Report No. PID11135 Project Name BRAZIL-TOCANTINS RURAL INFRASTRUCTURE (@) Region Latin America and Caribbean Region Sector Roads & highways (50%); Sub-national government administration (25%); General public administration sector (25%) Project ID P060573 Borrower(s) STATE OF TOCANTINS Implementing Agency STATE INFRASTRUCTURE SECRETARIAT SEINF-TO Address: Contact Person: Eng. Silvio Leao Tel: 55-63-218 1633 Fax: 55-63-218 1690 Email: leao@seinf.to.gov.br State Planning and Environment Secretariat Contact Person: Dr. Ricardo Dias Tel: 55-63-218 1150 Email: ricdias@seplan.to.gov.br Environment Category A Date PID Prepared October 31, 2002 Auth Appr/Negs Date November 1, 2002 Bank Approval Date January 28, 2003 1. Country and Sector Background State Geography. The state of Tocantins was created under the 1988 constitution, by separating the northern part of the state of Goias. It was incorporated into Brazil's northern region; it is part of the so-called "Legal Amazonia". But it is actually a zone of transition between the high plains of the Center-West cerrados to the south and the humid plains of eastern Amazonia to the northeast. The physical aspects of the state are characterized by two major rivers, the Araguaia, which flows along the state's western borders with Mato Grosso and Para, and the Tocantins. The climate is tropical, hot and humid, with a dry season from June to October. Most of the state's territory is covered with savanna (cerrado); small areas of tropical rain forest remain along the Araguaia river, and areas of semi-decidual forests remain in the North and the Southeast. The state is sparsely populated with a population of 1.2 million over an area of 290,000 km2. Economy. The main economic activity has been extensive cattle farming together with traditional subsistence agriculture. Recently, however, commercial agriculture has developed in the central and southwestern regions. The Prodecer program, with assistance from Japan, is contributing to expand soybean production in the central region; and the Rio Formoso program is helping increase irrigated cultivation of rice and other crops in the southwest. With its vast areas of farmable land, abundant water resources, and a favorable climate, many regions of the state have good natural conditions for sustainable agriculture. The state's economic development objectives are to: (a) increase agricultural and meat production, through the development of an economically and environmentally-sustainable agriculture where feasible and protection of fragile ecosystems; (b) expand the agro-industrial sector and promote exports; and (c) develop tourism activities as a complement to environmental conservation programs. The Government's strategy emphasizes the creation of a business environment conducive to private sector investment in regions or program areas with proven potential for sustainable agriculture, cattle-farming and/or tourism. It promotes the decentralization of the decision-making process for public investment, seeking to involve the key stakeholders and to build public-private partnerships in support of regional and local priorities. Poverty. Tocantins is the seventh poorest state in Brazil. The state's average per capita income is about R$1,900 (US$500 equivalent) p.a., well below Brazil average of about US$3,000 p.a.. A large proportion of the state population (56W) is living under the poverty line with an income of less than R$100 (US$26 equivalent) per month; and 25t are actually living under the extreme poverty line, with less than half this income. Poverty is worse in rural areas, with 68t of the rural population living under the poverty line. Tocantins is one of Brazil's most equal state, with a Gini coefficient of .56. The state's municipal index of human development (IDH-M) is estimated at .56 (on the basis of 1991 data, to be updated as soon as the 2001 data become available), well below Brazil average (.74) and below the median of the Brazilian states (.67). This composite index combines various socioeconomic indices which reflect education, access to health, water and other basic infrastructure services. There are also significant regional disparities. For example, the northern region of the state has a per capita income of less than US$300 equivalent p.a. and its IDH-M is less than .40. The poorest regions of the state (which are included in the proposed projects) are among the poorest regions in Brazil. Infrastructure. The lack of basic infrastructure, however, has been a bottleneck to the more rapid development of the state's agricultural potential. When created, the state had only 300 km of paved roads besides the Brasilia - Belem federal highway. Over 4,000 km have now been paved; and with the gradual improvement of navigation on the Tocantins river and the construction of the North-South railway, the competitiveness of the state's agriculture is expected to further increase. But there are still regions with sustainable development potential which do not have all-weather access to the trunk network. And many rural communities do not have all-weather access to municipal centers. Access to energy has been limited to the main towns and to their vicinity. With the completion of the hydropower plant at Lajeado and with the ongoing rural electrification program, however, access to energy will be substantially increased in most regions. But expanding the economic infrastructure to new areas with potential for sustainable development and ensuring effective and equitable delivery of infrastructure services to rural communities remains a key priority in the Government's strategy. - 2- Environment. Most of the state falls into the "Cerrado" (savanna) biome of central Brazil, which is generally suitable for cattle ranching and agriculture, but the latter usually only after heavy investments in soil correction and, in certain places, irrigation, and only where land forms are suitable. Fruit production is also an alternative in the Cerrado. So far, the predominant land use has been ranching, and agriculture has developed only more recently (soybean, maize, rice, etc.) on about 2t of the state's area. The northern region is at the transition to the Amazon biome, with denser rain forest, much of which has already been cleared. It has somewhat better conditions for agriculture than the Cerrado sub-regions, particularly for cultivation of perennial crops. It has been the focus of intense land conflicts and also of land reform settlement efforts in the past. It also provides income to many poor families as a source of extractivist products, such as babassu nuts. The main concern is with degradation of soils from unsustainable production, alteration of hydrological regimes and clearing of remaining forests, including gallery forests. The thinly populated, sandy and dry Jalapao region in the central-eastern portion of the state is recognized as fragile and having low potential for either ranching or agriculture, and is likely to be used only for some fruit production, ecosystem protection and tourism. The southeast of the state shows a highly diverse mosaic of land use. Soils have little fertility, but are suitable for ranching and some limited agriculture in short rotations. Several small areas have been proposed for ecosystem protection. A main concern in this region is soil erosion. The agro-ecological zoning of the state (ZEE), which was prepared under the state highway management highway project (SHMP) and is being detailed in the northern region under the natural resources policy project (NRPP) is an important instrument for the preparation of the Government's regional development programs. It is among the best efforts to date among Brazilian States to survey, map and document the physical characteristics of the various sub-regions. As a result, Tocantins has produced a remarkably clear vision of future land use, albeit in broad categories and at a small scale, including areas slated for some form of ecosystem protection. Progress was made in preparing for the zoning implementation under the NRPP, including building up some environmental management capacity in pilot municipios in the Bico do Papagaio and preparing the more detailed zoning of the region through a participatory process. The Government's environmental strategy, which is based on the lessons learned under the above pilot projects, is to effectively implement the zoning through a mix of economic instruments, regulations, licensing, supervision and monitoring activities. It particularly involves consolidating and expanding the state's environmental protection system, refining the agro-ecological zoning instruments, strengthening land use and water resource monitoring, rehabilitating and/or preserving riparian forest, and consolidating existing and establishing new ecosystem protection areas, in part under this project. The areas proposed by the state for ecosystem/biodiversity protection are generally in line with the priority areas identified by the 1998 biome-level workshop for the Cerrado funded by GEF through the Bank. Priorities under the NRPP will now focus on completing the detailed zoning of the Bico de Papagaio region, on building up an environmental capacity in 10 pilot municipios, on preparing master plans in two pilot municipios, and on designing appropriate economic instruments to support the zoning implementation. The RPRP will -3 - build on the experience developed under the NRPP and the PPG7 Demonstration Projects by providing adequate training and technical assistance to communities and municipal councils for sustainable production projects, and will provide incentives, in the form of a reduced community cost share, for a new category of projects which aim at the recuperation of degraded areas and the sustainable use of natural resources. State Fiscal Situation. The fiscal situation of the state is sound and, when compared to all other states in Brazil, it looks very comfortable. The state administration has consistently generated a primary surplus. Tax revenues have more than doubled from 1996 to 2001. The state has reduced its wage bill to 34% of net revenues, well below the maximum 60% specified by the Fiscal Responsibility Law. As a consequence, the state has managed to increase its investments from its own resources while containing its borrowings. The total debt (less than R$600 million) represents about 40% of the state's net revenues including federal transfers (about R$1.5 billion in 2001), and it is serviced and paid normally. This favorable debt situation, which results from the young age of the state, contrasts with the heavy debts of most other states. Development Framework. The Government prepared a comprehensive development framework for the State (PPA 2000-2003), consistent with the PPA for the Federation. The new administration, which will take office on January 1, 2003, will prepare a new PPA for 2004-2007, but the State Governor-elect indicated that the broad objectives and policies of the previous administration will be continued. The State PPA emphasizes freedom of initiative and social justice, environmental sustainability, and a broad participation of all segments of society in the development process. It is structured around five major objectives: Promote sustainable economic growth, with priority to the agricultural, agro-industrial and eco-tourism sectors; Reduce poverty, social inequity, and regional disparities; Consolidate the state's infrastructure, particularly in the transport and energy sectors; Strengthen the public administration, emphasizing sound fiscal management; and Enforce human rights and reduce crime and violence. For each of these objectives, the PPA specifies policies, programs and budgets. Overall, there are 144 state programs of an aggregated cost of R$ 11 billion over four years. About half of this amount is expected to come from private sources, 35% from the state budget, 8% from the federal budget, and 7% from borrowings. The state resources would be allocated primarily and equally to the social and infrastructure programs (about 40% each), to support economic growth (15%) and to public administration and safety (5%). The Government's strategy to achieve both sustainable economic growth and reduction of poverty and regional disparities emphasizes increasing the productivity of sustainable agriculture in poverty-targeted program areas with proven potential for sustainable development, and the competitiveness of their products. This is to be achieved through a mix of public infrastructure (mainly transport and rural electrification), community infrastructure and microfinance, environmental conservation, and social programs, which include programs aimed at eradicating illiteracy, - 4 - improving labor qualification, increasing schooling and the quality of primary education, and at improving water and sanitation. 2. Objectives The project development objective is to contribute to raising living standards and to reducing inequalities and regional disparities by improving access to markets, job opportunities, infrastructure and social services for rural communities in Tocantins' poorest regions, while ensuring sustainable use of natural resources and the protection of fragile ecosystems. This development objective is fully in line with the Government's development strategy, designed for a state in the process of consolidating its institutions and public expenditures programs (the state has been created 12 years ago, following separation from the state of Goias), and developing its economic potential (since its creation, the state has underwent an economic growth of 60-, and economy is expected to continue growing principally on the basis of agricultural and agro-industrial production, as well as eco-tourism). The Tocantins Rural Infrastructure Project (TRIP) was designed and will be implemented within the Government's comprehensive development framework (the Plano Pluri-anual, PPA) and within a clear strategic framework for all Bank activities in Tocantins, which also include an ongoing Natural Resources Policy Project (NRPP) under the Pilot Program to Conserve the Brazilian Rainforest (PPG7) and a proposed Tocantins Rural Poverty Reduction Project (TRPRP). The strategic framework emphasizes: (i) building decentralized, multisectoral planning processes with effective participation of the poor, and public-private partnerships for better delivery of infrastructure services and an improved investment climate; (ii) implementing the agro-ecological zoning of the state, as an instrument for targeting public infrastructure investments, for guiding the decentralized planning processes, for establishing ecosystem conservation units, and for licensing public and private investments; and (iii) promoting environmentally, socially and economically sustainable activities which generate employment and income for the poor through sustainable use of natural resources. In implementing the latter objective, the projects will build on and disseminate the lessons learned from pilot subprojects under the NRPP. The two new projects will target the same four regions of the state, i.e. the North (Bico do Papagaio), the Northeast (Goiatins - Pedro Afonso), the East (Jalapao), and the Southeast (Arraias, Dianopolis, Natividade, Taguatinga). These four regions which, together, represent about 50- of the state population and about half the number of municipios, have the lowest indices of human development (IDH) in the state. The North, which has the highest population density, is among the poorest regions in Brazil. In order to ensure effective spatial coordination of investments and to maximize synergies, the two projects will target program areas and municipalities within these regions through multi-criteria analyses which take into account the population and indices of human development, and, in the case of the TRIP, progress achieved under the institutional development objectives. Within the above strategic framework, the TRIP will focus on the actions needed at the state, regional and municipal levels, specifically: establish and/or strengthen participatory, multisectoral planning - 5 - processes at the regional and municipal levels guided by agro-ecological zoning instruments, build local institutions, and promote public-private partnerships for better targeting of public investment, effective delivery of infrastructure services, and sustainable use of natural resources; consolidate and expand the state's environmental protection system, refining the agro-ecological zoning instruments, strengthening land use and water resource monitoring, consolidating existing and establishing new ecosystem conservation areas, and rehabilitating and/or preserving riparian forests; increase the competitiveness and incomes of farmers in selected program areas with proven potential for sustainable growth by upgrading feeder road links to the main highway network; and improve access of rural communities to markets, off-farm jobs, education and social services by upgrading and maintaining selected municipal access road networks to all-weather condition. The RPRP will complement the TRIP by focusing on the actions needed at the community level, and specifically: strengthen the capacity of rural community associations to collectively define, implement and maintain community projects, and build an effective consultative process at municipal level to select sustainable, priority projects; increase incomes of rural poor by providing technical assistance and grants to community associations for starting new, sustainable, farming or other productive projects; improve the well-being of rural poor by providing technical assistance and grants to community associations for preparing and implementing selected community infrastructure projects; improve the conservation of ecosystems by providing technical assistance and grants to community associations for preparing and implementing selected community environmental conservation or rehabilitation projects. 3. Rationale for Bank's Involvement The Bank will help: through the development of regional and municipal planning capacity, and inclusion of local communities in the planning, implementation and monitoring process, developing synergies among the different rural development programs to maximize benefits to the poorest; involving the poorest in decisions affecting their communities; establishing frameworks for the preparation and implementation of regional and local development plans; bringing international experience and best practices in municipal management, including transparent financial management, increased efficiency of tax collection and public expenditures, management of local services, and access to knowledge; bringing international experience and best practices in highway and rural roads management, including administrative decentralization, maintenance by contract with the private sector, sustainability of rural infrastructure sector reforms, and road-related environmental and social safeguard policies and procedures; and promoting the conservation of the state's natural resources, by continuing to provide support to the structuring and implementation of the state's land use management policy. 4. Description -6- The project will be comprised of the following four components: a regional development planning and rural infrastructure management component, which will consist of technical assistance, equipment, software and of training of state and municipal staff to: establish and/or strengthen regional, sustainable development councils or fora, on a pilot basis in the Sudeste and Bico de Papagaio regions, with a broad representation of the poor, civil society, the business community and local administrations, under the councils' guidance and with technical support from regional units of SEPLAN, prepare, monitor and evaluate regional development plans or agenda. Emphasis will be on identifying regional and intermunicipal public investment priorities, on the spatial coordination of the various programs, on promoting associations of small municipios and public-private partnerships for effective delivery of public services and increased productivity and competitiveness of small farmers, and on sustainable use of natural resources. prepare, monitor and evaluate municipal development plans or agenda, identifying municipal and community priority projects through a broad public consultation and participatory process which effectively integrates all, including the poorest communities, through appropriate motivation and training programs; and strengthen SEPLAN's capacity to facilitate such decentralized planning process and to monitor implementation and evaluate results, including for the project; strengthen the tax collection, financial management and control systems of individual municipalities or associations of municipalities; and establish or strengthen the technical and administrative capacities of municipalities, or associations of municipalities, to deliver local infrastructure services, including improvement and maintenance of municipal road networks, on a sustainable basis. Emphasis will be put on addressing the needs of the poor, disseminating appropriate service standards and cost-recovery mechanisms, and promoting private sector participation through concessions or output-based contracts. an environmental management component, which will consist of technical assistance, equipment, software, small works and of training of staff to: prepare the detailed economic-ecological zonings of six priority regions and the agro-climatic zoning of intensive-use agricultural areas; define a land use policy with adequate incentives, economic and regulatory instruments, and state/local structures; prepare investment and operating plans for, and establish six priority environmental protection areas, including the necessary supervision infrastructure and equipment, training of operational staff, and environmental education of local communities; develop a plan to monitor essential climatic and hydrological conditions in the state, and establish the first elements of such hydro-meteorological system; initiate a program, with the participation of rural communities, to protect and/or rehabilitate riparian forest galleries (matas ciliares); and strengthen NATURATINS's decentralized licensing and monitoring capacities. a state road improvement and maintenance component, which will consist of civil works, engineering services, technical assistance, equipment, software, and training of staff for SEINFRA and/or DERTINS to: prepare, monitor and evaluate efficient state road programs and annual budgets on the basis of adequate technical standards and economic and -7 - environmental criteria and methodologies, and taking into account the regional development plans or agenda; prepare and/or supervise environmental assessments and management plans, with effective consultation of relevant communities; strengthen DERTINS' road maintenance capacity, particularly by shifting from force account to performance-based contract maintenance policies, gradually decentralizing its maintenance activities through the creation of new districts, and by reorganizing, its assistance to municipalities; and upgrade high-priority secondary and feeder roads (totaling about 800 km) linking areas with proven potential for sustainable production to the main highway network. a rural transport improvement component, which will consist of civil works, engineering services, technical assistance, equipment, software, and of training of municipal staff to: upgrade primary municipal access road networks (totaling about 6,000 km) prioritized under the decentralized participatory planning processes to all-weather condition through spot improvements, mainly (re)-construction of bridges, culverts, and other drainage improvements; experiment with pilot subprojects of decentralized maintenance of municipal roads, including creation of inter-municipal road consortia, output-based contracts with DERTINS and/or small local contractors using labor-intensive methods; promote cost-effective rural transport services, particularly school bus systems, and establish mechanisms to improve access of the rural poor to such services. 5. Financing Total ( US$m) BORROWER $50.00 IBRD $50.00 IDA Total Project Cost $100.00 6. Implementation The State of Tocantins will be the Borrower and the Federative Republic of Brazil the Guarantor. In order to ensure an effective coordination of the implementation of the two projects, SEPLAN will be responsible for implementing the PRPR and the planning and environmental components of the TRIP, in addition to continuing the execution of the NRPP. The project's planning component will be implemented through SEPLAN's Diretoria de Planejamento, while the environmental component will be implemented through SEPLAN's Diretoria de Zoneamento Ecologico-economico, with the support of SEPLAN's Dietoria de Meio Ambiente e Recursos Hidricos, and Diretoria de Pesquisas e Informacoes. The roads components of the TRIP will be implemented by the State Highway Department (DERTINS) of the State Secretariat of Infrastructure (SEINF-TO). A project management unit (PMU) will be established under the Director of Strategic Support in SEINF, to coordinate or maintain procurement, payments and disbursements, accounts, documentation and audits under the project, and to prepare project management reports. The PMU is expected to incorporate the experienced staff that effectively coordinated the execution of the recently-completed state highway management project (Loan no. 3714-BR). Regional and municipal development plans would be prepared by, respectively, the CONDERs and the CONDEMs, with support from SEPLAN's - 8- regional technical units and technical assistance provided under the project. The Bank will ensure appropriate coordination of its supervision activities of the project, the TRPRP as well as the ongoing NRPP. In particular, efforts will be made to ensure at least one joint supervision mission each year. Linkages between Investments and Institutional Components In order to provide appropriate incentives for the proposed institutional development measures, in particular for implementing the proposed participative planning mechanisms for sustainable local development, approval of municipal road network subprojects for financing under the project will be subject to presentation of the proposed municipal agenda for sustainable local development together with a report on the constitution of the municipal forum and on the actual participation process followed for the preparation of the development agenda and the road subproject. In the event that some municipios would not have presented satisfactory subproject applications with satisfactory development agenda and subprojects within two years of the loan effectiveness date, the amounts of the project allocated to such municipios would, at the mid-term review of the project, be redistributed to best performing municipios. Monitoring and Evaluation As both the TRIP and the TRPRP will contribute to the same objectives in the same target regions of Tocantins. Thus, the outcomes of both projects will be monitored and evaluated jointly, in an integrated manner. The methodology for monitoring and evaluation will be developed on the basis of the methodology already prepared for the Rural Poverty Alleviation Projects of the Northeast. A monitoring system will be developed to track progress in the implementation of each project to ensure that planned targets are met, to identify problems and accomplishments and to undertake or promote appropriate actions to improve project implementation. The respective Project Management Units will be in charge of project monitoring based on project information provided by project databases, field visits and inputs from project supervision reports, project-contracted studies and audits. Projects information will be accessible to both Project Management Units. The main considerations which will guide the organization of project evaluation are: (i) institutional and socioeconomic impacts will be evaluated by SEPLAN's Diretoria de Pesquisas, which is already in charge of monitoring and evaluating the impact of the various programs under implementation in the state to reduce poverty and foster economic development. The Diretoria has already developed a series of composite indicators which it compiles annually, on the basis of basic data collected mostly by various state and federal entities. The project will provide financing for training, technical assistance and equipment to strengthen the Diretoria's capacity and allow for the contracting of external assistance to complete in-house capacity; (ii) environmental impacts will be evaluated by SEPLAN's Diretoria de Zoneamento Ecologico-Economico, as it is one of the Diretoria's responsibility; and (iii) evaluation of the Bank's projects will be fully integrated in the evaluation work already undertaken by the Diretorias at the level of the -9- state programs. This implies, inter alia, that the indicators to be used for the evaluation of the Bank's projects will have to correspond to indicators already collected by the Diretorias, unless it is determined that none of the indicators collected is a relatively good proxy to measure the impact of the Bank's projects on a very specific and essential variable. While following this principle will obviously help reducing costs associated with evaluation, it will also help: (i) build up government's ownership in the evaluation process; (ii) ensure the sustainability of the institutional strengthening efforts within the Diretoria de Pesquisas; (iii) ensure inter-state comparability, as some of the key indicators used by the Diretoria de Pesquisas are used nationally; and (iv) a joint mid-term review will be undertaken to determine the efficiency of the projects design in reaching their objectives, and modifying, if necessary, the design of certain projects components and/or targeting. Project evaluation studies will be designed and implemented to asses the performance of the two projects in terms of their stated objectives, and to provide appropriate feedback to improve project operations. In particular, these studies will assess three inter-related dimensions of the performance of each project: (1) Socioeconomic impact: Whether the project improved living standards; (2) Targeting: Whether project interventions actually reached its intended beneficiaries, i.e. the rural poor; (3) Institutional impact: Whether the project increased institutional capacity and social capital at each jurisdictional level. The analysis of project targeting will assess whether the mechanisms used by the two projects to allocate resources actually served to reach the poor. The institutional analysis will assess how the two projects serve to enhance social capital in beneficiary communities, municipalities and regions (e.g. number of community associations, and municipal and regional councils formed, their activities and degree of participation). It will also examine the performance and capacity of community associations, municipal and regional councils and technical units at the State level. The socioeconomic assessment of the project will be based on a carefully designed impact evaluation framework and data from a baseline and follow-up surveys. The impact evaluation framework will include the following components: operationalization of (1) in terms of measurable impact indicators, reflecting both the direct effects (e.g. improved access to work, markets and services) and indirect effects (e.g. increases in income and other dimensions of well-being such as health and education) of project interventions; identification of the unit of analysis for each project type; identification of the most appropriate methodologies or combination of methodologies to be used given the characteristics of the projects; and an assessment of data availability and data needs consistent with the above. Finally, in order to enhance the policy implications of the impact evaluation, the latter should be complemented with cost-effectiveness analysis of the two projects compared with other interventions that use a more centralized delivery mechanism. 7. Sustainability The project will seek sustainability through: development of a spatial and participatory approach to rural development - 10 - and poverty reduction at policy, planning and implementation levels; establishment and strengthening of local capacity to define and seek funding for municipal and regional development plans, and monitor their implementation; increased social capital; better inclusion of rural population in society and economy, through increased awareness to rural economy potential and related support available to realize the potential; development of feedback mechanisms on efficiency/targeting of activities aiming at regional development and reduction of rural poverty; increased management capacity at municipal level, including tax collection and financial management capacity; development of funding mechanisms for maintenance of rural roads at local level; consolidation of the state's environmental management capacity; and more effective and sustainable operation and maintenance of the state highway network. 8. Lessons learned from past operations in the country/sector The following important lessons learned from past experience of the Bank in implementing this type of project have been incorporated into the design and preparation of the project: . Participation of beneficiaries: experience in Brazil and elsewhere has demonstrated that involvement of civil society an potential beneficiaries in the design, implementation and monitoring of local development and poverty reduction activities is fundamental to maximize the project's impact , in terms of matching the needs of the municipalities and communities, ensuring ownership, and sustaining project's impacts over the long term. As such, the project will support involvement of all stakeholders, including civil society and potential beneficiaries in developing, implementing and monitoring local development plans. . Project scope: OED reviewed 66 Bank-funded operations dealing with rural roads. Half of these operations focused exclusively on rural roads, while the other operations included also other components under Roads, Transport, Rural Infrastructure, Irrigation and Agriculture and Rural Development Projects. The outcome of all operations reviewed has been mixed, especially for agriculture or integrated development projects. A such, the OED review favors sector projects designed within a holistic strategy for rural development. This is especially true for a project in the transport sector, as transport is an intermediary good. The project fully integrates this lesson. Institutions for broad-based rural development: the success of rural development initiatives, particularly those targeted at the rural poor, depends upon the existence of well-functioning institutions, able to collaborate across regional, functional and governmental boundaries, and responsive to the populations they are meant to serve. The project and the RPRP will foster the strengthening of existing institutions, creation of fora for cross-sectorial collaboration, and building of social capital. 9. Environment Aspects (including any public consultation) Issues : The environmental objective of the project is to - 11 - continue supporting government's efforts in promoting the efficient use and conservation of the state's natural resources and to protect biodiversity and fragile ecosystems. Specific sub-objectives include: consolidating the state's capacity in terms of environmental management and monitoring: following the elaboration of the state zoning, the project will support the preparation of a detailed zoning of the most fragile and threatened Jalapao region, and of the entire Sudeste and Nordeste regions; preparation of plans for, and establish the six most urgent conservation units (UC), including the Jalapao Park (in coordination with GEF funded Programa Nacional de Biodiversidade); establishment of the first phase of a climate and water resource monitoring system; and initiation of a program to protect and to rehabilitate remains of tropical forest. The TRIP will also help SEPLAN to reassess the geographical targeting of the state expenditure programs in relation to the zoning; and to strengthen the local environmental licensing, supervision and monitoring capacities of NATURATINS; ensuring that the preparation of municipal and regional development plans include adequate provisions to protect sensitive areas and manage natural resources in a sustainable fashion: awareness of municipalities and local communities to environmental protection and sustainable natural resources management will be raised through existing activities in this area, including activities funded under various Government programs and the SPRN. In addition, development plans will be developed in close collaboration with environmental advisors, which will, inter alia, expose to and discuss with municipal and regional councils general principles of environmental protection and sustainable natural resources management, the state's environmental policies and objectives, and the recommendations of the detailed regional ZEEs, as they become available; and ensuring that physical activities funded under the project meet the requirements of the Bank safeguard policies: environmental issues are expected to be relatively minor, as physical activities under the project will basically concern strutural improvement of existing road sections on the state network, and very localized improvements of road infrastructure on the municipal network. Improvement activities will have mainly short-term, construction-related negative impacts (noise, dust and the like). Potential long-term negative indirect impacts from the improvement of state road sections will be handled through appropriate identification and mitigation processes, such as application of the ZEE's recommendations, various land use policy instruments, including land and water use restriction, establishment of protected areas, modification of project design and/or alignment. 10. Contact Point: Task Manager Aymeric-Albin Meyer The World Bank 1818 H Street, NW Washington D.C. 20433 Telephone: (202) 473 7101 Fax: (202) 676 9594 11. For information on other project related documents contact: The InfoShop - 12 - The World Bank 1818 H Street, NW Washington, D.C. 20433 Telephone: (202) 458-5454 Fax: (202) 522-1500 Web: http:// www.worldbank.org/infoshop Note: This is information on an evolving project. Certain components may not be necessarily included in the final project. This PID was processed by the InfoShop during the week ending November 8, 2002. - 13 -