Project/Programme Title: LOCAL GOVERNMENTS AND CLIMATE CHANGE-III (LGCC3)

Country(ies): Cambodia

National Designated Ministry of Environment Authority(ies) (NDA):

National Committee for Sub-National Democratic Development Accredited Entity(ies) (AE): Secretariat

Date of first submission: 08.10.2020 V.1

Date of current submission: 17.02.2021 V.2

Version: 2

Eligibility for SAP is determined by the review of the concept note and the ESS screening. Simplified Approval Process CONCEPT NOTE TEMPLATE V.1.4 GREEN CLIMATE FUND | PAGE 1 OF 6

A. Project / Programme Summary (max. 1 page)

☒ Project A.2. Public or ☒ Public sector Enhancing Direct A.1. Project or programme A.3 RFP ☐ Programme private sector ☐ Private sector Acess (EDA)

Check the applicable GCF result area(s) that the proposed project/programme targets. Indicate for each checked result area(s) the estimated percentage of GCF budget devoted to it. The summed up percentage should be equal to 100%.

Mitigation: Reduced emissions from: ☐ Energy access and power generation: 0 % ☐ Low emission transport: 0 % A.4. Indicate the result ☐ Buildings, cities and industries and appliances: 0 % areas for the ☐ Forestry and land use: 0 % project/programme Adaptation: Increased resilience of: ☒ Most vulnerable people and communities: 25 % ☒ Health and well-being, and food and water security: 20 % ☒ Infrastructure and built environment: 50 % ☒ Ecosystem and ecosystem services: 5 % A.5.1. Estimated mitigation impact (tCO2eq over project lifespan) tCO2eq A.5.2. Estimated adaptation impact 160,000 direct beneficiaries (number of direct beneficiaries) A.5. Impact potential A.5.3. Estimated adaptation impact 1,066,000 indirect beneficiaries (number of indirect beneficiaries) A.5.4. Estimated adaptation impact 6.5 % of the country’s total population (% of total population) A.6. Financing information A. 6.1. Indicative GCF Amount: 10,000,000 Currency: usd Financial Instrument: Grants funding requested (max (If other financial instrument is opted, please specify: _ ) 10M) * Please expand the information if needed.

Amount: 0 Currency: usd Financial Instrument: Grants A.6.2. Indicative co-financing (If other financial instrument is opted, please specify: _ ) * Please expand the information if needed.

A.6.3. Indicative total project Amount: 10,000,000 Currency: usd cost (GCF + co-finance)

a) disbursement A.7. Implementation period: 60 A.7.2. Total project/ programme 240 period: b) repayment period, lifespan if applicable: A.8. Is funding from the A.9. Is the Environmental and ☒ Yes ☒ Yes Project Preparation Social Safeguards Category C or ☐ ☐ Facility needed? No I-3? No The project ESS categorization is C with proposed activities to be considered of low risk with no to minimal adverse impact to the environment or to society. LGCC-3 will A.10. Provide rationale for support climate resilient capacity development, agricultural livelihoods for poor and the ESS categorization vulnerable farmers, and necessary small scale community infrastructure which may (max 100 words) include: domestic water supplies, rehabilitation of near-farm and on-farm water management infrastructure, non-intrusive flood refuges and climate-proofing of other community infrastructure such as rural roads. All sub-projects will be screened for Simplified Approval Process CONCEPT NOTE TEMPLATE V.1.4 GREEN CLIMATE FUND | PAGE 2 OF 6

environmental and social risks using established procedures. Any sub-projects deemed a significant risk with adverse impacts will be excluded.

A.11. Has the CN been ☒ Yes ☐ Confidential A.12. Confidentiality1 shared with the NDA? ☐ No ☒ Not confidential A.13. Executing Entity information NCDDS, Sub-National Administrations food security. Climate trends including greater unpredictability rainy season, increased floods and droughts and higher temperatures are stressing farming systems. Local Governments are responsible to support adaptation but lack capacity and resources. Local Governments Climate Change Phase 3 (LGCC-3) Objective: “Cambodia's A.14. Project/Programme local governments are fully enabled to play their role in building climate rationale, objectives and approach of resilience and fostering sustainable development” will be achieved through programme/project (max capacity development, integrating science-based and participatory adaptation planning 200 words) and Performance Based Climate Resilience Grants to local governments. NCDDS will manage the grants and will monitor E&S risks. UNCDF will support capacity development and knowledge management.

B. Project / Programme information B.1. Context and Baseline (700 words) Please see Annex 3 for information and maps supportive of the climate rationale including impacts, vulnerabilities and opportunities for improving resilience.

Cambodia is a least developed, predominantly agrarian country with approximately 76%[1] of its 15.85 million citizens living in rural areas which comprise 98% of the country's total landmass.

Cambodia's climate is tropical, 1901-2016 historical data shows mean annual temperatures of 25-27 degrees Celsius, with highs up to 40 degrees Celsius; and mean annual precipitation of 1,840 mm, with highs of up to 5,000 mm. There are two distinct seasons: a monsoonal rainy season (May to October) delivering up to 90% of the country's annual precipitation; and the dry season from November to April. Baseline change to the climate since 1960 include: mean annual temperature increases by 0.8°C, an increase in the frequency of hots days and hots nights and a decrease in frequency of cold days. Mean rainfall trends are not statistically significant, with some areas experiencing increases and others decreases.[2]

Expected climate projections for Cambodia based on multi-model ensembles, under the RCP 8.5 in 2040-2059[3] include mean annual temperature will rise by 1.54 degrees Celsius; annual precipitation will rise by 83 mm; annual cooling degree days will rise by 1,123 mm; and the annual maximum 5-day rainfall will rise by 34 mm. All projections indicate hot days increasing by 14-49% and hot nights increasing by 24-68% with drastic decreases in cold days and nights and monsoonal rain increases.

1 Concept notes (or sections of) not marked as confidential may be published in accordance with the Information Disclosure Policy (Decision B.12/35) and the Review of the Initial Proposal Approval Process (Decision B.17/18). Simplified Approval Process CONCEPT NOTE TEMPLATE V.1.4 GREEN CLIMATE FUND | PAGE 3 OF 6

Many of the key climate stressors impacting Cambodia are already prevalent from recent observations[4] and include increased: temperatures, evapotranspiration, drought, frequency intensity of extreme weather events (especially tropical storms), flooding, sea-level rise, and changes in rainfall patterns.

Cambodia has a climate dependent economy and as such, climate change acts as a threat multiplier impacting poverty, nutrition, agricultural dependence, settlements in flood-prone areas, public health and ecosystems. Agricultural and fishery activities comprise about 27% and 12% of GDP respectively[5] and are essential for food security and livelihoods. Although Cambodia has experienced a steady GDP of 8% over the last two decades owing growth in the garment export and tourism industries[6] drastic climate changes, coupled with one of the lowest adaptive capacities in South East Asia[7], and poor infrastructure have resulted in increased vulnerabilities. The Global Climate Risk Index now ranks Cambodia as the 14th most climate risk prone country in the world[8]. Based upon these and other impacts, climate change may reduce the country's annual average GDP growth by 6.6% and absolute GDP by 0.4% in 2020, by 2.5% in 2030, and up to 9.8% in 2050[9], in addition to threatening lives, livelihoods and ecosystem health.

Climate risks for agriculture are numerous with traditional farming systems under increasing stress due to disruptions seeing the wet season becoming shorter but more intense resulting in floods, and the dry season becoming longer resulting in water shortages, dry spells and the emergence of pests and diseases. Drier conditions combined with changing rainfall patterns lead to decreasing crop production and damaged or degraded agricultural land. This is particularly significant as rain-fed agriculture is a key component for most rural households unable to access or afford irrigation infrastructure. For example, rice is the predominant staple and is 80% rainfed, however with greater unpredicatablity seasons, farmers are unable to plan effectively - to plant, fertilise and harvest at optimal times. According to some studies[10], this could lead to 9.9% losses in wet season yields and 7.7 % loss in dry season yields by 2050, respectively. Other risks include increases in disease and pests impacting crop cycles and losses, and requiring farmers to invest further in crop additives such as pesticides, which may be damaging to land and water resources. Livestock farming, mainly poultry and pigs, is an important supplementary income source for land-poor families which are now vulnerable to high temperatures, water shortages and increased spread of disease. The impacts include loss of household income through livestock deaths or under-market sales.

Climate risks impacting water resources further increase vulnerability for agriculture, fisheries and related food security and livelihoods, in addition to impacting ecosystems health through flow regime alterations and saline intrusion. Irrigation systems are often degraded and lead to inefficient water use and shortages of water for domestic needs and for ecosystems health. Reduced surface water availability can lead to unregulated and unmonitored ground water extraction which may compromise both the quality and quantity of water for consumption by humans and livestock, as well as crop production. On the other hand, increased intensity of storms and wet season floods result in loss of life and crops and damage to rural infrastructure including rural roads and bridges. It is estimated that floods kill 100 people annually and cause agricultural losses of $100-170 million each year[11]. In 2009, impacts from Typhoon Ketsana resulted in 14 of 25 provinces reporting that their water supply and sanitation systems were damaged or washed away, while the 2013 flash foods affected 20 out of 24 provinces, totaling 377,354 households, and resulting in 168 deaths.[12] In coastal areas and the lower Mekong river system, sea level rise and saltwater intrusion similarly threaten livelihoods and ecosystems health by contaminating freshwater resources and degrading land resources.

Simplified Approval Process CONCEPT NOTE TEMPLATE V.1.4 GREEN CLIMATE FUND | PAGE 4 OF 6

While better-off households may be able to overcome some of these challenges, the poorest households in the most climate-sensitive districts will become increasingly vulnerable and find their rural livelihoods are no longer sustainable. This may lead to increased rural to urban migration or seeking work in neighbouring countries[13].

LGCC-3 will therefore target climate vulnerable Districts to improve their local adaptive capacities in addressing the climate hazards evidenced. 15 districts with approx. 160,000 direct beneficiaries (representing the most vulnerable members within specific communes), and overall approx. 1 million indirect beneficiaries (representing the average 15 rural Districts' aggregated population) will be selected based on a Climate Vulnerability Index (CVI) established by the LoCAL team and applied across all Districts in Cambodia to assess climate stressors, risks and impacts. Annex 3 provides climate-induced flood and drought risk maps (Figures 1, 2 and 3); and a map of Cambodia's top 50 highest scoring CVI Districts (Figure 4). The 15 target districts of the LGCC-3 project in Cambodia will be prioritized from the list of the 50 most vulnerable districts.

A low adaptive capacity is the main challenge these vulnerable communities face in becoming more resilient to the hazards outlined. Barriers include: (1) capacity to access and use data and climate science, in combination with participatory methods, to identify climate risks and vulnerabilities and plan effective interventions; (2) minimal financial resources to implement necessary adaptation measures and (3) farm infrastructure in ill-repair (rurual roads, bridges, water retention measures etc). The root causes of these barriers are: regulation, fiscal, social and technological in nature.

Currently, the Cambodian government is transferring many responsibilities for local development planning, investment and service delivery, to District administrations. These include responsibilities for the lowest levels of agriculture extension, irrigation management and women's economic empowerment. At the same time there is a global gap in climate finance to respond to these responsibilities and to address climate hazards. This leaves many districts compromised due to a lack of capacities and resources to protect and build community resilience. Of increased concern is district investment in infrastructure constructed with inadequate climate-proofing as a cost- saving measure.

LGCC-3 will directly address these barriers and gaps by providing adequate capacity and funding at the select district level, with climate adaptation investments integrated into the planning and budgetary cycles of local and district government plans. Investments will complement the national adaptation plan process by responding to climate challenges with locally appropriate solutions and by directing resources to the most vulnerable communities.

LGCC-3 is owned and implemented by the Royal Government of Cambodia (RGC) and aligned with the Cambodian Climate Change Strategic Plan 2014-2023 (CCCSP), the Nationally Determined Contribution 2020 (NDC) to the UNFCCC and SDGs numbers 1, 11 and 13. Proposed interventions of LGCC-3 reflect adaptation priorities in the NDC and are aligned with specific functions transferred to local governments under the RGC's National Programme for Sub-National Democratic Development (NP-SNDD), which also provides the implementation framework for the project. Simplified Approval Process CONCEPT NOTE TEMPLATE V.1.4 GREEN CLIMATE FUND | PAGE 5 OF 6

[1] Index mundi, 2018: Cambodia - Rural population, https://www.indexmundi.com/facts/cambodia/rural- population

[2] World Bank Group, GFDRR (2011). Climate Risk and Adaptation Country Profile: Cambodia.

[3] World Bank Group (2021) Climate Change Knowledge Portal.

[4] AHA Centre JICA (2015) Country Report Cambodia.

[5] US AID, 2019 Fact Sheet: Climate Risk Profile Cambodia

[6] The Kingdom of Cambodia (2020) First Biennial Update Report (BUR).

[7] Arief Anshory Yusuf & Herminia Francisco (2009) Climate Change Vulnerability Mapping for South East Asia.

[8] Germanwatch (2021) GLOBAL CLIMATE RISK INDEX 2021 Who Suffers Most from Extreme Weather Events? Weather-Related Loss Events in 2019 and 2000-2019.

[9] The Kingdom of Cambodia (2020) Cambodia's Updated Nationally Determined Contribution.

[10] US AID, 2019 Fact Sheet: Climate Risk Profile Cambodia.

[11] Rinbo (2009): The Expert Group Meeting on Innovative Strategies towards Flood Resilient Cities in Asia- Pacific Cambodia: Mainstreaming. Flood and Drought Risk Mitigation in East Mekong Delta.

[12] US AID, 2019 Fact Sheet: Climate Risk Profile Cambodia.

[13] ADB (2012): Addressing Climate Change and Migration in Asia and the Pacific.

B.2. Project / Programme description (1500 words) Please see Annex 4, 5, and 11 for supportive information on the LoCAL Facility, PBCRG mechanism, potential investment activities for LGCC-3 and the Implementation Arrangements.

LGCC-3 will enable 15 targeted Districts to effectively respond to identified climate impacts on critical natural and societal systems, by reducing vulnerabilities through climate risk-informed investments. Under LGCC-3 a pre- financing Performance-Based Climate Resilience Grant (PBCRG), will be transferred to the District (Khan) Administration, also referred to as a Sub-National Administration (SNA), upon meeting minimum standards. The PBCRG is managed and monitored by the NCDD-S, and overseen by a Grants Committee, which requires the District to plan and budget for a menu of eligible local climate risk-informed investments, or subprojects. This is embedded in the Enhanced District Climate Change Adaptation Strategy and Investment Programme. The NCDD-S will indicate to the District Administration, to take into account a PBCRG award of between 10% to 20% when developing its annual budget. Therefore budget will reflect the District Administration's 100% budget commitments to climate sub-projects, and the additional PBCRG funds. Simplified Approval Process CONCEPT NOTE TEMPLATE V.1.4 GREEN CLIMATE FUND | PAGE 6 OF 6

Eligible local investments include three types of activities (integrated within these are the GCF's four climate change adaptation result areas):

1. Services for strengthening climate resilience;

2. Climate proofing of infrastructure (to protect infrastructure against climate-related damage); and

3. Infrastructure that directly supports climate change adaptation.

The PBCRG directly supports the District's capacity, planning, budgeting and implementation of local adaptation measures in order to reduce their vulnerability to climate change impacts. The performance of the pre-financing grant is subject to an Annual Performance Assessment (APA) 12-months following disbursement, with the results affecting future grant levels to the District Administration. The PBCRG therefore offers additionality and an incentive for good performance at the local government level.

The PBCRG mechanism, shown by Figure 1, follows a successfully tested process adopted as part of the LoCAL facility in 14 other countries. The operationalization of the PBCRG in Cambodia is explained in the NCDD-S' Simplified Approval Process CONCEPT NOTE TEMPLATE V.1.4 GREEN CLIMATE FUND | PAGE 7 OF 6

“Manual for Performance Based Grants to Sub-National Administers” and follows the specific steps outlined in Annex 4:

Figure 1: The PBCRG cycle

The Local Climate Adaptive Living (LoCAL) Facility of UNCDF was first piloted in Cambodia and Bhutan in 2011 and is now implemented in 14 countries. LoCAL is recognized by the LDC Expert Group (LEG) as a standard mechanism to channel climate finance to local governments. The LoCAL Facility operates in three distinct phases and provides support in M&E, outlined further in Annex 4. In Cambodia LoCAL's phased approach includes:

Phase I Pilot - Testing: in 3 SNAs in the Takeo Province: the Doun Kaev Municipality and the Bati and Bourei Cholsar Districts. Funds supported from CCCA Trust Fund and UNCDF. Total funding amounted USD 164,686

Phase II Consolidating - Expanding: 5 Districts in Battambang: Bavel, Moung Russei, Rokha Kiri, Sampov Loun and Thma Koul. The funding for this LGGC2 and Bridging phase amounts to USD 1.6 Million from SIDA and UNCDF. The total funding for LGCC was further expanded with IFAD-GEF ASPIRE amounting to USD 8,365,516.57.

Phase III Scaling-up - National roll-out: commencing with LGCC-3, focused on 15 of the most vulnerable districts in Cambodia. Funds from GCF, UNCDF and SNAs.

LGCC-3 represents a national scaling-up of the LoCAL model, following successful results from Phases I and III including: 2 districts and 1 municipality in Takeo province, 5 districts in Battambang province, 276 adaptive measures financed, 32 districts added through IFAD's Agriculture Services Programme for Innovation, Resilience and Extension (ASPIRE), the co-financing of eligible infrastructure projects, the integration of climate change and disaster risk management into sub-national planning and budgeting, on average 85% of PBCRG's invested in climate adaptive measures and overall 51% of female beneficiaries accessed PBCRG investments.

Of the total investments made, 229 represented small-scale infrastructure projects mainly entailing construction of elevated roads/bridges an renovation / construction of rural/farm roads; restoration/protection of irrigation canals; and rehabilitation/construction of water gates, sewage systems and community ponds. These types of investments and others mentioned in Annex 4, would be potential sub-projects for financing in LCGG-3.

Lessons learned from the earlier phases to be addressed and integrated into Phase III through LGCC-3 include:

 Local governments have adequate capacity for simple climate change response actions but further capacity development is needed.  Smarter systems are needed to facilitate scale-up, and more cross sector partnerships are needed.  Access to accurate and reliable data, involvement from SNA and local communities is key to ensure adaptation results at the local level. Simplified Approval Process CONCEPT NOTE TEMPLATE V.1.4 GREEN CLIMATE FUND | PAGE 8 OF 6

 An innovative approach like PBCRG requires long-term policy support. To facilitate this, advocacy and knowledge sharing is needed from policy-makers with evidence from the field.

These and other results are provided in the Final Assessment report (2020) “Cambodia's Local Governments and Climate Change Project Bridging Phase”, and the (2018) “Financing local adaptation to climate change : Experiences with PBCRG”, provided as an attachment to this Concept Note. In addition to the web resource: https://www.uncdf.org/local/cambodia. The interventions eligible for PBCRG finance are of proven effectiveness and data on costs and benefits are available.

At scale, the LoCAL mechanism has transformative potential as seen in other applications such as Bhutan which started in 2 districts and has now scaled to 100 in Phase II, with plans to cover all 203 districts in Phase III. In Cambodia this transformative capacity will enable local governments to develop science-based adaptation strategies, mainstream resilience in their plans and budgets and invest to build resilience in groups and communities that lack the resources needed to adapt independently. To some extent this has already been evidenced by a successful transition from Phase I to Phase III, and by the 32 districts added through IFAD's ASPIRE subsequent to the observed success from Phase II in Battambang, as well as by the alignment of Sustainable Resilient Livelihoods (SRL) programme, a UNDP programme with LGCC.

LGCC-3 will be a stand-alone project within the framework of the NP-SNDD, and deliver three Components:

Component 1: Awareness and response capacities of local governments, communities and local actors strengthened and local adaptation responses promoted.

Capacity development activities of local administrators to mainstream climate change will be aligned with the NP- SNDD. A mixture of traditional training and professional development support to key staff members will be provided and will include use of e-learning.

Capacity development sub-activities will comprise (1) concept note on the CCA role of local administrations; (2) training needs assessment for this role; (3) course development; (4) testing in PBCRG Districts; and (5) mainstreaming to non-PBCRG Districts. Effectiveness will be monitored using a CCA mainstreaming index which forms part of the Annual Performance Assessment (APA).

LGCC-3 will share knowledge through web content, audio-visual and printed documents and through the LoCAL network. Simplified Approval Process CONCEPT NOTE TEMPLATE V.1.4 GREEN CLIMATE FUND | PAGE 9 OF 6

Component 2: Adaptation to climate change is integrated in District planning and budgeting, and investments and adaptation measures are implemented locally.

Enhanced District Climate Change Adaptation Strategy (EDCCAS) will be prepared including (1) GIS mapping of soils, hydrology, agriculture production, known climate risks, etc; (2) analysis of meteorological data and predicted future trends; (3) participatory vulnerability reduction analysis (VRA);(4) key climate vulnerabilities (communities, locations, sectors, infrastructure, ecosystems); (5) response strategies; and (6) multi-year sub-projects targeting the most vulnerable communities. The purpose of the EDCCAS is to enable optimal selection of scientifically evidenced investments for climate resilience, including those financed with GCF funding.

A feasibility study will be designed and the sub-projects will be integrated into the Investment Programme of District and Commune local administrations.

Based on an indication of the PBCRG allocation, the Districts will integrate the sub-projects in their annual budgets which are approved by the District Councils. The Districts will implement through their budget execution processes.

Component 3: The PBCRG is implemented and deployed on a large scale.

See Annex 4 for detailed steps-wise process.

The PBCRG will be allocated through a transparent and objective process overseen by a Grants Committee chaired by NCDD-S leadership with representation of UNCDF, the National Association of Local Governments, the Ministry of Economy and Finance (MEF) and NCSD/MEF. NCDD-S will contract a technical services provider for preparation of the EDCCAS, feasibility study, sub-project design and implementation supervision.

A PBCRG will be allocated to eligible Districts based on set eligibility criteria including, the Climate Vulnerability Index (CVI) developed by National Council for Sustainable Development / Ministry of Environment (NCSD/MoE). Grant awards will be calculated using a 75% base allocation, 25% population allocation and 25% APA score allocation.

PBCRG Minimum Conditions (MC) thresholds include: a) for first year access: the District has established a Climate Change Working Group under the leadership of the Board of Governors; b) for second year access: Simplified Approval Process CONCEPT NOTE TEMPLATE V.1.4 GREEN CLIMATE FUND | PAGE 10 OF 6 additional to first year MC, Council approval of the EDCCAS; and c) for subsequent years access additional to first and second year MC, a minimum acceptable CCA Mainstreaming Index score.

Sub-project proposals will be screened by the Grants Committee for eligibility. Eligible expenditure with PBCRG funds include: (1) preparation of EDCCAS; (2) design of sub-projects to build resilience of identified highly climate-vulnerable groups and communities; and (3) sub-projects. Sub-projects will address GCF adaptation strategic impact Area 1: health, food and water security, including emergency and disaster preparedness; Area 2: Climate resilience of livelihoods; Area 3: climate-proofing critical infrastructure (incremental costs); and Area 4: climate resilient ecosystems and ecosystem services.

Performance measures with equal weighting include: (1) quality of PBCRG outputs; (2) quality of PBCRG implementation process; (3) number, targeting of most vulnerable groups and participatory evaluation by the beneficiaries; and (4) Climate Change Mainstreaming Index.

An independent assessor will be contracted for the Annual Performance Appraisal and results will be presented in an annual reflection workshop. The Districts will be encouraged to prepare self-capacity development plans based on weaknesses identified.

Component 4: Project Management.

Both NCDD-S and UNCDF will provide management support to the overall activities under this proposal. Project staff, including administrative, assistant, finance, and support personnel, are identified under this component. Activities supported under this component may include but not limited to preparation of work plans, reports, procurement documents, records management, and liasion with consultants and auditors.

Component 5: Monitoring and Evaluation

Monitoring and Evaluation (M&E)

M&E will be conducted by NCDD-S with support from UNCDF. Monitoring spreadsheets will be regularly updated by District Administrations with verification through field visits. Quality of implementation, beneficiary satisfaction and institutional capacity developed will be measured by independent assessors in the APA. Household adaptation and awareness will be measured through an Impact Survey. There will be an independent evaluation at mid-term and end of project.

UNCDF will assist NCDD-S to align LGCC-3 M&E with the Assessing Climate Change Adaptation Framework (ACCAF) outlined in Annex 4. The ACCAF provides a data tracker which is applied in all LoCAL programme countries and builds on evaluations of the PBCRG mechanism and its implementation. This contributes to transformational change. Simplified Approval Process CONCEPT NOTE TEMPLATE V.1.4 GREEN CLIMATE FUND | PAGE 11 OF 6

Implementation Arrangement

Please see Annex 4 for an Implementation Arrangement diagram.

A Steering Committee will oversee implementation, NCDD-S as the Accredited Entity is the lead implementing agency for LGCC-3, directly to the GCF's Board for the overall management of LGCC-3, as well as for the financial, monitoring and reporting aspects of project activities. There is a strong synergy for NCDD-S in also managing SRL and ASPIRE, as well as other projects that transfer development resources to SNA's within the framework of the NP-SNDD. NCDD-S will directly execute Components 2 and 3 through the Project Management and Support Division.The SNA (mainly the District Administration, which oversees the Commune level) will comply with the PBCRG process, implement investments and manage the implementation of works and services associated with sub-projects and sub-grants to the Commune Council. UNCDF will be the key executing partner for Component 1 and Component 5. NCDD-S will execute Components 2 and 3 of LGCC-3 with UNCDF Technical Assistance and Quality Assurance through its Programme Management and Support Division (PMSD) which has experience of implementing PBCRG facilities under the previous LGCC projects.

Risk Management

Identified medium-level technical and operational risks for LGCC-3 based include (1) planning delays; (2) implementation delays; (3) inadequate technical quality; (4) outputs not cost-effective and / or do not address legitimate climate change risks; and (5) outputs not sustainable. These risks will be mitigated with the support of LoCAL expertise from wider programming and technical assistance to ensure effective measures are in place to prevent financial risk. Risk of abuse of funds will be mitigated through monitoring of procurement procedures. The residual risk of non-transparent allocation of grants is low - grant allocations will be overseen by the Grants Committee. For efficient use of GCF resources, relevant lessons learned from LoCAL programming will be integrated and addressed in LGCC-3. The Example Risk Analysis and its mitigation plan of the previous phase of LGCC has been attached in annex 8: LoCAL (LGCC-II) Project Risk Analysis.

B.3.Expected performance against the GCF investment criteria (1000 words)2 The expected impact of LGCC-3 is to strengthen the climate resilience of communities and local economies. LGCC3 will deploy in 15 vulnerable rural Districts in Cambodia. The project is expected to benefit - directly and indirectly - those residing in Districts' administrative boundaries where the LGCC3 is active. The estimate population for 15 target Districts in Cambodia is approx. 1,066,000 - based on the average population size of rural Districts in Cambodia (and as per the most recent National Census available - 2019). Out of the Districts population, it is estimated that, by the end of the project's completion, 15% will directly benefit from at least one investment and/or activity, i.e. approx. 160,000 people, and 100% will indirectly benefit from at least one investment and/or activity and, more generally, from project's outputs, as LGCC-3 will extend benefits of improved

2 For more information please refer to Annex XIV of document GCF/B.07/11 Simplified Approval Process CONCEPT NOTE TEMPLATE V.1.4 GREEN CLIMATE FUND | PAGE 12 OF 6

CCA mainstreaming to the whole population of the target Districts. The estimate on number of direct beneficiaries is provided based on collected data on beneficiaries throughout LoCAL implementation in Cambodia and globally.

LGCC-3 will increase resilience and enhance the livelihoods of vulnerable communities by investing in profitable and climate-smart agricultural practices and initiatives, which will include climate adaptive rice agriculture, other field crops, vegetable production for own consumption and for the market and small livestock activities. The benefits will be in terms of increased cash income, increased availability and quality of food for own consumption, improved food security and reduced vulnerability to climate shocks and long-term effects of climate change. Districts' inhabitants will benefit from investments to provide access to clean, secure, climate-resilient domestic water supplies to increase resilience of health and well-being. Approximately 100 critical infrastructure assets will be made more resilient to climate variability and change. Resilience of ecosystems in locations of critical importance to vulnerable communities will be improved with expected benefits in terms of reduced climate-related costs from soil erosion, flood hazards and fire damage and increased income and job opportunities for ecosystem- based livelihoods because of improved ecosystem services and goods available to local communities. The whole population of the target Districts will benefit from improved climate change adaptation planning and mainstreaming in investment programmes and execution, as result of capacity building and targeted TA[1].

Alignment with GCF investment criteria

LGCC-3 contributes to a Paradigm Shift potential by increasing climate resilient sustainable development through scaling up and institutionalising PBCRG. The PBCRG mechanism has a track record in creating an enabling environment for local governments to embed resilience and mainstream adaptation into their mandated local development planning and budgeting activities. The long-term aim is that climate finance will be available to all climate-vulnerable local governments nationwide. This shift is based on the expectation that:

1. LGCC-3 will form part of the RGC's National Programme for Sub-national Democratic Development (Phase 2), known as NP-2. Under NP-2 the capacity and resources available to local governments will be scaled up very substantially. The size of the PBCRG is selected to maintain reasonable proportionality to the SNA's own resources now (which are much smaller than SNA's resources will be in the future). Hence, in the future, SNA's will be able to fully fund climate resilience investments from their regular budget resources (own source revenues and fiscal transfers). However, this is a longer-term outlook and likely to take the full period of the NP-2 (to 2030) rather than by the end of LGCC-3. Focusing on performance- based and bottom-up approaches will, in turn, build legitimacy, opportunities, and, ultimately, technical, institutional, and operational sustainability at local levels while encouraging improvements overtime and encouraging private sector co-finance of enhanced resilience. The project will stimulate demand for services in new areas for private sector to enter new service sectors and markets and can also encourage new technical specifications for technologies that are climate oriented. Private and private-public climate- resilient investments will emerge from the planning process, particularly in agricultural activities. A study on leveraged finance as a result of UNCDF Local Development Fund pilots, such as LoCAL deployment, showed that in 8 out of the 10 countries studied local governments have been supported to deliver service and basic infrastructure. It is estimated that the total funds leveraged by the LDF pilots, where UNCDF made a smaller but crucial contribution over the reviewed period to the tune of 56 million USD (for the 10 countries), was in the region of USD 3.5 billion over the period from the original start of the pilot in Uganda in 1997-2017. Simplified Approval Process CONCEPT NOTE TEMPLATE V.1.4 GREEN CLIMATE FUND | PAGE 13 OF 6

2. recapitalization will take place at project mid-term with the aim of securing project continuation finances from multilateral donors and private sector stakeholders. Given the USD 7.8 billion climate funding shortfall required for Cambodia's NDC ambitions which will be implemented by 16 line Ministries, a recapitalisation strategy will be developed at the projects mid-term based on findings of the project mid- term review process. Interaction with other climate finance donors will be ongoing through prior to the project exit at year 5.

The outcomes of the programme will be shared nationally and internationally through capacity building program and knowledge sharing platform. Regulatory framework and policies within the NP-SNDD will be strengthened with the integration of adaptation.

Co-benefits of LGCC-3 investments are expected to include (1) improved conditions and reduced risks for local economic development; (2) improved local governance through participation of vulnerable communities in planning and implementation; (3) improved environmental management of water resources, sustainable agriculture practices, renewable energy technology, sustainable land use and improved carbon storage capacity; and (4) improved gender equity and women's economic empowerment.

LGCC-3 will target investments to groups and communities that lack the resources needed to build climate resilience to respond to the needs of recipients.

LGCC-3 is a country-owned project designed and implemented by NCDD-S as the National Implementing Entity. LGCC-3 is endorsed by the NDA and aligned with the CCCSP, the INDC, the updated NDC 2020, and the NSDP.

The interventions eligible for PBCRG financing are of proven efficiency and effectiveness. Yet, a part of the programme is extended for result-based payments, which is a relevant incentive model in climate finance to bring about both liquidity for the investment but also knowledge and capacity that derives from the design and implementation of those measures at local level. Phase I and II in Cambodia has demonstrated that if targeted TA is delivered and PBCRGs are put in place, performance improvements in enhanced resilience will be possible and climate funds will be effectively and efficiently channelled to the local level with local ownership of climate issues. Due to the economic situation of the target communities, these interventions require and fully justify the use of non-repayable grants. More specifically, feedback from current initiatives shows that: (1) The PBCRG incentive system works and contributes to a better consideration of climate issues at the local level, particularly as grant allocations are calculated taking account of performance scores for the previous year; (2) Integrating the mechanism into government systems avoids the creation of parallel planning and funding management systems; and (3) Integration of the mechanism into government systems allows efficient scaling (geographic expansion) and facilitates national ownership. The outcome from the project will contribute to improving and building the public goods and services which aiming at responding to the needs of the targeted beneficiaries and improving resilience of their livelihood (including increasing their income and improving environment ) as well as building resilience of local infrastructure and institutional government to respond to climate crisis.

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[1] For this calculation, household members of households directly using project outputs have been considered as direct beneficiaries.

B.4 Stakeholders consultation and engagement (300 words)

Please see Annex 4 Figure 4 for the implementation arrangements, and Annex 4 Figure 1 for flow of funds diagram (or Annex 5 flow of funds).

LCGG-3 has been developed through dialogue with a diverse group of stakeholders in national and local government, development partners and civil society organisations (CSOs). The proposal reflects the experiences and lessons learned from the LGCC-1 and LGCC-2 projects (see LGCC Final Assessment 2020 for the list of villagers and women's groups engaged), as well as SRL, ASPIRE, and other development projects within the framework of the NP-SNDD. The current proposal builds upon a Concept Note submitted to GCF by Ministry of Environment as NDA in January 2017.

Although the Grants Committee currently does not seat CSOs, the process of sub-project selection is based on participatory community engagement and local planning. In addition, part of the performance measures and the APA of LGCC-3 includes project beneficiary evaluation and affirmative gender inclusion percentages.

The LGCC-3 design was presented and discussed in a stakeholder workshop on 13 February 2020. Participants included representatives of the NCSD/ MoE (the NDA), NCDD-S, Ministry of Economy and Finance (MEF), local governments, development partners and NGOs.

NCDD-S will continue to discuss with stakeholders as the Concept Note is developed into a funding proposal. In particular, NCDD-S will ensure alignment with national climate change response strategy through National Council for Sustainable Development and with sub-national financial management policy through MEF. At the same time, NCDD-S is conducting an inclusive process for development of the next phase of NP-SNDD which identified climate change mainstreaming as an important cross-cutting issue. NCDD-S will continue to discuss with development partners including seeking co-financing opportunities for LGCC-3.

C. Indicative financing information (max. 2 pages) C.1. Financing by components Please provide an estimate of the total cost per component and disaggregate by source of financing. Indicative GCF financing Co-financing cost Component Output Amount Financial Type Amount Financial Name of (USD) (USD) Instrument (USD) Instrument Institutions 1. The 1.1 Build 741,650 741,650 grant 0 other awareness Capacity of Simplified Approval Process CONCEPT NOTE TEMPLATE V.1.4 GREEN CLIMATE FUND | PAGE 15 OF 6 and local response administration capacities s to of local mainstream governmen climate ts, change in NP2 communiti es and local actors are strengthen ed and local adaptation responses promoted 1. The 1.2 Develop 37,500 37,500 grant 0 other awareness and implement and an index of response sub-national capacities CCA of local mainstreaming governmen ts, communiti es and local actors are strengthen ed and local adaptation responses promoted 1. The 1.3 Share and 162,500 162,500 grant 0 other awareness exchange and knowledge of response climate capacities change of local response with governmen local ts, administration communiti s es and internationally local actors are Simplified Approval Process CONCEPT NOTE TEMPLATE V.1.4 GREEN CLIMATE FUND | PAGE 16 OF 6 strengthen ed and local adaptation responses promoted 1. The 1.4 Direct 50,667 50,667 grant 0 other awareness Fixed Cost for and project response implementatio capacities n of local governmen ts, communiti es and local actors are strengthen ed and local adaptation responses promoted 1. The 1.5 UNCDF 126,000 126,000 grant 0 other awareness Coordination and and TAQA for response component 1 capacities of local governmen ts, communiti es and local actors are strengthen ed and local adaptation responses promoted 2. 2.1 15 292,750 292,750 grant 0 other Adaptation Districts to climate prepare change is Enhanced Simplified Approval Process CONCEPT NOTE TEMPLATE V.1.4 GREEN CLIMATE FUND | PAGE 17 OF 6 integrated District in District Climate planning Change and Adaptation budgeting, Strategy with and assistance investment from technical s and services firm adaptation measures are implement ed locally 2. 2.2 Projects 429,000 429,000 grant 0 other Adaptation Designed and to climate Integrated in change is DIP integrated in District planning and budgeting, and investment s and adaptation measures are implement ed locally 2. 2.3 15 District 5,316,00 5,316,00 grant 0 other Adaptation Administratio 0 0 to climate ns implement change is priority CCA integrated activities in District through their planning regular budget and execution budgeting, processes and investment s and adaptation measures are Simplified Approval Process CONCEPT NOTE TEMPLATE V.1.4 GREEN CLIMATE FUND | PAGE 18 OF 6 implement ed locally 2. 2.4 Direct 50,667 50,667 grant 0 other Adaptation Fixed Cost for to climate project change is implementatio integrated n in District planning and budgeting, and investment s and adaptation measures are implement ed locally 2. 2.5 UNCDF 130,000 130,000 grant 0 other Adaptation Coordiation to climate and TAQA for change is component 2 integrated in District planning and budgeting, and investment s and adaptation measures are implement ed locally 3. The 3.1 11,000 11,000 grant 0 other Performan Performance ce-Based Based Grant Climate Board formed Resilience and approves Grant framework for Facility PBCRG (PBCRGs) is implement Simplified Approval Process CONCEPT NOTE TEMPLATE V.1.4 GREEN CLIMATE FUND | PAGE 19 OF 6 ed and deployed on a large scale 3. The 3.2 Districts 10,500 10,500 grant 0 other Performan apply for ce-Based PBCRG Climate Resilience Grant Facility (PBCRGs) is implement ed and deployed on a large scale 3. The 3.3 Grant 8,000 8,000 grant 0 other Performan Allocations ce-Based Approved by Climate PBG Board Resilience Grant Facility (PBCRGs) is implement ed and deployed on a large scale 3. The 3.4 NCDDS 307,500 307,500 grant 0 other Performan monitors ce-Based implementatio Climate n of PBCRG Resilience financed Grant activities Facility (PBCRGs) is implement ed and deployed on a large scale Simplified Approval Process CONCEPT NOTE TEMPLATE V.1.4 GREEN CLIMATE FUND | PAGE 20 OF 6

3. The 3.5 Annual 255,500 255,500 grant 0 other Performan Performance ce-Based Assessment Climate Resilience Grant Facility (PBCRGs) is implement ed and deployed on a large scale 3. The 3.6 Review 326,000 326,000 grant 0 other Performan and Update ce-Based Current Climate PBCRGs Resilience Design and Grant associated Facility Manuals&Too (PBCRGs) ls for scale up is phase and full implement national roll ed and out deployed on a large scale 3. The 3.7 Direct 50,666 50,666 grant 0 other Performan Fixed Costs ce-Based for project Climate implementatio Resilience n Grant Facility (PBCRGs) is implement ed and deployed on a large scale 3. The 3.8 UNCDF 503,000 503,000 grant 0 other Performan Coordiation ce-Based and TAQA for Climate component 3 Simplified Approval Process CONCEPT NOTE TEMPLATE V.1.4 GREEN CLIMATE FUND | PAGE 21 OF 6

Resilience Grant Facility (PBCRGs) is implement ed and deployed on a large scale 4. Project 4.1 174,000 174,000 grant 0 other Manageme NCDDProject nt Costs Staff Costs 4. Project 4.2 NCDD 238,600 238,600 grant 0 other Manageme Project nt Costs Administratio n Costs 4. Project 4.3 UNCDF 75,000 75,000 grant 0 other Manageme Project nt Costs Management 5. 5.1 300,000 300,000 grant 0 other Monitorin Monitoring g and and Evaluating Evaluation , and Costs Knowledg e Manageme nt 5. 5.2 Align 144,500 144,500 grant 0 other Monitorin LGCC-3 with g and the Assessing Evaluating Climate , and Change Knowledg Adaptation e Framework Manageme (ACCAF) nt 5. 5.3 External 93,000 93,000 grant 0 other Monitorin Project g and Monitoring Evaluating and , and Evaluations Knowledg e Simplified Approval Process CONCEPT NOTE TEMPLATE V.1.4 GREEN CLIMATE FUND | PAGE 22 OF 6

Manageme nt 5. 5.4 UNCDF 166,000 166,000 grant 0 other Monitorin Coordiation g and and TAQA for Evaluating M&E/KM , and Knowledg e Manageme nt 10,000,00 Indicative total cost (USD) 10,000,000 0 0 For private sector proposal, provide an overview (diagram) of the proposed financing structure. C.2. Justification of GCF Funding Request (500 words) The importance of the sub-national level is recognized in the area of adaptation to climate change (Paris Agreement Articles 7 and 11) but local governments in Cambodia lack resources and capabilities to play their full role in building resilience. The total budget allocation of all levels of sub-national administration in Cambodia is currently around 2% of GDP. Rural Districts have low potential for revenue raising due to the weakness of the rural economy and lack of commercial activity. RGC is committed to increasing fiscal transfers but the local governments' budget needs are also growing. RGC faces the need to re-prioritise spending in response to the COVID-19 crisis. The need for investments and services at local level is likely to exceed available funds for the foreseeable future.

LGCC-3 will finance incremental costs of increasing climate resilience, that local governments cannot finance from their general revenues, including livelihoods, health and wellbeing of the most vulnerable groups and communities, infrastructure and ecosystems. These investments are characterized by high social returns but low cash returns. The investments are not likely to attract private finance because of perceived high risks and the lack of cashflow generated. However, resilient livelihoods, infrastructure and ecosystems will reduce the risks for complementary private investments, for example loans for farm improvements, increased trading activity, agriculture processing etc.

The existence of a proven, effective modality of financing sub-national climate change adaptation is key to mobilising funds from external donors, as shown by LGCC which led to mobilization of larger amounts from IFAD and from UNDP / GEF.

Cambodia's local governments are not permitted to borrow directly. The RGC debt management strategy seeks to mix loan and grant funding for social projects that do not generate cash revenues. Grant financing is the most appropriate instrument for pro-poor and pro-vulnerable investments proposed for LGCC-3.

C.3. Exit Strategy and Sustainability (500 words) Simplified Approval Process CONCEPT NOTE TEMPLATE V.1.4 GREEN CLIMATE FUND | PAGE 23 OF 6

The sustainability strategy of LoCAL relies on its ownership by national stakeholders through a gradual deployment in each participating country:

 Phase I: Testing. The PBCRG mechanism is tested in a small number of local governments (3 Districts in the LGCC pilot) for 1-2 investment cycles;  Phase II: Consolidate. PBCRG are deployed to at least 5-10 local governments, in different regions and / or ecosystems. In Cambodia, LGCC-2 reached 8 Districts with further scale-up as the PBCRG mechanism was adopted by the SRL (10 Districts) and ASPIRE (32 Districts).  Phase III: Systematize. The PBCRG are scaled up so that the targeting framework is nationwide and all local governments are considered based on vulnerability and financing need.

GCF funding will accelerate the deployment of the mechanism. Sustainability will be ensured as (i) institutional processes for sub-national CCA mainstreaming will be in place; (ii) capacities of local governments will be strengthened; iii) better management of climate risks will make local investments more attractive to financial institutions; iv) lessons learned will facilitate further improvement of the methodology.

Throughout the implementation of the program, emphasis will be placed on the mobilization of additional domestic and external resources and on the ownership of processes by RGC, local governments and communities to secure their sustainability.

Internationally, LoCAL is testing approaches to bring private finance to support climate change adaptation in partnership with local governments. It is intended to introduce such approaches to Cambodia at an appropriate stage.

At the same time, NCDD-S is exploring a public-private partnership with a financial institution on producing other financing mechanisms that can be deployed at the local government in harmonization with the existing PBCRG mechanism in order to leverage the financial arm of private sector and attracting the participation from private actors.

LGCC-3 will be central to the climate change mainstreaming strategy of the NP-SNDD-2, which will have a ten- year timeframe. Therefore, implementation of the strategy and monitoring of results are expected to continue after the LGCC-3 investment phase is completed.

D. Annexes

☒ ESS screening check list (Annex 1)

☐ Map indicating the location of the project/programme (as applicable) ☐ Evaluation Report of previous project (as applicable) Simplified Approval Process CONCEPT NOTE TEMPLATE V.1.4 GREEN CLIMATE FUND | PAGE 24 OF 6

Annex 1: Environmental and Social Screening Checklist3 Part A: Risk Factors Please indicate your answers to the questions below and provide an explanation on the response selected. In cases when the TBD response has been selected please explain briefly why you are not able to determine now and when in the project cycle the question will be addressed. If the criteria is not applicable to the project you may write N/A in the justification box. Risk Factors YES NO Will the activities involve associated facilities and require further ☐ ☒ due diligence of such associated facilities? No associated facilities (not funded by the project, but that would not have been constructed if the project did not exist) are needed for project viability.

Will the activities involve trans-boundary impacts including those ☐ ☒ that would require further due diligence and notification to affected states? Works closely adjacent to international borders will be excluded. Project areas are expected to be wholly or almost wholly within the catchment of the Mekong River system, with outflows to Vietnam from the south of Cambodia. Because of the large volume of these outflows and the small scale of proposed interventions, no trans-boundary impacts are foreseen.

Will the activities adversely affect working conditions and health ☐ ☒ and safety of workers or potentially employ vulnerable categories of workers including women and children? Project activities will primarily support independent smallholder farmers. Some project activities will involve small scale construction works of short duration, with small workforces. NCDD-S and SNAs are the grant managers and will not directly manage those workers. The construction works will be sub-contracted. Employers will be required to comply with Cambodian labour laws and occupational health and safety standards, which forbid child labour and protect the rights of women and men workers, and with the Environmental and Social Safeguards Policy for Sub-National Democratic Development which has been reviewed and found compliant with GCF requirements.

Will the activities potentially generate hazardous waste and ☐ ☒ pollutants including pesticides and contaminate lands that would require further studies on management, minimization and control and compliance to the country and applicable international environmental quality standards? No project activities are expected to generate hazardous waste. Construction contractors will be responsible for appropriate management of (non-hazardous) construction wastes and will be required to comply with Sub-Decree 36 on Hazardous Waste Management of Ministry of Environment. Agriculture training will encourage safe and sustainable agriculture production including reduced and safe use of agriculture chemicals, following Cambodian Good Agriculture Practice (CamGAP) standards.

Will the activities involve the construction, maintenance, and ☐ ☒ rehabilitation of critical infrastructure (like dams, water impoundments, coastal and river bank infrastructure) that would require further technical assessment and safety studies? Large dams and other potentially hazardous infrastructure will not be financed. Construction works will be limited to re-habilitation of small-scale water infrastructure, rehabilitation of farm roads and similar.

Will the proposed activities potentially involve resettlement and ☐ ☒

3 In answering this checklist, you may refer to Annex 1: Guidance on Part A ESS Screening of the “Guidelines for the environmental and social screening of activities proposed under the SAP” Simplified Approval Process CONCEPT NOTE TEMPLATE V.1.4 GREEN CLIMATE FUND | PAGE 25 OF 6

dispossession, land acquisition, and economic displacement of persons and communities? Projects requiring land acquisition, involuntary resettlement and / or economic displacement will not be eligible for funding. As infrastructure works will be mainly limited to rehabilitation of existing small-scale structures, this restriction is not expected to present a problem.

Will the activities be located in or in the vicinity of protected areas ☐ ☒ and areas of ecological significance including critical habitats, key biodiversity areas and internationally recognized conservation sites? Sub-projects will be screened for proximity to protected areas and areas of ecological significance. Sub-projects with potential negative impacts on these areas will be excluded.

Will the activities affect indigenous peoples that would require ☐ ☒ further due diligence, free, prior and informed consent (FPIC) and documentation of development plans? Cambodia's indigenous minorities form about 1% of the national population and are located mainly in the northeast of the country. LGCC-3 will not support activities that have potential for negative impacts on indigenous peoples. Indigenous people will share in benefits of small-scale livelihoods and other resilience-building activities that do not pose any risk of negative impacts on indigenous communities or traditions.

Will the activities be located in areas that are considered to have ☐ ☒ archaeological (prehistoric), paleontological, historical, cultural, artistic, and religious values or contains features considered as critical cultural heritage? LGCC-3 will not support any activities in or with potential impacts on areas that are of importance for cultural heritage.

Part B: Specific environmental and social risks and impacts Assessment and Management of Environmental YES NO TBD and Social Risks and Impacts Has the E&S risk category of the project been ☒ ☐ provided in the concept note? Has the rationale for the categorization of the project ☒ ☐ been provided in the relevant sections of the concept note? Are there any additional environmental, health and ☒ ☐ ☐ safety requirements under the national laws and regulations and relevant international treaties and agreements?

Are the identification of risks and impacts based on ☒ ☐ ☐ recent or up-to-date information?

Labour and Working Conditions YES NO TBD Will the activities potentially have impacts on the ☐ ☒ ☐ working conditions, particularly the terms of employment, worker’s organization, non- discrimination, equal opportunity, child labour, and forced labour of direct, contracted and third-party workers? LGCC-3 activities will be implemented in compliance with the Policy on Environmental and Social Safeguards for Sub-National Democratic Development, which has been reviewed and found Simplified Approval Process CONCEPT NOTE TEMPLATE V.1.4 GREEN CLIMATE FUND | PAGE 26 OF 6 compliant with GCF requirements. Under these procedures, all sub-projects will be subject to the initial screening. This screening will exclude any activities found not to be compatible with risk Category C. All relevant Cambodian national laws and regulations will apply.

Will the activities pose occupational health and safety ☐ ☒ ☐ risks to workers including supply chain workers? The identification of risks and impacts is informed by the recent experience of LGCC, ASPIRE, SRL and other projects. Risk Category C will be ensured through screening and excluding of any potentially non-compatible activities. This is not expected to result in any significant limitations to project effectiveness.

Resource Efficiency and Pollution Prevention YES NO TBD Will the activities generate (1) emissions to air; (2) ☐ ☒ ☐ discharges to water; (3) activity-related greenhouse gas (GHG) emissions, (4) noise and vibration; and (5) wastes? Project activities will primarily support independent smallholder farmers. Some project activities will involve small scale construction works of short duration, with small workforces. Employers will be required to comply with Cambodian labour laws and occupational health and safety standards. Project activities will not have negative impacts on working conditions, workers' organisations, non- discrimination or equal opportunities. Child labour and forced labour are illegal in Cambodia and will not be permitted in any project context.

Will the activities utilize significant amount of natural ☐ ☒ ☐ resources including water and energy? Project activities will not result in increased occupational health and safety risks to any workers. Construction contractors will be required to comply with Cambodian labour laws and occupational health and safety standards.

Will there be a need to develop detailed measures to ☐ ☒ ☐ reduce pollution and promote sustainable use of resources? The small-scale infrastructure and livelihoods activities will not result in any significant pollution or GHG emissions. Use of solar pumping for on-farm water management will be encouraged, resulting in reduced GHG emissions. Some activities related to small constructions and organisation of workshops may result in very minor emissions. The project will implement green event measures and the ESS screening will be applied to avoid pollution and minimise emissions from constructions works. Construction contractors will be required to comply with Cambodian environmental laws and regulations on waste generation and management.

Community Health, Safety, and Security YES NO TBD Will the activities potentially generate risks and ☐ ☒ ☐ impacts to the health and safety of the affected communities? The LGCC-3 activities concern smallholder agricultural livelihoods activities and other small-scale activities with no significant increases in the use of water, energy or other natural resources. Agricultural activities will be screened to ensure that any water withdrawals are within sustainable limits.

Will there be a need for an emergency preparedness ☐ ☒ ☐ and response plan that also outlines how the affected communities will be assisted in times of emergency? Sustainable resource use will be promoted through resilient agriculture livelihoods activities. Environmental screening will be conducted as required by the Policy on Environmental and Social Safeguards for Sub-National Democratic Development. Sub-projects found pose risk of pollution or Simplified Approval Process CONCEPT NOTE TEMPLATE V.1.4 GREEN CLIMATE FUND | PAGE 27 OF 6 non-sustainable use of resources will be excluded. Therefore, the need to develop additional detailed measures to reduce pollution and promote sustainable use of resources is not anticipated.

Will there be risks posed by the security ☐ ☒ ☐ arrangements and potential conflicts at the project site to the workers and affected community? The small-scale activities of LGCC-3 are not expected to generate risks and impacts to community health and safety. Roads rehabilitated under LGCC-3 will be farm roads with very light traffic.

Land Acquisition and Involuntary Resettlement YES NO TBD Will the activities likely involve land adquisition and/or ☐ ☒ ☐ physical or economic displacement? Since the project will not generate any great risks or impacts on the health and safety of the affected communities, there will be no plan prepared for emergency preparedness and response plan. However, project funds may be used to support planning and preparation for climate-related emergency events related to pre-existing risks.

Biodiversity Conservation and Sustainable YES NO TBD Management of Living Natural Resources Will the activities potentially introduce invasive alien ☐ ☒ ☐ species of flora and fauna affecting the biodiversity of the area? Only very light security arrangements will be needed at construction sites etc. These will not pose any risk to workers or the community. The proposed project areas enjoy good peace and security. SNA will inform and consult with local communities to avoid any potential conflicts arising from construction works and will be available to provide conflict resolution if necessary.

Will the activities have potential impacts on or be ☒ ☐ ☐ dependent on ecosystem services including production of living natural resources (eg.agriculture, livestock, fisheries, forestry)? All infrastructure sub-projects will be screened and sub-projects requiring land acquisition / involuntary resettlement / economic displacement will not be funded. As infrastructure works will mainly be rehabilitation of existing small-scale structures, this is not expected to result in any significant limitations.

Indigenous Peoples YES NO TBD Will the activities potentially have any indirect impacts ☐ ☒ ☐ on indigenous peoples, ethnic minorities, or vulnerable and marginalized groups? There are no project activities with the potential to introduce invasive species.

Cultural Heritage Yes NO TBD Will the activities restrict access to the cultural ☐ ☒ ☐ heritage sites and properties? The project will support sustainable, small-scale agriculture without harmful impacts on living natural resources. Sub-projects to improve sustainable community management of ecosystem services (e.g. through community forestry, fishery management, eco-tourism etc) will be eligible for funding subject to screening demonstrating no potential negative impacts.

Will there be a need to prepare a chance-find ☐ ☒ ☐ procedure in case of the discovery of cultural heritage assets? Project activities will be small-scale and will not have indirect negative impacts on indigenous peoples. As noted above, indigenous people will benefit from project activities in the areas where they live on the basis of voluntary participation in small-scale activities that d not pose any risk of Simplified Approval Process CONCEPT NOTE TEMPLATE V.1.4 GREEN CLIMATE FUND | PAGE 28 OF 6

negative impacts on indigenous communities and traditions.

Stakeholder engagement and grievance Yes NO TBD Will the activities include a continuing stakeholder ☒ ☐ ☐ engagement procress and a grievance redress mechanism and integrated into the management/implementation plans? LGCC-3 will promote stakeholder engagement at all levels including (1) national stakeholder dialogue around climate change and decentralisation; (2) participation of outside stakeholders in the Grants Committee; (3) participation of local governments and civil society in planning activities at District level; (4) participation of local women and men in vulnerability reduction analysis and in sub-project identification and planning ; (5) community participation in sub-project implementation; and (6) beneficiary participation in sub-project evaluation within the Annual Performance Assessment framework. LGCC-3 grantees (local governments) receive and process grievances through an Ombudsman system. NCDD-S is currently enhancing its institutional grievance mechanism and preparing its institutional arrangement to operationalize the grievance redress manual.

Part C: Sign Off

Sign-off: ESS screening prepared by Mr. Long Viseth, Deputy Director of Program Management and Support Division, NCDDS Mr. Te Rithy, ESS advisor, Program Management and Support Division, NCDDS Ms. Sun Symeat, ESS staff, Program Management and Support Division, NCDDS

Approve by: Mr. Ngan Chamroeun, Head of NCDDS