Documentof TheWorldBank ReportNo. 39860 , PROJECTPERFORMANCEASSESSMENTREPORT MADAGASCAR ENVIRONMENTII (CREDITN009) June 26,2007 Sector Thematicand Global Evaluation Division IndependentEvaluation Group CurrencyEquivalents(annualaverages) Currency Unit =MalagasyArialy (MGA) 2003 US$1.oo MGA4200.00 2004 US$1.oo MGA2830.00 2005 US$1.oo MGA2053.00 2006 US$1 .oo MGA2139.00 AbbreviationsandAcronyms ' AFD FrenchDevelopmentAgency (AgenceFranqaisepour le Dheloppement) AGOA M c a nGrowthandOpportunityAct ANAE NationdAssociation for EnvironmentalActions (AssociationNationalepour les Actions Environnementales) ANGAP NationalAssociation for ProtectedAreas Management(AssociationNationalepour la GestiondesAires Protkgkes) AUE Water Users Association (Associationd'Usagersde 1'Eau) CBO Community BasedOrganization CDD Community DrivenDevelopment CFSIGE Environment Information Training Center(CentredeFormationpour les Sciences de 1'Infomation GPographiqueet Environnementale) CI ConservationInternational CIRAD Center for International CooperationonAgronomic Research(Centrede Coopkration Internationale en RechercheAgronomiquepour leDkveloppement) CNE NationalEnvironment Council (ConseilNational de I'Environnement) CNRE National Committeeo fEnvironmentalResearch(ComiteNational de la Recherche Environnementale) EEZ Exclusive Economic Zone EIA Environmental ImpactAssessment EP Environment Program EPZ Export ProcessingZones EU EuropeanUnion FID Community DevelopmentFund(Fonds d 'Interventionpour le Diveloppement) FIFAMANOR MalagasyAgricultural ResearchInstitute FMG MalagasyFranc FOFIFA MalagasyAgricultural ResearchInstitute FWUA FederationofWater UseAssociations GCV Collective Grain Storage(Greniers CommunautairesVillageois) GCF Legalized form of community-basedforest management(Gestion Contractualiske ForestiGre) GEF Global Environment Facility GELOSE Legalized form ofcommunity-basednaturalresourcesmanagement(GestionLocal Sdcuriske) GTZ GermanAgency for TechnicalCooperation GTDR RegionalRuralDevelopmentWorking Group (Groupede TravaildeDkveloppement Rural) HDI HumanDevelopmentIndex ICR Implementation CompletionReport IEG IndependentEvaluationGroup LEGWB IndependentEvaluationGroup (WorldBank) IFT LandTax (Impdt Foncier sur le Terrain) IMF InternationalMonetary Fund IMT IrrigationManagementTransfer Kfw GermanDevelopmentAgency M&E Monitoring & Evaluation MECIE EnvironmentImpact Assessment Legislation(Mise en Comptabilite' les Investissementsh 1'Environnement) O&M Operations& Management(inrelationto irrigation) ONE (Ofice Nationalpour 1'Environnement) OPCI Public Entityfor Inter-CommunalCooperation(Organisme Publique de Coope'ration Intercommunale) PADR RuralDevelopmentActionPlan(Pland'Actionpour leDdveloppement Rural) PAGE EnvironmentalManagementSupport (ProjectProjet d 'Appui h la Gestion de 1%nvironnement) PCD Community DevelopmentPlan(Plan Communal deDdveloppement) PNAE National Environmental1Action Plan(Plan National d 'ActionEnvironnementale) PO ProducerOrganization PPAR ProjectPerformanceAssessment Report PRSP PovertyReduction StrategyPaper PSDR RuralDevelopmentSupport Project (Projet de Soutien au Ddveloppement Rural) PTA Annual Work Program(Programmede TravailAnnuel) SAGE Support Servicesfor EnvironmentalManagement(ServicesdeAppui a la Gestion Environnementale) SFI IntermediateLandTenure Security(Sdcurite'FoncidreIntermddiaire) SFO Optimal LandTenure Security (Sdcurite'Foncitre Optimal) SFR RelativeLandTenure Security (Sdcurite'FoncidreRelative) SRA ImprovedRice ProductionSystem (SysttmeRizitreAmdliorde) SRI IntensiveRice Production System(SysttmeRizitreIntenszj) TAFA MalagasyNGO for researchon semis direct UNDP UnitedNationsDevelopmentProgram USAID UnitedStatesAgency for InternationalDevelopment WUA Water Users' Association WWF World Wildlife Fund ZPI Priority InterventionZone (ZonePrioritairedeIntervention) Fiscal Year Government: January 1to December 31 Director-General, IndependentEvaluation : Mr.VinodThomas Director,IndependentEvaluationGroup(World Bank) : Mr.Ajay Chhibber Manager, Sector, Thematic andGlobalEvaluation : Mr.Alain Barbu Task Manager : Ms. LaurenKelly 1 IEGWBMission: Enhancingdevelopmenteffectivenessthroughexcellenceand Independenceinevaluation. About this Report The IndependentEvaluationGroupassessesthe programsandactivitiesof theWorld Bankfortwo purposes: first, to ensurethe integrityof the Bank'sself-evaluationprocessandtoverifythatthe Bank'swork is producingthe expectedresults,andsecond,to helpdevelopimproveddirections, policies,and proceduresthroughthe disseminationof lessonsdrawnfromexperience.As partof this work, IEGWBannuallyassessesabout25 percentof the Bank's lendingoperationsthroughfieldwork. Inselectingoperationsfor assessment,preferenceis givento those that are innovative,large,or complex;thosethat are relevantto upcomingstudiesor countryevaluations;thosefor which ExecutiveDirectorsor Bank managementhaverequestedassessments;andthosethat are likelyto generate importantlessons. To preparea Project PerformanceAssessment Report (PPAR), IEGWBstaff examineprojectfiles andother documents, interviewoperationalstaff, visit the borrowingcountryto discussthe operationwith the government, and other in-countrystakeholders,and interviewBankstaff andother donor agency staff bothat headquartersand in localoffices as appropriate. EachPPARis subject to internal IEGWBpeer review, Panelreview, and managementapproval. Oncecleared internally, the PPARis commentedon by the responsibleBankdepartment. IEGWBincorporatesthe commentsas relevant. Thecompleted PPARis then sent to the borrowerfor review;the borrowers'commentsare attachedto the document that is sent to the Bank's Boardof ExecutiveDirectors.After an assessment reporthas beensent to the Board, it isdisclosed to the public. About the IEGWB RatingSystem IEGWB's useof multipleevaluationmethodsoffers bothrigorand a necessarylevelof flexibility to adaptto lending instrument,projectdesign, or sectoralapproach. IEGWBevaluatorsall applythe same basic methodto arriveat their project ratings. Followingisthe definition and ratingscaleusedfor each evaluationcriterion (additionalinformationis availableon the IEGWBwebsite: http://worldbank.org/ieg). Outcome: The extentto whichthe operation's major relevantobjectives were achieved, or are expectedto beachieved, efficiently. The rating hasthree dimensions: relevance, efficacy, and efficiency. Relevanceincludes relevanceof objectives and relevanceof design. Relevanceof objectives isthe extentto which the project's objectives are consistentwith the country's currentdevelopment prioritiesand with current Bankcountry and sectoral assistancestrategies and corporategoals (expressedin Poverty ReductionStrategy Papers, Country Assistance Strategies,Sector Strategy Papers, Operational Policies). Relevanceof design is the extentto which the project's designis consistentwith the stated objectives. Efficacyisthe extentto which the project's objectives were achieved, or are expectedto be achieved,taking intoaccount their relativeimportance.Efficiencyis the extentto whichthe project achieved, or is expectedto achieve, a return higherthan the opportunitycostof capital and benefitsat least cost comparedto alternatives.The efficiencydimensiongenerally is not appliedto adjustment operations. Possibleratingsfor Outcome: HighlySatisfactory, Satisfactory, ModeratelySatisfactory, Moderately Unsatisfactory, Unsatisfactory,HighlyUnsatisfactory. Riskto Development Outcome: The risk, at the time of evaluation,that developmentoutcomes (Or expectedoutcomes)will not be maintained(or realized). Possibleratingsfor Riskto DevelopmentOutcome: High Significant, Moderate, Negligibleto Low, Not Evaluable. BankPerformance: The extent to which services providedbythe Bank ensured quality at entry of the operation and supportedeffectiveimplementationthrough appropriate supervision (including ensuringadequate transitionarrangements for regularoperationof supported activitiesafter loankredit closing, towardthe achievementof development outcomes. The ratinghastwo dimensions: quality at entry and qualityof supervision. Possibleratingsfor BankPerformance: HighlySatisfactory, Satisfactory, ModeratelySatisfactory,Moderately Unsatisfactory,Unsatisfactory,HighlyUnsatisfactory. BorrowerPerformance: The extent to which the borrower (includingthe governmentand implementing agency or agencies)ensuredquality of preparationand implementation,and compliedwith covenantsand agreements,toward the achievementof developmentoutcomes. The ratinghastwo dimensions: government performanceand implementingagency(ies)performance.Possibleratingsfor BorrowerPerformance: Highly Satisfactory, Satisfactory, ModeratelySatisfactory, Moderately Unsatisfactory, Unsatisfactory,Highly Unsatisfactory. iii Contents PRINCIPAL RATINGS ................................................................................................... V KEYSTAFF RESPONSIBLE ......................................................................................... V PREFACE .................................................................................................................... vi1 SUMMARY .................................................................................................................... IX 1. BACKGROUND .................................................................................................. 1 The ProjectContext .......................................................................................................... 1 2 . PROJECT DESIGNAND IMPLEMENTATION ................................................... 3 Project Historyand Design .............................................................................................. 3 ProjectContent ................................................................................................................. 5 Implementation ................................................................................................................. 6 3 . ANALYSIS OF EFFECTIVENESS ...................................................................... 7 Efficiency ........................................................................................................................... 8 Efficacy .............................................................................................................................. 9 Bank Performance .......................................................................................................... 14 Borrower performance ................................................................................................... 15 4. MONITORINGAND EVALUATION DESIGN, IMPLEMENTATIONAND UTILIZATION .................................................................................................... 16 5. CONCLUSIONS ................................................................................................ 17 6. LESSONS ......................................................................................................... 19 ANNEX A BASIC DATA SHEET . ................................................................................. 21 ANNEX B .KEY INDICATORS ...................................................................................... 25 ANNEX C .PERSONS MET .......................................................................................... 35 ANNEX D COMMENTS FROMTHE BORROWER . ..................................................... 37 This reportwas preparedbyPatriceHarouandLaurenKelly who assessedthe project inJune 2006 . SoonWon-Pak providedadministrativesupport . V PrincipalRatings ICR* ICR Review* PPAR Outcome Satisfactory Satisfactory Moderately satisfactory Institutional Substantial Substantial Development Impact** Risk to Moderate Development Outcome Sustainability*** Likely Likely Bank Satisfactory Satisfactory Moderately satisfactory Performance Borrower Satisfactory Satisfactory Moderately satisfactory Performance M &E Modest The ImplementationCompletionReport (ICR)is a self-evaluationby the responsibleBank department. The ICRReview is an intermediate IEGWBproductthat seeks to independentlyverifLthe findingsof the ICR. **Asof July 1,2006, InstitutionalDevelopmentImpactis assessed as partof the Outcome rating. ***Asof July 1,2006, Sustainability hasbeen replaced by Riskto DevelopmentOutcome.As the scales are different, the ratingsare not directly comparable. Key StaffResponsible Project Task ManagedLeader Division Chief/ CountryDirector Sector Director Appraisal MichelSimeon Cynthia Cook Michael Sarris Completion Bienvenu Rajaonson RichardScobey Hafez M. H. Ghanem vii Preface This i s the ProjectPerformanceAssessment Report (PPAR) for the Environment Program PhaseIIProject inMadagascar.This project was financed throughIDACredit N0.009 inthe amount ofUS$30.0 million with aplanned government contribution o fUS $15.5 million, andprojectedco-financing byUNDP, IFAD,GEFM, GEF/UNDP, EU, France, Germany, the Netherlands, Japan, the Swiss, USAID, CARE, Conservation International, World Conservation Society, andthe World Wide Fundfor Nature for a total ofUS$109.50million. The credit was approved on January 9, 1997, became effective onJune 12, 1997 andclosed one year after the originally anticipated closing date onJune 30,2003. IEGpreparedthis report basedon anexamination o fthe relevantproject documents, legal agreements, project files andarchives, as well as other relevant reports, memoranda, andworkingpapers. Discussions were heldwith Bank staffinboth Washington D C andinMadagascar.An IEGfieldmissionvisitedMadagascarinJune 2006, conducted site visits, anddiscussedboththe project andthe effectiveness of Bank assistancewithrelevant government officials andstakeholders (see list ofpeople met in Annex E). Themission appreciatesthe courtesies andattention givenbythese interlocutors as well as the supportprovidedbythe Bank's office inAntananarivo. The assessment willbeusedas an inputinto an evaluation o fthe Effectivenesso f the World Bank Group's assistance for the Environment (1990-2006). FollowingstandardIEGprocedures, copies ofthe draft report were sent to government officials and agenciesfor their review andcomments. Comments were received andare included as Annex B. ix Summary This is a Project PerformanceAssessment o fthe secondphase o fMadagascar's EnvironmentProgram, or EP 11(POO1537). A multi-donor investment program launchedin 1991with the support o f abroad coalition of donors, agencies, andNGOs, the US$4lOm EnvironmentProgram was designedto operationalize Madagascar's 1989National EnvironmentActionPlan(NEAP)inthreephases over fifteen years. The first ofits kindin Africa, it hasbeenreferredto as `the most ambitious and comprehensive environmental programinAfrica,' (USAID 2005). Though innovative, EP 11, implementedbetween 1997 and2003 at acost ofUS$l50million, was designedwith `overly-ambitious' objectives (as notedbyIEGICRReview), that were revisedfollowing the Mid-TermReview. The original objectives ofEP 11were: (i) reversecurrent environmental degradation trends; (ii) promote sustainableuse o fnaturalresources, includingsoil, water, forest cover, andbiodiversity; and(iii) mainstream environmental considerations into macroeconomic and sectoralmanagement o fthe country. Too ambitious, the objectives were formally revised after the midtermreview. The revised objectives were: (i) increasethe sustainableuse of natural resources, including soil, forest cover, andbiodiversity intargeted areas; and(ii) establish conditions for mainstreaming sustainableenvironmental andnatural resourcesmanagement. The relevanceofthe program's objectives was andremains high. Madagascar `faces a spiral o f environmental degradationthat increasingly threatens sustainable development and its ecological heritage' due to forest cover loss, overexploitation o f its easternrainforests, and improper cultivation, or tavy (CAS 1994). However, project design itselfwas only partially relevant.While the instrument (APL)was highlyrelevant, designwas not linkedto the Bank's m a l strategy or operations. Designdidnot directly address reliance onwoodfuel by promoting substitutions or increasedproduction forest area. An internal review rated select design elements `best practice' but "[it] lacked arealistic work program and...implementation arrangements." With fourteen componentsand sevenIAs, designwas overlycomplex, lacking aproject level results framework. The design aptly diagnosedthe root causes ofdegradation- low agricultural productivity andhighpopulationpressureinecologically fragile areas. Yet the approachproduced only limited outcomesspatially, with little evidencethat behavioral change could beupheldex-post. EPI1didnot directIy combat forest governance although EP I1approvalwas conditionedonaforest policy, whichwas adopted, butnot implemented: Madagascarlost 6.2% o fits forest cover between1990-2005. The efficiencyofthe programwas low. Theproliferation ofenvironmental institutions scatteredinvestmentsindifferent directions resulting inmodestbenefitstreams on the ground, achieved at highcosts. Monitoringandreportingwas unsatisfactory: it didnot provide the basis for a credible efficiency analysis, nor a cost-effectiveness analysis, of most activities. The institutions attractedcompetitive staff away from line ministries andabsorbed as muchfunds as all four' Ministerial departmentsresponsible for rural development; there was also ahighdegree of duplication. Efficacy was substantialoverall, with shortcomings. Theproject substantially achieved(with some shortcomings) its objective to increase the sustainableuse ofnatural Agriculture, fishery, livestock,water and forests. X resources, including soil, forest cover andbiodiversity intarget areas. There was a decreasein the degradationo fcritical habitats and increasedincomes for 370,000 households(USAID 2006). It substantially contributedto reducing deforestation inProtectedAreas (PAS)at arate one-fourth to one-half the rate outsidethe PAS.The project reducedthe incidence o fTavy, reduced soil erosion, andimproved soil fertility, intarget areas. The GOM tripled the country's PAS,yet resources andcapacity are insufficient to manage the new system. Eco- tourism revenuesincreasedfive-fold (US$50 million in2000). Onthe other hand, the project only modestly achievedits objective to establishconditions for mainstreamingsustainable environmental andnatural resourcesmanagementat the national level. Sectoralpolicies now requireEIAs for mining, fishery, aquaculture, andindustry; but environmental impact assessmentefficiency remains low. A "polluter pays" principle now applies to investment decisions. The mainweaknesseswere low institutional capacity andgovernance issuesinthe forest sector. The goal o f strengthening environmental units incentralministries andregional cells was only partlyachieved. Tourism, IPR, urban, andpesticidepolicies were drafted, but not adopted; most conspicuously absentwas the forest policy. Basedonits highrelevance, low efficiency, andsubstantial achievement o f objectives, the project outcome is rated moderately satisfactory. Riskto development outcome is ratedmoderate. Giventhe globalpriorityof conserving Madagascar's uniquebiologicalheritage, internationaltransfers are likely to continue (as evidenceby the GEF's new ResourceAllocationFramework) albeit at a slower paceifthe agenciesare not properlymanaged. PAmanagementwill dependon sustained support for staff, infrastructuredevelopment, andthe successful integration of local communities into co-management schemes, topics currently under investigation by EP111. Demandfor fuelwoodneedsto berationalized, through the scaling upofalternative supply andtree plantationprograms:the NationalAssociation for EnvironmentalActions (ANAEi) hasbegunto issue landtitles inexchangefor tree planting; ANAEi also promotesthe useo f briquettesinlieu ofcharcoal, although the impact o fthese two activities is modest. The Forest Observatory hasbrought greatertransparency into the forest sector. Control ofthe sector will also beenhancedbynew zoning methods aimed at designing local forest management schemes inlinewith landuse (Le. watershedmanagement, tree plantations, processing purposes, auctionplots andor for watershed restoration). Education campaigns focused on alternatives to tavy needto be supportedifconservation gains achieved so far throughthe development o fproductive agricultural systems are to be maintained. Bank Performance, for bothquality at entry andquality of supervision, is rated Moderately Satisfactory. Project design was innovative, including a long-term approach for institutional developmentandenvironmental managementthat was collaborative and coordinated amongst donors andcivil society. While the project's original objectives were overly-ambitious, the Bankwas responsive inrevising the objectives at mid-term.Since preparationo fthe secondphasewas conducted simultaneously withthe completion reporting o fthe first phase, the designo fEP I1didnot hllyreflect lessonslearnedfrom the first phase, including the need for amorerobust program-wide systemo fmonitoring andreporting. Supervision, initiallyweak, was strengthenedafter mid-term.Meanwhile, the Bank could have assertedgreater leverage for the Forest Action Plan, since itwas a condition o fproject effectiveness. xi BorrowerPerformance is ratedModeratelySatisfactoory. The GOMdisplayed weak commitment duringthe first halfo fEP 11bynot supporting forest reforms. Highstaff turnover affected performance albeit the GOMincreasedtransparencythroughthe Forest Sector Observatory andawardedlegalidentityto the environmental agencies. Itmaintainedits commitment to the decentralization processby supporting the devolution o f resource managementrights andcontractsto communities, Yet despitepolicydevelopment on land security (inrural areas), the ability to upholdco-management contracts through community forest managementis limited. Key inter-sectoral policieswere drafted but not implemented. Irregular counterpart fundingresultedindelays; other delays causedby the political crisis were beyond GOM control. The implementing agent, AGEX, was well managedhowever unfamiliaritywithprocurement requirementsandfinancial managementcauseddelays. GoingForward Inspiteo fthe complex designandimplementationofEP11,the project hasincreased public awarenessthrough increasedNGO presenceandparticipationandregional networking. Ithas facilitatedthe managementtransfer ofnaturalresourcerights(including marineand coastal) to localcommunities. All six universitiesinMadagascar now have departments dedicatedto environmental education andtraining. And a standardizedmanagementsystem hasbeenlaunchedwhich promises to improve monitoring andreporting for EP III. Learning fiom EP Iand11,the Government organized anational public consultation insupport of a logicalframework intendedto optimize donor coordination duringthe last phase. EP IIwas implemented under severepolicy constraints: the low implementationo f requisite forest, land, agriculture, andenergypolicies stretchedits mandate acrosstoo many activities. Without greater economic intensification o f landuseanddevelopment ofnon- agricultural sources ofincome, the constraintsthat threatenedEP 11will persist. Revenue- generatingpotential ofNTFPs andenvironmental services remainunrealized. Greater emphasison tenure security andthe enforcement o f tavy regulations are necessaryto increase the adoption ofconservation-fkiendly agriculture technologies. Madagascar's highrate o f deforestation outside o fthe PASrequires increasedsupport for sustainablerural development. Lessons ThisAdjustableProgramLoan(APL), tranchedacross sector investmentloans over a 15-yearperiodprovedconducivetoinstitutionalcapacitystrengtheningand environmentalmainstreaming.Itrespondedto thetime neededto achieve institutional and enforcement capacity to implement NEAPSthat require reformo fnational legislation, strategies, andpolicies for effective application. Its longer-term nature signaled bothBank and borrower commitment to operationalizing the NEAP. Effectiveimplementationofsectorwide assistanceprograms,such as NEAPs, requireclose donor coordination,particularly for amicro-project approach. Complex projects with multipleimplementingagencies should use results-basedor performance-based contracts, rather thantraditional disbursement, as a vehicle o fproject implementation. A keylesson, internalized midwaythroughEP 11,andcorrectedfor inthe on-going EP111,is that unrealisticobjectives andtargets canunderminethe credibility of a program. Unclear objectives combined withpoor M&E often results inaproblem project. It is essential xii to givepriority and adequateresourcesto establishing realistic objectives, development of the counterfactual, support ofgood M&E, anddevelopment o fbenchmarks andbaselinesto ensure accountability, evaluation, andlesson-learning. The conservationofnaturalresourcescannotbeplannedinisolation. Coordinationwith othernationalprograms, especially rural development, is critical. A project with a grand superstructureapproachis less sustainablethaneffective implementationo f sector strategiesthat correct for environmental degradation. The decision to support the creation and strengtheningofnew environment agencies should bemade intandemwith discussionso frecurrent financing inthe long-term. Vinod Thomas Director-General Evaluation 1 1. Background The Project Context 1.1 Despite o fbeingthe most biologicallyrichisland on the plant, Madagascaris one ofthe world's poorest countries. Today, about 70 percent o fthe country's 15 million citizens livebelow the poverty line, while nearly halfo f its children under five years of age are malnourished. As reflected inIEG's most recent Country Assistance Evaluation (2006), Madagascarhas not achievedany significant reduction inpoverty, as measured byincome andconsumptionover thepast decade. 1.2 This poor poverty performance is somewhat counterintuitive giventhe fact that betweenthe mid-1990s andend-2001, Madagascarhadmade significant progressin terms ofmacroeconomic stabilization and structural reform. Over the period 1997-2001, the growthrate o freal GDP averagedalmost 5 percent (IMF PINNo. 03/07,2003). This has been, inpart, fueled bygrowth innontraditional exports, through abooming textile andapparelindustry for example. Madagascar's exports oftextile andapparelproducts grew from aboutUS$45 millionin1990to almost halfabilliondollars in2001 (Nicita, 2006).' The impact o fthis wave of export-led growth has marginally affected employment andwages inthe urbanareas, butbasedon analysis o f inequality conducted to informMadagascar's latest PRSP, the majority o fthe poor didnot benefitfrom the growthachievedduringthe 1997to 2001 period, as welfare gains didnot spreadto rural areas. 1.3 This i s becausemorethan80percent o fMadagascar's poor live inrural areas, and the agriculture sector, including fishing and forestry, accounts for 34% ofGDP and contributes more than70% to export earnings (whereas industry accountedfor only 8% in2003). Coffee, cloves, andvanillahavebeenthe mostimportant cashcrops, andall three have sufferedinrecent years2. Other cash crops include sugarcaneandcotton, which is grown for the local textile industry,Livestock are also animportant income earner. However, inthe last ten years, fish and shellfish have overtaken the former commodities as Madagascar'sleading exports, andthe country also receivesvaluable foreign exchange from fleets fishing around the coast. 1.4 Madagascar's mainfood crops are rice (the mainstaplewhich covers 61percent o ffarmed areas and 82 percento f irrigated areas), maize, cassava, andpotato. 1.5 Earningsfiom the servicesector comprisedthe remaining 58 percentof GDP; tourism is Madagascar's secondlargest foreign-exchange earner. Recognized as an 1. The World Bank.AlessandroNicita. Policy ResearchWorking Paper SeriesNo 3841. The terminationof Madagascar'sMFA status inearly 2005 andthe constraintsthat will be imposedby the third-party apparel provisionofAGOA inearly 2007 threatenthe healthofthis sector. 2. Coffee exportshavebeenhitbythe globalincreaseinsupply, cloves have sufferedfrom competition fromIndonesia.In1999,Madagascar was the largestproducerofvanilla inthe world, butthree cyclonesin 2000 destroyedaroundathird ofthe harvest.The industryhas alsobeenhitinrecentyears by increased competitionanduse ofartificial flavourings. 2 important development tool by Madagascar's most recent PRSP, there i s little evidence that earningsare contributing to welfare improvements, despite the fact that fifty percent o fparkentrancefees collectedbythe Systemo fProtectedAreas o fMadagascar' (SAPM -formerly, ANGAP)gotolocalcommunities.Madagascar'spotentialtoincreaseits earningsfrom sustainablymanagedecotourism i s vast: one out o f every two visitors to Madagascarvisits aprotectedarea. While its 33 endemic lemur species are a worldwide attraction, the fourth largestislandinthe worldpossesses an almost unrivaled array o f archaic life forms that are increasingly attracting tourists due to its geomorphology, history, andvaried climate. 1.6 Madagascarhasbeenrecognized as the single highest major biodiversity conservation priorityworldwide. According to the GEF, although Madagascaroccupies only about 1.9% o fthe landareaofthe African region, it is home to about 25% o f all Afkican plants. Overall, about 80% o fMadagascar'splant species are endemic, and for animals the proportion is usually even higher, the best examplebeingthe lemurs, close to 100% ofwhich occur naturally only inMadagascar. Inaddition, 95% o fthe country's 265 reptiles and99% o fits 120 amphibians are endemic, andfigures for other groups o f organisms are comparable. Higher-order endemismi s also extremely highinMadagascar, makingevenlessdiverseMalagasytaxa exceptionally valuable. 1.7 Madagascar'sbiodiversity is threatenedby a significant level of environmental degradation.The 1994CAS notesthat Madagascar i s `facing a spiral o fenvironmental degradationthat increasingly threatenssustainabledevelopment andthe country's unique ecological heritage.' The dominant form o f landuseinMadagascar- anda major driver o fthe country's vast original forest cover loss -- is shiftingcultivation by the slash-and- burnmethod, knownas T a ~ y Almost eighty per cent ofthe country's original forest . ~ cover has disappeared, or hasbeenseverely degraded, dueto tuvy, timber exploitation, uncontrolledlivestock grazing, fuel wood collectiodcharcoal production, hunting, corporate and small-scale mining, ornamental plant andwildlife collection and introduction o fnon-native wildlife species (CEPF 2003). Anthropogenic degradation and fi-agmentationo fMadagascar's forests havebeen found to be aprincipal cause o fthe decline ofmanyendemic species of flora and fauna, including lemurs (Hume 2006, Godfi-ey et al. 1997) and avifauna (Hume 2006, LangrandandWilm6 1997). Tavy i s also responsiblefor loss of an estimated200 tons o ftopsoil per hectareeach year (GEF 1996). 1.8 The Governmentof Madagascar responded by developingthe First National EnvironmentalAction Plan. The Government o fMadagascar (GOM) recognizedthese threats andput inplacethe first National Environment Action Plan(NEAP)in 1989. The Government demonstratedits commitment andownership ofthe planby supporting the 3. Ecotourismaccounts for 20% oftotal internationaltourism(World Tourism Organization, 2006). Worldwide, internationaltourists will increase from 613 millionin 1997to 1.6billionby 2020 andearnings willjump from $443 billion in1997to morethan$2 trillion by2020 (World TourismOrganization,2006). 4. Tavy typically involvescuttingandburninganacre or two of forest andthenplanning it withrice. After a year or two ofproductionthe field is left fallow for 4-6 years beforethe processis repeated.After 2-3 such cyclesthe soil is exhaustedofnutrientsandthe land is likely colonizedby scrub vegetationor alien grasses. However, the crop cycle for tavy is shorter thanfor irrigatedrice, hence it is one ofthe only forms of insuranceagainstthe droughtsthat occur about everythree years. Moreover, precipitous slopes and heavy, irregularrains make it difficult to maintainaffordableandcontrollableirrigationsystems on hills. 3 developmentandpassageo fanEnvironment Charter andthe National Environmental Policyin 1990 (Law 90-033, December2 1,1990). It enhancedits commitment by invitingdonors to collectively execute apioneering Environmental Support Program (discussedbelow andinthe following section). 1.9 Madagascar's NEAPrecognizesthe linkbetween environmental protectionand economic development andincludes six objectives to: protect andmanagethe national heritage o fbiodiversity, with a special emphasis on parks, reserves andgazettednatural forests, inconjunction withthe sustainable development o ftheir surrounding areas; improve the livingconditions o fthe population throughthe protection and managemento fnatural resourcesinrural areas with an emphasis onwatershed protection, reforestationandago-forestry; promote environmental education, training and communication; develop mapping andremote sensingtools to meet the demandfor natural resourcesandlandmanagement; develop environmentalresearchcapacitiesfor terrestrial, coastal andmarine ecosystems; and establishmechanismsor managing andmonitoringthe environment Donors, includingthe WorldBank, have responded by developingthe Environment Support Program The Environment Support Programwas designedto implementtheNEAP'Ssix pointprogram summarized above. 2. Project DesignandImplementation Project History andDesign 2.1 The Environmental SupportProgram(ESP) is uniqueinthat it was designedto operationalize the first NEAP inAfiica, negotiatedin 1988-1999 andmade effective in 1991. The excitement surroundingthe development andoperationalization ofthe first Afiican NEAP inone o f the world's highest biodiversity priorityzones is evidencedby its highlyparticipatory processwhichbrought multiple stakeholders anddonorstogether under asingle framework. Support for the NEAP processwas bolsteredbythe government's concurrent adoption of aNational Environment Charter5 andaNational Environmental Policy (Law 90-33) in 1990. The NEAP andthe ESP subsequently influencedthe development o fBank Country Assistance Strategies (CASs); all subsequentCASs include naturalresourcesmanagementobjectives. 2.2 The ESPwas innovative becauseitwas realistically designedwith an implementationperiod o ffifteen years: the program instrument employed would later be referredto as anAdjustable ProgramLoan (APL) inthe Bank.The design o fthe program 5. NEAP- Chartede 1'Environnement.December 1990. Madagascar ReportE0021. 4 follows the fifteen year planintroduced inthe NEAP -that envisagedestablishing a policy, regulatory, andinstitutional fiamework for the managemento fthe environment andtheresolutionofits most severe problems, includingdeforestation, soil degradation andbrownagendaissues. 2.3 The first phaseofthe APL (EP I) designed to establishthe foundation for was environmental managementthrough institutionbuildingandhumanresource development. Its objectives consistedof: (1) protecting the heritage o fbiodiversity inthe parks, reservesandgazettedforests, inconjunction with the development o fthe surrounding communities (2) and fightingdeforestation anderosion inpriority watershedswhere the negative economic impact was the highest. ENV Iwas designed with components: (1) protection andmanagemento fbiodiversity, (2) soil conservation, agro-forestry, reforestation, andother rural development activities inpriority areas, (3) mapping inpriorityareaand establishment o f a GIs, (4) landsurveying andtitling in priority areas, (5) environmental training, education andawareness, (6) researchand(7) a range of activities supporting institution building, establishment o f EL4proceduresand databases, studies andM&E. Inaddition, selectedcomponentsfiom the Bank-supported Forest ManagementandProtectionForestsproject were transferred at its closure in 1994 to ENV I. 2.4 Theobjectives ofthe first phaseofthe ESPwere later acknowledged to havebeen over ambitious; IEGratedthe outcome o fthe first phase unsatisfactoryas it failed to put inplacethe long-termfoundationnecessaryfor biodiversity conservation and management andthe monitoring andevaluation systems critical to assessresults on the ground. Physicalobjectives were barely executedor not attempted. The overall institutionalimpactwas assessedas "negligible" byKEGbecausethe agencies created underthe project lackedsustainablefunding andhadno impact onthe destruction o fthe environment. Sustainabilitywas assessed as unlikelybyIEGbecausestewardship was lacking andlocalbenefits hadnot been demonstrated. Bank and Borrowerperjormance werejudged unsatisfactory. This assessmentwas confirmedby an aProject Performance Assessment Rep01-t.~The first phaseo fthis APL didnot accomplishits task of creating a useful institutional fiamework for ProtectedArea management; infact some interviewees for this audit attest that it mayhaveinfact contributed to a `murky' institutional landscape. However, the project did establish an environmental baseline, discussed among abroadcoalition of donors, institutions andNGOswith the relevant aimo f improvingthe uniqueenvironment o fMadagascar. 2.5 The important lessonsderivedfiom ENV Iwere:' (1) program scope shouldbe realistic andwithin the country's implementation capacity; (2) financing should be for program as awhole, not earmarkedby activities;(3) community participation canbe promotedby demonstratingbenefits; (4) successfulmanagemento fProtected Areas requires a communication strategy;(5) clear monitorable indicators mustbe establishedto measureperformance;(6) institutional roles should beclearly definedwithin an establishedoverallpolicy fiamework; (7) design o fthe mini-projects component should 6. FirstEnvironmentProgram(Credit 2125-MAG) PerformanceAudit ReportAugust2000. ReportNo. 20667. WB WashingtonDC. 7. ICR EnvironmentIJanuary 1998.ReportNo 17297. 5 supportprogramobjectives; and(8) longterm sustainabilityrequires greater integration of the country's ruraldevelopment strategyandits environmental agenda. Manyo fthe lessonslisted abovewere not incorporated inENV PI. 2.6 The original project objectives o fEP 11were to: (i.)promote reversecurrent environmental degradation trends; (ii) sustainableuse o fnatural resources, includingsoil, water, forest cover andbiodiversity; and (iii) mainstream environmental considerationsinto macroeconomic and sectoral managemento fthe country. 2.7 The project's objectives were revised after the mid-termreview. The revised objectives pair downthe ambitious expectationsthat were present duringthe first phase andcarried throughthe first halfofENV II. revisedobjectives limitthe scale and The scope ofthe project, byindicating where environmental results will be achieved("in targetedareas") andinstead o f fully `mainstreamingenvironmental concernsthe needto establishconducive conditions instead. 2.8 The revisedobjectives of EP IIare to: (i) increasethe sustainableuseo fnatural resources, includingsoil, forest cover and biodiversity intargeted areas; and (ii) establishconditions for mainstreaming sustainable environmental andnatural resourcesmanagementat the national level. 2.9 The revisions o fthe project objective are inline with the constraints recognized in the PAD: ["that the project]. .will not be able to stop the environmental degradation . altogether or [even] reverseit." The PAD also statedthat the Program "has to be understoodas one that will endow the country with the capacity to manageits environmentalresourcesmore effectively andreducethe rate at which its natural resources are beingdepleted." Project Content 2.10 Restructuring o fthe project in2001resulted inregrouping andreducingthe original componentsinto the following four revised components: (i) SustainableSoiland WaterManagement in Priority TargetZones (USs43.5 million; actual $25.67million or 59%): Increasethe capacity o fthe rural population to sustainably managenatural resources, particularly land(soil), and water. The maininterventions under the component were 4,000 community and family mini-projects in500target communes (districts). Itincluded the establishmento fwatershedmanagementschemes. The component was to be implemented bythe National Association for Environment Action (MAE).* ~ ~~ ~ 8. ANAE: AssociationNationale d'ActionsEnvironnementales(National Associationfor Environment Action) is a new institutioncreatedtroughENVI. 6 (ii) ForestEco-systemManagement(US$43.1million,actual$20.94or49%) focused onimprovingthe managemento f forest ecosystemsbytransferring about 150,000 hectares offorests under the managementto the communities andbringing about 580,000 hectaresof forestsunder multiple-use managementschemes(ESFUM).' (iii)ProtectedAreaManagement(US$29.9million;actual$52.47or175%)focused onexpanding the ProtectedArea systemto achieve more comprehensive protectionofMadagascar's representativeecosystems. It also focused on improvingProtectedArea mana ement through institutional strengthening ofthe managementagency (ANGAP)19andgreater involvement o fcommunities. (iv) Environmental Policies and Institutions (US$38.5 million, actual $24.7%) to develop alegal andregulatory framework for environmental management andto strengthenregional environmental planningandmanagementincluding the Environment Management Support ServicesAgency (SAGE). Implementation 2.1 1 Whereas EP Iput inplace the policy andinstitutional framework for Protected Area management andthe sustainableuse o fnatural resources, EP I1expandedthe field coverageo f activities, strengthenedthe newlycreated executing agencies (at the expense often o fthe existing ministries), anddeveloped anddraftedpolicies for sustainable developmentinrelevant sectors, although critical policies like Forestry, have not been implemented. EP 11was implementedprimarily at the central andregional levels; it lackedeffective mechanisms for localparticipation, beyondthe design stage o f some of its component activities. Inparticular, site visits performed duringthe courseo fthe audit revealedlittle evidence o fjoint decision-making between communities andthe National Association for ProtectedAreas Management (ANGAP). 2.12 Implementationwas directed through aMulti-Donor Secretariat(MDS) establishedand financed bythe WorldBank, inpartnership with FrenchCooperation, USAID, WB, FDA, andUNDP. Since 2000, the M D S has coordinated donor funding for development and food safety activities. 2.13 EP11streamlined the institutional andimplementation arrangementsbyreducing the numbero fimplementingagencies from seven to four, while turningthe remaining three into independentserviceproviders. However, implementation inthe early years of the project was still hamperedby a lack o fharmonization o fthe financial management andaccounting systems across the implementing agenciesleadingto delays in implementation -however this was corrected for after the reorganization at mid-term. 2.14 Implementationwas also affectedbythe political crisis o f2002, which effectively brought EP I1implementation to ahalt. The ICRcandidly notesthat some o fthe conservation accomplishments inthe ProtectedAreas andelsewherewere somewhat set 9. ESFUMEco-SystemesForestiers a Usage-Multiple (Multiple UseForest Ecosystems). 10.ANGAP:Association Nationalepow les Aires Protkgkes (National Association for the Management o f ProtectedAreas). 7 back, as the conflict resulted inuncontrolled exploitation of forest andbiodiversity resources.The project requiredtwo extensions o fits closing date due to the crisis. 2.15 The implementationof EPIIhasbeencharacterized as having `spread itselftoo thin' across theruralsectors, for example, inanattempt to stemthe root causesof environmental degradation.These efforts mayhave compromisedEP II's ability to prioritize interventions inareas ofhighbiodiversity that could generatehighrates o f returninterms o fbuildingcritical capacity for environmental management, EIA monitoring, andenvironmental policy enforcement. Itwasn't until2001 that the Government ofMadagascarrenewedits support for the "Rural Development Action Plan" (PADR),thereby appropriately relieving NEAP hctions andinstruments fi-om the promotiono fruralproductivity through agricultural systems intensification. Close ministerial coordination ofthe PADR andthe NEAP will remain critical. 3. Analysis of Effectiveness 3.1 Based on its highrelevance, low efficiency, and substantial achievement of objectives, the project outcome is ratedmoderatelysatisfactory. 3.2 EPII's objectives were andremainhighly relevant.Madagascaris oneo fthe 17 recognizedmega diversecountriesinthe world that together account for 80 percent o fthe world's biological diversity. Nearly98 percent of Madagascar's landmammals, 91 percent o fits reptiles, and80 percent o f its flowering plants are found nowhere else on earth. The country's most notable species, lemurs, have 51distinct taxa and33 species that are 100percent endemic (the MacArthur Foundation, 2006). 3.3 As notedinthe 1994CAS, manyo fthese endemic species, bothflora andfauna, are threatenedby ahighdegree of environmental degradation. The 1994 CAS boldly announcedthat Madagascaris "facing a spiral of environmental degradation that increasingly threatens sustainabledevelopment andthe country's uniqueecological heritage" due to loss o fforest cover (Madagascar lost about 12millionhao f forest between 1960 and2000, or about halfits forest cover) due to overexploitation o fthe country's easternrainforests as well as improper cultivation techniques, such as slash- and-burnagriculture, knownlocally as Tuvy. 3.4 Identified through aninter-sectoral andhighlyparticipatory process, ENV I1 directly implementsthe National Environmental Action Plan(NEAP).Giventhe needto buildimplementation capacity andcommunity awarenessfollowingthe strong legislative commitment surrounding Madagascar's NEAP, the fifteen year, phaseddesign, mechanizedthrough what is today referred to as an adjustableprogram loan (APL)was andremains relevant. ThePRSPsputinplace duringthe projectperiodemphasizedthe links between natural resourcemanagementand sustainedgrowth. The most recent 8 PRSP' hasputpriority on agriculture-led growth andacknowledges the urgency o f ' mainstreaming environment inprojects andpolicies. 3.5 The program's conservationaims are fully supportedby the government, as evidencedbythe Presidential announcementat the World Parks Congress inDurban, SouthAfrica, inJune 2003 to triple the size ofthe ProtectedAreas network and conservationsites fiom 1.7 millionto 6 millionhectares. 3.6 Meanwhile, the relevance o fthe designof ENV I1is rated only partially relevant. The secondphaseo fthe Environment Support Programwas not designedto directly addressor combat forest governanceissues, i.e. the highincidence of illegal logging inthe rainforests o fEasternMadagascar, where ebony androsewood can earn upto US$2,000 atonininternationalmarkets. SincelocalBankstaffmustintercedeto try to blockthese activities routinely, theprojectwouldhavebeenmorerelevant hadit confronted forest governanceissueshead-on. Indeed, the approval ofEP I1was conditioned on the passageo f aNationalForest Policy, which was adopted but not adequatelyimplemented. While the creation o fthe Forestry Sector Observatory and cancellationo fthe illegalandnon-paying concessionswere important gains inthe forestry sector, Madagascar lost 6.2% o fits forest cover, or around 854,000 hectares, between 1990and 2005 (156,000 ofthese lost hectareswere primary forest cover). 3.7 Ninetypercentofthe woodharvestedinMadagascaris usedfor fuelwood. Annual consumption would require 40,000 ha'* o f additional forest plantations per year to satisfy the demandof a growingpopulation andto comply with the President's decree for an expansionofthe ProtectedArea system. Not addressingdirectlyMadagascar's highrelianceonwoodfuel through thepromotion ofsubstitution fuels or the increasein available forest areafor woodfuel production, contributes to the less thanhighlyrelevant rating assignedto this project design. Efficiency 3.8 The efficiency of the project was Moderately Unsatisfactory. The proliferation of institutions establishedpartly through theproject to manage the environment scattered investments in many dzflerent directions without any synergy making benefits streams modest but at high costs. Results on the ground are `thin' comparedto the investments made. The monitoring information was not satisfactory and didnotprovide thebasisfor acredible efficiency analysis, nor a cost effectiveness analysis, o fmost activities undertakenunder the project. Newly created institutions attractedcompetitive staff away fiom the line ministries andabsorbed as much funds as all departmentso fthe Ministryresponsible for ruraldevelopment andinefficiently duplicated Ministerial activities (e.g. ANAE).However, basic environmental agencies 11.The PRSPstrategy made availablewidely i s titledMadagascar Naturellement. (NB:word game with Nature). 12.p22Fuelwoodsupply/demandinReport on anActionPlan to improve Governancein theForestry Sector.USAID,January2002. IRG. 53 p. 13. Agriculture, fishery, livestock, water andforests. putinpacethrough EPIwere strengthenedinEPI t andawarenessofenvironmental issueswas raised, including inpolitical spheres. 3.9 TheProtected area Management component, the most significant incommitment terms, with US$52.5 million (only $5.6m ITF/IDA and $ 6.3m GEF) but it doubled the number ofprotectedareas from 21 inENV Ito 46 inENV11.However, manyofthese areas exist mostlyonpaper, without clearly lines o f demarcation. Deforestation rates appears to have decreasedas comparedto areas outside the reserves. The Soil and Water Management, funded at alevelofUS$25.7m (US$9.1 for IDA), was ill-designed and representedinefficient andriskyinvestments for the fanners who discontinuedpractices introducedafter project financing ended. Bothex-ante andex-post B/C analyses indicated substantial IRRfor the activities undertaken(ICR p.19 and20). The ICR pointed to severeflaws inthe analysis (p.50). Shadow pricingfor the environment was not included andwouldhaveimproved the project social profitability. The bottom line is that the financial analysis is apparentlynot profitable and so fanners would not engage these expenseswithout subsidiesfrom the Government or Donors. TheEnvironmental Policies and Institutions component absorbedUS$24.7m ($9.6 mfiom IDA) financed the creation and strengtheningof ONE and ANGAP. ANAE was later discontinued and became anNGO. Ecotourism increasedsignificantly duringthe project period; the target numberofvisitors was surpassedandthe number o fdedicated visits to protectedareas increasedfiom 50,000 in 1997to 100,000 in2001. Protected areas were the principal tourist attraction andaccountedfor 55% ofthe time spent bytourists. Yet while revenues from park entrancefees increasedfiom 493.8 millionFMGbefore EP2 to about 2,808.6 million FMGin2001 (duebothto the increaseinvisitors andanincrease ofpark fees introduced in 1997), revenuesare still insufficient to fundthe operatingbudget of SAPM (formerly ANGAP).Butthe creation o fthe FAPBb di s promising. FAPBi s the first of its kindto use IDA contribution to set-up an endowment fund for the environment. 3.10 The Forest Ecosystems Management component (US$24m) hasbegunto implement the Durbanvisiono fthe Government andas suchhas animportant future role to play inthe implementation ofthat policy. So far, governance anda lack o f capacity have beenthe mainconstraints onthe effective management o fthe 180,000has of Classified Forests (FC). The Observatory that was created to tackle the governance problem has not demonstratedlimitedimpact so far. Permits are allocated without geo- referencing andmarkingo fthe FCboundariesmakingenforcement difficult. The effective devolution o fmanagementto the communities on around 175,000 hectares suffers fiom the same problems and a lack o fcapacity and follow-up from the Forestry department. Efficacy 3.11 Overall, efficacy is assessedas substantial, with shortcomings.Most ofthe target outputsfor ENVII were met and, in some cases, surpassed but the environmental impacts on the ground are notyet visible. ENV I1is evaluatedhere against the project's revisedobjectives to: (i)increasethe sustainable use o fnatural resources, including soil, forest cover, andbiodiversity intargetedareas; and (ii) establish conditions for 10 mainstreamingsustainableenvironmental andnatural resourcesmanagementat the national level. Thesetwo objectives are assessedthrough the four project components: Soil and WaterManagement 3.12 Conservationefforts for soil andwater managementsignificantly exceeded project targets 14, yet retrospective studies ofthe components identifiedseveral shortcomings (See ICRpps: 13-14): Spontaneousadoption of conservation agriculture, whilegreater thanplanned, varied according to the type of activity, technology, and socio-economic conditions. Someefective but knowledge-intensive technologies did not lend themselveswellfor spontaneous replication, e.g., direct sowing or intensive rice systems which requireprecise water management. Similarly, conservation agriculture technologies which require start upfunding are dificult for farmers to adopt without external assistance. Thepromotion of agricultural intensification and emphasis on conservation, while increasing yields, did not necessarily substitutefor unsustainable subsistenceagriculture (farmers continued to use tavyfor food crops that required very little labor -- rather than buyingfood stufs with revenuespom cash crops generated under the intensified systems). Theaggregate impact onfood market was limited. Mini-project cost recovery was notfeasible barticularlyfor seeds,pesticides and small equipment), making the replicability of mini-projects unfeasible. TheForest Ecosystem Management Component 3.13 Theproject substantially contributed to reducingdeforestation. Overall, primary forest losshasbeenslowed to 0.6% inProtected Areas comparedwith 1.6+% outside ProtectedAreas over 5 years o fthe project. Specific ProtectedAreas ineastern Madagascar showedthat inprotected highlandforests (>800 melevation) deforestation rateswere a thirdto ahalfofthe rate observed inunprotected control areas, while lowland forests fared lesswell, ProtectedArea ratesrangingfor a thirdto 80% of unprotectedrates. Slash andburncultivationdecreasedby 72% duringthe first 4 years o f the project. J 3.14 Through Madagascar's ongoing processo f decentralization, the Bank aimed to help supportthe devolution offorest sector activities to the communities through the participatory development ofnatural resource managementplans for about 320,000 hectares o f forests (20% below the target) and forest managementplans for 180,000ha infour pilot gazettedforest reserves(whereby 100%ofthetargetwas achieved). The component also introduced apilot program on community forest management(GELOSE involving278 villages andencompassing 174,132 ha (exceedingthe targeted numbero f villages by 39% andthe targetedareaby 16%). While the concept oftransferring natural 14.5,072 agriculturalconservationmini-projectswere implemented(127% oftarget) andthe area covered (82,100 ha) was 256% oftarget. 11 resourcemanagementto localcommunities was well accepted, andresultedinthe development o f some 200 contracts, the simplified system developed for community forest management -- GestionContractuelle des For& -didnot addressthe critical constraints that were imposedonthe system bythe traditional systemo f landtenure. 3.15 Insome areas the capacity ofcommunities to manageforestswas insufficient; in other areas the ForestDepartment continuedto issueprivate logginglicensesfor areas alreadyunder community management, 3.16 Governanceissueshavehistorically affectedthe performance o fthe forest sector inMadagascar.Inthepast, asnotedintheICR,the sectorwas plaguedbyahigh tolerance for corruption, poor enforcemento fthe forest code andcumbersome regulations. While greater attention has beendrawn toward illegallogging, particularly through the implementationo fthe first two phases ofthe NEAP,the practice continues unabated.And illegalcapture andsale o f species listedthrough the CITES convention (signed andratifiedbyMadagascar) threatenthe environmental uniqueness andintegrity o fthe island's biodiversity. Duringthe past two IEGmissions to Madagascar(CAE, 2005 andEP I1PPAR, 2006), the WorldBankenvironment officer hadto urgentlytravelto the country's mainport inan effort to deter illegal export ofrosewood and ebony despite the ongoingbanonlogexport andloggingpermits. 3.17 Inresponseto perceivedgovernancechallenges, the project successfully supportedthe creationof anational Forest Observatory. Its functions include monitoring adherence to the legislation andregulations that were put inplace as part of the Environment Support Program; it was also involvedinestablishing forest zones. However, since the updatingof forest datainventory andforest zoning only started in 2001,the forest rehabilitation planswere delayed. InNovember 2004, the Presidentwas flown over the classified forest (forets classte) d'hbohilero to observeincidents of illegal logging. Recommendationswere made, includingthe strengthening of the Forestry Sector Observatory (OSF), but there hasbeen limitedimpact so far. ProtectedArea Management 3.18 Thenational systemofProtectedAreas expandedfiom 21(under EP I)to 46 underEP I1andnow cover 15% ofthe Madagascar'sforests and3% o fitstotal landarea. According to an assessmentconductedby IUCN, independently ofthe project, the capacity for ProtectedArea managementincreasedsignificantly, although less than anticipated. IUCNratedthe ANGAP management capacity as "satisfactory" intwelve ProtectedAreas, includingMadagascar's five most popular national parks, "average" in another three, while only "marginal" intwenty-three recently established areas. While staffing andmanagementplanningwere found to be adequateinmost protectedareas, ANGAP'Scapacity suffered fkom the availability o fequipment andvehicles, particularly inthenewprotectedareas. EnvironmentalPolicies and Institutions 3.19 TheEnvironmental Policies and Institutions component (US$24.7m; $9.6 IDA) financed the creation and strengthening o fONE, ANGAP, andANAE. Institutional 12 conflicts andmanagementdifficulties, combined with the launcho fthe decentralization processinone o fthe most centrally administered countries inAfiica, made implementing the numerousactivities difficult however. Recognizing the difficulty o fcoordinating the Environment Support Program's activities across multipleinstitutions, the Bank dropped theconceptofcreating anewforestry agency, ANGEF." Oneweaknessoftheproject was its insensitivitytowards traditional social decision-making arrangements -- itdidnot consider adequatelyhow to work through commune levelrepresentativeswho havebeen empoweredthrough the ongoing decentralizationprocesses, for example.16,17 . 3.20 The project successfully establishedfour environmental units ingovernment ministries to mainstreamenvironmental managementandalmost doubled the planned number o fregionalplanningcells (15 insteado f 9). At the local level, twenty-nine community cells were set-up to implement integratedmanagemento fmarine andcoastal zones. Over 250 environmental staff, 940 trainers andteachers and 1,140 students receivedenvironmental training; 86 environmental facilitators were trainedand accredited for community-based natural resourcemanagement. 3.21 Theproject supportedthe formulation ofnewpolicies for nine key sectors, including mines, fisheries andaquaculture, tourism, roads, forests, water, industries, and buildings; only three policies however were enacted: fisheries andaquaculture, mining, andindustry. The implementation o fthe country's Forest ActionPlan(designedto addressthe conservation, regeneration, andsustainableuse o f forest resourcesandto define investment programs) was stalled duringEP Iandis noticeably missingfrom the necessarypolicyreforms that were requiredas apreconditiono fEP 11. 3.22 The national environmentalimpact assessment(EM) systemwas strengthened through revision of legislation andproduction o f seven sectoral guidelines. Over one hundredEIAswere presentedto ONE during ENV 11.However, the lack of communication andbudget inthe responsibleMinistries madethe implementationof EIAsdifficult. 3.23 This component supportedthe ratification of severalenvironmental conventions on climate change, desertification, andwetlands. Riskto developmentoutcome:therisk, at thetimeof evaluation, thatexpected outcomes, would not be realized. 3.24 Risk to DevelopmentOutcome is ratedmodest at the presenttime, since the project will benefit from the extended support o f a thirdphaseo fthis fifteen year APL. 15. ANGEF would havebeena new executiveagencychargedwith managingforest resourcesbothinfully protectedareas andproductionforestswhere harvestingwould take place. As the manager of state forests, ANGEFwould haveenforcedsilviculturalobligationsfor commercialoperationsandengagein reforestationactivities. 16.GTDR GroupeTravail de DeveloppementRural (Regional RuralDevelopmentWorking Group) which are part ofthe new decentralisationexercise andare to take decisionsinthe 20 regionsinrural development. 17. PCD: PlanCommunalde Developpement( CommunityDevelopmentPlan) which are supposed to draw developmentplans at the level ofthe commune. 13 The greatestriskto development outcome o fthe entire Environmental SupportProgram i s the lack of financial sustainability o f the newlycreatedenvironmental agencies. As notedinthe ICR, fiscal sustainability o fenvironmental agencies establishedunderthe project is crucial inensuringoverall sustainability o fproject achievements. Itwas USAID,not the Bank,that supportedactivities focused onthe financial sustainability of the environmental institutions createdbythe program, particularly ANGAP and ONE. A SustainableFinancing Commissionwas set up inJuly 2000 andbecamethe key focal point inthe development of the Trust Fundfor Biodiversity andProtected Areas. However the Bank cancontribute to the development o fother financing mechanisms, such as carbonoffsets. 3.25 While the government hasdoubledthe number ofprotectedareas, the long- termviability andhealthof ecosystemsinandaroundthe project's target areas will inpartdependon the continuedstrengtheningof SAPM's capacity(formerly ANGAP). This will entail training andequippingstaff, supporting infiastructure development andthe demarcationo fpark boundaries. Humanimpacts on the parks' resourceswill needto berationalized through the development o fequitable benefit sharingschemes andincomegeneratingprojects inthe target areas. The Gelosesystem mustbeextendedto areasoutsidethe parks. Moreimportantly, localcommunities must be integrated intoparkmanagement, andmust hllyunderstandtheir stewardship roles. Environmentalinformation, education and communication campaignsmustbe supported throughout the year (not just on Environment Day), although the Government's decision to rotate annualEnvironment Day ceremoniesaround the country is abestpractice. Park staff must betrained inecological monitoringto improve parkmanagement. 3.26 Madagscar's biodiversitywill continueto bethreatenedby loss and unsustainablerateofforestcover loss unlessthe country, withthe support of the development community, cancurb demandfor fuelwood-through the development of alternative supply, forest plantations (without compromising the conservation of primaryforest), or both. While project interventions were successfulindecreasingthe use of Tavy intargetedareas, the methodis stillwidely practiced andthreatens the conservation gains that canbe achievedthrough the development o fproductive agricultural systems. The effective implementation o fthe Rural Development Action Plan (PADR), adoptedin2001, will significantly lowerthe risksto the outcomes so far achievedthroughout the life o fthe Environment Support Program. 3.27 Theprotectionandmanagement of ForestReserves andClassifiedForests will dependon the continuedpoliticalwill ofthe Presidentandthe Senate, the improvementof Governance,andimprovementincapacity at the central, regional, andlocallevels. While the country is nowmore consciouso fthe importance of its uniqueenvironment for economic development ando fits comparative advantageto build a tourism industry, absence ofpoliticalbacking would slow considerably the attainment o fthat objective. Governanceis the major constraint inforest relatedissues andwill continue to limitprogress ifenforcement is not taken more seriously. Effective decentralization o fnatural resourcemanagement, through devolution o fforest managementto organized forest communities (Gelose) hasthe potential o fincreasing accountability inthe sector. However such arrangementsrnthe risk ofelite capture, and 14 therefore the "co-" of the "co-management" mechanisms should bemonitored fkom a sustainableuse andpoverty alleviationperspective. BankPerformance 3.28 The mix ofinstrumentsdesignedto reduceenvironmentaldegradationand conservethe mega-biodiversity ofMadagascaris bestpractice.Madagascar's NEAP was the first ever, andwasjudiciously initiated ina country ofunique world environment through aparticipatoryprocess. As observedby aninternalreview, the project was notable for its innovative and far-sightedapproach, including a long-term approachfor institutional development and environmental management, collaborative andcoordinated interactionof donors, programmatic, comprehensive, andcross-sectoral approach, and flexibility to adapt andlearnbydoing. The project was aheado f its time inseveral aspects, including the adoption of a ComprehensiveDevelopment Framework before it existed; an Adaptable Program Loanbefore "APLs" existed, anda Learning and InnovationLoanbefore LILs existed. 3.29 Quality at entry hadseveral shortcomings. An internalreview concludedthat the project had "great promise and great flaws". The project's objectives were unrealistic. Implementation arrangementswere overly complex with too manyactors, components, andexcessiveproject demandgiven the weak institutionalbase. Specifically, the project suffered from shortcomings: EP11was insufficiently integratedintoMadagascar'sbroaderrural development strategy, aproblem exacerbatedbypoor cooperation between government and Bank'sstaff; The mainproject implementing agency, the NationalEnvironmental Office (ONE), createdunder the first phaseproject, hada budgetbiggerthanthe combined budgeto f existing Ministriesresponsible for ruraldevelopment (agriculture, water andforest, fisheries andlivestock), anddrew away their best - staff; Original objectives were unrealistic, not sufficiently linkedto the ultimate goals ofthe 15-year environmental program, were beyondthe capacity o flocalagencies to implement, andmonitoring andevaluation systems were inadequate; Local, incontrast to national, ownership was weak becauseincentive structures were not aligned to peoples'needs. Supervisionduringthe first halfofthe projectwas unsatisfactoryinrelation to the quality andrealismofreporting.Supervisionlackedpropermonitoringofthe social aspects o fimplementation and coordination with agricultural activities. There was inadequatecoordination withproject partnersconcerning monitoring, data collection, and reporting at the activity levelandweak upkeepo fproject records andmonitoring at headquarters. 15 3.32 Thebulkofsupervision expenseswere spent onannualplanning/fundhg exercises for the numerouscomponents and activities, One supervisionmission that cost US$210,000 revealsthat littlecost savings were achieved through this multi-donor arrangement. 3.33 Overall Bankperformance is ratedas Marginally Satisfactory due to a combination ofan innovative project designwhich was complicated but unrealistic objectives andoverly complex implementation arrangements. The Bankneverthelesswas responsive andflexible following the Mid-termReview, but demonstratedweak supervision inthis multi-partnerprogram duringthe first halfo f the project. Borrowerperformance 3.34 Borrower Performanceis ratedModeratelySatisfactory.The government displayed weak commitment duringthe first half o f ENVII, andwas unable to generate support for key forest reforms over the entire life of the project. Highturnover o fkey staffinthe Ministries andtechnical staffinthe sector hampered sustainedperformance. Nevertheless, the government establishedthe development of atransparent oversight mechanism through the Forest Sector Observatory, andimproved governanceinthe forestry sector bytighteningcontrols on logging andbiodiversity permits, canceling illegal or non-paying contracts, establishing andimposingamoratorium onthe transportation andexport o f specieslistedunder CITES- although Madagascar was noncompliant with CITES in2000 and2001. 3.35 The governmentpassedseveraldecreesthat gave legalidentityto the newly createdenvironmental agencies such as the NationalEnvironment Council (ONE) andthe Inter-ministerial Environment Committee (CIM). Itmaintainedits commitment to the ongoing decentralizationprocessby supporting the devolution o fnaturalresource managementrights and contractsto communities -although despitethe national development ofpolicies on landsecurity (inrural areas), the ability to uphold co- management contracts through community forest managementschemes is limited. 3.36 Although anumber ofkey inter-sectoral policies were drafted, environmental policies for agriculture (pesticides), tourism, andurbandevelopment didnot progress from drafting to implementation. Irregularand short counterpart funding ledto implementation delays. Implementation delays causedbythe political crisis was largely beyond government control. Butis it noteworthy that byproject end (2003), just intime to buildsupport for the thirdandlastphaseo fthe Environment Support Program, the government issuedaPolicy Letter onthe Environment, inwhich it confirmed its commitment to conservation o fnatural resources, reforestation through the HIPC initiatives, andsupport for creating abiodiversity conservation trust find. 3.37 A keycommitment was madeat the 5thWorld Parks CongressinDurban, South Afiica where the PresidentofMadagascarannouncedgovernment `s intention to expand its terrestrial ProtectedArea coveragefrom 1.5 millionhectaresto 5 millionhectares and its costal andmarine-areacoveragefrom 200,000 hectares to 1millionhectares. While this decision was madeafter the closingdate o f (September 2003), momentum for the 16 expansionwas builtthrough the gains made inEP I1andhas affected the remaining tranche o fthe program as awhole. 3.38 Theproject implementingagencies, referredto as AGEX, were managedby competent professionalswho did their best to meet their output targets under some times difficult circumstances.However, due to the complexity o fthe implementing arrangementsacross several agencies, aprogram-wide monitoring systemwas never developed. AGEX hadsomedifficultieswith procurement and financial managementthat also causedimplementation delays. 3.39 Borrower performance is ratedMarginally Satisfactorydue to weak government commitment duringthe first halfo fEP 11,specifically inrelation to weak support for key forest reforms. Performanceofimplementingagencieswas satisfactory, althoughwithsome gaps. The implementingagencies collectivelyreferredto as AGEX generally met or exceeded theirperformancetargets, however, weak aspectsincludeddelays causedbyinadequate procurement and financial management. 4. Monitoringand EvaluationDesign, Implementationand Utilization 4.1 M&E design and implementationare rated negligible.As notedinthe ICR, the project lacked an adequatemonitoringandevaluation system that would have allowed project managersto determine progress, identifyproblems, andmake adjustments. In addition, missinglinks betweenthe ambitious objectives andtargets ofthe program and the specific outputs o f annualwork programs made it difficult for the implementing agenciesto understandhow the short-term actions relate to long-term objectives. An inadequatereporting regimefailed to provide the managementinformationneededfor steering and supervisingsucha complex operation. ' 4.2 M&E utilization is ratedmodest, sincethe quantitative outputs reportedhave beenusedto informthe development ofthe thirdphaseo fthe Environment Support Program, now underway. The project reported on the achievements o fresults at the output level; however the quantitative achievementsreportedrelay nothing o fthe quality of the implementation o fthe activities, eventhough physical targets are reported as havingbeenexceeded. A few demonstrative examples are provided here: J+ Withinthe SustainableNRM(soil, forest cover, biodiversity) category, the project `measured' the numberofruralhouseholdswho participated inmini-projects: while 100,000 householdswere targeted, 389,600 householdswere actually reached. While the wider extension o fproject benefits is laudable, this type o f results reportingrelays nothingo fthe actual benefitsreceived, welfare gains, increasedawarenessor learning, or the sustainability o fthe servicesor benefits introducedbythe project. 17 9 Withinthesamecategory, thetendencytoreport onthenumberof"plans" drafted -suchaswatershedmanagementplans,communitydevelopmentplans,or numbero fprojects financed-is always inadequateinterms o fthe needto provide some evidenceo f outcome, or lack ofoutcome ifimplementation andor policyuptake is stalled. 9 UndertheForestryComponent, output indicators includequantitative targets (measured inha), such as "Area subject to managementtransfer intarget areas"; "Area undermanagement scheme"; and"Area under managementplans for classified forests." While only the first target inthis category was surpassed, the quantitative evidenceprovides no evidenceo fthe effects o fthe management transfer processor how the processtook place. While the last target was met exactly, again, the numerical outputs revealnothing o fthe processo f developing themanagementplansfor classifiedforests, howthis informationis sharedwith communities surrounding classified areas, or how encroachment is affectedbythe implementationofthese schemes. 9 UndertheNationalParksandEcotourismcategory, theresultsreportingreveals anddiscussionswith localhotelandparkstaffverifiedthat there hasbeenan increaseinthe numberof tourists. However, there are no indicators linkedto the level ofparkrevenues, the financial viability o fthe parks or ANGAP, the revenues allocatedto the villages, or how these revenues arebeingusedto help alleviate poverty andpromote sustainableuse o fnatural resources. 9 The categoryofenvironmental educationisperhapsmost suspectgiventhat a minimumreportingrequirement ofpresentingeducationresults requiressome analysis o f increasedlearning, awarenesswith the ultimate goal of achieving practical impact through changedbehavior. Reporting simply on the number o f curricula put inplace or attendanceratesreveals nothingabout the outcome or impact o fthis component. 5. Conclusions 5.1 Overall, ENVZI is rated moderately satisfactory. The Environment Support Program hasput inplace pro-environment policies and aregulatory andinstitutional fiamework to assist the country inreducing itshighlevels o f environmental degradation. The program has achieved notable gains, including: areductioninthe rate o fprimary forest loss inside the ProtectedAreas, a decreaseinthe use o fTavy andtherefore a reduction insoil erosion andan increaseinsoil quality andcrop yields inproject areas. However, lessonslearned fiom the soil andwater component prove that agricultural systemintensificationis a necessary,butnotsufficient, conditionto reduceslash- and-burnagriculture.More emphasis on landtenure security arrangements, improvedandenforcedslash-and-burn regulations, andbetter marketsto ensure adequatesupplies offoodstuffs at reasonableandpredictablepricesmaybe 18 necessaryto facilitate an increased adoption of conservation agriculture technologies. 5.2 EP11was implementedinan environment wrought with policyconstraints: the lack offull adoptionandimplementationo f forest, land, agriculture, andappropriate energypolicies stretchedthe program's mandateacross activities that targetedthe underlyingthreats of environmental degradation inMadagascar, namelyunproductive agriculture andillegal logging. Without greater economic intensification of land use and continued development of non-agricultural sources of incomes, the constraints that threatened EPI1will persist. Forest revenues are mainly raisedfrom unsustainable extractive activities while substantial revenue-generating potential from non-extractive products and environmentalservices remain unrealized. 5.3 EP IandI1createdand strengthened several new environmental agencies. Althoughresponsive, this strategy drained government Ministries andinstitutions ofkey staff. While some have spunoffto becomeindependent service providers, the financial viability of two key agencies -the NationalEnvironment Office and SAPM (formerly ANGAP) need to be strengthened. Likewise, the roles and responsibilities of the newly created agencies and the Ministry of Environment, Forests and Water have to be better clarified. While, the national environmental impact assessment(EIA) systemwas strengthenedthrough revision o flegislation andproduction o f seven sectoral guidelines, EMmonitoring andimplementationto date has not beenconductedina timely enoughmatter to improveproject design or environmental enforcement. 5.4 Regulation was improved through establishment ofthe national Forest Sector Observatory as an independent, multi-stakeholder watchdog to oversee the sector and identifyneededmanagementimprovements. Illegalandnonpayingconcessionswere either stoppedor cancelled andcontrols on logging andbiodiversity permits were tightened.However, since the NEAPand the Environment Support Programwere launched inthe early OS, Madagascar has lost about one million hectares of forest. Thistrend will be difficult to reverse ifsustainable ruraldevelopment is not supported. 5.5 While the Government o fMadagascarhas demonstratedits commitment toward appropriate environmental conservation, the rate o fexpansion o fProtectedAreas is outpacing government'sability to provide adequatelogistical support. Income fi-om tourism increasedmorethan six-fold in2001 due to a doubling o fthe numbero f ecotourists and an increaseinpark fees. However, increasedtourism revenueis insufficient to maintainthe Systemo fProtected Areas; increasedrevenues (50% o fwhich are to bedirected toward the communities through projects) have not significantly contributed to decreaserateso fruralpoverty around the protected areas. Newfinancing mechanismsmust befound to he@ cover operating and maintenance costs and expand sustainabletourismof theprotected areas. 19 6. Lessons 6.1 This Adjustable ProgramLoan(APL),tranched across sector investment loans over a 15-year periodproved conducive to institutional capacity strengtheningand environmental mainstreaming. Itrespondedto the time neededto achieve institutional andenforcement capacity to implementNEAPSthat require reformo fnational legislation, strategies, andpolicies for effective application. Its longer-term nature signaledbothBank andborrower commitment to operationalizing the NEAP. 6.2 Effective implementation of sectonvide assistanceprograms, such as NEAPS, require close donor coordination, particularly for amicro-project approach. Complex projects withmultipleimplementingagencies should use results-basedor performance- basedcontracts, rather thantraditional disbursement, as avehicle o fproject implementation. 6.3 A keylesson, internalizedmidwaythrough EP11, andcorrected for inEP111, is that unrealistic objectives andtargets canunderminethe credibilityo f aprogram. Unclear objectives combinedwithpoor M&Eoftenresults inaproblemproject. It i s essentialto give priority andadequateresourcesto establishing realistic objectives, development of the counterfactual, support o f good M&E, anddevelopment o fbenchmarks andbaselines to ensure accountability, evaluation, andlesson-learning. 6.4 The conservationofnaturalresourcescannotbeplannedinisolation. Coordination with other nationalprograms, especially rural development, i s critical. A project with a grandsuperstructure approachis less sustainablethaneffective implementationo f sector strategiesthat correct for environmental degradation. The decisionto support the creation andstrengthening ofnew environment agencies should bemadeintandemwith discussionsofrecurrent financing inthe long-term. 21 Annex A Annex A. BasicData Sheet SECONDMADAGASCARENVIRONMENTPROJECT(LOANNO.3886) Key ProjectData(amounts in US$million) Appralsal Actualor Actual 88 % Of estimate current estimate appraisalestimate IDA Credit 48.2 44.1 91.5 Government 29.7 16.6 55.9 Cofinance 77.1 65.05 84.4 Total project costs 155.0 125.75 81.1 CumulativeEstimatedandActualDisbursements woo ~~~ FY98 FY99 F Y O l FY02 FY03 FY04 Appraisal estimate(US$M) 2.9 9.6 15.6 21.7 27.6 29.9 29.8 Actual (US$M) 6.0 11.2 17.6 22.3 25.3 27.5 27.5 Actual as %of appraisal 206.9 116.7 112.9 102.8 91.7 92.0 92.0 ProjectDates Orjginal Actual Initiating memorandum 0511811995 Appraisal 06/01/1996 Boardapproval 01/99/1997 Effectiveness 02/01/1997 0611a1997 MidTerm Review 11/01/1999 05/29/2000 Closingdate 06/30/2002 06/30/2003 StaffInputs No. of Staff Weeks us$'ooo Identification1Preparation 6.0 24.0 AppraisaVNegotiations 11.0 44.0 Supervision 30.0' 120.0 ICR 13.0 56.0 Total 60.0 244.0 'USD.4,000 30 staff participatedinmissions(atan averageof 2 SWslstaff) + 6 SWsfor supervision with no mission;allat an average of per SW. Annex B 22 MissionData Date No. of Specializations lmplementation Development (month/year) persons represented progress , objectives Identification1 ow1911995 4 TTL-EnvironnentSpecialist, Preparation BiodiversitySpecialist, OperationsAnalyst, Marine EnvironmentSpecialist 0911211995 1 lTL-Environment Specialist 1112711995 1 Natural Resources Economist Appraisal1 0312211996 5 TTL- Env. Economist, Negotiations Info SystemsIMonitoring, Natural Resources Economist,Operations Analyst, Economist 0611811996 4 V L - Env. Economist, Info SystemsIMonitoring, Lawyer, Environment Specialist 0911611996 2 TTL- Env. Economist, Lawyer Supervision 1 12/12/1997 4 TTL- Env. Economist, Info S SystemsIMonitoring, Economist-MDS,Forester- MDS Supervision2 06/22/1998 4 TTL- Env. Economist,Env. Info S & Fin. Management,Env. Economist,Forester Supervision3 0411911999 3 ManagementInfo, Env. Specialist, MDS Economist -Env. S Supervision4 07/04/1999 2 TTL- Env. Economist,Env. S ManagementSpecialist Supervision5 11/24/1999 4 lTL- Env. Economist,Env. S Specialist, Env. Program Officer, Sociologist Supervision6 1Ill82000 3 TTL- Env. Economist, Env. S Specialist (2) Supervlsion7 03/24/2001 4 TTL- Env. Economist,EnvJlnfo S Systems Specialist, Env. Specialist, Env. Safeguards Specialist Supervision8 02/28/2002 3 FinancialManagement U Specialist, Procurement Specialist, ProgramAssistant Supervision9 09/06/2002 3 TTL- Env. Economist,Financial S ManagementSpecialist, ProcurementSpecialist 23 Annex A -~ __ _ _ _ _ _ Date No. of Specializations Implementation Development (month/year) persons represented progress objectives ~~ ICR 0511612003 2 TTL- Env. Economist, Env. Economist 07l27l2003 3 TTL- Env. Economist,Natural ResourcesMngtSpecialist, Env. Economist 11/14/2003 3 lTL- Env. Economist,Natural ResourcesMngtSpecialist, Env. Economist, Financial Specialist,Procurement Specialist,ProgramAssistant Consultant. PerformanceRating:S: Satisfactory;U: Unsatisfactory 25 Annex B Annex B. KeyIndicators OutcomeDmpactIndicators(targetsvs. actualat endofproject) Indicatorsandtargets per component at Target Actual restructuring Sustainablenaturalresourcesmanagement (soil, forest cover, biodiversity) Measures o f soil loss intarget areas under <12tihdyear From 1.6 to 8tihdyear conservation management Measureso feconomic benefits to families 10% +26% participating insoil conservation % ofhouseholdsapplying conservation 70% 26% still applying technologies after 2 years Forestry Tavy practice intarget areas %change 7% down from 13% Measureso fforest cover loss intarget areas 2 %/year 0.6% annual deforestation in the PASand 1% inClassified Forests NationalParksandEcotourism Measures o fbiodiversityintarget areas 0,62 0,74 Increasedmanagementquality o f 12 62% 41% protectedareas Illegal tavy practice in 12ProtectedAreas <0,8% 0, 34% inrain forest and0,49 in dry forest Environmental Policies, Instruments, InformationandProgramming Policy reformindex 100% 52% Systems inplace for environmental management, Index =90% 81% includingthose for transfer o fmanagement rightddecentralization. Annex B 26 OutputIndicators(targetsvs. actual at endofproject) Indicatorsand targetsper componentat restructuring Target Actual SustainableNRM(soil, forest cover,biodiversity) # o f conservation agriculture mini-projects 4,000 5,072 Area under direct conservation agriculture from miniprojects 32,000 ha 82,100 ha Measureso fruralhouseholds who have participated inmini- 100,000 389,600 projects Watershedmgmtplans createdfor X # Ha 5,000 ha 6,900 ha # o f communal development plan 20 44 Families outside project adopting techniques 50,000 75,140 # o fprojects financed by FORAGE 35 18 Forestry/NaturalResources Area subject to managementtransfer intarget areas 150,000 ha 174,132 ha Area under management scheme 400,000 ha 320,000 ha Area under managementplansfor classified forests 180,000 ha 180,000 ha NationalParksandEcotourism # o fprotectedareas managedby ANGAP 39 38 # o fvisitors 368,500 410,023 # o f interpretation centers 8 5 EnvironmentalManagementSupportServices (SAGE) # o fpilot integratedmanagementplans (marine/ coastal) 2 7 completedwithlessonslearned for wider replication Area under relative landtenure security 120,000 ha 109,000 ha Nationallevel spatial managementplandeveloped (marine and 80% 100% coastalzone ) Marine protected areas with plan 4 5 # o foperational participative multi-local structures 6 15 Policy, Instruments,Information,andProgramming #(PIIGE) Environmental policies developed and adopted 11 6 # o ftargeted (sectoral) policies harmonized withEIA system 9 5 # o f EIAsprocessed 145 103 # o foperational environmental units createdindifferent sectors 24 14 # o fenvironmental information sub-systems (dashboards) 1 4 # o fconvention ratified 7 7 EnvironmentalEducation Environmental education activities reinforced 80% 80% # o f curricula inplace 3 4 # o f students attending courses 1200 1387 (staff, trainers, graduates) 27 Annex B OriginalComponents Originally, EP2had fourteen componentsorganizedinthree sets o f activities: (i) operations; field (ii) activities;and(iii) activities. strategic support Set I.FieldOperations: Fieldoperations involvedthe following four components. Sub-set 1. SpecializedSub-sector Activities(corresponding to about 80% ofEP2cost) Component 1. SustainableSoil andWater Management(ANAE)(US$43.5 million) The focus o fthis component was the implementation o f4,000 community level mini-projects on soil, water and landmanagement.The implementing agency for the component was ANAE. Component2. Multiple-useForestEcosystemManagement(ESFUM )(US$29.9 million) The focus o fthis component was improving management o f gazetted forest reservesand community forests as well as reorganization andstrengthening o fthe forestry department. The implementing agency for the component was the forestry department. Component3. NationalParksandEcotourism(CAPE) (US$43.1million) The focus o fthis component was expandingthe protected areanetwork and improvingthe capacity for their management. The implementing agency for the component was the national park service (MAE). Component4. MarineandCoastalEnvironment(JEMC)(US$6.6 million) The focus o fthis component was formulating o fpolicies for managemento fcoastal andmarine zones andimprovement o fthe relevant legal framework. Sub-set2, RegionalProgrammingandLocalManagement(AGIR) This sub-set comprised the following three components: Component 5. Supportto LocalNaturalResourceManagementandLandTenureSecurity (GELOSE) (US$6.9 million) The focus o fthis component was to set-up the appropriate legal andregulatory framework for the transfer ofmanagementfrom stateto communities, andtest the implementation o fthe management transfer for about 150-200villages. Component6. Supportto RegionalProgrammingandSpatialAnalysis (AGERAS) (US$4.3 million) The focus o fthis component was establishing six regionaltechnical units to provide support to EP2 Regional Programming Committees (RPCs), andto formulate local environmental strategies and sub-projects financed bythe Regional Fund. Component7. RegionalFundfor EnvironmentalManagement(FORAGE) (US$3.3 million) The focus o fthis component was to fmance environmental managementactivities onademand-driven basis. Annex B 28 Set II.StrategicActivities (US$4.2 million): This set had the following two components: Component 8. Upgradingofthe LegalFrameworkandFormulationofEnvironmentalPolicies (US$2.8 million) This component includedupgrading o fthe legalandregulatory fiamework and development and adoption ofenvironmentalpolicies, strategies and instruments. Component 9. AssistingSector MinistriesinImplementingPoliciesandMaking EnvironmentalImpactAssessment@IA) Operational(US$1.4 million) This component focusedon strengthening EL4regulations andproceduresand establishment of environmental units within the sectoralministries. Set III. Activities Support This set hadthe following five components : Component 10.Research(US$2.5 million) The focus o fthis componentwas to establish aresearchcoordination committee to identify priority researchareas and support applied environmental andbiodiversity research.The implementing agency for the componentwas ONE. Component 11.EducationandTraining(US$2.0 million) The focus o fthis component was to improve the environmental content ingeneral education, as well as invocational training. The implementingagency for this component was CFSIGE. Component 12. GeographicInstruments(US$1.2million) The focus o fthis componentwas to buildgeographic informationsystem(GIS) capacity to produce key geographic information. The implementingagency ofthis component was FTM. Component 13.EnvironmentalInformationSystem(US$1.7 million) The component focused onbuildingcapacity o fvarious environmental management agenciesto produce and exchangeinformationnecessaryfor informedenvironmental management. Component 14. Communication, Monitoring,Evaluation,ProgramCoordinationand Management(US$5.8 million) The focus o f this component was to support operation o fONE and other coordinating bodies such as the National Environment Council andthe Interministerial and Steering Committees. RevisedComponents Restructuring and simplificationo fthe project in2001resultedinregrouping andreducing the original componentsinto the following four revised components: Component 1.SustainableSoil andWater ManagementinPriorityTarget Zones (US$29.53 million) Component 1after project restructuring remainedas originally designed. Itfocused on increasing the capacity o fthe ruralpopulation to sustainably managenatural resources,particularly land(soil) andwater. The maininterventions underthe component were 4,000 community and family mini- projects in500 target communes (districts). Itincludedthe establishment o fwatershed management schemes. 29 AnnexB Component2. ForestEco-systemsManagement(US$24.02 million) Component 2 after projectrestructuring remainedas originally designed. It focused on improving the managemento f forest ecosystemsby transferring about 150,000 hectares of forests under the managementto the communities andbringingabout 580,000 hectaresof forests under multiple-use managementschemes. Component3. ProtectedAreas Management(US$56.93 million) Component 3 after projectrestructuring remainedas originally designed. It focused onexpanding theprotectedareasystemto achievemorecomprehensiveprotectiono fMadagascar's representative ecosystems.It also focused on improvingprotected areas management through institutional strengtheningo f the managementagency (ANGAP) and through greater involvement o f communities. Component4. EnvironmentalPoliciesandInstitutions(US$39.36 million) Component 4 underwent significant changes duringproject restructuring. The revisedcomponent took over key activities o fseveral original components, includingthe Environmental Information Systemcomponent, EMcomponent, and Environmental Education component. The thrust o fthe revisedcomponent 4 was to (i) develop a legal andregulatory framework for environmental to management; and (ii) to strengthenregional environmental planning andmanagement includingthe EnvironmentManagement Support ServicesAgency (SAGE). The relationship between the original andrevisedcomponents is summarized inthe following table. ORIGINAL COMPONENTS CHANGEAT RESTRUCTURING REVISEDCOMPONENTS (ImplementingAgency) (ImplementingAgency) Component1 RevisedComponent7 Sustainable Soil and Water Transformed intothe revised SustainableSoil andWater Management(ANAE) Component 1 Managementin PriorityTarget Zones USD29.53million(ANAE) USD43.5 Million Component2 RevisedComponent2 Multiple-use ForestEcosystem Transformed intothe revised MultipleUse ForestEm-system Management(ESFUM) Component2 Management USD 29.9 million(ForestryDepartment) USD24.02 million(Forestry Department) Component3 Revised Component3 NationalParksand Emtourism(CAPE) Transformed intothe revised ProtectedAreas Management USD43.1 million(ANGAP) Component3 USD 56.93 million (ANGAP) Component4 Marineand CoastalEnvironment(EMC) Partlyabsorbed under the revised USD6.6 million(ONE) Component4, implementedby Services d'AppuiB la Gestionde I'Environnement (SAGE) Component5 Support to LocalNaturalResource Partlyabsorbed under the revised Managementand LandTenure Security Component4, implemented by SAGE; (GELOSE)USD6.9 million(ONE, Land LandTenure Departmentactivities Tenure Department) dropped Component6 Supportto RegionalProgrammingand Partlyabsorbedunder the revised SpatialAnalysis (AGERAS) Component4, implementedbySAGE USD4.3 million (ONE) Annex B 30 ORIGINALCOMPONENTS CHANGE AT RESTRUCTURING REVISEDCOMPONENTS (ImplementingAgency) (ImplementingAgency) Component7 RegionalFundfor Environmental Dropped Management(FORAGE) USD3.3 million(ANAE) Component8 RevisedComponent4 Upgradingof the LegalFramework and Transformed intothe revisedComponent EnvironmentalPoliciesand Formulationof EnvironmentalPolicies 4, implementedby ONE and MOE Institutions USD2.8 million(ONE) USD 39.36 million(ONE) Component9 AssistingSector Ministriesin Partlyabsorbed underthe revised implementingPoliciesand Making Component4, implementedby ONE and EnvironmentalImpactAssessment MOE OperationalUSD 1.4 million(ONE ) Component10 Research Partly absorbed underthe revised USD2.5 million (ONE) Component4, implementedby SAGE Component11 Education-Training Thematictraining and its implementing USD2 million(CFSIGE) agency,CFSIGE,dropped. Environmental Educationabsorbed underthe revisedComponent4, implementedby MOE Component12 GeographicInstruments Dropped USD 1.2 million (FTM) Component13 EnvironmentalInformationSystem Partlyabsorbed under the revised USD 1.7 million (ONE) Component4, implementedby ONE Component14 Communication,Monitoring, Evaluation, Partlyabsorbed underthe revised ProgramCoordinationand Management Component4, implementedby ONE USD5.8 million (ONE) 31 Annex B PROJECT COSTS AND FINANCING Table 1.Project Cost by components (US$million) Estlmake nt Actual P m t a p e w-illr Adual o f ertruEturil? 112.6 56.93 5247 92.17% 39.7 24.02 m94 87.16% 17.1 29.53 25.67 86.94% 29.5 1041 39.3 6 24,70 62.75% 6.1 13.1 6.3 3.8 3.0 3.9 24 1A 11.8 2 2 1.8 1.1 1.5 s a 2 141.3 6'4 7.3 1SS.O 149.84 123.76 62.6% Annex B 32 Table 2. Project Financing by component I (a3I I 18.0 15.5 2.6 7.44 I -I I Table 3. Project co-financing by component (US$ million) 1/ Does notinclude AFD andCIRAD under French co-financing 33 Annex B Table 4. Madagascar PRSCMatrix for the environment and natural resources PRSC-1 PRSC-2 PRSC-3 Expected results 2003-June 2004 Jul2004-Mar 2005 Apr 2005-Dec 2005 Institutionalreformto Establishmentof ANGEF becomes Improvedforest separateforestry NationalManagement operational sector regulationfrom forestry Agency for Water and governance. operations. Forests(ANGEF). Reformsto forest Pilotingof long-term Forestexploitation Transparentand- exploitation:(i) permitssystem, and movesto a efficientforest maintainingban on implementationof competitivebidding exploitation. unfinished precious forest zoning. system wood productexports; (ii) publicationof forest exploitationpermits; (iii) eliminationof non- competitivepermit allocation. New FoundationLaw on Creationof the FAPBis fully Protectedarea the environmentis Foundationfor operational. system placedon presentedto Parliament. ProtectedAreas and a more sustainable Biodiversity(FAPB). footing. Decreeestablishesa Sector ministriesare I EIA of Dublic Increased one-stop-shopfor given budgetto carry investment is complianceof both applicationof EIA out EIA of public routinelycarried out. publicand private legislation(MECIE). investments. investmentswith EIA legislation. Establishmentof a Publicationof Public investment Communes are reliableforest and brush complianceof programs reward given incentivesto fire detectionsystem. communeswith forest complying controlforest and fire control legislation. communes. brushfires. 35 Annex C Annex C. PersonsMet Governmentof Madagascar and Parastatal Organizations RABOTOARISON CharlesSylvain Ministrede I'Environnement RABENEVANANA Man-Wai Director IHSM RAJAOBELISON Joel Director INFTN General Director Environment, Ministry of the RAKOTOARISOA, Jacqueline Environmentand Forestry RAKOTOARYJean Chrysostome GeneralDirector ONE RAKOTONDRALAMBO, Andrianntahina DirectorGeneral, ANAE RAKOTONDRASATA Roland Nationalcoordinator OLEP RAMANGASONGuy Suzon General Director,ANGAP RAMAROKOTO Jeannine DirectorPFGD RAMIARISON Claudine ExecutiveDirector SAGE RANAIVOMANANA Lala Director Panning ONE Head HydrogeologyLaboratory,Tana RANAIVOARISOA Alfred University RANDRIANARIVELO Odon CirconscriptionChief MEEF Toliara RASOANIRINA Jocelyne Head SAGE Toliara RASOAVAHINY Laurette MEEF, Coordinator ProtectedAreas System CoordinatorPE3, CELCO, Ministryof the RAZAFINDRALAMBO, Guy Environmentand Forestry RAZAFINDRAZAKA Benjamin GeneralDirector ANDEA RAZAUAVictor DIREP, Chief forestry services Toliara RAZANAKA Samuel Ecologist, Enseignant ChercheurCNRE Tana Biotechnologyand Genetics, Enseignat- REFENO Germain Chercheur CNRE Antanarivo REJOFIEMTEMA Felicite Director MEEF Toliara TSARAMILA Jean-Claude Chef de Cantonnement MEEF Toliara TSITOHERY Avison Andre Chef de RegionAfsimo Andrefana Privatesector andNon-Governmental Organizations ANDRIAMAHENINA Fenosoa Tany Meva Foundation, Executif Director KFW andAHT GroupAG, Anti-Erosion ANRIAMANANJARA Naivo Programme BERNER Pierre Tropecol, EnvironmentalConsultant HAWKINS Franck DirectorConservation International MaireAnkililoaka and President Regional LAMARRE PierreJean-Marie Committee SW PADDACK, Jean-Paul Regionalrepresentative,WWF RegionalVice President, Conservation RAJAOBELINA Leon International RAKOTOARISOAJacqueline Kraomita Chair RAKOTOBE Oliva Tany Meva Foundation, program Dept.Head RAKOTOMALAZAPierr-Jules HeadWWF Toliara RAKOTOVAOSolohery EnvironmentalConsultant RASOANAIVO NyAndomahefa CoordinatorFiaraction AnnexC 36 Donor Organizations Coop6ration Franqaise, Conseiller du BELVAUX Eric Directeur MMEF GAYLORD, Lisa RuralSector and Environment, USAID KECKAndrew ProjectChief, MEEF Dept.of Forestry, USAID RAMAROJAONAPatricia Director EnvironmentProgramUNDP RANDRIAMIHARISOA,Delphin EnvironmentOfficer, EU Delegation Cooperation Francaise,conseillerTechnique SENDRANE Isabelle aupres de la DG Foret du MEEF Program Director Protectionet Gestion Durable des RessourcesNaturelles, SIEGE Ludwig Gesellschaftfur TechnischeZusammenarbeit WorldBank Staff and Consultants*Interviewedin Madagascar BETTENCOURT,Sophia Lead ESSDin Madagascar BIDANI, Benu Lead Economist BOND, James P. Country Director CARRET Jean Christophe Sr. Natural ResourcesEconomist FENO, Paul-Jean Safeguards Officer HEIDENHOF, GUnter Governance MINTEN, Bart Principal, Cornell University PFEIFFER,Hermann Consultant,WatershedmanagementProject RAJAOBELISON Rondro ESSD ProgramAssistant RAJAONSON, Bienvenu Senior EnvironmentalSpecialist RANDRIANJOHARY, Alain Pierre Program Officer, Secretariat Multibailleur RAZAFIARISON, Ziva RuralDevelopmentSpecialist including Bank-financedconsultants. 37 AnnexD Annex D. Commentsfromthe Borrower To: Abarbu@worldbank. org From: Razanamanana Date: 05/18/2007 05:02 AM Subject: Madagascar: Madagascar:Projet Environnement, PhaseII(Cr6dit N"009) Rapport d'6valuation Monsieur Alain Barbu, ChefDivisionde 1'Evaluation Endousremerciant dem'avoir adress6unucopie dece document,j'ai l'honneur devous faire parvenir les quelques lignes suivantes, si ce n'est pashors du sujet. Je voudrais suggkrer d'orienter le Projet Environnement vers le Dkv6loppement durable,lequel semble btren6glig6. A monhumbleavis, laquestionpos6eauparagrahe4.2(Page 19) de cerapport m6rited'btre approfondie: "a t-on dtabli la capacit6 B assurer l'bducation des gknbratioons htures?" Eneffet, ces 15 dernibresannkes, de grandsprojets environnementaux ont 6t6 dbvkloppb B Madagascar... et les r6sultats&ant ceux qu'ils sont; mais quidde l'avenir ou des g6n6rations futures! Autrement dit, leurs impacts tiennent-ils pleinement compte des besoins des gknkrations fbtures?Alapage 21, ila 6t6 sugg6r6 de "rechercher de nouveaux m6canismes de financements, et de d6v6lopperdurablement l'activit6 touristique dans les A.P".Ces projets de tourisme durable pourrait btre des projets Pilotes et servir de modbles pour tout Madagascar avec les encadrementsnkcessaires.Avec l'adhbsion et auprofit de tous les acteurs concern6s( communautkslocale, visiteurs, professionnels,etc...),lesprojets touristiques permettraient d'exploiter laprbervationde l'environnement auprofit de Tous, car nous preservonsnonpas -seulementpour leplaisir de prkserver! Ainsi, unguide d'investissement devrait btre6labor6 et mis B ladisposition de ceux qui veulent s'installer dansouautour des A.P. - Des campagnes de sensibilisation seraient egalementlanc6espour mobiliser les acteurs concernbs. - Parallblement, 1'6ducationne devrait pas btrenegligee. L'objectifprincipal en est que les projets environermenntaux ne soient pas seulement des chargespour les gtnkrations futures( car certaineschargesreviennent A eux), maisque celles- ci profiteront 6galement de leurs impacts bconomiques, sociaux et ,6videmment, environnementaux . Dbv6loppement durable oblige! Vous remerciant de votre comprkhension,j e vous prie de croire, Monsieur, B l'assurance de ma consid6ration distingu6e. MmeRakotomanana-Razanamanana, Charg6ed'6tudes auMinistbre des transports et dutourisme Annex D 38 UnofficialEnglishTranslation Mr.AlainBarbu, Manager, Department o f Evaluation Iampleasedtoprovideyouwithmycommentsontheabove-mentionedreportwhichwasshared withme. Iwouldsuggestdirectinfiinking EnvironmentRojecttowardssustainabledevelopmentwhichseems to have been neglected. According to me, the questionraised inparagraph 4.2 inpage 19 o fthe report is worthy o fbeing further detailed:"has somethingbeendoneto ensureaproper transfer of(knowledge) educationto future generations." Indeed, inthe last 15 years, some important environmental projects were developed in Madagascar.. .and we have seen the results inthe ground. However, there is a real concern about the fut;re o f the generationsto come. Inother words, will the traditional environment projects have any impact at all on fbture generations' needs? Inpage 21it was suggestedto "look for new financing mechanisms, andto develop, ina sustainableway, tourism activities inthe AP". Those sustainable eco-tourism projects couldbe set upas pilot projects andbeused, later on, as standard projects throughout Madagascarwith the appropriate supervision mechanisms. With the support o fall involvedparties (local communities, visitors, professional staff, etc.. .) who will take benefit fiom them, the eco-tourism projects' main objective would be to properlypreserve the environment for All whileprovidingsound activities to tourists. Therefore, Iwould like to propose the following steps: - to develop an investment plan (or framework) to bemade available to potentialinvestors inand -- around the AP; to start promotion campaigns to rally all involvedparties; andfinally to promote eco-tourism while educating people about environment (certainly income-generation activities butpreservation ofenvironment first) through IEC (Information, Education and Communication). The main objective is to ensurethat hture generationstake advantage o f environmental and socio- economic impact o f environmental projects andnot the opposite becauseifnot well designed environment projects canbe a burdendue to related environment services cost). These are some perspective on sustainabledevelopment. Ithankyouforyourcomprehension. Yours Sincerely, Ms.Rakotomanana-Razanamanana, Responsible ofthe Department Studies MinistryofTransportation andTourism