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Reducing Cambodia’s Emissions Through Decentralized Forest Management (the ‘Project’)

Cambodia | Conservation International (CI)

9 November 2018

Project/Programme Title: Reducing Cambodia’s Emissions Through Decentralized Forest Management (the ‘Project’)

Country(ies): Cambodia

National Designated Authority(ies) (NDA): H.E. Say Samal, Ministry of Environment

Accredited Entity(ies) (AE): Conservation International (CI)

Date of first submission/ version number: [2018-11-9] [V.1]

Date of current submission/ version number [2018-11-9] [V.1]

PROJECT / PROGRAMME CONCEPT NOTE Template V.2.0 GREEN CLIMATE FUND | PAGE 0 OF 12

Notes • The maximum number of pages should not exceed 12 pages, excluding annexes.

Proposals exceeding the prescribed length will not be assessed within the indicative service standard time of 30 days.

• As per the Information Disclosure Policy, the concept note, and additional documents provided to the Secretariat can be disclosed unless marked by the Accredited Entity(ies) (or NDAs) as confidential.

• The relevant National Designated Authority(ies) will be informed by the Secretariat of the concept note upon receipt.

• NDA can also submit the concept note directly with or without an identified accredited entity at this stage. In this case, they can leave blank the section related to the accredited entity. The Secretariat will inform the accredited entity(ies) nominated by the NDA, if any.

• Accredited Entities and/or NDAs are encouraged to submit a Concept Note before making a request for project preparation support from the Project Preparation Facility (PPF).

• Further information on GCF concept note preparation can be found on GCF website Funding Projects Fine Print.

http://www.greenclimate.fund/how-we-work/funding-projects/fine-print/#p_p_id_56_INSTANCE_4CvAHaIYKHcJ_


A. Project / Programme Information (max. 1 page) A.1. Project or programme ☒ Project

☐ Programme A.2. Public or private sector

☒ Public sector ☐ Private sector

A.3. Is the CN submitted in response to an RFP?

Yes ☐ No ☒ If yes, specify the RFP:

A.4. Confidentiality1 ☐ Confidential ☒ Not confidential

A.5. Indicate the result areas for the project/programme

Mitigation: Reduced emissions from:

☐ Energy access and power generation

☐ Low emission transport

☐ Buildings, cities and industries and appliances

☒ Forestry and land use Adaptation: Increased resilience of:

☐ Most vulnerable people and communities

☐ Health and well-being, and food and water security

☐ Infrastructure and built environment

☐ Ecosystem and ecosystem services

A.6. Estimated mitigation impact (tCO2eq over lifespan)

27MtCO2e

A.7. Estimated adaptation impact (number of direct beneficiaries and % of population)

A.8. Indicative total project cost (GCF + co-finance) Amount: USD 30 million A.9. Indicative GCF

funding requested Amount: USD 25 million

A.10. Mark the type of financial instrument requested for the GCF funding

☒ Grant ☐ Reimbursable grant ☐ Guarantees ☐ Equity ☐ Subordinated loan ☐ Senior Loan ☐ Other: specify___________________

A.11. Estimated duration of project/ programme:

a) disbursement period: 6 years b) repayment: not applicable

A.12. Estimated project/ Programme lifespan

6 years

A.13. Is funding from the Project Preparation Facility requested?2

Yes☒ No ☐ Other support received ☐ If so, by who:

A.14. ESS category3 ☐ A or I-1 ☒ B or I-2 ☐ C or I-3

A.15. Is the CN aligned with your accreditation standard?

Yes ☒ No ☐ A.16. Has the CN been shared with the NDA? Yes ☒ No ☐

A.17. AMA signed (if submitted by AE) Yes ☒ No ☐

A.18. Is the CN included in the Entity Work Programme?

Yes ☒ No ☐

A.19. Project/Programme rationale, objectives and approach of programme/project (max 100 words)

Cambodia is a least developed country with high deforestation working towards implementing forest management activities. GCF funds are being sought to build capacity at the provincial level to address the drivers of deforestation in areas not already included in REDD+ projects, by implementing proven decentralization models within 3 target provinces. The Project expects to reduce GHG emissions by 27MtCO2e over 5 years by reducing deforestation within 2.37M hectares of forest land and will provide an adaptation co-benefit of improved ecosystem services to 700,000 people. Conservation International leads as the AE, partnering with the Cambodian Ministry of Environment, World Wildlife Fund, and the Wildlife Conservation Society.

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). 2 See here for access to project preparation support request template and guidelines 3 Refer to the Fund’s environmental and social safeguards (Decision B.07/02)

http://www.greenclimate.fund/documents/20182/184476/GCF_B.12_32_-_Decisions_of_the_Board___Twelfth_Meeting_of_the_Board__8_10_March_2016.pdf/020edfa1-53b2-4abf-af78-fccf5628db2a

http://www.greenclimate.fund/documents/20182/751020/GCF_B.17_18_-_Review_of_the_initial_proposal_approval_process.pdf/559e7b1c-7f34-44dd-9eff-8fa235714312

http://www.greenclimate.fund/gcf101/funding-projects/project-preparation/#step-2-submit-a-ppf-application

http://www.greenclimate.fund/documents/20182/24943/GCF_B.07_11_-_Decisions_of_the_Board_-_Seventh_Meeting_of_the_Board__18-21_May_2014.pdf/73c63432-2cb1-4210-9bdd-454b52b2846b


B. Project / Programme details (max. 8 pages) B.1. Context and Baseline (max. 2 pages) Describe the climate vulnerabilities and impacts, GHG emissions profile, and mitigation and adaptation needs that the prospective intervention is envisaged to address. Cambodia is a rapidly developing LDC with its forest cover plummeting from 70% in 1970 to 57% in 2010 and down to 49% in 20144, representing a steep acceleration in the rate of forest loss and increase of GHG emissions. It has recently been implementing multiple forest conservation activities including REDD+ projects and is pursuing Results Based Payments to reverse these trends. The pattern of deforestation in Cambodia is due to a variety of drivers according to the National Forest Program (2010-2029). Over 1.78 million hectares of Economic Land Concessions (ELCs), or long-term leases, have been granted for agribusiness development (mainly rubber, palm oil, cashew nuts, sugar cane and cassava), raising animals and building factories to process agricultural products. Additional drivers come from the demand for fuelwood5 as an energy source (e.g. agriculture, manufacturing), and also there is high demand for timber for domestic, regional and global markets. Weather-related changes in temperature and rainfall have also been linked to forest desiccation, droughts and forest fires6 and further exacerbate impacts on ecosystem services, with impacts affecting some provinces like Preah Vihear and Mondulkiri, more than others7. As part of the pledge made in its NDC to achieve 60% forest cover under the UNFCCC Paris Agreement, Cambodia added new protected areas and Biodiversity Conservation Corridors (BCC) to its already extensive network of protected areas, resulting in 39% of its land surface (7.4 million ha) under some form of legal protection. The government is also undergoing decentralization, and as part of this has prioritized improved governance and forest management at the provincial level, which will help tackle deforestation at a more appropriate scale. Should forest management capacity be built and take place within key provinces as a model, replication across Cambodia’s entire protected area and biodiversity corridor network would result in around 330,000 ha of avoided deforestation and contribute to some 85 million metric tons of avoided GHG emissions The Project will empower provincial level authorities and improve forest management within three provinces rich in ecosystem services where recent deforestation is among the highest in the country-- Mondulkiri, Preah Vihear and Pursat provinces (see maps in Annex 1). The project seeks to reduce deforestation across an area of 2.37Mha in these three provinces. The target for avoided deforestation through project activities is 128,342 ha. With an average of 212tCO2e of above ground biomass per hectare, this will yield total emission reductions of 27MtCO2e. Though the primary focus of this proposal is climate change mitigation, the forests in each of the Project’s target landscapes also support the resilience of local populations to climate change through hydrological regulation services in the headwaters of important watersheds for agriculture, fisheries and power generation8. Cambodia’s rural poor in these provinces are also reliant on ecosystem services for crop production, fisheries and forest resources, which can provide 85-90% of the primary income of rural households9. Temperature increases and shifts in the timing of rainfall are having an impact on crop production and non-timber forest products in Cambodia in these areas, which is resulting in decreased livelihood opportunities for people living there10. The proposed project will include activities to improve the management of ecosystems and ecosystem services, including monitoring that is implemented with provincial participation. Please indicate how the project fits in with the country’s national priorities and its full ownership of the concept. Is the project/programme directly contributing to the country’s INDC/NDC or national climate strategies or other plans such as

4 Cambodia Cover Report 2014. Cambodian Ministry of Environment. 5 The term fuelwood in this Concept Note is used to refer to both firewood and charcoal. 6 Cambodia Climate Change Strategic Plan (2014-2023), the National REDD Strategy () and the National Protected Area Management Plan (2017-2023). 7 USAID Mekong ARCC Climate Change Impact and Adaptation Study for the Lower Mekong Basin (2013-2014) | U.S. Agency for International Development. 2016. 8 WWF 2013. The economic value of ecosystem services in the Mekong Basin; L. Sáenz et al.(2016) Global Ecology and Conservation, 7: 107–121; GMS EOC ADB (2015) Investing in Natural Capital for a Sustainable Future in the Greater Mekong Subregion. 5 Persson et al. 2010. Ecosystem Services Supporting Livelihoods in Cambodia 10 Mekong Adaptation and Resilience to Climate Change. 2016. DAI and USAID


NAMAs, NAPs or equivalent? If so, please describe which priorities identified in these documents the proposed project is aiming to address and/or improve. Cambodia’s NDC identifies Land-Use, Land-Use Change and Forestry (LULUCF) as a major source of GHG emissions and an area for mitigation action. The intention is to undertake voluntary and conditional actions to reduce emissions by increasing and maintaining forest cover at 60% of the national land area by 2030. The NDC states that emission reductions in the forestry sector will be achieved through a series of actions, several of which are being implemented including: improved management of the forest estate (through reclassification of protected forests and other areas into protected areas and biodiversity corridors, cancelation of 400,000 ha of ELCS, and oversight of monitoring given to MoE to check environmental compliance of production forests)11. The Ministry of Environment has indicated in national REDD+ task force meetings that it has prioritized its next steps towards achieving its NDC, including increased capacity on-the-ground at the provincial level to keep forest intact within prior and newly designated protected areas, utilizing spatial planning to avoid future overlap between protected areas and ELCS, and supporting sustainable livelihood activities to reduce pressure on forest resources. The Project will advance the National REDD+ Strategy 2016-2025 (NRS)12 across a broad scope of activities including (a) improving effectiveness of land use management; (b) encouraging implementation of sustainable forest management activities; (c) promoting stakeholder participation and enhancing capacities, knowledge and awareness to implement the national strategy. The Project is also closely aligned with the National Protected Area Strategic Management Plan (NPASMP)13 which seeks to strengthen decentralized management structures, implement multi-sector sustainable finance systems, increase participation of local communities, increase law enforcement effectiveness (e.g. patrol staffing capacity and numbers, and implement improved forest monitoring methods and technologies). Likewise, opportunities exist for the Project the to link NPASMP goals with NRS goals, particularly around land use monitoring and finance strategies. The adaptation components of Cambodia’s NDC are based on a recognition of the vulnerability to climate change of agriculture, forestry, the country’s infrastructure and human health. Seasonal flash floods and droughts are emphasized as a specific climate threat that will be exacerbated by climate change14. Ecosystem services from forests will be important for providing resilience from these threats. In particular, the forests in each of the Project’s target landscapes provide hydrological regulation services in the headwaters of important watersheds for agriculture, fisheries and power generation15. Co-benefits are estimated for populations surrounding the target areas within each province The contributions of the Project outcomes to key national development and environmental policy and strategy documents is summarized in the table below.

Project Outcomes Key relevant national policies and strategies16

NSD

P

NBS

AP

NSP

GG

CC

CSP

NAP

A

NPA

SMF

NFP

NR

S

Outcome 1. Low emissions Economic Land Concession models are implemented in each of the priority landscapes √ √ √ √ √ √ √

Outcome 2. Improved management of forests contributing to emissions reduction √ √ √ √ √ √ √ √

Outcome 3. Financial mechanism created to cover recurring costs of improved forest management √ √ √ √ √ √ √

Describe the main root causes and barriers (social, gender, fiscal, regulatory, technological, financial, ecological, institutional, etc.) that need to be addressed. Where relevant, and particularly for private sector project/programme, please describe the key characteristics and dynamics of the sector or market in which the project will operate.

11 FLEGT stands for Forest Law Enforcement, Governance and Trade. It aims to reduce illegal logging by strengthening sustainable and legal forest management, improving governance and promoting trade in legally produced timber. 12 Based on the Oct 2016 draft of the NRS, which is currently being finalized 13 The National Protected Area Strategic Management Plan 2017 to 20131 by the Ministry of Environment published 2017. 14 USAID Mekong ARCC Climate Change Impact and Adaptation Study for the Lower Mekong Basin (2013-2014) | U.S. Agency for International Development. 2016. Available at: https://www.usaid.gov/asia-regional/documents/usaid-mekong-climate-change-study-main-report-2013. 15 WWF 2013. The economic value of ecosystem services in the Mekong Basin; L. Sáenz et al.(2016) Global Ecology and Conservation, 7: 107–121; GMS EOC ADB (2015) Investing in Natural Capital for a Sustainable Future in the Greater Mekong Subregion. 16 NSDP = National Strategic Development Plan; NBSAP = National Biodiversity Strategic Action Plan; NSPGG = National Strategic Plan on Green Growth; CCCSP = Cambodia Climate Change Strategic Plan; NAPA = National Adaptation Plan of Action; NPASMF = National Protected Area System Management Framework; NFP = National Forest Program; NRS = National REDD Strategy


The underlying barriers to addressing the drivers of deforestation according to the Forest Investment Program and the National REDD+ Strategy are:

• Limited resources and capacity of provincial government agencies to implement ELC policies and legislation and to monitor activities in ELCs;

• Lack of awareness about options for increasing agricultural production on existing lands. • Lack of access to legal timber and fuelwood sources; • Insufficient awareness about alternative economic opportunities for communities living near to forests; • Limited resources and capacity for on-the-ground forest protection and management at the provincial level; • Lack of institutional structures to coordinate land use, forest cover change monitoring, and otherwise

implementing forest and land use-related policies at the provincial level. The proposed Project activities as described in section B.2 are designed to address these barriers. B.2. Project / Programme description (max. 3 pages)


In terms of rationale, please describe the theory of change and provide information on how it serves to shift the development pathway toward a more low-emissions and/or climate resilient direction, in line with the Fund’s goals and objectives. The goal of the Project is to secure Cambodia’s protected areas and biodiversity corridors in areas not already covered by the three government-approved REDD+ projects, to reverse otherwise accelerating trends of deforestation and to help prepare the country for full implementation of the decentralization policy at the provincial level. The Project will combine interventions to ensure sustainable forest resource policy, direct action to improve forest management and development of financial mechanisms to support long term forest management. The Project will address root causes of deforestation in the country’s protected area system within three priority provinces containing ecosystem service rich protected areas and biodiversity corridors --resulting in a reduction of the deforestation caused by large scale agriculture and fuelwood use for industry. The Project interventions will be implemented by the Ministry of Environment (MoE) with support from Conservation International’s Greater Mekong Program (CI GM), World Wide Fund for Nature (WWF) and the Wildlife Conservation Society (WCS)17. Anticipated results include demonstration of how an LDC with high deforestation like Cambodia can stabilize its rapid rate of forest cover loss, generating lessons learned to expand the provincial-based model to cover the entire protected area and biodiversity corridor system, and ensuring that Cambodia is prepared to access additional forest-based financing including REDD+. The on-the-ground activities to improve forest management will be focused on the country’s protected area network and on three large areas of contiguous forest that the MoE has recently identified as forest and biodiversity “Connectivity Corridors” in the three target provinces: The landscapes are under threat from agricultural expansion by smallholders, clearing of Economic Land Concessions, illegal timber extraction and infrastructure development. In the Northern Plains, clearing of forest for commercial purposes (creating new agricultural lands and/or logging for timber) is the most important threat whereas in the mountainous Cardamoms agricultural expansion by small scale farmers is the principal threat forest managers seek to address. In the Eastern plains, deforestation is caused by a mixture of commercial threats and clearance by smallholders. Cambodia’s rural poor in Mondulkiri, Preah Vihear and Pursat provinces are also highly reliant on ecosystem services provided as co-benefits, such as crop production, fisheries and forest resources, given that they can provide 85-90% of the primary income of rural households 18. By choosing three landscapes and provinces with varying causes of threats to forests, the Project will generate a variety of lessons to help reduce deforestation across the rest of the country. Cross cutting themes that will be relevant throughout all of the outcomes are ensuring gender equality, social and cultural standards in project activities and ensuring long term sustainability of actions undertaken both financially and from a technical perspective. Annex 2 shows a preliminary theory of change indicating how the outcomes and outputs will address the causes of deforestation. The Project will have three outcomes:

• Outcome 1. Low emissions Economic Land Concession models are implemented in each of the priority landscapes;

• Outcome 2. Improved management of forests contributing to emissions reduction; • Outcome 3. Financial mechanisms created to cover recurring costs of improved forest management.

Outcome 1. Low emissions Economic Land Concession models are implemented in each of the priority landscapes (Implementation of activities led by MoE and CI Greater Mekong (CI GM), WWF and WCS). This outcome will address the lack of capacity and resources among national and provincial government agencies to implement ELC legislation and to monitor the activities happening in ELCs. The emphasis will be on improved planning to reduce conflicts over land use and improved monitoring to ensure that activities on ELCs are compliant with legislation. Illustrative activities under this outcome are:

• Spatial planning for multiple land uses including ELC reforestation; • Developing action plans to ensure ELCs provide needed resources but are also in compliance with land and

protected area laws; • Monitoring and enforcement of ELC laws.

17 The Project will also be designed and executed in close collaboration with AFD, UNDP and FAO, who are also developing projects for submission to GCF, to find and enhance synergies between the projects. 18 Persson et al. 2010. Ecosystem Services Supporting Livelihoods in Cambodia


• Increasing coordination with Forestry Administration who grants ELCs. Outcome 2. Improved management of forests contributing to emissions reduction (Executed by MoE and CI GM, WWF and WCS). This outcome will include the on-the ground activities needed to reduce emissions due to forest loss in the protected area network and the three connectivity corridor landscapes. The outputs include improved forest protection and management including provincial level support to enhance protected area management effectiveness, support to community protection and monitoring of forests, delivery of livelihood alternatives for forest dependent people, restoration of degraded forests, and building capacity of national and provincial authorities to improve enforcement in order to ensure proper forest protection and management. Management plans will be developed for key areas of connectivity and protected areas. Improved agricultural management will be promoted, measures to improve fire risk management implemented and permanent water sources will be protected, enhanced and restored. Illustrative activities under this outcome are:

• Supporting livelihood alternatives to deforestation and degradation (including production in community forests and sustainable charcoal production);

• Improving forest protection and management; • Restoring degraded forests in areas connecting protected areas; • Publishing lessons learned and best practices; • Strengthening capacity of authorities and landholders for implementing govt. forest-relevant policies under

decentralization, and for executing climate change mitigation measures. Outcome 3. Financial mechanisms created to cover recurring costs of improved forest management (Executed by CI GM). The Royal Government of Cambodia (RGC) has long recognized the need to establish long term financial mechanisms to support the forest conservation activities, and also recognized the need to have financing available in the future to deal with new or emerging threats. As part of this Project, a Forest Conservation Trust Fund will be set-up19 to provide long term support for forest conservation activities that address such threats and contribute to climate change mitigation and adaptation. Seed capital from GCF will be requested towards this Trust Fund. Once in place, the Project proponents expect that the Fund will attract funding from other donors with a history of supporting conservation activities in Cambodia. The Trust Fund mechanism could also be used as a means of managing and disbursing REDD+ and other forest financing options. CI, for example, has developed a Trust Fund for the Cardamom mountains with 2.5M deposited and generating interest that has the potential to be expanded to cover multiple protected areas and corridors. Illustrative activities under this outcome are:

• Reviewing existing forest funds including Central Cardamom Mountain National Park Trust among others to determine suitability for use as the Forest Conservation Trust Fund

• Creating and capitalizing the Forest Conservation Trust Fund to deal with emerging threats; • Linking to the national REDD+ program and possible results-based payments

This Project will help move the national REDD+ process forward by implementing measures in 3 of the country’s most forested Provinces. Working at the Provincial scale will ensure that the interventions are fully compliant with the RGC’s strategy of decentralization of government function. The provinces where the project will be implemented also fall within the 3 biodiversity conservation corridors that were designated by the RGC in 201720. The project will therefore generate significant biodiversity co-benefits. Describe how activities in the proposal are consistent with national regulatory and legal framework, if applicable. All the proposed interventions are consistent with existing legislation and are designed to support existing laws and policies. Outcomes 1 and 2 in particular are designed to strengthen the implementation of regulations regarding ELCs, protected areas and forest management. In addition, the project is aligned with and will take guidance from the national policy on decentralization and deconcentration through which increased autonomy and responsibility for land use decisions is being passed to

19 Further work is needed as part of the Project preparation to clarify the best option for the Trust Fund. One possibility is to expand the scope of an existing Trust Fund for forest conservation in the Cardamom Mountains so that it can support activities across the whole network of protected areas and connectivity corridors. 20 A sub-decree issued in February 2017 designated 3 Biodiversity Conservation Corridors, with the purpose of protecting forests, biodiversity, and allowing for small scale livelihood activities.


provincial authorities. These authorities are therefore essential for on-the-ground implementation of activities to reduce deforestation and increasing their role in forest protection will be a major focus of this project. Describe in what way the Accredited Entity(ies) is well placed to undertake the planned activities and what will be the implementation arrangements with the executing entity(ies) and implementing partners. Conservation International addresses root causes of climate change and adaptation to its impacts as part of its mission of safeguarding nature for human well-being. CI's mitigation efforts incorporate the conservation and restoration of forest ecosystems, the implementation of climate-smart agriculture and the protection and restoration of coastal ecosystems (blue carbon). CI also supports vulnerable populations' efforts in adapting to climate change via conservation and restoration activities, as well as providing solutions for adaptive and sustainable management of key service-providing ecosystems (i.e. coral reefs, mangroves, and wetlands). CI through its program in Greater Mekong (CI-GM) has worked in close partnership with local communities and government agencies in Cambodia since 2001. CI has an agreement with the RGC to operate as an NGO through a Memorandum of Understanding with the Ministry of Foreign Affairs with the latest three-year agreement signed in December 2016. CI also has a current Memorandum of Understanding with the Ministry of Environment (signed June 2016); and with the Ministry of Agriculture, Forestry and Fisheries (January 2016). CI’s field presence covers the Cardamom mountains, Prey Lang, Veun Sai and Tonle Sap areas in Cambodia, with the Cardamoms found in 2012 to have the lowest deforestation rate in the Northern Cardamom region despite the enormous and increasing pressures it faces. The Central Cardamoms Protected Forest Trust Fund, the first protected area trust fund of its kind in Cambodia was established in 2015 and helps fund the management of area in perpetuity. In terms of implementing arrangements, the Project activities will be implemented by the Ministry of the Environment (MoE) on behalf of the RGC’s National Council for Sustainable Development (NCSD)21. A specific mandate of the NCSD is to lead, manage and facilitate work related to developing a green economy, climate change, biodiversity conservation and biosafety. The inter-ministerial nature of NCSD is intended to foster useful collaboration between Ministries and government agencies in addressing issues and constraints related to the sustainable management of forests. Technical support will be provided by Conservation International Greater Mekong, WWF and WCS. The governance arrangements for the project The exact governance arrangements and contractual arrangements necessary to implement the project will be developed as part of the project design phase. Please provide a brief overview of the key financial and operational risks and any mitigation measures identified at this stage. The financial and operational risks associated with the Project are expected to be low but a full assessment of risks will be carried out as part of the proposal development. The Project will involve several grants from CI to partner organizations. CI has a long history of providing grants to partner organizations and has well-established procedures for managing and monitoring grants to partners that will reduce financial risks associated with the grant making process. Operating projects in rural Cambodia can be challenging due to a lack of buy-in and compliance as well as a lack of capacity, but CI and its partners have well established reputations as trusted advisors and are experienced at operating projects in this environment and this proposed Project is not expected to pose significant risks.

B.3. Expected project results aligned with the GCF investment criteria (max. 3 pages)

The GCF is directed to make a significant and ambitious contribution to the global efforts towards attaining the goals set by the international community to combat climate change, and promoting the paradigm shift towards low-emission and climate-resilient development pathways by limiting or reducing greenhouse gas emissions and adapting to the impacts of climate change. Provide an estimate of the expected impacts aligned with the GCF investment criteria: paradigm shift, sustainable development, needs of recipients, country ownership, and efficiency and effectiveness. The Project is expected to make a significant contribution to reducing GHG emissions from deforestation while also strengthening the protection and management of forest ecosystems that are important for the provision of ecosystem services that provide natural climate change adaptation benefits. Further work will be done on determining impact,

21 The NCSD was established by Royal Decree in 2015 to promote sustainable development aimed at ensuring economic, environmental, social and cultural balance within the Kingdom. The NCSD is chaired by the Minister of Environment with the Prime Minister acting as Honorary Chair and it therefore provides an important forum for ensuring cross sectorial coordination between different ministries on sustainable development issues.


outcome, output and activity indicators during the project development. The figures below are based on initial calculations that will be further refined during the project preparation phase. The GCF Performance Measurement Framework impact indicators that are relevant to the project are as follows:

• 1,780,000 hectares (75% of forest in project area) of ecosystems strengthened, restored and protected from climate variability and change

• 27 million tonnes of carbon dioxide equivalent (tCO2e) emissions avoided and/or GHG removals by sinks (including increased removals) –from REDD+ and other land use activities

• 700,000 beneficiaries of more resilient ecosystem services, based on the number of people estimated to be directly dependent upon protected area forest resources in target provinces, representing approximately 4.4% of Cambodia’s population

Paradigm shift Cambodia’s priority natural forests22 are currently being deforested and degraded by unsustainable extraction of timber and fuelwood as well as agricultural development that increases GHG emissions and damages ecosystem services on which the livelihoods of millions of people depend. The paradigm shift resulting from this project is that empowering and building the capacity of local level authorities promotes and enforces low emissions development. The Project will reverse currently very high deforestation trends by facilitating bottom-up versus top down decision-making by government, which enables more customized and tailored activities to be implemented that are directly focused on meeting the specific deforestation drivers in each place, like fuelwood access and insufficient livelihood alternatives available to communities. Best-practices demonstrated through newly implemented provincial scale models will also serve as proof of concept for ensuring good forest management and governance under decentralization. A set of knowledge outputs will be produced by the Project to disseminate lessons learned so that it can be replicated in other provinces. The Project will offer new evidence that provincial level authority and management over forests can reduce GHG emissions, maintain critical ecosystem services, and increase resilience to climate change. The Project also contributes to GCF’s objective of facilitating the shift of countries to low-emission sustainable development pathways. Without urgent investment in protection, opportunities such as REDD+, ecotourism and other means of securing long term financing for protection will not be possible. Sustainable Development Related to sustainable development, further work to quantify expected co-benefits will be done during the project preparation phase. The Project is expected to help the RGC meet targets related to the UN Framework Convention on Climate Change, the UN Convention on Biological Diversity and the Sustainable Development Goals. Rural poverty is acute in communities living near to Cambodia’s protected areas, suggesting that the planned activities to support alternative livelihoods are likely to be benefiting people who depend directly on the ecosystem services that the Project will help to maintain. The sustainable livelihood interventions that are envisaged will promote a range of activities that strengthen the resilience to climate change of local communities, create jobs and improve livelihoods. Examples of important sustainable development indicators for the project include the following: Economic co-benefits, which include income increases and improved resilience to income shocks for people living in the target landscapes; and a reduced government funding gap for forest protection activities due to contributions from the Forest Conservation Trust Fund. Social co-benefits, which include greater participation of women in income-related decision making and controlling finances at the household level; and strengthened relationships among individuals within project communities due to shared benefits offered as conservation incentives, reduced land conflicts and increased environmental leadership Environmental co-benefits, which include improved soil quality including water retention; avoided erosion and excessive sedimentation due to reduced deforestation; and improved biodiversity conservation by improved species protection Needs of recipient Cambodia’s climate change strategies specifically recognize the importance of protecting the nation’s forests to mitigate GHG emissions but also to maintain the ecosystem services they provide. This Project will help the RGC to achieve this aim. The Project will address impacts of rapid deforestation and increased emissions by improving agricultural practices to prevent forest clearing, improving access to knowledge about how to plan for multiple land uses including Economic Land Concessions, and provides access to alternative livelihoods—all of which reduce pressure on forest resources—

22 The priority natural forests are within the protected area network and the three “connectivity corridors” that the MoE has defined.


while also ensuring that the forests are intact enough to secure financing which will enable longer term protection under an always changing context of future or emerging threats. The Project will also improve the integrity of ecosystems which are of critical importance to the natural resilience and adaptive capacity of most of the Non-Timber Forest Products as well as species of many common wild relatives (CWRs) of cultivated crops. Ecosystems that are degraded, diminishing in area, and under increasing stress (anthropogenic or climate driven) are less resilient to climate changes and shocks23. This project will also help increase ecosystem resilience. Country Ownership: At this stage, two rounds of formal stakeholder consultation have occurred, one with the Project partners and a second round, with more than 60 participants representing more than 15 government agencies, development partners, and NGOS. MoE and CI have also maintained regular discussion with AFD, FAO, and UNDP who are designing complimentary projects for submission to GCF24. More than one year has also been spent working closely with Project partners, including NCSD and MoE. CI has also designed a Stakeholder Engagement Strategy (SES) to ensure systematic coordination with all relevant stakeholders during the project preparation phase and beyond. The SES allows for the consultative process to be ongoing throughout project design, implementation and reporting so that regular updates and assessments of progress can be made. The SES aims to be as inclusive as possible, providing a framework for engagement with actors from government, academia, civil society, the private sector, indigenous groups and any other relevant stakeholders at either the national, sub-national or local level. Efficiency and effectiveness: Estimated cost per tCO2e for the Project = USD30M/ 27 M tCO2e = USD 1.11 per tCO2e This price is well below the typical cost per tCO2e of projects funded by the GCF. Estimated cost per beneficiary for the project = USD30M/700 000 people = USD 42.86 per beneficiary C. Indicative financing / Cost information (max. 3 pages) C.1. Financing by components (max ½ page) Please provide an estimate of the total cost per component and disaggregate by source of financing. For private sector proposal, provide an overview (diagram) of the proposed financing structure The financial elements of the project will be developed in detail during the project design phase. The total budget required from GCF is estimated at this stage as being approximately US$25M grant funding from GCF’s public sector window. The grant funding will include approximately US$27.5 M for Project activities and a US$2.5M contribution for capitalisation of the Forest Conservation Trust Fund (included in Outcome 3).

Component Indicative cost (USD)

GCF financing Co-financing Amount (USD)

Financial Instrument

Amount (USD)

Financial Instrument

Name of Institutions

Outcome 1 5M 4.5M Grant 500K In kind TBD Outcome 2 20M 18M Grant 2M Grant

funding TBD

Outcome 3 5M 2.5 M Grant 2.5 M Trust Fund TBD

23 USAID Mekong ARCC Climate Change Impact and Adaptation Study for the Lower Mekong Basin (2013-2014) | U.S. Agency for International Development. 2016. Available at: https://www.usaid.gov/asia-regional/documents/usaid-mekong-climate-change-study-main-report-2013. 24 MoE and CI expect to continue working closely with other AEs developing projects for submission to GCF to ensure that synergies between the projects are included in the project design. For example, some of these other projects intend to provide loans to private sector companies which could provide an opportunity to encourage more sustainable agricultural practices in ELCs.


Indicative total cost (USD)

30M 25M 5M

C.2. Justification of GCF funding request (max 1 page) Explain why the Project/ Programme requires GCF funding, i.e. explaining why this is not financed by the public and/ or private sector(s) of the country. Cambodia is classified by the U.N. as a Least Developed Country and lacks sufficient public financial resources to implement its climate change and green development objectives. Cambodia has enjoyed strong economic growth over last decade: GDP grew an average annual rate of 8% from 2000 to 2010 and at least 7% since 2011. However, it remains one of the poorest countries in South East Asia with a 2015 GDP per capita estimate of $3,500 (180th in the world) due to a combination of increasing flood and drought risk and weak governance/institutional systems 25 . Cambodia is also ranked number one in overall vulnerability according to Standard & Poor’s (S&P) climate change ranking. Despite this high vulnerability, investment in joint mitigation and adaptation strategies has been minimal in Cambodia. This Project will allow Cambodia to pursue aspirations under its National Forest and REDD+ plans for reversing current trends of high deforestation. It also allows for demonstration of sustainable land concession models—which we expect will inspire investment from other private sector entities in these models. Cambodia has made an impressive commitment to utilizing forests and forest protection as part of its primary strategy to mitigate the impacts from CC, and to also provide co-benefits of biodiversity conservation and livelihood improvements, but needs support to realize these goals while it also aims to take advantage of other financing opportunities, such as REDD+ and ecotourism, which will first require demonstration and documentation of forest protection. Support is needed now to build financial institutions and market opportunities, with strong interest from the government in conservation-related financing as a means of raising revenue for forest protection. Some of this work has begun related to UNREDD with support from the Japan International Cooperation Agency, but it remains focused largely within the Ministry of Agriculture, Forestry and Fisheries, with greater connections needed to Ministry of Foreign Affairs and Economics and Finance to facilitate new forest financing opportunities like REDD+ and water Payments for Ecosystem Services. This project provides an opportunity to demonstrate the much sought after win-win of a developing economy while also retaining its natural capital and particularly forests as part of climate resilience and mitigation efforts. Cambodia is well placed to set a trend for others towards green growth and this project is an opportunity to demonstrate an integrated approach to climate change mitigation and adaptation in large forested landscapes. Describe alternative funding options for the same activities being proposed in the Concept Note, including an analysis of the barriers for the potential beneficiaries to access to finance and the constraints of public and private sources of funding. Currently there are no alternative funding options of the scale needed to secure Cambodia’s priority forests. Other sources of multilateral and bilateral aid are contributing to the protected area system and the RGC contributes core salary and running costs. International NGOs such as CI, WWF and WCS also raise funds from private sources to contribute to the protection of biodiversity and forest ecosystems. However, a significant funding gap remains if threats to forests are to be adequately addressed26. The Protected Area Management Plan as an estimated implementation finance gap of 46.8 million27. Justify the rationale and level of concessionality of the GCF financial instrument(s) as well as how this will be passed on to the end-users and beneficiaries. Justify why this is the minimum required to make the investment viable and most efficient considering the incremental cost or risk premium of the Project/ Programme (refer to Decisions B.12/17; B.10/03; and B.09/04 for more details). The justification for grants and reimbursable grants is mandatory. In the case of private sector proposal, concessional terms should be minimized and justified as per the Guiding principles applicable to the private sector operations (Decision B.05/07). CI is requesting grant funding for this Project due to Cambodia’s status as a LDC, the lack of alternative finance options and because the proposed activities will provide a public good on which the livelihoods of many of Cambodia’s rural poor depend, rather than directly generating revenues. The grant mechanism will be passed on by CI to other organizations involved in delivering the proposed Project activities.

25 Central Intelligence Agency (CIA) The World Factbook 2015 26 The National Protected Area Strategic Management Plan 2017 to 20131 by the Ministry of Environment published 2017. 27 Royal Government of Cambodia (RGC) 2017. National Protected Area Strategic Management Plan 2017-2031.


C.3. Sustainability and replicability of the project (exit strategy) (max. 1 page) Please explain how the project/programme sustainability will be ensured in the long run and how this will be monitored, after the project/programme is implemented with support from the GCF and other sources. Sustainability and replicability of the Project are central to its design. The Project is fundamentally about shifting Cambodia’s current trajectory of rapid deforestation and associated GHG emissions to a new paradigm in which deforestation in the nation’s priority natural forests is reduced through empowered and effective provincial level action. GHG emissions are also reduced and critical ecosystem services are maintained and are more resilient to climate change. Achieving this objective will be an important component of helping Cambodia achieve its green development goals and shifting to a low-emission sustainable development pathway. The Project includes activities to address capacity gaps and to encourage long term behaviour change that will not revert back to unsustainable traditional practices. To ensure sustainability the Project focuses on sustainable finance options at multiple levels. These include continued community livelihood development, public-private conservation agreements, and a trust fund to ensure on-going financing is in place for newly emerging threats. CI, WCS and WWF all have a long and successful history of partnering with the Cambodian government and Cambodian communities to establish groundbreaking sustainable finance solutions such as REDD+, public-private conservation enterprises, and conservation trusts. All the project partners recognize that ensuring financial and technical sustainability of project activities is a vital consideration for the project design. The conservation NGOs have a demonstrated long-term commitment to specific landscapes targeted by the project that has been underpinned by fundraising, and through engaging communities and government in capacity building activities that have facilitated their support and protection of these areas. They are also working directly with the government to set up trust funds and REDD+ projects, so that longer term financing can be secured. But central to all of this is ensuring that the forest can be conserved now while such opportunities can still be pursued. The proposed activities will not necessarily generate revenues to allow for newly emerging threats that may require additional interventions and financial support to implement them. To address these needs, the creation and capitalization of a Forest Conservation Trust Fund is a project output. As part of the project preparation phase we will analyze whether this is best achieved by modifying the existing Cardamom Trust Fund to expand its geographical focus or by creating a new Trust Fund. With the recent establishment of the Cardamom Trust Fund by CI, a long-term financing mechanism has been established to secure long term financing for the conservation of the Cardamom mountain forests. Operating currently as an endowment, it can be diversified to include sinking and endowment funds, and also be expanded to cover additional protected areas and forest landscapes. The partners will also continue to support private sector investment into forest protection through coordination with the national REDD+ program, building upon the project successes and results on the ground, as well as technical support for monitoring forest cover change over time. The creation of the Forest Conservation Trust Fund is another important aspect of the work that can potentially be used to flow some of the anticipated future REDD funding directly for improved forest management on the ground.

C.4 Engagement among the NDA, AE, and/or other relevant stakeholders in the country (max ½ page) Please describe how engagement among the NDA, AE and/or other relevant stakeholders in the country has taken place and what further engagement will be undertaken as the concept is developed into a funding proposal. Planning with the NCSD and MoE including the NDA has been underway for more than 2 years. A series of meetings were held to review the concept note project components, discuss ideas with partners, and through multiple iterations of the concept note. In addition, 2 stakeholder consultation meetings were held, one with initial project partners and NCSD/MoE, and another co-hosted by MoE/NCSD with more than 60 participants attending, representing Project partners, MoE, among other government and development agencies and NGOs. A stakeholder engagement strategy has been developed in conjunction with this concept note and will be implemented as part of the full proposal development process. The strategy has been developed based on CI’s robust procedures for stakeholder engagement as laid out in its Environmental and Social Management Framework that applies to all of its GCF projects (and which was part of the procedures documentation on which GCF accreditation was based). The engagement plan has also adopted best practices and approaches for stakeholder engagement from the International Finance Corporation (IFC) to provide a framework for in country coordination and multi-stakeholder engagement. As described earlier, extensive efforts have been made during the development of the project concept note to align as much as possible with Cambodia’s existing strategic governance frameworks, national climate change strategies, plans


and priorities and project activities are largely informed on this basis. Many of the existing national policies and strategies have themselves already been through multi-stakeholder consultation processes. Most importantly, the Project will be directly contributing to advancing the Protected Area Management Strategy and the National REDD+ Strategy which has been the subject of multiple consultations and for which there is a permanent consultation group in place including representatives from community groups and civil society organisations drawn from across the country. Although stakeholder engagement has not yet been started in the three provinces targeted by this project, the project partners, and in particular MoE, CI, WCS and WWF already work in these provinces with local communities, civil society groups and administrative authorities. The existence of good working relationships that are already in place will facilitate the stakeholder engagement process. D. Supporting documents submitted (OPTIONAL) ☒ Map indicating the location of the project/programme (Annex 1) ☒ Diagram of the theory of change (Annex 2) ☐ Financial Model ☐ Pre-feasibility Study ☐ Evaluation Report of previous project ☒ Letter of Support from the Royal Government of Cambodia (Annex 3)

Self-awareness check boxes

Are you aware that the full Funding Proposal and Annexes will require these documents? Yes ☒ No ☐ • Feasibility Study • Environmental and social impact assessment or environmental and social management framework • Stakeholder consultations at national and project level implementation including with indigenous

people if relevant • Gender assessment and action plan • Operations and maintenance plan if relevant • Loan or grant operation manual as appropriate • Co-financing commitment letters Are you aware that a funding proposal from an accredited entity without a signed AMA will be reviewed but not sent to the Board for consideration? Yes ☒ No ☐

GCF Concept Note: “Reducing Cambodia’s Emissions Through Decentralized Forest Management”

Annex 1: Proposed Project Areas and Preliminary GHG calculations

Map of the three proposed project landscapes: Pursat (West), Preh Vihear (North Central), and Mondulkiri (East) PA = Protected areas PA ELC = Protected areas overlapping with Economic Land Concessions Corridor ELC = Corridors overlapping with Economic Land Concessions ELC = Economic Land Concessions


Forest cover in 2015. Deciduous forest is in lighter green, evergreen forest in darker green. (Cambodia National Mekong Committee (CNMC) produced for the Ministry of Environment Department of Geographic Services) Forest Type Hectares % of Area Deciduous Forest (DCD) 1,437,000 60.55% Evergreen Forest (EVG) 936,340 39.45%


Business as Usual Baseline and reported FREL forest cover change rates for 2006, 2010, and 2014 with logarithmic projection. Emission calculated using FREL reported emission factors.

Deciduous Forest 2018 2019 2020 2021 2022 Total Deforestation % 1.92% 2.01% 2.10% 2.18% 2.26% Deforestation (ha) 26,205 26,958 27,566 28,045 28,409 137,182 Emissions (tCO2e) 3,838,496 3,948,744 4,037,827 4,108,016 4,161,285 20,094,367 Effectiveness 0.1 0.25 0.5 0.75 0.75 Reductions tCO2e 383,850 987,186 2,018,913 3,081,012 3,120,964 9,591,925 Evergreen Forest 2018 2019 2020 2021 2022 Total Deforestation % 2.92% 3.09% 3.26% 3.41% 3.56% Deforestation (ha) 25,290 26,034 26,572 26,927 27,121 131,943 Emissions (tCO2e) 7,103,849 7,312,904 7,464,094 7,563,908 7,618,152 37,062,908 Effectiveness 0.1 0.25 0.5 0.75 0.75 Reductions tCO2e 710,385 1,828,226 3,732,047 5,672,931 5,713,614 17,657,203 Total Reductions = 27,249,128.33 tCO2e ELCs in Project Area: 198,873 ha Ecosystems Strengthened. 1,780,000 ha (75% of 2015 forest area in project area). This assumes 75% of forest area are degraded (or will be degraded) and will benefit from our activities.

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

DCD EVG Log. (DCD) Log. (EVG)


Annex 2 Theory of Change Secure Cambodia’s protected areas and connectivity corridors to reverse otherwise accelerating trends of deforestation and help

prepare the country to access forest-based financing

Small scale fuelwood extraction

Large scale legal and illegal timber and

fuelwood extraction on ELCs

Slash & burn agriculture & small scale agricultural

expansion

Fuelwood demand for domestic cooking and charcoal production

Limited economic opportunities for forest

communities

Absence of legal timber and

fuelwood sources

1 ELC: Economic Land Concession

Limited resources and capacity for forest

protection and management

Outcome 3: Long term finance for improved forest management • Forest Conservation Trust Fund created and capitalized; • Future financing mechanisms for avoided deforestation projects

initiated

Outcome 1: Low emissions ELC models are implemented in each landscape

• Spatial planning followed for multiple land uses including ELC reforestation;

• Action plans developed to ensure ELCs provide needed resources but are also in compliance with land and protected area laws;

• ELC laws monitored and enforced.

Outcome 2: Improved forest management • Livelihood alternatives to deforestation and degradation supported; • Forest protection and management improved; • Degraded forests restored in areas connecting protected areas; • Lessons learned, and best practices published; • Capacity of authorities and landholders strengthened under decentralization.

Goal

Th

reat

Caus

eIn

terv

entio

n

ELC1 expansion (more

of them and increased size of existing ones)

Limited resources and capacity to implement ELC policies/laws

ELCs exist that overlap with areas under protection


Annex 3. Letter of Support from Cambodia’s GCF NDA

reducing cambodia’s emissions through …...investing in natural capital for a sustainable future...

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