Documentof The World Bank FOROFFICIAL USEONLY ReportNo: 43048-LAC PROJECTDOCUMENT ONA PROPOSEDGRANT GLOBAL ENVIRONMENTFACILITY TRUST FUND INTHEAGGREGATEAMOUNTUPTOUSD$2.903 MILLION FORTHE REGIONALPROJECT INSUPPORTOF THE FIRSTPHASEOF THEUS$20.8 MILLION GEF SUSTAINABLETRANSPORTAND AIR QUALITY PROGRAM September 25,2008 SustainableDevelopmentDepartment LatinAmerica andthe CaribbeanRegion This document has a restricteddistribution and may be used by recipients only in the performance of their official duties.Its contents may notbe otherwisedisclosedwithout World Bank authorization. CURRENCY EQUIVALENTS (ExchangeRate Effective {Date}) CurrencyUnit = USD = USDl USD = SDR1 FISCAL YEAR January 1 - December31 ABBREVIATIONS AND ACRONYMS ANTP BrazilianNationalPublic Transport Association ASIF Activity, Structure, Intensity,and Fuel Choice APO Adaptable ProgramOperation BRT Bus Rapid Transit CAI-LAC Clean Air Initiative for Latin American Cities CAS Country Assistance Strategy CDM Clean DevelopmentMechanism CNG CompressedNaturalGas co CarbonMonoxide c02 Carbon Dioxide COPPE Coordinationof Post-GraduationPrograms in Engineering EA Environmental Assessment EMBARQ The WRI Center for SustainableTransport EMP Environmental ManagementPlan ESMF Environmental and Social Framework GEF Global EnvironmentalFacility GHG Greenhouse Gas GTZ Gesellschaft fiir TechnischeZusammenarbeit I-ce Interface for Cycling Expertise IEA InternationalEnergy Agency IES IntegratedEnvironmentalStrategies IIASA InternationalInstitutefor Applied Systems Analysis ITDP Institutefor Transportation and DevelopmentPolicy MTS Mass Transit System NEA National ExecutingAgency NMT Non-motorizedTransport NOx NitrogenOxides NREL NationalRenewable Energy Laboratory OP11 Operational Program# 11of GEF PAD Project AppraisalDocument PM Particulate Matter FOR OFFICIAL USE ONLY PMlO Particulate Matter less than 10 microns' diameter PUC PontificalCatholic University SEDESOL Mexico Secretary of Social Development SIL Specific Investment Loan STAQ Sustainable Transport and Air Quality SUMA Sustainable Urban Mobility in Asia SUSTRAN Sustainable Transport Action Network SUTP Sustainable Urban Transport Project uc University of California UFRJ FederalUniversityof Rio de Janeiro UITP InternationalAssociation of Public Transport UNDP UnitedNations Development Programme UNEP UnitedNationsEnvironmentProgramme USP Universityof S8o Paulo VKT Vehicle KilometersTraveled WRI World Resources Institute Vice President: Pamela Cox Country ManagedDirector: Laura Tuck Sector Manager: Jose Luis Irigoyen Task Team Leader: Paul Procee This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not be otherwise disclosed without World Bank authorization. LATINAMERICA GEF SUSTAINABLE TRANSPORT AND AIR QUALITY PROGRAM CONTENTS Page A. STRATEGIC CONTEXT AND RATIONALE ................................................................... i 1. Country and sector issues .................................................................................................... 3 2. Rationale for Bank involvement......................................................................................... -6 B. PROGRAM DESCRIPTION ............................................................................................... 7 1. Grant instruments............................................................................................................... -7 2. Program and Project Objectives .......................................................................................... 8 3. Description o f the Projects that compose the Program...................................................... 10 4. Lessons Learnedand Incorporatedinthe Program Design............................................... 14 5. Alternatives considered and reasons for rejection............................................................. 16 C. IMPLEMENTATION ......................................................................................................... 17 1. Partnership arrangements .................................................................................................. 17 2. Institutional and implementationarrangements ............................................................... -17 3. Monitoring and evaluation o f outcomes/results ................................................................ 19 4. Sustainability ..................................................................................................................... 20 5. Critical risks and possible controversial aspects ............................................................... 21 6. Conditions for Negotiations and Effectiveness ................................................................. 22 D APPRAISAL SUMMARY . .................................................................................................. 22 1. Economic. financial and fiscal analyses ............................................................................ 22 2. Technical .......................................................................................................................... -23 3. Fiduciary............................................................................................................................ 23 4. Social ................................................................................................................................. 24 5. Environment ...................................................................................................................... 24 Annex 1: Country and Sector or ProgramBackground .......................................................... 26 Annex 2: Major RelatedProjectsFinancedby the Bank and/or other Agencies ..................30 Annex 3: ResultsFrameworkand Monitoring ......................................................................... 32 Annex 4: DetailedProgramDescription ................................................................................... 40 Annex 5: ImplementationArrangements .................................................................................. 56 Annex 6: FinancialManagementand DisbursementArrangements ..................................... 64 Annex 7: ProcurementArrangements ....................................................................................... 70 Annex 8: EconomicAnalysis ...................................................................................................... 74 Annex 9: SafeguardPolicy Issues ............................................................................................... 91 Annex 10: ProgramPreparationand Supervision ................................................................... 92 Annex 11: Documentsin the ProgramFile ............................................................................... 93 Annex 12: IncrementalCost Analysis ........................................................................................ 94 Annex 13: STAP RosterReview ............................................................................................... 105 Annex 14: SpecificAnnexes by Country: Sector Issues. Eligibility. and Consistency with CAS ............................................................................................................................................. 136 1 ARGENTINA...................................................................................................................... . 136 2. BRAZIL............................................................................................................................... 138 3. MEXICO ............................................................................................................................. 141 Annex 15: SelectionProcess for Proposalsto be includedin Component2 ........................ 144 Annex 16: Citiesthat submittedproposalsto be includedin Component2 ........................ 147 REGIONAL SUSTAINABLE TRANSPORT AND AIR QUALITY PROJECTAPPRAISAL DOCUMENT GEF GRANT LATIN AMERICA AND THE CARIBBEANREGION Date: August 25, 2008 Team Leader: Paul Procee Sector Director: Laura Tuck Sectors: Road and Transport Sector Project ID: PO96017 Environmental screening category: B LendingInstrument: GEF Grant 1 [ ] Loan [ 3 Credit [XI Grant [ ] Guarantee [ 3 Other: Source GEF 1 Counterpart I Total Responsible Agency: C A I Clean Air Institute - Expected effectiveness date: December, 2008 Expected closing date: December, 2012 Does the project depart from the CAS incontent or other significant respects? Ref: PADA.3 []Yes [XINO d Does the project require any exceptions from Bank policies? Re$ PAD E [ ]Yes [XINO Have these been approved by Bank management? [ ]Yes cIN0 I s approval for any policy exception sought from the Board? [ ]Yes [XINO 1 Does the project include any critical risks rated "substantial" or "high"? Ref: PAD C.5 [ ]Yes [XINO Does the project meet the Regional criteria for readiness for implementation? Ref: PAD E [XIYes [ ] N o Project development objective Ref: PAD B.2, Technical Annex 3 The project has been structured as a part o f the Regional GEF Program consisting o f four operations, one at the Regional level and three in the following countries: Argentina, Brazil and Mexico having a common focus in: (i)reducing GHG emissions growth rates through the promotion o f an increase in the patronage o f less energy intensive transport modes in cities; and (ii)inducingpolicychangesinfavorofsustainabletransportprojects. Project descriptionRef: PAD B.3, TechnicalAnnex 4 The Regional Project which will deepen the knowledge base regarding climate change issues related to the transport sector, develop a framework for knowledge exchange, foster a multi- sectoral policy dialogue on climate change and transport related issues; and, analyze, compare and disseminate lessons learned from pilot investments inthe 11 cities participating inthe program. The Regional Project is divided into four operational components: (1) Assessment of Environmental Benefits and Co-Benefits o f Transport Interventions, (2) Institutional Strengthening, (3) Policy Dialogue at Regional and National Level, and (4) Program Management and Monitoring. These components will function in complementary fashion towards the achievement o f each o f the three main development objectives stated above. While subcomponents 1, 2 and 3 are designed to satisfy the needs o f the 11 cities directly participating in the Program, their products and processes are open to all Latin American cities. Subcomponent 4 i s more tightly focused on the 11 cities directly participating in the Program, for it addresses project administration concerns. Annex 4 provides a more detailed description o f the Regional Project, as well as the overall STAQ Program. Which safeguard policies are triggered, if any? Re$ PAD D.6, TechnicalAnnex I O This Regional project does not trigger any environmental or social safeguards. Each country specific project will have their own safeguard management plan. Significant, non-standard conditions, if any, for: Ref: PAD E Board presentation: None Effectiveness Conditions: (i)Finalizingthedraftoperationalmanual. (ii) signingofaparticipationagreementwithoneNationalExecutingAgency. The .. 11 A. STRATEGIC CONTEXT AND RATIONALE 1. Countryand sector issues Climate Change and Urban Transport Nexus 1. The transport sector i s currently responsible for more than one-third of the carbon dioxide (C02) emissions in Latin America, and i s the fastest growing sector. The International Energy Agency projects that C02 emissions from vehicles will increase by a factor of 2.4 (or 140%); from about 4.6 gigatonnes in 2000 to 11.2 in 2050. The vast majority of this increase will take place in developing regions, especially Latin America and Asia, as a result of increasedmotorization and vehicle use. 2. At the same time, Latin American cities are rapidly growing. About 75% of Latin Americans currently live in urban areas and this is where most of the vehicle kilometers of travel (VKT) occur. Urban transport, therefore, represents a key sector for long-run GHG mitigation efforts in Latin America. The increased use of cars and motor vehicles not only generates additional GHG emissions, but also results in growing air pollution and associated health impacts, increased congestion, more accidents and reduced competitiveness of cities. While most cities still feature a considerable share of walking and public transport trips, car ownership and use are expected to continue increasing with economic and population growth. In addition, cities in Latin America are expanding and sprawling rapidly as the mobility needs are being primarily satisfied by a growing reliance on individual motor vehicles while public transit systems are of low quality, further increasing emissions and reducing energy efficiency. The poor are the most affected as they rely solely on public and non-motorized transport for their mobility, while investments are increasingly directed to infrastructure that mainly benefits wealthier car users. 3. To mitigate GHG emissions from the transport sector it i s important to mainstream environmental concerns into sectoral policies, programs, and investments. This can most effectively be accomplished by linking these efforts to the Bank's extensive participation with governments throughout Latin America in the development and execution of transport sector initiatives within key urban areas of the region, thus leveraging these significant investments to attain global environmental benefits while ensuring that other developmental goals are also met. Opportunityfor sustainable transport and sound land-useplanning 4. There exists a strong foundation upon which to combat the perilous trend of growth in unsustainable and energy intensive transport in Latin America. Despite the rapid growth in vehicle numbers, most Latin American cities are not yet locked into absolute automobile dependence. The current average car ownership levels of 100 vehicles per 1,000 inhabitants in Latin America are still low compared to international standards and thus provide a great opportunity for maintaining the current modal split by implementing 3 policies and measures that reduce growth o f private vehicle use in cities while creating incentives for public and non-motorized transport. 5. Cities are all but consolidated in Latin America at relatively high levels o f population density, especially near city centers, which represents a powerful asset when applying transit oriented planning and sustainable transport towards reducing climate change concerns and addressing local health and economic needs. Some urban centers have successfully implemented sustainable transport programs, like Bogota and Curitiba, but barriers still prevail in most urban areas that prevent the successful implementation o f a systematic and effective approach to reduce energy intensity o f transport systems and create more livable cities. Sustainable transport policies, which promote cleaner and more efficient public and freight transport; foster non-motorized transport as a viable and safe transport option; enhance modal inter-connectivity; and coordinate land-use and transport planning to reduce the average trip length and facilitate modal shift, when applied will have important additional benefits on the local economy, environm'entand society. Strategic Approach 6. The GEF Sustainable Transport and Air Quality Program (STAQ Program) is divided into a Regional Project and three separate Country Projects, one in Argentina, Brazil and Mexico, respectively. This Program has been specifically designed to link directly with ongoing or planned Bank transport initiatives with key cities within each o f these countries, thus leveraging these significant investments to attain global environmental benefits while ensuring the attainment o f other developmental goals. The Regional Project, which i s the main focus o f this PAD, supports the goals o f the overall STAQ Program by ensuring (i)the expansion o f the knowledge base in the region on climate change and transport related issues; (ii)increased knowledge-sharing across countries and cities in the entire Latin American Region; (iii)coordination and cooperation amongst GEF Implementing and Executing Agencies, financing institutions and other organizations engaged in sustainable transport investments in the region;. and (iv) the fostering o f policies and guidelinesto promote more energy efficient and climate friendly transport systems in the cities of the region. The STAQ Program, through the Regional Project, will have an impact beyond the three countries and 11 cities formally participating and should leverage interest and demand for additional investmentsinthese and other cities and countries in Latin America. The products and processes of the Regional Project will be open to the direct participation o f all interested Latin American cities, allowing them access to vital lessons learned throughout the entire Program towards properly starting their own initiatives. The resulting increases in demand for resources and technical assistance will create opportunities for other donors, technical agencies and governments to participate with resources under a commonly agreed upon framework for sustainable transport. Thus, the STAQ Program has the real potential o f growing as other cities and countries participate, and other funds are raised. 7. The Country Projects will include technical assistance and pilot investments aimed at introducing and developing sustainable transport initiatives towards promoting the clean air agenda in each participating city, which will provide valuable lessons to inform and 4 develop appropriate policies at a national level. Separate Project Appraisal Documents prepared for each Country Project will provide detailed descriptions o f their respective project and sub-projects. Barriers Removal 8. The STAQ Program will address the most common barriers that exist at the city and national level to implementing sustainable transport practices in Latin America, including those detailed in the following paragraphs. The Regional Project will address these barriers in its role o f supporting the STAQ Program. Both its general technical supervision and standalone activities, which will focus on initiatives at the national and regional level, will be simultaneously performed with and complement those activities contained in the Country Projects, which will focus on investments and policies at the local level. (i) Institutional Barriers. Current institutions in charge o f transport and land-use planning often lack the required capacity and interest to promote sustainable transport; to develop regulatory frameworks, plans, or policies and implement them. In general, decision making i s fragmented and there i s no mechanism to coordinate transport, environment and urban planning activities, and these consequently normally follow different incentives and implementation timeframes. Transport operators are often informal and lack the capacity to put into practice business models that provide better economic returns while addressing local and global needs for efficiency and equity. (ii) Regulatory Barriers. Existing regulations often pose obstacles for institutional coordination, private sector participation, or even for adopting sustainable transport measures. Examples o f these barriers are the difficulties experienced by cities to impose vehicle traffic restrictions, financial and regulatory obstacles to introduce cleaner technologies and fuels, the lack o f public transport regulations. Adopting or deepening these mechanisms often require new legislative frameworks. For example, a law to allow congestion charging in Santiago has been pending Congress approval for years. Proper land-use plans require proper legislative frameworks; that i s the case o f areas around transport terminals and degraded areas in urban centers which cannot be densified or re- developed, respectively, for housing, commerce, or entertainment due to existing restrictions on land use. (iii)Financial barriers, Inmany cases, these are linked to the institutional and regulatory barriers. There i s a notorious lack o f resources at the local level to invest in sustainable transport projects. Private investors seldom take financial risks in the absence o f proper regulation, and institutional capacity to guarantee enforcement. In many cases, it is necessary to help develop the right incentives to bring the required resources. As per the government's resources, it i s more a matter o f adequate priority setting and the strengthening o f institutions to support the case for better sustainable transport with financing and economy planning agencies. To promote better transit oriented development, or for BRTs, pilot cases and good business development will have to prove 5 that costs cannot only be recovered but also that sustainable transport may bring about net economic gains. Links between land use planning and economic development related to infrastructure development and improved accessibility have to be explored under the project and provide a basis for generating resources at the local level and foster public- private partnerships. Besides, cleaner technologies and alternative fuels require good business models and incentives at the national level. At the international level, there is a lack o f coordination amongst international donors, and in many cases resources overlap and often counteract each other. Proper coordination will ensure better use o f resources, and their use to support common development agendas. (iv) Technical barriers. Many cities and stakeholders lack the capacity to design cost-, effective policies, implement sound projects and monitor effectiveness. Demonstration projects will help develop the capacity o f local staff. An example i s the lack o f transport engineers and specialists that can design and implement safe, ample, and attractive NMT facilities to attract new users. Good access to clean, comfortable, effective BRT will certainly help boost the demand for the system. (v) Cultural barriers. The often negative perception o f the general public about transit systems or non-motorized transport will need to be overcome to ensure acceptability o f proposed measures and policies to develop sustainable transport modes and provide continuity in investments.Sustainable modes have to be appealing, and cannot only rely on the user's awareness about climate change and air pollution. The number o f individual motor vehicles in Latin America i s rising rapidly as a result o f growing economies and incomes, but there i s still time to maintain the considerable levels o f public transport use; however, concerted efforts are needed to change perceptions and raise awareness on the environmental, mobility and health benefits o f non-motorized and good quality public transport. 2. Rationale for Bank involvement 9. The Bank's involvement in the urban transport sector i s a response to the challenges raised by the rapid growth o f Latin American cities, and by the need for a coordinated effort to address transport and environment issues at the regional level and to ensure that Latin American cities are well-positioned to meet the demands o f an increasingly global economy. The World Bank aims at improving accessibility for all urban residents, reducing transport costs - not only in a financial sense, but in terms o f time and environmental damage as well - and increasing transport efficiency, enhancing urban productivity, competitiveness and contributing to the region's overall economic growth. By acting on several fronts such as public transport enhancement, freight management, coordination o f public sector policies in land use and transport planning, promotion o f environment-friendly transport solutions such as non-motorized transport and traffic demand management, this Program aims to reconcile transport efficiency with quality o f life and global and local environmental sustainability. It i s also a partial response to some of the more intractable problems associated with urban poverty, not only in terms o f access to economic opportunity, but also in terms o f the broader dimensions o f social 6 inclusion through improved access to schools, health facilities, and wider social interaction. 10. The World Bank has a long and proven track record and in-house expertise to implement transport, urban development, and environmental projects. Its presence inthe different sectors and various Latin American countries provides a unique cross- referenced perspective which allows replication o f good practices, while drawing on lessons learned and experience. This Program was conceptualized and specifically designed to best leverage this presence and perspective towards successfully promoting sustainable transport practices throughout the region. 11. Regional coordination and South-South learning are integral elements o f the program's approach, and the Bank has substantial comparative advantage in this regard and is already involved in several knowledge exchange programs. One o f the most recognized programs i s the Clean Air Initiative for Latin American Cities (CAI-LAC), an active network o f information exchange, capacity building, and knowledge creation among Latin American cities in the area o f air quality in general, and transports contribution in particular. The CAI-LAC will play a crucial role in the exchange o f information and involvement o f partners, including Latin American cities not initially in the STAQ Program. 12. Another key element o f the strategy envisioned by the STAQ Program is the involvement o f many Latin American cities working jointly in implementing sustainable transport projects at the same time. This will create synergies and help create visibility and wider political support for sustainable transport polices and provides cross- fertilization for innovative solutions. The Regional Project presents the cross-cutting and regional activities that involve information exchange and development and dissemination of measurement methodologies, which will surely spur mobilization o f decision makers and stakeholders across Latin America, far beyond the initilally selected cities. The Bank i s in a unique position to facilitate this process and ensure involvement o f government, private sector and other development agencies. It i s also expected that the Bank will be in a position to finance some o f the sustainable transport projects identifiedunder the STAQ Program. This will result in lowering the cost o f development o f sustainable urban transport strategies throughout the region, even for cities that are not receiving funding under this round ofthe proposedProgram. B. PROGRAMDESCRIPTION 1. Grant instruments 13. The STAQ Program consists o f a 4 year GEF umbrella grant, adhering to the structure o f a Horizontal Adaptable Program Loan (APL) approach: (i)a Regional Project which will deepen the knowledge base regarding climate change issues related to the transport sector, develop a framework for knowledge exchange, foster a multi-sectoral policy dialogue on climate change and transport related issues; and, analyze, compare and disseminate lessons learned from pilot investments in the 11 cities participating in the program; and, (ii)three Country Projects - Argentina, Brazil and Mexico -each 7 comprised of three or four city sub-projects to develop sustainable urban transport and reduce greenhouse gas emissions by promoting investments in the following thematic windows: Management of Freight Transport; Integration of Land Use, Transport and Environmental Planning; Modal Shift to Public Transport; Non-motorized Transport; and Travel Demand Management. 14. Grants will be committed betweenFY09 and FY12, and implementedbetween FY09 and FY13. Funding will be made available through national grants to eligible municipalities based on the above criteria. Each Country Project will be individually preparedand will undergo a complete appraisal identical inform and processto any other project that i s presented to the Board, which will include the preparation of individual PADS. Constituent grants will meet all applicable GEF and World Bank policies, practices and standards. Grants under the STAQ Program will be implemented using fiduciary and procurement procedures for investment operations as appropriate to each case and as determined by relevant guidelines, OPs and BPs. 15. This PAD focuses on the Regional Project as part of the overall STAQ Program. Approval is sought for Bank support for the STAQ Program following the Horizontal APL approach, and the first grant for the Regional Project. The subsequent grants will be presented when eligibility criteria have been met and projects have been appraised and negotiated. In accordance with the Bank's procedures for horizontal APLs, each subsequentgrant package will be circulated to the Board for informationafter approval in principle by Management. In the absence of requests from three or more Executive Directors for Board consideration of the grant, Management approval will become effective ten working days after circulation of the documents to the Board. 2. Programand ProjectObjectives Higher level objectives to which theprogram contributes 16. The higher-level objective of the STAQ Program is to reduce the rate of growth of GHG emissions from transport in Latin America through the promotion of less energy intensive and cleaner modes of transport. The Program, which was approved in pre- appraisal stage in August 2006 under the GEF I11 Strategic Priorities, is consistent with the programmatic goals of GEF Operation Policy 11 and the GEF Strategic Priority in Climate Change focal area (CC-6). GEF grants under OP11 are to promote the implementation of low carbon technologies, modal shifts to less polluting forms of transport, and interventions related to bus rapid transit systems, non-motorized transport, traffic management, and land use planning. The elements of the STAQ Program will contribute to these goals by financing the incremental costs associated with awareness generation, policy adjustments, regulatory initiatives, and climate friendly technology options towards playing a crucial role inovercoming key barriers to adoption of climate 8 from transport in intervenedcorridors3.The Regional Project will aggregate the Country Specific Indicators that will be monitored within the context of each individual Country Project and will be compiled and analyzedat the regional level. 22. The estimated approval dates and sizes of the grants under the APL approach are summarized in the following table. The ratio between GEF financing and Cofinancing i s quite favorable for the total Program. Given the relative nature of the activities between the Regional Project (mostly studies and coordination activities) and the Country Projects (mostly investments), it i s reasonable to expect higher levels of Cofinancing for the Country Projects than for the Regional Project. PhasesofGrants GEF Cocfinancing Total ProjectedBank US$m US$m US$m ApprovalDate 1Grant 1: RegionalProject I 2.903 I 2.093 I 4.996 1 10/08 I Grant 2: Argentina Project 3.987 7.882 11.869 10/08 Grant 3: Mexico Project 5.378 31.581 36.959 01/09 IGrant 4: Brazil Project I 8.532 I 16.972 1 25.504 I 01/09 I ~ ITotalProgram I 20.800 I 58.528 I 79.328 I I 3. Descriptionof the Projectsthat compose the Program 23. The STAQ Program has been structured into a Regional Project and three Country Projects. The Regional Project will focus on monitoring, developing methodologies and toolkits, and dissemination of lessons learned towards strengthening the capacity of specific cities directly participating in the Country Projects, as well as any other interested Latin American cities, to be able to develop comprehensive strategies to promote sustainable transport. The 3 Country Projects, each of which consist of either 3 or 4 city-specific sub-projects, will focus on facilitating the planning and implementation of sustainable transport investments and policies at the city level. 24. Each of the individual projects of the STAQ program will have their own individual PADs. This PAD focuses on the Regional Project; however, it also comprehensively presents the overall STAQ Program in order to facilitate a full understanding of the role in the Regional Project plays within it. Separate PADs will be prepared for the Country Projects inArgentina, Brazil and Mexico. RegionalProject (USD2,903,000). 25. The Regional Project will fulfill the coordinating function for the entire STAQ Program by providing general technical supervision as well as perform several standalone activities. In general it aims to provide a framework for developing harmonized sustainable transport, climate change and air quality strategies across the region. The 3Comparing with and without project scenarios 10 friendly development, transport policies and technologies in the urban transport sector. In addition, the overall structure and methodology of the Program was designed to ensure that it: (a) i s country-driven and supports governments' efforts to promote sustainable development; (b) strives to leverage other funds; and (c) demonstrates cost-effectiveness o f different measures to reduce GHG emissions associated with transport. 17. The Regional Project and the three Country Projects will contribute towards adoptiodcreation o f sustainable transport policies in selected cities and support the adoption o f policies at the national level to significantly lower C 0 2 emission in the long run, and increase the number of person-trips taken place in more efficient transport systems. More specific project development objectives will be presented in PADS for each Country Project within more local contexts; below are the development objectives o f the Regional Project. Regional Project Development Objectives 18. Regional project development objectives will be: (i)to establish a network o f local and national government stakeholders, international organizations and private sector entities to promote policies and actions leading towards more energy efficient and cleaner urban transport systems in Latin American cities; (2) to assist cities to develop sustainable urban transport strategies that integrate climate change and air quality components; and, (3) to improve the capacity o f cities to quantify the impacts o f transport policies on climate change and air pollution emissions. 19. The outcome indicators that measure the attainment o f the above mentioned Regional PDOs are: (i)formal support and financial resources leveraged to C A I to coordinate activities at the regional level, involving local and national governments, international organizations and private sector; (2) number o f cities with a strategy to reduce C 0 2 through sustainable transport strategies; (3) number o f cities applying assessment tools to quantify greenhouse gas and air quality impacts o f select transport options. Country-Spec@ Project objectives 20. The Country-Specific Project development objectives are to: (i)reduce GHG emissions growth through the promotion o f long term increase in use of less energy intensive transport modes; and (ii)to create policy guidelines and address barriers for more energy efficient and cleaner transport investmentsinselected cities and countries. 21. The country-specific indicators that will be monitored in the city sub-projects are: (i) relative increase of number o f trips in public transport compared to the `business-as- usual' baseline in participating cities'; (ii)number o f NMT trips in intervened areas compared to baseline*; and (iii)reduction in the growth rate o f C02-equivalent emission ''AsIbidem a share of total trips, comparing with and without project scenarios 9 approach it will implement will enable it to have an impact beyond the individual projects and sub-projects and integrate other cities and projects financed by partner organizations. Indeed, all Latin American cities will be welcome to access the informational database to be produced by the Regional Project, as well as participate in its workshop or training activities. 26. The Regional Project will foster the development o f a regional network o f local and national government agencies, donors, international organizations and private sector entities that will contribute to the implementation o f mechanisms to carry out horizontal (across municipalities) and vertical (between municipal, national and regional levels) knowledge sharing on the preparation, appraisal, implementation, outcomes, and lessons o f the individual projects. 27. The Regional Project will analyze and disseminate local and global environmental impacts o f pilot investments in 11 cities and disseminate lessons learned among cities formally participating in the STAQ Program, as well as to other Latin American cities towards helping them develop integrated approaches to sustainable transport that addresses all the GEF thematic windows in a more comprehensive way. For example, increasing the public transport share o f passenger travel plays a central role in developing sustainable transport policies in cities around the world, but need to be accompanied by strong policies to reduce the growth in car use, implementation o f land use controls to promote public transport systems and improve accessibility and integration o f these systems with pedestrian and biking facilities. While participating cities have proposed specific projects in particular windows, the Regional Project will assist them in implementing additional complementary interventions so that the aggregate impact o f their overall sustainable transport initiatives will be much larger than the sum of the impacts o f each individual intervention. 28. The Regional Project will help harmonize strategies and help develop and build consensus around common better methodologies and modeling tools to assess the greenhouse gas and air quality emission reduction benefits o f different urban transport investments, including policy and technology options. These tools should help decision makers in making more informed decisions on future projects. The project will help develop policy guidelines and initiate dialogues with key decision makers to address financial, institutional and regulatory barriers and create long-term strategies and incentives for sustainable transport in cities and countries in Latin America. It will be implementedby the Clean Air Institute, which will foster coordination with other projects in the region and worldwide involving participation o f key partners such as GTZ, WRIIEMBARQ, ITDP, HewlettFoundation, and the Clean Air Initiative 29. The Regional Project will be divided into four operational components: (1) Assessment of Environmental Benefits and Co-Benefits o f Transport Interventions, (2) Institutional Strengthening, (3) Policy Dialogue at Regional and National Level, and (4) Program Management and Monitoring. These components will function in complementary fashion towards the achievement o f each o f the three main development objectives stated above. While subcomponents 1, 2 and 3 are designed to satisfy the 11 needs o f the 11 cities directly participating in the Program, their products and processes are open to all Latin American cities. Subcomponent 4 i s more tightly focused on the 11 cities directly participating in the Program, for it addresses project administration issues. Annex 4 provides a more detailed description of the Regional Project, as well as the overall STAQ Program. Country Projects (USD 17,897,000).4 30. Each Country Project will consist o f city subprojects which are not identical in design because each of them looks forward to addressing a variety o f local realities, priorities and conditions. However, these city sub-projects will seek to achieve common objectives and have to meet the following eligibility criteria: 0 Sub-projects should focus on the 5 thematic windows described below, seeking greenhouse gas emissions reductions in urban transport and ensure long-term sustainability . 0 Sub-projects should serve as models o f innovation in sustainable transport management and greenhouse gas emission reductions, thereby contributing to cross-city learning, replication, and regional policy development. Sub-projects should foster the inclusion o f sustainable transport and climate change aspects in overall plans, strategies, policies and financial mechanisms at the local, national and regional level. Sub-project partners should be willing to share data, information and experience and collaborate with other cities at the metropolitan, national and regional level. 31. The Country Projects in Argentina, Brazil and Mexico consist o f pilot investments and technical assistance to 11 pre-identified cities to remove barriers for sustainable transport. These projects and sub-projects will co-fund measures in five thematic "Windows", following the World Bank's priorities and GEF priorities for climate change mitigation inthe urban transport sector5: (i) Management of freight transport: technical assistance on ways to improve efficiency o f goods transport in urban areas, and reduce conflicts with and impacts on other modes o f transport. Fundingi s proposed for USD $1,370,000. (ii) Integration of land-use planning, transport and environmental management: technical assistance and measures to foster more integrated transport and land use planning to reduce the use of private motor vehicles, reduce trip lengths, and increase accessibility to public and non-motorized transport. These activities are intended to increase the number o f cities with integrated plans, institutional capacity and incentives to incorporate land-use considerations into transport planning processes and, potentially, capture resources from land valorization to finance sustainable transport improvements. Funding i s proposed for USD See Annex 4 for a detailed relation of activities in each city under each o f the Windows or areas of intervention Karekezi, S. ,L.Majoro, T. Johnson, 2003. Climate Change Mitigation in the Urban Transport Sector: Prioritiesfor the World Bank. The World Bank. 12 $1,O 10,000 million, to ensure adequate distribution o f different types o f technical assistance across a range o f cities. (iii) Modal Shift to Public Transport: Pilot investments and technical assistanceto facilitate the improvement o f public transport systems and/or improve the effectiveness and interconnectivity o f those systems with other complementary modes o f transport and induce mode switching away from the use o f private cars. The intended outcome of these activities is to help improve the quality of public transportation by improving the efficiency o f operations and introducing cleaner technologies, as well as by implementing complementary measures, towards attracting new users and retaining existing ones. Funding o f USD $8,638,000 million for this Window i s proposed, in order to ensure that cities with different levels o f capacity and at different stages in the planning process for public transport systems are represented. (iv) Non-motorized transport: pilot investmentsand technical assistance to better integrate walking and biking into the culture and planning processes o f cities, and to create incentives for their use. An important aspect will be to integrate NMT with current mass and public transport systems. The intended outcome of these activities i s to convince and prepare cities to further promote walking and bicycling usage as viable and safe modes o f transport and make further investments in non-motorized facilities. Funding is proposed at about USD $3,696,000 million, reflecting the absence o f a cultural tradition of bicycle use in the region. (v) Transport Demand Management: technical assistance to support the development and possible implementation o f measures to rationalize use o f private cars, and create incentives for more widespread use o f public transport and non-motorized modes. The intended outcome o f these activities i s to induce cities to design and, where possible, help cities to implement transport demand management schemes such as car-free zones, car-free days, parking management plans, or road-pricing schemes. Funding in this Window i s proposed at about USD $2,8 12,000 reflecting a cautious investmentandthe needto manage political expectations carefully. 13 - . Table B.3.1. Summarv of STAQ Proxram Costs (in USD) _---- .--.-_-- -.^ I--- -1-1 _lll_ "x.--I___L _I__ _Ir_ CO- I WAQProgramCost ByProject, Activity G'' fiiiancing I -- USD USU USR Component 1. Improve methodologiesto assess climate change, air 538,000 132,000 670,000 quality and other benefits of transport interventions Component 2. Strengthen regional capacity for project preparation 811,000 309:OOO I,120,000 and implementation Component 3 Mainstream climate change and air qualit).. 764,000 789.000 1,553,000 considerations onto transport. land use and energy planning Component 4. Program Management, Monitoring and Evaluation 790.000 863.000 1,653.000 Subtotal 2,903,000 2,093,000 4,996,000 Window 1: Management of Freight Transport (2 cities) 1,370,000 3 10.000 1,680,000 Window 2: Integration of Land Use Planning, Transport Management and EnvironmentalManagement(4 cities) 1,010,000 1,485,000 2,495.000 Window 3: Modal Shifi to Public Transport (10 cities) 8,638,000 43,985,000 52,623,000 Window 4: Non-motorizedTransport (8 cities) 3,696,000 6,903,000 10,599,000 Window 5: Travel Demand Management(3 cities) 2.8 12,000 3,450,000 6,262,000 Proiect Administration 371.000 302.000 673,000 Subtotal 17,897,000 56,435,000 74,332,000 4. Lessons Learned and Incorporated in the Program Design 32. The Bank has a long-standing involvement in the sector o f climate change and air quality management in general, and its interrelationship with urban transport in particular. The first loan in this regard, approved in 1992, had the objective o f reducing traffic-generated air pollution in Mexico City. To disseminate lessons learned and involve other cities, the Bank, with support from other partners, created the Clean Air Initiative in Latin American Cities in 1998. Similar initiatives have now been launched in Asia and Africa. Recent experience with GEF and Carbon Finance in Mexico City's Metrobus Insurgentes Corridor will also be used as a model to leverage additional support and financing for urban transport projects. In addition, recent strategy papers on Pollution Management and Urban Transport discuss extensively the effects o f urban traffic on air quality, and urban transport operations in Bogota, Buenos Aires, Lima, Santiago and Sao Paulo include air quality management components intheir design. 14 33. While all of the lessons learned and incorporated into the design of the overall STAQ Program are not directly relevant to the design of the specific components of the Regional Project, they are included here because the primary purpose of Regional Project i s to promote and propagate these very lessons throughout the region. Some of the lessons learnedinclude: 34. Regional synergies and holistic approach. Cities and countries facing a similar array of transport and air quality problems should not need to reinvent the wheel to confront these issues. The concern for a holistic approach to development call for greater integration in GEF funded projects, while separating execution of investments by country and city, lessons and experience across the region should be made available and shared in a common regional framework that leapfrogs advancements and reduces the learning curve for cities undertaking measures similar to those adopted elsewhere. Starting in the three largest countries in the region will have a ripple effect that will influence policy change in the region. This is especially important as fast growing secondary cities in LatinAmerica could soon reachunsustainabletransport and urban development patterns that would be very difficult to change. 35. GHG emission reduction strategies bring many additional benefits. The sustainable transport strategies outlined inthe five windows that aim at reducing GHG emissions will bring many additional benefits such as better air quality and reduced health impacts, improved accessibility of the poor, improved safety, economic efficiency and development, and more competitive and attractive cities. The program i s designed to maximize local and global benefits. While technology improvements will play an important role in reducing emissions, their effectiveness will be limited by the expected growth of motor vehicles inthe region. 36. Importance of linking GEF with existing or future investments. The GEF funding i s relatively small compared to overall investments in urban transport in the region. The GEF funds are strategically allocated to countries and cities with true capacity and commitment to sustainabletransport, and preferably with existing or future Bank projects that can benefit from additional investments to improve energy efficiency. The Regional GEF Program will analyze mechanismsto involve the private sector and capture financial resources for follow up investments. These mechanisms will be essential to ensure long- term sustainability of investments. 37. Freight transport is a growingproblem. Many Latin American cities are located at strategic nodal points of national and regional freight transport routes as well as being the origins and/or destinations of goods movement. Freight transport is poorly regulated and managedby cities; addressingthe problem could potentially have an enormous impact on fuel consumption and emissions, as well as open new opportunities for World Bank operations in rationalizing freight distribution inmetropolitan areas. 38. Communityparticipation is vital for success. The PAD for the GEF grant to support the introduction of climate friendly measures in transport of Mexico City stresses that a "participatory approach, incorporating public opinion in the project, i s required to 15 establish legitimacy o f the project". Similarly, the Bogota experience demonstrates the importance o f community involvement which contributed to the public acceptance, even pride, for several "project outputs, notably TransMilenio and the bike paths". Grant recipients have been encouraged to maintain close consultation with civil society, NGOs and district governments during preparation o f their proposals, and will continue to be encouraged to maintain this collaboration throughout implementation. Behavioral changes and political commitment depend on public awareness and pressure, and can greatly enhance acceptance and long-term sustainability o f interventions. 39. Public transport as part of long term transport, environment and land-use strategies. As demonstrated in Curitiba and Bogota, important operational improvements require visionary leadership with a willingness to take risks, long-term commitment and continuity. This applies as well to air quality management. Changes in personal travel behavior are unlikely to occur unless there i s a long-term government commitment. By officially endorsing the grant requests and allocating adequate co-financing, the mayors o f the beneficiary cities have already shown leadership and commitment. 40. Construction of bikeways alone is not suflcient to ensure increased use of bicycles. In 1996, about 46 km o f Bank-financed bikeways were successfully implemented in Lima. However, the number o f cyclists did not increase significantly, as the project did not include a coherent strategy to overcome the cultural barriers inhibiting bicycle use. Therefore, an important set o f activities under Window 4 o f the proposed project includes also multi-pronged promotional strategies aimed at making bicycle use more attractive. 5. Alternatives considered and reasons for rejection 41, Stand-Alone SILs with single Grant Agreement: The option o f a stand-alone SIL with a single Grant Agreement with a regional executing agency and three subsidiary Grant Agreements was analyzed, but rejected since it was not seen appropriate to channel all funding through a single agency and transfer fiduciary responsibilities to this agency while it would go into sub-GAs with national level government agencies used to deal with the World Bank directly. It was considered essential that the regional executing agency focuses on technical knowledge and dissemination aspects and captures the combined effects o f the individual projects, which are potentially more than just the sum o f the parts. 42. SIL with multiple Grant Agreements: This option would require the presentation o f a negotiated Grant Agreement for each country to the Board along with the corresponding PADS.The approach would be costly and weakenthe structure for regional scaling up of knowledge, lessons learned and results. Promoting such synergies i s essential in the context o f Latin America, where the relatively modest scale o f this GEF Grant must be leveraged to obtain the widest possible impact. 43. A regional level APL approach was determined to be the best option and would consist o f separate Grant Agreements with a national-level executing agency per country which will then enter into subsidiary agreements with each participating municipality. The horizontal APL approach has the advantage that the Board would approve the 16 concept of the horizontal APL based on the framework PAD and the negotiated Grant Agreement for the country that is ready. As the other countries get to the point of being ready and after negotiating their Grant Agreement, the team would then only need to seek the approval ofthe RVP. 44. The APL, especially through its proposed knowledge sharing activities, also allows the piloting and consolidation of standard methodologies and approaches (for preparation, appraisal, implementation, M&E) that will be valuable under a possible future wholesaling mechanism. Although transaction costs are slightly higher since separate PADS will have to be prepared for the different country sub-programs, it provides a possibility to move forward with the program in each country independently. The Adaptable Program Lending (APL) framework could eventually be used for including new countries and cities interested in following the same framework and thematic windows for investments insustainable transport and climate change. C. IMPLEMENTATION 1. Partnershiparrangements 45. The Program i s designed to foster partnership around the different projects, sub- projects and windows at the regional and city level. Coordination with other stakeholders was discussed and feedback so far has been positive and the need to coordinate efforts between different donors and key technical groups (Le., WRYEMBARQ, ITDP, Clean Air Institute and CAI-LAC members) working on sustainable transport i s recognized by everybody. As stated, the Regional Project is aimed at involving in its implementation key players in the region in the area of sustainable transport. The Country Projects will foster in-country partnerships and involvement of different stakeholders ranging from government agencies, private sector and community organizations. On a couple of cities there are complementary OP11 activities being implementedby the Bank as part of this program. 2. Institutionaland implementationarrangements 46. The Program has been structured in two groups of projects. A Regional Project focuses on monitoring and developing methodologies, toolkits and dissemination of lessons learned aimed at strengthening the capacity of cities and the region as a whole with respect to sustainable transport; and 3 Country Projects that consist of 11 city- specific sub-projects. Following are the proposed institutional and implementation arrangements. (i) Grant Agreement for the Regional Project The Regional Project will be executedby the Clean Air Institute (CAI), a not-for-profit recipient that represents the region, and whose mission conforms to the program's objectives. The process to select the Executing Agency of the Regional Project includeddiscussions with 17 the three National Executing Agencies, participating cities and key technical agencies and donors in the region, which all endorsed the Clean Air Institute to execute regional activities. CAI was found to be the only organization that represents the region through its network of Latin American decision makers and technical agencies that has the mandate to reduce greenhouse gas emissions and generally improve air quality through building bridges between cities seeking solutions and donors, government agencies, and the private sector. The CAI has a Board of Directors that is comprised of world leading experts, including: Dr. Mario Molina, a Nobel Prize winner for his work on atmospheric pollution, &. Alan C. Lloyd, President of The International Council on Clean Transportation and former Secretary of the California Environmental Protection Agency, and RichardAyres, one of the `most respectedenvironmental attorneys inthe US who shaped the Clean Air Act and its implementation. This combination of expertise and experience provides the CAI with an unparalleled capacity to address the challenges that the region faces towards implementing successful sustainable transport, air quality and climate change policies in a comprehensive and lasting fashion. The CAI is hosted by the Breakthrough Technologies Institute (BTI), a Washington, D.C. based non-profit organization that promotes solutions to air pollution, global warming and other public policy challenges. BTI provides financial and administrative services to CAI and was competitively selected among three short-listed institutions to host the CAI. The CAI will execute regional activities related to development of methodologies, implementation of benchmark studies, preparation of policy guidelines and dissemination of lessons learned. The CAI will work in partnership with other organizations, and most activities will be developed with support of third parties, A Steering Committee to be constituted by representatives from the participating National Executing Agencies (NEAs) and relevant regional agencies will be formed by CAI to guarantee proper coordination and avoid unnecessary duplication of efforts by individual program cities. A grant agreement will be signed between the Bank and CAI for the Regional Project, and cooperation agreements will be signed between the NEAs, participating cities and the CAI addressing coordination activities, information exchange, technical assistance and training. These Agreements have already beendrafted and discussedbetween CAI andthe NEAs. The role of the CAI, through technical expert groups, is to oversee the technical execution of the different thematic areas ("windows") and monitor overall program progress. The CAI will also be developing a long-term strategy and leveraging funding for sustainable transport, climate change and air quality related investments in the region. The Project Office in CAI will include a project director, who will contract individual consultants on a part-time basis to function as: operations specialists, country coordinators, environmental specialists, transport specialists, financial specialists, procurement specialists and informational systems specialists. The 18 C A I will be responsible for day-to-day coordination and technical support for the STAQ Program, as follows: implementing regional activities, monitoring overall program progress, auditing financial reports at the program level and for taking necessary steps to ensure sustainability o f the relevant program activities. (ii) Grant Agreements for Country Projects. Grant Agreements will be signed with each of the three National Executing Agencies. The national authorities responsible for urban transport and involved in the implementation of urban transport projects will function as the national executing agency of each country. These are: the Secretary o f Transport of Argentina, the National Public Transport Association (ANTP) in Brazil and the Secretary o f Social Development (SEDESOL) in Mexico. To further strengthen links between World Bank loans and the Regional GEF Program, institutional and implementation arrangements commonly used for these loans will be followed in the case o f the GEF program. Agreements will be reached between national executing agencies and selected cities regarding procurement, financial management, and supervision o f investments. Pertinent details are described inAnnexes 18 and 19. The Regional Grant Agreement has been discussed with the Regional Executing Agency and the 11 cities have been selected, and the content o f all city-projects has largely beenestablished. Supervision o f activities will be done by the World Bank and the executing agencies at the regional and national level. The Bank supervision will benefit from the involvement o f staff already participating in dialogue and urban transport and environment operations in the three countries andthe selected cities. This approach will ensure consistency o f the GEF program with previously established overall development policies and activities on urban transport already taking place, as well as provide economies o f scale. 3. Monitoringand evaluation of outcomedresults 47. Each Country Project will have its own Results Framework o f objectives, end-of- program outcome indicators, and intermediate indicators. The municipalities will have the main responsibility for data collection and reporting on city specific sub-project results to national executing agencies, who will share this information with the Clean Air Institute for further analysis and benchmarking studies. The Regional Project will aggregate and evaluate data at the complete program level for wider policy analysis and dissemination. Common consensus program indicators will be usedto permit comparison and aggregation between cities and countries. Annex 6 provides details on specific procedures and monitoring and evaluation responsibilities at the local and regional level. 48. In addition to the overall monitoring and evaluation will be carried out in all participating cities, the C A I and the Bank will perform an in-depth assessment o f outcomes and benefits using detailed methodologies to link output and outcome indicators, which will advance the development o f more comprehensive methodologies 19 and indicators. Once outcome indicators have been developed that are cost-effective to implement, they can be replicated and applied in other cities not formally part o f the program. Application o f outcome indicators methodologies in these additional cities may depend on the availability o f additional (external) funding sources. 49. Besides direct monitoring o f the program progress, this approach will attempt to address current uncertainties regarding how to best evaluate GHG and other co-benefits o f sustainable transport projects. Many organizations have shown interest incollaborating with the program in the development of an internationally agreed-upon assessment framework and set o f methodologies, which would take into account existing realities (lack o f data, limited fiscal and institutional capacity, lack o f resources, etc.). 4. Sustainability 50. Evidence of borrower's commitment to and ownership of the program and relevant policies. The city sub-projects recommended for inclusion in the Regional GEF program have undergone a rigorous review in the context o f an international competition. While the guidelines of this competition established the broad windows to be funded, all specific activities in the competition were proposed by the cities, in the context o f that competition. Proposals lacking clear political and institutional commitment were rejected by either a Blue Ribbon Panel or subsequently the Bank. (See Annex 20 for additional details). 51. Sustainability. The selected city proposals were assessed based on technical quality, local capacity, commitment and political support, as well as the existence o f an active positive relationship between that city and the World Bank, as evidenced by successful collaboration on past, ongoing, or proposed investment operations. The 11 selected city projects are expected to have the highest direct GHG impact and indirect impact through dissemination o f lesson-learned within the respective countries and at the regional level. There i s a sound basis for successful implementation and there i s a good chance for long- term investments in follow up projects. To ensure overall sustainability, the program will focus on strengthening institutional and regulatory frameworks and financial sustainability at the city and country levels. 52. At the city level, the Regional GEF Program will assist in creating mechanisms and institutional frameworks to coordinate planning and decision making on transport, environment and urban development. The program will help strengthen the institutional and human capacity to prepare, plan, implement, monitor and evaluate the performance and environmental benefits o f sustainable transport projects. The program will also help strengthen public-private partnerships in financing and operation o f urban transport systems. The program will foster the implementation o f economic and regulatory incentives to mainstream environmental considerations into the urban planning and transport planning process, as well as in specific bidding and contract documents for operators and contractors. Proposed policies at the local and national levels will provide the basis for long-term promotion of more efficient and cleaner transport systems. 20 53. To ensure continuous investments in the operation, maintenance and expansion o f sustainable transport systems in cities in Latin America, the Regional GEF Program will assess the potential for public-private partnerships and opportunities for local funding for sustainable transport projects, through taxes, surcharges, tolls and property and land-use development funds. At the regional level, the GEF will foster partnerships with other development banks, donors, national governments and the private sector to create a more continuous and diverse stream o f funding to supplement local investments in sustainable urbantransport projects. 54. Replicability. Replicability i s a key feature in the design o f the program and the regional approach. The World Bank has gained experience in developing a number o f individual Regional GEF Programs in cities like Lima, Mexico and Santiago, but lacked effective tools for a wide dissemination o f experiences and foster investments in other cities and countries. This program i s designed to bringing together the experiences from past GEF OPll projects implemented by the Bank and other agencies, combined with successful approaches inthe region, like Bogota and Curitiba, to the forefront o f political, technical and public discussion at local and national level. Having different cities working jointly on similar issues will help them learn from each other and leverage additional investments in these and other cities in the region. The past experiences will provide guidance to the team and cities in preparing and implementing city specific projects. The regional activities will target the 11 cities, but not exclude other cities from participating and learning from the process. The large demand from cities in the region - 25 cities submittedproposals that were not selected is also an indicator o f the potential - for replicability. The Regional Project will also advance national level involvement and adoption o f national level incentives and removal o f barriers to foster replication and additional (non-GEF)investmentsinsustainable transport. 5. Critical risks and possible controversialaspects Forthe overall project, the following riskswere identified. Risks RiskMitigationMeasures At the level ofregional By packagingthe project as an APL, this risk is Moderate implementation of a program of mitigatedby allowing each project and sub-project this scale, there is a risk that to move independently.It is importantto note that Country Projectsand city specific the city sub-projectswere selectedbased on the sub-project implementation will technical capacity of the city agenciesand political proceedat vastly different paces, support. owingto different circumstances and capacitieswithin each city. Municipalitiesmay have The composition of the individual sub-projects will Moderate difficulty providingadequate also take into account the source and availability o f counterpart fundingto the counterpartfunds for specific investments. Cities projects. were selectedbased on actual availability of counterpart funds and Bank loans. Fragmentationof institutional A governance structure will be put in place during Moderate 21 responsibilitiesat the localand year 1of program implementation.The possibility nationalfederal level may hinder of using CAI as technical secretariat for the the program's knowledge sharing knowledge and policy component lends strong and policy development. credibility. Fullrepresentation of key stakeholders from different entities will help assure effectiveness. Procurement risks The CAI has no experience with the Bank's Moderate procurementprocedures.The team will be trained, the Operational Manualwill provide clear guidance and an experiencedprocurement specialist should be added to the team on a part-time base. Financialrisks No extraordinary FM mitigation measures are Modest foreseen besides standardproject arrangements. The continuity of adequacy of FM arrangements wouldbe assessedduring FM project supervision. Risks specific to city specific projects and their particular activities are discussed in Annexes 18 and 19. 6. Conditions for Negotiations and Effectiveness 55. Each operation will meet the Bank's criteria for readinessby resolving all substantive design issues (e.g., finalizing the content of operational manuals and agreements between national executing agencies and participating cities) by negotiations. Effectiveness conditions will be limited to formal actions that the executing agency cannot take until after grant signing. D. APPRAISAL SUMMARY 1. Economic, financial and fiscal analyses 56. Economic and financial: Each Country Project will include net incremental costs and benefit analysis, on the basis of `with' and `without' project scenarios. Overall, the largest GHG emission reduction will be the result from long-term indirect benefits, since most of the activities undertaken focus on barrier removal and development of long-term strategies. In a number of cities, however, the program i s expected to have a relatively short-term impact in terms of modal shift towards more climate friendly modes of transport such as public and non-motorized transport. 57. The analysis to estimate GHG emission benefits is largely basedon an assessment by Wright and Fulton (2005) on the impact of sustainable transport investments in Bogota on changes in mode shares. Details about the methodology for calculating this reduction are given in Technical Annex 9, and the methodology will be further refined as better assessment methodologies will become available. 58. Since there are many uncertainties involved in estimating GHG emission reductions from transport interventions, two scenarios were prepared, showing the low and high 22 estimate of GHG emission reductions that can be expected from this program. The first "low" scenario assumes that only 25% of the cities will move forward with follow-up investment and that only 25% of these cities will be successful in replicating the results achieved in Bogota. The second "high" scenario assumes that all cities will achieve desired results towards implementing sustainable transport activities as a result of the Regional GEF Program. The first scenario produces a net reduction of about 2.4 megatonnes of C02 over 20 years, at a cost of about USD 6.15 per ton. In the second scenario, GEF investments lead to a reduction of about 38.8 megatonnes of C02 over 20 years, at a cost of USD 0.38 per ton. 59. The uncertainties involved in estimating CO:! emission reductions from transport projects are recognized and are themselves barriers to better mainstreaming climate change and environment considerations into transport decision-making. As part of the program implementation, therefore, under the Regional Project, there will be a systematic effort to improve the assessment of GHG emission reductions and other benefits that can be obtained with environmentally oriented urban transport policies and interventions. 2. Technical 60. The selection of cities and sub-projects was, among others, based on the technical quality of the proposals and capacity of the local agenciesto implement and supervise the city-specific projects and specific activities. The detailed designs and technical specifications of works will conform to Bank standards. The specific studies and technical assistance to be funded by GEF will follow general guidelines and principles of sustainable transport presented in documents such as the World Bank's Transport Strategy: Cities on the Move, and the Sourcebook on Sustainable Transport released by GTZ. Locations for specific investments inworks, particularly for Windows 3 and 4, will be screened for viability and impacts. Inaddition, technical specialists will be contracted to oversee the quality of the works. More details regarding the screening will be provided inthe country-specific PADS. 3. Fiduciary 61. Financial management assessments The program has been structured in a Regional Project focusing on developing a holistic approach and Country Projects consisting of pilot investments in 11 participating cities. The Regional Project will be implementedby the Clean Air Institute (CAI) and the Country Projects will be implemented by the designated National Executing Agencies (NEAs) in each country (Mexico, Argentina and Brazil). The World Bank will sign a grant agreement with CAI for the execution of the regional project and three separate grant agreements with the NEAs in each country. Therefore, program funds for the Regional Project will be disbursed through a Designated Account at CAI. Two major factors were taken into consideration for the risk assessment are the project environment as well as the specific fiduciary control framework, which includes BTI's institutional capacity on Financial Management (FM); existing processes and systems for budgeting, accounting, financial reporting and treasury operations. The overall risk assigned is Modest, no extraordinary F M mitigation 23 measures are foreseen besides standard project arrangements. The continuity of adequacy o f FM arrangements would be assessed during FM project supervision. Assessments o f the NEA ineach country are included inthe separate country-specific PADS. 62. A procurement assessment will be conducted for all executing agencies, the objectives o f which are to (i)evaluate the capability o f the implementingagencies and the adequacy o f procurement and related systems in place, to administer procurement in general and Bank-financed procurement in particular, (ii)assess the risks (institutional, political, organizational, procedural, etc.) that may negatively affect the ability of the agency to carry out the procurement process, (iii)develop an action plan to be implemented as part o f the project to address the deficiencies detected by the capacity analysis and to minimize the risks identified by the risk analysis, and (iv) propose a suitable Bank procurement supervision plan for the project considering the relative strengths, weaknesses and risks revealed by the assessment. 4. Social 63. The program i s expected to enhance social equity and poverty reduction efforts by improving accessibility, particularly for the poor, while also improving environmental quality. As much as possible, the Regional GEF Program will follow the environmental and social management plans prepared for ongoing urban transport loans. A Public Participation Framework, to be prepared by the entity responsible for the regional project, will outline best practice inpublic consultation for sustainable transport projects in order to ensure maximum likelihood of success. 64. None o f the proposed city specific sub-projects require involuntary resettlements. The GEF resources will complement counterpart investments in small pilot investments and bikeways that will not have any considerable social impacts and civil works where resettlement issues are neither present nor potential. An Environmental and Social Management Framework (ESMF) for each sub-project will be prepared and include specific procedures and an abbreviated resettlement framework and public participation framework. 5. Environment 65. The city specific sub-projects are expected to have positive environmental impact in the long-run, since they aim at improving the quality of public transport and non- motorized transport systems. The sub-projects are designed to have a positive long-term impact due to the reduction o f global and local emissions, such as C02, Particles, NO,, SO, and other pollutants currently present in the selected cities. The reduction will be directly linked to improved vehicle operation, reduced trip lengths, use o f more efficient modes o f transport and improved technologies. However, some short-term and long-term induced impacts mighttrigger OP 4.01. 24 66. The STAQ GEF Program has been categorized as "B", as it will mostly be studies and technical assistance and involve only minor civil works such as bikeways, short busways, improvements to existing street infrastructure (modal segregation, traffic signs and signals) and improvements to terminals. The civil works will follow the alignments o f existing roads and rights-of-way. Construction could cause some minor and localized negative environmental impacts consisting essentially o f noise, vibration, dust, and traffic disruption. Additional negative impacts during construction could also occur due to haulage and final disposal o f materials from the construction sites. The Regional Project will completely consist o f studies and general technical supervision activities and will not directly involve the implementationo f any specific investment or policy. 67. Environmental assessments will be prepared for the civil works under the city sub- projects. The EA will include screening for the presence o f natural habitats and any potential social impacts caused by the sub-project. An Environmental Management Plan will be prepared for each sub-project to address potential environmental impacts identified, including specific procedures for environmental screening and management, responsibilities (institutional and individual) and the provision o f adequate budgets to address environmental issues during implementation. 25 Annex 1: Country and Sector or ProgramBackground LATINAMERICA: GEF SustainableTransport and Air Quality Program Latin America's transport sector contributes relatively more greenhouse gas emissions to the atmosphere than any other region in the world, While transport accounts for about 21% of C02 equivalent GHG emissions worldwide, in Latin America, the sector contributes about 34% o f regional GHG emissions (IEA World Energy Outlook), larger than any other single sector. So while Latin America is responsible for only 3% of global COz equivalent emissions, it contributes 7% of worldwide transport C02 emissions. With 75% of the region's population living in cities, Latin America i s also one o f the more highly urbanized regions of the developing world. The strategic link between climate change and urban transport policy, therefore, i s particularly tight in the Latin America region. Region wide, a glance at the statistical trends is not encouraging. Many cities are facing rapid and rampant motorization; car ownership and use in the region has grown substantially over the past two decades. In Latin American countries for which motorization statistics exist, rates of vehicle ownership per capita are growing between 2.1 and 7.1% per year, with an average of 4.1% per year for the region between 1999 and 2003 (International Road Federation2005). Concomitant with motorization is the pressure it creates - for land, for infrastructure, and for energy. In Santiago, for example, between 1980 and 1992, growth in land area outstripped growth in population by a factor of almost 150% (Zegras and Gakenheimer 2000). Anecdotal evidence since 1992 suggests that land acquisition on the fringe has accelerated even faster, while the 2002 census suggests that population growth slowed from previous levels. This type of pressure for land also puts pressure on infrastructure. Demand for more services has led to a shortage of road space, affecting both public and private vehicles alike. Some cities have responded with capital intensive capacity- expansion efforts, such as heavy rail, flyovers, and elevated expressways; Mexico City, for example, recently moved to proceed with a plan to put a second level on some of its existing elevated expressways. Said double-decker expressway is already reaching capacity. With increased car usage and congestion has come deteriorating air quality. An ongoing World Bank study of regional air quality in Latin America has found high occurrences of lack of compliance with EPA, WHO, or local air quality standards, as shown in the table on the next page. 26 Table Al.l Number of Selected Urban Centerswhere Pollutantsare Identifiedas Suspect and Non-Suspect Critical (amongthose assumed to generatemore reliable and representativedata): Based on available data from Latin American cities, transport contributes 95% o f carbon monoxide emissions, about a third o f all sulfur dioxide, 80% o f NOx emissions, two- thirds of all hydrocarbon emissions, and about 40% o f combustion-related particulate emissions, on a population-weighted average. Inthree mega-cities o f the region, Mexico, Santiago, and Sao Paulo, transport i s responsible for most o f the CO, NOx, and VOC emissions. Inshort, the transport sector i s a substantial contributor to ambient air quality problems around Latin America. The health effects associated with human exposure to these pollutants range from minor and temporal effects on the respiratory and nervous systems, to permanent respiratory damage and in some cases death. Air pollution in mega-cities like Sao Paulo has been associated with increased mortality rates and productivity losses from related illness and disability. Even in middle sized cities in the region, air quality degradation i s a growing issue. Moreover, the distributional effects o f poor air quality are similar in cities throughout Latin America: it disproportionately affects the poor, children, and the elderly. With pressures for greater accessibility, better management o f land-resources, and concern about ambient air quality, transport policy decisions often occur in an environment where climate concerns fade into the background. Indeed, delay from congestion or lost quality o f life associated with bad air pollution are substantially more 27 tangible and pressing for political decision-makers and average people than concern for the global environment. The global nature of climate change, combined with the ubiquity of the pressures such as accessibility, motorization, and air quality discussed above suggest the need to take a regional approach in efforts to couple climate change mitigation with urban transport policy. Indeed, the Bank's existing efforts in this area - notably in three GEF projects in Mexico City, Lima, and Santiago - have missed an opportunity to ensure that clients are communicating with and learning from each other, even as they undertake similar strategies and use many of the same methodologies. No region is as fertile a testing ground for fostering such client-client learning opportunities as Latin America, for several reasons. First, a network o f cities already exists inthe Clean Air Initiative for Latin American Cities, in which the Bank has been a partner. A regional approach to GEF lending is expected to build upon that network. Second, some cities in Latin America have been in the vanguard o f developing policies that integrate political, environmental, accessibility, and greenhouse gas reduction objectives. Curitiba, Quito, and Bogota are three o f the most commonly cited examples, but a growing number o f other Latin American cities may soon join this list in the future, including Sao Paulo, Mexico, and Santiago, all o f which are undertaking Bank-financed projects to strengthen public transport and urban development. In Bogota, for example, the TransMilenio project has presented an alternative model o f how urban space can be allocated, potentially enhancing accessibility while foregoing the need for substantial land take or infrastructure expansion. TransMilenio, a mass transit system based on buses, i s part of the strategy implemented to reduce the impact o f congestion on the economy and quality o f life in the city by reducing reliance on private cars, and consists o f the following main sub-projects: (i) infrastructure to improve traffic congestion under the responsibility o f the public sector (exclusive lanes, stations and terminals, access ways, parking lots and maintenance shops); (ii)an efficient operating system (operation companies, buses and employees) run by the private sector; (iii)an effective and transparent fare collection system (equipment, card based and fiduciary management) run by the private sector; and (iv) a permanent public institution incharge of planning, operation and control. -TransMilenio's achievements include: Substantial increase in ridership compared with public transport ridership before implementation; - Commercial success: bus companies have recovered investments in newer vehicles - within four years; Absence o f public subsidies for operation: operating costs are financed from the fare box; - Reduction in average travel times by almost a third; - Improved safety; 28 - Reduced levels o f ambient pollution concentrations along corridors where segregated busways have been implemented; -- Good public image; and Reduction inC02-equivalent emissions per passenger kilometer. Another key part o f Bogota's strategy has been strengthening non-motorized transport, with awareness and safety campaigns for cycling, as well as provision o f new infrastructure for pedestrians and cyclists. The result o f all o f these efforts has been a strategic reorientation in urban transport investment priorities in the Bogota region. Subsequent Bank projects and GEF activities in the region have shown the extent to which new strategic priorities are emergingall around Latin America, not only inBogota. There is a great opportunity to strengthen south-south dialogue and experience-sharing, critical to move the agenda o f sustainable transport forward. Notwithstanding these successes and the extent to which they have fostered new thinking about urban transport in Latin America, a fundamental weakness o f urban transport practice in the region i s the inability to measure and quantify the impacts on and the synergies between transport planning and operational decisions and greenhouse gas emissions outcomes. So while we can point to Curitiba and other cities as incorporating the kinds o f integrated land-use, transport and environmental planning that are believed to be more sustainable and that we would like to foster in cities around the region, to date, it has been difficult to make the quantitative case. Correcting this shortcoming will require a regional approach; data collection and the methodologies and tools used needto be consistent, transparent, and accessible. The multi-city approach and the inclusion o f a regional project providing technical assistance (i.e., studies, surveys, workshops, training) and institutional strengthening has several advantages over more conventional GEF projects. First, it generates sustained interest among an interrelated network o f grant recipients and helps build a long-term interest in sustainable transport and air quality. Second, cities whose proposals are not accepted for GEF financing may have additional opportunities to get funded, through further GEF operations or other sources, an incentive to improve their strategies, and - through the activities o f the Clean Air Initiative as well as the cross-cutting mechanisms o f the present proposal - to access to technical assistance to do so. Third, the program helps keep many cities in the region involved and thinking about the issue o f sustainable transport even if they are not formally associated with the program or receiving money from it. The inclusion o f a cross-cutting, regional project means that non-participating cities will still have access to information, data, tools, and methodologies developed. 29 Annex 2: Major RelatedProjectsFinancedby the Bank and/or other Agencies LATINAMERICA: GEF SustainableTransport and Air Quality Program Current Bank lending and grant funding operations inrelated sectors incountries proposedto receive funding under this Program are summarizedinthe table below. Countries proposedto receive funds not appearing inthis list have no recent or ongoing operations inrelated sectors (urban transport, urban environment, or urban development). Table A2.1 Current Bank UrbanTransport Lendingin Selected Countries Country Name rating DO number Approved Status Prating Buenos Aires Urban Transport Additional Financing PI04984 03/27/2007 Active Infrastructure Puerto Rosario PI01421 06/01/2008 appraisal Pre- _ _ Logistics and Transport Sector PO89857 07/03/2006 Closed N/A Competitiveness Argentina Urban Transport in Metropolitan _ _ _ _ Areas PO95485 -- Buenos Aires Infrastructure 1st Phase PO88032 12/07/2004 Active N/A APL S BuenosAires Infrastructure 2nd Phase APL PI05288 06/28/2007 Active S S Basic Municipal Infrastructure PO60484 06/06/2006 Active MS MS BuenosAires Urban Transport PO39584 5/15/1997 Active S S Rio de Janeiro Mass Transit project PO43421 03/05/1999 Active S S Salvador urbanmass transit project PO48869 06/17/1999 Active MS S Sao Paulo Trains and Signaling P106038 05/05/2008 Pipeline N/A N/A Brazil Freight Logistics, how to decrease the Custo-Brazil P101433 1O i l 812006 Active NIA NIA Brazil FortalezaMetropolitan Transport Project PO60221 12/14/2001 Active U MS Sao Paulo Metro Line 4 PO51696 01/22/2002 Active Available Not Sao Paulo Metro Line 4 -Additional p105959 0510512008 Pipeline Financing N A N A M X Massive Federal Urban Transport P110474 M X National Urban Transport APL I1 P106822 Mexico Decentralized Infrastructure Reform and Development Loan PO80149 06/08/2004 Active MS MS Introductionof Climate Friendly measures in Transport PO59161 10/29/2002 Active S S DF Transport Climate Change P107159 10/10/2008 Pipeline NIA NIA Chile CL Sustainable Transport & Air Quality for Santiago PO73985 11/23/2003 Active MS S 30 PO35740 .. Peru PE Lima Transport Project / 12/09/2003 Active MS MS PO74021 31 Annex 3: ResultsFramework and Monitoring LATIN AMERICA: GEF SustainableTransport and Air Quality Program ResultsFramework Regional PDOs ProjectOutcome Indicators Use of Project Outcome Information (1) To establish a network of local (i)Formalsupportandaworkplan and national government financed by different sources to At local level, results will help build stakeholders, international coordinate activities at the regional the case for replication in other cities organizations and private sector level, involving local and national entities to promote policies and governments, international Reportson program results included actions for more energy efficient organizations and private sector in national communications to and cleaner urban transport UNFCCC. systems in Latin American cities (2) To assist cities to develop (2) Cities with a strategy to reduce Information providedto policy sustainable urban transport C02 through sustainable transport makers in charge of Climate Change strategies that integrate climate strategies, including regulatory and mitigation plans change and air quality components financial frameworks that foster sustainable transport systems at local and national level (2) Better understandingof the local and global environmental impacts of different transport policy and technology strategies in cities (3) To improve the capacity of ( 3 ) Cities applying assessment tools Modeling tools will be disseminated cities to quantify the impacts of to quantify greenhouse gas and air to the international community to transport policies on climate quality impacts of select transport help as guidancefor other upcoming change and air pollution emissions options(3) Availability and actual projects application of tools for local and national decision makers and project developers to assess and compare transport policies and investments in terms of climate and air quality benefits Intermediate Outcomes Use o f Intermediate Outcome Monitoring ionalProject TechnicalAssJstan - iional Level (i)Formalsupportandawork plan (i)Number ofagreement lettersfrom Periodical reportson sustainable financed by different sources to local and national governments, transport measures coordinate activities at the regional international organizations and level, involvinglocal and national private sector formally endorsing the Dissemination of polic) options to governments, international program enhance public participation and organizations and private sector alloh feedback (ii)Amountofadditional resources leveraged by the GEF Program Review of strategies, policies by through the CAI international experts to enhance quality and ensure consistency (iii)Number ofstaffworking atthe CAI to managethe work plan (ii) Cities with enhanced capacity (iv) Number of case-studies, reports Periodicalreports and workshops to and strategies to reduce C02 through and guidelines on strategies to share advancements, and allow sustainable transport strategies, reduce C02 by sustainable urban enhancement of methodologies including regulatory and financial transport program disseminatedin frameworks that foster sustainable the region Dissemination 32 transport systems at local and national level (v) Number of trainees that have taken the sustainable transport, climate change and air quality courses offered by the program. (iii)Citiesapplyingassessmenttools (vi) Number of cities applying tools Periodical reports and workshops to to quantify greenhousegas and air methodologies available to assess share advancements quality impactsof select transport transport policies and investments in options terms of climate and air quality Dissemination benefits at city and project level Country-specificPDOs ProjectOutcomeIndicators UseofProjectOutcome Information (1) To foster long-term increase in (I) Increase in number of trips made Resultswill be disseminatedto the the patronage of less energy by public transportation within international community to help as intensive transport modes so as to intervenedcorridors compared to guidancefor other upcomingprojects promote reduction in the growth corridor baseline rate of GHG emissions At local level, resultswill help build (2) Increase in number of NMT trips the case for replication in other cities within intervened areas compared to corridor baseline Inclusion of results in national communications to UNFCCC and (3) Decreaseof C02 equivalent tons inform policy makers in charge of emitted by ground transport in Climate Change mitigation plans intervenedcorridors as derived by improvements in modal split (2) Implementation of integrated (4) Number of cities that are urban transport, environment and integratingenvironment and climate climate change policies and change components into urban regulatory frameworks in cities transport and land use master plans that foster the development of and studies, which include sustainable transport systems at development of regulatory and local and national level financial frameworks that foster the development of sustainable transport systems at local and national level IntermediateOutcomes IntermediateOutcomeIndicators Use of IntermediateOutcome Monitoring CounttyProjects and city sub-projects -Pilot Investments and technical assistance IW1 -FreightManagement (i)Strengthenedcapacityof (i) Comprehensivestudies analyzing Dissemination to stakeholders, stakeholders to monitor and control the impactsand providing private and public freight transport in selected cities recommendationson improving fuel efficiency, reducing GHG emissions Promotionof financing mechanisms from freight transport within urban to help renew fleet areas Periodical reports Review of draft plans, programs by recognized experts W2 -Transport and Urban Planning 33 (i)Designofpoliciesandregulations (i)Numberofcitieswithland-use Periodicalreports, creation of for sustainable land use and transport policies and regulations institutional bodies development in selected cities designediproposed that create incentives for more efficient and Dissemination of results sustainable transport oriented development Review of draft plans regulations to ensure consistency Promotionto private developers. articulation with corridor development W3 -Public TransDort Enhancement ~ (i)Improvementorimplementation (I) Number of initiatives to improve Periodical reports of mass transit systems in selected public transport operations cities (segregated or non-segregated) Dissemination material through modernizingoperations framework or complementary Promotion campaigns infrastructure (ii)Strengthencapacityto promote (ii)Numberofcities preparingor Review of draft plans regulations to interconnectivity with other transport implementing specific measures to ensure consistency modes in selected cities promote inter-connectivitybetween public transport systems and other Workshops to involve policy makers, modes of transport budget planners Promote public participation W4 -Non Motorized Transport (i)Increaseinpublicuse,acceptance (i) Higher awarenessof citizens on Periodical reports and awareness of cycling as a viable the importanceof NMT and its role mode of transport in selected cities in reduce emissions and improve Dissemination material efficiency of the transport system (ti) Develop local capacity to design (ii) Number of NMT initiatives (km Promotioncampaigns non-motorized facilities in selected or facilities) including pedestrian, cities bikeways and ancillary facilities built Review of draft plans regulationsto ensure consistency Workshops to involve policy makers, budget planners W5 -Transport Demand Management Dissemination, information and implement traffic demand plans developed or in place campaigns management measuresto reduce vehicle kms and increase efficiency Open space for public participation in selected cities feedback Review of draft plans regulations to ensure consistency Monitoring of results. Institutional issues. Regular progress reports, as well as annual monitoring and evaluation reports for the program will be coordinated by the CAI with support from the NEAs. Monitoring and Evaluation is included as a sub-project of the Regional Project. EachNEA will have staff assignedto collecting and reviewing data collected from cities. The CAI will monitor overall progress. 34 Data collection. Because most of program components address overcoming barriers to the implementation of sustainabletransportpolicies ratherthan this implementation itself, most of the informationto be collected will not be not quantitative innature, but rather attitudinal, or indicative of a shift inattitudes. Collecting this data involve a combination of gathering reports from counterparts incities participating inthe program, surveys, and aggregatinginformationfrom other sources. The cities formally participating inthe program will be requiredto provide detailed monitoring data regarding specific sub- project investments. Participation of additional cities indata collection activities will be voluntary. Capacity. Because data collection, analysis, and evaluation will be carried out by the CAI, which has proven its ability in the past to carry out this function, and funding for this activity has beenassured, capacity to carry out the evaluation is not consideredto be an issue. 35 a U C z 0 C 8 - 0 m, 0 2 a v, 3 C 0 8 0 Ln C \o a v, 3 rn 0 0 C x I W P Baseline The GHG emissions baseline is the direct result o f the modal split, multiplied by the number of kilometers, and emission factors' (grams/km) o f each mode. The current aggregate modal share used to construct the baseline i s derived from available information provided by cities and information found inthe literature. ModalSplit inLatinAmerica* Private automobile 21Yo Motorcycle 1Yo Taxi 2% Conventional bus 39% Bus rapid transit 4% Walk 25% Bicycle 1Yo * Average for selected cities The number o f trips is calculated by multiplying the aggregate population by 2.2, the assumed trip generation rate per person. The aggregate CO:!emissions were basedon no changes inmodal share among different categories. The trip generation was also assumed to be static over the 20 year period. This i s an unlikely assumption that results in a more conservative estimate since both trip generation rates and populations will probably grow over this period. The methodology also assumes that average trip distances will not change - also not a reasonable assumption, but one that results in a more conservative estimate, in that it undercounts the number vehicle kilometers o f travel in the baseline. Based on this methodology (more details in Annex 9), the baseline C02 emissions are 212 million tons over 20 years. The modal share will be disaggregated at project level (city) as information becomes available and to ensure proper monitoring o f impact o f GEF investments in each city. Targets The activities implemented by this programpromote modal shift from private vehicles to more energy efficient transport modes like public transport, walking and biking and the reduction o f vehicles kilometers traveled incities and the region. While the program will monitor modal share changes and reductions inkmtraveled, it i s very difficult to set targets related to modal changes (and GHG emission reductions) within the life-timeo f this program (4-5 years). Targets have been established for specific corridors and interventions that the GEF i s helping implementina number o f cities. Through the removal of barriers, development of plans, proposedincentives, and demonstration projects, GEF will supportthe institutional, regulatory, and social framework for modal changes over the longer term. Activities implementedby the program will have direct quantifiable outputs (pilot investments, implementation o f BRTs, * Based oninformation from Chile. 38 bikeways, mobility plans, policies, etc.) linked to outcomes (local and national regulations, financial incentives, post-project investments)that can be monitored and will provide the basis for future modal shifts.The precise impact o f these policies on GHG emission reductions will obviously be difficult to predict and to monitor within a multi-stakeholder and complex sector likeurbantransport. Addedto this will be the complexity of working at a regional level in 3 countries. Recognizing these uncertainties related to emission reductions from different urban transport policies and interventions, this program aims to develop a better framework that can be used by GEF and other agencies to quantify expected GHG emissions reductions and monitor and evaluate effectiveness o f policies and programs. 39 Annex 4: DetailedProgramDescription LATIN AMERICA: GEF Sustainable Transport and Air Quality Program Overview 1. This program i s designed to mitigate greenhouse gas emissions from urban transport by rationalizing the use o f different motorized transport modes and promoting the modal shift to less polluting modes o f transport and seek additional benefits in terms o f reducing local air pollution and congestion, improving efficiency o f the transport system and increasing accessibility o f the poor. 2. The STAQ program is expected to reduce GHG emissions in one or more o f the following ways: (1) number o f vehicles, (2) distance traveled or (3) emission per vehicle distance traveled. Distance Emission veh- --Modal share - Zoning practices Fuel type Load factor Density o f housing --Vehicle technology --Congestion pricing Mixed land-use Maintenance Economic incentives ---Transport corridor --Driver behavior densification --Congestion Operational design 3. Achieving an efficient urban transport system in Latin America i s a major and difficult task and needs sustained financial, institutional and political support in the long term. It requires the participationof stakeholders, who play a key role inthe selection of transport modes, and moreover inthe intensity o f transport use. 4. This program takes advantage o f synergies among similar types of projects indifferent cities, and forges a regional approach to mainstreaming the innovations that some Latin American cities have already developed and others that the Project will pilot in selected cities. B y exploiting such synergies, a regional approach can produce multiplier effects (not to mention economies o f scale) and help remove the barriers at local, national and regional level, as identified below. 40 1. Management of - Lack of recognition that freight movement is a problematic source of C02 emissions, congestion, freight transport and emissions of air pollutants such as particulate matter and oxides of nitrogen; Lack of regulatory frameworks to set and enforce standards for rolling stock renewal, and registration; Lack of regulatory and institutional framework to enforce more efficient freight distribution and transport management; Lack of political support from national, state and local government levels; Lack of institutional capacity to implement a strategy at local level; Lack of support from transport and logistics companies to rationalize public transport system; Lack of comprehensive strategies to renew the fleet and improve quality of fuels Inadequate mechanisms for identifying improvements and disseminating results 2. Integration of Deficient coordination between environment, urban planning and transport planning land-use Legal requirementsand constraints, as well as project development timelines under which these planning, agencies operate are often incompatible transport and Lack of legal instruments and financial and economic incentives to implement densification and environmental mixed land-uses management Lack of local institutional and technical capacity to implement projects Lack of political support from national, state and local government levels Inadequatetools and methodologies to assess impacts of land-uses and location of activities on transport system 3. Modal shij to Perception that achieving improved public transport is expensive, difficult, and will threaten our public transport quality of life and lifestyle. Lack of support from private operators to rationalize public transport system Lack of regulatory framework and enforcement capacity to rationalize transport system Risks associated with investment in new technologies and improved fuels Lack of financial resources to sustain investmentsin project expansions and maintenance Lack of technical capacity and experience to rationalize system and manage privately operated public transport systems Negative influence of marketing pressures and advertisementswhich almost always promote the purchase and use of private cars Outreach and improvementsto attract new users is deficient Connectivity with other modes (walking, cycling, etc.) is often poor, leading to perceptionsthat the system is difficult or burdensometo use 4 Non-motorized - Lack of public support, as walking and cycling are often perceived as unsafe, undignified, or transport inefficient Allocation of resources for facilities for pedestrians and cyclists often overlooked; such facilities, ifdevelopedat all, are often the result of supplementalfunding to other projects Lack of local institutional and technical capacity to design adequate bikeway networks and effective bicycle promotion strategies Lack of financial resources for investments in prqjects 5. Transport Lack of public and political support demand Perception that transport demand management will threaten the quality of life and lifestyle management Lack of local institutional and technical capacity to implement prqjects Lack of financial resources for investmentsto sustain projects Lack of information on the positive impacts of reduced speeds, lower emissions and traffic free zones. 41 Overall Program Design 5. This GEF Program i s divided into a Regional Project and an Argentina, Brazil and Mexico Project. These countries were chosen since they are highly urbanized, the Bank is preparing or implementing projects, and they are leader and regional catalysts of policy and technology change. The Regional Project will assist in improvingthe understanding on the links between transport, air quality and climate change; foster the adoption of policies, strategies and institutional framework to overcome barriers at the local, national and regional level, and assist in the collection and sharing of informationon best-practices and pilot city investments in selected cities. The Regional Project will further strengthen region wide efforts to strengthen, integrate, consolidate and harmonize strategies that will expand beyond the scope of the GEF Program. 6. The three Country Projects inArgentina, Brazil and Mexico are focused on pilot investments in 11 cities that will demonstrate and assess impacts of policies and investments on the ground, provide lesson to overcoming political, institutional and technical barriers and develop comprehensive sustainable transport, air quality and climate change strategies at local, national and regional level. Figure A4.1. GEF Regional Sustainable Transport Program Regional Project Activities --- Dissemination Project GHG and co-benefit assessment - Policydialogue Regional capacity building - Project supervision and monitoring of lessons learned Country Projects: Pilot Investments in 5 thematic windows -- Posadas Cordoba Sub-project Sub-project Le6n Sub-project - Rosario Sub-project -- Silo Curitiba Sub-project Paulo Sub-project - Tucuman Sub-project --- Puebla Monterrey Sub-project Sub-project 42 RegionalProject TechnicalAssistance and Institutional Strengtheningat RegionalLevel - (USD2,903,000) The Regional Project will build on the Clean Air Initiative's network of Latin American cities and stakeholders to foster horizontal (across municipalities) and vertical (between municipal, state, and federal levels) knowledge sharing on the preparation, appraisal, implementation, outcomes, and lessons of the individual projects. The project will help harmonize efforts and develop an integrated strategy to improve air quality and reduce GHG inthe transport sector at local, national and regional level. The aim is to move beyond the 12 selected cities and 3 countries and provide a regional framework for knowledge exchange, expertise and policy implementation, leverage additional resources and foster the introduction of long-term sustainable transport policies and finance mechanisms in the region. The knowledge gained under existing and future projects (GEF and others) focusing on sustainable transport, climate change and air quality, will be integrated into the Regional Project. Some of the key institutional, regulatory and financial barriers for the introduction of cleaner fuels and technologies, incentives for non-motorized and public transport systems, better maintenance and driver behavior, integrated urban and transport planning, better regulated freight movements in cities, better motorized transport demand management and reduction of overall vehicle kmtraveled will be addressed at city, national and regional level. Development of human capital and solid institutions i s a key element to ensure that climate change, air quality and other sustainability considerations are incorporated in the provision of urban development and transport systems to improve quality o f life and reduce poverty in Latin America. The Regional Project is divided into the following components: (1) evaluate and improve existing methodologies to assess and demonstrate climate change, air quality and other benefits of transport interventions; (2) strengthen the planning and implementation capacity of local and national level institutions and key stakeholders to maximize GHG and air quality benefits of existing and future transport projects; (3) foster the adoption of regional national and local comprehensive policies that mainstream climate change and air quality considerations into transport, land use and energy planning; and (4) establish project implementation monitoring and support systems at the national and local levels to ensure conformity with GEF OP11 objectives. Eachof the Regional Project componentswill focus on addressingthe following barriers: a. Component 1 will address: (i)the lack of coherent and consistent methodologies for estimating GHG emission reductions from transport measures that would assist decision making; and (ii)the absence of consistent data to evaluate climate and air pollution impacts of transport investments and land-use strategies, and data collection systems; b. Component 2 will address: (i)the lack of comprehensive strategies and action plans at the regional, national and local level to reduce GHG and air pollution emissions from the transport sector; and (ii)the lack of technical knowledge in devising climate friendly transport strategies and projects; 43 c. Component 3 will address: (i)the lack o f financial and political support for the preparation and implementation o f sustainable transport projects; and (ii)the limited awareness and capacity o f urban transport, environment and planning authorities to advance sustainable transport, climate change and air quality agenda; and d. Component 4 will (i)address the needs o f consistent data collection and Program monitoring and (ii)assist the cities in overcoming bottlenecks in sub-project implementation. All components will help strengthen coordination amongst governments, regional stakeholders, international agencies and private sector to maximize results on the ground; and, while project components are presented separately below, they are closely interrelated and also linked with pilot investments in the selected cities under the country-specific projects. Component 1. Evaluate Methodologies to assess climate change, air quality and other benefts of transportinterventions (US0 538,000) 1. Objectives. The overall objective i s to gather, assess and enhance existing models to quantify greenhouse gases emissions and air quality impacts o f different transport interventions. Consultants will be gathering information about existing transport demand and emissions models and select a limited number o f models for more detailed evaluation regarding data requirements, accuracy in forecasting demands and modal mix, and quantify greenhouse gas and air pollutant emissions at the project and city level. The assessment will compare data complexities and intensity, accuracy o f model predictions, comparisons with real-world measurements and applicability o f models at project and aggregate city level. 2. The project will identify models that can cost-effectively assist decision making within the transport sector and analyze the baseline and additionality o f transport sector investments in terms of potential for GHG and air pollution emission reductions. The project will assess the technical and institutional capacity requirementsin usingthe model. Inprinciple, the models will cover all windows o f the project and during implementation, an international expert group will advise on the specific models that will be selected for further evaluation and supervise consultants and provide recommendations. Regional aggregate transport, air quality and climate change scenarios will be developed and disseminated - this effort will largely be based on aggregating and evaluating recent and ongoing completed studies and reports. 3. Efforts will be coordinated with other ongoing Bank initiatives and assessments, such as the low-carbon studies in Brazil and Mexico and the transport and C D M operations in Colombia, Chile and Peru. 4. SpeciJic Activities: Identify and review existing transport demand, emission and climate change assessment methodologies and their applicability for different types o f projects and aggregate city- wide assessment to be implementedunder the STAQ Program, including identification o f data requirements. 44 0 Evaluate commonly used or promising methodologies and compare them with real-world measurements and data from 2 to 3 cities. 0 Identify strengths and weaknesses o f different models at different scales (local, city and national level) based on: simplicity, accuracy, user friendliness, appropriateness for decision making, replicability, and costs. 0 Create online forums and organize technical workshops to disseminate and discuss models and methodologies with governments and stakeholders at regional and city level. 0 With support from other projects (e.g. low carbon studies, IES studies, IEA reports, etc.) compile regional scenarios to estimate: (a) current climate change and air quality baselines, (b) alternative transport scenarios, and (c) potential GHG and air quality benefits as a result o f sustainable transport programs inArgentina, Brazil and Mexico. 5. Outputs/Products 0 Establishment o f internationally recognized and demonstrated methodologies suitable for project assessment (micro) and integrated city-wide assessment (macro) o f benefits and co-benefits of urban transport investments in Latin American Cities. 0 Publication o f reports on the assessment methodology applied to at least 3 cities in Latin America. 0 Developmentand dissemination o f baseline and scenarios for transport and air quality in the region. 0 Website and toolkit with detailed information. 6. Partners. Possible partners could include USP, COPPERJFRJ, PUC Chile, IIASA, ICLEI, EPNIES, NREL, WRI/.EMBARQ, U C Riverside & Berkeley, UNEP/UNDP, Centro Mario Molina. Component 2. Strengthening planning and implementation capacity of local and national level institutions (US0 811,000) 1. Objectives. The aim o f this component i s to assist and strengthen the capacity o f cities to maximize GHG benefits o f investments and help implement comprehensive urban transport policies that effectively address air quality and GHG concerns, while taking account o f other key priorities such as accessibility, equity and economic sustainability. 2. This component will provide a platform to learn from experiences in Bogota, Curitiba and other cities, have shown that the greatest GHG, air quality and other benefits o f transport systems are achieved when comprehensive packages arejointly developed and implemented. 3. This component will assist cities in imbedding proposed interventions in comprehensive strategies that will maximize GHG and other benefits, for example: better modal integration between NMT and public transport to increase ridership, improve operational efficiency o f public transport systems (including BRT corridors) to improve energy efficiency, foster technology improvements within existing mass transit systems to reduce emissions, create incentives for transit oriented land-use planning and development to create incentives for low-carbon transport modes, develop policies to reduce attractiveness o f individual motor 45 vehicles infavor o f public transport systems or NMT.C A I will work with partners to provide direct assistance to selected cities and develop and disseminate technical guidance notes and materials on sustainable urban transport in Latin America. 4. GTZ/SUTP and ITDP, among others, have agreed to share their training materials and coordinate the implementation o f this component. Following the GTZ/SUTP model, regional training networks will be created, where C A I and GTZ/SUTP will coordinate activities with regional and international organizations. Local partners will be in charge o f the local support and logistics to administer the courses and leverage resources. Local experts will also be involved in training delivery. By applying a train-the-trainer approach, this component will ensure long-term sustainability and assist in the replication o f experiences that are initially developed with international support (as far as the available budget allows). GTZ i s currently developing a similar approach in Asia along with CAI-Asia and other partners under the SUMA project. GTZ will contribute with in-kindresources amounting to up to US$200,000 including resource material, staff time and other requirements for training courses, based on their previous experience. 5. The component will also support the development o f an interactive website and the sharing o f knowledge and experience between participating cities and stakeholders involved in the project preparation and implementation and disseminate experiences throughout the region. This component will reach beyond the 11 selected cities and be open for other cities to participate inevents and learn from other cities' experiences. 6. Activities 0 Deliver hands-on assistance and training to local staff and stakeholders in (i) development o f integrated municipal land use, transport, climate change and air quality strategies, (ii)increasing efficiency o f urban transport system through technology and operational improvements, (iii) transport impact evaluation (with focus on climate change and air quality); (iv) design and implementation o f cleaner public transport systems, (v) planning and design o f bicycle and walking facilities, (vi) transport demand and mobility management incities, and (vii) development of detailed emission inventories With support from partners, create and maintain a virtual network o f regional trainers, experts and institutions to deliver activities in Latin America inthe long run. Compile and disseminate a hands-on manual to develop sustainable transport strategies and projects. Become a clearinghouse o f strategies, options, instruments and experiences to design and implement transport programs and projects and their linkages to climate change and air quality. 7. outputs 0 Training material on Mass Transit Options, Non-Motorized transport, Transport Demand Management, Land use and transport and Freight Transport 0 Trainers are selected from interested Latin American cities, mainly from Argentina, Mexico and Brazil Trainers are trained on general issues of sustainable urban transport 46 0 Trainers are trained on the topics o f Mass Transit Options, Non-Motorized transport, Transport DemandManagement, Land use and transport and Freight Transport Tailored technical assistance to cities inpreparing and implementing project interventions 8. Partners. Major partner for this component i s GTZ SUTP. Other potential and contributing partners include ITDP, SEDESOL, I-ce, UITP, SusTrAN LAC, WRIEMBARQ, USP, COPPELJFRJ, PUC Chile, and Centro Mario Molina. Component 3. Foster the development of regional national and local comprehensiveclimate change, air quality, energy,transportand land usepolicies (US0 764,000) 1. Objectives. Climate change i s a global challenge and requires a global solution. Ultimately, an effective strategy will require commitments and actions by countries and regions. One the other side, local air pollution i s a common challenge and concern for most Latin American Cities. Some o f the major barriers inhibiting the introduction o f cleaner technologies and more efficient transport modes are related to government policies and regulations, and to perceived political priorities. The objective o f this Component i s to build awareness and foster policy dialogue at the national and local levels, involving key government decision makersand other stakeholders, to advance the agenda for introduction of incentives for more rational use o f motor vehicles and facilitate introduction o f more fuel efficient and cleaner technologies. 2. The GEF will also help coordinate efforts among the various stakeholders inthe L A C region, by bringingtogether appropriate experts, fostering the establishment o f networks, developing guidance, and sharing a variety o f tools, C A I can assist L A C cities, not only in securing program funding, but also in working toward program self-sufficiency by exploring opportunities for local financing. 3. Activities: Organization o f high-level annual conferences and workshops for targeted dialogues between national and local governments, opinion leaders and key stakeholders to foster mainstreaming o f climate change and air quality consideration in National and Local Transport Policies and Regulations, including dissemination o f successful experience o f institutional coordination and strengthening Develop hand-outs and easily accessible information for decision makers on key environmental and climate change impacts o f transport policies and possible measures to reduce impacts Coordinated policy dialogue with 3 countries on the implementation o f national policies and economic incentives to promote sustainable transport, energy efficiency, clean technologies and fuels and facilitate implementation o f local action plans. 4. outputs 0 Website with information regarding national-level policies and strategies around the world 3 Annual Conferences bringing together decision makers and key stakeholders to discuss current issues related to transport, environment and climate change. 47 About 6 policy notes (2-4 pages) and guidelines on key information, lessons learned and case-studies illustrating the links betweentransport, environment and climate change 6 tailored workshops to foster dialogue among key local and national decision makers, including regional workshops bringing together representatives from different countries. 5. Partners. Potential partners include UNEP, UNDP, UNFCC, International Development Banks, Relevant National Government Agencies, ITDP, WRVEMBARQ and Centro Mario Molina. Component 4. Project implementation monitoring and support (US0 790,000) 1. Objectives. The objective i s to provide tailor made technical assistance to participating cities and continuous and structured monitoring, supervision and evaluation of the program's impacts vis-a-vis the indicators presented inAnnex 3, the overall goals o f GEF OP11 and the proposal received from each city. This component will help gather data on vehicle population, fleet composition, activity and modal share and analyze impacts of the project in each participating city and perform some benchmarking studies to compare cities and identify main institutional, political and technical barriers that cities face in implementing policies. An overall assessment o f existing trends and program impacts will be addressed under this component. This component will help inproviding warning systems regarding the progress o f the program and will be o f great importance in recommending corrective measuredsteps if problems arise. It will also enable the program to fulfill the reporting requirements of the GEF implementingagencies and help provide inputs to the assessment o f different transport, air pollution and GHG emissions under component 1. 2. Activities: Overall management o f the program, including all required annual financial reports, technical progress reports, audit and any additional report as requiredGEF. Technical assistance to cities in project design, preparation, implementation, supervision and evaluation. Timely policy and technical support when requested by participating cities to (a) resolve specific issues or problems related to project implementations, and (b) open windows of opportunity (for sustainable transport improvements) that are likely to arise with changes ingovernment policies or decision-makers. Gathering and processing o f data and information from participating cities to prepare baseline and progress in project implementation Prepare data monitoring tools for reporting and dissemination Development o f guidelines and proposing policies to institutionalize indicators for periodic and public reporting at city level (transparency and public access to information). Training activities for indicators measurement, monitoring and assessment. 3. outputs Technical assistance reports Program performance indicators Semi-annual progress reports 48 0 Website with information on project and related activities 4. Partners. Potentialpartners include ITDP, Centro Mario Molina. Country Projects Pilot investments, technicalassistance, and capacity buildingactivities - in select cities (USD17,897,000) The program will finance technical assistance and some pilot interventions in 11 selected metropolitan areas in 3 countries' to remove barriers for sustainable transport. The eligible activities vary from city to city, depending on the level o f preparedness, institutional capacity, potential impact, and on-going activities. In many cases, the program will build on on-going transport and land-use planning processes, helping introduce and reinforce solid sustainable transport concepts, and helping erase existing political, technical, economic, regulatory and financial barriers. Insome other cases, the program will have to help introduce new concepts and potential benefits to policy makers and stakeholders. The 11 proposed city specific projects will co-fund measures in the five thematic "Windows" outlined in Table A4.1 above. These windows follow the World Bank's and GEF priorities for climate change mitigation in the urban transport sector". The level o f funding proposed for the country projects and city-specific sub-projects is USD17,9 million. Details about how the sub-projects were selected can be found in Annex 20. Details about the specific activities to be funded in each country can be found in Annexes 18 and 19. The remainder o f this section summarizes the types of activities funded under each window plus the capacity-building element. Window 1.Management of Freight Transport 1. Background. Almost all cities in Latin America and the Caribbean face similar problems with regard to freight transport: (1) negative environmental impacts resulting from an old and poorly maintained cargo transport fleet (often averaging over 20 years); (2) long delivery times even on short distances due to conflicts with other modes of transport, traffic congestion and other logistical inefficiencies; (3) large number of inter-municipal and intra- municipal trips for delivery o f goods; and (4) lack o f regulation for proper and efficient freight transport management (strategic regulations have not been implemented, that could make delivery o f goods and freight transport more efficient especially between and within urban areas). 2. Baseline. Sub-projects in this area will be focused on cities where there i s needto rationalize urban freight traffic or to regulate its operation within urban limits. For the baseline, it is ARGENTINA (Cordoba. Rosario. Posadas. Tucurnan); BRAZIL (Port0 Alegre, Belo Horizonte. Curitiba. Salvador); and. MEXICO (Monterrey, Ledn. Ciudad Juarez, Puebla). loKarekezi, S. ,L.Majoro, T. Johnson, 2003. Climate Change Mitigation in the Urban Transport Sector: Prioritiesfor the World Bank. The World Bank. 49 expected that freight trips in the coming years will steadily increase with little overall planning as to peak traffic hours, and conflicts with other modes. Long-distance freight transport into the cities will continue to be relatively unplanned with respect to other transport users, leading to additional congestion, air pollution and excess o f C02 emissions. 3. GEF alternative. Under the GEF funded alternative scenario, the proposed activities will help government agencies to identify the problems caused by freight transport and design measures to address its impacts on traffic and the environment. Selected measures will be implementedto start rationalizing freight movements in the larger cities that will result in important reductions in GHG emissions. 4. GEF incremental Jinancing. The specific incremental activities that will be undertaken through GEF support for this Window amount USD $1,370,000 as detailed in the appraisal document for the respective country project. 5. Sustainability. Since one o f the most important aspects o f this window i s to promote the rationalization o f freight traffic through a set o f regulations, it i s expected that some companies will benefit inthe long term from economic savings due to an improvement inthe efficiency o f their operations. Also sustainability will be achieved as result o f the political will to enforce the new regulations and, at the same time, implementing an incentive program. Window 2: Integration of Land UsePlanning, Transport and Environmental Management 1. Background. Measures in this area aim at mixing land uses incentives with transport and environmental policies, thus reducing trip lengths and promoting shift to more efficient transport modes. One o f the main reasons for the environmental and public transport problems has been the lack o f coordination between the planning, environmental and transport agencies, when defining the cities' development goals. This has often led to sprawl, the decline o f urban centers (historic and other key areas) and the deterioration o f public transport. 2. Objectives. The main focus o f this window is to promote high-density land use along public transport (such as BRT) corridors and to prevent the type o f urban sprawl which forces people to use their own motorized vehicle; this will be o f particular relevance to currently medium-sized but rapidly growing cities. This window will also aim at revitalizing urban centers for their cultural, social, educational or economic importance by a combination o f land use, public transport and environmental incentives, while helping to recover public space and promote more efficient transport modes. It will also help design instruments and incentives, including action plans for implementation o f changes incurrent land-use patterns. 3. Baseline. Studies and action plans addressing urban and transport development issues usually do not integrate all aspects o f urban planning and may not take into account the long term effects on city growth. Where they exist, development plans and urban planning tools are commonly disconnected from the transport and mobility master plans. 50 4. GEF alternative, The proposed activities will help reduce the total km traveled km traveled by private motor vehicles. GEF assistance will help expedite and co-finance studies to develop action plans to create development - business/housing/educational - along major public transport corridors and around major transit stations and terminals. GEF funding will be complementing and leveraging locally available funding to carry out the studies and pilot interventions at the urban level. Also, GEF may help explore ways to co-finance the development o f transport corridors through the use o f land-use property value financing schemes, capturing increases in property values for corridor re-developments. The GEF alternative will promote private investments and catalyze high-density land use along transport corridors that will trigger higher demand for public transport and NMT in the long term. The presence o f the GEF will attract the support o f other co-financing, including local government, real-estate agencies and land developers. 5. GEF incrementalfinancing. The incremental activities that will be undertaken through GEF support for this Window amount USD $1,010,000 as detailed in the appraisal document for the respective country project. 6. Sustainability. Land-use pattern change i s a long term process that i s likewise expected to last. It takes time to change people's preference and behavior and to consolidate them, but pilot interventions will be devised so they show visible benefits. During the preparation phase, measures to ensure project sustainability will be devised. Public demand will be the key to ensure sustainability of this window. Window 3. Modal Shvt to Public Transport 1. Background. Several Latin American cities are in the process o f modernizing their public transport systems, some o f them through the adoption o f BRT, and some through other efficient public mass transport modes. As a result, public transport i s being improved, but there i s still need for technical assistance to ensure the best use o f the new systems, and their integration with the other transport modes. While in many cases the BRTs are operated through private concessions, there i s still a scarcity o f experience and know-how to develop a sustainable business model and also to ensure the renewal o f the fleet. In many other cases, the process o f exploring BRT or other efficient mass transit systems i s just starting, but service providers and government decision-makers are often reluctant to a change o f the existing situation. Moreover, the adoption of cleaner technologies i s not always considered due to the large economic and political costs already involved in restructuring the public transport systems. 2. Objectives. The main objective o f this window is to maximize the use o f public transport in medium-sized and large cities, by improving its service quality and speed - thereby enhancing its attractiveness and image. Recent experience has shown that BRT technology can facilitate a quantumjump in this regard, within relatively modest budgets. An important element i s public transport integration, both within the mass transit network and with complementary modes. In cities where there i s already a BRT, the project will seek to maximize its potential as a sustainable mode o f transport. In other cities it will help in determining whether BRT or other mass transit investments would be appropriate and may 51 support the planning for such systems in specific corridors. In most cities, it will aim to promote the integration o f public transport with other modes such as cycling, car commuting, walking, and paratransit services (pedicabs, shared taxis, etc.). Public transport route restructuring i s another important aspect, especially where a relatively large number of small- capacity vehicles i s replaced by fewer but larger buses. Incentives for the use of modern low-emission buses along the corridors will be examined, and special attention will be given to improving accessibility and mobility o f the urban poor to efficient and clean public transport systems. 3. Baseline. The baseline situation in this window will widely vary from city to city. In cities where BRTs or other efficient mass transit systems are already in the process o f being implemented, there i s usually a lack o f emphasis on modal integration, linking non-motorized transport, taxis and other modes to the new systems. In some other cases, the image o f bus transport i s poor and requires promotional and communication campaigns. In most other cities, the public transport systems are still inefficient, and restructuring has not been considered, or encounters political and economic barriers that needto be overcome. 4. GEF alternative. GEF funds will create conditions so local bikers, commuters and pedestrians combine their travel with public transport services, by connecting important trip generators and/or attractors with key links o f the main transport systems. GEF funding will also help coordinate other forms o f public transport such as taxis and bike-taxis to the BRT system development and to promote a shift to non-motorized vehicles and reduce the use of private cars. Modal interconnectionwill result in a reduction o f energy consumption per trip thus decreasing the overall GHGemissions from the transport sector. 5. GEF incremental Jinancing. The incremental activities that will be undertaken through GEF support for this Window amount USD $8,638,000 as detailed in the appraisal document for the respective country project. Sustainability. Where there is strong support by Government and civil society, this window i s very likely to sustain itself after completion o f the GEF program. Moreover, users and operators o f other forms o f transport may begin to perceive BRTs and the associated bus transport systems as complements rather than competitors, inducing a favorable perception that may in the future result inhigher and more sustainable modal shifts. Window 4. Non-motorized Transport 1. Background A large share o f urban trips takes place on foot". However, limited attention has been given to developing and maintaining proper walking facilities in most cities. Safe facilities and secure access to major corridors i s needed to encourage walking trips. As for bicycles, experience in cities such as Bogota, suburban Buenos Aires and Santiago has shown that there i s a good disposition to use this transport mode, provided that bicycle parking and properly designed and safe bikeways are in place, and linked to the cities' activity centers, such as education and work areas. Also, it has been shown that infrastructure I'In Sao Paulo's Metropolitan Area, walking trips represent about 6% of the total distance traveled. 52 alone i s not sufficient, and that promotional strategies and complementary measures are needed, such as car-free streets on Sundays (pioneered with great success in Bogota, Quito and other cities), educational program to teach cycling, and bike repair clinics. The integration o f non-motorized transport to public transport systems can be vital for the success of this window. Even a moderate shift to non-motorized modes of transport could provide substantial benefits. For the GEF-supported Marikina (a district of Metro Manila, Philippines) bikeway project, it was estimated that an increase o f bicycle use from 1.6% in 2000 to 2.8% in 2015 will yield aggregate benefits o f USD4 million for an initial investment o f USD2.1million. 2. Objectives. The objective o f this window is to facilitate and promote walking and the use of bicycles as a viable and safe alternative to the use o f private cars. It aims to promote a larger modal share o f non-motorized trips in Latin American cities, and provide improved access to the public transport system, attract business investments, improve local pedestrian and bicycle facilities and integrate them with metropolitantransport corridors. 3. Baseline. At this time, biking i s limited in most cities and there are usually no concrete plans to promote bikeways as part o f the transport system. It i s likely that without GEF intervention, the cities would continue to neglect the potential role o f walking and biking As part o f the transport system. The current scenario has been to create sparse bikeways and pedestrian zones in a few cities but without integrating them to the upgrading o f public transport systems, thus reducing the potential of becoming effective alternatives for transport. 4. GEF Alternative. The GEF program will help prepare overall guidelines for non-motorized transport facilities and bring these modes to the forefront o f urban transport planning. GEF funds will help in promoting non-motorized travel and will also assist indeveloping walking and biking facilities in a few pilot neighborhoods served by mass transit services, with the objective o f convincing car drivers to switch to walking and biking for short trips and to use a combination o f NMT and public transport for longer trips. The GEF alternative will promote private investments and catalyze mixed land use along transport corridors that will generate more short trips and also trigger higher demand for public transport and NMT. 5. GEF incremental financing. The incremental activities that will be undertaken through GEF support amount to USD $3,696,000,as detailed in the appraisal document for the respective country project. 6. Sustainability. It i s also expected that the non-motorized transport window will have a positive demonstration effect which will strengthen political support for the bikeway and pedestrian programs. Window5: Transportdemand management 1, Background. Since rising motor vehicle use trends have negative environmental externalities, measures addressing traffic demand management will have a positive impact on reducing local and GHG emissions from transport. In central London, motorized vehicle traffic decreased 20% in the first few months after the introduction o f congestion pricing scheme, 53 which also generates sources o f funding for more efficient transport modes. Many other European cities have applied traffic calming measures and circuitous traffic circulation patterns with great success, restricting car use in central areas without affecting their commercial viability. In some Latin American cities such as Mexico, Bogota, Santiago, or Sao Paulo, restrictions for private car circulation in alternative daily schedules have shown positive impact in reducing congestion and promoting modal shift to public transport, or to a more efficient use o f the private car fleeti2. Objectives. This window aims at reducing and rationalizing the use o f private motor vehicles incities, and more specifically inthe city centers, where normally most o fthe daily activities occur. Traffic demand measures to be explored include improved parking policies, park-and- ride facilities, restriction o f circulation in selected areas, traffic cell management, and physical segregation o f modes. Baseline. At this moment there are hardly any signs that the governments at national or local level will carry out studies for exploring road pricing alternatives, and only few cities have been considering other car use limitations such as license-based access restrictions. As per other transport demand management measures, the range o f action i s very broad from city to city. But in most cases there still room to improve, even in cities like Sao Paulo or Bogota, where the circulation restriction schemes have already proven their potential, further refinementsmay be needed. 13, In most cities, however, there are no plans to restrict private car use, or sometimes there are even contradictions in the policies; for example, inexpensive parking at city centers may generate additional car travel demand and increase congestion. GEF Alternative. The GEF will consider options to reduce and manage traffic flow in the cities, which could involve innovative techniques such as Intelligent Transportation Systems and traffic re-direction. Also, efficient schemes for restricting private car circulation will be explored. The GEF support to traffic demand measures will help leverage resources from state and local government agencies. Measures such as selective street closures, parking controls, pedestrianization schemes, traffic-cell circulation patterns or congestion pricing could helpreduce traffic volumes and associated costs. GEF incrementalfinancing. The incremental activities that will be undertaken through GEF support amount to USD $2,812,000 as detailed in the appraisal document for the respective country project. Sustainability. Measures to reduce and restrict private car circulation may raise opposition even at the conceptual stage, therefore it will be very important to widely disseminate the results and benefits from experiences in other parts o f the world where road pricing has been implemented. Nevertheless, the sustainability of the afore-mentioned measures will closely depend on how environmental management i s applied. 12Car users can be motivated to organize car pooling, or to better distribute trips during the day. In Sao Paulo and Santiago, studies have been envisagedto examine the potential of congestion pricing schemes 13 In Sao Paulo, the "Rodiizio" is only focused to transport within the center of the municipality of Sao Paulo, but excludes the rest of the Metropolitan Area. The Government is interested in enlarging the area of coverage. In Bogota, the "Pico y Placa " works only for peak hours, and the Government is considering its expansionto the whole day. In both cases, TA is necessary to design the most efficient alternative. 54 Annex 5: ProgramCosts LATINAMERICA: SustainableTransport and Air Quality Program This program will have a total cost of USD77.1 million, out of which GEF will fund USD20.8 million. Co-financing from the different urban centers comes as a combination of investment resources, in-kind contributions, following the principles established in Table in Annex 1. Program costs are summarized and presented here in different forms. Table A5.1 summarizes costs by Project, Component and Window. Table A5.2 gives detail on program costs, and GEF and counterpartfunding, by window. Regional Project -Sustainable Transport and Air Quality Component 1: Improve methodologiesto assess climate change, air 670,000 quality and other benefits of transport interventions 538,000 132,000 Component 2. Strengthen regional capacity for project preparationand implementation 811,000 309,000 1,120,000 Component 3 Mainstreamclimate change and air quality considerationsonto transport, land use and energy planning 764,000 789,000 1,553,000 Component 4. Project Monitoring and Evaluation 790,000 863,000 1,653,000 Subtotal Regional Project 2,903,000 2,093,000 4,996,000 Country Projects Pilot investments, technical assistance, and capacity building activities in select cities - Argentina Window 1 Window 2 205,000 615.000 1,220,000 Window 3 2,382,000 6,107,000 7,989,000 Window 4 1,400,000 1,010,000 2 310,000 Window 5 Project Administration 150.000 150,000 Subtotal Argentina 3.987.000 7.882.000 11,869,000 Brazil Window 1 1,250,000 200,000 1,450,000 Window 2 600,000 750,000 1,350,000 Window 3 2,499,000 10,600,000 13,099,000 Window 4 1,180,000 1,850,000 3,030,000 Window 5 2,812,000 3,450,000 6.262.000 Prqiect Administration 191,000 122,000 3 13,000 Subtotal Brazil 8,532,000 16,972,000 25,504,000 Mexico Window 1 120.000 1 10,000 230.000 Window 2 205,000 120,000 325.000 Window 3 3,757,000 27,278,000 3 1,035.000 Window 4 1,116,000 4,043.000 5,159,000 Window 5 Project Administration 180,000 30,000 210,000 Subtotal Mkxicn - ............. 5.378.000 31.581.000 36.959.000 ..,. ,~~~ - 7 - - I - - - -- 7 - - - 7 -- - Total for Country Projects 17,897,000 56,435,000 74,332,000 55 Annex 5: ImplementationArrangements LATIN AMERICA: GEF Sustainable Transport and Air Quality Program ImplementationOverview The program has been structured in four separate projects: (i)a Regional Project focusing on developing a holistic approach and bridge the individual sub-program and city projects through analysis and learning. A mechanism would be established to carry out horizontal (across municipalities and countries) and vertical (between municipal, national and regional levels) knowledge sharing on the preparation, appraisal, implementation, outcomes, and lessons o f the individual projects. It would draw upon, but not be limited to, the municipalities participating Regional GEF Program and (ii)three Country Pro-iects consisting o f pilot investments and specific interventions in 11participating cities. The World Bank will sign a Grant Agreement with the Clean Air Institute (CAI), for the execution o f the cross-cutting regional project. The C A I is currently hosted by the Breakthrough Technologies Institute (BTI), based in Washington, DC. Three separate Grant Agreements will be signed with the National Executing Agencies (NEAs) in each country. The Grant Agreement with NEAs will include a clause regarding separate agreements betweenthe C A I and each NEA regarding program monitoring and evaluation, information sharing, dissemination o f lessons learned and technical assistance. Figure A5.1. ImplementationArrangements .................................................................................................................................................................................................................................................................................................................. .., ................................. World Bank RegionalProject: j YEA ............. ....................................... a: Reports . - * - . - Participating Cities USD USD JSD 7 ~ ~ ............................................................................................................................ %. 56 CAI will be responsible for compiling information regarding the monitoring and evaluation of project progress against agreed milestones and indicators and coordinate supervision with NEAs. CAI will be responsible for the execution of regional activities, which would include compiling financial audits, progress reports and specific benchmarking studies. InstitutionalAnalysis CAI: As the program coordinator, CAI offers leadership and convening capacity, as well as direct access to informationand expertise related to transport and environment issues, including: alternative fuels, energy efficiency, air quality and climate change, clean technologies and emission controls, improved public transport, better management of travel demand, improved landuse and transportplanning, andpromotion of bicycle andpedestriantravel. The Clean Air Institute's mission i s to improve air quality and fight climate change caused by global warming. The Institute manages the Clean Air Initiative for Latin American Cities (CAI- LAC), a partnership for cities, private sector and non-governmental organizations, originally implementedand operatedby the World Bank. The CAI plays a pivotal role in helping Latin American cities reduce greenhouse gas emissions and clean the air; and serves as an important bridge between cities seeking solutions and donors, government agencies, and private sector. The CAI is a forum for regional strategy and program development, as well as for channeling training, technical assistance, and information exchange throughout the region. To add to the reputation of the CAI, its Board of Directors includes internationally recognized experts that will ensure technical soundness and political support at local and national level for proposedinterventions: 1 Dr. Mario Molina from Mexico, one of the world's most knowledgeable experts on pollution and the effects of chemical pollution on the environment that received the 1995 Nobel Prize in chemistry for his work in atmospheric chemistry and the effect of chlorofluorocarbons (CFCs) on the depletion of the ozone layer. I Dr. Alan C. Lloyd, Presidentof The International Council on Clean Transportation, who served as the Secretary of the California Environmental Protection Agency and as Chairman of the California Air ResourcesBoard; and, 1 Mr. Richard Ayres, principal of the Ayres Law Group in Washington, one of the US' most well-respected environmental attorneys, who has shaped the Clean Air Act and its implementation since its inception and has been involved in many of the most significant law andpolicy issues surrounding the Act. At the country level, Grant Agreements will be signed between the World Bank and existing Project Implementing Unit (PIU) of ongoing loans or loans under preparation - preferredoption -orleadingnationaltechnicalorganizationsinthefieldofurbantransportandsustainableurban mobility. The STAQ Program will follow, as much as possible, the management structure of existing and future Bank operations in the country. Specific arrangements will be presented in the separate PADSfor each country. 57 Table A5.1. PotentialProgram PartnershipInstitutionsand their Strengths Institution Strength Argentina: Secretary o f Project implementation unit of the urban transport project in Buenos Aires Transport (ongoing) and metropolitanregions inthe country (under preparation) Extensive experience with Bank's financial management, procurement and Contacts: safeguardpolicies Jorge de Belkustegui, Urbantransport expertise Project Coordinator National agency responsible for urbantransport Alfredo Femandez, Capacity to involve other cities in Argentina and disseminate lessons leamed Budget Officer nation-wide SebastianAnapolsky Key in addressingnationalbarriers Brazil: ANTP Key national government agency involved in urban transport related programs and financial support to cities. Contacts: Organizesnationalforums for municipal secretariesof transport Marcos Bicalho, Director Expertise in urbantransport related project, focusing on sustainable mobility, accessibility and public and non-motorizedtransport Knowledge dissemination and training on transport and environment related topics Mexico: SEDESOL Project implementationunit of previous urban transport project and project currently under preparation Contact: Extensive experience with Bank's financial management, procurement and Carlos Valdez Mariscal, safeguard policies Directorof Infrastructure, Urban transport expertise Highwaysand Transport Nationalagency responsible for urbantransport Capacity to involveother cities in Mexico and disseminate lessons learned Key in addressingnationalbarriers CAI (Washington, DC) Extensive experience working on air quality and climate change issues in Latin America Contacts: Strong relationshipwith major urban agglomerations in Latin America Sergio Sanchez, Executive Aggregates many development agencies and technical organizations on Director CAI issuesrelatedto transport and environment Mario Molina, Board Goals and objectives, complementary to Member CAI Covers the entire Latin American Region Robert Rose, Executive High level Director BTI Other PotentialPartners 0 BlueMoonFoundation 0 Interface for Cycling Expertise (I-ce) 0 The Hewlett Foundation SustainableUrban Transport Project (GTZ SUTP) 0 The Institutefor Transportation & Development Policy (ITDP) 0 UnitedNations Environment Program (UNEP) 0 UnitedStates Department of Transport (DOT) 58 The CAI will seek to attract funding from other donors and foundations to strengthen program supervision, knowledge dissemination and dialogues at the national and regional level to address key policy and regulatory barriers. Additional inputs will be sought from GEF/World Bank sustainable transport projects, and from the United Nations Environment Program (UNEP), which will implementone of the Regional Project of the program. ImplementationArrangements A Grant Agreement (GA) will be signed between the World Bank and the CAI to execute the regional project and carry out horizontal (across municipalities and countries) and vertical (between municipal, state, and federal levels) knowledge sharing on the preparation, appraisal, implementation, outcomes, and lessons learned from individual projects and related policies/programs inthe region. Separate GASwill be signed between the World Bank and NEAs for the subsequent phases - Country Projects - of the STAQ Program. The respective NEAs will implement and supervise the execution of city-specific activities in each country (see Annex 2) based. The GASwith NEAs will include language referring to separate MoUs that will be signed betweenthe CAI, the NEAs and the cities regarding information and knowledge sharing and participation in regional activities. The role of the CAI, through technical expert groups, is to oversee the technical execution of the different thematic areas ("windows") and monitor overall program progress. The CAI will also be developing a long-term strategy and leveraging funding for sustainable transport, climate change and air quality related investments inthe region. The Project Office in CAI will include a full time project coordinator, a technical specialist with responsibility for M&E and an administrative assistant. The CAI will be responsible for day-to- day coordination and technical support for the STAQ Program, as follows: implementing regional activities, monitoring overall program progress, auditing financial reports at the program level and for taking necessary steps to ensure sustainability of the relevant program activities. Specific arrangements within each country will be specified inthe PADSprepared for each phase of the program. The NEA in each country will ensure that cities in each country implement projects following the eligibility criteria. The NEA will have fiduciary oversight over the GEF disbursements in each city. They will ensure that Bank's financial, procurement and safeguard policies are followed in each country. The NEAs will oversee the procurement of activities; compile financial and technical reports o f the cities at the country level, disseminate lessons learnedat the national level and work with the CAI on regional strategies and policies. 59 WorldBank , Grant CAI/BTI (IA) Agreement Regional EA ProgramTechnicalManapement Program Steering Committee: Program technical oversight will be the responsibility o f the Program Steering Committee (PSC), to be the World Bank (chair), C A I (Secretariat) and to consist of NEAs, selected cities, and invited expert groups. The PSC will review and approve work plans, resource allocation and supervision and monitoring o f program activities. The preparation o f the annual Work Plan will be an iterative process whereby the C A I in coordination with the NEAs discusses regional and national project and sub-project plans. Representatives o f the NEAs will participate in the PSC, and ensure national level integration of city specific activities, involve national government agencies, monitoring execution o f the sub- program within their country and for reporting to the C A I and PSC. CAI, in addition to assuming technical leadership, program coordination and M&E o f all program activities, will be involved in the technical execution of the following Project activities: (a) strengthening o f technical capacity for environmental risk assessment and management; (b) strengthening o f technical capacity for socio-economic impact assessment; (c) training in environmental risk assessment, management and communication for competent authorities and practitioners; (d) training in socio-economic benefit/cost assessment for competent authorities and practitioners; and (e) compilation o f science-based information on biosafety for dissemination to the general public. 60 InternalCoordination(Procurement,FinancialManagementandInformationExchange) Procurement CAI will have the responsibility for procurement for regional project related activities, and the NEAstogether with the participating cities will oversee procurement of city-specific activities in each country. For details refer to Annex 7. FinancialManagement Regional Project Program Funds for the Regional Project will be disbursedthrough a Designated Account at CAI who will then allocate funds to the cross-cutting regional activities. Country Projects Funds for city-specific activities will be disbursed through a through a Designated Account to financial intermediaries or NEAs upon signature of a GA between the World Bank and the respective NEA, and MoU between the CAI and the NEA. Separate agreements will be signed between NEA and cities regarding the procurement and contracting of works and services. For details of financial management arrangements, see Annex XX. I nformation Exchange CAI is the depository of all information, technical, management and financial reports at the program level, provided by the NEAs and participating cities. Each NEA is the depository of all national and city-specific project information and is responsible for maintaining records. Selected information may be published on a program website, which i s hosted by the CAI. The program will create an intranet to facilitate informationexchange within the program. IntellectualPropertyRights The program is expected to deliver a number of outputs which are subject to various types of intellectual property rights (IPR), e.g., authors' rights, patents, trademarks, logos, knowledge, products, methodologies, databases (including p-versions) and other forms of intellectual property. All partners and subcontractors commit through Letters of Agreement or Understanding to freely and continuously share the outputs on which they have acquired such rights, with all other program partners and funding donors, while respecting authorship. Subcontractors commit to transfer all IPR they may obtain as part of their activities in this program, to the contractor. 61 ImplementationRisks Critical risk: Loss o f focus and coherence. The participation o f multiple countries with different interests and capacities to implement the activities, and participation o f multiple institutions within each country could make program implementation difficult. To counteract these risks, the following mitigation measurements will be taken: (a) Initial selection o f entities was based on expertise, complementarities and work record o f key countries/ institutions as entry points for each country to guarantee commitment and execution; and (b) Governance arrangements will include a PSC with representatives from NEAs and key partners to foster common approaches and ensure that participating entities focus on program objectives and outputs. Critical risk: Deficient or slower-paced performance o f cities may affect sequencing o f program activities and financing. In this event, C A I in consultation with the PSC and the World Bank/GEF would develop an alternative action plan for recouping country performance, and the pace o f project and individual city sub-projects execution. Independent Country Projects might mitigate most o f these risks. Critical Risk: Electoral change in a partner countries and cities may result in changing priorities and shifting support away from the program and specific projects. In this event, CAI, in consultation with the NEAs and the World BanUGEF, will develop a strategy consistent with program activities and objectives, to educate new administration in program goals and methodologies. Monitoringand Evaluation The monitoring and evaluation (M&E) of the different projects and sub-project will be done by the cities in coordination with national NEAs. CAI will be responsible for monitoring and evaluating the regional level impacts and coordinate data gathering and monitoring o f overall progress o f the program at the country and city levels. The M&E system i s based on a cascade o f goals, purposes, results, and activities where higher-order activity, that is, projects, become the purpose o f the lower order, that is, the city-specific sub-projects and regional project components. This approach will ensure the tracking of all activities to the developmental objective o f the Program. The PSC will assist in keeping the national interests within the framework o f implementation progress. The Program design includes baseline determinations and performance (milestones) indicators to monitor the implementation o f the plan. Such monitoring will consist o f an internal evaluation at the project and sub-project level. The monitoring will be based on periodic reports. Data would be generated using a bottom-up approach. The NEAs will compile data gathered by each city on sub-project progress. C A I will compile the information received from NEAs, perform quality control and prepare progress reports, which will include the Regional Project indicators. C A I will provide standardized formats and templates for the different reports. The program will have the following monitoring and evaluation instruments: . . Annual operational plan, procurementplan andtraining plan Semi-annual progressreports 62 ......Semi-annualfinancial reports Annual World Bank supervision missions Annual progress reports Annual financial reports Mid-Term Review ImplementationCompletion Report At the program level, M&E responsibilities are as follows: a) CAI's Projects Office: responsible for preparing the reporting calendar, formats and templates, maintaining compliance with calendar and format, collating and synthesizing at the program level, delivering reports to the WB, identifying any departures from the planand bringingthese to the attention of the Bank and suggesting solutions; b) NEAs: responsible for collating elements at national level for all the reports called for by CAI's Projects Unit, identification of departures from plan (reporting to CAI, proposing solutions); c) Cities: responsible for preparing the data for all reports, early warning on problems (including proposals for solutions). The program will establish an M&E system consistent with the GEF program guidelines and the Bank's operational standards. It will be presented to the Bank before Appraisal and constitute part of the Operational Manual. See additional M&E conceptual details in Section C3, 63 Annex 6: FinancialManagement and DisbursementArrangements LATINAMERICA: GEF SustainableTransport and Air Quality Program Summary Conclusionof FinancialManagement Assessment. Insummary, the proposedproject has beendesignedas follows: (i) The Program has been structured infour separate Projects, a Regional Project focuses on developing a holistic approach and a city-specific sub-projects consisting of three national sub-programs with pilot investments and specific interventions in 11 participating cities. The Regional Project will be implemented by the Clean Air Institute (CAI) and the Country Projects will be implementing by the designated National Executing Agencies (NEAs) ineach country (Mexico, Argentina and Brazil). The World Bank will sign a grant agreement with CAI for the execution of the Regional Project and three separate grant agreements with the NEAs in each country. Therefore, program funds for the Regional Project will be disbursedthrough aDesignatedAccount at CAI. This assessment only relates to the Clean Air Institute (CAI). On the basis of the assessments performed, the financial management team presents the following conclusions: Clean Air Institute (CAI) OrganizationalArrangementsand Staffing Overall project coordination and administration for the Regional Project will fall under CAI, an independent non-profit corporation founded in 2006 to manage the Clean Air Initiative for Latin American Cities (CAI-LAC). Therefore, CAI will be directly incharge of financial management (FM) tasks, which basically include: (i)budget formulation and monitoring; (ii)cash flow management (including processingpayments and submitting loan withdrawal applications to the Bank); (iii) maintenanceof accounting records, (iv) preparation of in-year and year-end financial reports, (v) administration of underlying information systems, and (vi) arranging for execution of external audit. It is important to note that Breakthrough Technologies Institute Inc. (BTI) i s the host organization and fiscal sponsor of the Clean Air Institute (CAI). BTI, founded in 1993, i s an independent non-profit corporation dedicated to serving the public interest by promoting environmentally-advanced technologies through independent analysis and education, and by fostering information exchange worldwide. BTI has an established financial system and governance structure, with the executive director responsible for signing checks and the office/financial manager responsible for receipts, accounts payable, bookkeeping, financial reporting and all other financial recordkeeping. BTI utilizes an independent firm for payroll services, as well as an outside accounting firm to assist in the preparation and review of tax forms and provide financial advice. Financial statements are audited by another independent accounting firm. It is expected that CAI will benefit from using the established financial system and governance structure of BTI. 64 Figure 1 CAI-BTP Organization Chart Note /IThe BreakthroughTechnologies Institute IS the host organization and fiscal sponsor of the Clean Air Institute BudgetPlanning A budget i s prepared annually for approval by the Board. Budgets for individual projects are prepared at the start o f the project and modified whenever a material change in the project financing occurs. Budgets for each project are updated monthly and reviewed by the project manager and the Executive Director. BTI/CAI i s prepared to use a similar approach for the proposed project. The only added step would be the review o f the project annual work (POA) and procurement plan by the WB. Accountingand FinancialReporting Accounting Policies and Procedures. Significant accounting policies are enumerated in a short manual, which would also apply to the project. BTI uses the accrual method o f accounting and it i s expected that C A I will utilize the same accounting policies and procedures. FM arrangements specific to the project that are not contemplated in the cited regulations and procedures will be documentedinthe Operational Manual. Information Systems.BTI utilizes QuickBooks Pro as its accounting system. BTI's accounts are generally segregated by project/grant, which allow for proper financial recording and reporting for individual projects/grants. BTI/CAI anticipates that it will establish a restricted fund and separate project account for the proposed project, which will be acceptable for basic reporting to WB. Financial Reports. On a semester basis, as part o f the project report, C A I will prepare and submit to the WB an unaudited interim financial report (IFR) containing at least: (i)a statement o f sources and uses o f funds and cash balances (with expenditures classified by component); (ii) 65 a statement of budget execution per component (with expenditures classified by the major budgetary accounts); and (iii)a reconciliation of the Designated Account. The interim reports will be submittednot later than 45 days after the end of each semester. Inthis case, the IFRs are not expected to be utilized for disbursement purposes, The IFR formats will be presented for Bank review before negotiations. On an annual basis, CAI will prepare project financial statements including cumulative figures, for the year and as of the end of that year, of the financial statements cited in the previous paragraph. The financial statements will also include explanatory notes in accordance with the Cash Basis International Public Sector Accounting Standard (IPSAS), and CAI's assertion that loan funds were used in accordance with the intended purposes as specified in the Loan Agreement. These financial statements, once audited, will be submitted to the WB not later than six months after the end of the Government's fiscal year (which equals the calendar year), The supporting documentation o f the semi-annual unaudited financial reports and annual financial statements will be maintained inthe Unit's premises, and made easily accessible to WB supervision missions and to external auditors. Flow of Funds WBDisbursement Method. Loanproceeds will be withdrawn by CAI using the advance method supported by documentation showing that the grant proceeds previously withdrawn have been usedto finance eligible expenditures. Supporting documentation will be inthe form of Statement of Expenditures (SOEs), with the exception of payments related to contracts above the SOE threshold, which will be reimbursed against full supporting documentation. As of pre-appraisal the SOE threshold for the project has not been set yet, but will follow the prior review threshold indicated by procurement. SOEs will be submitted quarterly to the World Bank for replenishment of the DesignatedAccount. Other Procedures. By appraisal, no need has been identified for the use of special commitment procedures. Should the need arise during implementation; the Bank will evaluate it and if granted, agree to their use via an amendment to the Disbursement Letter. The project may use reimbursementor direct payments. Therefore the following Disbursement Methods may be used under the Loan: Reimbursement Advance Direct Payment WB Designated Account. CAI will open a segregated Designated Account in a commercial bank in the US in US dollars, to be used exclusively for deposits and withdrawals of grant proceeds for eligible expenditures. After the conditions of effectiveness have beenmet, and the designated account has been opened, CAI will submit its first disbursement request to the WB, together with the expenditure and financing needs forecast for the next three months. For 66 subsequent withdrawals, CAI will submit the disbursement request, along with the supporting documentation (SOE). At any time, the undocumentedadvance to the designated account cannot exceed the authorized ceiling, which has beenestablished at`US$500,000. Disbursement Deadline Date. Four months after the closing date specified in the Loan Agreement. Audit Arrangements Internal Audit. Neither CAI nor BTI have established an internal audit department. BTI utilizes an independent accounting firm to review the internal control system of the organization and audit the financial statements annually. External Audit. The annual project financial statements prepared by CAI will be audited following International Standards on Auditing (ISA), by an independent firm and in accordance with terms of reference (TORS), both acceptable to the Bank. The audit opinion covering project financial statements will contain a reference to the eligibility of expenditures. The annual financial audit of the project will be part of the regular BTI annual audit work and will be due to be presentedto the World Bank no later than 6 months after the end of the fiscal year. In addition, memoranda on internal controls ("management letters") will be produced on an annual basis. The audit work describedabove can be financed with grant proceeds. Disbursement Schedule Category Amount of the Grant Percentageof Expendituresto Allocated (expressed in USD) be Financed (~inc~usive/exc~usive]' of Taxes) I I I (1)" Consultancy services 1,953,000 100% (2) Training and OperatingCosts 950,000 100% I ITOTAL AMOUNT I 2,903,000 I I 67 Country Issues Public financial management systems are not involved inproject execution as the project will be executed by the CAI, a US non-profit corporation located in Washington, DC. RiskAssessment Summary The FM risk assessment process aims at identifying FM risks so as to take appropriate measures mitigating identified project risks. This enables the Bank to make decisions on the appropriate level o f supervision intensity allocating FM resources in a manner consistent with assessed risks. The preliminary overall FMrisk is assessedas modest. Two major factors taken into consideration for the risk assessment are the project environment as well as the specific fiduciary control framework, which includes BTI's institutional capacity on FM; existing processes and systemsfor budgeting, accounting, financial reporting and treasury operations. The overall risk assigned is Modest, no extraordinary FM mitigation measures are foreseen besides standard project arrangements. The continuity o f adequacy o f FM arrangements would be assessedduring FM project supervision. The following table presents the risk assessment, as well as the risk mitigating measures incorporated into the design o f the project and the financial management implementation arrangements. Risk Risk RiskMitigating Measures Incorporated into Condition of Rating Project Design NegotiationsBoard or Effectiveness(Y/N)? Inherent Risk Country Level M Public financial management systems are not involved in project execution as the project will be executed by the CAI, a US non-profit corporation located in Washington, DC. Entity Level M Training will be provided to CAI as it currently possesses relatively little experience with external funding. Project Level M The FM aspects of the project will be concentrated in a unit (CAI) responsible for overseeing the fiduciary aspects of externally-funded projects, staffed with personnelpossessingadequate qualifications. The Credit Agreement will include a covenant that CAI will be required to maintain adequate implementationarrangementsat all times. Control risk Budgeting, M Project budget and accounting will be registered in 68 Accounting, BTI's system Internal Control The project will prepare an operationalmanual. Effectiveness:Y CAI will open a segregated DA to manage Bank funds. Financial M The project will utilize BTI's existing system for Reporting, budget execution and its own accounting system. Auditing CAI will furnish annual audit reports to the Bank M (auditors will be contracted 3 months after the declarationof effectiveness). FMRisk Financial Management Action Plan An actionplan has been discussed withthe Borrower to complete needed FMarrangements for adequacy o f FM systems to be inplace before project effectiveness and i s designed to be completed before negotiations. The detailed activities are presented below Action 2. Finalize the draft FM section of the project operational manual. CAI/BTI Completed 3. Include project in BTI's annual audit contract. CAIiBTI After effectiveness 4. Draft classification to allow project financial reporting and CAUBTI Completed classification on BTI's accountingsystem. 5. Provide training in Bank procedures. World Bank By effectiveness I I ~ 6. Finalize Project costing and make a final decision on disbursement Completed categories. CAIiBT1 7. Determineand finalize retroactive financing, if necessary. CAIiBTI Completed 69 Annex 7: ProcurementArrangements LATINAMERICA: GEF SustainableTransport and Air Quality Program A. General Procurement for the proposed program would be carried out in accordance with the World Bank's "Guidelines: Procurement Under IBRD Loans and IDA Credits" dated May 2004; and "Guidelines: Selection and Employment o f Consultants by World Bank Borrowers" dated May 2004, and the provisions stipulated in the Legal Agreement. The various items under different expenditure categories are described in general below. For each contract to be financed by the Loadcredit, the different procurement methods or consultant selection methods, the need for pre-qualification, estimated costs, prior review requirements, and time frame are agreed between the Borrower and the Bank in the Procurement Plan. The Procurement Plan will be updated at least annually or as requiredto reflect the actual project implementation needs and improvements ininstitutional capacity. B. Assessment of the agency's capacity to implement procurement An assessment o f the capacity of the proposed ImplementingAgency (the Clear Air Institute- CAI)) to conduct procurement actions for the project was initiated by Jose M. Martinez, Procurement Specialist, in September 2007. The assessment reviewed the Agency's organizational structure and their staff preparation for implementingthe expected procurement activities under the project. Professional experience at C A I level: The staff expected to form the Implementation Team in C A I has not direct experience in projects funded by multilateral banks, but has extensive experience managing grants from federal Recommendations. In order to mitigate the risk posed by the fact that the future Implementation Team does not have direct experience in Bank-funded procurement operations, we propose the following recommendations: (i)procurement training must be provided to the staff expected to be involved in procurement of the goods and services before the project starts, thus reducing the risk of failure inprocurement-related activities; (ii)inorder to facilitate a better understanding of procurement operations, an Operations Manual with a Procurement Section must be prepared by the Client and reviewed and cleared by the Bank; and not least important, (iii)a procurement consultant with experience in Bank-funded procurement must be hired as part o f the Team; this selection mustbe monitored and cleared by the BaWPAS. We consider this project under HIGH category, procurement-wise, until the necessary procurement capacity has been created. The proposed risk category (HIGH) may be subject to revision and moved to MODERATE once the Bank determines that the required procurement capacity has been built at CAI. 70 The Bank and CAI should discuss options and alternatives to address these risks: (i) early an procurement training program to the CAI relevant staff expected to be involved in project procurement activities; (ii)ensure direct consultation on procurement matters and direct assistance from Bank procurement staff through the Task Team Leader, specifically during procurement and procurement plan preparation; (iii) creating a monitoring and control system of the procurement actions, including a filing system for project procurement activities; (iv) the early hiring of a consultant experienced in Bank-funded procurement to (a) prepare a project procurement manual or the procurement section to the project operations manual; (b) work on procurement document preparation and project procurement processes, and (c) work as advisor to the Team on procurement-related issues. C. ProcurementPlan The Borrower, at appraisal, developed a procurement plan for project implementation which provides the basis for the procurement methods. This plan has been agreed between the Borrower and the Project Team on August 27, 2008, and is available at the Clean Air Institute, Washington, DC. It will also be available in the project's database and in the Bank's external website. The Procurement Plan will be updated in agreement with the Project Team annually or as required to reflect the actual project implementation needs and improvements in institutional capacity. D. Frequencyof ProcurementSupervision In addition to the prior review supervision to be carried out from Bank offices, the capacity assessment of the Implementing Agency has recommended semi-annual supervision missions to visit the field to carry out post review of procurement actions. 71 E. Detailsof the ProcurementArrangementsInvolvingInternationalCompetition 1. Goods,Works, and NonConsultingServices (a) List o f contract packages to be procured following ICB and direct contracting : List o f consulting assignments with short-list o f international firms: 1 2 3 4 5 6 7 Review Expected Estimated Selection by Ref* Submission Proposa's Comments No. Description of Assignment cost Method (Prior/ Bank Date Post) 1 ImproveMethodologies to assess climate change, air quality U$400,000.- QCBS Prior and other benefitsoftransport interventions 2 ContractingTrainingand Technical Assistance Services U$400,000.- QCBS Prior 72 List of consulting with short-list of individual consultants: Contracting Type of Amount N O . Denomination Task description method contract (US$) Contracting Operations Support coordination and M&E of overall 3cv Based On 1 Specialistsfor Central Office U$561,000.- STAQ Program. time (part time) (Section 5) Contracting a Program Coordinateregional component activities in 3cv 2 Coordinator for Argentina Argentina and serve as a linkbetweencities, BasedOn U$207,000.- time (part time) federal government and the project main office. (Section 5) Contracting a Program Coordinateregional component activities in 3cv 3 Coordinator for Brazil (part Brazil and serve as a link betweencities, federal BasedOn time U$183,000.- time) government and the project main office. (Section 5) Contracting a Program Coordinateregional component activities in 3cv 4 Coordinator for Mexico (part Mexico and serve as a link betweencities, BasedOn U$207,000.- time time) federal government and the project main office. (Section 5) Contracting environmental/ M&E reviews of city projects in Argentina, 3cv 5 emissionsspecialistsfor Brazil and Mexico, forming part of supervision BasedOn U$363,000.- time project reviews missions (Section 5) M&E reviews of city projects in Argentina, 3cv 6 Contracting transport BasedOn U$571,000.- specialistsfor project reviews Brazil and Mexico, forming part of supervision time missions (Section 5) 3cv I Contracting Financial Preparationof financial statements for overall BasedOn U$116,000.- Specialists STAQ Program (Section 5) time 8 Contracting Procurement Support in procurementof Regional Project 3cv BasedOn U$96,000.- Specialists activities (Section 5) time Development and maintenanceof website 3cv 9 Contracting systems and Based On U$127,000.- Internet specialists containing information on overall STAQ time Program (Section 5) 3cv Perform yearly audits of Regional Project Contracting Independent activities and gather information regarding BasedOn U$75,000.- lo Auditor time audits of Country Projects (Section 5) 73 Annex 8: EconomicAnalysis LATINAMERICA: GEF SustainableTransport and Air Quality Program For the purpose o f preliminary economic analysis o f the proposed GEF operation's investment, the cost-effectiveness of the indirect impacts of the GEF operation was selected as the primary indicator. While such an indicator does have some weaknesses (discussed in more detail in Section 2), it was considered appropriate for this operation, since the primary emphasis o f the proposed GEF operation i s to enable further action to be taken by cities and national governments. While some direct investments are occurring under the program Windows, for example in non-motorized facilities or facilities to coordinate inter-modal movements, these are primarily demonstrative, to show what kinds o f outcomes are feasible. The analysis adopted, therefore, does not consider the immediate program outcomes -that is, the reduction or elimination o f barriers that impede adoption o f policies that lead to structural reductions in C02 emissions from the sector - but rather, the indirect outcomes that will occur if the policies impeded by the barriers addressed by the program do, indeed, become adopted within a reasonable time frame following the completion of this program. Such an analysis assumes that these more substantive measures will, indeed, be effective. The methodology draws primarily on previous work developed by Shipper et. a1 (2000) and Wright and Fulton (2005); it applies the model developed by the latter to the decomposition framework proposed by the former, to examine how aggregate populations have reacted in the past to aggregate changes in the Windows o f interest. The interventions and investments in Bogota at the end o f the 1990's and early part o f this decade represent the kinds o f interventions contemplated through the five windows. If the barrier removal activities and fomentation o f activity through pilot projects are successful, the cities participating in this program will adopt a range of measures that, in aggregate, resemble efforts undertaken in Bogota. By examining the kinds of CO2e emissions reductions that occurred inBogota duringthis period, it is believedthat insight can be drawn on the kinds o f changes that could be expected from widespread adoption of these measures in project-related countries, and these changes are used to estimate cost- effectiveness o f the program. Section 1 discusses the methodology and results. Section 2 discusses strengths and weaknesses in the indirect estimation methodology. Section 3 presents an alternative, direct estimation methodology. 1. Economicanalysisof indirect emission reductions Reducing C02 emissions i s rarely an overriding objective o f urban transport policy, although it i s often compatible with those other, more immediately compelling objectives. A Bus Rapid Transit system, for example, is almost never implementedin order to reduce C02 emissions from the sector, although, ifproperly conceived, designed, and implemented, may in fact reduce C02. To gauge the amount o f C02 reduction from a policy, analysts need to compare the amount o f 74 C02 emitted from the entire sector over a given period o f time after the policy is adopted with the amount of C02 emittedfrom the entire sector over the same period of time ifthe policy were not adopted. This i s representedas: where: AG = c in greenhouse gas emissions associated with the project; G g = greenhouse gas emissions from the evaluation scenario (e.g. with interventions); Gc- greenhouse gas emissions from the counterfactual scenario (e.g. business-as-usual); and B and C are alternative occurrences for the same period intime. GBand Gc can each be derived using Shipper et. al's ASIF Identify (Schipper et. al. 2000): where: G =total greenhouse gas emissions; A_ = activity (e.g. passenger kilometers, ton kilometers); S, = share of activity occurring on mode m; Imf= intensityofactivity unitoccurringinmodemvehicleusingfuelf(e.g. fuel energy consumed per passenger kilometer); and Fj-=net carbonI4intensityof fuelf(e.g. net carbon content per unit o ffuel consumed), The "I" term i s further defined as: where: E, = energy intensityof vehicle v (e.g. fuel consumed per vehicle kilometer); 0,=average vehicle occupancy pervehicle kilometer occurringinvehicle v; and VKT, = vehicle kilometers traveled by vehicle v. The above framework allows the identification o f sources o f C02 reduction from policies, by identifying the associated element. For example, Wright and Fulton (2005) identify potential sources o f C02 reductions from Bus Rapid Transit projects: - Increasing the share o f public transport ridership by dramatically improving the quality o f service (interms of travel time, comfort, security, cleanliness, etc.)[S]; - Improving the flow o f vehicles by constructing segregated busways [I]; 14For simplicity, this analysis does not includemethaneor nitrous oxide. 75 Reducing idling by using pre-board fare-collection systems [I]; Reducing total bus vehicle kilometers by replacing four to five smaller buses with a larger articulated vehicle [A]; Reducing backhauling and other cross-movements by use of global positioning systems to optimize supply and demand [A]; Facilitating land-use changes such as densification or transit-oriented development at nodes and along the BRT corridor to reduce growth indemandfor automobile travel [A]; Facilitating the use of cleaner technologies and fuels, both by requiring minimum-emission standards for vehicles, and creating operational circumstances that allow operating companies the opportunity to accumulate capital and invest in fleet renewal and cleaner technologies [Iand F]. The letters in bold show how such a source of CO2 emissions reduction might be mapped onto the ASIF identify framework presented above. An ex ante, quantitative and disaggregate analysis of these sources would be difficult to carry out for even a single city with ample data available. To attempt to do so for the presentproject was not feasible. Instead, Wright and Fulton's recent analysis for emissions reduction potential from a hypothetical "large, developing-nation city" has been adapted to form a starting point for the analysis (Wright and Fulton 2005). Their analysis uses numbers largely derived from South American transport systems, including Bogota's TransMilenio to construct a baseline against which they test specific scenarios. In their scenario analysis, they assume that every 50 kilometers of new BRT busway leads to a 5% increase inpublic transport mode shares, every 50 k m s of cycle ways leads to a 1% increase in bicycle mode share and every 80 kilometers of pedestrianfacilities leads to a 1% increase inwalking mode share. Table A8.1 Base case used by Wright and Fulton Fuel C02 over 20 Mode share Trips/ day Distance consumption C02 (kg)/ COZlday Mode Passengen' travelled/ day (liters/ (tonnes, yearsd (%) ( 0 0 0 ~ ) ~ vehicle-km (km, 000s) litef O0Os) (tonnes, km)b 000s) Automobile 20 2000 0 15 13,333 10 8 2 42 1087 2 21,744 Motorcycle 4 400 0.105 3809 2.2 2.42 63.2 1266 Taxi 5 500 0 15 3333 10 8 2 42 271 8 5436 Mini-bus 50 5000 1 3 3846 30.3 2 87 1043 5 20,870 BRT 0 0 5 2 0 64.1 2 87 0 0 Walking 20 2000 1 150 0 0 0 0 Bicycle 1 100 1 100 0 0 0 0 2465.8 49,315 "Based on I O million total tripsiday Fuel efficiency figures for private vehicles and motorcycles are based on the IEA spreadsheet model (IENSMP, 2004) The tuel efticiencq figure for BRT vehicles is based upon the TransMilenio value The fuel efficiency for conventional buses is a weighted average of the tuel efficiency for buses, mini-buses and micro-buses from sources cited in Wright and Fulton2005 `The fuel for all private vehicles is assumed to be gasoline The fuel for mini-buses and BRT vehicles is assumed to be diesel Emissions/liter of fuel are taken from IEA spreadsheet model (IENSMP, 2004) Vehicle-km traveled during weekends is assumed to be one-half of weekday travel The authors then define six scenarios according to the type of infrastructure investment, including Bus Rapid Transit, pedestrian and bicycling facilities (corresponding to Windows 3 76 and 4 of the present Project). The resulting CO:! reductions are then compared with the base case emissions as given above. Table A8.2 Cost effectiveness of combi ations of i Scenario eo2 emissions Name wlock,shams over 20 years I automobile , 19% 1 motorcycle , 4% BRT mode share taxi 4% USD125 million (50 increases mini-bus . 48% 47,409.7 1,905.5 km of BRT at from 0 to 5 USD2.5 million/km) walking 19% automobile . 18% motorcycle , 4% BRT mode share taxi 3% USD250 million increases mini-bus 45% 45,086.8 4.228.5 (100 km of BRT at USD59 USD2.5 millionlkm) motorcycle , 4% Walking 4% USD6O million (400 mode share taxi km of pedestrian increases mini-bus 47% 45,888.7 3,426.6 upgrades at USDl7 from 20 to 25 USDI50,00O/km) walking 25% automobile .) motorcycle , 4% Bicycle mode 1 share taxi 5% USD3O million (300 increases mini-bus 48% 47,393.3 1.922.0 km of cycle ways at USD15 I from 1 to 5 USDIOOOOO/ km) walking . 19% motorcycle 3% USD6O million (500 iicycle mode km of cycle ways at hare taxi , 5% USDIOO 0001 km, icreases mini-bus 45,154.9 1 46% 4,160.4 plUSDlO million USD14 *om1to 10 BRT , 0% promotional walking . 18% campaign) bicycle 10% 'ackage: automobile , 15% 36,917.5 12,397.8 USD370 million USD30 IRT, (BRT USD250 edestrian motorcycle 3% million; footpaths pgrades, taxi 3% USD6O million; ikeways mini-bus 34% bikeways USD60 BRT 10% million) walking 25% 77 COZ Col Scenario emissions reduced Cost(USD) Name Modesharer over 20 from the cost of perton of yeam baseline infrastructure COZ bicycle ' 10% Source:Wright and Fulton2005 1.1Cost effectivenessanalysis The above analysis provides an initial assessment of the orders of magnitude of modal shifts that can be expected from different measures or package of measures. For the analysis of the GEF regional program, some of the educated assumptions inthe Wright and Fulton spreadsheet model have been replaced with actual information available from the cities participating in the STAQ Program. A hypothetical megacity was constructed by aggregating data from individual cities, as available, and using modal share changes observed over seven years in Bogota, a regional reference, to gauge the kinds of changes that might be expected from the GEF interventions. The aggregate mode share of the hypothetical megacity was determined according to the categories in Wright and Fulton's spreadsheet's model. Mode share data for this purpose was derived from candidate cities' initial application package to the Bank, in which they were asked to provide as much of this information as possible. For a number of the cities included in the package, mode share data was incomplete or not available. These cities have been left out of the aggregate megacity calculations. In some cases, only motorized trip mode share was available, in which case a 25% walking mode share (the average for those cities that had non-motorized mode share data available) and 1% cycling mode share were assumed, with the remainder allocated accordingly. The mode shares were then averaged across all cities using a population weighting system." Cities aggregated into the hypothetical megacity are Monterrey, Leon, Ciudad Juarez, Cordoba, Belo Horizonte, Campinas, Curitiba, Port0 Alegre, and Salvador Bahia, resulting in an aggregate population of about 23.3 million. The resulting, aggregate average mode share i s as follows: Table A8.3 Assumed Baseline Aggregate Modal Share in Latin America Private automobile 24% Motorcycle 1Yo Taxi 1Yo Conventional bus 35% Bus rapidtransit* 6% Walk 25% Bicycle 2Yo Other / adjustment** 6% *Cordoba and Curitiba **Mode shares providedby some cities did not always sum to 100% 15A more accurate weightingtechnique would have beento aggregateby trips by mode, but this level of detail is not available. As a result, the method usedimplicitly assumesthat per capita trip generation is similar across all cities included in the aggregation. 78 The number of trips is calculated by multiplying the aggregate population by 2.2, the assumed trip generation rate per person. The model then allocates trips by mode based on mode shares as reported in Table A8.3 for the base case, and as described below for the GEF scenarios. Vehicle kilometers o f different vehicles associated with this modal distribution are derived from regional average vehicle occupancies, as reported in Wright and Fulton and shown on Table A8.1. C02 emissions factors used are those reported in Wright and Fulton (2005), that is, derived from the IEA spreadsheet model for cars and motorcycles (IEA 2004), from Bogota for the BRT, and from the weighted average value for conventional buses derived by Wright and Fulton (2005). Changes in mode share observed in Bogota since 1998, as shown in Table A8.4, are assumed to be caused by transport investments made in Bogota since 1998, investments similar in character to those the GEF program intends to foster.I6 By way o f qualitative comparison, changes in mode share for Lima, Peru, which did not make these types o f transport investments, are shown for the same period. The cost effectiveness of the GEF investment i s derived by assuming that similar changes in mode share will be observed after a similar period in our hypothetical composite megacity. Thus, it i s assumed that the mode share changes observed will occur over a seven year period, and thereafter will remain constant for the remaining years o f the 20-year economic analysis. In order to allow for the fact that many o f the Bogota-type investmentsthat would result inthe observed mode share changes may take some time to materialize, a 5-year lag has been incorporated into the economic model: years one and two constitute the investment period for the GEF program (no change inmode shares); years three through eight constitute the lag period (additional investment occurring, but no change in mode shares); years nine through 16 constitute the mode-share change ramp-up period (mode shares transition to the magnitude observedin Bogota), and in years 16 through 20, mode shares remain constant at the new levels. The COz emissions these mode shares produce over a 20- year period are then compared with those produced by a scenario that assumes that the mode shares remain constant at their 2005 values. The result i s probably a conservative estimate o f C02 emissions reduced because o f the GEF program, because, all else equal, an increase inhigh-C02 emitting modes as the Business- as-Usual case would be expected. Table A8.4 Changes in self reportedtrip mode shares in Bogota, a Private automobile 17% 8% 10% 11% Motorcycle 1Yo 3yo 0% 0% Taxi 10% 12% 3yo 5yo Conventional bus 56% 42% 50% 52% Bus rapidtransit 0% 19% 0% 0% Walk 7yo 12% 31% 25% Bicycle 1Yo 3yo 1Yo 1% Other 8Yo 1Yo 5yo 6% 16It should be notedthat these mode shares are derived from survey respondents' own estimations of annual travel. As such, they are less reliable than mode shares derived from travel diaries, but such information is not available. 79 Source: Bogota -- Ipsos-NapoleonFranco: Bogota, Como Vamos?; Lima: Plan Maestro de Lima (2004). Consejo de Transportede Lima y Callao del Ministerio de Transportey Comunicaciones Because the GEF investment actualizes these types o f changes only if it causes other investments to occur as a result, we construct a second scenario that applies only 6.25% o f the observed mode share change for Bogota to the hypothetical composite megacity. This limitation reflects an assumption that only one quarter o f the cities in the program will even follow through on sustainable transport policies and investments in a timely manner, and that only one quarter o f these would produce tangible, actionable results on the ground. Thus, two scenarios are analyzed: an upper limit scenario in which all cities accomplish the Bogota mode share changes, and a lower limit (conservative) scenario in which a very small portion o f the cities actually accomplish the mode share changes, resulting in an overall blended mode share change o f only 6.25% o f what was observed inBogota. For both the baseline and the lower and upper limit scenarios, trip generation and distance per trip were assumed to be static over the 20 year period. More than likely, though, trip generation rates will increase, as will travel distances. However, assuming static trip distances probably results in a conservative estimate, since they undercount the number o f vehicle kilometers traveled in the baseline, and probably underestimate the amount o f CO:, reduced as a result of the program. That said, if the predominance o f new trips generated over that 20 year period would be in outlying areas and for mainly discretionary trips, the proclivity to switch modes may be somewhat lower than observed in Bogota; without substantially more information, however, there i s no mechanism to know how the actual vector o f these countervailing tendencies. Resulting mode shares for the three scenarios are presentedbelow. Table A8.5 Changes inself reportedtrip mode shares in Bogota Lower-limit Upper-limit Current scenario scenario Proportion of modal share change of Bogota nia 6.25% 100% Private automobile 24% 24% 15% Motorcycle 1Yo 1Yo 3yo Taxi 1Yo 1Yo 3yo Conventional bus 35% 34% 21Yo Bus rapid transit 6% 7yo 25% Walk 25% 25% 30% Bicycle 2Yo 2Yo 4% OtheriAdjustment 6% 6% 0% Source: World Bank Calculations Overall COz emissions reductions numbers over 20 years, and their cost-effectiveness, were calculated for both scenarios. The results of the analysis are presentedbelow. The Baseline COz emissions are 269.5 million tons over 20 years. The lower estimate shows an overall reduction o f 2.7 million tons, while the upper limit scenario shows a reduction o f almost 52.6 million tons. 80 More detailed tables o f Baseline and Scenario Calculations are presented at the end o f this section. The cost range o f USD 0.33 to USD 6.44 per ton o f carbon removed reflect a highly leveraged set o f investments,and are clearly contingent on the assumptions made and a series of follow-up actions by cities and potential lenders. Table A8.6 Cost-Effectiveness of Lower and Upper Limit Scenarios Scenarios Lower limit Upper Umit Proportion o f Modal Share Change of Bogota 6,25% 100% Megatons o f C02over 20 years, Baseline 269.5 269.5 Megatons of C02over 20 years. GEF Scenario 266.2 216.1 Megatons of C02over 20 years avoided: 2.7 52.6 GEF funding from BRT and NMT windows (USDmillion) 17.4 17.4 Cost per ton of carbon removed: USD6.44 USD0.33 Source:World Bank Calculations These results are indicative of the order o f magnitude o f emissions reductions that could be expected if the program results in adoption o f Bogoth-like measures in the cities where the program will be investing, if those cities yield results similar to those measured empirically in Bogota. These estimated CO2 reductions are conservative in a number o f respects. First, they do not take into account other sources o f C02 emissions reductions beyond mode shifts, such as improved efficiency o f vehicle operations, reductions in trip lengths, and improved passenger loading, all of which are likely outcomes from a BRT / NMT / land-use strategy. Third, they do not take into account any benefits from Window 1, changes in freight distribution. While the assumptions may not be realistic, therefore, the analysis does point to how even subtle changes in modal shares can produce substantial reductions in CO2 emissions over 20 years. Regarding the Window 1, changes in freight distribution, only a qualitative assessment i s possible. C02 emissions and energy consumption reductions resulting from improvements in freight distribution could be expected to come from three sources: improvements in the load factors o f vehicles used to deliver freight both to city transshipment centers and to their final destinations, improvement in the technical efficiency o f the vehicles used to make deliveries (because o f more targeted use o f rolling stock), and reduction inefficiency losses associated with congestion from freight vehicles' blocking thoroughfares. At the present point in time, however, there is little hard information to quantify the magnitude o f these effects, even from developed country sources. Table A8.7 GHG emission from Baseline Mode 'Ode Vehicle km Litersof Tons of C02 Tons of C02 rhare dayper fuel per year over 20 years Private automobile 0.24 13,321,716 aa,ai 1,441 9,591,636 7,241,685 144,833,699 Motorcycle 0.01 510,432 4,861,260 106,948 80,746 1,614,911 Taxi 0.02 1,391,532 9,276,883 1,001,903 756,437 15,128,740 Conventional bus 0.39 24,443,356 18,802,582 5,697,752 5,101,269 102,025,371 Bus rapid transit 0.04 2,685,779 516,496 331,074 296,415 5,928,291 81 Walk 0.25 15,436,737 15,436,737 0 0 Bicycle 0.01 887,626 887,626 0 0 13,476,551 269,531,013 BASELINE Information: (1) Baseline population = 28,174,832;and (2) Trip generation rate = 2.2/person Table A8.8: Lower limit Scenario: 6'25% of Bogota's mode share change comes to fruition in vear 13. Mode Mode share Trip Vehicle h Litersof Tons of C02 Tons of C02 Yr dayper fuel per yea? over 20 years 13l Private automobile 0.21 12,973,053 86,487,018 9,340,598 7,052,151 141,043,029 Motorcycle 0.01 587,913 5,599,173 123,182 93,002 1,860,045 Taxi 0.02 1,469,013 9,793,421 1,057,690 798,556 15,971,112 Conventional bus 0.39 23,900,990 18,385,377 5,571,326 4,988,078 99,761,564 Bus rapid transit 0.06 3,421,846 658,047 421,808 377,650 7,553,006 Walk 0.25 15,630,439 15,630,439 0 0 0 Bicycle 0.02 965,106 965,106 0 0 0 13,309,438 266,188,755 1 Phases in from base-case mode share betweenyrs 6 and 13 2 In years 13 through 20 Table A8.9: Upper limit Scenario: 100% of Bogota's mode share change comes to fruition in year 13. Mode share &lode per Trips Vehicleh Litersof Tonsof C02 Tons of C02 yr 13' day fuel peryea? over 20 years Private automobile 0.12 7,743,099 51,620,663 5,575,032 4,209,149 a4,182,978 Motorcycle 0.03 1,750,125 16,667,857 366,693 276,853 5,537,062 Taxi 0.04 2,631,225 17,541,500 1,894,482 1,430,334 28,606,678 Conventional bus 0.25 15,765,508 12,127,314 3,674,944 3,290,223 65,804,458 Bus rapid transit 0.23 14,462,858 2,781,319 1,782,825 1,596,186 31,923,718 Walk 0.30 18,535,968 18,535,968 0 0 0 Bicycle 0.03 2,127,31a 2,127,318 0 0 0 1 Phases in from base-casemode share betweenyrs 6 and I 3 2 In years I 3 through 20 1.2 Cost - Benefit Analysis Methodology Inaddition to the cost-effect,deness indicators der, Jed and presented above - indicators be ievec to be the most appropriate measures for gauging such a program - a cost-benefit analysis was also undertaken, primarily to gain insights from sensitivity tests. Specifically, these sensitivity tests were intended to determine, for the blended mode share change in all of the cities participating in the program, what portion of the observed changes in Bogota would need to be effected in order for the GEF investment to be worthwhile, all else equal. 82 This breakeven point was derived for two values o f C02 reduction -- $5 per ton, and $15 per ton in2007. These values were adjusted for inflation over 20 years (assumed to be 2% per year), but the inflation-adjusted value of C02 emissions reduction was assumed to remain unchanged throughout the scenario. As with the cost-effectiveness analysis, a five-year lag was assumed into the calculations; it was assume that C02 emissions reductions would not begin until 2014 (5 years after the end o f the GEF program), and that these would phase in over 7 years at the same rate as observed in Bogota and then remain constant.I7 Net Present Value (using an assumed discount rate o f 11%) and Internal Rate o f Returnwere calculated for the 6.25 per cent and 100 per cent scenarios, using costs of investment in Windows two, three, four, and five o f the Country Projects, as well as the costs o f the Regional Project.I8 For the sensitivity analysis, the percentage o f Bogota mode share change applied to the hypothetical composite city was then changed incrementally until the Internal Rate o f Return was around 11%, and the Net Present Value o f the project was 0. This would be considered the "break-even" point for the project. Results Underthe 5-year lag assumption, at US$5 per ton of C02 reduced, the low-impact scenario (only 6.25 percent o f seven-year Bogota mode-share changes actually occur in the GEF project cities) shows an internal rate o f return o f negative five percent (NPV o f negative USD14.3 million), while the high-impact scenario results inan IRR of 26 percent (NPV o f USD31.5 million). It is worth recalling that only benefits resulting from mode-share changes are taken into account in this calculation. The analysis shows that, assuming a discount rate o f 11percent, the break-even point for the project with a five-year lag would be 35 percent - that is, at least 35 percent of the magnitude o f mode share changes observed in Bogota since 1999 would need to be fostered through subsequent investment in the cities participating in the GEF program, in order for the project to be worthwhile from a carbon emissions reduction point o f view, all else equal, and assuming (conservatively) that mode shifts are the only source o f COz emissions reductions. At US$15 per ton of C02 reduced, the low-impact scenario shows an IRR o f five percent, with an NPV o f negative US$8.2 million (assuming discount rate o f 11 percent). The high-impact scenario results ina project IRR o f 47 percent, or an NPV o f US$129.2 million. The break-even point at US$15 per ton o f C02 i s 11 percent - at least 11 percent o f the magnitude o f the mode- share changes effected in Bogota would need to be fostered as a result o f the GEF investment in order for the project to be worthwhile from a carbon dioxide emissions reduction point of view. 17The lagwas assumed to allow interventionsfostered by project to occur, since this analysis looks at indirect benefits. ISOnly Window 1 component costs were left out of the calculations, since Window 1 is not intendedto influence mode shares 83 Table A8.10 Selected indicators for sensitivitv tests Assumed ' Of YOof Bogota NPV~ Scenario ton of C O ~modeshare (mi,lions) IRR in2007 I.Assumeddiscountrate: 11% 2. Strengths and weaknesses of the indirect effects analysis The aggregate indirect effects analysis presentedin Section 1 has a number of inherent strengths. First, because it gauges sum-total effects of anumber of interventions rather than try to gauge the contribution of each one, it mirrors the mechanism by which sustainable transport policy will probably come about in practice - that is, as a package set of measures intended to improve aspects of the system unrelated to C02 emissions. Second, the total effect of all the kinds of interventions included in the GEF program i s expected to be greater than the sum of its parts. Measuring the C02 reduction potential of five kilometers of cycleway, for example, is quite different than measuring the incremental contribution of five kilometers of cycle way in the context of a broad range of urban transport sector interventions and reforms. The methodology adoptedrecognizesthis cumulative impact. These strengths notwithstanding, the indirect effects analysis methodology has a number of important weaknesses that should be highlighted. First, the analysis considered only mode share changes, that is, it accounted only for C02 reductions associated with shifts in mode shares based on current levels of travel demand. Other sources of C02 reduction - for example, from operational efficiency improvements, improvements in vehicle technology, reduction in the number of vehicles needed to provide a given number of offered seat-kilometers, etc. - are not taken into account. Second, as highlighted earlier, the indirect analysis methodology contains a number of uncertainties. The methodology held all baseline conditions other than mode share constant. As a result, the amount of COz reductions might be expected to increase over time. However, a number of factors may offset this increase. If, for example, trip generation growth were substantially skewed toward discretionary trips (which tend to be made by public transport at substantially lower rates than non-discretionary trips) or if decentralization continues to dominate land-use patterns, then the assumptionof modal switches inthe same proportions inthe future as observed inthe past may be optimistic. Third, while such a methodology may be appropriate for evaluating interventions that focus on institutional strengthening, methodological development, barrier removal, and pilot demonstrations, it would not be appropriate for full fledged investment projects where understanding the strength of each sub-project as a C02 reduction activity was important. The 84 aggregate, indirect methodology used here does not allow for assessment o f individual sub- projects or components. An assessment of potential C 0 2 emissions reductions resulting directly from the program was carried out. This assessment was carried out using a bottom-up methodology that estimated emissions reductions associated with each pilot investment included for each city in the program. This methodology does not adequately encompass the breadth of the activities undertaken inthe cities, nor does it take into account the effects o f the investment in the Regional Project. Data availability i s also substantially lower inmany o f the cities than would have been the case were a full investment program being implemented at the same time. Nevertheless, the direct assessment provides some interesting orders o f magnitude about the amount and relative cost- effectiveness o f different stand-alone measures. The methodological component o f the Regional Project will improve both the methodologies and base data on which to make these kinds o f assessments. 3. Economicanalysis of direct GHG emissions reductions 3.1 Summary of results The program is estimated to create direct annual GHG emiss,ms reductions between 423,000 to 717,000 annual C 0 2 equivalent tones. The results o f the calculations for direct emissions benefits are presented in the tables below. We caution that these calculations were based on available information for each city, so the values given for both tons o f C 0 2 removed and costs per ton are not directly comparable, but are shown for orders-of-magnitude. Table A8.11 Conservative estimate of direct emission reduction benefits of CEF program City NMT BRT Total Average M T C O 2 USD/MT MTCOa MTC02 L'SD/MT , I Leon 296,000 2,762 I07 2 1,220,000 23,963 5 0 9 26,725 56 73 Monterrey 599,000 96,725 6 2 1,922,000 83,752 2 2 9 180,477 I3 97 Sao Paulo 1,299,000 183,000 7 1 183,000 7 I O 5,011,000 303,025 81.4 6,373,000 303,020 150.5 423,045 129.6 85 MTC02 USDMT MTCOZ iMTCO2 USD/MT Leon 296,000 46,764 6 3 1,220,000 55,176 22 1 I O 1,940 14 87 Monterrey 599,000 23,277 25 7 1,922,000 84,019 2 2 9 107,296 23 50 Sao Paulo 1,299,000 277,000 4 7 277,000 4 69 5,011,000 487,954 16.4 6,373,000 506,624 27.5 717,578 25.7 3.2 Methodology for CalculatingDirectEmissionReduction EmissionFactors from different modes The quantification o f carbon dioxide impacts o f a shift in passenger trips between modes should ideally be based on the total number o f vehicle kilometers by each mode, times the fuel intensity per vehicle kilometer, times the net carbon content o f each unit o f fuel." In the case of conventional gasoline, diesel, and natural gas, net carbon content o f fuel generally does not vary substantially, so using the common assumption that 99% o f physical carbon content o f the fuels eventually oxidizes to carbon dioxide, with the number o f vehicle kilometers by mode and type o f vehicle, and the fuel intensity (economy) o f those vehicles, the calculation o f C 0 2 emissions i s fairly straightforward. The practical difficulty o f this methodology for the present analysis was that fuel intensity information was not widely available for the cities included in the program. What was available were estimates of annual vehicle kilometers by mode, plus C 0 2 emissions factors from extensive tests in Santiago de Chile. C 0 2 emissions reductions, therefore, were calculated largely from the Santiago emissions factors, as shown in Table A8.13. In essence, then, the estimates o f C 0 2 emissions from various cities should not be taken at face value, but rather represent Staffs best guess o f what C 0 2 emissions would look like in all cities included inthe program, if they had the same driving practices, vehicle models, local traffic conditions, local fuel types, and vehicle maintenance practices as Santiago. 19Net carbon content refers to the amount of carbon physically present in fuel, plus the carbon associatedwith productionand transport of the unit of fuel to the point of consumption. Inthe case of Brazil, where at least 25% of sugar-based ethanol is always used, and up to 100%ethanol can be usedat times, the net carbon content of fuel can vary substantially and be quite different than the physical content. A lifecycle analysis has not been carried out, however, becauseof resource constraints; for Braziliancities, therefore, it is likely that quantificationof directC02 emissions reductionsoverstatethe amount of C02 that will be reduced. 86 Table A8.13 Emissions Der VKT and Der Dassenger kilometer Averages - CI Mode Technology Emission Avg Grams Factors (gr/km) CaplPass COZlPax Buses Pre-Epa91 2600 65 40 EPA91 2100 65 32 EPA94 1100 65 17 Inter-urban 1097 65 17 Pullman type 1097 65 17 Articulated Euro I1 1000 130 8 Minibuses Pre-Epa91 2600 15 173 EPA91 2100 15 140 EPA94 1100 15 73 Inter-urban 1097 15 73 Pullman type 1097 15 73 Subtotal Trucks Light and semi-heavy duty 1097 1 1,097 Heavy duty 2000 1 2,000 Subtotal Private Catalytic 300 1.2 250 Non-catalytic 506 1.2 422 Average 403 Subtotal Taxis Catalytic 300 0.5 600 Non-catalytic 506 0.5 1,012 Subtotal Commercial Catalytic 396 1 396 Non-catalytic 600 1 600 Diesel 330 1 330 Subtotal Motorcycles 2-temp 450 1 450 4-temp 220 1 220 Subtotal Non-motorized Bicycles 0 1 T O T A L Source: CONAMA Emissions Inventory, 1997. When no-Latin America specific data was available, IEA, 2002 was used. In a few cases, fuel intensity figures were supplied by the client; in these cases, C02 emissions were calculated based on fuel content o f carbon, taken from Umwelt Bundesamt, as follows: Diesel: 2.62kg C02/litre Gasoline: 2.33kg C02/litre o f gasoline CNG: 0.48 kg C02/litre (200 bar) o f CNG. Window 1. Freight Transport GHG impacts for proposals for actual interventions into the freight sector were calculated based on total impact on truck kilometers multiplied by the average emissions per truck with as much truck type specific data as was available. When no vehicle kilometer specific impacts could be calculated but in the judgment o f the review team real vehicle kilometer reductions were probable, the following was used: 87 Estimatedreduction of truck kilometers. 2% Window 2. Public Transport Transit system restructuring impacts are taken from the reduction of bus or minibus kilometers per vehicle type multiplied by their specific vehicle emissions factors per vehicle kilometer. Modal shift impacts are taken from the impact on passenger trip kilometers by mode, and vehicle type when available. Fully modeled modal split impacts are rarely available due to the lack of a fully calibrated multi- modal traffic model inmost cases. Modal split impacts were therefore estimated inthe following way. Passengers Attracted from ExistingTransit system: 85% Passengers Attracted from Private motorists: 15% This modal shift projection is based on observed modal shift impacts on TransMilenio in Bogota (15%) on TransJakarta (19%), and in Curitiba (10%). Informationwas provided by the relevant transit authority (URBS in Curitiba, TransJakarta (JICA) for Jakarta, and TransMilenio SA for Bogota). The modal shift impact will depend on the impact of the design on road capacity for mixed traffic and other factors. In the case o f Bogota, TransMilenio relocated all buses out of mixed traffic lanes, increasing mixed traffic capacity. In the case of TransJakarta, many buses were allowed to continue to operate in the mixed traffic lanes. While from a standard traffic engineering perspective the former is preferable, from a modal shift perspective the latter i s preferable. Evaluators then assigned a weight based on the grade of BRT System as follows: Table A8.14 Modal Shift weight based on the grade of BRT systems Grade Definition Weight Grade A Fully grade separated, mostly median aligned 100% Prepaid, off bus, platform-level boarding High quality of service, reasonable price Speeds 25kph or greater Grade B Fully grade separated, mostly median aligned 70% Standard on-board payment and curb boarding Moderate quality service, reasonable price Speeds of 18 kph to 25 kph Grade C - -- Partially grade separated 30% Curb or median aligned Minor bus system priority measures Ifmore detailed data is available from a detailed emissions inventory about the existing vehicle mix, then these modal shift impacts were then assigned proportionally to the vehicle mix from the vehicle inventory. Where such information was not available, then emissions factors for vehicles that most closely resembled the existing vehicle mix in the opinion of the evaluators 88 were used. Inthe absence o f specific information on the level o f vehicle occupancy, the average figures inthe above indices table were used. Finally, to compensate for the fact that modal shift benefits tend to increase over time rather than remain constant, because without bus priority modal shift tends to be away from transit mode share (except in very poor countries where pedestrian trips are still being replaced with bus trips), we have added a multiplier effect to give the estimated 10 year average modal shift impact based on observed data from Curitiba and Bogota. Modal shift weight to give the 10year average: 3 Window 4. Non-motorized transport Walking and cycling are affected by the quantity and quality o f sidewalks, crosswalks and paths, path system connectivity, the security and attractiveness o f pedestrian facilities, and support features such as bike racks and changing facilities. Improved walking and cycling conditions tend to increase non-motorized travel, increase transit travel, and reduce automobile travel. The introduction o f even a moderate shift from motorized to non-motorized modes o f transport could provide substantial benefits interms o f GHG emissions. Bicycle assessment and weighting methodology To demonstrate the ability of safe, clean cycle ways - combined with a campaign of bicycle promotion - to attract users and reduce energy consumption, a number o f pilot projects are proposed in this window. The approach used was to estimate reduction in car VKT per year as a result o f bikeway construction, and multiply this VKT reduction times an emissions factor per VKT, to produce total emissions reductions per year resulting from the VKT. Car VKT reductions were estimated as follows: (1) Begin with assumptions about the number o f new bike trips associated with the program activities. In this case, it was assumed that each new kilometer o f cycle way i s associated with 2,200 new cycle trips per year. This number was derived from before and after measurements along the cycle ways in Bogota and Rio de Janeiro. If no kilometrage o f cycle-ways to be constructed was available at the time o f the analysis, an increase o f 1% over existing usage was assumed. (2) Quantify the total length o f new cycle trips for the city as a whole. This was done by multiplying the number o f new cycle trips times the average distance o f a cycle trip length inthe city, ifthat figure was provided, or 5 kilometers, ifno figure was provided. (3) It was assumed that there was a one-for-one correspondence in the distance of the cycle trip and the reduction o f a corresponding distance for a motorized trip. Unless more specific data was available, it was assumed that the new cycle kilometers traveled attracted trips away from motorized modes inthe following proportions: Cars: 20% Buses: 80% 89 (4) Discounting weights were then assigned to the resulting VKT reduced according to the character o f the cycle way, as follows: Table AS.15 Modal Shift weight based on type of bikeway infrastructure Definition Weight I. l.c\sl ofSenice A or bike lane<=2 meters ideor scr\ ices popular OD pairsor \\ I functions as fesdsr IOtransit trips 11. Level of Service B or C or bike lanes less than 1.5 m wide per direction and bike lanes 0.5 partially service popular OD pairs or sometimes function as feeder to transit or arejust painted line on the side of the street 111. Level of Service D or below or bike lanes less than 1.5 m wide per direction and bike 0 lanes do not service popular OD pairs or never functions as feeder to transit The resultingweightedcar VKT reduced was then multipliedby the COz emissions factors given above, to calculate GHG reduced per year. Pedestrian (and Parking) Methodology and Weighting The approach used to assessing the impact o f pedestrianization investments on GHG emissions was to determine impacts on overall mode shares, and then use these new mode shares to calculate car VKT, and GHG emissions reductions. The following factors were used to asses modal share impacts from pedestrianization investments. Since this often go hand-in-hand with parking control measures, parking has also been included inthe assessments, even though more strategic approaches to parking are included in Window 5 (transport demand management). Table AS.16 Modal Shift away from cars based on pedestrianinfrastructure YOmodalshift away from private cars I.Fullpedestrianizationoflargeareaofthetit\ center 2 0040 11. Full pedestrianization of small or medium area of city center 1.OO% 111. Full pedestrianization of one or two blocks in city center or of larger area with limited traffic 0.25% IV. Sidewalk expansionwi parking removal large area of city center 0.25% V. Expansion of sidewalks in non-central area 0.10% Window 5. Traffic Demand Management When a parking reduction measure is implemented, the C02 reduction calculation will be a simple function o f the parking spaces removed. For each parking space removed, the city gets one car trip times the average car trip distance times the emissions per average car reduced. 90 Annex 9: SafeguardPolicy Issues LATIN AMERICA: GEF SustainableTransport and Air Quality Program Project Location The program will be carried out in 11 cities in 3 different countries in Latin America. All cities selected have population equal or higher than 300,000 inhabitants, while many are located in highly urbanized areas with more than one million inhabitants. Minor physical investments - bikeways and segregated bus-ways - will take place in developed and consolidated areas, with mostly temporary and minor impacts. Borrower's InstitutionalCapacity for SafeguardPolicies The institutional capacity o f the borrower varies from city to city and country to country, which will be discussed in the PAD for each country project. The competitive selection process of cities and projects included screening for environmental management capacity o f local government agencies. An Environmental and Social Management Plan will be prepared for each city-specific infrastructure investments. Since the project is closely linked to existing Bank operations, the existing ESMF in each country/city is being used for the elaboration o f the Environmental and Social Management Plans o f the minor investments. The capacity o f participating executing agencies and city departments is satisfactory to apply the environmental and social management framework to civil works and monitor and evaluate implementation o f agreed policies and measures by contractors and other stakeholders involved inproject preparation and implementation. EnvironmentalCategory: B - PartialAssessment 91 Annex 10: ProgramPreparationand Supervision LATIN AMERTCA: GEF SustainableTransport and Air Quality Program Table A9.1 ProgramPreparationand SupervisionPlan Planned Actual PCN review April 4,2005 April 8, 2005 Initial PID to PIC December 5,2005 Initial ISDS to PIC December5,2005 Appraisal September, 2007 Negotiations September, 2007 Board/RVP approval October, 2007 Planneddate of effectiveness December, 2007 Planneddate of mid-termreview December, 2009 Plannedclosing.date December. 2011 Key institutions responsiblefor preparation of the program: Institutefor International Development Policy (ITDP) Local transport and planning agencies (see Annex 18) Table A9.2 Bank staff and consultantswho worked on the program included: Name Title Unit Paul Procee Co-TTL, Environmental Specialist LCSEN Andres Pizarro Co-TTL, Sr. Transport Specialist LCSFT Emmanuel James Co-TTL, Lead Transport Specialist LCSFT Jorge Rebelo Co-TTL, Lead Transport Specialist LCSFT Veronica Raffo Young Professional LCSFT Nicolas F. Estupinan Jr. Professional Associate LCSFT Elisabeth Goller Transport Specialist LCSFT Nelvia Hayme Diaz Language Program Assistant LCSEN Alan G.Carroll Operations Advisor LCSQE Jose M.Martinez Procurement Specialist LCSPT Alejandro Alcala Gerez Legal Counsel LEGLA Fabienne Mroczka Financial Management Specialist LCSFM 92 Annex 11:Documentsin the Program File LATIN AMERICA: GEF SustainableTransport and Air Quality Program 93 Annex 12: IncrementalCost Analysis LATINAMERICA: GEF SustainableTransport and Air Quality Program Overview This program is designed to mitigate greenhouse gas emissions from urban transport by rationalizing the use o f different motorized transport modes and promoting the modal shift to more efficient transport modes and seek additional benefits in terms o f reducing local air pollution and congestion, improving efficiency o f the transport system and increasing accessibility o f the poor. According to the figure below, the program i s expected to reduce GHG emissions in one or more o f the following ways: (1) number o f vehicles, (2) distance traveled or (3) emission per vehicle distance traveled. Number of Distance 1 Emission veh- I vehicles dist. traveled ---Modal share Zoning practices Fuel type Loadfactor --Densityof housing -- Vehicle technology Congestionpricing Mixed land-use - Maintenance - Economic incentives --Transport corridor Driver behavior densification ---Congestion Operational design Context and BroadDevelopmentObjective The transport sector is currently responsible for almost one-fourth of worldwide carbon dioxide emissions and it is the fastest growing sector. The International Energy Agency projects that the transport C02 emissions from vehicles are projected to increase by a factor o f 2.4 (i-e., by 140%), from about 4.6 gigatonnes in 2000 to 11.2 in 2050. Virtually all trends show an even greater growth in vehicle usage. At the same time, cities in Latin America have become the engines o f regional growth. The pace o f urbanization in Latin America i s faster than in any region o f the world. The urban population i s increasing rapidly in the whole o f Latin America and the proportion living in urban areas has also increased from 62,5% in 1970 to 78% in 2000 and it i s projected to increase up to 83% in 2020. The current urban transport systems in Latin America are already experiencing serious problems with increased pollution, energy use, congestion and other inefficiencies. Transport counts for 38% o f total fossil fuel related CO;! emissions in Latin America and growing motorization and vehicle use is one o f the main reasons for increased COz emissions. Therefore, transport policy decisions made today in developing nations will have profound ramifications on control of greenhouse gas emissions in the future. Besides the overall objectives o f reducing greenhouse gas emissions, the GEF interventions will also aim at benefiting other key developmental 94 objectives such as poverty alleviation, health improvements, economic efficiencies, reduction of local emissions and overall quality o f life, are realized indeveloping countries. Barriersfor an efficient and less carbon-intensivetransport system Achieving an efficient urban transport system in Latin America i s a major and difficult task and need sustained financial, institutional and political support in the long term. It requires the participation o f stakeholders, who play a key role in the selection o f transport modes, and moreover inthe intensity o f transport use. Table All.l BI Windows 1. Freight transport - Lack of recognitionthat freight movement i a problematic source of C02 emissions, congestion, and s emissions of air pollutants such as particulate matter and oxides of nitrogen; - Lack of regulatory frameworks to set and enforce standards for fleet renewal, and registration; - Lack of regulatory and institutional framework to enforce more efficient freight distribution and - transport management; Lack of political support from national, state and local government levels; - Lack of institutional capacityto implement a strategy at local level; - Lack of support from transport and distribution companies to rationalize public transport system: - Inadequate mechanisms for identifying improvements and disseminating results 2. Transport and - Deficient coordination between environment, urban planning and transport planning urbanplanning - Legal requirements and constraints, as well as project development timelines under which these agencies operate are often incompatible - Lack of legal instruments and financial and economic incentives to implement densification and mixed land-uses - Lack of local institutional and technical capacity to implement projects --Lack of political support from national, state and local government levels Inadequate tools and methodologies to assess impacts of land-uses and location of activities on transport system 3. Modal shft to Perception that achieving improved public transport is expensive, difficult, and will threaten our public transport quality of life and lifestyle. Lack of support from private operators to rationalize public transport system Lack of regulatory framework and enforcementcapacity to rationalize transport system Lack of support from private operators to rationalize public transport system Risks associated with investment in new technologies and improved fuels Lack of financial resourcesto sustain investmentsin projects Inadequate mechanisms for identifying improvements and disseminating resulting success stories, and beneficial trends are inadequate Lack of technical capacity and experience to rationalize system and manage privately operated public transport systems Outreach to current non-system-users for planning of and communication about the new system is inadequate Connectivity with other modes (walking, cycling, etc.) is often poor, leading to perceptions that the system is difficult or burdensome to use Operational priorities in general traffic management can disadvantage movement of public transport vehicles. increasing time delays and degree of reliability of public transport relative to the private car Involuntary Resettlements 4. Nan-motorized - Lack of public support as walking and cycling are often perceived as unsafe. undignified, or transport inefficient - Rights and responsibilities of cyclists and pedestrians vis-a-vis car drivers are often either poorly proscribed or poorly enforced - Allocation of resources for facilities for pedestrians and cyclists often overlooked; such facilities, if - developed at all, are often the result of supplementalfunding to other projects Lack of local institutional and technical capacity to design adequate bikeways and public participation 95 Windows Barriers -- in process Lack of financial resourcesfor investments in projects Involuntary Resettlements 5. Transport - Lack of public and political support Demand - Perceptionthat transport demand management will threaten the quality of life and lifestyle Management - Lack of local institutional and technical capacity to implement projects - Lack of financial resources for investments to sustain projects Strategy for overcoming barriers and Global Benefits The program is divided into a Regional Project that will create policy, economic and institutional incentives. The Country Projects focus on pilot investments and technical assistance to 11 cities and demonstrate impacts on the ground. Complementary, the Regional Project will focus on regional wide efforts to strengthen, integrate, consolidate and expand the scope o f the individual city projects. This will be done through the following components: (1) improve methodologies to assess climate change, air quality and other benefits o f transport interventions; (2) regional capacity building program to strengthen institutions and technical capacity o f stakeholders involved in project preparation and implementation; (3) mainstreaming to incorporate climate change and air quality considerations in transport, land use and energy planning, through policy dialogue at national and regional level, (4) monitor project implementation in the different cities and conformity with GEF OP11 objectives. The project activities are targeted to five strategic thematic "windows," followin the World Bank's and GEF priorities for climate change mitigation inthe urban transport sector5 . 0 a. Freight transport: improve efficiency of goods transport in urban areas, while also reducing conflicts and impacts on other modes o f transport. Emission reductions will result from less energy intensive transport o f freight, plus the removal o f conflict with climate friendly modes o f transport b. Transport and urban planning: foster more integrated plans that reduce the number o f trips, trips length and create incentives for public and non-motorized transport. GHG emissions will result from less fuel consumed per trip. C. Modal shft to public transport: implement measures that improve attractiveness and efficiency o f the public transport system and interconnectivity with other modes. GHG emissions will result from less fuel consumed per trip. d. Non-motorized transport: integrate walking and biking in the culture and planning process o f cities and create incentives for their use in cities. GHG emissions will result from less fuel consumed per trip. e. Transport Demand Management: implement measures to rationalize use o f private cars and create incentives of more efficient movement and modes of transport. GHG emissions will result from less fuel consumed per trip, as motorized trips get rationalized. The STAQ Program is tied together with a Regional Project whose purpose is to facilitate exchange, generate learning synergies, remove barriers at national and regional level, harmonize 20 Karekezi, S. , L.Majoro, T. Johnson, 2003. Climate Change Mitigation in the Urban Transport Sector: Prioirities for the WorldBank. The World Bank. 96 assessment methodologies among project participants, help mainstream environmental considerationsinto transport decision-making, and track overall progress. This program takes advantage o f synergies among similar types of projects in different cities, and forges a regional approach to mainstreaming the innovations that certain Latin American cities have developed. By exploiting such synergies, a regional approach can produce multiplier effects (not to mention economies of scale) and remove barriers that might be more influential than will be a series o f separate investmentsinthe same outputs. Baseline Scenario and Costs The baseline scenario takes into account current transport programs being implemented in the cities, which varies greatly from one to the other. In many cases, the baseline scenario accounts for existing BRT's or BRTs under advanced level of implementation. In most cases there are no bikeways being built, or conceived as transport means. In the case of pedestrian transport, the baseline case accounts for current levels of infrastructure, including the custom width and technical specifications. For most studies aimed at advancing the inter institutional coordination of land-use and transport planning, or for developing and promoting the implementation of sound transport demand management measures, or for developing freight management plans, the baseline i s practically inexistent. In the absence of GEF, all BRTs and Mass Transit Systems being developed would only focused on achieving a renewed plan for routes, concession schemes, and integrated fare for the bus system without muchconsideration of inter-connectivity to other modes, or the articulation to non-motorized transport development and local pedestrian facilities. At the upstream, studies to develop traffic restrictions or land-use incentives to reduce travel distances would not take place. In the same line, studies on incentives for school and housing location as a way to reduce the average traveled km would not take place with the needed celerity. Finally, freight management would basically remainfocused to the registry and licensing of vehicles. Total expenditures under the baseline scenario are estimated to be at least USD56,372,000. Alternative Scenario and Costs The proposed alternative will seek to demonstrate the benefits of measures aimed at promoting a change to less carbon intensive transport modes; a reduction of average traveled distance (avgas vehicle-km for specific trips), a more efficient use of transport (more passengers per vehicle kilometer); and less energy intensive freight transport. In order to make these measures possible it i s necessary to ensure an institutional coordination of sector policies and sustainable mainstreaming of the environmental dimension into land-useand transport planning. Most of the measures identified in the different windows of intervention interrelate to each other, posing significant synergetic effects. Combining BRT with sound pedestrian facilities can have an expansive effect on reducing GHG emissions, demand is increased for BRTs, modal shift from private vehicles generating reduction in car travel-km, and the multiplying effect on the land-use planning. According to Wright and Fulton2',additional GHG reductions may double as a result 21Wright, L.and L.Fulton, 2005. Climate Change Mitigation and Transport in Developing Nations, Transport 97 o f further modal shift, especially from cars, minibuses, motorcycles, and taxis, provided the right complementary measures are in place (i-e., regulation, accessibility, effective networks, effective land use planning). This means that modal shift from car vehicles alone may represent 5-6%.. The table below presents the incremental cost analysis for each window. The total cost of the GEF program alternative is estimated at USD77,172,000. IncrementalCosts Implementation o f the barrier removal strategy noted previously would require funding of incremental costs, which would be the difference betweenthe costs o f implementingthe baseline scenario versus that o f the alternative. GEF funds are sought to support incremental costs. The total cost o f the GEF Program alternative i s USD77,172,000, as compared with the baseline case o f USD56,372,000. Thus, the incremental cost o f the GEF Program alternative would be USD20.8 million. The tables below show the contribution of GEF to the development o fthe alternative. Reviews, Vol. 25, NO.6, pp-691-717 98 6 . .. . 0 0 3 2 0 c 0 0 2 0 2 0 0 - 0 P Q? 0 0 4 5R Annex 13: STAP RosterReview LATINAMERICA: GEF SustainableTransport andAir Quality Program ADDITIONAL COMMENTS BY STAP REVIEWER The following is the text of an e-mail receivedMarch 10, 2006, from the STAP reviewer, in response to commentsandreactions from the ProjectTeam on the STAP reviewer's initial comments(includedbelow): Dear Pierre, Many thanks toyou and all the WorldBank stafffor taking the time to address the issues raised in the STAP review. Afer looking over your responses, I amfully satisfied that each of the issues have been adequately addressed. As Isuspected,many of my previous concernswere simply a result of a lack of detailed knowledge of the speciJic proposals. In some cases, wording gave the appearance that measures were either insuflciently innovative or were potentially increasing emissions through improved circulationfor private vehicles. In thefew cases where the proposals could be borderline cases,you have sufficiently allayed such concerns. Isupposemy onlyfinal commentwouldberegardingtheability of regionalnetworks andinformation sharing to spur implementation. From my own experience,information networking is quite effective in building knowledge capacity and sparking creative ideas between cities. And certainly cities do tend to be a bit competitive with one another, so implementation in one city can enthuseanother tofollow suit. However, I would be reluctant to say that networking is that closely tied toproject commitment. It is perhapsjust a bit toopassive of an activity to overcomethe other obstacles to implementation. Since many of the activities within theproposals are study-based, the greatest challenge will be making study recommendations a reality. I suspect that in many cases it will take active outreach and other incentives to move cities to implementation. Thus,I might suggest having some wording in the PAD emphasizingthat the resources will be availablefor a strong post-study outreach effort towards key decision makers. In closing, it is clear that the STAQ will be a major benefit to the goals of sustainable transport in Latin America and greenhousegas reductions at theglobal level. Overall, the STAQ appears to be the right blend of elements to promote mode shifting to cleaner transport options. Again, thankyoufor your considered responses to my review. I wishyou much success with this project. Best regards, Lloyd Lloyd Wright lfiright@usa. net 105 STAP REVIEW AND RESPONSE The STAP reviewer summarizedhis recommendations at the end of his paper. We address these recommendationsfirst. Staff comments are initalics. 1. STRENGTHSOF PROPOSAL This section notes the strong points of the STAQ proposal: - By building on the existing efforts inBogota and Curitiba, the STAQ will both deepen and widen an ethic of sustainabletransport across the LatinAmerican region. - The competitive nature of the city selection process i s a highly-effective mechanism to achieve a quality input from cities; this practice shouldbe looked at as a possible standard infuture GEF solicitations. - The nature of the future tranches of funding makes for a strong incentive towards quality implementation. - The size of the proposedbudget and the distribution of the budget betweenthe Regional and Country Projects seems appropriate. - The regional nature of grouping many cities into a single GEF project will reduce transaction costs and timing delays inGEF project approvals. - The packageapproachof includingcomplementary measures together (Le. freight transport, land-use / environmental management, public transport, NMT, TDM) holds muchpotential to build project synergies. 2. RECOMMENDATIONS Overall, the STAQ is a well-written and well-considered proposal. The following are some recommendationsto consider to potentially strengthenthe contents and the delivery of the project: . With many of the proposedactivities focusing only on studies (especially in the areas of freight transport, land-use,and TDM), additional thought should be given on how to provide incentives for cities to move towards actual implementation. Agree. Staff believe that the regional character of the wholeproject will help ensure the likelihood that activities will movefrom study to implementation, by allowing cities to share similar experiences and craft solutions. . Public participation as noted inComponent 4 would not appear to be sufficiently highlighted or funded. More clarity is perhaps required on how public participation will be incorporated into each of the city projects. 106 Agree, Staff will require that cities receiving more than USD500,OOOinfunding under this project create a Public Participation Plan (PPP), based on a Public Participation Framework which will be developed by Bank staff(a1ong with the Environmental Management Framework). Additionalfunding for development and implementation of the PPPs cannot be allocated, but staffwill work with cities to ensure that co-financing resources be usedfor this. rn Projects supporting improved circulation for private motorized vehicles should be potentially re-examined for possible inducedtraffic impacts that could result inincreased emissions. Weprovide in-context responses belowfor individual cases. . Projects that only deliver marginal improvements to conventional bus services (non- BRT) should be possibly re-examinedto determine ifthere is sufficient innovation to warrant GEF funding. Staff believe that the criteriafor Window 3funding should be not whether afull-fledged BRT is contemplated or proposed, but rather whether the improvements contemplated will probably lead to a net reduction in (202, and whether GEF-financed incrementalfinancing will either increase the likelihood that the contemplated improvementswill come tofruition, or else will enhance the C02-reductionpotential of the improvements. GEFfunding has been used to support public transport improvements that are notfull-fledged BRT operations in thepast, namely in Santiago. . Indicators should be potentially strengthenedto include more quantitative factors such as actual emission reductions, changes inmode shares, noise level reductions, accident reductions, kilometers o f infrastructure constructed, etc. Agree. However, the sample indicators that the STAP reviewer includes in his list onpage 15 represent a mix of output measurements, outcome-oriented indicators, and objective- oriented indicators. We need to be careful that, as a basic requirement, we areproviding indicators of the intendedproject outcomes, and that indicators of goals and objectives of the project not be confused with those that gauge how well theproject is delivering its intended outcomes. Project activities --particularly enabling activities such as studies, capacity development,and community outreach activities -- will not directly reduce emissions, change modal shares, or affect trip distances. Rather, they willfacilitate future actions which will affect these things. (Monitoring of outputs - e.g.no. of kms of bikeway, etc. -- is generally done by supervision of sub-project implementation, and does not necessarily need construction of "indicators'3. In general, the indicatorsframework proposed has been reworked, and Section 3 and Annex 3 have been changed as appropriate. Staffare open to further discussions/suggestions. rn More explicit mention could be made o f social equity and poverty reduction impacts expected from the implementationof the STAQ. 107 Agree. It is worth noticing here, as afrst general approach to this issue, that the vast majority of GEFfunds are assigned to activities that will improve public transport services and non- motorized transportfacilities, i.e. the only modes of transport available to thepoor. In addition, GEFfunding in many opportunities will be blended with WorldBank loans, whichprimarily aims at implementing pro-poor projects. Section 0 4 will be rnodifed with thefollowing text: The project is expected to enhance social equity andpoverty reduction efforts by improving accessibility,particularlyfor thepoor, while also improving environmental quality. . Inthe future, some effort should be made to include countries and areas ofthe regionnot included inthis first trench; attention shouldbe especially given to Central America and the Caribbean. Agree. Special attention will bepaid to the inclusion of countries and/or cities of Central America and the Caribbean, especially those whichparticipated of the competitive selection process (Santo Domingo, El Salvador) in the list ofparticipants to the learning and dissemination activities under the Regional Project, so that they will strengthen their technical capacities and be able toformulate sound sustainable transport proposals likely to obtain further GEF (orfrom other source)funding. . Duringthe PDFprocess, initial estimates ofgreenhouse gas emissionreductions should be conducted for each of the city projects. Agree. This task was underway when draft of PAD sent to STAP reviewer, but had not been completed,so did not show up in the draft that was reviewed. This will be included in the Incremental CostAnalysis annex. . A large, single proposal of this type may have the impact of crowding out other proposals that are introduced for sustainable transport inthe Latin American region. It should be made clear that other executing agencies will still be able to put forward new proposals, especially proposals that promote best practice examples beyond the level being put forward under the STAQ. Agree. Section C.1.discussespotential partnership arrangements with institutions with whom the Bank collaborates regularly, and would continue to collaborate on thisproject,particularly for the regional project. Have added thefollowing sentence at the end of that section: "Bank staff also welcome theparticipation of cities in the region with current or new GEFprojects in sustainable urban transport developedand implemented outside of their STAQproject to participate in the regional project, andparticularly welcomes opportunities to collaborate with other implementing agencies.'I Inthe future, the STAQ shouldgive more awareness and attention to NMTissues that have not beenhighlightedinthis first trench. Specifically, measures to highlight include: shared space, non-motorized freight options, bicycle distribution, car-free weekdays, permanent car-free weekends, and pedicabs. 108 Measures included under Component2 were city-generated and included in their proposals to Bank staff: rf the measures listed above have not been highlighted in theproject, it is because there were no successful proposals that speciJically included them. Still, some, such as car-free days and car-free week-ends, willprobably be considered to bepart of the several non- motorized transportpromotion campaign envisaged under this grant In addition, these types of , activities will be among those discussedin Components2.2 and 2.3 (technical assistance and mainstreaming of environmental goals dialogs). . The STAQ would appear to be a complex initiative, especially interms of the requirements it imposes on oversight, administration, and support. The STAQ team should ensure that there are sufficient staff resources to properly oversee and support each one o f these city projects. Since some o f these initiatives are somewhat modest in terms o f their sustainable transport credentials, substantial technical assistance support will be likely. As an alternative, the STAQ could even consider reducing some of the less qualified first trench initiatives, in order to give more emphasis and support to the more progressive proposals. The need to balancefunding of (technically and institutionally) strongproposals withfunding of weaker onesfor the expresspurpose of institutional and technical capacity development was a fundamental factor in determining which city proposals to move ahead with. Thepnal mix of sub-projects is oriented slightly toward more qualiJiedproposalsfrom cities with less need of technical development,but staff believes that the mix of sub-projects proposed is robust. Because there is an important capacity-building element to the wholeproject, we believe that reducing the less qualified proposalsfurther would have reduced theproject's ability to leverage future GHG emissions reductions. Since most of theproject activities are in cities with either ongoing Bank operations or well advancedproject preparation discussions, we do not believe that the supervision, oversight, administration, and support issues are insurmountable. Staff responses to other STAP-reviewer comments other than those summarized above are provided below, inthe text. 109 STAP REVIEW LAC RegionalSustainableTransport and Air Quality Programme Review by: Lloyd Wright International transport consultant UniversityCollegeLondon and Wva Date: 27 February2006 Contact details: Lloyd Wright Armero 200y Avenida Universitaria Quito Ecuador Tel. +593 (0)9 577 6500 Email lfwright@usa.net 110 CONTENTS Background 112 Overview 113 I.Scientificandtechnicalsoundnessoftheproject 114 1. Technical justification and data provision 114 2. Financial adequacy of proposal 115 3. Barrier removal 119 4. Technical feasibility of initiatives 120 5. Scope of activities 121 6. Monitoring and indicators 124 11. Identification of global environmental benefits 125 111. Project fit with the goals of the GEF 127 IV. Regional Context 128 V. Replicabilityand sustainability 130 VI. Stakeholder involvement 132 VII. Review summary 134 1. Strengths of proposal 134 2. Recommendations 134 111 In 2005, the World Bank announced its intentions to propose an initiative, known as the SustainableTransport and Air Quality (STAQ) programme, which seeks to promote catalytic sustainable transport efforts in Latin America. This initiative has been proposed as an activity under the Global Environment Facility (GEF), as part of the GEF's efforts to combat global climate change. I n particular, the initiative encompassesthe GEF's Operational Programme 11 (OP ll), seeks to reduce greenhouse gas emissions emanating from the transport sector. which To date, the World Bank has led several other GEF efforts under OP 11, including existing projects in Lima, Mexico City, and Mexico Cities as well as most recent efforts in Hanoi, cities of Colombia, and cities of China. The STAQ programme consists of two distinct components: 1.)Pilot investments, technical assistance, and capacity-building activities in selected cities; 2.) Cross-cutting activities such as information sharing that are applicable to cities in the region as a whole. For the second component, the World Bank conducted a competitive process inviting cities across the region to submit proposals to the initiative. As a result of this process, a total of 22 cities in nine countries have been selected for participation. The expected GEF contribution to this second component is USD 17,897,000. For the first component, the requested GEF contribution is USD 3,140,000. Within the Project Appraisal Document (PAD), there are three stated objectives to the overall project: 1. "To help reduce the amount of carbon dioxide and air pollutants emitted in specific Latin American cities by facilitating the use of public transport and non-motorized modes, as well as planning for physical investments and regulatory frameworks that reduce the need for excessive movement of people and goods; 2. Facilitate the ability of policy makers, civic leaders, and technical staff in cities to envision and articulate a sustainable transport vision adapted to local conditions, and to identify concrete and measurable steps to move toward that vision; and 3. Facilitate the ability of cities to share knowledge, information, and methodologies relevant to their development of sustainable transport visions." (PAD, p. 9) Given Latin America's high levels of urbanization and relatively high share of greenhouse gas emissions from the transport sector, the proposed initiative holds the potential to address a significant area of global interest. 112 OVERVIEW The roster review of the GEF's Scientific and Technical Advisory Panel (STAP) plays a central role in determining the technical soundness of any GEF proposal. The intent of the GEF's operational programs are to "expand, facilitate and aggregate the markets for the needed technologies and to improve their management and utilization." To accomplish this objective, any proposal should be effective in: 1 Removing barriers to commercially viable technologies 1 Reducing costs of prospective technologies The roster review process involves a critical analysis of the proposed activities. In particular, the roster review should: . Assess institutional and regulatory framework of project 1 Evaluate soundness of quantitative estimates and verify data 1 Note both the strengths and weaknesses of the approaches described 1 Provide recommendations and suggestions on how proposal can achieve its objectives The review mostly attempts to address proposal areas that could be potentially strengthened along with suggestions on how to do so. This review has drawn upon three principal resource materials. These documents include: . Project Appraisal Document (PAD) 1 Project Development Facility (Request for Pipeline Entry Approval) 1 Project web site (http://www.cleanairnet.org/proyectogef) The available documents provided a thorough overview of the general programme as well as a sketch of each city's project proposal (Annex 19 of the PAD). However, the actual detailed city proposalswere not examined for the purposes of this review. Thus, the comments addressing city proposals are limited to the contents of Annex 19 in the PAD. Some portions of the PAD were not completed at the time of this review. Annexes 9, 12, 14, 16, and 17 were not available. However, the contents of these annexes are in general not central to this review. Only annex 9, "Economic and FinancialAnalysis", would be considered important to inclusion for review purposes. 113 I. SCIENTIFICANDTECHNICALSOUNDNESSOFTHEPROJECT Overall, the STAQ proposal is an ambitious and well-drafted proposal encompassing the major components of the sustainable transport concept (i.e. freight transport, land-use and environmental management, public transport, non-motorized transport, and transport demand management). This section of the roster review evaluates the STAQ proposal in terms of the quality of the technical data presented, the financial adequacy of the proposal, the effectiveness of the proposal in terms of barrier removal, the technical feasibility of the proposed activities, the scope of the activities, and the proposed monitoring and evaluation activities. 1. TECHNICAL JUSTIFICATION AND DATA PROVISION As the fastest growing source of global greenhouse gas emissions, the transport sector is a well-documented concern within efforts to mitigate the effects of climate change. Further, Latin America's high level of urbanization and growing vehicle ownership certainly justifies actions supported by OP 11. The STAQ proposal outlines some of the statistical justification for addressing the Latin American transport sector; this information is particularly found in Annex 1of the PAD. Basic emission levels for the region, demographic data, and growth levels for car ownership are provided. Likewise, some anecdotal evidence is put forward to suggest sprawl-type growth is occurring in the region. A limited technical reference is provided for each of these data points. Upon referencing to these sources, the data points were indeed correct. This brief section is probably adequate for a general justification of addressing Latin America's transport sector, especially given the relatively commonly held recognition of the problems at hand. However, it is possible that a more complete picture could have been developed in terms of technical justification. Use of the IEA/SMP spreadsheet could have helped to provide greater detail, especially at disaggregated levels with respect to modes and fuels.23 For example, the PAD does note that "Freight transport in urban areas is an important source of greenhouse gas emissions, particulate emissions, and congestion that exacerbates the emissions of other vehicles" (PAD, p. 16). Use of the IEA/SMP could have easily helped to quantify this statement with the actual freight emissions contribution in Latin America. Within the summaries of the city proposals, some quantitative justification was provided for a few cities. It is possible more detailed data was available within the complete city proposals, 23IEA/SMP (2004)' The IEA/SMP transportation model. http://www wbcsd.org/plugins/DocSearch/details.asp?type=DocDet&ObjectId=MTEONjc , 114 but these documents were not included in this review. Some of the data types provided within the city summaries included: . ....Air quality levels (Rosario, Quito, Monterrey) Emission levels (La Plata, Quito, Monterrey, Arequipa) Accident figures (La Plata, Panama City) Demographicfigures (La Paz, Guayaquil) Mode shares / fleet size (Rosario, Quito, Leon, Monterrey, Arequipa) Fuel costs (Campinas) Given the time limitations for conducting this review, no independent confirmation of these data could be made. Further, it is also realized that a major barrier to implementing sustainable transport in developing nations is the lack of such data. In many cases, studies of these types are explicitly part of each city's proposed activities. There were few references to data types that are typically included in a project cost-benefit analysis for transport initiatives. Such data would normally include: time-savings benefits, fuel savings benefits, and emission and noise benefits (such as health benefits and labor productivity). Again, it is quite possible that these sort of analyses would be included as part of the city studies as well as within the project monitoring process. The PAD document does make mention of documenting "co-benefits" as a principal objective within the monitoring and evaIuation process. 2. FINANCIALADEQUACY OF PROPOSAL Overallproject budget As a large and ambitious initiative, the STAQ is difficult to precisely evaluate from the perspective of financial adequacy. However, given the complexity and size of the problems associated with the Latin American transport sector, the overall initial trench of USD 40million would seem appropriate, especially given the inclusion of 22 different city projects. Component one, which includes pilot demonstrations, technical assistance, and capacity building, is allocated USD 17,897,000. Component two, which is cross-cutting regional activities, totals USD 3,140,000. However, within component one there is considerable variability regarding the nature of the planned activities. In some cases, the activity involves the development of a plan to implement a specific output and the provision of actual demonstration hardware. Examples of this type of activity include: . Rosario - Development of a transit corridor including bus infrastructure, landscaping, urban facilities and easy access to public transport stops. . Curitiba --Revitalization and enlargement of sidewalks 3080 Negr%o/XV de Novembro/ Conselheiro Laurindo Ciudad Juarez - Restoration of an unsafe and impassable zone in the city's downtown, linking to transport systems 115 .....Bariquisimeto - TA to support development and implementation of BRT, awareness campaign, training Posadas - 3km of BRT corridor in the AV, Uruguay, planning of the integrated transport system Monterrey Base line studies, design and implementation for Ruiz Cortines and Lincoln - corridors Puebla - Studies, equipment to design and operate three integrated BRT corridors of about 15 km each Arequipa Studies, design, training, awareness campaign to support BRT development - These activities produce an output with a fairly direct relationship to actual emission reductions, assuming that the planning activities lead to actual implementation. In these instances a projection of potential C02 emission reductionswould be a fairly straight forward analysis. By contrast, many of the other activities within component one revolve around informational and institutional studies that are less explicitly tied to actual implementation. Examplesof these types of activities include: S2o Paulo - Define a regulatory framework to promote more efficient and cleaner freight transport in the metropolitan area; S2o Paulo - Study the potential of Public Private Partnerships Rosario - Definition of modifications in previous land use patterns and adaptation of existing land use norms Quito - OD study and Baselinestudy to assess the social, economic, urban, mobility, and environmental impacts of the Metrobus-Qsystem Puebla - TA to help design and establish the organization (UGTP) that will take over responsibilities and tasks related to the planning of sustainable transport improvements for the city of Puebla Trujillo - TA to create Metropolitan Planning Council; training; institutional strengthening It will be considerably more difficult to draw a direct relationship between these types of activities and any eventual emission reductions. These activities are nevertheless still addressing barriers to sustainable transport, but the relationship to eventual implementation of specific measures will be more difficult to ascertain. It would therefore be somewhat useful to quantify the amount of funding be applied to the more implementation-oriented activities within component one and the softer activities within component one. This differentiation would not lessen the importance of the softer issues, but could be helpful in determining cost effectiveness in nearer-term emission reductions. The funding proposedfor the five thematic windows is as follows: Window 1.Freight transport: USD 827,000 Window 2. Land-use planning, transport management and environmental management: USD 5,972,000 Window 3. Public transport: USD 16,410,792 116 Window 4. Non-motorizedtransport (NMT): USD 12,343,597 Window 5. "Transport demand management (TDM)'"4: USD 2,002,000 Given that most of the substantive activities revolve around the public transport and NMT windows, this division of the funding is appropriate. The smaller amount for TDM reflects the fact that activities within this window largely revolve around studies and not implementation. However, this does raise questions over the level of commitment from the selected cities. No city seems to include any truly substantive activities to curtail usage of private motorized vehicles. The first component is divided into four Components: 1. Improve methodologies to assess climate change, air quality and other benefits of transport interventions 2. Regional capacity building program to strengthen institutions and technical capacity of stakeholders involved in project preparation and implementation 3. Policy dialogue at national and regional level to foster the implementation of policiesthat will facilitate the implementation of environment and sustainable transport strategies at the local level; and 4. Monitor project implementation in the different cities and conformity with GEF O P l l objectives. Under the given budget, component two represents 5.8 percent of the total budget under the first trench. This amount is probably appropriate for the given activities. However, since the detailed budget for any given Component is not provided, it is difficult to confirm the adequacy of the stated amounts. In the case of Component 4, the following statement was included in the PAD: "Component 4. (USD1,454,800) This Componentwill fund activities to monitor the implementation of the project, conduct general audits, ensure adequate and prompt reporting, and to allow public participation at all levels." It seems doubtful that this amount will be sufficient to fully address each proposed activity as well as "allow public participation at all levels". Public participation is a non-trivial issue which requires a concerted effort to organize, plan, and execute. There is no further mention in the document how public participation will occur within the broader project or within the individual city projects, although a few city projects, such as that for Ciudad Juarez, do make cursory mention of public participation. Finally, it is unclear why the total requested amount in Annex 5 is USD 31.7 million while the figure elsewhere in the documentationtotals USD 20.8 million. 24TDM is more conventionally referred to as "Transportation Transport Demand Management" rather than "Transport demand management", see http://www.vtpi.org/tdm/index.php. 117 Individualcity budgets The individual city budgets represent a diverse set of activities and costing procedures. Thus, it is difficult to make generalizations about the individual budgets as a whole. However, there are a few common issues to consider across the range of proposed budgets. In a few cases, the proposed budgets seem to be inconsistent with the scope of activities proposed. In these cases, the proposed amounts seemed to be insufficient to deliver the proposed outputs, even assuming that only local consultants were utilized rather than international professionals Table 1outlines some examples of budgets that appear insufficient . for the scope of the proposals. Table 1Potenl C6rdoba Implementinq the use of "trolleybuses" USD 516,000 Posadas 3 km of BRT civil works in the Av. Uruguay USD 1,375,000 Tucuman . Update of OD study USD 365,000 A qualitative study showing the possible impacts and benefits of the TMP Transport Master Plan for the Metropolitan Area of San Miquel de Tucuman Ciudad Juarez . 1opezMateosBikePath USD 1,360,000 Construction of a 5km of bike path, connecting the BRT system with a bike path feeder network, Building more than 22,000 square meters of sidewalks, including along Lopez Mateos avenue, Rehabilitate green spaces and plant 624 trees and 4,184 bushes along the streets. Acequia del Pueblo corridor . Improve an urban area of 120,000 sq. meters of an unsafe and deteriorated zone into a linear park. Construction of a 6km cyclist path, that will serve as a feeder to the BRT system Developing 6km of pedestrian trails along the storm- water channel, and building more than 13,200 square meters of sidewalks. Rehabilitate more than 60,000 square meters of green spaces. Puebla . Feasibility studies USD 105,000 . Technical Assistance Two bike-paths (30 km approximately) Five pedestrian routes (7 km. approximately) Five workshops on environmental awareness and protection Three projects of environmental recovery projects 118 There may also be other explanations for these apparent budgetary shortfalls. In the case of Posadas, the developersare potentially confusing "BRT" with a basic busway. In the case of Puebla, it would appear that the stated budget is only for the feasibility studies, and that the budget for the other items, such as the infrastructure, was inadvertently not included (even in the external, non-GEF budget). Many of the budgets also seem to include a good deal of infrastructure supported through GEF funds. This aspect is positive in the sense that it implies a clear intent to move towards full implementation. On the other hand, the GEF has historically not funded infrastructure hardware. Thus, a general question is whether the significant extent of GEF infrastructure funding as outlined in the city budgets is a legitimate activity. Finally, the overall total of the matchedfunds from non-GEFsources does represent the matched funding requirementsof at least 50 percent. The bulk of the matched funding, though, stems from a few cities that are including major civil works in their budgets. In fact, the vast majority of the counterpart contributions emanate from just two cities, Le6n and Monterrey. By contrast, there are several individual cities that are well short of a 50 percent match for their activities. These cities include: C6rdoba, La Plata, Posadas, Rosario, Tucuman, Concepci6n, Salvador, and Quito. In reality, this mismatchof counterpart funding highlights one of the main advantages of a regional, multiple city approach. Individually, many of these projects would not qualify for GEF funding due to a lack of counterpart funding. As a group, the over-supply of counterpart funding from one city helps to cover the requirementfor other cities. However, the lack of sufficient counterpart funding with some of the cities should nevertheless be a concern. If the lack of counterpart funding indicates that some cities are perhaps not as fully committed to the initiatives as they should be, then the political will to achieve full implementation could be lacking. 3. BARRIER REMOVAL The most common barriersto the implementation of sustainabletransport initiatives include: .. Political leadership and political will ... Opposition from key stakeholders(existing transit operators, motorists, etc.) Institutional inertia Financial Technical capacity Informational The STAQ holds the potential to address each one of these barriers in some form. The competitive nature of the city selection process was in itself a highly effective mechanism to raise awarenessof sustainable transport options as well as to build political will on these issues. The prospect for cities to qualify for the second trench is also an effective incentive to focus minds on implementation. Likewise, the cross-cutting activities proposed within component two of the proposal should help to further reduce informational barriers. In many of the individual 119 city proposals, there are stated strategies to address opposition from key stakeholders as well as plans for institutional building. However, whether all the pertinent barriers have been identified and addressed for each individual project cannot be completely confirmed through this brief review. While most of the NMT projects include some form of promotional activity, many of the public transport projects do not appear to explicitly address marketing or promotions. In many cases, it appears some activities are principally focused upon technical aspects without perhaps focusing enough attention on stakeholders. However, this observation is only based on the limited city information available in the PAD, and thus may not be an actual concern within the projects themselves. 4. TECHNICAL FEASIBILITY OF INITIATNES With the examples of Bogota and Curitiba established in the region, there would not appear to be any technical feasibility issues with the proposed activities. For the most part, the activities described have a sufficient track record to allay concerns about technical feasibility. BRT, cycle ways, pedestrian upgrades, parking policies, etc. all have some high-quality precedents from which cities can use as examples. Perhaps the only exception to this generalization is the biodiesel initiative being proposed for Campinas. However, the Campinas project is certainly within the spirit of the GEF in terms of promoting new technologies. Further, the technical issues related to biodiesel, while not trivial, are perhaps secondary to addressing the costing issues associated with the fuel. Therefore, technical feasibility should not be a significant issue for the proposed set of projects. If anything, there may be a slight concern regarding the degree of innovativeness represented by the proposals. While it would be perhaps unfair and unrealistic to expect cities to meet the standards set by Bogota, the proposals should represent a certain standard of "best practice" to qualify for GEF funds. Without more details from the city proposals, a definitive conclusion with regard to innovativeness cannot be reached in this review. However, there are a few city proposals which perhaps raise concerns. For example, the descriptions of the public transport components for Trujillo, Salvador, and Posadas seem to merely represent improvements to a conventional bus system. While there is certainly always merit to improving conventional bus systems, it is a question whether the ambition and innovativeness of such initiatives are worthy of GEF support. In the case of Rosario, it would appear that the principal upgrade to the bus system is the use of automatic vehicle location technology through GPS. While this technology is certainly of value within BRT systems, should this type of investment be the priority for a conventional bus system? In a BRT system, the ordering and spacing of vehicles is central to efficient operations. With a conventional bus system operating in mixed traffic, the GPS system may merely tell operators that the vehicles are delayed by traffic. This is information is useful to an extent, but the benefits to customers in terms of changes to travel times may be marginal. Would the investment for Rosario be better used on priority measures that would more directly improve customer travel times and operational efficiency? 120 5. SCOPE OF ACTIVITIES One of the most notableand positivefeatures of the STAQ proposal is the packaged approach to jointly promoting the major elements of sustainabletransport (i.e. freight, land-use/ environmental management, public transport, non-motorizedtransport, and TDM). Each of these measurescan be mutually supportive. Implementing just one element of sustainable transport can actually hinder progresswith other elements. For example, if only public transport improvementsreceive priority, mode share can actually be shifted away from non- motorizedoptions. By implementing multi-modal improvement schemes together this type of trade-off can be minimized. Additionally, simultaneousapplication of TDM and land-use measures helps to provide another set of incentivesto shift mode preferences away from private motorized vehicles towards public transport and NMT. In order to encourage this packaged approach even further, perhapscities proposing multiple components should have been explicitly given priority within the selection criteria. The stated selection criteria make no mention of a bias towards multi-window approaches(PDF, p. 11). In fact, many of the city projects make use of only one or two of the component windows. The component windows themselves as originally presented in the announcement materials are perhapsa bit scant in some areas. While some concepts, such as BRT, figure prominently as an option for cities to consider, the range of options presented under other areas, such as NMT, are more limited. In the PAD document, the NMT category is only described as "Non-motorized transport and urban space enhancements" while all other categories are accompanied by a list of options. Certainly, within the NMT window, there could have been an opportunity to highlight many progressiveoptions, including shared space, full pedestrianization, footpath improvements, covered footpaths, car-free weekdays, permanent car-free Sundays, cycle way development, bicycle distribution programs, walking and bicycling promotion, bicycle parking, NMT-PT integration, non-motorizedfreight delivery, and pedicabs. Likewise, some common options within land-use, such as smart growth policies and greenbelt preservationmight be appropriate to note in the future. In the TDM category, the STAQ may wish to consider "Travel Blending", "Travel Smart", and social marketing techniques as future options to also highlight. For public transport, some effort should be made to highlight the need for infrastructure catering to the physicallydisabled. It is possiblethat the lack of awareness extendedon NMTduring the announcement period subsequentlyaffected the degree of innovativenessdemonstrated in the city proposals. It is unfortunate that not a single city raised shared space (also known as post traffic calming) as an option to consider, despite the fact that the concept has grown considerably as an effective sustainabletransport option. The fact that shared space was not raised as a possibility by the STAQ developers perhapscontributed to shared space not appearing. Likewise, the lack of mention of bicycle distribution, non-motorizedfreight delivery, car-free days, and pedicabs perhaps underminedsubsequent interest from city officials. However, at the same time, it is recognized that the projects are ultimately locally driven, and that any lack of interest is perhaps due to informational or other barriers. This situation, nevertheless, should direct STAQ 121 team members in the future to better inform and highlight more progressive options with targeted cities. There is also a small semantically inconsistencywith the treatment of public transport as defined throughout the documents. From the various wordings provided, it is not clear if the project is seeking public transport proposalsfocused only on integration or if integration is just one highlighted issue within a broader package of public transport improvements. For example, the different wordings presented include: Cities make additional investmentsto enhance accessibilityto public transport for one or .. more groups (PAD, p. 9) Modernizationof Public Transport Systems (PAD, p. 34) Window 3. Modal Interconnection and improved effectiveness and efficiency of public transport (PAD, p. 38). It would appear that most cities interpreted the wording to mean that modal integration was just one aspect and that other types of public transport issues could also be proposed. It should be noted though that while integration is quite important there are also other public transport issues deserving of focus as well (e.g. transit priority infrastructure, institutional arrangements, effective public-private incentive structures, marketing and promotions, customer service, etc.). Within the city proposalsthemselves, there is some evidence of possibleconfusion over the window categories. In particular, many land-use/ environmental management initiatives would be more accurately listed as NMT or public transport projects. Table 2 outlines some project componentsthat are potentially mis-identified. Public transport La Paz Set up the institutional structure for the BRT Land-use Public project transport Port0 Alegre Promote environmentally friendly bus NMT Public transport Ciudad 1uarez . To develop an accessible and safe zone for Land-use NMT pedestrians, thereby generating a ..complementary demand for the public transport system. To organize the zone for better pedestrian mobility and accessibility. To offer safe pedestrianzones as to induce pedestrian mobility and the use of public transport. 122 . 7,000 m2of sidewalks reconstructed Curitiba Revitalizationand enlargement of sidewalks Land-use NMT Joio Negr%o/XV de Novembro/ Conselheiro Laurindo Arequipa Study of modal integration TDM Public transport These projects are quite possibly not misplaced since nuances between activities can be determinant in the window location. Further, the label given to an initiative is clearly less important than the activity itself. However, misplacement can raise concerns about a city's understanding of the issues. It is also possiblethat cities may have dispersed activities to other categories in order to give the appearance of a more complete work plan. There are also instances in the city proposalswhere the definition and/or the spirit of an eligible activity is potentially misapplied. In particular, some cities have proposed activities that would most appropriately be labeled as improvements to private vehicle circulation. While these initiatives can certainly be appropriate for inclusion within a GEF project in some circumstances, it is not clear if there is sufficient innovativenessto warrant a "sustainable transport" label. Some of these possibly borderline activities are listed in table 3. I Table 3 Potentiallyborderlineactivities city I Activity Belo Horizonte Elaborate a project for vehicle circulation Elimination of bottleneck in urban road network Salvador New/improved horizontal and vertical signalizing and traffic light system Quito Traffic circulation improvement between Quito and the Los ChillosVaIIey Monterrey To extend the traffic siqnals control network (SINTRAM) TrujiIlo Improvements to the traffic network in Av. EspaAa - Works for road redesign and geometric corrections & resurfacing, 3.6 kms. - Improvements to traffic signage There is not sufficient detail provided in the reviewed PAD to conclusively question any of these initiatives. These activities may indeed be entirely appropriate. However, in general, projects that improve circulation of cars are known to induce additional traffic. This induced traffic effect can easily lead to increasedand not decreased emissions. Thus, caution is urged in providing GEF funding for these type of activities. 123 6. MONITORINGAND INDICATORS The monitoring plan outlined in Annex 3 PAD seems complete and appropriate for the overall initiative. Further, the funding amounts set aside for monitoring activities also seem correct. The use of an independent NGO to oversee the monitoring and data collection process is also a well-consideredidea. Annex 3 also articulates the many outcomes and indicators to be used in evaluating the overall project. These indicators include: .. "Cities develop or show progress toward developing urban freight management plans .. Elements of cities' environmental management, land-use, and transport plans show evidence of increasedcross-fertilization Cities make progress toward developing viable land-value capture programs .. Cities make additional investments to enhance accessibility to public transport for one or more groups Cities make additional investments, policy changes, or consciousness-raising campaignsto make walking or cycling more feasible for one or more groups Cities develop viable, implementabletraffic management policies or plans" (p. 9, PAD). While these indicators are entirely appropriate on a qualitative level, it might be also worthwhile to consider a few indicators that can be linked to quantitative outcomes. For example, quantitative indicatorsto consider, include: . Change in mode shares during course of project Number of tons of C02-equivalents reduced ...... ... Air quality changes with respect to PM, SOX, NOx, and CO Reductions in ambient noise levels Amount of petrol savings realized Amount of time savings realized Reductions in accident levels realized Number of kilometres of BRT constructed Number of kilometres of cycle ways constructed Number of square meters of footpath and public space improvements These type of indicators may ultimately do more to convince other cities to undertake similar initiatives. Impacts outside of direct transport and environmental impacts receive little treatment within either the PAD or PDF documents. However, these initiatives are likely to also produce positive benefits in terms of social equity and poverty reduction. It would seem like these types of effects would be of interest to both the World Bank and the GEF. Sustainable transport initiatives are well known for their ability to increase equity through cost-effective access for low-income groups to jobs and public services. The appraisal section of the PAD (p. 19) merely states that \\no social issues have been identified." While this perfunctionary statement may simply be referring to the lack of negative impacts, there should perhaps be some consideration of indicators related to social equity and poverty reduction. 124 11. IDENTIFICATIONOF GLOBAL ENVIRONMENTALBENEFITS Based on the experiences of projects to date in cities such as Bogota and Curitiba, sustainable transport initiatives can clearly deliver reductions in greenhouse gas emissions. Mode shifting activities as promoted within the STAQ are regarded as perhaps the most effective elements to an emission reduction strategy.25 The proposal correctly notes the ASIF methodology as a logical starting point to quantify the emission reduction benefits. However, the PAD does give a perhaps somewhat incorrect impression that little work has been done to date with transport emission methodologies: "So while we can point to Bogota and other cities as incorporating the kinds of integrated land-use, transport and environmental planning that are believed to be more sustainable and that we would like to foster in cities around the region, to date, it has been difficult to make the quantitative case." (PAD, p. 23-34) In fact, both Bogota's TransMilenio and Santiago's TransSantiago have put forward CDM methodologies to the UNFCCC. The Project Development Documents (PDDs) for both TransMilenio and TransSantiago are available on the UNFCCC web site. Further, the August 2004 transport CDM workshop at CEPAL in Santiago brought together project developers from Asia, Africa, and Latin America. The methodologies presented on public transport, NMT, and vehicle maintenance should be seen as a good initial effort from which to build. The STAQ project monitoring team should make use of these efforts as a basis of moving forward with an emissions analysis. The PAD document makes clear that C02 estimations will be an important component of the monitoring and evaluation process: "Economic analysis will mainly come through the calculation of incremental costs, as it is based on cost-effectiveness of reducing GHG emissions. As part of the project implementation, under The Regional Project, there will be a systematic effort to determine the type of emission reductions that can be obtained with the different set of measures framed under the project windows; and the corresponding cost. This will allow the construction of an estimated average cost curve." (PAD, p. 18) However, quite often within PDF applications or within PDF activities some form of early emission reduction estimates are made. There is probably no reason that simple baselines and project scenarios could not be developed during the PDF process to provide an early indication 25Wright and Fulton (2005), Climatechange mitigation and transport in developing nations. Transport Reviews, 25(6): 691-717. 125 of the magnitude of potential reductions. Of course, the project developers may well have planned to perform such an analysis during the PDF stage. 126 111. PROJECTFIT WITH THE GOALSOF THE GEF The STAQ fits well with the stated objectives and eligibility criteria within OP 11. Specifically, the components of the STAQ comply with at least one of the following programmatic activities outlined in OP 11(p. 11-3): (a) Modal shifts to more efficient and less polluting forms of public and freight transport through measuressuch as traffic management and avoidance and increased use of cleaner fuels; (b) Non-motorizedtransport; (9 Advanced technologiesfor converting biomassfeedstock to liquid fuels. Most of the proposed initiatives fall into categories (a) or (b). The Campinas biodiesel initiative would qualify under (9. As noted earlier, the only areas of concern with regard to OP 11compliance are the measures that appear aimed at improving circulation for private vehicles. A cursory read of the city proposals gives a partial impression that such activities could potentially lead to an increase in emissions. However, the details of these activities may prove otherwise. 127 IV. REGIONALCONTEXT The STAQ will clearly deliver a strong impact across the Latin American region. Tranche one of the initiative covers 22 cities in nine countries. As noted in the PAD (p. 7), the STAQ will assist in the: "...creation of a critical mass of cities around the Latin America and Caribbean region engaged in progressive sustainable transport policy." The STAQ provides an interesting mix of cities with little sustainable transport history as well as cities with an existing performance record. For example, Curitiba, Port0 Alegre, and Quito all have had existing successes with BRT as well as NMT initiatives. Further strengthening the existing efforts in these cities carries much merit. Solidifying the role of these cities as best practice sites will offer the region more examples beyond Bogota. Annex 2 lists the other major transport projects of the bank in the region. It is clear that there are significant synergies between these existing World Bank projects and the STAQ. The World Bank should be encouraged to share as many lessons learned to date as possible. The extent of this lesson sharing should not just be limited to the success stories. Under the "lessons learned and reflected in project design" on pages 12 and 13 of the PAD, there is no real assessment of problems encountered. While the project documents do not mention any of the difficulties experienced to date with, for instance, either the Lima or Santiago projects, these lessons will be of great value to the STAQ cities. With multiple activities across 22 cities, it is unlikely that all will result in complete successes. Most likely, political support will stall in some cities, political administrations will change, and technical conditions will be altered. Highlighting the difficulties faced by a city like Lima could be of use in responding and reacting to non-functioning projects. The PAD document does allude to a recognition that more should be done with information sharing between the existing projects (PAD, p. 22): "Indeed, the Bank's existing efforts in this area - notably in three GEF projects in Mexico City, Lima, and Santiago - have missed an opportunity to ensure that clients are communicating with and learning from each other, even as they undertake similar strategies and use many of the same methodologies." Further, the STAQ may even wish to develop a contingency procedure for situations where projects become non-performing or where a fundamental project design change is required. The project has attempted to garner interest from a representative sample of cities across the region. However, it is noticeable that the Caribbean and much of Central America are not participating in the STAQ. It is also noticeable that a few countries are amply represented (Argentina, Brazil, and Mexico). Clearly, the project developers had little control over the 128 number of applicants or the quality of the applications from cities in these areas. Further, the inclusion of Panama City was expressly made to gain some regional balance. Nevertheless, project developers may wish to consider future strategies to engage non-participating parts of the region. Perhaps some of the STAQ preparatory workshops should in the future be targeted to these areas. 129 V. REPLICABILIN AND SUSTAINABILIN Despite the existence of high-quality sustainable transport examples in Bogota and Curitiba, replication across Latin America has been slow to develop. Initially, Curitiba's BRT efforts in the 1970s did lead to similar efforts in Belo Horizonte, Goihia, Port0 Alegre, and S%o Paulo. However, it is clear that none of these examples approached the level of quality of Curitiba. Likewise, Bogota has helped to propagate world-wide interest in both BRT and NMT options. But like Curitiba, none of the subsequent initiatives have matched the quality and depth of the original. Clearly, there is more to sustainable transport than going through the motions of project design. When political will and vision are not sufficiently present, compromises imposed by outside stakeholder groups tend to reduce the scope and quality of an initiative. For this reason, the STAQ has wisely included elements in component two to ensure political awareness and support are clearly prioritized. From the perspective of replicability and sustainability, these Components will likely be the key. The STAQ strategy appears to both "widen" and "deepen" an ethic of sustainable transport across the region. In countries and cities with some existing efforts in this area, such as Curitiba, Brazil, the project will deepen the best practice nature of the city's transport programme. In turn, Curitiba's example will likely be more influential with other cities. In other cases, for cities and countries with little history in transport best practice (e.9. Argentinean cities), the project offers a paradigm shift from the existing mindsets. In terms of building a sustainable model of regional replication, the project offers the following advantages: Lower the cost of project developmentthroughout the region Build consulting and institutional expertise Prove Bogota and Curitiba are not singular events Standardize planning procedures and reduce the costs of planning. The competitive nature of the selection process also holds much potential to ensure implementation and long-term project sustainability. The fact that there are subsequent tranches does give the STAQ team considerable leverage over future disbursments. Participating cities will have an incentive to perform well in the first tranche in order to be considered for a later tranche. The experience of Bogota also indicates that many of these measures inherently are capable of financial sustainability. The TransMilenio system requires no operational subsidies. Most other 130 cities now developing BRT initiatives have followed this model. However, there are other areas, such as maintenance of built infrastructure that will require more consideration of financial sustainability. In most cases, maintenance of non-motorized and public transport infrastructure can be funded through existing municipal revenues. However, STAQ and the city project developers should perhaps more explicitly address long-term maintenance issues within their proposals. 131 VI. STAKEHOLDERINVOLVEMENT Many of the city proposals do make a direct reference to addressing certain stakeholder concerns. Several projects include efforts to incorporate existing public transport operators into the process, or at least address this group through an outreach programme. A few proposals also make mention of the potential opposition from motorist groups. As a wider effort, it might be worthwhile for each proposal to explicitly address all the major groups affected by the initiatives. A simple stakeholder analysis could be rapid mechanism for at least raising awareness of each group. Some of the typical stakeholders that should be addressed are noted in table 4. User groups Car owners Public transport users Physically-disabled persons For the most part, the city proposals did not address the vast majority of these stakeholders. Nevertheless, these groups can be influential in both project acceptance and in project design. User groups can add design features that are often missed by "consultant experts". Public transport users will likely have significant insights into how to improve their services. Likewise, 132 few people are more qualified to design NMT facilities than the people who live in the particular area. As noted, the Regional Project Component 4 does make mention of public participation. However, the available funding does not appear to be sufficient for an effort of any size. Further, it is not clear to the extent public participation is a requirement within the city proposaIs. 133 VII. REVIEW SUMMARY 1. STRENGTHS PROPOSAL OF This section notes the strong points of the STAQ proposal: . By building on the existing efforts in Bogota and Curitiba, the STAQ will both deepen . and widen an ethic of sustainabletransport across the Latin American region. The competitive nature of the city selection process is a highly-effective mechanism to achieve a quality input from cities; this practice should be looked at as a possible standard in future GEF solicitations. ' The natureofthefuturetranchesoffunding makesfor a strongincentivetowards . quality implementation. The size of the proposed budget and the distribution of the budget between the two . major components seems appropriate. The regional nature of grouping many cities into a single GEF project will reduce . transaction costs and timing delays in GEF project approvals. The package approach of including complementary measures together (i.e. freight transport, land-use / environmental management, public transport, NMT, TDM) holds much potential to build project synergies. 2. RECOMMENDATIONS Overall, the STAQ is a well-written and well-considered proposal. The following are some recommendations to consider to potentially strengthen the contents and the delivery of the project: With many of the proposed activities focusing only on studies (especially in the areas of freight transport, land-use, and TDM), additional thought should be given on how to provide incentives for cities to move towards actual implementation. 134 Public participation as noted in Component 4 would not appear to be sufficiently highlighted or funded. More clarity is perhaps required on how public participation will be incorporated into each of the city projects. Projects supporting improved circulation for private motorized vehicles should be potentially re-examined for possible induced traffic impactsthat could result in increased emissions. m Projects that only deliver marginal improvementsto conventional bus services (non-BRT) should be possibly re-examined to determine if there is sufficient innovation to warrant GEF funding. Indicators should be potentially strengthened to include more quantitative factors such as actual emission reductions, changes in mode shares, noise level reductions, accident reductions, kilometresof infrastructure constructed, etc. More explicit mention could be made of social equity and poverty reduction impacts expected from the implementation of the STAQ. In the future, some effort should be made to include countries and areas of the region not included in this first tranche; attention should be especially given to Central America and the Caribbean. During the PDF process, initial estimates of greenhouse gas emission reductions should be conducted for each of the city projects. A large, single proposal of this type may have the impact of crowding out other proposals that are introduced for sustainable transport in the Latin American region. It should be made clear that other executing agencies will still be able to put forward new proposals, especially proposals that promote best practice examples beyond the level being put forward under the STAQ. In the future, the STAQ should give more awareness and attention to NMT issues that have not been highlighted in this first tranche. Specifically, measures to highlight include: shared space, non-motorized freight options, bicycle distribution, car-free weekdays, permanent car-free weekends, and pedicabs. m The STAQ would appear to be a complex initiative, especially in terms of the requirements it imposes on oversight, administration, and support. The STAQ team should ensure that there are sufficient staff resources to properly oversee and support each one of these city projects. Since some of these initiatives are somewhat modest in terms of their sustainable transport credentials, substantial technical assistance support will be likely. As an alternative, the STAQ could even consider reducing some of the less qualified first tranche initiatives, in order to give more emphasis and support to the more progressive proposals. 135 Annex 14: SpecificAnnexes by Country: Sector Issues, Eligibility,and Consistencywith CAS LATINAMERICA: GEF SustainableTransport and Air Quality Program 1. ARGENTINA STRATEGIC CONTEXT AND RATIONALE How is the country eligiblefor GEF co-financing? Argentina is eligible for GEF financing as it ratified the UNFCCC on March 11, 1994. In addition, the GEF focal point endorsed the project on June 10,2005. HIGHER LEVEL OBJECTIVES TO WHICH THE PROGRAM CONTRIBUTES How do land-useplanning,air quality and transport institutions relateto each other within the recipientcountry? Argentina is a federal country, whereby each Province has its own constitution and municipalities are autonomous. Eachjurisdiction is responsible for transport activities that take place on their territory. Cross-jurisdictional transport activities are managed at the next upper government level. For example, in the greater Buenos Aires area, public transport services operating between the Autonomous City of Buenos Aires (which has quasi-provincial status), and other municipalities of the Province are under the Federal Government's jurisdiction, public transport services serving two or more municipalities within the Province are under the responsibility of the Province and public transport service routes entirely within the territory of a single municipality are under the responsibility of that municipality. Air quality and land use policies are under the responsibility of the Municipalities, which are in charge of public transport services confined to their jurisdiction and which set the fares. However, the national government sets emission standards. Land use policies must be adopted by the legislative branch of the municipal government (consejo deliberante). How would the program contributeto the relevantCAS objective(s)? The strategy for the next CAS period is to deepen the Bank's participation in several areas, including sustainable transport, air quality, and climate change, primarily through lending for transport, land use planning, renewable energy and energy efficiency. The link of the GEF program with the Argentina's CAS i s found both within the environmental agenda of Argentina's CAS and in the main objectives of growth and poverty reduction, for which infrastructure investments will be crucial to achieve those objectives.. One of Argentina's main issues i s the management of pollution associated with urban growth and industrialization. The 136 bank i s already actively supporting a number o f public-private partnerships related to cleaner technology and air pollution monitoring. The GEF program will improve the quality o f life o f urban citizens by providing adequate urban planning policies to guarantee sustainable urban growth, and coordinate these policies with transport plans. Effective land-use policies and transport plans will help manage pollution in urban centers, and greenhouse gas emissions from the transport sector. The program will foster environmental regulation and will facilitate the implementation and use o f more efficient modes o f transport. The GEF program will contribute to sustainable growth o f the urban areas and will facilitate transport access to the poor with components like non-motorized transport infrastructure plans, BRT lines, tariff integration and transfer facilities studies. The CAS also lists as a priority institutional strengthening for better governance, and the GEF program will strengthenand link the different entities incharge o f environment management ina regional network for sharing experiences and enhancing the analytical tools available at institutional levels and make them accessible to all the cities. On-goingdialoguewith the World Bank and/or other multilateralinstitutions In the Urban Transport Sector, the World Bank, building on an on-going project for the Great Buenos Aires, i s currently initiating the preparation o f new Urban Transport operation that would cover the Great Buenos Aires and several metropolitan areas, including all four metropolitan areas to be beneficiaries o f the GEF program (Tucuman, Rosario, Cordoba and Posadas). Said loan i s part o f the 2007-2009 draft CAS for an amount o f US$200 million and i s expected to be approved the second quarter o f 2007. In these four metropolitan areas, it will finance works to improve public transport services (segregated busways and feeder routes in Posadas, trolleybus extensions and segregated busways in Cordoba, mass transit system in Rosario) and technical assistance, all of which i s fully consistent with and often complementary with the GEF Regional Program. Barriersto overcome One o f the barriers found in the urban, transport and environmental agencies o f these cities i s their staffs lack of technical skills. Some cities are willing to start working on sustainable transport projects, nevertheless staff and decision makers needtechnical assistance to commence. The mere fact o f preparing the GEF proposals provided a convincing incentive for cities to focus their transport strategies on sustainability and air quality issues. Some cities are aware of their weaknesses in these issues and the accompaniment o f the GEF program in their transport interventions will contribute to the development o f their technical capabilities in the matter. In other places, the lack of technical skills in the municipality staff was supplied by contracting consultants who helped design sound transport projects and even prepared the corresponding the STAQ proposal. This being said, the materialization o f the conclusions o f feasibility studies require some heavy investments that can be unaffordable for municipal finances or crowded out by other local priorities. The GEF program will kick-start these investments and promote the "clean" tendency intransport and land-use, whereas the local agencies will strive for more funds to continue that way and the private sector will be encouraged to join these investments as a result o f the confidence supplied by the presence o f the GEF. This "faith" and confidence o f the 137 private sector in innovative projects that change the traditional way o f thinking i s another barrier that the STAQ will beat. Urbanrailways are often considered as the best possible transport mode, which might be the case inthe Great Buenos Aires, but probably not, at least inthe short term, on secondary cities due to the heaviness o f investmentscompared to some more cost-effective solutions than can contribute to the reduction of GHG emissions as well. The STAQ project can contribute to the changing of that idea by its first component and through the on-going dialogue the Bank i s already maintaining in these cities thanks to the GEF program and will keep maintaining during program implementation. 2. BRAZIL STRATEGIC CONTEXT AND RATIONALE How is the country eligiblefor GEF co-financing? Brazil i s eligible for GEF financing as it ratified the UNFCCC on February 28, 1994. Inaddition, the GEF focal point endorsed the project on June 17,2005. How does the program fit within national report/communicationsto Conventions, national or sector developmentplans, or regionalintergovernmentalagreements? Brazil's Initial National Communication (INC) identifies that transport sector as one o f the main sources o f greenhouse gas emissions, responsible for 39 percent o f energy sector emissions (larger than any other energy sub-sector), and about 7 percent o f carbon-balanced emissions in 1994. The IN1includes a number o f national / industrial initiatives on C 0 2 reduction, including the well-known National Alcohol Program, and highlightsthe importance of co-control programs for local pollutants inlarge cities such as Sao Paolo. In 2004, the federal Ministry o f Cities published a National Policy on Sustainable Urban Mobility. This policy elaborated nine principles and 29 directives for urban transport policy, which are consistent with the five windows proposed for funding under Component 2 o f the program, and which are all represented inthe proposed city specific projects. HIGHER LEVEL OBJECTIrnS TO WHICH THE PROGRAMCONTRIBUTES How do land-use planning,air quality and transport institutionsrelateto each other within the recipientcountry? Urban Transport in Brazil i s the responsibility o f the municipal and state authorities: transport within a municipality is the responsibility of the municipality (e.g. BHTRANS in Belo Horizonte) and transport between two or more municipalities i s the responsibility of the State (e.g. DER-MGinMinas Gerais;). 138 Land use i s the responsibility o f municipalities (e.g. SMURBE inBelo Horizonte) I The Ministry of the Cities is responsible for urban policy development at federal level, including urban transport and urban planning. Air quality is the responsibility of municipalities (e.g. SMAMA in Belo Horizonte; ) and the State (e.g. SEMADS in Minas Gerais). At federal level, air quality issues fall within the responsibility o fthe Environment Ministry. How would the programcontributeto the relevantCAS objective(s) The program is consistent with the goals o f the CAS for Brazil summarized in its title "A more equitable, sustainable and competitive Brazil". Environmentally and socially sustainable development i s one o f the Bank's development priorities in Brazil, whose major environmental issue i s urban pollution. The program will: (i)helpmanagingthe urbanpollution causedby transport by promoting modal shift to public transport, introducing traffic and tariff management, increasing the provision of less polluting modes and public transport corridors, and inducing the use o f non-motorized transport through the improvement o f pedestrian and bicycle facilities and coordinating them with public transport. This will help improve accessibility to local services for the poor and also bring about positive health impacts (ii) GHG emissions and improve air quality through reduce rationalization intransport services and energy efficiency measures inthe transport sector, which will aim at a decline in fuel consumption (iii) enhance coordination between environmental, transport and planning agencies and promote a change inthe urban land use patterns to guarantee a sustainable urban development (iv) promote a more efficient freight management to lower logistics costs, relieve multimodal transport bottlenecks and reduce negative environmenta impacts resulting from a bad management and regulation o f freight transport. On-goingdialoguewith the World Bank and/or other multilateralinstitutions The World Bank i s currently involved in several cities in Brazil, including all o f those that wil benefit from this GEF operation. In SZio Paulo, the World Bank i s financing two projects that complement the GEF operation. The first project focuses on the expansion o f the metro system and the other the acquisition o f trains and overall improvement o f the suburban railway system. GEF investmentswill be integrated with these investments and complement overall goals set to improve the transport system inthe city. InCuritiba, a request for a possible World Bank loanto fund a project to increase the capacity o f the famous North -South corridor (operated by bi-articulated buses) has been approved by the Ministry of Planning. An identification mission took place in2002 but since the present Federal Administration cut down the budget for ongoing urban transport projects, the Bank did not pursue preparation of the loan and is awaiting a decision o f the Federal Government to resume the project. The GEF donation will allow the implementation o f measures such as a passing lane which will increase capacity o f the North-South Corridor while other higher capacity modes are being evaluated. In Belo Horizonte, the Bank completed the Belo Horizonte Metropolitan Transport Decentralization project which closed in 2003 and was rated satisfactory. The integration o f the 139 bus and rail systems is progressing very well and the Federal, State and Municipal governments are negotiating the transfer o f the system from the Federal to the local authorities. A municipal loan i s being prepared by the World Bank Urban Department, which, insofar as transport is concerned, includes segments o f a road which facilitates all-weather access to low-income neighborhoods. The GEF donation will allow the municipality to continue with its pioneer work in competitive bidding for bus routes and therefore facilitate bus rationalization and integration with the metro. Barriers to overcome Despite the awareness o f the importance o f environmentally sustainable urban transport and important achievements in some cities, such as Curitiba, Siio Paulo and Siio Paulo, there i s still much work to be done and many barriers to be overcome. In particular, in terms of institutional coordination there is a need to fine-tune the relations between the state and the municipal governments and to delineate clear definitions o f their respective roles in terms o f financing, planning and operation o f urban transport services in line with the 1988 Constitution. Coordination between the different transport entities in metropolitan areas i s often loose and informal, or even inexistent. If a formal coordination entity exists, there i s normally still a reticence to attribute it real powers and the necessary resources to plan, coordinate and set priorities for investment and integration. The direct and active involvement o f land use and environmental entities in such coordination structures i s even rarer. Brazil has a culture o f planning, and most cities prepare transport and urban development plans, even integrated ones and at metropolitan area level. However, unpredictability o f resource availability, and the consequent lack o f implementation o f such plans has been frustrating, discouraging these planning exercises. Planning instruments and tools often need improvement, and need to be based on a better set of regularly collected data and information. Another problem in many Brazilian cities i s the lack o f integration among different modes and among operators o f the same mode, both physically and in terms o f fare structures. Most Brazilian cities also have very powerful bus lobbies which make it difficult to rationalize public transport networks, introduce integration, and impose new environmental requirements for buses and fuels, and successful fight against forms o f informal transport. This goes hand in hand with a lack o f appropriate regulations for public transport services, preventing free entry and/or real competition in the market. Moreover, permissions for such services are not regularly bid, and often informally extended for a not clearly specified period at the moment o f their termination. Financial resources to improve vehicle fleets and carry out other investments are limited also because o f high fare evasion, inefficient pricing and subsidizing, low fare levels, a large number of unjustifiedfare reductions and exceptions, and reduced private sector participation, except for bus operations. It is also very common that cities pay extremely little attention to non-motorized transport users, which inmany places constitute a very large portion, especially among low income groups. Another feature regularly present in Brazilian cities is ruthless driving, leading to environmentally inefficient vehicle use and great safety hazards. Other deficiencies include inadequate vehicle inspection and maintenance, imperfect traffic and parking regulations, limited use o f pricing instruments and weak enforcement o f all types o f regulations, laws and standards. 140 The freight transport sector lacks appropriate regulations and a clear allocation of responsibilities, and decision making is very fragmented and little effective. Indeed, despite the fact that freight transport i s one o f the main polluters in most cities, this sector i s largely neglected. 3. MEXICO STRATEGICCONTEXT AND RATIONALE How is the countryeligiblefor GEF co-financing? Mexico i s eligible for GEF financing as it ratified the UNFCCC on March 11, 1993. In addition, the GEF focal point, Ms.Claudia Grayeb Bayata, endorsed the project on June 17,2005. HIGHER LEVEL OBJECTIVESTO WHICH THE PROGRAM CONTRIBUTES How do land-useplanning,air quality and transport institutionsrelate to each other within the recipientcountry? Urban transport management in Mexico i s a responsibility o f state and/or municipal governments, which depends on the particular legal arrangements established by each sovereign state. However, the Federal Secretariat o f Development Social (SEDESOL) has faculties to establish directives on this matter, as it i s responsible for coordinating and supporting the preparation and implementation regional urban development programs. In this sense SEDESOL coordinates programs for technical assistance, as well as training o f technicians and operators of infrastructure and services o f regional impact, among them urban transport. Air quality policies, regulations, and standards nationwide are the responsibility of the Secretaria de Medio Ambiente y Recursos Naturales (SEMARNAT). Besides the Health Secretariat, SEMARNAT establishes the Mexican Official Norms which define maximum allowable concentration levels o f criteria pollutants in ambient air. SEMARNAT also establishes the emission limits applicable to exhaust gases o f both new and in-use vehicles, as well as specifications for the environmental quality of fuels. SEMARNAT coordinates the elaboration and implementation o f Programs to Improve Air Quality (Proaires) of local application, with participation o f other federal agencies, state and municipal authorities, as well as o f private sector and social urban transport, among other stakeholders. SEMARNAT establishes and coordinates the application o f climate change policies for the country. The state and municipal authorities are responsible for monitoring air quality and to apply and enforce regulations and standards for prevention and control o f air pollution generated air by motor vehicles registered in its territory, with exception o f intercity transport vehicles that are a federal responsibility o f the Communications and Transports Secretariat. The state and/or municipal authorities are in charge of establishing and monitoring emission inspection programs and, in the case o f the Metropolitan Area o f the Valley of Mexico, to enforce the circulation restrictions established inthe "No Drive Day" Program (Program Hoy N o Circula). 141 How would the programcontributeto the relevantCAS objective(s)? One of the development challenges in the Mexico's CAS i s the promotion o f environmental sustainability. Mexico's concerns about air quality are well justified, as it i s the World's ninth largest GHG emitter and its main CO2 emission source i s energy combustion (89%). Consequently, there i s a significant incidence o f illness correlated to the exposure to air pollutants inurban areas. To address this issue, the 2001-2006 Environmental and Health Action Program include 15% o f reduction o f average population exposure to atmospheric pollutants. The STAQ program is consistent with the air quality improvement goals o f Mexico's CAS through its two components: (i)Sustainable transport projects and (ii)Institutional strengthening and knowledge management. The latter will help include environmental considerations into economic decisiodmaking by means o f dissemination activities such as workshops and websites, and the sharing o f knowledge and experiences among the network o f cities that will be launched. The wide landscape o f air quality improvement measures and emission reduction possibilities described inthe five windows o f the second component will contribute to the achievement o f this CAS'S objectives. In particular, the Poverty Reduction and Inequality theme o f the CAS is related to the city projects because o f the poor quality o f service that the public transport systems in Mexico offer, particularly to the poor. Examples are found in the high travel cost and congestion, accidents and urban degradation in the country's urban areas. In this regard, the STAQ program will contribute to the modernization o f the public transport by improving the current transport services, giving special attention to inter-modal transfers with adequate fare schemes, and connecting urban transport nodes and urban centers with the periphery and poor neighborhoods, all this leading to a reduction o f air pollution. Moreover, by the coordination of land-use planning with transport and environment management, the STAQ program will play a role in poverty alleviation by the inclusion o f the poor special needs in the transport services and the mitigation o f the diseases related to air pollution due to transport which specially affect to the more vulnerable groups insocieties, among them, the poor. On-goingdialoguewith the World Bank and/or other multilateralinstitutions In Mexico, the World Bank is preparing the Mexico Second Medium-Size Cities Urban Transport Project that builds upon a first Medium-Size Cities Project. The loan will support Bus Rapid Transit Systems and traffic demand management improvements, in all o f the cities to be covered by the STAQ program. The loan amount i s US$lOO million and it i s expected to be approved inthe 3rdquarter o f 2006. Barriersto overcome The traditional business structure o f bus services has lead to highly inefficient operations, resulting in a costly, unsafe and environmentally unsustainable public transport system. The key issues are: a) lack o f an organizational model that would facilitate efficient public transport operation in the metropolitan area, b) dispersed operations that hinder the effective control of bus services and contribute to traffic congestion, c) inefficient use o f vehicles, c) deficiencies in bus inspection and maintenance, e) lack o f professional management among bus operators, f) lack o f coordination between transport operations between States and Municipalities, and g) a fare 142 system which penalizes transfers and thus discourages inter-modal movements. These barriers are significant and require substantial efforts at the policy and regulatory levels. Each sub-program in Mexico has its own specificities but the overall GEF-funded program in Mexico will aim at addressing these barriers through the following : (i)improve the organizational structures o f operating companies to increase their productivity, technical capabilities, quality and efficiency o f service and profitability; (ii) modernize, in accordance with the norms regulating transport, under an orientation that permits the development o f a system o f transport which i s modern, efficient and organized; (iii) promote transparent tariff policies which permits financial self-sufficiency; (iv) provide an adequate balance between the supply and demand for transport services; (v) increase the capacity o f the local authorities to induce the required changes through institutional strengthening. The combination o f these actions should lead to great improvements in the quality o f public transport services and hence its attractiveness and competitiveness vis-a-vis less energy-efficient modes o ftransport. 143 Annex 15: Selection Process for Proposals to be includedin Component2 LATINAMERICA: GEF SustainableTransport and Air Quality Program 1. COMPETITIVE APPROACH. The program was designed in such a way that the interested cities in the region would compete for the available resources. The competitive approach seems adequate in view of the large number of eligible cities (ie, with population over 350,000 h.)and of the limited amount available (USD20.8 million for the first round). The cities were informed that the quality of their proposals would be assessed taking into account the technical soundness of the proposals, their expected impacts, the amount of proposedcounterpart funds andthe localpolitical commitment. 2. PROMOTION PROCESS. The program was promoted (i)through the website (www.cleanairnet,org/proyectogef); (ii) through bilateral contacts in cities with ongoing dialogue and/or preparing or executing a transport project with the Bank; (iii) through the Clean Air Initiative for Latin American cities (on which website the program was hosted); and (iv) through a set of regional workshops held in Lima (for Spanish speaking countries in South America), Recife (for Brazil), Buenos Aires (for Argentina) and Puebla(for Central America and the Caribbean). Most of those seminars were scheduled during or right after important regional urban transport seminars, including the most important urban transport seminar in LAC, CLATPU (Congreso Latino American0 de Transporte Publico Urbano). This way, a significant "captive" audience could be reached, taking advantage of the presence of many practitioners in the same place. 3. PROCESS FOR SUBMITTING PROPOSALS. A format for submitting the sub-project proposals was uploaded on the program's website. Cities could apply on-line or submit the proposal by e-mail. The closing date set out for receiving proposals from the cities to obtain GEF funding was December 16, 2005. To ensure a maximum level of participation and make sure the proposalswould fit the GEF's objectives, the LCSFT and ESSDteams followed up with many of the interested cities, taking advantage of supervisiodpreparation missions of other projects. Every city willing to participate could receive feedback on their draft proposal before the official submissiondeadline. About two thirds of the participating cities took advantage of the offer, and approximately 30 proposals (some 150-pagelong) were received for early feedback. 4. RECEPTION OF PROPOSALS. The Bank received 47 proposals from 12 countries for a total of USD93 million (well over the available USD20.8 million for the first tranche). It is worth mentioning that an incentive was provided for cities to propose joint proposals with the neighboring municipalities, with the objective of encouraging inter-jurisdictional cooperation in the urbantransport sector. 14 proposalscame from such association of municipalities, especially from Argentina and Mexico. The table inAnnex 28 lists all the proposals received, and the areas for which the corresponding cities were applying for GEF support. 5. EVALUATION PROCESS. To facilitate the evaluation process, the Bank team hired a group of recognized international experts, particularly known for familiarity with urban transport, land use and iar quality issues in Latin America, to help assess the proposals, including key aspects such as political and institutional commitment, technical soundness, institutional 144 capacity, consistency with on-going plans and programs, and the potential benefits of the city project. The panelmemberswere: 1. CesarArias, urbantransport consultant, formerly incharge of the development of the Ecovia and Trolebus Norte projects inQuito, Ecuador 2. Manfred Breithaupt,Senior Transport Advisor for the Germancooperation, Deutsche Gesellschaft fur Technische Zusammenarbeit (GTZ) 3. CarlosCeneviva,arquitect and urbanplanner, ex-Transport Secretary for the City of Curitiba ,ex President of the Curitiba UrbanDevelopment Company (URBS) 4. RalphGakenheimer,professor of Urban Planning at MIT 5. DarioHidalgo, Deputy General Manager of TRANSMILENIO S.A., Bogota, Colombia, (July 2000 - August 2003) 6. Jaime Lerner,architect and urban planner,ex-mayor of Curitiba, founder o f the Instituteo f Urban Planning and Researchof Curitiba (IPPUC). He implementedthe worldwide famous Curitiba Integrated Mass Transport System 7. AndrCs Monzbn,transport professor at the Universidad Politecnica de Madrid 8. Edgar Sandoval, General Manager of the Mass Transit company TransMilenio S.A since its foundation inOctober 1999 untilDecember2003 9. EduardoVasconcellos Public policy analyst of transport policy, Associate Director of the BrazilianNational Public Transport Association (ANTP) 10. Chris Zegras,Associate professor of Transport and Urban Planning at MIT Each panel member reviewed and evaluated 14 proposals received by the World Bank and completed an online questionnaire, providing a general assessment, ratings and recommendations for improvements. Eachproposal was reviewed by 3 panel members,and were rated as A (good), B (needsome work, good potential), and C (not eligible). To conclude the process, the team set up a meeting at the World Bank headquarters on January 25, 2006, again taking advantage of the presence of many of said experts in DC due to the Transport Research Board seminar. Those not present participated through video or tele- conference. The purpose of the meeting was to exchange views on the proposals between the various Panel members and to ask each panel member to pick the three best proposals reviewed, and the next three proposals with the highest potential and share with us their ratings for each proposal. 6. SELECTION PROCESS. The Bank team rankedthe proposals according to an overall rating taking into account the expert's individual ratings, the number of times these cities had beenmentioned inthe first-tier or second-tier group and the prospect for some follow-up loans from multilateral institutions to leverage funds that would complement the GEF investments. To reduce transaction costs we decidedto focus on top cities inthree countries. 145 The final selection looks as follow: i.Proposalsaccepted Country CitylUrbanCenter Population No. of Requested Allocated cities Funding Funding Argentina Cordoba 1,500,000 1 2,070,000 1,450,000 Posadas 366,000 4 732,000 732,000 Rosario 968,884 3 1,937,500 1,600,000 Tucumiin 798,346 3 1,400,000 205,000 Brasil Belo Horizonte 2,375,329 1 2,900,000 2,780,000 Curitiba 1,587,315 1 2,5 17,771 2,162,000 Sao Paulo 1 3,399,000 Mexico Juarez Chihuahua 1,218,817 1 1,697,000 1,091,000 Leon 1,139,574 1 1,792,000 1,5 16,000 Monterrey 3,243,466 9 5,000,000 2,52 1,000 Puebla 1,458,752 1 2,500,000 250,000 Total 17,897,000 7. REGIONAL PROJECT. USD2.9 million have been set aside for transversal activities, such as (i)identification of new projects in other cities willing to apply for the next round, (ii) networking activities between the participating cities, (iii)workshops and seminars, (iv) field trips for participating cities, (v) dissemination, (vi) monitoring and evaluation. This program will provide a golden opportunity for these municipalities to catalyze their sustainable transport agendsa, to work together and to exchange experiences through the network of cities this initiative will generate. For the Bank, this program offers a tremendous opportunity to follow closely what is happening in LAC in the urban transport sector, to contribute to substantial improvements in the life of city dwellers, to build up our knowledge to the benefit of all our clients and possibly to continue our action with follow-up operations. In July, before the individual projects start, we are organizing a sustainabletransport and air quality seminar in Sgo Paulo, to which we will be inviting all participating cities, no matter whether they qualified or not. One of the aims of this event will be to officially create the network of cities that the GEF program will help to work together on their urban transport agenda for the years to come. 8. GEF ELIGIBILITY SCREENING. Following initial allocation of funds as described above and review by experts, activities were screened to ensure eligibility for funding under GEF OP-11. As a result of this screening, the following modifications to the initial awards were made. 146 Annex 16: Citiesthat submittedproposals to be includedin Component2 LATINAMERICA: GEF SustainableTransport and Air Quality Program GEF Fundsrequestedby InvestmentType (USD) Total funds requested No. Countr city KO. of from GEF Y Population cities Transporf Land useand Public Non- Transport Transport Freight Transport motorized Managent Demand transport 1 AR Cordoba 1,500,000 I 350,000 1,720,000 2,070,000 MoroniSan 3 AR Martini3 de 1,095,400 3 153,356 328,620 1,708,824 2,190,800 Febrero 4 AR Posadas 366,000 732,000 732,000 5 AR Rosario 968,884 3 300,000 737,500 800,000 1,937,500 6 AR Tucumln 798,346 3 800,000 600,000 1,400,000 7 BO Cochabamba 516,685 1 680,000 680,000 8 BO El Alto-La Paz 1,700,000 2 812,000 500,000 2,463,000 9 BR Belo Horizonte 2,375,329 1 1,290,000 940,000 2,900,000 I O BR Campinas 969,396 1 1,337,000 1,337,000 1 1 BR Curitiba 1,587,315 1 1,190,000 1,855,771 3,045,771 12 BR Fortaleza 2,373,944 1 1,040,515 2,009,485 3,308,736 13 BR Guarulhos 1 1,211,680 438,320 1,609,000 14 BR Port0 Alegre 3,188,137 1 300,000 620,000 460,000 2,800,000 4,950,000 15 BR Recife 3,337,565 1 2,608,696 2,521,008 16 BR Rio de Janeiro 5,857,904 1 4,148,913 4,148,913 17 BR Salvadorde Bahia 2,631,831 I 911,000 1,098,000 716,000 1,020,000 4,000,000 18 CH Concepcibn 878,000 1 l20,000 800,000 120,000 500,000 1,540,000 19 CH Temuco 305,000 I 100,000 320,000 l00,000 520,000 20 CH Valparaiso 787,l I 4 1 120,000 530,000 609,000 21 EC Cuenca 417,632 17 150,000 823,000 1,033,000 22 EC Guayaquil 2,226.156 1 2,483,920 2,443,920 23 EC Quito 2,032,382 1 550,000 1,100,000 I80.000 790,000 2,595,000 24 ES San Salvador 2,200,000 3 1,150,000 1,150,000 - 25 MX Coatzacoalcos Minatitlan 307,724 3 258,197 39,723 615,440 26 MX Cordoba- Orizaba 643,574 2 965,325 51,484 1,287,100 27 MX Ensenada 302,954 1 560,747 28 MX Hermosillo 29 MX Juarez Chihuahua 1,218,817 1 17,000 1,580,000 1,697,000 30 MX Leon 1,I39,574 1 139,000 1,272,000 381.000 1,792,000 31 MX Monterrey 3,243,466 9 425,000 4,785,340 739,660 6,000,000 32 MX Pozarica 467,258 5 665.100 35,472 886,800 33 MX Puebla 1,458,752 1 200,000 2,000,000 300.000 2,500,000 34 MX San Luis Potosi I 744,000 1,674.000 35 MX Tijuana 1,574,510 1 3,000,000 3,000,000 147 GEFFuP~ requestedby InvestmentType (USD) Totalfan& countr requested city Population No. of ftrrm GEP 1 Y ;z:::' Landwe and Public Non- Managent transport Transport Transport motorized 37 MX Veracruz 642,680 2 501,I50 77,100 1,285,000 38 MX Xalapa 5 10,410 6 765,615 40,833 1,020,820 39 PA C. de Panama 1,488,700 4 4,000,000 4,000,000 40 PE Arequipa 862,747 1 40,000 30,000 915,000 120,000 1,300,000 41 PE Trujillo 761,635 1 245,000 825,000 1,163,000 42 SD Santo Doming0 1,000,000 I 200,000 200,000 200,000 I,000,000 1,600,000 43 UR Montevideo 1,780,795 4 300,000 2,300,000 100,000 200,000 1,600,000 44 VE Barquisimeto 1,000,000 1 150,000 500,000 1,000,000 1,609,000 45 VE Caracas 3,140,076 I 700,233 700,233 46 VE Maracaibo 1,647,319 I 5,l 16,279 5,116,279 47 VE Mkrida 378,960 I 500,000 550,000 700,000 1,750,000 Total 4,755,871 7.849.105 43,924,886 1,593,000 29,830,249 93,389,193 I Iftaxes may be financed under the Grant, use"inclusive ofTaxes"; iftaxes may not befinanced use"exclusive ofTaxes". unless the disbursement percentage is adjusted to exclude taxes. In the latter case, do not use exclusive of taxes". " `IFor GPOBA Grants the normal category will look something like: "[Goods, works and consultants' services for [heating connections under Part -of ]the Project". 148