contribution will be 15 percent of scheme cost. i. The community and the Partner Organization will jointly agree on disbursements based on implementation plan. Responsibilities of the community and Partner Organization will be clearly defined.

Social Mobilization

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

-8 - orientation and training programs to enable their capacity to operate in conflictive and divided situations. A Capacity Building Organization for POs will be recruited by PAF for this purpose. This organization will also monitor the work of POs and provide capacity building assistance where necessary.

Capacity Building

Capacity building of the local bodies of the community would be the basic requirement in planning, design, implementation and management of the sub-projects with environmental consideration. This will also assist to sustain the sub-project in the community as their required. 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 help VDCs perform their core functions and will include financial management, accounting, participatory budgeting, procurement and conducting of meeting. In addition, for those VDCs that attain basic capacity building will also be provided on specific thematic areas, including; existing government programs, gender issues, health issues, education, nutrition, PAF procedures, and others as may be necessary. A specialized agency will be recruited to develop a capacity building plan for VDCs and manage the program. In addition each VDC associated with the target villages will be eligible for a $ 1000 grant to procure technical assistance in areas not covered by the capacity building program. The PAF will assist VDCs in identifying TA service providers. Grant will be approved by the PAF Board.

Support to Micro-Finance Intermediaries:While PAF will not finance micro-lending, it will finance 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 to micro-finance intermediaries. The first task of this agency will be to identify capacity building needs and demand for capacity building.

Monitoring and Evaluation System: Monitoring and Evaluation will do monitoring for supervision, 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 time lag between group formation and sub-project formation, etc. Monitoring for evaluation will be based on a base-line study, a MTR study and final study tracking the evolution of the project impact indicators over time and geographically and comparing them with control village outside the project. Specifically the Monitoring and Evaluation system will include the following modules; a) a standard MIS; b) structured field visits to assess impact; c) measure impact against benchmarks established from Nepali and global experience; d) beneficiary assessments; and e) impact assessment surveys starting with a baseline during the early phase.

-9- 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 the south, east and west directions. With a total area of 147,181 kn 2, the country is characterized by diverse topography, geology and climate, as well as patterns of land use. It is roughly rectangular in shape with 885 km east west average length and about 193 km non-uniforrn north south width. Nepal is predominantly covered by mountain, with elevation ranging from 64 m above sea level at Kachlakalan in the Eastern Terai district of Jhapa to 8,848 m at the peak 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 are further divided into smaller units, called Village Development Committee (VDC) and Municipality. Currently, there are 3,914 VDCs and 58 municipalities in the country. Each VDC is composed of 9 wards and municipality ward ranges from 9 to 35. The detail information on physical features such as topography, soil and geology and land use is given below.

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 to the geography and climate and thereby differentiation occurs in land utilization depending upon 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 the Terai region. This lower belt of the country is highly fertile and is intensively cultivated. The altitude of this region lies between 66 m to 300 m. The area of this region covers 14.4% of the total land area of the country.

Siwalik Region: Covering an area of 12.7% of the country, this region lies at an altitude of 300 m to 1800 m. Several inner valleys in this region are densely populated and are potentially good for agriculture due to the alluvial soil deposits by the rivers. However, this region is very rugged 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 overall country. Covering a wide range of physiographic area, this region occupies 29.5% of the total land area of the country ranging from 200 m to 2000 m. As this region is highly cultivated and the proportion of people living in this region is also higher, agricultural product is always inadequate to maintain the living standard of the people living in this region. This could be due to the varied and rugged soil condition of this region.

High Mountain Region: This region lies below the snow line with an elevation ranging from 2000 to 2500 m. About 19% of the total area of the country lies in this region. Compare to the inhabiting 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 during the summer time.

High Himalayani Region: Stretched over highest peaks and mountains this region is always covered with snow and occupies 23.7% of the total land area. The altitude of this region ranges 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 of soil derived from the erosion of sediments from Hills and Mountain regions. The region is highly fertile and intensively cultivated. The main soil of Terai is Loam i.e. sand and clay mixed with a yellowish brown color. Every year new deposits of eroded soil are laid down on riverbeds. In this way, the Terai consists of tracts with new alluvium and areas of older deposits. The Terai area is gradually under the pressure of population concentration because of inter and intra migration process due to its high fertility.

The Churia ranges are composed of sand, conglomerate, quartzite, sandstone and partly rich in mica and calcareous clay. The soil cover of Churia is coarse and porous and thereby dry condition 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 the total annual soil loss from cultivated terraces occurs during the pre monsoon season. The declining 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 the mismanagement of environmental attributes. The soil erosion has been non-stop phenomenon aggravated 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 peaks separated by very deep gorges. Many prominent peaks including Mt. Everest, are located in this region. This region is environmentally fragile due to high steep topography. Table 3.1 provides 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 and shrub area, crop land (Khet and Bari), barren land (Pakho Jamin) and settlement area. Forest and shrub land are generally shallow and well-drained soils occurring mostly on moderately steep to very steep terrain. The land, which is used for crops like paddy, Khet has relatively low permeability as of high value of clay or loam in the soil. Bari and Pakho Jamin have relatively high permeability values as of high content of boulder and gravel beds.

While implementing in mid hills and mountainous region, the most prominent problems such as soil erosion and landslide may occur, however, the same problem may not occur frequently due to its plain nature with loam soil type. Proper environmental management plan should be developed to mitigate these impacts. Table 3.1: Soil Type and Geology of the Geographic Region. (KESL, 1986)

Region Elevation (m) Geology Soil Type Terai and Inner 60 - 300 Quatemary Ustochrepts, Haplustolls, Terai alluvium Haplaquepts, Haplustalfs, Ustifluvents and Ustorthents Churia range 200 - 1500 Tertiary sandstone, Ustochrepts, Haplustolls, siltstone, shale and Rhodustalfs, Ustorthents, conglomerates Dystrochrepts, Haplaquepts, Ustifluvents Mahabharat 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 Ustorthents Himalaya. > 4000 m Gneiss, schist, Cryumbrepts, Cryorthents limestone and and Rock Tethys sediments

3.2.3 Mining and Extraction

Mineral deposits can be divided into metallic minerals and nonmetallic minerals. Terai area has a good potential for gravel, sand, aggregate, groundwater, oil and gas. Middle Hills show the 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 have not yet been fully explored for mineral potentiality.

From the PAF project point of view, construction materials such as bricks, stone, aggregates and 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 of clay deposits is available for brick production. Stones used either for stone masonry in making structures or for paving purpose are available in the Hilly areas. Boulder gravel and sand are available in the rivers of Nepal. The situation of boulder and gravel in two selected Terai districts Siraha and Kapilbastu is given in Table 3.2. Similarly, stone and sand quarries are located in bedrocks in various parts of the country.

Table 3.2: Boulder, Gravel and Sand Reserve in Siraha and Kapilbastu (in 1,000m 3)

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 of Nepal (Fig. 3. 1). The distribution of land according to land-use type is shown in Table 3.3.

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

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

C T

0X/r vf Z o ou ZseS;r-* r A 12D8 e o- ;>

-2

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a -0

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

°.O------w....zesX ,wzz--...... Table 3.3: Land Use Pattern in Nepal (UNEP, 2001)

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

Agriculture land posses the second largest with 20% in terms of land use category in Nepal whereas the forestland covers 29% of the total land. The agriculture land has increased from 2,376 thousands hectors in 1980 to 2,968 thousands hectors in 1985. The agricultural land has remained constant during 1985 to 1999. Similarly, the per capita agricultural land has declined 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 1999 while 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 of no. of households having agriculture land, and livestock and birds has remained to be 75.6 and 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 is categorized into five major climatological zones based upon the altitudinal variation. They ' are: Subtropical, Warm Temperate, Cool Temperate, Alpine and Artic. Subtropical climate is found in Terai, Inner Terai and Churia. Similarly, the climate of the hilly area is warm temperate. However, even within a cross section of a mid hill area, lower river valleys are subtropical and high ridges are cool temperate. In the higher mountain region, Alpine climate is 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 the southwest monsoon brings about more than 80% of its total annual rainfall, and the other in winter, accounting for the rest. There is an increasing trend in rainfall from Terai to Siwalik region. The monsoon in general starts through eastern Nepal on around 10 th June and extend all 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 rainfall was 5,202 mm, recorded at Lumle in Kaski district where as minimum was observed to be 174 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 are 41°c and 30°c respectively, and 3°c and far below 0°c in winter, respectively. The highest temperature generally occurs in May and early parts of June and minimum occurs in the month of June. The capital of the country, Kathmandu, has a pleasant equable climate with average 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 relative humidity reaches more than 80% during monsoon, however, in dry season, it decreases less than 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, are encountered. Average sunshine hours are varied between 4 - 8 hours per day (CBS, 1998). In general, marked local climatic variation occurs due to high and steep topography and diversity with terrain, location and seasonal characteristics.

The selected districts under PAF Phase I are different in climatic nature according to geographical distribution. Siraha has tropical and sub-tropical climate, whereas Kapilbastu has only tropical climate. Similarly, Ramechhap lies in the cool-temperate and alpine zone and 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 the natural attributes of water. As, the water is directly concerned to human health, the degradation of which adversely affect on human health. Similarly, 80% of the total diseases are attributed to water related.

The anthropogenic activities are found to have the vital role to degrade the existing water condition in Nepal. The activity of disposing all sorts of domestic waste into the river is the major threats to Nepali river hitherto, especially in Kathmandu Valley. Similarly, the chemical wastes discharged from industries and the disposal of solid wastes in nearby open places, surface drains, yard and on the bank of river are the accelerating activities towards water pollution. Bhaktapur city has sewerage facilities and a wastewater treatment system. Similarly, in Kathmandu, an oxidation ditch named Guheswori waste treatment plant has recently been constructed and operated. Five constructive wetlands have been developed for treating 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. In the cities of Kathmandu, the capital of nation, only 15% of the houses have access to a sewerage 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 total industrial wastewater discharge of 8.557 million cubic meter contains 5.7 thousands tons BOD and 9.6 thousands tons of total suspended solids. Industries causing water pollution constituted 40 percent of the total 4,271 industrial establishments in the country in 1991/92. In 1991, 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 Kathmandu Valley. The effluents from many industries are directly discharged into the local rivers without treatments and spoiling the quality of river water.

15 3.3 Biological Environment

Nepal is immensely rich in biological diversity as it lies in between two big geographical regions, paleotropical and paleoarctic region. In spite of being small in size, which constitutes only about 0.03 percent of the world total landmass, it provides a favorable habitat for the luxurious growth of different biological species. The colntry has about 54% of the surface area under some sort of vegetation cover. A total of 118 ecosystems have been identified in different physiographic zones in Nepal. In addition, 75 vegetation types and 35 forest types are 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 percent on flowering plant species in comparison to the whole world. Table 3.4 below shows the plant diversity 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 Species Algae 687 13 40,000 1.72 Fungi 1,822 150 70,000 2.38 Lichen 471 48 17,000 2.77 Bryophytes 853 37 14,000 6.09 Pteridophytes 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 the recent State of The Environment Report 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 are vulnerable, and the remaining 31 species are documented as rare 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 Medicinal Plants on Nepal. Out of the total no. these species, it is roughly estimated that 30 percent are tree, 25 percent are shrub and 32 percent are herb and 10 percent climbers and 3 percent others (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 around 50 species have been utilised for commercial and household consumption. Fifteen fruits of more than 100 varieties, 50 vegetables with 200 varieties, and 10 varieties of potatoes are cultivated commercially. Some wild genotypes have also been identified and utilised by local people 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 713 for 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 ample of wild species. At present, in situ conservation of wild species are ensured in 9 national parks, 3 wildlife reserves, 1 hunting reserves and 3 conservation areas. Nepal shares 4.27 and 8.57 percentage of the total world's mammals and birds respectively. Table 3.5 provides the information regarding the faunal species in comparison with global faunal diversity.

* Out of 645 butterfly species, 29 are endemic, 142 are threatened, and 12 are endangered 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's Species Endemic sps. Species Share Arthropods Insects 5052 4 1,000,000 0.44 Butterflies 645 29 - - Moths 6000 - - Spiders 144 108 - Freshwater fishes 185 8 85,000 0.21 Herpetofauna Amphibians 43 9 4,000 1.07 Reptiles 100 2 6,5000 1.53 Birds 847 2 9,881 8.57 Mammals 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 Butterflies Amphibians CITES 55 111 19 3 Appendix I 28 16 9 Appendix II 16 94 10 3 Appendix III 3 1

IUCN 44 19 3 1 EN 9 2 CR 1 2 1 VU 15 7 1 LR/nt 7 8 1 1 LR/Ic 8 - DD 4 -

17 EN- Endangered, CR- Critically Endangered, VU- Vulnerable, LR/nt- Low risk/near threatened, 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 managed to achieve specific conservation objectives. In the context of Nepal, the protected areas are created 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 and preserve the environment in and around such areas by involving conservation of forest land areas, water, soil and cultural and ecological heritages. The management of national parks and wildlife reserves has attained special significance from the point of view of ecotourism. Not only that the wild animals can be observed in their natural habitats by visitors in national parks and wild life reserves but also help in educating people about animals and plants and their 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 wildlife conservation 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 in development regions. Covering area of these parks and reserves change from time to time due to extension programs.

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

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

Similarly, the primary objectives of the Department of National Parks and Wildlife Conservation (DNPWC) are to conserve the country's major representative ecosystems, unique natural and cultural heritage, and give protection to the valuable and endangered species. The DNPWC's present priority stresses a conciliatory approach with participatory management 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 for which the area is considered to be of outstanding universal significance. A world heritage nature site may exemplify process, or be representative of biological evolution, or contain the natural habitats endangered animals. It is a place of natural habitats of endangered animals and of exceptional scenic beauty, a spectacular view and a reserve for a large number of wild animals. Royal Chitawan National Parks and Sagarmatha National Park have been listed in the World Heritage Sites.

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

Geo National Physio- Area Gazetted Parks Graphic (sq. km.) Years Vegetation Wild Animals Zone Royal Terai and 932 1973 Sal (Shorea Robusta), One-Homed Chitwan Siwalik Chirpine, Khair, Rhinoceros, Gaur, Sissoo, Simal, Grass Royal Bengal Tiger, (Sacccharum & Wild Elephant, Inperata) Fourhorned Antelope, Pangolin, Golden Motor Lizard, Python, Bengal Florican, Lesser Florican, Gaint Hombill, Black Stork, White Stork, Gangetic Dolphin Sagarmatha High 1148 1976 Pine, Hemlock, Fir, Himalayan Tahr, Himal Juniper, Birch, Ghoral, Serrow, Rhododendron Musk Deer, Himalayan Black Deer, Weasel, Marten, Himalayan Mouse Hare, Jackal, Langur, Birds (At least 118 species) Langtang High 1710 1976 Sal, Chirpine, Red Panda, Himal & Rhododendron, Himalayan, Black High Nepalese Alder, Oak, Bear, Snow Mountain 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 throated marshlands, tussock marten, Otter, Wild grassland, Dog, Common Langur, Rhesus Macaque and Red Panda Shey- High 3555 1984 Rhododendron, Snow Leopard, Phoksundo Himal caragana Shrubs, Musk Deer, Blue Salix, Juniper, White Sheep, Grey Wolf, Himalayan Birch, Gorak, Great Silver Fir, Blue pine Tibetan Sheep, Spruce, Hemlock, Himalayan Tahr, Cedar, Poplar, Leopard, Jackal and Bamboo. Himalayan Black

19 Geo National Physio- Area Gazetted Parks Graphic (sq. km.) Years Vegetation Wild Animals Zone Beer Khaptad High 225 1984 Oak, Spruce, Fir, Barking Deer, Wild Mountain Hemlock, Oak, Boar, Goral, Maple, Birch, Himalayan Black Rhododendron, Bear, Yellow Grassland Flowers Throated Marten, like Primulas, Rhesus and Langur Buttercups, Wild Monkey, Leopards, Berries and varieties Wild Dogs, Jackal of medicinal herbs Musk Deer, Birds (224 species). (226 species) including hnpeyan pheasant (Dhanphe) Nepal's national bird, many types of Partridges, Flycatchers, Bulbuls, Cuckoos, Eagles Royal Terai and 968 1976 & Sal (Shorea Robusta) Rhinoceros, Tiger, Bardiya Siwalik 1988 and Grassland Gharial Crocodile, Gaur, Wild Elephant, Gour Homed Antelope, Striped Hyena, Pangolin, Gangetic Dolphin, Monitor Lizard, Pythan Sambar, Chital, Hog Deer, Barking Deer, Sloth Beer, Palm Civet, Wild Dog, Langur, Rherus Monkeys, Common Leopard, Ratel Makalu High 1500+830 1991 Rhododendron, Snow Leopard, Red Barun Himal and orchid (47 types), Panda, Musk Deer, Mountain Wild Boar Shivapuri Mid 104 2002 Pine, Oak, Chestnut, Himalayan Black mountain Rhododendron Beer, Leopard, Leopard, Jungle Cat, Rhesus Monkey

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

20 wildlife, especially migrated bird communities and of threatened animal or plant species. For example, Koshi Tappu Wildlife reserve is habitat for the only remaining population of wild buffalos, which is difficult to get in other parts of the country. Table 3.8 gives the description of wildlife reserves in Nepal. Table 3.8: List of Wildlife Reserves in Nepal (DNPWC, 2003)

Geo Wildife Physio- Area Gazetted Wildlife Physio (sq. Gaze.Vegetation Wild Animals Reserves Graphic ks.) Years W Zone Royal Terai 305 1976 Sal, Asna Wild Elephant, Royal Bengal Suklaphanta (Terminalia Tiger, Spotted Deer, Blue Alta), Simal, Bull, Barking Deer, Hog Karma, Khair, Deer, Wild Boar, Leopard, Sissoo, Jackals, Langur, Rhesus Imperata Monkey, 350 species of Cylindrica, birds, including Sarus Crane, Saccharun Swapm Francolin, Grass owl, Heteropogon Warblers, Flycatcher, Bengal Florican, Marsh Mugger Crocodile, Cobra, Python Koshi Terai 175 1976 Tall Kharpater Wild buffalo, Hog Deer, Tappu grasslands, Wild Boar, Spotted Deer, Thatch grass, Blue Bull, Rock Python and Khair-Sissoo 441 species of Birds Scrub Forest including Wild Tailed and Deciduous Stonechat, Striated Marsh Mixed Riverine Warbler, Shore Birds, Water Forest, Birds, Swamp Partridge and Bengal Florican, Gharial Crocodile, Gangetic Dolphin Parsa Terai 499 1984 Sal forest, Pine Wild Asian Elephant, Royal and forest, Khair, Bengal Tiger, Sloth Bear, Siwalik Silk Cotton Leopard, Blue Bull, Samber, Tree, Sabai Chital, Hog Deer, Barking Grass, Deer, Langur, Rhesus Macaques, Striped Hyena, Jungle Cat, Palm Civet, Giant Hornhill, Common Cobra, Banded Krait, Phython, King Cobra and 500 species of Birds including White Breasted Kingfisher, Paradise Flycatcher, Large Racquet- Tailed Drongo, Golden Backed Woodpecker

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

21 individual is dwindling. They are distinguished from domestic buffalo by their much bigger homs. 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 of international significance. Royal Suklaphanta Wildlife Reserve: The reserve is established to protect Nepal's last remaining herd of Swamp Deer (Cervus duvaucelli). The herd currently stands at about 2000 individuals. The reserve provides habitat for 350 species of birds, 21 species of fish and other endangered species. Parsa Wildlife Reserve: It was established as wildlife reserves to preserve the habitat for Wild Asian elephant. The reserve is also the habitat of 500 bird species and many other endangered species. DhorpatanHunting Reserve: This reserve provides.the needs of Nepalese and foreign hunters of Blue Sheep and other animals and preserves a representative high altitude ecosystem of Nepal (Table 3.9). Table 3.9: Hunting Reserve in Nepal (DNPWC, 2003)

Hunting Geo Physio- Area Gazetted Vegetation Wild Animals Reserve 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, Wild Bar, Rhesus Macaque, Langur, Mouse

ConservationArea: An example of conservation area is given in Table 3.10. Table 3.10: Conservation Area of Nepal (CBS, 1998)

Conservation Geo Physio- Area Gazetted Area Graphic (sq km.) Years Vegetation Wild Animals Zone Annapurna High 7629 1992 226 species of 101 species of mountain plants, 38 species mammals, 478 species of orchids, 9 of Birds, 39 species species of Reptiles and 22 species Rhododendrons 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 total area. Forest depletion is one of the major environmental issues in the country. The forests decreased 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 percent per annum, is considered to be the most important factor for diminishing forest area. More over, fuelwood is the main source of energy for cooking and heating purposes. Forests remain the single most important source for fiuelwood, particularly for rural people. Forests account for 78 percent of energy consumption.

22 Protected Areas of Nepal

N Legends: Annapurna National Park and Conservation Area W } t-E KKoshi 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 Park Royal Shukia Phant Wild Life Reserve Sagarmatha National Park ve + She-Phoksundov . , _ National Park M.Shivapuri Water Shed

100 0 100 200 Miles

Fig 3.2: Protected Areas of Nepal

23 Out of the total land area in the country, the forest area, according to the Land Resources Mapping Project (LRMP) accounted for 38% in 1978/79; in 1994 the area had declined to 29%. The shrub area increased during the same period from 4.7 to 10.6%. This has been mainly due to uncontrolled cutting of trees for fuelwood and forest clearance for agricultural land. Between 1978/79 and 1994, the estimated rate of annual deforestation in the Hills was 2.3% compared to 1.3% in the Terai, while for the country as a whole was 1.7%. During the same period, the annual decrease in forest and shrub together was 0.5%. In terms of area, the forests of the country decreased by 24%.

The agricultural area increased from 235,900 ha in 1980 to 2,968,000 ha in 1985 and then remained constant up to 1999. This increment was mainly due to the encroachment on forest areas. 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 stock was 522 million cubic meters of bark up to 10 cm top diameter, and this dwindled down to 387.5 million cubic meters in 1999. The growing stock for Sal (Shorea robusta) in the Terai forests declined from 101 m 3/ha to 72 m 3/ha and for other hardwood forests the decline was from 76 m3/ha to 58 m3/ha. Fuelwood consists 78% of the total fuel consumption and its use is one of the main causes of forest depletion. This is basically due to the lack of alternative fuel to wood. As a result, distances from the villages to the forests have increased. The forest has also been under great pressure from the ever-increasing demand of the livestock population 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 leasehold forestry. Community forests are the part of national forest handed over to users groups to conserve, manage and utilize for the basic needs of the community. Community forestry in the hills, in most cases, is functioning well and communities are deriving various benefits. A total of 15 percent of the forest area has already been converted to community forestry. A slightly old data (December 11, 2001) indicated that 10,969 community groups are managing 847,282 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 it for approval. The concerned District Forest Officer (DFO) is required to approve the operational forest management plan before handing over the forest to the Community Forest User Group. As of 2001, 939,195 hectares of forest have been handed over to communities

throughout the country. In the initial phase of the 9 th five-year plan, there were only 5,316 community forests and the number has been increased to about 12,000 by the end of the plan year (NPC, 2003).

3.5 Socio-economic Condition

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

24 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 sector contributes over 40% to the National Gross Domestic Products (GDP). The principal indicators of the socio-economy in 2001 included: life expectancy at birth- 59.7 years, literacy rate-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 per capita of Rs. 1,237 (UINDP, 2002). The HDI for urban areas (0.60) far outstripped that for rural areas (0.46), where more than 80% of the population lives, because of far better access to services, resources and opportunities. The indices for Mountain, Hill and Terai were estimated as 0.38, 0.51 and 0.47, respectively. The broad scattering of communities in the mountains sharply limits access to services and information and severely disadvantaged people 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 productive economic activities there.

Nearly four-fifths of the total population depends upon agriculture 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 2.3 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 and natural resources. Since, the opening of the kingdom to foreigners in 1956, tourist visits to the country 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 strong tourism viability as of many natural, archeological and religious attractions. However, in recent days, the tourist attraction is being decreased due to insurgency problems.

Nepal's energy consumption consists of three categories: traditional biomass, conventional commercial and alternative renewable energy resources. The trend of energy consumption depicts positive growth with increase in commercial and renewable resources at annual rate of 15.5% and 21%, respectively, and the traditional source at 2% over the last decade. Though the growth rate indicates increase in use of commercial and renewable energy by 2001/02, the traditional biomass still shares a mammoth share of 86% of the total energy consumption while that of commercial and renewable are 13.7 and 0.4% respectively. On fuel usages, the traditional fuel wood has the largest contribution of 76% (MoPE, 2003). The lack of alternatives 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 the rural area. Population explosion, deteriorating environmental conditions and constraints of resources has affected human health and health of the ecosystem. Environmental pollution adversely affects health of the people and the ecosystem. Air pollution causes respiratory problems like asthma and bronchitis. Some studies have shown certain co-relation between the pollution level and diseases like acute respiratory infections, lung cancer, cardiovascular disease, cataracts and tuberculosis. Similarly, 80% of the total diseases are attributed to water related. Polluted water causes typhoid, Japanese Encephalitis (JE), meningitis, visceral leishmaniasis (kala- azar), viral hepatitis, malaria and parasitic infection are also the results of environmental pollution. Because of the above problems, the mortality rate from diarrhea was 12 per 100,000 population and morbidity 612 per 100,000 population (WHO and NHRC, 2002).

Nepal is heading for the economic development with liberalization policy and has implemented 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 is fairly low, the mountainous landscape has also offered diverse potentials for economic development. The steep topographical features and high run-off are the main factors offering a hydroelectricity potential of 45,000 MW installed capacity although the theoretical hydropower potential of Nepal's rivers, based on an average flow, has been advocated at 83,000 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 peace among various ethnic communities. The family kinship networks provide the individuals with ranging personnel relations as well as social security in difficult times. People continue diverse ritual and religious practices, which give meaning to their life resulting stability in the society. 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, whose ancestors migrated into the country from the south and the Tibeto-Nepalese, whose ancestors entered into Nepal from the north. Although intermingling between the two groups has occurred, cultural, linguistic religious differences exist both between and within the two groups.

The indo Nepalese group comprises people who speak Sanskrit, the derived languages and are strict 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 social hierarchy) than by ethnicity. The Tibeto-Nepalese group comprises several different ethnic groups 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 strong shamanist element remains in the religious practices of many official religious practices of many 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 a small Muslim population mainly located in the Terai.

26 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 the moon. Dashain is the greatest festivals of Nepali. Dashain takes place during two weeks in September or October and celebrates the inevitable victory of virtue over the forces of evil; it is a time of gift giving, family gatherings, feasts, and rituals performed for the Goddess of Victory. During Tihar, three days in October or November, rows of lights are displayed on every building in worship of the Goddess of Wealth. In this festival, sister worships her brothers and wishes for his long life. Teej, a greatest festival of women, is observed in August or September and is a time for married women to go home to their parents, receive special treatment, ritually purify themselves, and pray for sons. Holi is a lively social event in February or March during which people dance in the streets and throw colorful powders on each other.

3.6.3 Marriage and Family

Marriage customs vary among the different castes. Traditional marriages are arranged by parents, 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 before getting married. Weddings are times of great celebration and feasting.

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

Land is inherited and divided equally between the sons of a family. Inheritance laws have been reformed, and women are gaining some property rights. They are responsible for the household 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 than in rural areas. Women in rural areas often marry before they are 18 years old. They join their husband's extended family at that time and are expected to contribute in husband's household works.

General Information of Selected Districts

The general information of the six selected districts for pilot phase of PAF programs are described below. Similarly, the demographic features and land use pattern of these districts are shown in Tables in 3.12 and 3.13, respectively. The development activities and Human Development Index are mentioned in Annex V and VI respectively. The selected six districts of 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 India in the South. It consists of 109 VDCs with population of 569,880. Population 10 years of age and over by economically active and inactive are 223,644 and 184,339, respectively. Literacy percent of 6 year and above is 38.

27 Ramechhap District: Ramechhap district is located in Janakpur Zone in Central Development Region of Nepal. It covers 1,546 sq. km. of land. It is surrounded by five districts namely Okhaldhunga 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 of 212,408. Population 10 years of age and over by economically active and inactive are 116,268 and 37,670 respectively. Literacy percent of 6 year and above is 41.

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

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

Muigu District: Mugu district is located in Kamali Zone in Mid-Western Development Region of 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 China in the North and Humla and Kalikot in the South. It consists of 24 VDCs with population 31,465. Population 10 years of age and over by economically active and inactive are 20,403 and 1,403 respectively. Literacy percent of 6 year and above is 25. Shey-Phoksundo, a biggest national park of Nepal also lies in this district. Some parts of the national park lie in the eastern part of the district. Similarly, Rara National Park is also located in the southern part of the district. Rara Lake (Mahendra Tal), situated at an elevation of 2990 m. is the main feature of this district. It is Nepal's biggest lake (10.8 sq. km) with a depth of 167 m. The brief description of National Parks and endangered species lived in these Parks are mentioned Section 3.3.3.

Darchula District: Darchula district is located in Mahakali Zone in Far-western Development Region of Nepal. It covers 2,322 sq. km. of land. It is surrounded by two districts and one state of India and China respectively, namely Bajhang in the East, Uttar Pradesh State of India in the West, Tibet of China in the North and Baitadi and Bajhang in the South. It consists of 41 VDCs with population 121,996. Population 10 years of age and over by economically active and inactive are 63,634 and 24,305 respectively. Literacy percent of 6 year and above is 45.

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

PopulationAvg. Household Pop. Density District Population Household VDCs Municity (/sq.km) 2001 2006* 2001 size 2001 2006* Siraha 569,880 651,521 102,551 5.56 109 0 479.70 548.42 Ramechhap 212,408 256,472 40,467 5.25 55 0 137.39 165.89 Kapilbastu 481,976 558,645 83,513 5.77 78 1 277.32 321.43 Pyuthan 212,484 234,077 57,065 3.72 49 0 162.33 178.82 Mugu 43,937 46,490 . 7,612 5.77 24 0 12.43 13.15 Darchula 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 28,155 Ramechhap 1,546 40,050 19,130 11,,429 66,152 Kapilbastu 1,738 87,709 6,146 933 77,838 Pyuthan 1,309 28,171 14,870 2,899 72,694 Mugu 3,535 11,972 7,121 91,927 111,099 Darchula 2,322 16,053 8,911 61,215 79,538

29 300000 400)00 500000 600)00 700)00 800000 900000 1000000 o>

W on Map of Selected Districts ei

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Fig. 3.3: Map of Selected D)istricts

CHAPTER IV

POLICY, LEGISLATION AND REGULATION

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

4.1 World Bank's EA Requirements

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

As per the Bank's policy and requirement, EA is initiated as early as possible in project processing and is closely integrated with the economic, financial, institutional, social and technical analysis that (a) environmental considerations are given adequate weight in project selection, 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 EA activities, any conflict of interest is avoided for the proposed project. The borrower is responsible for carrying out the EA. The Bank reviews the findings and recommendation of the EA to determine whether they provide and adequate basis for processing the project for Bank 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 environmental impacts. Category "A" projects require a full 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 environrmental analysis. Category "FI" projects do also require some environmental analysis.

Category A projects are likely to have significant adverse environmental impacts that are sensitive, diverse, or unprecedented. These impacts may affect an area broader than the sited or 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;

- 31 - * 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 human populations or environmentally sensitive areas that including wetlands, forests, grasslands and other natural habitats, which are less adverse than those of Category A projects. The impacts associated with B type projects may be site specific, few if any of them are irreversible and in most 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 narrower than 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 adverse environmental impacts. Beyond screening, no further EA action is required for a Category C project. 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, in subprojects that may result in adverse environmental impacts. For a FI operation, the Bank requires that each FT screen proposed subprojects and ensure that sub-borrowers carry out appropriate EA for each subproject. Before approving a subproject, the concemed agency verifies (through its own staff, outside experts, or existing environmental institutions) that the subproject meets the environmental requirements of appropriate national and local authorities and 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) financing during EA process, the borrower consults project-affected groups and NGOs about environmental aspects of the projects and takes their views into account.

For meaningful consultation between the borrower and project-affected groups and local NGOs on all Category A and B projects proposed for IDA financing, the borrower provides relevant material in a timely manner prior to consultation and in a form and language that are understandable and accessible to the groups being consulted. Public availability in borrowing country and official receipt by the Bank of the EA report are prerequisites to Banks appraisal of these projects.

- 32 - During the project implementation, the borrower reports on; a) compliance with measures agreed with the Bank on the basis of the findings and results of EA, including implementation of any environmental management plan (EMP), as set out in the project documents; b) the status of mitigatory measures and c) the findings of monitoring programs. The Bank bases supervision of the project's environmental aspects on the findings and recommendations of the EA, including measures set out in the legal agreements, any EMP, and other project documents.

A project's EMP consists of the set of mitigation, monitoring, and institutional measures to be taken during implementation and operation to eliminate adverse environmental and social impacts, offset them, or reduce them to acceptable levels. The plan also includes the actions needed to implement these measures. Management plans are essential as element of EA reports for Category A projects; for many Category B projects, the EA may result in a management 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 for ensuring that those responses are made effectively and in a timely manner; and (c) describe the means for meeting those requirements.

The proposed projects of PAF and its sub-project components are expected to have net positive impacts on human population and the environment. In fact and in a broad sense, the objective of sub-projects are to enhance the socio-economic status of the community and the environmental quality of the community and the surroundings by reducing the level of poverty and the traditional environmental risks. 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 and incorporate easily so as to improve the environmental performance. Thus as per these characteristics, PAF in general and specifically the sub-projects have been classified in Category B. The projects falling under this category require a limited environmental review to determine potential negative impacts, identify the appropriate mitigation measures and recognize the identification of opportunities for environmental assessment.

4.2 National Guideline Related to Environment

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

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

- 33 - Section 6 contains procedures for approval process. If any person or organization has implemented proposal without approval of IEE or EIA, the prescribed authority is empowered to close down such project, and to punish with a fine up to one hundred thousand rupees according to Section 18. In addition to the concessions and facilities to encourage any industry, enterprise, technology or process which causes positive impacts on environment protection (Section 15). Furthermore, the Act provides provisions for compensation for the victims of environmental pollution (Section 17). These provisions are support to enhance the environmental condition in Nepal. Under the provision of the Environment Protection Act 1997, article 24, His Majesty's Government 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) or an Environmental Impact Assessment (EIA) to carry out all proposed projects, which meet the criteria listed in Schedules I and 2 in the EPR. While EIA has been described as a detailed study or evaluation of the adverse environmental impacts, TEE has been mentioned as a report on analytical study or evaluation. The EPR clearly outlines in Rule 3, 5, 7 and 11, IEE or EIA report approval process. The provisions are made such that a proponent must submit a project proposal accompanied by either IEE or EIA studies for the approval depending in the nature of investment in the project. However, the concerned body should issue the Terms of Reference (TOR) in the format as prescribed in Schedule 3 of the Rules. Furthermore, the proponent should prepare and submit the IEE or EIA report in the format mentioned in Schedule 5 or 6 of the Rules respectively. The detail selection criteria for IEE is mentioned in Annex ITT.

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

The Ministry of Population and Environment has made necessary arrangement to open the EIA 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 the participation of different stakeholders right from the scooping to the approval process. The EPR, 1997 obliges the proponent to issue public notice on the contents prior to the preparation of a scoping report. Once the draft EIA report is prepared, based on the approved Terms of Reference (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 within 60 days upon receipt. These legal provisions are meant to enhance the participation of different 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 to participation 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 of all the people including the ethnic communities, indigenous people and down-trodden as well as socially and economically backward groups in bringing out social equality in mobilizing and allocating means for the development of their own region and in the balanced and equal distribution of the fruits of development. They have institutional development of local bodies

- 34 - EPR= Environmental Environmental screening to designate project Protection Rules type (EPR Schedules I and 2) 2054 amended 2055

No Further EA Project requires IEE Project requires EIA required (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 Committeev MOPE approves scope and TOR Prepare IEE Report (Rule 5) (Schedule 5) (Rule 7) 4

' pCarry[ out EIA 4 Public Input Submit to concerned l agency for approval (Rule 10) Prepare EIA Report Approved Not Approved (Schedule 6) (Rule 7)

Approved by Decision that EIA Concerned agency reviews concerned agency is neededconcemeagenc isneeand reports and submits to (Rule 11) (Rule 6) MOPE for approval (Rule II) v MOPE makes EIA report Public Input available for public review (Rule 11) I Review Committee MOPE reviews and approves EIA reports (Rule I 1) Approved | Not Approved

Implement project in PoetRdsg p comnpliance with IEE/ElA Project Redesign report (Rule 12) l

Concerned agency Resubmit monitors and evaluate implementation (Rule 13)

MOPE carries out environmental audit after 2 years (Rule 14)

Fig. 4.1 Environmental Assessment Process in Nepal

- 35 - capable of bearing responsibility, by providing such responsibility and power at the local level as is necessary to formulate and carry out plans. Constituting local bodies for the development of the local self-governance system in a manner that they are able to make decisions on the matters 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 the enviromnent and biodiversity consideration, and to give adequate priority for the protection of the environment during the formulation and implementation of the local level plans. In relation to the infrastructure development and environment projects, LSGA has the following elements.

* 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 as prescribed 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 village development 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 for environmental assessment study was included in the Sixth Plan (1980-85) in the planning history of Nepal. This commitment was re-enforced in the Seventh Plan (1985-90) with the National Conservation Strategy, 1987, and the Master Plan for Forestry Sector. The Eighth Plan (1992-97) elaborated the need for institutionalizing EIA system to attain to goals of sustainable development by integrating environmental aspects into development activities. The Nepal Environmental Policy and Action Plan (NEPAP) also recognized EIA as an essential planning and management tool to internalize environmental management system in the development projects. The Ninth Plan (1997-2002) emphasizes participatory EIA and the Tenth Plan (2002-2007) emphasizes to make the EIA process effective in the development projects.

Ninth plan (1997-2002) had a target of lowering the percentage of people living below the poverty line from 42% to 32%. However, by the end of three fiscal years this figure has been estimated as 37 % only. The tenth plan (2002-2007) has a target to lowering the poverty figure 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.

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

Indicators Ninth plan Tenth plan Indicators (2001-2002) (2002-2007) Infant mortality (per 1,000) 64 45 Maternal mortality (per 100,000) 439 300 Life expectancy (year) 57.6 62 Literacy rate (above 15 years), % 52.7 70 Water supply coverage 69 86.6 Sanitation coverage 25 50 Population growth 2.27 2.1 Population living below poverty line 38 30 Human development index (HDI) 0.466 0.517 Human 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 the commitment 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 and utilization 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 and relevant laws and environment related regulations are shown in Table 4.3.

- 37 - 4.5 Institutional Involvement at Local Level

Nepal govemment has established district level offices, which directly or indirectly involve to maintain environmentally sound and sustainable delivery of services at local level. These offices are responsible to implement National rules and regulations at local level, and have right to monitor other existing non-govemment offices and private sectors i.e. to know whether they are following National rules or not for local benefits. These institutions are responsible 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 Office District Agriculture Service Center, District Police Station, District Development Committee, Village Development Committee, District Soil and Watershed Conservation, District Education Office, District Road Department, District Electricity Corporation, District Government Hospital, Agricultural Development Bank, Rural Development Bank etc.

The PAF activities are mainly focused on agriculture, small scale factories, irrigation, water supply and sanitation, engineered trail and capacity building. The organizations listed above will certainly have both direct and indirect linkages to PAF activities implemented at the grass root level. Table 4.2: Enviromnent Related Provision in Some Contemporary Acts Acts Relevant Provisions Acts Relevant Provisions Local Self- Specific environmental scope of work for DDC, VDC and Governance 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 to sustainable development Forest Act, 1992 Conserve and manage forest and biodiversity Water Resources Act, 1992 Promote environment assessment, water quality standard, and avoid significant impacts on local environment in the course of water use Electricity Act, 1992 Avoid environmental effects during electricity generation and transmission Vehicle and Transport Management Regulate vehicular exhaust emission according to the Act, 1992 standard Industrial Enterprises Act, 1992 Promote the adoption of industrial pollution control measures, including incentive and disincentive provisions Pesticide Act, 1991 Regulate the use, production and distribution of pesticide Labour Act, 1991 Adopt preventative and curative measures for occupational health and safety Solid Waste (Management and Ensure solid waste management through the collection, Resource Mobilisation) Act, 1986 transportation, recycling, disposal, and the classification of hazardous wastes Soil and Water Conservation Act, Ensure soil conservation through land use regulation 1982 King Mahendra Trust for Nature Generate fund and manage the nature with people's Conservation Act, 1982 participation Tourism Act, 1978 Minimize environmental pollution during mountaineering activities National Parks and Wildlife Declare and manage national parks, wildlife reserves and Conservation Act, 1973 conservation areas

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

S. No Laws and Relevant Regulation Description 1. Animal Slaughter House and Meat Inspection Act, 2055 (1998) Hygiene 2. Consumer Protection Act, 2054 (1997) Food safety 3. Environment Protection Act, 2053 (1996) Environmental manage't 4. Environmental Planning Guidelines, 2055 (1998) Environmental manage't 5. Explosives Act, (1961) Environmental manage't 6. Financial Act, 2049 (1993) Environmental manage't 7. Food Act, (1966) Food safety 8. Foreign Investment & Technology Transfer Act, 2049 (1993) and First Environmental Amendment 2052 (1996) management 9. Local Self Governance Act, 2055 (1998) and Rules, 2056 (2000) Environmental manage't 10. National Environmental Impact Assessment Guidelines, 2050 Environmental manage't 11. New Civil Code of Nepal, (1962) Environmental manage't 12. The Conservation Act, (1972) Environmental manage't 13. Nepal Drinking Water Corporation Act, (1988) Water supply 14. Nepal Health Services Act 2053 (1996) and First Amendment 2055 Water supply (1998) 15. Water Resources Act, 2049 (1992) Water resource 16. Solid Waste Management and Resource Mobilization Act, (1986) Solid waste management 17. Ancient Monuments Protection Act, 2013 (1956) and Latest Urban environment Amendments 2052 18. Apartment Ownership Act, 2054 Urban environment 19. Civil Aviations Act, 2016 (1958) Urban environment 20. Environmental Impact Assessment Guideline for Industry Sector, Industry 2052 21. Factory and Factory Workers Act, (1958) Industry 22. Industrial Enterprises Act, 2049 (1992) and First Amendment 2054 Industry 23. Kathmandu Valley Development Authority Act, 2045 (1988) (Not Industry Enforced) 24. Mines and Minerals Act, 2042 (1985) Industry 25. Mines and Minerals Regulations 2056 (1999) Industry 26. Nepal Petroleum Act, (1983) Industry 27. Nepal Petroleum Products Act, 2040 (1983) Industry 28. Buildings Act, 2055 Infrastructure 29. Public Roads Act, (1974) Infrastructure 30. Public Roads improvement Cess Fund Act, 2052 Infrastructure 31. Tourism Act, (1978) Urban environment 32. Town Development Act, 2045 (1988) and Third Amendment Act . Urban environment 33. Town Development Committee Act, (1963) Urban environment 34. Town Development Fund Act, 2053 Urban environment 35. Town Development Fund Regulation, 2054 Urban environment 36. Town Planning Projects Implementation Act, (1973) Urban environment 37. Vehicle and Transport Management Act, 2049 (1992) and Rules, 2054 Urban environment 38. Aquatic Animals Protection Act, 2017 (1961) and First Amendment Forest and biodiversity 2055 39. Buffer Zone Management Regulations, 2052 (1996) Forest and biodiversity 40. Buffer Zone Regulations, (1996) Forest and biodiversity 41. Conservation Area Management Regulations, 2053 (1996) Forest and biodiversity 42. Conservation Area Regulations, Forest and biodiversity 43. Environmental Impact Assessments of Forestry Sector Guidelines, Forest and biodiversity (1994) 44. Forest Act, 2049 and First Amendment Act, 2055 (1998) Forest and biodiversity 45. Forest Protection (Special Arrangements) Act, (1967) Forest and biodiversity 46. Forest Regulations, (1994) Forest and biodiversity 47. Himalayan National Parks Regulations, (1979) Forest and biodiversity 48. Khaptad National Park Regulations, (1985) Forest and biodiversity 49. King Mahendra Trust for Nature Conservation Act, (1982) Forest and biodiversity

- 39 - Table 4.3, Continuous S. No Laws and Relevant Regulation Description 50. National Parks and Wildlife Conservation Act, (1973) Forest and biodiversity 51. National Parks and Wildlife Conservation Regulations, (1974) Forest and biodiversity 52. Plant Protection Act, (1972) Forest and biodiversity 53. Royal Bardia National Park Regulations, Forest and biodiversity 54, Royal Chitwan National Park Regulation, (1974) Forest and biodiversity 55. The Wildlife Conservation Act, (1958) Forest and biodiversity 56. Wildlife Reserves Regulations, (1977) Forest and biodiversity 57. Soil and Watershed Conservation Act, (1982) Soil and watershed 58. Electricity Act, 2049 (1992) Energy 59. Electricity Regulations, 2050 (1993) Energy 60. Hora Area (Newly Cultivated Land) Land Act, (1971) Land management 61. Land (Survey and Measurement) Act, (1961) Land management 62. Land Acquisition Act, 2034 (1977) Land management 63. Land Administration Act, (1971) Land management 64. Land Reforms Act, (1964) Land management 65. Land Related Act, 2021 and Fourth Amendment Act, 2053 Land management 66. Land Revenue Act, 2034 (1977) Land management 67. Pasture Land Nationalization Act, (1974) Land management 68. Pesticides Act, 2048 (1991) Land management 69. Rapti Doon Development Area Land (Sale and Distribution) Act, Land management (1967) 70. Natural Calamities (Relief) Act (1982) & Amendment (1989) Natural disaster 71. Guthi Corporatin Act (1964) NGO

4.6 International Obligations

The following is a list of the multilateral agreements related to the water and environment of which 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 and their 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 September 1978 * 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

- 40 - 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 the policy and implementation, the first phase of PAF will focus on six selected districts. The sub-projects to be implemented in these districts will be designed at later stage as the project proceeds. Therefore the actual locations of the proposed interventions are not identified at this stage since a process planning approach will be used during the implementation. The phase II of the PAF project is expected to cover all 75 districts of Nepal. As described in chapter III, the environmental condition and the socio-economic status are different for the communities located in these areas. The geographical diversity and settlement pattems and priorities of the communities dictate the type, size and benefits of the particular sub-project components. These facts clearly indicate that the emerging environmental issues will not be of same nature even for similar sub-projects in different areas. For example, an irrigation project may 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 provided in this section are not site specific. General characteristics of the project area are used for environmental assessment. The project would initially focus on six districts that have been seriously under-served. Selected POs will mobilize the beneficiaries in these districts and the beneficiaries community will submit the sub-project proposals to the PAF Board. As described above, the environmental and socio-economic issues of the regions within the project area are drastically different from each other. Each activity may yield varying impacts and may require different mitigation inputs across the regions depending on location.

Following the World Bank (1994) definition of the environment as "the natural and social conditions surrounding all mankind including the future generation", it is essential to encompass all of these aspects. In addition to this, the tradition and culture particularly associated with the indigenous and marginalized groups of people in rural areas is of great concern.

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

-41 - The specific details of the proposed sub-projects are not known at this stage. Thus the environmental impacts identified and listed on this chapter are not specific but of general in nature.

Based on the general characteristics of the area and nature of the activities under PAF, a brief assessment of the environmental and social impacts is summarized in Table 5.1. This table is a matrix comprising of sub-project components in the columns and environmental and social impacts in the rows. The sub-project components are classified into four groups namely; income generating project, community infrastructure project, social mobilization and capacity building. The income generating group is further classified into agriculture related and micro enterprises. The sub-projects listed under these categories are only indicative of the typical examples 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. The environmental impacts shown in Table 5.1 include physical, biological, socio-economic and related to traditional and culture. The shaded solid square in Table 5.1 indicates location specific significant negative impact, which has a very small magnitude. Unshaded square represents 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 was developed, which indicates level zero and level one sub-project. The screening of zero level and 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 Generating Activities

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

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

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

- 42 - 5.2.1 Impacts Associated Planning and Location

There could be some minor environmental impacts due to the project location. It has to give proper attention in selection of site for the project to minimize the conflict situation in the community. The selected site should cover-up majority of socially excluded and deprived people. Traditionally, in the process of site selection, the influencing individuals or local leaders take the major stake, this situation might effect the achievement of the desired goals of the 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 and implementation phase of the project. Income generating activities like cattle raising/ animal husbandry might accelerate the problem of soil erosion due to over exploitation of grazing land and forest products. For example, if goat raising scheme is entrusted to individuals with no lands, the scheme would be totally dependent on the grass and fodder from the surroundings. Besides this, improperly managed animal husbandry may lead to the deterioration of water and air quality and solid waste problems. In the contrary, the promotion of bio-gas not only helps to improve the indoor air quality but also helps to decrease the pressure on forest recourses. Bee keeping may lead to the impact on aesthetics creating disturbances to the passerby. Improperly maintained parts or the hardwares, for example, the accessories 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 such as poorest and socially excluded. Physical infrastructure projects would contribute the community in accessing the market and city area, providing health and educational benefits -and creating awareness through prompt communication and access. The examples of these activities include water supply and sanitation schemes, small scale irrigation, engineering trail, bridges, school building, health post/clinic facilities and development of trade center or market.

Although the project size seems to be big in terms of coverage, the individual physical infrastructures proposed under PAF are of small scale. Proposed individual interventions are targeted to cover only a few hundred households. The project component will disturb only a small portion of land (about a hector in total per project such as engineered trail, small scale irrigation canal or community water supply project). This is also spatially distributed in a distance of few kilometers. Therefore, no major environmental impacts are expected due to this project primarily due to small-scale intervention. No significant human resettlement or property 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 the forest, wetlands, grassland, and other natural habitats. However, there might be some minor impacts 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 brief discussion of these impacts according to different phases of the project establishment and operation is given below.

-43 - Table 5.1: Summary of Environmental and Social Impacts of PAF Activities Project 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 0 Farming b. Micro-enterprises I. Community Saving 0 0 Schemes 2. Ganment/tailoring0 3. Tannery U

4.1-Hand Loom U 0 S. Mill/Water 0 0E Mill

6. Paper Making 3 0o 7. Pottery00 Community Infrastructure Project

Water Supply E3 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 1 Development Social Mobilization 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 Traditional P1. Soil Erosion ~~~Field Sanitation Culture/Practices P2. LandslideB2. Forest and Habitat S2. Land Use ~T2. Traditional Ways of Protecting P2. LandslideB2. Forest and Habitat S2. Land Use Resources P3. Water Quality B3. Biodiversity S3. Social Abuse T3. Loss of Traditional Employment P4. Water Logging B4. Pesticides S4. Economic Condition P5. Down Stream Water Quality S5. Access to city/market P6. Air Quality S6. Resettlement/Rehabilitation P7. Noise S7. Migration P8. Solid Waste 58. Property Values S9. Conflict Situation SIb. Gender Issues SIl1. 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 is limited to sub-project area only.

- 44 - Table 5.2: Sub-project Classification

Level-O Projects Level-I Projects Beekeeping Cattle rearing Community saving schemes Bio-gas Vegetable farming Tannery Garment/ tailoring Paper making Handloom Small Irrigation canal -Mill/water mill Engineering trails Pottery Market development Trail bridge School building Water supply and sanitation Health post/clinic Sheds for animals Social mobilization Skill development on tailoring Capacity building for micro- financing Note: O-Project has no significant negative enviromnental impact but I-Project had some significant negative 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 the conflicts situation, for example: o In selecting the location of public tap stand post and the coverage of projects such as service area delineation of water supply project. This could be due to scattered households in the community and technical difficulties.

o In deciding the alignment of engineered trails or footbridges as of the rise in land value 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 could be another issue during the site selection for the project. It may also be necessary to protect prime agriculture land. The changes of prime agriculture land may affect social, economic and ecological conditions. The lack of planned land-use system affects the land productivity and creates environmental problems. This is due to the fact that agricultural land is normally defined as a physical entity which includes soil, water and associated plants and animals that are continuously inter-acting under influence of climate and people's activities.

Another concern is related to the selection of technology. There might be situations, which lead to technological lock-in making the system redundant and non-resilient. This will not allow the system to cater the emerging issues, which crop-up during the operational phase of the project. Priority should be given to modify the traditional technology and make it more efficient which also leads to preserve the traditional practices at the same time meet the project goals.

- 45 - 5.3.2 Impacts Associated with Construction and Implementation Phase

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

There is more possibility of influence by the exogenous factors in the community during the construction and implementation phase (eg. engineering trail, bridge etc.). There could be disturbances to the indigenous tradition and culture. The new project might change the villager'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 maintenance phase. Water logging may be the major issues in the irrigation project. It may cause soil erosion and disturb the downstream water quality. Sometime, villagers use more pesticides of same brand as required for the agricultural use that slowly decrease the productivity of the soil. It will also contaminate the water resource in the community. As shown in Table 5.1, the water supply and sanitation scheme may lead to health hazard and sanitation problems if there is no proper management system. This is due to the wastewater generated at the platform of tap stand posts. Similarly, personal hygiene and containers used for water transport are important from the sanitation point of view. This clearly indicates that although the focus of water supply project is to improve the health and sanitation situation but the improper management may undermine its goals.

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

People can visit various city areas frequently because of road access in the community, which influence on their livelihood. There might be possibility of discontinuation of traditional rituals, 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 selected community. Community training program is one of the activities, which can develop locally skilled man power to manage and sustain the development activities. Beside this, there are non-formal education and skill development programs under capacity building activities. These programs will enable them to select and plan their activities in certain areas with environmental consideration. They will also be trained to carry out compliance monitoring for environmental parameters and carry out mitigation measures to maintain the sound environmental condition in the community.

- 46 - There are no major environmental and social impacts expected due to this project activity in the community. However, looking at the specific project sub-components, there might be some major or minor negative impacts, which are listed in Table 5.1. A brief discussion of these impacts according to different phases of the project planning and implementation and operation 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 selected beneficiaries. This is because of the potential conflicts which may arise between social organization vis-a-vis local people. Providing training programs to community groups might affect on local traditional employment like tailor, mill/water mill operators, etc. In the process of training program people have to visit number of city areas and meet different people 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 of capacity 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 during operation phase. As shown in Table 5.1, some social abuse could appear in community due to social 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 to the exposure. The traditional concepts for using natural resources are interlinked with many festivals, rituals and group activities. In case of water resources, people carry out these activities because they consider water to be valuable resources, without it life existence would be 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 natural calamities beyond their capacity and people also worship Bar and Pipal trees, often located on trail side, which protect greenery in the community. The belief behind such activities is to ensure the sustainability of the system and protect the forest resources. Furthermore, the negative impacts on culture and tradition if proper awareness and training are not given include:

* The possibility of discontinuation of traditional rituals and festivals such as Nag Ptia, Devi Ptzja, Bali Ptyja and SansariMai Puja in water outlets. * Possibility of discontinuation of the old values and beliefs of considering the water sources or Chauitariat the trailside as places of spiritual importance.

- 47 - * Possibility of discontinuation of old believes that 'no one should damage or destroy the 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 and festivals which develop intimacy towards the project in long run and manage surrounding environment should be made.

5.5 Cumulative Environmental Impact

Forgoing discussion and results indicated that the PAF sub-projects do not create location specific significant environmental impacts. If similar sub-projects are launched in a district or in a region there could be significant impact in cumulative basis. For example, drawing water from a basin either for irrigation or water supply purpose may have significant downstream effect, 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 series of impacts created by more than one sub-project, or by the combined effects of several impacts from the similar sub-project, may be significant. Consequently, an ecosystem may be dramatically affected through cumulative impacts. It is necessary to consider the cumulative impact 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 incremental impact of the action when added to other past, present, and reasonably foreseeable future actions regardless of what agency or person undertake such other actions. Cumulative impacts can result from individually minor, but collectively significant actions taking place over a period of time.

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

- 48 - CHAPTER VI

ALTERNATIVE ANALYSIS

6.1 Introduction

In this chapter an attempt is made to systematically compare the alternatives, which have similar objectives and being implemented in the kingdom of Nepal. The major focus of the analysis is to learn from these alternatives and incorporate the attributes, which will help the PAF project to be sustainable and meet the goals. A criteria comprising the following elements was used for alternative analysis. a. Sustainability of delivered services b. Environmental impacts and mitigation measures c. Operating cost d. Suitability under local condition e. 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 of them may continue to be at conflict situation. It will be difficult to maintain the status quo. In absence of the projects, efforts will not be made to sustain the positive enviromnental benefits. This will lead to miss the opportunity of improving the socio-economic and environmental condition of particular community in comparison with nearby areas.

As shown in Table 4.1, the socio-economic indicator such as infant mortality rate, life expecting rate, and access to health and education indicate that more and concrete interventions are essential to improve the quality of life of rural and marginalized communities. The indicators reflect a relatively worse situation of health and sanitation and socio-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 activities proposed under PAF will not be implemented and the sub-projects will not be under taken, the prevailing environmental and socio-economic conditions will be continued till, any other agencies will address the issues and make similar interventions. As outlined above, the conflict 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 and community development. Table 6.1 provides a picture of various agencies involved in such activities. The projects undertaken with the help of various agencies normally follow different modalities. The level of community participation and sense of ownership also varied significantly. The past experience indicated that the projects implemented under central agency model poorly addressed the issues of community participation and sustainability of delivered services. In contrast, the projects based on community approaches were marked by much 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 physical environment but also the negative perception of development projects among the beneficiaries.

- 49 - Table 6.1: Institutions Involved in the Development of Rural Areas

S. No. Sector Agencies 1. Water Supply and Sanitation DWSS, RWSSFDB, UNICEF, FINIDA, HELVETAS, Red Cross, Army Welfare Agencies, NEWA 2. Road, Engineering Trail, DOR, Swiss Technical Corporation, RAP, Bridge DOLIDAR, CARE Nepal, PLAN International 3. Irrigation/ River training DOI, DOFSC 4. Micro-enterprises GTZ, ADB/N 5. Community Mobilization ACAP, UMN 6. 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 Roads DOR (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 various agencies as shown in Table 6.1. Therefore, a comparative analysis was made on selected projects undertaken by agencies, which follow similar principles of PAF. On the water supply and sanitation sector, the model of Rural Water Supply and Sanitation Fund Development Board (RWSSFDB) was selected and on irrigation site the model of Kalleritar Irrigation Project (KIP) under Department of Irrigation (DOI) was selected. For engineering trails and bridges, 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 in Table 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 available resources. The engineering components in the infrastructure development include building construction, road construction, bridge construction etc. These may. include variation in the technology (example: stone masonary, ferrocement or reinforced concrete or locally available methods), size and feature of the structure (example: numbers of small size reservoirs vs. a big 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. metal bridge), location of the structures (near village vs. in the forest), time schedule (construction phase during rainy season vs. winter season). The criteria for the selection of best alternative from these choices depend mainly on the local situation and suitability. However, the requirement from the environmental sustainability perspective is to ensure that the environmental impacts and technological lock-in effects are minimized.

- 50 - Table 6.2: Comparative Analysis of Alternatives

Criteria PAF RAP RWSSFDB KIP Scope 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 access training planning sanitation education * Uplift the economic * Capacity building of condition with SOs and communities providing petty- * Construction of family contract to local and institutional people latrines * Construction of * Women's participation Irrigation Canal and 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 increasing excluded in Nepal livelihoods for poor and sector Institutions agricultural disadvantaged people in * Deliver sustainable productivity in the hill areas. health and hygiene community. * To improve poor people's services access 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 in Delivered Services (CO) of the poor with * Use community based planning and training program facilitation from partner labors implementation phase facilitated by organization (PO) * Pro-people planning * Lack of proper HMG/Nepal * Empowering the * Empowerment of social monitoring and individuals in the capital evaluation during communities covered * Acknowledge the existing operation and under the project knowledge maintenance

- 51 - 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 were and Mitigation Measures screening process must be used for enviromnental applicable not applied adopted for each sub- appraisal which includes; * EA was carried out for * Environmental project proposal. District environment brief, entire project mitigation measures * People should not be IEE, EIA, environmental * Environmental were not incorporated involuntarily displaced management plan and mitigation measures and settled no land can be environment monitoring are employed purchased without the consent of its owner; * Sub-project should not affect environment adversely, and if so, project must indicate its appropriate remedy * The impact evaluation report will focus on effectiveness of the project interventions in improving the living conditions of the poor. Operating Cost Probably through the Make provision for funding Through community Through a fund (irrigation community saving practice the continuation of a district saving practice saving account) (to be included in OM) transport infrastructure maintenance system. A road maintenance fund will be established between the DDC including a cost sharing system with the VDCs that are influenced by the roads being constructed.

- 52 - Criteria PAF RAP RWSSFDB KIP Suitability Under Local Although the project will Initially the project has been The first phase of the Three VDCs in Dhading Condition 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 regions Capacity Building and * Building capacity of the * Maintenance management * Water user group * Water user association Institutional beneficiaries offices * Water user * Drinking water RequiTement * 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 groups included in OM)

- 53 -

CHAPTER VII

ENVIRONMENTAL MANAGEMENT FRAMEWORK

7.1 Mitigation Measures

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

In the light of the proposed project intervention, the identified environmental issues and the potential adverse impacts during the different states of project implementation along with the mitigation 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 Environmental Management 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 suggested on Table 7.1, the review of similar projects and the responsibility of the stakeholders, major activities to be considered under an EMP and their nature were identified. A summary of such activities is given on Table 7.2.

54 Table 7.1: Matrix of Environmental Impacts and Mitigation Measures

Proposed Potential Impact Mitigation Measures Time frame Responsibility Project Income Soil erosion due to over o Promote community forestry program Planning and COs, Community generating exploitation of grazing o Do not exceed the carrying capacity of operational stage activities land and over grazing land and search for other utilization of forest alternatives for fodder product o Ensure the fodder & grass for cattle o Don't keep a large number of cattle beyond capacity Water pollution due to o Composting and use as manure Operational stage COs, Community cattle's waste Deterioration of o Control the grazing practice on the Operational stage COs, Community downstream water periphery of water resources quality Adverse impact on air o Regularly clean up the cattle shed Operational stage Community quality due to cattle's o Use cattle and biogas waste for activity and waste of agriculture by developing composting biogas plant system Solid 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, Community and habitat due to with participation of women members excess use by cattle o Consider carrying capacity of the fodder and grass areas while planning o Protect forest premises with fencing and don't allow the direct cattle grazing inside the forest boundary

55 Proposed Potential Impact Mitigation Measures Time frame Responsibility Project Probability of spreading o Manage the cattle's wastes for Operational stage COs, Community disease if the cattle composting waste is improperly o Conduct awareness programs on health managed and sanitation Enhancement in o Ensure the market Operational stage PAS, POs, VDC, economic condition due DDC, COs to cattle raising Negative impacts on o If possible, keep the bees away from the Operational COs, Community aesthetic due to bees community phase Water pollution due to o Develop wastewater management Operational COs, Owner tannery waste and hand system phase Loom Solid waste due to o Develop waste management system Operational COs, Owner paper 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 Community Sanitation o Proper management of excavated soil during pipeline construction Contamination of water o Training and capacity building on proper Operational COs, Community during use water handling ways using the local and phase traditional resources o Conduct training program and awareness campaign on water borne diseases Biological water o Monitoring the conditions of project Operational and COs, community pollution component premises and buffer zones, maintenance periodic cleaning of the screen

56 Proposed Potential Impact Mitigation Measures Time frame Responsibility Project Problems due to o Re-using the wastewater in kitchen Operational Community, COs, generation and disposal garden, paddy fields, end disposal in stages VDC, DDC of platform drained soak pits, constructed wetlands, road wastewater side drain and natural courses Unsanitary condition o Develop a plan to construct latrines, Planning and PAF, COs, VDC, due to waste disposal develop a waste disposal system operational stage DDC and improper use of latrine facility in public places Possibility of o Developing a plan to encourage the users Planning phase PAF, COs, discontinuation of to continue rituals and festivals either at Community practices of conserving the protected old sources or at the the source and appropriate locations of the new sub- catchment area by projects plantation etc Disturbances on o Avoid the pipeline alignment Planning and PAF, Community, vegetation and crops construction from vegetation area, if construction COs, VDC, DDC during the construction possible stage of 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, Community practices and ways of traditional norms and values maintenances protecting resources stages

57 Proposed Potential Impact Mitigation Measures Project Time frame Responsibility Small 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 bioengineering techniques along the canal side Impact on vegetation o Avoid the canal construction from the Construction PAF, COs, VDC, and cropland area vegetation area stage Community during the construction o Recover the vegetation area in nearby of canal places if the impact is not avoidable Impacts 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 stage Water logging o Provide proper drainage facility Implementation COs, VDC, & operation Community phase Improper use of o Launch an awareness and capacity Operational stage COs, VDC, DDC Pesticides building program on pesticides use Land acquisition o Exchange the land with land on suitable Planning phase PAF, COs, VDC, Resettlement places in consensus with community DDC, Community Conflict on water o Proper distribution by using indigenous Operation and COs, VDC, distribution and traditional method of water maintenance Community distribution o Make the distribution system transparent to all the water users Problems of mosquito o Avoid the formation of water pool Operational stage COs, community and flies around the community o Conduct awareness program on health and sanitation to community and school children

58 Time frame Responsibility Proposed Potential Impact Mitigation Measures Project stage PAF, COs, DDC, on local o Assure the market to sell the agricultural Operational Enhancement VDC, Community economy products o Encourage farmers for producing cash crop and green vegetables to avoid Construction and PAF, COs, Engineering Acceleration of soil o Locate the road alignment possible development Community Trail erosion and landslide major unstable sites wherein o Minimum excavation by attempting to stage balance cut and fill and by the extensive use of retaining walls o Construction of a stable road formation o Location of cross-road drains at natural drainage sites Development and PAF, COs, VDC, Loss of agricultural o Locate the alignment on lowest value planning stages DDC, Community land, forest resources land along the ROW o Compensate for the loss of crop Planning and PAF, COs Loss of forest, habitat o Plantation on nearby area operational stage Community and biodiversity o Relocate the road alignment if adversely affect on biodiversity Construction COs, Community Adverse impact on o Proper disposal of excavated soil during stage downstream water the construction phase quality o Develop a appropriate drainage system Construction COs, Community Dispersion of dust o Regular spraying of water on dusty area stage around the construction area Construction and COs, VDC, DDC Social abuse o Conduct awareness programs operational stage Construction and PAF, COs, VDC, Impacts on cultural o Support programs, training and operational stage DDC traditions counseling

59 Proposed Potential Impact Mitigation Measures Time frame Responsibility Project 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 cash crops and green vegetables o Provide agricultural based training Conflict among the o Use participatory and transparency Planning and PAF, COs, DDC, community during the approach while selecting the road development VDC alignment of road alignment with the consultation with stage local community Trail 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 Implementing Agency 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, example latrine, Chautarion the trail site * Engineering design of components essential for environmental management, example soak pits, bioengineering measures, etc. * Selection of Technology Sub-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 measures Training 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 by road access and irrigation system * Training programs for proper handling of pesticides * Awareness campaign to community regarding the benefits physical infrastructures

7.3 Environmental Management Action Plan

As the specific sub-project under consideration may not have all the impacts listed in Table 5.1, therefore, it will be essential to sort out from the list, the specific activities to be carried in a 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 Environmental Management Action Plan (EMAP) during the planning. For level zero projects a preliminary assessment could be made in the proposal. The EMAP should be developed primarily with the purpose 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 the submission of sub-project proposals. It should be prepared by the comrnunity and should clearly mention the mitigation measures needed to be applied for environmental 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. It is extremely necessary to conduct a proper hazard/risk assessment before implementing the project. For example, infrastructures like trails, irrigation infrastructure, school buildings, health posts, cowsheds should be built on safe areas by ensuring proper site selection, so that there would be no risk of washing away as soon as the major rainfall occurs (Refer Chapter VI, Section 6.4). Once the altemative is selected, associated environmental impacts and mitigation measures should be identified.

3. Estimation of the tentative cost of the mitigation measures

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

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 Board after the approval of proposal. For this, the concerned government officer (eg. Department of Irrigation, Drinking water supply, DDC) would help the local communities for the preparation of engineering estimate.

5. Development of monitoring and evaluation schedule

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

The EMAP should provide guidelines to the construction and operation activities. The cost outlined 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 institutions ranging 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

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

Considering the administration of the apex PAF body it is recommended that a mechanism has to be developed in order to address the environmental and social issues. At this stage, it is customary to recommend that the apex body should utilize the following expertise for this purpose. 1. Environmental Expert 2. Anthropologist

Particularly, the role of anthropologist will be in identifying the issues related to the tradition and 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 development activities, 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 environmental performance in PAF related activities. These indicators will show the trend of environmental condition prevailing in the sub-project area and the proximity. Three types of indicators are described below.

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

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

Compliance Monitoring: This form of monitoring employs periodic sampling or continuous recording of specific environmental quality indicators or pollution levels to ensure project compliance with recommended environmental protection standards. Monitoring should be regular and performed over a long period. Interruptions in monitoring may result in generating insufficient data to draw accurate conclusions concerning project impact. For example, the water quality of a water supply system or and irrigation canal against the standard should be measured to know the compliance. Similarly, the performance of bioengineering measures in trails and roads could be used as a compliance indicator.

63 7.6 Independent Monitoring Agency

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

During monitoring attention should be paid on the contractor's activities on site, activities of the beneficiaries and quality and quantity of delivered services. This is to ensure that the proposed mitigation measures are effectively followed during the construction and operational phase. An independent professional staff working under PAF (Refer Operational Manual) or an independent agency contracted for the purpose will monitor these activities. However, this will 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 at district and village level. It is essential for the local people during the implementation and operation phase of the project.

The contents of the training course should focus on the needs of the local communities because they are the direct beneficiaries and implementer of the PAF project. The training programs, for example, should include awareness campaign, health and sanitary related training, training related to benefit of income generating activities, proper utilization of existing available natural resource etc. In this case, training program should also focus on the relationship between different components. of PAF sub-project activities with the central focus on sustainable development priority. Similarly, to ensure successful implementation of environmental 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 should include financial and managerial administrative skills, especially to enhance the capacity of local government, particularly VDCs, DDCs, to provide sustain services for poor and socially excluded groups.

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

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

Program Implementing and Target Group: At the village level target groups should include selected representative from community organizations like Water Users Groups, Forest Users Groups, 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 should include the following.

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

64 o Workers safety and health o Construction of latrines, disposal of waste waters, use of pesticides, sanitary and health related training, disposal/composting of solid waste, drainage construction methods by using local available resource etc. o Other relevant environmental mitigation measures.

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

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

Time Frame: The training programs are expected to be launched during project implementation and become a continuous process at operational phase at different time depending upon the situation. The awareness and health related trainings would be conducted during implementation phase to mobilize the rural people in incorporating environmental sanitation 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 carried out at operational phase.

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

65 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 and cultural identity distinct from the dominant society that makes them vulnerable to being disadvantaged in the development process. Because of the varied and changing contexts in which Indigenous Peoples are found, no single definition can capture their diversity. Indigenous People are commonly among the poorest segments of a population. In many contexts, they engage in economic activities that range from shifting agriculture in or near forests to wage labor or even small-scale market-oriented activities. Indigenous Peoples can be identified in particular geographical areas in Nepal. Although it is rather difficult to distinguish Indigenous People in Nepal based on the definitions given above, this document is aimed at addressing the issues related to Indigenous People, which need to be addressed by PAF project.

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

As mentioned earlier, it would be a daunting task to disaggregate the indigenous group in a target 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 addressing the marginalized groups including ethnic minorities, women and dalits located particularly in remote rural areas seem to be appropriate. In addition, a basis can also be made on minority caste, religion, language and the culture. Thus, Indigenous People meant in this document include 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 and Dhimal and JhangarJati in Eastern Terai.

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

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

- 66 - 8.2 Legal Framework

Although kingdom of Nepal remained and recognized as a Hindu Kingdom for centuries, the 1990 constitution has recognized and acknowledged the diversity in culture races language and religion. The constitution has committed to the protection, preservation and promotion of language, religion and culture, affirmative action for IPs and vulnerable groups. Article 4 of part 1 of the Constitution states that Nepal is a 'multi-ethnic, multi-lingual' kingdom. Article 6 of the same section, relating to the 'Language of the Nation', warrants citing infull on account of its importance to Indigenous Peoples and the activists who represent them on the national stage in Nepal:

1) The Nepal language in the devanagari script is the language of the nation. The Nepali language shall be the official language. 2) All the languages spoken as the mother language in the various parts of Nepal are the national languages of Nepal.

It also makes the provision of education in mother tongues up to grade five. Despite of various other problems and challenges including the instability in the governance, the elected governments 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. The committee recognized the existence of 61 Indigenous Nationalities in Nepal. Consequently, the Ninth Plan (1997-2002) explicitly made policies and programs targeting IPs. The Parliament has passed a bill forming a Foundation for Development of Indigenous Nationalities, which has recognized 59 IPs in Nepal. In 1999, the Local Self-Governance Act was amended, giving more power and authority to local govermment bodies such as District Development Committees (DDCs), Municipalities and Village Development Committees (VDCs) - including the authority to protect, preserve and promote IPs' language, religion and culture. The National Planning Commission (NPC) has also included programs and strategies for 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 ten groups 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, Unidentified cast/ethnic group. Similarly, the distributions of ethnic groups in selected six districts are given in Table 8.4.

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

S.N. Caste/Ethnic Percentage Group 1. Chhetri 15.80 2. Brahman-hill 12.74 3. Magar 7.14 4. Tharu 6.75 5. Tamang 5.64 6. Newar 5.48 7. Muslim 4.27 8. Kami 3.94 9. Yadav 3.94 10. Rai 2.79

CBS (2003) has also listed 92 languages spoken in the kingdom of Nepal in the recent statistical publication. The first ten groups are shown in Table 8.2. The publication showed that 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 Percentage 1. Nepali 48.61 2. Maithili 12.30 3. Bhojpuri 7.53 4. Tharu (Dagaura/rana) 5.86 5. Tamang 5.19 6. Newar 3.63 7. Magar 3.39 8. Awadhi 2.47 9. Bantanwa 1.63 10. 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 on population distribution of six districts by religions is given in Table 8.3.

- 68 - Table 8.3: Population Distribution by Religion of Six Selected Districts

Districts Total Hindu Bouddha Islam Kirat Jain Christian Sikh Bahai Others Siraha 569,880 517,911 9,890 40,926 791 29 69 21 17 226 Ramechhap 212,408 144,561 60,069 44 4,147 4 913 14 2 2624 Kapilbastu 481,976 390,698 3,285 87,573 6 15 120 175 12 92 Pyuthan 212,484 205,489 6,296 645 2 1 26 - 3 22 Mugu 31,465 27,198 4,258 2 - 1 3 - - 3 Darchula 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 data on the sub-project documents. Baseline data should include population, location, culture and belief, language, linguistic context, education, relationship of Indigenous Peoples to other local and national groups, natural resources management practices, accurate up-to-date maps of project influence. Besides this analysis of the social structure and income sources of the indigenous population, inventories of the resources that Indigenous People use and technical data on their production systems should incorporate in baseline infonnation. The sub-project proposal should include this information as far as applicable.

It is particularly important that baseline studies should capture the full range of production and marketing activities in which Indigenous People are engaged. Site visits by qualified social and technical experts should verify and update secondary sources. Table 8.4: Distribution of Ethnic Groups in Selected Six Districts

S.N.Group Ethnic ~~~~~District Siraha Ramechhap Kapilbastu Pyuthan Mugu Darchula 1 Nepali 29,692 128,519 103,582 188,200 35,947 110,325 2 Maithali 483,432 201 396 65 57 41 3 Bhojpuri 500 62 448 21 10 30 4 Newari 632 16,088 1,573 1,646 13 10 5 Gurung 134 58 166 927 4 - 6 Tamange 5,397 43,498 303 196 6 17 7 Abadhi 11 5 341,000 6 1 8 Tharu 141,161 13 51,481 44 1 85 9 Magar 4,615 10,220 1,455 2,001 1 62 10 Lumbu 110 5 110 7 2 17 11 Hindi 4,828 20 3,075 9 220 12 Rai/Kirati 524 944 2,109 1,819 4,363 167 13 Bhote/Sherpa 316 4,737 27 6 10 63 14 Thakali 21 21 53 1 8 3 15 Rajbanshi 17 2 38 8 1 1 16 Satar 5 7 - 3 17 Sunuwar 7 2 1 - 18 Danuwar 606 2 239 - 19 Sinthal 7 20 LocalLanguage 741 8,687 1,091 39 - 2,834 21 others 18,728 5,758 2,151 75 - 684 22 English 55 15 14 9 - 3 Total 691,532 218,855 509,325 195,081 40,424 114,566

- 69 - 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 to the fact that these groups have relatively less land holdings compared to the mainstream castes which have been engaged in farming activities. Additionally a few marginalized community 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 to hold the land which is originally belong to the low land people often indigenous group such as Tharu, Dhimal and Chaudhari. The migrated people often belong to the elite group with access to good education and property and this sometimes lead to the situation that Indigenous People loose the ownership of land they belong to. Thus the indigenous groups of people normally 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 more vulnerable as of their less access to the land.

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

If possible, the PAF activities will not promote land acquisition and resettlement. If it becomes mandatory to acquire some land proper compensatory measure will be employed. In general, any sub-project requiring land for the sub-project components will look for voluntary contribution or donation. However, land donations will be made fully voluntary, but also that such donations do not involve physical displacement or any significant adverse impacts upon incomes 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 any liabilities; ii) Land will be chosen by the community after ensuring that the sub-project will also benefit 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 the minimum economical viable stipulated size particularly in case of indigenous group. This size of land might vary from one locality to another. In this case, an agreement of minimum stipulation 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 that such land may have been occupied by landless (Suikinzbasi) is high. Normally, Ailani land should 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 the ownership of community organization. If any such land is mandatory then the local authorities such as VDC or DDC should be consulted and ownership be granted to the COs.

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

8.5 Strategy for Local Participation

Mechanism should be developed for the participation of Indigenous People in decision making and through out the project planning and implementation and evaluation. Because of the poverty, illiteracy, and awareness, many communities in Nepalese society still suffer from the benefits of modem development and follow the traditional practices and beliefs. Therefore some degree of social exclusion based on caste and ethnicity is still prevailed in Nepalese society. As indicated above, the indigenous groups of people do not get opportunities in participating in the development activities and getting the benefits. Hence, serious attention should be given to the poor Indigenous Peoples, dalits, as well as women, to ensure their effective participation in PAF activities. Many of the larger groups of Indigenous People have their own representative organizations that provide effective channels for communicating local preferences. Traditional leaders of those communities occupy key positions for mobilizing people and should be brought into the planning process, with due concern for ensuring 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 or livelihoods of Indigenous communities. Sub-project appraisal team should meet with number of IP groups and focus groups of IP project beneficiaries at selected sites to document any negative impacts experienced during the implementation of PAF project and further consult with these groups to mitigate these impacts in their own practices. Focus group discussions and interviews should be carried out to gather the information.

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

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

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

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

Items Type Items Paper and Bamboo, Jute o Basket, Bag, hand made fan, products o Snacks packaging items o Toys, Tray, mat o Bamboo Products Agriculture based o Poultry, Goat raising, pig raising, Buffalo raising o Dairy o Vegetable farming Small scale enterprises o Handkerchief o Bread, Chocolate o Flour and spices o Candle o Bidi o Chalk o Cotton thread items o Soap and sampoo Others o Mithila Art o Beauty parlor o Hair cutting o Metal products o Wooden garments

8.7 Institutional Capacity

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

o Ministry of Local Development o Department of Local Infrastructure Development o Ministry of Education and Sport o Ministry of Social Welfare o 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 or institutions that should and can take responsibility for implementing the suggestions. Hence, proper institutional arrangements should be made to tackle the issues and concerns of Indigenous Peoples. For this, PAF project should hire a legal expert and an anthropologist in order to address the Indigenous People's rights and issues. Documentation should be available also in local language by hiring bilingual experts. Similarly, it is recommended that where

- 72 - qualified local IP organizations and individual expertise exist, they should be involved to the extent possible during the project implementation. Involvement of such organization would help to generate demand, identify needs and problems, create effective participation and cooperation 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 progress can be measured at appropriate intervals. Pilot programs may be needed to provide planning information, for phasing the project component for Indigenous Peoples with the main investment. The aim must be the long-term sustainability of project activities subsequent. to completion of disbursement.

8.9 Monitoring and Evaluation

Strong monitoring and evaluation is imperative for the PAF board to assess how well its program 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. Independent monitoring capacities may be needed since the institutions responsible for indigenous communities have weak management histories. Monitoring by representative of Indigenous Peoples' own organization may be an efficient way for the project management to absorb the perspective of indigenous beneficiaries. Three types of monitoring indicators namely Baseline monitoring, Impact monitoring and Compliance monitoring, as outlined in the PAF Operational Guideline and EMF (Refer Chapter VII) should be used. Monitoring unit should be staffed by experienced social science professionals, and reporting formats and schedules appropriate to the project's needs should be established. Monitoring and evaluation report should be reviewed jointly by the PAF Board. The evaluation report should be made available to the public.

8.10 Cost Estimates and Financial Plan

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

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

- 73 -

References:

Canter, L. W. (1996), Environmental Impact Assessment, McGraw-Hill, Inc. New York CBS (1998), A Compendium on Environment Statistics 1998 Nepal, HMG national Planning commission Secretariat central bureau of statistics, Kathmandu Nepal. CBS (2003), District Level Indicators of Nepal for Monitoring Overall Development (Based on Selected Socio-economic Indicators), HMG, National Planning Commission Secretariat, 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 and Survey (DFRS), Ministry of Forests and Soil Conservation, HMG Nepal, publication 74 DNPWC (2002 and 2003), Leaflets on National Parks, Department of National Parks and Wildlife conservation, Kathmandu Nepal Forest Department (FD), Plant Department(PD), Department of National Parks and Wildlife conservation, Natural Science Museum (2003), a leaflet on Convention on International 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 Govermnent and The World Conservation Union, Nepal. IUCN and NSM/TU Nepal (2002), Nepal's Protected Flora and Fauna, an Introduction Relevant to the CITES, Kathmandu, Nepal Jha, H. B (2003), Dalit and dalit women of Terai, (In Nepali), Central for Economic and Technical 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 of Government, Ministry of Population and Environment, Kathmandu, Nepal MOPE (2002), Status of Environmental Convention Ministry of population and Environment Kathmandu, 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 Five Year Plan, Kathmandu, Nepal PAF' (2004), Project Concept Paper: Detailed Project Description, Annex 2 Poverty Alleviation Fund/The World Bank

- 74 - 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 forests that are significant in the district because it is virgin or it is an important habitat of rare and endangered fauna and flora, or it has high bio-diversity, or it is large, or it contains important medicinal plants and other non-timber products, and so on.

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

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

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

Other Important Areas in District: Areas known for natural resources (deposits of construction materials and minerals, major drinking water resources), Areas inhabited by special ethnic groups, Common property areas (common grazing lands), district and highly fertile lands and the like.

- 76 -

References:

Canter, L. W. (1996), Environmental Impact Assessment, McGraw-Hill, Inc. New York CBS (1998), A Compendium on Environment Statistics 1998 Nepal, HMG national Planning commission Secretariat central bureau of statistics, Kathmandu Nepal. CBS (2003), District Level Indicators of Nepal for Monitoring Overall Development (Based on Selected Socio-economic Indicators), HMG, National Planning Commission Secretariat, 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 and Survey (DFRS), Ministry of Forests and Soil Conservation, HMG Nepal, publication 74 DNPWC (2002 and 2003), Leaflets on National Parks, Department of National Parks and Wildlife conservation, Kathmandu Nepal Forest Department (FD), Plant Department(PD), Department of National Parks and Wildlife conservation, Natural Science Museum (2003), a leaflet on Convention on International 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 Government and The World Conservation Union, Nepal. IUCN and NSM/TU Nepal (2002), Nepal's Protected Flora and Fauna, an Introduction Relevant to the CITES, Kathmandu, Nepal Jha, H. B (2003), Dalit and dalit women of Terai, (In Nepali), Central for Economic and Technical 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 of Government, Ministry of Population and Environment, Kathmandu, Nepal MOPE (2002), Status of Environmental Convention Ministry of population and Environment Kathmandu, 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* Five Year Plan, Kathmandu, Nepal PAF1 (2004), Project Concept Paper: Detailed Project Description, Annex 2 Poverty Alleviation Fund/The World Bank

- 74 - 2 PAF , (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 in collaboration with MoPE/HMG, SACEP, ICIMOD, NORAD WHO and NHRC (2002), Situation Analysis Environment Health in Nepal, Center for Economic and Technical Studies and Creative Consultants, Kathmandu, Nepal World Bank (2004), Indigenous People, Operational Directive (OD 4.20), The World Bank Qperational Manual http://www. gisdaynepal.com.np/Maps/MapCatalog/NepalMaps/Physiography/PhysioTitle.ht m (23-02-2004)

- 75 - ANNEX II

FEEDBACK SLIP

(Environment Assessment of PAF Activities)

EA study is aimed at identifying major environmental issues associated with PAF activities and recommending a management framework. This feedback slip is designed to get information based on your experience. You are kindly requested to fill the slip and return it to 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 your experiences and indicate appropriate mitigation measures (eg. Compensation, plantation, awareness). Impact Environmental Impacts Generation Infrastructure Building Mitigation Measures Type Mitigation Measures Soil Erosion

0e Water pollution Down Stream Impacts

Deforestation Biodiversity lost C

Land acquisition 0 Health problems

a Lost of rituals and customs

.°= Lost of tradition ways of

-s U protection resources Hci

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

Major policy legislation relevant to your work O World Bank Policy on Environmental Assessment O National EIA Guidelines, 1993 Ol Environmental Protection Act 2053 and Rules 2054 O Local Self Governance Act 1999 and Regulation, 1999 O Others......

-77 -

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 100 hectares 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 purpose following their test in the concerned place, on a single block of 10 to 50 hectares in the 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 and 5 to 25 hectares in the hills as leasehold forests. 4. Clear felling or rehabilitation of national forests with an area of not more than 5 hectares. 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 from trees, 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 and construction activities specified in such plans. 13. Establishment of medicinal herbs centers for the commercial production of medicinal herbs and aromatic plants in public scrublands. 14. Commercial collection or industrial processing of non-polluting medicinal herbs and aromatic plants. 15. Construction of forest paths up to 5 kilometer long, and of fire protection lines up to 1O kilometer long. 16. Collection of boulders, gravel and sand and extraction of coal and other minerals from forest areas. b. Industrial Sector

1. Production of alcohol by the process of blending and establishment of distilleries equipped with boiling and fermentation facilities, with a production capacity of 5,00,000/- liters per day. 2. Establishment of breweries and wineries equipped with fermentation facilities with a production capacity of 500,000/- liters per day. 3. Establishment of acid, alkali, and primary chemical industries with a production capacity 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.

- 78 - 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 hour based 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 capital exceeding 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 root 17. Rosin turpentine, veneer and catechu. 18. Fish and meat processing. 19. Production of packaging materials 20. Poultry feeds. 21. Machine shop

- 79 - d. Mining Sector

1. Excavation of mines through relocation and resettlement of permanent residence of not 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 industrial minerals 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 Mines a. 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 roads b) Urban roads c) Rural roads d) 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 than from 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 steep gradient.

- 80 - 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 a steep gradient. iv. Any water resources development activity, which displaces not more than from 25 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 sources of water, watershed management or changed channel lines shall be considered to be 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 water sources (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 not more 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 providing services to a population ranging between 2,000 and 10,000. b. Following activities relating to waste emitted from houses and residential areas:

- 81 - 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 5 hectares 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 of polluted substances mixed with dangerous toxins:

i. Milk-processing industries with a capacity of not more than 26,000 liters a day. 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 in Clause (A) to Clause (I) and those below the standards of such proposals as well as the proposals below the standards of those mentioned in Schedule-2 with a cost of Rs. 10 millions to hundred millions.

- 82 - I ANNEX IV

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

Location of Revision /Addition Comment Response the Text in Delete the paragraphs 2,3 & 4 of section 2. 1, pp. 4 (meeting with World Bank mission and PAF officials) Revise the Project development objective according to the Included Chapter II, Section 2.2, pp 4 new version of Operational Manual of PAF, Section 2.2, pp 6 Rewrite the paragraph 2 of section 2.3 and include the Included Chapter II, Section 2.3, pp 6 negative list of sub-project in paragraph 3, pp. 7 Rewrite the project modality in Section 2.4, pp 7 and delete Project modality included and deleted Chapter II, Section 2.4, pp 6 the 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 7 also mentioned by. Paul Jonathan Martin) under the heading of 'General Chapter III, Section 3.7, pp informnation of selected districts' and ChpeII,Scin37pp227 map is included Remove 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. 22 IPDP 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 given Add existing institution at local level (Yuka Makino) Included Chapter IV, Section 4.5, pp 38

- 83 - Table IV.A: Continued

Location of Revision Comment Response the Text /Addition in Significant negative impact should be clarified properly Clarified that impacts are location specific and very small-scale in Chapter V, Table 5.1, pp 44 magnitude and limited to sub-project area only. To better reflect sub-project Sub-project classification (Paul Jonathan Martin) classification, a table of Chapter V, Table 5.2, pp 45 classification is given There should be some environmental impact after implementation of the project, it should be mentioned Included Chapter V, Section 5.2, pp 42 systematically and give its mitigation measures Screening criteria for sub-project and consider hazard and Included Chapter VII, Section 7.3, pp. 62 risk 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

- 84 - 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 Irrigated Land Land Land 1 Siraha 77726 77726 33862 2 Ramechhap 32276 4248 5158 3 Kapilbastu 84785 84453 30903 4 Pyuthan 23197 7037 4093 5 Mugu 9616 2030 972 6 Darchula 13201 4239 2230

Table V. B: Drinking Water Project, 1999/2000 (NDI, 2002)

Percentage of Benefited S.N. District Population Rural Urban Total 1 Siraha 50.1 86.94 53.43 2 Ramechhap 55.39 -- 55.39 3 Kapilbastu 85.53 49.39 82.51 4 Pyuthan 62.03 -- 62.03 5 Mugu 85.25 -- 85.25 6 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 181 383 2 Ramechhap 84 143 3 Kapilbastu 178 557 4 Pyuthan 62 146 5 Mugu 15 76 6 Darchula 7 96

- 85 - Table V. D: Total Number of Schools, Students and Teachers (2000) (NDI, 2002)

Number of Schools S.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 97 2 Ramechhap 1 1 12 41 3 Kapilbastu 2 2 7 67 4 Pyuthan 1 2 11 35 5 Mugu 0 1 9 16 6 Darchula 1 1 11 29

- 86 - ANNEX VI

Table VI. A: Human Development Index (NDI, 2002)

Mean Per Gender Human SNLife Dist s Adult Years of Capita Sensitive Development Expectancy Literacy oof Income Development Index Schooling NRs. Index 1. Siraha 62.5 24.42 1.89 9257 0.31 0.35 2. Ramechhap 61 24.81 1.50 6421 0.21 0.32 3. Kapilbastu 53.5 28.84 1.77 6541 0.24 0.29 4. Pyuthan 56 32.96 1.85 8141 0.24 0.32 5. Mugu 36 18.96 0.81 5065 0.09 0.15 6. Darchula 52 38.41 2.03 4876 0.21 0.29

-87 - I ANNEX VII

SUMMARY OF DISCUSSIONS WITH DIFFERENT STAKEHOLDERS

Poverty Alleviation Fund Stakeholder Consultation Workshop 12 December 2003

The December World Bank Mission participated in a one day workshop organized by the PAF Board on December 12th, 2003, to discuss the role of key stakeholders, particularly vulnerable communities and their role, PAF's operational rules and implementation. The session was attended by some Government Representatives, vulnerable and indigenous communities 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. Arjun Karki (President, NGO Federation), General Mr. Rukmagat Katuwal (Coordinator National Security Council Secretariat), Dr. Madhav Ghimire (Joint Secretary Ministry of Finance), Mr. Mohan Man Sainju (Executive Vice Chair, PAF Board), Dr. Durga Pokharel (National Women's Commission, Member PAF Board), Mr. Srikrishna Upadhya (SAPROS, member PAF Board), Mr. Bojraj Ghimire (Member NPC, member PAF board), Dr. Om Gurung (Nepal Adibasi Janajati Mahasangh, member PAF board), Mr. Shankar R. Joshi (Executive Director, PAF board), Dr. Rita Thapa (member PAF board), Mr. Padam Singh Biswakarma (National Dalit Organization, Member PAF board) and Rabi Sanju (PAF board). The mission also met with Donors to solicit information on their experience working with vulnerable groups 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 and workshop:

1. Project Objectives. HMGN views the Poverty Alleviation Fund as an alternative instrument of service delivery for the poor, intended to signal a departure from past practices and help establish government credibility in poverty alleviation. As such PAF needs to look different from other government programs. Hence its governance 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 the proposed project would therefore be a pilot where learning and trying out different models is a priority. It would initially target only a small number of districts. Once PAF 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 a critical impact.

2. Poverty targeting in PAF. There needs to be an objective and transparent criterion for targeting to prevent political and interest group interference. Targeting would take place at two levels: geographic targeting (district and villages), and household targeting.

- 88 - * District targeting. For the choice of districts, the Human Development Index could be one of the criteria. Another complementary criteria would be to spread pilot districts across regions and conflict and non-conflict areas to maximize learning effect and test approaches under a variety of situations.

* Village targeting. Targeting at the village level would be based on the poverty ranking of the VDCs which the Government is in the process of developing.

* Beneficiary targeting. For income generating sub-projects, beneficiary eligibility would be determined at the village level by the villagers themselves based on objective criterion including ethnicity, gender, accessibility to services and indicators of poverty such as level of assets and income. The target population would include all the indigenous groups, dalits, and women headed households. For village infrastructure sub-projects, eligibility would be determined based on number of jobs generated relative to size of sub-projects and number of jobs for the targeted beneficiaries. The beneficiary targeting within each village maybe done through a PRA/Wealth Ranking exercise.

3. Eligible Activities. Activities would be demand driven without pre-defined expenditure categories. Communities would choose from an 'open-menu' with a limited 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 the funds for either of the categories would be the same. Funds would be transferred to the eligible groups as grants.

4. Budget Constraints and Community Contributions. Two types of budget ceilings would be needed: one for small income generating subprojects undertaken by groups of poor people; another one for infrastructure subprojects benefiting the entire village. Experience from other countries with an identical level of poverty suggests a rule of thumb of $15 per capita (this means about $100 per family during the duration of the project) for a visible improvement in livelihoods. 30% of the village entitlement calculated in this manner could be used for village infrastructure. Community contributions would be essential for creating a sense of ownership, ensuring that prioritization takes place, and create a basis for sustainability of activities. Contributions could be cash or labor and amount to about 10% of the cost of the subproject.

5. Social Mobilization and Sub-project Cycle. Social mobilization is key for the formation of groups, dissemination of PAF rules of the game, and development of beneficiary capabilities. However social mobilization must not be viewed as an end in itself, but rather as a way to improve the voice of poor people. For income generating projects, especially for excluded groups, social mobilization would probably need to be done by NGOs or CBOs. In the case of community infrastructure projects, some level of technical support and facilitation would need to be provided by the DDC. Income generating projects could be approved at the village level by open community meetings held 3-4 times a year, thus ensuring transparency 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 to alcohol, tobacco, or religious institutions.

-89 - For Community Infrastructure projects there would be a case to require approval at the DDC level due to: larger amounts involved, technical aspects and need to ensure some linkage with the DDC development plans and other governmental programs (e.g suspension bridges, community water, school mapping etc.). Some of 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 projects may attract the attention of the insurgents with uncertain effects.

6. Institutional Arrangements

* The PAF Board's Role would be to approve strategy, programs and operational policies of the PAF, mobilize resources, approve annual budget and staffing of PAF secretariat, and support the monitoring/impact system and review results. The PAF Board must act and be seen to act in an independent and autonomous way for two reasons: (i) to ensure that funds are not captured or manipulated politically; and (ii) to ensure that there is no corruption in use of funds. If these problems crop up, the Board must (and be seen to) deal forcefully and independently with the problem. Failure to do so would be an indication that it is not or cannot function as an autonomous entity.

* The Secretariat's Role would be to implement the Project in line with the strategies, policies and priorities set by the Board; design and implement capacity building (including for its own staff); design targeting mechanisms and define the roles and responsibilities of DDCs and VDCs under PAF; prepare periodic progress reports, PAF Annual Report and Annual Audit report; design and implement monitoring and evaluation systems, including baseline; and design and implement communications and dissemination campaign. The Secretariat must be a lean and agile agency, staffed by motivated and professional individuals. It must have a strong sense of purpose and demonstrate a "new way of doing business" in terms of reaching poor and excluded groups. The Secretariat should be asked to prepare a budget and staffing plan, including the secretariat's organizational structure, that takes into account the principles of a lean and agile agency, its roles and responsibilities, appropriate salary levels to recruit professional and motivated staff, and the need, justification and staffing of Regional offices. To the extent possible (and at least initially) clustering Districts so that each Regional office would serve more than one District should be considered. The management overhead would be discussed and agreed on following a review of the Secretariat's proposed budget, 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 will operate at the village level-the "rules of the game". The rules must be seen as transparent, agreed to, understood and validated by the communities that PAF

- 90 - seeks to benefit (including the requirement of 10% contributions); (ii) seek community agreement on who are the most disadvantaged and excluded groups, and thus ensure agreement that a share of the funds will be targeted on these groups, ie community self targeting; and (iii) agree on village priorities for infrastructure projects that benefit the community as a whole, and where necessary, when agreements have to be sought with neighboring villages and VDCs (e.g. road projects). Local NGOs and Social Mobilizers would ensure that vulnerable communities are educated about the project benefits, so that they may given the appropriate training to identify and access resources for the effective preparation and implementation of their their sub-project. PAF will compliment the existing local decentralized structures to avoid created parallel institutions. * The District Development Committee (DDC) is where there is the greatest risk, in terms of bureaucratic delays, political capture and manipulation, and lack of transparency (i.e corruption), yet DDCs must have a clearly defined role 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 approve projects and set up Bank accounts for the beneficiary groups with approved projects (process of approval would be different by type of projects); (iii) for income-generating projects, indication from VDC that project was approved in open community meeting would suffice, if necessary the community approval process having been witnessed by DDC representative (or delegated to NGO or CBO); (iv) for infrastructure projects, approval by DDC would be required; this would also facilitate technical support (e.g. by DDC engineer or district planning officer) during project preparation and design; (v) responsibility for district baseline and monitoring evaluation system; (vi) responsibility for district communication and dissemination campaign; (vii) responsibility for coordination and liaison with PAF secretariat and its regional office. Possibilities to be considered would be a performance fee (or other types of incentives) for DDC in order to encourage efficient resource transfers and approval processes as well as technical support. Another design option to consider is to not distinguish by type of project in terms of DDC approval, but instead require DDC approval above a pre-defined project cost. This would result in an implicit self selection of projects since most income generation projects are likely to be smaller and this would fall below the DDC approval ceiling;

7. Fiduciary Arrangements. These include the Environmental Framework, procurement rules and the financial management system. The Environmental Framework must be simple and play three primary roles: (i) enable screening process by which activities that may pose environmental risks receive more scrutiny for approval; (ii) help improve community activities where warranted (e.g. quality of a drinking water supply system); and (iii) offer capacity building activities on environmental related issues. Procurement rules would be based on community procurement for subprojects and normal procurement procedures for other activities. There is wide relevant experience in Nepal, for example in the Drinking Water Supply Project. A financial management system would need to be designed and here again the system in the Drinking Water Supply Project could be adapted.

- 91 - 8. Communications. Communications are critical to create demand from beneficiaries, ensure transparency and foster learning across stakeholders. Appropriate strategy and tools would need to be developed to clearly present the project to the target population and make the rules of the game clear to everybody so that accountability to beneficiaries could take place.

9. Monitoring and Evaluation. In addition to the more traditional project monitoring systems mechanisms for community self monitoring, monitoring between 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 have been identified and as part the planned concurrent District Social and Institutional Assessments, systematic consultations will continue to be undertaken in line with PAF's demand driven and participatory approach. This consultative process would ensure that PAF's main beneficiaries, the vulnerable and indigenous communities are not only consulted in a reiterative way but are genuinely participated and benefiting from the program in a sustainable manner.

- 92 - Summary Discussion of the PAF Brain Storming Session 12 December 2003

All day session was participated in by PAF Staff, Board Members, representatives of Government Agencies, NGOs, Private sector, Donors including the World Bank and the Consultants. The brainstorming session was organized to discuss and feed back operational procedure, organization, financial procedure and environmental guidelines required for PAF operations.

1. The discussions centered around PAF Organization and management and issues relating 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 key factors for success. Likewise transparent and properly identified criteria for sub- projects and partner organization and broad based participation of all the community groups including women, vulnerable and socially excluded groups are important. 11. Community capacity to organize, procure the services and monitor through community auditing are important aspects. 12. Local governance agencies like VDC/DDC should be strengthened and be part of the process. Mechanisms must be built to involve local government. 13. Nepal has enough experience of its own successful program and lessons learnt from them need to be identified and incorporated in the PAF process. 14. PA activities must be holistic, not just focus on income. Targeting should take into 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 development indicators will be selected by PAF in initial years of learning. 16. Project cycle must not be long and approach must be flexible to accommodate local situations. 17. Per capita cost and community contribution were discussed to ensure better participation and ensure community sense of ownership. 18. PAF to adopt two approaches to target the poor, one based on targeting the poorest district and then community within it, and the second approach to address

- 93 - the vulnerable and socially excluded community/groups based on sub-project proposals directly from anywhere in Nepal. 19. Need to avoid duplication of efforts, coordinate with other similar programs and built on what already exist in the community. 20. Holistic approach to social mobilization and building the local community organizations with support from local NGOs, VDC? DDC and private sector organizations as important process. 21. PAF secretariat will be developed as lean effective structure and it is to procure the services of specialized services for communications, skill and capacity development and monitoring of projects. 22. VDC/DDC can assist in communicating PAF rules to the community, involve in identifying poor and vulnerable communities and monitoring community participation in sub-project. 23. Fund flow, contracting arrangements should be simple and based on milestones achieved. 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 choice as long as it meets the criteria. 25. Monitoring the performance, process and impact as well as targeting is crucial for PAF success. They should be complete and yet simple. Monitoring should encompass different levels including the community, PO and PAF.

- 94 - POVERTY ALLEVIATION FUND Stakeholder Consultations and Meetings during Project Preparation January and February 2004

Stakeholder consultation is a continuous process and one, which PAF is engaged in a systematic and reiterative way focusing on vulnerable communities, their needs and how the PAF operations would ensure their genuine participation with transparency and accountability. In this context, during the PAF preparation various stakeholder consultations and meetings are being held to inform the design of the project and solicit the views of partner organization, village and district representative, vulnerable communities and donors. The following 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 were discussed with regard to PAF Activities:

Field Visit and Meetings with DDCc, VDCs and COs in 2 villages (one heterogeneous -mix of ethnic groups and castes including Dalits and one homogenous-only Dalits) in Kavre District * Definition of poor based on criteria of food sufficiency and requirement in terms of number of months. Classification of poor in terms of three categories: Ultrapoor, Poor an Medium * Communities felt comfortable with the community-based demand driven approach and had expenrence in implementing their own projects with technical support, facilitation from CSOs, NGOs and other partner organization. * Proposals should address the communities' priorities as be determined by the whole community, paying attention to the neediest and community public goods. * Community investment funds provided from the LDF and own savings. Community established 3 types of funds: Dairy, Livestock Insurance and Local Development Fund. * Following the establishment of community funds there has been a decrease of individual 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 growth monitoring, 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 empowerment o Higher level of community cohesion o Lower household and intra-household conflict and violence o Increased use of health services o Increased number of cement toilet and pit latrines o Higher level of awareness in health and sanitation o Increased education enrollment resulting inl 00% children school enrollment o Increased awareness and education about family planning.

- 95 - 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

- 96 - * There should be a mechanism to ensure that the impacts and the mitigation measures match 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.

- 97 - Summary of Discussion held with WB Mission, PAF, PAF Consultants, Donors and NGOs 5-8 February 2004

The WB Mission, PAF and the Consultants held a thorough discussion on draft operational manual 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 and equity issues. 7. Provisions of 10% cash upfront for community group income/employment activities with discretionary provision by PAF. 8. Capacity building including community skill training, process/performance monitoring, baseline and impact evaluations, communication support to be undertaken by specialized agencies (SA). 9. Clearly defined contractual agreements between PAF and PO for social mobilization and capacity building activities, and PAF and CO for subprojects. 10. Monitoring indicators should include indicators for service standards, performance of POs and COs. 11. Two approaches to PAF operations, one through PAF regional or district office to work with the COs and other through POs working with COs involving community facilitators representing women, dalit, and indigenous groups were discussed. However, lack of district level structure of PAF, the later approach working through POs was adopted for now. 12. It was emphasized not to undermine the role of VDC/DDC. However to treat VDC/DDC as potential partner for the project 13. It was suggested that before launching the project, initial consultation (through rapid appraisal process) to understand the districts in terms of ethnic/caste groups, likely availability of POs, resources, etc would be useful.

- 98 - 1. Venue: World Bank Seminar Hall, Yak and Yeti Complex Date January 20, 2004 Participants:

Dr. Mohan Man Sainju, Vice Chairman, PAF Board Dr. Rita Thapa, Member, PAF Board Mr. Shankar Raj Joshi, Executive Director, PAF Mr. Roshan Bajracharya, The World Bank Mr. Tashi Tsiring, The World Bank Ms. Naima Hasci, Senor Social Scientist, The World Bank Ms. Lynn Benette, The World Bank Mr. Puma Man Shakya, Consultant Dr. Rajendra Shrestha, Consultant Dr. Nawa Raj Khatiwada, Consultant Mr. Chandra Nemkul, Consultant Mr. Raj Babu Shrestha, Executive Director, Water Supply and Sanitation Fund Board Mr. Shailendra Thakali, DFID Mr. Naresh Chapagai, Local Development Officer, DDC Kavre Dr. T. N. Shrestha, Program Co-ordinator, CEAPRED Ms. Shrijana Rana, SNV Nepal Mr. Durgesh Pradhan, Consultant

2. Venue: PAF Building, Chakupat, Lalitpur Date: February 05, 2004 Participants:

Dr. Mohan Man Sainju, Vice Chairman, PAF Board Mr. Shree Krishna Upadhaya, President, SAPROSS Mr. Krishna P. Sapkota, President, DDC Organisation Mr. Pitambar Acharya, ED, DIPROSS Mr. Dol Nath Neupane, ED, Samagra Bikash Kendra Mr. Shankar Raj Joshi, Executive Director, PAF Dr. Nawa Raj Khatiwada, Consultant Mr. Chandra Nemkul, Consultant Mr. Dilip Raj Joshi, Consultant Mr. Durgesh Pradhan, Consultant Dr. Rajendra Shrestha, Consultant Mr. Raj Babu Shrestha, Executive Director, Rural Water Supply and Sanitation Fund Development Board

3. Venue: PAF Building, Chakupat, Lalitpur Date: February 05, 2004 Second Session Participants:

Dr. Mohan Man Sainju, Vice Chairman, PAF Board Mr. Narendra K.C., Director, SAPROSS Mr. Kailash Rijal, Small scale loan expert, DIPROSS Mr. Amar Adhikari, Field Co-ordinator, Samagra Bikash Kendra Mr. Pooma Lal Shrestha, Program Co-ordinator, SIPRED Mr. Gokul Pyakurel, Deputy Director

99 - Mr. Kiran Kumar Shrestha, Head, Evaluation and Monitoring Department, The Rural Water Supply and Sanitation Fund Board Mr. Shankar Raj Joshi, Executive Director, PAF Dr. Nawa Raj Khatiwada, Consultant Mr. Chandra Nemkul, Consultant Mr. Dilip Raj Joshi, Consultant Mr. Durgesh Pradhan, Consultant Dr. Rajendra Shrestha, Consultant Mr. Raj Babu Shrestha, Executive Director, Rural Water Supply and Sanitation Fund Development Board

4. Venue: PAF Building, Chakupat, Lalitpur Date: February 11, 2004 Participants:

Dr. Mohan Man Sainju, Vice Chairman, PAF Board Ms. Geeta Sethi, Task Leader, PAF, The World Bank Mr. Luis, The World Bank Mr. Shankar Raj Joshi, Executive Director, PAF Dr. Nawa Raj Khatiwada, Consultant Mr. Pravakar Pradha, Consultant Mr. Santosh Nepal, Consultant

5. Venue: Kavre District, DDC, VDC and COs Date: February 10, 2004 Present: DDC, VDC members as well as 27 members of one CO and 33 members in another. Among them:

Maniju Mijar, Manager Bimala Maijar, Chairperson Mangal Bahadur Mijar, Chairperson Kur Bahadur Mijur, Manager Ram Lama, Social Mobilizer of Metherkot UDC Krishna Prasad, ADDCN Chairman Maryan Prasad, Program Officer, DDC Rajan Bhurar, Social Mobilizer of Khanalthok, UDC

- 100 - POVERTY ALLEVIATION FUND

Technical Consultative Session on Rules and Regulation, Operational, Financial and Environmental Manual Tuesday, January 20, 2004

World Bank Conference Hall Program

10:00 AM Registration

10:30 AM Welcome and Highlight the Objectives of Meeting: Mr. S. R. Joshi, Executive Director, PAF

10:30 AM Introductions

10:45 AM Presentation by Consultants: Rules and Regulation: Mr. Puma Man Shakya Operational Rules: Dr. Rajendra Shrestha Financial Manuals: Mr. Chandra Nemkul Environmental 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 Shakya Operational Rules: Dr. Rajendra Shrestha Financial Manuals: Mr. Chandra Nemkul Environmental Framework: Dr. Nava Raj Khatiwada.

3.30 PM Conclusions and Next Steps: Mr. S. R. Joshi, Executive Director, PAF

- 101 - PAF Stakeholder Consultations Summary 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 length on the first draft of the Operational Manual for PAF. The discussions focused on the following issues:

1. The focus of discussion was on criteria for selection of partner organization, community organizations, community contribution and participation, organization PAF secretariat and staff. 2. The draft was considered to be well written encompassing most of the issues important for PAF operation. 3. Although the proposed criteria for community contribution was appropriate, special provisions for remote communities and differentiated rates of contribution for Mountain, Hill and Terai communities were suggested. This will also justify in terms of 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 into consideration, high cost of transportation and labor in light of the remote communities and PAF should maintain some discretion in this. 5. Targeting the poor communities in the district is very important and practices based on wealth ranking by the community with participation of all including the women and vulnerable proposed in the manual is appropriate. However effort should be made to benefit all. 6. Victims of conflict (by either side), social discrimination and conflict affected areas should be given priority and effective provisions to reach them by PAF. 7. Role of partner organization and community organizations need to be very clearly defined. 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 support should target hard core poor and vulnerable as far as possible. Ensure mechanism to revolve such fund. 10. Need to link up PAF activities with similar activities undertaken by other agencies by building on what already exist in a holistic framework. 11. Adequate communication and information dissemination about PAF rules and effective social mobilization by POs is important. 12. PAF should emphasize on R&D to promote pro-poor policies, institutional reforms and effective service delivery. 13. Developing a service center concept at the VDC level will enhance service delivery and reduce unnecessary govemment interference. 14. Transparency in the process such as public audit and empowerment of community based on best practices need to be ensured. 15. Standardized formats for monitoring implementation, processes and partnership between PAF and PO and PAF and CO is required. 16. Implementation procedure should not be lengthy and disbursements of fund should not 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.

- 102 -