Mozambique Pilot Program for Climate Resilience (Ppcr)

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Mozambique Pilot Program for Climate Resilience (Ppcr) Final Report – For public release MOZAMBIQUE PILOT PROGRAM FOR CLIMATE RESILIENCE (PPCR) Private Sector Investment to Build Climate Resilience in Mozambique Freiburg, May 2013 Project: Pilot program for climate resilience (PPCR), Private Sector Investment to Build Climate Resilience in Mozambique: Woodland and Watershed Management. Client: International Finance Corporation (IFC) Author: Paul Borsy, Markus Grulke, Sheila Wertz, Timm Tennigkeit NB: Names of institutions, companies, projects and products in the report have been replaced with letters e.g. Company A, B, C or Product 1, 2 3 in order to maintain confidentiality of the entities, projects and products involved. Content Summary of the project studied ................................................................................................... 5 1 Introduction ............................................................................................................................. 6 1.1 The Pilot Program for Climate Resilience (PPCR) ............................................................. 6 1.2 Climate Change in Mozambique ...................................................................................... 6 2 Methodology .......................................................................................................................... 11 2.1 General approach ........................................................................................................... 11 2.2 Criteria applied ............................................................................................................... 13 3 General results and considerations ....................................................................................... 15 3.1 Miombo forest management ......................................................................................... 15 3.1.1 General considerations on forests and climate change ....................................... 15 3.1.2 General considerations for Miombo forest management ................................... 17 3.1.3 Growth and yield .................................................................................................. 17 3.1.4 Area required for sustainable forest management ............................................. 17 3.1.5 Current management practices ........................................................................... 18 3.1.6 Proposed sustainable forest management practices........................................... 19 3.2 Adaptation to climate change in Agriculture ................................................................. 21 3.3 Policy issues .................................................................................................................... 25 3.3.1 Hunting license and forestry concessions ............................................................ 25 3.3.2 REDD + in Mozambique ....................................................................................... 26 4 Results of the project screening ............................................................................................ 28 4.1 Company A project package ........................................................................................... 31 4.1.1 The four Company A projects in a nutshell .......................................................... 31 4.1.2 Company brief Company A .................................................................................. 34 4.1.3 Improved Miombo management with value chain integration ........................... 36 4.1.4 Conversion of pure eucalyptus stands into mixed plantations ............................ 47 4.1.5 Eco lodge and mangrove protection .................................................................... 55 4.1.6 Forest concession in existing hunting concession Nyala Safari ........................... 57 4.2 Cotton production and diversification with smallholder farmers .................................. 60 4.2.1 The company ........................................................................................................ 60 4.2.2 Cotton best practices and Initiative A .................................................................. 60 4.2.3 The climate resilient project investment ............................................................. 61 4.2.4 Climate resilience and cotton .............................................................................. 62 4.2.5 Risks ...................................................................................................................... 63 4.2.6 Investment ........................................................................................................... 64 4.2.7 Project brief .......................................................................................................... 64 4.3 Niassa REDD+ Carbon project......................................................................................... 78 4.4 Other projects/ companies screened (as presented in the interim report) .................. 90 4.4.1 Project Ranking/ Scoring of companies screened ................................................ 90 4.4.2 Companies not cleared by IFC .............................................................................. 91 4.4.3 Companies contacted but without further interest............................................. 91 4.4.4 Companies with some constraints ....................................................................... 91 4.4.5 Potential investors Potential investors with concrete business ideas and plans 111 Annex ........................................................................................................................................ 131 Annex 1: Terms of Reference ............................................................................................... 132 Annex 2: References ............................................................................................................ 140 Final report PPCR Mozambique IFC UNIQUE 5 Summary of the project studied The following table provides an overview of the full assessment carried out for this study. Se- lected companies and firms have been assessed in more detail, which can be found in chapter 4. Company A’s and Company B’s investments are highly recommended while we see major risks in the Niassa REDD+ Carbon project. Table 1: Overall Assessment Overview Project Climate Tech- Econom- Social Envi- Risks Overall Resili- nical ic Feasi- Impact ronmen- assess- ence Feasibil- bility tal Im- ment ity pact Company A ++ + + ++ ++ +++ - ++ Miombo Company A ++ +++ +++ 0/+ + - - ++ Eucalyptus diversifica- tion Company A ++ ++ 0/+- ++ - - ++ Eco Lodge Company A ++ ++ ++ + ++ 0/- + Hunting and Forest Li- cence Company B +++ ++ ++ +++ 0/+ - - +++ Niassa ++ + 0 0/+ ++ ++ + REDD+ (Note: “- “ in risks means that there is low risk in the investment) Final report PPCR Mozambique IFC UNIQUE 6 1 Introduction 1.1 The Pilot Program for Climate Resilience (PPCR) Mozambique holds considerable potential for private sector investment in natural resource management. These investments must be structured within an investment climate that fosters resilience against future climate change. The Strategic Climate Fund (SCF) is a multi-donor trust fund within the World Bank’s Climate Investment Funds (CIF) implemented through five Multi- lateral Development Banks (MDBs) including the World Bank Group/IFC. The PPCR is funded by the SCF and focuses on piloting interventions in developing countries in risk management and building climate resilience. PPCR interventions in Mozambique will be country-led with the ultimate aim of integrating climate change risks into national development planning and in- vestment programs. The PPCR is divided into two phases. Phase 1 supported the preparation of a Strategic Program for Climate Resilience (SPCR). The SPCR aims to integrate climate resili- ence into national priority development plans, budgets and investments. Phase 2 will focus on the implementation of the SPCR, specifically on programmatic support, and invest in priority sectors and provide support to on-the-ground adaptation activities identified during Phase 1. The IFC-managed component of the Mozambique SPCR, “Private Sector Investment to Build Climate Resilience in Mozambique” focuses on engaging the private sector and catalyzing pri- vate sector investments in climate change adaptation activities. The IFC has identified three investment options in natural resource management. These in- clude: a) Woodland management and agriculture in and adjacent to Niassa Reserve; b) Sustainable timber harvesting of Miombo woodlands in central Mozambique; and c) Watershed management and tourism in Gorongosa National Park. UNIQUE forestry and land use was contracted by IFC to review these three investment options. The intention is to select approximately five to ten feasible projects, of which four will be sup- ported by IFC in the year 2013 with a total volume of about 40 million USD. A total of 53 com- panies have been identified, of which six projects have been selected and studied in detail. In this report we provide information regarding the projects identified. Chapter 1 and 2 give a general introduction to the PPCR and climate change in Mozambique, while chapter 2 de- scribes the methodology applied. Chapter 3 provides general observations on agriculture and Miombo forest management under future climate change perspectives as well as key policy issues related to the identified projects. In chapter 4.1 to 4.3 we present the
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