WATER GLOBAL PRACTICE WATER RESOURCES MANAGEMENT (WRM) LEARNING NOTE Strengthening Climate-Informed Project Design February 2022 KEY LESSON public disclosure authorized As climate shocks increasingly impact the water- dependent sectors, it is vital that countries embrace integrated, cross-sectoral policies and programs. Water projects improve chances to attain positive climate-related and overall results by adopting an integrated and climate-informed approach to WRM, carefully managing climate- related environmental and social safeguards and establishing effective coordination mechanisms based on incentives with all relevant stakeholders. CHALLENGE Water security is being challenged by the effects of a changing climate on the hydrological cycle, leading to more pronounced climate variability. Water projects are increasingly exposed to more severe climate risks, which requires adopting a climate-informed integrated water resources management (IWRM) approach. Ample stakeholder coordination, close monitoring of water-related safeguards, and explicitly addressing relevant climate risks, can improve the achievement of development and climate-related objectives. This learning note is the third of a 4-note-series developed by the Water Global Practice (GP) Climate Change Team to highlight successful examples of water operations that support climate change–related activities and provide useful lessons and recommendations for project design. WATER GLOBAL PRACTICE Water Resources Management (WRM) – Strengthening Climate-Informed Project Design LEARNING NOTE WHAT TO DO HOW TO DO IT • Promote a climate-informed IWRM approach • Establish a strong link between sustained economic growth to help countries break down domestic and IWRM with climate change considerations. For instance, silos between line ministries1 and different embedding climate resilience as a mechanism to attain government levels, provide reliable and high- development objectives in a project’s narrative (i.e., project quality water services, and pave the path to documents, terms of reference, theory of change, and results positive climate-related outcomes. Projects framework) can increase likelihood of yielding the intended climate that support the coordination of sectoral results. ministries and facilitate horizontal and vertical integration among stakeholders can create an enabling environment for climate action. • There is a more pressing need for policy • Legal and regulatory frameworks are needed to promote efficient reforms that create the enabling environment IWRM, supported by information systems for monitoring and for IWRM and disaster risk management, decision making, and Early Warning System (EWSs) set up to which are both critical to adaptation. address climate change impacts. Enhancing water use productivity and conservation through innovative technologies and improved water storage, including aquifer recharge, are also critical elements of IWRM. As the need for climate action gains urgency, the pace of water policy reforms will have to be accelerated. Support for such policy reforms should thus be increased—by scaling up Development Policy Financing (DPF) and Program for Results (PforRs). Investment Project Financing (IPF) projects can play a role in this context through targeted technical assistance (TA) and capacity building. • Some Environmental and Social Safeguards • A precise assessment of the institutional capacity to carry (ESSs) are more closely related with climate out works related to these safeguards should be conducted, change2 and thus warrant special attention, and adequate risk mitigation measures, as well as permanent as they are linked with overall implementation monitoring, should be put in place to ensure overall project success. performance. A thorough assessment of Increased use of existing support tools, such as independent Panels climate risks with appropriate risk mitigation of Experts (PoEs) in dam safety, can help to address issues that measures at project appraisal, especially could otherwise prevent attainment of intended development in relation to Environmental Assessment, and climate results. Activities in support of adaptation and/or Involuntary Resettlement, Safety of Dams, mitigation generally require stronger institutional capacity to and International Waterways, can lead to consider all climate change–related factors and ensure a climate- positive climate results. resilient project design. • Early engagement with stakeholders on • Ensure high-level buy-in from the client and promote inter- climate-related issues pays off. Participatory sectoral coordination as key elements for good overall project decision-making processes that consider the implementation performance. Early engagement with beneficiaries interests of all parties involved and offer a set to identify priorities and set out plans, while generating incentives of well-calibrated incentives, result in higher (see case study below), are important ingredients for success ownership and attainment of climate-related of climate-informed projects. The emphasis on stakeholder objectives. collaboration and active involvement of local communities in planning and decision-making processes reduces the risk of conflict 1 For example, the ministries of environment, water, energy, agricul- over water resources and helps develop innovative solutions which ture, planning, emergency response, and finance. are more flexible, transparent, inclusive, decentralized, and cost- 2 Including the assessment and management of environmental and effective therefore generating wider support and leading to more social risks, resource efficiency and pollution prevention, community health and safety - including dam safety, land use management and sustainable outcomes. involuntary resettlement, indigenous peoples and stakeholder engage- ment and information disclosure. WATER GLOBAL PRACTICE Water Resources Management (WRM) – Strengthening Climate-Informed Project Design LEARNING NOTE WHAT TO KEEP IN MIND • An IWRM approach offers a more viable than fragmented, sectoral planning and management decisions and coherent way forward to enhanced resilience and sustainable growth in the face of increasing water scarcity and climate change. When designing a water project, practitioners need to consider the cumulative impacts of all developments at local, basin, national, or transnational level and not only of the specific operation under consideration in order to minimize effects on other up-stream and down-stream water uses. For instance, projects focusing on irrigation and drainage activities should be linked to a broader water resource management agenda, including potential climate change impacts, greenhouse gas emissions reduction opportunities, pollution control, watershed management, dam safety, and water allocation and regulation, to name a few. • Infrastructure- and system-level climate resilience can be achieved by ensuring the engineering design of the project is consistent with the core principles of the World Bank Resilient Water Infrastructure Design Brief and Building the Resilience of WSS utilities to Climate Change and Other Threats: A Road Map (see the Key Resources section). Given the added complexity inherent in building climate-resilient infrastructure, it is critical to have water infrastructure works contracts submitted to the Bank for prior review, especially in situations where institutional capacity is low or there is no previous experience with Bank-funded projects. This is especially important for integrating resilience into large and/or complex infrastructure projects. • Developing a system to estimate water balances can improve climate-informed decision making. Hydrological and meteorological data, coupled with climate projections, can inform critical decisions in relation to water allocation for different uses at the basin level. Moreover, environmental assessments in climate-informed projects should give more attention to a project’s impact on the project area’s water balance and environmental flows. Projects promoting adaptation by improving access to water for different uses, especially in drought- prone areas, need to consider long-term systemic impacts of additional water abstraction to ensure that environmental flows are retained. As a result, it is critical that during project design, task teams identify the impact of withdrawals on the long-term availability of water, considering various climate change and impact scenarios. • The selection of a lending instrument has an impact on overall and climate-related project performance. Translating a clearly defined theory of change with important climate-related objectives into a longer-term commitment with the Bank—i.e., a Multiphase Programmatic Approach (MPA) or Series of Projects (SoP)—will make it more likely for the expected results to crystallize before closing. However, these instruments are not always a viable option. Other instruments (DPF, PforR, or hybrid lending operations) are also suitable. As policy reform can be crucial for the success of IWRM and building climate resilience, using a DPF/PforR may make the successful introduction of policy/institutional reforms more likely. PforR can be an appropriate instrument to ensure implementation of activities that are critical to climate-related outcomes, especially in cases in which legal covenants may fail to serve as an effective lever. WATER GLOBAL PRACTICE Water Resources Management (WRM) – Strengthening Climate-Informed Project Design LEARNING NOTE Case study: Malawi Shire River Basin Management Program (Phase-I) Project FY12–FY19, IDA: US$ 125M The project’s main activities include: developing a modern integrated Shire Basin knowledge base, analytical tools and planning framework; rehabilitating targeted sub-catchments and protected areas for reducing flood and erosion risks, optimized water use for agriculture, improved livelihoods, biodiversity conservation, and increased carbon sequestration; and upgrading critical water infrastructure to enable improved regulation of water flows and strengthened climate resilience. Objectives • The larger Program Development Objective is to increase sustainable social, economic, and environmental benefits by effectively and collaboratively planning, developing, and managing the Shire River Basin’s natural resources. • The Phase-I project’s objective is to develop a Shire River Basin planning framework to improve land and water management for ecosystem and livelihood benefits in target areas. Aspect Lesson Climate-informed The central focus on addressing climate risks to promote improved livelihoods yielded IWRM Approach positive climate results. The rehabilitation and upgrading of the Kamuzu Barrage increased the regulated level of Lake Malawi by 40 cm, enhancing the inter-seasonal storage capacity of the lake and local communities’ resilience to droughts. In addition, when Cyclone Idai hit Malawi in March 2019, the timely operation of a revamped Early Warning System (EWS) and the upgraded barrage - which was possible due to improved inter-agency coordination3 - reduced peak lake discharges by 80% and allowed enough space to attenuate the impacts of incoming floods, permitting to maintain critical water services and effectively increasing resilience to floods in the entire basin. 3 The creation of a multi-sectoral National Water Resources Authority that improved inter-agency coordination, coupled with a community-based flood EWS, supported a revamped network of hydrometeorological stations feeding real-time data to a decision-support system. Climate-relevant The use of a PoE to ensure compliance with climate-related safeguards was an ESSs important success factor. The rehabilitation of the barrage involved the application of generic dam safety measures and was based on the advice of an international PoE and the recommendation of the Bank's quality assurance group. Dam Safety Plans (such as Instrumentation plan, Operation and Maintenance Plan, Dam Safety Plan and Emergency Preparedness Plan) were also prepared. Stakeholder Communities were actively engaged in land rehabilitation and forest conservation, engagement which was achieved by promoting participatory planning at sub-catchment and village levels, supported by capacity building (in the form of Farmer Field Schools) and investing in technologies to promote sustainable land management (SLM) practices and infrastructure to improve market access. Adoption rates of SLM were improved with the introduction of the Community Environmental Conservation Fund (CECF), which allowed environmental management works to be undertaken and monitored by communities to ensure receipt of a credit facility for any type of investment they may want to pursue. Buy-in from small farmers was strengthened through SLM practices that offered relatively quick returns, which led to the restoration of degraded lands and forest conservation as measured via changes in vegetation cover. WATER GLOBAL PRACTICE Water Resources Management (WRM) – Strengthening Climate-Informed Project Design LEARNING NOTE KEY RESOURCES Bonzanigo, Laura, Julie Rozenberg, Gregory C. Felter, Robert J. Lempert, and Patrick M. Reed. 2018. Building the Resilience of WSS Utilities to Climate Change and Other Threats: A Road Map. Washington, DC: World Bank. Browder Greg, Ana Nuñez Sanchez, Brenden Jongman, Nathan L. Engle, Eelco Van Beek, Melissa Castera Errea, and Stephen Hodgson. 2021. An Epic Response: Innovative Governance for Flood and Drought Risk Management: Main Report. Washington, DC: World Bank. Engle, Nathan L., Daniel Medina, Gregory C. Felter, and Sean Nelson. 2020. Resilient Water Infrastructure Design Brief. Washington, DC: World Bank. Hallegatte, Stéphane, Jun Rentschler, and Brian Walsh. 2018. Building Back Better: Achieving Resilience through Stronger, Faster, and More Inclusive Post-Disaster Reconstruction. Washington, DC: World Bank. Hallegatte, Stéphane, Jun Rentschler, and Julie Rozenberg. 2019. Lifelines: The Resilient Infrastructure Opportunity. Sustainable Infrastructure Series. Washington, DC: World Bank. Hallegatte, Stéphane, Rubaina Anjum, Paolo Avner, Ammara Shariq, Michelle Winglee, and Camilla Knudsen. 2021. Integrating Climate Change and Natural Disasters in the Economic Analysis of Projects: A Disaster and Climate Risk Stress Test Methodology. Washington, DC: World Bank. García, Luis, Juan Diego Rodríguez, Marcus Wijnen, and Inge Pakulski. 2016. Earth Observation for Water Resources Management: Current Use and Future Opportunities for the Water Sector. Washington, DC: World Bank. Martin, Nancy L., and Sundus N. Siddiqi. 2020. Guidance Note on Climate Indicators. Internal report. World Bank, Washington, DC. Ray, Patrick A., and Casey M. Brown. 2015. Confronting Climate Uncertainty in Water Resources Planning and Project Design: The Decision Tree Framework. Washington, DC: World Bank. World Bank. 2017. World Bank Environmental and Social Framework. Washington, DC: World Bank. World Bank. 2019. New Avenues for Remote Sensing Applications for Water Management: A Range of Applications and the Lessons Learned from Implementation. Washington, DC: World Bank. 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