REQUEST FOR PROJECT/PROGRAMME FUNDING FROM THE ADAPTATION FUND The annexed form should be completed and transmitted to the Adaptation Fund Board Secretariat by email or fax. Please type in the responses using the template provided. The instructions attached to the form provide guidance to filling out the template. Please note that a project/programme must be fully prepared (i.e., fully appraised for feasibility) when the request is submitted. The final project/programme document resulting from the appraisal process should be attached to this request for funding. Complete documentation should be sent to: The Adaptation Fund Board Secretariat 1818 H Street NW MSN P4-400 Washington, D.C., 20433 U.S.A Fax: +1 (202) 522-3240/5 Email: [email protected] 1 PROJECT/PROGRAMME PROPOSAL TO THE ADAPTATION FUND PART I: PROJECT/PROGRAMME INFORMATION Project/Programme Category: REGULAR PROJECT Country/ies: ETHIOPIA Title of Project/Programme: CLIMATE SMART INTEGRATED RURAL DEVELOPMENT PROJECT Type of Implementing Entity: NATIONAL IMPLEMENTING ENTITY Implementing Entity: MINISTRY OF FINANCE AND ECONOMIC COOPERATION (MOFEC) Executing Entity/ies: MINISTRY OF AGRICULTURE AND NATURAL RESOURCES, MINISTRY OF LIVESTOCK AND FISHERIES DEVELOPMENT, MINISTRY OF WATER, IRRIGATION AND ELECTRICITY, MINISTRY OF ENVIRONMENT, FORESTS AND CLIMATE CHANGE Amount of Financing Requested: 10 000 000 (in U.S Dollars Equivalent) Project / Programme Background and Context: Provide brief information on the problem the proposed project/programme is aiming to solve. Outline the economic social, development and environmental context in which the project would operate. 1. PROJECT BACKGROUND AND CONTEXT 1.1. Socio-economic and development context Ethiopia is a large, landlocked and diverse country, with an area of approximately 1.1 million km2 and a population of over 90 million. It is one of the world’s least developed countries, ranking 173 out of 186 countries in the UNDP 2015 Human Development Index. However, the country has committed to rapid and sustainable development, with a stated ambition to build a lower middle-income economy by 2025, increasing the per capita income of citizens so that it reaches over USD $1,000 by this time. To deliver this vision, the Government of Ethiopia has produced the Growth and Transformation Plan (GTP)1 and a succession of medium-term development plans 1 FDRE (2010). Growth and Transformation Plan (GTP) 2010/11-2014/15. The Federal Democratic Republic of Ethiopia. Ministry of Finance and Economic Development (MoFED). September 2010. Addis Ababa. 2 spanning three five-year planning periods (2010-2015; 2015-2020 and 2020-2025) (FDRE, 2010). The vision is to deliver average annual economic growth rate of 10% by building a modern and productive agricultural sector, strengthening the industrial base and growing exports. Ethiopia has shown solid socio-economic progress over the last decade. Progress under the first GTP (GTP-I) period was commendable, with average GDP growth rate of 10%2 and this high level of growth is expected to continue going forwards. This growth has contributed to significant poverty reduction in urban and rural areas3, as well as improving education, health, services and infrastructure. The introduction of a social safety net system has also targeted the poor and marginalised, with the introduction of the Drought Resilience and Sustainable Livelihoods Program (DRSLP) and the Productive Safety Nets Programme (PSNP). Nonetheless, Ethiopia remains a highly climate vulnerable country and future climate change has the potential to significantly reduce future growth trajectories4. Indeed, the country has been heavily affected by the 2016 El Niño, experiencing a major drought which has led to a major humanitarian response to support over 10 million people. This vulnerability centres on agriculture, livestock and water management. Agriculture underpins the Ethiopian economy and the majority of livelihoods. It accounts for approximately 40% of GDP (in 2015); nine of the top ten exports and 73% of all employment5. Agricultural production is dominated by small-holders and is predominantly rain-fed, making it very sensitive to climate variability and shocks. Similarly, a large proportion (around 60%) of the land area of Ethiopia is arid and is dominated by pastoral farming, which is highly sensitive to climate extremes in general and drought in particular. Recognising these challenges, Ethiopia is moving towards a low carbon and climate resilient economy. Indeed, it has one of the most advanced climate policy landscapes in Africa. A Climate Resilient Green Economy (CRGE) vision was launched in 2011 which set out that the economy should be resilient against the future impacts of climate change and be delivered with similar greenhouse gas emissions relative to today. In parallel with the CRGE vision, a Green Economy Strategy (GES)6 was launched, which detailed the pathway for delivering this low carbon middle-income ambition. The GE Strategy is built on four pillars: 1. Improving crop and livestock production practices for higher food security and farmer income while reducing emissions (agricultural and land use efficiency measures); 2 See NPC (2015), An assessment of performance of GTP-I, Addis Ababa (Amharic version). 3 Rapid economic growth led to a fall in income poverty. Poverty incidence (or headcount poverty index) decreased from 38.7% in 2004/05 to 23.4% in 2014/15, a reduction of 15.3 percentage point for the last ten years. Similarly, Ethiopia has achieved six of the eight MDGs-the two exceptions being maternal mortality and gender equality. 4 World Bank (20010). Economics of Adaptation To Climate Change: Ethiopia. Washington DC. 5 CSA (2014), National Labour Force Survey, Addis Ababa. 6 FDRE (2011). Ethiopia’s Climate-Resilient Green Economy: Green economy strategy. The Federal Democratic Republic of Ethiopia. November,2011. Addis Ababa. 3 2. Protecting and re-establishing forests for their economic and ecosystem services, including as carbon stocks (increased GHG sequestration in forestry); 3. Expanding electricity generation from renewable sources of energy for domestic and regional markets; and 4. Leapfrogging to modern and energy-efficient technologies in transport, industry, and buildings. In translating these pillars to implementation, six priority sectors have been identified: agriculture, livestock, urban, transport, industry and energy. Work is underway to produce detailed climate resilient (CR) sector strategies for all CRGE sectors, with CR strategies already in place for: Agriculture and forestry, Water and Energy, and Transport The CRGE and the sector strategies are also a key component of Ethiopia’s proposed activities in the Intended Nationally Determined Contribution (INDC)7, which is focused on increasing resilience and reducing vulnerability of livelihoods and landscapes in three pillars; drought; floods and other cross-•‐cutting interventions. Against this background context, this proposal aligns to the objectives of the second Growth and Transformation Plan (GTPII) and the CRGE strategy. 1.2. Environmental context Given Ethiopia’s extremely large landmass (1.1 million km2), agricultural production and agro-climatic zones are very varied, though much of the agriculture is characterised by mixed type farming systems. The country also has one of the most complex and variable climates in the world, driven by the varied terrain and its location with respect to global weather systems. Within a few hundred kilometres, the climate ranges from the hot arid Danakil desert, up to cool wet alpine highlands, and down to wet humid lowlands. There are also large differences in topography, with elevations that vary from below sea level to above 4000 metres. These differences in elevation account for the large variations in temperature across the country, from the hot low lands up to the cooler central ridge of the country. Ethiopia’s rainfall patterns are particularly complex. Mean annual rainfall varies dramatically, from desert levels up to 2000 mm/year, with a strong gradient across the country (with more rainfall in the west). There are also large monthly variations. Ethiopia’s rainfall is determined mainly by seasonal changes in large-scale global circulation systems, particularly the seasonal north–south movement of the Inter Tropical Convergence Zone (ITCZ). This leads to the bimodal rainfall season experience in southern Ethiopia and the uni-modal season in the North. These seasonal 7 FDRE (2015). Intended Nationally Determined Contribution (INDC) of the Federal Democratic Republic of Ethiopia. 4 rainfall patterns have a major influence on agricultural production, as rainfall is highly varied across the months of the year and across the country. Other global climate systems also play a role in Ethiopia’s weather, often by influencing the position and strength of the ITCZ. Unlike much of East Africa, there is no simple relationship between global circulation patterns such as the El Niño/La Niña – Southern Oscillation (ENSO) cycle and Ethiopia’s climate. ENSO events can lead to changes in precipitation in some regions of the country, but this is specific to the time of season. Figure 1. Ethiopia’s Elevation Profile (metres above sea level) (left), Annual Average Temperature (centre) and Rainfall (right). These factors lead to the high variability in annual and seasonal rainfall in Ethiopia between years (and even between decades). Yearly variation around mean rainfall levels is 25% and can increase