INTEGRATED SAFEGUARDS DATA SHEET CONCEPT STAGE Report No.: AC6218 Date ISDS Prepared/Updated: 09/01/2011 I. BASIC INFORMATION A. Basic Project Data Country: Mexico Project ID: P123760 Project Name: Mexico Forests and Climate Change Project Task Team Leader: Laurent Debroux Estimated Appraisal Date: November 7, Estimated Board Date: January 31, 2012 2011 Managing Unit: LCSAR Lending Instrument: Specific Investment Loan Sector: Forestry (60%);General agriculture, fishing and forestry sector (40%) Theme: Climate change (50%);Other rural development (50%) IBRD Amount (US$m.): 300.00 IDA Amount (US$m.): 0.00 GEF Amount (US$m.): 0.00 PCF Amount (US$m.): 0.00 Other financing amounts by source: Borrower 100.00 Financing Gap 0.00 100.00 B. Project Objectives [from section 2 of PCN] Support rural communities in Mexico to manage their forests and generate additional income from reduced carbon emissions and other forest products and services. C. Project Description [from section 3 of PCN] Component 1. Multi-Scale Institutional Strengthening. This component would aim to: (i) modernize CONAFOR as a leading forest agency worldwide; and (ii) foster collaboration with federal and sub-national entities involved in rural development and natural resources management. Subcomponent 1.1. Modernizing CONAFOR. This subcomponent would aim to modernize CONAFOR. New capacities and systems are needed to efficiently manage CONAFOR#s rapidly expanding budget and portfolio. The project would provide training, equipment, and other institutional support in the field and in headquarters. Key lines of work would include re- designing the national forest fund, and enhancing CONAFOR#s monitoring and evaluation systems. This subcomponent would also support communication and outreach, studies, participatory processes, in addition to all regular project management and coordination functions including monitoring and evaluation, and social and environmental safeguards. Subcomponent 1.2. Horizontal and Vertical Integration. This subcomponent would foster collaboration with partner institutions such as SEMARNAT, SAGARPA , CDI , CONABIO , CONANP , CONAGUA , PROFEPA , Nacional Financiera, and Secretaría de la Reforma Agraria, and it would promote partnerships with municipalities, inter-municipal associations and other entities involved in forest management and climate change policies in the field. It would support the creation of joint databases and monitoring systems, and the harmonization of policies and programs at local level in REDD+ priority regions. The project could provide training and equipment to the partner entities. It would also support training (in both technical and marketing areas) and accreditation programs for private experts that advise communities in preparing and implementing programs funded by CONAFOR. Component 2. Incentive Programs to Communities. This component would provide demand- driven matching grants to communities to combine sustainable forest management with local economic development, and to enhance the contribution of forests to climate change mitigation and adaptation. Subcomponent 2.1. Support to CONAFOR#s Regular Programs with National Coverage. This subcomponent would support existing programs related to community forestry and environmental services, namely PROCYMAF, PRODEFOR and PSA # providing additional income opportunities and making sustainable management more economically attractive. With regard to community forestry, the project would help communities to advance through a sequence of development phases towards sustainable management and income generation. It would support basic participatory assessments, training, and/or forest management, certification, processing and marketing activities. In the most advanced cases, it could support investments such as processing equipment and dirt road maintenance. With regard to forest-based environmental services, the project would provide financial transfers to interested communities as an incentive for protecting ecosystem services. This subcomponent would be open to multi- year proposals, and to proposals that blend activities from multiple programs. This subcomponent would have a national coverage. The selection process and eligibility criteria for the various programs would follow CONAFOR#s standard reglas operativas, which are updated annually. During preparation, the team will explore with Government counterparts (CONAFOR and the Ministry of Finance) the possibility of using new result-based lending instruments for the disbursements under this subcomponent. Subcomponent 2.2. Support to Special Programs in Priority Regions. This component would support CONAFOR#s efforts to develop more targeted and integrated approaches in priority regions that face special challenges in terms of carbon sequestration and emissions reductions (REDD+), social and natural vulnerability, and/or adaptation to climate change. In these regions, CONAFOR would make special efforts to customize the operating rules of its programs in response to regional specificities, to implement multiple programs in an integrated manner based on a spatial analysis at municipal or watershed level (instead of just responding to individual community demands), to promote territorial governance mechanisms (e.g. inter-municipal consortia), and to ensure the harmonization with other policies (e.g. SAGARPA#s agricultural and pastoral incentive programs, PROCAMPO and PROGAN). In these regions, the project would support integrated interventions combining forest management, soil restoration, ecosystem restoration, watershed protection, and pasture management at municipal or regional level. It would also help develop and pilot new models and tools that require innovation and testing in the field such as: increasing credit availability for agroforestry and silvopastoral practices that improve forest cover and quality, managing degraded forests with marginal commercial value, supporting communities that have outstanding land tenure issues, and strengthen existing programs such as PSA and community forestry to better deal with the characteristics of these regions. Priority regions considered for project support would include: the State of Oaxaca, the Cutzamala watershed (multiple States), Cuencas Costeras in Jalisco, and Lacandona in Chiapas. This component would be supported by the FIP resources , considering its focus on learning and innovation, cross-cutting dimension, and potential global benefits. D. Project location (if known) The project#s Subcomponent 2.1 (supporting demand-driven grants to communities on activities regarding community forestry and environmental services) will have national coverage. An estimated 3,000 ejidos and indigenous peoples# communities are expected to benefit from these grants. In addition to supporting community sustainable management and income generation activities, the grants will finance activities related to marketing, training, certification, equipment and forest roads maintenance. The project#s Subcomponent 2.2, the part proposed to be supported under the Forest Investment Program (FIP), will focus on priority regions (Cutzamala watershed-multiple states, Cuencas Costeras in Jalisco, and Lacandona in Chiapas, among others). Activities that will be supported include regional approaches to forest management, soil restoration, watershed protection, tree planting, pasture management, agroforestry, silvopastoral practices as well as supporting communities with land tenure issues. E. Borrower’s Institutional Capacity for Safeguard Policies [from PCN] CONAFOR, created in 2001, has been in charge of the Community Forestry (IBRD), the Community and Indigenous Conservation (GEF), the Payment for Environmental Services (IBRD) and the Biodiversity Endowment Fund (GEF). Institutional capacity assessments and expost reviews of performance and compliance have been satisfactory to the Bank. In this stage, the Bank is closely assisting in the preparation and design of the arrangements for this operation and the Strategic Environmental and Social Assessment for the complementary FCPF operation. Given the complexity of the current operation, CONAFOR will need to further strengthen their capacity to manage social and environmental issues. F. Environmental and Social Safeguards Specialists Mr Ricardo Hernandez Murillo (LCSEN) Ms Mi Hyun Bae Mbayo (LCSSO) II. SAFEGUARD POLICIES THAT MIGHT APPLY Safeguard Policies Triggered Yes No TBD Environmental Assessment (OP/BP 4.01) X No long-term or large-scale negative impacts are expected. More than 17 years of Bank operations in the forest sector in Mexico have contributed to good environmental practices in the three proposed areas of intervention in Subcomponent 2.1: Payment for Environmental Services (PSA), Community Forestry (Procymaf) and Forest Support Program (Profor). In the case of Component 3. Support to Special Programs in Priority Regions, the proposed approach ensures Safeguard Policies Triggered Yes No TBD an integrated approach to mosaics which was missing in the previous reforestation programs. Project activities include restoration of ecosystems, but no commercial plantations or reforestation programs will be financed. In case the project would consider financing the Reforestation Program in the future, a thorough analysis of its operation would be suggested prior to its incorporation. Overall, the cumulative impacts are expected to be positive. The potentially negative indirect impacts are expected to be reversed by the requirement of a community strategy, land use plan and zoning to prevent any expansion of agriculture and livestock activities in forest areas, as communities have more income. CONAFOR has commissioned an Environmental and Social Assessment drawing on substantial prior experience in community forestry and payments for environmental services, which will consider the REDD+ strategy. The EA will be complemented with the comprehensive consultation processes involved in the parallel preparation of the Strategic Environmental and Social Assessment assisted by the WB in the preparation of the FCPF proposal. The Environmental and Social Management Framework that will be produced before appraisal, shall consider any variations in the agricultural landscape and ongoing practices by local producers in designing mitigation measures and incorporating training and capacity building actions, and if required, an Integrated Pest Management Plan. Natural Habitats (OP/BP 4.04) X Triggering this safeguard should contribute to monitoring the positive impacts on natural habitat as part of overall project monitoring efforts to provide an objective measure of the conservation and sustainable management footprint of the project consistent with the project objective and results framework. As stated above, no new roads will be built and any activity in a government or community protected area will only be supported if is specified in the relevant Management Plan. The Natural Protected Areas System (SINAP), managed by CONANP is responsible to ensure any activities within the NPAs are compatible with their management plans. The National Biodiversity Commission (CONABIO) produced a map of #Priority Areas# and #Gap Analysis# of areas not included in the SINAP (and therefore not protected by a decree and management plan). CONANP and CONABIO will be responsible for screening any activities proposed in this areas. During the implementation phase monitoring activities will be established to ensure that critical natural habitats are not adversely affected. The ESMF will include provisions to assess possible impacts prior to any actions being undertaken on the ground. Forests (OP/BP 4.36) X This safeguard has been triggered for the previous PES and community forestry operations, and although the follow up assessments have shown positive impacts resulting from the social capital and capacity building investments, the ESMF should provide provisions for screening and scoping activities within the integrated mosaic approach proposed for the priority regions. The project will promote the use of third-party forest certification. Project activities include restoration of ecosystems, but no commercial plantations will be financed. Pest Management (OP 4.09) X CONAFOR will review the applicability of this policy during preparation, taking into account pest management needs in relation to any forest restoration activity as well as for any wood treatment issues that might be linked to sustainable forestry initiatives. Physical Cultural Resources (OP/BP 4.11) X Although there is a good chance find regulatory framework and institutional setup in Mexico, Safeguard Policies Triggered Yes No TBD new operations in almost any region may potentially derive in chance find of physical cultural resources which triggers OP 4.11 and is accordingly included in the EA and related instruments. Mexico created the first government authority to protect Physical Cultural Resources in 1808 (Junta de Antigüedades). The current legislation was passed in 1972 (Ley Federal sobre Monumentos y Zonas Arqueológicos, Artísticos e Históricos). It mandates any chance-find to be reported to the closest civil authority, which will in turn inform the federal authority, Instituto Nacional de Antropología e Historia. Since the project will not finance new infrastructure, the need to trigger this OP will be assessed during preparation and mitigation and management measures will be included in the ESMF as appropriate. Indigenous Peoples (OP/BP 4.10) X To meet the compliance requirement of OP4.10 (Indigenous Peoples), the project will prepare the Indigenous Peoples Planning Frameworks (IPPFs). Noting that the project activities under Subcomponent 2.1 are different from those under Subcomponent 2.2 both in terms of their geographical coverage (Subcomponent 2.2 will cover only the priority regions) and the nature and types of project investment activities supported by the FIP, the IPPF will include separate sections dealing specifically with: (i) the regular community forestry and environmental services programs with nationwide coverage; and (ii) the piloting of new, integrated and/or targeted policy tools (i.e. combination of forest management, soil restoration, tree planting, watershed protection and pasture management, access to credits, resolution of land issues) in the selected priority regions so as to reflect the specificities of these particular regions and particular mix of interventions. Among others, the IPPF will provide specific guidelines on culturally adequate consultations as well as measures to ensure joint planning and execution of activities. Involuntary Resettlement (OP/BP 4.12) X In regards to OP4.12, it should be noted that the project is designed to directly support communities and ejidos through demand-driven grants. All project-supported activities therefore will take place in a community context and any decisions about resource use will be taken by the community assembly. The project does not anticipate any land acquisition and does not plan to impose any new restrictions of access to natural resources. However, the project will invest in small physical infrastructure (road maintenance) and natural resource management activities (agroforestry, pasture management, soil restoration, tree planting, etc.). Given the above and given that the project coverage for Subcomponent 2.1 is national, there may arise an exceptional circumstance when the project will be forced to undertake limited land acquisition (e.g. for small physical infrastructures) and/or to impose limited restriction of access to natural resources in any expanded forest management areas. To comply with the OP4.12 during any such exceptional circumstances, the project will prepare a Resettlement Policy Frameworks (RPF) that outlines operational procedures for any such land acquisition and for restriction of access. Safety of Dams (OP/BP 4.37) X Projects on International Waterways (OP/BP 7.50) X Projects in Disputed Areas (OP/BP 7.60) X Environmental Category: B - Partial Assessment III. SAFEGUARD PREPARATION PLAN A. Target date for the Quality Enhancement Review (QER), at which time the PAD-stage ISDS would be prepared: 09/19/2011 B. For projects that will not require a QER, the target date for preparing the PAD-stage ISDS: N/A C. Time frame for launching and completing the safeguard-related studies that may be needed. The specific studies and their timing1 should be specified in the PAD-stage ISDS. During this stage of preparation (May-October 2011), CONAFOR will prepare an Environmental Assessment and an Investment Plan (required by FIP), building on lessons from the Community Forestry and Payment For Environmental Services projects. To comply with the OP4.10, the borrower will conduct a Social Assessment (SA) and based on the findings of the Social Assessment, it will draft the IPPF. To comply with the OP4.12 during any such exceptional circumstances such as limited land acquisition for small physical infrastructure and for imposing limited restriction of access in an expanded forest management area, the borrower will draft a RPFs. The borrower will disclose the EA, SA, IPPF and RPF according to the specific policy requirements; for Indigenous Peoples it should be disclosed in a form and manner that is culturally appropriate. The borrower will prepare an Investment Plan required by FIP, which corresponds to Subcomponent 2.2 of the Project. The Investment Plan will be disclosed, and the FIP project (actually component 2.2 of the proposed blended SIL and FIP operation, same PAD) will be consulted upon prior to its finalization. IV. APPROVALS Signed and submitted by: Task Team Leader: Mr Laurent Debroux 08/23/2011 Approved by: Regional Safeguards Coordinator: Mr Glenn S. Morgan 08/29/2011 Comments: Sector Manager: Ms Ethel Sennhauser 08/30/2011 Comments: 1 Reminder: The Bank’s Disclosure Policy requires that safeguard-related documents be disclosed before appraisal (i) at the InfoShop and (ii) in-country, at publicly accessible locations and in a form and language that are accessible to potentially affected persons.