Document of The World Bank FOR OFFICIAL USEONLY ReportNo: 33759-SV - PROJECTAPPRAISALDOCUMENT ONA PROPOSEDGRANTFROMTHE GLOBALENVIRONMENTFACILITY TRUST FUND INTHEAMOUNTOFUS$5.0MILLION TO THE REPUBLICOFELSALVADOR FORA PROTECTEDAREAS CONSOLIDATIONAND ADMINISTRATION PROJECT October27,2005 EnvironmentallyandSocially SustainableDevelopment CentralAmerica CountryManagementUnit LatinAmerica andthe CaribbeanRegion This document has a restricted distribution and may be used by recipients only in the performanceof their official duties. Its contents may not otherwise be disclosedwithout World Bankauthorization. CURRENCYEQUIVALENTS (Exchange Rate Effective M a y 31,2005) CurrencyUnit = US$ FISCALYEAR January 1 - December31 ABBREVIATIONS AND ACRONYMS ADESCO Community Development Association (Asociacidndel Desarrollo Comunal) AECI Spanish Agency for International Cooperation (Agencia Espaliola de Cooperacidn Znternacional) BASIM Barrade Santiago-El Imposible CAS Country Assistance Strategy CBD Convention on BiologicalDiversity CEL LempaRiver HydroelectricCommission (ComisidnEjecutiva Hidroele'ctrica del Rio Lempa) CENDEPESCA Center for the Development of Fishingand Aquaculture (Centro de Desarrollo para la Pesca y la Acuicultura) CEPRODE Center for Disaster Protection (Centro de Proteccidnpara Desastres) CESSA ElSalvador CementCompany (Cement0de El Salvador) CNR National Registry Center (CentroNacional de Registros) COAL LocalAdvisory Council (ConsejoAsesor Local) CONCULTURA National Council for Culture andArt (ConsejoNacional para la Cultura y el Arte) CORSATUR Tourism Corporationof ElSalvador CSJ Supreme Court of Justice (Corte Supremade Justicia) DGPN General Directorate for Natural Patrimony (Direccidn General de Patrimonio Natural) (also Department of NaturalResources) DO Development Objective EA Environmental Analysis EDD Disbursement Statements (Estadosde Desembolsos) EMP Environmental Management Plan EU European Union FMRs FinancialMonitoring Reports FONASA National Environmental Services Fund(FondoNacional de ServiciosAmbientales) FONAVIPO National Popular HousingFund(FondoNacional para la ViviendaPopular) FUSADES Salvadoran Foundation for Economic Development (Fundacidn Salvadoreliapara el Desarrollo Econdmico) GEF Global EnvironmentalFacility GEO Global Environmental Objective GOES Government of El Salvador (Gobiemo de El Salvador) IBRD InternationalBank for Reconstruction and Development IDB Inter-American Development Bank IFAC InternationalFederation of Accountants IGCN National Geographic and Cadastre Institute (Znstituto Geogrdfico y Catastro Nacional) ILO InternationalLabor Organization ILP Liberty and ProgressInstitute (ZnstitutoLibertad y Progreso) IP ImplementationProgress IPDP Indigenous Peoples Development Plan ISTA Salvadoran Institute for Agrarian Transformation (Znstituto SaEvadoreRo de FOROFFICIAL USEONLY Transjormacidn Agraria) ISTU Salvadoran Institute of Tourism IUCN IntemationalUnion for Conservation of Nature and Natural Resources LAC Latin America and the Caribbean Region LAPI LandAdministration Project I(Phase I) LAPI1 Land Administration Project II(Phase 11) M&E Monitoringand Evaluation MAG Ministry of Agriculture and Livestock (Ministerio de Agricultura y Ganaderia) MARN Ministry of Environment and Natural Resources (Ministerio de Medio Ambiente y Recursos Naturales) M B C Mesoamerican Biological Corridor MINTUR Ministry of Tourism MTR MidtermReview NBS National Biodiversity Strategy MP Management Plan NGO Nongovemmentalorganization NPA Natural Protected Area NPAS Natural ProtectedAreas System (Sistemade Areas Naturales Protegidas) OP Operational Program OPAMSS San Salvador Metropolitan Area Planning Office (Oficina de Planijlcacidn del Area Metropolitana de Sun Salvador) PA ProtectedArea PACAP Protected Areas Consolidation and Administration Project PAES Programto Support the NationalEnvironmental Management inElSalvador PANAVIS National Parks and Wildlife Service PCU Project Coordination Unit PES Payment for Environmental Services PIP Project ImplementationPlan PMIS Project Management Information System PNODT Plan Nacional de Ordenamiento y Desarrollo Territorial SIL Specific InvestmentLoan SIRyC Property Registry and Cadastre Information System (Sistema Informbtico de Registro y Catasfro) SNET National Land Studies Service (ServicioNacional de Estiidios Territoriales) SOE Statement of Expenditures SP Strategic Priority STP Technical Secretariat of the Presidency (Secretaria Tkcnica de la Presidencia) TOR Terms of reference UACI Institutional Procurement and Contracting Unit (Unidad de Adquisiciones y Contrataciones Institucional, CNR) UAP Project Administration Unit, LAP I(Unidad Administradora de Proyecro) UCP Project CoordinationUnit, PACAP (Unidad de Coordinacidn del Proyecto) UCP-LAP I1 Project Coordination Unit, LAP I1(Unidad de Coordinacidn del Proyecto) UFI Institutional Financial Unit of the Ministry of Environment and Natural Resources (Unidad Financiera Institucional) UNDP UnitedNations Development Program UNEP UnitedNations Environmental Program UPP LAP I1Project Preparation Unit (Unidad de Preparacidn del Proyecto) USAID U.S. Agency for Intemational Development W B World Bank This document hasa restricteddistribution and may be used by recipients only in the performance of their official duties. I t s contents may not be otherwise disclosed (withoutWorld Bank authorization. Vice President: PamelaCox Country ManagedDirector: Jane Annitage Sector Director: John Redwood Sector Manager: Abel Mejia Task Team Leader: Ann J. Glaubermrederic de Dinechin ELSALVADOR ProtectedAreas ConsolidationandAdministrationProject CONTENTS Page A. STRATEGICCONTEXT ANDRATIONALE .................................................................. 1 1. Country and Sector Issues ................................................................................................... 1 2. Rationale for Bank Involvement.......................................................................................... 3 3. Higher-level Objectives to which the Project Contributes .................................................. 4 B PROJECTDESCRIPTION . .................................................................................................. 6 1. LendingInstrument.............................................................................................................. 6 2. Project Development Objective........................................................................................... 6 3. Project GlobalEnvironmental Objective andKey Indicators ............................................. 6 4. Project Components............................................................................................................. 7 5. Lessons Learned andReflected inthe Project Design......................................................... 8 6. Alternatives Consideredand Reasonsfor Rejection ........................................................... 9 C IMPLEMENTATION . ......................................................................................................... 10 1. PartnershipArrangements ................................................................................................. 10 2. Institutional and ImplementationArrangements .............................................................. 11 3. MonitoringandEvaluation of Outcomes/Results.............................................................. 12 4. Sustainability andReplicability ......................................................................................... 12 5. Critical Risks andPossible Controversial Aspects............................................................ 13 6. Loadcredit Conditions andCovenants............................................................................. 14 D APPRAISALSUMMARY . .................................................................................................. 14 1. Economic andFinancial Analyses................................................... ................................. 14 2. Technical............................................................................................................................ 15 3. Fiduciary............................................................................................................................ 17 4. Social ................................................................................................................................. 17 5. Environment ...................................................................................................................... 18 6. Safeguard Policies ............................................................................................................. 19 7. Policy Exceptions and Readiness...................................................................................... 20 Annex 1:Country and Sector or Program Background .......................................................... 21 Annex 2: Major RelatedProjectsFinancedby the Bank and/or other Agencies ..................29 Annex 3: Results Framework andMonitoring ......................................................................... 31 Annex 4: Detailed Project Description ...................................................................................... 38 Annex 5: Project Costs ................................................................................................................ 49 Annex 6: ImplementationArrangements .................................................................................. 50 Annex 7: FinancialManagementand DisbursementArrangements ...................................... 56 Annex 8: Procurement Arrangements ....................................................................................... 62 Annex 9: Economic and FinancialAnalysis .............................................................................. 67 Annex 1OA: SafeguardPolicyIssues .......................................................................................... 77 Annex 10B: SocialAssessmentExecutiveSummary ................................................................. 79 Annex 1OC: ProcessFramework for MitigatingPotentialLivelihoodImpacts .................... 89 Annex 11:Project Preparationand Supervision ...................................................................... 94 Annex 12: Documentsinthe Project File .................................................................................. 96 Annex 13: Statementof Loansand Credits ............................................................................... 97 Annex 14: Country at a Glance .................................................................................................. 98 Annex 15: Incremental CostAnalysis ...................................................................................... 100 Annex 16: Pilot Site Selection ................................................................................................... 108 Annex 17: Coordinationbetweenthe ElSalvador ProtectedAreas and Administration and ElSalvadorEnvironmentalServicesProjects ........................................................................ 113 Annex 18: Maps ......................................................................................................................... 116 IBRDELS 33858.333859.33868. 33869 LCSEN A. STRATEGIC CONTEXT AND RATIONALE 1. Country andSectorIssues 1. Biodiversity Significance. El Salvador supports a large diversity of species, comprising 1,477 vertebrate species (27 percent of which are threatened with extinction) of which 510 are birds (including 17 of the 23 species endemic to northem Central America), 140 reptiles and amphibians, and about 7,000 native plants (including more than 700 species of trees), and 800 species of butterflies-all in an area the size of Massachusetts. This high biodiversity' stemming from the country's unique setting-it is highly volcanic and isolated from Central America's Atlantic moist forests-persists even though El Salvador retainsjust 2 percent of its primary forest vegetation. 2. Threats to Biodiversity. The globally and regionally significant biodiversity sheltered within the Natural Protected Areas System (Sistema de Areas Naturales Protegidas, NPAS) is severely threatened. El Salvador-the most densely populated country in Latin America-struggles with land-related issues, as population pressures have resulted in numerous encroachments into protected areas. These encroachments result in significant habitat destruction and deterioration, through the conversion of forests, pollution, and overexploitation of natural resources, all of which stem in part from a lack of environmental awareness. Due to unchecked habitat destruction, it i s likely that some of the smaller protected areas comprising the NPAS no longer contain sufficient natural or near-natural habitats to warrant special protected status. 3. Conservation Efforts to Date. Notwithstanding the global, regional, and national significance of its biodiversity resources, El Salvador has the least amount of land and water area formally protected of all the countries in the Mesoamerican Biodiversity Hotspot (around 75,500 hectares [ha] or 4.6 percent of the national area).293The NPAS aims to protect these remaining areas, but struggles due to a variety of challenges, explained more thoroughly in Annex 1. The NPAS includes 118 protected areas totaling approximately 40,000 ha, as well as an additional 35,500 ha of mangrove4-all under the jurisdiction of the Ministry of Environment and Natural Resources (MAN).Despite the large number of protected areas (PAS),their average size isjust 850ha: and virtually no PAShave any managed buffer zone, comprising only the core area: Of these lands, only about 7,000 ha, or 0.3 percent, are legally declared and demarcated, and no areas are fully consolidated (demarcated, titled, and under a functioning management plan). Thus, the majority of the NPASconstitutes "paper parks," with inadequate legal framework and physical protection. 4. The lack of clear protected area boundaries i s further complicated by the confusing institutional framework governing these lands. As described in Annex 1, the original PA system was created by the Ministry of Agriculture and Animal Husbandry (MAG), which had declared 47 PASby 1976. 'ElSalvador is part of the Mesoamerican Biodiversity Hotspot, as identified by the Critical Ecosystem Partnership Fund. According to the Ecosystem Profile: Southern Region, Mesoamerica (Critical Ecosystem Partnership Fund) this is significantly behind Costa Rica (with 24 percent of the land protected), Guatemala (23 percent), Nicaragua (17 percent), Panama(17 percent), Belize (10 percent), and Honduras (8 percent). More than 1.6 percent of El Salvador's land was officially designated as protected area in the newly approved protected areas law (Ley de Areas Protegidas, February 2005). These lands include all mangroves in the country, which were considered national forests outside o f the protected areas system prior to the passageof the law. According to the Wetlands Inventory (Inventario de Humedales), MARN2004. Protected areas range in size from 1.9 ha (Colomita) to 31,699 ha (Bahia de Jiquilisco). Only one park, El lmposible, includes a legally defined buffer zone (&ea de Veda). 1 The 1973 forest law (Ley Forestal) declared mangroves-which were not considered part of the NPAS-as natural resources of the State. The agrarian reform process, begun in 1980 to enable transfer from large landowners to the poor, expropriated 411,151 ha-about 20 percent of the country-including 22,000 ha of potential PASto the jurisdiction of the Salvadoran Institute for Agrarian Transformation (Znstituto Salvadoreiio de Transformacih Agraria, ISTA). When the NPAS was first proposed in 1990, it included 118 areas under MAG'Sjurisdiction-despite the fact that most of those lands officially pertained to ISTA, municipalities, and private landholders, and had been selected based on unclear criteria. The first national environmental law (Ley de Medio Ambiente; 1998) created MARN and gave them responsibility for the NPAS. In the 2002 Forestry Law, mangrove forests passed to MARN's jurisdiction. Today, MARN remains responsible for the oversight of the entire NPAS: but has legal title over only 7,072 ha. Consequently, the vast majority of the lands that theoretically could be part of the NPAS have unresolved legal status. 5. Conservation Needs and Opportunities. In addition to the lack of clarity regardingthe physical boundaries of the NPAS, the quality and type of environmental goods and services and biodiversity resources protected are not well known, making management and prioritization difficult. Given the limitedfinancial resources available, a refinement of NPAS National Strategy,* including a prioritization of efforts, i s much needed. Also needed i s greater stakeholder consensus around this strategy and around the broader importance of conservation. 6. MARNdeveloped the NPAS Strategy to prioritize 15 Conservation Areas (CA) comprising most of the country's PAS,building on the biological corridor concept. The specific approach to consolidate these CASmust target the primary threats to biodiversity, including naturalhabitat loss and degradation (NBSAP, 2000). Moreover, the consolidation of these areas should be done with the understanding and support of a wide range of local stakeholders, the majority of whom were not initially involvedinthe development of the protected areas strategy. 7. Currently, MARN lacks the legal tools to adequately manage the NPAS. While MARN i s legally responsible for the biodiversity within protected areas, the majority of which have human inhabitants, tested instruments for adequately consolidating those areas do not exist. In fact, El Salvador has no experience in definitively addressing human settlements inprotected areas. A new Protected Areas law, approved in February 2005, represents an important step toward the consolidation and sustainable management of the country's protectedareas system (see Annex l), the regulations for which needto be developed inthe near future. 8. An important legal distinction exists between mangroves' and Natural Protected Areas (WAS) with regard to landrights. Both mangroves and NPAs are considered "protected areas,"" wherein private or public entities are allowed to carry out activities that are compatible with the area's conservation upon authorization of MARN. Mangroves, unlike NPAs, are managed as sustainable use areas," wherein residents are eligible to receive land rights in the form of concessions, subject to uses defined in management plans. In NPAs, the new Law does not allow new human Today, the NPAS consists of 118 natural protected areas plus 35,500 ha o f mangroves, managed under eight management categories. These include natural reserve, national park, natural monument, habitadspecies management area, protected landscape or seashore, protected area with managed resources, and protectiontrestoration area and e,cological park. EstrategiaNacionalpara las Areas NaturalesProtegidas y Corredores Biologicos (2005). As governed under the 2002 forest law and the 2005 protected areas law. loEquivalent to IUCNCategory 11. Equivalent to IUCNCategory VI. 2 settlements once the areas have been established as protected,'* with the exception of the natural reserve category where no human settlements whatsoever are permitted. Thus, a methodology i s neededto identify illegal and legal settlements within PAS,andto regularize the latter. 9. While MARN has the mandate and political will to take the necessary actions to consolidate the NPAS, it i s severely resourceconstrained, both in financial and human capital terms. For example, the Director of MAR"s mangrove section is the only full-time employee working on mangrove conservation in the country. 10. An additional challenge for the NPAS relates to clarifying landtenure. In all but three PAS,lands are not titled in the name of MARN,13 but remain in legal limbo among other state agencies, municipalities and even private individuals. This lack of tenure clarity in unoccupied areas has in part led to invasions of state-owned lands (most of which are protected areas). Most of these invasions are by the ruralpoor, who have limitedproduction and livelihood alternatives. 11. The Government of El Salvador's (GOES) Land Administration Program (LAP), currently entering its second phase with IBRD support, i s systematically assessing land tenure nationwide. These efforts have important implications for the WAS, as LAP's activities include extensive geographic data collection (satellite images, overflights, and so forth) and determination of land rights. 12. Despite the significant threats to the NPAS, the culmination of several events has provided a unique opportunity to address these issues. First, the protected areas law, on hold for 25 years, was passedinFebruary 2005. This law provides MARNwith the legal framework necessaryto oversee these lands, and significant political capital. Second, the LAP i s midway through completing the cadastre and registry of all lands in the country-which has been deemed a priority effort for the new Government. During the preparation of the second phase of the IBRD-funded project, the GOES identified the importance of resolving tenure conflicts in protected area lands, without which the LAP's efforts to address all of El Salvador's lands will fall short. The LAP's implementing agency, CNR, has taken significant efforts to involve MARN in that project, including a component for demarcation of three (as yet unidentified) protected areas. While the participation of MARN in the LAP has historically been limited by MARN's capacity, by developing a partially blended operation, GEF funds will catalyze the consolidationof the national protected areas systemby exploitingthe significant opportunity presentedby the LAP. 2. Rationalefor BankInvolvement 13. The proposed Protected Areas Consolidation and Administration Project (PACAP) evolved from the recognition that the LAP provided an important and time-limited window of opportunity for advancing MARN's biodiversity agenda. The wealth of detailed, land-related data collected for land administration activities across the country could serve as a base for advancing large-scale conservation, including consolidating protected areas and developing a strategy for addressing illegal settlements within those areas. Furthermore, the massive data collection and maintenance activities of the LAP could, through the PACAP, be linked to and formatted for MARN's information catalog and management capacity, thereby addressing key information needs for the protected areas system. Moreover, the LAP could promote MAR"s agenda of legally `*The legal establishment of a protected area requires that it be demarcated, have secure title, and be decreed (via executive decree). l3There are 18 legal steps required to transfer landtitles from ISTA to MAW. This complicated process has led to significant delays in consolidating many protected areas. 3 consolidating key conservation areas and other protected areas under the protected areas system. The GOES expressed strong interest in working with MARN, CNR (the LAP implementing agency), and the Bank to take advantage of the conservation opportunity presentedby the LAP. 14. The GOES formally asked for World Bank assistancefor preparation of the proposed project and sought GEF assistance in a letter sent by the Technical Secretary of the Presidency on February 16, 2005. This further corroborated the endorsementof the GEF Focal Point on September29,2004. 15. Inaddition to the uniqueenabling environment presentedby the LAP,the GOES would greatly benefit from the World Bank`s competitive advantage in the region's land issues, with over 20 years of experience in land policies and operations and US$900 million (M) invested and committed in land-related programs in Central and South America. Given the growing body of knowledge regarding the conservation significance of landadministration projects, the most recent of these operations include specific environmentally focused components and/or activities. The GOES would also benefit from the World Bank's substantial experience in GEF activities, including GEFoperations inthe Mesoamerican Biological Corridor (MBC). 16. Finally, the World Bank has discussed the project with other donors interested in coordinating their efforts, including the IDB, the Spanish Agency for International Cooperation (AECI), and UNEP.The proposedproject will buildonongoing related activities, as described inSection C.l 17. GEF support is warranted because the project would: (a) conserve globally and regionally significant biodiversity, including some critically endangeredendemic species and ecosystems; (b) enhance the Salvadoran sections of the MBC, and the overall WAS; (c) support the piloting of consolidation of two protected areas to develop a strategy for addressing key issues affecting the majority of Salvadoran protected areas; (d) capture lessons learned from the piloting exercise for application in future scaling up and replication to other parts of the country, as well as a potential model for other countries in the region; and (e) complement the GEF-supported Payment for Environmental Services Project (PES; see Annex 18). Without the GEF increment, local benefits alone have, to date, beenunable to secureconservation of the protected areas system. 3. Higher-level Objectives to which the Project Contributes 18. The project directly contributes to the GOES agenda described in the Pais Seguro Program, which identifies as key, actions directed at enhancing the environment for future generations, and ensuring that national development i s environmentally and socially sustainable. Specifically, this national strategy includes actions to strengthen programs aimed at restoring mangroves and sustainably managing protected areas; strengthen the institutional and legal framework for the environment sector; and increase awarenesson environmentalprotection and natural resource use. 19. The project also directly responds to El Salvador's biodiversity priorities as per the 1999 National Strategy on Biological Diversity (NBS; GEF/UNDP/MARN). The NBS establishes as priority actions the implementation of a biodiversity information system and the consolidation of the WAS; the redefinition of institutional responsibilities for conservation activities; and the strengthening of national, institutional, and human resource capacities in biodiversity conservation. The project also strongly supports the draft Protected Areas Strategy (2005), and the proposed National Land Use Development Plan (Plan Nacional de Ordenamientoy Desarrollo Territorial; PNODT2003), which propose to create 15 CASdesigned to embed the severely fragmented NPAS within a larger landscapecontext. Moreover, the project strongly sustains the new PA Law, which provides the basic legal framework necessaryto consolidate the NPAS. 4 20. The new FY05-08 Country Assistance Strategy (CAS) for El Salvador, supports the three main pillars of the Government's agenda: (a) accelerating broad-based equitable growth and increasing employment; (b) improving equity by building human capital and expanding access to basic infrastructure, assets, and markets; and (c) enhancing security and reducing vulnerability. The CAS recognizes the need to consolidate the environmental sector's regulatory and legal framework and to support measures aimed at watershed recovery, reforestation, ecosystem management, and biodiversity conservation. The CAS further notes that vulnerability to natural disasters i s closely linked to rural poverty and that low productivity and high population pressures have depleted naturalresources, caused soil erosion and land degradation, led to loss of habitat, biodiversity, and natural forests, and exacerbatedproblems in water management and conservation. The project will contribute to the third objective of the CAS; by supporting the consolidation of the WAS, along with the strengthening of its institutional and legal framework, the project will directly contribute to addressing biodiversity conservation and the sustainable use of resources, and to reducing environmental degradation and therefore vulnerability to natural disaster. GEF OperationalProgram Goal 21. In the broadest sense, the project will contribute to all four GEF Operational Programs (OPs) by strengthening the Salvadoran protected area system, which includes aridand semi-arid, coastal and marine, forest, and mountain ecosystems. Through the targeted interventions that will consolidate two protected areas, the project specifically supports OP 2 (Coastal and Marine Ecosystems) and OP 3 (Forest Ecosystems). Activities in the Bahia de Jiquilisco Conservation Area will contribute to the conservation and sustainable use of El Salvador's largest extension of mangrove forests, while in the Lake Guija San Diego-La Barra Protected Area Complex the project will support the conservation and sustainable use of the freshwater biodiversity of Lake Guija, and the largest dry tropical forest area in El Salvador, an eco-region identified as bio-regionally outstanding and a highpriority at a regional scale14(see Annex 16). 22. The project supports the objective of Strategic Priority (SP) 1 "Catalyzing Sustainability of Protected Areas" through a comprehensive intervention that will: (a) strengthen the NPAS, through updating the national PA strategy and improving the relevant legal and institutional framework, and building MAR"s capacity to oversee the system; (b) improve the sustainability of the NPAS through capitalizing on the partially blended LAP I1to collect and systematize environmental data, and establish a PA monitoring and evaluation system; and (c) pilot the consolidation of two representative PASfor subsequentreplication throughout the NPAS. 23. By piloting the consolidation of two PAS and heavily emphasizing learning and adaptive management, the project would support SP 4 (Generation and Dissemination of Best Practices), by integrating project results into the redefinition of the National Protected Areas Policy and disseminating them at the national, regional, and global level. Linkwith IBRDLoan 24. The proposed project i s partially blended with the Second Land Administration Project (P086953), approved by the Board in March 2005. This US$40.2M project to the National Registry Center (CNR) is completing the cadastreand registry of all lands within El Salvador. Toward this aim, the LAP I1i s collecting highresolution spatial andtenure data, with direct applications to conservation l4A ConservationAssessment of the Terrestrial Ecoregions of Latin America and the Caribbean,E. Dinnersteinand others. 1995. 5 and protected areas management. While the LAP I1will resolve tenure for all private lands, it cannot do the same for all public lands, including PASand mangroves, because CNR does not have the mandate to do so. Thus, the LAP I1will define only the gross boundaries of PASand mangroves given the absence of defined procedures and limited capacity of MARN. Were it not for the proposed project, the significant conservation opportunity presented by the LAP would be lost. 25. The proposed project would capitalize on the opportunity provided by the LAP 11, using GEF funds to enable MARN's development of a strategy to consolidate PASand maintain the current human population distribution in those areas, limit allowable activities on critical biodiversity areas, develop a model to promote sustainable development, and participate with CNR in the delimitation of all 118 PASand mangroves in El Salvador. Moreover, the proposed project would influence IBRDfunds (LAP 11)to contribute to conservation of globally, regionally, and nationally significant biodiversity, through: (a) financing the collection of detailed tenure information for PASand mangroves in the linked registry-cadastre system (SIRyC) maintained and regularly updated by CNR, (b) targeting the LAPI1to demarcatethree priority PAS(determined by MARN), and (c) taking advantage of a key political moment to mainstream conservation into the broader land agenda. Moreover, the project helps secure additional CNR co-financing through ensuring their participation in delimiting all PASand mangroves (currently outside of the scope of the LAP). B. PROJECTDESCRIPTION 1. LendingInstrument 26. The proposed project i s a grant funded by a full-sized US$5 million (M) GEF contribution. It i s partially blended with the LAP I1IBRDloan (P086953). 2. Project Development Objective 27. The Project Development Objective of the partially blended LAP I1 i s to improve land tenure security and land transactions by providing efficient, equitable, and accessible land administration services, thereby facilitating better land-related investments and more productive and environmentally sustainablelanduse. 3. Project Global Environmental Objective and Key Indicators 28. The Project Global Environmental Objective of the PACAP is: to conserve El Salvador's globally significant biodiversity by strengthening the national protected areas system and consolidating two priority protected areas. GEOoutcome indicators: 0 Natural protected areas system strategy improved and pilot-tested. 0 Two pilot protected areas consolidated and effectively managed (Tracking tool score of at least 40 for the 35,600 ha inBahiade Jiquilisco and 1,917 ha inLago Guija Complex San Diego-La Barra). 0 Biodiversity benefits establishedin at least 12,400 ha: 6 o For Bahia de Jiquilisco PA, at least 11,000 ha of mangrove or associated humid forest within the core protection zones will have negligible deforestation compared to baseline (less than 1% over 5 years). o For the Lago Guija Complex San Diego-La Barra, at least 1,400 haof dry tropical forest or associatedriparian forest will have negligible deforestation compared to baseline (less than 1% over 5 years). 4. ProjectComponents 29. The project will have three components: (a) Strengthening of the Natural Protected Areas System (NPAS); (b) Consolidation and management of two pilot protected areas; and (c) Project Administration. The costs of each component and subcomponent are summarized inTable 1. Table 1.ProjectCostsby Componentai iSubcomponent Total GEF Government US$ I IBRD % US$ I % US$ % US$ % Component 1:Strengtheningof 1 the W A S 1.1Consolidationof WAS 1 strategy 3.2 23.9 0.5 10.5 2.0 58.8 ~ ~ 1.2. Strengthening of legal and institutionalframework 1.9 14.2 0.6 113.2 I 1.1 1 32.4 Dissemination and awareness ampaign I 0.3 1 2.1 1 ~ Subtotal 5.4 40.2 * 29.3 91.2 Component2: Consolidation andManagementofPilot I ProtectedAreas 2.1 Characterization and delimitation of pilot PAS 2.2 16.4 2.0 40.0 2.5 2.9 ~ 2.2 Legalizationandregularization I of pilot Pas 2.8 20.9 14.3 2.9 2.3 Management plans 2.1 15.7 2.0 40.8 0.1 2.9 Subtotal 7.1 52.0 3.9 78.0 2.9 57.5 0.3 8.8 Component3: Project Administration 0.9 6.7 0.7 13.1 0 0 TotalProjectCosts 13.4 5.0 3.4 Component1:Strengtheningof the National Natural ProtectedAreas System (US$5.4 M Total; US$1.40 M GEF) 30. The objective of this component i s to strengthen the NPAS to enable long-term sustainable management. This will be achieved through the consolidation of the existing strategy for the 7 WAS," with the participation and inclusion of all relevant stakeholders, and through the development of an adequate institutional and legal framework for the administration and managementof the NPAS.This component is divided into the following subcomponents: I.1:Consolidationof NPASstrategy 1.2: Strengtheningof the legal and institutionalframeworks I.3: Publicdisseminationandawarenesscampaign. Key outputs of this component include: (a) completion of a rationalization study of the WAS, (b) delimitation of at least 40 protected areas and mangroves, (c) ten-year Action Plan for consolidation of the WAS; (d) approved regulations for the implementation of the new Protected Areas Law, (d) draft interinstitutional agreements for operating the NPAS, and (e) at least 10 percent of national population aware of new protectedareas law andregulations. Component2: Consolidationand Management of Pilot ProtectedAreas (US$7.1M Total; US$2.9M GEF) 31. The component aims to develop, test, and finalize a methodology for the consolidation of two pilot Protected Areas, including their delimitation, demarcation, and regularization, and to develop and implement management plans for their sustainable use. The results of this component will feed into the consolidation of NPAS Strategy (Component 1). The component is divided into the following subcomponents: 2.1: Characterizationand delimitation of pilot PAS 2.2: Legalization and regularization of pilot PAS 2.3: Managementplansfor pilot PAS. 32. Key outputs of this component include: (a) Socioeconomic study, environmental information, cadastre, and registry for each pilot protected area linked with CNR database; (b) demarcation of the pilot PAS(including number of km demarcated of external boundaries of pilot areas, and core zones); (c) percent of pilot area lands with no unresolved tenure issues; (d) ministerial decrees to establish pilot PASpublished; (e) number of protected area field staff in each pilot PA.; and (f) amount of revenues raised from sustainable natural resource use concessions, visitor fees, and other potentialcost-recovery mechanisms. Component3: Project Administration (US$0.9M Total; US$0.7M GEF) 33. This component will focus on project management mechanisms including project coordination, planning, and monitoring and evaluation (M&E).The M&E system will be based on the existing system developed under the LAP I1to coordinate and supervise the project. The existing system will be strengthened to include key indicators to measure GEF project performance. The project will finance administrative, supervision, and M&Ecosts, including M&Esurveys. 5. LessonsLearned and Reflected inthe Project Design 34. The key lessons learned from other GEF and non-GEF projects (listed in Annex 2), were taken into consideration inthe design of the proposed project. These lessons include: l5The existing strategy is the Estrategia Nacional de Areas Naturales Protegidas y Corredor Bioldgico (MARN 2005). 8 o Lack of enabling legal and remlatorv frameworks topether with significant constraints in human resource skills and institutional capacity have resulted in limited sustainability of operations targeting conservation and sustainable use of biodiversity in El Salvador. Long- term effects have been further impinged upon by lack of interinstitutional coordination, poor planning, and overall ad hoc approaches with narrow sectoral and institutional focuses. Overlapping issues, jurisdictions, and impacts of sustainable ecosystem management require an adequate institutional and legal framework to guarantee the necessary interagency coordination and interaction. o Large-scale land administration activities present an important conservation opportunity. Extensive regional experience has shown that land administration projects present an important conservation opportunity. Landprojects directly contribute to conservation through the clarification of land rights, legally and physically, in and around protected areas, and the collection of environmental and geographic information. Indirectly, land projects can be powerful instruments to further the conservation agenda, through providing both reduced incentives for encroachment and occupation and a tool to help strengthen protected areas systems. Specifically, PA systems can benefit by: capitalizing on the information collected to clarify tenure, and demarcate and consolidate PAS;developing strategies based on this information to limit settlements in and near PAS, and to clarify use norms for those settlements; strengthening PA agenciesthrough land administrationactivities; involvingother stakeholders in decisions about those lands; and supporting conservation-friendly productive investments. Moreover, by exploiting the opportunity provided by land administrationefforts, where governments must address difficult land-related issues, conservation can be included at the core of the development agenda, buildingon the strong political commitment to leverage scarce funds for protected areas, update land-related laws and institutions, and bring stakeholders together. o Highly fragmented protected areas systems are difficult to efficiently manage. El Salvador's PA strategy has struggled with a highly fragmented system. Relatively small, highly threatened protected areas are less able to adequately preserve natural resources, as many threatened speciesrequire relatively large habitat expanses, linked by corridors. Additionally, fragmented areas require extensive monitoring and management, with significant budget ' implications. By promoting the establishment of CAS,in which PA nuclei are linked by biodiversity friendly corridors, the project aims to resolve one of the key root causes of biodiversity degradation inElSalvador. o Private lands can support biodiversity-friendly habitat. As the GEF-supported "Promotion of Biodiversity Conservation within Coffee Landscapes" found, biodiversity-friendly agricultural production systems can be economically, environmentally and socially sustainable. By creating incentives for encouraging production systems that are compatible with conservation objectives,' private lands in protected area buffer zones can contribute to biodiversity. o Broad stakeholder inclusion is key to conservation success. Buy-in of key stakeholders is critical to protected area viability. One factor that has hindered El Salvador's PA system i s the inadequate involvement of all necessary stakeholders (private and public sector, local residents, NGOs.). 6. Alternatives Considered and Reasons for Rejection 35. The main alternatives considered and rejected were: 9 1. No project, because the existing threats to biodiversity would continue to expand, resulting in a significant decrease inextent andquality of globally andregionally significant biodiversity. 2. A protected areas project focused only on MARN, without any link to CNR and the LAP11, because it would represent a significant missed opportunity to capitalize on the information collected, and enabling political environment created, by the LAP11. 3. A project focused on the management of individual protected areas, without efforts to consolidate the overall NPAS, because it would neither allow replicability of the lessons learned, nor promote long-term sustainability of the system. C. IMPLEMENTATION 1. PartnershipArrangements 36. Project preparation, implementation, and sustainability depend up the establishment of a number of partnerships, the most important of which links MARN, the PA agency, and CNR, the cadastre and registry agency, beginning with the close collaboration between the PACAP preparation team and the LAP I1 implementation team (UAP). This partnership was formalized by a letter of understanding for preparation activities, and will be further strengthened through a legal agreement. This cooperation benefits the PACAP through co-financing provided by LAP II, collaboration with on-the-ground activities involving information collection, delimitation and demarcation of PAS,and information dissemination. Inaddition, this partnership benefits the LAP 11, because MARN has come to a deeper understanding of the objectives and implementation mechanisms of the loan's activities, and as a result has begun to participate in areas critical to the loan's success but outside of CNR's mandate. 37. Other key partnerships established during project preparation, which should continue to flourish during implementation are: (a) coordination with the ESP16and Fund (Environmental Services Fund, or FONASA), managed by MARN with GEF and World Bank support, which aims to support the development of a PES system in pilot watersheds (including one of PACAP's pilot areas), and its future replication in other areas (see Annex 18); (b) coordination with the Mesoamerican Biological Corridor (MBC) project, implemented by UNDP and managed under MARN with World Bank, GTZ, WWF, and GEF support, working to consolidate El Salvador's portion of the MBC; (c) partnership with AECI, working on the Integrated Management of Mangroves and Coastal Wetlands project, which includes one of the PACAP's priority pilot areas; (d) partnerships with NGOs and Community Assocations (ADESCOs) actively working in the pilot PAS, whose participation will be critical to project success and information dissemination; and (e) partnerships with universities and research institutions, for definition of quantitative environmental baseline and related studies. 38. Inadditionto the LAP 11,three other projects deservespecial reference: Integrated Management of Trinational Montecristo Park (GEF full-sized project (FSP) under preparation/IDB), Sustainable Land Management in Watersheds Draining to the Gulf of Fonseca (GEF mid-sized project (MSP) under preparatiodUNEP), and AECI's Sustainable Management of the Bahia de Jiquilisco, El Jocotal, and Los Volcanoes Protected Areas; all three projects support complementary actions in areas not selected as priority under the proposed project. The project preparation unit has ~ l6 The Environmental Services Project (ESP) provides incentives to landowners living inprotected area buffer zones and other environmentally sensitive lands to sustainably manage their lands. The ESP and PACAP projects represent two complementary strategies to be undertaken by MARN, both of which pilot test mechanisms to support MAR"s Protected Areas Strategy (2005). Specifically, these projects support M A N in the creation of 15 Conservation Areas, by addressing the nuclei (natural protected areas), through the proposed project, and the buffer zones (adjacent private lands), jointly through the ESP and the proposed project (see Annex 17). 10 coordinated with these three projects, only one of which (AECI) shares intervention areas.17 Other GEF-supported projects have also been identified as relevant to the proposed projects, which are summarized inAnnex 2. 2. InstitutionalandImplementationArrangements (seeAnnex 6) 39. MARN will execute the project and have responsibility for all fiduciary aspects, monitoring and evaluation (M&E),and most technical aspects. 40. CNR will be responsible for limited technical activities (related to LAP II-delimitation, demarcation, registration), and training and capacity building for project fiduciary aspects and M&E. CNR and MARN will sign an agreement clarifying respective roles and responsibilities with regardto jointly implemented activities. No funds will pass to CNR from the project. 41. Direct implementation will be provided by a small Project Coordination Unit (Unidud Ejecutoru del Proyecto, PCU or PCU) within MARN's Department of Natural Resources (DGNP). The PCU will ensure overall project coordination with participating agencies and the World Bank. Specifically, the PCU will execute most activities in Components 1, 2, and 3 with support from CNR through the LAP 11-UCP. In particular, CNR will provide technical assistance to MARN regarding financial management and procurement, through training and advisory services." At the central level, the PCU will include a project coordinator, an accountant (financial officer), a procurement officer, and an administrative assistant. 42. The project will also support the creation of two regional units to oversee field activities under Component 2. In each of the two pilot protected areas, the project will support a regional coordinator, a social specialist, and a technician, who will jointly focus on policy and strategic issues, incoordinationwith the PCUand MARN's DGNP. 43. The majority of staff hired by MARN for the project will be temporary. However, key functions, activities and staff will be assumedby MARNby year 4 of the project. 44. Additionally, the project will contract an NGO (or other qualified entity) to oversee operational aspects in the two pilot areas. These entities will be responsible for developing and implementing managementplans and providing on-the-ground field presence. "The AECI-financed project aims to improve the management of wetlands along ElSalvador's easternPacific coast, including the Bahia de Jiquilisco, through the development and implementation of management plans. That project strengthens national policies for wetland protection and sustainable use, toward which it has achieved the identification, registry, mapping, and measurement of 90 percent of the nation's wetlands. Specifically, in the Bahia de Jiquilisco area, the AECI project has developed a management plan for the bay's wetlands (which form part, but not all, of the pilot area included in the proposed project), and applied for official RAMSAR designation. The proposed project would work with AECI to update this management plan, including remnant humid forest patches along with the bay's wetlands, and address tenure o f eligible residents. Moreover, the proposed project and the AECI Project would work together to consolidate this area throughjoint financing o f this updated management plan: AECI would construct two park administrative offices, and finance existing park guards, while the PACAP would finance the park administrator and new park guards, and both projects would work together to support ecotourism, promote sustainable use of natural resources by local residents, and implement M&E. '*The arrangements to ensure adequate fiduciary capacity established within MARN during year 1 of project execution are expected to benefit the Environmental Services project, which starts in 2007 (year 2 o f the proposed project). By January 2007, MARN's UFI unit, which will be jointly handling fiduciary aspects of both GEF- financed projects, would have at least one year o f experience successfully handling World Bank administrative requirements. 11 45. Because the project supports a co-management approach for PAS, other actors, such as municipalities, community associations, including the local Protected Areas Committees (COAL), NGOs, universities, and direct beneficiaries will be involved in its implementation, especially at the local level. The project will strengthen the capacity of these entities, and MARN, to support and participate in the development and management of the NPAS. MARN will coordinate the various participating agencies by means of agreements that will become effective, to the World Bank's satisfaction, before the correspondingactivities begin. 46. Given the pilot nature of the project and the importance of building multisector alliances, an advisory committee will also be formed, which will function under the coordination of MARN- DGNP. This group will include representatives from the PCU, MAG, ISTA, CNR, CONAMA, municipalities, the private sector, and a local representative from each of the pilot areas. The group, which would be convened by MARN at least once a month, would provide a strategic decision-making mechanism related to improvements to the NPAS Strategy, PA consolidation, and the results assessment for each of the pilot areas. 3. Monitoring andEvaluationof OutcomesEtesults 47. M&E is central to the project objectives, because the project-a pilot-mphasizes adaptive management, by which M&E results will be used to improve project design during implementation. The project M&E system will take advantage of the newly designed automated LAP11system, which tracks expenditures andprogressfor bothadministrative (procurement, flow of funds) and technical (project performance linked to outcome indicators) aspects. The LAP I1 M&Esystemwill serveas the basis for the PACAP'SM&Esystem, which will be strengthenedto include output indicators for the three project components. 48. As in the LAP11's system, the project M&E system will assure the project's efficient execution, and will be closely linked to the Results Framework. It will include a subsystem to allow project administrative and financial monitoring and to generate reports required by the World Bank's administrative, financial, and procurement sections. It will have another subsystem that will allow the generation of three types of indicators: (a) indicators for physical execution (outputs) and financial execution (inputs); (b) results indicators for each component; and (c) outcome indicators of project global environment objectives (GEO). 491 A baseline will be usedfor GEO outcome indicators. This will be updated inyears 2.5 and5 of the project. The primary data sources for the other indicators will be: (a) information from CNR and MARN; (b) field reports by contractors and PCU supervision reports, and those by other entities associatedwith the project; (c) CNR's Registry and Cadastre Information System (SIRyC); and (d) results from participatory field monitoring, undertaken by local beneficiaries andsupervised by the PCU. 50. The overall responsibility for the M&Esystem will be with the PCU, which will oversee ongoing consolidation of data obtained from activities carried out during PACAP execution and the maintenance of the web-based system. The M&E System will comply with the financial, procurement, administrative, and monitoring and evaluation characteristics required by the World Bank and those of the Technical Secretariat of the Republic of El Salvador. 4. Sustainability and Replicability 51. The project is highly country-driven. It evolved during preparation of the LAP 11, a participatory process involving extensive consultation with multisectoral stakeholders, during which it was recognized that the LAP provided a time-limited window of opportunity for advancing the 12 country's PA system. Followingthese consultations, MARNrequested GEF support to work with CNR and the Bank to take advantage of the strong conservation opportunity presentedby the LAP. 52. The project addresses long-term sustainability of the overall PA system and that of the individual pilot PAS.Current NPAS budgeting i s not adequate, and reflects neither actual expenditures nor those necessary to address long-term challenges. The PACAP specifically addresses this issue in Component 1 through strengthening MAR"s institutional capacity to plan for long-term expenditures necessary to sustain the system, evaluating alternative financing sources, and building their capacity to manage the system. Additional project activities further support MARN's institutional sustainability, such as the development of a PA M&E system linked to CNRs databases, a unified PA registry, development of partnerships with CNR and other institutions key to NPAS management, and the provision of PES incentives to private landowners. Regarding the sustainability of individual pilot PAS,the project will test mechanisms to capture alternate funding sources (such as establishing concessions for people with legal but irregular titles inor adjacentto mangrovesand protected areas, charging user fees, and so forth), the specific goal of which will be to contribute to financing the recurrent costs of those areas. As in most PA systems worldwide, it i s expected that the budget shortfall for individual PASwould be covered by annual appropriations, the costs of which will be evaluated duringproject implementation. 53. The project results will be replicable at two levels. First, at the individual PA level, the project i s developing and testing a strategy to consolidate two pilot protected areas (one PA complex, including several individual PAS,and the other a mangrove complex, including mangroves and individual PAS).These pilot areas were specifically chosen to represent conditions faced by most other PASinthe NPAS (see Annex 16). Thus, the lessons learned from this effort can be appliedto other PASin the future. Second, at the system level, the project i s takingthe lessons learned from the two pilot areas to translate them into a national protected areas strategy, along with the required legal and institutional frameworks to enable its implementation and long-term sustainability. One of the activities supported through the project i s the analysis of the resources (both human and financial) neededto implement this strategy and associated action plan, including the role of stakeholdersat the local and nationallevels. 5. CriticalRisks and PossibleControversialAspects Risks MitigationMeasures Risk Range Institutional weaknessof implementing Ongoing Bank dialogue with MARNover broad Modest agency. portfolio. MARN-targeted capacity building and institutional strengthening activities financed through project. Lack of participation by key stakeholders Design and implement intensive communication Modest at local level. campaign, based on results from socioeconomic census. Capacity building of key stakeholder groups financed through project. Poor coordination and lack of participation Establish advisory committee, including Modest by national and local agencies and representatives from MAG, ISTA, CNR, weakness of various agencies, especially CONAMA, municipalities, the private sector, and municipalities, with regard to human local communities. resources and equipment. Capacity buildingof COALSand ADESCOs at local level financed through project. 13 Training of key agencies and institutions financed through project. Land tenure has been the subject of major Establish an open dialogue with state sectoral Substantial conflict throughout the country's history institutions and with municipal offices and civil (e.g., titling), and the project may lead to society to avoid social conflicts as much as possible conflicts over land, become politicized, or and give more transparency to the process. be seen as an instrumentthat favors one or more groups to the detriment of others. Establish alternative conflict resolution mechanism to address local claims through project. IImplement and disseminate ProcessFramework. I 6. Loadcredit Conditions and Covenants Effectiveness: 0 Project's Operational Manual satisfactory to Bank 0 PCUestablished andkey staff contracted Legal covenants: 0 Interinstitutional agreement between CNR and MARNdefining responsibilities of each institution in the project 0 Agreements betweenMARNandISTAoutlining procedures for transfer of pilot arealands 0 Monitoring and evaluation system operating D. APPRAISAL SUMMARY 1. EconomicandFinancialAnalyses 54. The project economic and financial analysis estimated that the net present value (NFV) of incremental project benefits will be US$34.9m for a 50 year-period, with a discount rate of 12per cent. The economic internal rate of return i s 19 per cent, of which 82 and 18 per cent are associatedwith activities in the Bahia de Jiquilisco and Lago Guija Complex San Diego-La Barra pilot areas, respectively. Costs include the direct investment through PACAP over the project lifetime, as well as pilot area office investment and recurrent costs over a 50-year period. The expected incremental economic benefits result from sustainable management of the pilot areas. Specifically, sustainable land use patterns, resulting from the introduction of management plans, will yield an increase inthe quality and quantity of environmental services, thereby providing both national benefits (sustainable management of fish stocks and fuelwood, reduced agriculture-, livestock- and fishing-related soil and water contamination, and better soil conservation practices) and global benefits (carbon sequestration, biodiversity conservation). 55. Furthermore, the economic analysis examined two additional scenarios to calculate: 1) the revenue from concessions/authorizationsfor productive activities within the pilot areas; and, 2) the cost of relocating those currently living within the pilot areas to non-protected area lands. The estimated annual value for shrimp and salt harvesting concessions in Bahia de Jiquilisco i s US$34,040. The estimated annual value for agricultural authorizations in the Lago Guija Complex San Diego-La Barra is US$5,400. Under the second scenario, the economic cost of relocating all individuals within the core nucleus andbuffer zones of the two pilot areas i s considered to be US$79.6m. 14 56. A financial analysis of MARN's Natural Protected Areas System was undertaken to assess its financial viability. The analysis includes a cash flow assessment with a projection until 2015 that includes the incremental benefits and costs associated with the NPAS consolidation. The projection based on entrancefees and concession/authorizationrevenue indicates that these income sources are insufficient to finance the consolidation of the NPAS. So as to explore other potential complementary income sources, the analysis includes two additional income categories: 1) direct use of land and natural resources in protected areas (residential permits, fishing and fuelwood authorizationskoncessions); and 2) taxes to finance environmental services (departure tax at international airport, water consumption tax, and a hydroelectric power tax). Under scenario one (residential permits, expanded authorizationskoncessions), the NPAS would yield a deficit of $340,000 in year 2015, and therefore would not yield sufficient income to make the NPAS financially sustainable. Under scenario two (additional taxes from environmental service payments), the NPAS could generate a total surplus of US$1.25m over the next ten years and consequently achieve its sustainability. 57. IncrementalCost Analysis. The baseline scenario provides limited support for conservation of globally significant biodiversity, with US$21.9m being spent on activities related to the proposed project's objectives. The baseline scenario, however, provides this project with an enabling environment by collecting essential geo-spatial data and strengthening the related legal and institutional frameworks. The GEF alternative scenario would capitalize on this situation, consolidatingand sustainably managing two pilot areas, and strengthening the overall NPAS, thus contributing to the conservation of globally significant ecosystems and biodiversity. The total incremental project cost would be US$lOm; of these funds, US$5m would come from the GEF grant to fund global benefits, and US$5m would come from the partially blended LAP11IBRD loan. Together, these projects would produce significant local and global benefits (see Annex 15). 2. Technical 58. The proposed project will consolidate and strengthen ElSalvador's incipient NPAS. Inso doing, it will make fulluse of close linkages with the recently approved LAPI1to resolve land tenure issues and ensure technically soundboundary delimitation and physical demarcation of protected areas. 59. The project will improve the overall NPAS through enhancing MAR"s PA Strategy. Specifically, under Component 1, the project will support: (a) broad stakeholder consultation to identify and build consensus on the importance of the NPAS; (b) a study to rationalize the system through evaluating the conservation value of all PASin the system, recommending how MARN should prioritize efforts to consolidate the most important areas; (c) development of legal tools necessary to consolidate the system (including regulations for the newly passed PA law); and (d) a national public awarenesscampaign regarding the importance of biodiversity and PAS.Based on the results of these activities (and those of Component 2), the PA Strategy will be revised. 60. At the protected arealevel, the project will target two pilot areas for action: one mangrove (35,600 ha of mangroves and associated humid tropical forest) and one NPA (1,917 ha of tropical dry forest and associated riparian forest). Lessons learned from these two pilot areas will enable MARN to more effectively consolidate the remaining priority areas for Conservation within El Salvador. Each pilot area would be consolidated through: (a) defining the external and nucleus boundaries to minimize threats (excluding towns and intensive agriculture, to the extent possible); (b) developing and implementing a participatory management plan, including conservation-based zoning; (c) pilot-testing incentives to promote conservation (see below); and (d) legally establishing the area, including physical demarcation and legal decree. Activities of local NGOs would continue under renewed co-management agreements with MARN, as would project- sponsoredinvestments to improve the quality of protection and management. 15 61. Two pilot areas were chosen through a prioritization process that considered global, regional, and national biodiversity importance, probability of project success (based on existing land use, land tenure, size, participation, and other factors). The two pilot areas chosen were the Bahia de Jiquilisco Conservation Area and the Lago de Guija-San Diego-La Barra Complex (see Annex 16). 62. Bahia de Jiauilisco: This proposed Conservation Area (CA), a 63,000 ha complex of mangroves, intertidal mudflats, estuaries, barrier islands, sandy beaches, and remnant humid forest patches (totaling 35,600 ha), as well as buffer zones, extends along the Pacific coast from the mouth of the Rio Lempa to Playa El Espino. The area's biodiversity significance includes four species of nesting sea turtles (all globally threatened), the threatened Black-handed Spider Monkey (Ateles geoflroyi), and a large diversity of migratory birds, including abundant shorebirds and land birds. Due to its importance for migratory birds, the area has been nominatedas a Ramsar Wetland Site. The mangroves and adjacent humid forest patches are bordered by intensive agriculture and several towns. The mangrove currently receives limited on-the-ground protection (from AECI), and the small remnant forest patches are supported by individual NGOs. Key threats include conversion of mangroves for housing, expansion of shrimp and salt ponds, agriculture, and tourism. 63. Possible Proiect-suvvorted Incentives: In this area, the project would pilot the use of incentives such as redefining concession types to promote sustainable activities (for example, regulated fishing and shellfish harvest, controlled tourism, limited mangrove harvesting)-thereby regularizing existing residents of the mangroves and directly adjacent buffer zones under the condition that they comply with the managementplan-as well as charging user fees, and so forth. Additional incentives include support for alternative income-generating activities, and a small grants program. Residents of the broader buffer zone would receive training and capacity building. 64. Lano de Guiia-Sun Dieno-La Barra: This complex of proposed natural protected areas i s iocated innorthwestern El Salvador along the Guatemalan border. It includes the proposed San Diego-La Barra National Park, comprising 1,389 ha of relatively contiguous tropical dry forest (the largest expanse in El Salvador), 517 ha of disturbedearly regeneration tropical dry forest, and 11ha of floodplain forest with an impressive egret breeding colony, and five lakes and lagoons. The proposed project would directly address the 1,917 ha of primary and regenerating dry forest and associated floodplain forest and wetlands. The lakes and lagoons could be incorporated into the managedpilot area duringproject implementation 65. Sun Dieno-La Barra National Park: The proposed park includes one of the largest expanses in Central America of Central American Tropical Dry Forest Ecoregion-an area with "Critical" conservation status (the highest ranking.)lg This forest area i s surrounded by intensive agriculture, yet still reasonably well protected by the local NG0.20 66. Laao de Guiia and Laguna de Metapan: The larger, multiple-use proposed NPA covers several freshwater bodies, including the 3,170 ha Lago Guija and the smaller Laguna de Metapan. These lakes are of considerable biodiversity interest, harboring at least two globally threatened fish species, Mojarra Negra (Cichlasoma guija) and Istatagua (C. trimaculatum), plus numerous water birds.21 l9World Bank-WWF Conservation Assessment of Terrestrial Ecoregions of Latin America and the Caribbean (Dinersteinand others 1995). *'CEPRODE, the localNGO, has a co-managementagreement with MARNbut currently receives no funds from them. The effective conservation of these lakes is likely to prove very challenging (more so than the dry forest), because the environmentalthreats (includingtilapia andother invasivefish species stockedby MAG, heavy fishing pressure from some 1,400 local people, intensive agriculture along much of the shoreline, pollution associated with agrochemical runoff and sewage 16 67. Key threats to the area include encroachments by farmers, agriculture-related forest fires, heavy fishing, invasive species (for example, fish), pollution from agrochemicals, and sewage. Possible Project-supported Incentives in this area include piloting the use of conditional titles linked to the management plan, support for alternative income-generating activities, and small grants to support conservation-friendly activities. 3. Fiduciary 68. MARN will be responsible for managing the fiduciary aspects of the project through the PCU located within MARN. Its main financial and accounting responsibilities will include: (a) maintaining accounting records, (b) processing disbursements, (c) preparing project financial statements in accordance with World Bank guidelines, (d) managing bank accounts, (e) managing financial information systems, (f)preparing and submittingquarterly FinancialMonitoring Reports (FMRs), and (g) preparing andsubmittingwithdrawal applications. Financial 69. The financial management (FM) assessment carried out during the preparation of the ESP reviewed MAR" s FM structure, experience in managing donor-funded projects, and its internal operating performance and procedures. On the basis of this assessment, the FM team concluded that overall, MARNhas limited FM capacity (limited staffing and FM system) and does not have extensive experience in managing World Bank-funded projects. Therefore, an experienced financial management officer (accountant) must be hired to manage project accounting and financial reporting information. However, because MARN has demonstrated its willingness to increase its capacity and, assuming MARN carries out the proposed action plan (especially regarding staffing), it would have FM arrangements adequate to meet the Bank`s minimum fiduciary requirements to manage PACAP's specific financial activities. The project i s rated modest for overall risk. The action plan (in Annex 7), supervision plan, and external audit scope have been designed to manageidentifiedrisks. 70. It is proposed that: (a) a Special Account in U.S. dollars will be opened in the Bunco Central de Resentu to specifically manage grant funds; (b) at least at the beginning, the project will use transaction-based disbursements; (c) each quarter MARN will prepare the FMRs to be submitted to the World Bank; and (d) annual project and MARN financial statements will be audited by independent auditors in accordance with International Standards on Auditing issued by the International Federation of Accountants (IFAC) and of El Salvador's Corte de Cuentus, in accordancewith terms of reference (TORS), bothacceptable to the World Bank. Procurement 71. An assessment of MARN's capacity to implement procurement actions for the ESP recently approved by the Board of Directors concluded that because MARN has no previous experience implementing World Bank projects, the associated risk i s considered high. Consequently, it i s recommended that a Procurement Officer be hired as part of the PCU. 4. Social ~~~~ pollution from numerouslakeshorehomes and the town of Metapan) will not be easily controlled by MARN. One of the first key decisions indelimiting the future boundariesof the NPA will be to decide whether to include (any or all of) the privately owned shoreline lands, along with the publicly owned lake surface area. 17 Stakeholder Involvement 72. A participatory social assessment was done in each pilot protected area to: (a) identify all key stakeholders who should participate in decision-making on project design and implementation; (b) consider the project's key stakeholders in a significant and adequate manner for the design, promotion, and execution of the project; and (c) identify the possible risks that could hinder the achievement of project objectives and make rewmmendations to compensate for such risks. 73. As described in Annex 10B, the assessment, based on quantitative and qualitative methods, identified project beneficiaries/stakeholders as: (a) specific focus groups such as the very poor (mostly people with un-regularized land rights, such as those without titles or concessions, former people displaced by the civil war, and peasants) and wealthy (mostly holding legal but irregular titles in areas subject to MAR"s jurisdiction); (b) MARN; (c) CNR; (d) municipal offices; (e) NGOs; and (f) ADESCOs-all of which will be able to know what are the boundaries, who are the land's legal titleholders, and what are their rights with regard to land, and what are the use restrictions on those lands-and, (g) civil society-the local and national population, who will benefit from an improved PA system-and the regional and global populations who will gain from the conservation of regionally and globally significant biodiversity. 74. The project expects to mitigate and prevent adverse social impacts through: (a) emphasizing early and frequent consultation with key stakeholders at the local and national level, carrying out social promotion and education to achieve capacity building and participation; (b) strategically disseminating the project, clearly showing its objectives and scope and avoiding the creation of false expectations; (c) establishing dialogue with state sectoral institutions, municipal offices, NGOs, and ADESCOs to avoid social conflicts as much as possible; (d) developing management plans for the pilot areas with the participatory involvement of local stakeholders; (e) creating alternative conflict-resolution mechanisms at the local level to address project-related disputes; and (f)creating incentives, through the implementation of management plans. 75. In addition to the social assessment, six participatory workshops have been held. These include four national bringing together over 300 key stakeholders, including national agencies, municipalities, private sector representatives, ADESCOs, NGOs, and citizens to discuss how national conservation objectives could be integrated into the systematic land regularization process, and the specific project objectives. Two additional local workshops were held (one in each pilot area), in which local stakeholders contributedto the project design (see Annex 10A).23 5. Environment 76. The project is designed to achieve a strengthened PA system, based on results gleaned from the consolidation of two priority protected areas. Through this outcome, the project aims to contribute to the conservation and sustainable use of regionally and globally significant biodiversity in El Salvador resultingfrom the rationalization and consolidation of the protected areas system. 77. The project was born in part from the results of the Environmental Assessment (EA) done for the LAPI1project, which found that that project had significant positive potential impacts related to the improved management of PAS,because land administration presents a limited window of opportunity to limit population distribution in PAS,limit allowable activities on ecologically ' 22Three of these national workshops were associated with the preparation o f the partially blended L A P I1and are described inthe PADfor that project. The fourth national workshop focused solely on the objectives o f the proposed roject, as described inAnnex 10. The local workshop in Lago Guija was held on May 17,2005, and the local workshop for Bahia de Jiquilisco was held on June 20,2005. 18 sensitive lands, and develop a model for promoting sustainable development on those lands. This project attempts to realize those positive environmental impacts through consolidating two pilot protected areas and improving the overall managementof the national protected areas system. 78. The proposed project aims at addressing the root causes of biodiversity loss in El Salvador by piloting a methodology to consolidate two priority protected areas. The project will develop and pilot-test mechanisms for the regularization of communities in and near two priority conservation areas, one mangrove (Bahia de Jiquilisco) and one inland protected areas complex (Lago Guija- San DiegwLa Barra, or "Lago Guija Complex")-as long as those residents abide by use limitations established in broadly consulted management plans-as part of a long-term comprehensive and sustainable development plan for those pilot areas. This methodology will come out of a participatory process, led by M A N and involving other government agencies addressing land and natural resource issues, and civil society and the private sector. Pilot consolidation activities will address the potentialconditional regularizationof residents inand near PAScontaining globally significant biodiversity, and will develop and implement management plans, including identifying and supporting conservation-friendly income-generation activities for those residents. By developing and testing a methodology for consolidating PASand supporting the creation of a strategy to rationalizethe PA system, successful project completion would greatly advance biodiversity conservation in El Salvador. Inaddition, by providing secure tenure, support for environmentally sustainable livelihood activities, and a strategy for quelling encroachment into the few remaining critical biodiversity nodes in the country, and strengthening the legal and institutional framework for natural resource management, the project contributes to the long-term protection and conservation of globally significant biodiversity. 6. Safeguard Policies Safeguard Policies Triggered by the Project Yes No EnvironmentalAssessment (OP/BP/GP4.01) [XI E l Natural Habitats (OP/BP 4.04) [XI [ I Pest Management (OP 4.09) [ I [XI Cultural Property (OPN 11.03, being revisedas OP 4.11) [XI [ I Involuntary Resettlement (OP/BP4.12) [XI E l Indigenous Peoples (OD 4.20, being revised as OP4.10) [ I [XI Forests(OP/BP 4.36) [XI [I Safety of Dams COP/BP 4.37) [ I [XI Projects inDisputedAreas (OP/BP/GP7.60)" [ I [XI Projects on InternationalWaterways (OP/BP/GP 7.50) E l [XI "By supporting the proposedproject, the Bank does not intendto prejudicethe final determinationof the parties' claims on 79. The project is classified as a Category B, requiring some type of EA but not a full-scale Environmental Impact Assessment. Recommendations of the project's EA, currently being finalized, will be embedded in the project design. In accordance with OP 4.01, the project EA builds on that done for the linked LAP 11, which was conducted by national and international experts during2004. Specifically, the PACAPEA consists of three studies: (a) an overall PA study developing recommendations for improving the WAS; (b) ecological assessments of the two pilot areas; and (c) an EA of eligible project activities within the two pilot areas. The project design i s fully consistent with the Bank's Natural Habitats, Forests, and Cultural Property policies (see Annex 10A for details). 80. Although no involuntary resettlement would take place under the project, there might be increased restrictions on access to natural resources for some of the people living in, or adjacent to, the project pilot areas. Consequently, a Process Framework (see Annex IOC) has been produced to 19 ensure that project beneficiaries receive appropriate consideration and assistancein their efforts to maintain or improve their livelihoods. Such assistance would be provided during the formulation and implementationof managementplans for eachpilot area. 81. Inaccordance with IBRD's policy on Disclosure of Information (BP 17.50), copies of the EA and Process Framework are available for viewing at MAW'Soffice (Edificio ISTA, km 2.5 Calle a Santa Tecla, San Salvador), on MARN's website (www.mam.gob.sv), and in the Bank`s InfoShop in Washington. 7. Policy Exceptions andReadiness 82. The project does not require any exception from IBRD or GEF policies. The fiduciary arrangements are in place. All key project staff and consultants are expected to be mobilized prior to project effectiveness. Adequate monitoring and evaluation capacity i s already in place. This project complies with all applicable Bank policies. 20 Annex 1:Country and Sector or ProgramBackground ELSALVADOR: ProtectedAreas ConsolidationandAdministrationProject Country and Sector Issues 1. Biodiversity Significance: El Salvador, located in the geographical center of the Mesoamerican Biodiversity Corridor, supports an impressive diversity of species, comprising 1,477 species of vertebrates (27 percent of which are threatened with extinction), with 510 bird species (including 17 of the 23 birds endemic to northern Central America), and 140 species of reptiles and amphibians, around 7,000 native plant species (including more than 700 species of trees), and 800 species of butterflies-all in an areathe size of Massachusetts.This highbiodiversity-stemming from the country's unique setting, peppered with volcanoes and isolated from Central America's Atlantic moist forests-persists despite the fact that El Salvador retains just 2 percent of its primary forest and perhaps 25 percent natural vegetation (including secondary forests). El Salvador also contains one of the largest expanses of mangroves in Central America (centeredaround the Bahiade Jiquilisco). 2. Threats to Biodiversity: The globally and regionally significant biodiversity sheltered within El Salvador's protected areas system (WAS) i s severely threatened. El Salvador-the most densely populated country in Latin America4ontinues to struggle with land-related issues, because population pressures have resulted in numerous encroachments into protected areas. These encroachments result in significant habitat destruction and deterioration, through the conversion of forests, pollution, and overexploitation of natural resources, all of which stem in part from a lack of environmental awareness. As a result of unchecked habitat destruction, it is likely that some of the smaller protected areas comprising W A S no longer contain sufficient naturalor near-natural habitats to warrant special protected status. 3. Protected Areus System Design and Consolidation: El Salvador's protected area sybtem offifizidlly includes 118 natural protected areas, totaling 39,975 and approximately 35,500 ha of mangrove-all under the jurisdiction of the Ministry of Environment and Natural Resources (MARN). Despite the large number of protected areas, their average size i s just 850 ha, rangingfrom 1.9 ha (Colomita) to 31,699 ha (Bahia de Jiquili~co~~),and virtually no areas have any legally defined buffer zones.26Of all the countries in the Mesoamerican Biodiversity Corridor, El Salvador has the smallest amount of area under formal protection (just 75,500 ha, representing 4.6 percent of the total Of this 4.6 percent of the country subject to MARN management, only about 7,000 ha (0.3 percent of national area) are legally declared and demarcated. To date, no Salvadoran protected areas are fully consolidated (demarcated, titled, and under a functioning management plan). Thus, the vast majority of the protected area system constitutes "paper parks," with an inadequate legal framework and virtually no physical protection. 4. The system's protected areas are largely undefined, both in terms of their physical boundaries and ecological resources, making management and priorization difficult. In addition, protected areas have been traditionally managed as individual units, where conservation efforts have considered mostly a 24 As per GEO. 25 According to M A W data, and considering only the area covered by mangroves (not the associated estuaries, beaches, bay, mudflats, and so forth). 26 Only one park, El Imposible, includes a legally defined buffer zone (drea de Veda). 2' According to the Ecosystem Profile: SouthemRegion,Mesoamerica (Critical Ecosystem Partnership Fund) this i s significantly behind Costa Rica (with 24 percent o f the land protected), Guatemala (23 percent), Nicaragua (17 "ercent),than Panama(17 percent), Belize (10 percent), and Honduras (8 percent). More 1.6 percent of El Salvador's land was officially designated as protected area in the newly approved protected areas law (Ley de Areas Protegidas, February 2005). These lands include all mangroves in the country, which were considered national forests outside o f the protectedareas system prior to the passageof the law. 21 "boundary inward" approach, thus limiting the possibilities of linking these protected areas with others within the landscape. 5. Given the limited resources available for protected area management, and the need to sustainably manage biodiversity, El Salvador developed a National Plan for the management of its landscape (Plan Nacional de Ordenamientoy Desarrollo Territorial, PNODT, 2002). Through this Plan, 15 Conservation Units (now called Conservation Areas) were proposed to provide an ecologically sound and administratively feasible way to link protected areas, through the establishment and management of biological corridors and buffer zones. The idea of establishing 15 Conservation Areas is consistent with the need to prioritize biodiversity conservation efforts in the country. To date, management efforts considering this approach are being initiated in two Conservation Areas (Apaneca-Ilamatepec and Bahia de Jiquilisco). 6. Building on the PNODT, the "Natural Protected Areas and Biological Corridor National Strategy" was recently elaborated by MARN (2005). This strategy considers an ecosystem approach to biodiversity conservation, and sets forth clear strategic activities to strengthen the NPAS. These include (a) institutional capacity building, (b) land use and Conservation Area planning, (c) political advocacy, (d) public communication, (e) economic sustainability, (f) information management, and (g) research. This strategy seeks to address the main threats to the NPAS: habitat loss and degradation, resulting in the loss of renewable natural resources, which, in turn, diminish the quality of life of local human populations. MARN has incorporated this strategy into its work program, strengthening liaisons with NGOs and ADESCOs working in protected area management. However, there i s still the need to incorporate a larger number of key stakeholders, who (directly and indirectly) have an impact on specific protected areas and on the overall NPAS. 7. Institutional and Legal Framework: The original protected areas system was created by the Ministry of Agriculture and Livestock (MAG), which had declared 47 NPAs by 1976. Before 1973, the mangrove forests were controlled by the local municipal authorities. With the approval that year of the Forestry Law (Ley Forestal), the mangrove forests were declared Natural Patrimony under the jurisdiction of MAG, and thus were protected lands. However, these forests were not managed as PAS(with park guards, management plans, and so forth), but were considered multiple use areas. In these areas, MAG, both through its Forestry (Servicio Forestal) and Fisheries (CENDEPESCA) services, was legally responsible for controllingthe use of naturalresourceswithin mangrove ecosystems. 8. The agrarian reform process began in 1980 to facilitate transfer from large landowners to the poor, and expropriated 411,15 1ha-about 20 percent of the country-including 22,000 ha of potential natural protected areas for the jurisdiction of the Salvadoran Agrarian ReformInstitute (ISTA). 9. When the Salvadoran NPAS was first proposed in 1990, it included 118 areas under MAG'S jurisdiction-despite the fact that most of those lands officially pertained to ISTA, municipalities, and private landholders, and had been selectedbased on unclear criteria. The first national environmentallaw (Ley de Medio Ambiente, 1998) created MARNandtransferred to this institution the responsibility for the management of the W A S . Today, MARN remains responsible for the oversight of more than 118 protected areas under eight management categories, plus approximately 35,000 ha of coastal mangroves, but has legal title over only 7,072 ha. Consequently, the vast majority of the lands that theoretically are part of the SANP have unresolved legal status. 10. An important legaldistinction exists between mangroves (governed under the 2002 forest law and the 2005 protected areas law) and natural protected areas (NPAs) with regard to land rights. Both mangroves and NPAs are considered "protected areas,"29 wherein private or public entities are allowed to carry out 29Equivalentto IUCNCategory 11. 22 activities that are compatible with the area's conservation, on authorization of MARN.Mangroves, on the other hand, are managed as sustainable use areas:' wherein residents are eligible to receive usufruct rights in the form of concessions, granted by MARN, subject to uses defined in management plans. In "As, the new law does not allow new human settlements once the areas have been established as protected, with the exception of the natural reserve category where no human settlements whatsoever are permitted. This implies the need to develop a methodology to identify illegal and legal settlements within PAS,and how to regularize the latter. 11. Institutional Capacity for Protected Areas Management: MARN, created in 1998, is severely resource constrained, both in financial and human capital terms. Its diverse responsibilities and small annual budget (around US$5 million) severely limit its capacity for on-site staffing of the main protected areas, and for the coordination of the broader Conservation Areas. Currently, six technical staff, mostly located in the national capital (in the Protected Areas Section of the General Directorate of Natural Patrimony, DGPN), are responsible for oversight of the entire WAS3' There is also only one full-time employee (also basedin San Salvador) for all of the country's mangrove ecosystems. 12. Land Tenure: An additional challenge for the WAS relates to clarifying land tenure. In all but three protected areas comprising 7,072 ha, the system's lands are not officially titled inthe name of MARN, but remain in a legallimbo among other state agencies, municipalities, and even private individuals. This lack of tenure clarity in unoccupied areas has in part led to a significant number of invasions of state-owned lands (most of which are protected areas). Most of these protected area invasions are by the rural poor, who have limitedproduction and livelihood alternatives. Table 1.1 Legally Protected Areas inElSalvador Protected Area MONTECRISTO ELIMPOSIBLEELJOCOTAL LAGUNA Legal Status ExecutiveDecree, 1987 ExecutiveDecree. 1989 Legislativek n e e , 1996 Hectares 1,973 2,985 1,571 Location Metapin, SantaAna. Part of a SanFranciscoMenendezand ElTransito,SanMiguel BiosphereReserve Tacaba, Ahuachapan Biodiversity Largest cloudforest in One of the richest areas of RAMSAR site since 1998. characteristics country, with 40% of its biodiversity inthe country. Contains some of the largest amphibiansand36% of One of the region's few flocks of waterbirds in reptilesindanger of protectedareas of Pacific country and servesas arefuge extinction. forests, containingalmost400 to migratorywater birds. differenttree species, more Offersone of the last than500butterfly species, and remaininghabitats for Jabiru 45 mammalspecies, most of mycteria in the country. which are threatenedor endangered. Management plan Designedandinoperation, Designedandimplemented Designedandimplemented jointly createdwith the jointly with MARN andthe jointly with NGOs. governments of Honduras and NGO SalvaNatura. Guatemalaunderthe Trifinio Plan. Currentsources EuropeanUnion, UNESCO, IUCN, SalvaNatura, CARE, MARN, AECI, IUCN. offinancial Japanese Intemational AECI. support CooperationAgency, IDB, 30 Equivalent to IUCNCategory VI. 31 Each technician is responsible for 10 to 15 protected areas, most o f which do not have on-site protection. Only one National Park (Montecristo) has an on-site Director, and five areas have a limited number of parkguards. 23 13. The Government's Land Administration Project (LAP), currently entering its second phase with IBRD support, is systematically assessing land tenure nationwide. These efforts have important implications for the NPAS, because LAP's activities include extensive geographic data collection (through satellite images, overflights, and so forth) and determinationof land rights. 14. Enabling Environment: Despite the significant threats to the protected area system, the culmination of several events has provided a unique opportunity to address these issues. First, MARN has recently completed several documents to strengthen the NPAS, including the (a) National Biodiversity Strategy, (b) National Land Use and Development Plan, (c) Natural Protected Areas and Biological Corridor National Strategy, (d) National Strategy for Biodiversity Monitoring and Evaluation, together with procedures, and (e) National Strategy for Co-management, with its corresponding procedures. Perhaps most important, the NaturalProtected Areas Law was finally approved in 2005, thus establishing the legal framework for managementof the SANPunder MAR"sjurisdiction (see below). 15. Furthermore, the LAP i s midway through completing the cadastre and registry of all lands in the country, which has been deemed a high priority by the new Government. Duringthe preparation of the second phase of the IBRD-funded project, the Government identified the importance of resolving tenure conflicts in protected area lands, without which the LAP's efforts to address all of El Salvador's lands will fall short. The LAP's implementing agency, CNR, has made significant effort to involve MARN in that project, including a component for demarcation of three (as yet unidentified) protected areas. By developing a partially blended operation, GEF funds will catalyze the consolidation of the national protected areas systemby exploiting the significant opportunity presentedby the LAP. Summary of New Protected Areas Law 16. The new Protected Areas Law, which was approved by the Assembly on February 13,2005 and came into force on February 24, 2005, defines the structure and configuration of the NPAS, identifying the rules for selecting, establishing, and managing the areas, both public and private, that can or should be part of it. Specifically, the objective of the law i s to regulate the legalization process, administration, management, and increaseof protected areas, with a view to promoting biodiversity conservation through their sustainablemanagementfor the benefit of the country's population. 17. According to the law, the protected areas will be legally established through executive decree, on the basis of their biological, technical, and legal characterization andpriority, as determined through technical studies. The regulation (Reglamento) for the implementation of the law (which i s still a work in progress) will define the required steps for establishing an area as a protected area, including its delimitation, technical categorization, and demarcation. Private properties will be eligible to be part of the Protected Areas System, as long as they are significant from a biological or historical standpoint and are managed, by the owner, in accordance with the law. The declaration of protected area will have to be recorded in the Property Registry. All protected areas will be registered inthe Protected Areas Registry maintainedby the Ministry of Environment. 18. The law further defines management categories, according to the objectives established for a given area and its available natural resources. These categories broadly corresponds to the IUCNprotectedarea managementcategories. 19. Responsibility for implementation. Overall responsibility for the implementation of the law and its regulations lies with the Ministry of Environment and Natural Resources. With regard to the management of protected areas, the law identifies three levels of responsibilities: (a) a national, strategic level, under the leadership of a Protected Areas National Committee (to be created); (b) a national, operational level, 24 under the leadership of the Directorate General of Natural Patrimony; and (c) a local level, at which Local Advisory Committees will be the main instrument for inclusion and broad participation of the local entities and communities. 20. Co-management approach. To ensure its efficient and effective implementation, the law allows MARN to delegate, through executive agreement, some of the activities related to protected areas management to autonomous entities, municipalities, or NGOs legally established. Co-management and the formal participation of civil society in the management of protected areas i s an important concept in ElSalvador, sanctioned inthe Environment Law of 1998.It takes on even greater importance considering the limited institutional capacity within the Ministry of Environment and the ongoing decentralization efforts. Indeed, since the 1990s,NGOs have been actively involved inthis area, and today several of them (about 30) have beendelegatedthe managementof a protected area. 21. Management plans. The delegation of the protected area management will require the formulation and approval of a management plan for the specific area. While no new human settlements are allowed within a protected area once it has been established, the managementplan will have to include, if the case occurs, specific regulations to ensure that the preexisting settlements operate in accordance with the conservation objectives set for the area. No human settlements whatsoever are permitted in the Nature Reserve category. Currently, however, a methodology to identify illegal and legal residents within PAS andthe regularization of the latter does not exist. 22. No management plan has yet been implementedfor mangrove forests in El Salvador, despite the fact that the country supports one of the largest expanses of mangroves in Central America (for example, Bahia de Jiquilisco)?* The development of ecosystem-based management plans for mangroves are of paramount importance given the highpopulation density in El Salvador's forests-at 269.6 persons/km2. El Salvador's mangroves are subject to population pressures three times higher than any other Central American country. 23. Activities within PAS.The management plan will also define buffer zones and regulate the productive activities therein so that they are compatible with the conservation of the area. More generally, the law allows private or public entities to carry out activities within protected areas that are compatible with the area's conservation, on authorization of the Ministry of Environment and Natural Resources.Inmangrove areas, in addition to authorizations, residents are eligible to receive usufruct rights in the form of concessions, grantedby MARN, subject to uses defined in managementplans. 24. Biological Corridor approach. The law further allows combining the administration as a Conservation Area of those protected areas that are geographically interconnected and ecologically interdependent, thereby contributing to. the conservation efforts within the Mesoamerican Biological Corridor. Protected Area Management Case Studies 25. Montecristo NationalPark: The management of Montecristo National Park, the largest cloud forest in the country, was initiated in 1976 to prevent landslides and flooding into the City of Metapan. Duringthe 1970s and 1980s, Montecristo was considered to be the best-managed park in the country, due to its permanent staff. A local fund was established (Fondo deActividades EspeciaZes)-replenished with entry fees, timber sales, and sales of flowers and coffee grown in certain park areas-by which the administration can generateand reinvest money for management. 32AECI recently completeda managementplanfor a portionof the Bahiade Jiquilisco, andplansto implementit in the short term. 25 26. Since its establishment, Montecristo has been managed by the GOES, with active participation by both MARN and the Vice-presidency, since the area borders two other nations, Honduras and Guatemala. The park headquarters, a colonial building built in the late 1880s and refurbished with the help of CONCULTURA, serves as a tourist attraction. While several other governmental institutions participate in the managementof the park, neither co-management agreements nor concessionshave been granted to fundactivities considered within the Park's ManagementPlan. 27. Montecristo National Park i s located within the Guija-Montecristo Conservation Area (PNODT 2002). This 44,531 ha Conservation Area is divided into three zones: (a) high, containing Montecristo National Park, where mountain waters feed Laguna de Metapan and Lago de Guija; (b) intermediate, a densely populated area; and (c) low, representing the only dry forest in the country, containing L a Barra and San Diego Protected Areas. 28. The Pilot Trifinio Project (Proyecto Piloto Trifinio, PPT), supported through the European Union, was initiatedin 1995. One of its main goals is to establish a Trinational Biosphere Reserve, covering large extensions of land at the nexus of three countries (El Salvador, Guatemala, and Honduras), with the Park as its nucleus. PPT has promoted sustainable agriculture, integrated forestry management, water provision, health and education, and small business formation in the buffer zones, and increased the awareness of the importance of the Park. 26 Table 1.1: MainSuccessesand Shortcomingsof Montecristo NationalPark Management Management of Main Successes Main Shortcomings Montecristo Zentralized and bureaucratic process to obtain National Park Zontinuous conservation efforts since :ntry permits 1976 Buffer zones not effectively managed Reforestation and soil conservation programs Unresolved legal situation of human settlements within the Park ManagementPlan in operation Lack of social development projects Relatively well-trained guides Insufficient funding because not all money from Establishment of a governmental fund the governmental fund is reinvested in the Park for the management of the Park Limited participation of key stakeholders in the Established fire control system. Management Plan. Linkages with other Successes Shortcomings Protected Areas Proyecto Piloto Trifinio Non-continuous buffer zone management efforts Human activities and attitudes not congruent with sustainable management of land and resources Nonexisting interinstitutional arrangements among governmental entities to jointly administer land and resources among PAS Lack of incentives for private landvwners tu develop alternative and sustainable productive activities. El ImposibleNational Park ElImposible National Park is one of the largest (2,985 ha) and biodiverse PASwithin the WAS. One of the few areas of protected Pacific forests, El Imposible contains almost 400 different tree species, more than 500 butterfly species, and 30 mammal species, most of which are threatened or endangered. The National Parks and Wildlife Service (PANAVIS) began administering the park in 1976, establishing a group of park guards. Through the 1980s, its management by PANAVIS took a "boundary inward" approach, excluding the participation of other key stakeholders and the communities situated around the park, many of whom were dependent on the park`s resources for at least part of their livelihoods, in the development of the park`s management plan and other key decisions. This led to a number of problems that are still being grappled with today. In 1991, as part of a strategy to decentralize and socialize the management of PAS,PANAVIS signed a co-management agreement with SalvaNATURA, a Salvadoran NGO. From this date onward, this NGO has been responsible for all management activities in the park, except for activities regarding law enforcement. A Management Plan (MP) was elaborated in 1996, and i s being updated. Currently, 6 national (MARN-financed) and 15 private (SalvaNATURA-financed) park guards work in the park. SalvaNATURA thinksthat at least 25 park guards are neededto adequately protect the area. El Imposible is part of the El Imposible and Barra de Santiago Conservation Area (PNODT 2002). This 36,000 ha Conservation Area is divided into three zones: (a) h&, containing El Imposible, at the 27 headwaters of five large rivers; (b) intermediate, the largest and most densely populated zone; and (c) low, coastal area including alluvial plains and mangrove ecosystem. In addition to El Imposible, the Conservation Area contains four other PASlocated on the low zone (Barra de Santiago, Santa Rita, Zanj6n ElChino, andCara Sucia). Several initiatives aiming at integratingthe managementof all the PASwithin the Conservation Area have been developed since the mid-l990s, including BASIM (Barra de Santiago-El Imposible), financed by IUCN, and the Green Project (PROMESA), financed by USAID. PROMESA'S approach was to strengthen biodiversity conservation within the Conservation Area, through sustainable management of the entire watershed, providing opportunities by linking natural habitats through implementing sustainableagriculture and forestry inthe intermediate zone between ElImposible and Barrade Santiago. Table 1.2: MainSI cessesandShortcomingsof ElImposible ationalParkManagement Main Successes Main Shortcomings ElImposible Continuousconservationeffortssince 1976 SustainableDevelopmentProgramof NationalPark ManagementPlanhasnot been Management Co-managementagreementsigned since 1991 implemented ManagementPlanin operation Bufferzones have notbeendelimitated and effectively managed Novelelementsof the ManagementPlan Unresolvedlegal situationof human Excellent promotion of El Imposible in mass settlements within the Park (30 families) media Territorialconflicts with neighboring Increasedeco-tourism farms Social Development Projects in several Lackof continuity of Social Development communitiesexecutedwith small grants Projects Insufficientfunding Limited participationof local communities andother key stakeholders inthe ManagementPlan Successes Shortcomings Linkages with other PAS PROMESA project developedover four years Non-continuousbuffer zone management efforts BASIMprojectunder development Humanactivities and attitudes not congruent with the sustainable managementof landand resources Nonexistentinterinstitutional I arrangements amonggovernmental entitiestojointly administer land and resourcesamong PAS Lack of incentivesfor private landowners to develop alternativeand sustainable productiveactivities 28 Annex 2: Major Related ProjectsFinanced by the Bank and/or other Agencies ELSALVADOR: ProtectedAreas ConsolidationandAdministration Project " Progress Objective FINANCED BY THE WORLD BANUGEF Agricultural Agricultural Sector Reformand $40M S S sector reform Investment Project (PRISA) (Project ID7167) Land LandAdministration Project $50M S S administration (Project ID7174) Land SecondLandAdministration Project $50M administration (Project ID86953) Biodiversity Promotion of Biodiversity $0.7M S S Conservation within Coffee Landscapes(GEFMid-size Grant) (Project ID56914) Environmental Environmental Services Project $10M services I Project (GEFFull-size grant; IBRDloan; (GEF+IBRD) ID6~ 10) I $600,00O(PHRD) I FINANCED OTHER BY AMOUNT SECTORISSUES DEVELOPMENTAGENCIES IDB $30,000,000 Programto Support the Environmentalmanagement and NationalEnvironmental watershedmanagement Management inElSalvador (PAES) IDB $348,000 Institutional and technical strengthening for Municipal environmental municipal environmental management management IDB $300,000 Design of a Programfor Sustainable Development Sustainabledevelopment of the of Bajo Rio Lempa LempaRiver IDB $37,529,000 Institutional and technical strengthening for solid Environmental clean-up of waste and aidwater quality management critical areas GEF/ UNDP $694,000 Mesoamerican Biological Corridor Biological corridor GEF/UNDP $423,000 Strengthening National Capacities for Biodiversity Biodiversity management Management; National Biodiversity Strategy 29 GEF/UNDP $257,000 Small-scale sustainableenergy sourcesfor Electrification based on sustainabledevelopment renewable resources UICN $1,000,000 IntegratedWatershed Management for a Watershed management SustainableWater Supply inBenefit of the Local Population and Ecosystemsinthe El Imposible- Barra de SantiagoGeographic Unity Government of Holland $244,000 Strengthening of regionalenvironmental Environmental Management managementsystems AECI $223,000 Support to the Management of the Complejo Protectionof Natural Areas Andes-Volcanes Protected Areas AECI $1,280,000 Management of Protected Areas and Watersheds Protectionof Natural Areas ~ Ramsar Agreement $26,000 Restoration of the NaturalHabitats of Cerrdn Conservation of NaturalAreas. Grandefor its Conservation and Rational Use inEl Salvador USAID $100,000 Improve civil society participation in Participationinenvironmental environmentalmanagement management Government of France $3,000 Landuse information Atlas of Agriculture and Forest inElSalvador Government of Finland $600,000 Promotion of sustainableenergy for rural poor Renewable Energy EU $4,500,000 Landregularizationand formalization LandTransfer Program EU $9,600,000 Strengthening of local and central environmental EnvironmentalManagement and natural resources management Strengthening (FORGAES) FIAES $12,225,000 Support to protectedareas, management of small Small-scale sustainable watersheds and coastal-marine ecosystems development for conservation FONAES $3,136,000 Conservation and protection of biodiversity, ElSalvador EnvironmentalFund institutional strengthening and reforestation 30 Annex 3: ResultsFramework and Monitoring ELSALVADOR: ProtectedAreas ConsolidationandAdministration Project Global Environment OutcomeIndicators Useof Outcome Information Obiective To conserve ElSalvador's Updated strategy and action plan National protected areas globally significantbiodiversity for consolidating sustainable system strategy approved and bystrengtheningthe national nationalprotected areas system necessary supporting policy protectedareassystemand developed. framework developed. consolidatingtwo priority Two pilot protected areas Replication of PA consolidated and effectively consolidation andadaptations managed (Trackingtool* score of to existing individual PA at least40 for 35,600 ha inBahia management plans underway de Jiquilisco and 1,917 hain inother PAinthe system. Lago Guija ComplexSun Diego- La Barra). Biodiversity benefits established Dissemination of results at inat least 12,400 ha: national, regional, and global o ForBahia deJiquilisco levels. PAat least 11,000 haof mangrove or associated humidforest within the core protection zones will have negligible deforestation (less than 1% over 5 years) compared to baseline. o For the Lago Guija ComplexSunDiego-La Barra at least 1,400 haof dry tropical forest or associatedriparian forest will have negligible deforestation (less than 1% over 5 years) compared to baseline. IntermediateResults ResultsIndicatorsfor Each Use of ResultsMonitoring Oneper Component Component ComponentOne: ComponentOne: Component One: NPAS strengthenedto enable Completion of a prioritization YR 2: Prioritization study long-term sustainable study of the NPAS. presented at policy workshops. managementthrough consolidation of existing Action Planfor implementation YR 5: Action Planpresentedto strategy. of the updated W A S key decision-makers. * Tracking Tool for GEF Biodiversity Strategic Priority 1. 31 Delimitationof at least40 7R 5: Incorporate information ?rotectedareas and mangroves. ntoprotected areas registry inked with integrated cadastre I md registry system (SIRyC). 4pprovedupdated regulations for IR 14: Incorporate lessons implementation of the new earnedfrom pilot sites into draft ProtectedAreas Law. egulations. Draft interinstitutional u'R3-5: Incorporateconcerns of agreements for operating the Ley stakeholders into WAS. igreements. At least 10%of national population aware of new YR 1-5: Update information protected areas law and :ampaign based on results. regulations. I Component Two: ComponentTwo: ComponentTwo: Socioeconomic census, YR1: Inventory of all existing environmental information, ?ilot site information made, with mappedofficialboundaries, Sata gaps identified and cadastreandregistry for each prioritized. pilot protected areacollectedand linked with CNR databases. YR1-2: Developplan for linking zxisting data to CNR database. YR 3-5: Linkprotected area database with SIRyC. Percent of pilot protected area YR 1-3: Resolve identified I lands with no unresolved tenure conflicts through Alternative issues. Conflict Resolution (ACR) means. Demarcation of pilot PAS YR 2-4: Determineand (including external boundaries of disseminate best methodfor pilot areas, and nuclei): number demarcation. of kmdemarcated and 5% of perimeters demarcated. Executive Decreesto establish YR 4: Publishand register pilot PAS. Executive Decrees. Number of protected area field YR 2-5: Improve management staff ineach pilot area plans and staffing requirements basedon monitoring: results. ** ~ Management plans will include zonification (including buffer zones, core zones, and so forth), types and limits of allowable uses of natural resources by zone, basic infrastructure and user fees, granting of land rights (through usufruct, concessions, conditional titles, and so forth) to eligible residents within the pilot areas, monitoring and evaluation, and co-management, where appropriate. 32 Amount of revenues (inUSD$) YR 2-5: Use results to refine raised from sustainablenatural NPAS Strategy andActionPlan. resourceuse concessions, visitor fees, and other potentialcost recovery mechanisms. Component Three: Component Three: Component Three: Project effectively managed, Publicationof periodic Project YR 1-5: Improveproject design supervised, and monitored. reports (FMRs, semestral reports, basedon monitoring results. and annual work plan available). Regular performance and impact YR 2-5: Assess performance of monitoringreports produced and PCU staff and modify staffing if disseminated inaccordancewith needed. annual work planschedule. MTRavailable andtransmitted to YR 2-5: Annual budget review the Bank. to adjust work plan. 33 $ 3 U E ke! VI 8E VI % % B - % 2 5 X X X X X X a 5? * .-a cg 0c8 X X X 2 8 - 3 VI M X X X X X X X x 0 C X X X X 0 Annex 4: Detailed Project Description ELSALVADOR: Protected Areas Consolidation andAdministration Project 1. The Project Development Objective of the partially blendedLAPI1i s to improve land tenure security and land transactions by providing efficient, equitable, and accessible land administration services, thereby facilitating better land-related investments and more productive and environmentally sustainablelanduse. 2. The Project Global Environmental Objective for the proposed project is: To conserve El Salvador's globally significant biodiversity by strengthening the national protectedareas system and consolidatingtwo priority protectedareas. 3. The envisioned project global environment outcome indicators are: 0 Updated strategy and action plan for consolidating sustainable national protected areas system developed. 0 Two pilot protected areas consolidated and effectively managed (tracking tool score of at least 40 for the 35,600 ha in Bahia de Jiquilisco and 1,917 ha in Lago Guija Complex San Diego-La Barra). 0 Biodiversity benefits established inat least 12,400 ha: o For Bahia de Jiquilisco PA, at least 11,000 ha of mangrove or associated humid forest within the core protection zones will have negligible (less than 1% over 5 years) deforestation compared to baseline. o For the Lago Guija Complex San Diego-La Barra, at least 1,400 haof dry tropical forest or associatedriparian forest will have negligible deforestation (less than 1% over 5 years) compared to baseline. Project Overview and Components 4. The proposed project-a pilot-would develop and pilot-test mechanisms for the regularization of communities in and near two priority pilot protected areas-as long as those residents abide by use limitations established in broadly consulted management plans-as part of long-term comprehensive and sustainable development plans for those pilot areas. The results of the pilot activities would be used to update and strengthen the national protected areas system (NPAS). The project i s a priority of the Government of El Salvador and the El Salvador Ministry of Environment and Natural Resources(MARN). Component1: Strengtheningof theNational ProtectedAreas System (NPAS) (US$5.4M Total; US$1.40 M GEF) 5. The objective of this component is to strengthen the W A S to enable long-term sustainable management and use of biodiversity resources, using an ecosystem approach. This will be achieved through the improvement and consolidation of the existing strategy for the System,33with the participation and inclusion of all relevant stakeholders, including the private sector. The strengthening of the system will be further achieved through improvements to the institutional and legal framework for its administration and management. 33The existing strategy is the Estrategia Nacional de Areas Naturales Protegidas y Corredor Bioldgico (MARN2005). 38 1.1:Consolidationof NPAS Strategy 6. The aim of this subcomponent is to improve and consolidate the existing NPAS strategy through data collection (targeting existing data gaps), prioritization of efforts, and broad stakeholderconsultation and consensusbuilding. 7. This subcomponent will build on the National Protected Areas Strategy (Estrategia Nacional de Areas Naturales Protegidas y Corredor Bioldgico; MARN2005), which aims to contextualize the existing fragmented NPAS into a landscape-based management framework, usingthe concept of Conservation Areas. This Strategy has to date not been broadly consulted with key stakeholders, including public and private sector institutions, andthe generalpopulation. 8. Toward this aim, MARNwill undertake a rationalization and prioritization study of all 118 areas, including mangroves, currently included in the NPAS. This study will include a rapid ecological assessment of all such areas and their surroundings, an evaluation of the institutions and other entities (NGOs, ADESCOs, etc.) currently I involved in the management of those areas, and recommend where to focus efforts to consolidate and manage a system, including the areas supporting the most important biodiversity. 9. Results of the prioritization study, along with results obtained from project preparatory studies (including recommendations for improving the institutional oversight and economic viability of the WAS) and results from project implementation in the pilot areas, and the existing Strategy, will be discussed as part of a broad "policy dialogue" with key stakeholders regarding the NPAS. The consultations, which will comprise workshops, meetings, and roundtable discussions, will be held in San Salvador and in at least three department capitals. Key stakeholders include representatives of MARN, CNR, MAG, ISTU, ISTA, CONCULTURA, CENDEPESCA, NGOs, and ADESCOs participating in the co-management of protected areas (PAS), municipalities, the academic sector (and museums), the private sector, and the general public, as well as the CONANP (the National Council on Protected Areas), which has yet to be formed. Based on the results of the workshops, MARNwill develop a 10-year Action Planfor implementation of the NPAS (working from the Preliminary Action Plan prepared duringproject preparation and includedas Attachment 1below), includingresponsible parties, time frame, and costs. 10. Inaddition, as part of this component, MARNwill participate inthe delimitation (e.g. the field-based determination of gross boundaries) of protected areas and mangroves, currently being undertaken by CNR in LAP I1areas. Furthermore, this subcomponent will finance MARN's participation in the delimitation of remaining priority protected areas and mangroves in the LAP Iarea. 11. Key outputs of this subcomponent include: (a) completion of a prioritization study of the NPAS; (b) an Action Plan for implementation of the updated NPAS; and, (c) delimitation of at least40 protected areas and mangroves. 39 1.2:Strengtheningof the Legal and Institutional Framework 12. The aim of this subcomponent is to identify gaps in, and propose solutions to, the legal and institutional framework for consolidating the WAS, and to strengthen MARN so it has the capacity to effectively managethe consolidated system. 13. Buildingon results of the legal, institutional, economic, and NPAS analyses conducted during project preparation, and results of project implementation, this subcomponent will develop specific tools and recommendations necessary to adapt the laws and institutions governing the protected areas system. Specifically, with regard to the institutional framework, recommendations for streamlining institutional oversight of the NPAS will be developed and implemented when possible, to avoid the existing duplication of efforts (for example, ISTU and MARN with parallel responsibilities in distinct areas) and bottlenecks (for example, reducing the 18 necessary steps for transferring title for protected areas from ISTA to MARN). Likewise, key responsibilities will be proposed for all vital institutions and entities (for example, NGOs) working in or near protected areas to facilitate their management, and MARN will establish convenios with key institutions and entities to formalize these roles. 14. Similarly, the legal framework for protected areas will be improved through several activities. First, based on results of subcomponents 1.1 and 2.2 (see below), MARN will develop a proposal for improving identified legislative' gaps regarding the consolidation of the NPAS, including all forests, mangroves, conservation areas, protected areas, and other ecosystems of interest. Second, MARN will work to draft the norms and procedures necessary to enable the granting of use rights (such as concessions and authorizations) to, and to recognize and allow the presence (through conditional "marginalized" titles or other legal instruments that would recognize the presence of those people within the protected areas) therein of, eligible residents in protected areas. Third, building on project results, MARN will develop updated regulations for the new Protected Areas Law. Fourth, MARN, with the support of CNR, will develop the legal tools necessary to facilitate the creation of a unified protected areas registry linked to CNR's property registry. Last, MARN will lead a proposal for developing an alternative conflict resolution mechanism for issues related to the managementof protected areas. 15. Key outputs of this subcomponent include: (a) approved regulations for the implementation of the new Protected Areas Law, and, (b) draft interinstitutional agreementsfor operating the WAS. 1.3: Public Dissemination and Awareness Campaign 16. The objective of this subcomponent is to design and carry out a public dissemination and awareness campaign to: (a) promote an understanding of the importance of biodiversity conservation, the NPAS, and its sustainable use; (b) make people aware of the new protected areas law and other regulations regarding the conservation and use of protected areas; and, (c) publicize the goals and results of the proposed project, at the local and international level, thereby facilitating the application of identified best practices. 40 17. This campaign, which will be developed prior to project effectiveness, builds on lessons learned from the implementation of the LAP. The campaign's specific message and methods will be adjusted to the various target audiences, at the local (Pilot Areas and other PASwhere the project could be replicated) and national levels. At the local level, the campaign will be implementedby atwo private entities (such as NGOs; one for eachpilot area). At the nationallevel, the campaign will be undertaken by a firm, working with representativesof MARNand ISTU. The goals and results of the project will be further shared at the international level through participation in relevant workshops and conferences. 18. Key outputs of this subcomponent include: at least 10 percent of national population aware of new protected areas law and regulation. 2: Consolidationand Management of Pilot ProtectedAreas (US$7.1M Total; US$2.9M GEF) 19. The objective of this component i s to consolidate two pilot areas through the development, testing, and finalization of a methodology. For the purposes of the project, protected area consolidation includes the delimitation and physical demarcation of the pilot areas, regularizationof eligible residents through the granting of authorizations for their landuse and the issuanceof appropriate legal instruments to recognize and allow their presence in the pilot protected areas, the development and implementation of participatory management plans, and co-management. The results of this component will be used for the consolidation of the overall protected areas system included inComponent One. 2.1: Characterization and Delimitation of Pilot Protected Areas 20. The aim of this subcomponent is'to characterize and delimit the proposed pilot areas, through the collection, systematization, and analysis of physical, ecological, socioeconomic, cadastral, spatial, and legal data. 21. Under LAP 11, CNR will undertake activities related to collection and analysis of cartographic and cadastral data. Specific activities include: (a) the preparation of basic cartography and digital mapping for cadastre surveys in Bahia de Jiquilisco (this was already done for the Lago Guija Complex under the LAP I); (b) verification of rights and delimitation of properties in both pilot areas; and (c) transfer of registry data to SIRyC, linkingthem with cadastre data. 22. MARN will be responsible for compiling, updating, and organizing existing data regarding ecological and biological resources, socioeconomic activities, land use, and existing infrastructure. Specific activities include: (a) preparation of a detailed socioeconomic study; (b) analysis of existing environmental and land use data (including concessions) and identification of information gaps; (c) studies to fill the identified environmental data gaps; and, (d) linking the existing, MARN-managed Environmental Information System (Sistemade Znformacidn Ambiental) and Protected Areas Registry (Registro de Areas Protegidas) with CNR's geographic information systems and SIRyC, where relevant. MARN will also use the land tenure, socio- economic, biological and other information to choose and delimit on a map (with precise geographic coordinates) the official boundaries of each pilot protected area. In all cases, these boundaries will be determined emphasizing two key criteria, enabling 41 MARN to focus on sustainable management of biodiversity: 1) conservation of existing important biodiversity; and, 2) minimization of conflicts. 23. Key outputs of this subcomponent include: socioeconomic census, environmental information, mapped official boundaries, cadastre, andregistry for each pilot protected area collected and linked with CNR databases. 2.2: Legalization and Demarcation of Pilot ProtectedAreas 24. The aim of this subcomponent i s to complete the steps necessary to legally declare (through Ministerial Resolutions) both pilot areas as protected areas. 25. MARNwill be responsible for overseeing all activities related to the legal declaration of the pilot areas. Specifically, MARN will: (a) resolve conflicts related to boundary properties; (b) secure title to the pilot area lands, through coordination with ISTA and possibly local municipalities; (c) physically demarcate the pilot area boundaries (including buffer and core zones), with the support and participation of local municipalities and communities; (d) oversee alternative conflict resolution mechanisms; and (e) draft and approve ministerial resolutions legalizing the pilot areas. 26. CNR, through the LAP11, will providethe following services: (a) technical assistance for the demarcation of the pilot area boundaries; and (b) registry of the declaration of the pilot areas inthe name of MARNinthe SIRyC. 27. Key outputs of this subcomponent include: (a) demarcation of pilot PAS(including number of km demarcated of external boundaries of pilot areas, and core zones); (b) percent of pilot area lands with no unresolved tenure issues; and, (c) ministerial resolutions to establish pilot PAS. 2.3: ManagementPlansfor Pilot ProtectedAreas 28. The aim of this subcomponent i s to develop and implement comprehensive managementplans for the buffer and core zones of two pilot protected areas. 29. For each pilot area, MARN, through the contracting of NGOs (or other suitable entities), will be responsible for overseeing the updating and improvement of existing management plans to reflect new information and all lands included within pilot area boundaries. Specifically, in close collaboration with local stakeholders (e.g., ADESCOs, COALS, NGOS, private sector, cooperatives, municipalities, and final beneficiaries), management plans will be revised to more effectively guide the conservation and sustainable development and use of pilot protected areas. These plans will include zoning (including buffer zones, differential use zones, and so forth); types and limits of allowable uses of natural resources by zone (buildingupon results of a study of possible sustainable activities in each pilot area), basic infrastructure, and user fees; granting of land rights (through usufruct, concessions, authorizations, conditional titles, and so forth) to eligible residents within the pilot areas; monitoring and evaluation; and co-management, when appropriate. During the updating of the management plan, MARN would be responsible for ensuring both they and the NGO (or other entity contracted) provides a local presence through hiringboth key staff and, inthe case of the NGO, park guards. 42 30. In the case of concessions for sustainable natural resource use (such as ecotourism, fishing, and extraction of non-timber forest products) in mangrove areas, the 2005 Protected Areas Law requires one of two options: 1) that concessionaires make payments to the Ministry of Finance, which would require an inter-ministerial agreement between MARN and the Ministry of Finance to make these new concessions feasible in the Jiquilisco Pilot Area; or 2) that a Special Activities Fund (FondodeActividades Especiales)be established by MARNfor Jiquilisco. 31. MARN, COALS,ADESCOs, co-management NGOs, and local municipalities would jointly be responsible for implementing an alternative conflict resolution mechanism to address project-related grievances, according to the agreed framework developed under Component 1.2. The specific joint responsibilities would be set forth in an agreement (convenio) between MARN and the institutions involved. Implementation of this activity would involve the hiring of one or more consultants to prepare mediation procedures and help train local mediators. 32. While the project would not result in the involuntary resettlement of any people, there might be increased restrictions in access to natural resources for some of the people living in, or adjacent to, the project pilot areas. Consequently, MARN would be responsible for implementing the project's Process Framework (see Annex lOC) to ensure that project beneficiaries receive appropriate consideration and assistance in their efforts to maintain or improve their livelihoods. Such assistance would be provided during the formulation and implementation of management plans for each pilot area. 33. Once finalized, MARN, through the contracting of NGOs (or other suitable entities), would be responsible for implementing the management plans in key core areas through agreements with local actors (e.g., municipalities, NGOs, ADESCOs, and/or other organizations interested in participating in co-management). Financing of co- managed activities would be developed jointly through MARN and the interested entity. These co-managed activities are expected to include, among others, small civil works (such as park guard stations, observation platforms, boat ramps, and nature trails), field equipment, and local-level protected area promotion. In addition to these activities, MARN will provide small grants to support local communities in conservation-compatible activities, including demonstration projects. 34. The key output of this subcomponent is: (a) number of protected area field staff in each pilot PA.; and (b) amount of revenues raised from sustainable natural resource use concessions, visitor fees, and other potential cost-recovery mechanisms. Component3: ProjectAdministration (US$0.9M Total; $0.7M GEF) 35. The objective of this subcomponent i s overall management of the proposed project including monitoring and evaluation (M&E). 36. MARN will be responsible for project administration mechanisms including planning and M&E. The M&E system will be based on the existing M&E system-developed by CNR under LAP 11-to conduct overall project coordination and supervision. This system will be modified and strengthened to include key indicators to measure GEF project performance. The activities will also include necessary audit services. 43 C .n Ucd c 0 .d 0 0 0 0 0 0 0 0 0 I as .9 y e 0 0 0 0 0 0 0 0 I e 4 %Ee .-Cv c C e ru E c 2 .e 0 c .3 U3 .3 a 3 CT E a 2i 0 0 0 0 0 0 I e e 0 e e l 0 e e e 0 e e e e e e e e e Ucd e a e e e e e a e Annex 5: ProjectCosts ELSALVADOR: ProtectedAreas ConsolidationandAdministrationProject ComponentsProject Cost Summary (us$'ooo> . COmDOnen~SUbCOmDOnent Local Foreign Total 1.Strengthening of the NationalProtectedAreas System(WAS) 1.1. Consolidationof WAS Strategy 439.2 40.8 480.0 1.2. Strengthening of legaland institutional framework 405.9 209.1 615.0 1.3. Public dissemination and awareness campaign 229.5 25.5 255.0 Subtotal 1,074.6 275.4 1,350.0 2. Consolidation and Management ofPilot Protected Areas 2.1. Characterization and delimitation of pilot PAS 103.5 11.5 115.0 2.2. Legalizationandregularizationof pilot PAS 605.O 68.9 673.9 2.3. ManagementPlans for PilotsPAS 1,785.3 64.1 1,849.4 Subtotal 2,493.8 144.5 2,638.3 3. Project Administration 567.3 35.5 602.8 Total BASELINE COSTS 4,135.7 455.4 4,591.1 PhysicalContingencies 150.0 22.8 172.8 Price Contingencies 221.0 15.1 236.1 Total PROJECT COSTS 4,506.7 493.3 5,000.0 49 Annex 6: ImplementationArrangements ELSALVADOR: ProtectedAreas ConsolidationandAdministrationProject The Ministry of Environment and Natural Resources (MARN), the agency responsible for the national Natural Protected Areas System (NPAS), will be the Project executing agency, with responsibility for overall management, supervision, coordination, technical and fiduciary control, and monitoring and evaluation of the grant. Direct implementation will be provided by a small Project Implementation Unit (PCUor PCU) within MARN's Department of Natural Resources (DGPN). The project i s partially blended with the second phase of the IBRD-funded Land Administration Project (LAP II), implemented by the National Registry Center (CNR), a financially sustainable, fully administratively autonomous agency responsible for the successful implementation of the LAP'Sfirst phase (LAP I). the proposed project, CNR will participate intechnical activities inComponents 1and For 2 related with delimitation and demarcation of overall pilot areas and parcels included therein, and cadastre and registry, and rightsverification. Inaddition, the project will capitalize on CNR's experience, because CNR will provide technical assistance to MARN regarding financial management and procurement, through targeted training and advisory services, related to Component 3. An agreement between MARNand CNR will define the specific roles and responsibilities of both institutions for Project execution. Institutional Analysis Ministry of Environment and NaturalResources. MARN was created by Presidential Decree No. 27 of May 16, 1997, published in the Official Gazette No. 88, Volume 335, on the same date. Its responsibilities and functions are to formulate, plan, and execute environmental and natural resources policies and legislation; promote active participation by all sectors in the sustainable use of natural resources and the environment; and collaborate with the Ministry of Foreign Relations in handling issues of internationalcooperation related to the environment and natural resources. MARNhas the authority to enter into legal contracts, includingthe creation of sinking and trust funds. The Ministry i s headed by a Minister, Vice Minister, Executive Director, and three General Directors. MARN i s divided into three departments: Natural Resources, Citizen Participation, and EnvironmentalManagement. As of December 2004. MARNhad220 staff. Activities of the three departmentsare: 1. Natural Resources. Enhancement, management, and protection of El Salvador's natural resources. The department i s divided into four divisions: Physical Resources, Biological Resources,Mangrove Systems, and Protected Areas. 2. Citizen Participation. Facilitating links among civil society, municipalities, autonomous institutions and NGOs, and governmental organizations to conserve the environment and promote sustainable development. The department i s divided into three divisions: EnvironmentalEducation, Gender, and EnvironmentalComplaints. 3. Environmental Management. Environmental evaluations and monitoring of the Agreements and Protocol Units and the environmental information system. This department has one division, EnvironmentalEvaluation. Ministry of Agriculture and Livestock (MAG). The Ministry for Agriculture and Livestock was created by Executive Decree No. 234 of October 14, 1946, published in Official Gazette No. 134, Volume 141, subsequently modified by Decree No. 517 of the.Revolutionary Council on February 28, 1950, published 50 in the Official Gazette No. 49, Volume 148 of March 1, 1950. It directs, coordinates, and controls execution of govemment activities related to agriculture, forestry, fishing, and livestock. MAG has 1,877 staff and i s headed by a Minister, Vice Minister, and Presidential Commissioner for Agriculture. It includes four advisory offices (Policy and Strategy, Agricultural Planning, Legal Counsel, and Intemal Audits) and five centralized operational directorates (Plant and Animal Health; Forest, Watershed, and Irrigation Management; Fishingand Aquaculture; Agricultural Economics; and Agribusiness). Activities of the four advisory offices are: 1. The Policy and Strategy Office develops and implements sector policies and strategies based on national and international macro- and microeconomic trends in agriculture, forestry, and fishing. 2. The Agricultural PlanningOffice carries out institutional planning, advises the various offices of MAG on the planning, formulation, and implementation of projects and institutional development, and conducts monitoring and oversight of the proposed objectives and goals. 3. The Legal Counsel's Office advises the Minister, Vice Minister, and other ministry officers as needed. 4. The Intemal Audit Office exercises internal control of the Ministry's administrative, financial, and managementsystems. Centerfor the Developmentof Fishing(CENDEPESCA). The Center, part of MAG, is responsible for developing and implementing policies for the promotion of fishing and aquiculture, including catch regulations. Ministry of Tourism (MINTUR/ISTU/CORSATUR). The objective of MINTUR is to promote El Salvador as a tourist destination through establishing the regulatory framework and juridical security for tounst-related industries operating in the territory. MINTUR i s directly supported by the following agencies: 0 The Tourism Corporation of El Salvador (CORSATUR), an autonomous agency created in 1996 responsible for coordinating all sectors (private and public), involved inthe promotion of tourism. Working with MARN, CORSATUR has developed a Strategic Plan for the Sustainable Development of Ecotourism in El Salvador, which aims to promote tourism activities through environmental education activities directed to improve the quality of life of the communities living intourist areas while protecting biodiversity within the W A S . 0 The Salvadoran Institute of Tourism (ISTU), a public entity created in 1961 responsible for administering and conserving the State's patrimony important for tourism, including artistic and historical aspects, and for developing andconservingtourism attractions. National Council for Culture and Art (CONCULTURA). This council, created in 1990 as a decentralized agency operating under the Ministry of Education, is responsible for the conservation and promotion of art and culture in El Salvador. In particular, it i s responsible for the conservation of El Salvador's archeological areas, the administration of which i s important for the development of the W A S . Salvadoran Institute for Agrarian Transformation (ISTA). ISTA is responsible for overseeing El Salvador's agrarian reform process and for transferring to MARNall lands, still in its name, which form part of the NPAS. This process, started in 1999, i s based on Legislative Decree 719 (article 30) and ExecutiveDecree 103 (article 50), both issued in 1996, which describe the procedure for transferring such lands to MARN, the agency identified as responsible for the protected areas management in the Environment Law. 51 National Registry Center (CNR). CNR, created in 1994, i s the agency responsible for maintaining and providing official information on intellectual, commercial, and land property. It maintains cadastral and legal information on all land parcels in the country. Through the LAP Iand 11, it i s updating this tenure information throughout the country. Municipalities. Local municipalities are responsible for the overall political and administrative management of their territory, including the sustainable management of natural resources and related services. Nongovernmental Organizations. The goals and structure of NGOs vary according to their founding charters. They are associations or foundations that do not seek to directly profit their members, founders, or managers. They are authorized by the Interior Ministry, facilitated by the "Law on Nonprofit Associations and Foundations" contained in Legislative Decree No894 and its respective regulations. They may act at the national, regional, municipal, or local levels. There have been 5,464 NGOs registered in El Salvador since 1934. M A W has identified 70 NGOs that work in the environmental field and 26 that have specific activities inthe potential project area. Universities. El Salvador's universities are regulated by the Law on Higher Education contained in Legislative Decree No522 and by the Ministry of Education through the National Directorate on Higher Education. This i s a special system that contains the general principles for organization and operation of the National University and for private universities and official and private technical institutes. This framework encompasses three functions: teaching, scientific research, and social outreach. El Salvador currently has a national university, 26 private universities, 6 specialized institutes, and 9 technical institutes. In 2001 there were 1,589 students registered in six recognized major courses of study in the fields of agriculture and environment. Agricultural Associations and Cooperatives. These are special organizations governed by regulations contained in the Special Law on Agricultural Associations in Legislative Decree No. 221, which grants the Ministry of Agriculture and Livestock authority to provide legal, administrative, andfinancial advice for creating agricultural associations and cooperatives to develop and conduct activities related to land ownership for the benefit of their members. They are legal entities administered by a Board of Directors that i s elected by a general assembly of the members. Their activities are determined and regulated by their charters. Community Associations. Community Associations (ADESCOs) are based on a declaration of interest by a group of at least 25 citizens establishing a purpose for the association. Legal standing or recognition i s granted by the municipality through the mayor or an authorized representative, which allows the association to raise funds and execute agricultural, infrastructure, tourism, environmental, and other types of projects. These activities are governed by the statutes creating the association, which include stipulations defining the type of organization, its area of operation, formation of its board of directors, and their rights,responsibilities, and obligations. ImplementationArrangements The Project would finance the creation of a central PCU within MAR"s Department of Natural Resources (DGPN) that would be responsible for overall Project coordination. The PCU will include a central and two regional offices. The central PCU will comprise four staff members: a project coordinator, administrative assistant, financial management officer (accountant) and procurement officer (see Figure 6.1). The project coordinator will be responsible for overall project implementation, as well as focusing on policy issues, with an emphasis on the activities in Component 1. The accountant and 52 procurement officers will report to the project coordinator, but will be physically located for the first year of project implementation in CNR's administrative unit (UACI), after which they will move to MARN's Institutional Financial Unit (UFI). CNR will then continue to provide technical assistance to MARN regarding financial management, procurement, and monitoring and evaluation as neededduringthe life of the project. The central PCU i s meant to be temporary and all its relevant functions and activities to be assumedby MARN starting in year 5 of the project. Two regional units will be created, operating out of regional offices, established by the project (one each in the Guija and Jiquilisco pilot areas), which will serve as MARN's local headquarters. Eachoffice will comprise three (in the case of Guija) or four (in Jiquilisco) key staff a regional coordinator, a social specialist, a protected area specialist, and, in the case of Jiquilisco, a local development specialist. The office staff will focus on overseeing implementationof Component 2, ensuring policy development in the pilot areas adequately protects both important biodiversity and local communities. Specifically, the regional coordinators will be responsible for the overall management of the component, including oversight of other entities responsible for project implementation, as well as overseeing policy dialogue between local stakeholders and MARN. The social specialists will be responsible for overseeing outreach and communication with local stakeholders, overseeing implementation of the Process Framework, promoting conflict resolution mechanisms and overseeing the allocation of land rights and resource use within the pilot areas. InJiquilisco only, a local development specialist will support the social specialist, through coordination of social development activities and supporting outreach and communication with local stakeholders. The protected areas management specialists will be responsible for overseeing the delimitation and demarcation of the pilot areas, acting as a liason with local NGOs responsible for management plans, and monitoring and evaluation. MARNhas developed a transition plan outlining how key project-funded technical staff would be absorbed by the management structure of the two pilot protected areas following project completion. Such technical staff would then likely be funded through proceeds of the managementplan (for example, user fees, concessions, and so forth). Inaddition to the regionalPCU, local entities including NGOs (or other capable entities), ADESCOs and municipalities will be responsible for implementation of parts of Component 2. The development and supervision of management plan implementation and much of the on-the-ground presence will be the responsibility of NGOs, under MARN's oversight. Management plan implementation will be the joint responsibility of MARN, NGOs, ADESCOs and municipalities under terms set forth in legal agreements or contracts. Given the pilot nature of the project and the importance of building multisector alliances, an advisory committee will also be formed, which will function under the coordination of MARN's DGNP. This group will include representatives from the PCU, CNR, MAG, ISTA, CONAMA, municipalities, the private sector, and a local representative from each of the pilot areas. The consultative group, which would be convened by MARN at least once a month, would support the project through providing a strategic advisory mechanism with regard to the development of a strategy for PA consolidation, a methodology for its implementation, and the results assessment for each of the pilot areas. Internal Coordination: To ensure MARN has sufficient capacity to manage the Project, during the first year of execution, the PCU will be structuredjointly with the LAPI1project unit (LAPI1UCP, housed within CNR) as follows: 1. Procurement: Physically located within CNR-UACI. After one year of project implementation, this function will move to MARN's UFIdepartment. 53 2. Financial management: Physically located within CNR-Depurtamento de Desarrollo Humano, Administrucidn y Finanzas (DDHAF). After one year of project implementation, this function will move to MAR"s UFIdepartment. Coordination with ParticipatingAgencies: For the implementation of technical activities, cooperation agreements will be signed between MARNPCU and the other participating agencies. Specifically, for those activities, in Components 1and 2, relating to the implementation of LAP II-delimitation/demarcation/registration, and training and capacity building for project fiduciary aspects, and monitoring and evaluation, an agreement will be signed by CNR and MARN, clarifying respective roles and responsibilities. Similarly, an agreement will be signed by MARNPCU and the COALS,NGOs, ADESCOs, and municipalities that will participate in the local execution of Component 2 activities, specifically the implementation of management plans. Finally, MARNPCUand ISTA will sign an agreement setting forth the process for transferring to MARN those ISTA-owned lands identifiedas potentialprotected areas. 54 PACAP Organizational Chart 1 Central PCU Project IIII I ExecutingUnit _---_---------_-__ Coordinator UCP LAP II Directorate Natural Financial ----------------- FinancialManagement Patrimony Officer DDHAF Procurement ----------------- ProcurementOffice Officer 1ManagementOf Environmental SY::::gd 1 1Managementof 1 1 I Administrative Assistant Biodiversity t:!:d Management Coordinator Coordinator Jiquilisco Guija RegionalOffice RegionalOffice i I I I I r---- Social Social I II Specialist HI Specialist I I ~--,,, I1 1 I 1 ADESCO ADESCO Development I I Specialist I I I I I '----Specialist ProtectedArea 55 Annex 7: FinancialManagementand DisbursementArrangements ELSALVADOR: ProtectedAreas ConsolidationandAdministrationProject Summary ConclusionofFinancialManagement Assessment 1. On the basis of the assessments performed, the financial management team presents the following conclusions: 1. The executing agency, MARN, will be responsible for managing the fiduciary aspects of the proposed project, through a Project Coordination Unit (PCU), located within MARN. 2. Overall, MARNhas limited capacity with respectto financial management(limited staffing and financial management system) and does not have extensive experience in managing projects financed by the World Bank. Thus the need to hire an Accountant for the management of accounting and financial reporting information of the proposed project, with appropriate experience. 3. Assumingthat MARNcarries out the proposed action plan presented in this assessment, especially with regard to staffing, it would have in place adequate financial management arrangements that meet the Bank's minimum fiduciary requirements to manage the specific financial activities of the proposed project. 2. Standardrequirementdagreements.It was agreed (a) that the project will use transaction- based disbursements; (b) that each quarter MARN-PCU will prepare the Financial Monitoring Reports (FMRs) to be submitted to the World Bank; (c) that annual project financial statements will be audited inaccordance with InternationalStandards on Auditingissuedby the.Irirernaliuiiai Federation of Accountants (IFAC), by independent auditors and in accordance with terms of reference (TORS)acceptable to the World Bank; and (d) that, during the implementation of the project, CNR will continue to provide technical assistance to MARN with respect to financial management, including training and physical space for the procurement officer and financial managementofficer (accountant) duringthe first year of implementation. 3. Implementing Arrangements. The executing agency for the proposed project will be MARN("Ministerio de Medio Ambiente y Recursos Naturales"). Project implementation will be carried out by MARN through a Project Coordination Unit (PCU), located within MARN's Department of Natural Resources (Direccih General de Patrimonio Natural-DGPN). MARN will have overall financial and accounting responsibility for the proposed project, including (a) maintenance of accounting records, (b) processing disbursements, (c) preparation of project financial statements in accordance with World Bank guidelines, (d) management of bank accounts, (e) management of financial information systems, (f) preparation and submission of quarterly Financial Monitoring Reports (FMRs), and (g) preparation and submission of withdrawal applications. 4. Staffing. As indicatedabove, MARNwill create a PCUto managethe proposedproject. At a minimum, the staff of the PCUshould include a project coordinator, an administrative assistant, a procurement officer and a financial management officer/accountant with sufficient experience working with projects financed by international agencies or donors. The procurement officer and the financial management officer (accountant) would report to the project coordinator but be located within the UACI and the UFI, respectively (MARN's central procurement and financial units). Additionally, for each of the two pilot areas, the project will contract an area director, a 56 social specialist, and an operations specialist to oversee the implementation of the management plans. Flow of Funds 5. Project funds will be managed by the executing agency (MARN), with fund transfers from Treasury (DGT)utilizing the same mechanismused by local funds. 6. Under this mechanism, a Special Account in U.S. dollars will be established by the Treasury (Ministerio de Hacienda) at the borrower's request in Banco Central de Reserva. After the declaration of effectiveness, the World Bank will, upon MARN's request, make an authorized allocation to the Special Account. Replenishments of the Special Accounts will be made using a traditional disbursement method (transaction-based procedures, monthly submission of Statements of Expenditures (SOEs); see flow of funds diagram below). 7. MARNwill also open a separate operating account in a commercial bank to facilitate local payments. Transfers to the operating accounts would be made from the Special Account, on the basis of requestspreparedby MARN, supported by commitments. Flow of Fundsfor the Project 57 Accounting and Reporting 8. Segregation of Duties. MARN's organizational structure and established procedures support an adequate segregation of procurement, payment, and recording activities. The authorization to execute a transaction will be the main responsibility of the Project Coordinator and/or Technical Officers. Procurement activities will be the main responsibility of the procurement officer. And, the recording of the transaction will be the main responsibility of the Accountant. 9. Budgeting. A budget will be prepared at the beginning of each year. The borrower will be responsible for compiling a comprehensive budget for the project. Typically, the annual budget would include: An annual work plan classified by major goals/objectives, including physical and financial programs. A budget (broken down at least quarterly) specifying detailed expenditures by major component, category, and sourceof funds. 10. Payment and Operation of Bank Accounts. MARN will be responsible for project disbursement to vendors. The process i s expectedto be as follows: The Project Coordinator and Procurement Officer review the invoice (generally against a PO or contract) and review necessaryapprovals from the Technical Officers. The approved invoice and payment request i s received by the Accountant for processing. The Accountant reviews the information and preparesa check request. The check request i s submitted to Treasury for processing (including authorized signatures). Once the authorized signatureshave been obtained, the check is deliveredto the vendor. Documentation i s filed appropriately and transaction recorded into the computerized accounting system. 11. Bank account reconciliations will be prepared at MARN, through the project financial unit, on a monthly basis. 12. Information Technology (IT) Systems. Project funds will be captured in the integrated financial management system (SAFI) used by MARN. However, given the need for the aggregation of information from SAFI on a component basis (for financial monitoring to the Bank) and preparing withdrawal applications on the basis of disbursement categories, the PCU will implement a basic financial system. The system should include a module for procurement and physical monitoring. MARN i s in the process of designing such a system, which will be implemented prior to the effectiveness of the project. The PCU will also implement a periodic reconciliation process between the information in SAFI and in the project financial management system. 13. Safeguard over assets. Assets acquired using project funds will be in the custody of the respective organizations. The borrower will use the existing fixed asset system to keep a detailed subsidiary ledger (asset register) of equipment acquired. The amounts in the register will be reconciled monthly against the respective account balances. And, at least one annual physical inspection of the assets will be undertaken by PCU staff, preferable with the participation of external auditors. 58 14. Implementation of management plans. Subcomponent 2.3 will finance the updating and implementation of management plans in the two pilot protected areas. These activities will be through agreements with local actors, such as NGOs, ADESCOs, and/or other interested organizations. These agreementjcontracts would be entered on the basis of, among other things, the organization's eligibility, formal cost estimates, and the defined outcome or delivery of end product. Payments to local actors/organizations will be made based on the contract provision, including a reasonable advance (if applicable) and tranches connected to physical progress. The agreemendcontract template, including procurement and record keeping responsibilities of the recipient will be part of the project operational manual. 15. Internal Audit. MARN has an internal audit department, which generally does not audit internationally funded projects, as they are audited instead by external independent auditors. For this project, the use of extemal independent auditors will contributeto ensuring that the resources are used for the purpose intended. 16. External Audit. The audit policy of the World Bank, as documented in "Guidelines: Annual financial reporting and auditing for World bank-financed projects" will be applicable to the project. This means that a single audit opinion covering: (a) project financial statements, (b) special account statements, and (c) adequacy of supporting documentation maintainedby MARN in respect of expenditures claimedfor reimbursement via SOE procedures and eligibility of such expenditures for financing under the respective Grant Agreement, will be required. 17. In addition to the audit opinion, the auditors will have to present the management letter, covering: (a) weaknesses noted by the auditors in the intemal control systems of the project, (b) cases of application of inappropriate accounting policies and practices, (c) issues regarding general compliance with broad covenants, and (d) any other matters that the auditors considers shouldbe brought to the attention of the borrower. 18. The project coordinator will be responsible for ensuring the external audits are undertaken, ensuring the recommendations of the auditors are complied with, and sending the results of annual and final financial audits to the Bank within at least six months of the end of the fiscal year and project close. Duringthe first two year of project implementation, the auditors will be required to perform semi-annual reviews and submit semi-annual audit reports to the Bank. The cost of these audits will be financed with project resources. 19. Reporting. The MARN-PCU will be responsible for producing the Financial Monitoring Reports (FMRs) on a quarterly basis to be submitted to the Bank, only for monitoring purposes at the beginning and possibly for disbursement purposes, once the system has been tested. FMRs will include a narrative outlining the major project achievements for the quarter, the project's sources and uses of funds, a report presenting expenditures by subcomponent, a physicalprogress report, a procurement report and a procurement table. FMRs should be submitted to the Bank no later than 45 days after the end of the reporting period. 20. The annual financial statements will include the project's sources and uses of funds, a report presenting expenditure by subcomponent, the schedule of SOEs presented during the year and a reconciliation of the Special Account. These reports will be prepared by the borrower and made available to the auditors after the end of the fiscal year. 21. DisbursementArrangements.Withdrawal from the grant will made, at least at the beginning, using transaction-based disbursement procedures. Once the preparation of required reports has been established and reviewed by the Bank's team, the disbursement method could be changed to 59 report-based procedures (based on the submission of FMRs). Under the transaction-based disbursement method, the SOE thresholds would be consistent with the procurement prior review thresholds. All supporting documentation for payments using SOE procedures and other payments in general for Project activities will be retained by MARNfor audit purposes and made available for the Bank's supervision. Financial ManagementAction Plan Action IIProductnndicador IIResponsable IIDeadline 22. Supervision Plan. During project implementation, the Bank will review the project's financial management arrangements in two principal ways: (a) reviewing the project's quarterly financial management reports, MARN-PCU's periodic financial information, annual audited financial statements, and the auditor's management letter; and (b) duringthe Bank's missions, review the project's financial management arrangements to ensure compliance with Bank requirements. Accredited financial management officers will assist inthe supervision process. 60 Allocation of Grant Proceeds (US$ million) Expenditure Category Amount Financing Percentage 1.Goods, Works, Consultant Services, 2.0 100% Training,' Non-Consultant Services,' and Operating Costs 2. Goods, Works, Consultant Services, 2.8 100% Training,' Non-Consultant Services? and Operating Costs 3. Unallocated 0.2 __- Total Financing 5.0 1.Training includes training-related expenses different from consultants for workshops, seminars, and study tours. The loan would finance travel, subsistence, and per diems to trainers and trainees, registration fees, logistical expenses for organizationof training events, and training materials. 2. Non-consultant services include demarcation activities. 3. Operating costs include operation and maintenance o f vehicles and equipment, travel and subsistence of MARN and CNR officials for supervision o f all field activities (demarcation, supervision o f management plan implementation, delimitation, etc.). 61 Annex 8: ProcurementArrangements ELSALVADOR: ProtectedAreas ConsolidationandAdministrationProject A. General 1. Procurement for the proposed project would be carried out in accordance with the World Bank's "Guidelines: Procurement under IBRD Loans and IDA Credits" dated May 2004, "Guidelines: Selection and Employment of Consultants by World Bank Borrowers" dated May 2004, and the provisions stipulated in the Legal Agreement. The various items under different expenditure categories are described in general below. For each contract to be financed by the Loadcredit, the different procurement methods or consultant selection methods, the need for prequalification, estimated costs, prior review requirements, and time frame are agreed between the Borrower and the Bank in the Procurement Plan. The Procurement Plan will be updated at least annually or as required to reflect the actual project implementation needs and improvements ininstitutionalcapacity. 2. Procurement of Works: Works under this project will be procured using the Bank`s Standard Bidding Documents (SBD) for all ICB and SBD agreed with the Bank for NCB and shopping. All SBDs will be included inthe Operations Manual. 3. Procurement of Goods: Goods procuredunder this project will include vehicles, computers, printers, office equipment, communication equipment, GPS, furniture, hardware and software for photogrammetric, boat w/outboard motor, telephones, radios, and so forth. To the extent possible contracts will be grouped in biddingpackages of more than US$250,000 and procured following International Competitive Bidding (ICB) procedures using Bank-issued Stanciara Bidding Documents. Contracts with values below this threshold per contract may be procured using National Competitive Bidding(NCB) procedures with standard biddingdocuments agreed by the Bank. Contracts for goods that cannot be grouped in larger bidding packages and estimated to cost below US$50,000 per contract may be procured usingShopping (National and International) procedures basedon a modelRequestfor Quotations (RfQ) satisfactory to the Bank. 4. Procurement of Non-Consulting Services: Technical services under the project amount to approximately US$460,000. These include demarcation of national protected areas. A decision has been made to prepare customized documents for this area by adapting the Procurement of Works, smaller contracts, standard documents, and the draft services (non-consulting) document to the peculiarities of landprojects. Work i s underway and it i s expected that before effectiveness, the project will have an approved document in this area. Contracts for Technical Services estimated to cost US$1 million or more will be procured following ICB procedures. Contracts estimated to cost between US$lOO,OOO and US$l million may be procured following NCB procedures. Contracts estimated to cost below US$lOO,OOO may be procured under lump-sum fixed contracts awarded on the basis of quotations obtained from three qualified domestic contractors inresponseto a written Request for Quotations agreed with the Bank. Non-Consulting Services other than Technical Services also include training activities such as workshops, and so forth. 5. Selection of Consultants: Consulting services from firms and individuals required for the project include impact evaluation studies, diagnostics, financial and procurement audits, advisory services from individual consultants, supervision, PCUstaff, and so forth. 62 6. Operational Costs: Operational costs have been identified in the procurement plan. These costs have beenreviewedand found acceptableto the Bank. 7. The procurement procedures and SBDs to be used for each procurement method, as well as model contracts for works and goods procured, are presented inthe Project's Operations Manual. Prior Review Thresholds Contract Value Expenditure Thresholda Procurement Category (US$thousands) 1 Method Contracts Subjectto Prior Review >250 ICB All (tender documents andevaluation reports) 2502 4 0 NCB All (tender documents and evaluation reports) Goods Firsttwo eachcalendar year (request for I 5 0 Shopping quotations and evaluationreports) All contracts above US$25,000 >1,000 ICB All (tender documents and evaluation reports) 1502 150 ICB services (incl. 1502 <25 NCB All contracts above US$25,000 training) t I I I 2 5 Shopping Non-consulting I >1,000 ICB All contracts above US$lOO,OOO services 1002 <1,000 NCB Firsttwo contracts each calendar year Services) I 1 0 0 Shopping First two contracts each calendar year >loo QCBS Whole processfor each contract above Consulting $50,000 and all single source contracts (firms)a 1002 4 0 QCBSILCSICQ I 5 0 LCS/CQ Consulting (individual)a II 1ISection V inthe All cases above US$25,000 and all single- Guidelines 1 source contracts Direct contracting 1Allcases regardless of the amounts involved All cases regardless of the amounts involved All cases identified for prior review inthe procurement plan All cases not included inthe procurement Agreements plan, regardless of the amounts involved All terms of reference for which Bank no objection is required All processesthat, due to their complexity or nature, the task manager decides must have the Bank's no objection a. Thresholdsfor consultingincludethe sum of the original contractand all extensions. Note: The project will includenoexpenditures for works 63 2. The thresholds will be reviewed when the PCU gains experience in Bank's rules and regulations. All single-source selection of goods and works, regardless of the amount of the contract, will be subject to prior review by the Bank. B. Assessmentof the Agency's Capacity to ImplementProcurement 3. Procurement activities will be carried' out by the Ministry of Environment and Natural Resources (MARN) through a Project Coordination Unit (PCU), located within MARN. Although the PCU will be responsible for coordinating the activities of the project, it has been decided that to promote institutional strengthening the procurement function will be integrated within the organizational structure of MARN. The project's procurement officer will be integrated within the procurement unit of MARN (UACI), with a direct link to the PCU. The Project Operations Manual will include, in addition to the procurement procedures, the SBDs to be used for each procurement method, as well as model contracts for works and goods procured. 4. A full assessment of the capacity of MARNto implement procurement actions for the project was carried out by Luis Prada, World Bank Procurement Officer, on September 2004 for the National Environmental project for which MARNis the implementing agency. For the proposed project, a desk review of the capacity of MARNto implement procurement actions for the project has been carried out. The review included the organizational structure for implementing the project, the volume and complexity of procurement actions for the new project as well as the new arrangements by which the procurement function i s being integrated into MARN's relevant central procurement unit (UFI). Although MARN has no previous experience implementing World Bank projects, considering that procurement under this project i s neither complex nor complicated, except for the technical services, it has been decided that the PCUwill carry out all procurement actions. In the case of Technical Services and during the initial stages of project implementation, CNR which i s implementing the LandAdministration project (LAP11) and has extensive experience with World Bank procurement rules, regulations and procedures, will assist the PCUinMARNduringthe critical stages of the procurement process. 5. The overall project risk for procurement i s high. C. ProcurementPlan 6. The Borrower has finalized a Procurement Plan for project implementation that provides the basis for the procurement methods. This plan was agreed between the Borrower and the Project Team duringappraisal and is available inthe project files. It will also be available in the project's database and in the Bank's external website. The Procurement Plan will be updated in agreement with the Project Team annually or as required to reflect the actual project implementation needs and improvements ininstitutionalcapacity. D. FrequencyofProcurementSupervision 7. In addition to the prior review supervision to be carried out from Bank offices, since the overall risk assessment has been rated as HIGH, it i s recommended that procurement supervision should take place every six months during the first year of the project and once a year thereafter and to reassess the capacity of the PCUto carry out procurement after one year in order to review the prior review thresholds. 64 E.Action Plan 8. The following actions are recommendedto address major weaknesses identified by the Bank and to increase the capacity of MARNand the PCUinparticular for implementingprocurement: Procurement Cvcle Management: The Procurement Plan will be finalized and approved prior to negotiations. Completion of the Operations Manual i s a condition of effectiveness. Standard bidding documents for all procurement methods must be prepared for use by the project and should be based on the Bank's SBDs in the case of NCB. SBDs for Requests for Quotations for Goods and Works have to be prepared and approved by the Bank and included in the Operations Manual. During project launch, the PCU staff concerned should be trained in the use and application of the SBDs. A system for monitoring procurement must be implemented prior to effectiveness. Increased supervision by the Bank i s recommended during the initial stages of project implementation. Since Contract Administration is considered a weak area in the project, close supervision and monitoringi s recommended. 9. Organization andFunctions: It has beenagreedthat a procurement officer with relevant Bank procurement experience will be hiredprior to effectiveness. Although this personwill be physically inthe UACI, he will respondto the project coordinator. Since internal manuals andinstructions do not exist, priority should be given to preparing the Operations Manual. This i s a condition for effectiveness. 10. Support and Control Systems: Since no auditing procedures are in place, the audit requirements must be established in coordination with financial management. Technical and administrative controls must be established, implemented and included inthe Operations Manual. MARNmust immediately enforce the fraud and corruption provisions inthe Bank guidelines and SBDs. Anticorruption clausesmust be includedinall biddingdocuments. 11. Record Keeping: Proper record keeping will have to be ensured and a check list included in each file to permit verification that all relevant information i s included. As the volume of procurement increases, it will be necessary to define a physical area to keep all records and files of the procurement processes under the project. 12. Staffing: The PCU will be strengthened with the hiring of a dedicated procurement officer with relevant experience in Bank procurement. It i s recommended that to the extent possible, training courses in Spanish be identified for the procurement officer to attend. Although this person will be physically in the UACI during year one, and in the UFIduring years two through five, he will respondto the project coordinator. 65 Attachment 1 Details of the Procurement Arrangement Involving International Competition 1. Goods, Works, andNon-consultingServices (a) List of contract Packages that will be procured following ICB and direct contracting: 1 2 3 4 5 6 7 Procure- Domestic Review by Ref. Contract Estimated ment Preference Bank Expected Bid- No. (Description) Cost Method P-Q (yedno) (Prior / Post) None (b) ICB Contracts estimated to cost above US$150,000 per contract and all direct contracting will be subject to prior review by the Bank. 2. ConsultingServices (a) List of Consulting Assignments with short-list of intemational firms. 2 1 3 1 4 I 5 6 Ref. Description of Estimated Selection Review by Bank Expected Proposals No. Assignment cost Method (Prior / Post) Submission Date Comments None (b) Consultancy services estimated to cost above US$50,000 per contract for firms, US$25,000 for individuals, and single-source selection of consultants (firms and individuals) regardless of the contract amounts will be subject to prior review by the Bank. (c) Short lists composedentirely of national consultants: Short lists of consultants for services estimated to cost less than US$200,000 equivalent per contract may be composed entirely of national consultants in accordance with the provisions of paragraph 2.7 of the Consultant Guidelines. 66 Annex 9: Economicand FinancialAnalysis ELSALVADOR: PROTECTED AREAS CONSOLIDATION AND LANDADMINISTRATION PROJECT 1. An economic and financial analysis was conducted to estimate the net incremental economic benefits of the Protected Areas Consolidation and Administration project (PACAP) and assess the financial sustainability of the consolidation of MAW'SNatural Protected Areas System (NPAS). The project's objective i s to conserve El Salvador's globally significant biodiversity by strengthening the NPAS and consolidating two priority protected areas under different conservation categories, including: (i) the Bahia de Jiquilisco mangrove forest; and (ii) drythe tropical forest of the Lago Guija Complex San Diego-La Barra (SDLB) Economic Analysis 2. A costhenefit analysis undertaken to assess the project's economic impacts estimated that the net present value (NPV) of incremental project benefits will be US$34,9m for a 50 year-period or US$0.7m per year with a discount rate of 12per cent. Of these, it i s expected that 82 per cent of the benefits will be derived from activities in the Jiquilisco pilot area and 18 per cent from activities in the SDLB. The costs include the direct investment through PACAP over the life of the project and the investment and recurrent costs of the office in each of the pilot areas over a 50-year period. The economic intemal rate of retum i s 19per cent. 3. The expected incremental economic benefits come from the introduction of sustainable managementof the pilot areas, including the core zones and surroundingbuffer areas. Sustainable land use patterns, resultingfrom the introduction of management plans for these areas, will yield: (i)reductioninenvironmentaldegradation;and(ii) increaseinthequalityandquantityof a an environmental services, thereby providing both national benefits (e.g. reduced agriculture-, livestock- and fishing-related soil and water contamination, better soil conservation practices, and sustainable management of fish stocks) and global benefits (e.g. increased biodiversity conservation and carbon sequestration). 4. The analysis was done for a 50-year period, as most of the project's benefits are expected to be long-term in nature. The analysis further compared "with" and "without" project situations to determine the project's incremental benefits. Furthermore, two additional scenarios were examined to calculate: 1) the revenue from concessions/authorizationsfor productive activities within the pilot areas; and, 2) the cost of relocating those currently living within the pilot areas to non-protected area lands. The following table summarizes the incremental economic benefits for each activity, which are explained inthe following section. 67 Jiquilisco SDLB wood T O T A L Jiquilisco and SDLB 76.2 1.5 'Value Value of carbon at a national level ($~s/M~c) of carbc at a global level ($20/MtC) Total calculated basedon global level 5. Carbon Sequestration. Carbon sequestration refers to long-term carbon storage in the terrestrial biosphere, underground, or the oceans thereby reducing or slowing the buildup of carbon dioxide (the principal greenhouse gas) concentration in the atmosphere. The value of carbon sequestration i s calculated basedon: (i) the price of US$4.5 per metric ton (MtC),34 which i s the average price for the emission-reduction rights at the individual country level; or (ii)the price of US$20 per ton,35which i s the estimated benefit to society at the global level. Usingthese values, the conservation of the biosphere in the two pilot areas i s expected to provide economic benefits of US$12.3m over a 50-year period using the price for emission-reduction rights (US$4.5NtC) for carbon sequestration. This i s calculated based on the loss of carbon sequestration that would occur in the absence of the project, given the assumed trends of deforestation. To estimate the deforestation rate in Jiquilisco, data were used from a recent 34 Duringa presentationto the Annual Meetingof Host Country Committeeon CarbonFinance,the weightedaverageprice for buyerspurchasinghigh-qualitypotentialcomplianceinstrumentswas reported to be between$4.00 to $5.00. Fromthe presentationnotes of RichardRosenzweig,NatsourceAsset Management,February2005. 35 Pagiola,Stefano, Konradvon Ritter andJoshuaBishop, Assessing the Economic Value of Ecosystem Conservation,The WorldBankEnvironmentDepartment, EnvironmentDepartment PaperNo.101 68 that estimated that the annual mangrove deforestation rate in El Salvador has been 5.8 per cent since 1996 (before which it was 0.8 per cent). For the SDLB, the evaluation used a constant deforestation rate of 49.5 hectaredyear from 2005 to 2010, which increased by 1per cent from 2011 until 2055. The annual carbon storage capacity of mangroves and dry tropical forest are estimated to be 200 MtCha and 73.9 MtCha, re~pectively.3~ 6. Fish Production. Fishing i s an important economic activity in both Jiquilisco Bay and SLBD. These fish stocks, however, are seriously threatened due to resource overexploitation and water pollution. The project i s expected to result in benefits associated with traditional and industrial fishingequivalent to US$56.3m. This estimate is calculated as described below. 7. Sixty per cent of El Salvador's commercial fishing is mangrove-dependant. As Jiquilisco Bay accounts for 54 per cent of El Salvador's total mangrove area, it could be expected to support more than 30 per cent of the nation's commercial fishing. The depletion (overfishing) rate of Jiquilisco i s estimated by CENDEPESCA to be 5 per cent. Basedupon these data, and assuming a linear relationship between mangrove area and mangrove-dependent annual fish production, Jiquilisco's productivity index was calculated at 271 (i.e. sustainable harvest of 5,877,757 kgestimated mangrove area in 2003 of 217,050 ha). Assuming the productivity index remains constant, the overfishing rate will increase to 17 per cent after 2010 as a result of continued deforestation. Consequently, the NPV of fish production foregone to deforestation will be US$53.8m over a 50-year period. 8. The fish production of the freshwater lakes Metapan and Guija, located in SDLB, i s severely threatened by risinglevels of pollution and deforestation associated with intensifying agricultural activities and urbanization. If the project were not implemented, the NPV of lost fish production would be US$2.5m over a 50-year period. 9. Fuelwood. Estimates of current annual fuelwood consumption in the two pilot areas range from 140,000 MtC in Jiquilisco to 231,880 MtC in SDLB. As one hectare i s considered able to sustainably produce 409 MtC of fuelwood each year, it i s estimated that the current annual extraction surpasses the sustainable volume of extraction by 57 hectares in Jiquilisco. In SDLB, current annual extraction i s 1,253 MtC below the sustainable production. Without the project, future overexploitation of fuelwood i s expected to increase due to continued deforestation and population growth. In order for fuelwood collection to be sustainable, the rate of its exploitation must be equal to its regeneration. The NPV for the incremental benefits of fuel exploitation with the project will be US$0.7m in Jiquilisco and US$-O.lm in SDLB. It should be noted that while the total incremental benefits are negative in SDLB, those values do become positive after 2021. 10. Sustainable aquifer management. One probable effect of deforestation would be the reduction of underground water reservoirs (aquifers) in the area. The socio-economic survey results indicate that 56 per cent of the Jiquilisco population use wells to provide water. In the without project scenario, it i s estimated that by 2020 the capacity of local wells will be exceeded, requiring investment in a water pumpingsystem to import water from the nearby cities of Puerto Triunfo and Usulutan. The NPV of this investment is US$165,000 over a 50-year period. Aquifer conservation is important not only for drinking and agriculture, but also for maintaining the 36 Alpizar Vaglio, Edwin et al. 2003 "Evaluacih del Potencial de Mitigaci6n del Sector Forestal en la Repdblica de El Salvador, Ante el Cambio ClimBtico, Mediante PrBcticas de Reforestacidn y Forestaci6n", p. 21 37 ibid 69 freshwater flows into the mangroves, which i s in turn vital for maintaining the salinity level on which much of the mangrove-associatedorganismsand processesdepend. 11. Pollution and soil erosion. The SDLB pilot area supports about 1,800 hectares used for agriculture, of which 1,500 ha and 280 ha3*are in the buffer zone and core ``nucleus" zones, respectively. The establishment of basic crops, using poor agricultural practices (such as slash- and-burnand intensive use of agrochemicals), has ledto erosion, loss insoil water absorption and soil fertility, and sedimentation of Lake Guija and Lake Metapan. According to a slope soil erosion study carried out by MARNfrom 1974-1979, it i s estimated that erosion on slopes under agricultural production without conservation techniques contributes 19 MtC/ha annually. With the project, it i s assumed that through technical assistanceand financial incentives, all producers in the core nucleus of Portion 2 of the reserve as well as producers on slope areas of the buffer zones will introduce improved practices for soil conservation, thereby reducing the erosion rate by 90 per cent. The NPV of these project-associatedincremental benefits i s estimated at US$6.8m over a 50-year period. Economic Benefits from Concessions 12. The economic analysis estimated the economic benefit associated with the provision of concessions in the pilot areas, which would be granted through the project for sustainable activities within the pilot areas. 13. MARN has proposed the amounts that would be paid by residents for concessions (in mangroves) and authorizations (in non-mangrove protected areas). The renewable concessions would be valid for a five-year period with the proceedsentering the country's General Fund. The proposed rates and expected annual revenues from such concessions are summarized in the followingtable. Expected Rates and Revenue from Concessions, 1. Salt harvesting (includes construction and management) 2. Aquaculture for shrimp, fish, etc. (includes construction and management) under three levels of technology: Jiquilisco a) Extensive (need definitions of each $75 $7,320 b) Semi-extensive $125 $1,449 c) Intensive SDLB 3. Agriculture I TOTAL:I $48,209 * Assuming I the total area under existing production schemes remains constant. 38The 280 ha are located in the core zone of Portion 2. 70 14. Shrimp and Salt Harvesting Concessions. In Jiquilisco, the environmental analysis identified 30 existing shrimp farms representing a total of 546 ha, of which 488 ha are managed under an extensive regime, and 59 ha as semi-intensive. The annual economic value of these existing concessions i s estimated to be US$8,769, which i s paid to the nation's General Fund. To estimate revenue from salt harvesting activities, 2002 data3' show that 65 salt concessionsexist in Jiquilisco, for a total area of approximately 1,702 ha. The value of these concessions is US$34,040 annually. 15. Farming Authorizations. There are approximately 1,800 ha dedicated to agricultural activities inthe SDLB, including 1,520 ha in the buffer zone and 280 ha within the core nucleus. Of this area, it is estimated that about 882 ha inside the buffer zone are farmed illegally. If authorizations are given to all residents through the project, including those currently operating illegally, the economic benefits would be US$5,400 per year. EconomicCost of Relocation 16. Under an alternative scenario, the economic cost of relocating all individuals within the core nucleus and buffer zones of the two pilot areas was conducted. Inthe case of Jiquilisco, the limits were defined as those identified by the 1973 census, while in the case of SDLB, the boundaries are those identified by LAP 11.It was assumedthat relocation of residents was done through the provision of land outside of the pilot areas so that those residents could continue to undertake productive activities under similar conditions. The average property value reported in the socio- economic survey was used to calculate the cost of relocation. The resulting estimated cost of relocation i s considered to be US$79.6m. Economic Cost of HumanRelocationfrom PilotAreas (US$Million) I I I SDLB 2,173 $29.7 $10.3 $40.0 TOTAL: $79.6 Financial Analysisof MARN'sNatural ProtectedAreas System 17. A financial analysis of MAR"s Natural Protected Areas System (NPAS) was undertaken to: 1) identify the project's incremental financial benefits and costs with regards to the NPAS; and 2) to assess the financial viability of the W A S . The analysis includes a cash flow assessment, based on: (i)historical information for the years 2001-2005 (the "without project" scenario) to identify current revenue and cost of the NPAS; and (ii) a 10-year projection until2015 (the "with project" scenario) that includes the incremental benefits and costs associated with the NPAS consolidation. The analysis includes historic costs so as to compare MAR"s current budget with the incremental costs of consolidating the NPAS. 18. The following table shows the budget executed by M A W over the past five years, the approved budget for 2005, and the environmental funds that have been executed during this period. The environmentalfunds contribute to the protection of the NPAS, but they are not part of 39JICA.2002. Estudiosobre el desarrollo de lapesca artesanal en ElSalvador (informe final borrador). San Salvador, ElSalvador. 71 the budget allocated to MARNby the Ministry of Finance. Specifically, the environmental funds that have contributed to MARN's activities include the Special Activities Fund for MAG, the FundInitiative for the Americas (FIAES),FONAES, and Montecristo National Park.All of these funds come from sources external to MARN except for the park fees collected at Montecristo National Park (which are the only protected area-relatedfees that go back to MARN). I I I I I I Institutional Direction and Administration 1,372 1,983 1,751 1,713 1,090 1,090 Sustainable Development of Natural Resources 1,792 1,442 1,626 1,846 1,081 1,081 Support to other Institutions 303 229 1,770 2,007 1,448 1,448 Sustainable Development of Natural Resources (counterparts) 434 306 200 242 242 TotalBudgetExecutedby MARN - 3,467 4,088 5,453 5,766 3,861 3,861 EnvironmentalFunds 3,116 2,540 2,195 937 953 967 I I I 1 1 1 I I I I I I 6,583 6,628 7,648 6,703 4,814 4,828 1 19. The following table presentsthe projectedincremental costs of the consolidated NPAS for the periodbetween 2006 and 2015. 20. The cost of WAS consolidation mainly reflects the investments and recurrent costs associated with the 15 conservation area offices that MARN intends to establish. The assumed timeline for the establishment of these offices i s as follows: two in 2006 (Jiquilisco and SDLB); three in 2007; four in 2008; three in 2009; and three in 2010. It i s assumed that the initial investments in each office would need to be repeated every eight years due to depreciation. By 2001, when all 15 offices will be operational, the annual average estimated incremental cost i s US$2.5m, which represents65 per cent of the general budget currently executed by MARN. 21. In addition to the incremental costs associated with the establishment of conservation area offices, the analysis assumes a necessary initial investment in ecotourism infrastructure, such as guest houses and interpretative trails, so that the protected areas attract revenue from tourism. It i s estimated that only 12 NPAs have potential for tourism, and thus would require this investment. The cost of ecotourism infrastructure in Jiquilisco and SDLB was not considered in the analysis, as the respective investment would be financed under PACAP. For the other 10 areas, the projection for infrastructure investment i s estimated to be US$6.5m. 22. The NPAS expects to generate incremental income from park entrance fees and the selling of authorizations and concessions. Basedon the current situation inElImposible National Park, it i s estimated that approximately 7,500 visitors per year on average will visit the 12 protected areas with tourism potential, of which half are nationals (paying US$3 each) and the other half 72 foreigners paying US$6 each). The NPAS could generate as much as $380,000 per year when tourism infrastructurehas beenestablishedinthe other protected areas with tourism potential. 23. Income associated with shrimp and salt harvesting concessions in Jiquilisco and agriculture authorizations in SDLB i s estimated to generate about $50,000 per year, of which 86% comes from Jiquilisco. It is important to note that the potential concession-related income inJiquilisco i s significantly higher than what would be expected to come from other "As. For the purposes of the estimated cost projection, the average annual concession-related income for NPAs was assumedto be US$lO,OOO. 24. The analysis shows that the income generated from park fees and concessions/authorizations i s insufficient to finance the consolidation of the NPAS. 25. So as to explore other potentialcomplementary income sources, the analysis comprised three additional possible sources of financing, including: (i) residential permits (fees to protected area residents for their right to use the land to live); (ii) concessions/authorizationsfor fishing; and (iii) fees for the sustainable use of fuelwood. Although MARNi s not currently considering the sale of residential permits, this measure could help raise about US$99,000 annually in each NPA, assuming permits were sold at a rate equivalent to 1.5 per cent of the property value. If M A W were to sell concessions/authorizationsfor fishing, they could raise US$62,000/year in Jiquilisco alone, assuming a 1.5 per cent tax on total production. In other non-mangrove NPAs, an annual average of US$lO,OOO could be generated from fish concessions/authorizations, adjusted to an inflation rate of 2.5 per cent. Similarly, were MARNto charge fees for the use of fuelwood, it could generateabout US$29,500 per year for each NPA. 26. If these three additional sources of financing were tapped, the balance between incremental cost and revenues would yield a deficit of US$340,000 in year 2015, representing a "savings" of US$2.2m compared to the estimate based on visitor fees and concessions/authorizations for agriculture, shrimp and salt. While this i s significantly closer to the costs needed to consolidate the NPAS, these sources alone will not yield enough income to make the NPAS financially sustainable. 27. The second scenario includes income generated from payments for environmental services. These additional sources are: 0 A fee included within taxes for international air departures. As an example Costa Rica charges such a tax with the logic that tourists benefit from the natural beauty of its national parks. While El Salvador also has an international air departure tax, it does not currently include an environmentalcomponent; 0 A tax for water consumption. Protectionof the NPAS will directly affect the volume and quality of water available in El Salvador's aquifers, thereby benefiting the national population. MARN could charge an environmental tax linked to water consumption regulated by the ANDA system; and 0 A tax for hydroelectricenergy usage. Consolidation of the NPAS would contributeto the production of hydraulic power. Consequently, an environmental tax could be charged for the use of associatedenergy. 28. The projection evaluated different tax rates to propose a specific tax bundle that would generate a small surplus and result in an approximately equal distribution among these three 73 sources of financing. These rates and expected revenue are shown in the following table. The total amount of incremental income expected from these taxes i s US$2.7m per year. Usingthese additional sources of financing, the projection shows that by 2011, when all the offices will be open, the NPAS could generatea profit. 29. The analysis concluded that in order to make the NPAS financially sustainable, it i s necessary to consider a revenue structure that includes income generated from traditional sources (park fees and an expanded system of concessions/authorizations) as well as income generated from environmental service payments. 74 > a v, ?u"/c c\1 a + $ /E 18 N 00 m 00 3 c\1 c\1 00 - - Airport departuresat 750,000 per year, the expected incomewould be $693,000 Tax for Water Consumption $0.0028 per metric Assuming an annual water consumption of 249 liter million m3, the expected income would be $697,000 Tax for Hydroelectric Power $0.5 per Gwh Assuming an annual injectionof 1382Gwh, the expectedincomewould be $691,000 30. Sensitivity Analysis: Income reduction and cost increase switching values were calculated for the incremental cashflow analysis of the NPAS. The income sources included in the analysis were park entrance fees, concessions/authorizations for agriculture, shrimp, and salt, an international air departure tax, water consumption tax, and hydroelectric power generation tax, while the cost sources included were the cost for opening the new offices and infrastructure investment for ecotourism-all with a discount rate of 12 per cent. As shown in the following table, the "PAS i s very sensitive to changes in income and cost; in fact, with a reduction in estimated income, estimated cost could increase simultaneously by only 4.3 per cent. Furthermore, the analysis shows that the WAS is more sensitive to changes in income than cost. Everything else being equal, income cannot be reduced by more than 7.9 per cent before the IRR quickly becomes negative. Similarly, costs can be increased up to 9 per cent before the IRR i s below the discount rate. This analysis demonstratesthe importance of developing additional funding sources for the NPAS . Presentation of Switching Values (IRR=12%) ' `Simultaneo@y , x A. Income 4.3% A. Income 7.9% B. Cost 76 Annex 10A: SafeguardPolicyIssues ELSALVADOR: ProtectedAreas ConsolidationandAdministrationProject 1. This project is expected to have a highly positive environmental impact. If implemented as planned, the project would have no significant adverse environmental effects. It would also comply with all applicable World Bank safeguard policies, as explained below. 2. EnvironmentalAssessment (OP 4.01). The project i s classified as Category B, requiring some type of Environmental Analysis (EA) but not a full-scale Environmental Impact Assessment. In accordance with OP 4.01, this project EA buildsupon the one done for the partially blended LAP 11, which was conducted by national and international experts during the summer of 2004. Specifically, the PACAP EA consists of three studies: (a) An overall protected areas study to develop recommendations for improving the NPAS; (b) ecological assessments of the two pilot areas; and (c) an environmental assessment of eligible project activities within the two pilot areas. This latter document provides the environmental criteria and procedures that are to be reflected within the protected area management plans that will be produced for each pilot area during project implementation (as part of Component 2). It indicates, among other information, (a) the types of eligible civil works (park guardhouses, observation platforms, physicaldemarcation, and so forth) and other project investments (excluding any which are likely to be environmentally harmful); (b) the simple procedures and responsibilities (within MARN) for environmental screening and supervision of these investments; and, (c) standard environmental rules for civil works contractors andworkers (regarding waste disposal, raw materials sourcing, no hunting, and so forth). In accordance with OP 4.01, extensive consultation with conservation NGOs, local community representatives, and other stakeholders on the project's environmental and other aspectstook place duringthe preparation of the three reports that comprise the EA. 3. Natural Habitats (OP 4.04) and Forests (OP 4.36). The project i s fully consistent with the Bank's Natural Habitats and Forests policies. It would not cause, nor facilitate, any significant loss or degradation of forests or other natural habitats. On the contrary, the project is intended to prevent, or at least reduce, such loss or degradation by improving the protection and management of natural habitats within the project areas. Through the management plans to be developed for each pilot conservation area (under Component 2), the project will regulate any extraction of natural products by local people. The project will also support the environmental monitoring of such harvesting (and making adjustments in harvesting limits, if needed) to ensure sustainability. In the Bahia de Jiquilisco Conservation Area, limited harvesting of mangrove trees (as an alternative to ongoing activities that are more destructive to the mangroves) might possibly be authorized under the managementplan that will be developed duringproject implementation. In such a case, the management plan will specify the need to conduct any mangrove harvesting in accordance with the criteria of OP 4.36 (Paragraph 12) for forest harvesting by local communities under community forest management. 4. Cultural Property (OPN 11.03). Some of the conservation areas to be supported under the project (indirectly through Component 1 and directly through Component 2) contain significant archaeological, historical, or other cultural patrimony. The preservation of cultural sites or relics will be an important element of the management plans for relevant conservation areas. 5. Involuntary Resettlement (OP 4.12). Although no involuntary resettlement of any people will take place under the project, there might be increased restrictions in access to natural resources for some of the people living in, or adjacent to, the project pilot areas. Consequently, a Process Framework (see Annex 1OCbelow) has been producedto ensure that project beneficiaries receive appropriate consideration and assistance in their efforts to maintain or improve their livelihoods. 77 Such assistance would be provided during the formulation and implementation of management plans for eachpilot aiea. 6. In accordance with IBRD's policy on Disclosure of Information (BP 17.50), copies of the Environmental Assessment Report and Process Framework are available for public viewing at CNRs UCP office (1" Calle Poniente and 45 Av. Nte. # 2310, San Salvador) and on CNR's website (www.cnr.gob.sv). These documents are also available in the Bank's InfoShop in Washington. 78 Annex 10B: SocialAssessment Executive Summary ELSALVADOR ProtectedAreas ConsolidationandAdministration Project 1.Background The National Registry Center (CNR) and the Ministry of Environment (MARN), as agreed between the World Bank and the Government of El Salvador in the Country Assistance Strategy (CAS) for El Salvador, have the objective of promoting landtenure security. The design of the Project takes as its basic framework objective the conservation of biodiversity and reduction of poverty in rural and semi-urban areas in and near priority protected areas. The Project will cover two pilot protected areas: Bahia de Jiquilisco (Jiquilisco Bay) andLago Guija (Guija Lake). 2. Designof the SocialAssessment To investigate the social universe to be covered by the Project, the Social Assessment (SA) identified and analyzed several different "sociogeographic" scenarios. These consist of various geographical areas and the social groups that characteristically utilize or occupy the areas (project beneficiaries as well as other social actors), including small and medium-sized rural producers, and the semi-urban population. The SA incorporated a gender perspective where relevant. Interms of tenure, the following types of beneficiaries were considered: People with legal, but irregular, titles, this includes people -rich andpoor as well as ex-guerillas -who have lands titled by the municipalities, ILPand/or ISTA. e People with concessions (e.g. existing use rights), which include those with concessions frnv MARN/Hacienda to undertake three types of activities: salt production, shrimp production, and agriculture. Concessionsare only legally allowed inmangrove areas. (Protected areas can provide similar use rightsunder the new protected areas law through authorizations.) The types of concessions and authorizations that will be offered will be expanded through the project's development of managementplans. 0 People with no legal title to land or use right:This includes people living inand/or usingthe pilot areas, but without any legalrightto the land or its use. 3. Methodology The SA (a) identified the social actors involved, especially beneficiaries, and the mechanisms for their participation in project design and execution; (b) analyzed the factors influencing access to land, including gender; (c) documented the existing modalities of land tenure; (d) studied the nature of land tenure conflicts and the instruments for their resolution; (e) examined the potential social impacts of the Project and recommended actions to avoid, mitigate or enhance impacts depending on their contribution to project objectives; and (f) presentedrecommendations for the design and implementation of the Project to maximize beneficiary participation so as to achieve social development and poverty reduction. The SA was based on a combination of quantitative and qualitative methodologies. These included the collection of relevant secondary information, collection of primary data in the field relevant to the purposes of Social Assessment, consultations directly with the social actors involved to interpret the information collected, empirical verification of interpretations and conclusions in the field, and design of recommendations for project management. 79 Primary Data Collection: Views of the Beneficiaries. Three instruments were used to obtain the views of project beneficiaries and other social actors that will be involved in the project, as well as primary data concerning their land tenure situation. First, a socioeconomic survey was conducted of about 400 rural and semi-urban producers that occupy land in buffer zones with and without benefit of title. Second, semi-structured interviews were used to gather information from key informants, including members of ADESCOS and farmers, as well as NGOs (FIAES). Third, focus group discussions were held among direct beneficiaries of the Project (producers, ADESCO members and local leaders), non-governmental organizations (NGOs) and official institutions responsible for the current land administration system and associated programs. The latter served to compliment, corroborate and triangulate information and opinions received from the sample survey. Gender Focus. So as to identify the significant gender-specific issues around land tenure, to provide data needed to address existing disparities and discriminatory factors, and to facilitate actions that favor women's access to land and ownership of production means, the SA collectedand analyzed specific issues flagged by women heads of households. This focus was maintained in the sample survey as well as in interviews and focus group discussions. 4. Results Land Tenure Characteristics. The majority of El Salvador's rural population occupies land owned by the national government (including both lands occupied for generations and land acquired by the State for agrarian reform purposes) and enjoy possession rights but do not have legal titles. The Project and the LAP I1with which it is linked are designed to establish the necessary conditions to legalize some such possession. Some 60% of rural producers do not have titles to their farms. Salvadoran law provides the opportunity for these farmers to convert their possession into legal title through agreements with ISTA. While the majority of lands are legally considered to be under the "possession" of an individual, there are several forms of property rights that are recognized, depending upon how that possession was acquired (e.g. through inheritance, concession by the State, purchase or usufruct). The sample survey for the SA found that the majority of the lands in the pilot areas were acquired by occupancy, reform groups, inheritance or concession. The main obstacles to acquiring a title are economic: more than half of rural people live inpoverty, and they cannot bearthe cost of land and its title; the situation i s even more severe for those living below the extreme poverty line. Furthermore, the institutional, legal and operational weakness of the current land administration system might constitute major obstacles (see LAP I1Project Document). Institutional Factors. El Salvador still needs to improve the institutional response and efficiency of the land administration system and clarify some related norms and procedures. This process i s been carried out by the partially blended LAP 11, implemented by CNR. Still, the beneficiaries of that project have difficulty understanding how the various parts function, who the responsible agencies are, and how to resolve their cases. Economic Factors. Currently, the cost of land and land titling - which are the responsibility of the individual seeking legal title - are not affordable to the great majority of rural and semi-urban Salvadorans.Inaddition to the significant costs of land and title, the time-consuming process necessary to obtain a title, including land measurement, mapping, title search, title generation and land registry, imposes a hightransactions cost that serves as a disincentive to property rightsregularization. Cultural Factors. Despite the long history of the informal property market in El Salvador, some farmers are aware that without legal title, they are at a disadvantage. At the same time, however, there i s a wide- spread perception that land regularization and titling will incur high fees and time expenditures, while 80 moreover putting those who start the process at risk of loosing their lands if they are unable to pay the debts acquired with the State. Gender Barriers to Land Tenure Remlarization. While there are no special legal impediments affecting women's access to land tenure regularization, in practice, ideological and social stereotypes have historically interfered. Generally speaking, rural women possess neither land nor family patrimony, limiting their productivity and precluding their ability to generate some security for their offspring. To overcome these social limitations, the project shouldplace special emphasis on education and information dissemination to both genders, more than on further refinement of the legal framework, and the policies, programs and actions designed under the project should provide special instruments for incorporating women into the project's activities. Identification of Beneficiaries and Other Social Actors. The Project will benefit all those rural and semi- urban property holders who do not have registered legal title to the property upon which they depend for their livelihood. Specifically, the Project will benefit, at least, 40,000 small and medium producers in rural areas of which 80% are poor households. Most of these households have developed agricultural, livestock, fishing, extractive and manufacturing productive activities in areas traditionally dedicated to agriculture. Withinthis group, special attention i s requiredto recognize the productive activities of female heads-of-households. About 70% of the personsconsulted have "separate" parcels, including one used for residential purposes and another for agricultural activities. This pattern was found to hold in both rural and semi-urban areas. Land Tenure Conflicts and Conflict Resolution. The findings of the SA indicate that despite the overarching national legal framework and country-wide commonalities inthe socioeconomic, institutional and cultural factors that constrain access to land tenure security, there i s marked variation in the nature and significance of land tenure conflicts among the pilot areas. For instance, the Jiquilisco area i s home to many ex-guerillas who were granted land within the pilot area as part of the post-war Peace Agreements. Generally speaking, landtenure conflicts in protected areas stem from failure to regularizethe holdings of individuals with possession or usufruct rights dating from before the creation of the protected area. Conflicts occur where protected areas have not been demarcated, and local property holders do not know the boundaries of protected areas. Still other conflicts are rooted in the exploitation of wood and other naturalresources, without authorization by environmental authorities. To address these conflicts, the project will pilot the establishment of formal and alternative conflict resolution mechanisms. Specifically, the project will support the targeted use of alternative dispute resolution strategies and methods to facilitate the resolution of disputes over landtitling, demarcation, and the definition of possible mixed-use regimes within protected areas. A pilot program in dispute resolution will be launched in the opening months of the project and closely monitored to permit objective assessment of its utility. Key activities proposed for the dispute resolution component of the project include the following: A training programfor project staf, especially those persons that will identify and seek to resolve conflicting titling and demarcation claims inthe project areas. The training will provide a general introduction to the principles underlying alternative dispute resolution (ADR), but will emphasize the development of mediation skills relevant to the field teams' operating responsibilities. General introductory trainingin dispute resolution frameworks and strategies also will be provided to key staff of the eight government agenciesthat will be implementing the project. Development offield manual. The manual will provide hands-on, practical guidance for how field team members can apply dispute resolution principles to the settlement of competing claims over land titling and protected area demarcation. 81 0 Design of a conflict resolution monitoring and evaluation program that can be used to assess the value of individual training events, field team success in using ADR techniques to resolve lana conflicts, and the utility of the manual. 0 Collaborative planning seminars for selected staff of the government agencies executing the project. Three government agencies with highly diverse mandates, philosophy, work cultures, and operating systems (e.g., the technical orientation of MARNcompared with the legal orientation of the CNR) need to develop shared objectives and operating procedures in order for the project to succeedover the longrun.The project will underwrite a series of collaborative planning seminars inwhich representatives ofthe government agenciescandevelop acollaborationframework. Protected Areas. Land tenure conflicts in protected areas stem from failure to regularize the holdings of individuals with possession or usufruct rights dating from before the creation of the protected area. Conflicts occur where protected areas have not been demarcated, and local property holders do not know the boundaries of protected areas. Still other conflicts are rooted in the exploitation of wood and other natural resources, without authorization by environmental authorities. The Project will demarcate two pilot protected areas and regularize the holdings of existing population. This is the first time El Salvador will undertake massive regularization in such areas. The Project will reach an agreement with present occupants on a cut-off date, before which all farmers and households resident in the area will have the right to title to their holding under certain conditions, for instance that they agree to: (a) restriction of uses on the land, (b) bide by specific rules governing the exploitation of natural resources within the pilot areas; and (c) participate actively in management plans. Social assessment results indicate that about 90% of the people, at least in the Guija pilot area, are willing to participate in conservation and management plans if these are well-designed in terms of timing (relative to the agricultural calendar), activities, and monitoring, and if there is some economic compensation. With regards to the experience of these people in implementing activities including within the existingGuija managementplan, most beneficiaries indicatethat previous reforestation activitieshave failed because there i s no follow-up or monitoring activities. It seems that the reforestation programs included in the management plan were designed as a tree-planting activity and do not provide maintenance to ensure forest formation. It seems also that indicators to measure reforestation need to be revised. The common indicator i s number of trees or acres planted, but the more appropriate indicator mightbe number of acres supportingforest cover after three years. All marine and coastal lands have various degrees of protection in relation to Integrated Coastal Management Plans, which are subject to legal enforcement in terms of inland zones subject to tidal flooding. Familiesusingthese lands must obtain title to the landby square meter rather than by hectare. In these cases, the Project will need to develop special provisions to ensure access to titles. Relationship Between Poverty and Tenancy Regularization. It should be notedthat the project beneficiary population greatly coincides with the priority intervention areas identified in the Poverty Map of El Salvador. Froma social standpoint, a key condition necessary for the GOES to achieve poverty reduction i s to establish alliances and linkages among the project activities and those of other Government institutions with responsibility for registry (CNR, ISTA), credit, technical assistance, education, etc. to compliment the impact of land regularization. Without these associated investments, the effects of regularizing land tenure may be nullified. Moreover, the results of the focus groups and peasant interviews indicate that there i s a general fear that, far from improving the situation, land titling may have the opposite effect: many may be tempted to sell their land if the price for that land rises as a result of titling, and in the absence of complimentary programs to assist the poor to increase their productivity. This unwanted outcome would draw subsistence farmers off the land into the urban slums where impoverishment could deepen, given the lack of suitable skills and education of the rural poor. The full 82 SA provides detailed data regarding the socioeconomic characteristics of the rural and semi-urban population, as well as details of the actual legal status of the lands upon which they depend. Social Scenarios. The pilot areas differ in terms of existing social scenarios. For example, the Guija area includes more beneficiaries affected by the Agrarian Reform - some of which have received titles and other are still inprocess -while inJiquilisco, large groups of beneficiaries settled inthe area as a result of the Peace Agreements. These "ex-guerilla" groups include members of both the Armed Forces and the revolutionary groups, representing both sides of the war, some of whom have received property titles while others have not. Not all ADESCOS work well nor represent the community's interests to the same degree. From both a capacity and organizational perspective, the ADESCOs vary widely. This aside, generally speaking, local people relate to the ADESCO as an entity. The role of the ADESCOs in the two pilot areas differ: in Guija, ADESCOs are stronger and play a more important role in the minds of the local beneficiaries, while in Jiquilisco Bay, as people are mostly organized in cooperatives, they place more importance on the cooperative than on the ADESCOS. Inbothpilot areasthere area limitednumber of "Natural ResourcesGuards", funded by localNGOs, as well as Environmental Police (part of the National Police). Both areas are home to "Peace Judges" to whom people could submit their complaints directly or through the Environmental Police. InGuija, ISTA has zoned and demarcatedlotsnear San Diego Volcano, inthe south-west areacore of the pilot area. Most of these lots are not used for households, but for agricultural production. Some of these farmers have titles. A parallel situation was found in Jiquilisco Bay where ISTA has also provided titles that are incongruent with MAR"s conservation objectives. Poverty and Land Tenure. Rural poverty i s determined by structural conditions, which in turn affect agricultural production. In the case of El Salvador, this largely comprises the economic and technical constraints of traditional agriculture in facing a global market. However, the lack of property titles i s a recognized factor contributing to poverty and to preventing peasants from realizing new economic opportunities. Thus, the project challenge will be to secure complementary processes and conditions that complement the delivery of property titles, such as: (i)mechanisms to guarantee access to land; (ii) changes in the social relationship between producers, the State, financial institutions and consumers; (iii) changes in the institutional and legal framework and in the mechanisms for technological transference to support associative efforts and consolidate the productive capacity of small- and medium-size producers. Social Organization of the Actors. Actors organizations can be classified into three groups: (a) first-level organizations, including ADESCOS, producer organizations, cooperatives, community councils or committees (most water-related) with strictly local-level presence; (b) second- and third-level organizations, including the Association of Small and Medium Producers and the Federation of Agricultural Cooperatives. As described above, it should be noted that ADESCOS are key local organizations whose activities vary across the country depending upon the degree to which social capital has been developed in each community. Some ADESCOS execute activities with local municipalities and/or NGOs to provide potable water and garbage collection such as in San Diego (Guija). Others execute reforestation activities, as in El Desague (Guija). There are also some cooperatives formed as a result of the Agrarian Reform, which play a large role in Jiquilisco. It i s likely that these peasants feel more need to organize in order to protect their landclaims. 83 Other Social Actors. In addition to the beneficiary organizations and the regional and national organizations working with them, there are three other types of social actors, private companies, NGOs, and Government institutions. Private companies include businesses such as CEL, CESSA and other tourist companies developing entertainment centers such as restaurants, spas and hotels in the pilot area buffer zones. There are also NGOs working in the pilot areas, areas such as FONAES and FLAES, whose degree of effectiveness, and related perception by local people, varies across communities. Lastly, government institutions include: (a) CNR, (b) Ministryof Tourism, (c) CONCULTURA, (d) Ministry of Culture, and (e) Ministry of Agriculture, among others. Social Risks:The SA considered that the greatest social-related risks that project could face are: 1- Institutional Weakness.MARN is a new institution with very limited experience in demarcation and land rights allocation in protected areas. 2- Weak Project Coordinating Unit. Given the innovative nature of the project coupled with the limited capacity of MARN, the project needs a strong Project Coordinating Unit (PCU) familiar with World Bank and govemment procedures to ensure efficient and effective project execution. The project's regional offices will need highly capable social scientists to work with engineers, biologists and other in developing and implementing the conflict resolution processes, as well as the overall project. This PCU should be staffed with highly capable professionals (including social officers). 3- Weak Project Execution Strategy. Conflicts in the field (protected areas) will be aggravated if PCU and regional offices are weak and if the project's strategies are not adequate to deal with specific social realities. 4- Lack of Trust. Local people interviewed felt that some donors and government institutions have promised to implement many activities that have never been accomplished. To avoid the same mistake, the PCU must ensure that the project communication and dissemination campaign i s properly done and effective. Messageshave to be clear avoiding the creation of false expectation and conflicts. 5- Inter-institutional Coordination. MARN must closely coordinate with ISTA regarding pending property titles within pilot protected areas. 6- Land Owners. Specific mitigation and compensation measures must be developed to address land owners, as otherwise this group could be at risk of losing benefits through the project. Special attention should be paid so as to prevent land owners from losing, while those without clear tenure benefit from titles duringthe project demarcation process. Components Potential Risk Conflict Agency to Process and Activities ResolutionMeasures Resolve Conflict Strategyto Perceptionof those Informland owners of MARN- MARNshouldensure that: consolidate with irregular but their property rights DGNPwith 1) community NPAS legal titles that community participatory methodsand strengtheningthe Establish incentives to participation training re: land rights are NPAS could result ensure that land clear and well-established injeopardy to owners cooperate with to get land owners in private property MARN board; 2) incentives are appropriateto promote Sourcesof cooperation and ensure livelihood are that property rightsare 84 jeopardized well protected Use/property rights Project MARN-DGPN and local ~ Strengthening Ensure that Project of Legal and livelihoods of personnel, especially Regional and communities in Framework those living and/or at regional level, are central PCU cooperation with project producing inside of well trained in legal offices staff, ADESCOS (Guija) PA or buffer zones matters and Cooperatives are not respected (Jiquilisco Bay) should ensure that the Project personnel communities living in and lacks knowledge of near the PA are informed new PA law, thus about legal issues to not protecting the understand their rightsand rights o f households responsibilities living inside or near PA 85 Strengthening 0Lack of coordination 0Buildstrong PCUwith MARN BPrioritize the 3f Institutional between M A R N good communication establishment of PCU Framework central offices and channels between and regional offices. PCU will lead to MARNcentral offices B PCU should be based on inconsistent actions and regional and local organizational chart with at regional and local personnel well-defined levels responsibilities PCU must include at Design a deployment least one social officer strategy to move ineachregion personnel and begin operations quickly Dissemination 0Weak project Ensure clear messages PCU is Hire a competitive and Awareness dissemination so that people responsible company to design and Campaign understand their rights for ensuring execute the campaign Weak explanation of and responsibilities, as the campaign project components well as benefits o f PA, addresses all and activities that and do not perceive issues, leads to people's their interest to be including misunderstanding threatened project and creates false Campaign must target information expectations andlor different actors: (a) as well as perceptions people living and conflict working inside PA, (b) resolution people living within the PA but working in bufferzones, (c) people living in buffer zones but working in PA, (d) people living and working inbuffer zones 2. Consolidation zd Management of Pi16 ProtectedAreas Characterization Information Project should hire a PCU and Ensure COALs are truly and management is company and work COALs community-based Delimitation o f inadequate with CNR to delimit: committees, with Pilot Protected 0Miscommunication (a) PA area participation of local Areas between project boundaries; (b) community residents, personnel and local residential lots; (c) NGOs, ADESCOS, community agricultural lots; and project personnel and Abuse of power (d) use zones within MAW, to ensure that People actively the PA people perceive as oppose the project though they have a voice inthe process and abuses will not take place Incase of conflict, the first recourse should be the COALs, which must resolve in 2 weeks and send the case to Environmental Police, which must inturn resolve it in 72 hours. If 86 case is not resolved by COAL, escalate process; if not resolved by Police, send cases to court Legalization 0 Project's strategy to Ensure that people's TU, with Maximize public and offset impacts to rights are protected Alpport o f participation in project Regularization different groups is and their interests are :ontracted implementationthroughout of Pilot PAS not perceived as fair taken into account in igencies life or adequate the design of project :NGOsor internal and external Ither) boundaries Builda consensus among the residents so they support the rules and objectives o f each use zone 0 Ensure that rules for legalization and regularization are clear, well- disseminated and adhered to Management 0Management Plans Ensure that MPclearly: UCP See ProcessFramework Plans not well-prepared or Identify important implemented areas for conservation Include activities to promote sustainable development of existing populations Include community participation strategies according to different social realities Are financially sustainable 3. Project Manat ment Lack of community Ensure that social UCP, NGOs, involvement in indicators and ADESCOs M&E community participation indicators are included inM&E 0 Ensure that community members participate in collection of M&E data Consultation and Participation. It i s highly recommended that the project set aside sufficient resources to strengthen the capacity of the rural, peri-urban and urban organizations that constitute natural allies, in order to secure their active involvement inProject's activities, particularly with ADESCOS. Social Impact Indicators. The following are some of the most important indicators: 87 0 Number of families with holdings and property title regularized by the Project (especially the 50% living in poverty) vs. number of families without title in areas that are adjudicable. 0 Number of land rights conflicts resolved and accords signed among peasants and the System of Protected Areas. 0 Number of land property disputes solved through alternative conflict resolution mechanisms vs number of dispute solved throughjudiciary means. 0 Percentageof producers living under the poverty line making payments relatedto the cost of land andtitles underthe terms to be offered by the Project. 0 Percentageof women heads of householdsreceiving title. 0 Number of poor landowners in the processof obtainingproject grants. 0 Number of households inthe processof obtaining credit through usingtheir legalizedproperty as collateral. 88 Annex 1OC: ProcessFrameworkfor MitigatingPotentialLivelihoodImpacts ELSALVADOR: ProtectedAreas ConsolidationandAdministrationProject 1. Project Summary. The Project seeks to strengthen the national protected areas system through a strategy developed based on results from the consolidation of two priority protected areas. The principal activities of the project will include protected area policy reforms, as well as cadastre and registry, demarcation and legalization of two pilot protected areas, land conflict resolution, and development and implementation of management plans including regularizationof eligible residents through the granting of authorizations for their land use and the issuanceof appropriate legal instruments to recognize and allow their presenceintwo pilot protected areas: Jiquilisco Bay and Guija Lake. 2. PotentialImpacts on Livelihoods. As the Project aims to protect important biodiversity inthe pilot areas, the possibility remains that some Project activities to establish and consolidate protected areas might materially affect the current livelihoods of certain Salvadorans living within or adjacent to these pilot areas. This Process Framework outlines the key guiding principles, criteria and procedures which the Project will follow in such cases, to ensure that eligible, affected persons are assistedintheir efforts to restore or improve their livelihoods in a manner which maintains the environmental sustainability and territorial integrity of the relevant protected areas. In all such cases, MARN as the executing agency would seek to address the livelihood issues of these persons in a manner which i s fair, just, and inaccordance with Salvadoran law, as well as consistent with the World Bank's Safeguard Policies on Involuntary Resettlement (OP 4.12), Indigenous Peoples (OD 4.20), Natural Habitats (OP 4.04) and Cultural Property (OPN 11.03). 3. Key Principles: The following principles will guide the project's consolidation of pilot protected areas and relations with communities living incore and buffer zones of those areas. e Preventionof new settlementsinside protected areas: The Project will initiate actions to prevent new human settlements inside of protected areas. Furthermore, the Project will take care to ensurethat activities supported through the project do not create incentivesfor the creation of new settlements inprotected areas. 0 Information and communication: The Project will emphasize dissemination of clear, true and timely information to beneficiaries (including government and non-governmental organizations and the general public) as to the Project objectives, scope and benefits. The Project will strongly emphasize the provision of detailed information regarding the rights and obligations of the direct project beneficiaries, in a manner that i s accessible and enables any questions, doubts or issues to be raised and resolved as quickly and efficiently as possible. -e Participation: Broad public participation by those communities living in and near the protected areas will be strongly emphasized in the formulation, updating, execution, monitoring andevaluation of Management Plans 89 Biodiversity conservation and sustainable development: Management plans will aim to harmonize the needs of local, human populations with the preservation of natural resources. Environmental education. Environmental education will be strongly emphasized so as to promote awareness and sound behavior among the population of the importance of natural resource conservation. Respect of legal land rights within protected areas. Existing legal but irregular property titles within protected areas will be respected, as will results of "prueba testimonial" studies to demonstrate the acquiredrights of individuals living within the protected areas. No involuntary resettlement. To effectively implement the project, no involuntary physical displacement or relocation of people would be required, and none will take place as a part of this project. Voluntary resettlement. In the case that human settlements in protected areas are not considered compatible with the conservation of important biodiversity, and innovative measures to mitigate the impacts of those settlements are not feasible, as a last recourse voluntary resettlement plans will be developed with the participation of would-be beneficiaries that would enable those persons to stay within the protected areas, respecting the uses and practices established in the Management Plans. Programs of voluntary resettlement, which would guarantee the reestablishment of existing socio-economic conditions, would be included within the Management Plans. Transparency. The dissemination and validation of management plan formulation, execution, monitoring and evaluation will be done in a fully transparent manner, such that all protected area community sectors are aware of the process. This process will be managed so as to guarantee that established criteria and procedures are applied transparently and equitably for all. Co-responsibility. Management plan development and implementation will include clearly defined roles and responsibilities for all institutions involved, including national and local govemmental entities, social organizations and communities. Respect for cultural identity of local communities and indigenous groups. The development and implementation of managementplans will respect the cultural identify of local communities and indigenous groups, inthe case that they are found to live within the pilot areas. 4. Eligibility Criteria. The procedures outlined below will apply to Salvadorans who have occupied the land, or frequently utilized the natural resources, within a protected area prior to the official cut-off date. The project through MARN will specify the cut-off-date on a case- by-case basis for each protected area, after close consultation with local residents and other stakeholders. To assist in this process, project has incorporated within its design the functioning of local, community-based committees. As a general principle, the cut-off-date should be the date by which time essentially every head of household could reasonably be expected to know of the official existence and on-the-ground location of the protected area or could be a different date for each protected area based on its particular circumstances. In some cases, the cut-off-date might be the starting date of the demographic census that will normally 90 be part of the land tenure-socioeconomic study for establishing or consolidating a new protected area. In other cases, the cut-off date might be before the census, if the existing protected area's location was previously demarcated or otherwise adequately publicized to local residents and neighbors (such as through routine patrol or enforcement actions). Persons who illegally occupy or begin exploiting the naturalresources of a protected area after the cut- off-date would not be eligible for any type of ,livelihood-related or other assistance(consistent with the spirit of the Banks OP 4.12). Besides the cut-off date, other decisions concerning the eligibility of occupants or neighbors of protected areas for special consideration regarding livelihood issues would be consulted with stakeholders and recorded in the protected area Management Plan. 5. Procedures for Pilot Area Consolidation Pro-iectInformation Dissemination: Information regarding the project's goals, activities and advances will be disseminated at the local, regional and national levels in accordance with a communications strategy currently being finalized. This strategy i s being developed to specifically target key stakeholders such as local communities and NGOs, as well as local, regional andnational institutions and the general Salvadoran population. a. Objectives: The objectives of the Project information dissemination campaign are the following: 0 At the nationaland regionallevel: 1)disseminate the project objectives and reach; 2) generate a positive attitude toward the project; and 3) encourage public support for the project. 0 At the local level, specifically for those communities living inprotected areas and inthe surrounding buffer zones, the above objectives as well as: 1) encourage support for the sustainableuse of naturalresourcesand conservation; 2) motivate local participationin the design and implementation of Management Plans; 3) disseminate the mechanismsfor, and encourage participation in, local community-based committees (COALS); and 4) establish a two-way communications channel between communities andthose responsible for project development and implementation. b. Public Audiences: The communication strategy will emphasize the importance of regular public audiences through a variety of channels, inboth the public and private sector, such as governmental institutions, NGOs, privatebusinesses, schools, churches and civil society. Technical Studies: The following technical studies will be done to document the status and location of natural and cultural resources within the pilot areas: 91 a. Rapid EcologicalAssessments: RapidEcological Assessments(REAs)will bedone in each pilot area to identify priority areas for conservation. The REAs will be done using field verification of existing information and aerial photography and/or satellite images. The results will be usedas a basis for the design of Management Plans. b. Socio-economicDiagnostics:Thesediagnostics will be done to characterize the existing occupations and uses of the pilot areas. Specifically, the diagnostics will: a) characterize existing landuse andtenure; b) assess the local social dynamics, identifying key relationships between local actors, andthe prevalent forms of social organization; c) characterize the local economic dynamics, identifying the role of actors and economic agents, and their relationships with the natural resources of the area; and, 4) identify historic andcultural values linkingthe identity of local populations with the natural resourcesof the pilot areas and their surroundings. Additionally, these diagnostics will assessthe characteristics of the local populations, existingconflicts and infrastructure. c. Development of Management Plans: The project will develop and implement managementplans (MP) for the two pilot areas, Working heavily with local populations, these MPs will incorporate information from the Rapid EcologicalEvaluations and Socio-economic Diagnostics, as well as existing management plans, to develop strategies that encouragemedium- and long-term sustainable development of the pilot areas. Buildinguponthese inputs, the MPs will includethe definition the external pilot area boundaries (including both the core and buffer zones), as well as internal boundaries of differential use zones. These zones will be developed consideringthe location of existing human settlementsand activities, the state of biodiversity conservation, and the compatibility of human uses with natural resource conservation. The allowable uses within internal zones will be defined, taking care to incorporate those populations whose existing uses and practices may be limited by these zones. Insuch a case, the MPs will include substitute activities for such persons. Draft MPs will be disseminated and consulted with local stakeholders so as to validate and revisethem, where necessary.The final MPs will also be heavily disseminated so that stakeholders and localbeneficiaries and knowledgeable about this key project activity. d. Implementation of Management Plans: The project will ensure the full implementation of Management Plans inpriority zones. For programs included within the MPs that require community participation, signed agreementswill set forth the obligations and rightsof eachparticipant. Regular meetings will be held with local actors to update them on the MP's advances and results. 92 e. Conflict Resolution: the project may require the resolutionof conflicts expected to include those: (i) among co-management entities and the localpopulation; (ii) to related land tenure, especially regardingprotected areaandprivate parcel boundaries; (iii) regardinguse of naturalresources inside of pilot areas. Such conflicts will be addressed through a specific alternative resolution mechanismdeveloped through the project. This mechanismi s expectedto function as follows. Initially, conflicts will be addressed locally, first through the project's regional PCUthat investigate the complaint, and attempt to resolve it through mediation, then through the COALs for each pilot area, each of which includes representativesfrom MARN, local communities, andNGOs and ADESCOs working inthe protected area. If the conflict cannot be resolved at this level, it will be escalatedto MARN's Natural Patrimony Department. If still not resolved, the conflict will be addressedat the strategic level through CONANP (the National Protected Areas Council), which includes the Minister of MARN, and representatives of the Ministries of National Defense, Education, andAgriculture, National Civil Police, Attorney General for Human Rights,universities, NGOs, and communities living in protected area buffer zones. Inorder to trigger this process, conflicts should be addressed to MARN's regional PCUor MARN's Inspectorate located inSan Salvador. f. Monitoringand Evaluation: Projectmonitoringandevaluation (M&E)will take place at the pilot area and project level. At the pilot area level, M&Ewill follow the method set forth inthe PROARCA manual "Medicio'n de la efectividad de manejo de dreas protegidas" adaptedby MARNfor use inElSalvador. Monitoringof biodiversity parameterswill follow norms established inthe "Manual para la evaluacibny monitoreo de la integridad ecolo'gicaen Areas Protegidas" (PROARCA, 2004), as well as those set forth in the "Manual de Inventarios y Monitoreo" (MARN,2003), and "Modelo de seguimientoecoldgicoen espaciosNaturales Protegidas" (Atauri y De Lucio, 2002). At the Project-level, M&Ewill include those indicators established inproject documents, such as the environmental assessments done for project preparation (MARNy CNR, 2005a; MARNy CNR, 2005b). 6. InstitutionalArrangements: Implementation of this Process Framework is the responsibility of MARN. SupportingMARNwill be a number of actors, such as ISTA, CNR, municipalities, NGOs, ADESCOs, COALs, and the private sector. Specifically, ISTA, CNR and the municipalities will provide MARN with information regarding those pilot area residents that have registered property claims or rights. Technical studies, such as the REA, Socio-economic Diagnostics, and MPs will be overseen by MARN, and carried out by private sector firms and/or NGOs (or other competent actors). Implementation of management plans will be the responsibility of those entities contracted by MARN. Conflict resolution will be the responsibility of MARN, who will preliminarily delegate such activities to COALs. 7. Financing: The activities mentionedabove are included inthe scope and costs of the project. 93 Annex 11:ProjectPreparationandSupervision ELSALVADOR: ProtectedAreas ConsolidationandAdministrationProject Planned Actual PCNreview Sept. 7,2004 InitialPID to PIC Nov. 18,2004 InitialISDS to PIC Nov. 18,2004 Appraisal September 22,2005 Negotiations October 56,2005 Board/RVP approval November 29,2005 Planneddate of effectiveness Jan. 31,2006 Planned date of midterm review January 5,2009 Planned closing date June 30,201 1 Key institutionsresponsible for preparation of the project: CNR, MARN Bankstaff andconsultants who worked on the projectincluded: Name Title Unit AnnJeannetteGlauber Co-TTLEnvironmental Officer LCSEN Frederic de Dinechin Co-TTL/Senior LandOfficer LCSER George Ledec Lead Ecologist LCSEN Anna Corsi Operations Analyst ESDVP ElenaCorrea Senior Social Specialist LCSEO Jorge Villegas Consultant LCSEN LuisPrada Procurement Specialist LCOPR Fabienne Mroczka FinancialManagement Specialist LCOAA Joseph Formosa Loan Officer LOAGl Monica Lehnhoff Procurement Analyst LCOPR Teresa Roncal Operations Specialist LCSER FabiolaAltimari Country Lawyer LEGLA SelphaNyairo Legal Associate LEGLA Ketty Morales Project Assistant LCSER Mary Lisbeth Gonzalez Social Consultant Roger Pipe Economic Consultant Simon Milward Junior Professional Associate LCSEN MarkZimsky Senior Biodiversity Specialist GEF 94 Bank funds expendedto date on project preparation: 1. Bankresources: $52,200 2. Trust funds: $350,000 3. Total: $402,200 EstimatedApproval and Supervision costs: 1. Remainingcosts to approval: $30,000 2. Estimated annual supervision cost: $80,000 95 Annex 12: Documentsinthe ProjectFile ELSALVADOR: ProtectedAreas ConsolidationandAdministrationProject 1. Government's project document 2. DetailedProject cost tables 3. Procurement Plan 4. Participatory Social Analysis 5. Process Framework 6. Economic-Financial Analysis 7. Analysis of Protected Areas System (NPAS) 8. Environmental Assessment of Bahia de Jiquilisco 9. Environmental Assessment of Lago Guija Complex 10. Environmental proceduresfor management plans inpilot areas 11. InstitutionalAnalysis 12. LegalAnalysis 13. Monitoring andEvaluationplan 14. Protected Areas Tracking Tool for Bahia de Jiquilisco Conservation Area and Lago Guija-San Diego- LaBarra Complex 15. Summary of public consultations 16. Absorption plan for project staff 96 Annex 13: Statementof Loansand Credits ELSALVADOR: NationalEnvironmentalManagementProject ~~ ~~ Differencebetween expectedandactual Original Amount inUS$ Millions disbursements ProjectID FY Purpose IBRD IDA SF GEF Cancel. Undisb. Orig. Frm.Rev'd PO64919 2003 SV JUDICIAL MODERNIZATION 18.20 0.00 0.00 0.00 0.00 18.02 6.58 0.00 PROJECT PO67986 2002 SV-EARTQUAKEEMERGENCY REC. & 142.60 0.00 0.00 0.00 0.00 139.86 -2.74 0.00 HEALTHSER PO50612 1998 SV EDUCATIONREFORM 88.00 0.00 0.00 0.00 0.00 14.04 14.04 14.04 PO41680 1998 SV SECONDARYEDUCATION 58.00 0.00 0.00 0.00 0.00 12.47 12.47 0.00 PO07164 1997 SV PUBLIC SECTOR MODERN 24.00 0.00 0.00 0.00 0.00 7.62 7.62 0.00 PO07174 1996 SV LAND ADMINISTRATION 40.20 0.00 0.00 0.00 0.00 3.88 3.88 -0.96 Total: 360.80 0.00 0.00 0.00 0.00 195.89 41.85 13.08 ELSALVADOR STATEMENTOFIFC's HeldandDisbursedPortfolio InMillionsof US Dollars Committed Disbursed IFC JFC FY Approval Company Loan Equity Quasi Partic. Loan Equito Quasi Partic. AFP Crecer 0.00 1.20 0.00 0.00 0.00 0.78 0.00 0.00 2001 CAESSEEO 43.44 0.00 0.00 70.90 30.02 0.00 0.00 48.54 2002 CALPIA 0.00 2.00 0.00 0.00 0.00 1.99 0.00 0.00 1997100 CESSA 0.00 0.37 0.00 0.00 0.00 0.37 0.00 0.00 1998103 CUSCATLAN-ES 0.00 0.00 15.00 0.00 0.00 0.00 15.00 0.00 2004 Metrocentro 25.00 0.00 0.00 0.00 10.00 0.00 0.00 0.00 1998 SEFBatenas 1.29 0.00 0.00 0.00 1.29 0.00 0.00 0.00 1999 SEFIMACASA 0.00 0.20 0.00 0.00 0.00 0.20 0.00 0.00 Total portfolio: 69.73 3.77 15.00 70.90 41.31 3.34 15.00 48.54 Approvals PendingCommitment FY Approval Company Loan Equity Quasi Partic. Total pendingcommitment: 0.00 0.00 0.00 0.00 97 Annex 14: Countryat a Glance ELSALVADOR: NationalEnvironmentalManagementProject Lifeewectancy latest year av Access to improvedwter source Trade Indebtedness 2002 2002- -E/ Salvador STRUCTURE of the ECONOMY 1982 1992 2001 2002 I Growth of investment and GDP (%) (%of GDP) Agriculture 32.6 14.2 9.5 40 T Industry 222 29.6 29.7 20 Manufacturing 16.6 23.8 23.0 0 Services 452 56.2 60.8 -20 Private consumption 76.7 88.4 87.9 -40 Generalgovernment consumption 15.8 9.4 13.0 Imports of goods andservices 28.5 32.4 42.9 I -GDI -GDP I 1982-92 1992-02 2001 2002 Growth of exports and imports (averageannualgrowth) ( O h ) Agriculture 0.8 0.8 -2.1 30 Industry 2.5 4.9 5.0 20 Manufacturing 2.6 5.0 4.2 Services 2.5 4.3 12 a Private consumption 42 4.3 0.2 0 Generalgovernment consumption -2.9 2.7 11 .IO Gross domestic investment 6.9 3.4 -5.3 Imports of goods andservices 6.0 9.8 3.3 98 1992 ilr' iJEt Y R A a E 1982 1392 BALANCE ai PAYMENTS 1992 Ixi7 P U78 $342 *. 2992 i '@ "E. 0 E bfb u 11 ZI I 1:11 Annex 15: IncrementalCostAnalysis ELSALVADOR ProtectedAreas ConsolidationandAdministration OVERVIEW The development objective of the partially blended Second Land Administration Project is to improve land tenure security and land transactions by providing efficient, equitable, and accessible land administration services, thereby facilitating better land-related investments and more productive and environmentally sustainable land use. The global objective of the proposed project is to conserve ElSalvador's globally significant biodiversity by strengthening the national protected areas system and consolidating two priority protected areas to have a strengthened national protected areas system inplace, through a strategy based on results from the consolidationof two priority protected areas. The global objective will be accomplished by the following components: (i) Strengthening the National Protected Areas Strategy (NPAS)-improving the existing strategy, institutional framework and necessary legal instruments for the national protected areas system based on broad stakeholder participation, and disseminating lessons leamed through the process; (ii) Consolidation and management of pilot protected areas-developing and implementing strategies for consolidating two pilot protected areas-Bahia de Jiquilisco Conservation Area and Lago Guija-San Diego-La Barra Protected Area Complex-including management plans; and (iii) Project Administration-improving capacity to manage and supervise, and monitor the protected area system, The principalproject outcomeswill be: (i) Updatedstrategy and action planfor consolidatingnational protected areas system developed; (ii) Two pilot protected areas consolidated and effectively managed (Tracking Tool score of at least 40 for the 35,600 ha in Bahia de Jiquilisco and 1,917 ha in Lago Guija Complex San Diego-La Barra); and (iii) Biodiversity benefits established in at least 37,000 ha (in Bahia de Jiquilisco P A at least 35,600 ha of mangrove or associated humidforest coverage that will have zero deforestation compared to baseline; in Lago Guija Complex San Diego-La Barra at least 1,400 ha of dry tropical forest or associated riparian forest that will have zero deforestation compared to baseline). The GEFAltemative will achieve these objectives at a total incremental cost of US $10million (M), 5.0 Mof which is being requestedfrom the GEF to directly fund global benefits and 5.0 Mof which would come from the IBRD loan for the LAP I1project which would fund necessary data-collection activities and investments in methodologies, as well as producing associated domestic benefits that would be essentialinorder to make the global benefits sustainable. 100 ContextandBroadDevelopment Goals El Salvador supports an impressive diversity of species, comprising 1,477 species of vertebrates (27 percent of which are threatened, or severely threatened, with extinction), including 510 bird species (of which 17 of the 23 birds endemic to northern Central America are a part), an estimated 7,000 native plant species, including more than 700 species of trees, 140 species of reptiles and amphibians, and 800 species of butterflies- all in an area the size of Massachusetts. This high biodiversity stems from the country's unique setting, being highly volcanic and isolated from Central America's Atlantic moist forests. Yet, despite the importance of these resources, El Salvador's protected area system only covers 755 km2, representing only 4.6 percent of the total The El Salvadoran authorities are becoming increasingly aware of both the importance of indigenous biodiversity and the significant threats to its sustainable management, which include a variety of unsustainable land and natural resourcepractices that are increasingly impacting all ecosystems and have been exacerbated by the intense population growth that has made the country the most densely populated area in Latin America. These include: conversion of wetlands and other critical natural habitats to agriculture or other land development; interference with the hydrological regime of wetlands for agriculture, municipal and industrial use of water; pollution; overgrazing and other unsustainable agricultural practices; huntingandunsustainable management of marine resources; and encroachment into protected areas. El Salvador's National Protected Areas System (NPAS) aims to protect these remaining resources, but has struggled due to a variety of constraints, most importantly the complicated legal and institutional frameworks coupled with severely constrained institutional capacity for protected area management, lack of a tested model to consolidate the NPAS or individual protected areas, and unclear inadequate land tenure. Additionally, the biodiversity harbored within the NPAS i s threatened by habitat transformation, fragmentation and degradation; encroachments into protected areas are a serious problem for which the government does not have a viable strategy. These encroachments result in significant habitat destruction and deterioration, through the conversion of forests, pollution, and overexploitation of resources, all of which stem inpartfrom a lack of environmental awareness. However, a series of events have culminatedto provide an important enabling environment for addressing the threats to the globally significant biodiversity protected within the NPAS. First, the protected areas law, on hold for 25 years, was passed in February 2005. This law provides MARN with the legal framework necessary to oversee these lands, as well as significant political capital. Secondly, the IBRD- loan financed Land Administration Project (LAP)i s mid-way through the completion of the cadastre and registry of all lands in the country-which has been deemed a priority effort for the new government. Duringthe preparation of the secondphase of the IBRD-funded project (which will begin disbursements in January 2006), the GOES identified the importance of resolving tenure conflicts in protected area lands, without which the LAP's efforts to address all of El Salvador's lands will fall short. The LAP's implementing agency, CNR, has taken significant efforts to involve MARN in that project, including a component for demarcation of three protected areas. While the participation of MARN in the LAP has historically been limited by MARN's capacity, by developing a partially blended operation, GEF funds 40According to the Ecosystem Profile: Southern Region, Mesoamerica (Critical Ecosystem Partnership Fund) this is significantly behind Costa Rica (with 24 percent of the land protected), Guatemala (23 percent), Nicaragua (17 ercent), Panama(17 percent), Belize (10percent), and Honduras (8 percent). More than 1.6 percent of El Salvador's land was officially designated as protected area in the newly approved protected areas law (Ley de Areas Protegidas, February 2005). These lands include all mangroves in the country, which were considered national forests outside o f the protected areas system prior to the passageof the law. 101 will catalyze the consolidation of the national protected areas system by exploiting the significant opportunity presentedby the LAP. The immediate development goals of the new Government of El Salvador administration include accelerating broad-based equitable growth and increasing employment, improving equity by building human capital and expanding access to basic infrastructure, assets, and markets, and enhancing security and reducing vulnerability. Inresponse, the World Bank`s new business compact with the Government of El Salvador focuses on priority areas consistent with the Government's reform agenda, including: (a) consolidating the regulatory and legal framework for the environment sector, supporting implementation of measures aimed at watershed recovery, reforestation, management of ecosystems, and biodiversity conservation; and (b) supporting activities to promote sustainable development, as vulnerability to natural disasters i s closely related to rural poverty and that low productivity and high population pressures have depleted natural resources in many rural areas, caused soil erosion and land degradation, led to loss of habitat, biodiversity, and natural forests, and exacerbated problems in water management and conservation. The GOES has also set forth priorities for biodiversity in the 2002 National Strategy on Biological Diversity (NBS; GEF/UNDP/MARN). The NBS establishes as priority actions the implementation of a biodiversity information system and the consolidation of the national protected areas system; the redefinition of institutional responsibilities for conservation activities; and the strengthening of national, institutional and human resource capacities inbiodiversity conservation. Baseline Scenario Baseline scenarios for the three objectives of the project are set out below. The table in Attachment 1 below gives further details. 1: National Protected Areas Strategy: The following ongoing projects provide baseline support for the NPAS: The Mesoamerican Biological Corridor project (UNDP/GEF), which i s improving management capacity for key protected areas; Further UNDP/GEF ventures that have supported the development of the National Biodiversity Strategy and improved capacity for nationalbiodiversity management; The National Land Use Plan (Funded by the Salvadoran Fund for Preinvestment Studies; FOSEP), which established 15 Conservation Areas for consolidating protected areas management; The FORGAES project (EU), which has strengthenednaturalresource management; The FIAES project (funded through the US Debt Swap), which has supported small-scale sustainable development for conservation; Participation in Environmental Management project (USAID), which has improved civil society participation innatural resource management; Several projects supported by the Spanish Government (AECI), including supporting the management of Los Volcanes National Park, and the Integrated Management of Mangroves and Coastal Wetlands (including a national wetlands inventory); and Preparatory studies funded by the GEF/IBRD-financed Environmental Services Project, which provide detailed descriptions of landuses and incentives in andaround protected areas. The current costs of the baseline activities that provide support for this component are US$19.3 million. On their own, these activities will result in a certain reduction of pressure on the protected areas but 102 further activities are essential if adequateprotection is to be given that is appropriate for El Salvador to play its role within the Meso-American Biological Corridor. Fortunately, however, there i s significant potential for conserving global biodiversity as the baseline establishes an enabling environment for further activities to provide these global benefits. In particular, the geo-spatial data provided by the baseline and the strengthening of the institutional framework and management efforts in effect lays the groundwork for the current project to achieve global benefits through resulting in long-term conservation and sustainableuse of globally and regionally significant biodiversity. 2: Consolidationand Management of Two Pilot Areas (Bahia de Jiauilisco and Lago Guiia San Diepro-La Barra): The following ongoing activities inthe pilot protected areas contributeto the baseline: 0 Management Plans, which exist for part of both pilot protected areas (Funded by AECI in Bahia de Jiqulisco and CATIE in San Diego-La Barra); 0 Ramsar proposals for Bahia de Jiquilisco (AECI) and Guija San Diego-La Barra (IUCN), grants to local NGOs at both sites (CODEPA, UNES, CRD, MSM, Asociacih Mangle and the local ADESCOs in Bahia de Jiquilisco-and CEPRODE in San Diego-La Barra) provided by FIAES and NCN; 0 Sustainable Development Program for the lower Lempa River, which includes the Bahia de Jiquilisco (funded by IDB); and 0 Lessons learned from the GEF-financed Promotion of Biodiversity within Coffee Landscapes, which will likely be used to provide alternative income generation sources inthe pilot areas. The current costs of these baseline activities are US$2.0 million. On their own, these activities will result in protection of the biodiversity within these areas. However, this will fall far short of the potential protectionthat could be provided through comprehensive conservation activities in these areas combined with sympathetic management of the surrounding area and management of an entire national protected area systemfunctioning as partof the Meso-American biological corridor. 3: Proiect Management and Monitoring: The proposed project relies heavily on monitoring and evaluation (M&E) to capture lessons learned, which will in tum be used to adapt project management and design. The proposed project's M&E system builds directly upon the system built for the LAP 11, which contributes to the baseline for these activities. Additionally, the substantial investments in technical and institutional strengthening for LAPproject management, in part contribute to the baseline as the proposed project will capitalize upon this installed capacity to handle most project administration activities (for example, procurement, financial management). The estimated cost of the baseline i s US$0.6 million. Future investment would buildon the lessons learnedand best-practice generatedby the LAPI1project and would be essential for producing a consolidated protected area system that would adequately conserve the globally significant biodiversity. OverallBaseline CostsandBenefits Baseline Costs: Implemention of the aforementioned programs/projects alone will contribute-in a limitedway-to the project development objective. The total estimated costs of baseline activities amount to US$21.9 M and sources of assistance vary, consisting of Government revenues and funds from bi- and multilateral organizations. The Governmentlpublic contribution to the baseline is an estimated 29 percent. The remaining estimated 71 percent of the baseline costs is financed by external donors (AECI, IUCN, 103 EU, CATIE, EUand IDB)and the other GEF-funded projects, mentionedabove, that help to produce the limitedbaseline global benefits that are detailed below. Baseline Benefits: Activities under the Baseline Scenario will result in limited protectionof biodiversity, increased national environmental benefits related to small-scale conservation, forest and watershed management, increased participation in conservation, and slight improvements in protectingcoastal areas. In addition, forest and soil conservation measures should marginally increase carbon storage in El Salvador's forested areas. Moreover, land regularization activities should somewhat decrease pressure on protected areas, through the improved tenure security in nearby areas (although no parallel regularization or detailed information collection will take place in protected areas). Likewise, some progress will be made in achieving broader development goals related to strengthening environmental management and improved social and rural development. Training that has been provided by the GOES has been focusing on the importance of land rightdtenure security, but does not contribute to an improved understanding of the importance of conservation as a global or regional environmental issue. The baseline would include some introductory actions aimed at biodiversity conservation, such as: partial on-the-ground supervision and management of the two pilot protected areas, but this i s very restrictedin scope and highly dependent on outside funding sources; preliminary development of regulations for the new protected areas law, utilizinginadequate resources and basedon highly limitedexperience; Under present circumstances, any action toward consolidating the protected areas system (or individual protected areas) would have less than optimal outcomes. Implementing a strategy for consolidating the system requires appropriate policies, techniques and methodologies applicable to: (a) strategies seeking support from rural landowners/residents as regards implementation of biodiversity-friendly land uses, including developing effective incentives; (b) identifying additional significant and sustainable sources for system financing; and (c) building capacity and clarifying roles and responsibilities for agencies charged with managing (or contributing to the management of) protected areas; and (d) gaining broad consensus as to the importance of and objectives for the W A S . GEFAlternative: Scope: The GEF Alternative will support the conservation and sustainable use of regionally and globally significant biodiversity in El Salvador through the rationalization andconsolidation of the protected areas system. The project would finance the incremental costs through a US$S.OM GEF grant and US$5.OM provided by the IBRDLAP I1Project. Specifically this money would be used to: (i) Improve the strategy, institutionalframework and necessary legal instruments for the national protected areas system based on broad stakeholder participation, and disseminating lessons learned; (ii) Develop and implement strategies for consolidating two pilot protected areas-Bahia de Jiquilisco Conservation Area and Lago Guija-San Diego-La Barra Protected Area Complex-including managementplans; and (iii) Improve capacity to manage, supervise and monitoring the protected areas system. Costs: The total cost of the GEF Altemative, combined with the Baseline i s estimated to be US$ 31.9M which includes a GEF grant of US$5.0M and US$5.OM from the IBRD-loan financed LAPI1project. This LAPI1project is the partially blended Second Land Administration Project (IBRD loan) for which the GOES is borrowing US$40.2M, to fund national environmental benefits including: 104 (i) Improvedprioritization of protected areas interventions; (ii) Reduced local poverty through the adoption of sustainable development practices and improved tenure security in small rural properties, leading to increased soil productivity and new possibilities to obtain financial resources derived from environmental services rendered by target priority pilot protected areas; (iii) Better quality and quantity of water for local consumption through improved natural resource management, and the resulting decrease in erosion rates and sediment flows into water bodies; and (iv) Increased capacity for protected area management, including improved outreach and involvement of civil society and the private sector inprotected area management contributing to the improvedquality of life for El Salvadorans. This GEF project will influence these IBRD funds to demarcate three new protected areas within the updated and linked national land cadastre and registry and to obtain high-quality geospatial and land tenure data for the two pilot protected areas and their surroundings, as well as investments in methodologies (including legal tools) for land regularization. This will both help the LAP I1project to achieve local benefits as well as enabling the GEF project to pursue its objectives. In addition, the local benefits generatedby the IBRDproject will improve the sustainability of the global benefits produced by the GEFproject. This breaksdown into the three project components as shown inthe table inAttachment 1: Benefits: Under the GEF Alternative, El Salvador would have in place a strengthened protected areas system, built on experience gained through consolidation of two priority protected areas. This would contribute to the conservation and sustainableuse of regionally and globally significant biodiversity in El Salvador through the rationalization and consolidation of the protected area system. Additionally, it would assist the country in developing adequate tools and mechanisms to facilitate future large-scale consolidation of the overall protected area system, while providing additional opportunities for improved livelihoods and economic well-being of rural communities, which could inturnbe used in other countries inthe regionundergoingor considering landregularizationprograms.42 Global benefits would include: (i) Long-term conservation and sustainable utilization of globally and regionally significant biodiversity, through strengthenedon-site management; (ii) Developmentof viable approachesto sustainable naturalresource use inprotected areas; (iii) Enhanced ecosystem integrity as a consequence of the adoption of improved natural resource management practices, in both productive landscapes and priority ecosystems (mangroves, humidtropical forest, tropical freshwater lakes and wetlands, and tropical dry forest), which results in decreased soil erosion, increased carbon sequestration, and improved conservation and sustainableuse of biodiversity; (iv) Enhanced ecosystem integrity through implementation of corridors between isolated protected areas of global biodiversity importance; (v) Restoration of globally important ecosystems, including through active reforestation programs and decreasedpressure on those systems, with positive impacts on conservation of aquatic and terrestrial biodiversity; and 42 The IBRD is currently supporting ten similar projects in Latin America, with another ten under preparation. In addition to El Salvador, these include projects in other Central American countries such as Guatemala, Nicaragua, Honduras, and Panama. 105 (vi) An establishedprotectedareamonitoring system, basedonthe updatedprotected arearegistry and cadastre, incorporating global concernsto the baseline M&Eactivities. Sustainability would be ensured in part through the IBRD-financed components that would ensure local benefits arose from the conservation of globally significant biodiversity, as well as through the GEF- financed activities including a more rational, focused protected area system supported by a strong institutional and legalframework. IncrementalCosts The incremental cost-the difference between the Baseline Scenario (US$21.9M) and the GEF Alternative (US$31.9M),i s US$lOMwhich would be financed partly by a US$5.OMgrant from the GEF which would fund interventions to conserve the globally significant biodiversity and partly through US$5.OMfrom the LAP I1 IBRD loan which would fund activities such as demarcation and data collection and ensuring that local benefits arose from this conservation. These are essential to the project's success as they provide the necessary background data and contribute to ensuring the sustainability of the project. The matrix below summarizes the baseline and incremental expenditures duringthe five-year projectperiod. cost US$ Category Million Domestic Benefit Global Benefit Slight decrease in pressure on protectedareas Limited protection of globally significant local through land regularization activities in biodiversity neighboring lands Preliminary developmentof regulations for the new protectedareas law, utilizing inadequateresources andbased on highly limited experience Updatedlarge-scalegeospatialdata usedfor non-conservationpurposesand omitting protectedareas from detailed cadastre and registry activities Improved policy, institutional framework and Baseline US$19.3M tools to strengthenprotected areas management Improved prioritizationof management efforts for protected areas system Improved long-term financial planning ability for protected area systemmanagement; Improved institutional capacity to enforce protected areas legislation Improved public participation in natural resourcemanagement Improved understandingof the importanceof conservationto long-term economic growth. 106 Someeconomic benefitsto local communities Long-term conservationand sustainable (funded with IBRDmoney) that are essential utilizationof globally and regionally significant for them to engage positively inconservation biodiversity and to ensure the sustainability of the global Development of viable approachesto sustainable US$22.2M benefits naturalresourceuse inprotectedareas With GEF (Additional Demarcationof three new protectedareas Alternative 0.9MIBRD 2.OMGEF) (bringing the total numberof demarcated protectedareas within El Salvador to six out of 118) Delimitation of all protectedareas and mangrovesincountry Incremental US$2.9M Comp2: ConsolidationandManagementof PilotProtectedAreas Limitednaturalresource managementof two Limited protection of globally significant local pilot areas biodiversity Baseline US$2.0M Improved tenure security for some people living on private landsadjacentto pilot areas Improved naturalresource management of two pilot areas, including alternative income Developmentof viable approaches to sustainable generationactivities, leading to decreased naturalresourceuse inprotectedareas local poverty Enhancedecosystem integrity as a consequence US$8.2M Improvedtenure securityfor eligible people of the adoption of improved naturalresource With GEF (Additional livingon state lznds within protectedareas management practicesinpriority ecosystems Alternative 3.9M IBRD 2.3M GEF) and for some peopleliving on private lands Enhancedecosystem integrity through corridor adjacentto pilot areas implementation betweenisolatedprotectedareas Somebenefits to local communities that are of global biodiversity importance essentialfor them to engage positively in Restorationof globally important ecosystem, conservationand to ensure the sustainability with positive impactson conservationof aquatic of the global benefits. and terrestrial biodiversity I Incremental US$6.2M Comp 3: Project Administration and Monitoring Baseline US$0.6M Improved project and management skills at Limited protection of globally significant local national and protectedarea levels biodiversity Improved institutional capacity to monitor Increasedcapacity for consolidating protected protectedareas area system US$l.SM Monitoringand evaluationsystemincorporating With GEF (Additional 0.2MIBRD Monitoring and evaluation systemin place global concernsto the baselineM&Eactivities 0.7MGEF) and operational Improved outreachand involvement of civil society and the private sector in natural resources monitoring and management Incremental US$0.9M Total Baseline: US$21.9M Total GEFAlternative: US$31.9M(5.OM GEF Zrant, 5.OM.from IBRD-loan financed LAP II proiect) TotalIncremental Costs: US$lOM 107 Annex 16: Pilot Site Selection ELSALVADOR: ProtectedAreas ConsolidationandAdministrationProject Background The Protected Areas System of El Salvador (NPAS) comprises 118 Natural Protected Areas (Areas Naturales Protegidas; NPAs) and all mangroves in the country. As most NPAs included in the System are small and isolated, the Ministry of Environment and Natural Resources (MARN) has proposed the creation of 15 Conservation Areas (Areas de Conservacidn), comprising most Natural Protected Areas (NPA) and all mangroves, along with buffer zones linkingthose areas. The goal of this proposed project i s to strengthen the W A S by developing a strategy to consolidate Conservation Areas. Toward this aim, the project will consolidate and managetwo pilot areas (consisting of one full Conservation Area, and one portion of a Conservation Area. The lessons learned through this effort can be used throughout the NPAS to createa comprehensive and robust nationalprotected area system. Methodology for Choosing Pilot Sites: The pilot areas were chosenthrough a two-step process. Step one was done duringthe prioritization of Conservation Areas, as part of the development of the National Protected Areas Strategy (Diagndstico y priorizacidn de Areas Naturales Protegidas y Corredor Bioldgico Nacional; 2005). This effort, undertaken in 2004, was led by MARN, and convoked 14 experts in protected areas management, representing government institutions, NGOs, community associations, and academics. The goal of this prioritization was to be able to use the list and information about the parks to target and optimize future management. The specific criteria usedare described below. Step two was done in February 2005 during the preparation of the proposed project. Building upon the results of step one, MARN protected area experts developed additional criteria important to the project objective which required, in particular, that the areas be representative of other areas in their management requirements, cover a comprehensive set of management conditions in order that the suggestions produced would be transferable and contain sign$cant threats to theirfuture conservation.The specific criteria are described below. Criteria for Choosing Pilot Sites The specific criteria used duringthe two-stage pilot site selection included: Step One: State of conservation of the area; Legal and landtenure status; Representativenessof the ecosystems as typical of El Salvador; 0 Degree of community participation inthe area's management; Biodiversity andpresenceof endangeredor threatened species; Ecosystem goods and services that the area provides; and 0 Total size. 108 Steo Two 0 Representativeness: the existing threats are typical of those faced by PASwithin the NPAS, including: o Pressurefrom economic development; o Highinvasionthreats; and o Unresolved land-tenure issues. 0 Comprehensiveness: the areas chosen represent examples of contrasting management requirements types and legal frameworks, which cover, as far as possible, situations that will be found throughout most of the NPAS. Specifically, the areas together will contain examples o f o Mangroves; o Naturalprotected areas; o Unconsolidated (non-legalized) areas with potentialfor integration intothe WAS; o Preferably one example of an entire Conservation Area; and o A broadspectrum of physical andbiologicalcharacteristics. 0 Threats to priority biodiversity due to lack of resources (financial or human) that prevent adequate protectionand management of resources. 0 Enabling Enviroment: the existing enabling environment i s representative of those in other areas including: o The area has existing local stakeholder capacity including NGOs and social organizations; o Updated geo-spatial data exists or will exist due to the LAP and LAP11IBRD projects; and o The surrounding landscape facilitates the creation of biological corridors, as there are relatively large, well-protected nuclei. Results FollowingStep One, five areas were identified as being of significant conservation value and of potential use as pilot sites. These were: 0 Bahiade Jiquilisco Conservation area; 0 MontecristoNationalPark; 0 ElImposibleNationalPark; 0 Lago Guija-San Diego-La Barra Complex; and 0 Colima Natural Protected Area. It should be notedthat, duringstep two, the additional criteria of being representative of other areas inEl Salvador and containing significant threats to conservation ruled out the two most renowned areas-the Montecristo National Park and the ElImposible National Park-because of the significant and successful conservation efforts realized to date, coupled with the highamount of resources dedicated to these areas. Also, satisfying the criteria of having a comprehensive balance of different situations clearly favored choosing Bahia de Jiquilisco Conservation Area and the Lago Guija-San Diego-La Barra Complex as: 0 They have complementary and broad ranging geographical and biological conditions that cover most of the conditions that will be found in other protected areas throughout ElSalvador; and 109 0 Together, they contain a comprehensive blend of legal frameworks including an entire conservation area, and mangrovesandNatural Protected Areas within conservation areas. Therefore the GOES considered that: (a) Bahia de Jiquilisco ConservationArea; and (b) Lago Guija- San Diego-La Barra Complex (Lago Guija Complex), part of the Trifinio Conservation Area were the best choices for pilot areas. Detailedsite descriptions demonstrating this are given below. PilotProtectedArea#1:LagoGiiijaSanDiego-LaBarra Complex (Lago Guija Complex) The 5,840 ha Lago Guija complex i s located in the extreme northwest of El Salvador along the Guatemalan border. The area supports a wide variety of habitats, including: several lakes (Lago Guija, Metaph Lagoon, San Diego Lagoon, Clara Lagoon and TeconalA Lagoon); two separate Natural Protected Areas including the 1,831 ha tropical dry forest expanses of San Diego-La Barra Natural Protected Area (the best and most intact example of this regionally threatened ecosystem in ElSalvador), as well as surrounding private lands. Thus, the project would provide useful, transferable examples for protectionof a wide variety of scenarios. From a biodiversity perspective, the complex is of high conservation value, supporting numerous animal species that are threatened and in danger of extinction, both locally and internationally, endemic plants, and other dry forest speciescomprising cactus andBignoniaceae, with a highpresence of migratory birds, such as Falco peregrinus, Buteo ptatypterus, Icterus galbula, Dendroica vires, Dendroica magnolia, piranga rubra, Catharus ustulatus.The area supports one of the last relict patchesof tropical dry forest in El Salvador, which, according to Dinnerstein and others (1995), is bioregionally outstanding, a high conservation priority at a regional scale and critically threatened. Within the area 180 species of plants have been recorded including: Terminalia oblonga, Ceiba petandra, Cochlospernumvitifolium, Sloanea ternijlora y Omphalea oleifera; 250 species of birds, including: Agamia agami, Nomonyc deminicus, Parabuteo unicinctus, Pardirallus maculatus, Amazona auropilliata, Anas acuta and Pasarian ciris; 37 species of mammals, including: Canis latrans, Galictis vittata, Leopardus wiedii and Conepatus mesoleucus. Also present are fish species Cichlasomaguija (Mojarra negra o nativa), which is in danger of extinction, and Cichlasomatrimaculatum (Istatagua), which i s threatened. The area also i s representative of mountainous regions being surrounded by dormant volcanoes and mountains including the volcanoes of San Diego, Isla El Tule, Masatepeque, L a Vega de la Caiia and Cerro Quemado. The area also supports active local communities and local groups have developed a proposal to designate the area as a Ramsar site. Inaddition to its global and regional important for biodiversity, the site contains strong local partners (for example, CEPRODE, the local NGO, and the community ADESCO), which are actively involved in conservation, a solid baseline, and a protected area management plan that has been developed incollaboration with a local NGO with technical assistance from CATIE. On the Guatemalan side of Lago Guija, there i s no official protection, but also currently no significant human populations. The site also contains many typical key threats, including encroachment, agriculture-associated forest fires, illegal hunting, resource extraction, lack of education and options, and water pollution (from agrochemicals and household sewage). PilotProtectedArea#2: BahiadeJiquilisco ConservationArea The proposed Bahia de Jiquilisco Conservation Area is a 63,000 hectare complex of coastal mangroves, intertidal mudflats, estuaries, barrier islands, sandy beaches, and remnant humid forest patches that i s 110 representative of other coastal areas. It comprises several Natural Protected Areas-Chaguantique (77.1 ha in two patches), Normandia (440.6 ha), and El Tercio (43.5 ha), which protect remnants of alluvial forests (3,551 ha.), along with the Bay's mangrove forests (19,330 ha)-the largest expanse in the country. The area conserves populations of the threatened species the black-handed spider monkeys (Atelesgeoflroyi), as we11as breeding sites of coastal and marine birdspecies, and four species of nesting seaturtles. The Bahia de Jiquilisco Conservation Area also contains most of the country's marine and coastal birds, as well as being the unique nesting site for some of them. Species of fauna in danger of local extinction include four species of nesting sea turtles (all threatened), the American crocodile (Crocodrylus acutus), caiman (Caimdn crocodilus), spider monkey (A. geoflroyi), white-tailed deer (Odocoileus virginianus), and the bivalve casco de burro (Anadaru grandis). The area also supports a large diversity of migratory birds, including abundant shorebirds as well as land birds, including the American oystercatcher (Haemuntopus palliate), yellow-naped parrot (Amazona auropalliatu), Pacific parakeet (Aratinga strenua), and muscovy duck (Cuirina moschuta). Owing to its importance for migratory birds, the area has been nominated as a Ramsar Wetland Site. Geomorphologically, the area plays an important role in terms of processing water-borne nutrients, controlling coastal erosion and mitigatingearthquake damage. The area also has prominent NGOs operating in the small remnant forest patches, which operate on a total annual budget of $100,000 (see Table 17.1). MARNprovides no direct budget support to the management of the area and no on-the-ground government activities exist, despite the importance of the ecological resourcespresent. Key threats to the area include conversion of mangroves for housing, expansion of shrimp and salt ponds, agriculture and tourism. 111 Table 17.1: NGOManagementof HumidForestPatchesinBahiadeJiquilisco BahiadeJiquilisco ConservationArea Location Organization Source Amount Duration PuertoParada CODEPA FIAES $20,000 2 years Overall ConservationArea UNES IUCN $50,000 1year ElEspino CRD FIAES $20,000 2 years SanJuan del Gozo MSM FIAES $20,000 2years Bajo Lempa Asociaci6n Mangle FIAES $20,000 2years Nancuchiname ADESCO BN FIAES $20,000 2years Bibliography MARN. 2005. "Diagn6stico y Priorizaci6n de Areas Naturales Protegidas y Corredor Biol6gico Nacional." MARN/CBM. Dinnerstein, Olsen, Graham, and others. 1995. "A ConservationAssessment of the Terrestrial Ecosystems of LatinAmerica andthe Caribbean." Washington, D.C.: World Bank. . ElSalvador.Inprep.Law of NaturalProtectedAreas. IUCN. 2004. RedList. www.red1ist.org. MARN y CNR. 2002. Land UseMaps CORINE LandCover. ElSalvador. MARN. 2003. "Manual of Procedures for the Participation of Society in the Management of Protected Areas. MARN/UNDP/GEF MARN. In prep. "Management Strategy for Protected Areas and National Biological Corridors." MARN/UNDP/GEF WWF. 2003. Global 200. www.panda.org. 112 Annex 17: Coordination betweenthe ElSalvador Protected Areas and Administration and ElSalvador Environmental ServicesProjects ELSALVADOR: ProtectedAreas Consolidation andAdministration Project 1. The two IBRDIGEF-supported projects in El Salvador-the Protected Areas Consolidation and Administration project (PO92202; PACAP) and the Environmental Services project (PO64910; ESP)- contribute to the protection of globally significant biodiversity through different yet complementary approaches aimed at countering differingroot causes of biodiversity loss. The ProtectedAreas Consolidation andAdministration project: (a) strengthensthe nationalprotected areas system(NPAS), through updatingthe W A S Strategy, improving the related legal and institutional frameworks, improving MAR"s capacity to oversee the NPAS, and improves its sustainability through the creation of a unified protected areas registry and monitoring and evaluation system; and (b) consolidates two priority protected areas (one national park/Natural Protected Area and one protected mangrove forest) through a pilot program to develop and implement management plans that regularize communities in those areas, subject to use restrictions emphasizing the sustainable use of protected area resources. The Environmental Services project provides incentives to landowners living in protected area buffer zones and other environmentally sensitive lands to change their landusepractices, thereby contributing the enhancementandprotection of biodiversity. 2. Consequently, both projects, in conjunction, support the GOES'S strategy to further biodiversity conservation through the prioritization of 15 conservation units, comprising most of the country's protected areas (for example, El Salvador's "Natural ProtectedAreas", corresponding to IUCN Category II), building upon the biological corridor concept. The conservation units constitute "nuclei", comprising the country's 118 natural protected areas, and surrounding private lands that comprise the "buffer zones". The specific approach to consolidate these areas target the primary threats to biodiversity, including habitat destruction, and the loss of natural resources stemming from deterioration in the quality of life for locd pnpulations ,* (NBSAP 2000). 3. In concert with the partially blended Land Administration projects, the proposed project aims at contributing to this strategy by developing and pilot testing mechanisms for biodiversity conservation. Specifically, the LAP(under Phase Ithat is nearing completion andPhase IIthat i s partially blended with the proposedproject) would delimit all protectedareas inthe LAP11area, resolve landtenure in adjacent private lands (buffer zones), and collect highquality geospatial data for many protected areas?3Buildingupon the enabling environment presented by the LAP 11, the proposed project would develop protected area policy reforms, delimit all protected areas (nuclei) in El Salvador, and in two pilot protected areas (Bahia de Jiquilisco and Lago Guija Complex, including both nuclei and buffer zones), demarcate and legalize those areas, resolve land conflicts, and develop and implement management plans including granting of usufruct rightsto eligible residents.The proposedproject would providepayment for environmental services(PES) as an incentive for biodiversity-friendly land use in private lands adjacent to the protected area nuclei (buffer zones) inthe BahiadeJiquilisco.44 4. Table 20.1 shows how both projects target different types of lands within priority Conservation Areas: the Environmental Servicesproject does not work within strict protected areasbut only inthe buffer zones of those areas as well as inmangroves,which are subjectto a different degree of legalprotection (corresponding to IUCNCategory VI); the ProtectedAreas Consolidation andAdministration project, on the other hand, will work inone NaturalProtectedArea andone mangrove. 43These include all protected areas and mangroves in the LAP I1area, plus the Lago Guija pilot area that is in the (already completed) L A P Iarea. 44 The Payment for Environmental Services Project overlaps with the proposed project in one area: Bahia de Jiquilisco. The selection of future PES Project sites would strongly consider the proposedproject's second pilot area (Lago Guija Complex), so as to maximize biodiversity conservation impact. 113 5. Likewise, the approaches and activities supported by the two projects are different yet complementary. The Environmental Servicesproject provides paymentsto landowners, whose landuse practicescontribute to the conservation and restoration of lands supporting globally significant biodiversity. This market-based mechanism i s intended to promote biodiversity-friendly land use in areas critically important for conservation, yet outside the national protected areas system. In contrast, the ProtectedAreas Consolidation and Administration project supports the consolidation of the pilot areas (nuclei), including demarcation, resolution of legal status, development and implementation of management plans, capacity building and institutional strengthening for those areas-in short, the direct infrastructure and capacity investments to enabletheir sustainability. Only usingmechanismstargeting bothprivateand public landscan MARNrealize their ConservationArea-basedstrategy. 6. Both projects are intentionally designed to complement each other's activities to maximize impact and minimize duplication. With regard to technical activities, special attention will be paid to the institutional strengtheningkapacity building and legal framework aspects of both projects to prevent redundancy and promote synergy. As noted, the partially blended LAP II/PACAPprojects focus on defining tenure for all private and public lands inEl Salvador, advancing the rationalization of the national protected areas system, consolidating two priority protectedareas and developing a strategy to address existing communities inthose areas. These activities are strongly complemented by the ESP, which provides incentives to landowners living in protected area buffer zones and other environmentally sensitive lands to sustainably manage their lands. The two complementary strategies are pilot testing mechansisms to support MARN in the establishment of it's 15 Conservation Areas, by addressing the nuclei (natural protected areas), through the landadministration GEF, andthebufferzones (adjacentprivatelands), through the ESP. 7. In addition to their technical complementarily, implementation arrangements have been developed to enhance impact. Both projects aim to maximize MAR"s technical and administrative capacity, while mainstreaming GEF activities within M N ' s portfolio and staffing. Specifically, a small project coordination unit (PCU) will be createdfor each project-and part of MARN's existing administrative unit- comprising a project coordinator, administrative staff and a few select technical'people. Likewise, bothPCUs include fiduciary staff (an accountant and procurement officer) that will be physically located within MARN'sexisting accountingunit (UFI).More importantly, as the proposedproject will be implemented in January 2006, one year earlier than the start date for the PES Project, the capacity created within MAW for complying with World Bank fiduciary andadministrative standards will benefit the PESProject. Toward this aim, the proposed project takes advantage of the partially blended LAP IIby housing PCU fiduciary staff within the LAP11administrative unit (UACI within CNR) for the first six months of project implementation so that they are trained in approved administrative procedures. After this period, the fiduciary staff would move to MARN's UFI, where they would, in tum, build relevant capacity within MARN staff (and PES Project staff, as needed). Location of Investments Project Activity Protected Mangrove Buffer Zone Area (Nucleus and (Private (Nucleus)45 Private Lands) Lands)& Protected Demarcation X X X* Areas Legal Consolidation X X X* Consolidation Management Plan and Development X X 45IUCNCategory 11. 46IUCNCategory VI. 114 _ _ _ ~ Administration (PACAP) Environmental Services (ESP) PaymentsLegal X X Framework 115 MAP SECTION This map was produced by the Map Design Unit of The World Bank. The boundaries, colors, denominations and any other information shown on this map do not imply, on the part of The World Bank Group, any judgment on the legal status of any territory, or any endorsement or acceptance of such boundaries. To Metapán Laguna de Metapán EL SALVADOR LAGO GUIJA SAN DIEGO - LA BARRA COMPLEX PILOT PROTECTED AREA Lago de Gùija NATURAL PROTECTED AREA SELECTED CITY AND TOWN DEPARTMENT CAPITAL GUATEMALA LAKES NATIONAL CAPITAL SECONDARY ROAD BUFFER ZONE MAIN ROAD INTERNATIONAL BOUNDARY Area of map Metapán Lago de Gùija La Palma HONDURAS Nueva GUATEMALA Candelaria de Concepción la Frontera Embalse Cerrón Lem p a Grande Paz Chalatenango Santa Ana Lempa Ahuachapan Chalchuapa Aguilares Lago de Coatepeque Sensuntepeque Jocoaitique La Hachadura Suchitoto Ilobasco Torol Osicala Nueva Lago de Ciudad Barrios Esparta Izalco Armenia Illepango Cojutepeque Sononate Nueva San Salvador San Francisco Santa Rosa SAN (Gotera) de Lima oasco Acajutla SALVADOR JiboaSan Vicente G Santiago Olocuilta Zacatecoluca Tecoluca de María La Libertad San Luis Lemp San Miguel Jiquilisco Usulután Bahí JUNE La Herradura La Unión La Uandióne IBRD Bahía iquilisco de J Grandede Sa Laguna de Olomega 2005 33868 PACIFIC OCEAN Intipuca Golfo de Fonseca 90°W 89°W 88°W This map was produced by the Map Design Unit of The World Bank. The boundaries, colors, denominations and any other information shown on this map do not imply, on the part of The World Bank Group, any judgment on the legal status of any territory, or any endorsement or acceptance of such boundaries. GUATEMALA Metapán La Palma HONDURAS Lago de EL SALVADOR Güija Candelaria de la Frontera C H A L AT E N A N G O Nueva Embalse Cerrón Concepción S A N TA A N A Grande Lempa Chalatenango 14°N Lempa Santa Ana 14°N Chalchuapa Paz Ahuachapan Lago de Aguilares CUSCA Suchitoto Jocoaitique Coatepeque L A C A B A Ñ A S Sensuntepeque La Hachadura L I B E R TA D Ilobasco AHUACHAPÁN TLÁN SAN Torola Osicala Izalco Armenia SALVADOR Ciudad Barrios Nueva S A N M O R A Z Á N Esparta San Francisco Sononate Lago de Cojutepeque V I C E N T E (Gotera) S O N S O N AT E Nueva SAN Illepango San Salvador SALVADOR San Vicente Santa Rosa de Lima Goascorán Acajutla Jiboa S A N L A Olocuilta Zacatecoluca Tecoluca Santiago M I G U E L La Libertad San Luis L A de María San Miguel U N I Ó N PA Z Lempa U S U L U T Á N 90°W La Herradura Usulután LaBahí Jiquilisco de San ió Miguel Un a nde EL SALVADOR La Unión Bah ía ode sc Jiquili Grande Laguna de Olomega NATURAL PROTECTED AREAS SYSTEM AND MESOAMERICAN BIOLOGICAL CORRIDOR Intipuca Golfo de Fonseca SELECTED CITIES AND TOWNS NATURAL PROTECTED AREAS DEPARTMENT CAPITALS 13°N 13°N NATIONAL CAPITAL MESOAMERICAN BIOLOGICAL PACIFIC OCEAN 0 10 20 Kilometers IBRD CORRIDOR DEPARTMENT BOUNDARIES JUNE INTERNATIONAL BOUNDARIES 0 10 20 Miles 33859 2005 89°W 88°W 90°W 89°W 88°W This map was produced by the Map Design Unit of The World Bank. The boundaries, colors, denominations and any other information shown on this map do not imply, on the part of The World Bank Group, any judgment on the legal status of any territory, or any endorsement or acceptance of such boundaries. GUATEMALA Metapán La Palma HONDURAS Lago de San Diego - La Barra EL SALVADOR Güija Candelaria de la Frontera Nueva Concepción Lempa Chalatenango 14°N Santa Ana Embalse Lempa 14°N Chalchuapa Paz Cerrón Ahuachapan Aguilares Grande Jocoaitique Lago de Suchitoto Coatepeque Sensuntepeque La Hachadura Ilobasco Torola Osicala Izalco Armenia Ciudad Barrios Nueva Esparta San Francisco Sononate Lago de Cojutepeque (Gotera) Nueva Illepango San Salvador SAN SALVADOR San Vicente Santa Rosa de Lima Goascorán Acajutla Jiboa Olocuilta Zacatecoluca Tecoluca La Libertad San Luis Lempa Santiago de María San Miguel La Herradura Usulután LaBahí 90°W Jiquilisco Grandede San ió Miguel Un a nde La Unión Laguna de EL SALVADOR Olomega SELECTED PILOT PROTECTED AREAS AND Intipuca Golfo de Fonseca MESOAMERICAN BIOLOGICAL CORRIDOR Bahia de Jiquilisco SELECTED CITIES AND TOWNS SELECTED PILOT PROTECTED AREAS 13°N 13°N PROVINCIAL CAPITAL NATURAL PROTECTED AREAS PACIFIC OCEAN 0 10 20 Kilometers IBRD NATIONAL CAPITAL JUNE MESOAMERICAN BIOLOGICAL 0 10 20 Miles 33858 CORRIDOR INTERNATIONAL BOUNDARIES 2005 89°W 88°W EL SALVADOR BAHIA DE JIQUILISCO PILOT PROTECTED AREA MANGROVE SELECTED CITY AND TOWN (INSET) DEPARTMENT CAPITAL (INSET) HUMID FOREST NATIONAL CAPITAL (INSET) BUFFER ZONE INTERNATIONAL BOUNDARY (INSET) This map was produced by the Map Design Unit of The World Bank. The boundaries, colors, denominations and any other information shown on this map do not imply, on the part of The World Bank Group, any judgment on the legal status of any territory, or any endorsement or acceptance of such boundaries. EL SALVADOR Nacuchiname Normandia pa Lem Rio Chaguantique Manglar El Trecio Bahia de Jiquilisco Manglar Bajo Lempa La Esperanza San Carlos La Redenci n o Ceiba Doblada Isla San Sebastian Metapán Lago de Gùija HONDURAS GUATEMALA Embalse Cerrón Lem p a Grande Paz Chalatenango Santa Ana Lempa Ahuachapan Lago de Coatepeque Sensuntepeque La Hachadura Torol Lago de Illepango Cojutepeque Sononate Nueva San Salvador San Francisco SAN (Gotera) oasco SALVADOR JiboaSan Vicente G Zacatecoluca Lempa San Miguel PACIFIC OCEAN Jiquilisco Usulután Bahí JUNE SanMiguel La Unión La e IBRD Bahía iquilisco de J Gr a ndede Uandión Laguna de Olomega 2005 33869 PACIFIC OCEAN Golfo de Fonseca Area of map