Attachment J.1 IEE Asia 21-081 and IEE Asia 20-042.pdf

INITIAL ENVIRONMENTAL

EXAMINATION

PROJECT/ACTIVITY DATA

Project/Activity Name: Agricultural Input Market System Geographic Location(s) (Country/Region): Nepal/ Lumbini, Bagamati, Sudur-paschim and

Karnali provinces Amendment (Yes/No), if Yes indicate # (1, 2...): No Implementation Start/End Date (FY or M/D/Y): 2021/2026 If Amended, specify New End Date: - Solicitation/Contract/Award Number(s): TBD Implementing Partner(s): TBD Bureau Tracking ID: TBD Tracking ID of Related RCE/IEE (if any): Asia COVID 19 PIEE Asia 20-042 Tracking ID of Other, Related Analyses: -

ORGANIZATIONAL/ADMINISTRATIVE DATA

Implementing Operating Unit(s):

(e.g. Mission or Bureau or Office)

USAID Nepal, SEED Office

Other Affected Operating Unit(s):

Lead BEO Bureau: Asia Funding Account(s) (if available): $24.9 million Original Funding Amount: $24.9 million If Amended, specify funding amount: - If Amended, specify new funding total: - Prepared by: Sujan Piya Date Prepared: 3/17/2021

ENVIRONMENTAL COMPLIANCE REVIEW DATA

Analysis Type: ☒Environmental Examination ☐Deferral Environmental Determination(s): ☒Categorical Exclusion(s)

☒Negative Determination with Conditions ☐Positive ☐Deferred (per 22 CFR 216.3(a)(7)(iv)

IEE Expiration Date (if applicable): 2026 Additional Analyses/Reporting Required: No Climate Risks Identified (#): Low ___13___ Moderate ___2___ High ___#___ Climate Risks Addressed (#): Low __13___ Moderate ___2___ High ___#___

Asia 21-081

THRESHOLD DETERMINATION AND SUMMARY OF FINDINGS

PROJECT/ACTIVITY SUMMARY

The Agricultural Input Market System activity focuses on improving agricultural productivity, competitiveness, resilience, and inclusivity in Nepalese agriculture by improving availability and accessibility of four critical inputs- Seed, Fertilizer, Irrigation and Agricultural Equipment. This activity builds on a current activity- Nepal Seed and Fertilizer (NSAF) but the scope of work is broader than NSAF. While NSAF is focused on seed and fertilizer, this one includes seed, fertilizer, irrigation and agricultural mechanization. The Activity adopts a market system development approach and strengthens the functioning of the input market system by closely working with the government and private sector stakeholders. Its main areas of work include building capacity of government and private sector, strengthening the policy environment, strengthening the agricultural input supply chain, and improving farmers' knowledge system on improved inputs and technology.

ENVIRONMENTAL DETERMINATIONS

Upon approval of this document, the determinations become affirmed, per Agency regulations

(22 CFR 216).

TABLE 1: ENVIRONMENTAL DETERMINATIONS

Projects/Activities Categorical Exclusion Citation (if applicable)

Negative Determinatio n

Positive Determination

Deferral

Project/Activity 1 — The enabling environment for seed business strengthened

Project /Activity 2- Public and private sector (Seed Companies) stakeholders’ technical capacity and partnership enhanced

Sub-activity 2.1 Building the technical capacity of public sector, seed companies and seed multipliers

2.2 Support seed companies and

multipliers to access improved germplasm

Project/Activity 3- Seed companies’ and seed producers’ businesses improved through better access to business

1 Positive Determinations require preparation of a Scoping Statement and Environmental Assessment.

2 Deferrals must be cleared through an Amendment to this IEE prior to implementation of any deferred activities.

development services and stronger supply chain networks Sub-activity 3.1 facilitate financial institute for appropriate loan product development targeting seed entrepreneurs

3.2 Support to develop robust

seed quality inspection system

3.3 Local service provider

development by building capacity of agrovet on seed production technology

Project/Activity 4- Seed producer groups/cooperatives technical and institutional capacity built

Sub-activity 4.1 ICT platform development for seed business related information and networking

4.2 Technical training to seed

producer groups/cooperatives

Project/Activity 5- Access to quality fertilizer, at the right time, and in the right quantity, improved

5.1 Strengthening fertilizer

supply chain network

5.2 Systematize demand and

supply of fertilizer by crop and location based on district soil fertility mapping

5.3 Support to promote voucher

system

Project/Activity 6:

Effectiveness and efficiency of the fertilizer subsidy mechanism improved

Project/Activity 7: Fertilizer use efficiency enhanced

7.1 Support to revise and

develop location and crop specific fertilizer recommendation based on soil fertility status

7.2 ICT platform development to

disseminate knowledge on balanced fertilizer use at farmers level

7.3 Facilitate private

company/ies to establish soil testing centers

7.4 Promote soil health card for

efficient use of fertilizer

Project/Activity 8: Commercial opportunities for balanced fertilizer production and distribution established

8.1 Piloting and business case

development on the economic viability of blended fertilizer by different crop and geographic location

8.2 Technical assistance to the

government and private sector on blended fertilizer technology

Project/Activity 9- Access to irrigation for commercially oriented agriculture increased

9.1 Enhance the performance of

existing surface irrigation schemes

9.2 Facilitate financial institutions

for appropriate loan product development for water MSMEs and water users

9.3 Strengthen private sector

service providers to promote irrigation technology

Project/Activity 10- Water use efficiency enhanced

Project/Activity 11- Capacity of local government, civil society and private sector for sustainable watershed management enhanced

Project/Activity 12- Enabling environment for sustainable water resource management and irrigation system improved

12.1 Build the institutional

capacity of local civil society for the participation in local plan development on watershed management

12.2 Inter-municipal level/inter-

provincial level collaboration mechanism developed for upstream and downstream management of watersheds

Project/Activity 13- Uptake of modern agricultural equipment in primary production and value addition increased

13.1 Rapid deployment of time- ☐ ☒ ☐ ☐

and labor-saving agricultural equipment in areas heavily affected by the COVID-19

13.2 Appropriate loan product

development for MSMEs and farmers for mechanization

13.3 Piloting and scaling up the

successful custom hiring service system at the local level

Project/Activity 14 – Policy environment for agricultural equipment promotion improved

Project/Activity 15- Maintenance service system for agricultural equipment improved

CLIMATE RISK MANAGEMENT

For this activity, CRM screening showed no major climate risks and hence scored no Risk or Low climate risk rating for technical assistance and capacity development activities. However, in the area of fertilizer, irrigation, agricultural mechanization, and watershed management there are low to moderate risks which can be mitigated with climate resilience design and management practices. The implementation partner will be required to conduct climate screening to identify climate risks and mitigation measures during the annual activity planning process to develop a mitigation strategy/adaptation plan as an annex or separate section of each Annual Work Plan.

BEO SPECIFIED CONDITIONS OF APPROVAL

IMPLEMENTATION

In accordance with 22 CFR 216 and Agency policy, the conditions and requirements of this document become mandatory upon approval. This includes the relevant limitations, conditions and requirements in this document as stated in Sections 3, 4, and 5 of the IEE and any BEO Specified Conditions of Approval.

1. IP Briefings on Environmental Compliance Responsibilities

USAID/Nepal/ Agricultural Input Market System team shall provide potential implementing partners (IPs) with a copy of this IEE as an element of the procurement instrument. The potential bidder shall have a copy of IEE and in their technical and financial proposals and propose how the project with IEE conditions will be implemented. IEE conditions shall be negotiated, and ultimately be mandatory part of the award.

2. Development of an EMMP

The IP whose activities are subject to one or more conditions set out in Section Three of this IEE shall develop and provide to the COR/AOR/MEO/CIL for review and approval an Environmental Mitigation and Monitoring Plan (EMMP) that clearly documents how their project will implement and verify all IEE conditions and monitoring and reporting mitigation measures that apply to their activities.

The EMMP shall identify how the IP will ensure that IEE conditions that apply to activities supported under sub-contracts and sub-grants are implemented. A sample EMMP format is included as ANNEX A to this IEE.

3. Integration and Implementation of EMMP

The IP shall integrate their EMMP into the project work plan, allocate budgets to implement all IEE conditions, and implement the EMMP and all IEE conditions and report on its implementation and findings as an element of regular project performance reporting.

The IP shall ensure that sub-contractors and sub-grantees integrate implementation of IEE conditions, where applicable, into their own project work plans and budgets, and report on their implementation and findings as an element of sub-contract or grant performance reporting.

4. Integration of compliance responsibilities in prime and sub-contracts and grant agreements

a. The AOR/COR shall ensure that any future contracts or agreements for implementation of a project, and/or significant modification(s) to current contracts/agreements shall reference and require compliance with the conditions set out in this IEE, as required by ADS 204.3.4.a.6 and ADS 303.3.6.e.

a. The IP shall ensure that future sub-contracts and sub-grants agreements, and/or significant modification(s) to existing agreements reference and require compliance with relevant elements of these conditions.

5. Assurance of sub-grantee and sub-contractor capacity and compliance

IP shall ensure that sub-grantees and sub-contractors have the capacity to implement the relevant requirements of this IEE. The IP shall, as and if appropriate, provide training to sub-grantees and sub-contractors in their environmental compliance responsibilities and in environmentally sound design and management (ESDM) of their activities.

6. New or modified activities

As part of its work plan and all annual work plans thereafter, IPs, in collaboration with their COR/AOR/MEO/CIL, shall review all ongoing and planned activities to determine if they are within the scope of this IEE.

If IP adds new activities or makes substantial modifications to existing activities, an amendment to this IEE addressing these activities shall be prepared for USAID review and approval. No such new activities shall be undertaken prior to formal approval of this amendment.

Any ongoing activities found to be outside the scope of the approved Regulation 216 environmental documentation shall be halted until an amendment to the documentation is submitted and written approval is received from USAID.

7. Compliance with Government of Nepal Requirements

Nothing in this IEE substitutes for or supersedes IP, sub-grantee, and subcontractor responsibility for compliance with all applicable Nepali laws and regulations and relevant international environmental, heath, and safety agreements, including ILO, WHO endorsed and ratified by the Nepal government. The IP, sub-grantees, and sub-contractors must comply with Nepali environmental regulation unless otherwise directed in writing by USAID; however, in case of conflict between host country and USAID regulations, the latter shall govern.

USAID APPROVAL OF INITIAL ENVIRONMENTAL EXAMINATION

PROJECT/ACTIVITY NAME: ___________________________________________________

Bureau Tracking ID: ______________________

Approval: Adriana Hayes for Sepideh Keyvanshad. MD has delegated clearance to DMD due to COVID demands.

5/7/2021

Sepideh Keyvanshad, Mission Director Date

Clearance: Cleared 5/3/2021 David Chalmers, SEED Acting Director Date

Clearance: Cleared 5/3/2021 Shanker Khagi, Mission Environmental Officer Date

Clearance: Cleared with suggestions on draft 05/04/2021 Netra Sharma, Climate Integration Lead Date

Clearance: Cleared with comments through email Andrei Barannik, Regional Environmental Advisor for SCA and Afghanistan & Pakistan-

Date 04/29/2021

Clearance: Cleared with minor edits Mark Driver, Regional Legal Officer Date 05/06/2021

Clearance: Cleared with minor edits 5/7/2021 Adriana Hayes, Deputy Mission Director Date

Concurrence:

Will Gibson, Asia Bureau Environmental Officer Date

DISTRIBUTION:

COR file

OAA and RLO

MEO file

Environmental Compliance Database

William L Gibson Digitally signed by William L Gibson Date: 2021.05.18 10:39:09 -04'00'

INITIAL ENVIRONMENTAL

EXAMINATION

CONTENTS

1.0 PROJECT/ACTIVITY DESCRIPTION 5

1.1 PURPOSE OF the IEE 5

1.2 PROJECT/ACTIVITY OVERVIEW 5

1.3 PROJECT/ACTIVITY DESCRIPTION 5

2.0 BASELINE ENVIRONMENTAL INFORMATION 6

2.1 LOCATIONS AFFECTED AND ENVIRONMENTAL CONTEXT (ENVIRONMENT,

PHYSICAL, CLIMATE, SOCIAL, Threatened and ENDANGERED species) 6

2.2 APPLICABLE AND APPROPRIATE PARTNER COUNTRY AND OTHER

INTERNATIONAL STANDARDS (E.G. WHO), ENVIRONMENTAL AND SOCIAL LAWS,

POLICIES, AND REGULATIONS 6

2.3 COUNTRY/MINISTRY/MUNICIPALITY ENVIRONMENTAL CAPACITY ANALYSIS (AS

APPROPRIATE) 6

3.0 ANALYSIS OF POTENTIAL ENVIRONMENTAL RISK 7

4.0 ENVIRONMENTAL DETERMINATIONS 7

4.1 RECOMMENDED ENVIRONMENTAL DETERMINATIONS 7

4.2 CLIMATE RISK MANAGEMENT 7

5.0 CONDITIONS AND MITIGATION MEASURES 8

5.1 CONDITIONS 8

5.2 AGENCY CONDITIONS 9

5.3 MITIGATION MEASURES 10

6.0 287.0

28ATTACHMENTS:

1.0 PROJECT/ACTIVITY DESCRIPTION

1.1 PURPOSE OF THE IEE

The purpose of this document, in accordance with Title 22, Code of Federal Regulations, Part 216 (22 CFR 216), is to provide a preliminary review of the reasonably foreseeable effects on the environment of the USAID intervention described herein and recommend determinations and, as appropriate, conditions, for these activities. Upon approval, these determinations become affirmed, and specified conditions become mandatory obligations of implementation.

This IEE also documents the results of the Climate Risk Management process and construction risk management process in accordance with USAID policy (specifically, ADS 201mal/ ADS 303maw).

This IEE is a critical element of USAID’s mandatory environmental review and compliance process meant to achieve environmentally sound design and implementation. Potential environmental and social impacts should be addressed through formal environmental mitigation and monitoring plans (EMMPs) and/or Environmental Assessments (EAs), if needed.

1.2 PROJECT/ACTIVITY OVERVIEW

Based on high levels of hunger and poverty, on April 24, 2010, Nepal was officially selected as one of twenty focus countries worldwide for the USG Feed the Future (FTF) Presidential Initiative. This activity is one of the initiatives under FTF program of USAID Nepal Mission.

Other activities implemented under the FtF are Knowledge-based Integrated Sustainable Agriculture in Nepal II (KISAN II), Nepal Seed and Fertilizer (NSAF), FTF Integrated Pest Management (IPM), and the Cereal Systems Initiative for South Asia (CSISA) covid response activity. This Activity is focused on improving productivity, competitiveness, resilience, and inclusivity in the agriculture sector of Nepal by focusing on four critical production inputs- Improved seed, Irrigation, Agricultural mechanization and Fertilizer. The Activity focuses on strengthening market systems of the selected agricultural inputs with an objective of improving availability and accessibility of these inputs to smallholder, vulnerable, marginal, and women farmers for better income and household food security. The purpose of this Activity will be achieved by producing the following 15 outputs by implementing this Activity in 25 districts in Lumbini, Sudurpaschim, Karnali and Bagmati provinces.

1. The enabling environment for seed business strengthened

2. Public and private sector stakeholders’ technical capacity and partnership enhanced

3. Seed companies’ and seed producers’ businesses improved through better access to business development services and stronger supply chain networks

4. Seed producer groups/cooperatives technical and institutional capacity built

5. Access to quality fertilizer, at the right time, and in the right quantity, improved

6. Effectiveness and efficiency of the fertilizer subsidy mechanism improved

7. Fertilizer use efficiency enhanced

8. Commercial opportunities for balanced fertilizer production and distribution established

9. Access to irrigation for commercially oriented agriculture increased

10. Water use efficiency enhanced

11. Capacity of local government, civil society and private sector for sustainable watershed management enhanced

12. Enabling environment for sustainable water resource management and irrigation system improved

13. Uptake of modern agricultural equipment in primary production and value addition increased

14. Policy environment for the promotion of agricultural equipment improved

15. Maintenance service system for agricultural equipment improved

1.3 PROJECT/ACTIVITY DESCRIPTION

TABLE 2: DEFINED OR ILLUSTRATIVE PROJECTS/ACTIVITIES AND SUB-ACTIVITIES

Project/Activity 1 — The enabling environment for seed business strengthened Sub-activity 1.1 Build institutional capacity of seed association and support for policy advocacy Project /Activity 2- Public and private sector stakeholders’ technical capacity and partnership enhanced Sub-activity 2.1 Building the technical capacity of seed companies and seed multipliers

2.2 Support seed companies and multipliers to access improved germplasm Project/Activity 3- Seed companies’ and seed producers’ businesses improved through better access to business development services and stronger supply chain networks Sub-activity 3.1 facilitate financial institute to offer loan services to seed entrepreneurs

3.2 Support to develop robust seed quality inspection system

3.3 Local service provider development by building capacity of agrovets on seed production technology Project/Activity 4- Seed producer groups/cooperatives technical and institutional capacity built Sub-activity 4.1 ICT platform development for seed business related information and networking

4.2 Technical training to seed producer groups/cooperatives

Project/Activity 5-Access to quality fertilizer, at the right time, and in the right quantity, improved

5.1 Strengthening fertilizer supply chain network

5.2 Systematize demand and supply of fertilizer by crop and location based on district soil fertility mapping

5.3 Support to promote voucher system

Project/Activity 6: Effectiveness and efficiency of the fertilizer subsidy mechanism improved

6.1 Engagement with the government to systematize its fertilizer subsidy program Project/Activity 7: Fertilizer use efficiency enhanced

7.1 Support to revise and develop location and crop specific fertilizer recommendation based on soil fertility status

7.2 ICT platform development to disseminate knowledge on balanced fertilizer use at farmers’ level

7.3 Facilitate private company/ies to establish soil testing centers

7.4 Promote soil health card for efficient use of fertilizer

Project/Activity 8: Commercial opportunities for balanced fertilizer production and distribution established

8.1 Piloting and business case development on the economic viability of blended fertilizer by different crop and geographic location

8.2 Technical assistance to the government and private sector on blended fertilizer technology Project/Activity 9- Access to irrigation for commercially oriented agriculture increased

9.1 Enhance the performance of existing surface irrigation schemes

9.2 Facilitate financial institutions for appropriate loan product development for water MSMEs and water users

9.3 Strengthen private sector service providers to promote irrigation technology Project/Activity 10- Water use efficiency enhanced

10.1 Capacity building of water user associations on better management of water schemes and on efficient water use Project/Activity 11- Capacity of local government, civil society and private sector for sustainable watershed management enhanced

11.1 Support local governments for sustainable water management Project/Activity 12- Enabling environment for sustainable water resource management and irrigation system improved

12.1 Build the institutional capacity of local civil society to participate in local plan development on watershed management

12.2 Inter-municipal level/inter-provincial level collaboration mechanism developed for upstream and downstream management of watersheds Project/Activity 13- Uptake of modern agricultural equipment in primary production and value addition increased

13.1 Rapid deployment of time- and labor-saving agricultural equipment in areas heavily affected by the COVID-19

13.2 Appropriate loan product development for MSMEs and farmers for mechanization

13.2 Piloting and scaling up the successful custom hiring service system at the local level Project/Activity 14 – Policy environment for the promotion of agricultural equipment improved

14.1 Policy dialogue on the removal or decrease of tariffs on spare parts Project/Activity 15- Maintenance service system for agricultural equipment improved

15.1 Development of local human resources on agricultural equipment maintenance

Will this project/activity involve construction3 as defined by ADS 201 and 303? Yes ☐ No ☒

2.0 BASELINE ENVIRONMENTAL INFORMATION

Nepal has a large diversity of topography, ecosystems and habitats. The country’s abundant and diverse natural resource base plays an important role in supporting livelihoods of a majority of its citizens and, if managed well, has the potential to continue to do so for many years.

Nepal’s vast natural capital —the stock of natural ecosystems that yields a flow of valuable ecosystem goods and services to the present and future generations—are critical to ensuring food security, power development, and a robust tourism sector. Deteriorating natural resources, including biodiversity, water, and forests, poses a significant threat to the long-term health of Nepal’s economy and may reverse many development achievements. Over 40 percent of Nepal’s economy is tied to agricultural production, supporting the livelihoods of two thirds of the country’s population. Tourism in Nepal is the second-largest foreign income earner after remittances.

Despite some notable successes in protecting Nepal’s natural resources, significant threats remain. Invasive species, such as the terrestrial “mile-a-minute” vine and water hyacinth, are quickly taking over forest and freshwater areas. Poorly planned and constructed secondary roads are contributing factors to landslides, and larger infrastructure is reducing habitat connectivity. Unregulated agriculture is expanding into forest and wetland areas in the Terai, while migration is leaving terraces in the hills barren, un-maintained, and prone to collapse.

Specific threats to freshwater ecosystems, and the water resources vulnerable people need to survive, including poorly sited, constructed, and managed dams, large-scale water diversion plans, urban domestic waste, aggregate mining from riverbeds, and agricultural pollution. The wide range of habitats and species found in Nepal means that areas of important biodiversity remain unprotected or under-protected.

3 Construction, as defined by ADS 201 and 303, includes: construction, alteration, or repair (including dredging and excavation) of buildings, structures, or other real property and includes, without limitation, improvements, renovation, alteration and refurbishment. The term includes, without limitation, roads, power plants, buildings, bridges, water treatment facilities, and vertical structures. In the box below, describe any construction planned for this project/activity. Refer to ADS 201maw for required Construction Risk Management procedures.

Nepal is vulnerable to various natural disasters, including floods, droughts, and seismic hazards. The 2015 Gorkha earthquake and its aftershocks caused over $7 billion in loss and damages and resulted in nearly 9,000 lives lost, mostly in the hilly and mountain regions.

Further information on the status of the environment in Nepal could be found at:

https://www.adb.org/publications/country-diagnostic-environment-nepal.

https://openknowledge.worldbank.org/bitstream/handle/10986/32645/139924.pdf?sequence=2& isAllowed=y

2.1 LOCATIONS AFFECTED AND ENVIRONMENTAL CONTEXT (ENVIRONMENT, PHYSICAL,

CLIMATE, SOCIAL, THREATENED AND ENDANGERED SPECIES)

This Activity focuses on the FTF Zone of Influence (ZOI) in order to complement and build on USAID’s ongoing efforts to improve food and nutritional security and stimulate agriculture-led economic growth in that geographic area. The FTF ZOI was identified in the GFSS Country Plan due to the potential in those areas for agricultural growth as well as high levels of poverty, malnutrition, and vulnerability. As shown in the map, FTF Zone of Influence (ZOI) comprises 25 districts from Bagmati, Lumbini, Sudurpaschim, Karnali provinces. It includes both hilly and Terai plain areas. Hilly districts are geographically difficult terrain with rich biodiversity and are more vulnerable to climate induced risks.

District selection will be finalized shortly, but may include, Achham, Baitadi, Dadeldhura, Doti, Kailali, Kanchanpur, Banke, Bardia, Dailekh, Dang, Jajarkot, Pyuthan, Rolpa, Rukum, Salyan , Surkhet, Arghakhanchi, Gulmi, Kapilvastu, Palpa, Makwanpur, Sindhupalchowk, Kavre, and Makwanpur.

2.2 APPLICABLE AND APPROPRIATE PARTNER COUNTRY AND OTHER INTERNATIONAL

STANDARDS (E.G. WHO), ENVIRONMENTAL AND SOCIAL LAWS, POLICIES, AND REGULATIONS

The Government of Nepal (GON) has a policy of enforcing all environmental legislation, but the previous centralized GON never had a sufficient work force for consistent enforcement. Nepal has now transitioned to a federal state, with monitoring of the application of such codes and legislation mandated to the 753 municipal governments, 7 provincial governments and a federal government at the center. While they have the potential for high interest and ownership of such tasks, they still lack capacity. The legislation includes the Environmental Impact Assessment Guidelines 1993; Environmental Protection Act 2019; Environmental Protection Rules 2020. The Guidelines, Act, Rules, and other regulations provide the basic legal framework for all environmental assessments in Nepal with the aim:

● To manage natural and physical resources efficiently and sustainably,

● To balance development efforts and environmental conservation to fulfill the basic needs of the people in a sustainable manner,

● To safeguard national heritage,

● To mitigate the adverse environmental impacts of development projects and human actions, and

● To integrate the environment and development through appropriate institutions, adequate legislation and economic incentives, and sufficient public resources.

The Guidelines, Act, and Rules require that either an IEE or EIA is required for any development project. It is noted that the existing legislative frameworks are adequate in relation to proposed USAID activity. However, the GON has been inconsistent in the implementation of these.

2.3 COUNTRY/MINISTRY/MUNICIPALITY ENVIRONMENTAL CAPACITY ANALYSIS (AS

APPROPRIATE)

Despite various policy measures, progress in mainstreaming environmental consideration is limited in Nepal mainly due to weak enforcement of environmental laws, regulation, and standards and poor environmental monitoring system. The government and private sectors’ environmental capacities are low and the public sector has very limited awareness. Thus, lack of coordination, linkage, and integration between environmental and development activities is a key concern. Moreover, poor database management related to the environment is also a big problem. Poor bureaucratic capacity and political instability in the country have also hampered to bring environmental concerns at the forefront of the development work. Similarly, limited financial resources is another key issue in considering environmental concerns in development work.

3.0 ANALYSIS OF POTENTIAL ENVIRONMENTAL RISK

PROJECT/ACTIVITY 1: AGRICULTURAL INPUT MARKET SYSTEM

TABLE 3A. POTENTIAL IMPACTS – PROJECT/ACTIVITY 1

Project/Activity Potential environmental and social impacts Project/Activity 1 — The enabling environment for seed business strengthened

The current seed regulatory framework is inadequate: The Enabling the Business of Agriculture (EBA) index estimates that the time to register a new cereal variety is 611 days, while Nepal’s quality of seed regulation score is 5 on a scale of 0-9.

Similarly, as per Seed policy and regulation, private seed entrepreneurs are not permitted to multiply foundation seeds from breeder seeds. In this context, this activity focuses on creating an enabling environment for seed entrepreneurs through appropriate policy change.This activity does not incur any direct environmental and social impacts. However, an enabling policy environment for seed business may lead to the increased investment on high yielding hybrid varieties that may replace traditional varieties which could impact biodiversity adversely and increase dependency of smallholder farmers on external sources of seed. Similarly, the existing seed quality inspection system is also not effective to monitor the quality of seed; policies and regulations relating to biosecurity are also very scattered and not effective. This situation, if not dealt properly while creating a private sector friendly business environment, may lead to contaminated seeds in the market that may affect production as well as public health.

Project /Activity 2- Public and private sector stakeholders’ technical capacity and partnership enhanced

This activity focuses on capacity building of public institutions, seed companies and seed multipliers through technical training and technical backstopping. This activity leads to increased production and multiplication of hybrid seeds which may replace the traditional varieties and adversely impact agro biodiversity and expose smallholder farmers to market induced risk. Most of the smallholder farmers in rural hilly areas use traditional varieties; these varieties are location specific and transferred through generation to generation. The replacement of such local varieties in various locations by improved seed may impact agro biodiversity.

Sub-activity 2.1 Building the technical capacity of seed companies and seed multipliers

It focuses on building a technical capacity of seed companies and seed multipliers through training, mentoring and support.

This sub-activity leads to increased production and multiplication of improved seeds that may replace traditional varieties.

Nepal is a part of the world’s biodiversity hotspot and ranks the 49th in the world for biodiversity. Among 24,300 total species in the country, 28% are agricultural genetic resources (AGRs), termed as agrobiodiversity. There are 12 agroecosystems supporting 1026 species under crop component4. Improved seed production by private companies replaces traditional varieties which may pose an adverse impact on crop biodiversity and expose farmers to market and climate induced risks.

2.2 Support seed companies and

multipliers to access improved germplasm

This sub activity mainly establishes linkages between national research companies and CGIAR to access improved germplasm for new variety development which leads to development of new improved seed varieties and may replace traditional existing varieties and impact agro biodiversity.

Project/Activity 3- Seed companies’ and seed producers’ businesses improved through better access to business development services and stronger supply chain networks

This activity is oriented towards building various business developed support services to seed multipliers and seed companies. This activity may lead to adverse social and environmental impact.

Sub-activity 3.1 facilitate financial institute for appropriate loan

This activity is focused on supporting and facilitating financial institutions to develop appropriate loan products for seed

4 Agrobiodiversity and its Conservation in Nepal:

https://www.nepjol.info/index.php/JNARC/article/view/28111 product development targeting seed entrepreneurs entrepreneurs and does not directly generate any adverse environmental and social impacts. However, it may lead to higher investment on new and improved seed production and multiplication that may replace traditional low yielding but climate resilient varieties and affect the agro biodiversity.

3.2 Support to develop robust seed

quality inspection system

This activity supports government to strengthen the seed quality inspection system and does not pose any adverse environmental and social impact

3.3 Local service provider

development by building capacity of agrovet on seed production technology

This activity provides training to local market actors such as agrovets to build their technical know-how on seed production technology so that they can deliver technical information to farmers and seed multipliers. This does not directly pose any adverse environmental and social impacts. However, it will help to improve seed multiplication programs and increase availability of improved varieties in the market that may replace traditional varieties and narrow down agro biodiversity and expose farmers to the market induced risks and uncertainties.

Project/Activity 4- Seed producer groups/cooperatives’ technical and institutional capacity built

This activity is mainly focused on improving technical and institutional capacity of seed producers’ groups through training and mentoring and does not pose any direct environmental and social adverse impact

Sub-activity 4.1 ICT platform development for seed business related information and networking

This activity supports the development of ICT based virtual platforms that helps business networking and improve connectivity among market actors and farmers. This does not pose any adverse environmental and social challenges

4.2 Build entrepreneurship and

business skills to systematize supply chain management

This activity provides training and other skill development support and facilitates seed entrepreneurs to expand supply chain networks to rural areas and does not pose any adverse environmental and social challenges

Project/Activity 5- Access to quality fertilizer, at the right time, and in the right quantity, improved

This activity basically focuses on systematizing fertilizer distribution systems to improve fertilizer access to the smallholder farmers. This activity may pose some adverse effect on the environment.

5.1 Strengthening fertilizer supply

chain network

This sub-activity focuses on expanding the supply chain network of fertilizer distribution across various production zones and locations. It improves the timely availability of fertilizer by location and crop. It increases the access and use of chemical fertilizer which will adversely affect the environment.

5.2 Systematize demand and

supply of fertilizer by crop and location based on district soil fertility mapping

This activity focuses on ensuring supply of fertilizer based on demand by location and crop as guided by district soil fertility status. This improves fertilizer use efficiency and reduces adverse environmental impact due to haphazard use of chemical fertilizer.

5.3 Support to promote voucher

system

This sub-activity scales up a successful model of voucher system to improve fertilizer distribution and access. It may adversely impact the environment due to better access and use of chemical fertilizer.

Project/Activity 6: Fertilizer subsidy mechanism become more effective and efficient

This activity's major focus is to improve subsidy delivery mechanisms to make fertilizer subsidies on macronutrients (Nitrogen, Phosphorus and Potash) more efficient and effective.

This activity does not include procurement of any fertilizer; thus the terms and condition of ADS 312 and Fertilizer financing guidance are not applicable. Its main focus is on developing a ICT based tracking system for the fertilizer subsidy provisioned by the Nepal government. This does not generate any adverse environmental and social impacts.

6.1 Engagement with the

government to systematize its fertilizer subsidy program

This sub-activity supports government agencies to adopt new innovations such as ICT platforms to channelize subsidy mechanisms in fertilizer so as to improve the efficiency and effectiveness of fertilizer subsidy delivery. This does not pose any serious environmental and social impacts

Project/Activity 7:Fertilizer use efficiency enhanced

This activity improves fertilizer use efficiency through application of balanced nutrients at the right time and place. It does not pose extra environmental and social consequences; it would rather help to reduce the adverse environmental consequences due to haphazard use of chemical fertilizer.

7.1 Support to revise and develop

location and crop specific fertilizer recommendation based on soil fertility status

This sub-activity supports the government institutions such as Ministry of Agriculture and Livestock Development (MOALD) and National Agricultural Research Council (NARC) and private fertilizer distributors such as local cooperatives and agrovets and farmers institution such as farmers group to revise the old and obsolete fertilizer recommendation with revised ones based on existing soil fertility status across different geographies. It helps to improve fertilizer use efficiency and does not pose further environmental and social challenges.

7.2 ICT platform development to

disseminate knowledge on balanced fertilizer use at farmers level

This activity supports ICT based innovation and does not pose any adverse environmental and social impact

7.3 Facilitate private company/ies

to establish soil testing centers

This sub-activity is focused on promoting soil testing services in the project areas and does not pose any adverse environmental and social impact

7.4 Promote soil health cards for

efficient use of fertilizer

This sub-activity promotes use of soil health cards to the farmer level and makes them aware about soil health conditions, which ultimately enhances fertilizer use efficiency and does not pose any adverse environmental and social impact

Project/Activity 8: Commercial opportunities for balanced fertilizer production and distribution established

This activity basically deals with the promotion of blended fertilizer in Nepal to promote balanced use of fertilizer for higher fertilizer use efficiency and better crop productivity. It promotes more fertilizer use, though in balanced quantity, and may pose some environmental challenges

8.1 Piloting and business case

development on the economic viability of blended fertilizer by different crop and geographic location

This sub-activity is basically piloting and testing of technical and economic feasibility of blended fertilizer and does not pose any adverse environmental and social impact

8.2 Technical assistance to the

government and private sector on blended fertilizer technology

This sub-activity provides capacity building of the government and private organizations to produce and promote blended fertilizer use in Nepal. It may pose some negative environmental consequences

Project/Activity 9- Access to irrigation for commercially oriented agriculture increased

This activity mainly focuses on improving access to irrigation through better water resource management and may pose negative externalities in terms of environmental and social impacts if natural water resources are not sustainably managed

9.1 Enhance the performance of

existing surface irrigation schemes

This sub-activity mainly focuses on building technical, institutional and management capacity of water users’ associations/committees and local governments to improve the performance of irrigation schemes. The Activity will capitalize local government and community investment to rehabilitate existing non-functional or under functional irrigation schemes and does not invest directly in water scheme construction. Thus, it does not pose any adverse environmental and social impact.

Rather, it contributes to enhance the proper use of existing schemes.

9.2 Facilitate financial institutions

for appropriate loan product development for water MSMEs and water users

This sub-activity promotes loan schemes for water MSMEs and water users to invest in irrigation technology. This may lead to over-exploitation of natural water resources, if proper attention is not given for sustainable water harvest and use.

9.3 Strengthen private sector

service providers to promote irrigation technology

This sub-activity develops local service providers such as irrigation equipment maintenance service providers, irrigation equipment suppliers. It may adversely impact the environment if it leads to overexploitation of natural water reservoirs.

Project/Activity 10- Water use efficiency enhanced

This activity focuses on improving water use efficiency by improving knowledge and skill of water users’ associations and does not generate any adverse social and environmental impacts

10.1 Capacity building of water user

associations on better management of water schemes and on efficient water use

This sub-activity focuses on building the technical and management capacity of water users’ associations to manage existing water schemes and also use water more efficiently. It does not pose any adverse environmental and social impact

Project/Activity 11- Capacity of local government and civil society for sustainable water management improved

This activity mainly focuses on improving water governance through capacity building of government and civil societies and does not pose any adverse consequences to the environment and society at large.

11.1 Support local governments for

sustainable water management

This sub-activity builds local government capacity in the area of planning, implementing and monitoring of water management projects. It does not pose any adverse environmental and social impact

Project/Activity 12- Enabling environment for sustainable water resource management and irrigation system improved

This activity focuses on creating an enabling policy environment to promote sustainable water management practices that includes promotion of climate adaptive water management practices, spring source conservation, judicious use of water resources and does not impact the environment adversely

12.1 Build the institutional capacity

of local civil society for the participation in watershed management planning process

This sub-activity empowers local civil society and farmer groups and builds their knowledge system to participate and contribute in local water resource plan development and implementation. It does not pose any adverse environmental and social impact.

12.2 Inter-municipal level/inter-

provincial level collaboration mechanism developed for upstream and downstream management of watersheds

This sub-activity focuses on improving collaboration and coordination between and among local and provincial governments for better watershed management. It does not pose any adverse environmental and social impact

Project/Activity 13- Uptake of modern agricultural equipment in primary production and value addition increased

This activity focuses on promotion of agricultural mechanization in primary agriculture operation and along the agricultural value chain and may pose some environmental challenges as increased mechanization promotes the use of fossil fuels

13.1 Rapid deployment of time- and

labor-saving agricultural equipment in areas heavily affected by the

COVID-19

This sub-activity promotes mini tillers, and other agriculture equipment to save labor and may pose some minor environmental challenges

13.2 Appropriate loan product

development for MSMEs and farmers for mechanization

This sub-activity focuses on improving access to financial services to MSMEs and farmers which helps to accelerate the pace of agricultural mechanization. It may pose adverse environmental impacts as increased mechanization comes along with increased use of fossil fuels

13.3 Piloting and scaling up the

successful custom hiring service system at the local level

This sub-activity contributes to the increased access and use of agriculture equipment at the farmers level and may pose adverse environmental challenges due to use of fossil fuel to run the farm equipment

Project/Activity 14 –Policy environment for the promotion of agricultural equipment improved

This activity facilitates government institutions to develop policy instruments to promote agricultural mechanization. It may generate some adverse impact on the environment.

14.1 Policy dialogue on the removal

or decrease of tariffs on spare parts

This sub-activity advocates for reducing the tariff rate on spare parts of agricultural equipment with an objective of minimizing the cost of equipment maintenance and also creating opportunity for local assembling units development. It indirectly contributes to promote agricultural mechanization which may pose further environmental challenges.

Project/Activity 15- Maintenance service system for agricultural equipment improved

This activity mainly focuses on improving agricultural equipment maintenance services in rural areas and does not pose any extra adverse environmental and social impact

15.1 Development of local human

resources on agricultural equipment maintenance

This sub-activity trains local service providers for maintenance service of agricultural equipment and does not pose any adverse environmental and social impact

4.0 ENVIRONMENTAL DETERMINATIONS

4.1 RECOMMENDED ENVIRONMENTAL DETERMINATIONS

The following table summarizes the recommended determinations based on the environmental analysis conducted. Upon approval, these determinations become affirmed, per 22 CFR 216.

Specified conditions, detailed in Section 5, become mandatory obligations of implementation, per ADS 204.

TABLE 4: ENVIRONMENTAL DETERMINATIONS

Projects/Activities Categorical Exclusion Citation (if applicable)

Negative Determinatio n

Positive Determination

Deferral

Project/Activity 1 — The enabling environment for seed business strengthened

Project /Activity 2- Public and private sector stakeholders’ technical capacity and partnership enhanced

Sub-activity 2.1 Building the technical capacity of public sector, seed companies and

5 Positive Determinations require preparation of a Scoping Statement and Environmental Assessment.

6 Deferrals must be cleared through an Amendment to this IEE prior to implementation of any deferred activities.

seed multipliers

2.2 Support seed companies

and multipliers to access improved germplasm

Project/Activity 3- Seed companies’ and seed producers’ businesses improved through better access to business development services and stronger supply chain networks

Sub-activity 3.1 facilitate financial institute for appropriate loan product development targeting seed entrepreneurs

3.2 Support to develop robust

seed quality inspection system

3.3 Local service provider

development by building capacity of agrovet on seed production technology

Project/Activity 4- Seed producer groups/cooperatives’ technical and institutional capacity built

Sub-activity 4.1 ICT platform development for seed business related information and networking

4.2 Technical training to seed

producer groups/cooperatives

Project/Activity 5- Access to quality fertilizer, at the right time, and in the right quantity, improved

5.1 Strengthening fertilizer

supply chain network

5.2 Systematize demand and

supply of fertilizer by crop and location based on district soil fertility mapping

5.3 Support to promote

voucher system

Project/Activity 6:

Effectiveness and efficiency of the fertilizer subsidy mechanism improved

Project/Activity 7: Fertilizer ☒ ☐ ☐ ☐ use efficiency enhanced

7.1 Support to revise and

develop location and crop specific fertilizer recommendation based on soil fertility status

7.2 ICT platform development

to disseminate knowledge on balanced fertilizer use at farmers level

7.3 Facilitate private

company/ies to establish soil testing centers

7.4 Promote soil health card

for efficient use of fertilizer

Project/Activity 8:

Commercial opportunities for balanced fertilizer production and distribution established

8.1 Piloting and business

case development on the economic viability of blended fertilizer by different crop and geographic location

8.2 Technical assistance to

the government and private sector on blended fertilizer technology

Project/Activity 9- Access to irrigation for commercially oriented agriculture increased

9.1 Enhance the performance

of existing surface irrigation schemes

9.2 Facilitate financial

institutions for appropriate loan product development for water MSMEs and water users

9.3 Strengthen private sector

service providers to promote irrigation technology

Project/Activity 10- Water use efficiency enhanced

Project/Activity 11- Capacity of local government and civil society and private sector for sustainable water management enhanced

Project/Activity 12- Enabling environment for sustainable water resource management and irrigation system improved

12.1 Build the institutional

capacity of local civil society for the participation in local plan development on watershed management

12.2 Inter-municipal

level/inter-provincial level collaboration mechanism developed for upstream and downstream management of watersheds

Project/Activity 13- Uptake of modern agricultural equipment in primary production and value addition increased

13.1 Rapid deployment of

time- and labor-saving agricultural equipment in areas heavily affected by the

COVID-19

13.2 Appropriate loan product

development for MSMEs and farmers for mechanization

13.3 Piloting and scaling up

the successful custom hiring service system at the local level

Project/Activity 14 – Policy environment for agricultural equipment…