The World Bank Indonesia Climate Resilient and Low Carbon Agriculture Development Project (P180681) Project Information Document (PID) Concept Stage | Date Prepared/Updated: 10-Mar-2023 | Report No: PIDC35624 Mar 09, 2023 Page 1 of 12 The World Bank Indonesia Climate Resilient and Low Carbon Agriculture Development Project (P180681) BASIC INFORMATION A. Basic Project Data OPS TABLE Country Project ID Parent Project ID (if any) Project Name Indonesia P180681 Indonesia Climate Resilient and Low Carbon Agricultural Development Project (P180681) Region Estimated Appraisal Date Estimated Board Date Practice Area (Lead) EAST ASIA AND PACIFIC Jan 09, 2024 Mar 28, 2024 Agriculture and Food Financing Instrument Borrower(s) Implementing Agency Investment Project Financing Ministry of Finance Ministry of Agriculture Proposed Development Objective(s) The Project Development objective is to increase productivity, resilience and adoption of low carbon agriculture approaches of the targeted commodities in selected project locations. PROJECT FINANCING DATA (US$, Millions) SUMMARY-NewFin1 Total Project Cost 670.00 Total Financing 670.00 of which IBRD/IDA 500.00 Financing Gap 0.00 DETAILS -NewFinEnh1 World Bank Group Financing International Bank for Reconstruction and Development (IBRD) 500.00 Non-World Bank Group Financing Counterpart Funding 170.00 Borrower/Recipient 170.00 Mar 09, 2023 Page 2 of 12 The World Bank Indonesia Climate Resilient and Low Carbon Agriculture Development Project (P180681) Environmental and Social Risk Classification Concept Review Decision Substantial Track II-The review did authorize the preparation to continue B. Introduction and Context Country Context 1. Indonesia has made significant progress in multiple development fronts over the past 25 years. This includes advances in access to electricity (67 percent of the population in 1995 to 99 percent in 2020); urbanization (36 percent of the population in 1995 to 56 percent in 2020); non-agricultural employment (57 percent of employment in 2006 to 71 percent in 2020); and fertility rates (declining to slightly above the population replacement rate in 2020). During this period, Indonesia’s economy grew at an average rate of five percent per year‒contributing to income convergence that accelerated rapidly relative to peer countries1 since 2009. The poverty rate concurrently fell from 19 percent in 2000 to 9.4 percent by 2019. Indonesia is among the countries that have made the fastest gains in poverty reduction in the last two decades.2 2. The COVID-19 pandemic and ripples from the Ukraine crisis had reversed Indonesia’s development gains in some areas—but Indonesia’s economy is showing signs of recovery, albeit significant downside risks remain. The COVID-19 pandemic and high food and fuel prices in late 2022 have led to increases in the number of the poor. Inflation picked up reaching 5.7 percent (year-on-year [yoy]) in October 2022, driven by rising international commodity prices, increased domestic energy tariffs, and higher producer prices. Short-term increases in food inflation negatively impact poor and vulnerable households more, as poorer households spend a larger share of their expenditure on food. 3. Climate change presents additional risks for Indonesia—as a country that is vulnerable to the adverse impact of climate change and a contributor to global greenhouse gas (GHG) emission, Indonesia recognizes the need to transition to a resilient and low-carbon development pathway. Indonesia’s geography renders it susceptible to a wide range of natural disasters, particularly climate-related hazards, such as flooding, landslides, and droughts, which frequency and intensity are expected to be exacerbated by climate change, resulting in significant loss of life and economic damage. Through its “Long-Term Strategy for Low Carbon and Climate Resilience 2050�,3 the Government of Indonesia (GoI) has increased its ambition on GHG reduction to rapidly reach net zero emission by 2060 or sooner. Adaptation ambitions in the Enhanced Nationally Determined Contribution (NDC) 2022 were raised through programs, strategies, and actions aiming to achieve economic, 1In this context, peers are Nigeria, China, India, Ukraine, Thailand, the Philippines, Mexico, the Arab Republic of Egypt, the Russian Federation, and Brazil, selected based on their statistical similarity in terms of population, GDP per capita, and total GDP. 2 Source: SUSENAS. 3 Long-Term Strategy for Low Carbon and Climate Resilience 2050, Government of Indonesia. https://unfccc.int/sites/default/files/resource/Indonesia_LTS-LCCR_2021.pdf Mar 09, 2023 Page 3 of 12 The World Bank Indonesia Climate Resilient and Low Carbon Agriculture Development Project (P180681) social and livelihood, and ecosystem and landscape resilience in the face of climate change. 4. Agriculture in particular is highly vulnerable to climate change impacts, with implications for food and nutrition security. Rising temperatures and shifting rainfall are projected to decrease yields of several agriculture commodities. By 2030 the projected yield will decreased -0.72 percent for irrigated rice, 7.1 percent for maize and 1.19 percent for palm oil respectively, all of which are key to poverty reduction and food security. Pest and disease outbreaks, often induced by higher temperatures, are expected to intensify. In addition, the climate change will exacerbate the impact of floods, droughts, and saltwater intrusion. These factors contribute to a higher risk of crop failure, which in turn leads to loss of income for farmers and increased price volatility for consumers. Sectoral and Institutional Context 5. Indonesia is undergoing an economic transformation that offers opportunities for a green and resilient rural sector growth. About 43 percent4 of Indonesia’s population reside in rural areas and close 29 percent5 of the Indonesian workforce work in the agricultural sector. Primary agricultural production6 accounted for 12.47 percent of GDP in 2022. While the process of structural transformation will lead to the share of primary agriculture in national GDP and employment to decline over time, a modernizing food system —comprising farmers, service providers, food manufacturers, and distribution companies—has much to contribute to Indonesia’s higher-level development objectives. 6. Indonesian agriculture is dominated by small-scale farmers. There are 33.5 million farmers in Indonesia, spread across 27.7 million agricultural households8. Close to 90 percent of farmers own less than 2 ha of land—within this group, two-thirds own less than 0.5 ha. There are regional differences, with holding size in Java being typically smaller than other major islands. These characteristics make farmers more vulnerable to market and climate shocks. The fragmented and small size of land holdings hinder achieving economies of scale and pose significant challenges with respect to input procurement efficiency and accessing financial services, marketing, mechanization, and traceability, among others. Commercialization, aggregation and the transformation of food supply chains could offer new opportunities for smallholder farmers. 7. Farmer groups, organizations, and cooperatives could play a potentially important role to address challenges related to technology adoption, economies of scale and aggregation; however, current organizations still face multiple challenges which limit their efficacy. Given the small and fragmented land holdings, the Government of Indonesia has encouraged the formation of farmer groups and cooperatives. Farmer group ( kelompok tani/poktan) membership are requirements to receive public support in agriculture, such as input subsidies and agricultural extension. 8. Women play a vital role in farming communities, particularly within agricultural food systems , however their contributions are often rendered invisible. In 2017, women accounted for 37% of the agricultural labor force in Indonesia, amounting to approximately 38.7 million people.[1] However, women’s roles in farming communities 4 World Development Indicators, World Bank. 5 Statistics Indonesia (Badan Pusat Statistik), Government of Indonesia. 6 Primary agricultural production refers to the production of products of the soil and of stock farming, including harvesting, milking and farmed animal production prior to slaughter, without performing any further operation changing the nature of such products. 7 World Development Indicators, World Bank. 8 Statistics Indonesia. 2018. Agriculture Intercensal Survey. (link) [1] 2019. Country Gender Assessment of Agricultural and the Rural Sector in Indonesia, FAO Mar 09, 2023 Page 4 of 12 The World Bank Indonesia Climate Resilient and Low Carbon Agriculture Development Project (P180681) are often relegated to unpaid family workers or farm laborers on other people’s farm, due to socio -cultural constraints that render their visibility hidden in plain sight. For women in rural areas, the burden of conducting laborious, time-consuming, unpaid domestic work is often coupled with unpaid role as laborers in subsistence farming, rendering a large portion of their day on tasks that are unpaid and undervalued. 9. The sector has suffered from the impact of climate change over the past decades and will face growing challenges. Nearly 23,000 extreme weather events, including droughts and floods, have occurred between 1998 and 20189, which have had severe impacts on the agricultural sector. While a 12 percent increase in annual rainfall has been recorded between 1990 and 2020, projections indicate increasingly erratic rainfall patterns in the coming years. Annual rainfall is estimated to increase at the national level by 1–5 percent by 2100, but large variations per season are expected, including a 4.8 percent decrease in dry season rainfall.10. 10. The agricultural sector is also a contributor to Indonesia’s GHG emissions. Historically, land use change and forestry had been a major contributor of Indonesia’s GHG emissions11, accounting on average 40.4 percent of national GHG emissions between 2000 and 2020. In 2020, this share was 17.5 percent. Palm oil plantations had been one of the largest drivers of land use change12. The implementation of a moratorium on the issuance of new permits in primary forests and peatlands, introduced initially in 2011 and made permanent in 2019, had contributed to a deceleration in the rate of deforestation in recent years. Separately, agricultural production contributed 9 percent of national GHG emissions in 202013, with rice cultivation and livestock being the main emitters. In addition, food loss and waste are also significant contributors with Ministry of National Development Planning (BAPPENAS) estimating that the average annual contribution of emissions associated with food loss and waste equaled 7.29 percent of Indonesia’s GHG emissions between 2000-2019. The transition to climate smart agriculture (CSA) that combines measures to increase productivity, build resilience, and foster a low-carbon agriculture pathway will contribute to improving farmer and consumer welfare. This is a much-needed priority agenda for GoI. 11. In alignment with the GoI’s “Long-Term Strategy for Low Carbon and Climate Resilience 2050�, the Ministry of Agriculture has formulated a “Grand Design for Climate-Resilient and Low-Carbon Development in the Agricultural Sector� in February 2022. The grand design document describes the strategy to improve the adaptive capacity of the country’s agricultural sector to climate change while simultaneously achieving its NDC commitments, as well as contribute to food security and sustainable agricultural development in Indonesia. The framework, together with the establishment of a MoA Climate Change Working Group, provides an opportunity to improve the linkages and create synergies between the different CSA-related initiatives that currently resides under different technical units within the MoA. By ratifying the Paris Agreement, and as outlined in the Enhanced NDC in 2022, Indonesia has committed to reducing 31.89 percent of GHG emissions by 2030 under the 9 Savelli, A., Atieno, M., Giles, J., Santos J., Leyte, J., Nguyen, N.V.B., Koostanto, H., Sulaeman, Y., Douxchamps, S., Grosjean, G. 2021. Climate Smart Agriculture in Indonesia. CSA Country Profiles for Asia Series. The Alliance of Bioversity and The International Center for Tropical Agriculture; The World Bank Group. Hanoi, Vietnam. 88 p. 10 World Bank. 2021. Indonesia Vision 2045: Towards Water Security. 11 The energy sector and land use change and forestry are the two largest sources of GHG emission in Indonesia. However, according to MoEF data, emissions from land use change and forestry has a greater variation from one year to the other —in some years, it is the largest source of GHG emissions; in other years, it is second to energy. Emissions from land use change and forestry happen when there is a change in land cover from one that is high in carbon stocks (e.g., natural forests) to one associated with a lower level of carbon stock (e.g., palm oil plantations), thereby reducing the absorption of CO2. 12 Juniyanti, L.; Purnomo, H.; Kartodihardjo, H.; Prasetyo, L.B. Understanding the Driving Forces and Actors of Land Change Due to Forestry and Agricultural Practices in Sumatra and Kalimantan: A Systematic Review. Land 2021, 10, 463. (link) 13 Ministry of Environment and Forestry. 2022. Greenhouse Gas Inventory and Monitoring, Reporting, and Verification 2021. Mar 09, 2023 Page 5 of 12 The World Bank Indonesia Climate Resilient and Low Carbon Agriculture Development Project (P180681) unconditional mitigation scenario (without international support) and 43.20 percent under the conditional mitigation scenario (with international support). The GHG emission reduction target within the agriculture sector, focusing primarily on the rice and livestock sectors, is 10 million tons of carbon dioxide equivalent (CO2e) under the unconditional mitigation scenario, and 12 million tons of CO2e under the conditional mitigation scenario. 12. The National Medium-Term Development Plan (Rencana Pembangunan Jangka Menengah Nasional, RPJMN) 2020–2024 has highlighted climate-resilient and low-carbon development as priorities in Indonesia’s climate change mitigation and adaptation plan. In agriculture, adaptation and co-benefits for mitigation are keys in addressing potential GDP loss from climate change risks. The MOA is adapting its programs accordingly, by mainstreaming agriculture adaptation and mitigation in its five priority areas for food system development: productivity enhancement, diversification, logistics, agriculture modernization, and export promotion. 13. The private sector could complement the public sector’s role in incentivizing the adoption of climate -smart practices and in co-financing necessary investments. Indonesia has a vibrant agribusiness sector comprising large multinational corporations, local large agribusiness companies, and MSMEs operating in multiple commodities. To ensure a consistent supply of farm produce that meet market standards, many private sector companies are already providing technical advisory to farmers, promoting the use of improved technologies, as well as providing value chain financing and price premiums for sustainably produced goods. Private sector investments such as these could help fill the gap in finance needed to transition to a climate-resilient and low- carbon agriculture sector, which the public sector alone would have difficulties to cover, particularly at the local level. On the other hand, the public sector could play a stronger role in setting the rules of the game in private sector participation, crowding-in and coordinating private sector investments, as well as in developing critical public infrastructure needed for the transition (e.g., knowledge, innovation, and dissemination systems; irrigation; climate-smart technology packages, among others). Relationship to Country Partnership Framework (CPF) 14. The proposed Climate Resilient and Low Carbon Agriculture Development Project fully aligns with the World Bank Group’s Country Partnership Framework (CPF) for Indonesia for Fiscal Year 2021–2025 (FY21–FY25) (Report No. 157221-ID), under Objective 4.2: Improve agriculture and natural resources-based livelihood. By mainstreaming interventions on digitalization, gender, and climate change adaptation and mitigation, the proposed project activities also aligns with the three cross-cutting themes of the CPF. By supporting smallholder farmers, who comprise mostly the rural poor, the proposed project will directly address the twin goals of the World Bank Group (WBG) of alleviating extreme poverty and boosting shared prosperity. By focusing on emission reduction and adopting a One Health approach for livestock health, the project will also contribute to global public goods of climate change mitigation and pandemic prevention. The project provides an opportunity to act upon recommendations outlined in the World Bank’s Climate Change and Development Report for Indonesia, specific to the agriculture sector, such (i) delivering site-specific CSA intervention packages based on local vulnerabilities; (ii) bridging yield gaps through sustainable intensification; and (iii) re-orienting public spending in agriculture to incentivize resilient and low-carbon agriculture. The project adheres to the Green, Resilient, and Inclusive Development (GRID) approach by focusing on improving resilience; reducing emissions related to rice and livestock; improving carbon sequestration through high-value tree crops; and supporting smallholder farmer’s collective action. The project is also aligned with the World Bank Agriculture and Food Global Practice’s food systems approach that contributes to healthy people, a healthy economy, and a healthy planet. Mar 09, 2023 Page 6 of 12 The World Bank Indonesia Climate Resilient and Low Carbon Agriculture Development Project (P180681) 15. The proposed project appears consistent with Indonesia’s NDCs and will contribute to meeting the GoI’s commitment to the Paris Agreement on climate change adaptation and mitigation. It is well-aligned with Indonesia’s national policy frameworks and high-level commitments. The project will focus on scaling up i) climate-smart rice systems; ii) climate-smart livestock systems; and iii) sustainable intensification of tree crops. The project is anchored in RPJMN 2020–2024. By supporting climate-smart agriculture (including transitioning land to lower-emission crops, scaling up climate-smart rice and climate-smart livestock, improving water and land use efficiency, improving soil health, improving livestock management (including improved feeding practices, animal health, etc.), promoting clean energy in agricultural supply chain, reducing food loss, and so on), this operation contributes to Indonesia’s NDC 2021 and Indonesia’s Long-Term Strategy for Low Carbon and Climate Resilience 2050. This project aims to operationalize the grand design and contribute to core development priorities of the GoI, including improving farmers profitability, commercialization and export, nutritional security, enhanced resilience, and reduced GHG emissions. The GoI signed the methane pledge in United Nations Climate Change Conference (COP26) in 2021. This project, by focusing on methane emission reductions from the rice and livestock, will contribute to meeting GoI’s commitments to methane pledge. C. Proposed Development Objective(s) The Project Development objective is to increase productivity, resilience and adoption of low carbon agriculture approaches of the targeted commodities in selected project locations. Key Results (From PCN) 16. The PDO will be measured through a combination of indicators to demonstrate increased productivity, resilience and low carbon aspect of the project (annex 1 provides an indicative results framework for the project). At the PDO level: 1. Increased productivity will be measured by percentage increase in yield per hectare for rice and percentage increase output per unit of livestock (in %); 2. increased resilience will be measured by calculating land areas adopting climate smart agricultural practices (area under climate-smart rice, area under sustainable pasture management, and area under sustainable intensification of tree crops) (in ha); 3. adoption of low carbon agriculture approaches will be measured by calculating the reduction in GHG emission (in metric tons of carbon dioxide equivalent [MTCO2e]) as a result of project activities. D. Concept Description 1. To promote a more productive, climate-resilient and low-carbon agriculture, the project will focus on three commodity groups namely a) rice; b) livestock; and c) high-value tree crops, both estate crops (e.g., coffee, cocoa, coconut, rubber) as well as horticulture crops (e.g., mango, durian, citrus, rambutan). These commodity groups were selected because of: i) their significance to the economy and rural livelihoods; ii) their exposure and vulnerability to climate change; and iii) their carbon footprint. The project will mainstream diverse approaches that promote climate-resilient and low-carbon agricultural development such as re-generative agriculture, conservation agriculture, sustainable livestock farming, circular economy, reduced food loss, integrated farming and value chain approaches. It will provide an opportunity to demonstrate the different yet complementary roles Mar 09, 2023 Page 7 of 12 The World Bank Indonesia Climate Resilient and Low Carbon Agriculture Development Project (P180681) of public and private actors in value chain development. Lessons from the project would guide further scale -up and adaptation of successful models in other locations, as well as inform the design of other government initiatives aimed at sustainably increasing agriculture productivity, improving farmer income, and enhancing food security. 2. Climate-Smart Rice: The MoA, through the Strategic Irrigation Modernization and Urgent Rehabilitation Project (SIMURP; P15758514) climate-smart pilot, has developed a standardized package for climate-smart rice production. This package comprises seven integrated practices including: i) water-saving practices, such as intermittent irrigation and Alternate Wetting and Drying (AWD); ii) use of high-yielding, resilient, and low-emission rice varieties; iii) balanced fertilizer application; iv) use of organic fertilizer; v) optimum spacing between rows; vi) application of site-specific cropping calendar for agronomic practices; and vii) optimum application of biopesticides and integrated pest and disease management. These integrated practices have demonstrated positive results, including increased yields, reduced GHG emissions, reduced chemical fertilizer application, while also reducing water pollution. The proposed project will scale up these practices, in addition to introducing other good practices such as: i) improved straw management and reduced stubble burning; ii) rice fortification (e.g., use of bio-fortified rice varieties and fortified rice kernels); and iii) increasing rice milling efficiency. 3. Water availability, through irrigation, is one of the core prerequisites for practicing alternate wetting and drying (AWD), which is one of the integral parts of climate-smart paddy production. On-time and adequate availability of water is one of the challenges confronting farmers when adopting AWD, and investment in irrigation infrastructure and services is one of the solutions to address the challenge. In Indonesia, over the past few years, the Government of Indonesia (GoI), with support from international financial institutions (IFIs), has invested significant financial resources in irrigation infrastructure development, rehabilitation, upgrading, and improved service delivery. The World Bank-financed Strategic Irrigation Modernization and Urgent Rehabilitation Project (SIMURP) aims to rehabilitate 250,000 ha of irrigated infrastructure, while the Asian Development Bank-financed Integrated Participatory Development and Management of Irrigation Program (IPDMIP) aims to rehabilitate 500,000 ha of irrigation infrastructure. Taking advantage of and leveraging the massive investment in irrigation infrastructure development, this project aims to transform part of the rehabilitating irrigation acreage into climate-smart paddy production. This project will not finance the development, upgrading, or rehabilitation of primary, secondary, or tertiary irrigation infrastructure. Instead, as a prerequisite for site selection, this project will choose geographies where irrigation infrastructure is fully functioning, financed by SIMURP, IPDMIP, or other GoI projects, and promote climate-smart paddy production in those areas. The project will provide some resources for minor repair and maintenance for water user associations/local MoA offices to ensure last-minute delivery. In addition, the project, under the capacity development sub-component, will support coordination with Water User Associations (WUA), regional and district-level Public Works Departments, and the Ministry of Public Works to ensure coordination on the ground. 4. Climate-Smart Livestock: Both intensive and extensive livestock production systems are found in Indonesia. Demand for beef is rapidly expanding driven by rising per capita incomes. Some practices to promote climate- smart livestock. These include: i) enhanced feed management practices (e.g., changing feed mix, increasing protein content, use of green forage and seaweed supplements) to improve productivity and reduce emissions from enteric fermentation; ii) livestock health interventions (e.g., improving veterinary services, vaccination 14 Approval Date: June 21, 2018 Mar 09, 2023 Page 8 of 12 The World Bank Indonesia Climate Resilient and Low Carbon Agriculture Development Project (P180681) services, interventions around Anti-Microbial Resistance (AMR), improving diagnostics and surveillance capabilities for zoonotic diseases)15; iii) improved animal husbandry practices; iv) improved manure management; v) pasture improvement and rehabilitation; vi) improved herd management; and vii) supply chain interventions to improve culling/slaughterhouses/cold chains, etc. The project aims to support the scale up of these practices. 5. High-Value Tree Crops: The tropical climate of Indonesia is suitable for a range of tree crops, which in addition to providing remunerative incomes to farmers, also provide opportunities for carbon storage. There is potential to support the diversification of smallholder farmers into perennial tree crops, both estate crops as well as horticulture crops especially in degraded and/or marginal agricultural land. Through the proposed project, the MoA will promote diversification into high-value tree crops on existing agricultural land. The intervention could include: a) provision of resilient and high yielding planting material; b) demonstration plots; c) farmer field schools and provision of advisory services; d) facilitation of tools and equipment for pruning and tree management; e) improved soil and tree fertility management practices; f) intercropping for revenue generation; g) support for value chain integration and post-harvest infrastructure; and i) integration with livestock to promote circularity. 6. The above-mentioned integrated packages for climate-smart rice, climate-smart livestock and high-value tree crops will be delivered by this project through a set of four inter-related components namely: 1) developing climate-smart agricultural infrastructure; 2) scaling up the adoption of climate-resilient and low-carbon agricultural technologies and practices; 3) strengthening agricultural institutions and dissemination, as well as human resources empowerment; and 4) project management. Legal Operational Policies Triggered? Projects on International Waterways OP 7.50 No Projects in Disputed Areas OP 7.60 No Summary of Screening of Environmental and Social Risks and Impacts . The overall environmental and social risk rating is Substantial. The environmental risk rating is Substantial while social risk rating is Moderate. The project will bring positive environmental and social benefits through climate-resilient and low- carbon packages and activities targeted at existing farmlands in ten provinces. However, the application of the packages through large scale demonstration plots of up to 50 ha may potentially lead to risks to soil and water when not implemented according to the design of the climate-smart and resilient and low-carbon principles. Environmental and Social Standards (ESS) that are currently relevant for the project include ESS1 (Assessment and Management of Environmental and Social Risks and Impacts); ESS2 (Labor and Working Conditions), ESS3 (Resource Efficiency and Pollution Prevention and Management), ESS4 (Community Health and Safety), ESS5 (Land Acquisition, Restrictions of Land Use and Involuntary Resettlement), ESS6 (Biodiversity Conservation and Sustainable Management of 15 These also contribute to the One Health agenda. Mar 09, 2023 Page 9 of 12 The World Bank Indonesia Climate Resilient and Low Carbon Agriculture Development Project (P180681) Living Natural Resources), ESS7 (Indigenous Peoples), and ESS10 (Stakeholder Engagement and Information Disclosure). The project locations do not affect international waterways and therefore does not fall within the scope of application of OP 7.5 Projects on International Waterways and is not implemented in any disputed areas; thus, OP 7.60 Projects in Disputed Areas is also not triggered. The environmental risk rating is Substantial. Site-specific technologies will be applied through large-scale demonstration plots which may be as large as 50 ha in contiguous farmer plots. The relatively large scale of the demonstration plots which, when not implemented according to climate-smart and resilient and low-carbon technologies, may potentially lead to risks such as eutrophication of surface waters as result of application of agrochemicals and pesticides; hazardous farm wastes, disposal of feed/animal/processing wastes, and fertilizers leaching in surface water run off contaminating soils and groundwater; soil erosion and sedimentation; and health and safety risks of workers and communities through exposure to physical, chemical and biological hazards (zoonosis, bacteria, fungi, mites, viruses); and noxious odors. Climate-resilient and low-carbon technologies are relatively new to Indonesia and together with the limited experience of the implementing agency and farmers may increase the likelihood of these risks despite that the project is providing capacity building. Although MoA showed commitment & good environmental risk management in past & ongoing projects with the Bank, those activities were much smaller in size compared to this project, thus will require larger capacity & resources to implement adequately. MoA will set up institutional arrangements for ES management and allocate sufficient budget for applying ESMF, hiring at least one dedicated environmental expert & one social expert & assigning ES focal points at project locations. The social risk rating is Moderate. By design, the project is envisaged to generate positive outcomes through increasing resilience and reducing emissions of selected commodities aimed at sustainably increasing agriculture productivity, improving farmer income, and enhancing food security. The project will be implemented on the existing agriculture land areas and involve sustainable agriculture intensification. The social risk rating is assessed as moderate based on the project type and nature of its activities that includes collecting data/information through mapping activity; small to medium scale civil works; data and digital infrastructures; knowledge dissemination; incentives provision, access to finance, and institutional strengthening. Construction works to support climate-smart infrastructures are expected to be of small to medium size will be implemented within the existing facilities premises and/or existing land owned by project beneficiaries. The demonstration plots will also use land owned by beneficiaries and/or MoA’s land. Small scale land acquisition may occur for the development of rural climate-smart facilities. Expropriation of property, physical displacement, and restriction of land use are not envisaged. Risks associated with labor influx, Sexual Exploitation and Abuse/Sexual Harassment (SEA/SH) or Gender-based Violence (GBV), is considered low as civil works are planned to be small-medium scale and will mostly employ local labor. Risk associated with child labor and risk related to Community Health and Safety due to the use of agrochemical are anticipated. It is essential for the project design to ensure inclusiveness and to provide accessible channels and equal distribution information system to address issue on social inclusion for project activities associated with data and digital information, knowledge dissemination, incentive provision and access to finance. Environmental and social instruments. The potential environmental and social risks and impacts will be mitigated through a project level ESMF as the scale of activities and exact footprint are not yet determined. The ESMF will screen subprojects to exclude high risk activities (avoids areas of biodiversity of importance, large-scale construction, projects lead to compulsory land acquisition and physical displacement, procurement of harmful agrochemicals, use of genetically modified organisms etc.) and identify requirements for preparing the Environmental Site Assessment (ESA [AMDAL, Analisis Mengenai Dampak Lingkungan]), Environmental Social Management Plan (ESMP [UKL-UPL, Upaya Pengelolaan Lingkungan-Upaya Pemantauan Lingkungan] or Statement of Readiness to Manage and Monitor the Environment [SPPL, Surat Pernyataan Pengelolaan Lingkungan]), LARAP (Land Acquistion and Resettlement Action Plan) in accordance with the subproject environmental and social risks. The ESMF will detail: ECOPs to manage risks of small to medium construction Mar 09, 2023 Page 10 of 12 The World Bank Indonesia Climate Resilient and Low Carbon Agriculture Development Project (P180681) works, management of wastes, asbestos handling, electronic waste disposal, and occupational health and safety; pesticides management; screening and land due diligence; Resettlement Policy Framework (RPF) including Voluntary Land Donation and willing buyer-willing seller protocols; Labor Management Procedure (LMP) including provisions to limit children participation in farm based project activities and general provisions on terms of employment of project workers referring to applicable national labor law and ESS2 and worker’s grievance redress mechanism, COVID-19 protocols; and requirement for a Construction ESMP (CESMP). Institutional arrangements, roles and responsibilities, assignment of dedicated environmental and social experts, capacity building, and allocation of budget will be detailed in the ESMF. Further assessment will be conducted regarding the project's risks to Indigenous Peoples as the exact sub-project locations is still unknown. However, it is unlikely that Indigenous Peoples are present in the sub-project locations considering that Indigenous Peoples are not usually involved in commercial farming activities. In the circumstance that technical assistance is applied to design site-specific packages or other activities, a Terms of Reference (TOR) will be developed to include requirements of good environmental and social risk management practices & ESMF. Further clarification on use of technical assistance will be made closer to appraisal. The TOR will be reviewed and cleared by the Bank TOR and specified accordingly in the ESCP. A Stakeholder Engagement Plan (SEP) will also be prepared to provide guidance to the project implementers in promoting inclusive engagement during project implementation, establish a grievance redress mechanism and requirements of information disclosure. . CONTACT POINT World Bank Vikas Choudhary Senior Agriculture Specialist Borrower/Client/Recipient Ministry of Finance Pak Suminto Director General direktoratPH@kemenkeu.go.id Implementing Agencies Ministry of Agriculture Pak Hermanto Executive Secretary ditjen.psp@pertanian.go.id Mar 09, 2023 Page 11 of 12 The World Bank Indonesia Climate Resilient and Low Carbon Agriculture Development Project (P180681) FOR MORE INFORMATION CONTACT The World Bank 1818 H Street, NW Washington, D.C. 20433 Telephone: (202) 473-1000 Web: http://www.worldbank.org/projects APPROVAL Task Team Leader(s): Vikas Choudhary Approved By APPROVALTBL Practice Manager/Manager: Country Director: Satu Kristiina Jyrintytar Kahkonen 29-Mar-2023 Mar 09, 2023 Page 12 of 12