The World Bank Adaptation Fund: Increasing Climate Resilience & Enhancing Sustainable Land Management in the Southwest of the Buenos Aires Province (P125804) REPORT NO.: RES28076 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF ADAPTATION FUND: INCREASING CLIMATE RESILIENCE & ENHANCING SUSTAINABLE LAND MANAGEMENT IN THE SOUTHWEST OF THE BUENOS AIRES PROVINCE APPROVED ON SEPTEMBER 20, 2013 TO THE ARGENTINE REPUBLIC ENVIRONMENT & NATURAL RESOURCES LATIN AMERICA AND CARIBBEAN Regional Vice President: Jorge Familiar Country Director: Jesko S. Hentschel Senior Global Practice Director: Karin Erika Kemper Practice Manager/Manager: Valerie Hickey Task Team Leader: Tuuli Bernardini The World Bank Adaptation Fund: Increasing Climate Resilience & Enhancing Sustainable Land Management in the Southwest of the Buenos Aires Province (P125804) ABBREVIATIONS AND ACRONYMS GoA Government of Argentina IP Implementation Progress MAyDS Ministry of Environment and Sustainable Development PDO Project Development Objective OPDS Provincial Agency for Sustainable Development PIU Project Implementation Unit SAyDS Secretariat of Environment and Sustainable Development The World Bank Adaptation Fund: Increasing Climate Resilience & Enhancing Sustainable Land Management in the Southwest of the Buenos Aires Province (P125804) BASIC DATA Product Information Project ID Financing Instrument P125804 Investment Project Financing Original EA Category Current EA Category Approval Date Current Closing Date 20-Sep-2013 30-Dec-2018 Organizations Borrower Responsible Agency The Argentine Republic, Ministry of Finance Ministry of Environment and Sustainable Development Project Development Objective (PDO) Original PDO The PDO is to contribute to reducing climate and man-made vulnerability of the agroecosystems in the Southwest of the Buenos Aires Province by increasing adaptive capacity of key local institutions and actors and piloting and disseminating climate resilient and sustainable land management practices. OPS_TABLE_PDO_CURRENTPDO Summary Status of Financing Net TF Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed TF-15041 18-Mar-2014 18-Mar-2014 27-May-2014 30-Dec-2018 3.96 1.97 1.99 Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No The World Bank Adaptation Fund: Increasing Climate Resilience & Enhancing Sustainable Land Management in the Southwest of the Buenos Aires Province (P125804) I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING A. Project Status 1. The US$3.96 million Adaptation Fund grant was approved by the World Bank on September 20, 2013 and declared effective on May 27, 2014. As of December 2017, disbursements account for 50 percent of the grant proceeds. Current closing date is December 30, 2018. 2. Project implementation suffered from significant delays as the first disbursement took place a year after effectiveness, and the Project Implementation Unit (PIU) became legally operational only in July 2016, two years after effectiveness. These delays were due to slow bureaucratic processes coupled with issues related to the change of the responsible authorities within the then Secretariat of Environment and Sustainable Development (SAyDS) in December 2014. 3. After the slow implementation start and associated Implementation Progress (IP) and Project Development Objective (PDO) ratings of Moderately Unsatisfactory in June 2016, the PIU has consolidated its performance with committed contributions by personnel of the Ministry of Environment and Sustainable Development (MAyDS). The IP and PDO ratings were eventually upgraded to Moderately Satisfactory in February 2017. Since the Project Mid-Term Review in April 2017, IP has been Satisfactory. PDO rating remains Moderately Satisfactory as the original implementation period might not result sufficient to fully achieve the development objectives of the Project. Implementation of safeguards has been rated Satisfactory throughout Project implementation. The Project has no outstanding audit reports or audit reports not satisfactory to the World Bank. B. Rationale for Restructuring 4. The need for restructuring was first discussed with the Government of Argentina (GoA) during the Mid-Term Review mission in April 2017. In August 2017, the GoA officially requested a restructuring that covered (i) simplification of the Project design by dropping two minor outputs that are not considered cost-effective at the current situation in the Project area, (ii) adjustments to the Results Framework; (iii) revision of the implementation arrangements regarding the degree of participation of the Provincial Agency for Sustainable Development (OPDS, for the Spanish acronym); and (iv) reallocation of grant proceeds among Disbursement Categories. 5. Some of the changes requested by the GoA require the approval from the Adaptation Fund. The World Bank team has engaged with the Adaptation Fund Secretariat throughout the Mid-Term Review, particularly on the simplification of the Project design and adjustments to the Results Framework. As the discussions with the Adaptation Fund are still on-going and the need for the reallocation of funds between Disbursement Categories is urgent to continue payments for consulting services and thus satisfactory Project implementation, it was agreed with the GoA to proceed with a phased restructuring: (i) this responds to the need for the reallocation of funds and includes an update of the disbursement estimates, and (ii) a second restructuring on the other changes requested by the GoA would be processed once respective conclusions have been reached with the Adaptation Fund. The World Bank Adaptation Fund: Increasing Climate Resilience & Enhancing Sustainable Land Management in the Southwest of the Buenos Aires Province (P125804) II. DESCRIPTION OF PROPOSED CHANGES 6. Reallocation between Disbursement Categories: As requested by the GoA, a reallocation of grant proceeds among Disbursement Categories is needed mainly to increase the funding for Consultants’ services. The following table presents the proposed reallocation. All percentages of expenditures to be financed (inclusive of taxes) remain at 100 percent. Amount of the Grant Revised Amount of the Grant Category Allocated (USD) Allocated (USD) (1) Goods 1,620,446 1,970,000 (2) Consultants’ services 284,232 950,000 (3) Non-consulting Services 884,611 632,190 and works (4) Training, Travel and 816,133 210,000 Workshops (5) Operating Costs 198,010 198,010 (6) Unallocated 156,768 0.00 TOTAL AMOUNT 3,960,200 3,960,200 7. Change in Disbursement Estimates: The revised Disbursement Estimates are presented in the following table by World Bank fiscal years. The proposed numbers reflect the materialized execution through FY17 and the current estimates of the forthcoming disbursements. Fiscal Year Current Proposed 2014 0.00 0.00 2015 500,000 0.00 2016 1,500,000 500,000 2017 1,500,000 884,436 2018 460,000 1,951,204 2019 0.00 624,560 III. SUMMARY OF CHANGES Changed Not Changed Reallocation between Disbursement Categories ✔ Change in Disbursement Estimates ✔ Change in Implementing Agency ✔ The World Bank Adaptation Fund: Increasing Climate Resilience & Enhancing Sustainable Land Management in the Southwest of the Buenos Aires Province (P125804) Change in Project's Development Objectives ✔ Change in Results Framework ✔ Change in Components and Cost ✔ Change in Loan Closing Date(s) ✔ Cancellations Proposed ✔ Additional Financing Proposed ✔ Change in Disbursements Arrangements ✔ Change in Overall Risk Rating ✔ Change in Safeguard Policies Triggered ✔ Change of EA category ✔ Change in Legal Covenants ✔ Change in Institutional Arrangements ✔ Change in Financial Management ✔ Change in Procurement ✔ Change in Implementation Schedule ✔ Other Change(s) ✔ IV. DETAILED CHANGE(S) OPS_DETAILEDCHANGES_REALLOCATION _TABLE REALLOCATION BETWEEN DISBURSEMENT CATEGORIES Financing % Current Allocation Actuals + Committed Proposed Allocation (Type Total) Current Proposed TF-15041-001 | Currency: USD iLap Category Sequence No: 1 Current Expenditure Category: GO 1,620,446.00 818,194.94 1,970,000.00 100.00 100.00 iLap Category Sequence No: 2 Current Expenditure Category: CS The World Bank Adaptation Fund: Increasing Climate Resilience & Enhancing Sustainable Land Management in the Southwest of the Buenos Aires Province (P125804) 284,232.00 326,794.32 950,000.00 100.00 100.00 iLap Category Sequence No: 3 Current Expenditure Category: NCS, CW 884,611.00 146,128.66 632,190.00 100.00 100.00 iLap Category Sequence No: 4 Current Expenditure Category: TRN, TRAVEL, WORKSHOPS 816,133.00 16,975.70 210,000.00 100.00 100.00 iLap Category Sequence No: 5 Current Expenditure Category: OP 198,010.00 164,820.02 198,010.00 100.00 100.00 iLap Category Sequence No: 6 Current Expenditure Category: UNALLOCATED 156,768.00 0.00 0.00 Total 3,960,200.00 1,472,913.64 3,960,200.00 OPS_DETAILEDCHANGES_DISBURSEMENT_TABLE DISBURSEMENT ESTIMATES Change in Disbursement Estimates Yes Year Current Proposed 2019 0.00 624,560.00