Document of The World Bank FOR OFFICIAL USE ONLY Report No: 66831-MV PROJECT PAPER FOR PROPOSED GRANT US$ 3.83 MILLION TO THE REPUBLIC OF MALDIVES IN SUPPORT OF THE WETLAND CONSERVATION AND CORAL REEF MONITORING FOR ADAPTATION TO CLIMATE CHANGE (P128278, TF011853) MALDIVES: CLIMATE CHANGE TRUST FUND (P120337, TF071418) April 19, 2012 Sustainable Development Department Environment, Water Resources and Climate Change Sector Maldives Country Management Unit South Asia Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCY EQUIVALENTS (Exchange Rate Effective {Date}) Currency Unit = US$ US$1 = Maldivian Rufiyaa (MVR) 15.2 FISCAL YEAR July 1 – June 30 ABBREVIATIONS AND ACRONYMS AusAID Australian Agency for International MEMP Maldives Environment Management Development Project CAS country assistance strategy MMA Maldivian Monetary Authority CBD Convention on Biological Diversity MOE Ministry of Education CBWMPs Community-Based Wetland MOFA Ministry of Fisheries and Agriculture Management Plans MOTAC Ministry of Tourism, Arts and Culture CCAC Climate Change Advisory Council MOU memorandum of understanding CCTF Climate Change Trust Fund MVR Maldivian Rufiyaa COREMAP Indonesia Coral Reef Rehabilitation NBSAP National Biodiversity Strategy and and Management Project Action Plan CP Community Participation NAPA National Adaptation Programme of CQS Consultants’ Qualifications Action DC Direct Contracting NCB National Competitive Bidding EU European Union NEAP National Environmental Action Plan EIA Environmental Impact Assessment NGIS National Geographic Information EPA Environment Protection Agency System ESAs environmentally sensitive areas NOAA National Oceanographic and ESDD Environmental and Social Due Atmospheric Administration Diligence NPC National Planning Council FBS Fixed Budget Selection OP Operational Policy FM financial management PDO Project Development Objective FMA Fisheries Management Agency PMU Project Management Unit GDP gross domestic product QBS Quality-Based Selection GOM Government of the Maldives QCBS Quality- and Cost-Based Selection IBRD International Bank for RAPs Resettlement Action Plans Reconstruction and Development SAP Strategic Action Plan ICB International Competitive Bidding SLDG Strengthening Local Democracy and IDA International Development Governance Association SRFP standard request for proposal IEC information education SSS Single-Source Selection communication SST sea surface temperature IUFRs interim unaudited financial reports TOR Terms of Reference LCS Least Cost Selection UNDP United Nations Development LGA Local Government Authority Programme LSA Land and Survey Authority WCCM Wetland Conservation and Coral Reef MCS Monitoring Control and Surveillance Monitoring (for Adaptation to Climate Change Project) Regional Vice President: Isabel M. Guerrero Country Director: Diarietou Gaye Sector Director: John Henry Stein Sector Manager: Herbert Acquay Task Team Leader: Priti Kumar ii Table of Contents I. Strategic Context and Rationale…….……………………………............... 1 A. Country and Sector Background…….……………………………….............. 1 B. Rationale for Bank Involvement…….……………………………….............. 7 C. Higher Level Objectives to which the Project Contributes…….…................. 8 II. Project Description…….……………………………………………............. 9 A. Project Development Objective and Key Indicators…….……….................... 9 B. Project Components…….……………………………………………............. 10 1. Component 1: Wetland Conservation…….……………………................ 10 2. Component 2: Coral Reef Monitoring…….……………………............... 12 3. Component 3: Project Management…….………………………............... 13 C. Project Costs…….……………………………………………………............ 14 D. Lessons Learned and Reflected in Project Design…….…………….............. 14 III. Implementation…….………………………………………………............... 15 A. Institutional and Implementation Arrangements…….……………….............. 15 B. Monitoring and Evaluation of Results…….………………………................. 15 C. Sustainability…….……………………………………………………........... 16 IV. Key Risks and Mitigation Measures…….…………….……………............ 17 V. Project Summary …….……………………………………………….......... 18 A. Economic Analysis / Justification…….………………………………............ 18 B. Fiduciary…….………………………………………………………............... 19 C. Environment and Social Due Diligence…….…………………………........... 24 D. Policy Exceptions…….………………………………………………............. 26 Annex 1. Results Framework…….………………………………………………........... 27 Annex 2. Detailed Project Description…….………………………………………........ 30 Annex 3. Institutional Arrangements. …….………………………………………......... 40 Annex 4. Risk Matrix…….………………………………………………………........... 41 Annex 5. Implementation Support 45 Strategy…………………………………………….......................................... Annex 6. Team Composition…….………………………………………………........... 47 Annex 7. Disbursement Table.......................................................................................... 48 References and Endnotes…….…………………………………………......... 49 iii DATA SHEET Republic of Maldives WETLAND CONSERVATION AND CORAL REEF MONITORING FOR ADAPTATION TO CLAIMATE CHANGE (P128278, TF011853) Project Paper South Asia Region Environment, Water Resources and Climate Change Sustainable Development Department Maldives Country Management Unit Basic Information Date: April 19, 2012 Sectors: General water, sanitation, flood protection (100%) Country Director: Diarietou Gaye Themes: Climate Change – 30% Biodiversity – 30% Water Resource Management – 30% Environmental Policies and Institutions -10% Sector Manager/Director: Herbert Acquay/John Henry Stein EA Category: B – Partial Assessment Project ID: P128278 Instrument: TAL Team Leader(s): Priti Kumar Recipient: Ministry of Finance and Treasury, Ameenee Magu, Male’ 20379, Republic of Maldives, Phone: +960 3349226, Fax: +960 3324432 Executing Agency: Ministry of Housing and Environment, Ameenee Magu, Male’ 20392, Republic of Maldives, Contact: Mr. Saleem Ahmed Title: Permanent Secretary Telephone No.: +960 3004100 Email: ahmed.saleem@mhe.gov.mv Project Implementation Period: Start Date: April 15, 2012 End Date: September 30, 2014 Expected Effectiveness Date: May 1, 2012 Expected Closing Date: September 30, 2014 Project Financing Data(US$M) [ ] Loan [X] Grant [ ] Other [ ] Credit [ ] Guarantee For Loans/Credits/Others Total Project Cost : US$ 3.83 m Total Bank Financing : Total Cofinancing : US$ 0.08 m Financing Gap : Financing Source Amount(US$M) BORROWER/RECIPIENT US $ 0.08 IBRD IDA: New IDA: Recommitted Others US$ 3.83 4 Financing Gap Total US $ 4.91 Expected Disbursements (in USD Million) Fiscal Year FY 12 FY 13 FY 14 FY 15 Annual 0.3 1.0 1.6 0.93 Cumulative 0.3 1.3 2.9 3.83 Project Development Objective(s)  To strengthen institutional capacity of MOHE and local councils for planning and demonstration of community based wetland and water resources management, and  To implement a coral reef monitoring system. Components Component Name Cost (USD Millions) Wetland Conservation and Water Resources Management 2.13 Coral Reef Monitoring 1.03 Project Management 0.46 Compliance Policy Does the project depart from the CAS in content or in other significant respects? Yes [ ] No [ X] Does the project require any exceptions from Bank policies? Yes [ ] No [ X] Have these been approved by Bank management? Yes [ ] No [ X] Is approval for any policy exception sought from the Board? Yes [ ] No [X] Does the project meet the Regional criteria for readiness for implementation? Yes [ X] No [ ] Safeguard Policies Triggered by the Project Yes No Environmental Assessment OP/BP 4.01 X Natural Habitats OP/BP 4.04 X Forests OP/BP 4.36 X Pest Management OP 4.09 X Physical Cultural Resources OP/BP 4.11 X Indigenous Peoples OP/BP 4.10 X Involuntary Resettlement OP/BP 4.12 X Safety of Dams OP/BP 4.37 X Projects on International Waters OP/BP 7.50 X Projects in Disputed Areas OP/BP 7.60 X Legal Covenants Name Recurrent Due Date Frequency Description of Covenant Team Composition Bank Staff 1 Name Title Specialization Unit UPI Priti Kumar Senior Environmental Specialist Environment SASDI 210231 Anupam Joshi Environmental Specialist Environment SASDI 327894 Sumith Pilapitiya Lead Environmental Specialist Environment SASDI 80629 Darshani De Silva Environmental Specialist Environment SASDI 333145 Sunethra Chandrika Samarakoon Procurement Specialist Procurement SARPS 333182 Poonam Pillai Senior Environmental Specialist Environment SASDI 202048 Supul Chamikara Vijesinghe Financial Management Specialist Financial Management SARFM 349165 Marinela E.Dado Senior Operations Officer Procurement Specialist SASDI 15400 Name Title Specialization Unit UPI Marie Florence Elvie Team Assistant Program Support SASDO 192664 Lakshmi Narayanan Team Assistant Program Support SASDO 286858 Mary Ann Ashra Fernando Team Assistant Program Support SASDO 384428 Non Bank Staff Name Title Office Phone City Kalyani Kandula Consultant 09949854440 Hyderabad Vani Kurup Consultant 9810965992 New Delhi Henry Opdam Consultant +31 62 232 7570 Nijmegen, Netherlands . Locations Country First Administrative Location Planned Actual Comments Division 2 I. Stratecic Context and Rationale A. Country and Sector Background 1. The Republic of Maldives is a collection of small islands to the south-west of Sri Lanka in the Indian Ocean. It comprises about 1,190 islands grouped into 26 atolls forming a chain of over 820 kilometers in length and spread over an area of more than 90,000 square kilometers. These islands are built, protected and sustained, almost entirely, by living coral. Only 33 of the 290 inhabited islands have a land area of more than one square kilometer.1 The islands are low lying with an average elevation of only 1.5 meters. The total population of Maldives in 2009 was 324,992.2 In terms of area and population, it is the smallest Asian country. The human development index for Maldives is 0.602 placing it above the South Asia regional average of 0.516.3 The two most important economic sectors of the Maldives are tourism and fisheries, contributing to nearly 80 percent of the country’s gross domestic product (GDP). 2. Vulnerability to Climate Change: The Maldivian islands are regularly exposed to multiple natural hazards and the disaster risk scenario for the country is described as “moderate� due to a low probability of hazard occurrence and high vulnerability from exposure to geographical, topographical and socio-economic factors.4 Its unique geography makes this archipelagic small-islands nation particularly vulnerable to projected adverse consequences of climate change,5–6 including sea-level rise, as well as increases in sea surface temperature, ocean acidification7 and frequency/intensity of droughts and storms. For example, sea levels are projected to rise within the range of 10 to 100 centimeters by year 2100, threatening submergence of the entire country in the worst-case scenario. Extreme rainfall events are likely to occur at twice the current frequency by 2050.8 Higher ocean temperatures increase the rate of coral bleaching and increase the risk of massive coral die-off during the local ocean temperature spikes that occur during El Niño events (the severe 1998 El Niño raised sea surface temperatures around the Maldives by as much as 5°C).9 3. Overview of Wetland and Coral Ecosystems: In the Maldives, there are natural depressions or wetlands (locally known as Kulhi) situated within or partly along the coast. These wetlands are either brackish or freshwater, may be linked to lagoons, and almost always support mangroves. Of the 1,190 Maldivian islands only 41 islands have wetlands,10 making conservation of these ecosystems a priority. The Maldives has the seventh largest coral reef system in the world. It is estimated to contain 3.14 percent of the total coral reef area of the world.11 These reefs, while not as diverse as those in the coral triangle in south east Asia, are amongst the richest in the world in terms of species diversity and aesthetic appeal, and host over 1,900 fish species, 187 coral species and 350 crustaceans. 4. Importance of Wetland and Coral Ecosystems to Economy: The wetland and coral ecosystems of the Maldives make a significant contribution to its economy. A 2009 study of the economic value of biodiversity to the Maldives12 indicated that 71 percent of national employment (78,500 jobs), 49 percent of public revenue (MVR 2.5 billion), 62 percent of foreign exchange (US$435 million), 98 percent of exports (MVR 1.7 billion) and 89 percent of GDP (MVR 135 billion) are biodiversity dependent. a) Wetlands: Qualitatively, the Maldivian wetlands are considered to be highly productive ecosystems that provide several goods and ecological services. They reduce the outflow of silt, nutrients and sand onto house reefs. The low-lying, richer soils support numerous species of mangrove. Wetlands contribute to groundwater recharge and support livelihoods of local communities by providing wood (used in boat building, house building, fencing, and as firewood for cooking and smoking 3 fish), supporting agriculture (taro, chillies, banana, etc.), contributing to fish yield, supplying plants for traditional medicine and supporting tourism.13 b) Coral reefs: Ecosystem goods and services derived from coral reefs include reef food fishery, live-bait fishery that underpins the environment-friendly pole-and-line fishery, coral sand that sustains the beaches of the Maldives, physical defence from erosion and storm surge, tourism attraction as well as cultural and aesthetic value. Coral reefs are a major driver for key economic sectors such as tourism and fisheries. A 2007 conservation investment study14 for the Maldives showed that an average visitor would undertake 1.42 and 3.76 times more trips during the next five-year period with improvement in fish abundance and coral quality, respectively. The fisheries sector creates 14,500 jobs and produces 99 percent of all visible export earnings. Reef fishery accounts for about 18 percent of the total fish production of the Maldives.15 5. Significance of Wetland and Coral Ecosystems in Climate Change Adaptation: Sustaining wetlands and coral reefs is a cost-effective strategy for climate change adaptation with strong benefits for disaster mitigation, poverty reduction and biodiversity conservation. a) Wetlands: The carbon sequestration potential of wetlands is not significant in the Maldives due to their extremely small size. However, these in-land ecosystems help in climate change adaptation16 through their role in flood and soil erosion control, groundwater recharge, freshwater storage and livelihood support. They lessen the effect of flooding during high rainfall events and storm surges and also provide water security during low rainfall periods. b) Coral reefs: The coral reefs serve as natural breakwaters; loss of corals means decreased protection from waves and currents, and an increase of beach erosion and inundation. 6. Key Drivers of Degradation of Wetland and Coral Ecosystems: The wetlands and coral reefs in the Maldives are threatened by anthropogenic and climatic factors. a) Wetlands: While quantitative information on the extent of wetlands degradation due to various threats is not available, the documented major drivers for wetland degradation in the Maldives are:17  Drain and channel constructions that divert or increase water outflow leading to drying-out of wetlands. Soil degradation in dried-up wetlands leads to soil nutrient leaching, as well as acidification and wetlands shrinkage.  Wetlands reclamation (filling in) for road construction, housing development, waste disposal, agriculture, tourism development, vector control, etc.  Storm surges and sea level rise that leads to increased intrusion of sea water into the water table causing soil salinization and resultant change in species composition.  Aquaculture development (sea cucumber, shrimp).  Timber overharvest.  Pollution (eutrophication) due to solid waste dumping, domestic sewerage discharge and agricultural run-off. b) Coral reefs: The key drivers of coral reef degradation in the Maldives are increase in sea surface temperatures and ocean acidification stemming from climate change and local pressures, such as reclamation, dredging and pollution from released untreated sewage and effluents as well as solid waste.  Rising sea temperatures may lead to coral bleaching and death. The Indian Ocean 1998 bleaching event caused a reduction in live coral from an estimated 40–60 percent to less than 3 percent.18 Projections suggest that during the 2050s more than 95 percent of reefs globally will experience thermal stress sufficient to induce severe bleaching in most years.19 4  Rising carbon-dioxide levels increase ocean water acidity and affect coral building. By 2050, only about 15 percent reefs will be in areas with suitable chemical conditions for coral growth.20  In the Indian Ocean, more than 65 percent reefs are threatened by local activities, with nearly 35 percent under high or very high threat from overfishing, land-based pollution and coastal development.21 Coral reefs in the Maldives have been under significant pressure since the tourism boom in the mid-1970s. Mining for construction materials, dredging for coastal development, untreated sewage release, etc. has led to localized negative impacts (while coral mining has been banned, regulated sand mining is allowed). Large reef areas, including deeper water reefs and reefs on the outside edges of the atolls, are not yet under such stress and would survive with effective management. However, when the projected adverse impacts, particularly from climate change are factored in, the prognosis is poor. 7. Issues in the Policy and Regulatory Context for Wetland and Coral Conservation: The policy context in the Maldives is supportive of wetlands and coral reefs conservation from the standpoint of biodiversity conservation and climate change adaptation. The Government of the Maldives (GOM) is a signatory to the Convention on Biological Diversity (CBD). Work is underway for Maldives to become a signatory to the Convention on Wetlands (Ramsar Convention) — an intergovernmental treaty for conservation and sustainable use of Wetlands of International Importance. The National Biodiversity Strategy and Action Plan22 and the Third National Environmental Action Plan (NEAP) stress the importance of protecting and restoring coral, wetlands and mangrove ecosystems. The Strategic Action Plan (SAP; also called National Framework for Development 2009–2013) stresses conserving and sustainably utilizing biological diversity to ensure maximum ecosystem benefits. 8. From a climate change perspective, the National Adaptation Programme of Action 23 2006 (NAPA) gives priority to increasing adaptive capacities and climate resilience of communities. The NAPA emphasizes wetland conservation through priority actions, such as flood control, aquifer recharge and natural water catchment area protection. It recognizes the importance of coral reefs implicitly through coastal protection services and explicitly by banning coral mining and protecting reefs/house reefs from developmental impacts. The existing umbrella environmental regulation — Environmental Protection and Preservation Act 1993 — provides for wetland and coral conservation in a broad manner. While the regulatory framework includes the Environmental Impact Assessment (EIA) regulation (2007) and Environmental Liability Regulation (2011) which provide for conservation in a broad manner, there are no specific regulations or ordinances pertaining to wetlanda and coral conservation. Overall, national policies (NBSAP, NAPA, NEAP, National Solid Waste Management Policy and SAP) that provide the basis for climate change adaptation in the country are comprehensive and favorable to wetland and coral reef conservation; however, their implementation remains a key concern. 9. National and Local Institutional and Governance Constraints: At the national level, Ministry of Housing and Environment (MOHE) and Ministry of Fisheries and Agriculture (MOFA) are two overarching agencies responsible for wetland and coral conservation, respectively. a) Wetlands. The MOHE’s regulatory arm — the Environmental Protection Agency (EPA) — is responsible for ensuring wetlands protection in collaboration with the local governments. EPA has severe institutional constraints (such as human and 5 financial resources) to carry out its roles effectively. The recent civil service downsizing policy has led to further staff shortage at EPA. At the local government level, the city councils, atoll councils and island councils are responsible for development in their respective jurisdictions. The technical capacity within these local government agencies in relation to wetland conservation is limited. The atoll councils and island councils were elected recently after the Act on Decentralization of the Administrative Divisions, 2010 was ratified. Therefore, these councils are at an early stage of establishing themselves as institutions for local governance. In summary, the key constraints with respect to national and sub-national institutions and governance are related to limited human resources, technical capacity and inter-agency coordination / partnership. b) Coral reefs: MOFA provides technical support for coral conservation. MOFA also faces severe institutional constraints (such as manpower and financial resources) to carry out its roles effectively. As with the EPA, the recent civil service downsizing policy has also led to a major shortage of staff and expertise at MOFA. However, MOFA is the only government agency in the Maldives that has some capabilities to conduct coral reef research. MOFA is keen to explore sustainable public-private partnerships to further such initiatives. Fortunately, several private resorts are active in coral reef monitoring through their in-house marine biologists and contribute from their Social and Environment Responsibility Fund to execute monitoring initiatives. Thus, the key constraints are related to limited human resources and technical capacities in the public institutions to develop and sustain public private partnerships in coral reef monitoring and management. 10. Gaps in Current Management and Monitoring Models for Wetlands and Coral Reefs: Wetland management models and coral reef monitoring models being implemented in the Maldives have certain gaps. These are described in the following paragraphs. a) Wetlands: While GOM declared 37 coastal and marine areas as protected areas, management plans for only two of these protected areas (Huraa Mangrove Nature Reserve in Male Atoll and Eydhigalhi Kilhi in Hithadhoo of Adhoo Atoll) exist. GOM has also proposed a list of environmentally sensitive areas (ESAs) to offer protection, as well as safeguard and enhance biological diversity conservation.24 Eighty-seven wetlands/mangrove sites have been declared as ESAs. There are no management plans for any ESAs so far. The key constraint to developing management plans and implementing the few that have been developed, has been inadequate capacity at the national and sub-national levels to facilitate and manage partnerships in ecosystem management. Rain water harvesting, which is used by an estimated 75 percent population,25 abounds with problems such as poor use and structural maintenance, poor water quality monitoring and non-involvement of local councils, utilities and community in operations and management. b) Coral reefs: None of the marine protected areas or ESAs (34 reef systems and 11 bottom reefs) have management plans. Public sector efforts for coral reef monitoring have been limited in coverage and sporadic in execution owing to human resource and budgetary constraints. Only 15 coral reef sites form the basic national coral reef monitoring program and only three sites were monitored in the last coral reef monitoring survey (2010) by MOFA. While the MOFA has been active as a clearing- house for information on coral reef status, monitoring data generated are not easily accessible and are thus underutilized for decision making. Although coral reefs are of immense importance to Maldives, there is little cooperation from stakeholders (especially tourism operators) in coral ecosystem monitoring. 6 11. Need for Scalable and Replicable Models on Wetland Management and Coral Monitoring for Climate Change Adaptation: There is a strong need to demonstrate models for both wetland management and coral monitoring in the country. These models will be particularly useful, if implemented successfully, in the context of the recent decentralized governance framework. However, local stakeholders — atoll councils, island councils, civil society organizations, tourist resorts and the local community — either have limited awareness of their role or channels are unavailable to facilitate their involvement. Models involving local stakeholders need to provide technical know-how through national-level institutions, such as the EPA and MOFA, while involving local stakeholders in day-to-day conservation and monitoring activities. Once piloted and proven successful as an effective climate-resilience and conservation approach, the models could be scaled-up and replicated across the country. a) Wetlands: As mentioned earlier, wetlands contribute to climate change adaptation in multiple ways. Their role in drainage and water security is especially significant for the Maldives in the context of climate uncertainty. It is a special challenge for Maldives to sustain the Maldivian wetlands in view of its extremely limited land resources and the demand for housing and infrastructure development. For wetlands conservation, it is important to demonstrate that wetlands can yield tangible economic benefits (in addition to ecological benefits) and that conservation can be achieved through a process of collaboration with the local communities (as opposed to a purely regulatory/policing approach). Involvement of the local governments in conservation planning, demonstration of economic benefits through ecotourism, and flood mitigation through drainage management are initiatives that build community capacity in wetland management for climate change adaptation. To strengthen water security in the Maldives, a demonstration of the rain water harvesting approach that includes robust technical design and participatory planning and management is required. b) Coral reefs: Coral reefs can play an important role in climate change adaptation as they offer protection to islands from storm surges and beach erosion. Climate change threatens reefs through bleaching and poor conditions for coral building. In view of the economic and ecological significance of coral reefs to the Maldives, it is important to intensify and expand efforts to monitor their status. It is also important to demonstrate how information from monitoring can be utilized to support decision- making to prioritize areas for conservation based on resilient coral reefs mapping, and coral reef status information tracking at specific locations over time to understand the impact of interventions, etc. 12. Previous and Ongoing Experiences in Wetland Management and Coral Reef Monitoring in the Maldives: Some experiences in the Maldives that are relevant to both wetland conservation and coral reef monitoring are presented below. a) Wetland conservation:  Atoll Ecosystem-based Conservation of Globally Significant Biological Diversity in the Maldives’ Baa Atoll project supported by Global Environment Facility and United Nations Development Programme (UNDP) (2004–2011)  Integrating Climate Change Risks into Resilient Island Planning in the Maldives project supported by UNDP (2010–2013)  Present Cost-effective, Locally Appropriate Coastal Management and Drainage Management Options Contributing to Climate Change Resilience of Communities in Fares-Maathoda supported by UNDP (2011–2015)  Building Capacity and Mainstreaming Sustainable Land management in Maldives supported by UNDP (2007–2011)  Maldives Protected Area System project supported by Australian Government’s Overseas Aid Program (AusAID) (2000–2003) 7 b) Coral reef monitoring:  Maldives Environment Management Project (MEMP) supported by the World Bank (2009–2014)  Managing Coral Reef Fishery for Biodiversity, Ecosystem and Economic Benefits supported by Darwin Initiatives (2009–2013)  The Atoll Ecosystem Conservation Project (AECP) in Baa Atoll supported by UNDP (2008 to 2012)  The Reef Check scheme in around 50 sites (1997 onwards)  The Bleach Watch scheme by SEAMARC in collaboration with International Union for the Conservation of Nature and Natural Resources (IUCN) (2011 to 2012)  Private sector monitoring initiatives (SEAMARC, CDE Consulting, tourist resorts, etc.). 13. A key feature in the above-named projects has been community involvement in conservation planning and monitoring. The WCCM draws on and builds upon this existing experience to demonstrate partnership models for wetland planning and coral reef monitoring. The existing projects also provide opportunities for exchanging experiences and learning in land use planning, drainage and flood management, protected area management and coral reef monitoring. In particular, the Bank-supported MEMP’s experiences in community involvement in solid waste management provide useful inputs to address solid waste management issues in the wetlands. More significantly, under the MEMP, the Bank has funded the development of a National Coral Reef Monitoring Framework26 and protocols for coral reef monitoring. It has also supported the development of the National Geographic Information System (NGIS)27 — a database management platform. The ongoing MEMP implementation and the gains achieved thus far provide an opportunity for consolidation and synergy for the proposed project. 14. Project to Provide Support through Climate Change Trust Fund (CCTF): A multi- donor Maldives CCTF was established in December 2009 for a period of three and a half years to address climate related risks facing the Maldives and strengthen its resilience to these risks. GOM will use majority of the resources (approximately US$9.5 million) to carry out priority projects relating to climate change adaptation and mitigation. GOM proposes to undertake the Wetland Conservation and Coral Reef Monitoring (WCCM) for Adaptation to Climate Change project to focus on wetland conservation and coral reef monitoring with support from CCTF to support its climate change adaptation efforts. 15. GOM led the project selection process in the CCTF that resulted in WCCM project formulation. The alignment of the project with the GOM’s policies (NBSAP, NAPA, SAP and NEAP) that clearly prioritize actions that increase the adaptive capacity of communities to manage climate change related risks to freshwater availability and, that ensure conservation of biological diversity was the key criterion that influenced its selection. The process of project selection was consistent with the arrangements given in CCTF legal agreements and took into account CCTF’s role in governance structure, namely, the National Planning Council (NPC), Climate Change Advisory Council (CCAC) and the Technical Committee led from the President’s Office. The WCCM project selection process was as follows:  The CCAC members first reached an agreement on the CCTF program’s priority areas that included wetland conservation and coral reef monitoring.  With the Council’s prioritization, the relevant line ministries (MOHE and MOFA) were then requested to submit concept notes for CCTF support to the governance structure. 8  The proposals were reviewed by the Technical Committee for strategic and technical merit, endorsed by NPC, and finally submitted to the World Bank with a request to initiate project preparation. B. Rationale for Bank Involvement 16. Alignment with Sector and Country Strategies: The WCCM project is in line with the strategy adopted under the World Bank Maldives FY08–12 country assistance strategy (CAS). The CAS identifies ‘enhanced capacity to manage the country’s pristine, but fragile, natural environment’ as one of the three strategic development outcomes. It supports GOM’s priorities in environmental management to help: (i) strengthen environmental management capacity and skills in the government and of other stakeholders; (ii) build a sound knowledge base to better address the environmental risks facing the country; (iii) mitigate the threats to nature-based tourism by improving environmental infrastructure; and (iv) implement a strategy to build climate resilience and adapt to the impending climate change risks. 17. World Bank’s Experience and Expertise: The Bank has extensive experience in supporting climate change adaptation, wetland management and coral reef monitoring across several regions.28 While the wetlands in the Maldives are significantly smaller compared to wetlands elsewhere, elements of wetlands management developed under several projects and lessons learnt in those projects would guide wetlands management in the Maldives, particularly on: (i) community-based wetland management planning and implementation; (ii) ecologically sustainable economic opportunities; (iii) wetland monitoring protocols; and (iv) increased resilience against intense weather events. The Bank supported ‘Coastal Wetlands Protection and Development Project’ in Vietnam is working to re-establish the coastal mangrove wetland ecosystems along the Mekong delta. A similar coastal mangrove re- establishment is being undertaken in the ‘Integrated Coastal Zone Management Project’ in India. An extensive wetlands monitoring plan was implemented under the ‘Sodic Lands Reclamation Project’ in India. In the ‘Development, Empowerment and Conservation in the Greater St Lucia Wetland Park and Surrounding Region’ project, the Bank is supporting conservation, sustainable resources use, rational land use planning, and local economic development associated with wetlands to ensure availability of fresh water of adequate quality and to increase access among local communities to conservation-compatible economic opportunities. 18. The Bank has supported several projects involving coral reef ecosystems monitoring. Under the Kiribati Adaptation Program (Pilot Implementation Phase II), the Ministry of Fisheries and Marine Resource Development of the Republic of Kiribati undertakes a monitoring program to assess coral health in the Gilbert Islands group.29 The Indonesia Coral Reef Rehabilitation and Management Project30 (COREMAP) (1998–2004) included a component on Monitoring Control and Surveillance (MCS) for providing technical assistance, surveillance equipment, studies, surveillance operations, workshops and incremental staff costs to support national surveillance and enforcement units, surveillance and enforcement operations at target project sites, and surveillance training. The Mozambique Coastal and Marine Biodiversity Management Project31 (2001–2005) included a sub-component on biological monitoring designed to support ecological surveys and monitor key indicator species (e.g. turtles and dugongs) and habitats (e.g. coral reefs). The project included training local communities to build capacity for data collection and relaying coral reef data to the Global Coral Reef monitoring network. 19. In the Maldives, the Bank has been engaged in a European Union-funded solid waste management project under the Post-Tsunami Emergency Recovery Project and is currently engaged in the MEMP. The Bank is thus well-positioned to assist GOM in this endeavour 9 with its expertise in climate change adaptation, wetland management, coral reef monitoring and institutional development. The WCCM project would also be a good demonstrable example for other islands in the Maldives as well as for other vulnerable island economies in adapting to climate change by conserving ecosystems. C. Higher Level Objectives to which the Project Contributes 20. The WCCM project is aligned with SAP and the NAPA of GOM. SAP identifies environmental sustainability as a key cross-cutting theme. The WCCM project contributes to realizing the following SAP32 goals and policies for the environment sector:  Goals: Promote the rights of all citizens from the impacts of climate change; and protect and preserve the natural environment to ensure prosperous economic development.  Policies: Develop resilient communities by addressing impacts of climate change, disaster mitigation and coastal protection; conserve and sustainably use biological diversity and ensure maximum ecosystem benefits; and enable a fully functional decentralized environmental governance system. 21. The WCCM project responds both directly and indirectly to the following priority adaptation needs listed in the NAPA:33  Land, beach and human settlements: Build capacity for coastal protection, coastal zone management and flood control; and integrate climate change adaptation into national disaster management framework.  Water resources: Undertake aquifer recharge and other measures to reduce salinization from saltwater intrusion and storm surge flooding; and protect and preserve natural water catchment areas.  Coastal protection services: Enforce a ban on coral mining; protect reefs from development; and protect house reefs. 22. Furthermore, the WCCM project directly contributes to the umbrella multi-donor CCTF’s following objectives:34  Strengthen knowledge and leadership in GOM to deal with climate change issues;  Improve capacities and regulatory and governance frameworks to integrate climate risk management into development strategies and plans;  Build adaptive capacity and climate resilience through tangible pilot interventions;  Improve institutional and management capacities in the government and non- government sectors to deal with adaptation that will bring both developmental and climate change benefits. Project Descriptionb A. Project Development Objectives and Key Indicators 23. Project Objectives: The project has two development objectives:  To strengthen institutional capacity of MOHE and local councils for planning and demonstration of community based wetland and water resources management, and  To implement a coral reef monitoring system. 24. Indicators: The project implementation period is two and a half years (January 2012 to June 2014). Due to the WCCM project’s short duration and pilot nature, the indicators will b Please refer to Annex 2 for Detailed Project Description. 10 capture intermediate outcomes. The key intermediate outcome indicators for the project will be:  Two community-based wetland management plans (CBWMP)c that are approved and under implementation.  Data on coral reef health from at least five tourist resorts is produced within the coral reef monitoring framework. 25. Project Area: The Wetland Conservation component will mostlyd be implemented in Fuvahmulah (73°24'30"E and 0°16'45"S) of Gnaviyani Atoll and Hithadhoo35 (73°05'37"E and 0°37'06"S) of Seenu Atoll (also called Addu Atoll). Both are large islands with significant human populations, wetland areas, rampant flooding problems, and where wetlands play an important role in natural drainage and freshwater security. 26. The Hithadhoo and Fuvahmulah wetlands are among the largest in the country and are significant for biodiversity conservation, freshwater security and flood control. The Wetland Conservation component when implemented in these islands will yield wetland management lessons for other islands in the country.  Wetlands of Hithadhoo: The Northern Wetland Area comprises Eidhigali Kilhi (declared protected area) which has a management plan; and the Southern Wetland Area comprises Maamendhoo Kulhi (declared Environmentally Sensitive Area) and Fehele Kulhi both of which do not have management plans.  Wetlands of Fuvahmulah: The Northern Wetland Area comprises the Fuvahmulaku Bandara Kulhi and the Southern Wetland Area comprises the Dhandi Magu Kulhi (both declared Environmentally Sensitive Areas) both of which do not have management plans. 27. Alif Alif Ukulhas Island situated 70km west of Male (in North Ari Atoll) has been selected for demonstrative investments in rain water harvesting based on the criteria of having water-stressed conditions during the dry months, need for pilot investments to demonstrate water security and institutional willingness (of the local council and the utility company). The activity ‘capacity building on climate change adaptation’ for local governments will cover all the local councils in the country. 28. North and South Male’ Atolls (administratively in Kaaf Atoll) have been selected to implement the coral reef monitoring component based on the following criteria: (i) proximity to Male’ enabling easier access to technical support and training services from Male’; (ii) fairly large concentration of resorts that are likely to be interested in this project; and (iii) opportunity for monitoring by MOFA staff. If a significant number of resorts in North and South Male’ Atolls participate then it will also provide good monitoring coverage for these Atolls. 29. Within North and South Male’ Atolls, this component will be implemented in at least five pilot resorts selected on the following criteria: (i) demonstrated commitment by the partnering resort; (ii) logistical ease of access for monitoring; (iii) building on existing systems/historical data set; (iv) opportunity for future extension to regions/local communities/students; (v) social, economic (stakeholder use, level of negative impact, management), and environmental significance reflected, for example, in protected areas and c The two wetlands will be identified from the following in consultation with the local councils: Hithadhoo’s Eidhigali Kilhi (updating of CBWMP); Hithadhoo’s Southern Wetland Area [Maamendhoo Kulhi and Fehele Kulhi], Fuvahmulah’s Fuvahmulaku Bandara Kulhi and Dhandi Magu Kulhi (development of CBWMP). d For all activities in the sub-component 1.1 on ‘Community-based wetland management’ and for the activity Geo-hydrological assessment study in the sub-component 1.2 on ‘Technical support for drainage management and water harvesting’. 11 environmentally sensitive areas; and (vi) sensitivity/vulnerability to climate change. Visits in June to resorts in North and South Male’ Atolls together with feedback from a workshop on 19th June suggests a positive interest in participation. B. Project Components 30. The proposed WCCM project will have three components designed based on consultations held with GOM, civil society organizations and other stakeholders, as well as technical assessment36 undertaken as part of the project preparation process. Please refer to Annex 1 for details on the project components described below. 1. Component 1: Wetland Conservation and Water Resources Management 31. Objective: The component’s primary objective is to strengthen capacity of GOM and communities to plan for coastal wetlands conservation, drainage management and rain water harvestinge through pilot activities. It would also provide technical support for building local councils’ capacity on climate change adaptation. 32. The activities to be financed are grouped under the following sub-components: 1.1 Community-based wetland management 1.2 Technical support and demonstrative implementation for drainage management and rain water harvesting 1.3 Strengthen local government capacity to mainstream climate change considerations. 33. Sub-component 1.1. Community-Based Wetland Management: This sub-component aims to support the development and implement Community-Based Wetland Management Plans (CBWMPs). It will enable local governments to have a clear strategy for wetland management and help the community derive sustained benefits from the conservation effort. This sub-component will ensure participation at all decentralized levels of the government as well as island communities. The key outputs are updated/developed CBWMPs for wetlands in Hithadhoo and Fuvahmulah; a demonstrative CBWMP implementation undertaken; established ecotourism facilities at select wetland sites in Hithadhoo and Fuvahmulah; and documented best practices in community-based wetland conservation. The key outcomes include: increased capacity of local councils and community stakeholders for planning and implementation for wetland conservation activities that demonstrate sustainable economic and ecological benefits to local communities. The main activities are:  Develop and implement CBWMPs.  Perform a pilot on ecotourism.  Document best practices in community-based wetland management. 34. Sub-component 1.2. Technical Support and Demonstrative Implementation for Drainage Management and Rain Water Harvesting: This sub-component aims to: (i) support a geo-hydrological assessmentf of selected islands to identify measures to improve drainage and reduce flood incidence, and demonstrate investments on drainage management; and (ii) e Three aspects — community-based wetland conservation, drainage/flood management and water harvesting — are closely related. Wetlands in the Maldives play a significant role in island drainage, flood mitigation and water security. f The Environment and Social Due Diligence study undertaken by a GOM hired consultant as part of project preparation as well as preliminary technical assessment undertaken during project preparation provide a fair amount of information on the geo-hydrology of the two islands. Building upon this, the proposed geo- hydrological assessment is expected to identify specific measures (including all details such as technical design and costing) for drainage management and flood control. 12 provide technical assistance to develop innovative models for rain water harvesting and demonstrate innovative rain water harvesting technology implementation. The rationale for this sub-component is that a warmer future climate (as predicted by the climate change scenarios) will cause a greater variability in the Indian Ocean monsoon, thereby increasing chances of extreme dry and wet monsoon seasons,37 and aggravating drinking water shortages that currently affect 30 percent of the population38 as well as flooding that affects 18 percent of the inhabited islands.39 Sound technical support will help implement measures that mitigate floods and contribute to freshwater security by regulating water outflow into the wetlands and sea and is thus significant in the climate change uncertainties scenario. The key outputs are: a geo-hydrological assessment report which would include options for flood control, a technical report on suitable rain water harvesting technologies, and implementing demonstrative investments on drainage management/flood control and rain water harvesting based on options identified in the relevant reports. The key outcome would be enhanced technical capacity for drainage management/flood control and freshwater security. The main activities are:  Drainage management: geo-hydrological assessment; participatory planning; and demonstrative implementation.  Rain water harvesting: rain water harvesting models assessment; participatory planning; demonstrative implementation; and capacity building on rain water harvesting. 35. Sub-component 1.3. Strengthen Local Government Capacity on Mainstreaming Climate Change Considerations: This sub-component aims to build capacity of government officials, particularly local councillors, to mainstream climate change adaptation considerations into development planning and management functions. It will thus value-add to the recent decentralization initiative that requires all atoll and island councils to make local development plans. The key output is a tested training module on climate change adaptation. The key outcome would be enhanced capacity of local councillors for integrating climate change adaptation considerations into the local planning process. The main activity is to develop and deliver a training module for local councils on climate change adaptation through a ‘training of trainers’ approach. 2. Component 2: Coral Reef Monitoring 36. Objectives: The primary objectives are to pilot capacity building in tourist resorts for coral reef monitoring and provide technical support to develop a technology platform (referred to as ‘the Coral Reef Monitoring Framework’) that will enable easy access to data and decision support tools. 37. As previously mentioned, MEMP funded the development of a National Coral Reef Monitoring Framework in 2009. The 15 scalable coral and reef fish monitoring protocols developedg are consistent with the international Reef Check Programme endorsed by the Convention on Biological Diversity. The protocols allow for collection by different skill groups and subsequently integrating this information. The 13 protocols were technically tested in 2009. A subset of these protocols was further refined into the MEMP monitoring and evaluation framework in 2010. However, the full coral reef monitoring framework has g MCREH:IP01 - Attitude and Opinion – local; MCREH:IP02 - Attitude and Opinion – visitor, MCREH:IP03 - Marine Diet – local; MCREH:IP04 - Marine Diet – Resort; MCREH:IP05 - Marine catch per unit effort (CPUE); MCREH:IP06 - Marine inundation; MCREH:IP07 - Marine sedimentation; MCREH:IP08 - Marine settlement plate & quadrat; MCREH:IP09 - Marine submarine free swim; MCREH:IP10 - Marine surface observations; MCREH:IP11 - Marine transect – seabed; MCREH:IP12 - Marine transect – water column; MCREH:IP13 – Terrestrial observations; MCREH:IP14 – Water quality – marine; MCREH:IP15 – Water quality – terrestrial. 13 not been further developed and implemented. The WCCM project will build on work undertaken in MEMP on coral reef monitoring and help support data exchange with the NGIS. Coral reef monitoring protocols developed under MEMP will be peer reviewed and revised where possible to accommodate key Reef Check, BleachWatch and other global initiative indicators. 38. The activities to be financed under this component are grouped under the following sub-components: 2.1 Training and capacity building 2.2 Monitoring coral reefs 2.3 Web-enabled technology platform (‘the Coral Reef Monitoring Framework’) 2.4 Dissemination and policy inputs 39. Sub-component 2.1. Training and Capacity Building: This sub-component aims to provide training to tourist resorts to undertake field data collection and to use ‘the Coral Reef Monitoring Framework’ for data entry, analysis and decision-making. It will also build capacity of government bodies in specialized areas relevant to coral reef monitoring. The key output is a developed and tested training module for coral reef data collection and trained resort and government staff. The key outcome would be enhanced capacity for using ‘the Coral Reef Monitoring Framework’ for data entry, analysis and decision-making by key stakeholders (resort and government staff) and enhanced technical capacity on specialized areas relevant to coral reef monitoring in government staff. The main activities are:  Develop and deliver training modules and materials  Provide specialized training on technical aspects relevant to coral reef monitoring 40. Sub-component 2.2. Monitoring of Coral Reefs: This sub-component aims to undertake field data collection using the coral reef monitoring protocols to feed into ‘the Coral Reef Monitoring Framework’. The key output is data for at least a one-time dataset for five resorts collected using the protocols. The key outcome would be sustained use of field and remote sensing data tools (‘the Coral Reef Monitoring Framework’ and ‘Bleaching Risk Assessment Tool’) for data entry and analysis by key stakeholders (government and tourist resorts). The main activities are:  Field monitoring using coral reef monitoring protocols  Remote sensing monitoring and decision tools for climate change risk assessment 41. Sub-component 2.3. Web-enabled Coral Reef Monitoring Framework: This sub- component aims to build a web-enabled system for ‘the Coral Reef Monitoring Framework’ that can exchange selected data with the NGIS. The key output is a tested and fully functional web-enabled framework that can exchange selected data with the NGIS. The key outcome would be sustained use of ‘the Coral Reef Monitoring Framework’ for data entry, analysis and decision-making by key stakeholders (government and tourist resorts). The main activity is web enabling coral reef monitoring data and decision tools. 42. Sub-component 2.4. Dissemination and Policy Inputs: This sub-component aims to facilitate extension, mainstream and make sustainable ‘the Coral Reef Monitoring Framework’ through wider dissemination of best practices in participatory coral reef monitoring and inputs to strengthen policy. The key output is exchange workshops and preparing best practice/policy notes. The key outcome is extending ‘the Coral Reef Monitoring Framework’ to other regions in the Maldives and to mainstream it. The main activities are:  Experience exchange workshops  Prepare best practice/learning/policy notes 14 3. Component 3: Project Management 43. The objective is to carry out the various management functions entailed in implementing the project. It would also include project monitoring and progress reporting. This component will include incremental costs to the existing Project Management Unit (PMU) established for MEMP. The costs would include set-up costs relating to office infrastructure and equipment, incremental professional staffing, individual consultancies and operating costs. While MOHE has the overall responsibility for project implementation and for ensuring that the project objective is met, it will execute the project through EPA, MOFA, in close coordination with the utility company and Land and Survey Authority (LSA). The PMU staff in MOHE will recruit a Project Manager, a Wetlands Coordinator and a Coral Reef Monitoring Coordinator to undertake day-to-day management. The PMU will include the following functions: overall project and specific component management, liaison with other agencies and programs, financial management, procurement, monitoring and evaluation, and project communications. In addition, there will be project management staff posted at the Fuvahmulah and Hithadhoo islands for guiding and overseeing activities in the wetlands component. The project will also support a part-time Resort Liaison Officer at MOFA. Participating resorts will provide and manage their primary data through the website assisted by contractors. C. Project Costs Project cost by component) Total (US$ millions) Component 1 - Wetland conservation and water resources 2.13 management Component 2 - Coral reef monitoring 1.03 Component 3 - Project management 0.46 Total Project Base Costs 3.62 Physical contingency 0.025 Price contingency 0.18 Total Project Cost 3.83 D. Lessons Learnt and Reflected in Project Design 44. The WCCM project design is based on lessons learnt from the following important experiences: (i) previous efforts on wetland conservation and coral reef monitoring by GOMh; (ii) the Bank’s global experience in relevant sectors, including wetland conservation and coral reef monitoringi; (iii) documented global research and experiencej. 45. The key lessons incorporated in the project design include the following:  Linking ecosystem protection with livelihood development is a more effective approach to protect critical areas than relying on enforcement alonek: The WCCM project has an activity to support ecotourism under the wetland conservation component through which it seeks to demonstrate sustained revenue to local councils from conservation efforts. h Atoll Ecosystem Conservation Project, Maldives Protected Area System Project, Maldives Environment Management Project i Vietnam Coastal Wetlands Protection and Development Project, Indonesia COREMAP j Reefs at Risk Revisited and Fish Watch Maldives k Vietnam Coastal Wetlands Protection and Development Project 15  Decentralizing decision-making is key to the success of integrated conservation and development projectsl: The WCCM project complements GOM’s decentralization policy in two ways — by engaging local councils in a pilot on wetland management and by training councillors on climate change adaptation.  Coral reef conservation is most successful when there is support from local stakeholders in resource assessment and monitoringm: The WCCM project involves a key stakeholder group (i.e. tourist resorts) that is directly dependent on the coral reefs (for revenue and employment). Such an approach has already been piloted in the Maldives.  Approaches to coral reef monitoring and enforcement measures must be cost-effective and sustainablen: The WCCM project design demonstrates a public–private partnership model for coral reef monitoring based on the principle that private enterprises (resorts) that benefit from a natural resource need to contribute to its conservation while the government concentrates its resources on delivering a standards setting, compliance audit and advisory role. III Implementation A. Institutional and Implementation Arrangements 46. The governance arrangements for CCTF would apply to the WCCM project as well. They comprise the NPC and CCAC led by the Office of the President and a Technical Committee of national experts. 47. The MOHE has the overall responsibility for the WCCM project. The PMU staff for MEMP will be augmented to carry out project management for the WCCM project. The PMU will coordinate project activities and directly execute some specific sub-component activities. It will ensure fiduciary aspects (chiefly financial management and procurement) implementation throughout the project duration. The PMU will have a part-time Project Manager who will be responsible for overall project management. A part-time Procurement Officer and Financial Management (FM) Officer will be responsible for the project’s fiduciary management requirements. 48. EPA will provide technical oversight and coordination support to the wetland conservation component. PMU will have a Wetlands Coordinator who will be responsible for day-to-day project implementation. S/he will be supported by EPA’s Biodiversity and Water & Sanitation Units. At the island level, two Wetlands Management Officers will be placed in a Project Implementation Unit (PIU) in each local council office (Fuvahmulah Atoll Council, Hithadhoo Island Councilo) for field-level project activity implementation. For the rain-water harvesting system pilot in Sub-component 1.2, the MHE will solely carry out the procurement activities. MHE and EPA will be responsible for monitoring and supervising the contractual works with cooperation from the Utility (Male Water and Sewerage Company). The assets will be transferred to the Utility six months after the system is commissioned. A cooperation and asset transfer legal agreements between the MHE, EPA and the Utility will be signed prior to commencement of procurement activities. l Vietnam Coastal Wetlands Protection and Development Project m Reefs at Risk Revisited and Fish Watch Maldives n Indonesia COREMAP o Fuvahmulah has an Atoll Council and 8 ward councils (equivalent to island councils). As the wetlands will cover more than one ward council, the atoll council will be the focus of the project intervention. In Hithadhoo, the Hithadhoo Island Council will be the focus of the project intervention. However, these arrangements are to be further discussed and finalized with the MOHE. 16 49. The MOFA through the Fisheries Management Agency (FMA) will provide technical oversight and coordination support to the coral reef monitoring component. A Coral Reef Monitoring Coordinator will be responsible for the day-to-day implementation of the project. S/he will be supported by a part-time senior international technical advisor, and by MOFA’s Information Technology Cell and Coral Reef Monitoring Unit. There will also be a part-time Resort Liaison Officer at MOFA. Participating resorts will provide and manage their primary data through the website assisted by contractors. An MOU will be signed between the MHE, MOFA, the participating resorts and the Ministry of Tourism, Arts and Culture (MOTAC) prior to commencement of the training activities under Sub-component 2.1 in order to clarify stakeholder roles and responsibilities. Details on institutional arrangements are provided in Annex 3. B. Monitoring and Evaluation of Results 50. Monitoring framework and indicators: A results framework to track inputs and outputs for each sub-component has been developed for the WCCM project. This is presented in Annex 1. 51. Monitoring and evaluation arrangements: The Wetland and Coral Reef Coordinators working in close coordination with the Project Manager in the PMU have the overall responsibility for planning and coordinating monitoring and evaluation activities. They keep track of agreed indicators on a regular basis, as specified in the results framework. PMU is responsible for providing quarterly technical and financial reports to the World Bank on project implementation progress. Outcomes assessment will be done through an evaluation study undertaken by a monitoring and evaluation consultant towards the end of the project implementation period. The evaluation study will include consultations with civil society organizations (non-governmental organizations, resorts, community groups, etc.). The findings will assist GOM in scaling up community-based wetland management and coral reef monitoring to other islands. Likewise, the Bank team will monitor project outcomes and outputs during project supervision using data compiled by PMU, generated by the project, and from other sources to evaluate progress. The implementation support plan is provided in Annex 5. The above monitoring and evaluation arrangements will ensure timely collection, information analysis and reporting and enable efficient use of the monitoring and evaluation system by the managers, policy makers and other stakeholders. C. Sustainability 52. The project is designed with an inherent emphasis on sustainability as it addresses some of the root causes of weak wetland conservation and coral reef monitoring, such as lack of systems for local involvement, inadequate technical information and limited capacity. The following is a brief description of sustainability at three levels: policy, institutional and financial. 53. The project is expected to lay an analytical foundation and build a culture of results and policy development in community-based wetland management and coral reef monitoring areas through activities such as preparing best practices/policy notes to provide strategic direction to wetland management and coral reef monitoring in the country. These policy advocacy initiatives will help mainstream and ensure sustainability of interventions. Moreover, there is a strong policy environment in the country that favors sustainability of project outcomes such as identification of areas for protection/conservation as Protected Areas or Environmentally Sensitive Areas,40 existing land use plans for Fuvahmulah and Hithadhoo, and GOM’s recent decentralization policy. 17 54. The project’s implementation structure will be shared with MEMP. While this institution is not permanent, PMU includes some staff on secondment from key government ministries and agencies such as MOHE and EPA. The project will therefore contribute to strengthening capacities of national government officials in the areas of fiduciary, wetlands management and coral reef monitoring, and environmental and social safeguards. The exit strategy for the WCCM project (that will be drafted based on the findings of an evaluation study) will specify details on the activities transitioned from PMU to key GOM agencies. 55. The project will also contribute to capacity building of local councillors in climate change adaptation. It is envisaged that local councils will have sustained involvement in CBWMP (in accordance with their mandate under the Act on Decentralization of the Administrative Divisions, 2010) implementation. This will be facilitated by building a long term perspective as part of the plan, capacity of local councils and their close involvement in project implementation. The tourist resorts, even during the project duration, will be contributing (in kind) to coral reef monitoring costs and will be expected to continue to do so after the project period. The exit strategy for the project (as well as policy / best practice notes) will explore sustainability options for continued monitoring and website maintenance. 56. The project is designed with the GOM’s cost share being primarily in kind through salaries of government officials in PMU and island offices. While fiscal sustainability will be difficult to achieve in such a short timeframe, the exit strategy for the project will explore sustainability options. It is hoped that successful outcomes will motivate GOM to invest larger public resources for wetlands management and coral reef monitoring. IV. Key Risks and Mitigation Measures 57. The overall risk to PDO achievement is likely to be moderate. The table below summarizes the key risks to the WCCM project and possible mitigation strategies. Risks Risk Rating Mitigation Measures Some atoll and island council members, Low Project activities integrate tourist resorts, donors and non- participation of local councils, governmental organizations may not communities and resorts. appreciate and value the project design Multiple rounds of stakeholder which may cause resistance during consultations were held during implementation and lead to delays. preparation. Stakeholder capacity is limited — GOM Medium PMU at GOM as well as the has limited experience in implementing local councils will be provided climate change adaptation projects, and with technical staff for project local councils have limited fiduciary implementation. Fiduciary capacity. responsibility (financial management, procurement) will be centralized at PMU. In view of the relatively short Medium PMU will enter into an implementation period, delays in agreement/MOU with local wetland management plan development, partners (local councils, website design, etc., would have knock- resorts) to secure their on effects. commitment to timely implementation. Project preparation includes a procurement plan to facilitate timely technical assistance. 58. The detailed risk matrix is provided in Annex 4. 18 V. Project Summary A. Economic Analysis / Justification 59. A conventional financial and economic analyses cannot be applied to this project because of the limits at the present time for accurate impact measurement. The WCCM project’s development objective is to strengthen institutional capacity for planning and demonstrating community-based wetland management and to implement a coral reef monitoring system. 60. The main project benefits will be derived from: (i) CBWMP implementation; (ii) technical support and demonstrative implementation of measures for drainage management and rain water harvesting; (iii) improved coral reef monitoring with participation of key stakeholders; and (iv) an increase in capacity for wetland management and coral reef monitoring. 61. In addition, indirect economic benefits that stem from improved wetland management and coral reef monitoring include: a) Benefits from improved wetland management: Support for livelihoods (agriculture, fishery, boat building, fuelwood, etc.), water security (groundwater recharge, freshwater storage), ecotourism (livelihood for local community as nature guides, revenue for local councils, diversifying tourism products from marine environment), flood mitigation due to better drainage, improved water availability from rain water harvesting, biodiversity conservation (habitat protection, bird and other animal species protection, traditional medicinal plants conservation), etc. b) Benefits from improved coral reef monitoring: Easy access to information for decision-making on conservation and increased key stakeholder involvement in conservation — which will lead to evidence-based conservation (for example, identifying priority reef areas for protected area network design) — and will in turn have benefits for livelihoods (support for livebait tuna fishery), biodiversity (reef habitat conservation), tourism (protecting the main tourism product of the Maldives), and disaster risk mitigation (defense against storm surges, beach erosion mitigation). 62. Quantifying direct project benefits alone understates the potential economic impact of project interventions. For example, the total annual recreational use benefit of tourists visiting the Maldives is estimated to be USD 695 million41. However, weaknesses in environmental data collection at the present time and difficulty in monetizing environmental benefits, exacerbates the difficulty of measuring and valuing many of the effects involved, especially indirect benefits from the proposed interventions. 63. While the nature of the WCCM project does not lend itself to quantifying benefits, the following qualitative description demonstrates the preference of the project model over the current scenario: a) Business as usual: The EPA is mostly confined to regulatory functions. Its limited human resource and technical capacity constrain its use for wetland conservation. Similarly, MOFA’s coral reefs monitoring is insufficient (in frequency, geographical range, resolution) to inform evidence-based decision-making. Supporting EPA and MOFA to enhance human and budgetary resources for undertaking wetland management and coral reef monitoring by themselves may not sustain after the project period. Hence, investing in these same systems will yield limited returns. 19 b) Project model: The project will facilitate EPA/MOHE to focus on capacity building of decentralized institutions — local councils — for wetland management through training, technical support and developing management plans. Successful ecotourism is expected to yield revenues that would provide a long-term stake to local councils to conserve wetlands. Further, the project will create a positive environment for MOFA to partner with the private sector (tourist resorts) to provide an information platform for coral reef monitoring and play a supportive role (standard setting, supervision, audit, technical support) in coral reef monitoring. Pending successful implementation, this model would allow MOFA to recover costs in the long term by charging resorts for using the information platform and support services. In conclusion, the project is expected to be cost-effective compared to the business-as-usual scenario. 64. Experience from other community-based natural resource management and climate change adaptation projects in South Asia has shown that these are usually economically viable:  In the case of the Vietnam Coastal Wetlands Protection and Development Project42 the cost-benefit analysis estimates that the ERR is 14%. This involves reclamation of coastal land along a 470 km coastline in the Mekong Delta and the benefits include enhanced marine productivity, increased/stabilized farming incomes for an estimated 25,000 households in the project area, improved storm protection, improved provincial environmental monitoring capacity, etc.  In the case of the Maldives Environmental Management Project43 the cost-benefit analysis estimates that a 12 percent IRR would be achieved by preventing degradation of 160 hectares of coral reef per year in the project area – this would represent approximately one resort (‘house’) reef under the control of a tourist operator. B. Fiduciary 65. Financial Management: The WCCM project will be implemented by the PMU that implements MEMP in MOHE. PMU will also handle the financial management arrangements under the project. PMU’s FM assessment was completed by the Bank’s FM specialist and CCTF’s FM risk was rated as “moderate� which is similar to the rating under the MEMP. The key findings are as follows: a) Expenditures and fund flows under CCTF: A designated PMU account will be set up in US$ with the Maldivian Monetary Authority (MMA – the Central Bank), to receive funds from CCTF. The World Bank will advance an amount to this Bank account, to meet estimated expenditures for the next six months, as forecasted in the interim unaudited financial reports (IUFRs). From this Bank account, payments will be made to suppliers, vendors and consultants for CCTF’s share of project activities. Although several agencies are involved in planning and coordinating the various sub-projects financed by CCTF, all funds will be paid for and spent at PMU level which will help simplify fund flows and project FM arrangements as well as establish proper internal and operational controls from a fiduciary perspective. For all sub-projects, payments will be made directly by PMU. b) Staffing: PMU has financial management personnel with hands-on experience in World Bank fiduciary procedures. The FM Officer attached to MEMP will be responsible for the project’s financial management. He will be assisted by an FM Assistant who is identified among the MOHE staff and seconded to CCTF on a fulltime basis. c) Operations Manual: The Operations Manual is available and acceptable to the Bank. It will be followed in implementing CCTF activities. This manual has detailed procedures on budgeting, accounting, fund flows, financial reporting and audit 20 arrangements including the auditors’ Terms of Reference (TOR). In addition, the manual also includes formats for accounting registers and books of accounts, the fixed asset and inventory management process. CCTF specific business process flow mapping will be updated as a separate chapter to this manual by the FM Officer after consulting with agencies implementing projects. d) Accounting policies and procedures: All funds for the project will be routed through PMU which will be responsible for funding all project expenditures, accounting for them, and reporting on CCTF’s financial and physical progress. Books of accounts for CCTF will be maintained on a cash basis of accounting and all applicable international accounting standards and policies will be applied. The accounting software currently used by PMU will be used for CCTF. IUFRs will be prepared on cash basis and will also forecast funds required for the next six months. e) Financial management information systems: The existing accounting system is voucher based, computerized, and a double entry system that can generate expenditure information similar to expenditure classification in the government budget, by identifying the funding source. PMU currently maintains designated accounts for MEMP. These accounts are reconciled on a monthly basis which reflects good practice. A separate financial statement for the project will be prepared by PMU to distinguish CCTF activities from those of MEMP. All CCTF books of accounts will be maintained as a separate sub-ledger in the accounting system. f) Financial reporting: PMU is responsible for the project’s overall financial reporting. Other government agencies involved in the projects will provide physical reporting, procurement progress and other documentation that may be required from an accounting and audit perspective, on a monthly basis to PMU. Starting from the end of the first calendar quarter after project effectiveness, PMU will submit quarterly IUFRs to the World Bank within 45 days from the end of each such quarter. g) Internal controls: PMU’s internal controls were assessed during preparation and determined as capable of ensuring transparency and accountability in operations and allowing smooth coordination of multiple agencies under CCTF. PMU’s internal controls, as documented in the Operations Manual, would be tailored to capture CCTF activities where necessary. h) Internal audit: CCTF will be subject to a regular internal audit by a chartered accountant firm to assess whether the funds have been disbursed on a timely basis, reached the intended recipients, and whether transactional controls and propriety have been maintained and used effectively and efficiently for the intended purposes. Internal audit TOR will be detailed in the Operations Manual. The internal audit reports will be shared with the World Bank. i) External audit: There are serious capacity issues in the Audit Office of the Maldives. Therefore, CCTF’s financial statements, as prepared by PMU, will be audited by an independent audit firm acceptable to the World Bank and selected from a shortlist of approved audit firms kept by the Office of the Maldives Auditor General to maintain full transparency and provide adequate assurance to all stakeholders that funds were used for the purposes intended. They will also review the procurement undertaken by the project to ensure that it follows International Development Association (IDA) guidelines for procurement. The TOR for the external audit is included in the Operations Manual. The external audits would be conducted every fiscal year and audited financial statements together with the auditor’s report will be submitted to the World Bank within six months of the end of the fiscal year. There are no outstanding audit reports under Bank-funded projects being implemented by the PMU. j) Disbursement arrangements: The World Bank will disburse project funds on the basis of periodic IUFRs incorporating financial and physical progress reports in agreed formats by PMU on a quarterly basis. In addition, taxes and duties will be excluded from financing and salary top-ups to civil servants will be financed by the TF. Annex 21 7 provides a disbursement table, complete with the disbursement category structure, types of expenditures to be covered, allocations and financing percentage. k) Supervision plan: The supervision activities will include an FM supervision mission at least once every six months, supplemented by desk reviews of internal and external audit reports, quarterly financial reports and dialogue with project staff as needed. 66. Procurement: Procurement of all goods, works and non-consulting services required for and to be financed out of the proceeds of the Grant shall be in accordance with the requirements set forth or referred to in the ‘Guidelines: Procurement of Goods, Works, and Non-Consulting Services under IBRD Loans and IDA Credits & Grants by World Bank’ (dated January 2011). Procurement of consulting services shall be in accordance with ‘Guidelines: Selection and Employment of Consultants under IBRD Loans & IDA Credits & Grants by World Bank Borrowers’ (dated January 2011) and the provisions stipulated in the legal agreement. For each contract to be financed under the Grant, the different procurement methods or consultant selection methods, the need for pre-qualification, estimated costs, prior review requirements and timeframe are agreed upon between the recipient and the Bank in the procurement plan. 66. The following methods will be applicable for goods, works and non-consulting services consistent with the relevant sections of the Bank’s Procurement Guidelines: International Competitive Bidding (ICB), National Competitive Bidding (NCB), Shopping (S), Direct Contracting (DC), and Community Participation (CP). 67. National Competitive Bidding. To ensure economy, efficiency, transparency and broad consistency with the provisions of the Procurement Guidelines, goods, works, and non- consultant services procured under the NCB method shall be subject to the following requirements: a. Only the model bidding documents for NCB agreed with the Bank shall be used for bidding; b. Invitations for bids will be advertised in at least one widely circulated national daily newspaper, and bidding documents will be made available at least twenty one (21) days before, and issued up to, the deadline for submission of bids; c. Qualification criteria will be stated in the bidding documents, and if a registration process is required, a foreign firm declared as the lowest evaluated responsive bidder shall be given a reasonable time for registering, without let or hindrance; d. Bids will be opened in public in one location, immediately after the deadline for the submission of bids, as stipulated in the bidding document (the bidding document will indicate the date, time and place of bid opening); e. Except in cases of force majeure or exceptional situations beyond the control of the implementing agency, the extension of bid validity will not be allowed; f. Bids will not be rejected merely on the basis of a comparison with an official estimate; g. Except with the prior concurrence of the Bank, there will be no negotiation of price with bidders, even with the lowest evaluated bidder; 22 h. A bidder's bid security will apply only to the specific bid, and a contractor’s performance security will apply only to the specific contract under which they are furnished; and i. Bids will not be invited on the basis of percentage premium or discount over the estimated cost, unless agreed with the Bank. 68. The following methods will be applicable for consultants selection, consistent with the relevant sections of the Bank’s Consultant Guidelines: Quality- and Cost-Based Selection (QCBS), Quality-Based Selection (QBS), Least Cost Selection (LCS), Fixed Budget Selection (FBS), Selection based on Consultants’ Qualifications (CQS), Single-Source Selection (SSS), and Sole Source Procedures for the Selection of Individual Consultants. Consultant shortlists for services estimated to cost less than US$100,000 or equivalent per contract may be comprised entirely of national consultants in accordance with the provisions of paragraph 2.7 of the Consultant Guidelines. 69. The Bank’s standard request for proposal (SRFP) document will be used for all consultant services. The SRFP may be customized, as appropriate, for small value assignments (less than US$300,000). 70. The MEMP PMU will handle the procurement arrangements under the project. A MEMP PMU procurement management assessment completed by the Bank’s procurement specialist rated the procurement-related risk of CCTF as “moderate�. The key findings of the procurement risk assessment that led to a moderate rating are as follows: a) Accountability: PMU has a clear accountability system with clearly defined responsibilities and delegation of authority on who has control of procurement decisions — in accordance with GOM’s Financial Regulations, and more specifically the new Procurement Regulations which are to be adopted soon. Procedures for addressing complaints are not clearly defined but will be prepared in consultation with the Anti-corruption Commission and the Tender Evaluation Board. PMU has a well- documented set of implementation procedures manual, accessible to staff in the form of an Operations Manual. b) Record keeping: Records are well maintained, secure and protected at the PMU office, including documents relating to procurement processed through the Tender Evaluation Section. c) Staffing: PMU has key staff with experience and a satisfactory track record in procurement and contract management, but additional support will be required. It is unclear if there is a published and known code of ethics that describes appropriate behaviour related to procurement. PMU will include details on this in the Operations Manual after consultation with relevant authorities. d) Procurement planning: PMU has a track record of adhering to and updating realistic procurement plans. e) Bidding documents: Simple templates acceptable to the Bank exist for procurement methods. f) Contract management and administration: There exists a mechanism for procurement and/or contract monitoring (quarterly procurement monitoring reports). g) Procurement oversight: Procurement is covered under external audit but is not sufficiently detailed. The Bank will conduct regular prior and post reviews, as identified in the procurement plan, and will share findings and recommendations with GOM and European Union (EU). Contract awards will be published on the MEMP website for oversight by civil society groups. 23 71. The existing MEMP PMU with experience in the Bank’s procurement guidelines and procedures will be responsible for all CCTF procurement activities. Therefore, procurement activity is expected to run smoothly. 72. Procedures for addressing complaints are not clearly defined under the project, but will be prepared in consultation with the Anti-corruption Commission and the Tender Evaluation Board during first three months of implementation of the project. Procurement is covered under external audit but is not sufficiently detailed. The Bank will conduct regular prior and post reviews, as identified in the procurement plan, and will share findings and recommendations with GOM and European Union (EU). Contract awards will be published on the MEMP website for oversight by civil society groups. 73. The Procurement Officer attached to MEMP will be responsible for procurement under the project on a part-time basis and will be assisted by a full-time Procurement Assistant (identified from among MOHE staff). Both officials will follow up, as necessary, on all procurement activities and liaise with GOM’s Tender Evaluation Section for all contracts costing more than MVR 1.5 million as per government requirements. All procedures and documents to be used for procurement activities are in the Operations Manual and have been appraised and will be reviewed, updated and agreed to with the Bank, as and when necessary. The thresholds for procurement methods and prior review are provided in the table below (prior review and method thresholds would be reviewed annually and adjusted, if necessary). Expenditure Contract Value Procurement Method Contracts/Processes Subject to Prior Category (Threshold) Review Works >US$30,000 NCB All contracts subject to post review US$100,000 ICB All contracts costing over US$600,000 >US$30,000 and NCB All contracts subject to post review US$100,000 All competitive methods; All contracts over US$300,000 Services (firms) advertize internationally