Updated Project Information Document (PID) Report No: AB566 Project Name SOUTH AFRICA - Cape Action Plan for the Environument Region Africa Regional Office Sector General agriculture, fishing and forestry sector (100%) Theme Environmental policies and institutions (P); Biodiversity (P); Other environment and natural resources management (S) Project P075997 Borrower(s) REPUBLIC OF SOUTH AFRICA Implementing Agency(ies) National Botanical Institute Address: Kirstenbosch, Private Bag X7, Claremont, 7735, South Africa Contact Person: Professor Bran Huntley Tel: +27 21 79 98800 Fax: +27 21 761 4687 Email: huntley@nbict.ac.za Environment Category B (Partial Assessment) Date PfI} Prepared December 21, 2003 Auth Appr/Negs Date December 3, 2003 Bank Approval Date May 18, 2004 1. Country and Sector Background Conservation of the CFR South Africa, like many developing countries, is experiencing significant losses to its natural resources, including biodiversity, especially in the CFR. The impact of these losses includes: (i) reduced diversity and ecosystem functioning; (ii) lower availability of natural resources needed for socio-economic development (as in the fishing and the eco-tourism industries); and (iii) reduced recreational and social value of the natural environment; and (iv) degradation or loss of ecosystem services such as for the provision of water. The key threats to biodiversity and to natural resources in the CFR include: (i) habitat loss and fragmentation, primarily through urban expansion and agricultural development; (ii) invasion by alien plant and animal species; (iii) fire, including inappropriate fire management; (iv) over-abstraction, of surface and underground water; and (v) over-exploitation and harvesting of marine resources and certain plant and flower species. The root causes of the biodiversity losses include the following: (i) whilst the CFR is characterized by relatively well developed conservation institutions, further capacity is required to implement a long term conservation agenda to conserve the CFR; (ii) there has historically been a lack of coordination between conservation agencies which has diluted the ability to implement a long tern program to conserve it; (iii) a coherent education agenda, aimed at encouraging inhabitants and business to conserve the CFR, has been lacking; (iv) there has historically been too little emphasis placed on developing new models to increase the area of the CFR under conservation management, especially involving private land and the conservation of marine resources. This has resulted in an ineffective system of conservation areas to conserve a 2 PID representative sample of the CFR including the regions 1200 threatened plant species and marine resources; (v) there has historically been too little emphasis on incorporating biodiversity considerations into land use planning in order to prevent habitat loss. Further, in threatened areas, fiscal and other instruments required to encourage landowners to not develop in priority conservation areas have been lacking; and (vi) policy and legal framework for addressing biodiversity threats in watersheds have been lacking. Governrment strategy: GoSA has undertaken a number of strategic interventions to address the above issues. At a National level, GoSA has: (i) signed and ratified all key intemational conventions pertaining to biodiversity conservation including: the Convention on Biodiversity (CBD), Ramsar, CITES and World Heritage Convention; (ii) has enacted a Constitution which supports a person's right to sustainable development. In addition it has introduced the umbrella National Environmental Management Act (1998) and the Living Marine Resources Act. It has introduced a National Biodiversity Bill and a Protected Areas Bill for Parliamentary approval in 2004. Importantly, the Biodiversity Bill makes provision for the Grant recipient agency, the NBI, to be transforrned into the South African National Biodiversity Institute, in order to support the imptementation of programs such as the C.A.P.E. program. Land use planning legislation has also been introduced at both a National and Provincial level which requires local authorities to integrate natural resource considerations into the annual municipal planning cycle. Policy and legislation to support watershed management is also being implemented; (iii) adopted a bioregional approach to the conservation of biomes, based on the C.A.P.E. strategy; (iv) adopted a new school curriculum which includes conservation education; (v) agreed to expand the area of South Africa under protected area management from 4.5%- 7.5%; (vii) provided additional financial resources to the capital costs of expanding the protected area network; (vi) in 2001, GoSA approved a Medium-termn GEF Project Priority Framework which identified the CFR as a top priority for GEF support; and (vii) developed the Working for Water and Poverty Relief programs which employ members of the local community to eradicate key threats to watersheds and biodiversity through removing invasive alien plants. In order to implement the C.A.P.E. Program, the GoSA, the NBI, the three Project Sub-Executing Agencies, other stakeholders and the private sector, have undertaken a considerable number of actions. These include: (i) creating institutional arrangements to support the co-ordination and implementation of the C.A.P.E. Program and the Project. The Cape Coordination Comnmittee (CCC) and Cape Implementation Committee (CIC) have been established to provide high level political and technical support. The Cape Co-ordination Unit (CCU) has been established and staffed to support Project preparation as well as Project co-ordination and implementation on day to day basis. Further, all 23 signatories to the C.A.P.E. Program have endorsed it and have substantially aligned their work programs and activities to it; (ii) in terms of financing, a CEPF Grant of US$6 million has been leveraged of which half the funds have been committed to supporting an array of complementary civil society initiatives in the C.A.P.E. Program. This includes support to the establishment of 2 project co-ordination units for 2 of the proposed mega-reserves, with planning now at more advanced stage. In addition the GEF has allocated US$3 million to the execution of the C.A.P.E. Agulhas Plain Initiative (conservation area in the CFR) with strong support from SANParks. In order to increase self generated income for conservation agencies, private sector concessions are being developed; (iii) 3 PID lessons learnt from the GEF support to the Cape Peninsula National Park are being rolled out to other conservation areas in the CFR; (iv) through initial sub-executing agency support, the area of private land under conservation management has been increased with 148 private nature reserves, 43 conservancies, 36 natural heritage sites and 2 biosphere reserves found in the CFR; (v) in terms of new fiscal instruments to increase the area under conservation, GoSA has agreed to provide rates rebates (local tax relief) to private land owners contracting land into protected areas. In addition GoSA has undertaken to examine proposals made to the Draft Tax Bill to provide similar relief, and (vi) working for Water and Poverty Relief projects are being successfully implemented in order to remove alien vegetation from watersheds. 2. Objectives The Project Development Objective is to support the conservation of the Cape Florisitc Region (CFR) and adjacent marine environment by laying a sound foundation for scaling up and replicating successful Project outcomes. The Project will achieve this through 2 sub-project objectives (i) laying the foundations for mainstreaming biodiversity into the economy; and (ii) by undertaking carefully targeted conservation demonstrations in selected biophysical, socio-economic and institutional contexts with a view to scaling these up. The Global Objective is to ensure that the conservation of Cape Floristic Region and adjacent marine environment is secured by 2024. This goal is derived from the Overall C.A.P.E. Program Goal which is stated as: "by the year 2024 the natural environment and biodiversity of the Cape Floristic Region and adjacent marine environment will be effectively conserved, restored wherever appropriate, and will deliver significant benefits to the people in a way that is embraced by local communities, endorsed by government, and recognized intemationally" The Project is supported by the World Bank and the UNDP as described in section C4 of the Project Appraissal Document (PAD). Background to the Proiject The C.A.P.E. Biodiversity Conservation and Sustainable Development Project (henceforth referred to as "the Project") is derived from a program of the Government of South Africa (GoSA). The GoSA has developed the C.A.P.E. Program to protect the rich biological heritage of the CFR (See Figure 1), and to ensure that biodiversity conservation is mainstreamed into economic development and poverty alleviation strategies. The basis for the C.A.P.E. Program was laid by GEF support in September 2000. In this period, the Cape Action Plan for the Environment, referred to as the CAPE 2000 Strategy, was developed. It identified the key ecological pattems and processes which need to be conserved in the CFR and the key threats and root causes of biodiversity losses. This resulted in a spatial plan identifying the priority areas for conservation intervention and a series of systemic program activities to be undertaken in three phases, over a 20 year period, to conserve the CFR. A second, Phase 2 application, will be made to the GEF at the end of this Project, seeking lower levels of GEF, Bank and UNDP support. Phase 3, will be funded from domestic resources. Each phase of the C.A.P.E Program is designed 4 PID as a relatively discrete element to generate defined global environmental benefits, as GEF support, whilst key, cannot be guaranteed for Phase 2. GEF/Bank and UNDP support to the first five years of the C.A.P.E. Program (Phase 1) includes a Critical Ecosystem Partnership Fund allocation for civil society involvement, complemented by the C.A.P.E. Agulhas Biodiversity Initiative and the subject of this application. The implementation responsibility for the C.A.P.E. Program, and the Project, falls under the Cape Co-ordination Unit (CCU) of the National Botanical Institute (NBI) which is the recipient of the Grant. It will be supported by three Sub-Executing Agencies including the South African National Parks (SANParks), the Western Cape Nature Conservation Board (WCNCB) and the Wilderness Foundation (WF). Annex 11 provides a background to the project area including a description of the area's biodiversity and socio-economic context. Annex 14 provides a description of the overall C.A.P.E. Program. 3. Rationale for Bank's Involvement The CFR has been identified as a global biodiversity hotspot under threat and worthy of intemational conservation action. The role of the GEF, the World Bank and of UNDP is to provide technical and financial support, to augment current baseline capacities, based on agreed pre-feasibility studies. Both organizations are well positioned to support the Project due to their extensive experience in supporting large conservation programs in middle income and developing countries. Support from the World Bank and UNDP is based on comparative advantage. The World Bank's strengths lie in supporting large programs which leverage significant investment including public and private sector, which provide opportunities for mainstreaming into productive sectors of the economy and which identify how best to enhance economic linkages. The World Bank is currently supporting a number of biodiversity and land degradation projects that promote integrated ecosystem management, identifying threats and root causes of biodiversity loss. The World Bank has good knowledge of South Africa and of the CFR through its current support to the Cape Peninsula Biodiversity Conservation Project (including the C.A.P.E. Program), support to three MSPs, including one through the National Botanical Institute, and the preparation of the Addo Project. Extensive support has been provided in the planning, management systems, capacity-building, tourism assessment, conservation education, knowledge management and alien species control activities. Further, the Bank is able to provide support on the cost effectiveness analysis of pilot activities with respect to scaling up opportunities. The UNDP has similarly provided support and is currently preparing a number of programs in the region which focus on integrated ecosystem management. Programs under implementation include the regional SABONET Program, Benguela Current Large Marine Ecosystem Program, with others under preparation including the Agulhas Biodiversity Initiative as well as MSPs. Based on experience inside and outside of South Africa, the UNDP is positioned to lead on the capacity building and conservation education components of the Project. Annual funder round tables will be hosted by the South African Governnent and supported by the 5 PID Bank and the UNDP. The aims of the funder roundtables will be: (i) for the recipient to annually report to funders, donors and other domestic agencies on Project progress and to agree on the Project deliverables and use of financial resources for the next year; (ii) finalize the support of additional funders and donors to the Project. The target is to increase financial support by an additional 15% in this regard; and (iii) seek additional specialist technical support from funders to the Project. The funder roundtables will therefore constitute the culmination of various earlier bilateral discussions involving Government, the Bank and UNDP with existing funders and donors, rather that the initiation thereof. This support will take place whilst recognizing the preferred South African Government position to use Government funds within the CFR and to direct donor funds to the poorer Provinces, such as the Eastem Cape. 4. Description The aim of the Project is to catalyse and drive the implementation of the C.A.P.E. Program in Phase 1 through: (i) laying the foundations for mainstreaming biodiversity into the economy; and (ii) by undertaking carefully targeted conservation demonstrations in selected biophysical, socio-economic and institutional contexts with a view to scaling these up. The Project has been designed to address systemic issues including threats and root causes of biodiversity losses. The design has been tested with all key partners and found to be feasible. Laying a foundation for mainstreaming biodiversity in the CFR into economic activities will entail: (i) institutional strengthening; (ii) supporting conservation education; and (iii) implementing a program co-ordination, management and monitoring framework. Supporting the conservation of the CFR by piloting and adapting models for sustainable, effective management will include support to (iv) protected area management; (v) establishing the foundations of the biodiversity economy; and (vi) integrating biodiversity concerns into watershed management. Component 1: Institutional strengthening. GEF: US$1 .4m. Executed by NBI (US$0.968m) for priority institutions including the WCNCB (US$0.432m) for five new Catchment Management Agencies. This component will align and strengthen institutions to conserve the CFR. It will: (i) enhance interagency co-operation and strategic planning for conservation management in the CFR, including five catchment management agencies which are about to be established; (ii) build capacity for effective conservation management, including enhanced capacity to involve people actively; (iii) develop and appraise strategies for financial sustainability across the suite of Project executing agencies; and (iv) establish a shared and comprehensive information management system to share the most important knowledge requirements. Component 2: Conservation education. GEF: US$0.6m. Executed by NBI in partnership with key education institutions (Rhodes University) for key Project partners. This component will support the development of a conservation education and awareness program to conserve the CFR. It will: 6 PID (i) facilitate co-ordinated environmental education about the CFR by establishing a focal point and mechanism for co-ordination and technical support to site-specific interventions at the level of each sub-component and activity across the Project; and (ii) develop and disseminate materials focused on CFR biodiversity, supportive of informal and formal education curricula, including training of educators to capitalize on the favorable education policy environment. Component 3: Program and Project co-ordination, management and monitoring. GEF: US$ 1.11 m. Executed by NBI (US$0.968m) for all beneficiary institutions to the Project This component will strengthen the C.A.P.E. Co-ordination Unit at the NBI to undertake: (i) program co-ordination and management; (ii) financial management of the overall Project; (iii) program portfolio management and co-ordinated monitoring and evaluation to assess lessons learned and support and develop a replication plan, based on cost benefit analysis; and (iv) a communication program. Component 4: Protected areas. GEF: US$4.12m. Executed by SANParks (US$1.327m) for Garden Route and MCM (Marine Protected Areas); WCNCB ($US 1.694m) for protected areas in the Western Cape and MCM (Kogelberg Marine Reserve); and Wilderness Foundation (US$1.099m) for DEAET. This component will expand the protected areas of the CFR. Refer to Fig 2. It will: (i) plan and consolidate three large protected area complexes involving private landowners and inhabitants as beneficiaries (Cederberg, Baviaanskloof and the Garden Route), including highly threatened lowland habitat. Different models for public-private sector management will be applied in these areas which represent characteristic institutional and socio-economic settings across the CFR; (ii) establish two freshwater, two estuarine and two clusters of marine protected areas; (iii) develop sustainable management effectiveness of protected areas through implementation of a Strategic Performance Management System, based on the models developed in the Cape Peninsula National Park and emergent rapid assessment techniques for management effectiveness being developed by World Bank/WWF/IUCN; and (iv) develop a harmonized protected area information management systems, plans for responsible tourism investment and visitor impact mitigation in four protected areas as well as protected area business plans and mechanisms for financial sustainability in four protected areas. Component 5: Biodiversity economy and conservation stewardship. GEF: US$2.45m. Executed by NBI (US$1.475m) and by WCNCB (US$0.975m) for DEA&DP, DoA and key municipalities. This component will mainstream biodiversity considerations into economic growth and development, including some demonstrations in key interventions areas (Refer to Fig 3.) It will: (i) integrate fine-scale conservation plans in five priority target areas into government spatial planning and regulations at municipal level; 7 PID (ii) increase landowner commitment to conservation through co-ordinated extension services and co-operative management schemes in priority target areas; and (iii) develop and pilot financial incentives to conserve biodiversity in threatened lowland habitats. This will include tax incentives and payment for ecological services. Component 6: Watershed management. GEF: US$132m. Executed by NBI (US$0.906 m) for estuarine and freshwater protected areas; and by WCNCB (US$0.432m) for DWAF (watersheds). This component will address watershed management and freshwater and estuarine protected areas in key intervention sites (Refer to Fig 4.): (i) increase the effectiveness of the "Ecological Reserve" measure in water resource management in three watersheds, and incorporate biodiversity concerns into the new fire management systems being implemented; (ii) create an alien invasive species management strategy and business plan for the entire CFR and pilot the control of invasive aliens in certain priority ecosystems; and (iii) design and test a CFR estuarine management program, based on relevant case studies. Note: Rounding off changes figures slightly 1. Institutional strengthening (UNDP) 2. Conservation education ( UNDP ) 3. Program management and coordination (Bank) 4. Protected area management (Bank) 5. Establishing the foundations of the biodiversity economy (Bank) 6. Watershed management (Bank) 5. Financing Source (Total (US$m)) BORROWER/RECIPIENT ($44.13) GLOBAL ENVIRONMENT FACILITY ($9.00) UN DEVELOPMENT PROGRAMME ($2.00) Total Project Cost: $55.13 6. Implementation During Project preparation, iterative assessments and consultations were undertaken to identify the most suitable agencies and organizations to execute and support the Project. Criteria included assessing the legal mandates of agencies, anticipated new legislation, experience in project implementation, the availability of technical and financial resources, fiduciary systems and the desire/commitment to execute activities. Based on this assessment the following arrangements were determined. The recipient of the Grant will be the National Botanical Institute (NBI), supported by a special unit within the organization, the Cape Coordination Unit (CCU). The CCU will perform the responsibilities assigned to the NBI in the Grant Agreement on a day-to-day basis. There will be three Sub-Executing Agencies to the Grant Agreement, namely the Western Cape Nature Conservation Board, South African National Parks and an NGO, the Wilderness Foundation. The Sub-Executing Agencies will be delegated responsibility for the performance of certain key 8 PID activities by the NBI. The reasons for this design and the responsibilities for implementation of the Project are provided below: (i) National Botanical Institute (NBI). After extensive negotiations between all roleplayers, the NBI was identified as the lead executing agent for the Project. It is already executing three GEF projects and its new legal mandate, in terms of the Biodiversity Bill, will include support to implementing bioregional programs such as the C.A.P.E. Program. The NBI is a statutory body of National Government. It will take overall responsibility for the Project, supported by the CCU. The CCU consists of a Co-ordinator, Administrative Assistant, Finance/Business Manager, Communications Manager and Program Developer, with all other supervisory, administrative, financial and human resource management services supplied by the NBI. The operation of the CCU will be partially financed through the Grant and the WCNCB. The CCU will implement cross-cutting activities related to Institutional Strengthening and Program Co-ordination, Management and Monitoring. It will also execute some of the Conservation Education, Biodiversity Economy and Watershed Management activities. GEF financing: US$5.059m. (ii) Western Cape Nature Conservation Board (WCNCB). The WCNCB is a statutory conservation body of the Western Cape Government. It has considerable implementation capacity in conservation management at the Provincial level. It will take responsibility for executing the Cederberg mega-reserve area as it already manages a large protected area in the Cederberg. It will also assume responsibility for supporting Conservation Stewardship and Watershed Management (in partnership with the Department of Water affairs and Forestry (DWAF) because it is active in the area and has the capacity. GEF financing: US$3.515m. (iii) South African National Parks (SANParks). SANParks will take responsibility for executing the Garden Route Initiative because it already manages three smaller protected areas in the Garden Route and has the management capacity to expand these. It will also support the development of the associated Marine Protected Areas as it has long standing history in managing marine resources in the area. It will perform these activities in partnership with DEAT, DWAF, WCNCB and NGOs. GEF financing: US$1.327m. (iv) Wilderness Foundation (WF). The Eastern Cape Province has recognised its weakness in planning and implementing new conservation areas. It has therefore contracted the WF, a professional and capable conservation NGO, to act on its behalf. The WF will take responsibility for executing all activities relating to the Baviaanskloof initiative under Component 4 (Protected Areas). GEF financing: US$1.099m. The legal arrangements for Project execution are as follows: The NBI will be the Grant recipient. Separate Project Agreements will be signed between the Bank and the three sub-executing agents. The NBI will in turn sign separate subsidiary agreements with each of the Sub-Executing Agencies spelling out the activities to be performed, financial management, procurement, reporting, monitoring and safeguard requirements. Regarding the implementation arrangements for complying with safeguard policies, the following will apply: * the NBI will assume overall responsibility for ensuring compliance to Bank safeguards; but * it will delegate the planning and execution of this responsibility to the three 9 PID Sub-Executing Agencies through subsidiary agreements. The NBI will however be responsible for seeking Bank endorsement of compliance to safeguards and will therefore monitor performance in this regard. Financial Management Project financial management will be overseen by the existing NBI Finance Department. The CCU will manage the overall coordination of the Project between the NBI and its three sub executing agencies. The CCU's Project Co-ordinator will be assisted by technical specialists, as well as a Finance and Procurement officer. The officer will be responsible for keeping copies of all accounting records (originals files with the payment documentation kept at the NBI Finance Department), justification of claims from the Sub-Executing Agencies, disbursements and replenishment of the Special Account, financial reporting on CCU activities as well as consolidating the activities of the Sub-Executing Agencies into CCU reports, and general administration of the unit. The officer will report to both the CCU's Project Co-ordinator and the NBI's Director of Finance who will remain the "Accounting Officer" for the Project. This is an existing and fully staffed department comprising a qualified Chartered Accountant as head, assisted by other professionally qualified accountants in the department. The CCU will however be responsible for producing a comprehensive project performance report incorporating the activities of the Sub-Executing Agencies. The NBI already has a comprehensive Accounting and Admin Manual. This will however be 'customised' to incorporate the new CCU and the relationship with the Sub-Executing Agencies. The NBI chart of accounts and NBI systems will be used for overall project accounting and reporting. The Financial Monitoring Reports (FMR s) for the Project are still to be designed but it is expected that both the Sub-Executing Agencies and NBI' s systems will support the preparation of FMR s. Internal auditors currently exist in the SANParks and are about to be introduced into the WCNCB. The Wilderness Foundation does not have internal auditors due to its size this is not foreseen as a constraint on the Project due to the size of the funds which they will manage. External audit arrangements are provided through the Auditor General of South Africa which has statutory responsibility for the audit of the NBI, SANParks, and WCNCB. The Wilderness Foundation is audited by Ernst and Young. While there appear to be no problems with auditor qualifications, even where the Auditor General out sources the service, the agreed audit terms of reference will need to be reviewed for compliance with the requirements of the Bank. Governance structures As the Project is supported by a range of other key partners, including central, provincial, local government and NGO's the governance relationship is established as follows: (i) the key high level partners to the C.A.P.E. Program, are bound by a Memorandum of Understanding (MoU). 10 PID The parties to the agreement include the National Ministries of Environmental Affairs and Tourism and Water Affairs and Forestry, and the Members of the Executive Councils of the Western Cape and Eastern Cape, responsible for Environment Affairs; (ii) The MoU creates two key structures: the C.A.P.E. Coordinating Committee (CCC), with the overall function to co-ordinate the long-term implementation of the C.A.P.E. Program. This is a structure which operates at a political level between National and Provincial Government. The second structure, the C.A.P.E. Implementation Committee (CIC), represents government departments, municipalities, statutory bodies and accredited non-governmental organizations. It is responsible for executing the C.A.P..E. Program according to the recommendations of the CCC. It therefore operates at a technical level; and (iii) the MoU designates the NBI as the program management agency to execute C.A.P.E and therefore the recipient of the GEF grant. The NBI has established an Executive Committee (EXCO) to include key staff of the NBI and representatives of the CIC's Executive Committee to clear monthly work program issues. World Bank and UNDP support The arrangements between the World Bank and the UNDP for supporting the Project are as follows: * the GEF Council has endorsed the UNDP as implementing agent for components 1 and 2. It has endorsed the World Bank as implementing agent for components 3-5; * each agency will, as per separate Grant Agreement, assume responsibility for all aspects of the implementation of the components listed in each Grant Agreement. This includes Project supervision and monitoring all fiduciary issues and responding to the clients needs for technical assistance. Each agency will be responsible for covering its own costs in this regard; * all technical project documents will be shared between the two agencies; * the two agencies will as far as possible plan and conduct joint supervision missions, mid term reviews, reporting to the GEF and implementation closure processes; and * all Project reporting has as far as possible been standardized between the 2 agencies. Planning cycle and funder roundtables Once a year, a funder roundtable will be convened by the NBI with the Sub-Executing Agencies, key stakeholders and funders and donors. The aim of the roundtable will be to report back on Project implementation progress, the annual work plan and the annual budget. All key stakeholders to the Project will be invited to the roundtable including Government, NGO's and bilateral donors. The private sector is unlikely to participate in these meetings as, by its nature, it will look to specific investment opportunities in the Project area which are best addressed through for example concessioning processes. It should be noted that donor co-ordination meetings, held during Project preparation, indicated a preference of bilateral funders to fund activities outside of the Western Cape which is perceived to be a relatively wealthier area. 11 PID Financial management and procurement The NBI will be responsible for undertaking the fiduciary responsibilities set out in the two Grant Agreements between the NBI, the World Bank and UNDP respectively. It will open Special Accounts for each of the Bank and UNDP Grant Agreements at a commercial bank. The NBI will ensure that procurement is undertaken in accordance with the applicable Bank Grant Agreement and UNDP procurement procedures for all activities. The NBI, in terms of the subsidiary agreements with Sub-Executing Agencies, will ensure that these agencies adhere to the applicable procurement rules, it will validate claims for reimbursement of costs incurred by these agencies. Together, with its own claims, the NBI will forward claims to the Implementing Agencies for payment. 7. Sustainability The Project is considered to have high opportunity for being sustainable and a low to medium risk rating. It is characterized by low levels of GEF investment to baseline and co-financing, relatively robust institutions to execute the Project as well as growing private and public investment in the sector. The Project is designed to ensure that it can be concluded without further GEF investment to continue to support the operating costs of Project activities after Project closure. Four key factors have been taken into account to ensure sustainability: (i) the baseline financial and technical capabilities of executing agencies will be developed to meet the new requirements described in the Project; (ii) project execution will primarily take place at the executing agency level where responsibility, capacity and know-how resides; (iii) the Project will engage with resource users responsible for biodiversity losses such as in the marine environment in order to ensure acceptability and support for new models; and (iv) markets for the provision of ecological services will be operationalized and ecological provisions will be mainstreamed into the productive sectors of the economy in order to develop a new layer of resource managers. 8. Lessons learned from past operations in the country/sector Lessons learnt reflect experiences, including international best practice, from programs and projects under preparation or supervision inside and outside of South Africa, the findings of implementation completion reports and agency reviews. Five key lessons are reflected in the Project design. 3.1 Programmatic approach In order to implement a large number of conservation interventions within a biome over a long period of time, it is essential to select a Program approach. A discrete project by project approach can not address the threats and root causes of biodiversity losses as it can not easily support mainstreaming activities. It is also important to pilot and develop new models for conservation management according to different settings and which can be scaled up and replicated in similar contexts. This requires the implementation of a sound monitoring and evaluation system to assess the cost effectiveness of the various models. Program designs should build on the outcomes and lessons derived from pre-feasibility investments and lessons learnt from existing successful outcomes in the area. Further, bioregional conservation programs should be driven by the borrower and have strong domestic political support. The Project has followed this model, having been developed from a bioregional planning framework and a clear pre-feasibility action plan. 12 PID 3.2 Participatory approach Involving all relevant stakeholders in Projects at the right level, is key to success. Therefore, there should be coherence and consistency in the approach to stakeholder participation in Projects. In addition, successful stakeholder participation is dependent on a commitment to participatory approaches by executing bodies. There should be sensitivity to local variations of culture, history, language and traditions. Groups marginalised for reasons of poverty, gender, culture and language require specific attention and support in the design and implementation of detailed participation activities. This is important in order to assess whether the envisaged Project benefits, to these groups, in fact materialize and the adjustments which need to be made in this regard. Significant local stakeholder support and commitment is best leveraged through decentralized approaches. Lastly, the early involvement of stakeholders in Project and or activity planning is essential in order to ensure ownership and successful project implementation. The Project has developed a clear monitoring and evaluation system, public participation policy and communication strategy, taking into account the above. 3.3 Institutional capacity for project execution Wherever practicable, implementation responsibilities should be vested in existing institutions rather than creating new ones. The selection of institutions for implementation should be informed by an analysis of institutional capacities, a strategic review of mission and policy objectives, goals, operational performance and budgets. The Project has, based on an assessment of institutional capacities, identified the key agencies to execute the Project. 3.4 Over-harvesting of marine resources Traditional fishery management measures (e.g. size limits, bag limits, closed seasons) that are not used in conjunction with Marine Protected Areas (MPA's) have failed to limit exploitation. Therefore, both the use of traditional management models together with the development of MPA's is required. Further, the successful implementation of these measures requires monitoring, surveillance and control at all levels. The Project therefore intends to pilot the design and implementation of these measures. 3.5 New market-based mechanisms Payment for ecological services has been found to be a viable mechanism to conserve natural resources. The lessons learnt from the implementation of the payment for ecological services program in Costa Rica and the design work in Madagascar will be applied to conserve the Lowland areas in the Project. This will include the identification and mapping of areas to be conserved and the development of alternative payment models to conserve them. It is however important that such funding mechanisms are placed on a sustainable financial footing. 13 PID 9. Environment Aspects (including any public consultation) Issues : The Project is predicted to have a positive environmental benefit. The Bank has approved the Environmental and Social Management Framework for the Project. It addresses Bank Policies for Environmental Assessment (EA) OP4.01 and BP4.01 and South African Environmental Impact Assessment (EIA) legislative requirements including the similarities between the two; (ii) the potential of Project activities to trigger South African EIA and Bank EA and other safeguard requirements; (iii) capacity building needs of agencies required to implement the ESMF; (iv) EMP requirements; and (v) the implementation arrangements for managing the EA process and other safeguards (other than resettlement which is addressed separately). A high compatability was found to exist between Bank EA and South African EIA requirements. The main difference is that the Bank requirements for environmental management plans (EMP's) are marginally stricter than in South African legislation. However, in practice EMP's are always required in South Africa in order to mitigate potential project impacts. Regarding the implementation of Bank safeguards, the few activities that may trigger formal EA processes are likely to emanate from Component 4 of the Project. This component involves the consolidation and expansion of a number of protected areas. This includes the provision of sensitive, small-scale tourism infrastructure, development of small and medium size enterprises, as well as provision of communication services and infrastructure upgrading. Activities listed in terms of the South African EIA Regulations, such as provision of roads, and changes of land use will result in the SA EIA process being triggered. Should these activities be anticipated to result in significant negative environmental or social consequences, or occur in a sensitive environment, relevant World Bank safeguard policies will also be implemented. Regarding implementation of the ESMF, it provides for: * Determining which Bank Safeguards are triggered and the process for seeking compliance to Bank and SA requirements. Agencies will use the screening table, included in the ESME, to assist them in this process; and * Proceeding with the expanded EA process. This may involve undertaking both the South African Scoping and EIA processes or simply undertaking a Scoping process and preparing an EMP. Whilst the NBI will be responsible for ensuring compliance with Bank EA requirements, this responsibility will effectively be managed by the three Sub-Executing Agencies responsible for implementing the three mega-reserve proposals. The World Bank will be required to provide the relevant approvals for activities triggered by the ESMF/Bank safeguards. Regarding training, as the EIA processes being followed are already being extensively applied in South Africa, little training for Bank EA is envisaged. However, minor provision will be provided in capacity building and institutional strengthening components of the Project. Consultation and disclosure for site specific EAs and EMPs EA's, required in terms of the Project, will be disclosed to all relevant stakeholders as is currently practiced and required by South African law. 14 PID 10. List of factual technical documents: Under prep 11. Contact Point: Task Manager Christopher James Wamer The World Bank 1818 H Street, NW Washington D.C. 20433 Telephone: South Africa + 27 12 4313127 Fax: South Africa + 27 12 4313134 e-mail cwamer@worldbank.org 12. For information on other project related documents contact: The InfoShop The World Bank 1818 H Street, NW Washington, D.C. 20433 Telephone: (202) 458-5454 Fax: (202) 522-1500 Web: http:// www.worldbank.orgfinfoshop Note: This is information on an evolving project. Certain components may not be necessarily included in the final project.