Additional Financing of Basin Improvement Project (RRP NEP 43448)

CLIMATE CHANGE ASSESSMENT

I. Basic Project Information Project Title: NEP (43448-014) Bagmati River Basin Improvement Project - Additional Financing Project Cost (in $ million): Amount ($ million) Source Current (Original Additional Total Amount) Financing Asian Development Bank (ADB) 30.0 63.0 93.0 Ordinary Capital Resources (OCR, 25.5 63.0 88.5 concessional loan) Special Funds resources (grant) 4.5 0.0 4.5 Government 6.0 15.8 21.8 Total 36.0 78.8 114.8 Location: , Valley, Sectors / Subsector: 1. Agriculture, natural resources and rural development / Rural flood protection; water-based natural resources management 2. Water and other urban infrastructure and services / Renovation and protection of cultural heritage; urban sewerage; other urban services Theme: Inclusive economic growth; Environmentally sustainable growth Brief Description (particularly highlighting aspects of the project that could be affected by weather/climate conditions and natural hazards):

The Government of Nepal with the support of ADB has initiated the Bagmati River Basin Improvement Project (current project) in 2013 to protect the Bagmati River. The current project is launched with ambit of enhancing the water resources and water quality of the river, accelerating the economic growth of the country and living standard of the people. The additional financing for the Bagmati River Basin Improvement Project is required to scale-up the current project including consolidation of water management institutions, expansion of riverbank beautification works, riverine community mobilization, and the design, build and operation of a wastewater treatment plant (WWTP). The additional financing is also required to meet the cost overruns to the current project with which performance is on track. As per ADB Safeguard Policy Statement 2009, the additional financing is categorized as category B in environment as none of the anticipated impacts due to the project are of irreversible, diverse, or unprecedented in nature.

Bagmati River has a history of extreme flooding, which is a common occurrence during the monsoon season.1 Future projections of rainfall under a high emission scenario (A2 SRES or RCP8.5 scenarios) indicate that precipitation will continue to increase during monsoon season. Wastewater collection and treatment facilities are often situated at the lowest point possible as their operation leverages gravitational pull, but they can therefore easily be inundated by water level rise. When storm water and sewer collection systems are combined, higher intensity rain storms can overwhelm treatment facilities leading to a failure of treatment.

II. Summary of Climate Change Finance (if applicable) Project Financing Climate Finance (in $ million)* Source Amount (in $ million) Adaptation Mitigation ADB Resources OCR COL 63.00 1.96 2.55 ADF Grant

1 Initial Environmental Examination Report (accessible from the list of linked documents in Appendix 2 of the report and recommendation of the President). Paras. 8, 60, and 61. 2

Project Financing Climate Finance (in $ million)* Source Amount (in $ million) Adaptation Mitigation

Co-financing**

* Please refer to the Umbrella Guidance Note on Counting Climate Finance (October 2016) and relevant sector guidance notes issued, in estimating climate mitigation and/or adaptation finance for the project. ** ADB-administered donor trust funds, financing from multilateral climate funds such as Global Environment Facility, Climate Investment Fund, Green Climate Fund, and bilateral financing, among others.

III. Summary of Climate Risk Screening and Assessment A. Climate Risk Screening (see relevant climate and hazards information in the Appendixes) a. Hazards Projected temperature increase Low Projected change in average precipitation Low Extreme events (Extreme rainfall episodes leading Medium (during monsoon season) to floods, as represented by the 90th percentile values) Earthquakes Medium b. Sensitivity of Project Components to Climate/Weather Conditions and Geological Hazards Components of additional financing include: Sensitivities

(i) Landscaping Activities: Landscaping and Construction phase maybe delayed by inclement beautification works of Bagmati Riverbanks in weather. different stretches (Uttar Gaya, Gokarna, Guheshwori, Thapathali to Balkhu); During operation, wastewater treatment may be (ii) Construction of a WWTP at Tukucha; and affected by the rise of water level. Wastewater (iii) Restoration and reconstruction of the collection and treatment facilities are often situated archaeological (cultural heritage) monuments at the lowest point possible as their operation along Thapathali to Balkhu. leverages gravitational pull, but they can therefore easily be inundated by water level rise. When storm water and sewer collection systems are combined, higher intensity storms can overwhelm treatment facilities leading to a failure of treatment.

Landscape works and monuments could be damaged by prolonged floods. c. Capacities 1. The current project is complemented by the Wastewater Management Project, which is financing the design, construction and management of strategic WWTPs in the Kathmandu Valley. 2. Feasibility studies and detailed designs to address various threats and risks (such as flooding or earthquake) to the additional financing were financed and done under the current project. 3. Support from donor partner (ADB) is available as the overall Project (i) remains technically feasible and economically viable; (ii) is accorded high priority by the government; (iii) is consistent with the project’s development objectives; and (iv) is consistent with the Country Partnership Strategy for Nepal, 2013–2017 which supports Nepal’s peace and development.2 The additional financing project is included in the ADB Country Operation Business Plan, 2019–2021.3

2 ADB. 2013. Country Partnership Strategy: Nepal 2013–2017, extended 2019. Manila. 3 ADB. 2018. Country Operation Business Plan: Nepal 2019–2021. Manila. 3

4. Presence of communities, private sector, and other civil society organizations (CSOs) in some parts of the river stretches that provides good examples in improving river zones that could be scaled up for the whole River (e.g., creation of green spaces and proper solid waste disposal practices).4 5. The Government has devolved the construction and operation of the WWTP to experienced private operator which will be better placed to manage potential impact of climate change on the plant operation and safety. 6. Flood forecasting and early warning system for the Bagmati River is in place with 72 hours dissemination time lag before flood event. B. Climate and Disaster Risks and Adaptation Assessment 1. Long-term climate change that could impact the project components includes increase in rainfall during the monsoon season that could lead to flooding (see Appendixes A3 and A4). Both the A2 SRES and RCP8.5 scenarios indicate wetter than the average wet monsoon seasons (June to October). 2. Earthquake intensity depends on the distance from the fault rupture and local conditions as well as on the magnitude and depth of the earthquake. Climate change could aggravate the damages incurred during earthquake. 3. Climate change adaptation may involve additional investments on design (consider peak river discharge with climate change projection) and materials for improved operation and maintenance of the wastewater treatment facility. C. Climate Risk Classification: LOW. While the project exposure to flood hazard is medium, risk is reduced to low when the existing capacities of the current project are taken into consideration, such as presence of appropriate policy, presence of organized groups to assist in the government efforts, access to technology and information, and available institutional capacities. The caveat is for monitoring and evaluation to capture whether these capacities are really working to reduce sensitivities and vulnerability of the proposed project to different climatic and non-climatic factors with respect to impacts to its components. D. Climate Risk Screening Tool/Procedure Used (specify): SARD climate risk screening framework and methodology.

IV. Management Actions

• Ensure that the slab level of WWTP will be kept above HFL which considers the conditions described by the projected precipitation change. • Include in the design–build–operate contract the M&E of how rainfall and hydrological change in the project areas impact the operations of the WWTP during implementation, to verify if the operation of the system are disrupted, and to be able to apply corrective actions in cases of negative impacts on the wastewater management and flood risk management operations. • Mobilize, raise awareness, and build capacity of local government and communities for riverbank management and maintenance including awareness on how climate change will affect the flooding situation in their areas. • A potential greenhouse gas mitigation activity is the installation of sludge digester to produce electric power and reduce the plant power and sludge disposal expenses.

V. Climate Adaptation Plans within the Project (if applicable)

Adaptation Activity Target Climate Risk Estimated Adaptation Adaptation Finance Finance (in $ million) Justification Increase design criteria Risk of increased $1.96 million Models predict possible from 25 years return flooding intensity higher precipitations flood period to 100 during monsoon which years may impact flood intensity

4 Project Administration Manual (accessible from the list of linked documents in Appendix 2 of the report and recommendation of the President). 4

VI. Climate Mitigation Plans within the Project (Describe project activities, indicators and associated finance aimed at reducing greenhouse gas emissions and budgetary allocations; for each mitigation activity, provide an estimate of associated cost and the justification for the estimate.) Mitigation Activity Estimated Estimated Mitigation Mitigation Finance Greenhouse Gas Finance Justification (GHG) Emissions (in $ million) Reduction (tCO2e)/year Building a sludge 168 tCO2e/year5 $2.55 million Reduce methane digester to burn emission in the methane produced by atmosphere. the WWTP and produce electricity

5 GHG emission is based on calculation of the carbon footprint of the wastewater treatment plant which was assessed using online carbon footprint calculation tool for waste water treatment plant at https://va- tekniksodra.se/2014/11/carbon-footprint-calculation-tool-for-wwtps-now-available-in-english/

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Appendixes: Information Used in Climate Risk Screening A1. Project Location Description The Bagmati River Basin (BRB) of the Kathmandu Valley (Figure A1-1) in Nepal originates from where three headwater streams converge at Baghdwar in Shivapuri, Kathmandu (27°46′16″ N, 85°25′38″E, elevation 2,690 m), stretches about 597 km and flows over the valley covering 678 km2 of watershed. At its mouth, Bagmati converges with Koshi River. The river basin lies within two major geologic units, the basin-filled fluvio-lacustrine sediments underlying the basement rocks of Pre-Cambrian to Devonian ages.

The BRB is one of the major basins of Nepal and sustains much of the socioeconomic activities of the country. The basin's water is widely used for drinking, irrigation, industrial, and other purposes in the Kathmandu Valley, which comprises about 15% of the basin area. Rivers in the basin possess rich cultural and heritage values (NTNC, 2009).6 Observing stations for rainfall and river discharges are located in several places in the BRB (Figure A1-2). Figure A1.1: Location map of Bagmati River Figure A1.2: Locations of rainfall and river discharge stations in Bagmati River

A2. Current Climate and Trends Rainfall in Nepal occurs due to the southeast monsoon which lasts between the months of June to September. The humid monsoon air stream blowing from the Bay of Bengal is forced to rise as it meets the Himalaya. As a result, heavy rainfall occurs on some sections of the southern Himalayan slopes. Nepal receives about 1,500 mm rainfall in a good monsoon regime in a year (DHM Records). Rainfall is concentrated, and more than 75% of the annual rainfall occurs during the months of June to September. The months of October to May are dry and the rainfall that occurs is sporadic.

The climate of the BRB varies from cold temperate in higher mountains and warm temperate at mid- elevation levels to subtropical in the southern lowlands (<1,000 m mean sea level [msl]) with a mean annual temperature of 20°C–30°C. In the warm temperate climatic zone (1,000–2,000 m msl), the mean annual temperature range is 15°C–20°C and in the cold temperate climatic zone (2,000–2,900 m msl), this value varies from 10°C to 15°C. The mean relative humidity varies from 70% to 86%. The average annual rainfall in the basin is about 1,800 mm with 80% of the total annual precipitation occurring during the summer. Snowfall is negligible in the basin. River flow is low during the spring and peaks during the summer with maximum value during July or August.

6 National Trust for Nature Conservation. 2009. Bagmati Action Plan (2009–2014). Kathmandu. 6

The study of Shrestha (2010)7 on the Bagmati River dynamics showed that the rainfall pattern in the watershed as well as discharge is gradually decreasing (Figure A2.1). Apart from reducing trend of rainfall, groundwater extraction is another cause which has been affecting flow of the Bagmati River. According to the National Water Plan 2002, the total annual abstraction is estimated at 23.4 million cubic meters, which is much greater than the maximum recharge estimate of 14.6 million cubic meters. It also affects the groundwater recharge and ultimately reduces the water yield from natural springs. Since the Bagmati River is a perennial river, fed by storm and spring flow, such changes in climatic conditions is affecting the river’s morphological development. The amount of precipitation received by the rainfall gauge stations within the study area is gradually decreasing, which has direct impacts on the river discharge as well (Figure A2-2). Figure A2-1: Average annual precipitation Figure A2-2: Average annual precipitation and river discharge in the Bagmati watershed and river discharges in other stations around the river

A3: Future Climate and Changes in River Hydrology Babel et.al. (2013)8 characterized the potential hydrological impact of future climate in the Bagmati River Basin, Nepal. The basin wide future hydrology was simulated by using downscaled temperature and precipitation outputs from the Hadley Centre Coupled Model, version 3 (HadCM3), and the Hydrologic Engineering Center's Hydrologic Modeling System (HEC-HMS). Temperature projections indicated maximum increase during the summer rather than winter for both the IPCC A2 Special Report on Emissions Scenarios (SRES) scenarios.

Precipitation may increase during the wet season, but it may decrease during other seasons for A2 scenario. Under the A2 scenario, pre-monsoon water availability may decrease more in the upper than in the middle basin. During monsoons, both upper and middle basins show increased water availability. During the post-monsoon season, water availability may decrease in the upper part, while the middle part shows a mixed trend. Table A2-1 below summarizes the changes in temperature for the BRB. For precipitation scenario A2 indicated increases in basin average annual precipitation by 2.0%, 7.3%, and 13.2 %, respectively, for the 2020s, 2050s, and 2080s.

Analysis of spatial variation showed a mixed trend for A2 scenario. All the stations in the upper basin, except the Kathmandu airport station, show decrease in precipitation, while the stations in the middle basin, except , show an increase in precipitation in the future. This indicates that for scenario

7 Shrestha, P. 2010. Climate Change Impact on River Dynamics of the Bagmati Basin, Kathmandu, Nepal. 8 M.S. Babel, S.P. Bhusal, S.M. Wahid, and A. Agarwal. 2013. Climate change and water resources in the Bagmati River Basin, Nepal. Theor Appl Climatol. DOI 10.1007/s00704-013-0910-4. 7

A2, climate change may result in a slight reduction of annual precipitation in the upper basin, while the middle basin may have increased precipitation. However, this increased precipitation is mainly due to a higher increase of precipitation during the monsoon season. The changes in rainfall have subsequent impact on the space and time distribution of river hydrology expressed as water availability (see Table A2-1). Future trends in extreme 24‐hour rainfall events and peak flood values vary between 195 mm to 552 mm among the different rain gauges, corresponding to a peak discharge at Pandhera Dobhan of 16 523 m3/s for the 100‐year return interval (Dithal and Kayastha, 2013).9

9 Y.P.Dhital and R.B. Kayastha. 2013. “Frequency analysis, causes and impacts of flooding in the Bagmati River Basin, Nepal”, Journal of Flood Risk management Vol 6, Issue 3 (September), pp. 253–260. 8

Table A2-1 Changes in water availability during 3 future periods relative to 1980s using A2 SRES scenario

A4: Climate Change Projections10 Bagmati River (27.15N/85.49) Figure A4-1: Projected monthly temperature change11

Temperature Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec change, 0C 90 percentile 3.76 3.09 4.07 3.96 3.94 2.89 2.21 2.43 2.26 2.75 2.72 3.46 Ensemble median 2.52 2.30 2.20 2.69 2.13 1.78 1.41 1.38 1.60 1.97 2.08 2.11 10 percentile 1.69 1.34 1.21 1.50 1.54 0.83 0.77 0.69 0.9 1.65 1.43 1.32

10 Source: https://climateknowledgeportal.worldbank.org/country/nepal/climate-data-projections. Future climate information is derived from 35 available global circulation models (GCMs) used by the Intergovernmental Panel on Climate Change (IPCC) 5th Assessment Report. Data is presented at a 1°x1° global grid spacing, produced through bi-linear interpolation. Scenarios used the IPCC RCP 8.5 high emission scenario. 11 Mean or change in monthly temperature compared to the reference period (1986-2005). In general, value of monthly temperature change varies between 0 and 4 degrees. Zero value indicates there is no change in projected monthly temperature compared to historical mean. 9

Figure A4-2: Projected monthly precipitation change12

Precipita- Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec tion change, mm 90 14.88 14.48 7.47 14.35 17.5 91.83 53.93 45.66 63.70 32.89 9.24 8.38 percentile Ensemble 2.83 0.30 -0.70 -0.75 3.20 9.51 5.83 10.53 21.03 7.32 -4.68 -2.95 median 10 -23.88 -13.11 -10.77 -19.81 -20.59 -24.83 -65.97 -30.71 -14.48 -9.17 -35.2 -28.07 percentile

12 Mean or change in monthly precipitation compared to the reference period (1986–2005). In general, the value of monthly precipitation change varies between –100 and +200 mm. Zero value indicates there is no change in projected monthly temperature compared to historical mean.