use of dpl for inclusive green growth and hydro
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Use of DPL for Inclusive Green
Growth and Hydro Sustainability
Development in Himachal Pradesh,
India
January 22, 2016
Engagement in India• Vishnugad Pipalkoti Hydropower Project
– 444 MW run-of-the-river
– Uttarakhand
– $648 M IBRD ($922 M capital cost)
– Project sponsor - THDC
• Rampur Hydropower Project
– 412 MW run-of-the-river
– Himachal Pradesh
– $400 M IBRD ($670 M capital cost)
– Project sponsor - SJVNL
• Development Policy Loan in HP on Inclusive Green Growth and Sustainable Development 2
- Located in the Western Himalaya
- Forms the catchments of rivers flowing into north India & Pakistan
- Food, water and ecological security of north India
- Supports delicate and sensitive ecosystems including sub-tropical, temperate and cold desert conditions
- Area: 55,673 Sq. Kms. Forest cover 37,033 sq. kms; 66.5% of total geographical area
HIMACHAL PRADESH
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Why HP is vulnerable?
• Critical northern watershed of the country (any shifts could have significant downstream effects)
• Agricultural sector is still a predominant aspect of the economy contributing to over 45% to the net state domestic product and with nearly the entire population of the state depending directly upon agriculture
• Forests cover about 38% of the total area of the state and for most rural people forests are an important source of livelihood
• There is increasing evidence of retreating of Himalayan glaciers at a rate of about 10-15m (33-49ft) each year
• Himachal ranks among top five States in respect of natural hazards such as earthquakes, flashfloods triggered by cloud burst, landslides, avalanches and forest fires
• Current development path ingrained in intensive use of existing resources (hydro, industry, tourism)January 22, 2016 4
Environmental Sustainability: Challenge and Opportunity
• Himachal Pradesh’s unique topography and higher dependence on sectors such as agriculture, forestry, water resources and tourism, makes it particularly vulnerable to degradation and also to the adverse effects of climate change
• This challenge can be turned into an opportunity to transform the economy to one which is sustainable and climate resilient in the long run.
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Rationale for Green Growth • Although HP has done relatively well among Indian states,
mountain economies across the world are on average poorer and less developed than their lowland counterparts
• To compensate for the disadvantage of poor connectivity and higher costs of difficult terrain, many mountain economies have attracted capital intensive manufacturing through incentives and subsidies
• HP DPL to support Himachal Pradesh in the improved management of its natural resources across growth engines of the economy and to promote inclusive green growth and sustainable development , and was designed to unleash HP’s comparative advantage of generating growth through improved stewardship of its natural assets
• Why a DPL? to provide budgetary support for sector-wide reforms6January 22, 2016
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First DPL - Fiscal DPL:
Supported Fiscal Actions,
PFM reform, Established
Department of
Environment and
improved management of
catchments of
hydropower projects
creation of an
environment master plan.
Second DPL - HP IGG
DPL: Supports
inclusive green growth
objective and
environmental and
social sustainability for
green growth.
Investment Loans: Watersheds,
rural roads, state roads, carbon
finance for forestry hydropower,
etc,
Technical Assistance CAT
Plan, HP Economic Report,
River Basin Optimization
Study of Sutlej, Capacity
Assessment of Department
Environment, Tourism SEA,
PSIA, etc
Summary of the Synergistic Engagement in HP
January 22, 2016
Attitudinal shift towards Environmental Sustainability
Government of HP declares environment as an area of priority concern and pioneers many environmental initiatives
• Establishment of a Department of Environment
• Establishment of a Special Area Development Authority for carrying out approved development plans in a sustainable manner
• Initiation of Environment Master Plan based on Vulnerability assessments, as a decision making tool (to influence planning and investment decisions)
• Commitment toward ensuring that Himachal Pradesh becomes a carbon-free state
• Development of a state-level strategy and action plan for climate change
• Launch of Community Led Assessment, Awareness, Advocacy and Action Program
• Chief Minister’s Conclave on Mountain Ecosystems
• GoHP has introduced a host of initiatives designed to enhance environmental stewardship and to build a new platform for sustainable growth
• The development objective of the proposed Development Policy Loan to Promote Inclusive Green Growth and Sustainable Development (HP IGG DPL) is to support HP in the improved management of its natural resources across growth engines of the economy and to promote inclusive green growth and sustainable development. January 22, 2016 8
Investment Lending vs. DPLs
Investment Lending
Operation
Development Policy Operation (DPL)
Finances activities that create physical and social infrastructure
Supports policy and institutional actions that are usually part of a broader government policy or program
Disburses as costs are incurred Disburses as actions are taken
Implementation: 5-10 years Implementation: 1-3 years
Narrow (sub)sectoral scope Economy-wide or sector-wide reform > for low carbon development, ability to reach scale
Sustained capacity-building with hands-on Bank staff participation
Country committed to reform, e.g. good track record, and capacity to design, implement and monitor programs
January 22, 2016 Adjustment Lending ~ 9
DPF contributes to countries’ results by supporting
policy and institutional reforms
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Country
Developme
nt ProgramPrior
Actions
Results
The country designs and implements its development program/strategy
The World Bank supports key policy/institutional actions, drawn from the country program
Key results, flowing from the prior actions are used to monitor and evaluate impact. When possible results are drawn from government programs
Adequate macroeconomic policy
Adequate fiduciary systems
DPF is governed by Operational Policy (OP) 8.60
How to Address Attribution
• DPLs are assessed based on end-of-program outcomes (1-3 years) against baseline
• Green Growth/Low Carbon outcomes often not discernible in such a short span of time
• Challenge to come up with measurable outcome indicators in the short term that demonstrate policy actions are working
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Inclusive Green Growth and Sustainable Development DPL Series
• HP DPL series designed as two distinct Development Policy Loans of $100 m each: – first DPL financed by IBRD was approved Sept 2012 and fully
disbursed
– Second DPL was financed by the Clean Technology Fund, which helped for the first time the CTF pilots the use of DPLs
• Parallel Technical Assistance Program: – Poverty Social Impact Analysis
– Strategic Assessment of Industrial Development
– Capacity Building on Tourism Master Plan and Sustainable Tourism Destination
– Natural Capital Accounts
– Technical Assistance on Sustainable Hydropower
– South-South Exchange12January 22, 2016
Sustainable Development & Green Growth in HP
• GoHP’s innovative environmental policy program with objective to promote a paradigm shift towards an environmentally sustainable model of economic growth
• This operation supports enabling policies that are needed to achieve this objective: (a) Promotion of Climate Change Adaptation and Mitigation (b) Development of Environmentally and Socially Sustainable Hydropower; (c) Empowering Local communities to Promote Watershed Management; (d) Environmentally Sustainable Industrial Development (e) Environmentally Sustainable Tourism and (f) Institutional Mechanism for Integration of GIS in
Informed Decision Making.13January 22, 2016
Environmentally and Socially Sustainable Hydropower Development
Bank’s Interventions
• Basin wide digital GIS based map of hydropower potential
• Cumulative Environmental Impact Assessment (CEIA) studies for the five key river basins and Integrated Catchment Area Treatment (CAT) plan for the Sutlej river basin
• Local Area Development Fund (2009) to include annuities to affected communities
State’s initiatives • Basin wide Monitoring
protocols for hydro projects including monitoring of environment and social aspects
• Panel of Experts for the state to oversee hydro ( env. and social)
• Mandatory e-flow @15% downstream of structure and Real time Monitoring
• Web disclosure of Families eligible for Benefit sharing and GRM 14January 22, 2016
ENERGY SECTOR
27 GW of hydro power potential; 10GW already harnessed
Low carbon green energy, avoided thermal generation
Maintaining ecologically sustainable flows
― Mandated the release and maintenance of 15% minimum lean flows downstream of diversion structure to maintain riverine ecology.
― Real Time On-Line Continuous Flow Measurement & Data Logging Devices have been installed for monitoring ecological flows; public disclosure
― Managing erosion, sedimentation & catchment degradation.
― Global Positioning System (GPS) based photo monitoring of muck dumping of the hydro projects.
― A two tier process of Environment Impact Assessment (EIA)
― Environmental issues also addressed in power transmission lines
― Avoided thermal generation of 11,300,000 Mwh by 2014 against baseline of 6,576,750 Mwh in 2011 ,15
CEIA/ Comprehensive CAT Plan
Being done in all 5 major river basins
Cumulative Environment al Impact Assessment
Comprehensive Catchment Treatment Plan
CEIA- Satluj & Chenab Basin are ready
Public Consultation being done
Peer review process
Panel of social and environmental experts
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ADDRESSING SOCIAL AND ENVIRONMENTAL CONCERNS
• Environmental public hearing
• Local Area Development Fund (LADF) in about 25projects; estimated Rs.1600 million This is 1.5%project cost for LADF; spent/being spent on thelocal area development in project affected areas.
• 1% of power sales revenue for local area; cashtransfer started
• Grievance Redressal Committee
• Crop damage compensation policy
• Communication strategy for the hydro sector17
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More than just financing –ensuring sustainability
• Facilitation: Fostering a productive dialogue between the various actors involved in complex multipurpose projects, especially on international waters
• Promoting Sustainability: Setting up economic, financial, technical, environmental and social arrangements in a way that deliver long-term sustainable benefits at both the national and local levels
• Flexible Financing: Providing long-term predictable resources in low-income and high risk places to the public and private sectors, as well as partial risk guarantees
• Measuring Results: Providing support for monitoring and implementation to help countries actually achieve their objectives and get value for money from their investments
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World Bank-supported initiatives
Uttarakhand ( Govt of Uk & THDC; Vishnugad PipalkotiHEP)
• River Optimization study on Alaknanda
• Cumulative Impact Assessment on Alaknanda
• Minimum flow / e-flow assessment and
• Panel of experts for Environment and Social to assist project preparation
Himachal Pradesh (GoHPand SJVNL; NJHEP, Rampur HEP and Luhri HEP)
• River Optimization study on Sutlej
• Comprehensive CAT plan of Sutlej basin
• Cumulative Impact assessments
• Forum of Hydropower Producers of Sutlej Basin
• Benefit Sharing Schemes
Financing Sustainable Hydropower
Pre-conditions
• Strong political motivation – central and state level
– Support at policy, regulatory and institutional levels
• Strong technical and economic rationale
• Sustainability
– Strong technical preparation, investigation (hydrology and geology), appropriate river basin management.
– Social and environmental analysis and risk mitigation
– Strong procurement processes, contract documentation, risk allocation
– Low cost financing22
