Document of The World Bank Report No. 13715-HO STAFF APPRAISAL REPORT HONDURAS ENVIRONMENTAL DEVELOPMENT PROJECT MARCH 1, 1995 Natural Resources and Rural Poverty Division Country Department II Latin America and the Caribbean Regional Office CURRENCY EQUIVALENTS Honduran Lempira 1.0 = US $0.11 (February 1995) SDR 1.0 = US $1.47 (January 31, 1995) FISCAL YEAR January I to December 31 WEIGHTS AND MEASURES The Metric System is used throughout the report ABBREVIATIONS AND ACRONYMS AGSAC Agricultural Sector Adjustment Credit (Credit No. 2540-HO) CAS Country Assistance Strategy CESCCO Center for the Study and Control of Contaminants (Centro de Estudios y Control de Contaminantes) COCONA National Consultative Council of the Environment (Consejo Consultivo Nacional del Ambiente) COHDEFOR Honduran Forestry Development Corporation (Corporacion Hondurenia de Desarrollo Forestal) CONAMA National Commission of the Environment (Comision Nacional del Medio Ambiente) CPPR Country Portfoho Performance Review CSJ Supreme Court (Corte Suprema de Justicia) CTA Technical Advisory Committee (Comitd Tecnico Asesor) DECA General Directorate of Environmental Assessment and Control (Direccion General de Evaluacion y Control Ambiental) DGAM General Directorate of Environmental Services of the Ministry of Public Health (Direcci6n General de Atencion al Medio de la Secretaria de Salud Pu`blica) DIGEPESCA General Directorate of Fisheries of the Ministry of Natural Resources (Direccion General de Pesca de la Secretaria de Recursos Naturales) DMH General Directorate of Mines and Hydrocarbons of the Ministry of Natural Resources (Direcci6n General de Minas e Hidrocarburos de la Secretaria de Recursos Naturales) DPPA General Directorate of Environmental Policy and Planning (Direccion General de Politicas y Planificaci6n Ambiental) DRH General Directorate of Water Resources of the Ministry of Natural Resources (Direcci6n General de Recursos Hidricos de la Secretaria de Recursos Naturales) EIA Environmental Impact Assessment (Evaluaci6n de Impacto Ambiental) EJ Judicial School of the Supreme Court (Escuela Judicial de la Corte Suprema de Justicia) ENEE National Electric Energy Company (Empresa Nacional de Energia Eldctrica) FA/FGR Environmental Prosecutor's Office of the Public Prosecutor's Office (Fiscalia del Ambiente de la Fiscalia General de la Repuiblica) FGR Public Prosecutor's Office (Fiscalia General de la Repuiblica) FHIS Honduran Social Investment Fund (Fondo Hondurenio de Inversi6n Social) GDP Gross Domestic Product GIS Geographic Information System GOH Government of Honduras ICB International Competitive Bidding IDA International Development Association IDB Inter-American Development Bank IDF Institutional Development Fund IIJ Juridical Research Institute of the National Autonomous University of Honduras (Instituto de Investigaciones Juridicas de la Universidad Aut6noma de Honduras) IHT Honduran Tourism Institute (Instituto Hondurefio de Turismo) LCB Local Competitive Bidding LGA General Environmental Law (Ley General del Ambiente) LIB Limited International Bidding NGO Non Govenmment Organization NIF Not IDA-financed PA/PGR Environmental Attorney's Office of the General Attomey's Office (Procuraduria del Ambiente de la Procuraduria General de la Republica) PAAD Environment and Development Action Plan (Plan de Accion de Ambiente y DesarroUlo) PASI Informal Sector Support Program (Programa de Apoyo al Sector Informal) PCU SEDA's Project Coordination Unit (Unidad de Coordinacion del Proyecto de la SEDA) PGR General Attomey's Office (Procuraduria General de la Republica) PHRD Pohcy and Human Resources Development Fund SANAA National Autonomous Water and Sewage Service (Servicio Aut6nomo Nacional de Acueductos y Alcantarillados) SDR Special Drawing Right SECPLAN Ministry of Coordination, Planning and Budget (Secretaria de Coordinacion, Planificaci6n y Presupuesto) SECOPT Ministry of Communications, Public Works and Transport (Secretaria de Comunicaciones, Obras Publicas y Transporte) SEDA Ministry of the Environment (Secretaria del Ambiente) SHCP Ministry of Finance (Secretaria Hacienda y Credito Publico) SINEIA National System of Environmental Impact Assessment (Sistema Nacional de Evaluacion de Impacto Ambiental) SINIA National System of Environmental Infomiation (Sistema Nacional de Informacion Ambiental) SRN Ministry of Natural Resources (Secretaria de Recursos Naturales) SSP Ministry of Public Health (Secretaria de Salud Publica) SOE Statement of Expenditures UNAH National Autonomous University of Honduras (Universidad Aut6noma de Honduras) [JPSA Agriculture Sector Planning Unit (Unidad de Planificaci6n Sectorial Agricola) USAID United States Agency for International Development UNDP United Nations Development Programme UOT Land Use Planning Unit of the Ministry of Coordination, Planning and Budget (Unidad de Ordenamiento Territorial de la Secretaria de Coordinacion, Planeamiento y Presupuesto) VAT Value Added Tax HONDURAS ENVIRONMENTAL DEVELOPMENT PROJECT STAFF APPRAISAL REPORT TABLE OF CONTENTS CREDIT AND PROJECT SUMMARY ........................................................ iii 1. BACKGROUND .........................................................1 A. Introduction .........................................................1 B. Geographic and Socio-Economic Context ........................................................ 1 2. THE ENVIRONMENTAL SECTOR .........................................................3 A. Overview .........................................................3 B. Key Environmental Issues .........................................................3 C. Legal and Institutional Framework .........................................................5 D. Government Sectoral Policy, Strategy, and Objectives ........................................................7 E. Assistance Strategy .........................................................8 F. Lessons of Experience .........................................................9 G. Rationale for IDA Involvement ........................................................ 10 3. THE PROJECT .........................................................11 A. Project Objectives .................................................1....... 1 B. Project Description .........................................................11 (1) Environmental Planning and Legislation Component ................................................... 12 a. Environmental and Land Use Planning ........................................................ 13 b. National Environmental Information System ........................................................ 14 c. Legal and Regulatory Framework ........................................................ 15 d. Training and Public Awareness ......................................................... 17 (2) Environmental Quality Assessment Component ........................................................ 17 a. National System of Environmental Impact Assessment ............................................. 17 b. Pilot Projects for Environmental Impact Assessment and Auditing ........................... 18 (3) Local Government Environmental Management Component ........................................ 18 a. Technical Assistance for Municipal Environmental Management ............................. 19 b. Environmental Investments ........................................................ 19 (4) Administration and Project Coordination Component .................................................. 22 a. Technical Assistance to SEDA's Administrative Unit .............................................. 22 b. Project Coordination and Management ........................................................ 23 4. PROJECT COSTS AND FINANCING PLAN ........................................................ 24 A. Project Costs ........................................................ 24 B. Financing Plan ........................................................ 26 C. Recurrent Costs Arising from the Project ........................................................ 26 D. SEDA's Budget and Project Sustainability ................................................................. 26 5. PROJECT ORGANIZATION AND MANAGEMENT .......................................................... 28 A. Status of Preparation ................................................................. 28 B. Implementation Arrangements and Schedule ................................................................. 28 This report is based on the findings of a World Bank appraisal mission which visited Honduras on June 29 - July 9, 1994. The mission members were Messrs./Mmnes. Carlos E. Quintela (Task Manager), Anita Artaza, Eduardo Forno, Robert Kanchuger, Alberto Ninio, Juan Quintero, and Victor Vergara. Peer reviewers are Messrs. Philip Hazelton (LA3NR) and Luis Pisani (LAI HR). Messrs. Edilberto Segura, Michael Baxter, and Ted Nkodo are the Director, Division Chief, and Projects Adviser, respectively. ii C. Procurement ................................................................ 29 D. Disbursements ................................................................ 32 E. Accounts and Audits ................................................................ 34 F. Project Supervision, Monitoring and Evaluation ..................................................... ......... 35 6. EXPECTED BENEFITS AND RISKS ................................................................ 36 A. Benefits ................................................................ 36 B. Risks ................................................................ 37 7. AGREEMENTS AND RECOMMENDATION ................................................................ 39 A . A greem ents ................................................................ 39 B. Recommendation ................................................................ 40 LIST OF TABLES Table 1: Participating Municipalities in the Local Government Environmental Management C om ponent ................................................................ 20 Table 2: Proposed Environmental Subproject Categories for FHIS ............................ ................ 22 Table 3: Estimated Project Costs ................................................................ 25 Table 4: Financing Plan ................................................................ 26 Table 5: Financing Plan by Expenditure Category ................................................................ 27 Table 6: Financing Plan for Incremental Recurrent Costs ........................................................... 27 Table 7: Minimum Projected Increase in SEDA's Budget .......................................................... 28 Table 8: Procurement Arrangements ................................................................ 30 Table 9: Estimated Schedule of IDA Disbursements ................................................................ 33 Table 10: Financing Plan and Estimated Annual Disbursements ................................................. 34 LIST OF ANNEXES Annex A: General Description of the National System of Environmental Impact Assessment Annex B: Institutional and Legal Framework Annex C: General Description of the Ministry of the Environment Annex D: Policy Statement from the Government of Honduras Annex E: Project Implementation Schedule Annex F: Detailed Costs Tables Annex G: General Description of Honduran Social Investment Fund Annex H: Commitment Letter for Counterpart Financing by the Government of Honduras Annex I: Monitoring and Reporting Annex J: Supervision Plan Annex K: Project Priority Letter from the Government of Honduras Annex L: Documents in Project File Map: IBRD 26390 iii HONDURAS ENVIRONMENTAL DEVELOPMENT PROJECT STAFF APPRAISAL REPORT CREDIT AND PROJECT SUMMARY Borrower: The Republic of Honduras Implementing Agency: The Ministry of the Environment (Secretaria del Ambiente - SEDA) Beneficiaries: The Ministry of the Environment (SEDA), the Honduran Social Investment Fund (Fondo Hondurefno de Inversi6n Social - FHIS), line ministries and agencies, and municipalities. Poverty: Not applicable. Amount: SDR 7.4 million (US $10.8 million equivalent) Terms: Standard IDA terms, with 40 years maturity and 10 years of grace. Commitment Fee: 0.50% on undisbursed credit balances, beginning 60 days after signing, less any waiver. Financing Plan: See para. 4.4 Economic Rate of Return: Not applicable. Environmental Classification: B Map: IBRD 26390 HONDURAS ENVIRONMENTAL DEVELOPMENT PROJECT STAFF APPRAISAL REPORT 1. BACKGROUND A. Introduction 1.1 Honduras is one of the poorest and least developed countries in the Latin America and Caribbean Region, with an annual per capita income of $580. About one third of the population lives in extreme poverty. Although the natural resource potential of Honduras is substantial, population growth of about 3% annually, along with inappropriate land management and forestry policies, have been responsible for the conversion of large areas of high forestry potential into other less suitable activities, the destruction of vital watersheds, and the loss of important biodiversity assets. Unplanned urban settlements, the lack of budgetary resources and inefficient cost recovery policies to finance the necessary infrastructure are among the leading causes of inadequate quality of water supply, poor sanitation, deficient solid waste management, and the resulting health problems. 1.2 Public awareness of the importance of protecting the country's valuable timber, soil, water, and coastal resources and improving the quality of urban life has been growing as a result of increasing evidence that the unsustainable exploitation of these resources and urban deterioration threaten the country's economic development and health. Legislation for agriculture, forestry, and municipal government has been enacted which has helped establish a framework for improved resource management. The Government of Honduras (GOH) has also moved to coordinate and implement its environmental policy by enacting in July 1993 an Environmental Law (Ley General del Ambiente - LGA), which established a Ministry of the Environment (Secretaria del Ambiente - SEDA), issuing implementing regulations, and completing the Environment and Development Action Plan (Plan de Acci6n del Ambiente y Desarrollo - PAAD). The new Administration, which assumed office in January 1994, has affirmed the environmental initiatives of its predecessor, as well as the commitment to protect the environment and promote the sustainable use of the country's natural resources. B. Geographic and Socio-Economic Context 1.3 Honduras is a heavily forested and predominantly mountainous country, with narrow coastal plains and numerous inland valleys. It straddles Central America, between the Caribbean Sea and the Pacific Ocean. Its subtropical climate, with wide variations of humidity, provides a habitat for a diversity of flora and fauna. In that rich and diverse region, and under limited resource use regimes, indigenous peoples in pre-Columbian times managed to thrive and prosper. With an increasing demand for natural resources 2 and population pressure, which continues at a 3% population annual growth rate, Honduras is facing a much different reality. 1.4 Because of its topography, the arable land available for cultivation in Honduras is limited. Only about 25% of the land area is classified as suitable for agriculture and livestock. Areas suitable only for forestry, on the other hand, originally covered about two-thirds of the territory. However, a series of factors, among them the concentration of land ownership in few hands, policies that discouraged the sustainable use of forests, and high population growth rates, have resulted in the expansion of agriculture, mostly in the hands of the rural poor, into marginal areas, as well as in non-selective timber extraction practices, The consequences of these trends have been the accelerated loss of vegetation cover, notably the reduction of the actual forest cover to about 45% of the total land area, and the increased incidence and severity of soil erosion, which in turn have deeply affected local water cycles and the productive potential of agricultural land. 1.5 The economy of Honduras is relatively small and highly sensitive to changes in the external environment as a result of its dependence on a few export commodities and donor assistance, and because of a heavy debt burden. Manufacturing and mining industries combined account for approximately 25% of GDP. Manufacturing has been traditionally dominated by agro-industries, but has diversified in recent years to include apparel, electrical appliances, leather goods, and various assembly type products produced mainly for the US market. The service sector (including public administration) accounts for the remaining 35% of GDP, which includes a small tourism sector with potential for further growth. 1.6 Agriculture, directly and indirectly, accounts for about 40% of GDP, 80% of merchandise exports, and about 60% of employment. Banana and coffee are the leading traditional export products, accounting for about 60% of total exports. Shrimp and lobster exports have grown dramatically in recent years, rising from about 3% of total exports in 1980 to about 13% in 1992. Although the forestry sector has great potential, the export value of primary forest products decreased by more than 40% during the 1980s, and now accounts for about 6% of exports. The agricultural sector presents the anomaly of a small number of relatively technologically advanced and prosperous producers of the country's principal export products existing alongside a large number of very poor and small farmers who eke out a subsistence existence on lands that are frequently not well suited for agriculture. 1.7 Increased agricultural productivity is one of Honduras' most promising avenues for future economic growth. This can be achieved through modernizing production technologies and by moving large areas from low-value crops such as corn, beans, and sorghum, to higher value export crops such as melons and pineapples. The rich natural resource base of Honduras can accommodate further expansion in some sectors, such as fisheries and the rational development of forestry resources. However, the sustainability of this growth is dependent on the protection, adequate management, and rational use these resources. 3 2. THE ENVIRONMENTAL SECTOR A. Overview 2.1 The GOH, and the public in general, have become increasingly aware of the extent and seriousness of environmental degradation in Honduras and its potential negative social and economic impact. The country has had difficulty in managing its environmental problems as a result of previous inappropriate policies, institutional weaknesses, poor coordination between government agencies, and incomplete and unclear legislation. In an effort to develop a more comprehensive and coordinated set of environmental policies, the Government created the National Commission for the Environment (Comisi6n Nacional del Medio Ambiente - CONAMA) in July 1990, with responsibility for preparing legislation, developing policies and regulations, establishing training programs, and monitoring compliance with international treaties. CONAMA, supported by an Institutional Development Fund (IDF) grant, drafted the PAAD described above. As a result of the enactment of the draft legislation into law in July 1993, CONAMA became the Ministry of the Environment, SEDA. Since achieving ministerial status, SEDA has prepared implementing regulations and regulations for the preparation of environmental impact assessments that have been issued by the Government. 2.2 The enactment of the LGA, the issuance of the PAAD, and the initial regulations issued by the GOH have been major achievements in themselves. They are the basis on which to develop institutions and improve environmental management at the national and local levels, and by public agencies and private organizations. However, the development of a sound institutional framework on which to support a broad and far-reaching environmental agenda and to implement the growing body of environmental laws and regulations has only just barely begun. The proposed project's fundamental goal is to assist the GOH in its efforts to move these initiatives forward. B. Key Environmental Issues 2.3 Honduras' principal environmental concern is the sustainable use of natural resources. The key environmental issues identified in the PAAD are related to deforestation, soil degradation, water pollution, depletion of coastal and marine resources, and the loss of biodiversity. 2.4 The most visible and perhaps most pressing environmental issue is that of deforestation. In the last thirty years, Honduras has lost about 40% of its forest, principally as a result of an advancing agricultural frontier and extensive livestock ranching, in addition to logging and firewood extraction. More than half of the cleared land was only suitable for forestry, so that deforestation has neither served the interests of the environment, nor that of sustainable agricultural development. Until 1992, the Agrarian Reform Law and forestry law and policies established a perverse set of incentives 4 which encouraged cutting the forest and replacing it with crops or pasture to avoid possible expropriation of land and lumber resources. The GOH's monopoly of timber exports, direct intervention in pricing and production, and controls over the production and marketing of wood and agriculture products, reflected and encouraged the short-run, extractive nature of the Honduran forest resource utilization by small and large enterprises, and inhibited the development of sustainable practices in the private sector forestry industry. The increased rates of deforestation and loss of vegetation cover have had a serious effect on the health of watersheds, exacerbating the effects of regional precipitation patterns by disrupting local water cycles. In recent years, the diminished water flows in the summer caused by lower than average precipitation and watershed destruction are creating scarcities of potable water to meet urban needs, and of water for irrigation and energy generation. For the same reasons, in the winter months, the flood cycle in some areas has decreased from fifteen to twenty years cycles to become annual events. These problems have been aggravated by Honduras' rapidly growing population (the country's 3% annual growth rate is one of the highest in Latin America), an increased urban population (which now accounts for 40% of the total country population), and the growing demand for potable and irrigation water. 2.5 Soil degradation occurs in two principal ways in Honduras. One is with respect to poor farmers engaged in hillside farmning. It is estimated that at least 25% of the land used for agriculture falls into this category and that 30 to 40% of the population is engaged in subsistence level hillside farming. Improper farming practices have led to significant soil erosion, which has had negative economic and ecological consequences. Soil erosion has been responsible for agricultural production losses and river, dam and coastal area siltation. The second concerns flatland agricultural activities in the coastal plains and valleys. These lands have been dedicated for decades to extensive livestock production and the production of export crops. Soils have been depleted because of monoculture practices and contaminated by the indiscriminate use of agricultural chemicals, causing both economic loss and health hazards. 2.6 Water pollution has several causes. The often excessive and uncontrolled use of chemical fertilizers and pesticides, particularly in coffee and banana production, has contaminated both water and soils. The lack of adequate sewage treatment facilities has contaminated the country's major rivers. Inadequate handling of solid wastes, and the failure to treat industrial and hospital wastes has also increased water and soil contamination. 2.7 The depletion of marine and coastal resources has become a matter of increasing concern as shrimp farming continues to play an increasingly important role in the national economy. The estuaries and mangroves of both coasts have been subject to deterioration as a result of their over-exploitation and contamination. According to a 1993 study, as reported by SEDA, between 1989 and 1992, 17% of the high-quality mangroves (categories other than stressed and dwarf mangroves) in the Gulf of Fonseca were lost. Coral reefs have been destroyed in the Bay Islands area on the Atlantic coast at an 5 alarming rate as a result of tourism, sedimentation, and contamination. Recorded fish catches on both coasts have also fallen in recent years. 2.8 The expansion of Honduras' agricultural frontier and the destruction of its forest cover have been the principal cause of the loss of biodiversity. Honduras has diverse ecosystems, with rich flora and fauna, particularly in its humid tropical and subtropical forests. Although the GOH has identified and is pursuing various programs for preserving biodiversity, its most important efforts will be aimed at the sustainable use and conservation of forests and natural resources. C. Legal and Institutional Framework 2.9 Honduras' 1982 Constitution establishes the general framework for environmental protection and the enactment of environmental laws. Article 45 gives the State the responsibility of maintaining an environment that will protect the health of the people, and Article 340 provides authority for it to regulate natural resources and for granting use permits to the private sector. However, it was not until July 1993 that the LGA was enacted. The new law has substantially altered the legal and institutional framework for environmental management by: * establishing the principle that coordinated planning and management are necessary for the successful management and preservation of natural resources; * creating a lead environmental agency, SEDA, with responsibility for sector policy development, coordination, and planning; X requiring environmental impact assessments for public and private activities with potentially negative environmental consequences, as established in the regulations of the National System of Environmental Impact Assessment (Sistema Nacional de Evaluaci6n de Impacto Ambiental, SINEIA), which are summarized in Annex A; * providing for the issuance of environmental standards and regulations; and * creating a legal environmental enforcement arm, the Environmental Attorney's Office (Procuraduria del Ambiente - PA/PGR). 2.10 SEDA's principal responsibilities, in addition to its policy, planning, and coordination activities, include: (a) providing technical assistance to sector agencies and municipalities; (b) coordinating the development of a national land use plan;' (c) evaluating environmental impact assessments and the issuance of environmental licenses Land use planning (Ordenamiento Territorial), as defined by SECPLAN, has three dimensions: infrastructure, human settlements, and natural resources, sensu lato. All land use planning initiatives by the GOH will be carried out in this context, from basic information management to the actual implementation of the resulting land use plan (Plan de Ordenamiento Territorial). 6 for projects; and (d) developing environmental norms and standard. The law creating SEDA limits its staff to 35 persons. In the short time since its creation, SEDA has focused on recruiting staff, issuing the PAAD and key regulations, and on preparing this project. A description of the current institutional and legal framework for environmental management and of SEDA can be found in Annex B and Annex C, respectively. 2.11 SEDA faces some difficult challenges in fulfilling its legislative mandate to carry out its responsibilities under the LGA. It is correctly giving priority to the building of its staff and competence. However, it also faces the challenge of establishing its environmental leadership position. Sector agencies, often representing interests more concerned with exploitation rather than conservation of natural resources, and operating under their own laws and with large bureaucracies, may resist being integrated into the environmental approach established by the new law. In addition to national agencies, Honduras' 291 municipalities, with important environmental responsibilities under the 1992 Municipal Law, must be integrated into the new scheme. Overcoming sector agency resistance and establishing leadership will require SEDA to demonstrate competence, political skill, and commitment. 2.12 The most important sectoral agencies with environmental responsibilities are: (a) the Ministry of Natural Resources (Secretaria de Recursos Naturales - SRN), which has jurisdiction over forestry, agriculture, mining, water resources, and fisheries; (b) the Ministry of Public Health (Secretaria de Salud Publica - SSP), which has jurisdiction over water quality and food products; and (c) the Ministry of Communications, Public Works and Transport (Secretaria de Comunicaciones, Obras Publicas y Transporte - SECOPT), which is responsible for large public sector infrastructure projects. Other important agencies with environmental responsibilities include the Honduran Forestry Development Corporation (Corporaci6n Hondurefia de Desarrollo Forestal - COHDEFOR), the National Electric Energy Company (Empresa Nacional de Energia Electrica - ENEE), the National Autonomous Water and Sewerage Service (Servicio Nacional Aut6nomo de Acueductos y Alcantarillados - SANAA), and the Honduras Tourism Institute (Instituto Hondurefio de Turismo - IHT). The Ministry of Planning (Secretaria de Coordinaci6n, Planificaci6n y Presupuesto - SECPLAN) retains important planning authorities that affect the environment, particularly in relation to public investment and land use planning. 2.13 In addition to the LGA and the Municipal Law, which affect general environmental management, there are many laws covering sector specific issues. A list of these laws, which are sometimes conflicting and overlapping, is contained in Annex B. A new law has recently been enacted that creates the Public Prosecutor's Office (Fiscalia General de la Republica - FGR) that will share criminal and judicial enforcement responsibilities with the PA/PGR. Knowledge of the LGA and the various laws that affect environmental quality and management is limited, not only in the general public, but also in the legal community. This is due not only to the newness, complexity and conflicting nature of some of the laws, but to a lack of training in environrnental law matters and problems in the publication and distribution of the laws. Within the framework provided by the LGA, it will now be necessary to resolve outstanding conflicts in the law and to issue required environmental 7 standards and regulations. The criminal laws and enforcement procedures will have to be developed to assure compliance with the law. 2.14 The enactment of the LGA, the establishment of SEDA, and the issuance of the PAAD have provided a legal and institutional base for managing the environment. The proposed project is designed to build on that base through the institutional strengthening and investments that it will finance. D. Government Sectoral Policy, Strategy, and Objectives 2.15 The GOH's sectoral policy, strategy and objectives are set out in the PAAD and amplified and confirmed in the attached policy statement (Annex D). The GOH'sis dedicated to protecting the environment and the promotion of sustainable development of the country's natural resources. 2.16 As already noted, deforestation is Honduras' most pressing environmental issue. The rapid and often indiscriminate destruction of forests has been in large part responsible for many of Honduras' problems of soil degradation, water shortages, flooding, estuary sedimentation, and loss of biodiversity. As a result, the GOH has given its highest priority to the halting of harmful practices and to develop policies and procedures that support the environmentally sustainable management of forest and land resources. 2.17 The centerpiece of the GOH's forestry and agricultural sector reforms is the 1992 Law for the Modernization and Development of the Agricultural Sector ( and its implementing regulations. This law has introduced modifications to the forestry laws that: (a) eliminate any activity or function of the forestry public sector related to the production, marketing, and trade of forest products; (b) reorient the role of the public sector towards management and protection of public forests, regulation of private forests, fire protection, and forest extension and research; (c) require management plans as a pre-requisite for all forest utilization; and (d) provide for the establishment of protected forest areas and the promotion of biodiversity conservation. IDA is supporting the GOH's new policies and procedures through an SDR 43.3 million (US $60 million) Agricultural Sector Adjustment Credit (AGSAC), Credit No. 2540-HO, which was approved in July 1993. 2.18 Other priority environmental issues at the sectoral level, and some of the measures in the GOH's strategy to deal with them, are: * Soil degradation. Establish policies and alternatives to discourage the further expansion of agriculture to unsuitable lands, provide technical assistance to limit soil erosion, and regulate the use of chemicals and fertilizer. * Water shortages and flooding. Develop water pricing policies to encourage a more efficient distribution of water resources and carry out a master plan for the development of water resources. 8 * Water and soil contamination. Develop effective command and control mechanisms, develop economic incentives and disincentives to control pollution, and investments in waste treatment and disposal facilities. * Biodiversity. Improve management of protected areas and parks. * Marine and coastal resources. Strict enforcement of environmental assessments for economic activities. 2.19 In order to meet its objectives of dealing squarely with environmental sectoral problems, the GOH has been carrying out and contemplates proceeding with a program that will build consensus on environmental problems at a national level, improve the legal and regulatory framework; and develop the necessary human resources to manage the environment. E. Assistance Strategy 2.20 IDA assistance strategy is based on the premise that sustainable economic development requires the protection and sound management of Honduras' natural resources. IDA is also concerned about the health effects of environmental degradation on people and on the loss of biodiversity. The 1993 AGSAC is supporting the GOH's new policies and procedures for the environmentally sound management of forest and land resources. An IDF grant for US $185,000 was also extended to Honduras in October 1992 for the purpose of helping the Government to organize its environmental activities, establish priorities within such activities, and prepare the PAAD. In connection with the IDF grant, an IDA/GOH dialogue has taken place on environmental issues. The proposed project is a direct result of the work done under the IDF grant and the ensuing dialogue. Other IDA-funded projects include the Agriculture and Natural Resources Project, which is being prepared to consolidate AGSAC initiatives concerning forestry development, land administration, and agriculture technology generation and diffusion; and the Basic Education Project, also now under preparation, which will support education reforms and curriculum development, and will introduce environmental education in primary and intermediate levels. 2.21 Although USAID and the Inter-American Development Bank (IDB) are the major active donors in the sector, the UNDP, Japan, Canada, Switzerland, and the Netherlands all have participated in sector financing. USAID's major direct efforts in the sector have been through providing a US $10 million grant to a private sector environmental organization, the Fundaci6n VIDA, and projects to support the sustainable management of commercial pine forests and improved hillside farming. Aside from cofinancing AGSAC, IDB has recently provided US $20.4 million for a project for the management of renewable resources for the Cajon watershed. IDB now has under consideration a project directed at the management of coastal and marine resources, provision of potable water, and sewage treatment in the Bay Islands, an area of significant tourism potential off the Caribbean coast. The UNDP has provided technical assistance support for the sector, 9 including the earlier financing of assistance for CONAMA and the current financing of assistance to SEDA. Canada is providing C $16.5 million from the reprogramming of Honduran debt, which is available for the 1993 to 1998 period for a fund to finance environmental and sustainable development projects. Swiss funds from the Paris Club debt reprogramming are also available for environmental projects. The Policy and Human Resources Development Fund (PHRD) provided US $400,000 for the preparation of this project. Meetings were held with donors during project preparation to apprise them of the development of the proposed project and to determine their interest in project financing. There was strong agreement on the need to increase institutional capacity in the sector, and donors informally indicated that were such strengthening to occur, additional project financing would likely be forthcoming. F. Lessons of Experience Country Specific Lessons 2.22 Although there has been some recent improvement in project implementation, IDA/World Bank projects in Honduras have often experienced delays and problems because of weak management and budgetary constraints. Frequent staff turnover in project management and cumbersome administrative procedures have also hindered project implementation. However, many of these problems have been avoided in the two IDA operations with the Honduran Social Investment Fund (FHIS) (Credit No. 2212-HO, February 1991; Credit No. 2401-HO, May 1992). The success of these operations have been influential in selecting FHIS to be the executing agency for the investment component of the proposed project. The FIUS success is in large part due to its status as an autonomous agency, free of government administrative regulations and salary constraints. In order to improve project management, IDA has taken several approaches. It has held Country Portfolio Performance Review (CPPR) meetings to address project issues; carried out periodic in-country disbursement, procurement, and audit workshops; and has given a high priority to project supervision. Addressing the underlying causes of many of the project implementation problems will require a much longer time horizon by means of concerted actions to reform civil service and public sector management and budgetary practices. These structural issues are being addressed by IDA in the context of the preparation of a public sector adjustment operation. In terms of the proposed project, several actions have been and will be taken to avoid project implementation problem. Assurances were obtained that sufficient funds are budgeted for audits in order to avoid auditing delays. A strong Project Coordination Unit (PCU) has been incorporated into the project design and plans are being made for an in-country project launch workshop after Credit signing. Sector Lessons 2.23 IDA/Bank has financed environmental projects focusing on institutional development in Brazil, Bolivia, Chile, and Mexico, and others that are currently at different stages of preparation. IDA/Bank staff and consultants who have worked on 10 preparing and implementing three of those projects have been on the appraisal team for the proposed project and the project design has incorporated the lessons that they have leamed. The principal lessons leamed from the previous IDA/Bank projects are that a successful environmental project requires: * strong political commitment; * well defined medium and long term objectives, supported by an established and open planning process; * consistent legal and regulatory framework; * closely coordinated actions of the many institutions whose activities affect the environment and its management, * clear understanding of environmental issues by key officials, as well as the population at large; and * adequate information to manage environmental and natural resource programs. G. Rationale for IDA Involvement 2.24 The proposed project is consistent with IDA's Country Assistance Strategy (CAS), as discussed by the Board of Directors during the presentation of the Agricultural Sector Adjustment Credit (AGSAC) No. 2450-HO on August 5, 1993, and agreed to with the GOH in the May 1994 CPPR meeting, giving priority to institutional development in the environmental sector and to the management of natural resources. The proposed project is consistent with the adjustment program begun in 1990 and will complement the AGSAC which supports fundamental institutional and policy reforms with respect to forestry management. IDA's role in the proposed project, on the pivotal issues of environmental policy and the development of the institutional framework in this emerging sector, will help coordinate and rationalize assistance from bilateral and multilateral agencies. 2.25 This project addresses some of the following important issues in establishing a rational system of environmental management: (a) weak institutional capacity to set national policies, strategies, and plans; (b) inadequate coordination between agencies having environmental responsibilities; (c) conflicting laws and regulations; (d) inadequate environmental norms and technical standards, (e) inadequately trained technical staff in institutions with environmental responsibilities; (f) a lack of public awareness and involvement in environmental matters; and (g) limited involvement of municipalities and communities in environmental management matters. In addressing these issues, the project provides an institutional framework for the Government to address its environmental problems and for IDA and other extemal financing agencies to finance projects in support of these efforts. I1 3. THE PROJECT A. Project Objectives 3.1 The proposed project has three principal sets of objectives. The first set of objectives is to strengthen the capacity of government agencies in environrmental and natural resource planning; policy, legal and regulatory framework development; interagency and intersector coordination, environmental monitoring; and enforcement of environmental laws and regulations. The proposed project will help establish the PAAD as a permanent planning process, and through it develop the capacity of sector and other governrment agencies to incorporate environmental variables in their natural resource and land use plans. NGO and public participation is an essential element of the environmental planning process, which will be amply supported by the project. The second set of objectives is to assist SEDA and relevant sector agencies in the strengthening and implementation of a national system of environmental impact assessment, to develop the methodologies for the preparation and processing of environmental impact assessments and environmental audits in high priority sectors; and to engage NGOs, communities and the private sector in the environmental assessment review process (Annex A). The third set of objectives is to develop the environmental management capacity of selected municipalities in a manner that will increase the involvement of grassroots organizations and individuals in the environmental affairs of their communities; and to finance, on a pilot basis, environmental projects at the municipal and community levels, and by small and micro-enterprises, through the FHIS. B. Project Description2 3.2 The multisectoral nature of the project requires the participation of a number of agencies for its successful implementation. SEDA is the primary implementing agency. In that capacity it will coordinate closely with all the agencies participating in the project, and with the FHIS in particular, which will be responsible for the implementation of the environmental investment subcomponent with a certain degree of autonomy. SEDA will play a leading role in the implementation of the technical assistance components, subcomponents, and activities of the proposed project, but the direct execution of the different parts of the operation will fall, in addition to SEDA, on SECPLAN, SRN, SSP, COHDEFOR, the General Attorney's Office (Procuraduria General de la Republica - PGR), FGR, the National Autonomous University of Honduras (Universidad Aut6noma de Honduras - UNAH), and the Supreme Court of Justice (Corte Suprema de Justicia - CSJ), with the support of qualified national and international NGOs and consultants. 3.3 All the activities related to the environmental investments will be the direct responsibility of FHIS, as contained in operating procedures and guidelines which SEDA 2 The costs of the components, subcomponents, and activities include contingencies and taxes, unless otherwise noted. Totals may not add up due to rounding. 12 and FHIS have agreed to, and are generally described in para. 5.4. FHIS was selected to be the implementing agency for the environmental investments subcomponent because of its successful record as a financial intermediary for projects at the municipal and community level. Although FlHS has focused on economic and social infrastructure projects, there has been a strong correlation between its poverty alleviation objectives and the environment. Approximately 24% of the resources committed by FHIS between 1991 and 1993 fit the profile of environmental infrastructure. Furthermore, the poverty index used by FHIS to allocate funds among the 18 departments and 291 municipalities is based largely on infrastructure needs that coincide with environmental improvement objectives.3 3.4 To accomplish the stated objectives, the project has been organized into four components: environmental planning and legislation (US $3.5 million); environmental quality assessment (US $2.2 million); local government environmental management (US $5.3 million); and administration and project coordination (US $1.4 million). At negotiations, assurances were obtained from the GOH that subsidiary agreements, satisfactory to IDA, will be signed between SHCP and SEDA, as implementing agency, and FHIS, no later than the dates indicated in the implementation schedule (Annex E) (para. 7.2(a)). (1) Environmental Planning and Legislation Component (US $3.5 million) 3.5 This component is aimed at providing key agencies with technical assistance in environmental planning, policy, legislation, and training. It has been organized into four subcomponents. The Environmental and Land Use Planning Subcomponent provides support for the development and establishment of a permanent environmental planning process that will incorporate environmental variables into other sectoral planning initiatives, and in the general development and land use planning efforts of the GOH. Because adequate and reliable information is essential to the planning process, the National Environmental Information System Subcomponent was included in this component to support the design, establishment and operation of the National Environmental Information System (Sistema Nacional de Informaci6n Ambiental - SINIA). The SINIA, rather than to generate information, will serve as a network for the exchange of information among the different users and information generation centers that exist in Honduras, which will receive training and equipment under the proposed project. The Legal and Regulatory Framework Subcomponent will support the harmonization of the current legislation with regard to environmental management, the preparation of norms and technical standards, the strengthening of environmental law enforcement capacity, legal training, and publication of documents. Finally, the Training and Public Awareness Subcomponent will support the coordination of all training and public awareness activities that are included in the different components and subcomponents of the proposed project. 3 The distnbution is based on an index which takes into account three factors with different relative weights: (a) access to potable water (50%); (b) access to clean water and latrines (20%); and (c) child malnutrition rates (30%). 13 a. Environmental and Land Use Planning Subcomponent (US $1.5 million) 3.6 This subcomponent will support the development of three environment-related planning initiatives (environmental planning per se, natural resource planning, and land use planning) and the preparation of three studies. The activities under this subcomponent will engage the key government actors in environmental management, in addition to NGOs, communities and the private sector, and will strengthen the institutional framework established by the LGA. To complete the tasks included in this subcomponent, the proposed project will finance four incremental staff positions and operation expenses on a declining basis; 235 months of local consultants, seven months of international consultants; 11 studies; six workshops and seminars; publications; one vehicle; and computers and office equipment ( Annex F). At negotiations, the following assurances were obtained from the GOH: (a) that an agreement, satisfactory to IDA, between SEDA, SECPLAN and SRN regarding their respective roles in land use planning in general, and, specifically, regarding those activities to be undertaken under the proposed project, will be signed no later than the dates indicated in the implementation schedule (Annex E) (para. 7.2(a)); and (b) that the studies will be completed by the dates indicated in the implementation schedule (Annex E) and that the relevant results of these studies will be incorporated in the environmental planning initiatives as described above (para. 7.2(b)). 3.7 Environmental Planning (US $632,000). The main focus of this activity will be the consolidation of the PAAD into a permanent environmental planning process. SEDA's General Directorate of Environmental Policy and Planning (Direcci6n General de Politicas y Planificaci6n Ambiental - DPPA), with the active participation of the National Consultative Council of the Environment (Consejo Consultivo Nacional del Ambiente - COCONA) and the Technical Advisory Committee (Comite Tecnico Asesor - CTA), as established in the LGA, and with broad NGO and public participation, will review, evaluate, and update, PAAD and will produce a Environmental Policy Paper and a National Environmental Profile every two years. As part of the environmental planning process, efforts will be made to quantify in economic and social terms the costs and benefits of the environmental policies and actions implemented by the GOH. DPPA will also produce SEDA's annual operating plans and, in coordination with the sectoral planning units of other agencies with responsibility for environmental management, it will prepare annual environmental investment plans, both consistent with PAAD. In order to coordinate all the actions required to successfully implement the PAAD, SEDA will also design, develop and implement a monitoring and evaluation system. 3.8 Natural Resource Planning (US $86.000. The proposed project will provide support to the Agriculture Sector Planning Unit (Unidad de Planificaci6n Sectorial Agricola - UPSA) located in the SRN. The focus of the support will be the harmonization of current natural resource policies with the environmental mission and objectives of the current administration and the PAAD. Among the products of this process will be an environmentally consistent sectoral policy document that will help transform current non- sustainable production practices. This process will also provide SRN the basic framework 14 with which to participate actively in the environmental planning initiatives associated with the PAAD. 3.9 Land Use Planning (US $499.000). A land use plan consistent with the framework laid out by the PAAD and the official development strategies and policies, is essential to the development of the environmental management capacity of public agencies in Honduras, in particular of SEDA, SRN and SECPLAN. This task has been given renewed importance in the LGA, which makes land use planning an important element of the national environmental management strategy. In order to seek a closer integration with the development and public investment planning activities, the proposed project will assist SECPLAN in the establishment of the Land Use Planning Unit (Unidad de Ordenamiento Territorial - UOT). The work will begin with the updating of existing environmental baseline maps, where available, and the preparation of new maps where not. This activity will take into account and will incorporate the work being done by other government agencies with the support of different bilateral donors. From these maps, the UOT will prepare and submit to SEDA, SRN, and other key agencies a land use strategy proposal. These activities, particularly those related to the generation of geographically referenced environmental information, will be integrated to SINIA (paras. 3.11-3.15). 3 .10 Studies (US $237.000). Three studies will be conducted in areas of immediate relevance to the planning and policy initiatives being undertaken by SEDA and sectoral agencies, in the following areas: economic incentives for environmental management; biodiversity conservation; and solid waste management. The proposed project will also provide support for additional studies that may be agreed between the IDA and the GOH during project implementation in the areas of environmental and natural resource management. b. National Environmental Information System Subcomponent (US $0.9 million) 3.11 The proposed project, under this subcomponent, will support the design, development, and administration of the SINIA. The SINIA is an essential tool for environmental planning, management, monitoring and enforcement. It will incorporate, and make available to interested parties, information generated by SEDA, the sector agencies and the municipalities. Additionally a geographic information system (GIS) and a documentation center will be established. To complete the tasks included in this subcomponent, the proposed project will finance three incremental staff positions and operation expenses on a declining basis, two studies; two scholarships; two workshop; and computer and office equipment (see Annex F). At negotiations assurances were obtained from the GOH that adequate space will be provided to house the staff, consultants and equipment needed to implement this subcomponent (para. 7.2(h)). 3.12 System Design. Development and Administration (US $483.000). The first stage in the establishment of the SINIA, the diagnostics, is being conducted by SEDA, prior to the system design and the start of project implementation. The proposed project will support the design of the computerized information network and its subsequent 15 development and administration. The development phase will include the establishment of the central network administration systems and the training of the personnel of the government agencies that will participate in the SINIA by generating information and using the information available through the network. 3.13 SINIA Equipment (US $305.000). After the SINIA has been established, equipment and software will be provided to the government agencies that will participate in the SINIA as described above.4 These agencies will be connected to the central network administration, housed at SEDA, via modem. 3.14 Geographic Information System (US $138,000). To complement the computerized network, the project will support the establishment of a GIS. The GIS will give SEDA the capacity to analyze geographically referenced environmental information being produced and made available through the SINIA by the participating government agencies. It will also provide SEDA with the monitoring and evaluation tools needed to implement the National System of Environmental Impact Assessment (SINEIA) (para. 3.23). 3.15 Documentation Center (US $23,000). A documentation center, focused on non electronically stored information (printed, photographic, video material) will be established in SEDA. It will provide the above-mentioned materials and information to all the agencies participating in the SINIA and, where appropriate, to all NGOs, private, public, and academic organizations interested in environmental management matters. c. Legal and Regulatory Framework Subcomponent (US $0.8 million) 3.16 The legal and regulatory framework subcomponent will be implemented through the following activities: (a) the compilation of existing legislation and regulations dealing with environmental management or affecting the environment; (b) the harmonization of the laws and regulations with respect to environmental matters; (c) the development of environmental norms and technical standards; (d) the strengthening of the legal enforcement capability of the PGR and the FGR; and (e) the training of and technical assistance on environmental laws and regulations to judges, attorneys, and legal advisors to institutions involved in environmental management. To complete the tasks included in this subcomponent, the proposed project will finance 6 incremental staff positions and operation expenses on a declining basis; 75 months of local consultants; seven months of international consultants; 8 workshops and one course on environmental legislation; publications; 2 vehicles; and computers and office equipment (Annex F). At negotiations, assurances were obtained from the GOH that the following agreements, satisfactory to IDA, will be signed no later than the dates indicated in the implementation schedule (Annex E): (a) between SEDA, PGR, and FGR on coordination for the enforcement of environmental laws; and (b) between SEDA and UNAH's Juridical Research Institute (Instituto de Investigaciones Juridicas - IIJ) on the maintenance of the computerized 4 The following government agencies will be provided computer equipment and software financed by the project: SECPLAN, SRN, SSP, COHDEFOR, PA/PGR, FA/FGR, UNAH, and CSJ. 16 information system, on the procedures and principles ruling the exchange of environmental information, and/or on the use of the equipment, financed by the project (para. 7.2(a)). A signed agreement, satisfactory to IDA, between the SEDA and the Judicial School of the Supreme Court (Escuela Judicial de la Corte Suprema de Justicia - EJ) will be a condition of disbursement for the implementation of the environmental legislation training program(para. 7.3(a)) 3. 17 Harmonization of Laws and Regulations (US $171.000). A national multidisciplinary team, under the coordination of the DPPA, will analyze the laws and regulations affecting the protection and management of the environment for the purpose of identifying and making recommendations to resolve inconsistencies. This team will focus on the legislation dealing with water, soil and forests. Workshops will be conducted to permit and encourage broad participation by government agencies involved in environmental management, in addition to NGOs, communities and the private sector. A legal information management center will be designed and established to aid in this activity at the IIJ All the laws affecting the environment will be collected and entered into a computerized information system which will be periodically updated. Computers and related equipment will be purchased so that relevant official entities may access the system. This center will be part of the SINIA. 3.18 Norms and Technical Standards (US $64.000). DPPA will lead this effort and will start by designing the methodology for the development and implementation of environmental norms and technical standards. In order to achieve the maximum level of participation and to ensure the participatory nature of the process, this process will include all the consultative levels established in the LGA, namely the COCONA, and representatives of a broad range of institutions of the public and the private sectors. 3.19 Legal Enforcement (US $362.000). The responsibility for the enforcement of environmental laws and regulations falls ultimately on the PGR, through the PA/PGR, created by the LGA, and the FGR. The FGR, also known as the Public Ministry (Ministerio Publico), was created by law on December 20, 1993, for the purpose of representing the legal interest of the people of Honduras. As part of its organizational structure the FGR has a unit, the Fiscalia del Ambiente (FA/FGR), with the a mandate of filing environmental suits on behalf of the people of Honduras. The relationship between the environmental units of both the PGR and the FGR is still in a formative state. Some experimentation will be required in order to establish a sound and realistic conceptual framework that will permit the PGR and FGR to operate effectively and efficiently in the enforcement of environmental laws and regulations. The process of defining their respective roles has begun with the drafting of an agreement between SEDA, PGR, and FGR. The support that will be provided to the environmental units of the PGR and the FGR will be in the form of additional staff, the purchase of equipment, and training in legal enforcement. 3.20 Legal Training and Technical Assistance (US $196.000). Training will be provided to approximately 400 judges, attorneys, and legal advisors to institutions 17 involved in environmental management to instruct them in the substance of the environmental laws and their enforcement. This activity will be implemented with the cooperation of the EJ. An international consultant will assist in the preparation of course materials and will train two local trainers. d. Training and Public Awareness Subcomponent (US $0.3 million) 3.21 This subcomponent will assist DPPA in its efforts to support and coordinate environmental training, public information, and education programs. DPPA will work closely with the sector agencies and municipalities in identifying training needs. It will conduct public information programs to acquaint the general public, as well as targeted special groups and organizations, about environmental issues and SEDA and agency environmental activities. To complete the tasks included in this subcomponent, the proposed project will finance 60 months of local consultants, 9 scholarships; 8 workshops and one course; numerous public awareness activities; and computers and office equipment (Annex F). (2) Environmental Quality Assessment Component (US $2.2 million) 3.22 The principal objective of the Environmental Quality Assessment Component is to support the establishment of a system of effective environmental impact assessments and environmental audits that will assure that all public and private sector projects are environmentally sound and continue to be so throughout their operation. This component will provide support for the strengthening of the National System of Environmental Impact Assessment (Sistema Nacional de Evaluaci6n de Impacto Ambiental - SINEIA), and for pilot projects for environmental impact assessment and environmental auditing. SEDA's General Directorate of Environmental Assessment and Control (Direcci6n General de Evaluaci6n y Control Ambiental - DECA) will be the agency primarily responsible for the implementation of the component, but the work will require the active participation of key public sector agencies and the assistance of local and international consultants. The activities under this component will stress hands-on training to build the skills of the staff of SEDA and sector agencies. At negotiations, assurances were obtained from the GOH that agreements, satisfactory to IDA, between SEDA and each of the agencies participating in the establishment and operation of the SINEIA and other components financed by the proposed project, will be signed no later than the dates indicated in the implementation schedule (Annex E) (para. 7.2(a)). a. National System of Environmental Impact Assessment Subcomponent (US $1.4 million) 3.23 DECA has responsibility for the design, establishment, and operation of the SINEIA. This subcomponent will provide DECA with the necessary assistance to enable it to carry out its duties. Environmental sector units will be established or strengthened in six key sector agencies. Three of these agencies are part of the SRN: the General Directorate of Mines and Hydrocarbons (Direcci6n general de Minas e Hidrocarburos - 18 DMH), the General Directorate of Fisheries (Direcci6n General de Pesca - DIGEPESCA), and the General Directorate of Water Resources (Direcci6n General de Recursos Hidricos DRH). A fourth agency is autonomous and decentralized:COHDEFOR. The remaining two agencies are part of the SSP: the General Directorate of Environmental Services (Direcci6n General de Atencion al Medio - DGAM) and the Center for the Study and Control of Contaminants (Centro de Estudios y Control de Contaminantes - CESCCO). Each of the agencies will receive equipment, long-term technical assistance and training in order to carry out their environmental responsibilities. Other units, many of them at the municipal level, will receive training and technical assistance under other subcomponents of the proposed project. Laboratory and measurement equipment will be financed for CESCCO, which will be the agency responsible for providing the baseline data required for the management of pollution based environmental problems. To complete the tasks included in this subcomponent, the project will finance operation expenses on a declining basis; 150 months of local consultants; 36 months of international consultants; 8 workshops and one national-level Environmental Impact Assessment (EIA) congress; 7 vehicles; 2 boats; computers, laboratory and office equipment (Annex F). At negotiations, the following assurances were obtained from the GOH: (a) that adequate space will be provided to house the staff, consultants and equipment needed to implement this subcomponent (para. 7.2(h)); and (b) that agreements, satisfactory to IDA, will be signed wvith all the participating agencies no later than the dates indicated in the implementation schedule (Annex E)(para. 7.2(a)). b. Pilot Projects for Environmental Impact Assessment and Auditing Subcomponent (US $0.8 million) 3.24 Pilot environmental impact assessments and environmental audits will be conducted in four sectors: forestry, agro-industry, mining and energy. In addition to the technical aspects of the impact assessments and the audits, the pilot activities will include the development the methodology for rapid environmental assessments and for public participation. The pilot activities will be conducted by local and internationally recruited consultants, with the participation of personnel from DECA and relevant sector agencies. The entire process will be designed to provide the participants with hands on experience on impact assessments and audits of the key sectors and related activities. Training manuals, with detailed description of methods and procedures, will be prepared and seminars conducted based on what was learned in undertaking the pilot activities. To complete the tasks included in this subcomponent, the proposed project will finance four major studies in the selected sectors which will be prepared using the methodology described above (see Annex F). (3) Local Government Environmental Management Component (US $5.3 million) 3.25 This component will strengthen the capacity of selected municipalities to undertake relevant environmental management activities by providing technical assistance for municipal environmental management and financing environmental investments at the municipal and community level. The technical assistance subcomponent will develop the 19 methodology for later application in other municipalities. The environmental investment subcomponent will also be considered a pilot for the development of the methodology needed by the FHIS to support environmental subprojects at the municipal and community level. The combined effect of these subcomponents will give municipalities the capacity to identify their environmental needs and the FHIS the operational tools to meet those needs. a. Technical Assistance for Municipal Environmental Management Subcomponent (US $1.1 million) 3.26 This subcomponent will strengthen the capacity of 20 municipalities, in four different regions of the country (see Table I on page 20, and the attached Map IBRD 26390), to manage their natural resources and to address their environmental problems. It will also increase public participation in the solution of the environmental problems of the community by: (a) assisting in preparation of local environmental diagnostics and action plans, and municipal land use plans; (b) providing technical assistance to mayors, municipal corporation members and employees and community leaders through extension work, (c) promoting opportunities offered by other project activities (e.g., environmental investment projects); (d) providing municipalities with equipment, tools and materials related to environmental management and adequate to the technical capability of municipal employees (e.g., binoculars, photographic cameras, radio-communication, measuring instruments, water quality test kits, manuals, maps); (e) implementing six workshops in each participating municipality to discuss local environmental problems and explore alternatives to solve them, and (f) implementing four environmental education projects for women (one in each region). The proposed project will finance the costs of the workshops, equipment, technical assistance, and program administration. To complete the tasks included in this subcomponent, in addition to the workshops and training projects mentioned above, the proposed project will finance 216 months of local consultants and miscellaneous field equipment (Annex F). At negotiations, assurances were obtained from the GOH that agreements, satisfactory to IDA, between SEDA and the municipalities that will participate in the pilot program of municipal technical assistance, will be signed no later than the dates indicated in the implementation schedule (Annex E) (para. 7.2(a)). b. Environmental Investments Subcomponent (US $4.2 million) 3.27 This subcomponent will provide technical assistance and financial support to the FHIS for the design and implementation of pilot municipal and community level environmental investment subprojects in the selected municipalities (see Table 1, page 20). As indicated in para. 5.4 and Annex G, FHIS' operations will be closely coordinated with SEDA. The activities under this subcomponent include: (a) the direct support for pre- investment studies and environmental investments; (b) a line of credit for environmental investments by micro-enterprises; (c) the establishment of the environmental unit at FHIS, and (d) the evaluation of the environmental investments funded under this component. One of the objectives of this subcomponent is to assist the FlIS in developing the capacity and the instruments for the management of a larger municipal and community level environmental investment portfolio at the national level. To complete the tasks 20 included in this subcomponent, the proposed project will finance 53 months of local consultants, 28 pre-investment studies, eight scholarships for short courses; two seminars, one vehicle; computers and office equipment (Annex F). A signed agreement, satisfactory to IDA, between the GOH and FHIS regarding the implementation arrangements and specifying, inter alia, the environmental assessment criteria that will be used to select and evaluate the subprojects and the role of SEDA in project approval and monitoring, will be a condition of disbursement for the activities under the Environmental Investments Subcomponent (para. 7.3(b)). Table 1: Participating Municipalities in the Local Government Environmental Management Component WATERSHED REGION MUNICIPALITIES Patuca Catacamas Catacamas Juticalpa Dulce Nombre de Culin Guaimaca Aguan Olanchito Olanchito Arenal Tocoa Saba Chamelecon and Ulua Santa Rosa de Copan Santa Rosa de Copan Dulce Nombre Cucuyagua San Juan de Op6a Veracruz Dolores Concepci6n Santa Barbara Santa BArbara Chinda San Jose Colinas Trinidad ._____________________ . _____________ .llama 3.28 Municipal and Community Environmental Investments (US $3.0 million). The subproject categories of environmental investments, which have been identified jointly by SEDA and FHIS and that will supported by FHIS, are listed in Table 2 (page 22). The funds will be distributed among the 20 municipalities in four different regions as defined in Table I (page 20). Given that the poverty index used for the economic infrastructure subprojects that is already operating at FHIS is a proxy for environmental infrastructure deficiency, the same index will be used for the distribution of funds for the environmental subprojects in the selected municipalities. The rules for the allocation of the funds among regions, municipalities and subprojects are as follows: (i) any region may receive no more than 35% of the total available funds for environmental investments under this activity; (ii) any municipality may receive no more than 40% of the funds available to its region; and (iii) no single subproject may represent more than 45% of the funds available for the given 21 municipality. Cost-sharing by the municipalities will be encouraged to increase the subproject size. Other than these measures to assure diversification of the portfolio and the spatial distribution of subprojects, the environmental subprojects will be managed in the same manner as any other infrastructure subprojects in FHIS. In addition to the environmental investment subprojects the proposed project will fund, also through FI-HS, the preparation of up to 25 pre-investment studies for small-scale environmental infrastructure subprojects. The relevant pre-investments studies, satisfactory to IDA, will be a condition of disbursement for municipal and community environmental investment subproject categories (para. 7.3(c)). 3.29 Small and Micro-Enterprises Line of Credit for Environmental Investments (US $468.000). In the first stage of the development of a line of credit for environmental investments by small and micro-enterprises, the proposed project will finance, through the FFHS, three pre-investment studies in the following areas: (a) ecotourism; (b) solid waste collection and recycling; and (c) cottage industry pollution abatement. These studies will be technical, financial, and social feasibility studies conducted to determine the structure of future credits to a given sector or type of subproject. The studies will specify the technical, financial, and institutional norms to follow in subproject design as well as the possible risks of financing such ventures. They will also include the preparation of design and technical specifications that can be used for FHIS' future work. Upon completion of the pre-investment studies, FHIS will establish a line of credit for small and micro-enterprises to finance environmental ventures in the areas listed above, through the Informal Sector Support Program (Programa de Apoyo al Sector Informal - PASI). PASI was established in 1990 to provide credit to small and micro-enterprises through NGOs. The subprojects financed under this activity will adhere to the established operating procedures and eligibility criteria as described in more detail in Annex G. Loans to the eligible intermediary NGOs will be made at market interest rates. However, given that the objective of this activity is to facilitate the transition of small and micro-enterprises to more environmentally benign technologies and practices, proposals at below-market rates may be considered, but will have to be carefully justified and approved by IDA. Three NGOs will be selected to act as financial intermediaries from a list and institutional profiles of five submitted by FHIS prior to negotiations (para. 7.1). Access to this line of credit will not be restricted to subprojects in the selected municipalities (Table 1, page 20). The relevant pre-investments studies, satisfactory to IDA, will be a condition of disbursement for the small and micro-enterprise line of credit (para. 7.3(d)). 3.30 Establishment of the Environmental Unit at FHIS (US $593.000). The FHIS environmental unit will be established to carry out FL-S' responsibilities in the development of its environmental investment portfolio, to incorporate environmental considerations into FH-S operations in general, and to prepare the technical specifications of the environmental investment subprojects that will be financed by FHIS. Additional staff will be hired, consultants engaged, training undertaken, material and equipment purchased, and workshops held for FHIS contractors. 22 3.31 Evaluation of the Environmental Investments (US $153.000). Given the pilot nature of the environmental investments being implemented through FHIS and PASI, the proposed project will finance the evaluation of all such investments and the instruments used to carry them out (i.e., FHIS and PASI). The results of this evaluation will be useful as the FHIS expands its role in support of the environmental needs of municipalities and communities. Table 2: Proposed Environmental Subproject Categories for FHIS SUBPROJECT TYPE SUBPROJECT CATEGORY Urban and community parks . Construction and rehabilitation of urban and community parks, Solid and liquid waste * Urban and small industry solid waste collection, processing, management disposal, and recycling l Septic tanks and oxidation ponds Protection of water sources . Small infrastructure for the protection and rehabilitation of water wells, watersheds, and other natural water sources Soil protection and erosion * Planting and maintenance of wind breaks control * Construction of erosion prevention drainage ditches and other minor infrastructure Biodiversity conservation . Community and family operated ecotourism facilities in and around protected areas l Posting boundary of demarcated protected areas * Small infrastructure for the sustainable management and rehabilitation of community and traditional fishing operations Energy generation and . Alternative energy generation initiatives (e.g., wind, solar) conservation . Construction high efficiency wood-burning of stoves and ovens (4) Administration and Project Coordination Component (US $1.4 million) 3.32 The objective of the component is to strengthen SEDA's administrative capacity and its management of the project. The support to SEDA's administrative unit is aimed at those aspects related to its day-to-day operation. It is aimed at complementing the ongoing efforts to define and establish SEDA's operating procedures and management methodology. Given the complexity of the project, it is essential that SEDA have a project-support coordination unit with the exclusive responsibility to ensure the successful implementation of the proposed project. The administrative unit and the PCU will work closely throughout the implementation of the project in order to ensure the that SEDA is administratively, as well as technically, capable of undertaking and expanded environmental mandate at the conclusion of the proposed project. a. Technical Assistance to SEDA's Administrative Unit Subcomponent (US $0.1 million) 3.33 In order to strengthen SEDA's administrative capacity, support will be provided for the design and installation of a sound budgeting and accounting system. This support will be directed to the administrative unit of SEDA and is expected to increase its capacity 23 to support the administrative requirements of managing the different systems under the scope of responsibility of SEDA (e.g., SINEIA, S[NIA). To complete the tasks included in this subcomponent, the proposed project will finance one incremental staff position on a declining basis; four months of local consultants, one study; and office equipment Annex F). b. Project Coordination and Management Subcomponent (US $1.3 million) 3.34 The nature of the project and SEDA's limited experience in project management make it important to have a unit dedicated exclusively to assist in project management and all tasks related to project implementation, including procurement and audits. To complete the tasks included in this subcomponent, the proposed project will finance four full-time technical consultants and two full-time support personnel for the PCU, in addition to 20 months of local consultants to assist in project implementation as needed; one vehicle; computers and office equipment; and operating costs. Additionally, the PCU will be responsible for contracting the audits and for retaining the services of a procurement agency (Annex F). 3.35 Project Coordination Unit (US $902,00O). SEDA, through the PCU, will be responsible for the overall management of the proposed project. The administrative and technical responsibilities of the PCU are discussed in greater detail in the Project Operations Manual (Manual de Operaciones para la Ejecuci6n del Proyecto Desarrollo Ambiental de Honduras) which can be found in the project files (Annex L). In general terms, the PCU will have the following responsibilities: * to manage the project finances, involving the appropriate agencies on matters of disbursement, procurement of goods and services, payments for goods and services provided, and audits; * to track and report to the appropriate agencies of the GOH and IDA, all expenses incurred during project implementation; * to participate actively, with the appropriate agencies, in the procurement process; * to prepare, in consultation with all the agencies and organizations participating in the implementation of the proposed project, the annual operating plan and budget; * to track the progress in project implementation using the agreed upon performance and impact indicators Annex I); * to review the terms of reference of all contracts, and technical specifications of all equipment to ensure consistency with project objectives and established implementation targets; 24 * to prepare all the necessary documentation necessary for, and to assist with the conduction of, the periodic supervision missions of IDA; and * to monitor and follow-up on all the FHIS implemented activities, including all technical and administrative matters. 3.36 Technical and Financial Audits (US $227,000 . The PCU will be responsible for retaining the services of an independent auditor, acceptable to IDA, to conduct technical and financial audits of the project on an annual basis. The investment projects being implemented by FHIS will be audited following the arrangements and procedures currently established under the FHIS II project (Credit No. 2401-HO). A detailed discussion of the auditing requirement for this subcomponent can be found on page 34, under the section on Accounts and Audits. 3.37 Procurement Agency (US $216,000). The project requires the purchase of equipment and the contracting of consultants in the early stages of project implementation. In order to successfully meet the established timetable, the services of a procurement agency will be retained for the first three years to assist in the procurement of goods and services. 4. PROJECT COSTS AND FINANCING PLAN A. Project Costs 4.1 The total project cost is estimated at US $12.5 million, including taxes and contingencies. The foreign exchange costs amount to US $1.9 million, approximately 15% of the total project cost. Given the nature of the proposed project, most of the project cost (80%, excluding taxes) is for local expenditures, which consist of local salaries and consultants, office furniture and supplies, and environmental investments. The larger expenditure categories are the environmental investments with US $3.1 million (25% of total project cost), consultants and technical assistance with US $2.4 million (19%), and studies with US $1.7 million (14%). The project costs by component and by expenditure category are shown in Table 3 (page 25) and Table 5 (page 27), respectively. Additional cost information is provided in Annex F. 4.2 Contingency Allowance. Physical contingencies amount to 5% for all expenditure categories except for the environmental investment subprojects/subloans. Any increase in the cost of the investment subprojects/subloans will result in a reduction in the total number of subprojects/subloans financed. Price contingencies for foreign costs are based on a projected international yearly inflation rate of 2.2% from 1995 to 2001. 4.3 Duties and Taxes. Locally procured goods are subject to a value-added tax (VAT) of 7%. Works and consultant services are subject to a 5% tax. Imported goods such as computers, technical equipment, vehicles, and office technology equipment are subject to 25 a combined custom taxes and VAT of 23%. The estimated cost of the proposed project includes approximately US $620,000 in local duties and taxes. Table 3: Estimated Project Costs a/ % % Total (USS '000) Foreign Base Local Foreign Tota Exchange Costs A. Environmental Planning and Legislation 1. Environmental and Land Ust Planning Environmental Planning 539 24 563 4 5 Natural Resources Planning 73 6 79 7 1 Land Use Planning 384 67 450 15 4 Studies 217 0 217 - 2 SubtotalEnvironmentalandLandUsePlannrng 1,213 96 1,309 7 11 2. Nationml Environmental Inforiation System System Design, Development and Admuinsttion 392 37 429 9 4 SINIA Equipment 19 256 275 93 2 Geograupuc Information System 34 90 124 73 1 Documentation Center 5 16 21 75 Subtotal National Environmental Information System 451 398 849 47 7 3. Legal and Regtuatory Frsmework Harmomzation ofLaws and Regulations 131 28 158 18 1 Norms and Technical Standards 37 22 59 37 1 Legal Enforcement 288 34 322 11 3 Legal TrauungandTechrucal Assistance 149 30 179 17 2 Subtotal Legal and ReguLstory Framework 604 114 718 16 6 4 Trainmg and Public Awareness 280 13 293 5 3 Subtotal Environmental Planning and Lgislation 2,547 622 3,169 20 28 R Environmental Qumlity Assessment 1. Natiorml System of Environmental Impact Assessment Suppon for DECA 56 88 144 61 1 Support for DM1 2 22 23 93 Support for DIGEPESCA 2 31 33 93 Support for DRH 2 22 23 93 Support for COHDEFOR 2 22 23 93 Support for DGAM 2 22 23 93 - Support for CESCCO 45 178 223 80 2 Trainng and Technical Assistance 565 252 817 31 7 Subtotal NationalSystem of Environmental Impact Aaessment 675 637 1,312 49 11 2 Pilot Projects for Envucnmental Impact Assessment and Audit 408 272 680 40 6 SubtotalEnvironmentalQu ltyAssessment 1,083 909 1,992 46 17 C. Local Government Environmental Management I Technical Assistance fcr Municipal Environental Management 906 95 1.001 9 9 2. Environmental Investments Muncipal and Community Environmental Investments 2,920 0 2,920 - 25 Mtcro-enterpnse Lmne of Credit for Environmental Investments 460 0 460 - 4 Establishment ofthe Environmental Unit at FIES 520 30 550 5 5 EvaluaticmoftheEnvircnmentallnvestments 140 0 140 -I Subtotal Environmental Invesatents 4,040 30 4,070 1 35 Subtotal Local Government Environmental Management 4,946 125 5,071 2 44 D. Adminstration and Project Coordination I SEDAsAdministrativeUnit 58 1 59 1 1 2 Project Cordination and Management 1,156 43 1,199 4 10 Subtotal Administration and Project Coordination 1,214 43 1,258 3 11 Total BASELINE COSTS bl 9,790 1,699 11,489 15 100 Physical Contingencies 337 85 422 20 4 Price Conungencies 489 79 568 14 5 Tota PROJECT COSTS 10,616 1.863 12,480 15 109 a/ Totals may not add due to rounding b/ Includes local taxes amounting to US S0.6 million 26 B. Financing Plan 4.4 The proposed IDA credit of SDR 7.4 million (US $10.8 million equivalent) will finance 86% of the total project cost over the projected six-year implementation period. It will cover 100% of the foreign exchange expenditures and 89% of the estimated total local costs. Local costs financing is justified because of the fact that 80% of the project is for local expenditures (excluding duties and taxes) and because of the severe financial constraints of the GOH. At negotiations, assurances were obtained from the GOH that US $1.7 million, or 14% of the total project cost, including taxes and duties, will be made available as counterpart financing (para. 7.2(c)). The complete financing plan is shown in Table 4 (page 26), Table 5 (page 27) and Table 6 (page 27). The proposed credit will be made under standard IDA terms, with 40 year maturity and 10 years of grace. Table 4: Financing Plan a! (135$ 000) GOII IDA Total Amount % Amount % Amount % 1. Foreign 0 - 1,863 100 1,863 15 11. Local (Excl. Taxes) 1,081 11 8,915 89 9,996 80 III. Taxes 620 100 - - 620 5 Total Project 1,701 14 10,778 86 12,480 100 a,' Includes price and physical contingencies. lTotals may not add due to rounding. C. Recurrent Costs Arising from the Project 4.5 Some expenditures introduced by the proposed project will become part of the GOH's ongoing recurrent costs after project completion in 2001. Such recurrent expenditures are: (a) salaries for staff who will be hired to perform new tasks or to reinforce already existing teams; (b) office materials, manuals and brochures; and (c) operating expenditures for newly created units and tasks. Incremental recurrent expenditures will be financed by IDA on a declining basis. The credit will finance 100% of recurrent expenditures in 1995 and 1996, 60% in 1997 and 1998; 20% in 1999 and 2000; and 0% in 2001. Yearly totals and financing method for incremental recurrent expenditures are shown in Table 6 below. D. SEDA's Budget and Project Sustainability 4.6 SEDA was created in 1993 with the LGA. That year it operated with the budget of CONAMA, the institution it replaced. The 1994 budget approved by the Congress of Honduras was of US $0.30 million, later supplemented with an additional US $0.05 million (a total of Lps. 2.3 million). For 1995, Congress approved Lps. 2.8 million, an increase from the previous year, but because of devaluation the dollar-equivalent amount 27 is approximately US $300,000. These budget figures are exclusive of other contributions to SEDA in the form of grants and loans from bilateral and multilateral agencies. The projected budget requirement at the end of the proposed project in 2001, is US $392,000, including all the incremental activities originating from the proposed project. The projected increase in SEDA's budget, which ranges between 0% and 14% per year in the period 1995 - 2001, as indicated in the Table 7 below, has been agreed by the GOH in the letter of commitment of counterpart funds from Ministry of Finance ( Secretaria de Hacienda y Credito Publico -SHCP) (Annex H). Table 5: Financing Plan by Expenditure Category a/ (US$ oo) GOH IDA Total Amomt % Amount % At_,t % 1. Imwastit=e Cob A. Pr9ect Coorduatn Umt Salaxin 40 5 763 95 803 6 L. C. ta_o . d T.ehcal A dts nn Locl Co.ltants 9S 5 1,867 95 1,965 16 I,unatmotal Conalwtntb 0 0 431 100 431 4 Soktotl C.nsdtaa and Tockal Assistance 98 4 2,298 96 2,396 19 C. sludim S5 5 1,622 95 1,708 14 D. Audi1irt and Procurmit ARUncy 22 5 420 95 442 4 E. Smmu, Worbhop and Sdwlatupl 44 5 U43 95 S87 7 F. Conp and Offlioe quimnt 36 7 481 93 517 4 G Laboratcy and Feild Equipnant 28 7 370 93 398 3 H Vuiid. 20 7 272 93 293 2 1, Offlice FwtiLre 38 100 0 0 38 0 J Prfotnt Mtnal 167 100 0 0 167 1 K. r7115 Ia*wosloo SuyrcOjeci 136 5 2,590 95 2,726 22 Suldoun 0 0 404 100 404 3 Subtotal FHnS Iw-s.ub 136 4 2,994 96 3.131 25 L. Swvitand Prosmon 129 100 0 0 129 1 M Envrorsntm l S auuuwg of invatmat Subprqa 15 5 282 93 296 2 Total layaotm Coata 860 8 10,345 92 11,205 90 11. Rocwoot Coat A. IrtmunntalSalties 324 53 292 47 616 5 B. Opeabng Cosb 223 62 135 38 358 3 C. Trwvd and Per dtarn 3 32 6 68 9 0 D AdnimstrabonofInvament SubpiertFHIS 292 100 0 0 292 2 Tat) Racrre. Cuas 841 66 433 34 1,275 10 Total 1,701 14 10,778 86 12,480 100 at Indud prioe and phyul cortutgnoam Totals may not t d due touroundrn Table 6: Financing Plan for Incremental Recurrent Costs a! (usS VW0) 1995b/ 1996 1997 199t 199 20w0 2001Vb Tor IDA 59 131 90 91 31 32 - 433 tOH 93 192 108 79 144 146 79 842 IcrromwoulRwromtEapodluse 152 323 198 170 175 177 79 1,275 aI lmd.s pice nd physcmal cartwrm, and taxa. Totals mosy not add up due torounding. V' Coven ax montrt of opwacias 28 Table 7: Minimum Projected Increase in SEDA's Budget a/ (US3 000) 1994V' 1995/ 1996 l97 19" 1999 2000 2001. E.stmted An...] dgd (aluan-ofgprnut mdl) 345 300 303 346 347 392 392 392 E.rmatad 00H Contnbutou for Rcuffwat Coa. d' 3 6 49 49 95 95 48 %* InormA ual Bud5et Rerq- antm I 1 4 0 13 0 * E alm. mdude p.o and phyac.1 -n9igaua.., M tamx Total. my not add up du. to rafn&m bl Aa1 budget pavd by Co.W for 1994 (Lp. 2 3 milbon) c/ AcOual budget .provd by Crp.. for 1995 (Lp 2 Htlhon) d/ Egtm.bd ,anta] -.:t p...dnur. a.ad -th projd unplan.bo e/ 0OH co bt-abo ..Woaltd bued on ato prjad--ont. 5. PROJECT ORGANIZATION AND MANAGEMENT A. Project Preparation 5.1 Project preparation was financed with a grant of 42,400,000 (US $400,000 equivalent) from the PHRD Fund, and by the GOH. The project preparation was coordinated by the PCU, which held frequent consultations with the various agencies that will be involved in the project, and particularly with the following: (a) FlHS, because of its role in implementing the investment component; (b) SECPLAN, because of its overall planning role; and (c) SRN, because of its role as head of the agriculture and natural resources sectors. Additionally, the PCU has worked closely with key staff from DPPA and DECA in project design and preparation. The proposed project was submitted by SEDA to IDA at the time of appraisal and is contained in the project files, along with relevant documents produced in the course of project preparation (Annex L). The PCU will assume project implementation functions after the credit becomes effective. 5.2 The environmental investments subcomponent of the proposed project was prepared by FHIS staff, working closely with the PCU and IDA staff. FHIS' experience with the two IDA credits that it has received has facilitated the preparation of the investment component and prepared the FHIS staff to implement the proposed project. B. Implementation Arrangements and Schedule 5.3 SEDA will be responsible for overall project management. FlUS will be responsible for the Environmental Investment Subcomponent. Overall responsibility for the management of the project in SEDA will fall on the PCU, which has coordinated the preparation and design of the project. The PCU will work closely with SEDA's two directorates, DPPA and DECA, and with FHIS. The PCU will have a staff of six: (i) a general coordinator, responsible for overall project management; (ii) a technical coordinator, responsible for the preparation of the annual operating plans and budgets, and for ensuring the technical standards during project implementation are met; (iii) an administrative coordinator, responsible for all the administrative matters related to the management of the project, inter alia, processing all disbursement applications, no objection requests, and other IDA-related administrative tasks; (iv) an accountant; (v) a secretary; and (vi) an office assistant. DPPA will have the lead responsibility over the 29 Environmental Planning and Legislation Component and the Technical Assistance for Municipal Environmental Management Subcomponent. DECA will have the lead responsibility for the Environmental Quality Assessment Component. FHIS will have the lead responsibility for the Environmental Investment Subcomponent. 5.4 The overall framework for the selection and management of the environmental investment subprojects is contained in the operating procedures and guidelines which SEDA and FHIS have agreed to (Annex G), and that can be found in the project files. SEDA will have a continuing role of commenting on environmental projects by participating in the approval of subprojects as part of FHIS' operating committee. In this capacity, SEDA will have the right to veto projects that are environmentally unsound, within an established period of time (five working days). FHIS will be responsible for the contracting and supervision of subprojects, using the same procedures that it uses with it other infrastructure projects. Under these procedures, works are executed by private contractors and are supervised by FHIS until they are completed and transferred to the municipality for operation and maintenance. For the execution of the line of credit, FHIS will operate through the PASI. Subloans will be made to intermediary NGOs, and they in turn will make subloans to the final beneficiaries as described in para. 3.29 and in Annex G. 5.5 The proposed project will be implemented over a period of approximately six years, and is expected to be completed by June 30, 2001. Selected project activities are expected to begin after appraisal mission is concluded and will be eligible for retroactive financing in an amount equivalent to US $1.08 million, after July 1, 1994. All project activities will begin on the first year of the project, with the exception of the Pilot Environmental Impact Assessment and Auditing Subcomponent and a few other minor activities. A project implementation schedule is contained in Annex E. C. Procurement 5.6 A Country Procurement Assessment Report for Honduras was issued in September 1990. Honduran procurement legislation and procedures are generally satisfactory, except where participation of foreign contractors and consultants are concerned, due to the preference provisions for local contractors and consultants. In any event, ICB in this project is not feasible. Subprojects will consist of many small and dispersed contracts. Goods will be purchased mostly through limited international bidding (LIB) among qualified suppliers. Limited competitive bidding is a standard practice in the Honduran private sector. Importers generally obtain quotations from several suppliers and buy on the basis of best quality and price. Table 8 (page 30) summarizes procurement arrangements under the credit. 5.7 The project's Operations Manual, as revised after negotiations, will provide a detailed description of all procurement procedures to be used by any of the project entities (SEDA, FHlIS and PCU) with purchasing/contracting responsibilities and will include a procurement schedule. The hiring of a procurement agent has also been considered, since 30 the implementing agency, SEDA, is a newly created government agency and a rapid disbursement pace is expected for the first two years. The following paragraphs indicate those procurement activities which will require prior review by IDA. Where prior review will not be required, ex-post review of contract documentation will be carried out during supervision. The proposed review methods are expected to provide a prior review coverage of 40% in value of all IDA-financed contracts. At negotiations, assurances were obtained from the GOH that procurement arrangements satisfactory to IDA will be followed as described in paras. 5.8-5.10 (para. 7.2(e)). Table 8: Procurement Arrangements a/ CuSS 000) Procurement Method International Local CompeUUve CompetiUve Bidding Bidding Other N.I.F. Total I.Works 1. I Emviruumntal Inveswtnta (Fl-S) Subprojsact /a 3I 1,90S /f 2,726 (777) (1,313) (2,590) Sublom - - 404 - 404 (404) (404) 2. Goods 2.1 Vehidca, Cnputar, Ollcc Equipmnt, Labomtry and Field Equipment - 60 1,147 /g 1,207 (56) (1,067) (1,123) 2.2 Fumniture - - - 33 33 3. Co,uultancxe 3.1 Conultants, Tcchical Anistance and Studics /b - 4,343 296 5,139 (4,622) (4,622) 3.2 Trainig /c - - 337 - 337 (S43) (343) 3.3 Procct Coordinatig Uhit /d - 303 - S03 (763) (763) 4. Nicellancous 4.1 IncrmnntalRccurrewtExpenditures/e - - 343 135 983 (433) (433) 4.2 Adrinirtraion of Invstmrcnt Subprojecu (FHIS) - - - 292 292 Total -73 10,S41 760 12,430 (333) (9,945) - (10,778) Note: Figures in parceutheis arc the rcspective amotnts finsaed by IDA la Subproj*cls executed by FHIS \b Inhldes iuces nd promotioa, and prmtion mntenal. Ic Includes travd and per diern for training \d Includes PCU ularies, Auditirg and Pcuremnnt Agency ic Includes incrementl recurrcnt salaries, operating cots and officc rnaterials TfLocal ahopping for USSI million and direct cntractiig for 0. niillion g IJB for USSO. S nillion, and local and iritntional shopping for about USS0.2 miLion 5.8 Goods. IDA's Procurement Guidelines (May 1992) will govern the procurement of all goods financed under the project. Computer and related equipment, furniture, 31 vehicles, and other office, laboratory and field equipment will represent about 10% of total project costs. This equipment is primarily manufactured abroad and will be procured under LIB procedures from suppliers with established maintenance and services facilities in Honduras. Standard bidding documents isssued be the World Bank will be used for all procurement through LIB. For procurement using LCB procedures, standard bidding documents acceptable to IDA will be used. To the extent possible, contracts for goods will be grouped in lots to allow procurement of larger packages. In the case of computer equipment, vehicles, laboratory and field equipment packages exceeding US $50,000 will be procured through LIB. Such equipment in lots below US $50,000 will be procured through international shopping procedures up to an aggregate amount of US $150,000. Other equipment (e.g., office equipment) will be procured through local competitive bidding (LCB) in packages of US$25,000 or more. When estimated to cost less than US $25,000 per package, and up to an aggregate amount equivalent of US $50,000, equipment will be procured under local shopping procedures with quotations from at least three eligible suppliers. LIB contracts and the first three LCB contracts for SEDA and FHIS each year will be subject to prior review by IDA. 5.9 Investment Subprojects. IDA's Procurement Guidelines (May 1992) will govern the procurement of all civil works and associated materials financed under the project. Investment subprojects will consist of civil works and associated materials for small scale environmental investment subprojects implemented by FHIS and a line of credit to financial intermediaries (NGOs) implemented by PASI. Civil works or goods for small scale environmental investment subprojects will represent about 24% of total costs of the proposed project and will not exceed US $164,000 equivalent of project funds for any one subproject. Cost-sharing by municipalities will be encouraged, particularly in those cases where projects exceed the maximum amount eligible for project financing as stated above. Procurement for all subprojects will be through LCB, local shopping, and direct contracting. LCB will be used for subprojects over US $70,000 and local shopping for subprojects under that amount, up to and aggregate of US $1,000,000. Direct contracting may be allowed for subprojects under US $35,000 each in remote areas where local shopping is not feasible, up to an aggregate amount of US $820,000. These procurement procedures, with the exception of the maximum allowable subproject amount, are the same used by FHIS under the IDA financed FFHS-Il project. The line of credit to financial intermediaries will be operated under PASI, which will award loans to no more than three NGOs acceptable to IDA, selected from five candidate NGOs submitted at negotiations by FIUS for consideration by IDA (para. 7.1). The selected NGOs will receive loans in amounts not exceeding US $167,000 for them to award subloans to eligible small and micro-enterprise for (a) ecotourism, (b) solid waste collection and recycling, and (c) cottage industry pollution abatement projects, following the guidelines developed by the pre-investment studies as described in para. 3.29 and Annex G. The final beneficiaries (the recipients of the subloans) will follow standard commercial practices satisfactory to IDA for the purchase of materials. The first three LCB contracts for FHIS each year will be subject to prior review by the Bank. 32 5. 10 Consultants. IDA's Guidelines for the UIse of Consultatits (August 1981) will govern all consultancies financed under the project. Terms of reference for all studies and contracts for services will be subject to IDA approval. Prior review of all consultant contracts with individuals will be required for contracts exceeding US $10,000 and for all consultant contracts with firms exceeding US $30,000. These thresholds will allow for prior review of approximately 60% of the total value of Bank financed consultants contracts. Contracts below the respective prior review threshold will require only prior review of terms of reference and post-review. D. Disbursements 5.11 The proposed credit will be disbursed over a six year period, with a completion date of June 30, 2001 (Table 9, page 33). The project closing date will be December 31, 2001. The proceeds of the IDA credit will be disbursed against eligible project expenditures at the following rates (net of taxes): (a) 100% of the PCU salaries and operating expenditures, including travel and per diem, (b) 100% of the costs for consultant services and studies; (c) 100% of the training activities including travel and per diem, (d) 100% of costs for equipment and vehicles; (e) 100% of costs for small investment projects and pre-investment studies, (f) 100% for costs for the line of credit for small investment projects; and (g) incremental recurrent expenditures will be financed by IDA on a declining basis: 100% in 1995 and 1996, 60% in 1997 and 1998, 20% in 1999 and 2000; and 0% in 2001. The financing plan by disbursement categories, the disbursement schedule by funding sources, and the schedule of expenditures by component and disbursement category are presented in Table 5 (page 27), Table 10 (page 34), and Annex F, respectively. An estimated schedule of disbursements is contained in Table 9 (page 33). 5.12 Except for contracts requiring prior review, disbursements would be made against certified statement of expenditures (SOEs) for which detailed documentation to provide evidence of expenditures would be retained by the implementing agencies and made available for the required audit and for IDA supervision missions. Disbursements for contracts for goods not exceeding US $50,000, for incremental recurrent and operating expenditures, and for consultancies and services not exceeding US $30,000 with consultant companies and US $10,000 with individual consultants would be made against SOEs prepared by the implementing agencies. SOEs would be submitted directly to IDA every month to request reimbursement. 5.13 To ensure timely and efficient project implementation, various start-up activities are underway: (a) the PCU has started preparation of the operations manuals and procedures to be followed by SEDA, FIS, and the other implementing agencies, terms of reference for the consultants and incremental staff, and the technical specification of the equipment that will be required to start project implementation on schedule, (b) SECPLAN has initiated the establishment of the UOT and the preparatory work for the preparation of the National Land Use Plan; and (c) FHIS has initiated the organization of its environmental unit and has begun to review the current subproject specifications to incorporate environmental criteria. Retroactive financing will be provided in respect of all 33 expenditure categories up to US $1.08 million (10% of the proposed credit) for eligible expenditures incurred after July 1, 1994. The eligible expenditures agreed with the GOH after appraisal are the establishment, operations and associated activities of the UOT (para. 3.9), FHIS' Environmental Unit (para. 3.30), PCU (para. 3.35), and those activities under the Technical Assistance for Municipal Environmental Mangement Subcomponent (para. 3.26). Table 9: Estimated Schedule of IDA Disbursements a/ (USs '000) Standard Disbursed Durine Disbursement Semester Cununulative Disbursement Profile b/ IDA Fiscal Year Semester Ending Amount % of Amount % of %ofTotal Total Total 1996 December95 1,842 17 1,842 17 0 June 96 2,398 22 4,240 39 10 1997 Decernber 96 2,398 22 6,638 62 18 June 97 957 9 7,595 70 26 1998 Decernber 97 957 9 8,552 79 38 June98 585 5 9,136 85 54 1999 Decernber98 585 5 9,721 90 70 June99 330 3 10,051 93 82 2000 December 99 330 3 10,382 96 90 June00 151 1 10,532 98 94 2001 December00 151 1 10,683 99 98 June 01 96 1 10,778 100 100 a] Credit assumed to beconme effective on July 1995. Totals may not add up due to rounding. Includes price and physical contingencies. b/ Standard Disbursement Profile for agriculture sector projects in Honduras (June 1994). 5.14 While estimated disbursements are expected to take place over six years, which matches the standard disbursement profile for agriculture projects in Honduras, the credit is estimated to disburse more rapidly the first few years than the standard disbursement profile indicates. The reason for this is that the proposed project requires that most of the procurement of goods and services, and the financing of environmental investments take place during the first two years. In this period, approximately 29% of the total project cost is expected to be spent for consultants, studies, seminars and workshops, and equipment alone; in addition to all the environmental investment subprojects, which correspond to 25% of the total project costs (Annex F). To minimize the risks associated with the proposed disbursement profile, the following actions are taking place: (i) a number of preparatory activities are currently being undertaken by the PCU and the FHIS to advance the procurement process; (ii) the PCU has been working on the procedures for project implementation since the early stages of project preparation and their familiarity with the project, its requirements and the agencies involved will facilitate significantly the implementation process, (iii) the services of a procurement agency are being retained to 34 assist the PCU with the contracting of consultants and the acquisition of equipment; finally, (iv) the FHIS has ample experience in the management of investments of the size and for the target groups being considered under the proposed project, and the implementation projections for the component under their management is based on past performance experience. Table 10: Financing Plan and Estimated Annual Disbursements a/ (USs o000) 1995b/ 1996 1997 1998 1999 2000 2001b/ Total IDA 1,842 4,795 1,914 1,169 661 301 96 10,778 GOH 217 597 231 179 202 195 80 1,701 Total 2,060 5,393 2,145 1,348 863 496 175 12,480 aJ Includes price and physical contingencies, and taxes. Totals may not add up due to rounding. b/ Covers six months of operations 5.15 At negotiations, assurances were obtained from the GOH that a Special Account will be established at the Central Bank of Honduras with an initial deposit of US $0.25 million, the estimated amount of four months of disbursement under the proposed project for activities other than the environmental investments. After an aggregate amount of US $0.75 million has been withdrawn from the Special Account the amount of the deposit will be increased to US $0.5 million. The Special Account will be managed by SHCP, under established procedures between IDA and the GOH (para. 7.2(c)). The Special Account will be accessible by SEDA and FHIS, through SHCP5, and will be replenished monthly on their request (and no less frequently than every 3 months), or whenever one third of the authorized amount has been withdrawn, whichever occurs first. FHIS will notify the PCU, whenever initiating a replenishment request. Withdrawal applications for replenishment of the Special Account will be fully documented, except for expenditures not subject to prior review by IDA (see para. 5.12). All replenishment applications should accompanied by monthly bank statements of the Special Account, which have been reconciled by the Borrower. Withdrawal applications for payments to be made outside of the Special Account will be accepted provided that the amount requested is equivalent to at least 10% of the amount advanced to the Special Account (US $50,000). E. Accounts and Audits 5.16 At negotiations, assurances were obtained from the GOH regarding auditing arrangements for the SEDA and FHIS implemented activities of the proposed project, as described in this, and the following paragraph (para. 7.2(d)). For the SEDA- implemented activities, an independent auditor acceptable to IDA will: (a) audit accounts of SEDA, SOEs, and the Special Account; (b) apply auditing procedures satisfactory to IDA that In order to expedite the replenishment procedures, SHCP has agreed to process the replenishment requests within 5 working days of receiving the properly completed documentation from the PCU or FHS. 35 conform to generally accepted auditing procedures; (c) carry out its auditing work in a timely manner (an annual audit report will be presented to IDA no later than six months after the end of each fiscal year); and (d) render an audit opinion, or the reason why such opinion cannot be rendered. Auditing procedures were submitted to IDA by SEDA prior to negotiations and will be incorporated into the Operations Manual. The administrative subcomponent of the proposed project will provide assistance to SEDA in the establishment of an accounting system. 5.17 The FHIS-implemented activities of the proposed project provide for the continuation of auditing arrangements and procedures currently taking place under IDA's FHIS II project. These arrangements provide for a system of quarterly and annual audits. Quarterly audits will be undertaken by private independent external auditors, acceptable to IDA, who will examine a sample of subprojects6, review the contracts thereunder, ascertain compliance with contract terms, review physical progress and adequacy of accounting records, and state whether procurement guidelines are being followed. In addition physical inspections will be conducted by qualified personnel in the context of the above-mentioned quarterly audits. Private independent external auditors, acceptable to IDA, will alsc continue the annual audits of FHIS which provide for the submission to IDA, through the PCU, within six months after the end of the fiscal year a report which will contain certified copies of balance sheets and income statements, with the auditor's opinion of these financial documents and separate opinions on: (a) project accounts; (b) SOEs, (c) procurement procedures; and (d) a summary of the quarterly audits of subprojects. F. Project Supervision, Monitoring and Evaluation 5.18 Because of the complexity of the project and the fact that environmental management is a recent addition to the priorities of the GOH, falling under the mandate of relatively new institutions, the project will require extensive and close supervision, particularly during the first two years (Annex J). To facilitate the start of implementation activities, a project launch workshop will be held before or shortly after the project becomes effective. It is expected that the project will become effective in July 1995. The workshop will be organized by the PCU, with the assistance of external facilitators. The purpose of the workshop will be to familiarize the executing agencies with IDA procurement, disbursement, and other administrative procedures and to ensure that project managers and staff develop a common understanding of the project, its objectives, its targets, and the role of each of the agencies involved in project implementation. A major focus of the workshop will be to discuss in detail the preparation and execution of the annual operating plans of each implementing agency and to clearly identify critical coordination areas. 5.19 Semi-annual IDA supervision missions will evaluate progress against the annual operating plans, and against the agreed upon project performance and impact indicators 6 A proportional higher sample of subprojects awarded through direct contracts will be subject to audits. 36 (Annex I). Each year one of IDA supervision missions will coincide with a formal annual review, or the mid-term review to be carried out jointly with the GOH during the third year of project implementation (September 1998). Annual and mid-term reviews will assess progress against performance and impact indicators and will be used to evaluate possible adjustments that may be required. They will also include implementation planning workshops to provide representatives of the participating agencies with an opportunity to review progress, refine plans, and discuss possible adjustments to the different aspects of project implementation. Annual reviews will be carried out no later than March 31 each year; and the mid-term review by September 30, 1998. The semi-annual supervision mission will be carried out no later than September each year. 5.20 The PCU will be responsible for the monitoring and evaluation of the project. The Operations Manual, which will be distributed to all the participating agencies, includes detailed instructions on all administrative matters, and the monitoring and evaluation procedures to be adopted. From the monitoring and evaluation information provided by the participating agencies in the course of project implementation, the PCU will prepare all the documentation required by IDA for the supervision of the project (Annex I and Annex J). The reports will follow a format that will be included in the Operations Manual. At negotiations, assurances were obtained from the GOH that quarterly progress reports, in a format satisfactory to IDA, will be sent to IDA,through the PCU, within 30 days of the end of the quarter starting with the third quarter (July-September) of 1995 during the first year; thereafter the progress reports will be sent to IDA semi-annually within 30 days of the end of the semester starting with the second semester (July-December) of 1996 (para. 7.2(f)). 5.21 The PCU will also be responsible for the preparation of the annual operating plans and budgets, in coordination with all the participating agencies. At negotiations, assurances will obtained from the GOH that these plans and budget will be submitted to IDA for review and approval not later than November 30 each year starting with November 30, 1995 for the 1996 plan and budget. As condition of effectiveness the operating plan and budget for the first six months of the project (July - December 1995) should be submitted in June 1995 (para. 7.4 (a)). 6. EXPECTED BENEFITS AND RISKS A. Benefits 6.1 Sustainable economic growth in Honduras depends on halting the spread of environmental degradation and on the sound management of the country's natural resources. Unless this is done, Honduras not only risks loss of its most promising opportunities for economic growth in agriculture, fisheries, and tourism, but also puts in jeopardy its ability to maintain current production levels and exposes its citizens to health and environmental hazards. The proposed project will help Honduras meet its environmental challenges through important institutional operational and regulatory 37 changes, and investments in environmental protection and conservation projects at the local level. 6.2 Environmental Planning and Legal Framework. The proposed project will strengthen the GOH's capability to develop and implement environmental policies, strategies, and plans. This will be accomplish by internalizing environmental considerations and variables in the development and land use planning initiatives of the GOH. The establishment of a permanent and participatory environmental planning process will open the door for public input on the decisions that determine the sustainability of the models of development being adopted by the government. The proposed project will clarify the legal framework, making it easier and more likely that the private sector will react favorably to the development of environmental laws and regulations while increasing the capacity of government agencies to enforce environmental laws. It will additionally generate and make available data and information needed for carrying out an effective environmental program, train professionals in environmental and natural resources management, establish an environmental data system, and increase the awareness and understanding of environmental problems. As part of the environmental planning process, efforts will be made to quantify in economic and social terms the costs and benefits of the environmental policies and actions implemented by the GOH. 6.3 Environmental Impact Assessments and Audits. The proposed project will assist the GOH in establishing an effective and transparent environmental impact assessment process. It will fund the development of the methodology for conducting environmental impact assessments and audits in key sectors and will engage government agencies, the private sector and the public in general in the environmental assessment of development projects with potentially negative environmental effects. 6.4 Local Government and Community Participation in Environmental Management Initiatives. The proposed project will improve environmental management capacities at the local level, broaden understanding and support for environmental protection. Additionally, it will finance high priority environmental projects at the municipal and community level aimed at improving the quality of the environment for the urban and rural poor. B. Risks 6.5 Resistance to the Role of SEDA. SEDA is a new institution and may experience resistance from older, larger and more powerful public sector institutions as it begins to assume its legally mandated role to develop, manage, coordinate, and supervise environmental policy. To the extent possible this risk has been reduced by: (a) involving key other public agencies in the project preparation process and providing them assistance under the proposed project, (b) strengthening SEDA's planning and coordination capacity under the institutional component of the proposed project, (c) resolving conflicting laws and regulations that will undermine SEDA's authority under the harmonization of the laws subcomponent of the proposed project, and (d) receiving confirmation of the GOH's 38 political commitment to the priority it attaches to environmental management and the environment. In the long run, the effective performance of SEDA and the continued political commitment of the GOH will be the best assurance that this risk will be overcome. 6.6 Project Complexity. The nature of environmental projects, which cut across many sectoral activities, and the nature of institutional development, which calls on the development of many skills and capacities, make some project complexity inevitable. Project design and preparation have tried to reduce this risk in the following ways: (a) requiring operating agreements that establish a clear definition of the roles of, and responsibilities between, public institutions involved in project implementation, (b) utilizing existing institutions, rather than creating new ones7; (c) preparing a project implementation plan incorporating the lessons learned from other similar IDA/Bank financed projects8; (d) eliminating project components, or combining them with other activities9; and (e) creating a strong PCU that began its work as SEDA's project preparation unit in November 1993 and is now thoroughly familiar with the proposed project and knowledgeable about IDA procedures. 6.7 Human Resources. Although the development of human resources is a key subcomponent of the institutional development of the proposed project, the success of this subcomponent will depend in the longer term on addressing the underlying problems that have made it difficult for well-qualified technical personnel to be recruited and retained in the civil service. These issues are being addressed in the context of the preparation of an IDA public sector adjustment operation. In the shorter run, the problem is addressed by the contracting of local persons outside the civil service for project implementation and technical assistance support. 6.8 Counterpart Funding. There is the risk of receiving timely and adequate counterpart financial support. The risk, however, has been reduced by designing the proposed project so that SEDA will not expand over its current authorized level of employees and its budget will increase only gradually over the life of the proposed project. A letter of commitment of counterpart funds from SHCP (Annex H) and a letter stating the project priority from SECPLAN (Annex K) have been submitted. These letters, together with the policy statement of the GOH (Annex D) reinforce the commitment of the current administration to the successful implementation of the proposed project. Additionally, at negotiations, it was agreed that a formal letter of commitment from the GOH to provide counterpart funding and to make the required annual budget allocations for the project will be submitted to IDA as a condition of credit effectiveness (para 7.4(b)). FH1S is being used for the investment component, rather than creating a new environmental fund. 8 The advice of consultants with experience in IDA/Bank's Chile and Bolivia projects was secured. 9 The environmental education curriculum subcomponent has been transferred to the education project currently under preparation. 39 7. AGREEMENTS AND RECOMMENDATION A. Agreements 7.1 During project preparation, agreements were reached regarding the role that SEDA and key government agencies will play in support of an environmental and land use planning process, enforcement of environmental legislation, definition of environmental policy, and coordination of environmental management activities. Additionally, agreement was reached regarding the role of SEDA and sectoral agencies in the development and implementation of the SINIA and SINEIA, a pilot technical assistance program for selected municipalities on environmental management, and support to municipalities and communities on for the design and implementation of environmental investment subprojects through FHIS. The documentation on these matters received prior to negotiations can be found in the project files and is listed in Annex L. Prior to negotiations, FHIS submitted the institutional profiles of five NGOs eligible to act as financial intermediaries for the PASI-operated line of credit for environmental investments by small and micro-enterprises (para. 3.29). 7.2 At negotiations, assurances were obtained from the GOH that: (a) the agreements listed in the implementation schedule (Annex E) will be signed by the dates indicated therein (paras. 3.4, 3.6, 3.16, 3.22, 3.23, 3.26); (b) the economic incentives, biodiversity conservation and solid waste management studies will be completed by the dates indicated in the implementation schedule (Annex E) and that the relevant results will be incorporated in the Borrower's environmental planning initiatives (para. 3.6); (c) the Special Account will established and maintained (para. 5.15) and adequate counterpart funding for each participating agency will be made available to the project in a timely manner (para. 4.4); (d) the project accounts and Special Account will be audited annually by independent auditors satisfactory to IDA and a copy of the audit report, including a separate opinion on SOEs, will be provided to IDA through SEDA's PCU within six months of the end of each fiscal year (para. 5.16); (e) procurement arrangements, satisfactory to IDA will be followed (para. 5.7); (f) quarterly progress reports, in a format satisfactory to IDA, will be sent to IDA, through the PCU, within 30 days of the end of the quarter starting with the third quarter (July-September) of 1995 during the first year; thereafter the progress reports will be sent to IDA semi-annually within 30 days of the end of the semester starting with the second semester (July-December) of 1996 (para. 5.20); 40 (g) an operating plan and budget for the succeeding year will be submitted by each November 30 (including November 30, 1995) throughout the project implementation period, the annual operating plan and budget will be submitted to IDA for review and approval; joint GOH-IDA annual supervision reviews will be held no later than March 31 of each project year beginning in 1996; and a project mid-term review will be carried out no later than September 30, 1998 (para. 5.21), and (h) the PCU will be maintained adequately staffed and equipped during the life of the project (para. 3.34), and adequate space to accommodate the incremental personnel, consultants and equipment will be provided by all the participating agencies (paras. 3.11, 3.23). 7.3 Conditions of disbursement. The following are conditions of disbursement: (a) for legal training activities, a signed agreement, satisfactory to the Association, between the GOH and the EJ (para. 3.16); (b) for any Fl-S-implemented activities, a signed agreement, satisfactory to the Association, between the GOH and FlIS regarding the implementation of the Environmental Investments Subcomponent, including the environmental assessment criteria that will be used to select and evaluate the subprojects and the role of SEDA in subproject approval and monitoring (para. 3.27), (c) for municipal and community environmental investment subproject categories financed through FHIS, the relevant pre-investment studies, satisfactory to the Association (para. 3.28), and (d) for the small and micro-enterprise line of credit managed by FHIS, the relevant pre-investment studies, satisfactory to the Association (para. 3.29). 7.4 Conditions of Credit Effectiveness. Conditions of effectiveness are: (a) the operating plan and budget for the first six months (July - December 1995) of the project (para. 5.21); and (b) a formal letter of commitment from the GOH to provide counterpart funding and to make the required annual budget allocations for the project (para. 6.8). B. Recommendation 7.5 Subject to the above assurances and conditions, the proposed project will constitute a suitable basis for an IDA credit of SDR 7.4 million (US $10.8 million equivalent) to the Republic of Honduras on. standard IDA terms, repayable in 40 years including 10 years of grace. Retroactive financing from the IDA credit for up to SDR 0.74 million (US $1.08 million equivalent) for eligible expenditures incurred after July 1, 1994, is recommended. Annex A Page 1 of 2 HONDURAS ENVIRONMENTAL DEVELOPMENT PROJECT GENERAL DESCRIPTION OF THE NATIONAL SYSTEM OF ENVIRONMENTAL IMPACT ASSESSMENT Environmental Impact Assessment Categories All project, public or pnrvate, will fall in one of two environmental impact assessment categories, as described in the regulations of the National System of Environmental Impact Assessment (Sistema Nacional de Evaluacion de Impacto Ambiental - SINEIA), which can be found in the project files. Category 1, includes projects that do not require and environmental impact assessment, but require an environmental analysis using procedures established by the Ministry of the Environment (SEDA). Category 11 includes projects that require a formal EIA, and recognized three levels as indicated below. LEVEL 1 LEVEL 2 LEVEL 3 Projects with a high level of environmental risk that Project with an intermediate level of environmental risk Projects with minimal environmental risks but that still require a full EIA. that require an intermediate EIA. require an EIA to cover specific negative effects on the environment. Steps Necessary to Obtain an Environmental License PROCESSING STEPS APPLICANT' SEDA' CONSULTANTJ ENVIRONMENTAL UNITS4, (Time) NGOs5, GENERAL PUBLIC Step I . Registers project and fill out form * Receives documents and opens file (2 days) for environmental license. for project. Register, fill out form for . Publicly announces intention to * Informs other pertinent environmental license obtain license. organizations. Step 2 . Coordinates interinstitutional team . NGOs, Community groups may (30 days) formed with environmental units, send comments to SEDA to include Categorization of project and local govemment offices and NGOs in the terms of reference. preparation of terms of reference to: (a) inspect project site and * Environmental units, municipal prepare a preliminary govemments and NGOs may environmental analysis; (b) assign a participate in preparation of the I APPLICANT: Individual or company submitting an application for an environmental license for a particular project. 2 SEDA: Ministry of the Environment (Secretaria del Ambiente), represented by the General Directorate of Environmental Assessment and Control (Direcci6n General de Evaluaci6n y Control Ambiental - DECA). 3 CONSULTANT: Individual or firm hired by the applicant to prepare the environmental impact assessment (FIA) under the terms of reference prepared by SEDA. 4 ENVIRONMENTAL UNITS: Environmental units operating in sectoral agencies (e.g., ministries), or municipalities. 5 NGO: Non government organization. Annex A Page 2 of 2 PROCESSING STEPS APPLICANT' SEDA2 CONSULTANT' ENVIRONMENTAL UNITS1, (fMie) NGOs5, GENERAL PUBLIC category (I or 11) to the project terms of reference. based on its potential environmental impact; and (c) consult the general public. . Issues the clearance for the project, if assigned to Category 1. * Prepares the terms of reference for environmental impact assessment (EIA) for the project, if assigned to Category 11. Step 3 . Upon receiving the terms of a Prepares ELA following terms of * NGOs, communities, and the (No definite time limit) reference for the EIA prepared by reference. general public may participate in Preparation of EIA SEDA, the applicant may: (a) . Holds public consultations with the the preparation of the EIA, proceed with the preparation of the community, NGOs, and the general following the terms of reference. EIA; or (b) appeal to SEDA public according to terms of * Environmental units participate in requesting a modification in the reference. the follow-up activities resulting terms of reference. * Delivers the completed EIA to from the ELk * Reviews EIA prepared by the applicant. consultant and submits it for SEDA's consideratioii. Step 4 * Announces publicly the submission * Rcviews the EIA with the * Revises the EIA as instructed by the * Environmental units, NGOs, (30 days) of the completed EIA to SEDA. interinstitutional committee, the applicant. communities, and the general public . Evaluation of EIA * Upon receiving the determination NGOs, and the general public. have access to the EIA and may issued by SEDA, the applicant may: * Prepares technical assessment of submit written comments for (a) accept the findings and signs an the EIA and issues a determination SEDA's consideration. agreement to comply with which: (a) accepts, (b) rejects, or (c) . Environmental units may participate mitigation measures established by requests modifications to the EIA in the review process. SEDA; (b) revise the EIA following submitted by the applicant. SEDA's recommendations; or (c) appeal SEDA's determination. Step 5 * Awards environmental license to the (5 days) project after applicant signs the Environmental license awarded agreement to comply with the mitigation measures indicated in SEDA's determination. * Does not award the environmental license to project. 43 Annex B Page 1 of 5 HONDURAS ENVIRONMENTAL DEVELOPMENT PROJECT INSTITUTIONAL AND LEGAL FRAMEWORK 1. The 1982 Constitution of Honduras provided the general framework for environmental protection and enactment of specific environmental laws. The responsibility of the State to maintain the quality of the environment, and to regulate the use of natural resources, is established in Articles 145 and 340 of the Constitution, respectively. In July 1993 the General Environmental Law (LGA) was enacted. With it, the legal, institutional, and operational framework for environmental management in Honduras was strengthened. In legal terms, the LGA provided the principles for environmental protection in every type of natural resource (e.g., air, water, soil, flora and fauna). In institutional terms, it created several new institutions such as (i) the Ministry of the Environment (SEDA), with a policy, planning, coordination, enforcement, and monitoring role; (ii) the National Consultative Council of the Environment (COCONA), with the role of formulating environmental policies; (iii) Technical Advisory Committee (CTA) to act as the technical secretariat of the COCONA; and (iv) the Environmental Attorney's Office (PA), responsible for assisting with the judicial and administrative enforcement needs. In operational terms, the LGA and its subsequent regulations defined new instruments and mechanisms for environmental management, among them the National System of Environmental Information (SINIA) and the National System of Environmental Impact Assessment (SINEIA). 2. Even though the LGA has made a significant contribution to the improvement of environmental management, much remains to be done. This is particularly true with regard to the role and responsibility of the sectoral agencies, particularly in relation to the development, monitoring and enforcement of environmental norms and technical standards, and to the enforcement of environmental laws and regulations. 3. Environmental management at the sectoral level. With the exception of the LGA, the legislation dealing with environmental issues in Honduras remains dispersed and is often contradictory. The LGA, by singling out SEDA as the principal agency responsible for the environmental affairs in Honduras, has begun the move in the direction of establishing more favorable legal and institutional conditions for the development and implementation of a far reaching environmental agenda. However, given that sectoral laws are the direct responsibility of sectoral agencies, and the issues related to environmental norms and technical standards are not clearly defined in the LGA, the mechanisms by which SEDA can ensure that these sectoral laws and their accompanying regulations promote environmentally sustainable development and resource management need to be much more clearly defined. This complex task is made more difficult by the number and the relative strength of the existing sectoral agencies involved directly or indirectly in environmental matters. These agencies include, among others, (i) the Ministry of Natural Resources - SRN which has jurisdiction over agriculture, mining, water resources, fisheries and others; (ii) the Ministry of Public Health (SSP) which has 44 Annex B Page 2 of 5 jurisdiction water and air quality; (iii) the Ministry of Planning (SECPLAN) which is responsible for land use planning (ordenamiento territorial); in addition to (iv) National Autonomous Water and Sewage Service (SANAA); (v) National Electric Energy Company (ENEE); and others. 4. Enforcement of environmental laws and regulations. Several factors play a role in determining the effectiveness of law enforcement efforts: clear institutional responsibilities, consistent and complementary general and sectoral legislation, and adequate training for law enforcement officials. (a) Institutional considerations. With the recent enactment of a law creating the Public Prosecutor's Office (FGR), it is possible that the potential for judicial enforcement of the environmental laws will be greater. It is expected that, in principle, while the FGR will defend the interests of society, the PA will continue to exercise its role as the legal counsel for the State. Considering the potential functional overlap between the FGR and the PA, effective coordination mechanisms and a clear definition of roles will be required, in order to maximize their respective efforts. (b) Legal framework. The body of laws and regulations is still far from consistent or properly harmonized. General environmental management, for instance, is covered in the LGA and the 1992 Municipal Law. With regard to the water sector additional laws are important such as the National Waters Law, the law that establishes SANAA and the Health Code. The forest sector is regulated by the Forestry Law, the law that establishes the Honduran Forestry Development Corporation (COHDEFOR), Forestry Incentives Law, and the Law for the Modernization and Development of the Agrarian Sector. Regarding pollution control and environmental quality, the primary laws are the Health Code, the Plant Health Law the Animal Health Law, the Regulation for Pesticides Control Law, the Hydrocarbons Law, the Terrestrial Transportation Law, and the Labor Code. This list is by no means complete, it just serves to illustrated the level of complexity of the legislative milieu in some of the key sectors affected by, or affecting the developing environmental agenda. At the same time that some areas are cluttered with laws and regulations, others lack the proper legislative framework. Take for instance environmental crimes, which have not been typified in the Penal Code, and thus make it difficult to turn environmental violations into serious offenses. Likewise, the lack of national quality and emission standards constitutes a problem when an agency needs to determine and prove that the environment has been harmed. (c) Legal training. The maze of laws and institutions affecting and regulating the actions of both the public and private sectors, coupled with the recent emergence of environmental management instruments (e.g., environmental 45 Annex B Page 3 of 5 impact assessment, environmental audits, environmental permit), make the compliance and enforcement of the environmental legislation difficult and confusing. Lack of information about the new environmental legislation and regulations is perhaps the most serious obstacle for their enforcement. A recent interview with judges in Tegucigalpa showed that they were not aware of the LGA and other relevant environmental requirements such as environmental impact assessment. Among the possible, not mutually exclusive, reasons that explain the interview's findings are: (i) the inadequate training of law students; and (ii) the limited distribution and high prices of the Official Gazette. Legislation Related to Environment Mangement I1. General a) Municipal Law (Ley de Municipalidades) b) Constitution of the Republic (Constituci6n de la Republica) c) Law of the Attorney General of the Republic (Ley de la Procuraduria General de La Republica) d) Law of the Public Prosecutor's Office (Ley de la Fiscalia General de la Republica o Ministerio Publico) e) Law of the Controller General of the Republic (Ley Organica de la Contraloria General de la Repiublica) f) General Environmental Law (Ley General del Ambiente) g) Regulation of the General Environmental Law (Reglamento de la Ley General del Ambiente) h) Regulation of the National Environmental Impact Assessment System (Reglamento del Sistema Nacional de Evaluacion de Impacto Ambiental) 2. Water a) Civil Code (C6digo Civil) b) National Waters Law (Ley de Aprovechamiento de Aguas Nacionales) c) Law of the Constitution of the National Autonomous Water and Sewerage Service (Ley Constitutiva del Servicio Aut6nomo Nacional de Acueductos y Alcantarillados) 3. Forestry a) Forestry Law (Ley Forestal) b) Law of the Honduran Forestry Development Corporation (Ley de La Corporaci6n Hondurefia de Desarrollo Forestal - COHDEFOR) c) Law of the Creation of the National School of Forestry Science (Ley de Creaci6n de la Escuela Nacional de Ciencias Forestales) d) Forestry Incentives Law (Ley de Incentivos Forestales) 46 Annex B Page 4 of 5 4. Agriculture a) Law for the Modernization and Development of the Agricultural Sector (Ley para la Modernizaci6n y el Desarrollo del Sector Agricola) b) Plant Health Law (Ley de Sanidad Vegetal) c) Regulation of the Registry, Import, Manufacturing, Storage, Transport and Sale and Use of Pesticides (Reglamento de Registro, Importacion, Elaboraci6n, Almacenamiento, Transporte, Venta y Uso de Plaguicidas 5. Health a) Health Code (C6digo de Salud) b) Penal Code (C6digo Penal) 6. Mining a) Mining Code (C6digo de Mineria) b) Law of the Exploration, Industrialization, Refining, Transport and Commercialization of Fuel and Associated Substances (Ley de Hidrocarburos) 7. Fauna a) Fisheries Law (Ley de Pesca) b) Animal Health Law (Ley de Sanidad Animal) 8. International Instruments a) Ramsar Convention, Protection of Wetlands b) Paris Convention, Protection of World's Cultural and Natural Patrimony c) Convention on International Trade of Endangered Species d) Montreal Protocol and the 1985 Vienna Convention, Protection of the Ozone Layer e) Basel Convention, Transboundary Movement of Hazardous Waste f) Climate Change Convention g) Biodiversity Convention Institutions Directly or Indirectly Involved in Environment Management I General a) Ministry of Environment (Secretaria del Ambiente) b) Ministry of Natural Resources (Secretaria de Recursos Naturales) c) Ministry of Coordination, Planning and Budget (Secretaria de Coordinaci6n, Planeamiento y Presupuesto) d) Ministry of Economy (Secretaria de Econornia) e) Ministry of Public Education (Secretaria de Educaci6n Publica) f) Ministry of Communication, Public Works and Transports (Secretaria de Comunicaci6n, Obras Publicas y Transporte g) Ministry of Culture (Secretaria de Cultura) h) Ministry of Labor and Social Security (Ministerio de Trabajo y Previsi6n Social) 47 Annex B Page 5 of 5 i) National Company of Electric Energy (Empresa Nacional de Energia Electrica) j) Honduran Tourism Institute (Instituto Hondureino de Turismo) k) Environmental Attorney's Office (Procuraduria del Ambiente) I) Public Prosecuter's Office (Fiscal General de la Republica) m) Controller General of the Republic (Contraloria General de la Republica) n) National Congress - Environmental Comisson and Natural Resources Comisson (Crongreso de la Naci6n - Comisiones de Medio Ambiente y de Recursos Naturales) 2. Water a) National Autonomous Water and Sewerage Service (Servicio Aut6nomo Nacional de Acueductos y Alcantarillados) b) Municipal Division of Waters (Division Municipal de Aguas-Municipalidad de San Pedro Sula) 3. Forestry a) Honduran Forestry Development Corporation (Ley de La Corporacion Hondurefia de Desarrollo Forestal - COHDEFOR) b) National School of Forestry Science (Escuela Nacional de Ciencias Forestales) 4. Health a) Ministry of Health (Secretaria de la Salud Publica) 5. Pollution Control a) Center for the Study and Control of Contaminants (Centro de Estudios y Control de Contaminantes, Secretaria de Salud Publica) 6. Land Tenure a) National Land Institute (Instituto Nacional de Tierras) b) National Agrarian Institute (Instituto Nacional Agrario) 7. Private Sector a) Honduran Business Council (Consejo Hondurefio de la Empresa Privada) 48 Annex C Page 1 of 2 HONDURAS ENVIRONMENTAL DEVELOPMENT PROJECT GENERAL DESCRIPTION OF THE MINISTRY OF THE ENVIRONMENT 1. The General Environmental Law (LGA), which entered into effect in July, 1993, created the Ministry of the Environment (SEDA). The functions of SEDA are as follows: (a) to define the objectives, formulate policy and establish environmental priorities; (b) to coordinate the environmental activities of the public institutions and promote the participation of the public in these activities; (c) to coordinate, with other government agencies, the development of the National Land Use Plan (Plan de Ordenamiento Territorial); (d) to develop, implement and manage the National System of Environmental Impact Assessment (SINFIA); (e) to coordinate environmental training programs for all levels of society; (f) to develop and coordinate the National System of Environmental Information (SINIA). (g) to promote scientific research on environmental issues; and (h) in general terms, to dictate, execute and propose any necessary means for the preservation of the natural resources and the betterment of the quality of human life. MINISTER COCONA E N V R O N E Y ' N O FI C .. ... .... .... .. ... .. .. . . .. ... ... .... .. .. ... ... ... .... .. .. . ... . . .. . ... .. VICE MINISTER CTA LEGAL | ADM[ISTiRONTICOUNSEL | DPPA | Project DECA Coordination Unit Figure 1: Organizational Structure of SEDA 2. The organizational structure' is presented in Figure 1. Its operating arms are the General Directorate of Environmental Policy and Planning (DPPA) and the General Originally, the organizational structure of SEDA included a third general directorate, the Direcci6n General de Gesti6n y Desarrollo Ambiental. However, before it was implemented, it was determined 49 Annex C Page 2 of 2 Directorate of Environmental Assessment and Control (DECA). Additionally, SEDA has two inter-institutional instruments to serve as the vehicle for the development of a cross- sectoral environmental agenda, the National Consultative Council of the Environment (COCONA) and the Technical Advisory Committee (CTA). 3. The DPPA has the following functions: (a) to prepare inventories of environmental problems and support natural resource inventories; (b) to prepare environmental policy, objectives, goals, and strategies; (c) to coordinate the development of land use plans; (d) to harmonize environmental legislation; (e) to design, implement and manage the SINIA; (f) to promote environmental research; (g) to incorporate environmental principles in forestry and watershed management plans; (h) to prepare and implement environmental training programs; (i) to coordinate with the Ministry of Education formal environmental education programs (j) to plan and develop non-formal environmental education programs (k) to assist municipalities in the development of environmental units and in the preparation of environmental programs and projects; 4. Among the functions of the DECA are: (a) to design and manage the SINEIA; (b) to coordinate the preparation of technical norms; and (c) to supervise projects to ensure their compliance with environmental regulations 5. The COCONA is an advisory group, chaired by the Vice Minister of the Environment, and formed by the vice ministers of several sectoral ministries, and representatives of the private business community, NGOs, peasant and workers groups. The COCONA has the mandate of establishing the environmental policy framework of Honduras. 6. The CTA is chaired by the Vice Minister of the Environment, and is composed of environmental specialists from the public and private sectors. The CTA acts as secretariat of the COCONA and has the mandate of advising the COCONA members and the Minister of the Environment on all scientific and technical matters arising in the course of developing and implementing the national environmental agenda. 7. The Project Coordination Unit is a temporary unit established for the purpose of supporting the administration and implementation of the IDA-financed Environmental Development Project. that it would be more efficient, operationally and financially, to limit the number of general directorates to two and to distribute the work load among them. 50 Annex D Page 1 of 4 HONDURAS ENVIRONMENTAL DEVELOPMENT PROJECT POLICY STATEMENT FROM THE GOVERNMENT OF HONDURAS' 6. ENVIRONMENTAL POLICY The main environmentalproblems the countryfaces are deforestaton; erosion, degradation of maritime and coastal resources; inadequate management and pollution ofprotected areas and wildlife; pollunon of rivers andfresh water resources; and the lack of adequate systems for the disposal of solid waste and waste water THE ENVIRONMENTAL PROBLEMS In the last 30 years deforestation has accelerated markedly. From 1965 to 1989 it is estimated that the forested area was reduced to 5.2 million hectares, of which 2.8 million correspond to the pine forests and 2.3 million to latifoliate forest (see Table 13). The rate of deforestation of the latifohate forest was 2.2 percent per year; the average area of latifoliate forest destroyed was 62,500 hectares per year. Destruction of the pine forest is less in both absolute and relative terms: the deforestation rate was 1I.1 percent per year, with an average of 33,000 hectares lost annually. Table 13 Millions of hectares Forested Area (1) Annual rate of Forest Potential 1965 1989 deforestation (%) Conifer 3.7 3.6 2.8 1.1 Latifoliate 3.9 3.8 2.3 2.2 Total 7.6 7.4 5.2 2.2 (1) Sources: FAO, 1965; GTZ, 1990 The situation in the forestry sector reflects the different pressures brought to bear on the forest by the country's various economic and social groups. The strong economic groups (ranchers, loggers, and landowners) pressure the forest in order to expand their livestock and farming activities, and to exploit forest resources intensively and extensively. The forests, in turn, are pressured by migratory agriculture to meet the needs of peasants who own marginal agnrcultural lands or landless peasants for expansion and subsistence, as well as for use as fuelwood. The results of this type of exploitation of forest resources have quickly ensued deforestation, erosion, floods, etc. In the maritime and coastal area the situation is similar, marked by overexploitation of marine resources by the export-oriented fishing and shrimping companies, and to a lesser degree by local population groups engaged in fishing for subsistence and to meet the demand of the domestic market; cutting of mangrove forests primarily for use as fuel in salt production; etc. As a result of Excerpted from the official policy framework document (Las Medidas Econ6micas y su relaci6n con la Politica de Desarrollo Sostenible y Equitativo del Gobierno de Honduras) submitted by the Govemrnent of Honduras to the National Congress in July 1994. 51 Annex D Page 2 of 4 this situation, the country's maritime and coastal resources are being degraded at a fast pace, undercutting the viability of their sustainable use by present and future generations. THE ENVIRONMENT AND DEVELOPMENT ACTION PLAN Today, in view of the accelerated processes of liberalization and privatization nationally and worldwide, there is an urgent need to redefine the role of the state, as both protector of natural resources and regulator of their sustainable use. The problems noted above have largely resulted from the lack of appropriate environmental policies, institutional weaknesses that make it difficult to implement corrective measures, weak interinstitutional coordination (among both public- and private-sector institutions), and the existence of an imprecise and incomplete regulatory framework. The current Government has decided to abide by the general environmental policy guidelines set forth in the Environment and Development Action Plan developed by SEDA. The Environment and Development Action Plan proposed that govemment environmental policy begin with five strategic programs to be carried out in a coordinated and complementary fashion around decision-making geared to solving the country's priority environmental problems. These strategic programs are: * The creation of a political andparticiatory consensus to address the question of environment and development so as to incorporate concepts of sustainable development in all productive activities. To attain more effective participation, an information system that is efficient in terms of access and availability will be needed; such a system should ensure that the people and institutions involved make decisions based on adequate knowledge of the subjects or matters on which an opinion must be given or a decision made. * Legal and institutional strengthening, in order to define consistent and coordinated actions for formulating, implementing, and evaluating policy on the environment and sustainable development. The strategy for legal and institutional strengthening requires institutionalizing the participation of the entities involved in environmental management so that they take on the commitment to decentralize state management, thereby promoting popular participation at both the normative and operational levels, especially in local geographic areas through the municipal governments. * Implementation of an environmental education program, for both formal and non-formal education, that considers sustainable development in its full meaning and that helps foster environmental awareness in national society. In order for an environmental management strategy such as this to be successfil, not only the community but also technical staff in charge of managing this strategy need to have a certain level of training and education in environmental issues. * Promotion and adoption of sustainable agriculture, to prevent degradation of soils and to provide services to the impoverished rural majority. This strategy, like the next one, suggests the need for a program to attack and overcome poverty. The program should focus on those areas with the greatest environmental degradation, since the poorest population groups are located in those areas. 52 Annex D Page 3 of 4 Improving the urban environment in rekdion to povety, in order to halt deterioration and improve living conditions for urban dweUlers, especially the poorest, at the same time strengthening the productive capacity of the cities. In summary, the Government will strengthen intemal capabilities for natural resource management so that such resources can be used in a sustainable fashion, training the population and technical staff in charge of management so that they are capable of evaluating, using, accounting for, and protecting the country's natural wealth, In this regard, the education and training of Hondurans, especially the poorest, should be a priority task of the Govemment, so as to facilitate their development and technical progress, creating the conditions needed for living a decorous life on an equitable footing with respect to the rest of the population. THE GENERAL ENVIRONMENTAL LAW In order to seek solutions to the problems noted, especially the lack of an appropriate regulatory framework, the National Congress passed the General Environmental Law via Decree No. 104-93 of May 26, 1993. In this Law, the conservation, restoration, and management of natural resources are declared to be of public utility and social interest. At the same time, it creates the Ministry of the Environment (SEDA), which is responsible for administering environmental legislation in Honduras, formulating and coordinating national environmental policy, and for public- and private-sector institutional coordination in this area; the Environmental Attomey's Office (PA), which by delegation represents the interests of the state administratively and judicially in relation to environmental issues; and the National Consultative Council of the Environment (COCONA), advisory body to the Ministry of the Environment. The General Environmental Law marks the first time Honduras has ever had a substantial legal framework that regulates environmental management per se, while also defining a series of control instruments such as environmental impact studies by existing industries and those to be formed in the future, and mandates comprehensive management of the national territory to ensure the rational use of lands, soils, and watersheds. In addition to the characteristics of the land, one should also take into account the economic, demographic, and social factors. Finally, the Law includes sanctions for violators and tax incentives for the companies required by the Environmental Impact Assessment System to acquire special machinery and equipment to control emissions or pollutants either to start up their activities or to continue in operation. It is hoped that with the creation of Ministry of the Environment the capacity of the public sector to protect the environment and foster sustainable development will increase, allowing for greater coord.nation among public institutions such as the National Electric Energy Company (ENEE), Honduran Forestry Development Corporation (COHDEFOR), Ministry of Communications Public Works and Transportation (SECOPT), National Autonomous Water and Sewage Service (SANAA), and the Ministry of Natural Resources (SRN), and private institutions involved in environmental protection. Under the General Environmental Law economic actors absorb the costs of pollution produced by their own operations. Under the Law, the problem of waste treatment will be addressed with support for the construction of municipal treatment systems and the development of "environmental industries" to offer specialized waste treatment services to the private sector. 53 Annex D Page 4 of 4 The new economic activities, such as oil refining proposed for the Trujillo area, are subject to the results of the environmental impact study and mitigation measures. THE FORESTRY EMERGENCY The forestry sector is beset by a large-scale crisis that has resulted mainly from the lack of an adequate framework for supervision to ensure the sustainable exploitation of the forest by private actors. A forest policy will be formulated and implemented to reorganize state forestry administration and to review its legal framework; this initiative is aimed at addressing the current situation, which is marked by the uncontrolled cutting and burning of our forests. These initiatives are based on the fundamental principles of sustainable resource management, multiple uses, and sustained yield in areas of interest for forestry. It is our purpose that this policy be undertaken with the participation of the private sector and with modem and compensatory techniques for exploiting the forest so that our children and our children's children can enjoy this natural wealth over time. Such an approach attributes real value to our forest resources, and will clarify property rights over tiem. The undervaluing of this resource together with the lack of clear property rights have contributed to its destruction in previous years. For example, in the forestry sector the Govenmment will insist on auctioning concessions for logging in the national forests; the illegal clearing of these forests will no longer be allowed. In addition, management plans will be required for extracing wood, abiding by the principles of sustainable forest management, and the capacity of COHDEFOR to supervise such plans will be strengthened. In one essential part of this strategy, the management of protected areas will be strengthened through the National System of Protected Areas (SINAP), and community participation in the management of protected areas will be encouraged. ENVIRONMENTAL MONITORING: THE PILLAR OF SUSTAINABLE DEVELOPMENT The policies noted above are based on current knowledge of the factors that contribute to the destruction of our environment To expand and further this knowledge, and to evaluate the impacts of the policies adopted, the Govenmment will establish a national system for environmental monitoring in order to give "advance warning" of new problems as they arise and to design as quickly as possible solutions based on careful studies of the phenomena observed. As a result, a flexible and effective environmental policy framework will be established. IIONDURAS Annex E ENVIRONMENTAL DEVELOPMEN T PROJECT Page I of 4 Project Imnplementation Schedule F T29N5 I, _ _ 200 t290911 | 0 t 202 2002 ID ..kN.-. ) ~333 I IO 73 jjio 33 2 3 43~Qj) ~ 3 -F4 I 23 IIONDrlkASI NVIK(NMLNIAL DEVEOPNIENr PROJECT_ I S4v3 .v1.o3t .0-c., SIICP, SE D d -FIIlS * Jl 3 '95 2 PLANNING AND LEGISLATION _ S0n .o.-.t b--n SED)P, SF-P AN .3d SHN *J. I '9 4 E.ol1.....I.4__Xe1 s.d L-d U.. PL.o.g 5 E.d1...... p2011411 6 94-97 E.,fr. i P... Ce. 7 Updl sd p.bliMh -- -W p31.00k J.j 3 .9 J 23 f * D..(2 1.13021.0131,391.l.11I prlcy P.P J.d I ff6 _ S. ,7 'ff 9 P Wp., nd ondsl I 1 l5 05W0. S.". M _6 Dn 7f Is Pt s.d W .d o p1 w..khop. D-. 3 RI. 23 '97 _I UpdW. od W pA.h PAAD M. 31 97 M J_ 2717 _3 Upd_ = h _(971 215 ff. l 2 -0 D. 17f 14 5 4Mr sd p.6h l sososoI.1 .1.0 4 p . (9 '7 Ds I7 '77 is_M-9. W -h~ tl. fd PAAD JW 3 9 #.29S D. U . 16 99 -90 . -o. rb..6. CYds 17 pd sod Wp.6h .IsoWl p o1 la .. .y _ J I J9 I" M I *3. 20 910)1501~p-. -.k 0.1116 plsolg .11011h11 D. 31 00 M. 31 0 2_ UpD/s46p .W p 1. PAAd AP. I M J M 22 rp,. .d a.d soo.1oo 00PoI6 (00) Od I 1p _ D. 2A 349 24 Mesol nd -5 .. 01. sopkoo.I.oo r d. PAAD J I D_ 2999 is 0-I F.*..L d P A A.gCyd.(F I) 26 0~~~~~~)94.0 .1. pb46.2 -O..oav. p.oOi. m J.. M 27 MO phynd15 cw I4 p ofw P S_ ii H 9',200 Task Summary * Milestone Rolled Up Miestone O HONDURAS Annex E ENVIRONMENTAL DEVELOPMENT PROJECT Page 2 of 4 Project Implementation Schedule _99 291 1997 1993 19"9 290 2ml2 292 ID Tl' 1N_ Ql I Q2 Q3 I Q4 I Ql|2 |1Q3 I Q4 i Ql I Q2 Q I Q4 I Ql 2 2 I |I 2 Q3 I Q4 3 Ql I Q2 I Q3 I Q4 i Ql Q2 I Q3 I Q4 I Ql I Q2 I Q3 | Q4 Ql| Qi 2S Upd mwd pub6h -w tMvsbnrAW p -p (01) 0.1 2 o Dw299" 29 Monmr ond eiuso the mrqdanmo of th. PAAD J_ S. D0 29 1 3. S_.i P_g 31 Hwo r_a pobo- Jl 3 _ D 2D . 5 32 Dfe sed fid J_I inf '3 33 Lid '- _ Ed.Mbbah wd opa SECPLANs Lud Use Plavu Umt R1 2 3 J_ M3 35 P e,e lnd uw sbiely ud bse mno1 uuq Apr 1 394 Doc 2794 34 dlp Mu psubbh l base awvon tduuuusl maps wp_ J. 19 im 30w 37 Sm__ SS Prepq bbveaty 1ud JdoI 94 Du 27 1f 9 Prsept sobdwu e bdy J.1 9I D. 27 1 49 P1rqp seo -m fom a nw lal rnmr_ga sIndy A 1 97 Due 2997 41 N_ Eu1-mm lw Syt_ (SINIA) 42 Dan wmpud zpemnnd SSNLA Apt . J4 29 ' 43 Erhbi" a neogmphe mfm m systm Ot 19 Sep 29 97 44 Esdbbah a dwxoeu mi OmnT (d I J_ 30 '7 4S L_ d R w F_kw 46 1zn apemenu bderm SEDA and UNAH * Od 11M 47 Hua S - d _s md r_a4u - W. 4S Dm-u *nd eptirt thl kle mfsumatun 0get system Ot 2 VS J_ 29 1 49 Pt5- Mid pulh Irgul inno (96) J I 9 _ Mw 29 -94 so LtpJ d pub i kle eomnfusbon (99) J_ I _ Apr 19 51 P epmi siidet woeap, fee tfew hb-msz*so of la mid regudeon Ap I 9 Doe 2794 S2 Dmal p_ped b_ Doet 3 _ Mmn 2317 53 Pmem and op l_- e n M_Sl 17 _ J. 2717 54 M~~14m ead f~d SS Papas md o=&1d wmbipa E &g drvlopn ofep-e _ Od I23S Dot 299 Tak Sumnmwy Mlestoe Roled Up Miestone HONDURAS Anne E ENVIRONMENTAL DEVELOPMENT PROJECT Page 3 of 4 Project Implementation Schedule 1995 1996 MI9 1998 1992 2001 2002 ID TnkNt e I Q2 2 3 4 2 3 4 Q 2 Q3 4 | Q2 Q3 4 | 4 2 3 56 Condunt atu&t s fot the adopt of non, and tenhral st-uda J I M 29d'9d 57 SW g . eeont tt between SEDA PAPGR and FAIFGR 0.t I 75 58 Lqa ..rm. 59 Staithet the .-oronrtutt AtoretosOhSce OCt 2i95 J.n 29 S1 00 Strentheat the En- r ,ntne,l Po-tecuott Office (k 2 95 J_n 29 '0l 01 SWs ageemt-tett between SEDA nd FI (SJ * Oct 1 97 02 Lg1 lealnidg nd whwca l a.sI esino, 63 Prepe ad conduct - hops o ottn etol bse tnd regolt-no not I 97 Jun 29 9" 04 r_ea~r -d PnbIk A e 65 En- biniag ad pu lle e . pr.gr 66 Devdlop and tnpitttent the tag. and dcholathcp p,ogr l96! Oct 2 *95 Jan 2 ff 67 Dtvdop and tttplttett the tUe-ntt nd scholrshp prog, (97) Sp 30 6 Ju 27 97 I8 Dvlop and npiet th t.tn and tchol.hp propagt (99) Sep29 '97 Ja2 26'91 69 Dvelop ad -npietnnt twe tutg and acho.lthup p,ogtut (99) Sep 21 ' _ Jun 25 '"9 70 Dvlop and anpietnett the trtan5g ad Wcholrltasp progsn (00) Sep 2799 Jun 23 '00 71 Deveop nd tpletent ptbbc a -enn sctme,;0 Jul 3'95 Jan 29 'el 72 ENVIRONMENTAL QUALITY ASSESSMENT 73 S.gn Weeanett betwett SEDA nd partcip.trtg" soctotal asetci *e . 1 ,95 74 NY I S 7y .1 Euvle tunl tlp-t AamasanI 75 PNeoae technical nd openatottl tUnce to SEDA amd eetotal gm Oct 295 M_ 11 391 76 Purchase eqa.prtot foe SEDA uad tentool 4aene Jdi '9 MY 28 I7 77 Ptpa nd convene an entvnooatnt,tal ausetttent congres4 Jn 1 9 _ Mw 31 9 78 PrA trata A_ _ nd _ a. tsd_ 79 Frntary ect. Ppsne nd conduct t as tnenta and aadtb Jtd 3 '9 Dae k '7 w Mr rnT aeM ectc- tgpa an cnduct tad audt Od I Mw 3k98 *1 EarV aw,se- Ppte and conduct nv t 'Anenb and udibt JJ- I 9 J _ 8 " n2 Af~vmdui y s Ptrepo n and cnduct tav aass nesta and aut sdas Oat I M, M29 80 _3 LOCAL GOVKERBNMUT ENV"R(S9MENTAL MANACEMEINT Task Summary Milestorie Rodked Up Milestone O HONDURAS Annex E ENVIRONMENTAL DEVELOPMENT PROJECT Page 4 of 4 Project Implementation Schedule _ In~~~~~~~~~~~~~~~~~~~~~95 1 996 1997 199 1999Im 2000t 2001 2002 ID TkNi. Ql I Q2 3 Q1 I Q4 Ql | Q2 | Q3 | 24 | Ql | Q2 | Q3 | j4 2 I Q3 4 2 |3 |4 2 Q 4 Ql Q2 Q1 4 | _ Q2 | 3 U4 Stgn agetement between SEDA amd the partompang m-cplt- Jul J3'15 its M ldpAl E.n'r_a4w. T-dol A..iat- _ U Prepare and pubish muncctp.l --v eo-t.l profiles nd actob p- Jt4 3 '95 Jun 26 ' 37 lInpireucot trtrpl onent actaOl plans J I ff J 29 '01 1S Dors and nenpiement ovuonmentd u tnuntg progrm for w Un '9f D. 26 '97 39 Prepare and cdct commuty workshops J I' n 29 01 _0 E.n...n IareImrtat 91 PIontdebu dsfor m aucpal amd co-rrty ntronmentu Itnvesments J3lJ'95 Dt327'96 92 Estbhsh a nucro cnlerpr ine of cred for evunmental tvestments JtJ 5 _ 27 97 93 Establih th En erl Ut at EttS Jt 3 '95 Se 26 '97 U Eva-uate the envtonrmental tnvetmentu O 2 '95 __ Sep 26 '97 95 ADMINISTRATION AND COORDINATION 9f T tI dtu aItn ' SEDA'. Adminalrattni U. 97 Provde thcnlnc nd operatonal assurnne to SEDAS Ad uustrw Uv t U ntt9 Jun 29 '01 n1 Projet Cturdiwaan nd M ag...W 99 Estabibul ahnd support SEDA's Project Cootduton Unt J3 Jun 29 n01 in Conduct 1996 adts 3.1 1 '96 i Stp 27 '96 101 Conduct 997 autdI Jun 30 '97 USp 26 '97 132 Conduct 1998 ud,ts J. 29 S 25 193 Conduct 1999 .cdcts J- 29 S" 24 1t4 Conduct 2000 tudtts .' J- 26 ee0 i s.6 22 '00 535 Conduc 2001audts J.. 25 li S.P 21'l i46 Retn thne aenv s of a procurement genc y _ 3t J- 26 ' Task Summary Milestone Rolled Up Milestone > 58 HONDURAS Annex E ENVIRONMENTAL DEVELOPMENT PROJECT Appendix Key Agreements Page 1 of 1 ID Task Name and Description By Date I Sign agreement between SHCP, SEDA and FHIS July 3, 1995 Sign agreement, satisfactory to IDA, between SHCP, SEDA, as the implementing agency, and FHIS regarding the project implementation arrangements and specifying, inter alia, the environmental assessment criteria that will be used to select and evaluate the investment subprojects and the role of SEDA in subproject approval and monitoring. 3 Sign agreement between SEDA, SECPLAN and SRN July 3, 1995 Signed agreement, satisfactory to IDA, between SEDA, SECPLAN, and SRN regarding their respective roles in environmental planning, land use planning, and other activities to be undertaken jointly in this project. 46 Sign agreement between SEDA and UNAH October 1, 1995 Signed agreement, satisfactory to IDA, between SEDA and UNAH's Juridical Research Institute on the establishment and operation of an information system for environmental legislation and on the harrnonization of the existing environmental laws and regulations. 57 Sign agreement between SEDA, PA/PGR, and FA/FGR October 1, 1995 Signed agreement, satisfactory to IDA, between SEDA, PA/PGR, and FA/FGR establishing the procedures for the effective coordination of the enforcement of environmental laws and regulations. 61 Sign agreement between SEDA and EJ/CSJ October 1, 1997 Signed agreement satisfactory to IDA, between SEDA and the EJ/CSJ on the design and implementation of the environmental legislation training program. 73 Sign agreement between SEDA and participating sectoral agencies October 1, 1995 Signed agreement, satisfactory to IDA, between SEDA and each of the agencies participating in the SINEIA and other components of the project. 84 Sign agreement between SEDA and the participating municipalities July 3, 1995 Signed agreement, satisfactory to IDA, between SEDA and the municipalities that will participate in the environmental technical assistance activities financed by the project. HONDURAS Annex F ENVIRONMENTAL DEVELOPMENT PROJECT Page I of 18 Components Projet Cost Snnmmsry % % Total (LemPia '000) (USS '000) Foreign Base Local Foreiln Total Local Foreign Totxd Exchange Coats A. KEuliena Planing ad Legislation 1. Euvftrn_ental and LAnd Use Planning Enviromna Planning 4,963.1 218.3 5,181.4 539.5 23 7 563 2 4 5 Natural Resources Planning 670.8 53.0 723.9 72.9 5 8 78.7 7 1 LAnd Usc Planning 3,528.2 611.8 4,140.0 383.5 66.5 4500 15 4 Studies 1,996.4 - 1,996.4 217.0 - 217 0 - 2 Subtotal Environmental and Land Use Planning 11,158.5 883.2 12,041 7 1,212.9 96 0 1,308.9 7 11 2. Natkial Environmental Information Si-stem Sycm esign, Developmntn and Admnistration 3.606 0 337.9 3,944 0 392 0 36.7 428 7 9 4 SINIA Equipnent 176.9 2,3506 2,527.5 19.2 2555 2747 93 2 Geographic Information System 312 5 829 2 1,141 6 34.0 90 1 124 1 73 1 Documentation Center 49 7 146 3 196 0 54 159 21 3 75 - Subtotal National Environmenta Information System 4,145 1 3,6640 7,809.1 4506 3983 8488 47 7 3. Legal and Reglatory Framwork Hanronization ofLaws and Regulations 1.2009 257.1 1,458.0 1305 279 1585 18 1 Norms and Technical Standards 338 1 202 0 540 0 36.7 22 0 58.7 37 1 Legal Enforcemrent 2,645 6 316 8 2,962 4 287 6 344 322 0 11 3 legal Training and Technical Assistance 1,368 4 276.0 1,644 4 1487 300 1787 17 2 Subtotd Legal nd Regultory Framework 5,552 9 1,051.9 6,604 R 603.6 1143 7179 16 6 4. Training and Public Awareness 2,5743 124.1 2,6984 2798 135 2933 5 3 Subtotal Fnvironmental Planning and Legislation 23,430 8 5.723 2 29,154 0 2,546.8 622 1 3,168 9 20 28 B. Fnvironnental Quality Assment 1. National System of Environmental Impact Assessment Support for DECA 516.1 811.8 1,327.9 56.1 882 144.3 61 1 Support for DMH 15 1 201 0 216 2 1 6 21 9 23.5 93 - Support for DIGEPESCA 21.6 2866 3082 23 312 335 93 Support for DRII 151 201.0 216 2 1 6 21 9 23 5 93 Support for COHIDEFOR 15 1 201 0 216 2 16 21 9 23 5 93 Suppoil for DGAM 15 1 201 0 216 2 1 6 21 9 23 5 93 - Support for CESCCO 411 7 1.639 5 2,051 2 44 8 178 2 223 0 s0 2 Training and Technical Assistance S,1980 2,3184 7,5164 5650 2520 817(0 31 7 Subtotal National System of Environmental Impact Assessment 6_'07 9 5,860 5 12,068 4 674 8 6370 1,311 8 49 11 2 Pilot Projects for Environmental Impact Assessment and Audit 3,753 6 2,502 4 6,256 0 408.0 272.0 680 0 40 6 Subtotal F.rvironmwntsl Quality Assessment 9,961 5 8,3629 18.3244 1,082.8 909.0 1,991 8 46 17 C. Local Government Environmental Management 1. Technical Assistance for Municipal Environental Management 8,338 3 8727 9,211.0 906.3 949 1,001.2 9 9 2. Environsental Investments Municipal and Community Environmental lInestments 26,863.8 - 26,863.8 2,920.0 - 2,920.0 - 25 Micro-enterprise Line of Credit for Environmental COSTAB: SUMCOM HONDtJRAS Annex F ENVIRONMENTAL DEVELOPMENT PROJECT Components Project Cost Sumnary Page 2 of 18 % % Total (Lempira '000) (USS '000) Foreign Base Local Foreign Total Local Foreign Total Exchange Costs Investments 4,232.0 - 4,232.0 460.0 - 460.0 - 4 Establishment ofthe Enviromnental Unit at FHIS 4,780.9 278.1 5,059.0 519.7 30.2 5499 5 5 Evaluation ofthe Environmental Investrnents 1,288.0 - 1,288.0 140.0 - 140.0 I Subtotal Environmental Investments 37,164.7 278.1 37,442.8 4,039.6 30.2 4,069.9 1 35 Subtotal Local Government Environmental Management 45,503.1 1,150.8 46,653.8 4,946.0 125.1 5,071.1 2 44 D. Administration and Project Coordination I. SEDA's Administrative Unit 531.6 6.7 538.3 57.8 0.7 58.5 1 1 2. Project Coordination and Management 10,639.8 391.7 11,031.4 1,156.5 42.6 1,199.1 4 10 Subtotal Administration and Project Coordination 11,171.4 398.4 11,569.8 1,214.3 43 3 1,257.6 3 11 Total BASELINE COSTS 90,066.8 15,6353 105,702.0 9,789.9 1,699.5 11,489.4 15 100 Physical Contingencies 3,100.3 781.8 3,882.1 337.0 85.0 422 0 20 4 Price Contingencies 4,501.8 725.7 5,227.5 489.3 78.9 5682 14 5 Total PROJECT COSTS 97,669.0 17,142.7 114,811.7 10,616.2 1,863.3 12,479.5 15 109 0 COSTAB: SUMCOM HONDURAS Annex F ENVIRONMENTAL DEVELOPMENT PROJECT Page 3 of 18 Expenditure Accounts Project Cost Summary % % Total (Lempira '000) (USS '000) Foreign Base Local Forei4n Total Local Foreign Total Exchange Costs 1. Investment Costs A Project Coordination Unit Salaries 6,519.1 - 6,519.1 708.6 - 708.6 - 6 B. Consultants and Technical Assistance Local Consultants 16,336.9 - 16,336.9 1,775.7 - 1,775.7 - 15 Intemational Consultants 32.2 3,574.2 3,606.4 3.5 388.5 392.0 99 3 SubtotalConsultantsandTechnicalAssistance 16,369.1 3,574.2 19,943.3 1,779.2 388.5 2,167.7 18 19 C. Studies 11,463.2 2,723.2 14,186.4 1,246 0 296 0 1,542.0 19 13 D. Auditing and Procurement Agency 3,680.0 - 3,680 0 400.0 - 400.0 - 3 E. Seminars, Workshops and Scholarships 7,381.5 - 7,381.5 802.3 - 802.3 - 7 F. Computer and Office Equipment 301.9 4,0105 4,312.4 32.8 4359 4687 93 4 G. Laboratory and Field Equipment 256.5 3,116.5 3,373.0 27.9 338.7 3666 92 3 H. Vehicles 291.5 2,210.9 2,502 4 31.7 240.3 272.0 88 2 1. Office Fumiture 326.1 - 326.1 35.5 - 35.5 - - J. Promotion Material 1,391 4 - 1,391 4 151.2 - 151.2 -I K. FHIS Investments Subprojects 24,379.8 - 24,379.8 2,650.0 2,650.0 - 23 Subloans 3,680 0 - 3,680.0 400.0 - 400 0 - 3 Subtotal HIS Investments 28,059.8 - 28,059.8 3,050 0 - 3,050 0 27 L. Services and Promotion 1,048.8 - 1,048.8 114.0 - 114.0 - I M. Environmental Screening of Investment Subprojects 2,526.6 - 2,526.6 274.6- 274 6 - 2 Total Investment Costs 79,615.6 15,635 3 95,2508 8,653.9 1,699.5 10,3534 16 90 I. Recurrent Costs A Incremental Salaries 4,990.1 - 4,990 1 542.4 - 542.4 - 5 B. Operating Costs 2,908.1 2,908 1 316.1 - 316.1 - 3 C. Travel and Per diern 690 - 69.0 7.5 - 7.5 - D. Administration of Investment Subprojects FHIS 2,484 0 - 2,484 0 270 0 - 270.0 - 2 Total Recurrent Costs 10,451.2 - 10,451.2 1,1360 - 1,136.0 - 10 Total BASELINE COSTS 90,066.8 15635.3 105,702.0 9,789.9 1,699.5 11,489.4 15 100 Physical Contingencies 3,100.3 781.8 3,882.1 337.0 85 0 422 0 20 4 Price Contingencies 4,501.8 725.7 5,227.5 489.3 78.9 568 2 14 5 Total PROJECT COSTS 97,669.0 17,142.7 114,811.7 10,616.2 1,863.3 12,479.5 15 109 COSTAB: SUMEA HONDURAS Annex F ENVIRONMENTAL DEVELOPMENT PROJECT Page 4 of 18 Expenditure Accounts by Finanders (US$000) Locsi GOH IDA Total (ExcL Dutes & Amount % Amount % Amount % For. Exch. Taxes) Taxes 1. Investment Coss A. Project Coordination Unit Salaries 40.2 5.0 763.3 95.0 803.5 6.4 763.3 40.2 B. Consultants and Technical Assistance Local Consultants 98.3 5.0 1,867.1 95.0 1,965.4 15.7 1,867.1 98.3 Intenational Consultants - - 430.9 100.0 430.9 3.5 427.1 3.7 - SubtotalConsultants and Technical AssIstance 98.3 4.1 2,298.0 95.9 2,396.3 19.2 427.1 1,870.9 98.3 C. Studies 85.4 5.0 1,622.3 95.0 1,707.7 13.7 329.5 1,292.9 85.4 D. Auditing and Procurement Agency 22.1 5.0 420.3 95.0 442.4 3.5 - 420.3 22.1 E. Serniars, Workshops and Scholarships 44.4 5.0 842.7 95.0 887.1 7.1 - 842.7 44.4 F. Computer nd Office Equipment 36.2 7.0 480.8 93.0 517.0 4.1 480.8 -0.0 36.2 G. Laboraiory and Field Equipment 27.8 7.0 369.7 93.0 397.5 3.2 367.3 2.4 27.8 H. Vehicles 20.5 7.0 272.2 93.0 292.6 2.3 258.6 13.6 20.5 1. Office Furniture 37.9 100.0 - - 37.9 0.3 - 35.3 2.7 J. Promotion Material 166.5 100.0 - - 166.5 1.3 - 154.9 11.7 KV FHIS Investments Subproject 136.3 5.0 2,589.9 95.0 2,726.2 21.8 2,589.9 136.3 Subloans - - 404.4 100.0 404.4 3.2 - 404.4 - Subtotal HIS Investments 136.3 4.4 2,994.3 95.6 3,130.6 25.1 - 2,994.3 136.3 L. Services and Promotion 129.2 100.0 - - 129.2 1.0 - 120.2 9.0 M.EnviromnentalScrenoingofInvestmentSubprojects 14.8 5.0 281.6 95.0 296.4 2.4 - 281.6 14.8 Total Investwent Costs 859.7 7.7 10,345.2 92.3 11,204.9 89.8 1,863.3 8,792.3 549.3 IL Recurret Costs A. Incrental Salaries 324.3 52.6 292.2 47.4 616.5 4.9 - 585.7 30.8 B. Operating Costs 222.7 62.2 135.2 37.8 358.0 2.9 - 332.9 25.1 C. Travel and Per diemn 2.7 31.9 5.8 68.1 8.5 0.1 - 7.9 0.6 D. AdninistrationofInveslment Subprojects FHIS 291.7 100.0 - - 291.7 2.3 277.1 14.6 Total Recrrent Coasb 41.4 66.0 433.2 34.0 1,274.6 10.2 - 1,203.6 71.1 Total Dbburnent 1,701.1 13.6 10,778.4 86.4 12,479.5 100.0 1,863.3 9,995.8 620.4 COSTAB: EXPFIN HONDURAS Annex F ENVIRONMENTAL DEVELOPMENT PROJECr Page S of 18 Components by Financiers (US$ '000) Local GOH IDA Total (ExcL Duties & Amount % Amount % Amount % For. Exch. Taxes) Taxes A. Environmental Planning and Legislation 1. Enviromnmental and Land Use Planning Environmental Planning 277.7 43.9 354.4 56.1 632.1 5.1 25.2 569.5 37.5 Natural Resources Planning 4.9 5.7 81.0 94.3 85.9 0.7 6.3 75.2 4.4 LAnd Use Planning 21.2 4.2 478.0 95.8 499.2 4.0 71.5 406.5 21.2 Studies 11.9 5.0 225.4 95.0 237.2 1.9 - 225.4 11.9 SubtotalEnvironmentalandLandUsePlannlng 315.7 21.7 1,138.8 78.3 1,454.5 11.7 103.0 1,276.5 75.0 2. National Environmental Infonatlon Systen SystcmDesign,DevelopnmentandAdrninietration 116.5 24.1 366.3 75.9 482.7 3.9 39.8 417.7 25.2 SINIA Equipment 21.3 7.0 283.2 93.0 304.5 2.4 283.2 -0.0 21.3 Geographic lnformation System 9.1 6.6 128.9 93.4 137.9 1.1 100.0 28.9 9.1 Documentation Center 5.9 25.2 17.4 74.8 23.2 0.2 17.4 4.2 1.6 SubtotalNatonalEnvlronmentallnfonntionSystemn 152.7 16.1 795.7 83.9 948.4 7.6 440.3 450.8 57.2 3. Legal nd Regubtory Framework Hamonization ofLaws and Regulations 16.1 9.4 154.9 90.6 171.0 1.4 30.0 133.2 7.8 Norns and Technical Standards 2.1 3.4 61.5 96.6 63.7 0.5 23.8 37.7 2.1 Legal Enforcement 167.5 46.3 194.2 53.7 361.6 2.9 36.6 306.0 19.1 Lel Training and Technical Assistnce 94.2 48.1 101.6 51.9 195.8 1.6 33.0 152.8 10.0 Subtotal Legal and Regulatory Framework 280.0 35.3 512.1 64.7 792.1 6.3 123.4 629.7 39.0 4. Trauiing and Public Awareness 140.5 42.5 190.3 57.5 330.8 2.7 15.1 296.3 19.5 SkoWt l Eus'm-a P-u.ing and Le pbiaho 888.8 25.2 2,637.0 74.8 3,525.8 28.3 681.8 2,653.3 190.7 B. EAvlommeuta Qily Aaament 1. Nalomi System of Ea _rommetal Impaet A _aaet Suppot for DECA 26.7 16.8 132.2 83.2 158.9 1.3 95.7 52.1 11.1 Supprt for DMH 1.8 7.0 23.7 93.0 25.5 0.2 23.7 -0.0 1.8 Suport for DIGEPESCA 2.5 7.0 33.8 93.0 36.3 0.3 33.3 -0.0 2.5 Support for DRH 1.8 7.0 23.7 93.0 25.5 0.2 23.7 -0.0 1.3 Su"pt for COHDEFOR 1.8 7.0 23.7 93.0 25.5 0.2 23.7 -0.0 1.8 Support for DGAM 1.8 7.0 23.7 93.0 25.5 0.2 23.7 -0.0 1.8 Suppot for CESCCO 29.8 12.2 213.S 87.8 243.6 2.0 193.3 33.2 17.1 Tra g and Tedical Aaisance 74.1 8.2 834.4 91.3 908.5 7.3 279.5 596.7 32.3 SlbtaiaNalo.alSyxtm ofElnwlrommallmpaetAaenent 140.3 9.7 1,309.0 90.3 1,449.3 11.6 697.2 681.9 70.2 2. Pilot Prtfcta for Envromnea Inmact Aaeaundt nd Audit 37.9 5.0 721.0 95.0 759.0 6.1 303.6 417.4 37.9 Sutota Environmental Q uiy A _essea t 178.2 8.1 2,030.0 91.9 2,208.2 17.7 1,000.7 1,099.3 108.2 C, Locel Government EnKroumeta Management 1. Tehnical Amgiance for Municipal Managemat 57.4 5.2 1,046.8 94.8 1,104.2 8.8 102.7 944.1 57.4 2. FAVrVmntl hsvesneAst Minicipal nd Commnt Environmental lnvestmts 428.0 14.2 2,589.9 85.8 3,017.9 24.2 - 2,867.0 150.9 COSTA1: COMFIN HONDURAS Annex F ENVIRONMENTAL DEVELOPMENT PROJECT Page 6 of 18 Components by Financiers (US S -000) Local GOII IDA Total (Excl. Duties & Amount % Amount % Amount % For. Exch. Taxes) Taxes Micro-enterprise Line of Credit for Environrmental Investments 312 0.7 464.9 99.3 468A1 38 - 464 9 3.2 Establishment ofthe Environrmental Unit at FIlS 37.8 6.4 554.8 93.6 592.6 4.7 32A 530.0 30.5 Evaluation ofthe Environmental Investments 7.6 5.0 144.9 95.0 152.6 1.2 - 144.9 7.6 Subtotal Environrnental Investments 4766 11.3 3,754.6 88.7 4,231.2 33.9 32.1 4,006.9 192.2 SubtotalLocalGovernmentEnvironmentalManagement 534.0 10.0 4,801.4 90.0 5,3354 42.8 134.8 4,951.0 249.6 D. Administration and Project Coordination l. SEDA's Administrative Unit 27.1 41.3 38.5 58.7 65.6 0.5 0.8 61.2 3.6 2. Project Coordination and Management 72.9 5.4 1,271.6 94.6 1,3445 108 45.2 1,231.0 68.3 Subtotal Administration and Project Coordination W000 7.1 1,310.1 92.9 1,410.1 11.3 46.0 1,292.3 71.9 Total Disbursement 1,701.1 13.6 10,778.4 86.4 12,479.5 100.0 1,863.3 9,995.8 620.4 0% COSTAB: COMFIN HONDURAS Annex F ENVIRONMENTAL DEVELOPMENT PROJECT Page 7 of 18 Project Components by Year -- Base Costs (US$ '000) Base Cost 1995 1996 1997 199S 1999 2000 2001 Total A. Environmental Planning and Legislation 1. Environmental and Land Use Planndng Environmental Planning 80.6 102.4 111.5 81.4 99.5 70.2 17.6 563.2 Natural Resources Planning 17.0 31.6 19.6 10.6 - - - 78.7 Land Use Planning 54.0 168.0 78.0 48.0 78.0 24.0 - 450.0 Studies - 142.0 75.0 - - - - 217.0 SubtotalEnvironmnental ndL ndUsePl nnlng 151.6 444.0 284.0 140.0 177.5 94.2 17.6 1,308.9 2. National Environmental Wfornution System SystemDesignDevelopmnent andAdrministration 22.1 111.8 77.0 73.2 73.2 57.2 14.1 428.7 SINIA Equipment 23.3 81.6 79.8 60.5 29.6 - - 274.7 Geographic Infosmation System - 6.0 104.7 8.9 2.3 2.3 - 124.1 Documentation Center - 15.9 5.4 - - - - 21.3 SubtotalNational EnvironmentallnformationSystem 45.4 215.3 267.0 142.5 105.1 59.5 14.1 848.8 3. Legal and Reguatory Framework Harmnonization ofLaws and Regulations 60.9 82.0 12.2 3.0 0.2 - - 158.5 Norms and Technical Standards - 58 7 - - - - 58.7 Legal Enforcement 71.2 45.6 45 6 45 6 45.6 45 6 22.8 322.0 Legal Training and Technical Assistance - 100.1 787 - - - - 178.7 Subtotal Legal and Regulatory Framework 132.1 286.4 1365 486 45.8 45.6 22.8 717.9 4. Training and Public Awareness 0.8 68.1 64.1 70.9 45.1 44.3 - 293.3 Subtotal Environmental Planning and Legislation 330.0 1,013.8 751.7 402.0 373.5 243.6 54.5 3,168.9 B. Environmental Quality Assement 1. National System of Envirommental Impact Assessment Support for DECA - 110.6 7.4 74 7.4 7.4 4.1 144.3 Support for DMH - 23.5 - - - - - 23.5 Support for DIGEPESCA - 33.5 - - - - - 33.5 Support for DRH - 23.5 - - - 23.5 Support for COHDEFOR - 23.5 - - - - - 23.5 Support for DGAM - 23.5 - - - - - 23.5 Support for CESCCO - 198.4 5.4 5.4 5.4 5.4 3.0 2230 Training and Technical Assistance - 233.0 301.0 233.0 50.0 - - 817.0 Subtotal Nafonal SystemofEnviromnentalImpactAssessment - 669.5 313.8 245.8 62.8 12.8 7.1 1,311.8 2. Pilot Projects for Environmental Impact Assessment and Audit - 170.0 240.0 170.0 100.0 - - 680.0 Subtotal Environmental QuaIty Assessment - 839.5 553.8 415.8 162.3 12.8 7.1 1,991.8 C. Local Government Environmental Management 1. Technical Assistance for Municipal Management 94.0 360.9 296.4 205 8 44.1 - 1,001.2 2. Environmental tnvestments Municipal and Comrunity Environmental Investments 613 0 2,280.0 27.0 . - 2,920.0 COSTAB: COMYRB HION DURAS Annex F ENVIRONMENTAL. DEV'ELOPNMENT PROJECT Page 8 of 18 Project Components by *'ear -- Base Costs (USS 000) Base Cost 1995 1996 1997 1998 1999 2000 2001 Total NMliLo-enterprise Line ofCredit for Environmental In%estments 460 0 - - 460 0 Establishment of the Environmental tUnit zit I-IIIS 231 ( 259 3 S9 6 - - F49 9 Evaluation of the Environmental Investments 120 880 400 - - - - 1400 Subtotal Environmental Investments !16 u 26273 126t - - - 4(0699 Subtotal Local Gosernment Ensironnmental Management 1.410,0 2.988 2 423 0 205 8 44 1 - - 5.071 1 1). Administration and Project Coordination I SEI)A's Administrative t'nit 14 5 8 0 R0 O S ( 40 58 s 2 Project Coordination and lManagernnt 2302 221 9 1iY9 15' 15 69 l )49 794 1.199 1 Subtotal Administration and Project (Cordination 244 229 9 205 9 lO,s 9 A I 6 9 3 1 4 1 (2576. Total BASELINE COSTS 1f984 5.071 4 1.934 4 1.189' 4 R 41) 1450 114489 4 PhNsical Contingencies '2 6 147 7 96 7 c9 s 37 3 21 0 7 2 422 () Price Contingencies 22 4 173s 11 7 Y8 9 80 6 s 2311 568 2 Total PRO.JEI ( COSTS . 'u 5,392 5 2, 144 8 1,34- 8 863 I1 -962 1- I 3 12,479 5 Taxes 86 1 278 ) 107 9 66 3 46 0) 26 9 9 ' 62( 4 Eoreign Exchange 235 2 877 8 425 6 242 2 80,4 2 2 - 1,863 3 CI, COSTAB: COMYRB HONDURAS Annex F ENVIRONMENTAL DEVELOPMENT PROJECT Page 9 of 18 Project Components by Year -- Total Including Contingencies (uSS '000) Totals Including Contingencies 1995 1996 1997 1998 1999 2000 2001 Total A. Environmental Planning and Legislation 1. Environmental and Land tJse Planning Environmental Planning 856 111.1 123.6 923 1152 83.1 21.3 632.1 Natural Resources Planning 18 1 34.2 21.7 12 0 - - 85 9 Land Use Planning 57.3 182.3 86 5 544 90.3 28 4 - 4992 Studies - 154.1 83.2 - - - - 237 2 Subtotal Environmental and Land Use Planning 161.0 481.7 3149 158.6 2055 111.5 213 1,454.5 2. National Environmental Inforrnation System System Design, Development and Administration 23.5 121 3 85 4 82.9 84 8 67.7 17.1 482.7 SINIA Equipment 24.7 88 5 88 5 68.5 34.3 - - 304.5 Geographic Information System - 6.5 116.1 100 2.6 27 - 137.9 Documentation Center - 17 2 6.0 - - - 23 2 Subtotal National Environmental Informnation System 48 2 233 6 296.1 161 5 121 7 70 4 17 1 948 4 3. Legal and Regulatory Framework Harmonization of Laws and Regulations 64 7 89 0 13 6 3 4 0 3 - - 1710 Nonns and Technical Standards - 63 7 - - - - - 637 Legal Enforcement 75 6 495 5( 06 5 1 7 528 54.0 27 6 3616 a' Legal Training and' 'echnical Assistance - 1086 87 2 - - - - 1958 Subtotal Legal and Regulator% Framework 14U 2 310 7 1 51 4 551 53 S4 0 27 6 792 1 4 Training and Public Awareness 0 9 73 9 711 80 3 52 3 52 4 - 31n R Subtotal Ensironmental Planning and Legislation 31 I, ( 1)9 8 1 4 4" ' 41'2 288 3 fi 9 3 2' 8 B. Ensironroental Qualits Assessment 1. National Sstem of Ensiroinmental Impact .\Asessieint Support for DI A - 12()( 82 X4 Xfi 8 50 1iS9 Support f,-r DMII 255 - -- - - 255 Support for 11(FPiSF - ,C 3i3 - - 3 Support f,r )Ril 255 - - c Support for CfIIDF,() 2 S - - - 25 Support for IDf ,A.M 2S - - - - 2 Suppo.I fo ('SC()O 2152 6() 61 63 64 36 2436 Training and Technical Assistancc - 252 8 333 7 26410 579 - 9085 Subtotal National System of Ensironmental Impact Assessment - 726 3 347 9 278 72 7 IS 86 1,449 3 2. Pilot Projects for Environmental Impact Assessment and Audit - 184 4 266.1 192 6 l i 58 - - 759 0 Subtotal Environmental Quality Assessment - 910 8 614 0 471 2 188.5 15 1 8 6 2.208 2 C. Local Go%ernment EnNironmental Nlanagement 1. Technical A,ssistance for Municipal Mianagement 99.8 3916 3286 2332 51.1 - - 1.104.2 2. Environmental Investments Municipal and Community Environmental Investments 623 8 2,364.1 29 9 - - - - 3,017 9 COSTAB: COMYRT IIONDtJRAS Annex F ENVIRONMENTAL DEVELOPMENT PROJECT Page 10 of 18 Project Components by Year -- Totals Including Contingencies (tJSS '000) Totals Including Contingencies 1995 1996 1997 1998 1999 2000 2001 Total Micro-enterprise Line of Credit for Environmental Investments 468.1 - - - - - - 468.1 Establishment ofthe Environmental Unit at FIIIS 245.2 281.3 66.1 - - - - 592.6 Evaluation ofthe Environmental Investments 12.7 95.5 44.4 152.6 Subtotal Environmental Investments 1,349.9 2,740.9 1404 - - - - 4,231.2 Subtotal LocalGovernmentEnvironmental Management 1,449.6 3,132.5 469.0 233.2 51 1 - - 5,335.4 D. Administration and Project Coordination I. SEDA's Administrative Unit 15.4 8.7 8.9 9.1 93 9.5 4.8 65.6 2. Project Coordination and Management 244.4 240.7 219.4 178.9 181.7 183.3 960 1,344.5 SubtotalAdmlnistratlonandProjectCoordination 259.8 249.4 228.3 188.0 191.0 192.8 100.8 1,410.1 Total PROJECT COSTS 2,059.7 5,392.5 2,144.8 1,347.8 863.1 496.2 175.3 12,479.5 ah 0C COSTAB: COMYRT HONDURAS Annex F ENVIRONMENTAL DEVELOPMENT PROJECT Page 11 of 18 Project Components by Year - brvestmeu/Recurrent Comt (USS '000) Totab Incluing ContInencie If5 1996 1997 199 1999 2000 2001 Tota A. E _vlromnet Planning and Leglbatim. 1. Envireunental nd Land Use Pbnning Environmental Plnning Investment Costs 47.8 51.2 60.7 29.7 49.5 17.8 - 256.6 Recwrent Costs 37.8 59.9 62.9 62.6 65.7 65.4 21.3 375.5 Subtold Environnental Planning 85.6 111.1 123.6 92.3 115.2 83.1 21.3 632.1 Natural Resources Planning Investment Costs 18.1 34.2 21.7 12.0 - - - 85.9 Land Use Planning Investment Costs 57.3 182.3 86.5 54.4 90.3 28.4 - 499.2 Studes Investment Costs - 154.1 83.2 - - - - 237.2 Subtotal Environnental and Land Use Planning 161.0 481.7 314.9 158.6 205.5 111.5 21.3 1,454.5 2. National Environmental Infornmtion System System Design, Development and Administration Investment Costs 23.5 106.0 54.2 51.0 52.1 34.3 - 321.1 Recurrent Costs - 15.3 31.3 32.0 32.7 33.4 17.1 161.6 a, Subtotal System Design Development and Administration 23.5 121.3 85.4 82.9 84.8 67.7 17.1 482.7 ' SINIA Equipment Investtnent Costs 24.7 88.5 88.5 68.5 34.3 - - 304.5 Geographic Inforrmation System Investment Costs - 6.5 116.1 10.0 2.6 2.7 - 137.9 Documentation Center Investment Costs - 17.2 6.0 - - - - 23.2 Subtotal National Environmental Information System 48.2 233.6 296.1 161 5 121.7 70.4 17.1 9484 3. Legal and Reguatory Framework Harmonization of Lxws and Regulations Investment Costs 64.7 89.0 13.6 3.4 0 3 - - 171.0 Norms and Technical Standards Investment Costs - 63.7 - - - - - 63.7 Legal Enforcement Investment Costs 51.4 - - - - - - 51.4 Recurrent Costs 24.2 49.5 50.6 51.7 52.8 54.0 27.6 310.3 Subtotal Legal Enforcement 75.6 49.5 50.6 51.7 528 54.0 27.6 361.6 Legal Training and Technical Assistance Investment Costs - 108.6 87.2 - - - - 195.8 Subtotal Legal and Regulatory Framework 140.2 310.7 151.4 55.1 53.1 54.0 27.6 792.1 4. Training and Public Awareness Investment Costs 0.9 73.9 71.1 803 52.3 52.4 - 330.8 Subtotal Environmental Planning and Legislation 350.3 1,099.9 833 4 455.5 432.5 288.3 65.9 3,525.8 COSTAB: COMYIR HONDURAS Annex F ENVIRONMENTAL DEVELOPMENT PROJECr Page 12 of 18 Projet Componenb by Year- InvestneUt/Recurrent Coab (USS 000) Totas Induding Contingencies 1995 1996 1997 19 1999 2000 2001 Totd 8 Envinmental Qualty Asesment 1. Nadonl Sytem of FAviroumnetal Impact Assesument Support for DECA Investmnnt Costs 112.0 - - - - - 112.0 Recurrant Costs -.0 S.2 3.4 3.6 8.3 5.0 46.9 Subtotl Support for DECA - 120.0 3.2 3.4 3.6 3.3 5.0 158.9 Support for DMH Invabtment Costs 25.5 - - - - - 25.5 Support for DIGEPESCA Invesent Costs - 36.3 - - - 36.3 Suport for DRH Investnent Cods 25.5 - - - - 25.5 Support for COHDEFOR Investment Cods - 25.5 - - - - 25.5 Support for DGAM Investment Costs - 25.5 - - - 25.5 Support for CESCCO -_ Investment Costs - 209.3 - - - - 209.3 Recurent Costs 5.9 6.0 6.1 6.3 6.4 3.6 34.2 Subtotd Support for CESCCO - 215.2 6.0 6.1 6.3 6.4 3.6 243.6 Training and Technkal Assistance Investment Costs - 252.8 333.7 264.0 57.9 - 908.5 Subtotal National System of Environmental Impact Assessment - 726.3 347.9 278.5 72.7 15A1 8.6 1,449.3 2. Piot Projects for Environmental Impact Assessaent and Audit Invesmnt Costs - 184.4 266.1 192.6 115.8 - - 759.0 Subtotal Environmental Quality Asssment - 910.8 614.0 471.2 1885 151 8.6 2,208.2 C. Local Government Environmental Management 1. Technical Assitance for Municipal Management Investmcnt Costs 99.8 391.6 328.6 233.2 51.1 - 1,104.2 2. EnvIronmental Investnents Municpal and Community Environmental Investments Investffent Costs 537.8 2,188.4 - - - - - 2,726.2 Recurrent Costs 86.0 175.8 29.9 - - - 291.7 Subtotal Municipal and Community Environmental Investments 623.8 2,364.1 29.9 - - - - 3,017.9 Micro-enterprise Line of CredIt for Environmental Investments Investment Costs 468 1 - - - - - - 468.1 Establishment of the Environmental Unit at FHIS COSTAB: COMYIR HONDURAS Annex F ENVIRONMENTAL DEVELOPMENT PROJECT Page 13 of 18 Project Component by Year- nveshnent/Recurmnt Cosb (USS 000) Toteb Includin Contingencies 1995 1996 1997 199m 1999 2000 2001 Total Invesnment Costs 245.2 2S1.3 66.1 592.6 Evaluaion of the Environmental Investmenb Investment Cost 12.7 95.5 44.4 - - - - 152.6 Subtotal Eivilrental Investments 1,349.9 2,740.9 140.4 - - - 4,231.2 SubtotalLocalGovenumentEnvironmentalManagement 1,449.6 3,132.5 469.0 233.2 51.1 - 5,335.4 D. Amnstration and Project Coordination 1. SEDA's Admnirstrative Unit Investment Costs 11.2 - - - 11.2 Recurrent Costs 4.2 8.7 S.9 9.1 9.3 9.5 4.2 54.4 Subtotal SEDA's Admnistratve Unit 15.4 8.7 S.9 9.1 9.3 9.5 4.2 65.6 2. Project Coordination and Management Investnent Costs 244.4 240.7 219.4 178.9 181.7 183.3 96.0 1,344.5 Subtotl Admhnstratlon and Project CoordInaton 259.8 249.4 228.3 1S.0 191.0 192.2 100.2 1,410.1 Totl PROJECT COSTS 2,059.7 5,392.5 2,144.8 1,347.2 263.1 496.2 175.3 12,479.5 Total Investment Costs 1,907.4 5,069.5 1,947.1 1,178.1 627.9 312.9 96.0 11,204.9 Toal RecurTent Costs 152.2 323.0 197.7 169.8 175.2 177.3 79.4 1,274.6 COSTAB: COMYIR HONDURAS Annex F ENVIRONMENTAL DEVELOPMENT PROJECT Page 14 of 18 Expenditure Accounts by Yean -- Bse Cosbt (US$0 O) Bae cost Foreign Exchange 195 1996 1997 199 1999 2000 2001 Total % AAmount 1. Investment Costs A Project Coordination Unit Salaries 59.1 118.6 118.6 118.6 117.6 117.6 58.7 708.6 B. Consutants and Technical Assistance Local Consultants 207.8 563.8 460.3 348.0 136.9 55.0 4.0 1,775.7 - - Intemational Consultants 40.0 164.0 104.0 84.0 - - - 392.0 99.1 388.5 SubtotalConsultants andTechnicalAssistance 247.8 727.8 564.3 432.0 136.9 55.0 4.0 2,167.7 17.9 388.5 C. Studies 95.0 578.0 440.0 220.0 185.0 24.0 - 1,542.0 19.2 296.0 D. Auditing and Procurement Agency 116.7 93.3 73 3 33.3 33.3 33.3 16.7 400.0 E. Seminars, Workshops and Scholarships 64.5 251.2 293.5 130.8 53.6 8.8 - 802.3 - - F. Computer and Office Equipment 69.4 115.7 183.6 66.4 31.6 2.0 - 468.7 93.0 435.9 G. Laboratory and Field Equipment 24.1 328.3 14.2 - - 366.6 92.4 338.7 H. Vehicles 105.0 167.0 - - - - - 272.0 88.3 240.3 1. Office Fumiture 22.9 12.5 - - - - 35.5 J. Promotion Material 7.2 95.8 13.2 15.7 13.2 6.0 - 151 2 K. FHIS Investments Subprojects 532.0 2,118.0 - - - - - 2,650.0 Subloans 400.0 - - - - - - 400.0 - - - Subtotal HIS Investments 932.0 2,118 0 - - - 3,050.0 - - L. Services and Promotion 22.8 22.8 22.8 22.8 22.8 - 114.0 M. Environmental Screening of Investmnent Subprojects 97.5 144.6 32 5 - - - - 274.6 Total Investrnent Costs 1,841.2 4,773.7 1,756,0 1,039.6 594.0 269.5 79.4 10,3534 16.4 1,699.5 11. Recurrent Costs A Incremental Salaries 35.7 82.8 942 94.2 94.2 94.2 47.1 542.4 - - B. Operating Costs 26.3 52.2 54.9 54.9 54.9 54.9 18.1 316.1 C. Travel and Per diem 0.4 0.8 2.3 0.8 2.3 0.8 0.4 7.5 D. AdninistrationofInvestmentSubprojects FHIS 81.0 162.0 27.0 - - - - 270.0 Total Recurrent Costs 143.4 297.7 178.3 149.8 151.3 149.8 65.6 1,136.0 - - Total BASELINE COSTS 1,984.6 5,071.4 1,934.4 1,189.5 745.3 4193 145.0 11,489.4 14.8 1,699.5 Physical Contingencies 52.6 147.7 96.7 59.5 37.3 21.0 7 2 422.0 20 1 85.0 Price Contingencies 22.4 173.5 113.7 98.9 80.6 56.0 23.1 568.2 13.9 78.9 Total PROJECT COSTS 2,059.7 5,392.5 2,144.8 1,347.8 863.1 496.2 175.3 12,479.5 14.9 1,863.3 Taxes 86.1 278.0 107.9 66.3 460 26.9 9.2 620.4 - Foreign Exchange 235.2 877.8 425,6 242.2 80.4 2.2 - 1,863.3 COSTAB: EAYRB HONDURAS Annex F ENVIRONMENTAL DEVELOPMENT PROJECT Page 15 of 18 Expenditure Accounts by Years -- Total Including Contingencies (US$ '000) Totals Including Contingencies 1995 1996 1997 1998 1999 2000 2001 Total l. Investment Costs A Project Coordination Unit Salaries 62.7 128.6 131.5 134.4 136.2 139.1 71.0 803.5 B. Consultants and Technical Assistance Local Consultants 220.6 611.7 510.3 394.3 158.5 65.1 4.8 1,965.4 International Consultants 42.5 177.9 115.3 95.2 - - - 430.9 Subtotal Consultants and Technical Assistance 263.1 789.6 625.6 489.5 158.5 65.1 4.8 2,396.3 C. Studies 100.8 627 1 487 9 249 3 214.2 28.4 - 1,707.7 D. Auditing and Procurement Agency 123.8 101 3 81 3 378 38.6 39.5 20.2 442.4 E. Seminars, Workshops and Scholarships 68.4 272.5 325.5 148.2 62.1 10.4 - 887.1 F. Computer and Office Equipment 73.7 125.5 2036 75.3 36.6 2.4 - 517.0 G. Laboratory and Field Equipment 25.6 356.2 15.7 - - - - 397.5 H. Vehicles 111.5 181.2 - - - - - 292.6 1. Office Fumiture 24.3 13.6 - - - -- 37.9 J. Promotion Material 7.7 103.9 14.7 17.8 15.3 7.1 - 166.5 IC FHIS Investments Subprojects 537.8 2,188.4 - - - - 2,726.2 Subloans 404.4 - - - - - - 404.4 Subtotal HIS Investments 942.2 2,188.4 - - - - 3,130.6 L. Services and Promotion - 24.7 25.3 25.8 26.4 27.0 - 129.2 M. Environmental Screening of Investment Subprojects 103.5 156.9 36.0 - - - - 296.4 Total Investment Costs 1,907.4 5,069.5 1,947.1 1,178.1 687.9 318.9 96.0 11,204 9 I. Recurrent Costs A Incremental Salaries 37.9 89.8 1044 1067 109.1 111.5 57.0 616.5 B. Operating Costs 28.0 56.6 608 62.2 63 5 649 21.9 3580 C. Travel and Per diem 0.4 0.8 2 5 0.8 2.6 0.9 0.5 8.5 D. Administration of Investment Subprojects FHIS 86.0 175.8 29.9 - - - - 291.7 Total Recurrent Costs 1522 323.0 197.7 169.8 175.2 177.3 79.4 1,274.6 Total PROJECT COSTS 2,059.7 5,392.5 2,144.8 1,347.8 863.1 496.2 175.3 12,479.5 COSTAB: EAYRT IIONDURAS Annex F ENVIRONMENTAL DEVELOPMENT PROJECT Page 16 of 18 Allocation of Credit Proceeds (C'SS 'th)) Suggested Allocation of Credit Proceeds Credit Amounts Disbursement Total Project Cost Average Disbursement % IUnallocated Allocated Credit Amount % Total Local F_orign Total local F'oreign Total Total Local Foreign Total Local Foreign A %ehicles and equipment a I 1, >' '? 'n Ii ;' 7 I 11 l i at 3 135 13 Furnitwu i C Consultants Services 44 AF1 3 c l ; J 3b 73'A1 D Training b S'4 OC 3V S !71 -, ' - 82 'C . '' 1 S' s' A F Pto(ectyCxnaaig i A A w4 3; c F1 c bc . C at 'JS 4 A F Investment Subprojects Subproject- executed b' F I ;** 7',. Q O 9 77' Sul,ans 34' A A 4 4 14 4 1-4 I I - 4 I3 3-3 Subtotal Investment Subprojects ,,J4 .130 3 i4 1 - h 'J 4 F S F ' i4 54s G Incremental Recurrenti pend.turces 4:12 344 1 44 1 4A1 * 1 - 4>17 4 - RI FFDlS Adminnstrati,n '1 7 91 7 - U'nallocated 323 4 Total 1.7'F A SPA 4 12' 47A5 I J ? 3 l 5 ' . (I778 4 32'3 4 '7 nSo 1<433 I X a7, 1,807 4 Credit amounts financed bF IDA 'a Includes furniture, compute and office equipment, and laboratory and field equipment lb Includes ttanel and per diem COSTAE ALLOCF HONDURAS Annex F ENVIRONMENTAL DEVELOPMENT PROJECT Page 17 of 18 Procurement Arrangements (USS W000) Procurement Method iAol lUmted Competitive Internatlonal International L1cal Direct Financial Consulting Bidding Bidding Shoppinr Shopping Contracting Intermediaris Services N.B.F. Total A Vehicies, Computer. Office Equipment, Laboratory nd Field Equipment/a 60.4 905.4 181.1 604 - 1,207.2 (56.1) (842.0) (168.4) (56.1) (1.122.7) B. Furniture - - - - - 37.9 37.9 C Consultants, Tcchnical Assistance and Studies /b - - - - 4,842.8 295.8 5,138.6 (4,622.2) (4,622.2) D Trining /c - 887.1 - 887.1 (842.7) (842.7) E. Project Coordinating Unit /d - - - 03.5 - 803.5 (763.3) (763.3) F. ncremental Recurrent Expenditures/c - - - 84.8 763.5 - - 134.6 983.0 (43.3) (389.9) (433.2) G. Environmemtal Investments (FPIS) Subprojects /f 817.9 - - 1,090.5 817.9 - - - 2,726.2 (777.0) (1,036.0) (777.0) (2,589.9) Subloan - - - - - 404.4 - - 404.4 (404.4) 044 H. Administration of Invcstment Subprojects (FHIS) - - - - 291.7 291.7 Total 878.2 905.4 181.1 1,235.7 1,581.4 404.4 6,533.4 760.0 12,479.5 (833.1) (842.0) (168.4) (1.135.4) (1,166.9) (404.4) (6,228.2) - (10.778.4) Notc: Figures in parenthesis arc the rcspcctive amounts financed by IDA \a LIB for USS0.5 million, and local and intcrnational shopping for about USS3.0 million. \b Includes services and pronotion, and promotion material. \c Includes travel and per diem for training \d Includes PCU salries, Auditing and Procurement Agency be Inludes incremental recurrent salaries, operating costs and office materials \f Subprojects executed by FHIS COSTAB: PROMTH 1IOND 'DRAS Annex F ENVIRONMENTAL DEVELOPMENT PROJEC'T Page 18 of 18 Procurement Accounts by Yearn (uSS '000) Totals Including Contingencies 1995 1996 1997 1998 1999 2000 2001 Total A. Vehicles. Computer, Office Equipment. Lahoratory and Field Equipment a 210 8 662 9 219.3 75 3 36 6 2.4 1,207.2 B Furniture 24 3 13.6 - - - - 37 9 C Consultants, Technical Assistance and Studies b 599.0 1,.03 5 1,270 8 820.3 453 1 167 0 25.0 5,138 6 D Training c 68 4 272 5 325 5 148.2 62.1 10.4 - 887.1 F Project Coordinating Unit cd 62.7 128.6 131.5 134.4 136.2 139 1 71.0 803.5 F. Incremental Recurrent Expenditures 'e 66 2 147 2 167.8 169 8 175.2 177.3 79 4 983.0 C. Environmental Investments (FHIS) Subprojects /f 537.8 2,188.4 - - - - 2,726 2 Subloans 404.4 - 404.4 Subtotal Environmental Investments (FIIIS) 942.2 2,188.4 - - - - - 3,130.6 H. Administration of Investment Subprojects (FHIS) 86.0 175.8 29.9 - - 291.7 Total 2,059.7 5,392.5 2,144.8 1,347.8 863.1 496.2 175.3 12,479.5 \a LIB for US$0.5 million, and local and international shopping for about USS3.0 million. \b Includes services and promotion, and promotion material. \c Includes travel and per diem for training 0" \d Includes PCU salaries, Auditing and Procurement Agency \e Includes incremental recurrent salaries, operating costs and office materials TfSubprojects executed by FHIS COSTAB: PROYRS 77 Annex G Page I of 11 HONDURAS ENVIRONMENTAL DEVELOPMENT PROGRAM GENERAL DESCRIPTION OF THE HONDURAN SOCIAL INVESTMENT FUND Background 1. Social Investment Funds (SIFs), such as the Fondo Hondurefio de Inversi6n Social (FHIS), were created in Latin America and the Caribbean to alleviate the impact on the poor of the reduction in income and employment caused by the debt crises and the structural adjustment and reform measures taken to lay the basis for renewed growth. The creation of S[Fs responded to the lack of capacity of traditional social sector mmnistnes to meet the extraordinary and complex demand for social infrastructure generated as a result of structural adjustment. Unlike line ministries, SIFs are financial intermediaries with limited but high caliber technical staff to enable expedient public investment in an efficient and targeted manner. In addition, central ministries employ SIFs as executing agencies to contract out works such as schools and health centers. A key attribute of the demand driven nature of SIFs is the high degree of involvement by municipalities, communities and NGOs. The efficiency and success of the SIFs depend on a pnrvate sector management style, exception from public sector recruitment and salary limitations from the annual government budget cycle, and from government procurement and disbursement procedures. Origin and Institutional Development 2. In Honduras the FIES is a demand driven financial intermediary which depends on the private sector and NGOs for the production of infrastructure for municipalities and communities. The FHIS was created by legislative decree in February 1990 as a diversified agency of the Office of the President for a period of three years, subsequently extended to 7 years until 1997. Finally, in December 1994, Law 153-94 was enacted extending the life of the FHIS for 12 years. The performance of the FHIS thus far has been extraordinary. Since its inception FHIS management has provided agile and effective leadership and made the necessary adjustments to maintain an efficient operation that by an large met its objectives. However, the change in administration in January 1994 has brought new management to FHS which has required a period of adjustment. The GOH has reaffirmed its commitment to FF1S by extending its mandate three years until April, 1997. The change in administration provides an opportunity to conduct analysis on the performance of FHIS focused principally on the sustainability of FHIS subprojects and on the administration of the institution. This analysis will be conducted in conjunction with the preparation of the third IDA financed FHIS operation. IDA Credits 3. IDA has provided two credits to FHIS which accounts for approximately 25% of total FHIS revenue since its creation. In February 1991 a Social Investment Fund credit (No. 2212- HO) of SDR 14.3 mnillion (US $20 million) was approved to finance FHIS and other priority social sector activities (food coupon pilot, Living Standards Measurement Survey (LSMS), sector planning). In May 18, 1992 a credit (No. 2401-HO) for SDR 7.4 million (US $10.2 78 Annex G Page 2 of 11 million) was made to help finance a range of small scale subprojects in four categories: (i) social infrastructure (54% of total subproject cost), economic infrastructure (13%) and (iii) social services (22%), and (iv) credit to the informal sector. Objectives 4. FHIIS' primary objective is to promote improved living conditions for disadvantaged groups in rural and urban areas. FI{S provides grant and credit financing for the execution of social and economic subprojects for the purpose of increasing the productivity, level of employment, income and contributing toward meeting basic needs of the poor in Honduras. This relatively broad mandate has enabled FHIS to provide grant financing for the production of infrastructure ranging from latrines to schools and generate credit programs for the informal sector for financially viable small scale subprojects. Organization 5. FHIS is currently undergoing some institutional changes. These changes are being closely followed by the Association in the context of this project and a third FHIS operation, now under preparation. To this date, however, FHIS is headed by an Administrative Council composed of the Ministers of Planning, Labor and Social Welfare and Finance, the President of the Congress, three civilian representatives, including an NGO representative, a presidential delegate, and the FHIS' Executive Director. This council is supposed to meet every three months and is responsible for setting policies and approving regulations. Subproject approval is the responsibility of an Operations Committee which is presided by the Executive Director and composed of FIBS' division chiefs. In addition, the FIlS has opened up the operations committee to intersectoral ministries such as the SEDA. 6. The internal organization of the FHIS is presented in Figure 1. The FHIS is headed by an Executive Director who is a cabinet level position and depends directly from the Presidency. Six administrative support units (data management, legal, fundraising, public relations, personnel, programming and contractor control) support the technical units responsible for receiving, promoting, and evaluating subprojects and the units responsible for the supervision of subproject execution. Subprojects are submitted by the municipalities to FHIS through the subproject reception unit of the subproject operations unit. Subprojects are evaluated by the evaluation unit and if they are considered feasible they are submitted to the subproject committee for consideration and subsequent approval. The Control and Monitoring Department takes over the supervision of the subproject through three supervision units. This office is also responsible for receiving the work from the contractors and then tuming over the infrastructure to the local government. 7. Absolute and relative levels of staffing for the different units which correspond to the subproject cycle is a critical consideration to maintain subproject quality and efficient processing. A particular concem is the capacity to supervise ongoing subprojects. The Office of Control maintains a flexible hiring practice and presently has six permanent supervisors and 28 contract (year-long) inspectors. This practice makes it possible to maintain the desired ratio of subprojects to supervisors of 40. The profile of the professionals that supervise subprojects has been limited to civil engineers. With the introduction of the environmental screening 79 Annex G Page 3 of 11 procedures as well as the pilot environmental subprojects, FHIS will hire up to six environmental specialists as needed. It is expected that the diversification of the supervision staff will permit FHIS to carry out a more effective supervision. rADMINISTRATIVE | COUNCIL l I INTERNALKN AUDIT |EXECUTIVE l |DIREC TOR l OPERATIONS COMMITTEE ADMINISTRATIVE SUBPR JECTS MONITORING AND SUPPORT UNITS DEPARTMENT CONTROL DEPARTMENT * Adnuinistration * Contractor Control * Data Managenent * Fundraising COMMUNITY ENVIRONMENT * Legal PARTICIPATION * Personnel * Programming & Analysis Figure 1: Organizational Structure of FHIS 8. The current structure of the FHIS Office of Subproject Development reflects two new initiatives, community participation and environment. The community participation unit oversees the sustainability of subprojects while the environment unit is responsible for the new environment window as well as incorporating environmental considerations into the FHIS portfolio. The sustainability and environmental agenda in the FHIS were part of the design of the IDA II credit to FillS. However, it has been evident that in order to incorporate environmental and community participation objectives in an institution such as the FHIS it is necessary to have an explicit strategy which is fully integrated in the subproject cycle. Subproject Programming and Implementation 9. The FlES finances subprojects according with eligibility criteria and evaluation parameters established in an Operational Manual approved by IDA under its first credit to FHIS. Investments are financed in the areas outlined below, according to the following standardized menu of subprojects: (a) Social infrastructure subprojects. Includes (i) the rehabilitation, maintenance, and construction of pre-primary and primary schools, health centers and posts, water and sewerage systems and (ii) maintenance of rural roads. (b) Economic infrastructure subprojects. Includes the financing of (i) public works and simple infrastructure such as repairs and construction of canals and ditches, construction of gutters and sidewalks, and reforestation; and (ii) 80 Annex G Page 4 of 11 subprojects of special interest to project cultural heritage and ethnic minorities, provided that subprojects in either category generate significant employment at reasonable costs. (c) Social services subprojects. Includes programs for nutrition, primary health care, vaccination, primary and pre-primary education (such as school breakfasts), nutrition assistance to pre-school age children, early stimulation, training of midwives, health promoters, and community health guardians, provision of furniture, teaching matenrals and small libraries to primary schools. (d) Informal Sector Subprojects: The FHIS makes funds available to NGOs for lending at market oriented rates to help expand small and micro-enterprises in the productive and service sectors. Terms and conditions for financing of informal sector subprojects are detailed in the Operational Manual. 10. The environmental subprojects, currently under preparation, are expected to focus on urban issues and rural issues that meet the implementation criteria of FHIS subprojects (short execution of 6-8 months). Environmental subprojects will finance four principal areas: (i) urban and community parks; (ii) solid and liquid waste management; (iii) protection of water sources; (iv) soil protection and erosion control; (v) biodiversity conservation; and (vi) energy generation and conservation. Sources of Financing 11. FF1S finances its operations through donations or soft loans from donors, multilateral and bilateral agencies. Counterpart financing from the GOH finances the FHIS operating cost and municipalities contribute resources indirectly by leveraging FHIS funds. Donors have the flexibility of targeting their contribution to the FHIS by specifying the window or even the specific subproject that they wishes to finance. This provides an efficient financial intermediation of development assistance. From 1990 to December 31, 1993 FHIS received approximately US $83.3 million equivalent. From April 1994 to April 1997, FHIS is projected to receive approximately US $100 equivalent (see table). Major Sources of Funding 1990-1994 Source US$ million equivalent IDA 20.7 Interamerican Development Bank 20.6 KfW 14.5 Government of Honduras 13.2 USAID 8.7 Other 5.5 TOTAL 83.3 Source: FILS 12. Besides the extemal sources of financing, the GOH, through the Ministry of Finance (SHCP), transfers resources to the FHIS to finance the operations cost (9%) plus an additional transfer of 10% as counterpart funds. In the period 1994-97 it is expected that central 81 Annex G Page 5 of 11 govemment, line ministries, municipal govemment and beneficiaries will contribute approximately 25% of the total resources of FHIS. The remaining 75% originate from multilateral and bilateral development credit institutions and donors. FHIS is currently undergoing an active replenishment and is seeking to meet commitments to satisfy the base 1994-97 operations program of US $117 million equivalent. As of June 1994 approximately US $101 million equivalent had been identified as potential resources entering the FHIS from 1994- 1997. FHIS Expected Sources of Funding 1994-1997 (June, 1994) Source US$ million (equivalent) IDA 25 Interamenrcan Development Bank 15 KfW 25 FIDA 18.75 OPEC fund 5 UNDP 0.5 UNICEF 2 CIDA 2 SECPLAN - COSUDE 5 Govemment of Honduras 28 TOTAL 101.25 Application of Funds 13. From April 1990 to March 1994 the FFHS has financed 5,469 subprojects for a total amount of approximately US $91.1 million. The average size of subprojects has increased from US $4,360 in 1990 to US $20,300 in 1993. Subprojects are typically executed in less than 8 months. Ninety-four percent of the application of funds is done on a grant basis and the remaining 6% correspond to credits to informal sector business persons. Infrastructure operations correspond to 75% of FHIS activities. FHIS 1990-1994: Total Subproject by Type Number of Subprojects Total Cost Disbursed Number % US$ % US$ % million million Infrastructure 4,479 82 69 75% 60.1 76% Basic needs 936 17 17.3 19% 14.8 19% Institutional Strengthening 2 <1% 0.2 <1% <1 <1% Production 61 1% 5.7 6% 4.4 6% TOTAL 5,478 92.1 79.3 Source: FlUS, December 31, 1993 14. The definition of the application of funds to subprojects is determined by three factors: (i) poverty targeting, (ii) sectoral earmarking, and the (iii) nature of the transfer as either donation or credit. However, the principal factor which defines the application of funds is the effective demand of the community for subprojects. All applications for grant financing from the FIRS must be endorsed by municipalities. To a significant extent the demand from a 82 Annex G Page 6 of 11 community for a given subproject is shaped by the promotion of contractors eager to produce infrastructure. 15. The targeting of FHIS funds to beneficiaries is done based on a poverty index at either the departmental or municipal level. The poverty index is a population adjusted index which takes into account three indicators with different relative weight: child malnutrition (30%), access to potable water (50%), and access to sewerage (20%). Municipal targeting establishes a maximum amount that may be invested to each of the 291 municipalities while the departmental cnrteria take a more regional approach by distributing the resources to each department (18), and the municipalities within the department are free to submit proposals based on the total amount allocated to the department. 16. Sectoral, or subproject type, earmarking is done by directing investments to specific categories or subprojects. The sectoral definition of the FHIS portfolio is also affected by the role the FHIS plays as a financial intermediary for line ministries. For example, agreements with the Ministries of Health and Education to build health posts and schools tend to define the FIRS profile. More specific sectoral targeting may occur if donors select specific subprojects to be financed through the application of donations or credits. For example, as a response to the cholera problem of the early 1 990s there has been a significant initiative by donors to finance latrines. 17. The FHIS has a credit mechanism to reach the informal sector in sustainable manner through its Programa de Apoyo al Sector Informal (PASI) program. The PASI works principally through NGOs who broker the credits to the community through community banks. The NGOs are given a margin of 10% of the value of the credit for administrative expenses. The NGOs then lend to micro-enterpn'ses or community banks with amortization periods of between 6 and 12 months with a 3 month grace. The interest rate is set approximately 2 points below market rate. The PASI is working with 48 PVOs as financial intermediaries. In the period from November 1991 to November 1993 the PASI has made 8,900 credits with a default rate of 4.6%. 18. Projected application of funds for the period from April 1, 1994 to April 1, 1997 are expected to be US $117 million or approximately 4,600 subprojects with an average cost of US $26,500. Infrastructure makes up approximately 60% of total investment and remains the principal application of funds for the FHIS. FHIS 1994-1997 Projected Total Base Program by Subproject by Type Subproject Type US$ million equivalent % Infrastructure 56.1 48 Basic needs 28.6 24 Community Development 11.2 9 Production 11.5 10 Environment 10.0 9 TOTAL 117.0 100 Source: FHIS 83 Annex G Page 7 of 11 Sustainability 19. The sustainable flow of benefits from FHIS infrastructure is an essential element of measuring the success of the Fund in meeting its objectives. FH1S management has recognized that sustainability has not been addressed with sufficient emphasis for some subprojects in the first four years of the fund's existence. With the cooperation of KfW the FHIS is taking steps to address this situation. The sustainability strategy that is being launched includes the creation of a community participation unit that will work with PVOs and NGOs to confirm and strengthen the commitment of the community and the municipalities to the subprojects that are submitted to the FIS. The PVOs and NGOs will work with the community prior, during and after the completion of the work. Through this participatory approach it is expected to reverse a tendency of lack of ownership and corresponding lack of responsibility for FHIS financed work. The cost generated by the community participation strategy will be included as part of the subproject cost and it will not exceed more than 5% of subproject cost. In order to reinforce the participatory approach the FHIS has signed an agreement with the Association of Municipalities of Honduras (AMHON) in order to define a matching grant mechanism whereby the municipalibes can leverage FHIS resources by cofinancing infrastructure with FHIS resources. The matching grant scheme would favor the poorest municipalities by commnitting a greater proportion of FHIS resources for every Lempira committed relative to wealthier municipalities. Environmental Considerations 20. FHIS is the single largest provider of municipal infrastructure in Honduras. The magnitude and diversity of its portfolio places it in a privileged position to have an important positve impact through an environmentally sound development agenda. The capacity of FHIS to establish good practice in the provision of environmentally sound local infrastructure is strengthened by its collaborabon with SEDA. SEDA will analyze and propose changes to the structure and procedure of the FHIS environmental initiative so that it fulfills the objectives of the environmental impact regulatory framework. In addition, the SEDA will have a seat in the FHIS operabons committee which is responsible for approving all FHIS subprojects. This will permit SEDA to participate in the definition of local environmental public infrastructure being financed by FHIS. Lastly, the FHIS environmental office will be part of the SINEIA which will pen-nit FHIS and SEDA to share environmental and investment information. 21. FHIS has proposed a three pronged approach to guarantee the environmental quality of the subprojects that it finances: (i) sound technical specifications of subprojects, (ii) sound incentive structure for contractors to follow environmental mandate, and (iii) systematic environmental screening of subprojects to determine the appropriate level of environmental impact which must be carried out. This strategy has given elements as described below: (a) Creation of an environmental unit. FHl[S is currently conforming an environmental unit composed of one experienced FEHS staff, a part time environmental expert on retainer and a secretary. In addition, the FHIS will hire as contract employees environmental specialists to serve as resource persons in the evaluation and supervision of the FHIS portfolio including the environmental subprojects. The incorporation of non-engineers to the FHIS 84 Annex G Page 8 of 11 technical staff will broaden the perspective during subproject evaluation and supervision. (b) Sound technical specifications. FHIS finances subprojects that are based on approved technical specifications. These technical specifications establish the dimensions, type of material and inputs as wel! as the construction processes that define the production of a given subproject. By controlling the technical specifications the FHIS is guaranteed to satisfy objectives such as the labor content and functonal characteristics of the infrastructure. FHIS management, through the environmental unit, has realized the potential benefit of reviewing the technical specifications to incorporate environmental considerations through three non mutually exclusive actions: (i) improve the technical specification to rationalize the material inputs, (ii) modify the specification of the subproject to include measures that prevent environmental degradation, and (iii) modify technical specifications to incorporate recycled matenral into the works. (c) Environmental incentives for contractors. Sound incentive structures for contractors to comply with the environmental initiative are essential in transforming policy into action. The project will provide technical assistance to define mechanisms to institutionalize environmental quality as part of the quality control criteria of any Fl-US work. The environmental unit has identified four points in the subproject cycle where incentives will direct the performance of contractors into environmentally sound practice: (i) entry of contractors into FHIS roster by obligatory environmental certification of contractors, (ii) entry of potential subproject to FHIS by refusing subproject designs that fail to incorporate all environmental aspects into subproject proposal, (iii) during execution through the inclusion of environmental criteria during the supervision of construction, (iv) upon conclusion of the work through inclusion of environment cnrteria to define the merit of the last payment ("quality of work") which corresponds to 5% of the value of the contract. (d) Environmental training for FHIS staff. FH[S supervisors and selected administrative staff will receive 64 hours of training on integrating environmental considerations into the subproject cycle. The seminar will explain the new environmental initiative as the FHIS screening process as well as the administrative modifications that help increase the environmental quality of FHIS subprojects. The consultants imparting the seminar will produce practical guidelines to be used by participants. Supervisors entering the FHIS will be required to see the videotaped summary of the course as well as familiarize him/herself with the course material. The course will be repeated 12-18 months after the initial seminar in order to maintain the technical competence to FItS supervisors. (e) Systematic environmental screening of subprojects. FHIS management has proposed to adopt environmental screening procedure for all subproject proposals that are submitted for consideration of FHIS for potential financing. SEDA is collaborating with FHIS to design and implement a strategy that 85 Annex G Page 9 of 11 satisfies the LGA including decision rules defining when a subproject requires a full EIA which must be reviewed by SEDA. The subcomponent will finance technical assistance to define a scheme to systematically screen subprojects according to their potential negative environmental impact. Under the proposed scheme all subprojects will fall in one of two environmental impact assessment categories, as described in the regulations of the SINEIA. Category I includes subprojects that do not require and environmental impact assessment, but require an environmental analysis using procedures established by SEDA. Category n1 includes subprojects that require a formal EIA, and recognized three levels as indicated below: Level 1: Subprojects with a high level of environmental risk that require a full EIA. Level 2: Subproject with an intermediate level of environmental risk that require an intermediate EIA. Level 3: Subprojects with minimal environmental risks but that still require an EIA to cover specific negative effects on the environment. 22. The systematic screening of the 4,225 subprojects to be financed by FHIS from August 1994 to April 1, 1997 would have an incremental cost to the FIRS administrative cost equivalent to approximately 0.25% of the portfolio. Thus incorporating the environmental screening is expected to increase the administrative cost of the FHIS from 9.4% to 9.7%. The incremental cost in person days to carry out the agenda is approximately 6 person days for subprojects that require an EIA, two-person days for subprojects with mild environmental impact and one-person day for subprojects that have virtually no impact on the environment. This is equivalent to approximately US $65 per subproject for a total of US $275,000. Informal Sector Support Program 23. In 1990, FHIS established the PASI to provide credit to small and micro-enterprises through qualified NGOs and technical assistance when appropriate. PASI started operating with a US $4.8 million grant from the GOHI, the Govemment of the Neatherlands and the IDA. As of July 1, 1994, PASI had approved 56 credits to intermediary NGOs totalling Lps. 40 million (US $4.4 million); 39 of them are still operating. These credits financed approximately 12,000 micro- enterprises out of an estimated 250,000 currently operating in Honduras. An estimated 1,638 direct permanent jobs were generated as a result of the program which operated through 32 intermediate NGOs. 24. Financing terms and conditions are included in the Operational Manual of the FHIS and are summaized below: Financial Arrangements (a) Arrangements whereby an NGO acts on behalf of FI{IS to undertake lending to informal sector beneficiaries according to terms and conditions spelled out in the Operational Manual. 86 Annex G Page 10 of 11 Principal Financing Conditions (a) Loan principal and interest to be repaid to FHIS (or successor of FHIS) according to an amortization schedule to be specified. (b) NGO will be fully responsible for debt service and required to absorb any loan losses. (c) Use of funds by NGO for purpose other than those agreed with the FHIS results in automatic recall of funds by FHIS. Approval (a) Financial Arrangements between FHIS and NGO approved by Operations Committee of FHIS. (b) Individual subloans approved by management committee of NGO. Target Beneficiaries (a) Small and micro-entrepreneurs in productive and service sectors located in marginal urban zones and rural zones with high unemployment rates and low income who do not have access to formal credit at present. Examples of beneficiaries are shoemakers, handicraft makers, market or street vendors of food, clothes, utensils, mechanics, hairdressers, small tire repair shops, small farmers, etc. (b) Operational Manual defines small and micro-enterprises based on subproject amount and includes other parameters to define target beneficiaries such as maximum number of employees, sales per month, according to sectors. Requirements for Participating NGOs (a) Must be properly registered legally. (b) At least three years experience in their field. (c) Adequate administrative and financial structure to undertake loan appraisal, recovery, and supervision. (d) Satisfactory recovery on existing portfolio (at least 95 percent). (e) Adequate capacity to provide technical assistance to beneficiaries. (f) Quarterly financial reporting to FHI1S. (g) Audit by extemal, private, independent auditors. Subproiect Cn'teria (a) Loans to final beneficiaries to be appraised according to technical and financial criteria appropriate for this type of operation. (b) Subprojects to promote individual and group savings. Size of Loans (a) Size of loans to intermediary NGOs: From US $50,000 to US $167,000, in local currency. (b) Maximum size of subloan to final beneficiaries:US $6,000 in local currency. Lending Tems (a) Repayment Period: in accordance with the type of activity being financed (expected to vary between 3 months for working capital to 24 months for equipment). (b) Interest Rate: market rate to be applied by NGO, adequate to cover lending and recovery costs and ensure reasonable net income, as agreed with FHIS. 87 Annex G Page 11 of 11 (c) Net income from lending operation to be shared between NGO and FHIS according to a proportion established between FHIS and NGO. (d) Solidarity group guarantee, (or in some cases fiduciary guarantee) required from beneficiary. Grants for Technical Assistance (a) Technical assistance to be provided by NGOs to final beneficiaries in simple administrative, accounting, and technical aspects. 88 Annex H Page 1 of 1 SECRETARIA DE HACIEN DA Y CREDITO PUBLICO REPUBLICA DE HONDURAS Tegucigalpa,D.C. 1 DE SEPTIEMBRE DE 1994 C?-1100 T ngeniero EDILBERTO F.SEGURA The World Bank Director Country Depsrtament IT Latin America And Caribbean Regional ..Office 1818 H. Street, N.E. Wa:sh;ngton,D.. C 20433-- U. S. A- Est1-mado Se?ior Seeura: La Secretaria de Hacienda y Cre'dito PQblico en nombre y representacln del Gobierno de la ReptLblica de Honduran, comunica al Banco Internacional de Reconstruccifn y fomento q.ue en base a lo que se establezca en 1ae- ClAusulas Contractuales, incluidas dentro del Contrato de Pr6atamo a suscribirse con ese Organizmo por un monto de US$.12.o (DOCE MILLONES DEi DOLARES) para financiar el Proyecto "Desarrol}o Ambiental de Honduras- el Gobler-no de Hondurac crumplir& con el comproTaiso de asignar los fondos necesarios para cubrir gastos a ser financiados con la Contraparte Nacional Para el Proyecto. Las previsiones de los fondos se haran en base a los procedinientos establecidos en rueatra legislac6in en materia de ejecuci6n presupuestaria Y en atenci6r± a los requerimiento6 que presente la Unid.ad Ejecutora del pr Aprovecho la oportunidad para patentizar al Sefior Segura las mue de mi consideracidn y estima- Minisrt,ro SD CFC/GD/ m ds -de cc:. Dr .Car 108 hedinia Mini stro SEDA CFC/GD)C/l1edes- 89 Annex I Page 1 of 2 HONDURAS ENVIRONMENTAL DEVELOPMENT PROJECT MONITORING AND REPORTING I. Systematic and accurate reporting of project performance would be essential given the extent of institutional changes, the scope of proposed project activities, and number of agencies responsible for implementation. Active monitoring would be crucial taking into account the innovative nature of the project and the need for adjusting for possible changing circumstances during implementation in accordance with overall project objectives as described and agreed upon during appraisal. 2. The executing agency, the Ministry of the Environment (Secretaria del Ambiente - SEDA) through the Project Coordination Unit (PCU) will be responsible for coordinating and assisting all the agencies participating in the implementation of the project in the preparation of their individual reports. The PCU will consolidate the individual reports and will forward the consolidated report to IDA within 30 days of the end of the quarter during the first year, when quarterly reports will be required, and within 30 days of the end of the semester thereafter, when semi-annual reports will be required. 3. The reports will focus on evaluations of progress against the annual operating plans, measures of project performance and impact, and other issues related to project implementation and management. They are designed to be used by the Government of Honduras (GOH) and IDA as an effective tool for project monitoring and would include the following sections: (a) The Summary of Project Implementation would give a general description of project implementation during the period under review, by component, including the project's overall status, adherence to the Annual Operating Plan and project impact to date. In addition, this section should comment on the effectiveness of project coordination among project agencies and on project administration issues, including fund flows/government budgeting, disbursements, procurement, accounts and audits and technical assistance. The summary status of each component would be covered in a separate section. The status of actions proposed and issues unresolved from the previous report, and actions proposed for the following period, would also be included. (b) Performance and Impact Indicators would provide quantitative indicators of project implementation by component and subcomponent as identified in Appendix 1. (c) Financial Indicators would provide a summary of funds released by the GOH and IDA, during the quarter by project component and disbursement category (i.e., works, goods, services, and other expenditures). 90 Annex I Page 2 of 2 Procurement method and processing status by disbursement category, and estimated future disbursements, would also be identified. The proposed format for the financial indicators section of the reports is presented in Appendices 2a and 2b. (d) The Status of Legal Covenants would present a summary of compliance with project's legal covenants with cross-references to the legal documents and the Staff Appraisal Report (SAR). The information would be presented as shown in Appendix 3. 4. In summary, an outline of the report would be: Part I Overall summary A. General status 1. Major recent events 2. Adherence to Annual Operating Plan 3. Development impact to date B. Project administration 1. Fund flows and Government budgeting 2. Disbursements 3. Procurement 4. Financial reporting (accounts and audits) 5. Technical assistance C. Organization and Management 1. General monitoring and evaluation 2. Coordination among project agencies D. Component by component discussion of status, problems and next steps Attachment 1. Summary of recommended actions (who should do what by when) Attachment 2. Summary status of recommended actions from last report Part II Tables on performance and impact indicators Part III Tables on financial indicators Part IV Table showing status of legal covenants HONDURAS Annex I ENVIRONMENTAL DEVELOPMENT PROJECT Appendix I Monitoring and Reporting Project Perforonace and Impact Indicators Page 1 of 6 Quarter:_ _ 176 17 19 Original Revised Actual Orgnal Revsed Actua Otggmal Revsd Actual Onigmnal Revised Actual C _mp.et Subcaaspoue'st AdIvles Task. Taret| Target T| Tapmdt Taged Target Taret Trsg | Target A Environmenlad PlaWuung A I EnwonmentaI nd Land A I a Envicomental Pnmnig EnvromnentaI Profie upted and ad Lgslibon Ue Plabnng pubbshed Enviromneta Acon Plan updated and publshed _ _ _ Enwirtemental Invsment Progamn updated nd publshed _ _ ___ MMonoring and evalutio systein YES YES YES _______________________ designed and lunctioning YES__YES _E ___YES A I b Natural Resources Harnmionzed sectonal polces published I A I c Land Use Planneg Land Use Pannung Unut established nd YES YES YES YES operatig_ _ _ _ LAnd Use Planning Strategy prepard andI published__ _ _ __ _ _ ___ _ _ __ _ _ _ Base environmental maps prepared/updated nd published A I d Stuibes: B.odverstv. Bohdersity study completed and Sobd waste nd published Economic incentie_ Sold waste study completed and published Eonormc incentives study completed n =d ____ ___ ____ ___ ____ ___ published _ _ _ _ _ _ _ __ _ _ _ A 2 NbtonW Environmental Ak2 System Design. SINIA designed and functioning Information System Development nd YES YES YES YES Admmnisutiaon A 2 b Nanonal Environmertald Computers, comtuations hardware Infomatbon System nd sofhwre purchased and instaled n 14 13 10 Erqipment the ptaping agences A-2 c Geographic Inbfomatimon GIS designed nd fiuctioning System YES YES YES YES A 2d4 Docunentaton Center DC estabbished and funtoning= YES YES YES A 3 Lagal and Regulatory A 3a Hannaniation of Laws Envronmena legislabon tfofmuaton Franmework and Reglations system designed and fmciuning YES YES YES YES Update and pubbsh saninmuy of laws and I I regulatins_ Workshops organized for the htatmonuzbron of environmental 5 legilanon __ Genenrl tnforation semtnars organized 2 HONDURAS Annex I ENVIRONMENTAL DEVELOPMENT PROJECT Appendix 1 Monitoring and Reporting Agendixf1 Project Perfornnace and Itpact Indicators Page 2 of 6 Quarter: 19" 19% 1"~~~~~~~~~~7 19"1 Original Revised Actual Original Revlsed Actual Ognal Revl d AcuaL Original Revised Actual Sbsw -a.uu ActtitsTasks Target Tuget Tualet Trget Trget Target Tget Turt A 3 b Norms nd Techwical Methodology for the adopion of Standads envrosnental noms nd technical YES standuds approved A 3c Legal Enforcement PA nd FA fuly staffed. equrpped and _ YES YES == A 3d Legal Traming nd Legal professionals tind or Technical Assistance envtronnetal legislation nd regulitions 00 300 A 4 Trauung and Pubc A4a Environmenla Trauung Nnbei of scholatshps awaded Awareness nd Pubhc A ees 3 3 3 Progrm_ Environnental pubbc awareness packages 4 4 4 4 B Environmentl Quality B I National System of B I a Eqpmimnent for Pabtin agencies fuSy equipped and Assessment Environmental Impact DECA/SEDA, functonig Assssment DMH/SRN, DIGEPESCA/SRN, DRHVSRN, YES YES YES COHDEFOR, DGANMSSP, and CESCCO/SSP N B I b Training nd Technical Scholarships for oversea short training Assistance for programs awarded DECA/SEDA, DMH/SRN, DJIGEPESCA/SRN, DRHISRN, COHDEFOR 3 3 4 DGAM/SSP. CESCCO/SSP, nd othe agencis Traning seminars on EIA methodology 2 2 2 oegaticzed122 Training manuls on EA methodology 2 2 2 produced 2 2 2 EIA Congress convened I B 2 Pilot Projcts for B 2 a Fotesty Sector Pilot environmental sment concluded Environiential Impact Arassmnit and Audirtng Pilot environmental audbt concluded B 2 b Agro-industry Sector Pilot nvironmental ment concluded Pdot environmental audit concluded B 2 c Mnnmg Sector Pilot environmental assessment concluded HONDURAS Annex I ENVIRONMENTAL DEVELOPMENT PROJECT Appendix I Monitoring and Reporting Project Performace and Impact Indicators Page 3 of 6 Quarter: 1995 196 1"7 19"9 C _paae.t Subeam_amaut AeMitt. Tatula Ongal Reised Actual Orinal Revised Actu l Oginwwl Revised AcAtul Onnal Resed Actual ___________o __p_n_____A_th___Ta _k ___ Target Taget Tar8et Target Taget Target -_ Trget _ Pdot environnental audit concluded B 2 d EnergY Sector Pilot envronmental assessment concluded Pilot enironmental audit concluded C Loc Governmtent C I Tcchucal Assistance for C I. Catcain,as, Olanctuto. Minucipal environentl profles prepare Envtronmental Municipal Environmen Santa Rosa de Copan, Management Managuemnnt nd Santab rbara 5 7 13 Regons Municipal environmntal action plat 5 7 13 prepared___ Publc partapation semnins, organzed 6 34 40 34A Environmentl training prograin for 2 women organuzed _ _ C 2 Environmental C 2 a Munimpal nd Pre-investment sludon conducted lnreutments Comnuinwiy Environmental Investnments . _ _ I. Projects funded nd corpleted 18 42 _ C 2 b Micro-enterpnise itne of Pre-mvestment studite conducted Credit for Enironmental Investnents 3 Percent of credit ne aocated = 100% C 2 c Estabshment of the Enviomnental Urnt established nd Envronmenl Unit at functioniW YES YES YES YES Scholrships for oveseas short traung 6 2 propamn awarded Supervisors nd Inpewtms tramed in EtA 45 45 methdodogy _ _ _ EIA seiUnars for executing agencies 6 C.2 d Evaluahon of the Projects evahalued Enrotunental I 0 25 D Admnitmo and D I TechnIal Asaisce to D I a Strengthenrn SEDA's Admmsbative Unt fully staffed, Project Coordautalon SEDA's Admirnstraive Admisrtrative Capacty eqipped, and Buc6orig UntJ YES YES YES YES D 2. Project Coordfauabon and D2 a Projct Coordntion Project Coordiution Unit fuly staffed, Mamgement Unit equupped4 id fianctioning YES YES YES YES D2 lb Techical and Fnancal Annual audits conducted Audits I I I D2 e Prourement Agency Servie from a procurement agency YES YES YES HONDURAS Annex I ENVIRONMENTAL DEVELOPMENT PROJECT Appendix 1 Monitoring and Reporting P 4 of 6 Project Perfomsce and Impact Indicators Page Quarter:_ 2000 2001 c.np..mt Subvpom.t Atvtties Tasks Orginal RevLsed Actual Onpw Revised Actual Ognal Revised Actual C _________________ Subce___nt___________ Target Taget _ Taget Target Ta aet Target _Tre T_ A. Enviroinental Panning A I Environmental and Land A I a Environmental Panning Environmental Profile updated and and Legislation Use Plannng published Envuonrunental Action Plan updated and published ____ ____ Environmental Investment Progr mtm updated and pubbshed _ Monitonng and evahation systm YES YES YES designed atd functioning____________ A I b Natural Resources Harnonized sectoral polcies published A I c Land Use Plannig Land Use Plnning Unit established and YES YES YES operattg S Land Use Plannig Strategy prepared and publshed ____ ____ ____ Base environnental maps prepared/updated and publshed A-l d Studies Biodiversity, Biodiversity study completed and Solid waste and publshed Economic incentives Sold waste study completed and published__ _ _ _ _ _ _ ___ _ _ __ _ _ _ Economic inentives study completed and pubhished_ _ _ _ A 2 National Environmental A 2 a System Design SINIA designed and functionuig Informabon System Development and Administration YES YES YES A 2 b National Environmental Computer, commiunications hrdwae Information System and software purchased and instaled in Equipment the participating agees_ A 2 c. Geographic Information GIS designed and functioning System YES YES YES A 2 d Documentabon Cater DC established and fundioning YES YES YES A.3 Legal nd Regulatory A 3 a Harmonization of Laws Environmental legislation infornation Framework and Regulabions system designed and functioning YES YES YES Update and pubbsh sumrnmay of laws and regulatons _ Worshops organized for the ha _otzto of eivironmrental leslation _ General infomfiation seminars organized HONDURAS AnnexI ENVIRONMENTAL DEVELOPMENT PROJECT Appendix 1 Monitoiing and Reporting Project Perfonnace and Impact Indicators Page 5 of 6 Quarter:_ it" 2000 2001 Ongnal Revised Actual Orginal Revised Actual Origunl Revised Actual Componet Sabcompamat Actvitdes Task, Tuaget Target Tart Target Target Target A 3 b Norms nd Technical Methodology for the adoption of StAnduds environmental norms and techmcal standuds approved A 3 c Legal Enforcement PA and FA fuly staffed, equipped, and YES YES ____ ___ ____ ___ ____ ___ fuinctionuigY S A.3 d Legal Traimng and Legal professionals btrned mn Techcal AssLstance environmental legislation and regulabonsm A 4 Training and Publc A 4 a Environmental Trnung Number of scholarslups awarded Awareness and Publc Awareness Program Environmental pubbc awueness packages 4 B Environmental Quabty B I. National System of B I a Equipment for Particpating agencies fully equipped ad Assessment Environmental tmnpact DECA/SEDA, functioning Assessment DMHtSRN, DIGEPESCA/SRN, YES YES YES COHDEFOR, DGAMtSSP, and CESCCO/SSP tn B I b Traurtng and Technical Scholarships for overseas short tranng Assistance for programs awarded DECAtSEDA, DMHtSRN, DIGEPESCAtSRN, DRHtSRN, COHDEFOR, DGAMtSSP, CESCCOtSSP, and other agences Trarung senua on EA methodology 2 organized2 Tra=iing manuals on EA] methodology 2 produced2 EIA Congress convened B 2 Pilot Project for B 2 a Foresty Sector got environmental assessment concluded Environmental Impact Assessment and Auditing Pilot environmental audit concluded B 2 b Agro-industry Sector Pilot environmental assessment concluded Pilot environmental audit concluded B 2 c Mining Sector Pilot environmental assessment concludedl HONDURAS Annex I ENVIRONMENTAL DEVELOPMENT PROJECT Appendix 1 Monitoring and Reporting Project Perfonnace and Impact Indicators Page 6 of 6 Quarter:_ 1995 2000 2001 C__o.eut Sukerinpsuent ActIitIes Ta It OnEtnal Revised Acua Onginal Revtsed Actual Ongnal Revised Actua __________p ______ ________________Su' __________t____A_____ _______s____Tasks ________ Target Target Target Taget Target Trget Not envirotmettal audit concluded B 2 d Energy Sector PFlot environimenl assessment concluded Pilot environmental audit concluded C Local Government C I Technical Assistance for C I a Catacaimas. Olanchito, Municipal environmental profiles prepared Envrronmental Municipal Environmentd Santa Ross de Copani Management Management and Santa Birbar Regions Municipal envitronmental action pls prepared _ Pubhc partctpation serunars orgaruzed 6 Environmental tramung programs for women orgaruzed C 2 Environmental C 2 a Municipal nd Pre-investinent studies conducted Investments Conmunity Environmental Investments Projects funded and completed __ C 2 b Micro-enterpnse Line of Pre-ivestment studies conducted 0' Credit for Environmental Investments Percent ofcredit line allocated C 2 c Establishment of the Enviommental Unit established nd Environmental Unit at functioning YES YES YES FHIS Scholarships for oveasea short training progrums awarded Supervisors and mspectom trined in EIA methodology EtA senunats for executing agencies C 2d Evaluation of the Projects evaluated Environmental Investment D Aditnistution and D I Technical Assistance to DLa. Strngtheing SEDAs Adtinistmtive Unit fuly staffed, Project Coordination SEDAs Administistive Administnative CapctY eqipped and functioning Unit YES YES YES D,2. Project Coordination and D 2 a Project Cooriation Project Coordtion Unit fully staffed, Management Unit equipped, nd functioning YES YES YES D2b Technical and Fuacl Annual audits conducted I Audits__ _ _ _ _ _ _ _ _ _ D 2.c Procurement Agency Services from a procurement aen_cy re___ed HONDURAS Annex I ENVIRONMENTAL DEVELOPMENT PROJECr Appendix 2a Monitorlng and Reporting Quar-terly Financial Report: Budget Page 1 of 2 Quarter:_ (USS 'OOO) Totals Including Contingencies _______________________________________________________ l9" 5 189 6 19 7 8996 Budge Outey Ex 'ture Budge ouuic Es B I 7irees Expewitut- Budge ey-mE Fr.c_Rt Cuatnubt On Revised Actual Actuai Cutistiulative Orgml Revsd Acta Actual Cuzueclativu Resed Actual ActulCunuttnlatv UFsFuli A. Eu _irammu Phuhg and L* hila._ 1. Ewe _asmam _d Laud U.. Pim'ng Enwosunetl 856g 1 123 92 NaluaiResosecePlanie 181 ___34 2 217 12 0 LAnd Usa eitD 573 182 865 ' 544 Studesc 15.41 83 2 Sub8WEa*__la.d Lad ULtPh.._g 1610 481 7 3149 _9 1 6 2 N _&mnW E _Airamal 1mlla. Systm System Deing Depvelopennt ad Adietustniation 23 5 121 3 854 829 SlNtA inE ain tppit t 247 88 M 88 _ 68 5 Geograptar Infomeatio System _ __6 5 116 1 ____It ___ ___ Docusnenttimon Centr 172 60 Subtah Nafian E hivfr8a la1naMIla. Syata 48 . 233 6 296 161 5 3. Legal ad R.gukaey Frnmerk Hanm iaimon of Lams ad Regulaisons 64 7 890 13 6 34 Nons ad Tectwa Standairds 637 _6_ _ Leo tforrerneit 75 6 49 5 50 61 51 7 Lepi TrtuWng and Tehucad Assistance I0U6 872S6:_ Sbla t lA mds iR uwyq Fr n 1402 310 7 1514 . 55 1 4. Tritung and Pubhc Aweess 0 9 O739 n! 711 f 803 5ub8 EuA11r__til P i_g anid iA hl 3503 1,099 9 . 8334 455 _ B. Eramintal Qsmlt Ast saut_ 1. N _lawaS7 Sysam af Eln_Ia.dal ltm*a Aastmamt_t Sappoat fo DECA 1 1200 8 2 84 Support for DMH 25 5 Support for DIGEPESCA _ __36 3 _ _ Support fo DRH 25 5 Support for COHDEFOR 25 5 Suppoat for DGAM ____25 5 Support for CESCCO 2152 60 6 1 Trsnuig ad Temucal Assaistance 25218 3337 264 _ Subftab NallamI 5ysft dt Euekaaimtal tImpact Aa.sessm.ut 726 3 _ _ __ 347 9 _2,78 5 2 Plot ProJets fo Envirotanental impct_ A-seunien and Audit 1___ 4 41______ ___ 266 1 ________ 192 6 Sabtata E dr i Q_ty As tt rmtnt _1 i 84 _ 614 0 4712 C. Lard Gww _mat Ewfraneta Mm_agta._t I Tecluual Astsbnce fo Mwucia M _geas 9981 _ 3916 328 6 2332 2. E.,fron"al nIuveua. Miuntcpal ad Cottulty Envtrotesestal Investnerts 623 8 2,364 I 290 Micron ste Ls t of Cedit for Envirountrsi_al invesben 4651 Estabhisxnt of te Enviroauesital Umt at FHIS 245 2 2813 __ 661 Evaluation ofthes Envirn tanll Investisens 12 7 __ 95 31 44 4 S _btab Esisveine.bl tweemassits 1.3499 _ _ 2,7409 ' _ 10a4 SubttWl L.mi G.wrnaat Ewlr _tsl Massaguss _t 1,4496 3,132 5 4690 2337 D. Adinbbalwas _d PrjCt C ea,dh_ tla_ I SEDAS Adieutattv Unic 15 4 8 7 89 9 1 2 Project Coordination and Managett 244 _ _ 240 7 219 4 1789 SubltW A _mtrh _ - id Prjt Cerdtla_ 2598 _ 2494 2283 1 880 TW PROJECT COSTS j 2,059 71 5,392: 2,1 i4481 1,34718 _ _ HONDURAS Annexl I ENVIRONMENTAL DEVELOPMENT PROJECF Appendix 2a Monitoring and Reporting Quarterly Financial Report: Budget Page 2 of 2 Quarter:__ (USS '000) Totals Including Contingencies _ I 1 2000eee 2001 Bud et Ourmv pdittres Budet uwed Expediaure BudeQa Expeditures Proolt Coponents OuW Rnvised Actual Actual Cummulanive Oris Revised Actual Actual Cunrunulative Onguu Revised Actual Actual Curmrnulative A. Enaiensertal PbnnIng and Lelsistion 1. Envirmseatal and Land Ut Pl.anIng Environmetal Piannng 1152 83 1 213 Natural Resources Planning L,and Use Planning 903 _ 284 Studies - _ Subtal Envirosnentald Land Ut P s 205 5 III 5 213 2. Nationa Evlrumantal Informatimn Sysleni System Design. Developwnent and Adrntnistnion 848 67 7 17.1 SiNiA Equprment 34 3 Gcographic Infomation System 2 6 _ 2 7 Docuienab on Center_ Subtatl Naiodl Enw nanetajl nfratil Systm 1217 _ 70 4 _71 3. Legal and Reglatry Frarkn___ __ Hnnonrmozbon of Laws and Regulations 03 Norm and Tehnca Stndrd&s _ __, Legal Tniwng and Techncal Assistance Subtotal Legal and Regulatory Framewowk 53 __ 4 ___ _ __ _____ 27 6 ___ _____ _ 4 Traini and Publc Awaeness 52 3 = 52 4 = = =_O0 Subtotal Envrnntsntal Pbaning nd Legislation 4325 288 3 65 9 B. EnvIrsomental Qbafy Assessment 1. Natioa Systm of Envlrtnattal Impact Assessment Support for DECA 8 6 _ 88 _ 5 0 Support for DMH1 Support for DIGEPESCA Support for DRH_ Support for COFIDEFOR Suppoit for DGAM __ _ Support for CESCCO 6 3 63_ _ 6 Train and Techuncal Assistance 57 _____ Subtol NtIona Sydem of Envronmetal Impat Assesment 72 7 15.1 _6_ 8 2 Pilot Projects for Environmental Impact Assesunent and Audit 115.8 Subtal Evloetol Qtaity Astsesmnt 188,51 151 8t C. Locl ororaet Envirometa M"apnaeen I. TechFnical Asstance for Municipal Manaement 51 1 2. EnvItomena Investments Municipal and Community Environmental Investments Micro-enterprise Line of Credit for Environuental Investrnents Establishment of tihe Environmnental Unit at FHIS __ Evaluation of the Environmental Investrnents __ Subtol E n_ l Inve_sm ent Subtal Local Govermet nt Envirnmenta M ge t 511 _ _ D. Admllt_a_o and Prout CoordInat _on I SEDA's Adunistrative Unit 93 9. 5 4 8 2 Project Coorduintion and Managenent 181 7 183:3 96 Sub5o_ Adst__ts n ad Pr*ect Ctmrdiaton 1910_ 192.8 1008 Total PROJECT COSTS 863 i _I___ 4962 1753____ 753 liONDURAS Annex I ENVIRONMENTAL DEVELOPMENT PROJECr Appendix 2b Monitoring and Reporting Quarterly Financial Report: Disbursement Page 1 of I Quarter:_ (USS '000) Planned Actual Planned Actual Disbursed During Quarter Disbursed During Quarter Cummulative Disbursement Cummulantve Disbursement IDA Fiscal Quarter Amount % of Total Amount % of Total Amount % of Total Amount % of Total Year Ending ___ _ _ _ _ _ _ _ _ _ ___ _ _ _ _ __ _ _ _ _ _ 1996 Septemnber 95 921 9 _ 921 9 December 95 921 9 1,842 17 March 96 1,199 1 _ _ 3,041 28 _ June 96 1,199 I 1 4,240 39 1997 September 96 1,199 1 _ 5 439 50 December96 1,199 11 6,638 62 March 97 ____ 4 7,116 66 June97 479 4 7,595 70 __ _ 1998 September 97 _ 479 4 8,073 75 December 97 479 4 8,552 79 March 98 292 _ 3 8,844 82 . June 98 292 3 _ 9,136 85 1999 September 98 292 3 9,428 87 December 98 292 3 9,721 90 _ _ _. uf March 99 165 2 99;886 92 _ June 99 165 2 10,051 93 _ 2000 September 99 165 2 10,216 95 __ _ _ December 99 165 2 10,382 96 March 00 75 1 10,457 97 June 00 75 1 10.532 98 8 2001 September 00 75 1 10,607 98 I December00 75 1 10,683 99 _____ March 01 48 0 10,731 100 june01 48 0 10,778 100 HONDURAS Annex I ENVIRONMENTAL DEVELOPMENT PROJECT Appendix 3 Monitoring and Reporting Page 1 of 5 Status of Legal Covenants Agreement|Section Covenant Present Original Revised Description of covenant Comments type status fulfillment fulfillment date date Credit 3.01 5 The Borrower declares its commitment to the objectives of the Project as set forth in Schedule 2 to this Agreement, and, to this end: (a) shall carry out: (i) Parts A. I (a) and (d), A.2, A.3 (a) and (b), A.4, B, C. I and D of the Project, through SEDA; (ii) Part A. I (b) of the Project, through SNR; (iii) Part A. I (c) of the Project, through SECPLAN; (iv) Part A. 3(c) through PGR and FGR, and (v) Part A.3 (d) of the Project through SEDA with the assistance of the Supreme Court's Judicial School, pursuant to the Training Agreement; and (b) shall cause FIS to carry out Parts C.2, C.3, C.4 and C.5 of the Project, all with due diligence and efficiency and in conformity with appropriate engineering, financial, administrative, technical and environmental practices and the provisions of the Operational Manual, and shall provide, promptly as needed, the funds, facilities, services and other resources required for such Parts of the ______ ____ ~~~~~~~~~~~~~~~Project. 3.02(a) S July 1, 1995 The Borrower shall enter into an agreement with FHIS, satisfactory to the o Association, providing, inter alia, for: (i) the provision to FHIS of the funds, facilities, services and other resources required to enable FHIS to carry out Parts C.2, C.3, C.4 and C.5 of the Project, including the transfer of the proceeds of the Credit allocated to such Parts of the Project; (ii) the obligation of FHIS to carry out such Parts of the Project in accordance with the terms and conditions set forth in this Agreement, including the obligation: (A) to maintain records and accounts pursuant to the provisions of Section 4.01 of this Agreement, (B) the obligation of FIRS to mantain and operate a unit, within FIGS, with staff satisfactory to the Association, responsible for carrying out Part C. 5 of the Project, and (C) to carry out the obligations set forth in Sections 9.03. 9.04, 9.05, 9.06 and 9.07 of the General Conditions (relating to insurance, use of goods and services, plans and schedules, records and reports and maintenace, respectively), in respect of Parts C.2, C.3, C.4 and C.5 of the Project; (iii) environmental review criteria and procedures for selection and evaluation of investments and ventures under Parts C.2 (b) and C.4 of the Project; and (iv) the role of _____ ._______ .______ __________ SEDA in the approval and monitoring of such investments and ventures. 3.02(b) 5 The Borrower shall exercise its rights and comply with its obligations under the FHIS Agreement in such manner as to protect the interest of the Borrower and the Association, and to accomplish the purposes of the Credit, and except as the Association shall otherwise agree, the Borrower shall not amend, abrogate, waive or fail to enforce the FHIS Agreement or any provision thereof HONDURAS Annex I ENVIRONMENTAL DEVELOPMENT PROJECT Appendix 3 Monitoring and Reporting Page 2 of 5 Status of Legal Covenants Agreement Section Covenant Present Original 1 Revised Description of covenant f Comments type status fulfillment fulfillment date date 3.03 9 Without limitation to the provisions of Section 3.01 of the Agreement, the Borrower shall furnish to the Association for its review and approval, not later than November 30 of each year until the completion of the Project, beginning in 1995, a drafl of the Project operating plan and budget, in accordance with the Budget Letter, for the succeeding calendar year. 3.04 5 Except as the Association shall otherwise agree, procurement of the goods, works and consultants' services required for the Project and to be financed out of the proceeds of the Credit shall be governed by the provisions of Schedule 3 to this Agreement. 3.05 9 The Borrower shall furnish to the Association, not later than April 30, July 31, October 31 and January 31 during the first year of Project execution, and not later than July 31 and January 31 thereafter until the completion of the Project, a report of such scope and detail as the Association may reasonably request on the implementation of the Project during the three or six calendar months, as the case may be, preceding the month in which o the report shall be furnished to the Association. 3.06(a) 9 The Borrower shall: (i) undertake annual reviews of Project implementation with the Association, not later than March 31 of each year during Project implementation, beginning in 1996; and (ii) undertake an in depth Project implementation mid-term review with the Association, not later than September 30, 1998. 3.06(b) 9 As part of each such review, the Association may require that the Borrower prepare an action plan, satisfactory to the Association, to make adjustments in Project implementation. The Borrower shall furnish such action plan to the Association no later than one month after the conclusion of such review and shall thereafter carry out such action plan in accordance with its terms. 3.07(a) 5 July 3, 1995 The Borrower shall cause SEDA, SECPLAN and SRN to enter, not later than July 3, 1995, into an administrative arrangement, satisfactory to the Association, to determine their functions and responsibilities with respect to Project implementation, with special emphasis to Part A. I of the Project. 3.07(b) 5 October 1, The Borrower shall cause SEDA, PGR and FGR to enter, not later than 1995 October 1, 1995, into an administrative arrangement, satisfactory to the Association, to determine the functions and responsibilities of PGR and FGR with respect to Project implementation, with special ernphasis on the enforcement of environmental laws and regulations. 3.08(a) 5 October 1, The Borrower shall enter, not later than October 1, 1995, into an 1995 agreement, satisfactory to the Association, with the Universidad Nacional HONDURAS Annex I ENVIRONMENTAL DEVELOPMENT PROJECT Appendix 3 Monitoring and Reporting Page 3 of 5 Status of Legal Covenants Agreement|Section[Covenant Present Original T Revised Description of covenant Comments type status fulfillment fulfillment date date Aut6noma de Honduras, acting through the Instituto, regarding: (i) the establishment of a computerized information system in the Instituto; (ii) the procedures and principles governing the exchange of information stored in the Instituto's computerized database; (iii) the provision to the Instituto of the funds, facilities, services and other resources required to enable the Instituto to carrv out the activity under (i) above; (iv) the operation and maintenance of the computerized system referred to in (i) above, and (v) the obligation of the Instituto to take out and maintain with responsible insurers, or to make other provision satisfactory to the Association for, insurance of the equipment of such computerized information system against such risks and in such amounts as shall be consistent with appropnate practice. l 3.08(b) 5 The Borrower shall exercise its rights and complv with its obligations under the Instituto Agreement in such manner as to protect the interests of the Borrower and the Association, and to accomplish the purposes of the Credit, and except as the Association shall otherwise agree, the Borrower shall not amend, abrogate, waive or fail to enforce the Instituto Agreement or any provision thereof 3.09(a) 5 July 3, 1995 The Borrower shall enter, not later than July 3, 1995, into an agreement, satisfactory to the Association, with each of the Selected Municipalities, regarding their participation in the implementation of Part C I of the Project. 3.09(b) 5 The Borrower shall exercise its rights and comply with its obligations under the agreements referred to in (a) above, in such manner as to protect the interests of the Borrower and the Association, and to accomplish the purposes of the Credit, and except as the Association shall otherwvise agree, the Borrower shall not amend, abrogate, waive or fail to enforce said . ________ agreements or any provision thereof 3.1 0(a) 5 The Borrower shall maintain and operate until the completion of the Project, within SEDA, a unit (PCU) with functions and responsibilities satisfactory to the Association which shall include, inter alia: (i) coordination of the implementation of the Project; (ii) monitoring and evaluation of the Project; (iii) preparation of (A) the operating plans and budgets referred to in Section 3.03 of this Agreement, and (B) the reports referred to in Section 3.05 of this Agreement, (iv) procurement of goods under Parts A, B, C. I and D of the Project; and (vi) maintenance of the records and separate accounts referred to in Section 4.01 (a) of this l __________________________ _______IAgreement HONDURAS Annex I ENVIRONMENTAL DEVELOPMENT PROJECT Appendix 3 Monitoring and Reporting Page 4 of 5 Status of Legal Covenants reement Section Covenant Present Original Revised Description of covenant Comments ll type status fulfillment fuillet date date l 3.1 0(b) 5 The Borrower shall ensure that PCU is at all times staffed with an adequate number of full-time professionals with qualifications and responsibilities satisfactory to the Association, and shall be assisted by clerical staff in adequate numbers. 3.11 (a) 5 The Borrower shall maintain and operate until the completion of the Project, within SECPLAN, a land use planning unit (UOT) with functions and responsibilities satisfactory to the Association which shall include, inter alia: (i) updating of enviromental baseline maps and (ii) preparation of land use strategies. 3.1 I(b) 5 The Borrower shall ensure that UOT is at all times staffed with an adequate number of professionals with qualifications and responsibilities satisfactory to the Association, assisted by clerical staff in adequate numbers. 3.12(a) 13 The Borrower shall prepare and furnish to the Association not later than six months after the Closing Date or such later date as may be agreed for this purpose between the Borrower and the Association, a plan, of suchn scope and in such detail as the Association shall reasonably request, for the future operation of the Project. 3.12(b) 13 The Borrower shall afford the Association a reasonable opportunity to exchange views with the Borrower on said plan. 3.12(c) 13 The Borrower shall thereafter, carry out said plan with due diligence and efficiency and in accordance with appropriate practices, taking into account the Association's comments thereon. 4.01(a) I The Borrower shall maintain or cause to be maintained records and separate accounts adequate to reflect in accordance with sound accounting practices the operations, resources and expenditures of (i) the departments or agencies of the Borrower responsible for carrying out Parts A, B, C. I and D of the Project with respect to such Parts of the Project; and (ii) FFHS with respect to Parts C.2, C.3, C.4 and C.5 of the Project. 4.01(b) 1 The Borrower shall: (i) have the records and accounts referred to in paragraph (a) of this Section including those for the Special Account for each fiscal year audited, in accordance with appropriate auditing principles consistently applied, by independent auditors acceptable to the Association; (ii) furnish to the Association, as soon as available, but in any case not later than six months after the end of each such year, a certified copy of the report of such audit by said auditors, of such scope and in such detail as the Association shall have reasonably requested; and (iii) furnish .___________________ to the Association such other information concerning said records, accounts HONDURAS Annex I ENVIRONMENTAL DEVELOPMENT PROJECT Appendix 3 Monitoring and Reporting Page 5 of S Status of Legal Covenants Agreement Section Covenant Present [ Original Revised Description of covenant Comments type status fulfillment fulfillment _ pe date date and the audit thereof as the Association shall from time to time reasonably request. 4.01(c) 1 For all expenditures with respect to which withdrawals from the Credit Account were made on the basis of statements of expenditure, the Borrower shall: (i) maintain or cause to be maintained, in accordance with paragraph (a) of this Section, records and accounts reflecting such expenditures; (ii) retain, until at least one year after the Association has received the audit report for the fiscal year in which the last withdrawal from the Credit Account or payment out of the Special Account was made, all records (contracts, orders, invoices, bills, receipts and other documents) evidencing such expenditures, (iii) enable the Association's representatives to examine such records; and (iv) ensure that such records and accounts are included in the annual audit referred to in paragraph (b) of this Section and that the report of such audit contains a separate opinion by said auditors as to whether the statements of expenditure submitted during such fiscal year, together with the procedures and internal controls involved in their > ______ ________ _______ __________ preparation, can be relied upon to support the related withdrawals. Covenant types: Status: I = Accounts and audits C = covenant complied with 2 = Financial performance/revenue generation from beneficiaries CD = complied with after delay 3 = Flow and utilization of project funds NC = not complied with 4 = Counterpart funding SOON = compliance expected in reasonably short time 5 = Management aspects of the project or executing agency CP = complied with partially 6 = Environmental covenants NYD = not yet due 7 = Involuntary resettlement 8 = Indigenous peoples 9 = Monitoring, review, and reporting 10 = Project implementation not covered by categories 1-9 11 = Sectoral or cross-sectoral budgetary or other resource allocation 12 = Sectoral or cross-sectoral policy/regulatory/institutional actions 13 = Other 105 Annex J Page 1 of 2 HONDURAS ENVIRONMENTAL DEVELOPMENT PROJECT SUPERVISION PLAN 1. The proposed operation is relatively complex and the executing agency relatively new and with limited experience with IDA operations in the agricultural sector. Therefore, it will require close supervision, especially for the first two years of the project. 2. The supervision calendar for the first two years of the project is as follows. A project launch workshop will be held immediately after effectiveness. It will include the participation from senior staff from the participating agencies. Annual review workshops will be held to assist the participating agencies to develop a common understanding of the project's overall objectives, operational procedures, coordination needs and potential implementation problems. During the first two years, annual task manager input, including supervision missions and work at headquarters, is estimated to be 35 staff-weeks (SW) and the input of other IDA staff and/or consultants is estimated to be 52 SW. From the third year on, annual task manager input is estimated to be 15 SW per year, and the input from other IDA staff and/or consultants is estimated to be 12 SW. What follows is a list of supervision missions and annual reviews for the first two years of the project including the number of SW estimated per mission. 3. Proiect launch workshop. The project launch workshop will take place in the early part of the 3rd quarter of 1995' and will require 15 SW. It will focus on project concept and implementation, procurement and disbursement procedures, the 1995 Annual Operations Plans and Budget for each participating agency, the terms of reference for the consultants to be hired and the studies to be contracted, and potential start-up problems. The mission participants will be: (a) task manager (planning and budgeting); (b) environmental planning specialist; (c) land use planning specialist; (d) environmental law specialist; (e) procurement specialist; and (f) disbursement specialist 4. First supervision mission. The first supervision mission will take place at the end of the 3rd quarter of 1995 and will require eight SW. It will review project start-up activities, particularly procurement and disbursement procedures, and the budget and work program for 1995. It will also discuss the preparation of the 1996 Annual Operations Plan and Budget. The mission participants will be: (a) task manager (planning and budgeting); (b) environmental planning specialist; and (c) procurement specialist. 5. Second supervision mission and first Annual Review. The second supervision mission will take place the 1st quarter of 1996 and will require 17 SW. This will be a full supervision mission and the first Annual review. It will focus on project start-up and possible initial implementation problems and will evaluate the implementation of the 1995 Annual Operations Plan and Budget. The mission participants will be: (a) task manager (planning and budgeting); (b) environmental planning specialist; (c) land use planning specialist; (d) environmental law specialist; (e) environmental impact assessment specialist; and (f) municipal investments specialist. 6. Third supervision mission. The third supervision mission will take place the 3rd quarter of 1996 and will require 19 SW. It will focus on a review of the implementation of the work program I Calendar year: January I - December 31 106 Annex J Page 2 of 2 and the budget for 1996, and on project implementation issues, such as procurement and disbursement. It will also discuss the preparation of the 1997 Annual Operations Plan and Budget. The mission participants will be: (a) task manager (planning and budgeting); (b) environmental planning specialist; (c) land use planning specialist; (d) environmental law specialist; (e) information systems specialist; and (f) procurement specialist. 7. Fourth supervision mission. The fourth supervision mission will take place the Ist quarter of 1997 and will require 15 SW. This will be a full supervision mission and the Second Annual review. It will focus on the project components under implementation and will evaluate the implementation of the 1996 Annual Operations Plan and Budget. The mission participants will be: (a) task manager (planning and budgeting); (b) environmental planning specialist; (c) information systems specialist, (d) environmental law specialist; (e) environmental impact assessment specialist; and (f) municipal investments specialist. 8. Fifth supervision mission. The fifth supervision mission will take place the 3rd quarter of 1997 and will require 13 SW. It will focus on the project components under implementation, particularly the environmental quality assessment component, and the municipal environmental management and investment component. At this time the the project implementation requirements will be evaluated and adjustments to the PCU staffing and functions will be discussed. It will also discuss the preparation of the 1998 Annual Operations Plan and Budget. The mission participants will be: (a) task manager (planning and budgeting); (b) environmental impact assessment specialist; (c) information systems specialist; and (d) municipal investments specialist. 9. Based on the above plan, IDA staff requirements for project supervision for the first tvo years of the project will be: TASKS Staff-Weeks Planning, programning and budgeting 35 Procurement and disbursement 5 Environmental and land use planning 15 Environmental legislation 8 Environmental impact assessment 8 Municipal environmental investments 8 Information systems 8 TOTAL 87 10. Annual reviews wVill take place by March 31 each year and the mid-terrn review will take place by September 30, 1998. Both the annual reviews and the mid-term review will include a detailed review of the project against the agreed project performnance and impact indicators and all legal covenants. The appropriateness of staff levels and financial support from the GOH, and the project coordination requirements will also be reviewed. Accordingly, the annual and mid-term reviews will uffer the opportunity to modify project implementation as appropriate in light of actual implementation experience. 107 ADnICX I. Page I of 2 SECRETARIA DE - PLANIFICAC/ON Ls2ia:A4:.5[AgL , 5' COOPDINACION YPRESUPUES TO SEPLSECPLAN 1 de Jullo de 1994 Uficic No DVM-2101-94 Doctor DAVID DE FlRRANTI Jefet de Divisi6jn de C)peraciones para MNxicos y Medio Ambiente Departamenito Z-?anco Mundial Regi6n America Latina y El Caribe. Estimado Seilor Ferranti La Secretaria de Flanificaci&n, Coordinaci&n y PresuPuesto SECFLAN ha analizadc el Proyecto "DESARROLLC) AMBIENTAL DE HONDURAS" que ejecuta is Secretaria del Ambiente SEDA, en el marco de la Coopersci6n Financiers con el Banco Mundial. Considerando que loc objetivocs de este proyecto se orienta a fortalecer la capacidatd operativa de las instituciones nacionales con competencia en is aplicaciln de la Ley General del Ambiente, armonizar el marco legal vigente en materia ambiental, a establecer y hacer operativos los prlnci pales mecanismos de coordinaci6n, focmulaci6n, ampliacitn segulmiientos, control y evaluaci6n de la gesti6n y calidad ambiental, aspecto que pars nuestro Gobierno constitUYen la base Para alcansra el desarrollo sostenible, principios eztrat,gicos que hemos adoptsdo e impulsamos con criterio prioritario. Con agrado me permito oficialmente informarle que el Gabinete Econ&mlco en Ses t3 DEPARTMENT CAPITALS EOCHOLUTECA. -18M- 1-'t l8-- (3CHOLUTEXICA . N ATION AL CAPITAL MEXICC88 j8EUZE ' ~NICARAGUA ._ .N DEPARTMENT BOUNDARIES GUATEMALA7 HONDURAS I R O - -4= /*Y.._ x-{ 1n-. Sn' ~ ' ~ ' INTERNATIONAL BOUNDARIES =or EL n.naonanan SALVADo ONICARAGJA 0 25 50 75 100 Kiomkers on ,nfonmopoo ns O i l ] I-oh. I I I I ,ny on dse psd of 0 ~ ~ ~ ~ ~ ~ ~~~~~1WI IIIITh. Wotld Sank Orop, U' o COSTA RICA PANAMA 0 25 50 75 1 00 Miles alsvt-IfId 69.r M.4 of oy rI-Ar.Y 0 w~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~0 84 or acceptooce of such O 9W 86 82 COLOMBIA 86 84 .