The Government of India, Government of Himachal Pradesh and the World Bank today signed a US$80 million loan agreement to improve water management practices and increase agricultural productivity in selected Gram Panchayats (Village Councils) in Himachal Pradesh, a mountain state richly endowed with natural resources.

The Integrated Project for Source Sustainability and Climate Resilient Rain-Fed Agriculture in Himachal Pradesh will be implemented in 428 Gram Panchayats in 10 districts benefiting over 400,000 smallholder farmers, women and pastoral communities.

“As we encourage climate-smart agricultural practices in India, farmers will need both technical and financial support to adapt agricultural practices relevant to their geography and climate. As a mountainous state, Himachal Pradesh is particularly vulnerable to climate change and associated risks,” said Shri Sameer Kumar Khare, Additional Secretary, Department of Economic Affairs, Ministry of Finance, Government of India. “Sustainable water management practices under this project can play a big role in doubling farmers’ incomes, a goal set by the Government of India. It is, therefore, critical that the best use is made of all available technologies and resources to increase water-use efficiency,” he added.

The loan agreement was signed by Shri Sameer Kumar Khare, Additional Secretary, Department of Economic Affairs, on behalf of the Government of India and Mr Junaid Kamal Ahmad, Country Director for India, the World Bank on behalf of the World Bank. Whereas, the project agreement was signed by Shri Ram Subhag Singh, Additional Chief Secretary (Forest), on behalf of the Government of Himachal Pradesh; and MrJunaid Ahmad, Country Director for India, the World Bankon behalf of the World Bank.

“Climate change is a global issue. But, addressing its impact requires building resilience at the local level,” said MrJunaid Ahmad, World Bank Country Director in India “Not surprisingly, Himachal Pradesh’s history of devolving greater responsibility to Gram Panchayats offers the state a great advantage. Through GPs, Himachal supports farmers and pastoral communities in securing their livelihoods in face of climate variability and challenging agro-ecological conditions,” he added

In Himachal Pradesh, many of the lowland areas lack access to irrigation water and depend on decreasing amounts of rainfall during the critical monsoon season. Agricultural production and snowlines have already shifted to higher altitudes, impacting the production of fruits, including HP’s iconic apples. Climate change is also expected to increase average temperatures and decrease rainfall in the lowlands, while both temperatures and rainfall are expected to increase in the highlands, which could lead to more extreme flooding events.

The project will improve upstream water sources in forests, pastures and grasslands and ensure sufficient water is available for sustainable agriculture both in Himachal Pradesh and in downstream states.

Enhancing the climate resilience of agriculture and its allied activities is a key component of the project for which efficient use of water is the focal point. The project will set up hydrological monitoring stations to monitor the water quality and quantity. This will not only help lay the foundation for future water budgeting through better land use and agricultural investments, but also ensure more holistic catchment area treatment (CAT) plans that are based on source sustainability, carbon sequestration, and water quality.

The investment in downstream areas will augment the use of irrigation and help farmers shift from low-value cereal production to climate-resilient crop varieties and to higher-value fruit and vegetable production. The focus on increasing climate resilience and water productivity will help farmers maximize their financial returns on water use. The project will also work in collaboration with other government programs particularly those of the agriculture, horticulture, and animal husbandry departments. Supporting institutions through training of gram panchayats will help the state better manage its water resources.

“We hope that climate adaptation and mitigation measures under the project will help the state plan landbased resource management in the upper catchments of targeted micro-watersheds in Himachal Pradesh and enhance agriculture and water productivity in the downstream areas,” said MrChristopher Paul Jackson, Senior Agriculture Economist and World Bank’s Task Team Leader for the project. “Ultimately, such an effort will help improve forest cover, increase water quality and quantity, reduce erosion, and enhance community participation, including that of women, youth, and disadvantaged groups.”

Such efforts are also expected to generate carbon benefits for the state. The net GHG benefit per hectare for the project area is estimated to be 0.6 tCO2/ha/year.

The US$80 million loan from the International Bank for Reconstruction and Development (IBRD) has a final maturity of 14.5 years including a grace period of five years.

Loan financing for climate-resilient agriculture enables water management, hydrological monitoring and downstream irrigation investments and capacity building. The Governments of India and Himachal Pradesh and the World Bank agreed on an IBRD-financed project to improve water management and climate resilience in rain-fed agriculture across 428 Gram Panchayats, combining upstream source sustainability, hydrological monitoring and downstream irrigation investments, supported by institutional collaboration, Gram Panchayat capacity building, and measures to increase water-use efficiency and crop diversification.