Document of The World Bank FOR OFFICIAL USE ONLY Report No: ICR00005427 IMPLEMENTATION COMPLETION AND RESULTS REPORT ON LOANS IN THE AMOUNT OF US$137.5 MILLION TO THE REPUBLIC OF PARAGUAY FOR A SUSTAINABLE AGRICULTURE AND RURAL DEVELOPMENT PROJECT (PRODERS) August 31, 2021 Agriculture And Food Global Practice Latin America And Caribbean Region Official Use CURRENCY EQUIVALENTS (Exchange Rate Effective {Dec 22, 2020}) Currency Unit = Guarani Guarani 1 = US$0.0001 US$ 1 = 6939 Guarani FISCAL YEAR January 1 - December 30 Regional Vice President: Carlos Felipe Jaramillo Country Director: Jordan Z. Schwartz Regional Director: Anna Wellenstein Practice Manager: Preeti S. Ahuja Task Team Leader(s): Pablo R. Valdivia Zelaya, Edward William Bresnyan ICR Main Contributor: Hira Channa Official Use ABBREVIATIONS AND ACRONYMS CAS Country Assistance Strategy CDG Community Development Group (Comité Vecinal de Microcuenca) CFAA Country Financial Accountability Assessment CIS Community Development Groups Investment Subproject COC Community Organization Coordinator CPF Country Partnership Framework DEAg MAG: Directorate of Rural Extension (Dirección de Extensión Agraria) DGJ MAG: Directorate of Gender and Youth (Dirección de Género y Juventud Rural) DGP MAG: Directorate of Planning (Dirección General de Planeación) DIA MAG: Directorate of Agricultural Research (Dirección de Investigación Agrícola) DINCAP MAG: Directorate for the Coordination and Administration of Projects (Dirección Nacional de Administración y Coordinación de Proyectos ) DIPA MAG’s Directorate of Livestock Research EE Environmental Education EMP Environmental Management Plan ESMF Environmental and Social Management Framework FDRS Sustainable Rural Development Fund (Fondo de Desarrollo Rural Sostenible) FM Financial Management GIS Geographic Information System GDP Gross Domestic Product GOP Government of Paraguay GTZ German Technical Cooperation (Gesellschaft für Technische Zusammenar) IA Indigenous Association IFR Interim Financial Report IICA Inter-American Institute for Cooperation on Agriculture (Instituto Interamericano de Cooperación para la Agricultura) INDERT National Rural Development and Land Institute (Instituto Nacional de Desarrollo Rural y de la Tierra ) INDI Indigenous Peoples Institute of Paraguay (Instituto Paraguayo del Indígena) ISR Implementation Status Report JSDF Japanese Social Development Fund Official Use M&E Monitoring and Evaluation MAG Ministry of Agriculture and Livestock (Ministerio de Agricultura y Ganadería) MDP Micro-catchment Development Plan MSC Municipal Steering Committee NRM Natural Resources Management PARN Paraguay Natural Resources Management Project PIC Community Investment Plans PICI Indigenous Communities Investment Plan PIF Farm Investment Plan PIMA Market Access for Agricultural Products Project PMU FM Project Management Unit Financial Management POA Annual Operating Plan PRODERS Sustainable Agriculture and Rural Development Project (Proyecto de Desarrollo Rural Sostenible) PROMAFI Project for the Improvement of Family and Indigenous Agriculture (Proyecto de Mejoramiento de la Agricultura Familia e Indígena ) RENABE National Registry of Beneficiaries (Registro Nacional de Beneficiarios) SENACSA National Service for Animal Health and Quality (Servicio Nacional de Calidad y Salud Animal) UBN Unsatisfied Basic Needs VMG Vice Ministry of Animal Husbandry (Viceministerio de Ganadería) ZCU Zonal Coordination Unit Official Use TABLE OF CONTENTS DATA SHEET ........................................................................................................................... I I. PROJECT CONTEXT AND DEVELOPMENT OBJECTIVES ....................................................... 1 A. CONTEXT AT APPRAISAL ......................................................................................................1 B. SIGNIFICANT CHANGES DURING IMPLEMENTATION (IF APPLICABLE) ....................................6 II. OUTCOME ...................................................................................................................... 8 A. RELEVANCE OF PDOs ...........................................................................................................8 B. ACHIEVEMENT OF PDOs (EFFICACY) .....................................................................................9 C. EFFICIENCY ........................................................................................................................ 13 D. JUSTIFICATION OF OVERALL OUTCOME RATING ................................................................. 14 E. OTHER OUTCOMES AND IMPACTS (IF ANY) ........................................................................ 15 III. KEY FACTORS THAT AFFECTED IMPLEMENTATION AND OUTCOME ................................ 17 A. KEY FACTORS DURING PREPARATION ................................................................................ 17 B. KEY FACTORS DURING IMPLEMENTATION.......................................................................... 18 IV. BANK PERFORMANCE, COMPLIANCE ISSUES, AND RISK TO DEVELOPMENT OUTCOME .. 19 A. QUALITY OF MONITORING AND EVALUATION (M&E) ......................................................... 20 B. ENVIRONMENTAL, SOCIAL, AND FIDUCIARY COMPLIANCE.................................................. 22 C. BANK PERFORMANCE ........................................................................................................ 24 D. RISK TO DEVELOPMENT OUTCOME .................................................................................... 26 V. LESSONS AND RECOMMENDATIONS ............................................................................. 27 ANNEX 1. RESULTS FRAMEWORK AND KEY OUTPUTS ........................................................... 29 ANNEX 2. BANK LENDING AND IMPLEMENTATION SUPPORT/SUPERVISION ......................... 48 ANNEX 3. PROJECT COST BY COMPONENT ........................................................................... 51 ANNEX 4. EFFICIENCY ANALYSIS ........................................................................................... 52 ANNEX 5. BORROWER, CO-FINANCIER AND OTHER PARTNER/STAKEHOLDER COMMENTS ... 67 ANNEX 6. SUPPORTING DOCUMENTS (IF ANY) ..................................................................... 68 ANNEX 7. COMPLEMENTARY INFORMATION AND DATA ...................................................... 69 Official Use The World Bank PY PRODERS Sustainable Agriculture & Rural Development (P088799) DATA SHEET BASIC INFORMATION Product Information Project ID Project Name P088799 PY PRODERS Sustainable Agriculture & Rural Development Country Financing Instrument Paraguay Investment Project Financing Original EA Category Revised EA Category Partial Assessment (B) Partial Assessment (B) Organizations Borrower Implementing Agency Republic of Paraguay MAG/PRODERS Project Development Objective (PDO) Original PDO To improve the quality of life of Small-Scale Farmers and Indigenous Communities in the Project Area in a sustainable manner,through the support of actions to strengthen community organization and self governance, improve natural resources management andenhance the socio-economic condition of said farmers and communities. Revised PDO To improve in a sustainable way the socio-economic condition of Small-Scale Farmers and Indigenous Communities in the ProjectArea,through the support of actions to strengthen their communityorganization, self-governance, and access to markets and valuechains. i Official Use The World Bank PY PRODERS Sustainable Agriculture & Rural Development (P088799) FINANCING Original Amount (US$) Revised Amount (US$) Actual Disbursed (US$) World Bank Financing 37,500,000 37,500,000 37,500,000 IBRD-75030 100,000,000 100,000,000 100,000,000 IBRD-83160 Total 137,500,000 137,500,000 137,500,000 Non-World Bank Financing 0 0 0 Borrower/Recipient 9,250,000 0 0 Total 9,250,000 0 0 Total Project Cost 146,750,000 137,500,000 137,500,000 KEY DATES Approval Effectiveness MTR Review Original Closing Actual Closing 29-Jan-2008 30-Jun-2009 04-Feb-2013 28-Dec-2013 30-Nov-2020 ii Official Use The World Bank PY PRODERS Sustainable Agriculture & Rural Development (P088799) RESTRUCTURING AND/OR ADDITIONAL FINANCING Date(s) Amount Disbursed (US$M) Key Revisions 10-Jun-2013 15.76 Change in Results Framework Change in Components and Cost 07-Nov-2013 20.65 Additional Financing Change in Project Development Objectives Change in Results Framework Change in Loan Closing Date(s) 24-Jul-2015 44.98 10-Jul-2017 88.81 Change in Results Framework Change in Loan Closing Date(s) Reallocation between Disbursement Categories Change in Implementation Schedule 17-Jul-2018 112.85 Change in Loan Closing Date(s) 31-May-2019 121.94 Change in Components and Cost Reallocation between Disbursement Categories Change in Legal Covenants Other Change(s) 13-Nov-2019 130.01 Change in Results Framework Change in Loan Closing Date(s) KEY RATINGS Outcome Bank Performance M&E Quality Satisfactory Moderately Satisfactory Modest RATINGS OF PROJECT PERFORMANCE IN ISRs Actual No. Date ISR Archived DO Rating IP Rating Disbursements (US$M) 01 29-Apr-2008 Satisfactory Satisfactory .38 02 17-Nov-2008 Unsatisfactory Unsatisfactory .38 03 13-Mar-2009 Satisfactory Unsatisfactory .38 04 30-Jul-2009 Moderately Satisfactory Moderately Satisfactory .38 05 30-Sep-2009 Moderately Satisfactory Moderately Satisfactory .38 iii Official Use The World Bank PY PRODERS Sustainable Agriculture & Rural Development (P088799) Moderately 06 29-Dec-2009 Moderately Unsatisfactory .88 Unsatisfactory Moderately 07 07-May-2010 Moderately Unsatisfactory .91 Unsatisfactory 08 29-Jun-2010 Moderately Satisfactory Moderately Satisfactory .94 Moderately 09 04-Jan-2011 Moderately Satisfactory 1.25 Unsatisfactory 10 06-Sep-2011 Moderately Satisfactory Moderately Satisfactory 2.04 Moderately 11 14-May-2012 Moderately Satisfactory 6.15 Unsatisfactory Moderately 12 20-Nov-2012 Moderately Satisfactory 9.87 Unsatisfactory Moderately 13 10-Jun-2013 Moderately Satisfactory 16.14 Unsatisfactory 14 03-Nov-2013 Moderately Satisfactory Satisfactory 21.03 15 08-May-2014 Moderately Satisfactory Satisfactory 25.82 16 20-Aug-2014 Moderately Satisfactory Moderately Satisfactory 26.96 17 24-Feb-2015 Moderately Satisfactory Moderately Satisfactory 45.36 18 15-Sep-2015 Moderately Satisfactory Moderately Satisfactory 47.67 Moderately 19 26-May-2016 Moderately Unsatisfactory 59.18 Unsatisfactory Moderately 20 18-Oct-2016 Moderately Unsatisfactory 62.01 Unsatisfactory Moderately 21 05-Jun-2017 Moderately Satisfactory 85.53 Unsatisfactory 22 26-Oct-2017 Moderately Satisfactory Moderately Satisfactory 95.75 23 16-May-2018 Moderately Satisfactory Moderately Satisfactory 109.29 24 27-Nov-2018 Moderately Satisfactory Moderately Satisfactory 116.61 25 04-Jan-2019 Moderately Satisfactory Moderately Satisfactory 117.10 26 21-May-2019 Moderately Satisfactory Moderately Satisfactory 122.32 27 10-Feb-2020 Moderately Satisfactory Moderately Satisfactory 130.89 28 24-Aug-2020 Satisfactory Moderately Satisfactory 135.93 29 30-Nov-2020 Satisfactory Moderately Satisfactory 137.63 iv Official Use The World Bank PY PRODERS Sustainable Agriculture & Rural Development (P088799) SECTORS AND THEMES Sectors Major Sector/Sector (%) Agriculture, Fishing and Forestry 95 Agricultural Extension, Research, and Other Support 30 Activities Fisheries 5 Livestock 5 Other Agriculture, Fishing and Forestry 55 Public Administration 5 Other Public Administration 5 Themes Major Theme/ Theme (Level 2)/ Theme (Level 3) (%) Private Sector Development 100 Jobs 100 Finance 7 Finance for Development 7 Agriculture Finance 7 Social Development and Protection 29 Social Inclusion 29 Participation and Civic Engagement 29 Urban and Rural Development 50 Rural Development 50 Rural Markets 7 Rural Non-farm Income Generation 14 Land Administration and Management 29 v Official Use The World Bank PY PRODERS Sustainable Agriculture & Rural Development (P088799) Environment and Natural Resource Management 14 Water Resource Management 14 Water Institutions, Policies and Reform 14 ADM STAFF Role At Approval At ICR Regional Vice President: Pamela Cox Carlos Felipe Jaramillo Country Director: Pedro L. Rodriguez Jordan Z. Schwartz Director: Pedro Alba Anna Wellenstein Practice Manager: Ethel Sennhauser Preeti S. Ahuja Pablo R. Valdivia Zelaya, Task Team Leader(s): Gerardo Segura Warnholtz Edward William Bresnyan ICR Contributing Author: Hira Channa vi Official Use The World Bank PY PRODERS Sustainable Agriculture & Rural Development (P088799) I. PROJECT CONTEXT AND DEVELOPMENT OBJECTIVES A. CONTEXT AT APPRAISAL Context 1. At appraisal of the Sustainable Agriculture and Rural Development Project’s (PRODERS / also referred to as the Project) in 2006, the economy of Paraguay had emerged from protracted stagnation in the 1990’s but was still characterized by high inequality and significant poverty. Real GDP grew at an estimated rate of 3.5 percent in 2006, and the economic turnaround had led to a significant decline in external public debt, which stood at 30.5 percent of GDP in 2006, down from 50 percent in the earlier years. However, despite the economic turnaround, per capita GDP in 2006 was at the same level as a quarter of century earlier, inequality was extremely high, reflected in a GINI coefficient of 0.53 and gross inequality of land ownership. Additionally, figures from 2005 indicate that over 1.2 million people in rural areas lived in poverty - including almost all 86,000 indigenous people – and 650,000 people or 54 percent of the total rural population lived in extreme poverty. 2. The agriculture sector was critical to the economy and bimodal: a capitalized entrepreneurial agriculture, primarily responsible for sector growth, and 300,000 mostly small-scale farmers. In 2006, 10 percent of the rural population owned two-thirds of the land, while 30 percent of the population was landless. The economy of Paraguay was essentially natural resource-based, with agriculture and livestock production accounting for 25 percent of GDP, 85 percent of exports and 45 percent of the employed population. Small-scale farmers faced the challenges of limited access to land, capital and technology, and social and human capital resources. The land situation in Paraguay was characterized by significant inequality in tenancy and extensive irregularity of land title1. 3. Despite its ecological importance, Paraguay suffered from severe environmental degradation. This included accelerated erosion, loss of soil fertility, loss of biological diversity, decreased quantity and quality of water resources, and severe deforestation. A principal cause of this environmental degradation was Paraguay’s model of agricultural development which predominantly promoted short-term profits over long term environmental sustainability. Practices contributing to this degradation included expansion of the agricultural frontier through the colonization of new lands, slash-and-burn agriculture, extensive grazing, and mono-cultivation of cotton and soy. 4. Alignment with the Government’s Strategy: The Government of Paraguay’s (GOP) sectoral focus was on sustainable economic growth, including actions to strengthen agricultural production and agro-industry, address poverty and social exclusion particularly in rural areas, and to increase human capital by stressing equity and increased access to basic services.2 These actions were outlined in key strategy documents including the GOP’s National Strategy for the Fight against Poverty, Inequality and Social Exclusion and the Agriculture and Rural Development Program (2004-2008). This project focus is embedded in the Project Development Objective (PDO) which sought to improve the socio-economic condition of small-scale farmers and indigenous farmers in a sustainable manner. 1 Data has been taken from Project Appraisal Document 2 Reflected in the San Bernardino declaration of 2004 1 Official Use The World Bank PY PRODERS Sustainable Agriculture & Rural Development (P088799) 5. Rationale for World Bank (also referred to as the Bank) support. The rationale for the Bank’s support and involvement at the time of preparation can be pared down to three points: a. PRODERS was expected to benefit from the synergies associated with being part of an integrated portfolio. The World Bank’s project portfolio at the time of preparation included: (i) two projects in collaboration with the Japanese Social Development Fund (JSDF)3; (ii) an Additional Financing for Pilot Community Development Project (PRODECO); (iii) the Forestry Project; and (iv) the Land Administration Project. b. PRODERS’ design would benefit from the Bank’s experience with similar activities in other projects in Paraguay and internationally. In Paraguay, the preceding Paraguay Natural Resource Management Project (PARN) had promoted an integrated model of natural resource management and technological support to agriculture. The Bank had also supported successful micro-catchment area based sustainable rural development projects in several Brazilian states (e.g., in Santa Catarina and Parana). c. The Bank team could/would learn from related initiatives in Paraguay funded by other international agencies. For example: International Fund for Agriculture Development’s (IFAD) Paraguay Rural Project, on training beneficiaries and their organizations for collective commercialization of agricultural products; and the German Technical Cooperation (GTZ) executed Caazapá Rural Development Project, which focused on the sustainable management of natural resources and, on producers’ successful diversification of production. Theory of Change (Results Chain) 6. The Project was approved before presentation of a Theory of Change (TOC) in the Project Appraisal Document (PAD) became mandatory, and consequently, the PAD did not contain a diagrammatic representation. Figure 1 presents the Theory of Change based on the implicit results chain described in the PAD, and incorporates applicable changes to the Project over time, noted briefly in footnotes and discussed further in Section I B. 7. Targeting of beneficiaries: The two departments selected for intervention were Caaguazú and San Pedro, the poorest departments in the Eastern Region4. The 39 municipalities in these two departments were categorized as High, Medium and Low Priority based on criteria related to poverty and environmental factors (loss of forest cover and soil use). Micro catchments were to be selected during implementation using the same criteria. The PAD estimated that the Project would reach 16,800 small-scale farmers from 600 communities and 2,030 families from 73 indigenous communities. 3The Indigenous Land Regularization Project and the Indigenous Community Development Project 4 These departments were selected according to poverty-based targeting criteria using the national PLIPEX index (a prioritization method for targeting areas for social investments aimed at the reduction of extreme poverty). The PLIPEX index measures poverty levels according to income and Unsatisfied Basic Needs (UBN). It was calculated in 2004 by Paraguay’s Secretariat of Social Action. 2 Official Use The World Bank PY PRODERS Sustainable Agriculture & Rural Development (P088799) Figure 1- Theory of Change PDO: Improve the quality of life of small-scale farmers and indigenous communities in the project areas of San Pedro and Caaguazu departments in a sustainable manner* Intervention Intermediate Outcomes Project Outcomes Higher Level Outcomes C1. COMMUNITY ORG & CAPACITY BUILDING -Communities & organizations - including -Train project and technical staff in project indigenous – plan/collaborate concepts, methods, technologies & -Local organization, self-governance -Diverse local stakeholders acquire participatory planning & rural development management environmental awareness/knowledge -Design & implement environmental capacity improved -Local level implementation managed more education program -Women and youth participating in effectively Agricultural productivity and - Identify micro-catchments (changed to key decision-making -Capacity to conduct/manage sustainable areas selected based on poverty mapping)** -Indigenous communities share sustainability of small farm sector & indigenous communities for community agricultural & RD activities improves project benefits improved sub-projects -Create, strengthen, and legalize local organizations/groups. Poverty declines and quality of life improves for small-scale C2. RURAL EXTENSION & ADAPTIVE farmers and indigenous RESEARCH -Beneficiaries plan & implement sustainable communities -Train beneficiaries to enable them to agricultural/rural activities develop and implement demand-driven -Extension and research institutions providing Rural social exclusion reduced community-level development plans technical support. -Implement plans to catalyze shift to NRM -Producers organized for marketing produce and sustainable livelihoods. -Technologies validated Critical Assumptions -Beneficiaries’ marketing issues defined -Beneficiaries adopt sustainable Intervention to Intermediate Outcome -Adaptive research, farm trials & policy agriculture practices and are A1-Agencies and stakeholders collaborate effectively studies benefiting small farmers **** connected to inclusive value A2-Training/TA build local institutional capacity to implement the chains *** Project Living conditions and access to Intermediate Outcomes to Project Outcomes services improved A3-Training, targeting and information campaigns bolster the C3. SUSTAINABLE RURAL DEVT. FUND -Investment plans implemented by -Environmental conditions (soil, decentralized, participatory approach -Establish and activate Sustainable Rural beneficiaries water, vegetation) improved A4-Project investments reach indigenous communities, women & Development Fund (FDRS) -Indigenous communities supported by land youth -Provide grant financing for demand-driven titling, home improvements, improved A5-Land titling support promotes adoption of sustainable productive subprojects productive practices practices -Improved NRM practices adopted to reduce Project Outcomes to Higher-Level Outcomes environmental degradation A6-Increased productivity and improved market access leads to higher incomes for farmers A7-Decentralized, participatory approach fosters local ownership & sustainability C4. ANIMAL HEALTH IMPROVEMENT -National standards and control practices for Strengthen animal health institutions animal health boosted -Farmers practicing modern animal SENACSA and VMG*****: -Modernized laboratories conducting food health management and husbandry -Information systems and training Notes: safety and pathology analysis -Institutional framework, national -Modernization of laboratories & border and *The words quality of life were replaced with socio-economic -Animal tracking/information systems standards and systems for animal regional control posts condition in restructuring in November 2013 for increased precision -Farmers gain access to resources for animal health oversight operational -Animal tracking capacity improvements ** Changed in 2013 AF husbandry (training and genetic material) *** Addition in 2013 AF **** Research studies subcomponent dropped in June 2013 restructuring *****Focus on VMG removed in June 2013 restructuring 3 Official Use The World Bank PY PRODERS Sustainable Agriculture & Rural Development (P088799) Project Development Objectives (PDOs) 8. As stated in the Loan Agreement No. 7503-PY, the PDO was: “to improve the quality of life of Small-Scale Farmers and Indigenous Communities in the Project Area in a sustainable manner, through the support of actions to strengthen community organization and self-governance, improve natural resources management and enhance the socio-economic conditions of said farmers and communities.”5 Key Expected Outcomes and Outcome Indicators 9. In Table 1 below, the appraisal-stage PDO Indicators are assigned first – and as relevant - to the PDO itself, then to the main associated actions (framed as dependent clauses) needed to accomplish the PDO.6 Table 1: Original PDO Indicators Aligned to the PDO, and to its Associated Actions PDO Theme and Main PDO Indicators as per PAD Actions Improve the quality of life • At least 50 percent of the target farms increase their agricultural incomes by 30 percent. Of these, of Small-Scale Farmers and at least 20 percent obtain an agricultural income above the poverty line. Indigenous Communities • The incidence of poverty (measured in Unsatisfied Basic Needs - UBN)) reduced by 50 percent in in the Project Area in a the assisted small-scale-farmer and indigenous communities. sustainable manner, • 67 percent of beneficiary households with access to at least one additional basic service aimed at through: home improvements. Support of actions to • CDGs, MDCs and MSCs7 established, strengthened, and participating in the management of rural strengthen community sustainable development in at least 80 percent of the target micro-catchments and indigenous organization and self- communities in the project area with participation of women and rural youth in decision-making governance (appropriate level of participation to be agreed by the organizations). Improve natural resources • Environmental conditions (soil, water quality, vegetation cover) improved in at least 70 percent of management the 84 target micro-catchments and 73 indigenous communities • Greater awareness among 50 percent of project beneficiaries of land degradation and the potential contribution of sustainable natural resources and land management to improved livelihoods in the project area. Enhance the socio- • Production of crops for domestic consumption increased by 20 percent in 50 percent of the poorest economic condition of said beneficiary families. farmers and • Productivity of land (kg or MT/by hectare) increased by an average of 25 percent in 10,000 farms communities.” through the application of productive practices promoted by the project • 20 percent of indigenous communities without formal land titles at project start acquire titles and 50 percent of small-scale farmers without title receive assistance toward acquiring titles. Components 10. Component 1: Community Organization Development and Capacity Building (Appraisal Estimate: IBRD:US$2.23 Million, Actual Cost: US$1.67 Million). This component financed: (i) organization of beneficiaries to 5 As per the ICR Guidelines, the PDO statement is technically: “to improve the quality of life of Small-Scale Farmers and Indigenous Communities in the project area in a sustainable manner”. The remaining parts of the PDO statement are dependent clauses describing the means to these objectives. 6 The core PDO statement is treated as a single construct not requiring “unpacking” (ICR Guidelines). However, a more granular , meaningful alignment of the PDO Indicators is provided by aligning the PDO itself and its corresponding actions as described in the dependent clauses. 7 Community Development Groups (CDG), Micro-catchment Development Committee (MDCs), Municipal Steering Committee (MSC) 4 Official Use The World Bank PY PRODERS Sustainable Agriculture & Rural Development (P088799) participate actively in local decision-making structures8; and (ii) preparation of project staff to implement the project technical strategy aimed at the adoption of sustainable agriculture and rural development activities in micro-catchments and indigenous community territories. The component had two subcomponents: (1.1) Training and Environmental Education (EE), where the plan was to train project extension workers (micro-catchment, indigenous community and social organization technicians) and other project staff (including Ministry of Agriculture and Livestock - MAG - staff involved in the project) as well as rural workers and youth; and, design and implement an environmental education program; and (1.2) Community Organization Development, to facilitate training and strengthening of community organizations. 11. Component 2: Rural Extension and Adaptive Research (Appraisal Estimate: US$9.14 Million, Actual Cost: US$41.07 Million). Individual, small-scale, farmer households, producers’ groups, and indigenous communities would be helped to overcome technical, socio-economic, and environmental constraints to allow them to shift from existing, non-sustainable agricultural practices to sustainable livelihood strategies enhancing natural resources management and reducing rural poverty. There were two subcomponents: (1.1) Rural Extension - main activities included technical assistance and training for project beneficiaries, and assistance in development and implementation of the community development plans; and (1.2) Adaptive Research and Studies - financing of research trials, and marketing and policy studies. 12. Component 3: Sustainable Rural Development Fund (Appraisal Estimate: US$19.5 Million Actual Cost: US$87.15 Million). This component sought to implement an incentive mechanism – a Sustainable Rural Development Fund (FDRS) financing demand-driven investment subprojects - to facilitate and induce the adoption of the project strategy within the benefited micro-catchments. Proposals would be prepared by eligible project beneficiaries supported by project extension workers. In most cases, the FDRS grant would finance a maximum of 85 percent of the investments included in a subproject. Grantees would provide at least 15 percent in-kind contribution to cover the rest. The FDRS would finance five categories of subprojects: (i) Individual Small-scale Farmer Investment Subprojects for basic home improvements and sanitation (up to US$500.00 per subproject); (ii) Individual Small-scale Farmer Investment Subprojects to improve farm production and productivity (up to US$2,000 per subproject); (iii) Community Development Group Investment Subprojects to improve agricultural and livestock production and productivity (up to US$10,000 per subproject); (iv) Indigenous Community Investment Subprojects (up to US$25,000 for subproject); and, (v) Municipal Investment Subprojects (up to US$40,000 per subproject). 13. Component 4: Animal Health (Appraisal Estimate: US$3.38 Million Actual Cost: US$1.12 Million). This was designed to assist Paraguay to initiate animal health improvement measures and to contribute to the regional strategy for animal health management to ensure high national standards of animal health. It had two sub- components: (i) Strengthening the nodal implementing agency for this component - National Service for Animal Health and Quality (SENACSA); and (ii) Strengthening the Vice Ministry of Animal Husbandry (VMG). 14. Component 5: Project Management, Monitoring and Evaluation. (Appraisal Estimate: US$3.28 Million, Actual Cost: US$5.54 Million). This component included overall management of the project (i.e., supervision, monitoring, and evaluation activities), project audits, financial and project management capacity building at MAG, as well as project dissemination and coordination with other related projects and programs. 8 Decision making structures refer to beneficiary involvement in CDGs, MDCs and MSCs 5 Official Use The World Bank PY PRODERS Sustainable Agriculture & Rural Development (P088799) 15. The difference in the appraisal cost and the actual cost is driven primarily by the Additional Financing of US$100 Million that was approved in November 2013 and the associated scale-up of activities. Additional impacts were due to: (i) dropping of subcomponent 4.2 and downscaling of activities for Component 4.1; (ii) scaling up of training activities under Component 2; (iii) reallocation of funds from Component 1 and Component 5 to Component 3 in 2017 to adjust for the larger number of beneficiaries under that Component. B. SIGNIFICANT CHANGES DURING IMPLEMENTATION (IF APPLICABLE) 16. The Project was implemented over 12.5 years. Six restructurings and an Additional Financing (combined with a seventh restructuring) resulted in numerous changes. The following paragraphs summarize these changes, and Table A7.1 in Annex 7 provides an overview of the main changes over the Project’s lifetime. Revised PDOs and Outcome Targets 17. The PDO was revised once as part of an Additional Financing loan of US$100 million approved by the World Bank Board of Directors in November 2013. The revised PDO was to “improve in a sustainable way the socio- economic condition of Small-Scale Farmers and Indigenous Communities in the Project Area, through the support of actions to strengthen their community organization, self-governance, and access to markets and value chains”. Adjustments to PDO Outcome targets are detailed in Table A7.2, Annex 7. Revised PDO Indicators 18. PDO indicators changed considerably throughout the life of the Project: The PAD had ten PDO indicators but two were dropped by the restructuring of June 2013; five were dropped and two new indicators were added by the restructuring of November 2013. Finally, two PDO Indicators were rephrased in June 2017. The detailed changes in the PDO indicators are provided in Table A7.2 in Annex 7. Revised Components 19. Changes to the components at each applicable restructuring – and the Additional Financing - are provided below: a. June 2013: (i) Subcomponent 2.2. Adaptive Research: This was dropped because activities had not started and could not produce the expected results by the existing closing date; and (ii) Subcomponent 4.2- Support to the Vice-Ministry of Livestock (VMG) was dropped because of lack of progress, and because institutional changes reduced VMG’s mandate to implement field activities. b. November 2013 (Additional Financing): Specific changes to Project Components were: (i) Component 3: Activities were reoriented to focus only on community subprojects without any National Rural Development and Land Institute (INDERT) subprojects, and the number of community investment proposals to be financed was increased from 480 to 2,000 while the number of indigenous community proposals to be financed was increased from 45 to 130; and, (ii) Component 4: Animal Health activities financed under the original loan were re-oriented to strengthen the Project's support for small producers, rather than national-level activities to control Foot and Mouth Disease. 6 Official Use The World Bank PY PRODERS Sustainable Agriculture & Rural Development (P088799) c. July 2017: Introduced a new strategy/approach under Component 3 – Family by Family - targeting small- scale, individual farmers identified as living in poverty, instead of communities. d. May 2019: Added an activity in Component 5, described as financing of technical assistance to analyze and prepare possible interventions to strengthen community organizations and facilitate access to markets of Small-Scale Farmers and Indigenous Communities within the Project Area. e. Other Changes 20. Additional Financing in June 2013: (i) Geographical scope was expanded9; and (ii) the beneficiary targeting strategy was changed to selecting sub-districts based only on poverty indicators from the 2010 Census data. 21. The Restructuring of July 2017 reallocated loan resources between disbursement categories: The allocation for Component 3 (investments under the Sustainable Rural Development Fund), and Component 4 (Animal Health Improvement) was increased. Additional resources were devoted to Component 3 to finance an increased number of beneficiaries including those under the “Family by Family” strategy (introduced by this component). Component 4 (Animal Health Improvement) required additional funds for certain activities such as office rehabilitation for the Vice-Ministry of Livestock and a study on the feasibility of animal identification. Funds under Component 1 (Community Organization Development and Capacity Building) and Component 5 (Project Management) were reduced to accommodate the above-mentioned increases. Rationale for Changes and Their Implication for the Original Theory of Change 22. The following section provides the rationale for the six restructurings across the Project lifetime and the Additional Financing: a. Restructuring of June 2013: This restructuring followed the Mid-Term Review (MTR) of February 2013 (MTR delayed-original closing date was December 2013). The MTR acknowledged that the Project had disbursed only 30 percent of the funds in 80 percent of the project time, even though a significant acceleration of disbursement had occurred in 2012 (70 percent of the total amount disbursed to date). The MTR and other PRODERS´ documentation ascribe implementation delays to: (i) delayed project effectiveness; (ii) delayed recruitment of project staff; (iii) excessively dispersed project activities associated with animal health activities under Component 4; (iv) a complex menu of sub-projects which included diverse community investment projects in addition to Municipal Investment Plans; and (v) lack of an integrated Monitoring and Evaluation System. These challenges meant that the Project was behind in financing sub-projects (only half of the estimated beneficiaries had been reached a year from closing) and negligible progress had been made on Subcomponent 2.2 (no research studies conducted or started) or on Component 4 (no activities started with SENACSA or VMG)10. b. Additional Financing, November 2013: (i) The changes to components (expansion of scale and exclusive focus on community subprojects) were driven by the increase in project scope and the continued 9 In addition to the two departments of Caaguazú and San Pedro, the Project now included Concepcion, Canindeyú and Caazapá Eventually communities from neighboring departments in Eastern Region including Amambay, Central, Itapúa, Misiones, Guairá, Paraguarí, Cordillera and Alto Parana were included in Project’s geographic scope through changes in the operating manual. 10 Several operational adjustments to simplify and speed up the process of disbursements to the subprojects were also recommended by the MTR (e.g., reducing the number of disbursements to sub-projects to two) and incorporated in the Operational Manual. 7 Official Use The World Bank PY PRODERS Sustainable Agriculture & Rural Development (P088799) simplifications recommended by the MTR earlier that year; (ii) the change in targeting criteria was intended to improve the Project’s poverty focus; (iii) the changes in the PDO were meant to make it more measurable and clear; and (iv) the change in the dependent clause was in line with the PAD for the original loan (Loan 7503-PY), which also stressed the importance of diversifying production practices to help producers access new markets and develop value chains. c. Restructuring of July 2015: This was meant to improve support to rural communities by allowing for central procurement of goods and services in situations when this would result in faster and improved services compared to community procurement. d. Restructuring of July 2017: The closing date was extended, to allow the Project to achieve its intended objectives and, a new Family by Family approach was introduced in Component 3, targeting families rather than communities. The rationale was that although the community-based approach had significant benefits, it did not allow inclusion of the most vulnerable families who were not fully integrated into their community because of their lower income level. e. Restructuring of May 2019: The new activity introduced under Component 5 was intended to help the Borrower allocate funds for preparation of the follow-up project Market Access for Agricultural Products Project (PIMA), which was declared effective on July 6, 2020. f. Restructuring of November 2019: The Government of Paraguay requested an extension of the closing date to November 30, 2020 to achieve project targets not achieved due to delayed implementation of community investments (most were implemented in 2017-2019). II. OUTCOME A. RELEVANCE OF PDOs Assessment of Relevance of PDOs and Rating 23. The relevance of the PDO to the CPS and Country Partnership Framework (CPF) at closing is High. The PDO was highly relevant at the time of appraisal and remained consistently relevant throughout implementation with the World Bank’s CPSs and CPF. At closing, the primary themes of the PDO remained in the mainstream of the new World Bank/Paraguay CPF 2019–2023 (Report No131046PY). The Project was linked to one of the key objectives mentioned in the CPF 2019-2023 unlocking the productivity of the rural economy through the following two mechanisms. First, it looked to combine technical assistance with access to funds to help farmers overcome barriers to increase adoption of sustainable and diversified farm practices. Second, it contributed to this objective by providing basic services (such as electricity, water, and sanitation) and legal services for formalization of land rights for indigenous communities, that could enable vulnerable communities to become more productive. The Project remained fully relevant, even when considering its restructurings, none of which substantially altered the overall development objective. 8 Official Use The World Bank PY PRODERS Sustainable Agriculture & Rural Development (P088799) B. ACHIEVEMENT OF PDOs (EFFICACY) 24. A key source of evidence is a survey commissioned by the Borrower and the Bank and conducted by the Inter-American Institute for Cooperation on Agriculture (IICA) near the Project’s closing 11. The challenges of the Project’s M&E system during its implementation (described in Section IVA) make the IICA survey critical to a comprehensive and methodologically sound assessment of the Project. The survey consisted of a randomly selected and representative sample of 185 subprojects (consisting of 4,060 beneficiaries). Of the 4,060 participants, 925 were selected for individual surveys on personal/household information. The workshops and the survey were conducted in November 201912. The Family by Family (FXF) strategy is evaluated using an additional survey, conducted a year later, with a randomly selected representative sample of 460 beneficiaries. In lieu of a baseline, the IICA survey utilized retrospective questions, to reconstruct the initial situation - or without project - from the individual and collective memory of the beneficiaries, on topics such as crops produced, production volume, as well as sales prices and production costs 25. PRODERS-supported sub-projects were divided into four different strategies: Community Investment Plans (PIC), Indigenous Communities Investment Plan (PICI), Farm Investment Plan (PIF), and Family by Family (FXF). PICs, PICIs and PIFs included productive investments to increase yields and diversify agriculture systems, as well as social, environmental and community investments. The FXF typology included only productive investments, consisting of technology packages for vulnerable rural families. The demand-driven and flexible design of the Project meant that subprojects were varied in nature and the focus of activities depended on the needs of the groups. A summary of the type of investments and activities within each category is shown in the table below with the proportions of financing taken from the 185 workshops sampled: Table 2: Expenditure under investment categories for different subprojects Investment type PIC PICI PIF Description of Activities Financed under each Investment Category (%) (%) (%) Environmental 6 5 8 Establishment of nurseries, reforestation with native, exotic and fruit trees purchase of inputs for agroforestry practices. Productive 61 64 57 Purchases of Key crop inputs (including those for new sustainable practices promoted by the Project), animals (poultry, ruminants), tools, farm machinery and vehicles for transportation Social 7 25 12 Establishment of community drinking water systems, electrification, improvement of bathrooms, kitchens and other home repairs and purchase of cleaner stoves. Community 24 4 21 Establishment of community productive facilities (for e.g., processing facilities for crop outputs) Administrative 2 3 2 Hiring of services to assist with documentation for procurement of goods and financial management by community organizations 26. The revised PDO was “To improve in a sustainable way the socio-economic condition of Small-Scale Farmers and Indigenous Communities in the Project Area”. This objective was to be achieved through two main pathways: 11 The IICA report was the main source of evidence for the BCR. A summary of the key findings from the survey also utilized in the BCR are provided in Annex A7.3. 12 The workshops were conducted in 2019, but information was updated based on secondary information of prices and quantities produced. The survey of Family-by-Family beneficiaries was conducted in 2020. 9 Official Use The World Bank PY PRODERS Sustainable Agriculture & Rural Development (P088799) “(i) the support of actions to strengthen their community organization and self-governance and; (ii) access to markets and value chains”. 27. The following paragraphs first discuss how well the Project performed in the achievement of its objective. The discussion of achievement is divided into two parts: The first part focuses on the improvement of the socio- economic condition of small-scale Farmers and Indigenous communities while the second part discusses the qualification that this should be done in a sustainable way. Then the discussion moves to performance indicators that measure success in achieving the two main pathways mentioned in the paragraph earlier. Finally, the last part of the discussion is focused on successful completion of the two main activity streams of the Project (technical support and disbursement of funds to communities and families). Improvement of the socio-economic condition of Small-scale Farmers and Indigenous Communities 28. Direct Project Beneficiaries: The project reached 249,662 direct beneficiaries. The AF increased the target for beneficiaries to 256,000 (97 percent achieved); the target was reduced in 2017 to 225,000 (114 percent achieved)13. 29. PDO Indicator 1: “Number of targeted farms that increase their agricultural income by at least 30 percent”. The IICA survey indicates that 28,172 farms increased their incomes by 30 percent or more. This substantially exceeds the project target at closing of 10,000 farms (282 percent of the target)14 established by the 2017 restructuring. The target number of farms before it was reduced in the 2017 restructuring was 25,500. This target was also exceeded at 110 percent (28,172/25,500). 30. PDO Indicator 2: “No. of targeted farms which are able to pass above the poverty line ”15. From the IICA survey, 28,180 families were above the poverty line at the time of the survey. This achievement is higher than the target value (10,000 farms) set in 2017. Pre-2017 restructuring this target was worded as at least 50 percent incidence of poverty reduced in the assisted small-scale farmers and indigenous communities. According to the IICA survey data, the average poverty rate (proportion below the poverty line) in the sample before the Project intervention was 52 percent and 48 percent after the Project intervention. A 50 percent reduction in the incidence of poverty from 52 percent means that the poverty rate after the Project should be 26 percent, which indicates that the achievement of this indicator is only 55 percent (i.e., 26 percent/48 percent). 31. PDO Indicator #3: “Percentage of farms that have increased their productivity (per Ha) by at least 25 percent through the application of productive practices promoted by the Project” with a target of 25 percent of farms. Following discussion with Bank team, the IICA report used yield data for cassava and maize for measurement because both were grown by 71 percent of the sample. Some 32 percent of the sampled farms saw yield increases higher than 25 percent for at least one of these crops indicating an achievement rate of 128 percent (i.e., 32 percent/25 percent)16. 13 It should be noted that this is a conservative measurement of the direct beneficiaries as it only includes those who benefited from subprojects. There are another 49,579 direct beneficiaries of the Project's activities including: 440 trained PRODERS extension technicians and 49,139 teachers and students who received the Environmental Education Program. 14 Values are adjusted for inflation. 15 While the indicator mentions the 2016 poverty line (defined at PYG 446.798 it was updated by the 2017 restructuring), the ICR utilizes the analysis from the IICA survey which utilizes the 2019/20 poverty line which is higher at PYG 506,307. 16 This indicator remained unchanged in the 2017 Restructuring. 10 Official Use The World Bank PY PRODERS Sustainable Agriculture & Rural Development (P088799) 32. Evidence from the IICA report indicates that the results for PDO indicators 1-3 were robust to the introduction of the limited counterfactual analyses possible. The report utilizes national level rural income and production data reported as a counterfactual in the absence of a control group or baseline. Target values do not change significantly. 33. Two important Intermediate Indicators also provide evidence that the Project improved socio-economic conditions of target beneficiaries by looking at the provision of basic services to beneficiaries.17 Specifically, these are: “Families with improved housing (improved toilets, ovens, roof, etc.)” and “Number of indigenous communities which gained access to water and/or electricity thanks to the project”. The homes of some 19,314 families were improved, with improvements such as installation of sanitary latrines (6,407 families), installation of cleaner and more efficient stoves (8,177 families), upgrades of floors, ceilings and walls (8,489 families), provision of access to potable water (4,385 families), and provision of electric light (1,481 families), against a target of 8,000 (241 percent achieved), and 70 indigenous communities were provided with access to potable water or electricity against a target of 60 communities (117 percent achieved)18. Sustainability 34. The sustainability aspect is examined through two indicators. The IICA survey finds that 82 percent of the sample had adopted a sustainable technology or practice (e.g., green manure crops, crop rotation, leguminous crops, minimum tillage, and cover crops) or diversified production (e.g., dairy production, eggs, poultry, small ruminants, and fruit production) against the target of 80 percent (102 percent achievement). Additionally, good forestry practices were implemented on 5,430 hectares against a target of 6,000 hectares (91 percent). Good forestry practices were defined as agroforestry, reforestation with exotic, native and fruit trees, natural regeneration, and protection of yerba mate trees. Pathways to achievement of PDO 35. Two pathways were identified in the PDO statement to achieving the PDO. The first was to strengthen community organization and self-governance, and the second was to strengthen access to markets and value chains for the targeted beneficiaries. Evidence for the first pathway “strengthening community organization and self-governance” can be found in the IICA report outside of the PRODERS´ Results Framework. An index was developed to gauge the level of formalization of the organization at the time of the survey19. The index showed that 14.6 percent of the organizations reached a consolidated level of development and 29.3 percent of the organizations were classified as incipient, indicating their need for significant support to develop further20. 17 The indicator values for these two indicators are taken from the project database. 18 Some families benefitted from multiple activities, which is why the total is greater than 19,314. 19 34 questions related to different aspects of the organization were asked that could be grouped into categories of institutional arrangements, financial arrangements, marketing, external recognition of the organization and credit access. Based on the answers to the questions in the form applied in the Workshops, organizations of indigenous producers or communities were categorized as follows: (i) Consolidated, those organizations with affirmative answers equal to or greater than 80 percent; (ii) In Development, 61 to 79 percent and (iii) Incipient, equal to or less than 60 percent of positive responses. 20 It should also be noted as a caveat to the results from this index, that it captures the moment at which it was surveyed and does not capture progress or improvement in organizational capacity. 11 Official Use The World Bank PY PRODERS Sustainable Agriculture & Rural Development (P088799) 36. The second pathway is captured in the PDO Indicators “Associative management capacity increased: 80 percent of Community Development Groups (campesinos) / 50 percent of indigenous groups with business proposals oriented to business plans to access markets and inclusive value chains21”. Some 84.8 percent (106 percent achievement) of proposals from farmers and community organizations, and 62 percent (124 percent achievement) of proposals from indigenous groups were oriented towards accessing markets and value chains.22 37. There is also anecdotal evidence that the Project enabled some community groups to sell directly to agro- processors (examples include three communities selling raw milk directly to processors, and the Ache community processing and then selling yerba mate directly to the company GUAYAKI). The Project also promoted participation of communities in local market fairs, and sales data from the PIU database (from 2015-2019) suggest that an average of 12 percent of the sales made by groups was through fairs, with the proportion consistently increasing across the four years. Activity streams 38. Finally, two streams of activities conducted under the Project are assessed. The first set is related to training and equipment for technical staff and deploying this staff to train beneficiaries. The main intermediate indicator capturing this is “Number of technicians trained and operating in the project areas”. A total of 440 technicians were trained under PRODERS from a target of 345 set by the AF in November 2013 (128 percent achieved). Technicians were trained in areas related to improved production practices, marketing of agricultural produce, community development and strengthening of organizations, and gender issues. Also, under the first stream of activities, the Project provided equipment to different field units of the National Service for Animal Health and Quality (SENACSA) so that they would be connected to the main office. 39. The second stream of activities used by the Project was the disbursement of funds, goods, or services to those whose proposals were successful. The Project was largely successful in meeting the target number of proposals financed and completed for the peasant communities and the indigenous communities: 98.8 percent and 100 percent of proposals completed their planned activities and targets against the post 2017 restructuring target proposals (1,185 and 180 proposals, respectively), and 59 percent and 100 percent against the pre-2017 restructuring targets (2000 and 180 proposals, respectively). Justification of Overall Efficacy Rating 40. Overall Efficacy is rated Substantial. Factors considered in determining this rating were the following: a. The operation almost fully achieved its objectives and disbursed 99.7 percent of its loan proceeds - albeit with several extensions of the closing date. b. All six PDO indicator targets were exceeded if evaluated against the targets set post-2017 Restructuring. When the indicators are evaluated against the more ambitious (AF) targets pre-restructuring, i.e., when applying the position – with hindsight - that reducing certain targets in 2017 was not merited given the 21This includes the farm investment plans referred to as PIF, because of the indicator being focused on PIC. 22These indicators are not used as evidence for strengthening of community organization and self-governance, because the indicator captures capacity building of community organizations in a very specific area related to market access and value chains. Additionally, it should be noted this proportion comes from 116 plans instead of the 185 because they included only plans that were financed in the second half of the Project. 12 Official Use The World Bank PY PRODERS Sustainable Agriculture & Rural Development (P088799) context, four of the six PDO Indicators end targets were exceeded, and one shows substantial achievement (97 percent). However, the indicator related to reduction in poverty was far less successful when assessed against the AF pre-restructuring target. c. Out of 24 Intermediate Results Indicators, 21 met or exceeded their AF pre-restructuring targets. C. EFFICIENCY 41. The financial and economic analyses of agricultural results are also based on the survey of: (i) 185 workshop participants of the PIC, PICI and PIF strategy; and (ii) 460 beneficiaries for the Family by Family strategy23.. The financial analysis considered the benefits generated by the increased production, increased sales and diversification of agricultural systems promoted by PRODERS. The economic analysis considered in addition, the increased availability of time provided by social investments under PRODERS (implementation of improved stoves at household level and drinking water systems at community level), reduced incidence of acute respiratory diseases resulting from investments in improved stoves, and the recovery of ecosystem services due to PRODERS' environmental investments and capacity building. Income and cost flows were adjusted based on the implicit deflator of agricultural GDP, to eliminate the effect of price changes over time. The implicit deflator acts as a proxy to control the variation of income in products and inputs.24 42. The analysis shows that 77 percent of investment plans are viable (NPV>0) at 10 years (440/568), 86 percent at 15 years (487/568) and 89 percent at 20 years (506/568). The PICI is the typology that presented the lowest proportion of viable investment plans compared to the other investment typologies in all evaluation horizons (38 percent, 59 percent, and 67 percent for 10, 15 and 20 years). The positive results for the case of Family by Family stand out, in which it is observed that 83 percent, 90 percent and 94 percent of the subprojects, respectively, remained viable in 10, 15 and 20 years. 43. At the aggregate level, considering incremental cost, income and net income flows for all investment plans, all typologies present positive profitability indicators. At the aggregate level, a financial rate of return of 25.7 percent, 31.5 percent, and 32.5 percent at the 10, 15 and 20 year-horizon, respectively, is obtained. The benefit- cost ratio is 1.21, 1.39 and 1.46 at the 10, 15 and 20 year-horizons, respectively. Family by Family stands out, presenting the highest profitability indicators. PIF presented positive profitability indicators, but of a lesser magnitude than PIC and PICI. This represents the trend of improvement in the efficiency of PRODERS’ design and implementation of investment plans. 44. Results reveal the high sensitivity of financial profitability with respect to yields: With a 10 percent decrease in yields (either due to limited technical assistance, low adoption rate and/or incidence of climatic factors beyond the farmers’ control), the total NPV at the aggregate level falls by 56 percent, 36 percent, and 36 percent and the EIRR fell by 28 percent, 20 percent and 20 percent at 10, 15 and 20 years. 23 Thissample size ensures statistical representativeness with a confidence level of 95 percent and a margin of error of 4.6 percent for Family by Family. Maximum variance was assumed (Informe de Cierre del Proyecto de Desarrollo Rural Sostenible, 2020). 24 Given the high variability of the data, a dispersion analysis of the Financial Internal Rate of Return was performed for each typology, to identify extreme values (mean IRR plus / minus two standard deviations) that were generating distortions in the distribution These were dropped from the analysis. 13 Official Use The World Bank PY PRODERS Sustainable Agriculture & Rural Development (P088799) 45. Environmental and social co-benefits: It is important to note the importance of the generation of environmental and social co-benefits by PRODERS. Of the total economic benefits, 22 percent come from social benefits (lower incidence of respiratory diseases and increase in time availability due to efficient stoves and drinking water systems in the communities), 13 percent of the total benefits correspond to ecosystem services recovered by the Project, and 65 percent of the economic benefits come from agricultural productive activity. 46. Project rate of return: In the economic analysis, the total cost of the project, US$137.5 million, was considered. For a 20-year horizon, the incremental economic benefit for the entire Project is estimated at US$7.7 million, with an economic internal rate of return of 28.2 percent. 47. Aspects of design and implementation. The Project faced significant delays in completion, with the Project closing nearly three years after the closing date planned in the Additional Financing Paper (December 2017). Three changes of government and associated transitions, and the usually long timeline of projects in Paraguay due to the challenging operating environment, all contributed. To estimate the efficiency loss due to these delays a scenario was simulated in which all subprojects were implemented one year earlier. The NPV obtained under this scenario is US$10.7 million, which is 37 percent higher than the NPV obtained with the actual disbursements that were made (US$7.7). This is a downward estimate of the cost, since it assumes only a year delay.25 However this analysis should be qualified in the following way: This comparison is against the counterfactual of earlier implementation, while if extensions were not granted this would have meant incomplete or fewer subprojects (probably implying a lower rate of return), i.e., the longer timeframe/extensions provided the opportunity for the Project to achieve. Other characteristics of this Project were not of sufficient weight to markedly affect its efficiency. 48. Comparison to Appraisal: The table below provides a comparison to Appraisal EFA. The EIRR is higher for the analysis done at closing because it considers additional environmental and social benefits of the Project. Table 3: Comparison of results at appraisal and closing EFA PAD (2007) EFA ICR (2021) EIRR 17 percent 28.2 percent Quantified benefits Agriculture benefits Agriculture, environmental and social benefits Scope of analysis Loan 7503 Loan 7503 and Loan 8316 Economic discount rate Unknown 12 percent 49. Efficiency is rated Substantial, based on overall financial and economic results. The economic analysis of PRODERS likely underestimates the impacts on beneficiary families, as it is not able to quantify a series of benefits, e.g., assistance with obtaining identity documents for 4,099 beneficiaries; investments in improved sanitation; and access to electricity. Additionally, not all environmental benefits were quantified. D. JUSTIFICATION OF OVERALL OUTCOME RATING 50. The overall outcome rating is Satisfactory based on the following: 25It is complicated to create a scenario of what the return would have been if implementation had gone according to the scheduled timeline. This is because the returns are very sensitive to the assumption of when we assume each of the sample sub-projects started 14 Official Use The World Bank PY PRODERS Sustainable Agriculture & Rural Development (P088799) a. High rating for Relevance of the PDO based on its sustained alignment with World Bank strategy documents for Paraguay and government’s current strategic/planning instruments. b. Substantial rating for Efficacy, based on the achievement or surpassing of almost all key targets and important collateral/complementary achievements. c. Substantial rating for Efficiency, based on positive economic and financial outcomes. Split Assessment of Overall Outcome Rating 51. The Task Team considered the arguments for/against including a split assessment of overall outcome based on reductions in PDO Indicator targets by the Restructuring of July 2017 (see Table A7.2, Annex 7) and concluded that a split assessment was not warranted. The decision to reduce targets in 2017 despite strong progress reported at that time was based on the Bank team’s observations at the time that: (i) the Client’s management of M&E was inadequate; (ii) Project team was unable to provide clear guidance due to the recent turnover of PMU management; and (iii) there was confusion– again due to M&E deficiencies - on the status of disbursements to subprojects. In this context, the Bank agreed with the Client to reduce certain targets to more manageable levels. The revised targets were therefore not based on formal projections, and are judged – including in retrospect, by the Bank team - to have been unnecessary. With one exception, final achievement for the PDO Indicators in question came close to, or exceeded, their much higher AF targets. E. OTHER OUTCOMES AND IMPACTS (IF ANY) 52. Impact on indigenous communities: A particularly satisfying aspect of the Project has been its explicit focus on providing support to indigenous communities, who are amongst the most deprived in Paraguay. The Project financed investments in 180 indigenous communities from different linguistic families and peoples, reaching 7,876 households, of which 49.6 percent were women (40,168 individuals, or 34 percent of Paraguay’s 117,150 indigenous people). The Project approach to providing support to indigenous communities was highly participatory and included regular consultations with the communities throughout the project lifetime. Support for indigenous communities was multifaceted and key impacts include: a. Increase in incomes and poverty reduction: According to the results from the IICA survey, 74 percent of beneficiaries from indigenous communities (overall proportion was 47 percent) increased their income by 30 percent. In addition, the Project helped reduce the proportion of indigenous families living below the poverty line from 52 percent to 43.6 percent, a decrease of 8.4 percent (overall decrease was 4.6 percent). b. Provision of basic services: The Project financed the provision of safe potable water for 45 communities, electric power installations for 10 communities, and 15 communities received support for both water services and electricity installations. In addition, the Project financed home improvements or improved stoves for 7,212 indigenous families. c. Legal Support: (i) 5,923 individuals obtained identity cards enabling them to get equal access to government services; and (ii) 105 communities received support for regularizing their land titles. 53. Project activities contributed to diversification in agricultural production activities. For all intervention strategies, except for FXF, increases in agricultural income were driven by diversification of income sources. This shift is the most substantial for the indigenous communities, for whom 92 percent of agricultural income was coming from either maize or cassava before the Project against an average of 29 percent for the others. This 15 Official Use The World Bank PY PRODERS Sustainable Agriculture & Rural Development (P088799) proportion declined from 92 percent to 63 percent following project interventions. The key change was through livestock farming, with beneficiaries from indigenous communities increasing the proportion of their productive income from livestock from 9 percent to 32 percent after the Project26 27. 54. Food security and dietary quality were improved by the Project. Data from the sample for the year 2019- 2020 indicates that beneficiaries consume a large part of their production, and this is especially true for indigenous communities who consume 78 percent of total production28. This high level of self-consumption suggests that increased production improves food availability and therefore contributes positively to food security. An increase in livestock production, consisting of raw milk and eggs, (70 -78 percent of which is self-consumed) also implies a more nutritious and diversified diet for beneficiaries. Women and Youth 55. Project targeting ensured that 53 percent of total direct beneficiaries were women. The inclusion of women is particularly relevant when considering that according to the PAD, only 20 percent of small-scale farmer families in the Project area were female led. Women were successfully included in the Project via extensive technical support through the business plan/proposal preparation process and helping female led enterprises in registering as businesses or cooperatives. Out of the total 1,364 organizations with investment projects financed by the Project, 58 percent had at least 40 percent female members or higher. This proportion is higher for the 180 organizations from indigenous communities where 65 percent of the groups had at least 40 percent of women as members. 56. The Project oriented training and activities to increase women’s involvement and to allow them to benefit from the activities. The Project also offered training specifically designed for women in the areas of business planning and marketing. During focus group discussions held for the IICA report, women beneficiaries appreciated: (i) the community network that the Project helped create; (ii) being made the main beneficiaries of a subproject and the accompanying feeling of empowerment; and (iii) improved market access through points such as market fairs resulting in increased revenue and savings (primarily through better prices). 57. Finally, the Project’s investments in community water systems and improved stoves have larger impacts on women and children because they: (i) are more likely to be collecting water; and (ii) spend more time indoors, leading to greater exposure to dangerous particulates which cause respiratory diseases. Institutional Strengthening 58. The close and effective coordination with INDI for working with indigenous communities helped MAG build institutional capacity to work with indigenous communities. The Project had a highly participatory approach with regards to the indigenous communities. Regular meetings were established between the departmental and central coordinating authorities of the Project, and the departmental and/or interdepartmental indigenous organizations, to inform the communities about the progress of the Project, plan activities and discuss aspects 26 This shift is present but smaller for other intervention strategies, increasing from 3% to 7% for PIF projects and 19% to 26% for PIC projects. 27 Sources of income for the Family by Family strategy are stable in the years before and after the Project. 28 Figure for self-consumption is not reported in the before project period 16 Official Use The World Bank PY PRODERS Sustainable Agriculture & Rural Development (P088799) related to implementation. Additionally, the Project used radio shows to disseminate key messages regarding Project services and procedures and to better understand the issues faced by the indigenous communities by inviting representatives from these communities for discussions29. Poverty Reduction and Shared Prosperity 59. The Project achieved the targets for increased income and productivity, even when the more rigorous targets - revised downwards in 2017 - were applied. As discussed in the earlier sections the Project contributed to poverty reduction, especially amongst the more vulnerable indigenous communities. 60. In addition to these quantifiable benefits, Project activities have led to other non-quantifiable benefits such as; (i) investments in improved stoves lead to reductions in respiratory diseases; (ii) increased availability of time resulting from having drinking water systems in the communities; (iii) access to the Paraguayan social protection system due to issuance of identity documents; and (iv) highly valued activities by beneficiaries such as investments in improving bathrooms and providing electricity. III. KEY FACTORS THAT AFFECTED IMPLEMENTATION AND OUTCOME A. KEY FACTORS DURING PREPARATION 61. Key terms in the PDO statement were not well defined. The PDO referred to complex concepts such as “quality of life”, “sustainability”, and “improvement of natural resource management” whose definitions were not developed during the project lifetime. This lack of clarity posed a challenge in evaluating the project during implementation and the overall level of ambition of the Project. The team adjusted the PDO during a restructuring in 2013, primarily to clarify the wording in the PDO, and modified the PDO indicators and intermediate indicator multiple times during implementation to improve measurability. 62. The Results Framework had major shortcomings at design: The Results Framework changed substantially during the life of the Project, with many of the changes reflecting issues originating in the original PAD RF, which was grossly over-designed, demanding, and used unclear language. 63. Project design was participatory in nature through its: (i) model of demand-driven subprojects; (ii) emphasis on the active participation of beneficiaries in project implementation; and (iii) training of beneficiaries and technicians in participatory methodologies. This approach served the Project well throughout its life specially in its approach to the indigenous communities. 64. Readiness to implement: Initial delays faced by the Project indicate gaps in implementation preparation. Some of the issues emerging early on were (i) delays in signing of agreements between MAG and National Land and Rural Development Institute (INDERT), the Indigenous People’s Institute of Paraguay (INDI) and National Service for Animal Health and Quality (SENACSA); (ii) delays in the hiring of a human resource firm to contract necessary staff for the PMU, and (iii) delays in conducting the baseline surveys. 29 Information was on sustainable agricultural practices, on services provided by the Project such as assistance with acquiring identity cards practices, and informational messages such as those related to COVID-19 in the Project on masking social distancing, handwashing etc. 17 Official Use The World Bank PY PRODERS Sustainable Agriculture & Rural Development (P088799) 65. Project design was relatively complex with regards to the institutional capacity context. In addition to the main activities of the Project built around supporting sub-project implementation, original Project design also included other very different activities such as research studies (under Component 2.2), and capacity building activities for SENACSA and the Vice-Ministry of Livestock. B. KEY FACTORS DURING IMPLEMENTATION Factors subject to the control of implementing entities 66. There was significant transition of key figures involved in the Project over its lifetime . Between 2009 and November 2020, there were five different national administrations, eleven ministerial administrations in the MAG, six DINCAP Directors-General, and ten PRODERS General Coordinators. In addition to the learning curve associated with each managerial change, the transitions led to slowdowns in implementation as different administrations sought to independently review project activities. These transitions also caused slowdowns in approvals for hiring of staff, by delaying the procurement and confirmation of Project staff. 67. Modifications in implementation modalities agreed during the MTR helped the Project gain momentum over time. Following the MTR, the Project was restructured in June 2013. The scope of the Project was reduced (reduction in target number of subprojects and dropping of two subcomponents), and a number of administrative simplifications were agreed upon, such as limiting the number of financial transfers to subprojects to two and allowing the use of project funds by beneficiary committees to hire financial specialists 68. The Additional Financing allowed for the Bank’s continued engagement in the sector, but implementation was initially slow. Considering the Project’s low levels of disbursement and the slow implementation noted in the MTR conducted earlier in February 2013, the size of the AF is notable. However, the AF Project Paper notes that disbursement had increased (CY 2013 disbursements were 50 percent higher than CY 2012), and that the issues identified by the MTR had been addressed in the restructuring of June 2013. However, disbursements in the year 2013-2014 decreased slightly from the preceding year and the Project ratings were downgraded in the August 2014 Implementation Status Report (ISR). 69. Intensive supervision from the Bank’s side followed the effectiveness of the AF to help address implementation slowdowns: In order to address the administrative bottlenecks which had slowed Project implementation, the Project team conducted eight supervision missions between September 2014 (effectiveness of AF) and June 2015 to address issues such as: (i) delays in contracting a human resource firm to manage staff hiring (eventually 150 technical staff were hired without the firm); and (ii) challenges faced in procurement by communities due to difficulties in preparing needed documentation (restructuring in July 2015 helped communities contract accounting services which helped address this issue). 70. The targeting strategy changed from micro-catchments to selection based on poverty data: In December 2013, the Project shifted from a micro catchment strategy, which included poverty level and environmental degradation data, to one based solely on poverty data. The many other changes introduced in parallel to the change in the targeting strategy (based on the June 2013 restructuring preceding the approval of the AF discussed in the earlier paragraph) combined with limited data from the Project’s early phase make it difficult to evaluate the impact of this change. However, discussions with those involved in the Project prior to and following the change indicate that it was perceived as a positive shift. 18 Official Use The World Bank PY PRODERS Sustainable Agriculture & Rural Development (P088799) 71. Slowdown in implementation of subprojects in indigenous communities between 2014-2016. Following the cancellation of the contract in July 2014 with the service provider supporting the indigenous strategy, implementation slowed down for indigenous plans, but picked up pace in 2016 when another service provider was hired. This issue reflects some of the administrative challenges faced by the Project; the contract of the service provider for the indigenous strategy was ended unexpectedly, despite earlier commitments by MAG of renewal, and it took the Project a year and half to replace the provider because of the administrative and/or regulatory bottlenecks that complicated key functions such as hiring and/or renewing personnel contracts. 72. The Family by Family (FXF) strategy incorporated in a restructuring in 2017 reflected a change in strategy from community to individual families: The FXF strategy sought to improve the socio-economic condition of target beneficiaries but its strategy of providing specific input packages to individual families differed from the rest of the Project which was focused on community level commercial or productivity enhancement subprojects. By closing, this strategy comprised 8.5 percent of the Project’s beneficiary families. The strategy successfully targeted a more vulnerable (lower income) population amongst the campesino communities30. 73. Working with SENACSA entailed coordination challenges. The Project struggled after effectiveness to implement activities under Component 4.1 with SENACSA. This was partly attributable to unsuccessful coordination with SENACSA, because it has a high degree of financial and operational autonomy (around 95 percent of SENACSA’s total budget is financed by the private sector through fee-based services). Eventually, a scaled down version of Component 4.1 was implemented (provision of computers, routers, and lab equipment). Factors outside the control of government and/or implementing agencies 74. Adverse Weather Events and price fluctuations negatively affected production, but limited data is available to assess the extent of the impact: Significant adverse events weather include the drought conditions that affected agricultural production in the 2011/2012 and 2017/2018 growing seasons, and flooding in 2015/16 and 2016/17. Looking at the producer level prices of maize and cassava, the two main crops of PRODERS beneficiaries, a steady decline is evident in maize prices after 2013, while cassava prices dropped by 38 percent from 2014-2015, but began to rise following this sharp drop. 75. COVID-19: COVID-19 and the associated health and economic crises affected Paraguay near the end of the Project’s life. The strict lockdown imposed by the Ministry of Health to preclude COVID-19 spread prevented technicians from visiting rural communities to monitor progress and to close subprojects. A strategy adopted by PRODERS included the conduct of radio awareness campaigns, including in indigenous languages, on steps that would reduce the spread of the virus. Additionally, PRODERS supported affected project beneficiaries through procurement of farm inputs and small machinery worth US$3.5 million. IV. BANK PERFORMANCE, COMPLIANCE ISSUES, AND RISK TO DEVELOPMENT OUTCOME 30 Families were identified through a survey conducted by Secretaria de Tecnica de Planificacion to identify households in target regions living in extreme poverty and involved in the agriculture sector. 19 Official Use The World Bank PY PRODERS Sustainable Agriculture & Rural Development (P088799) A. QUALITY OF MONITORING AND EVALUATION (M&E) M&E Design 76. The scope of the M&E framework was comprehensive, designed to track and measure implementation and demonstrate results for the productive, socio-economic, and environmental elements of the Project. The key objectives of the M&E system at design, as included in Subcomponent 5.2 (Designing and Implementing a Monitoring and Evaluation System), were: (i) to monitor project progress towards objectives and develop a baseline status (ii) promote the responsible use of resources given the objectives pursued; (iii) provide information and receive feedback from those involved; and, (iv) generate methodologically sound inputs for the measurement, analysis, and dissemination of project results and lessons learned. 77. The many significant changes in the Results Framework throughout the Project’s life reflect poorly on the original RF, since most were driven primarily by its unsatisfactory design. The RF in the PAD consisted of 9 PDO Indicators and 64 Intermediate Results Indicators. By closing, the RF consisted of 6 PDO Indicators and 18 Intermediate Results Indicators (see detailed table with all changes and their rationale in Table A7.2). At project closing, only 3 of the original 9 development indicators were maintained (with adjustments) and 56 Intermediate Results Indicators had been removed, in addition to making 23 modifications and 10 additions of new Intermediate Indicators. The rationale for many of these changes included: (i) poorly defined indicators, i.e., lack of clarity on what the indicator was measuring and how this would be done; and (ii) repetition - there were multiple indicators capturing the same outcome. M&E Implementation 78. The project struggled with implementation of an effective M&E system. The issues with the M&E system were noted repeatedly in project Aide Memoires and in the Mid-Term Review conducted in 2013. In May 2016, a technical support mission from FAO recommended that M&E be given much higher priority to effectively address weaknesses that had prevented the accurate measurement of key PDO indicators and other project achievements to date. This issue was compounded by the frequent rotation of M&E staff, depriving the Project of an institutional memory in this area. The challenge with weak M&E systems has been noted in the documentation of other Projects in Paraguay, including in the ICR for Natural Resources Management Project (PARN), indicating that this may be a systemic issue for projects in this context. This suggests the need for closer study, and the potential introduction of more flexible, simpler, and realistic M&E approaches that move away from the “gold standard” (see below). 79. Challenges with the M&E system prevented a baseline on which formal impact evaluation could rely. After project effectiveness, the plan was to identify a control group in the micro-watersheds not served by the Project to conduct a baseline, and to prepare the technical specifications of the M&E system by the end of 2010. However, delays in the establishment of an effective M&E system prevented collection of baseline data even once Project activities were well underway. 80. The RF was substantially modified during the seven restructurings for simplification and clarity. During the life of the Project multiple Bank teams looked to improve on the RF, modifying it substantially. The teams’ modification made the indicators precise, measurable, and clearer. 20 Official Use The World Bank PY PRODERS Sustainable Agriculture & Rural Development (P088799) 81. The Project relied on three sources of information to inform the RF and provide guidance on project progress. a. The PRODERS database collected information on project activities, including training for extension staff and beneficiaries, number of sub-projects being financed, assistance provided to communities on the provision of potable water, electricity and on land titling, for example. Shortcomings included: (i) not collecting information on four of the six final PDO Indicators and on key Intermediate Results Indicators such as adoption of new technologies by beneficiaries; (ii) gaps in information for indicators on which it did keep records, e.g., registering the number of beneficiary families but not tracking the number of family members, needed to calculate direct beneficiaries; and, (iii) data collection on some of the indicators started only mid-way through project implementation, e.g., good forestry practices adopted on the Project's beneficiary farms only started to be tracked in 2015. b. The Project also utilized the RENABE (Registro Nacional de Beneficiarios) database to track the three main indicators and for assistance in identifying beneficiaries. The Project identified beneficiaries for the Family-by-Family strategy in 2017 using this database but due to its limitations, it was not utilized to report on the indicator values in the final ISR or this ICR. Identified limitations were: (i) restriction to peasant beneficiaries and not including data on indigenous communities; and (ii) data collection started later in the project lifetime, thus the sample of PRODERS beneficiaries in the database was not representative of all the geographical regions covered by the Project even for campesino beneficiaries. c. The third source of data was the IICA survey which has been discussed in the earlier section on Efficacy. The WB team noted the importance of an external evaluation of the Project in the Aide Memoire in May 2018, following which IICA was hired and produced a methodologically rigorous, well-documented report. 82. The main PDO indicators, on income increase, productivity and poverty decrease were updated four times across the 12.5 years of the Project. First reported in 2014, the indicator values were based on a survey conducted with 500 participants (400 beneficiaries and 100 control participants). They were updated a second time in 2017 when, during the restructuring, both the target and indicator values were changed. The third update was in the May 2018 ISR, based on calculations from the RENABE database. The last update reported in the 2020 ISR, based on the results of IICA’s 2019 survey, which rigorously examined, analyzed, and reported updated results for all indicators in the RF (summary in A7.2), greatly improving the evidence base for asserting project achievements in the ICR. M&E Utilization 83. However, the challenges with the M&E system detailed above with regards to design and implementation of the M&E system and the significant changes in the indicators across the life of the Project, meant that the Project did not have a consistent and systematic source of information/data to guide its progress and inform planning during its life. To overcome the challenges of implementing a successful communication strategy on Project progress, or to effectively disseminate results, the World Bank team and the PIU also relied on data on disbursement to subprojects, anecdotal evidence shared by the extension officers, and field visits to beneficiary communities for a comprehensive view of project progress and the issues being faced. The IICA report discussed earlier makes the dissemination prospects/potential more positive, and the messages clearer and better- substantiated. 21 Official Use The World Bank PY PRODERS Sustainable Agriculture & Rural Development (P088799) Justification of Overall Rating of Quality of M&E 84. Overall, M&E performance and quality is rated as Modest. The issues with the design and challenges experienced during implementation of the M&E system limited its use as a practical tool throughout implementation and beyond. The World Bank flexibly and repeatedly adjusted the PDO and Results Framework to simplify and improve the quality of the indicators to establish a methodologically sound basis for assessing project achievements, this did not outweigh the persistent weaknesses during implementation. B. ENVIRONMENTAL, SOCIAL, AND FIDUCIARY COMPLIANCE 85. The Project safeguards rating was Moderately Satisfactory (MS) at closing. The good practices promoted by the Project were highlighted, but the monitoring of investments and sustainability of the interventions left some room for improvement. The World Bank supervision missions helped generate recommendations and adjustments for improvements that were progressively and satisfactorily implemented. Environmental Aspects 86. Environmental Safeguards compliance was rated Moderately Satisfactory throughout the Project’s life. The Project was classified as Category B and activated four World Bank environmental safeguards during the preparation and implementation of the Project in its different phases: BP/OP 4.01 Environmental Assessment, BP/OP 4.04 Natural Habitat Conservation, BP/OP 4.36 Forest Conservation and OP 4.09 Sustainable Pest Management. Performance was as follows: a. The Project promoted practices that had a positive environmental impact including promotion of green fertilizers; reforestation with native and exotic species; adoption of agroforestry systems (e.g., silvo- pasture, windbreaker curtains, mixed home gardens); and reforestation of the native forest. b. PRODERS' investments in the environmental area, reflected in the subprojects, encouraged forest plantations implemented and managed to meet the demand for household firewood and to lower the pressure of use on native forests. A key example within indigenous communities was replacing use of native forest with exotic tree species like eucalyptus to meet firewood demand for the drying process of yerba mate. c. Integrated pest management techniques were disseminated, focused on biological controls, and types of parasites and tools for behavioral control of pests and insects. However, one of the recommendations by the Environmental Monitoring report was the need to monitor the use of pesticides, especially in summer months, against attacking cutting ants, and to intensify training on integrated pest control. Social Safeguards 87. The Project was classified as Category B and triggered Indigenous Peoples (OP 4.10) to extend its benefits to indigenous groups. An Indigenous Strategy was published on the Bank’s website and disseminated widely in- country. 88. Social Safeguard Performance and compliance was rated satisfactory through the life of the Project because: (i) the PMU was well-equipped with a fully dedicated team to manage the Indigenous Strategy at the Ministry level, duly supported by indigenous facilitators at the local level; and (ii) PRODERS reached or exceeded the goals 22 Official Use The World Bank PY PRODERS Sustainable Agriculture & Rural Development (P088799) established for the implementation of OP 4.10 in terms of development and investment plans, access to water and/or electricity, access to identity documents and support for certification of land tenure of indigenous communities, while also maintaining an inclusive and participatory approach with indigenous leaders and communities. Highlights also include the Project’s overall efforts to build engagement with indigenous communities, and the successful use of local facilitators. 89. The Indigenous Strategy was formulated based on consultations with the representatives of the different groups of indigenous people of Paraguay. The Project Preparation Team initially conducted consultations with indigenous leaders, INDI technical staff, technicians working on the Indigenous Component of the PARN and representatives of Indigenous NGOs working in the selected areas.31 Fiduciary Aspects 90. Financial Management (FM) performance ratings ranged from Satisfactory to Moderately Unsatisfactory (MU) and the FM risk rating was High throughout project implementation. The MU rating in November 2015 was driven by: (a) delays in appointing key PMU staff; (b) failure to reinforce FM staffing in view of the expanded activities to be financed under the Additional Financing Loan; and, (c) failure to complete the process for extending the contract of the concurrent auditor to carry out subproject audits. PRODERS’ implementation was complex, with transfers/grants to individuals, and geographically dispersed small rural and indigenous communities which, together with the limited FM capacity of the PMU, were major elements of the High FM risk. Other key aspects related to FM are: a. The concurrent subproject audits of beneficiary eligibility, procurement processes, uses of funds and documentation of expenses did not highlight any significant issues. All the Project’s Financial Statement Audit Reports were received on time or with a delay of less than four months, except for the Project’s first audit which exceeded that limit. All the Financial Statement Audit Reports expressed unmodified (i.e., clean) opinions. All Interim Financial Reports (IFRs) received during the project lifetime were considered acceptable and the majority (68 percent) were received by the due date. The Project’s Designated Account is fully documented. b. DINCAP’s planning, budgeting, accounting, internal controls, funds flow, financial reporting, and auditing arrangements have: (a) correctly and completely recorded all transactions and balances relating to the Project; (b) facilitated the preparation of regular, timely and reliable financial reports/statements; (c) safeguarded the Project’s assets; and (d) been audited providing reasonable assurance that the proceeds of the loan were used for the intended purposes. Procurement Compliance 91. Procurement Compliance performance ratings were Moderately Satisfactory throughout the Project. The public procurement regulatory system in Paraguay is consistent with the Bank's Core Procurement Principles and is in accordance with international good practices. The following summarizes the compliance history: a. Appropriate procurement approaches, clear procurement documents and robust evaluation reports were achieved only after much back and forth during the Bank’s review processes. This situation occurred due 31Workshops were held with representatives of 13 Indigenous Associations from the departments of Caazapá, Canindeyú, San Pedro, Alto Paraná, Amambay, Caaguazú, and Concepción. 23 Official Use The World Bank PY PRODERS Sustainable Agriculture & Rural Development (P088799) to: (i) procurement staff with limited capacity; (ii) intervention of actors in the Ministry (out of the Project Management Unit (PMU)), not familiar with Bank policies, who usually demanded non-applicable requirements from the local law; and (iii) duplicated and cumbersome internal procedures within the MAG, b. With regards to subproject implementation, initially communities struggled with preparation of the documentation needed for procurement. However, following the restructuring in 2015 they were permitted to allocate part of their budget to acquire accounting services, which helped smooth the procurement process from their end. C. BANK PERFORMANCE Quality at Entry 92. Key elements relevant for assessing the project’s quality at entry are as follows: a. Project was relevant to the context at appraisal, but the PDO was complex, and the Project faced many delays in launching. The Project adopted an innovative approach to addressing the challenge of reducing poverty amongst the poorest farmers/vulnerable groups through increased productivity while also promoting sustainable practices to deal with natural resource degradation. But the PDO included terms not clearly defined and the initial delay in implementation indicates significant issues at the preparation stage. 32 b. The implementation approach for the core set of project activities (the community level sub-projects) was logical, but the scope of activities was broad. Project design stressed the strengthening of the producer organizations and indigenous communities as a precondition for implementation of project activities on the ground. Participatory, demand-driven planning was emphasized. However, the scope of the activities was ambitious, stretching the institutional capacity of the implementing partner. c. The Project specifically targeted vulnerable groups in poor regions. The regions selected for project focus were those with the lowest socio-economic indicators. The Project explicitly targeted indigenous communities within these regions, and while RF indicators were not gender disaggregated in the PAD, the importance of targeting women farmers was discussed in the PAD. d. The M&E system/arrangements were not clearly described at entry. The Results Framework was fragmented and duplicative, requiring substantial change over the Project’s lifetime. (See Section IVA). e. Fiduciary aspects (procurement, FM, and safeguards) were adequately assessed, but persistent issues suggest a more careful assessment was needed. FM and procurement capacity assessments were conducted during preparation for the main implementing agencies, and action plans and training were designed to boost those agencies’ capacity. The required safeguards assessments and plans were prepared. However, persistent procurement issues and slow disbursements to subprojects suggest that a more careful ex ante assessment would have been appropriate to smooth implementation. f. The project risk assessment was realistic, but mitigation measures for risks related to institutional capacity proved insufficient. The Project risk assessment considered multiple risks and recommended mitigation strategies, however those proposed for risks related to institutional capacity (significant 32The earliest Aide Memoire is from a mission in Oct 2005. The Project was approved by the Bank’s Board in January 2008. Part o f the Project’s preparation costs were borne by a Japanese Trust Fund: Paraguay TF053772. 24 Official Use The World Bank PY PRODERS Sustainable Agriculture & Rural Development (P088799) consultations, public accountability, and capacity building) were insufficient to prevent slow implementation for the initial years of project activities. Quality of Supervision 93. Key elements relevant for assessing project supervision are as follows: a. Initial delays in implementation: The steep learning curve resulted in substantial implementation delays: a year before its original closing date (December 2013) the Project had only disbursed 33 percent of the loan. The Mid-Term Review (MTR) originally scheduled for June 2011 was delayed repeatedly because of high turnover amongst Project Coordinators and Bank Task Team Leaders33. b. Supervision missions mobilized a wealth of technical support sourced from World Bank Headquarters, the Country Management Unit, and other agencies such as the FAO. World Bank Teams carried out 27 implementation missions between project effectiveness (June 2009) and closing (November 2020). The missions comprised teams with relevant expertise, engaged in field visits and met with the PRODERS PMU team and relevant stakeholders to assess progress and challenges. c. The World Bank’s focus was generally proactive and supportive. The project was restructured seven times, suggesting strong proactivity in project teams’ approach to addressing project implementation challenges. Extensions to the Project closing date enabled the Project to substantially achieve its objectives. The restructuring following the Mid-Term Review was the most extensive and resulted in significant administrative and operational simplifications. d. The Additional Financing followed an MTR which resulted in scaling down and cancellation of some activities due to non-implementation. Despite the timing of the AF and the implementation challenges faced, it served as a vehicle to continue/sustain the Bank’s engagement with the country, to deepen and expand coordinated agricultural and environmental management, and to intensify the Project’s development effectiveness. e. There was relatively high turnover of Bank Task Team leadership during the Project’s life. Seven different TTLs led the Project from preparation to closing. However, two of the seven TTL’s served for nearly 8 of the Project’s 12.5-year lifespan. f. Challenges with the M&E system prevented teams from accurately assessing status of activities at a given moment: This was the case during the restructuring in 2017 when the Project team was unable to assess the achievement of targets resulting in adjustments, which were later assessed as unnecessary. g. The World Bank worked with the PRODERS project team and other executing agencies to ensure orderly project closure and sound transition arrangements for the regular operation of supported activities. This included determining responsibility and arrangements for the completion of some incomplete investments and ensuring the timely delivery of the Impact Evaluation and the Borrower Completion Report (BCR). 33 The Project was prepared on the heels of the Natural Resources Management Project I (PARN) that closed in March 2006, which had also piloted a similar sub-project model. However, for PARN key administrative and contracting functions were carried out by the United Nations Development Program (UNDP) instead of the National Directorate for Project Coordination and Administration (DINCAP) Implementation Completion Report for the Natural Resources Management Project (December 26, 2006). 25 Official Use The World Bank PY PRODERS Sustainable Agriculture & Rural Development (P088799) Justification of Overall Rating of Bank Performance 94. The World Bank’s overall performance is rated Moderately Satisfactory, due to modest shortcomings in both Quality at Entry and Quality of Supervision (as described earlier). These shortcomings are mainly associated with the complexity of project design given the challenging institutional context for project implementation, limitations in M&E and the RF, and questions associated with the size of and rationale for the AF. These shortcomings were at least partially overcome owing to the close supervision support provided by the World Bank team and the team’s effectiveness in working with the Borrower to address the large number of challenges that arose during implementation, through tools such as restructuring. D. RISK TO DEVELOPMENT OUTCOME 95. The main risk to the development outcome of the Project is the sustainability of the sub-projects financed under the Project, which is subject to multiple factors. The participatory approach deployed under PRODERS could increase sustainability by creating a greater sense of ownership of the activities; however, the organizations in the survey sample tended to be less formalized at closing which would make it difficult for the organizations to succeed in an increasingly formalized Paraguayan economy. The limited evidence from the IICA survey is positive: (76 percent of subprojects were still in operation two years post-completion;34 and (b) 97 percent of participants from the PIC and PIF projects indicated that they would continue to utilize the diversification practices and new sustainable technologies introduced by the Project35. 96. Alternate “multiplicative” models for providing technical assistance are needed to help improve the sustainability of the subprojects. The risk to subproject sustainability and continued use of the new improved practices adopted can be mitigated by multiplicative models that are less labor intensive then the traditional extension approach such as: e-extension, training of trainers/lead farmers and farmer field schools. The Project utilized the lead farmer approach and MAG is developing a call center for farmers to utilize such models for technical support. 97. Market risk associated with prices, production quality, and timing of delivery for honoring contracts could potentially hamper the profitability of many of the Project’s productive investments. The Project contributed to equipping small farmers with a deeper awareness of market demands and more integrated production systems. However, the preparedness of PRODERS beneficiaries for market risk is likely heterogenous depending on how well-structured and matured the beneficiary community organizations are. 98. The Project has also contributed to a better understanding of the risks associated with external weather events and weather variability, through encouraging adoption of sustainable practices and the Environmental Education Program which targeted teachers and students. Furthermore, MAG is disseminating meteorological bulletins and investing in agro-meteorological infrastructure to closely monitor extreme weather events and provide alerts to producers through the Project for the Improvement of Family and Indigenous Agriculture (PROMAFI, acronym in Spanish), funded by IFAD. 34 This indicator is limited to only those subprojects from the sample that had already finished at least two years prior to the survey date (2017), 92 out of the 185 sampled. Respondents from indigenous communities might have misinterpreted the question. This, in addition to the small sample of indigenous organizations for this question (only 12 organizations met the criteria of being more than 2 years old), suggests that information on indigenous communities from this question is unreliable. 35 PICI beneficiaries were not asked this question 26 Official Use The World Bank PY PRODERS Sustainable Agriculture & Rural Development (P088799) 99. The Project used a highly participatory model in working with producer organizations, farmers and indigenous communities. This emphasized strengthening local organizations, learning exchanges, and beneficiary empowerment. Participatory models can reduce initial reluctance to adopt improved methods and increase the likelihood of continued use of improved technologies and practices. V. LESSONS AND RECOMMENDATIONS 100. Inclusion of technical experts in M&E during project preparation and implementation is essential. The key lessons from the challenges faced by the M&E system during the Project’s life are: (a) the project preparation team should consist of an expert in M&E so that detailed strategies reflecting on-the-ground realities can be established from the start to reduce challenges with M&E during the project lifetime; (ii) specialized support should be brought in during implementation if necessary to design and set up an M&E system, and oversee consistent and methodologically sound monitoring practices, data systems and evaluation products. 101. Invest project resources in developing more sustainable models for delivering technical assistance. The Project relied heavily on technical assistance provided to farmers for training in new technologies and practices, including on financial matters; however, this task force was tied to the life of the Project. Technical support programs should include multiplicative models of extension and strengthen the capacity of the line ministry’s extension departments to successfully manage these programs in the post-project period. 102. Participatory approaches are essential for engaging with vulnerable people such as the indigenous communities. The Project conducted workshops at design and regularly throughout the life of the Project and used different communication mediums (such as radio shows) to remain in tune with the communities’ needs. However, one gap that serves as a recommendation for future projects is strengthening INDI´s institutional capacities to deliver the Project’s messages and support its implementation, acknowledging the habits and customs of such target beneficiaries. 103. The Project’s model of technical assistance along with financing communities for sustainable, productive, and diversified agricultural activities increased use of improved practices. More than 80 percent of respondents were using sustainable production practices at the time of the IICA survey or had implemented more diversified production practices. This is critical as the global need for adoption of sustainable agriculture production practices is becoming more intense. It is recommended that projects exploit all opportunities to promote these. 104. Customize approaches to accommodate different types of beneficiaries: Different levels of group formalization suggest that different approaches suit different types of groups. Less formalized groups for example would need greater and sustained technical support. Additionally, more commercially oriented subprojects would in general be suited for more formalized groups. A key lesson therefore is to better characterize and understand the limitations for the different types of beneficiaries at the design stage and to adapt approaches accordingly. 105. While the many contextual factors limit definitive assertions, insights from PRODERS suggest that in Paraguay, the community approach has advantages over targeting individuals. While community approaches requires greater coordination and training, specifically support for organizational development, key advantages over an individual approach include: (a) economies of scale in terms of commercial activity and the efficient use 27 Official Use The World Bank PY PRODERS Sustainable Agriculture & Rural Development (P088799) of public resources; (b) improved learning amongst farmers, for example through use of trainers/lead farmers; and, (c) enhancement of the support system available to farmers, as indicated from the focus group discussion with female farmers participating in market fairs. Finally, it should be noted that while the Family-by-Family approach was able to reach more vulnerable families compared to the community approach (as evidenced by their lower incomes), it was far more limited in its scope of activities. . 28 Official Use The World Bank PY PRODERS Sustainable Agriculture & Rural Development (P088799) ANNEX 1. RESULTS FRAMEWORK AND KEY OUTPUTS A. RESULTS INDICATORS A.1 PDO Indicators Objective/Outcome: To improve socio-economic condition of Small-Scale Farmers and Indigenous Communities Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion 1. Number of targeted farms Number 0.00 10000.00 28,172.00 that increase their agricultural income by at 30-Jun-2009 05-Jul-2017 30-Nov-2020 least 30% Comments (achievements against targets): Target exceeded, achieved at 281%. Methodology-Indicator value is taken from the IICA report commissioned near the end of Project by Borrower. IICA report used a representative sample of 185 workshops (with 4060 beneficiaries) and 460 F*F beneficiaries. The indicator is based on a before and after comparison of agriculture income. However, because no baseline data is available income values for "before" values are based on respondents' recall (respondents were asked about the year before the subproject started, which is determined with PRODERS administrative records). After values are based on agriculture income for the year 2018/2019. (Full survey was conducted in October 2019 for all strategies except F*F, for which the survey was conducted in October 2020. Figures for the other 3 strategies were updated for the year 2020 using price and production data for key agricultural products using secondary data). These figures from the last ISR were updated based on updated analysis from IICA, which is utilized in the ISR. These include 1) addition of the Family by Family beneficiaries and 2) Updating price and production to the agriculture year 2019/2020 from 2018/2019 29 The World Bank PY PRODERS Sustainable Agriculture & Rural Development (P088799) Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion 2. Number of targeted Number 0.00 10000.00 28,180.00 families that are able to pass above the poverty line (with 01-Jan-2009 05-Jul-2017 30-Nov-2020 per-capita income above Gs.446.798 per month in rural areas – expressed in Guaranies October 2016) OLD: At least 50% i Comments (achievements against targets): Target exceeded, achieved at 281%. Methodology-Indicator value is taken from the IICA report commissioned near the end of the Project by Borrower. Income values were calculated for the period 2018-2019 to determine status against the poverty line. This indicator utilized individual beneficiary income data (for 925 survey respondents) instead of the workshop level observations used in the earlier indicator These figures from the last ISR were updated based on updated analysis from IICA, which is utilized in the ISR. These include 1) addition of the Family by Family beneficiaries and the 2) Updating price and production for agriculture income to the agriculture year 2019/2020 from 2018/2019 Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion 3. Percentage of farms with Percentage 0.00 25.00 32.20 30 The World Bank PY PRODERS Sustainable Agriculture & Rural Development (P088799) land productivity (by ha) 01-Jan-2009 06-Dec-2013 30-Nov-2020 increased at least by 25 percent through the application of productive practicespromoted by the project Comments (achievements against targets): Target exceeded, achieved at 129%. Methodology-Indicator value is taken from the IICA report commissioned near end of Project by Borrower. Increase in agriculture production was based on yield increase n two commodities maize and cassava (since most beneficiaries produced either one of these). A 25% increase in yield for either commodity was recorded as an increase for the sake of teh indicator. Production values are based on "before" values (respondents were asked about year before the subproject started, based on PRODERS administrative records) and after values which were for year 2018/2019 (survey took place in 2019) except for F*F beneficiaries who were surveyed later in October 2020. These figures from the last ISR were updated based on updated analysis from IICA, which is utilized in the ISR. These include 1) addition of the Family by Family beneficiaries and the 2) Updating price and production to the agriculture year 2019/2020 from 2018/2019 Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion 4. Direct project beneficiaries Number 0.00 256000.00 225,000.00 249,662.00 30-Jun-2009 06-Dec-2013 05-Jul-2017 30-Nov-2020 5. Female beneficiaries Percentage 0.00 40.00 52.70 31 The World Bank PY PRODERS Sustainable Agriculture & Rural Development (P088799) Comments (achievements against targets): Target exceeded, achieved at 110% The direct beneficiaries of the Project include the total number of owners of farms benefiting from subprojects in PIF, PIC, PICI and FxF, extracted from the PRODERS database, was multiplied by the average number of household members, determined in the external surveys conducted by IICA, in 2019 for PIF, PIC and PICI and in 2020 for FxF. It should be clarified that, in previous calculations, the average number of family members, used for calculation, was a standard commonly used by the MAG (4 members per farm for peasant community plans, 6 for indigenous people and 6.3 for FxF), which has not had a recent update. Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion 6.A Associative management Percentage 0.00 80.00 84.80 capacity increased:80% Community Development 30-Jun-2009 06-Dec-2013 30-Nov-2020 Groups (campesinos) with business proposals oriented to business plans to access markets and inclusive value chain Comments (achievements against targets): Target achieved 106% of target 32 The World Bank PY PRODERS Sustainable Agriculture & Rural Development (P088799) Methodology-Indicator value is taken from the IICA report commissioned near end of Project by Borrower. Values are for PIC subprojects and the subprojects with indigenous communities (PIF projects are excluded because they were the Projects before this indicator was introduced in 2013 and F*F projects are excluded because those were at individual level). This indicator maintained different criteria for measurement for Campesino subprojects (PIC) and for indigenous organizations (PICI). The criteria for Campesino producer organizations for having business proposals oriented towards access markets and inclusive value chains was translated as the presence of four of five key documents in their business plans. Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion 6.B Associative management Percentage 0.00 50.00 62.00 capacity increased:50% of indigenous groups with 12-Jun-2013 06-Dec-2013 30-Nov-2020 business proposals oriented to business plans to access markets and inclusive value chai (P Comments (achievements against targets): Target exceeded, achieved at 124% of target Value is based on the IICA report commissioned by the Borrower. The criteria for indigenous organizations is different compared to the campesino community projects. For indigenous organizations, this was translated as the investment plan including the words that they would market at least one agricultural, forestry or livestock product, along with a brief qualitative description of its marketing 33 The World Bank PY PRODERS Sustainable Agriculture & Rural Development (P088799) A.2 Intermediate Results Indicators Component: C1 -- Community Organization Development and Capacity Building Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion 7. Number of technicians Number 0.00 290.00 345.00 440.00 trained and operating in the project areas 30-Jun-2009 30-Jun-2009 06-Dec-2013 30-Jul-2020 Comments (achievements against targets): target achieved, exceed at 127% of target The measurement was based on PRODERS data and records and was part of the results framework from the start of the Project. PRODERS had a structured training program for its technicians which included a few of the Project's own technical and administrative staff and mostly field technical staff. The difference from the last ISR occurs because the list of individuals was reviewed again and some individuals who had appeared again were removed from the calculation which is why this has reduced from 482 to 440 Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion 8. Number of people reached Number 0.00 8000.00 24,000.00 64,469.00 by Environmental Education Program 30-Jun-2009 30-Jun-2009 06-Dec-2013 30-Nov-2020 Comments (achievements against targets): 34 The World Bank PY PRODERS Sustainable Agriculture & Rural Development (P088799) Target exceeded 268% of the target. This indicator was measured based on PRODERS data and records of individuals trained under the Project's environmental education Program. Consists mostly of students and teachers Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion 22. Number of indigenous Number 0.00 60.00 70.00 communities which gained access to water and/or 30-Jun-2009 05-Jul-2017 30-Nov-2020 electricity thanks to the project Comments (achievements against targets): Target achieved, 117% of target This indicator was measured based on PRODERS records, and was included in the results framework in July 2017. 60 indigenous communities gained access to safe water, 10 to electricity and 15 to both supplies, benefiting a total of 3,643 families Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion 23. Number of indigenous Number 0.00 4000.00 5,923.00 people to whom a formal identity card has been 30-Jun-2009 05-Jul-2017 30-Nov-2020 35 The World Bank PY PRODERS Sustainable Agriculture & Rural Development (P088799) provided Comments (achievements against targets): Target exceeded, 148% of target. The measurement was based on PRODERS and INDI records. PRODERS worked with INDI to bring the equipment needed to certify the documentation process and coordinated the arrival of relevant staff from key institutions to the communities. It also provided resources to raise awareness in communities before the staff arrived. Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion 24. Number of indigenous Number 0.00 80.00 105.00 communities that have received land titling support 30-Jun-2009 05-Jul-2017 30-Nov-2020 Comments (achievements against targets): Target exceeded 131% of target Support for land titling benefited 105 indigenous communities with 8,523 members for a total of 52,351 hectares entitled or in process. These 105 communities recieved support from the Legal Team hired by PRODERS and commissioned to the Paraguayan Indigenous Institute (INDI) under the MAG- INDI Convention. Component: C2 -- Rural Extension and Adaptive Research 36 The World Bank PY PRODERS Sustainable Agriculture & Rural Development (P088799) Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion 12. Number of producers Number 0.00 600.00 2,500.00 2,782.00 trained as promoters in sustainable production and 30-Jun-2009 10-Jun-2013 06-Dec-2013 30-Nov-2020 financial/commercial matters Comments (achievements against targets): Indicator exceeded by 111% This indicator was measured based on PRODERS data and records and was included in the Project results framework in the first restructuring of the first phase of the project, in June 2013. The 2782 farmers are producers of selected farms who were previously trained and assisted by their extensionist technician but were now provided additional training, with support from the specialist in the organization and associative management, with the goal that they could provide support to other project producers in sustainable production issues, as well as commercial and financial. The farms of these 2782 farmers were used for additional activities during the Project such as field days (structured training for other farmers), demonstrations, and educational tours. Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion 13. Percentage of Percentage 0.00 80.00 82.00 beneficiaries trained that have adopted diversification 30-Jun-2009 05-Jul-2017 30-Nov-2020 and new sustainable technologies to increase production & produciivity 37 The World Bank PY PRODERS Sustainable Agriculture & Rural Development (P088799) Comments (achievements against targets): Target achieved at 103%. This indicator was based on the IICA survey commissioned by the borrower near the end of the Project. The value of 82% is based on a response to question on whether the respondents had diversified or adopted a sustainable technology or practice.Examples of sustainable practices include utilization of green manure crops, crop rotation, growing leguminous crops, minimum tillage, and cover crops. Examples of diversification practices include the production of milk and eggs, raising small animals, and fruit production. Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion 14. Ha under good forestry Hectare(Ha) 0.00 5000.00 6,000.00 5,430.00 practices 30-Jun-2009 30-Jun-2009 06-Dec-2013 30-Nov-2020 Comments (achievements against targets): Target substantially achieved at 91% Data was taken from the PRODERS database. “Good forestry practices” were defined as agroforestry, reforestation with exotic, native and fruit trees, natural regeneration, and protection of yerba mate trees. Component: C3 --Sustainable Rural Development Fund (FDRS) Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion 38 The World Bank PY PRODERS Sustainable Agriculture & Rural Development (P088799) 9. Families/farms with Number 0.00 12600.00 30,000.00 49,199.00 investment proposals 30-Jun-2009 30-Jun-2009 06-Dec-2013 30-Nov-2020 Comments (achievements against targets): Indicator was exceeded at 164%. This indicator includes families from PIF (10226), PIC(31097) and PICI (7876) strategies. Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion 10. Community Investment Number 0.00 480.00 1,200.00 1,180.00 Proposals financed and implemented (PIC) 30-Jun-2009 30-Jun-2009 05-Jul-2017 30-Nov-2020 Comments (achievements against targets): Target substantially achieved at 98%. This indicator was measured based on PRODERS data and records Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion 11. Number of Indigenous Number 0.00 60.00 180.00 180.00 39 The World Bank PY PRODERS Sustainable Agriculture & Rural Development (P088799) Communities Development 30-Jun-2009 30-Jun-2009 05-Jul-2017 30-Nov-2020 Plans financed and implemented (PICI) Comments (achievements against targets): Target achieved at 100% This indicator was measured based on PRODERS data and records Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion 15. Percentage of Percentage 0.00 80.00 99.70 subprojects that complete disbursements and 30-Jun-2009 06-Dec-2013 30-Nov-2020 investments targets established in their management plan Comments (achievements against targets): Target exceeded at 125% This data was taken from the PRODERS database. It is the percentage of subprojects that made their disbursements according to those set out in their investment plan Indicator Name Unit of Measure Baseline Original Target Formally Revised Actual Achieved at 40 The World Bank PY PRODERS Sustainable Agriculture & Rural Development (P088799) Target Completion 16. Percentage of Percentage 0.00 80.00 66.40 subprojects that achieve 80% of their intended results 30-Jun-2009 06-Dec-2013 30-Jul-2020 from the investment plan Comments (achievements against targets): Target was partially achieved at 83%. This indicator was based on data collected during the IICA survey. The indicator value was based on the question "What percentage of their expected results in the investment plan were achieved?" and offered four ranks to facilitate the response (i.less than 50%, ii. between 50% and 80%, iii.between 80% and 100% and iv.more than 100%). This question was asked for the PIF and PIC groups, but was not asked in the PICI workshops. So the values only include PIF and PIC groups. Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion 17. Percentage of Percentage 0.00 75.00 76.40 subprojects that are functional 2 years after their 30-Jun-2009 06-Dec-2013 30-Jul-2020 closing date Comments (achievements against targets): Target achieved by 102%. The completion date of the subproject is defined as when the subproject stopped receiving disbursement from the Project account). It should be noted that this indicator is limited to only those subprojects from the sample that had already finished at least two years prior to the survey date 41 The World Bank PY PRODERS Sustainable Agriculture & Rural Development (P088799) (2017), which is less than half of the subprojects sampled (92 out of the 185 sampled). This is lower for PIC and PICI subprojects where less than 27% of those sampled (32 out of 116) had been completed by 2017 or earlier. Additionally, respondents from indigenous communities might have misinterpreted the question and understood the question as to whether they were still receiving disbursements from the Project. Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion 21. Families with improved Number 0.00 8000.00 19,314.00 housing (improved toilets, ovens, roof, etc.) 30-Jun-2009 05-Jul-2017 30-Nov-2020 Comments (achievements against targets): Target exceeded by 241% The indicator was measured based on PRODERS data and records. Project team created a classification of 5 types of improvements in housing or access to supplies that improve the quality of life within it, and counted the beneficiary families by type of intervention Component: C4 -- Animal Health Improvement Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion 18. SIGOR (Geographic Yes/No No Y Yes Information System for SENACSA Regional Offices) 30-Jun-2009 05-Jul-2017 30-Jul-2020 local units connected 42 The World Bank PY PRODERS Sustainable Agriculture & Rural Development (P088799) Comments (achievements against targets): Target achieved at 100% PRODERS contributed to the decentralized units of SENACSA both departmental and district, being connected through a regional connection system. To this end, PRODERS invested in computer equipment for 16 secretariats Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion 19. SIGOR (Geographic Yes/No No Y Yes Information System for SENACSA Regional Offices) 30-Jun-2009 05-Jul-2017 30-Jul-2020 on line coverage Comments (achievements against targets): Target achieved at 100% PRODERS contributed to the expansion of SIGOR's online coverage by providing communication equipment (20 Routers) for secretaries Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion 20. Biotery lab Yes/No No Y Yes improved/rehabilitated 30-Jun-2009 05-Jul-2017 30-Jul-2020 43 The World Bank PY PRODERS Sustainable Agriculture & Rural Development (P088799) Comments (achievements against targets): Target achieved at 100% PRODERS made investments in equipment and improvements in laboratory facilities. 44 The World Bank PY PRODERS Sustainable Agriculture & Rural Development (P088799) B. KEY OUTPUTS BY COMPONENT Objective/Outcome 1: Improvement of the socio-economic condition of Small-scale Farmers and Indigenous Communities in a sustainable manner Outcome 1. Number of targeted farms that increase their agricultural income by at least 30 percent”. Target:10,000 / Result: 28,172 Indicators (282 percent) 2. No. of targeted farms which are able to pass above the poverty line Target: 10,000 / Result: 28,180 (282 percent) 3. Percentage of farms that have increased their productivity (per Ha) by at least 25 percent through the application of productive practices promoted by the Project Target: 25 percent / Result: 32 percent (128 percent) 4. Direct project beneficiaries (Total) Target: 225,000 / Result: 249,662 (111 percent) 5. Direct project beneficiaries (Women) Target: 40 percent / Result: 52.7 percent (132 percent) Intermediate 1. Families with improved housing (improved toilets, ovens, roof, etc.) Target:8000 / Result: 19,134 (241 percent) Results Indicators 2. Number of producers trained as promoters in sustainable production and financial/commercial matters Target: 2500 / Result: 2,782 (111 percent) 3. Percentage of beneficiaries trained that have adopted diversification and new sustainable technologies to increase production & Productivity Target: 80 / Result: 82.3 (125 percent) 45 The World Bank PY PRODERS Sustainable Agriculture & Rural Development (P088799) Key Outputs by Component 2: Component Number of visits by technicians to communities: no target/36,000 (linked to the Training activities for individual producers: no target/11,128 achievement of Legal services hired for assistance with land titling: Yes the Objective/ Visits by INDI to indigenous communities for processing of identity cards: 360 Outcome 1) Component 3 Indicators 1.Amount of money transferred to peasant beneficiaries under Planes de Inversion Familia (PIF) Result: no target/ US$4,737,905 a. Amount of money spent on purchases of crop inputs, animals (poultry, ruminants), tools, farm machinery and vehicles for transporting good to and from markets: US$2,690,067 b. Amount of money spent on community productive facilities (for e.g. processing facilities for crop outputs): US$973,031 c. Amount of money spent on community drinking water systems, electrification, improvement of bathrooms, kitchens, overall housing improvement and cleaner stoves: US$584,817 d. Amount of money spent on hiring of services to assist with procurement of goods and financial management: US$96,237 e. Amount of money spent on establishment of nurseries, reforestation and agroforestry practices in soils with steep soils: US$393,753 2. Amount of money transferred to peasant beneficiaries under Planes de Inversion Communitaria (PIC) Result: no target/US$47,891,906 a. Amount of money spent on purchases of crop inputs, animals (poultry, ruminants), tools, farm machinery and vehicles for transporting good to and from markets:29,410,917 b. Amount of money spent on community productive facilities (for e.g. processing facilities for crop outputs): US$11,386,283 c. Amount of money spent on community drinking water systems, electrification, improvement of bathrooms, kitchens, overall housing improvement and cleaner stoves: US$3,176,387 d. Amount of money spent on hiring of services to assist with procurement of goods and financial management: US$999,461 e. Amount of money spent on establishment of nurseries, reforestation and agroforestry practices in soils with steep soils: US$2,918,859 3.Amount of money transferred to indigenous beneficiaries under Planes Comunitarios Indigenas (PICI) Result: no target/US$11,296,271 46 The World Bank PY PRODERS Sustainable Agriculture & Rural Development (P088799) a. Amount of money spent on purchases of crop inputs, animals (poultry, ruminants), tools, farm machinery and vehicles for transporting good to and from markets: US$7,226,628 b. Amount of money spent on community productive facilities (for e.g., processing facilities for crop outputs): US$444,259 c. Amount of money spent on community drinking water systems, electrification, improvement of bathrooms, kitchens, overall housing improvement and cleaner stoves: US$2,797,956 d. Amount of money spent on hiring of services to assist with procurement of goods and financial management: US$294,343 e. Amount of money spent on establishment of nurseries, reforestation, and agroforestry practices in soils with steep soils: US$533,085 5. Value of inputs transferred to beneficiaries under Familia por Familia Result: no target/US$4,140,683 Component 4: 1.Purchased computers and communication equipment worth: no target/US$293,212 2.Purchased lab equipment for and repairs to the Bioterio laboratory: no target/US$381,310 Component 5 1. Preparation of a budget for the implementation team (100 percent) 47 The World Bank PY PRODERS Sustainable Agriculture & Rural Development (P088799) ANNEX 2. BANK LENDING AND IMPLEMENTATION SUPPORT/SUPERVISION A. TASK TEAM MEMBERS Name Role Preparation Gerardo Segura Task Team Leader, Senior Rural Development Specialist Harideep Singh Senior Rural Development Specialist Reynaldo Pastor Senior Counsel Michael Carroll Lead Natural Resources Management Specialist Alexandre Arrobbio Senior Financial Management Specialist Andres Mac Gaul Senior Procurement Specialist Jose Janeiro Senior Finance Officer Frank Fragano Environmental Consultant Marcelo Sili Consultant Teresa Roncal Operations Analyst Diana Rebolledo Language Program Assistant Alvaro Soler Senior Rural Dev Specialist Diego Paysse Rural Development Specialist Nestor Bragagnolo Agronomist, Micro-catchment Specialist Judith Lisansky Senior Anthropologist Maria Isabel Braga Senior Environmental Specialist Emilio Rodriguez Senior Procurement Specialist Kamine Jorge Senior Counsel Karen Ravenelle-Smith Language Program Assistant Graciela Lituma Rural Development Specialist Humberto Costa Rural Development Specialist Matthew Cummins Junior Professional Associate Supervision/ICR 48 The World Bank PY PRODERS Sustainable Agriculture & Rural Development (P088799) Pablo R. Valdivia Zelaya, Edward William Bresnyan Task Team Leader(s) Gustavo Adrian Canu, Martin Ariel Sabbatella Procurement Specialist(s) Miguel-Santiago da Silva Oliveira Financial Management Specialist Francis V. Fragano Environmental Specialist Rahmoune Essalhi Team Member Tatiana Tassoni Social Specialist Angel Alberto Yanosky Environmental Specialist Maria Emilia Sparks Social Specialist Mario I. Mendez Procurement Team Brenda Mendieta-Arroyo Procurement Team Sofia Keller Neiva Team Member Antonella Celeste Perila Procurement Team Hira Channa ICR Primary Author Anna F. Roumani Consultant B. STAFF TIME AND COST Staff Time and Cost Stage of Project Cycle No. of staff weeks US$ (including travel and consultant costs) Preparation FY05 11.419 45,569.81 FY06 27.067 139,502.47 FY07 18.718 129,835.77 FY08 30.113 164,780.02 FY09 0 0.00 Total 87.32 479,688.07 Supervision/ICR FY08 .275 14,121.69 49 The World Bank PY PRODERS Sustainable Agriculture & Rural Development (P088799) FY09 13.860 93,218.20 FY10 21.180 127,795.26 FY11 16.385 92,848.32 FY12 14.207 103,058.78 FY13 17.204 129,154.08 FY14 16.296 124,323.93 FY15 26.229 199,209.08 FY16 39.025 265,355.99 FY17 18.842 156,386.88 FY18 34.305 188,700.02 FY19 24.647 147,877.59 FY20 20.904 180,127.94 Total 263.36 1,822,177.76 50 The World Bank PY PRODERS Sustainable Agriculture & Rural Development (P088799) ANNEX 3. PROJECT COST BY COMPONENT 7503 PA 8316 PY Total Projected Total Executed (US$M) (US$M) (US$M) (US$M) Total Total Amount Amount Amount Actual Percentag Counter- at Counter at Counter Approved at Counter e of part Components Approval -part Approv part 8316 Total Project part Total Approval Contributi 7503 PA (US$M) al 8316 (US$M) PY+7503 Closing (US$M) (percent) on (US$M) PY PA (US$M) (US$M) (US$M) (US$M) C1 -- Community Organization 1.90 0.44 1.2 0.50 3.1 0.94 4.04 1.67 0.04 1.71 42% Development and Capacity Building C2 -- Rural Extension and 8.70 1.73 29.85 4.50 38.55 6.23 44.78 41.57 3.79 45.36 101% Adaptive Research C3 --Sustainable Rural 19.50 5.39 64.00 10.00 83.5 15.39 98.89 87.15 14.77 101.92 103% Development Fund (FDRS) C4 -- Animal Health 2.90 0.81 0.80 3.7 0.81 4.51 1.12 0.01 1.13 25% Improvement C5 -- Project Management, M&E and 3.20 0.85 3.90 1.0 7.1 4.9 12 5.53 2.34 7.87 66% Technical Assistance Unallocated 1.3 1.3 0 1.3 Front End Fee 0.25 0.25 0 0.25 0.25 0.25 100% Total 37.5 9.2 100 16.00 137.5 25.22 162.72 137.3 20.95 158.24 97% 51 The World Bank PY PRODERS Sustainable Agriculture & Rural Development (P088799) ANNEX 4. EFFICIENCY ANALYSIS Methodology 1. A standard cost-benefit analysis was performed to assess the financial and economic merit of PRODERS. A cost benefit analysis seeks to quantify all the incremental costs and benefits that can be directly attributed to the project. 2. The financial and economic analysis was carried out on each of the four types of investment plans considered by PRODERS: Community Investment Plan, Indigenous Communities Investment Plan, Farm Investment Plan and Family by Family (PIC, PICI, PIF and FxF, respectively for its acronym in Spanish). Quantified benefits of the project 3. The financial analysis considered the benefits generated by the increased production and diversification of agricultural systems promoted by PRODERS. The economic analysis, in addition to agriculture benefits, also considered the increased availability of time resulting from social investments of PRODERS (implementation of improved stoves at household level and drinking water systems at community level), reduction of the incidence of acute respiratory diseases resulting from investments in improved stoves, and the recovery of ecosystem services as a result of PRODERS' environmental investments and capacity building. Financial and economic benefits: increase in level and diversification of agricultural production systems 4. The financial and economic benefits considered correspond to the increase in production and diversification at subproject level, which have been achieved thanks to the project's investments in rehabilitation and conservation of natural resources, technical assistance for the implementation of good agricultural practices, organizational strengthening, delivery of production packages and strengthening of marketing chains. The project's interventions have promoted/resulted in the diversification of traditional crops, offering the option of producing several items in the same space and period, through the combination of a series of species that are important for household consumption and that are also in high demand by the market, based on polyculture management techniques and crop rotation. 5. In order to estimate the expected benefits of improved agricultural systems, a comparison is needed of the situation that producers would be in without project, with the future situation with project, i.e., investments to improve productive capacity. The Marginal Productivity Method was applied, consisting of estimation of the Net Present Value of the highest agricultural production resulting from the improvement in management of I&D systems as a result of the investments that the project funded. It is based on a theoretical agricultural production function which states that yields per hectare depend of a set of productive factors. = () Where: yj= yield per hectare of crop j, X= Matrix of productive factors per hectare (labor, capital, etc.) 6. The method is based on the principle that farmers maximize their profits by using the productive factors they have (productive capacity). The method is also based on the principle of the limiting factor, which states that the production frontier is determined by the productive input that is available at a level that prevents the increase of yields, regardless of whether the other productive inputs are available at levels that would increase production. Therefore, the improvement in productive capacity that has been obtained in the situation with project has 52 The World Bank PY PRODERS Sustainable Agriculture & Rural Development (P088799) allowed farmers to increase and diversify their agricultural production compared to the situation without a project. The financial and economic benefits are, therefore, the difference in net income between the situation with project and the situation without project: = ∑( ∗ − ) ∗ ℎ − ∑ ∗ − ∗ ℎ Where: AB= Agricultural benefit , pj= output price of crop j , qjwp = yield per hectare in with project situation Cwp= production cost per hectare in with project situation,haj = cultivated hectares of crop j, qjwop = yield per hectare of crop j in a without project situation ,Csp= production cost per hectare in without project situation 7. This method assumes that output and input prices are exogenous, meaning that they are not affected by the expected increase in production. Likewise, it is assumed that output and input prices will remain constant over time, in order to eliminate a price effect that may distort the results. Therefore, the incremental financial and economic benefit is directly related to the productive increase resulting from project investments to improve the productive capacity of the beneficiaries. Assumptions a. Sample 8. The financial and economic analysis is based on the collection of primary information from 185 investment subprojects randomly selected through participatory workshops with benefited families carried out between September and October 2019, distributed between PIF, PICI and PIC. This sample size ensures statistical representativeness with a confidence level of 90 percent and a margin of error of 10 percent for each of the categories36. Likewise, it is based on primary information obtained from 460 surveys randomly selected of FxF beneficiaries, taken between October and November 2020 by IICA (2021), whose margin of error is 4.6 percent and a confidence level of 95 percent37. Table 1. Sample size and number of subprojects implemented Typology of Investment Plans Sample Size Investment Implemented (Subprojects) PIF 69 472 PIC 66 712 PICI 50 180 FxF 460 4,569 Fuente: Own elaboration based on IICA, 2020 and IICA 2021. 9. In order to resolve the situation of not having baseline, the "Evaluación de Resultados del Proyecto de Desarrollo Rural Sostenible", executed by IICA, 2020, participatory workshops were held with the benefited communities (PIF, PIC and PICI), in order to reconstruct the initial situation or without project from the individual and collective memory of the beneficiaries, on topics such as crops produced, production volume, as well as sales 36 The dataset of this financial and economic analysis for agriculture benefits comes from the study "Evaluación de Resultados del Proyecto de Desarrollo Rural Sostenible", executed by IICA, 2020. According to Terms of Reference, this sample size ensures statistical representativeness with a confidence level of 90% and a margin of error of 10% for each of the categories: PICI, PIC and PIF. It was assumed maximum variance. The distribution of the sample between the typologies was carried out proportionally to the number of PICI, PIC, PIF implemented at the Department level. 37 This sample size ensures statistical representativeness with a confidence level of 95% and a margin of error of 4.6% for FxF. It was assumed maximum variance. 53 The World Bank PY PRODERS Sustainable Agriculture & Rural Development (P088799) prices and production costs. The same situation affects FxF, for which the study “Informe de Conclusión del Proyecto de Desarrollo Rural Sostenible (IICA, 2020) applied surveys to beneficiaries to construct the baseline. b. Model Farm 10. For each of the investment typologies (PIC, PIF and PICI), a model farm was built, which seeks to represent a typical production system in a without-project situation and in a with-project situation in terms of production structure, in order to build a flow of total income, total costs and net income that could be considered as a reference for PIF, PIC and PICI. The model farm contains data collected in terms of productive activities, including production of agricultural products intended for self-consumption as well as for sale. . 11. Costs: The financial analysis considered the total amount provided by PRODERS at investment plan level, which includes investments for environmental, productive, community and administrative purposes. Likewise, it considers non-monetary contribution (counterpart) from beneficiaries for the implementation of the investment plans. In the FxF typology, given the nature of its intervention, only productive investments were made, without implementing actions that involve investments for environmental, community and administrative purposes. It includes costs of crops (preparation of land, seeds for planting, care of the crop, harvest and labor) and livestock (feeding, sanitation and handling of animals). Likewise, the cost of technical assistance granted by PRODERS to the beneficiaries was considered. 12. Income: items destined for self-consumption and sale were considered, in order to represent the total value of the production that the model farm registers in each period analyzed. c. Financial flows 13. In the construction of flows, both costs and benefits were estimated considering the market prices of inputs and outputs. Following the assumption of the Project Appraisal Document 2007, an evaluation horizon of 20 years was considered. Additionally, the analysis has been carried out at 10 and 15 years. The income growth rate is calculated as an annual average between income and costs in the “without- project” and “with-project” situation. This analysis is necessary considering the lack of data in the intermediate periods to create the approximate financial flow of the project. This rate is used to construct the flows of total income, total costs and net income during the execution of the project. 14. The financial flows built for the model are based on the data of: investments (productive, environmental, community and administrative), income, residual value, production costs and technical assistance. To add technical assistance, a flow was made for each of the organizations, taking into account that it is a fixed amount per beneficiary and that it is provided during the execution of the project. A flow of investments, costs and income was built according to the years of initiation and implementation of each plan. After the project is finished, costs and income are kept constant: the productivity and efficiency improvements due to the project are maintained over time (sustainability principle). In the calculation of financial flows, residual values are included, and assume a depreciation of the assets of 95 percent in 15 years, which implies an annual depreciation rate of 0.18. The financial and economic discount rate considered was 12 percent per year. d. Agricultural implicit deflator 15. Income and cost flows are adjusted based on the implicit deflator of agricultural GDP, in order to eliminate the effect of price changes over time. To adjust the price effect and the input effect of the financial and economic analysis, the implicit deflator of agricultural GDP (base year 2018) was estimated based on information published 54 The World Bank PY PRODERS Sustainable Agriculture & Rural Development (P088799) by the Central Bank of Paraguay.. The implicit deflator acts as a proxy to control the variation of income in products and inputs. The formula used for the calculation is: = ( ) ∗ 100 e. Conversion factors 16. Specific conversion factors were calculated for this analysis in order to adjust financial prices to economic prices. Table 2. Conversion Factors Ítem Conversion Factor Standard conversion factor 0.971 Official Exchange rate (G/US$) 6,500 Shadow Exchange rate (G/US$) 6,696 Conversion factor for input price 0.75 Conversion factor for output price 0.85 Conversion factor for wage 0.831 Source: Own elaboration, 2021. f. Opportunity cost of capital 17. The financial and economic analysis considers a discount rate of 12 percent per year that was applied to all future cost and benefit flows. This rate includes different risks (macroeconomic and agricultural) and inflation. The sum of the flow of costs and benefits is discounted at this rate to generate the financial and economic Net Present Value (NPV) of the project. A Net Present Value greater than zero means that not only are the opportunity costs of the capital investment recovered, but a real net value equal to the positive amount of the NPV is generated. In addition to the NPV, the analysis presents other standard measures that are used to evaluate projects, including the Internal Rate of Return (IRR). The IRR is a discount rate that makes the NPV of all cash flows equal to zero in a discounted cash flow analysis. In other words, for a project to be viable, an Internal Rate of Return greater than 12 percent is required, given the assumed opportunity cost of capital. Finally, the Equivalent Annual Payment (EAP) is estimated, to show the NPV of an investment as a series of equal cash flows for the length of the investment. This indicator acts as a proxy for the average net income per year that the family will receive during the evaluation horizon. Economic benefits - decreased incidence of acute respiratory diseases 18. In the case of the economic analysis, in addition to the benefits due to an increase in the level and diversification of agricultural production systems, the analysis considers the decrease in the incidence rate of acute respiratory diseases from social investments oriented to implementation of improved stoves. To assess these benefits, the Forgone Output Approach was applied. PRODERS permitted the relocation of stoves outside the home, with more efficient combustion chambers. This has permitted, among other benefits, a reduction in the number of days in which the economically active population of beneficiary families stops working as a result of suffering from acute respiratory diseases and / or caring for sick relatives (minors and older adults). Therefore, families benefiting from social investments in improved stoves outside the home have more days that they can dedicate to work. Within the analysis, these days have been valued based on the average income observed in the workshops described in the previous section. The economic benefits are calculated from the least amount of days 55 The World Bank PY PRODERS Sustainable Agriculture & Rural Development (P088799) in which the members of the household that belong to the economically active population stop working due to suffering from acute respiratory disease. ∗ ∗ ( − ) ∗ (1 + ) = ∑ (1 + ) =1 Where: EBIRD= Economic benefit due to lower incidence of respiratory diseases, I= Annual average income ,Sto= number of improved stoves implemented, ewp= incidence of acute respiratory diseases in with-project situation , ewop= incidence of acute respiratory diseases in without-project situation, t= evaluation horizon, g= annual income growth rate, r= economic discount rate 19. This analysis was based on the results of Troncoso et al, 2018. They found that 26.5 percent of people who live in a household that uses coal or firewood as the main or secondary fuel inside the house presented cough and symptoms of acute respiratory diseases, while only 10.2 percent of people living in homes that use only clean fuels presented coughs and symptoms of acute respiratory diseases. The monthly labor income estimated is US$199 (weighted average of income of PIC, PICI, PIF and FxF). The evaluation horizon is 20 years, the income growth rate is 3 percent per year and the economic discount rate is 12 percent. Estimation of this benefit considered that PRODERS implemented 8,177 improved stoves. Economic benefits - decreased time requirement for collecting firewood 20. Another of the economic benefits quantified in this evaluation has been the decrease in the time dedicated to collecting firewood because of the implementation of improved stoves with more energy-efficient combustion chambers, that improve the control of heat emission. This means a lower consumption of biomass (firewood). Therefore, improved stoves have made possible the reduced requirement for firewood by households to satisfy their cooking needs. This implies that households spend less time collecting firewood. To quantify this benefit, the same approach was applied as for the benefit due to a lower incidence of respiratory diseases, that is, the greater availability of time that families can have, given that improved stoves are more efficient and require less firewood to operate. It was assumed that each family has a person who belongs to the economically active population to collect firewood. ∗ ∗ ( − ) ∗ (1 + ) = ∑ (1 + ) =1 Where: EBRFC= Economic benefit due to less time requirement for firewood collection, I= Annual average income Sto= number of improved stoves implemented, lwp= time spent collecting firewood in with-project situation’ lwop= time spent collecting firewood in without-project situation, t= evaluation horizon, g= annual income growth rate, r= economic discount rate 21. This analysis was based on the results of Troncoso et al, 2018. They found that rural households that require firewood as fuel dedicate 3.45 hours a week to the task of collection. It assumed that with the implementation of improved stoves, the time requirement for firewood collection will be 50 percent less (1.73 hours a week). Likewise, it is estimated that the monthly labor income is US$199 (weighted average of income of PIC, PICI, PIF and FxF). The evaluation horizon is 20 years, the income growth rate is 3 percent per year and the economic discount rate is 12 percent. To estimate this benefit, PRODERS’ implementation of 8,177 improved stoves was considered. 56 The World Bank PY PRODERS Sustainable Agriculture & Rural Development (P088799) Economic benefits - decreased time requirement for water collection 22. PRODERS made social investments for the implementation of drinking water systems at the community level, which allowed the resource to be permanently available for domestic use over time. These communities lacked potable water systems, so families had to dedicate time to collect water from surface sources nearby. To quantify this benefit, the highest availability of time that families can have was valued, given that beneficiary families have potable water systems in their own communities. It was assumed that each family has a person who belongs to the economically active population to collect water. ∗ ∗ − ) ∗ (1 + ) = ∑ (1 + ) =1 Where: EBRWC= Economic benefit due to less time requirement for water collection, I= Annual average income, SAP= number of benefited families with community drinking water systems, awp= time spent collecting water in with-project situation, awop= time spent collecting water in without-project situation, t= evaluation horizon, g= annual income growth rate, r= economic discount rate 23. This analysis was based on the results provided by PRODERS, who reported that rural households that need to collect water from surface sources dedicate 3 hours a day to this task, and with the implementation of potable water systems in the communities, the required time for collection is zero, since these systems are located in the same communities. It is assumed that the person in charge of collecting water belongs to the economically active population and the monthly labor income is estimated to be US$199 (weighted average income of PIC, PICI, PIF and FxF). The evaluation horizon is 20 years, the income growth rate is 3 percent per year and the economic discount rate is 12 percent per year. To estimate this benefit, it was considered that PRODERS implemented 214 drinking water systems. Economic benefits – improvement of ecosystem services 24. The natural environment is critical for the provision of a wide range of ecosystem services, which generate both direct and indirect benefits to human well-being and to nature. According to the World Bank (201738), ecosystem services include at least four types of benefits: a. Provisioning services that include specific products people obtain from ecosystems, including sustainable wood harvesting and non-timber values, including bushmeat supply. b. Regulating services, which are the benefits people obtain from the regulation of ecosystem processes, such as watershed protection, soil-erosion prevention, and carbon storage. c. Supporting services, which include natural processes necessary to maintain other services and which may include soil formation, nutrient cycling, and primary production. d. Cultural services, which include non-material benefits provided by ecosystems, such as natural areas for recreation, sacred sites, and sites that are important for research or aesthetic enjoyment. 25. PRODERS made environmental investments for the rehabilitation and conservation of natural resources in the environment in which the beneficiary communities live. PRODERS invested in the implementation of agroforestry systems, forest curtains, forest enrichment, reforestation and promotion of natural regeneration. The approach 38Worlds Bank. 2017a. The World Bank Environmental and Social Framework. Washington, DC http://pubdocs.worldbank.org/en/837721522762050108/Environmental-and-Social-Framework.pdf. 57 The World Bank PY PRODERS Sustainable Agriculture & Rural Development (P088799) used for estimating benefits is Value Transfer, which consists of estimating the value of an ecosystem service of interest in a specific place or case by assigning an existing valuation based on reference studies for a similar ecosystem elsewhere. To obtain the total economic value of ecosystem services, the value considered as a reference must be multiplied by the area that generates these environmental services − ) ∗ (1 + ) ( ∗ ) ∗ ( = ∑ (1 + ) =1 Where: EBES= Economic benefit for improvement of ecosystem services, VESEI= Economic value of ecosystem services per hectare, Ha= benefited hectares, swp= capacity to provide ecosystem services with-project situation, swop= capacity to provide ecosystem services without-project situation , t= evaluation horizon, g= annual ecosystem service value growth rate, r= economic discount rate 26. The analysis considered the ecosystem services and their valuations published by the World Bank, 202039, which identifies the main economic effects of forest loss in Paraguay and estimates an economic value of the ecosystem services provided by the forests in the regions of eastern and western Paraguay. In this case, the values corresponding to the eastern region of Paraguay were used, since PRODERS’ actions were concentrated in this region. Table 3. Ecosystem Services Valuation Región del Este Ecosystem service Type of ecosystem service de Paraguay US$/ha/year Sustainable timber and fuelwood harvest 107 Provisioning services Bushmeat harvest 24 Carbon capture and storage 165 Regulating services Watershed protection services 73 Soil-erosion protection services 150 Other services Other forest services 7 Total 526 Source: World Bank, 2020 27. The project carried out actions to improve the quality of provision of ecosystem services in 5,428 hectares. It is assumed that a without-project situation presented a significant degradation that prevented the potential generation of ecosystem services. It is considered that prior to the project intervention, this area provided ecosystem services at 30 percent of its potential (swop) due to degradation and mismanagement. As a result of the intervention of PRODERS, the capacity to provide ecosystem services improved, reaching 80 percent of its potential capacity to generate ecosystem services . Therefore, 50 percent of the values presented in Table 3 are taken as the price per hectare for the provision of ecosystem services. The evaluation horizon is 20 years, the growth rate of the value of ecosystem services is 3 percent per year and the economic discount rate is 12 percent per year. 39 World Bank, 2020. The Value of Forests in Paraguay – Economic Analysis and Policy Recommendations 58 The World Bank PY PRODERS Sustainable Agriculture & Rural Development (P088799) Unquantified benefits of the project 28. Other benefits that could not be quantified include: Financial: a. Increase in productivity and cultivated area in families that do not participate in the project but who are assisted by an extensionist trained by the Project b. The multiplier effect on other links in the economy due to forward and backward production linkages c. The effect on livestock production systems in terms of higher productivity given the strengthening of the Geographic Information System for SENACSA Regional Offices and the rehabilitation of the Bioterium Laboratory. Economic: a. Increase in productivity and cultivated area in families that do not participate in the project but are assisted by an extensionist trained by the project b. The multiplier effect on other links in the economy due to forward and backward production linkages c. The effect on livestock production systems in terms of higher productivity given the strengthening of the Geographic Information System for SENACSA Regional Offices and the rehabilitation of the Bioterium Laboratory. d. Improvements in health conditions due to social investments (access to improved bathrooms, electricity, home improvements) e. Improvement in food and nutritional security of beneficiary families f. Access to the Social Protection and Promotion System for people who have an identity document g. Increase in the value of the lands of indigenous communities that have been part of the project’s process of tenure regularization. Project cost 29. The economic analysis considered the total cost of PRODERS, including Loan 7503 and Loan 8316, for a total of US$137.5 million. It is important to note that all costs have been incorporated, but not all the benefits. Thus, this analysis under-estimates the real positive economic impact for society, and should be considered as on the lower end of net benefits. Results a. Outlier identification 30. For each typology, a dispersion analysis of the Financial Internal Rate of Return (FIRR) was carried out, in order to identify extreme values that are generating distortions in the distribution. The weighted average40 coefficient of variation is 122 percent.41 40 The weighting was carried out according to the proportion of the investment amount that PRODERS dedicated to each typology 41 Pearson's coefficient of variation is widely used in statistical analysis that allows the variation of data to be measured as a function of the mean. 59 The World Bank PY PRODERS Sustainable Agriculture & Rural Development (P088799) Table 5. Variation Coefficient Sample Size Coefficient of Typology (Investment Plans) Variation (%) PIF 69 105 PIC 66 124 PICI 50 141 FxF 460 157 Total of Investment plans 645 Weighted average 122 Source: Own elaboration, 2021 31. Figure 1 shows the high dispersion of the FIRR in the four typologies, especially in FxF, when considering all the observations.42 To identify outliers, for each typology an interval was established based on the average of the FIRR plus/minus two standard deviations: i) Upper Limit: average IRR + 2 standard deviations; ii) Lower Limit: average IRR - 2 standard deviation. This method was able to identify 17 percent, 36 percent, 20 percent, and 7 percent outliers for PIF, PIC, PICI and FxF typology, respectively, representing 12 percent of the total database. In this way, the estimates of the productive benefits in financial and economic terms were made based on 568 investment plans. Figure 1. Box Plot of FIRR per typology. Source: Own elaboration, 2021 Table 6. Outliers per Typology Sample size Typology Outliers Proportion (%) (Investment Plans) PIF 69 12 17 PIC 66 24 36 PICI 50 11 20 FxF 460 30 7 Total of Investment Plans 645 77 12 Source: Own elaboration, 2021 42 A box plot was made specifically for FxF because its dispersion is much greater than PIC, PICI and PIF. 60 The World Bank PY PRODERS Sustainable Agriculture & Rural Development (P088799) 32. Figure 2 shows the box plot by typology, excluding outliers. By excluding the outliers, it is observed that the coefficient of variation decreases to 101 percent, which reflects that this procedure reduces the high variability of the data. Figure 2. Box Plot of FIRR per typology excluding outliers. Source: Own elaboration, 2021 Table 7. Variation Coefficient Excluding Outliers Sample size (Investment Coefficient of Typology Plans) Variation (%) PIF 57 98 PIC 42 97 PICI 39 125 FxF 430 76 Total of Investment Plans 568 Weighted average 101 Source: Own elaboration, 2021 b. Financial analysis 33. To capture the medium and long-term effects, a financial analysis of the incremental net benefits was carried out considering 3 evaluation horizons: 10, 15 and 20 years. Given that the PIC, PICI, and PIF correspond to investment plans that cover several families that belong to the same organization, the results of profitability indicators are presented at the investment plan level (number of viable investment plans, NPV, and IRR), and subsequently the benefits are estimated at benefited family or farm level (NPV/beneficiary and EAP/beneficiary). In the case of FxF, the interventions carried out by PRODERS were at the family / farm level. 34. At a general level, 77 percent of investment plans are viable (NPV>0) at 10 years (440/568), 86 percent at 15 years (487/568) and 89 percent at 20 years (506/568). The PICI is the typology that presented the lowest proportion of viable investment plans compared to the other investment typologies in all evaluation horizons (38 percent, 59 percent and 67 percent for 10, 15 and 20 years). It is also the typology that presented the lowest financial results, in the three evaluation horizons. 35. When estimating the results at the beneficiary level, it is observed that the EAP, which corresponds to a constant annual cash flow that equals the NPV during the period considered in the evaluation horizon, is ₲ 2,937, 61 The World Bank PY PRODERS Sustainable Agriculture & Rural Development (P088799) ₲ 4,975, and ₲ 7,666 per year for PICI, PIC and PIF, respectively, taking a 10-year evaluation horizon. At 20 years, the EAP is ₲ 10,732, ₲ 12,275 and ₲ 13,181 per year for PICI, PIC and PIF, respectively. 36. The positive results for the case of FxF stand out, showing that 83 percent, 90 percent and 94 percent of the subprojects were viable in 10, 15 and 20 years. It is worth mentioning that in the case of FxF, the results were not directly comparable with PIC, PICI and PIF. Given the nature of its intervention, in FxF only productive investments were made, without implementing actions that involved investments for environmental, community and administrative purposes, unlike PIC, PICI and PIF, where these investments were considered in the cost flows to achieve the results. Table 8. Profitability Indicators per Typology at Investment Plan and Beneficiary Level, by Evaluation Horizon Evaluation Horizon Typology Indicator 10 years 15 years 20 years NPV>0 39 (68 percent) 42 (74 percent) 42 (74 percent) NPV ₲ 1,821,024 ₲ 3,295,279 ₲ 4,194,458 PIF IRR 29.4 percent 30.4 percent 33.5 percent NPV / beneficiary ₲ 43,312 ₲ 78,376 ₲ 98,453 EAP / beneficiary ₲ 7,666 ₲ 11,508 ₲ 13,181 NPV>0 27 (64 percent) 34 (81 percent) 34 (81 percent) NPV ₲ 4,786,706 ₲ 11,646,746 ₲ 15,612,046 PIC IRR 29.3 percent 37.5 percent 41.5 percent NPV / beneficiary ₲ 28,111 ₲ 68,399 ₲ 91,686 EAP / beneficiary ₲ 4,975 ₲ 10,043 ₲ 12,275 NPV>0 15 (38 percent) 23 (59 percent) 26 (67 percent) NPV ₲ 1,619,172 ₲ 5,571,295 ₲ 7,821,634 PICI IRR 4.7 percent 21.3 percent 25 percent NPV / beneficiary ₲ 16,594 ₲ 57,099 ₲ 80,163 EAP / beneficiary ₲ 2,937 ₲ 8,368 ₲ 10,732 NPV>0 359 (83 percent) 388 (90 percent) 404 (94 percent) NPV / beneficiary ₲ 192,534 ₲ 448,056 ₲ 593,204 FxF IRR 103 percent 114 percent 115 percent EAP / beneficiary ₲ 34,075 ₲ 65,785 ₲ 79,417 Source: Own elaboration, 2021 37. For each typology, incremental cost, income and net income flows were calculated considering all the investment plans identified in Table , in order to estimate aggregate profitability indicators. In the following table it is observed that all typologies present positive profitability indicators. At the aggregate level, a financial rate of return is obtained of 25.7 percent, 31.5 percent, and 32.5 percent at 10, 15 and 20 years-horizon, respectively. The benefit cost ratio is 1.21, 1.39 and 1.46 at 10, 15 and 20 years-horizon. 38. FxF stands out, presenting the highest profitability indicators. PIF presented positive profitability indicators, but of a lesser magnitude than PIC and PICI. This represents the trend of improvement in the efficiency of designing and implementation of investment plans by PRODERS. 62 The World Bank PY PRODERS Sustainable Agriculture & Rural Development (P088799) Table 9. Aggregated Profitability Indicators per Typology, by Evaluation Horizon Evaluation Horizon Typology Indicator 10 years 15 years 20 years VPN ₲ 46,708,327 ₲ 113,049,806 ₲ 151,035,289 PIF TIR 17.7 percent 21.7 percent 22.8 percent B/C 1.076 1.1545 1.190 VPN ₲ 70,222,725 ₲ 193,703,432 ₲ 265,078,834 PIC TIR 24.6 percent 32.5 percent 33.8 percent B/C 1.19 1.38 1.46 VPN ₲ 45,336,813 ₲ 155,996,251 ₲ 219,005,750 PICI TIR 24.8 percent 35.2 percent 36.7 percent B/C 1.16 1.41 1.51 VPN ₲ 41,943,706 ₲ 97,665,734 ₲ 129,283,909 FxF TIR 106.1 percent 113.8 percent 113.9 percent B/C 1.82 2.32 2.478 VPN ₲ 2,005,201,807 ₲ 4,713,305,663 ₲ 6,274,711,836 Aggregated TIR 25.7 percent 31.5 percent 32.5 percent B/C 1.21 1.39 1.46 Source: Own elaboration, 2021 c. Sensitivity analysis The results of the financial analysis assume that after the project, beneficiary families will be able to maintain the results permanently over time (at 10, 15 and 20 years). To evaluate the long-term robustness of the results achieved, a sensitivity analysis was carried out to assess how the project's financial profitability indicators change if there is a decrease in level of yields throughout the evaluation period. Simulating the decrease in yields over time seeks to analyze the case that the beneficiaries do not maintain the good results over time, due to less technical assistance after the project, low rate of adoption of good agricultural practices, and/or incidence of adverse weather conditions. For the sustainability analysis, a 10 percent decrease in yields was considered once the project was completed throughout the evaluation horizon to assess financial profitability indicators. In Table 4, one observes at the aggregate level an IRR of 18.4 percent, 25.3 percent y 26.5 percent at 10, 15 and 20 years respectively, and a benefit-cost ratio of 1.09, 1.25 and 1.29 at 10, 15 and 20 years respectively, figures considerably lower than those obtained in Table. PIF typology presents negative profitability indicators at 10 years of evaluation. However, at 15 and 20 years the trend reverses and shows positive indicators. PIC, PICI and FxF present positive profitability indicators at the aggregate level. 39. One of the major challenges for beneficiary families will be the sustainability of the results over time, post- project. This analysis reveals the high sensitivity of financial profitability with respect to yields: with a 10 percent decrease in yields (either due to low technical assistance, low adoption rate and/or incidence of climatic factors), the total NPV at the aggregate level falls by 56 percent, 36 percent and 36 percent at 10, 15 and 20 years. 63 The World Bank PY PRODERS Sustainable Agriculture & Rural Development (P088799) Table 4. Profitability Indicators Considering 10 percent Decrease in Yields after the Project. Investment Evaluation Horizon Indicator Typology 10 years 15 years 20 years VPN ₲-19,590,647 ₲ 28,581,847 ₲ 46,979,146 PIF TIR 9.4 percent 14.6 percent 15.7 percent B/C 0.97 1.04 1.06 VPN ₲ 26,439,437 ₲ 123,950,246 ₲ 167,327,213 PIC TIR 17.1 percent 26.0 percent 27.4 percent B/C 1.07 1.25 1.29 VPN ₲ 13,216,156 ₲ 102,763,449 ₲ 143,011,711 PICI TIR 16.0 percent 28.2 percent 29.8 percent B/C 1.05 1.27 1.33 VPN ₲ 32,660,522 ₲ 80,477,231 ₲ 107,609,715 FxF TIR 86.9 percent 96.4 percent 96.6 percent B/C 1.64 2.08 2.230 VPN ₲ 875,054,938 ₲ 3,025,371,557 ₲ 4,025,520,306 Agregado TIR 18.4 percent 25.3 percent 26.5 percent B/C 1.09 1.25 1.29 Source: Own elaboration, 2021 d. Economic analysis 40. An economic analysis of PRODERS was carried out to evaluate the incremental benefits for society by comparing the without-project situation and the with-project situation. The analysis considered the benefits generated by: a. increased production and diversification of agricultural systems provided by productive investments of PRODERS b. increase in time availability resulting from PRODERS ' social investments, specifically in improved stoves and drinking water systems c. decrease in the incidence of acute respiratory diseases resulting from PRODERS’ social investments in improved stoves d. recovery of ecosystem services because of PRODERS’ environmental practices and investments. 41. The total cost of the project was considered, that is, US$137.5 million. For a 20-year horizon, the incremental economic benefit for the entire project is estimated at US$7.7 million, with an economic internal rate of return of 28.2 percent43. 42. It is important to note the importance of the generation of environmental and social co-benefits of PRODERS. Of the total economic benefits, 22 percent come from social benefits (lower incidence of respiratory diseases and increase in time availability due to efficient stoves and drinking water systems in the communities), 13 percent of 43To represent a proxy the effect of the delay in disbursements of the PIF, PICI, PIC and FxF subprojects on the profitability indicators, a scenario was simulated that consider that all subprojects were implemented one year earlier. The NPV obtained is US$10.7 million, which represents 37% more than the NPV obtained with the disbursements that were actually made (US$7,7 million). 64 The World Bank PY PRODERS Sustainable Agriculture & Rural Development (P088799) the total benefits correspond to ecosystem services recovered by the project, and 65 percent of the economic benefits come from agricultural productive activity. 43. Productive investments, in general, were viable in all types (77 percent of investment plans have NPV>0 to 10 years of evaluation) and have increased the level of production and diversification of production systems, which translates into an improvement in net income and higher availability of food for household-consumption. However, it was not possible to quantify within the economic benefits the multiplier effect over the value chain nor the effect over other related sectors of the economy. 44. Social investments have a significant effect on beneficiary communities. In this analysis, it was only possible to quantify benefits (lack of information) due to a reduction in the incidence of respiratory diseases resulting from the investment in improved stoves and the higher availability of time resulting from having drinking water systems in communities and improved stoves. However, PRODERS has had other important benefits, such as the effect on food security due to the greater availability of food in the communities, one of the most important aspects in reducing levels of extreme poverty. Another important result is delivery of the identity document for 4,099 beneficiaries belonging to indigenous communities. Since these people and their families did not have an identity document, they were excluded from the Paraguayan social protection system. Another important benefit that could not be considered in the economic analysis was the investment in improving bathrooms and providing electricity, both investments highly valued by the beneficiaries. 45. Not all environmental services have been possible to quantify in the economic analysis. The provision of cultural services, such as natural areas for recreation, sacred sites, and sites that are important for research or aesthetic enjoyment, have not been valued for lack of information. 46. For all the above, the economic analysis of PRODERS underestimates the real impacts on beneficiary families, as it is not able to quantify a series of benefits highly valued by them. Therefore, these results should be considered as the lower limit of the benefits of the project. 47. The economic analysis carried out in the PAD (2007) was based on nine Illustrative Farm Models representative of individual agricultural farming and one representative collective indigenous production system. Profitability indicators was estimated considering constant input and product prices, constant real exchange rate, 100 percent of investment costs (excluding labor) included in farm models. Incremental net benefits were estimated based on the farm models (increased agricultural production and farmers’ income) and the prices adjusted to reflect the economic opportunity cost, while all transfers including taxes and subsidies were excluded from the analysis. The overall internal economic rate of return (EIRR) of the project was estimated to be 17 percent. This estimate was conservative, since it only takes into account production benefits from agricultural activity. One of the key reasons for the lower EIRR estimated in the EFA analysis in the PAD was that benefits from activities such as stoves (lower respiratory disease), introduction of community drinking systems (time saving specially for women) and improved ecosystem services were not included in the analysis presented in the PAD. 65 The World Bank PY PRODERS Sustainable Agriculture & Rural Development (P088799) Table 5. Comparison of EFA PAD (2007) and EFA ICR EFA PAD (2007) EFA ICR (2021) Result: Economic 17 percent 28.2 percent Internal Rate of Return Source of Secondary information of nine Illustrative Farm Primary information collected from 185 information Models representative of individual agricultural investment subprojects through participatory farming and one representative collective workshops with benefited families statistical indigenous production system representativeness with a confidence level of 90 percent and a margin of error of 10 percent for each of the categories (PIF, PICI, PIC and FxF) Source of quantified Agriculture benefits Agriculture, environmental and social benefits benefits Costs The cost stream is based on four elements: (i) Total costs of Loan 7503 and Loan 8316 was on-farm investment and recurrent costs; (ii) considered: US$137.5 million. extension to farmers; (iii) community development costs and training; (iv) community and municipality investments; and (v) partial costs of project administration. Costs utilized were the base costs plus physical contingencies. Scope of analysis Loan 7503 (US$37.5 million) Loan 7503 (US$37.5 million) and Loan 8316 (US$100 million), for a total of US$137.5 million Economic discount Unknown 12 percent rate Source: Own elaboration (2021), and PAD (2007). 66 The World Bank PY PRODERS Sustainable Agriculture & Rural Development (P088799) ANNEX 5. BORROWER, CO-FINANCIER AND OTHER PARTNER/STAKEHOLDER COMMENTS 67 The World Bank PY PRODERS Sustainable Agriculture & Rural Development (P088799) ANNEX 6. SUPPORTING DOCUMENTS (IF ANY) WORLD BANK DOCUMENTS: All internal documents related to the project can be found at: http://operationsportal.worldbank.org/secure/P088799/home?tab=documents ▪ Project Appraisal Document (PAD701) ▪ Loan Agreement ▪ Restructuring Papers ▪ Implementation Supervision Reports (ISR) ▪ Supervision Aide Memoires ▪ Integrated Safeguards Data Sheet ▪ Environmental Assessment ▪ Procurement Documents ▪ Financial Management Supervision Reports ▪ Auditing Documents ▪ Country Partnership Framework (CPF) and Systematic Country Diagnostic (SCD) STUDIES/REPORTS: ▪ FAO, 2017. Evaluación de Resultados del Proyecto de Desarrollo Rural Sostenible Paraguay (PRODERS), Préstamo 7503. Informe de Evacuación. ▪ IICA, 2019. Evaluación De Resultados Proyecto De Desarrollo Rural Sostenible (PRODERS). ▪ IICA, 2020. Informe de Conclusión del Proyecto de Desarrollo Rural Sostenible (PRODERS) ▪ Troncoso, K., Smith, K., Tagle, M., Galeano, A., Torres, R., Soares da Silva, A. 2018. Afecciones respiratorias por el uso de leña y carbón en comunidades de Paraguay. Pediatría, Vol. 45; N° 1; (enero - abril) 2018 ▪ World Bank, 2020. The Value of Forests in Paraguay – Economic Analysis and Policy Recommendations. ▪ Wageningen Workshop Proceedings (200) Adoption of Technologies For Sustainable Farming Systems https://www.oecd.org/greengrowth/sustainable-agriculture/2739771.pdf ▪ Food and Agriculture Organization (2005) Participatory policy development for sustainable agriculture and rural development. http://www.fao.org/3/ak483e/ak483e.pdf 68 The World Bank PY PRODERS Sustainable Agriculture & Rural Development (P088799) ANNEX 7. COMPLEMENTARY INFORMATION AND DATA Table A7.1. Project Stages by Timeline with Descriptions Timeline 2009 (July) 2013(Feb) 2013(Nov) 2015(July) 2017(July) 2018 (July) 2019 (May) 2019 (Nov) Event Original Project AF Loan in Project Project Project Project Project Loan restructured the amount restructured Restructured Restructured Restructured Restructured became in response of effective to MTR (US$100 (US$37.5 million) Million) approved PDO PDO changed PDO 9 PDO 1 PDO 5 PDO 2 PDO Indicators indicators indicator indicators indicators dropped dropped, 2 rephrased added (including one beneficiary number) Project 20 percent Targets Targets Targets reduction on increased, to reduced, average on reflect with limited targets increased reasoning as related to financing to why in the Component restructuring 3 paper (investment plans, MIPs dropped) Project Subcompone New New activity Components nt 2.2 and subcompone under 4.2 were nt n financial component 5 dropped education “financing of Focus technical completely assistance to on analyze and community prepare subprojects possible under interventions component 3 to ….” without INDERT subprojects Component 4 oriented to smallholder livestock producers 69 The World Bank PY PRODERS Sustainable Agriculture & Rural Development (P088799) Timeline 2009 (July) 2013(Feb) 2013(Nov) 2015(July) 2017(July) 2018 (July) 2019 (May) 2019 (Nov) Geographical 84 reduced to Area and microcatch 61 and 40 beneficiary ments areas target (microcuenc as) and 73 Indigenous Communitie s Disbursement Original:42 Original:55 Original:93 Original:100 Original:100 Original:100 Original:100 Original(7503 percent percent percent percent percent percent percent ) AF:N/A AF: N/A AF:10 AF:51.56 AF:75.60 AF:84.69 AF:92.76 AF(8316): percent percent percent percent Changes to Closing date Closing date Closing date Closing date closing date extended to extended to extended to extended to December December Nov 2019 Nov 2020 2017 2018 Other Allow Introduction Inclusion of Changes provision of of new the goods, approach Safeguards works, “Familia by Incident consultants’ Familia’ Response services and Requirement non- Money (new consulting reallocated corporate services in from requirement) addition to Component cash 1 and 5, to 3 and 4 70 The World Bank PY PRODERS Sustainable Agriculture & Rural Development (P088799) Table A7.2-Results Framework and Modifications PDO Indicators Item Original Results Framework 1st Restructuring post- Additional Financing Restructuring Final Version Measured (PAD) MTR Nov 2013 July 2017 at Closing, Nov 2020 Feb 201344 PDO: To improve the quality of No Change PDO Revised: To improve in a No Change No Change life of Small-scale Farmers and sustainable way the socio- Indigenous Communities in a economic conditions of Small- sustainable manner through the scale Farmers and Indigenous support of actions to strengthen Communities in the Project community organization and area, through the support of self-governance, improve actions to strengthen their natural resources management, community organization, self- and enhance the socio- governance and access to economic conditions of said markets and value chains. farmers and communities. Reason: Revision of PDO was intended to improve accuracy and clarity. The focus of supporting activities also shifted towards markets and away from natural resource management (NRM) as a means to effect change (although NRM continued as a cross-cutting theme/activities). 1. CDG, MDCs, and MSCs or IAs No Change DROPPED --- --- established, strengthened and participating in the management of Original target # of micro- Reason: Already covered under rural sustainable development in at catchments was 84 and Component 1. Also, AF shifted least 80 percent of target micro- target for the Indicator was focus of project actions from catchments and indigenous 67 MCs. “micro-catchments” to poverty communities in the project area zones (mapped for targeting with participation of women and purposes). rural youth in decision-making (appropriate level of participation to be agreed by organizations 2. At least 50 percent of the target No Change Revised Revised No change: farms increase their farm incomes (Increased target values) No. of targeted farms that No. of targeted farms that by 30 percent. Of these, at least 40 At least 70 percent of target farms increase their agricultural increase their agricultural 44The June 2013 Restructuring Paper states that “changes corresponded to an expected reduction of 25 -30% in expected outcomes”. Also, two subcomponents were dropped: Subcomponent 2 (Adaptive Research) and Subcomponent 4.2 (Support to the Vice-Ministry of Livestock). 71 The World Bank PY PRODERS Sustainable Agriculture & Rural Development (P088799) Item Original Results Framework 1st Restructuring post- Additional Financing Restructuring Final Version Measured (PAD) MTR Nov 2013 July 2017 at Closing, Nov 2020 Feb 201344 percent obtain an agricultural increase their agricultural income income by at least 30 percent income by at least 30 percent income above the poverty line. by 30 percent. Target: 10,000 farms Target: 25,500 farms (see ISR Target: 10,000 farms #15)=: 50 percent of 9,150 families Reason: Emphasis shifted to (OP) + 70 percent of the number of farms showing 29,850 families (AF) =25,470) increased income, rather than The wording “Of these, at least 40 a percentage: (i) Many factors percent obtain an agricultural outside project control have income above the poverty line” an impact on agricultural was revised and became a new income and poverty; (ii) the PDO Indicator: “Number of project approach required a targeted farms which are able to long process before achieving pass above the poverty line (with such impact: TA, then per capita income above investments expected to Gs446.798/month in rural areas – generate income, then expressed in Gs. as at October marketing, after which income 2016)”. can be measured. The initial See Item 5 below. target was overly ambitious, and was increased by the AF, Reason: Indicator redefined at a but was unrealistic in its more ambitious level (under the context. PAD version, 10 percent lifted above the poverty line would have NOTE: The source of data for been satisfactory). this significant decrease in target and achievement values is not clearly reported in project documentation. The subsequent value for this indicator reported in May 2019 was calculated using a sample of 1,029 from the RENABE database showed that incomes had increased by at least 30 percent for 24,734 farms 3. Production of crops for domestic No Change DROPPED --- --- consumption increased by 20 Reason: Already included in percent in 50 percent of the Based on a 20 percent other indicators poorest beneficiary farms increase in 1600 farms 4. Productivity of land (by ha) Revised Revised No change No change: increased by an average of 25 “10,000” was omitted, Percentage of farms with land Percentage of farms with land Percentage of farms with percent on 10,000 farms through replaced by “beneficiary”, but productivity (by ha) increased by productivity (by ha) increased land productivity (by ha) the application of productive target remained same. at least 25 percent through the by at least 25 percent through increased by at least 25 practices promoted by the Project. application of productive the application of productive percent through the processes promoted by the processes promoted by the application of productive 72 The World Bank PY PRODERS Sustainable Agriculture & Rural Development (P088799) Item Original Results Framework 1st Restructuring post- Additional Financing Restructuring Final Version Measured (PAD) MTR Nov 2013 July 2017 at Closing, Nov 2020 Feb 201344 Project. Project. processes promoted by the Target: 25 percent of 30,000 Target: 25 percent of 30,000 Project. farms = 7,500 farms farms (Shown as “no change” Target: 25 percent of 30,000 in 2017 RP and target shown farms Reason: Target was increased as 25 percent in subsequent to reflect AF scale-up. Approach ISRs). would include action towards increasing both the un-utilized area per farm, and yield per Reason: NA hectare. 5. The incidence of poverty No Change Revised Revised: No change: (measured in UBN) reduced by 50 Incidence of poverty reduced by Number of targeted families # targeted families able to percent in the assisted small-scale at least 50 percent in the assisted able to pass above the pass above the poverty line farmer and indigenous small-scale farmers and poverty line (with pc income (with percent income above communities. indigenous communities above Gr. 446.798 per month Gr. 446.798 per month in in rural areas – expressed in rural areas – expressed in Target: 37.5 percent (based on Guaranies Oct 2016) Guaranies Oct 2016). average share of beneficiaries Target: 10,000 farms Target: 10,000 farms living below the poverty line = 75 percent) See 2017 Restructuring Paper paras 22-23, and Indicator 2 “Measured in UBN” was omitted. Reason above. This indicator was split off from Indicator 2 above at time of AF. 6. 65 percent of beneficiary No Change DROPPED --- --- households with access to at least one additional basic service aimed Reason: Already an Indicator at home improvements under Component 3 7. 20 percent of indigenous No Change DROPPED --- --- communities without formal land titles at project start acquire titles, Reason: Beyond the control of and 50 percent of small-scale the Project farmers without titles receive assistance towards acquiring titles. 8. Environmental conditions (soil, DROPPED --- --- --- water quality, vegetation cover) improved in at least 70 percent of Reason: No reason the 84 target micro-catchments provided in 2013 and 73 indigenous communities. Restructuring Paper but probably associated with project no longer working with micro-catchments. 9. Greater awareness among 50 No Change DROPPED --- --- percent of Project beneficiaries of 73 The World Bank PY PRODERS Sustainable Agriculture & Rural Development (P088799) Item Original Results Framework 1st Restructuring post- Additional Financing Restructuring Final Version Measured (PAD) MTR Nov 2013 July 2017 at Closing, Nov 2020 Feb 201344 land degradation and the potential Reason: Judged as irrelevant contribution of sustainable natural resources and land management to improved livelihoods in the P area. 10. Greater awareness among 70 DROPPED: This PAD PDO --- --- --- percent of project beneficiaries of Indicator is not mentioned in the importance of good animal the 2013 Restructuring health management and Paper, the AF PP, or any husbandry. subsequent RPs (or ISRs). It is assumed dropped early on. 11. --- --- NEW Revised No change: Target reduced to 225,000 No. of direct project Number of direct project beneficiaries (225,000) beneficiaries No. of direct project -percentage of female direct Target: 256,000 beneficiaries (225,000) beneficiaries (40 percent) Of which Women: 40 percent - percent of female direct NOTE: beneficiaries (40 percent) ISR #26 shows target was Reason: Core PDO Indicator Reason: Reduction in the # reduced to 213,900 (from added of beneficiaries from 256,000 225,000). to 225,000 (-12 percent), was Reason: ISR #27 (Feb 2020) NOTE: The Project Paper for the to compensate for initial over- notes: “The estimates of the Additional Financing (2013) estimation. The June 2017 number of individuals added a new Core PDO Indicator poverty measurement showed benefited by the project is for direct beneficiaries, without that poverty was at best based on a more accurate stating a target. ISR #15 of May stagnant during the preceding calculation. The previous 2014 (immediately after AF) growth years, demonstrated estimate (225,000) was shows end-target of 256,000. the challenges of reducing based on the average poverty. The target reduction number of individuals per was compensated by non- family, while this target is monetary project benefits, as based on the actual number captured by 4 new of family members”. Intermediate Indicators. However, as this is a Core PDO Indicator, and the archive lacks evidence that this change was formalized, the 2017 target of 225,000 is used by the ICR for final measurement. 13. --- --- NEW No change Revised: Associative management capacity Associative management Indicator was split in two for increased 80 percent in capacity increased 80 percent monitoring and measurement Community Development Groups, in Community Development purposes in the January 74 The World Bank PY PRODERS Sustainable Agriculture & Rural Development (P088799) Item Original Results Framework 1st Restructuring post- Additional Financing Restructuring Final Version Measured (PAD) MTR Nov 2013 July 2017 at Closing, Nov 2020 Feb 201344 and 50 percent of Indigenous Groups, and 50 percent of 2020 ISR Community Groups with Indigenous Community - Associative management investment proposals oriented to Groups with investment capacity increased: Business Plans to access proposals oriented to Community Development markets and inclusive value Business Plans to access Groups with business chains. markets and inclusive value proposals oriented to Target: 80 percent CDGs, and 50 chains Business Plans to access percent IDGs markets and inclusive value chains - Target 80 percent Reason: It was considered essential to measure new activity - Associative management under the AF, access to markets capacity increased: and inclusive value chains Indigenous Groups with through Business Plans and business proposals oriented financial/marketing education. to Business Plans to access markets and inclusive value chains – Target 50 percent 75 The World Bank PY PRODERS Sustainable Agriculture & Rural Development (P088799) Intermediate Indicators - Evolution of the Results Framework with Explanation of Changes No. Original Results Framework 1st Restructuring post- Additional Financing 4th Restructuring Final Version measured (PAD) MTR June 2013 Nov 2013 July 2017 at Closing Nov 2020 Component 1: Community Organization Development and Capacity Building/OUTCOME - Greater community participation in the implementation of sustainable agriculture and rural development activities and increased local management capacity to support this implementation 1. 295 technicians trained and No change Revised: No change No change operating in the project area, 345 technicians trained and Number of technicians Number of technicians (including 120 PRODERS, 70 operating in the project area (295 trained and operating in the trained and operating in the DEAG, and 100 technicians from from Original Project and 50 from project area Target: 345 project area Target: 345 municipal and departmental AF) governments, and other relevant Reason: Changed to reflect institutions) scaled-up activities. At the time of AF preparation, 130 technicians had been trained. 2. Environmental education Target value changed Revised Revised No change program implemented and Environmental education program Number of people reached by Number of people reached by reaching about 8,000 people Target value reduced to 5,600 implemented and reaches about Environmental Education Environmental Education including teachers, students and people (from 8,000) 24,000 (8,000 from Original Program. Program. members of local organizations Project and 16,000 from AF) Target: 24,000 Target: 24,000 (e.g., municipal government Reason: NA Reason: Changed to reflect Reason: sector offices, and medium- and scaled-up activities. Also, the AF Minor rewording to simplify large-scale farmers’ reverted to the PAD target of organizations 8,000 to derive new 24,000 target. 3. Beneficiaries directly trained by Target values changed: DROPPED: --- --- the project including 800 rural 61 Micro-Catchment 61 Micro-Catchment Development laborers and youth, as well as Development Committees (from Committees members from the 84 Micro- 84) 27 Municipal Steering Committees Catchment Development 27 Municipal Steering Committees and 39 Municipal Committees Reason: (i) Micro-catchments Steering Committees (from 39) were discontinued under AF. Selection of target areas came to Dropped: 800 rural laborers be based on poverty mapping, not and youth MC areas; and, (ii) Municipal Reason: NA activities were cancelled after the 2013 restructuring 4. At least 600 Community Target values changed DROPPED: -- -- Development Groups, 73 420 Community Development -420 Community Development Indigenous Community Groups (from 600) Groups Associations, 84 Micro- 45 Indigenous Community -45 Indigenous Community Catchment Development Organizations (from 73) Groups Committees, and 55 Municipal Added: 17 Social Organization -National Coordination Committee Steering Committees established Technicians operating in project established and strengthened. In addition, area over life of project to -Municipal Steering Committees establishment of the National facilitate training and Reason: (i) 1st 2 measured under Coordination Committee. strengthening of local Component 2; (ii) National 76 The World Bank PY PRODERS Sustainable Agriculture & Rural Development (P088799) No. Original Results Framework 1st Restructuring post- Additional Financing 4th Restructuring Final Version measured (PAD) MTR June 2013 Nov 2013 July 2017 at Closing Nov 2020 organizations Coordination Committee not Reason: NA established under OP; (iii) Municipal activities cancelled after 2013 restructuring (see #3 above) 5. Participation of Stakeholders Revised DROPPED --- --- (male and female farmers, rural Word “Strong” added before Covered under other IR youth, indigenous peoples, rural “participation” Indicators. laborers) in meetings of project- supported groups (CDG, MDC, IA, and MSC) 6. --- --- --- New: No change Number of Indigenous Number of Indigenous Communities which gain Communities which gain access to water and/or access to water and/or electricity due to the Project electricity due to the Project Target: 60 Target: 60 Reason: Introduced in 2017 to capture the social or non- income benefits of the Project 7. --- --- --- New: No Change Number of Indigenous people Number of Indigenous people to whom a formal identity to whom a formal identity card has been provided card has been provided Target: 4,000 Target: 4,000 Reason: Introduced in 2017 to capture the social or non- income benefits of the Project 8. --- --- --- New: No change Number of Indigenous Number of Indigenous Communities that have Communities that have received land titling support received land titling support Target: 80 Target: 80 Reason: Introduced in 2017 to capture the social or non- income benefits of the Project Component 2: Rural Extension and Adaptive Research/OUTCOME – Small-scale farmers and indigenous communities planning and implementing sustainable agriculture and rural development activities at the farm, community and micro-catchment levels, with technical support from rural extension and research institutions. 9. Elaboration and execution of: Target values changed and DROPPED: --- --- -84 Micro-Catchment Devt Plans; new sub-indicators added -61 Micro-catchment Devt Plans 12,600 Farm Investment Reason: AF moved to poverty Proposals, including investments -61 Micro-Catchment Devt mapping, away from micro- in income generation, land titling, Plans (from 84) catchments rural home improvements, food -9,150 Farm Investment security, and improved land and Proposals (from 12,600) -1200 other producers trained in No change No change NRM practices. -480 Community Investment sustainable production practices Number of producers trained Number of producers trained -At least 60 Indigenous Proposals (New) Reason: Redundant/unclear as promoters in sustainable as promoters in sustainable 77 The World Bank PY PRODERS Sustainable Agriculture & Rural Development (P088799) No. Original Results Framework 1st Restructuring post- Additional Financing 4th Restructuring Final Version measured (PAD) MTR June 2013 Nov 2013 July 2017 at Closing Nov 2020 Community Development Plans, -45 Indigenous Community production and production and including investments in income Investment Plans (from 60) -1800 Indigenous beneficiaries financial/commercial matters financial/commercial matters generation, land titling, rural -Municipal Investment Plans trained by extension agents Target: 2,500 Target: 2,500 home improvements, food (dropped – 39 to 0) (including 1650 Indigenous security, and improved land and people, and 150 Indigenous No change No change natural resources management Added: promoters) Percentage of beneficiary, Percentage of beneficiary, practices. -600 producers trained as Reason: Numbers can be small-scale farmers trained small-scale farmers trained -39 Municipal Investment promoters in sustainable disaggregated under indigenous, have adopted diversification have adopted diversification Proposals developed and production youth and women beneficiaries and new sustainable and new sustainable implemented with the technologies to increase technologies to increase communities to support the -80 percent of beneficiary small- -At least 80 percent of small-scale production and productivity production and productivity improved management of natural scale farmers trained in farmers and 80 percent of Target: 80 percent Target: 80 percent resources (e.g., improvement of diversification and new Indigenous communities assisted existing rural roads, technologies regularly by rural extension establishment of nurseries, agents, by PY05 construction of facilities for -1200 other producers trained in Reason: Irrelevant for monitoring recycling pesticide containers). sustainable production practices -87 rural extension agents working -1800 Indigenous beneficiaries in the project area, including 84 at trained by extension agents the micro-catchments, and 3 in (including -1650 Indigenous Indigenous communities. people, and 150 Indigenous Reason: Irrelevant for monitoring --- promoters) Change target value: No change but Indicator -At least 80 percent of small- -9150 Farm Investment Proposals moved to Component 3 scale farmers and 80 percent of changed to: 30,000 families/farms below because it refers to Indigenous communities with Investment Proposals (9,150 investment. Same target. assisted regularly by rural from OP and 20,850 from AF) extension agents, by PY05 Reason: Changed to reflect scaled-up activities under AF --- -87 rural extension agents Revised: working in the project area, -480 Community Investment Indicator moved to including 84 at the micro- Proposals changed to: 2,000 Component 3 below because catchments, and 3 in Indigenous Community Investment Proposals it refers to investment. Target communities. financed and implemented (480 reduced to 1200. from OP and 1,520 from AF) Reason: NA Reason: Scaled up to reflect AF --- Revised: NOTE: -45 Indigenous Community Indicator moved to The June 2013 Restructuring Development Plans changed to: Component 3 below because dropped Sub-component 2 - 130 Indigenous Community it alludes to investment. Adaptive Research because Development Plans financed and Target increased to 180. related activities had not started, implemented (45 from OP and 85 and it was judged that they from AF) No change could not produce the expected Reason: Scaled up to reflect AF 2500 producers trained as No change results by the planned Closing promoters in sustainable 78 The World Bank PY PRODERS Sustainable Agriculture & Rural Development (P088799) No. Original Results Framework 1st Restructuring post- Additional Financing 4th Restructuring Final Version measured (PAD) MTR June 2013 Nov 2013 July 2017 at Closing Nov 2020 Date if started at that point. Continued/Revised: 2500 producers trained as development and financial -600 producers trained as promoters in sustainable and commercial matters promoters in sustainable development and financial production adjusted to: 2500 and commercial matters producers trained as promoters in sustainable development and financial and commercial matters Reason: Incorporated the new skills for commercial orientation of producers No change 80 percent of beneficiary -80 percent of beneficiary small- No change small-scale farmers trained scale farmers trained have 80 percent of beneficiary have adopted diversification adopted diversification and new small-scale farmers trained and new sustainable sustainable technologies to have adopted diversification technologies to increase increase production and and new sustainable production and productivity. productivity technologies to increase Reason: Adds “have adopted” to production and productivity denote use of training to take the next step. 10. 3200 farms diversify commercial Dropped --- --- --- activities Folded into other IR Indicators 11. Producers organized for Dropped --- --- --- purposes of marketing in 30 Folded into other IR Indicators percent of the targeted micro- catchments 12. At least 13,500 small-scale Dropped --- --- --- farmers and 73 indigenous Folded into other IR Indicators communities assisted by rural extension agents 13. About 17,100 men and women Dropped --- --- --- beneficiaries directly trained by Folded into other IR Indicators the Project including: 13,500 small-scale farmers; 1650 indigenous communities; 1200 medium-scale producers (with more than 20 ha); 600 community promoters; and, 150 indigenous community promoters. 14. 20 on-farm technology validation Dropped --- --- --- trials implemented Reason: Agricultural research activities largely dropped 15. 9 market studies for new Dropped --- --- --- products (3 for new indigenous Reason: Fled into other products) indicators 79 The World Bank PY PRODERS Sustainable Agriculture & Rural Development (P088799) No. Original Results Framework 1st Restructuring post- Additional Financing 4th Restructuring Final Version measured (PAD) MTR June 2013 Nov 2013 July 2017 at Closing Nov 2020 16. 16 feasibility studies for the Dropped --- --- --- development of new products Reason: Relevance 17. 6 studies aimed at addressing Dropped --- --- --- specific issues raised by Reason: Relevance indigenous communities (2 on land tenure) 18. 5 demand-driven studies aimed Dropped --- --- --- at addressing specific issues Reason: Relevance raised by micro-catchment and indigenous communities, including 3 studies to overcome technical, socio-economic and environmental problems, and 2 studies to generate awareness of environmental issues. 19. 2 policy harmonization studies Dropped --- --- --- developed Reason: Relevance 20. Base studies and proposal for Dropped --- --- --- follow-up operation developed. Reason: Relevance Component 3: Sustainable Rural Development Fund/OUTCOME – Small-scale farmers and indigenous communities implement investments designed to achieve improved incomes, rural home improvements, food security, animal health and reduced environmental degradation. 21. Projects stemming from Farm Revised: Revised: No change No change Investment Proposals -# Farm Investment Plans Family farms with investment Family farms with investment Family farms with investment implemented to increase reduced to 9,150 proposals proposals proposals productivity and adopt -12,000 ha under sustainable Target: # Farm Investment Target: 30,000 family farms Target: 30,000 family farms sustainable productive systems in productive practices (from Plans/Proposals increased from 12,600 farms; diversify 12,600) 9,150 to 30,000 production in 3,200 farms; -65 percent of beneficiary HH improve living conditions in rural with subprojects to improve Reason: Reflects AF scale-up homes through water supply and homes (9,150 from Original Project and sanitation in 65 percent of project 20,850 from AF) homes; and, improve access to Reason: More realistically markets for 100 producer groups. attainable targets (RP 2013) Dropped: -Hectares under sustainable Moved: productive practices (12,000 ha) -Diversification of production Reason: Already included under -Market access for producer other indicators groups -Beneficiaries with rural home See Component 2, Item 9 improvements (65 percent) above. These indicators folded Reason: Included under other into/included in other indicators. indicators 22. 480 Community Investment Revised Revised Revised No change Proposals implemented in water Target changed to 440 Number of Community Investment Number of Community Number of Community 80 The World Bank PY PRODERS Sustainable Agriculture & Rural Development (P088799) No. Original Results Framework 1st Restructuring post- Additional Financing 4th Restructuring Final Version measured (PAD) MTR June 2013 Nov 2013 July 2017 at Closing Nov 2020 supply facilities, agro-processing Community Investment Proposals financed and Investment Proposals Investment Proposals and artisanal micro-enterprises, Proposals implemented financed and implemented financed and implemented equipment for improved Target: 2,000 Target reduced: 1,200 Target reduced: 1,200 agriculture and land titling Reason: More realistic target Reason: Aggregate of 480 Reason: More realistic assistance. (Original Project) and 1520 estimate. (Additional Financing) 23. At least 60 indigenous Revised Revised: Revised No change communities benefited through Target reduced to 45 130 Indigenous Community 180 Indigenous Community 180 Indigenous Community subprojects from Indigenous Indigenous Community Development Plans financed and Development Plans financed Development Plans financed Community Development Plans Development Proposals, from implemented (45 from Original and implemented and implemented in land titling (when required), 60. Project and 85 under the AF) Reason: Revised target of improvement of rural homes, food Reason: Target changed to reflect 180 based on progress security, improved production Reason: More realistic target RF scale-up systems and sustainable land management practices, and income generation. 24. 39 municipalities receive support Dropped --- --- --- for the implementation of subprojects stemming from Reason: Municipal activities Municipal Investment Plans, in canceled by this Restructuring improvement of rural roads, establishment or improvement of nurseries (fruits and trees), and construction of recycling facilities for agro-chemicals. 25. Natural resources management No change Revised No change No change practices improved in the 84 micro-catchments and 73 Indicator revised to “6,000 6,000 hectares under good 6,000 hectares under good indigenous communities including hectares under good forestry forestry practices. forestry practices 12,000 ha under sustainable land practices”. management practices, and Target increased from 5,000 in 5,000 ha of forests recovered PAD to 6,000 ha by AF through re-forestation with native Reason: NRM in catchment species or natural regeneration. areas was de-emphasized under the AF in favor of stronger emphasis on markets and social development. The 12,000 ha under sustainable practices was dropped because already included under other indicators 26. --- --- Revised: No change No change Number of families/farms with Number of families/farms with Number of families/farms with investment proposals investment proposals investment proposals Target increased: 30,000 Target: 30,000 Investment Target: 30,000 Investment Investment Proposals Proposals Proposals Reason: Original PAD target was 81 The World Bank PY PRODERS Sustainable Agriculture & Rural Development (P088799) No. Original Results Framework 1st Restructuring post- Additional Financing 4th Restructuring Final Version measured (PAD) MTR June 2013 Nov 2013 July 2017 at Closing Nov 2020 9,150, increased to 30,000 to reflect scaled up activities under AF. 27. --- --- Revised: Revised No change Number of Indigenous Community Number of Indigenous Number of Indigenous Development Plans financed and Community Development Community Development implemented Plans financed and Plans financed and Target: 130 implemented implemented Reason: Changed at the time to Target: 180 Target: 180 rationalize duplication of results in different indicators under the PAD Reason: Target increased to RF; and to reflect the 85 Plans 180 to reflect progress under the AF added to the original target of 45 Plans. 28. --- --- New: No change No change Percentage of subprojects that Percentage of subprojects Percentage of subprojects complete disbursements and that complete disbursements that complete disbursements investment targets estimated in and investment targets and investment targets their management plan estimated in their estimated in their Target: 80 percent management plan management plan Reason: The Project needed to Target: 80 percent Target: 80 percent improve its disbursement execution to achieve AF outcomes on time 29. --- --- New: No change No change Percentage of subprojects that Percentage of subprojects Percentage of subprojects achieve 80 percent of their that achieve 80 percent of that achieve 80 percent of intended results from their their intended results from their intended results from Investment Plan their Investment Plan their Investment Plan Target: 80 percent Target: 80 percent Target: 80 percent Reason: Subprojects needed to have specifically quantified SMART indicators 30. --- --- New: No change No change Percentage of subprojects that are Percentage of subprojects Percentage of subprojects functional 2 years after their that are functional 2 years that are functional 2 years closing date after their closing date after their closing date Target: 75 percent Target: 75 percent Target: 75 percent Reason: Put in place to monitor sustainability 31. --- --- --- New: No change Number of families with Number of families with improved housing (toilets, improved housing (toilets, ovens, roof etc.) ovens, roof etc.) Target: 8,000 Target: 8,000 Component 4: Animal Health Improvement/OUTCOME – Animal Tracking and Information System (SIGOR) improved and covering the whole range of livestock units, laboratory 82 The World Bank PY PRODERS Sustainable Agriculture & Rural Development (P088799) No. Original Results Framework 1st Restructuring post- Additional Financing 4th Restructuring Final Version measured (PAD) MTR June 2013 Nov 2013 July 2017 at Closing Nov 2020 facilities for high safety, biotery lab and beef chemical residues analysis functioning efficiently, and field operations of both SENACSA and the Vice-Ministry of Livestock Production established and functioning efficiently to ensure high national standards of animal health. 32. SIGOR system with improved No change Revised No change No change coverage incorporating 4 new SIGOR (Geographic Information SIGOR (Geographic SIGOR (Geographic units reaching 76 local units; System for SENACSA and Information System for Information System for online information available for Regional Offices) local units SENACSA and Regional SENACSA and Regional 100 percent of information load connected Offices) local units connected Offices) local units connected with an average registering delay Target: Yes/No Target: Yes/No Target: Yes/No of 2 to 4 days instead of current Reason: SIGOR Indicator divided figures of 25 percent load and 1 month registering delay; NOTE: The AF refers only to information on livestock “SIGOR local units connected” movements available within a and “SIGOR online coverage” to week instead of current delay of summarize this indicator, about 1 month; livestock units interpreted to mean its division registration covering 100 percent into two indicators. of cases compared to current figures of about 95 percent. 33. --- --- Revised: No change No change SIGOR online coverage SIGOR online coverage SIGOR online coverage Target: Yes/No Target: Yes/No Target: Yes/No Reason: PAD SIGOR Indicator divided. 34. New high safety laboratory No change DROPPED --- --- providing high quality and safe pathogen agents sample Reason: NA processing and vaccines analysis. 35. Biotery laboratory producing high No change Revised: No change No change quality and adequate quantities of Biotery Lab improved/rehabilitated Biotery Lab Biotery Lab biological inputs for the high Target: Yes/No improved/rehabilitated improved/rehabilitated safety laboratory and other Yes/No Yes/No demanding laboratories 36. Chemical residues analysis No change No change DROPPED --- laboratory using 100 percent of Reason: NA its potential instead of current This indicator was retained by performance of 10 percent of the AF but is not shown in the potential 2017 Restructuring Paper and did not continue to be monitored in ISRs. 37. Improvement of animal health No change DROPPED --- --- control practices on 22 internal This Indicator was retained The AF Project Paper appears to movements control posts and 6 under the 2013 Restructuring. have dropped this Indicator, and it border livestock entries control was not monitored subsequently posts; cool chain involving in ISRs. management of vaccines 83 The World Bank PY PRODERS Sustainable Agriculture & Rural Development (P088799) No. Original Results Framework 1st Restructuring post- Additional Financing 4th Restructuring Final Version measured (PAD) MTR June 2013 Nov 2013 July 2017 at Closing Nov 2020 functioning adequately throughout the whole country; a complete vaccination coverage of small-scale farmers with livestock units within the 84 micro- catchments; and adequate training program for SENACSA staff extended to the whole country. 38. Provision of high- quality genetic DROPPED ---- --- --- material of cattle, sheep, milk cows and goats to small livestock Reason: NA units in the 84 micro-catchments 39. Small-scale farmers and NOTE: DROPPED --- --- indigenous communities of the 84 Not mentioned in 2013 As the AF shifted away from a micro-catchments trained in Restructuring Paper micro-catchment approach to animal health management, poverty zones/mapping, it is genetics, artificial insemination, assumed this was dropped (but and livestock and pasture not mentioned in PP). management. 40. Improvement of high- quality NOTE: DROPPED --- --- pasture availability in the 84 Not mentioned in 2013 As the AF shifted away from a micro-catchments through Restructuring Paper micro-catchment approach to provision of improved pasture poverty zones/mapping, it is seeds to sow 0.25 ha in each assumed this was dropped (but livestock unit not mentioned in PP). 41. Promotion of alternative NOTE: NOTE: --- --- enterprises such as poultry, pig Not mentioned in 2013 Not mentioned in AF PP and honey production among Restructuring Paper and small-scale farmers as a way to presumed dropped diversify risks. Component 5: Project Management, Monitoring and Evaluation/OUTCOME – Project management structure established, functioning and able to effectively execute project activities and integrate them with the activities of other sustainable rural development programs. 42. Project Management Unit No change NOTE --- --- established in MAG and Indicator retained by the 2013 Not mentioned in AF Project facilitating effective project Restructuring but not monitored Paper/ not monitored in ISRs implementation by FY01 in ISRs. 43. Effective collaboration and DROPPED NOTE --- --- coordination undertaken through Not mentioned in AF PP/or MAG in a systematic manner with Indicator not mentioned in 2013 monitored in ISRs other projects and initiatives, RP and not monitored in ISRs including the GEF/WB-proposed Paraguay Biodiversity, the WB’s Indigenous Land Regularization Project, KfW’s Natural Resource 84 The World Bank PY PRODERS Sustainable Agriculture & Rural Development (P088799) No. Original Results Framework 1st Restructuring post- Additional Financing 4th Restructuring Final Version measured (PAD) MTR June 2013 Nov 2013 July 2017 at Closing Nov 2020 Management, FIDA’s Paraguay Rural, and IDB’s Modernization of Agricultural Public Management 44. Annual Operating, Procurement, DROPPED NOTE --- --- and Disbursement Plans Not mentioned in 2013 RP Not mentioned prepared and submitted throughout the life of the Project. 45. Management Information System No change NOTE --- --- designed and operating from Not mentioned PY01 46. Geographic Information System No change NOTE --- --- operational and providing Not mentioned technical information and mapping for project implementation from early PY01 47. System to monitor project Revised NOTE --- --- activities, results and impacts Based on 2013 Restructuring Not mentioned fully operational in PY02 and RP, this Indicator is presumed participation of local stakeholders to include: “M&E system and local project staff established” and “Baseline studies undertaken”. 48. Project implementation and M7E DROPPED NOTE --- --- reports prepared and submitted Not mentioned in 2013 RP Not mentioned to the World Bank, MAG and to the project management throughout the life of the Project 49. Project communication and No change NOTE --- --- dissemination strategy elaborated Not mentioned in PY01 and implemented, including: one communication and dissemination strategy designed and implemented; 3 launch workshops; 10 informational workshops at departmental level; two national promotional campaigns; 15 department and local level campaigns; and, 5 animal health campaigns at department level. 85 The World Bank PY PRODERS Sustainable Agriculture & Rural Development (P088799) A7.3-Summary of Findings from IICA (2020) Report This report provides a comprehensive analysis of the Project including the context at concept stage, the definition of its objectives and implementation strategy, the challenges faced, and changes processed during the life of the Project, a rigorous analysis of its results and impacts, as well as the performance of the implementers, and reflections on the sustainability of the results achieved and the main lessons learned throughout the process. Chapter 1: Context and Description of the Project presents the main challenges facing the Paraguayan agricultural and rural sector at project design, which focused on the magnitude of rural poverty, environmental deterioration and reduced agricultural productivity of small-scale family farms. The formulation of PRODERS, completed in 2007, sought to establish strategies and support instruments to transform these areas, promoting a sustainable improvement in the quality of life of the peasant and indigenous communities. The main objective of PRODERS was to "sustainably improve the socio-economic status of small producers and indigenous communities in the Project area, through the support of actions, in order to strengthen their community organization, self-management, and access to markets and value chains". To achieve this objective, the Project was structured into 5 components: 1. Community Organization Training and Development; 2. Rural Extension; 3. Sustainable Rural Development Fund (SDF); 4. Improvement in Animal Health; and, 5. Project Management, Monitoring and Evaluation. The chapter describes the implementation strategy through these five components and the adjustments that were processed to achieve the defined goal. Chapter 2: PRODERS, discusses the results and uses the lens of Relevance, Efficiency, and Efficacy criteria for evaluating. The PRODERS, from its inception to the closure, remained relevant to the country's development objectives, aligned with national, sectoral policies and the World Bank's Partnership Strategy with the country. The fostering or competitiveness of Family Agriculture and Indigenous Communities, through key investments, technical assistance and new technologies for crop, soil and water management, as well as livestock production, positioned it as a key part of the National Government's strategy to reduce poverty and achieve the country's social development. The analysis of the Efficacy of the Project, is measured in terms of the fulfillment of its objectives and the extent to which the achievements are attributable to the activities or actions supported by the operation, make it possible to affirm with reasonable confidence that the PRODERS achieved its objectives and that the measured results are attributable to the actions implemented by the Project. Measuring the six (6) main indicators shows that, the Project, through its intervention strategies (Peasant, Indigenous and Family by Family Strategies) led to an income increase of at least 30 percent for 28,172 beneficiaries in a universe of 53,768 (52.3 percent), exceeding the defined target of 10,000 beneficiaries. This increase in productive income explains the achievements in combating poverty measured by indicator 2, where 28,180 beneficiaries, 52.4 percent of the universe, were above the poverty line at the close of the Project, far exceeding the target set at 10,000 beneficiaries. The two results mentioned are linked to the increase in land productivity in beneficiary farms, where 32.2 percent of the farms increased their productivity by at least 25 percent, also exceeding the expected target of 25 percent of the farms. Average farm productivity grew AMONGST beneficiaries of all intervention strategies, where maize productivity Increases boosted the increased productivity of peasant farms, and cassava productivity boosted increased productivity in indigenous communities and FxF farms. On the other hand, the remaining three development indicators defined for the Project show that 249,662 86 The World Bank PY PRODERS Sustainable Agriculture & Rural Development (P088799) direct beneficiaries were reached compared to 225,000 planned and the participation of women beneficiaries far exceeded 40 percent set as a target, with 52.7 percent of total beneficiaries being women. The defined targets for increases in the associative capacity of beneficiary organizations were also met, however these needed further clarification and discussion which are provided in the document. The evaluation of efficiency evaluates the use of the resources invested in the implementation of PRODERS, through the financial evaluation of the Project. The net present value (NPV) of all investment plans as a whole for 10, 15 and 20 years (with discount rate of 12 percent) is positive, with an internal return rate (IRR) of 25.7 percent, 31.5 percent and 32.5 percent respectively. The benefit-to-cost ratio (B/C) of the project for the 10-year horizon is 1.21. This means that the amount invested in the Project in 10 years, will produce 1.21 times the cost of the investment. The same ratio for 15 and 20 years is 1.39 and 1.46 respectively. There are other very positive results of the Project highlighted in this chapter such as Productive Diversification, Food Security, Diversification of Marketing Channels, with an emphasis on agricultural fairs, as well as the remarkable results obtained for vulnerable groups such as rural women and indigenous communities. Chapter 3 addresses Project Management and its Performance including its costs, the challenges faced in relation to the Project's M&E, the strengths and weaknesses in the preparation and implementation of the Project, as well as the positive and negative factors that could impact the results achieved. Chapter 4, 5 and 6 delves into the implementation of the World Bank's Social and Environmental Safeguards and their impact on outcomes; the challenges they face in ensuring the sustainability of the results achieved and reflecting the main lessons learned from PRODERS. In conclusion, based on the evidence of this report the Project has had positive results, analyzed from the perspective of its objectives and indicators, as well as about the efficient use of resources. It is confirmed that there are transformative experiences of the socioeconomic and productive fabric, which could be replicated and other practices that have room for improvement. PRODERS has been characterized with objectives that are not only economic and productive, but also social and cultural. It has acted in an integral way to improve the living conditions of the rural population and its roots. The Project leaves greater installed capacity and resilience in beneficiary organizations and sets the way for future interventions. 87 The World Bank PY PRODERS Sustainable Agriculture & Rural Development (P088799) A7.4-Key tables utilized in discussion in the Efficacy section from the IICA report Indicator 1 Table 1.1- Number of farms that had a greater than 30 percent increase in income Número de Fincas beneficiarias Número de Fincas de la muestra PRODERS Tot Number in sample with an percent del cuyo Ingreso incrementa al al income increase of at least 30 total de Total menos 30 percent (a precios 1/ percent (2020 prices) talleres 2/ 2020) 10.22 PIF 69 29 42 percent 4.298 Peasant 6 Communities 31.09 PIC 66 34 52 percent 16.020 7 Indigenous PICI 50 37 74 percent 7.876 5.828 communities 49.19 Community Plans 185 100 54 percent 26.146 9 Individual FxF 460 204 44 percent 4.569 2.026 53.76 TOTAL PRODERS 645 304 47 percent 28.172 8 52,4 percent Table 1.2- Income change of the sample of beneficiary sample by strategy type Ingresos promedio anual por Finca Income Before Income adjusted Income in 2020 Change income (PYG) by CPI (PYG) (PYG) "Before" -2020 PIF 9,675,043 12,627,896 17,015,804 34,7 PIC 13,432,307 15,274,530 18,466,598 20,9 PICI 4,939,968 5,611,511 11,612,754 106,9 FxF (*) 16,624,366 18,308,247 21,362,189 16,7 TOTAL (weighted average) 35,8 Indicator 2 Table 2.1-Farms above poverty Line by strategy type Number of households in sample Sample PRODERS beneficiaries Above Above the Total the percent Total poverty percent sample poverty line line 62,8 Peasant Communities PIF 344 216 10226 6.421 percent 88 The World Bank PY PRODERS Sustainable Agriculture & Rural Development (P088799) 59,2 PIC 331 196 31097 18.414 percent Indigenous PIC 25,2 250 63 7876 1.985 communities I percent 54,5 TOTAL, Plans 925 475 49199 26.820 percent Fx 29,8 Individual 460 137 4569 1.361 F percent 52,4 TOTAL PRODERS 1.385 612 53.768 28.180 percent Table 2.2-Before and after comparison of beneficiaries on poverty line Proportion of (in Variation Number of households in sample above the poverty line percent) in the poverty percent of the 100- ( percent of farms No of farms rate sample above the sample Total (percent) sample Before After Before After After ( “After" - Before (perce (percent (percen (2020) percent) "Before" nt) ) t) PIF 344 203 216 59,0 62,8 41,0 37,2 -3,8 PIC 331 185 196 55,9 59,2 44,1 40,8 -3,3 PICI 250 45 63 18,0 25,2 82,0 74,8 -7,2 PI (*) 925 433 475 46,8 51,4 49,5 45,5 -4,0 FxF 460 87 137 18,9 29,8 81,1 70,2 -10,9 TOTAL PRODER 1.385 520 612 37,5 44,2 52,2 47,6 -4,6 S (*) Indicator 3 Table 3.1-Farms that achieved productivity greater than 25 percent No of farm No of farms ( percent) Total farms beneficiaries With Increase in benefitting With an With increase from Total in Maize Productivity increase in in productivity PRODERS sample and/or >= 25 income >= 25 >= 25 percent Cassava percent percent PIF 69 62 28 45,2 percent 10.226 4.618 Maíze 49 26 53,1 percent Cassava 56 16 28,6 percent PIC 66 54 18 33,3 percent 31.097 10.366 Maíze 45 14 31,1 percent Cassava 45 13 28,9 percent PICI 50 48 7 14,6 percent 7.876 1.149 89 The World Bank PY PRODERS Sustainable Agriculture & Rural Development (P088799) Maíze 44 3 6,8 percent Cassava 48 7 14,6 percent Total 32,8 Investment 185 164 53 49.199 16.132 perc Plans. ent Maíze 138 43 Cassava 149 36 FxF 460 399 103 25,8 percent 4.569 1.179 Maíze 358 81 22,6 percent Cassava 326 95 29,1 percent 32,2 645 563 156 53.768 17.312 perc Total PRODERS ent Table 3.2Variation in area cultivated, production and yield per hectare in maize and cassava Area Production- Tonne. Yield Ton/ha Variation “before”/2020 cultivated -ha Produ Before 2020 Before 2020 Before 2020 Area Yield ction- PIF Maíze 45 49 80 108 1,8 2,2 8,8 34,7 23,8 Cassava 51 57 861 919 16,8 16,2 10,7 6,7 -3,6 PIC Maíze 47 59 92 127 2,0 2,2 25,1 37,7 10,0 Cassava 50 58 875 983 17,7 17,1 16,2 12,4 -3,3 PICI Maíze 21 33 60 96 2,8 2,9 55,3 59,9 3,0 Cassava 23 38 480 825 20,6 21,6 64,5 71,9 4,5 FxF Maíze 325 362 560 625 1,7 1,7 11,5 11,5 0,1 Cassava 306 285 4.225 4.063 13,8 14,3 -6,9 -3,8 3,3 Indicator 4 Table 4.1-Drect Beneficiaries Medición actual Medición previa Beneficiaries Average Average Plan with farm number of number of Total direct Total direct titles members per perce members per beneficiaries beneficiaries percent household nt household (workshops) (MAG) PIF 10.226 4,25 43.461 17,4 4,0 40.904 16,9 PIC 31.097 4,49 139.626 55,9 4,0 124.388 51,5 PICI 7.876 5,10 40.168 16,1 6,0 47.256 19,6 FxF 4.569 5,78 26.409 10,6 6,3 28.785 11,9 Total 53.768 249.662 100 241.333 100 90 The World Bank PY PRODERS Sustainable Agriculture & Rural Development (P088799) Table 5.1- Female Beneficiaries Number of Women Beneficiaries of sub-Projects Strategy/Plan Number of beneficiaries of community Plans sub-project Number percent PIF 472 10.226 4.351 42,5 PIC 712 31.097 16.292 52,4 PICI 180 7.876 3.969 50,4 FXF - 4.569 3.735 81,7 Total 1.364 53.768 28.347 52,7 Indicator 6 Table 6.1 Sample from workshops PRODERS Beneficiaries Total community Community Total community Total Community organizations organizations and organizations and organizations and and indigenous indigenous indigenous Proportion indigenous organizations organizations that organizations (PIC y organizations that evaluated in completed the PICI) completed the criteria workshop criteria a b c = b/a D e = d*c 66 56 84,8 711 603 PIC percent 50 31 62,0 180 112 PICI percent Total 116 87 891 715 Table 6.2-Categoriztion according to formalization-Criteria explained in text Incipient Development Consolidated PLANS TOTAL No percentage No percentage No percentage PIF 23 33,3 percent 32 46,4 percent 14 20,3 percent 69 PIC 4 6,1 percent 49 74,2 percent 13 19,7 percent 66 PICI 27 54,0 percent 23 46,0 percent 0 0,0 percent 50 54 29,2 percent 104 56,2 percent 27 14,6 percent 185 Indicator 13 and 14 Table 13.1-Percentage of beneficiaries who were trained who adopted diversification practices and new sustainable technologies to increase production Sample from workshops PRODERS Beneficiaries Model farms that Total farms Total beneficiaries Total that were Proporti Strategy were trained and evaluate din percent PIF, PIC y PICI trained and have on have adopted the workshops adopted the practices practices A B c = b/a d e = d*c f = e/d 91 The World Bank PY PRODERS Sustainable Agriculture & Rural Development (P088799) 69 60 87,0 10.226 8.892 PIF percent 66 54 81,8 31.097 25.443 PIC percent 50 39 78,0 7.876 6.143 PICI percent 185 153 49.199 40.478 82,3 Total percent Table 13.2- Hectares under which specific practices were adopted Total Indigenous Organizations (Org.) (Org.+Cis) Communities (CIs) Practices Applied Familie Famili Ha Org/CIs Families Ha Org Ha Cts s es Green Manure 9.829 695 24.958 9.155 619 22.030 674 76 2.928 Soil Improvement Soil Liming 5.803 291 8.199 5.480 273 7.425 323 18 774 Subsoiling 49 4 53 49 4 53 - - - Agroforestry 383 33 1.304 379 32 1.252 4 1 52 Reforestation 4.762 821 26.315 4.732 798 25.492 30 23 823 Forestry Practices Natural Regeneration 192 20 265 192 20 265 - - - Forest Enrichment 87 19 282 87 19 282 - - - Others 5 11 249 0,5 6 38 4,5 5 201 Traditional Soil Conditioning 4.651 199 5.892 2.830 127 2.695 1.821 72 3.197 Indicator 17-Number of sub-projects that are functioning 2 years after the closing date based on the workshop data Sample from workshops PRODERS Beneficiaries Sub-projects Total sub- that are still Total Sub- projects functioning two projects that Total farms Total Sub- Planes evaluated years after are still Proportion evaluated in percent Projects workshops that have closing date functioning closing date (only those that two years after before 2017 ended before closing date 2017) A b C d =c/b E f = e*d g = f/e 85,0 PIF 69 60 51 472 401 percent 90,0 PIC 66 20 18 712 641 percent 0,0 PICI 50 12 0 180 0 percent 76,4 Total 185 92 69 1.364 1.042 percent 92 The World Bank PY PRODERS Sustainable Agriculture & Rural Development (P088799) A7.5-Summary of findings from review conducted by FAO in 2016 The Republic of Paraguay signed Loan Agreement 7503 with the International Bank for Reconstruction and Development for the financing of the Paraguay Sustainable Rural Development Project on June 24, 2008, which was approved by National Law No. 3734 in June of 2009. The objectives of the Project are: i. Strengthen the capacity of the organizations involved for their active participation in decision-making bodies, as well as the technical and administrative capacity of those responsible for implementing the Project. ii. Provide the project beneficiaries with capacities, knowledge, skills and attitudes necessary to improve their production and marketing systems in a sustainable and environmentally compatible manner; iii. Provide financial resources to the beneficiaries to implement social, economic / productive, and environmental investments in farms and peasant and indigenous communities. In mid-2013, a restructuring of the project was carried out based on the evidence found in the Mid-Term Review carried out in February of the same year. A series of modifications were proposed to simplify project design and implementation to accelerate investments. Although many of the necessary adjustments were addressed through improvements in the Operations Manual, a modification was made to the results framework and the project components. Subsequently, at the end of 2013, the provision of an Additional Financing (AF) for US$100 million was approved for the project, also called Phase 2 (Loan 8316), to cover costs associated with the expansion of activities. The justification for the expansion is that the new government that was entering declared the reduction of poverty as one of its priority objectives. Considering that more than two thirds of the rural population live in poverty and is dedicated to agriculture, as well as the “menu” of intervention activities in the territory offered by PRODERS, it was requested to increase the scale of the project in terms of budget and territorial coverage. In addition, adjustments were made both at the Development Objective (PDO) level and at the Component level. The World Bank requested FAO, through the FAO / CP, to carry out an evaluation of PRODERS Loan 7503, which includes the period between June 2009 and December 2015 The Project is in line with what is proposed in the National Development Plan of Paraguay 2030, specifically with the strategies "Poverty reduction and social development", "Inclusive economic growth", as well as with the Agrarian Strategic Framework from period 2014-2018 and its six axes. Likewise, the project contributed to the third and fourth pillars of the EAP, as it has focused on the Departments of San Pedro and Caaguazú, which are two of the poorest in the country. Regarding the Effectiveness Subdimension, the result indicators and intermediate indicators that were defined in the restructuring of the project were evaluated. In this regard, the Project Executing Unit does not have information to determine compliance with the goals of the project's results indicators. Although efforts have been made to measure these indicators, the technical requirement, and the lack of information (due to a weak monitoring and evaluation system, lack of digitization and systematization of existing information, as well as the need to collect new primary information in field) has made it difficult 93 The World Bank PY PRODERS Sustainable Agriculture & Rural Development (P088799) to monitor and control these results. From the evaluation of the intermediate indicators and the results obtained from the samples selected to analyze the Efficiency Subdimension, it can be said that there is evidence that some goals of the project's results indicators have been achieved. However, it is necessary to carry out a structural evaluation regarding their effective achievement, which would allow for conclusion on whether the goals were achieved or not. This includes, among other elements, systematizing existing information (surveys and censuses), as well as collecting primary information to characterize the project situation of the beneficiaries through the application of surveys specially designed for this purpose on a sample that is statistically significant. The evaluation of the Efficiency Subdimension is based on the economic and financial analysis of the investment sub-projects, based on the gathering of primary information from a sample of sub-projects with a margin of error of 1.5 percent and a reliability of 90 percent. In financial terms, fifteen of the seventeen investment sub-projects that make up the sample were viable (NPV> 0). The two investment sub-projects that were financially unviable were from the Indigenous Communities Investment Plans (PICI). These results reflect the different investment approach of the PICIs compared to the PIFs and PICs. The PICIs had a higher proportion of social investments not aimed at generating income compared to the PIF and PICs. It was also found that the PICI subprojects that were financially viable are highly sensitive to changes in cost and income determinants. PIFs, on the other hand, are not as sensitive to increases in costs and income, and on average they can resist changes of around 20 percent. The economic analysis of the entire project shows a NPV of US$1.16 million, which indicates that PRODERS was an economically advantageous public investment for Paraguayan society. However, the sensitivity analysis indicates that an increase of more than 1 percent in costs or a decrease of 1 percent in income would make the sum of updated flows of incremental net benefits at social prices negative. It should be noted that the economic evaluation was carried out on the productive component and does not incorporate the benefits associated with social and environmental investments, therefore the effective impact received by the beneficiaries is being underestimated. Among others, benefits have been generated due to improvements in health, nutrition, and life expectancy due to the increase in the availability of food, improvements in access to drinking water, as well as a decrease in morbidity and costs for treating diseases that are contagious through consumption of contaminated water. Likewise, there are benefits for improving the conditions of their homes, which also have an impact on the health and well-being of families. Other economic benefits that the beneficiaries receive are the improvement of soils, reduction of erosion and capture of CO2 from the environment. With this, it can be considered that this estimate corresponds to the lower limit of the economic benefits achieved by the project. The report also analyses risk to accomplishment of the PDO. It is considered that, in the case of the results of indigenous communities, the process of creating social capital is in an initial phase that the project has collaborated in gestating and developing. It is necessary to continue supporting the process of social, environmental, and productive cohesion of the communities, in order for them to have the capacities to self-manage in a collaborative way, in such a way as to ensure that the results are maintained over time. In the case of small producers, although they have a better condition of social and socio-productive capital so the support they need: technical assistance, transfer of capacities and organizational strengthening, considering an approach to improve the conditions of commercialization, access to markets, value chains, etc. An important element for obtaining and maintaining the results of the project, both for small 94 The World Bank PY PRODERS Sustainable Agriculture & Rural Development (P088799) producers and for indigenous communities, is road connectivity, since it significantly determines the viability of physically having services, inputs and taking products to the marketing points. In the analysis of the World Bank's Performance Dimension, in its Input Quality Subdimension, it is considered that a project was designed that recognizes the critical relationship that exists in the rural world with respect to the poverty status of a significant proportion of its population. inhabitants, who have unsatisfied basic needs and low productive and social capital, with the opportunities offered by the development of sustainable agriculture as the basis of their living conditions. The project was not without challenges for its implementation from a technical and institutional point of view, due to the wide range of activities to be carried out in the territories. The main finding about the quality of the entry was the overestimation of the goals, as well as the wide dispersion of activities to be implemented in the territories. Regarding the Supervision Subdimension, it can be indicated that from the beginning of the project execution year 2009 until December 2015, fourteen missions were developed to support the implementation.45. The missions were made up of a professional team with expertise in various areas and duly reported, and included working meetings with the PRODERS team to assess progress and challenges, as well as meetings with relevant stakeholders for project management and field visits. The project had two Project Managers from the World Bank (TTL) from 2009 to 2015. Two deficiencies in supervision are recognized: the completion of the Mid-Term Review in February 2013, just 10 months from the date of project closure (December 28, 2013), which concludes that the project performance is unsatisfactory, and the weak monitoring and evaluation system, and general project management. Although the monitoring and follow-up system was reviewed in all missions, its weaknesses, and the actions required to correct the situation were defined, it could not be overcome. This partly explains the low monitoring and the lack of information to evaluate some intermediate indicators and project results indicators analyzed in the Effectiveness Subdimension. In the analysis of the Borrower Performance Dimension, it is considered that the Government has supported the project from the beginning, because it has been consistent with the national and sectoral development strategy. The project has been positioned as a good tool to contribute to the development of the territories where it is implemented. It is considered of first importance within the strategy of the National Government to reduce poverty and achieve the social development of the country. The positive positioning of the project is mainly due to i) its broad territorial presence in the departments with the highest poverty rates in the country, to ii) implementation of social and productive investments that are consistent with two of the pillars of the unsatisfied basic needs approach, aimed at overcoming poverty, since iii) explicitly considers the indigenous component within its implementation strategy. However, the high turnover of the General Project Coordinator, with five people in charge during the implementation period in the analysis period (June 2009 to December 2015), has meant a decrease in the efficiency of the project and its capacity to manage its management, due to the “cost” of learning for new people who arrive and some changes in implementation criteria, which hinder the continuity and fluidity of the execution of activities 45It should be noted that as of 2014, Loan 8316 came into operation, so since that year the objective of the missions was to supervise both loans. In sum, seven missions were carried out between 2009-2013 (supervision of Loan 7503), and seven missions between 2014-2015 (supervision of Loan 7503 and Loan 8316). 95 The World Bank PY PRODERS Sustainable Agriculture & Rural Development (P088799) Regarding the Performance Subdimension of the Implementing Agency, it is considered that it was designed to have all the human resources and capacities to respond to the technical, administrative, fiduciary requirements and to the project schedule. However, two important gaps are identified. The first is the high turnover of project personnel, which permanently faced repeated changes in strategic personnel of key middle managers in the implementation. This situation may be a factor that has weighed on the efficiency of the project due to the time in which the positions are left without responsibility and the cost of learning for new people who arrive. The second gap is linked to a deficiency in the implementation of the monitoring and evaluation system. This situation makes difficult the monitoring, evaluation and planning of its physical and financial management, as well as the systematic measurement of the indicators of the Results Framework and other project achievements. Both elements have threatened the proper execution of the project, which is shown in that, to date, the implementing agency has not carried out an effective monitoring or evaluation of the Project's Results Indicators. Having a good monitoring and evaluation system is highly relevant for a project that is not only complex in its implementation given the wide variety of activities that it must develop, but also because, for at least two years, Loans 7503 and 8316 were present operating and making disbursements simultaneously, Among the lessons learned from the project is that the demand-oriented decentralized implementation approach of the project, through the social organizations of rural territories themselves, which are in charge of defining their own needs with a view to investments in farms and in their organizations, is a positive aspect of the project development strategy, since it improves the sustainability of the results and promotes the creation and strengthening of the communities' social capital. However, organizational strengthening and a strong monitoring and evaluation system are essential elements for the implementation of a project in a decentralized manner. Likewise, a demand-oriented production development project, with good technical assistance and organizational strengthening, provides families with the means to expand agricultural production, link them to markets, and have social services, and thereby contribute to overcoming poverty measured by income and / or by the unsatisfied basic needs approach. To quantify the impact generated in overcoming poverty, it is necessary that the projects consider the determination of baselines that characterize the beneficiaries in their situation without a project. It is recommended that future projects give relevance to the insertion in markets and value chains on the part of indigenous communities and small producers. Likewise, it is necessary to give continuity to the development of technical capacities (to maintain increases in efficiency - productivity) and managerial (for the self-management of resources and the use of opportunities). It is of prime importance to have a good basic technical background when designing a project like this, since without the proper information goals and activities can be overestimated in the project formulation phase. Likewise, it is worth highlighting the need to have a project implementation agency with full technical, administrative, and legal capacities, and with management systems (financial, monitoring and evaluation) that generates information that allows effective monitoring of the activities and indicators of the project. project, especially in a complex project like this (territorial scale of intervention, decentralized implementation approach, wide range of investments in the territories). 96