Climate-Friendly Agribusiness Value Chains Sector Project (RRP CAM 48409-002)

Climate-Friendly Agribusiness Value Chains Sector Project (RRP CAM 48409-002) CLIMATE CHANGE ASSESSMENT I. BASIC PROJECT INFORMATION Project Title: Cambodia: Climate-Friendly Agribusiness Value Chains Sector Project Project Budget: $141.04 million ($90 million loan from ADB (confirmed), $10 million loan from GCF (to be confirmed), $30 million grant from GCF (to be confirmed), $3.66 million from beneficiaries and $7.37 million from Government) Project Location(s): Provinces of Kampong Cham, Tboung Khmum, Kampot and Takeo Sector: Agriculture and Natural Resources Subsector: Agriculture, natural resources and rural development Themes: Environment, Natural Resources & Agriculture Brief Description of the Project: The proposed Climate-friendly Agribusiness Value Chains Sector Project (CFAVCP) will support the implementation of Cambodia’s Agriculture Sector Strategic Development Plan1 and the Industrial Development Policy2 by enhancing competitiveness of agricultural value chains and improving rural household incomes and agricultural competitiveness by (i) providing improved critical production and post-harvest infrastructure, (ii) reducing energy costs by promoting bio- energy use and sustainable biomass management, and (iii) offering targeted agribusiness support services for selected value chains. The impact will be improved agricultural competitiveness through enhanced productivity, climate resilience, quality and safety, value addition and rural household incomes and the outcome will be more productive and resource efficient agribusiness value chains in project areas in the provinces of Kampong Cham, Tboung Khmum along the Greater Mekong Subregion (GMS) southern economic corridor, and Kampot and Takeo along the south-coastal economic corridor. These four provinces contribute significantly to the country’s agricultural gross domestic product (GDP) and have experienced significant losses from the impacts of climate variability and climate change. CFAVCP will build on lessons from recent ADB programs which emphasize the need for: (i) strengthening critical rural infrastructure; (ii) supporting enabling policy environment; (iii) promoting public-private-community partnerships; (iv) building technical and business development capacity of stakeholders; and (v) promoting climate smart agriculture practices. CFAVCP will have three outputs: Output 1: Critical agribusiness value chain infrastructure improved and made climate resilient, Output 2: Climate smart agriculture and agribusiness promoted, and Output 3: Enabling environment for climate friendly agribusiness enhanced. It will achieve these outputs by improving climate resilience of critical agricultural production and post-harvest infrastructure, intensification, and commercialization of rice, maize, cassava and mango. The project will help increase productivity and diversification, improve storage, processing, quality and safety testing capacity, and promote the use of solar and bio-energy. It will also create an enabling policy environment for agribusinesses and strengthen technical and institutional capacity for climate smart agriculture. This will, in turn, promote long-term environmental sustainability and enhance profitability for farmers and agribusiness enterprises. 1 Royal Government of Cambodia. 2015. Agriculture Sector Strategic Development Plan (2014-2018). Phnom Penh. 2 Royal Government of Cambodia. 2015. Industrial Development Policy (2015-2025). Phnom Penh. 2 Under Output 1, a list of subprojects focusing on irrigation infrastructure and water management systems, post-harvest infrastructure, and support to farmer groups and cooperatives, has been identified and feasibility analyses completed for a representative set. Water Catchment Ponds. The project includes modernization and rehabilitation of existing 426 on farm surface water catchment ponds and dig/ commission at least 800 on-farm water catchment ponds. These ponds will be used for supplementary irrigation and will be suited to collect surface runoff. Laser land leveling will be introduced at farm level to effectively prepare the land and manage water resources while reducing emissions for over 4,000 ha of land. Drip Irrigation technology. The project involves the implementation of 10 drip irrigation systems to enhance quality and quantity of mango production. Cooperative Storage and Drying Units. Project activities include the construction of an estimated 80 cooperative storage and drying units. Rural access roads and commune tracks. The project proposes the improvement of rural roads and tracks along at least 250 km to link farm units and production zones to the proposed 80 cooperative storage and drying units. Biodigester Screening. The project aims to support the National Biodigester Program (NBP) to install about 12,000 biodigesters and 6,000 compost huts in target provinces, and harness the fertilization potential of bio-slurry for households. In addition, the project will establish four Provincial Agricultural Development Centers (PADC) and four Provincial Agricultural Engineering Workshops to create resource and training centers for service provision, agribusinesses and farmer value chain linkages. The project will finance the building of a PADC in Kampong Cham, Takeo, and Tboung Khmum provinces and the rehabilitation of the existing extension/agricultural development center in Kampot. The project will also support the construction of three mechanization workshops, including classrooms in Kampot, Kampong Cham and Tboung Khmum and commissioning of a new workshop and classroom in Takeo. At the National Agricultural Laboratory (NAL), the newly inaugurated Plant Biotechnology Laboratory (PBL) will be supported by the project’s capacity building output on (i) establishing genetically modified organism (GMO), plant toxins, bio-fertilizer and organic fertilizer testing capacity; (ii) supporting ISO 17025 accreditation; (iii) developing tissue culture protocols for banana and cassava; and (iv) assisting in the laboratory commercialization process to achieve partial cost recovery. Under Output 2, the project will support the development of (i) climate smart agribusiness policy; (ii) climate-conscious product standards; and (iii) the development and release of climate resilient varieties. Under Output 3, the project will invest in the creation of an enabling policy and regulatory environment for agribusinesses, the identification of opportunities for private sector engagement in climate change mitigation and adaptation, and provision of improved climate and market information services to allow farmers to plan their cropping season. This output will facilitate 3 harmonization of standards, public-private partnerships, and green financing. Three key activities include: (i) climate friendly agribusiness policies and standards; (ii) green finance and risk sharing mechanisms; and (iii) information and communication technology (ICT) to support climate risk management. I. CLIMATE CHANGE TRENDS AND PROJECTIONS Cambodia's climate is tropical, with characteristically high temperatures, and two seasons are recognized: a monsoon driven rainy season (May‐October) with south-westerly winds ushering in clouds and moisture that accounts for anywhere between 80% to 90% of the country’s annual precipitation, and a dry season (November-April), with cooler temperatures, particularly between November and January. Average temperatures are relatively uniform across the country, and are highest (26°C - 40°C) in the early summer months before the rainy season begins. Temperatures remain at 25°C to 27°C throughout the rest of the year. The wet season arrives with the summer monsoon, in May through November, bringing the heaviest rainfall to the southeast and northwest. Mean monthly rainfall at this time of year can be more than 5,000 mm in some areas. Inter‐annual variations in climate result from the El Niño southern oscillation, which influences the nature of the monsoons in the region and generally bring warmer and drier than average winter conditions across Southeast Asia, while La Niña episodes bring cooler than average conditions.3 (i) Historical and Projected Changes in Temperature Analysis of historical data (1901-2012) suggest that the rate of temperature increase has been most rapid in the drier seasons (December-January-February and March-April-May), increasing 0.20°C -0.23°C per decade, and slower in the wet seasons (June-July-August and September- October-November), increasing 0.13°C-0.16°C per decade. More recent trend since 1960 suggest accelerated change. The following are climate trends for Cambodia observed between 1960 and 2003 (footnote 3). - Mean annual temperatures have increased by 0.8°C since 1960, at a rate of about 0.18°C per decade. The rate of increase is most rapid in the drier seasons, increasing 0.20°C‐0.23°C per decade, and is slower in the wet seasons, increasing 0.13°C‐0.16°C per decade. - Since 1960, the frequency of hot days4 has increased significantly (+46, with strongest increases noted in September-November), as has the frequency of hot nights (+63, with strongest increases noted in December-February). The frequency of cold days5 has decreased significantly in September- February. - The average number of cold days per year has decreased by 19 (5.2%). This rate of decrease is most rapid in December-January-February. 3 World Bank’s Climate Change Knowledge Portal. 4 Hot days or nights are defined as the temperature above which 10% of days or nights are recorded in current climate of that region

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