Documentof The World Bank FOROFFICIAL USEONLY ReportNo: 41404-AR PROJECTAPPRAISAL DOCUMENT ONA PROPOSEDLOAN INTHE AMOUNT OF US$60MILLION TO THE ARGENTINE REPUBLIC A SUSTAINABLENATURAL RESOURCESMANAGEMENT PROJECT January 23,2008 SustainableDevelopment Department Argentina, Chile, Paraguayand Uruguay Country ManagementUnit LatinAmerica and the CaribbeanRegion This document has a restricted distribution and may be used by recipients only in the performanceof their official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCY EQUIVALENTS Exchange Rate Effective November 5,2007 Currency Unit = Peso $Peso 3.136 = US$1 US$0.3196 = AR$1 FISCAL YEAR January 1 - December31 ABBREVIATIONS AND ACRONYMS AGN National General Auditors Office APN National Parks Administration BNA National Bank of Argentina CAS Country Assistance Strategy CGN Accountant General Office DA DesignatedAccount EA Environmental Assessment EMP Environmental ManagementPlan DNCAP NationalDirectorship for Conservation of ProtectedAreas - APN FAP Fiduciary Action Plan FDA Forestry Development Agents FDO Forestry Development Offices FIRR Financial Rate of Return F M Financial Management FMR Financial Monitoring Reports GDP Gross Domestic Product IAU Internal Audit Unit IBRD International Bank for Reconstruction and Development IFR InterimUnaudited Financial Report IFPAs Integrated Fiduciary PerformanceAssessments INAI National Institutefor Indigenous Issues INFONA NationalForestry Institute INTA NationalAgricultural Technology Institution NAP National Action Plan NEFs Forestry ExtensionNodes NFD Native Forest Directorate NGO Non-governmental Organization PEFTS Federal Strategic Plan for Sustainable Tourism PES Payment for Environmental Services POA Annual Operational Plan SAGPyA Secretariat of Agriculture, Livestock, Fisheries and Food SAyDS Secretariat of Environment and Sustainable Development SFM Sustainable Forest Management FOR OFFICIAL USEONLY SIDIF IntegratedFinancial Information System SIFAP National Protected Areas System SIGEN General Syndicate o f the Nation SNAPS Argentina's National Protected Areas System SOE Statement o f Expenditure TFO Technical and Fiduciary Office TOR Terms of Reference UEPEX Executing Unit for International Loans UPAF Upper Parana Atlantic Forest WA Withdrawal Application Vice President: Pamela Cox Country ManagedDirector: Pedro Alba Sector Manager: Ethel Sennhauser Task Team Leader: Robert Ragland Davis This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not be otherwise disclosed without World Bank authorization. ARGENTINA SustainableNatural ResourcesManagementProject CONTENTS Page A. STRATEGIC CONTEXT AND RATIONALE .................................................................. 6 1. Country and sector issues .................................................................................................... 6 2. Rationale for Bank involvement........................................................................................ 11 3. Higher level objectives to which the project contributes .................................................. 11 B . PROJECT DESCRIPTION ................................................................................................ 12 1. Lending instrument............................................................................................................ 12 2. Project development objective and key indicators ............................................................ 12 3. Componentsof the project................................................................................................. 13 4. Lessons learned and reflected inthe project design .......................................................... 18 5. Alternatives considered andreasons for rejection............................................................. 19 C. IMPLEMENTATION ......................................................................................................... 21 1. Partnershiparrangements .................................................................................................. 21 2. Institutional and implementation arrangements ................................................................ 21 3. Monitoringand evaluation of outcomeshesults ................................................................ 22 4. Sustainability and Replicability ......................................................................................... 23 5. Loadcredit conditions andcovenants............................................................................... 26 D. APPRAISAL SUMMARY. ................................................................................................. 27 1. Economic and financial analyses....................................................................................... 27 2. Technical ........................................................................................................................... 28 3. Fiduciary ............................................................................................................................ 29 4. Social ................................................................................................................................. 29 5. Environment ...................................................................................................................... 30 6. Safeguardpolicies.............................................................................................................. 31 7. Policy Exceptions and Readiness...................................................................................... 31 Annex 1: Country and Sector Background ............................................................................... 32 Annex 2: Major RelatedProjects Financedby the Bankand/or other Agencies ..................39 Annex 3: Results Frameworkand Monitoring ......................................................................... 42 Annex 4: DetailedProjectDescription ...................................................................................... 61 Annex 5: ProjectCosts................................................................................................................ 71 Annex 6: ImplementationArrangements .................................................................................. 73 Annex 7: FinancialManagementand DisbursementArrangement ....................................... 78 Annex 8: ProcurementArrangements ....................................................................................... 89 Annex 9: Economic and FinancialAnalysis .............................................................................. 95 Annex 10: SafeguardPolicy Issues ........................................................................................... 110 Annex 11:ProjectPreparationand Supervision .................................................................... 118 Annex 12: Documents in the ProjectFile ................................................................................ 120 Annex 13: Statementof Loans and Credits ............................................................................. 124 Annex 14: Country at a Glance ................................................................................................ 127 Annex 15: DetailedPark Descriptions ..................................................................................... 129 Annex 16: SubprojectImplementationArrangements .......................................................... 140 Annex 17: PartneringProvincialInitiatives ........................................................................... 147 Annex 18: BiodiversityConservationin ProductiveForestryLandscapesProject ............150 Annex 19 PlantationExtensionand Technology Transfer (TT) ........................................... 152 Annex 20: PlantationForestryResearch ................................................................................. 162 Annex 21: Maps (IBRD 35976) ................................................................................................. 170 ARGENTINA SUSTAINABLE NATURAL RESOURCES MANAGEMENT PROJECT APPRAISAL DOCUMENT LATIN AMERICA AND CARIBBEAN LCSAR Date: January 23,2008 Team Leader: Robert Ragland Davis Country Director: Pedro Alba Sectors: General agriculture, fishing and Sector ManagedDirector: Ethel Sennhauser forestry sector (60%); Forestry (20%); Central Project ID: P100806 government administration (20%) Environmental Assessment: Partial Themes: Other environmentand natural Assessment resources management(P);Other rural LendingInstrument: Specific InvestmentLoan development (P);Participation and civic engagement (P) Global SupplementalID: PO94425 Team Leader: RobertRagland Davis LendingInstrument: Specific Investment Loan Sectors: Forestry (5OY0);Centralgovernment FocalArea: B-Biodiversity administration (3O%);General agriculture, Environmental Assessment: Partial fishing and forestry sector (1O%);Sub-national Assessment government administration (5Y0);Agricultural SupplementFullyBlended?: No extension and research(5%) Themes: Biodiversity (P);Other environment andnatural resourcesmanagement(S);Other rural development (S);Environmental policies andinstitutions (S);Rural policies and institutions (S) For Loans/Credits/Others: Total Bank financing (US$m.): 60.00 Proposedterms: Fixed Spread Loan (FSL) inU S dollars, payable in 15 years, including 5 years International Bank for Reconstruction and 1 60.00 0.00 60.00 Development Global Environment Facility (GEF) 7.00 0.00 7.00 Total: 78.80 0.00 78.80 Borrower: The Argentine Republic ResponsibleAgencies: Secretariat o fAgriculture, Livestock, Fisheries and Food; The Secretariat of Environment and Sustainable Development; and The National Parks Administration Zumulativel 1.20 I 2.70 I 4.70 I 6.50 I 7.00 I 0.00 I 0.00 1 0.00 I 0.00 Project implementation period:. Start: July 31, 2008 End: September 30, 2013 Expected effectiveness date: July 31, 2008 Expected closing date: March 31, 2014 Does the project depart from the CAS incontent or other significant respects? Ref: PADA.3 [ ]Yes [XINO Does the project require any exceptions from Bank policies? Re$ PAD D.7 [ ]Yes [XINO Have these been approved by Bank management? [ ]Yes [ IN0 I s approval for any policy exception sought from the Board? [ ]Yes [XINO Does the project include any critical risks rated "substantial" or "high"? Re$ PAD C.5 [ ]Yes [XINO Does the project meet the Regional criteria for readiness for implementation? Re$ PAD D.7 [XIYes [ ] N o Project development objective Re$ PAD B.2, TechnicalAnnex 3 Improve the sustainable and efficient management o f forest resources, conserve biodiversity in protectedareas and forest landscapes, and integrate small producers into forestry development and conservation. Global Environment objective Re$ PAD B.2, TechnicalAnnex 3 To conserve globally and regionally significant biodiversity inproduction landscapes located in critical Argentine ecosystems. Project description Re$ PAD B.3.a, TechnicalAnnex 4 Component 1. Native Forests and Biodiversity. Technical assistance for an investment on native forest issues. Component 2. Sustainable Plantation Forestry. To establish institutional and policy frameworks; improve environmental, economic and social sustainability o f the plantation sector and inagro-forestry, especially with small holders. Component 3. Strengthen 11 existing national parks and set the stage for increased conservation of the Chaco Ecosystem. Which safeguard policies are triggered, if any? Re$ PAD 0.6, TechnicalAnnex 10 0 Environmental Assessment (OP/BP/GP 4.01) Natural Habitats (OP/BP 4.04) Pest Management (OP 4.09) Cultural Property (OP/BP 4.11) Involuntary Resettlement (OP/BP 4.12) Indigenous Peoples (OP 4.10) Forests (OP/BP 4.36) Significant, non-standard conditions, if any, for: Re$ PAD C.7 Board presentation: no exceptions Loadcredit effectiveness: no exceptions Covenants applicable to project implementation: The borrower will design, implement andthereafter maintainduringthe execution ofthe Project, a fiduciary monitoring program acceptable to the Bank for the purposes o f producing quarterly (or any interval acceptable to the Borrower and the Bank) reports on the fiduciary aspects andphysicalperformance o fthe Subprojects financed under the Project. 0 Prior to the carrying out o f any activity under a Subproject, the borrower will: (i) sign the corresponding Subproject Agreement; and (ii) out a fiduciary assessmentof the carry Intermediary Agent, when applicable. A. STRATEGIC CONTEXT AND RATIONALE 1. Country and Sector Issues 1. Natural resources have long been a driving force for the Argentine economy. The country has vast expanses o f fertile and forested lands, navigable rivers, spectacular natural landscapes, and abundant mineral resources, all o f which are complemented by strong land tenure security. Yet despite its wealth o f resources and conditions conducive to growth, during the 1990s and early 2000s Argentina imported most o f its forest products such as wood and paper, a result o f low domestic competitiveness in those sectors. Following the peso's devaluation, however, natural resource use has resurged, contributing significantly to the country's high level o f economic growth over the last five years. The forestry sector reverseda 10-year trade imbalance in 2004, agriculture grew by 25% in 2005 and tourism i s 20% higher than pre-crisis levels. While such growth i s positive, these activities place considerable strain on soils, forests, water resources, and natural habitats. 2. The unsustainable use o f Argentina's resources furthers environmental trends that are "still o f great concern," according to a recent World Bank co-sponsored publication Argentina: State of the Environment 20051. These trends include increased deforestation and its consequent loss o f biodiversity; erosion and water contamination from intensive agriculture and grazing; and depletion o f fisheries in the Patagonia region, among other issues o f environmental concern. On the positive side, however, improvements in the Argentine economy should permit increased capacity to reduce these pressures and tackle longer-term issues such as the sustainable use o f natural resources. 3. Demonstrating its commitment to sustainable development, the Government o f Argentina has engaged in dialogue with the World Bank concerning a wide range o f natural resource management (NRh4) issues, from deforestation to land degradation, fisheries depletion, and sustainable tourism.2 The national-level Secretariats o f Agriculture (SAGPyA), Environment (SAyDS), and Tourism (which includes the National Parks Administration, or APN) have assumed prominent roles inthis process, applying new capacities gained through several recently closed or soon-to-close Bank projects. All parties have expressed interest in enhancing capacity at the level o f provincial and local governments for resource management and enforcement o f environmental regulations, given the federal structure o f the country. In addition, the three agencies; APN, SAyDS and SAGPyA have made a commitment to working together to develop a formal plan for the forest sector which embraces production, sustainable use and conservation o f the forest sector and the wider landscape. The proposed project will provide an important platform and financing for this consensus work to take place in concert with other agencies, NGOs and private stakeholders. 'Brown,environmental I A. et al. 2006. La situacidn Ambiental Argentina 2005, FundacionVida Silvestre Argentina These issues are commonly describedas "green" (natural resources) issues. The Government has also engaged the Bank in an ongoingdialogue on the so-called "brown" (pollution), and "blue" (water resources management)issues which are integratedinto other operationsdiscussed inthis document. 6 4. The key challenges for each o f the three main priority areas for NRM in Argentina- forestry, sustainable land use management, and protected area managementhiodiversity conservation-are summarized below. 5. Forestw and Sustainable Land Use Management. Argentina covers almost 280 million hectares o f land, o f which 20% (60 million ha) are considered to be moderately or severely eroded. Each year an additional 0.6 million ha o f degraded soils are added to this total. The rising trend inland degradation i s closely linked to another growing environmental problem: deforestation. Forested land covers only 12% o f the country (around 34 million ha), o f which approximately 3% (1.2 million ha) constitute plantation forests, primarily o f exotic pines and eucalyptus. The national average for the deforestation rate has been 0.6-0.7% (200,000 ha annually) over the past ten years--twice the Latin American average. Recent reports by the SAyDS indicate that over 1 million hectares o f forests have disappeared over the last four years alone. 6. The driving forces behind deforestation are complex. In the past it was driven by the expansion o f livestock, cotton and maize production. Today, however, it i s being driven by record world prices for soybean, which has caused widespread deforestation inthe fragile Chaco. The denuded land is then subject to greater erosionfrom wind and water as well as salinization, a result o f the increased rates o f evaporation. How to contain the problem i s largely a question o f economics and governance. First, since it is unrealistic to conserve the entire Chaco, priority areas for conservation need to be identified; second, to protect priority areas appropriate incentives need to be provided which would bridge the gap between private owner interests on the one hand, and the value of public goods and services flowing from native forest on the other; third, cost effective and trust worthy institutional mechanisms are needed to administer and monitor the system. Complimentary to this, additional protected areas could be created. 7. The primary causes o f natural resource degradation in other parts o f Argentina include overgrazing (especially in Patagonia and the arid and semi-arid regions); poor irrigation practices leading to salinization; mono-cropping and other poor agricultural practices; and the excessive use o f agricultural chemicals, which lead to soil contamination. 8. A major element o f the natural resource base, the forestry sector employs about 500,000 people (24,000 o f whom are small producers) and represents about 2% o f GDP. Forests also provide a wide range o f natural habitats while protecting valuable soil and water resources. With the exception o f national parks and small areas o f provincial lands (tierrusfiscales), all forests andplantations are privately owned. 9. Native Forests. Over 76% o f the native forests are located in the "Bosque Chaqueiio" (or "Chaco") ecoregion. This area in northwest Argentina spans twelve provinces and i s presently the most threatened eco-region in the country, primarily as a result o f the massive industrial- scale clearing for soybean c~ltivation.~The remaining native forests outside the Chaco are situated in isolated formations in different extremes o f the country: about 12% are found inthe northwest's rugged humid sub-tropical Yungas forests, 4% are in the northeast province o f Misiones within the Upper Parana Atlantic Forest (also considered a biodiversity hotspot), 6% The Chaco is South America's second largest forest ecosystem, behindthe Amazon. 7 are in the south in the Patagonian Andes and Tierra del Fuego, and less than 1% remain in the north-central Espinal. 10. Deforestation in these areas is often accompanied by detrimental social impacts on the rural poor; although having historical ties to the land, these groups often lack formal land titles and, therefore, are highly vulnerable to displacement by others. Forest loss also affects the hydrologic cycle, destroys biodiversity, and can lead to accelerated soil erosion and loss of soil fertility. Aside from the effects of the burgeoning soybean industry, the Chaco is also highly degraded as a result of decades of over-harvesting of timber, woodland grazing, and fires. Measures by the national and provincial governments to reduce deforestation and illegal harvesting in the Chaco have had negligible impact, and coordination among federal, provincial and local authorities is lacking. 11. Presently, the newly approved Ley de Bosques (No. 26.331 of 2007) and provincial laws are the primary means to regulate forest management and protection. Not all provinces adhere to the same standards; nor are the laws effectively enforced, given the low capacity and funding available to the provincial authorities and forestry departments. Concerned by high rates of deforestation, the Secretary of Environment has pressed hard to have the Ley de Bosques approved, a condition of which is that provinces will not be allowed to authorize deforestation until they have undertaken a land use planning exercise in the province. The law, which is one of the major achievements of the Native Forests and Protected Areas project (IBRD 4085-AR), also provides for incentives for protecting and managing native forests. Concerted action at several levels of government is now needed to ensure that the various laws and regulations that now exist are duly enforced. There is also a need for greater levels of outreach and incentives to farmers and producers in order to ensure that their practices are environmentally sustainable and productive. 12. Plantation Forests. Tree plantations are located mainly in the provinces of Misiones, Corrientes, Entre Rios, Buenos Aires and Santa Fe, with much smaller areas being located inthe provinces of Neuquen, Rio Negro, Chubut and SaltdJujuy. Despite their limited area (1.2 million ha) and distribution, plantations account for 90% of domestic wood supply and for all wood exports. The potential to expand planted areas in Argentina is considerable given that it has large areas of land available at low cost, favorable growing conditions and good infrastructure (such expansionhas already taken place in Chile and Uruguay despite limited land availability). Plantedforests offer excellent growth potential, even though native forests far exceed plantations inphysical area. They also offer an alternative to native forests for wood supply and canprovide environmental benefits in degraded areas by protecting soils and reducing erosion. However plantation forestry has never realized its full potential in Argentina because of a weak enabling environment - that is, institutional leadership is fragmented, weak and unresponsive, policies are unstable, strategic information is lacking or unavailable and small producers find it difficult to get started. On the other hand, plantation forestry has the potential to impact biodiversity if not properly planned and executed, particularly in grassland habitats. Therefore, it is important to ensure greater environmental sustainability in plantation practices, in part by providing incentives through government forestry institutions. The country is in the early stages of implementing a more ambitious plantation forestry strategy that includes a greater focus on environmental sustainability. Other related issues such as potential for mitigation and adaptation 8 to climate change, fuelwood supply, plantations with native species, and agro-forestry should be analyzed and included in future sector strategies and programs. 13. Protected Area Management and Biodiversity Conservation. The national protected areas system o f Argentina, managed by the Administracion de Parques Nacionales (APN), i s the oldest in South America. It covers 3.5 million hectares and includes 36 protected areas and 4 "natural monuments". These protected areas include mountains, forests and glaciers in Southern Patagonia and Tierra del Fuego, a small fraction o f the highly threatened Chaco forests, sub- tropical rainforests in the Yungas, and Upper Parana Atlantic Forest, including the spectacular waterfalls o f Iguazu National Park. Yet national park areas comprise only 1.3% o f the country, falling far short o f the I U C N recommended 10% minimum necessary to ensure long-term maintenance o f these ecosystem^.^ Moreover, several ecosystems are underrepresented within Argentina's National Protected Areas System (SNAP). 14. The Federal Protected Areas System (SIFAP) i s constituted under a voluntary inter- institutional agreement which is broader in its coverage including provincial, municipal, and private protected areas. Together with the national areas they helpto increase the protected areas coverage by another 4.5 ercent. Almost 19 million hectares are protected within the SIFAP's P over 360 protected areas. Standards for conservation inthese areas are, in general, much lower than in the federal protected areas. Problems range from lack o f park guards, tenure insecurity, and poor demarcation to, at the extreme level o f threats, the delisting o f protected areas for transformation to agriculture. Only a quarter o f these areas are declared under strict conservation categories; therefore, it i s imperative to strengthen the capacity for conservation o f biodiversity while sustaining livelihoods where human populations and protected areas co-exist. Private reserve efforts have also been limited and owe their existence mainly to NGO's (most notably Fundacidn Vida Silvestre Argentina, Conservation Land Trust and Fundacidn Habitat y Desarrollo) and individual efforts. The incentive structures established to sustain these private conservation efforts are few and lack sufficient financial backing and sustainability, as well as technical capacity for their implementation, oversight, and dissemination. The use o f payment for environmental services (PES) systems or programs has had limited application in Argentina to finance public and private conservation efforts. Efforts must move beyond the more academic studies that have been done toward more concrete experiences with PES for watershed and biodiversity conservation, as well as other areas such as carbon sequestration and landscape protection. 15. Conservation corridors are also needed to maintain the integrity o f ecosystems, ensuring protection o f a diversity o f habitats, avoiding genetic isolation o f plant and animal populations, and precluding fragmentation. Few corridors have been established to date in Argentina, most notably the Corredor Verde in the Upper Parana Atlantic Forest. There is demonstrated interest in establishing corridors within the Andean Patagonian-Valdivian Forest ecoregion (potentially transboundary with Chile) and the Chaco ecoregion (that should link with important conservation efforts inBolivia and Paraguay). The technical studies and proposals are well advanced for both o f these ecoregions. Other areas targeted for corridors include the Yungas, the Patagonian 4Caracas Action Plan- IV IUCN World Congress on ProtectedAreas 5Burkhart,R. 2005. Las Areas Protegidas de la Argentina in Brown, A. et al. 2005. Situacidn Ambiental de Argentina 2005. FundacionVida Silvestre Argentina. 9 Atlantic coast and the Parana and Delta waterway.6 The implementation o f these efforts has been minimal in terms o f on-ground interventions and requires capacity-building and political will as well as the strengthening o f core protectedareas that serve as "anchors" for the corridors. 16. National parks comprise some o f Argentina's major tourist attractions. Glaciers and waterfalls provide a spectacular backdrop for tourism and leisure activities, dating as far back as the late 19`h century, in some cases. Several of the oldest parks are well endowed with infrastructure and human resources; however, many are reaching their limits to support tourism sustainably. Other parks are receiving heightened levels o f tourism but are unable to maintain adequate levels o f protection under these circumstances due to a lack o f infrastructure, user services and human resources for management. There i s also an increasing recognition o f the need for more inclusive development o f the parks to involve local communities and indigenous groups in the sharing o f economic benefits. Investment in such areas in infrastructure, local development and service provision, as well as capacity-building and environmental education, are needed to both stimulate tourism and growth inrural areas and sustain conservation efforts at the same time. Several areas o f the country have the potential to benefit from this increase in tourism, though there i s still a need to improve coverage and strengthen the conservation o f representative ecosystems, primarily by filling gaps in the protected areas system. Despite its extensive coverage, this system still lacks adequate representation within several ecosystems, especially in the Chaco, the grasslands o f the Pampa, and marine and coastal areas o f the Atlantic. The InstitutionalandDevelopmentFramework 17. Argentina has three levels o f government; federal, provincial, and municipal, that generate legislation and regulations regarding natural resources and the environment. The federal government's role in forestry and protected areas i s fragmented and somewhat limited in certain regards. At the federal level, forestry i s split between the Secretariat o f Agriculture, Livestock, Fisheries and Food (SAGPyA) inthe Ministerio de Ecomomia y Produccidn, and the Secretariat o f Environment and Sustainable Development (SAyDS) in the Jefatura de Gabinete de Ministros. Specifically, plantation forestry falls under the Direccidn de Forestacion (DF) o f SAGPyA, while native forests are the responsibility o f the Direccidn de Recursos Naturales (DRN) of SAyDS. The Instituto Nacionul de Asuntos Indigenas (INAI) under the Ministry o f Social Development i s responsible for forestry matters on indigenous people's reservations. The National Parks Administration (APN) comes under the Ministry of Tourism. 18. Primary responsibility for NRM, including forest management, falls to the provinces, with the national government playing a policy and support role (with the exception of direct national government management o f national parks), although it may set minimum environmental standards and incentive programs through Federal legislation. Establishment o f national parks must also be authorized by provincial legislation. In general, governance o f NRM inrural areas, particularly inthe Chaco, has beencharacterized by weaknessesincontrol. ~ _ _ 6Frassetto.A. et al. 2005.Los Corredores Ecologicos en la Argentina in Brown,A. et al. 2005. Situacidn Ambiental deArgentina 2005. FundacionVida Silvestre Argentina 10 19. Nearly all natural resources in Argentina are owned by the private sector. The use o f these resources i s regulated primarily by individual provincial laws, where enforcement in respect to environmental impact assessments i s typically lacking. Sustainable management therefore has to include market incentives to engage landowners, in addition to government policy or public commitment. The overall policy and financing framework required to strengthen the appropriate roles o f the public and private sectors in a broad agenda o f NRM i s not yet inplace. 2. Rationale for Bank Involvement 20. The current Argentina CAS refers to promoting agricultural growth, reducing rural poverty, and improving environmental management. In addition, the CAS highlighted the importance o f the forestry sector, while emphasizing that "Argentina's growth has long been, and will continue to be, based in significant part on its tremendous natural comparative advantages". I 21. Prior to this proposed loan, the Bank has gained a considerable body o f experience across the various NRM sectors. Examples are the recently closed Forestry Development Project, the recently closed Native Forests/Protected Area Project, the GEF-Financed Biodiversity Conservation Project and various agriculture-sector projects with elements closely tied to land and water conservation. In addition, the current pipeline includes various operations that are highly complementary to the proposed project, including the Integrated Water Resources Management Project (addressing the "blue" agenda, as per footnote 2), the Matanza-Riachuelo Project and the Municipal Solid Waste Management Project (addressing the "brown" agenda), the GEF-financed Biodiversity Conservation in Productive Forestry LandscapesProject, various smaller NRM-related GEF medium-sized projects (MSPs) financed through the Decentralized MSP Program, and various biomass-related carbon finance deals to be financed through the Argentina Carbon Facility. This combined experience will not only ensure that realistic and workable proposals are prepared, but also that the underlying issues constraining the potential in these sectors are fully addressed. The proposed project will also provide an important opportunity to foster inter-institutional coordination and collaboration between many o f the agencies involved in environmental and natural resources management, such as SAGPyA, SAyDS, APN and provincial authorities in a high-priority area, where poverty rates are high and ecosystem impacts are on the rise. 3. Higher Level Objectives to which the Project Contributes 22. The proposed project is consistent with the Government o f Argentina's position on several national policies and international treaties in regard to the environment and sustainable natural resource management. These include the UN Convention to Combat Desertification and its national level implementation or national action plan (NAP). Inaddition, the components for biodiversity conservation o f the proposed project are consistent with the National Biodiversity Strategy adopted in 2003 by the Secretary o f Environment and Sustainable Development (Resolution 91/03). This document provides the policy framework and priority setting for biodiversity conservation inArgentina inits many possible forms under the CBD. 'Argentina Country Assistance Strategy, May 4, 2006, ReportNo. 34015-AR, pg. 146. 11 23. In regard to forestry, previous Bank projects have helped Argentina confront the main issues inthe sector and to develop a consensus on priorities, the newly approved Ley de Bosques being an example. However, it still lacks a consolidated forest policy at federal and provincial levels. This incomplete policy agenda provides the rationale in part for the present project and will be incorporated as an activity under the new operation. The project is fully compatible though with the Bank's new forestry strategy, Sustaining Forests: A Development Strategy (2002), as well as with Bank's recently issuedrural strategy for LatinAmerica and the Caribbean (LAC) Reaching the Rural Poor: A Rural Development Strategy for the Latin America and Caribbean Region (2002). Inaddition, the project is also compatible with the World Bank LAC Region's environment strategy (2002), Making Sustainable Commitments - An Environment Strategy for the World Bank. In addition, Argentina is part o f the Montreal Process on indicators. 24. Argentina does have a national strategy regarding tourism. The government has produced the Federal Strategic Plan for Sustainable Tourism (PEFTS) in 2005 that provides the guiding principles for the sector over the next years. Inthis respect, national parks are considered a key element in conserving the natural resource base for sustainable economic development in the tourism sector. B. PROJECT DESCRIPTION 1. LendingInstrument 25. The agreed instrument is a Sector Investment Loan (SIL). The total project cost is US$71.80 million over 5 years, US$60 million of which will comprise World Bank financing. The level of complementary funding from GEF is US$7 million. 2. ProjectDevelopmentObjectiveand Key Indicators 26. The Project Development Objective is to: Improve the sustainable and efficient management of forest resources, conserve biodiversity in protected areas andforest landscapes, and integrate small producers intoforestry development and conservation. This it would do by: (i)improvingthepolicy andplanning frameworks, (ii)strengtheninginstitutional capacity at federal and provincial levels, (iii)upgrading park management capacity, infrastructure and sustainable development opportunities in and around parks, (iv) improving and promoting private forestry informationdelivery services, (v) assistingsmall and medium-scale farmers, land owners and producers to adopt sustainable forms of forestry, agriculture and agro forestry, (vi) institutionalizing environmental safeguards and incorporating best practices, and (vii) by encouraging more private-sector involvement in service provision. The complex issue of deforestation would be addressed mainly through Component 1 (Native Forests and Biodiversity). Activities under this component would aim to identify viable ways of reducing deforestation in a sustainable way, and while this is expected to lead to a reduction in deforestation over the longer term, it is unlikely to result in significant reductions during the project period. 12 27. In forestry, the project would focus on (i)developing cohesive policy and institutional instruments at federal and provincial levels supportive of investments in more environmentally sustainable forestry and conservation, (ii)supporting efficiency gains by making research and extension more competitive and responsive to user needs, and (iii)promoting the integration of resource-poor small and medium sized producers into sustainable forestry and forest conservation. 28. Even though forestry activities will have national coverage, plantation forestry will focus mainly in the high potential areas of Mesopotamia, Buenos Aires/Delta and the Patagonian Andes, that is, in those areas where plantation forestry i s developing rapidly. Simultaneously, it will asses the development potential in other areas of the country and identify the most appropriate interventions to develop that potential inthe second half of the project including the Pampas, NOA, Mendoza-Cuyo, and Grandes Valles. In native forests, the project will focus initially in the Chaco, with other areas being included later. In all areas the project will seek to maximize gains by ensuring that the three components are fully synchronized. 29. The project would also strengthen management capacity of eleven priority protected areas and upgrade APN's institutional capacity in Buenos Aires. Infrastructure, training, equipment and incremental costs would be financed in the existing parks along with sustainable development activities for local populations living near the parks. The renovation and modernization of one of APN's historic buildings inBuenos Aires would also be included. 30. Key indicators for the PDO include: (a) Policies, regulatory frameworks, and promotion programs in place; consensus obtained on new institutional arrangements and partnerships needed to execute policies; regional environmental strategies prepared; funds available to small producers for conservation, tree planting and SFM; (b) The national parks system and surrounding communities are benefiting from improved management capacity and increasedtourism; (c) Chaco regional office functioning, piority areas identified and information generated supportive of feasible SFM models and plantation forestry; (d) National and provincial governments increase budgets and programs dedicated to SFM, tree planting and conservation. 3. Componentsof the Project 3 1. The project will have three components, each of which will be implemented by a separate executing agency and have its own integrated Technical and Fiduciary Office (TFO) and special account. Each TFO would administer implementation of the project, including financial management, procurement, and administrative tasks, as well as technical supervision and oversight as well as monitoring and evaluation. Project implementation and monitoring and evaluation is included as a separate subcomponent under each of the following three 13 components. A more detailed discussion of project administration and monitoringand evaluation subcomponentscan be found inAnnex 4. 32. ComDonent 1. Native Forests and Biodiversity [Executing agency: SAVDS)(Total Cost US$4.75 Million, IBRD Cost US$3.77 Million). The native forest component to be implemented by SAyDS will be largely preparatory in nature and will focus mainly on the Chaco. It will last only two years and is intendedto preparethe way for a follow-on investment regarding native forest issues generally.' It will include mainly technical assistance for the preparation of detailed proposals and studies needed for follow up investment. It will have the following subcomponents: (i)Formulation of a Native Forests and Biodiversity Project (Total Cost US$1.65 Million) and (ii)Pilot Activities, Studies and Outreach Programs (Total Cost US$3.10 Million) that will support the introduction of sustainable management and conservation practices innative forests. 33. The component will support the critical first steps toward developing a "national forestry program" needed to bring focus and coherence to the country's forestry program, a process that will require the participation of stakeholders. It will also improve the capacity of Native Forests Directorate to address issues inthe Chaco by establishing a regional office inthe area. 34. A review of the structure and mandate of the Native Forests Directorate of SAyDS together with stakeholders will be performed, the aim being to identify an appropriate role and structure for the institutionfor effective implementation of the National Forestry Plan. 35. To nurture provincial government initiatives aimed at SFM and biodiversity conservation, the component would also make funds available for provincial proposals which support project objectives. Assistance would be provided on a competitive and demand-driven basis, with guidelines and eligibility criteria being drawn up by the project (see Annex 17 for details). 36. Key activities include: (a) The formulation of detailed proposals for the follow-on investment for sustainable management and conservation of native forest eco-systems; (b) Participatory development of federal and regional strategies for the management and conservation ofnative forests; (c) Establishment of a Chaco Ecoregion Forestry Unit of SAyDS to pilot regional studies, oversight and promotionof sustainableforestry; (d) Studies to identify the potential and delivery mechanisms for Payments for Environmental Services (PES), together with the institutional arrangements neededto provide incentives for SFM; ~ ~ The Government of Argentina has provided a preliminary priorization of up to US$30 million for the follow-on operation. 14 (e) Studies to identify viable models for managing native forest and for monitoring the movement of forest produce; (f) Training and information systems for provincial government forestry and environmental agencies regarding SFM; and (g) Funds to support provincialinitiatives which are supportive of project objectives. 37. Component 2. Sustainable Plantation Forestry (Executing. agency: SAGPyA and N T A ) (Total Cost US$31.85 Million, IBRD Cost US$26.49 Million). With the exception o f EIAs in forest management plans there are very few `checks and balances' available to mitigate the possible impacts of plantation forestry on the environment. The main aim of the Sustainable Plantation Forestry component would therefore be to: (i)establish institutional and policy frameworks conducive to more sustainable and shared growth in the plantations and agro forestry sector; (ii) raise environmental awareness vis-a-vis plantation development; (iii)improve plantation and agro forestry productivity by supporting the generation, analysis and transfer of strategically important information; and (iv) support the integration o f smallholders and small producers into the plantation and agro forestry production cycle while promoting sustainable practices among producers generally. The component will work with the Secretariat of Agriculture, with primary responsibility for plantation forests. An additional long-term objective will be to improve cooperation and policy consistency between SAGPyA and the native forests agency SAyDS, as well as with the provinces which retain front-line responsibility. While component coverage will be nation-wide, activities will focus initially in areas with proven high potential, that is, Mesopotamia, Pampeana, Delta, Mendoza-Cuyo, Patagonian Andes and Grandes Valles, and the Northwest (NOA). Following a positive outcome to the mid-term review, the component will incorporate other areas on a conditional basis. 38. The component would include assistance to re-position and re-focus federal and provincial administrations responsible for plantation and agro forestry; improve the policy framework at federal and provincial levels; prepare plantation environmental strategies in 5 eco regions; foster closer links between the federal and provincial forestry administrations, and between them, the private sector and civil society; upgrade and integrate federal and provincial forestry information systems; provide support to demand-driven and competitive research programs; support the expansion of private sector forestry extension services; facilitate the entry of small producers into the supply chain; and promote best practices among all producers. It would also finance the support of demand-driven provincial initiatives supportive of component/project objectives (see Annex 17), and provide support to Universities to upgrade training in forestry. Finally, the DF offices within the SAGPyA building will also be improved and upgraded. 39. Key activities include: (a) Improving links betweenthe federal Forestry Directorate and the field; 15 Strengthening the capacity of provincial forestry administrations to take a leadership role in promoting sustainable plantation and agro forestry at the provincial level; Creating an environmental framework supportive of sustainable plantation forestry; Training and upgrading informationsystems at federal and provinciallevels; Establishing a competitive forestry researchprogram; Technology transfer and promotionof best practices; Promoting high quality private forestry extension services; Integrating small- and medium-sized forestry producer groups into the local forest economy; Improvingtraining at university forestry faculties; and Support to provincialinitiatives supportive of project objectives. 40. Component 3. Protected Areas and Conservation Corridors (Executing agency: APN) (Total Cost US$35.05 Million, IBRD Cost US$29.59 Million). This component would have the twin objectives of strengthening APN's capacity to manage existing national protected areas and to set the stage for expanding protection to the insufficiently protected and highly- threatened Chaco ecosystem. Specifically, it aims to strengthen management capacity of eleven priority protected areas and to upgrade APN's capacity in Buenos Aires. Infrastructure, training, equipment and incremental costs would be financed in the existing parks, along with the renovation andmodernization of one or more of APN's historic buildings inBuenos Aires. 41. The specific Chaco regional focus would bring APN, in cooperation with SAyDS, SAGPyA (including INTA) and the provinces, together in a process for the eventual establishment of a biological-sustainable use corridor to link the Argentine Chaco with that of Paraguay and Bolivia. An integral part of the effort would be the stakeholder involvement (especially at a provincial level) in planning and implementing the corridor as well as evaluating the potential for establishmentof new protected areas inthis context. Support would include land use planning in buffer zones and within the corridor (at the local and sub-provincial levels) inthe context of any follow-on project that might support its implementation. This component may entail future GEF and carbon finance complementary financing in the follow-on for both protected area conservation and carbon sequestration, all closely linked with rural development investments. 16 42. Key activities include: (a) Strengthening 11 national protected areas for improved conservation management andtourism services; (b) Support for sustainabledevelopment activities innational park buffer-zones; (c) Participatory planning of a conservation sustainable use corridor in the Argentine Chaco; (d) Strengthening institutional systems for administration, communication, data management and outreach; (e) Improving or gathering baseline data for management plans for new and existing protectedareas; and (f) Renovation and modernization of one or more of APN's historic buildings in BuenosAires. 43. Key intermediate results expected under each component, and the associated key indicators, are: Component I:With regard o f Native Forests and Biodiversity: (i) critical areas of native forests most in need of protection identified; (ii)institutional, policy and planning frameworks at federal and provincial levels establishedand supportive of private investments in sustainable forest management and conservation; (iii) management of private and public native forests integrated into broader conservation initiatives such as biological corridors, watershed management programs and climate change operations; (iv) participation of small holders in sustainable forest management initiatives facilitated; (v) compliance and verification mechanisms strengthened; (vi) public awareness increased regarding the need to manage and conserve native forests; and (vii) provincial administrations taking the lead in promoting sustainableNRM. 44. Component 2: With regardto Sustainable PlantationForestry: (i) institutional and policy frameworks established and conducive to sustainable and shared growth in the sector; (ii) regional environmental strategies and education campaigns in place; (iii) plantation and agro forestry productivity raised through efficiency gains in the generation, analysis and transfer of strategically important information; (iv) smallholders and small producers effectively integrated into the plantation and agro forestry production cycle and sustainablepractices being adoptedby plantation owners; and (v) provincial administrations taking the lead in promoting sustainable plantation forestryg. The project will not finance large-scaleindustrial plantations.Because Argentina has vast expansesof arable land with conditions favorableto tree growth, the risk that forestry production would crowd out other productive activities is negligible. Moreover, the project will work with producersto incorporatetrees into existing productive activities through silvo-pastoril and agro-forestry systems, which will help to diversify farmers' incomes. 17 45. Component 3: With regard to Protected Areas and Conservation Corridors under this component the expected intermediate results include: (a) strengthened capacity o f APN to promote and manage increased tourism in the SNAP; (b) increased technical and scientific support capacities for effective in-situ biodiversity conservation; (c) increased participation o f local communities in protected areas management; and (d) strategy prepared for the Argentine Gran Chaco Biological Corridor. 46. In addition to the indicators outlined above, each component contains indicators for management and monitoring and evaluation. Intermediate results: (i) project management system working efficiently, according to World Bank rules and federal law, to be measured by output indicators such as audits, disbursement reports, reports, etc.; and (ii)institutional monitoring system (SAGPyA, SAyDS, and APN) up and running, monitoring and evaluation findings disseminated and incorporated into ongoing programs, and partnership arrangements exist in at least one participating province. 4. Lessons Learned and Reflected in the Project Design 47. The Native Forests component o f the Native Forests and Protected Areas project (Ln. 4085-AR) was quite successful and attained nearly all its development goals. It worked directly linked with the federal Native Forest Directorate (NFD) which came into being in 1992 (although part o f an institutional continuum starting in 1948 through the creation o f the former National Forestry Institute or INFONA, that disappeared in 1992). The component contributed significantly to help strengthen a fledgling institution, especially with the development o f tools such as the UMSEF and the preparation o f the first National Native Forest Inventory. However, experience with the project highlighted the complexity of the issues underlying the sustainable management o f privately owned native forests and deforestation in a country as large as Argentina and with a diversity o f forest ecosystems. It laid bare the disconnect between the various institutions responsible for native forests, the disconnect between those institutions and stakeholders, the absence o f a shared vision at federal and provincial levels vis-&vis the future role o f native forests, and, given the limited capacity o f the federal Native Forests Directorate, the importance ofdeveloping collaborative partnerships to addressnative forest issues, especially to urgently and efficiently mitigate the loss o f forests resources. 48. The Protected Areas Component o f the project focused on increasing the environmental sustainability o f key protected areas in the Patagonia region o f the country and the design o f a modernization plan. The component was initially operated within the ex-Secretary o f Natural Resources and Human Environment along with the Native Forests Component. However, during implementation the National Parks Administration was transferred to the Ministry o f Tourism. The change resulted in administrative difficulties infunds flows between the two agencies. This constraint was resolved by establishing a separate special account and procurement authority for parks, and underscores the necessity for such an arrangement inthe present operation which will operate inthree different ministries. The execution of works inthe parks was initially slow. This was due in part to the lack o f involvement o f the decentralized parks personnel in the planning and execution o f the activities, as well as the economic crisis. The present project has ensured that each o f the parks has been visited and consulted with regarding the proposed activities duringpreparation, andhas provided input to the final list of works and activities for the project. 18 A committee including the park managers will be formed duringthe supervisionphase to ensure a seamless connection with the Buenos Aires Headquarters. 49. The Argentina Forestry Development Project (Ln. 3948) which focused on plantation development and closed in 2006 was also rated as successful. Lessons learnt include the following: (i) working with individual small producers is expensive and logistically challenging and that working with groups was far more effective; (ii) greater involvement o f the federal Forestry Directorate would have been beneficial for policy development; (iii)forestry research programs need to be demand driven to ensure that results are applied; (iv) state-led forestry extension services are unlikely to prove sustainable; (v) the use o f second tier institutions at field level such as NGOs is a highly effective way o f addressing the needs o f small producers; (vi) partnerships should be developed with provincial forestry administrations to help the sector move forward at the local level; and (vii) more attention i s needed to monitoring and evaluation to assess the real impact o f interventions. Lessons learned from both projects have been taken into account indesigning the new operation. 5. Alternatives Considered and Reasons for Rejection 50. The overall project concept and design seeks to integrate both productive use o f natural resources and conservation, with a strong emphasis on developing collaborative partnerships with local actors to make this happen. This is the major design alternative that was chosen over the alternative o f separate federally-led loan operations for native forests, national parks, and productive forestry. The alternative was chosen based on understanding among those involved that there is greater need for coordination and cooperation to achieve their shared and individual goals. The approach generates greater needs from an administrative standpoint, however the high level mechanisms established for dialogue between the institutions will serve to have a more focused impact inthe regions selected for project intervention. 5 1. The alternative o f working under different operations would potentially disperse the areas o f intervention, whereas the present configuration and design has permitted a strategic focus on the Chaco Ecoregion by both APN and SAyDS while integrating SAGPyA into an environment o f greater dialogue regarding the impacts o f the productive sector on the environment and the need to mainstream biodiversity conservation in production systems. This also makes sense from the SAGPyA point o f view given the recently approved Biodiversity Conservation in Productive Forestry Landscapes Project funded by the GEF (US$7 million) through the IBRD. The links made with the present SNRM project will permit the maximumpositive environmental impact for the GEF project given the need to design low-impact forestry projects with coordination from the biodiversity institutions. At the same time the alternative selected will allow the priorities, policies, and institutional capacities o f the environmental institutions to permeate the SAGPyA productive outlets throughout the country and target project areas. 6. Components 52. Inpreparingthis component, the three options considered, namely: (i) repeater o f the a Forestry Development Project, Biodiversity Conservation Project and Native Forests and 19 Protected Areas Project; (ii)a provincial forestry development project; and (iii)an operation at both federal and provincial levels. 53, Although there are long-standing policies and regulations regarding native forests conservation and management, recently the sector has seen important advances thanks inpart to investments by the GOAand the IBRD, one example being the new Ley de Bosques. The SAyDS however, still lacks the capacity to promote the application of sustainableforest management and conservation practice in the field. This is a complex undertaking given that most forests are privately owned and subject to provincial legislation and controls. To move ahead in this direction, support is needed to build on the achievements of the previous project, with support focused mainly on field activities in critical areas. The challenge is one of how to persuade the main actors involved (forest owners and provincial governments) to adopt and apply sustainable forest management practice inthe field. 54. The Forestry Development project was a success, despite difficult country conditions. It was the Bank's first forestry operation in Argentina and was prepared over ten years ago. It worked exclusively with federal institutions and started from quite a low level of development in the sector. For all intents and purposes, the project was a `preparatory' operation which made a significant contribution to filling key information gaps, improving the quality of planting stock, exploring ways of delivering information to users, testing the effectiveness of small holder forestry interventions, providingmodest amounts of training to SAGPyA staff, and inopening up a dialogue with the GOAon policy and institutions. A difficulty faced at the time of preparation was that SAGPyA was not ready to rethink its role in the sector; neither did it truly embrace the need for policy reform. While SAGpyA and its Forestry Directorate have functioned satisfactorily as collectors and disseminatorsof information, their ability to provide leadership in driving the sector forward is still very limited. Doubts also surround the sustainability of state- led interventions in forestry extension - the 7 forestry extension nuclei created by the project confirmed that demand for extension i s so strong that it is doubtful whether the state could ever respond adequately. The project also largely ignored the potential which the provinces have to play in promoting forestry and the importance of making research demand driven and competitive. For these reasons, and to take account of the changes that have occurred over the last ten years, the idea of a repeater project was rejected. 55. Finally, the Biodiversity Conservation Project was also successful in its strengthening of the National Parks System with a particular focus on some of the most outstanding and important areas within priority ecosystems. Instead of repeating the original project, with a strong focus on establishing core areas and strengthening infrastructure, APN decidedto integrate its efforts with those of SAGPyA and SAyDS and to focus strategically on developing corridors in priority ecoregions, integrating local communities into project management (including more flexible-use management categories) and developing sustainable buffer zones. Some aspects included also will have system-wide benefits by strengthening outreach and communication, thus increasing tourism and sustainability of the protected areas system overall. 56. The possibility of working with the provinces directly was also considered. However, those provincial governments with large expanses of native forests, for example the Chaco, also tend to be poor, institutionally weak and not credit worthy. In fact, most depend heavily on the 20 central government for funding. Working directly with the provinces would also be politically complex under the current Bank-Government of Argentina arrangements, where the federal government would need to be responsible for debt repayments. Therefore the provincial environmental activities are integrated with the native forests federal institution component, thereby establishing an important dialogue betweenthese two levels of government. 57. Essentially, the sustainable management and conservation of native forests in Argentina requires the willing participation of three main actors, namely forest owners, the provincial governments and the federal government. Consequently, the only realistic and practical option for moving forward would seem to be a partnership of the three main parties. In this respect, a project where the federal government works with the main actors in establishing the rules of the game for sustainable forest management, and one that provides support to create an enabling environment (policies laws and incentives) and technical packages for this to happen, was deemed to be the best alternative. In addition it was deemed that the process of strengthening national institutions, establishing dialogue with provinces and the private sector, and increasing local capacities i s urgently needed and requires a rapid response. Therefore the preparatory activities of the component are designed as a platform of technical assistance and capacity- building to allow this process to evolve quickly, permitting the advance to the investment project with solid technical grounding and potential for sustainability. Future activities or operations will move forward much more effectively if the groundwork has been done properly in this regard while the GOAand Bank have established milestones regarding preparation to achieve the objectives within the tight timeline established. The design also incorporates pilot activities and outreach to permit a National Forestry Plan to move forward and ensure that SAyDS maintains its role as a key player inthis sector. C. IMPLEMENTATION 1. PartnershipArrangements 58. Total project costs for World Bank financing is US$60 million over 5 years and the level of complementary funding from GEF is US$7 million. 59. The GEF Funded (through IBRD) Mainstreaming Biodiversity into Productive Forestry Landscapes is a US$7 million project within SAGPyA that will fund incremental costs of mainstreaming biodiversity into planting practices in key biodiversity regions of Argentina (Mesopotamia and Patagonia). It will provide key capacities that are complementary and strengthenthe efforts of the SNRMproject. Inaddition, the SNRh4 is expected to provide some co-financing to the project for expanding mainstreaming activities in provinces outside the globally important ecosystems funded by the GEF increment (see Annex 18 for a summary of this project). 2. Institutional and Implementation Arrangements Section C.2 (c) Institutional and ImplementationArrangements 60. The proposed Sustainable Natural Resources Management Project will be implemented by SAGPyA, SAyDS, and APN. The three institutions are familiar with the institutional and 21 fiduciary requirements o f the proposed project, which are similar to those o f the recently closed Forestry Development Project", Native Forests and Protected Areas Project" and Biodiversity Conservation Project'*. B y utilizing established human capacity, systems, and procedures, these arrangements will greatly reduce the initial training and costs required to correctly implement the project and will assure much higher quality administration and management. 61. Each agency will be responsible for the FM functions o f the component which i s to be implemented by the same; comprising budgeting, accounting and reporting including preparation o f interim unaudited financial reports (IFR), internal control, flow o f funds and external auditing. Each entity will be accountable for the financial management arrangements o f the component under its implementation responsibility and will produce a set o f interim and annual financial statements. Thus, there will be three segregated sets o f interim reports and annual financial statements to be audited separately. 62. The Instituto Nacional de Tecnologia Agropecuaria (INTA) is proposed to act as co- executor o f Subcomponent 2.1.3 for an amount o f approximately 1.8 million o f IBRD funds. An implementation agreement will be signed between SAGPyA and INTA, and will include the required FM arrangements acceptable to the Bank to ensure that funds are used for the purpose intended. A section describing detailed FM procedures for this subcomponent and acceptable to the Bank as well, will be incorporated into Component 2 Operational Manual once the SAGPyA- JNTA agreement is signed. 63. In addition, each entity, through its TFO, will carry out procurement activities as specified in Annex 8 (Procurement Arrangements). The incremental costs o f the TFOs will be financed by the project. 3. MonitoringandEvaluationof Outcomes/Results 64. Monitoring the impact and performance o f the project will be undertaken at the TFO level ineach of the three institutions implementing the SNRM project. They will do this through (i) linestudiesandtheevaluationofkeydatarelativetoprojectobjectivesandperformance, base and (ii)short-term consultancies with thematic specialists who would gather and analyze information not routinely generated by the project in order to objectively and impartially assess impacts. Funding for the implementation o f the monitoring system i s provided for under each component, and will comprise a joint effort between the government, private sector, NGOs, consultants, and academia where pertinent. All the institutions have prior experience with monitoring the impact o f these types o f projects and investments which will be o f help in ensuring that the task is done properly. The results o f monitoring and evaluation will be disseminated at local, national and international levels. Annex 3 details the project monitoring strategy and key impact and process indicators. 10Forestry Development Project (PO06040 Loan 3948 AR). I1Native Forests and ProtectedAreas Project (P040808, Loan 4085 AR) l2GEF- Biodiversity ConservationProject (PO39787 TF 28372 AR). 22 4. Sustainability and Replicability Institutional Sustainability 65. The three institutions involved inthe project have improved their budgetary situation and scope o f activities over the past few years. This i s due in part to Argentina's political and financial stability, and also thanks to important efforts directed at capacity building and institutional strengthening. 66. In the protected areas component, the project will work with existing parks under the system. Investments and institutional strengthening components will allow provision o f more services and generate more income from park visitation. Working with local communities also diminishesthe pressures on the institution from needing to increase the park guard levels when adequate support i s achieved. This i s also one o f the focuses o f the new project. 67. With regard to Sustainable Plantation Forestry, beyond the project period, only modest additional expenditures should be required to ensure that project momentum i s maintained. Policy and planning will require only minor adjustments over time, while the private sector will be encouraged to take a more active role in research and training o f extension agents. Ongoing funding for small and mediumproducers will be managed within the framework o f Law 25,080 and Resolution 800/2005 that are processes already well institutionalized. Financial Sustainabilitv 68. All the components incorporate some aspects of financial sustainability. Inparticular the protected areas component has a specific focus on tourism and local community economic benefits with investmentsto promote financial sustainability. The administrative efforts should also improve management capacity and efficiency with existing funding while corporate image activities may also help inattracting new sources o f funding internally and internationally. 69. The Native Forests component seeks to involve local actors as partners inimplementation and they will be expected to assume greater responsibility for component activities over time. It will also pilot a series o f activities in the areas o f payment for environmental services, sustainable forestry management, non-timber forest products among other efforts that link the economic aspects o f natural resources, generating financially viable alternatives while seeking sustainable use and management o f natural resources. 70. Tourism i s providing a growing share o f the APN budget for protection o f the parks system. APN income has tripled since 2002 with some US$10 Million, or a third o f its annual budget, coming from its own resources. Visitation to the parks included within the project has quadrupled over the last 10 years with high potential to increase income to manage the system and for improving conditions o f local communities, as many of these parks are located in impoverished areas. 71. Prospects for financial sustainability o f the Sustainable Plantation Forestry component are promising because the project aims to enhance conditions for private investment in areas o f 23 high potential. Furthermore, partnerships between the federal and provincial governments and between the government and the private sector will spread the financial burden o f the project across several institutions, the aim being to reduce the risk o f imposing an unsustainable financial burdenon the federal and provincial governments. Replicability 72. The parks system o f Argentina is a model for protected areas management in a developing country. Although the system i s not as large as ideally would be required, the quality o f the conservation i s high, compensating somewhat for the shortfall incoverage. Argentina has over the years trained park guards from neighboring countries and provides fora for discussion of regional and international conservation issues. In 2007, APN sponsored an international IUCN congress on protected areas which served to focus attention on the Argentine system and also to provide opportunities for exchange and knowledge sharing with other countries. The models to be established through the project interventions, especially regarding corridors, will be replicable in Mercosur countries that face a complicated panorama for landscape and biodiversity conservation due to growing private productive activities. 73. The Sustainable Plantation Forestry component, together with its associated GEF project, has been designed to lay the institutional, human resources, policy and equity frameworks for viable and sustainable private investments in plantation forestry. Given that Argentina has planted only 1.2 million ha o f the millions o f ha with environmental conditions favorable to tree growth, there i s considerable scope for replicability. In addition, the project could also provide useful and relevant models for expanding plantations on a sustainable and equitable basis in Uruguay and Paraguay. The associated GEF model could also be replicated in Chile, Uruguay, and other countries aiming to mainstream biodiversity conservation into plantations management. 74. On native forests management, Bolivia and Paraguay are struggling to identify viable mechanisms to help arrest the degradation o f their Chaco and Atlantic forests, and, in this respect, the Native Forest and conservation component could make a valuable contribution. 5. Critical Risks and Possible Controversial Aspects 75. The main risks are as follows: (a) Arresting deforestation and promoting native forest management i s a complex challenge, and the institutional capacity to address the issue is limited. To mitigate this risk, a cautious approach has been taken, while SAyDS will be seeking the participation and advice o f international experts regarding SFM in the design process; (b) Because federal level institutions and provincial institutions involved in the project lack coordination mechanisms, relevant impacts across the sector could be compromised. To reduce this risk, the federal institutions, based on their own initiative, have generated a coordination mechanism which has been included as a 24 loan covenant. The project supports the National Forestry Plan, which will provide for a more coordinated approach with stakeholders at the federal, provincial, NGO, and private sector levels in dealing with forest conservation and production; and (c) Fiduciary Risks. The financial management arrangements for the proposed project meet applicable Bank requirements. All executing agencies have qualified and experienced staff in World Bank-financed activities, capable o f undertaking the financial management functions for the project. There i s a moderate element o f risk due to the fact that four independent entities (the fourth being INTA) will be involved in project implementation. However, proposed mitigating measures will adequately cope with the identified risks. A detailed risk assessment is provided inAnnex 7. 76. The following table summarizes risks with ratings according to their level (Low, Medium, or Highrisk, with mitigation). Risk Weak and The national level institutions involved M The Bank has a strong presence in unstable inproject implementation underwenta Argentina and a long history of institutions series of institutional and bureaucratic working with the implementing (National) changes inthe past decade. Some have agencies. The election of Cristina a history of high turnover associated Kirchner should spell continuity of with changes in government andtheir personneland mission for the three reporting lines can fluctuate. agencies. The Project incorporates lessons learnedfrom similar past projects. Weak and Primary responsibility for NRMrests M The project will provide support to unstable with the provinces. Ingeneral, the strengthenprovincial institutions and institutions provincial governmentsare weak in policy/planning frameworks and will (Provincial) NRM,particularly inthe Chacoand in include a partnershipactivity in poorer provinces inthe westhorthwest components 1 and 2 which provinces section of the country. They have a can access on a competitive basis to weak and poorly enforced legal finance initiatives of their own framework in regardto environmental choosingwhich support project impact assessment. objectives. Multiple The project requires the successful M The three agencies have committed institutions and collaboration of three distinct themselves to working together to coordination government institutions, each develop a formal plan for the forest implementing its own activities. sector. Ongoing dialogue between the federal institutions and with high level decision-makersto keep them informed will help improve coordination. Procurement Although SAyDS and SAGPyA have M EachTFO will be staffed at all times implementedprojects previously, there by a ProcurementSpecialist is presentlya lack of procurement acceptable to the Bank. SAGPyA expertise inthese agencies. In will be responsible for carrying out addition, athird entity, INTA, will the main procurementactivities of serve as co-executor along with INTA. A concurrentaudit will be SAGPyA. Subprojectsto be executed carried out to control the subprojects. 25 Risk Descrintinn -- -.. .. .. - t : *?,* Operationtspeeifi by SAGPyA add an additional level of complexity to the procurement. Financial There is a moderateelement of risk M The financial management Management due to the fact that four independent arrangements for the proposed entities will be involved in project project meet applicable Bank implementation. requirements.All executing agencies have qualified and experienced staff in World Bank-financed activities, capable of undertaking the financial management functions for the project. Local Local governmentsmay not prioritize M The project will provide a platform governments capacity building for natural resource for maintaining an ongoing dialogue uninterested management. with stakeholdersthrough the national forest plan and the work with the provincial governments. Park Land Tenure Parks with complex tenure and social M Social and environmental conditions, such as indigenouspeople assessments should mitigate the living inthe vicinity, may delay effects of these potential execution. complications and risks. The borrower has conductedan IPP for the project which conforms to the Bank's safeguards policy for parks where indigenouspeople are living nearby. Failure to lower The project is not designed to L The project will support the critical deforestationrates unilaterally reducedeforestation. first steps toward developing a Misunderstandingsof the time and "national forest plan" neededto efforts required to ameliorate bring focus and coherence to the deforestation in a country as large and country's forest sector. It will complex as Argentina might arise provide a platform for inter-agency externally. action on deforestation issues and develop the technical tools and institutional mechanismsto address deforestationand stimulate the sustainable management and conservationof native forests. Plantations Exotic plantations can be a M Project seeks to increase controversial issue in the Southern environmental sustainability and Cone. social equity of plantations through various activities and with the GEF semi-blendedMainstreaming Biodiversity in Productive Forestry Landscapes.The IBRDproject includes Strategic Environmental Assessments. It will not finance large-scaleindustrial plantations. 6. Loadcredit Conditionsand Covenants 77. Loan Covenants: 26 (a) Section 11, B.3 "Standard" wording for project audits. The annual audited financial statements will be furnished to the Bank not later than six months after the end ofeach year; (b) Section 11, B.2 "Standard" wording for IFRs. Semiannual IFRs will be submitted to the Bank not later than 45 days after the end o f each calendar semester and will be part o f the semiannual project progress reports; and (c) There are two disbursement conditions: The first being that payments under Category (2) set forth inthe table inPart A o f the Loan Agreement are contingent upon the execution o f an Agreement between INTA and SAGPyA which i s acceptable to the Bank; and the second being that payments under Categories (3) and (5) set forth in the table in Part A o f the Loan Agreement, are contingent on the execution of a subsidiary agreement betweenThe Ministry of Economy and Productionand APN, which also must be acceptable to the Bank. D. APPRAISAL SUMMARY 1. Economic and FinancialAnalyses 78. The project envisions three types o f investments: technical assistance, capacity building and institutional strengthening directed toward small and medium producers to improve the management and sustainability o f forestry plantation and agro-forestry systems, small-scale sustainable projects in park buffer zones, and infrastructure investments in selected national parks. 79. On plantation forestry and agro-forestry, Argentina has excellent growth rates and production costs are competitive. Better markets, higher quality timber (and therefore higher prices) could enhance their returns. With plentifuland inexpensive landinMisiones and northern Corrientes provinces, Argentina offers attractive investment returns, especially if more wood processing capacity i s added and timber quality i s improved. Rates o f return for native species plantations without land costs in Argentina are low, but could be increased through genetic improvement programs. Nevertheless, investmentreturns for native species are reasonable inthe country with growth rates, o f at least 5 m3 per ha per year. These rates o f return are comparable to those o f other capital assets, excluding land costs. 80. Land costs, government subsidies, and reserve areas affect timber investment significantly. State subsidies generally increase the rates o f return by about 2% to 3% when they are available, or land expectation values by about US$300 to US$500, Le., the share o f establishment costs. Forest reserve areas decrease rates o f return by about 1% excluding land costs. In conclusion, investments in plantations, at least o f exotic species, in Argentina are profitable, even for small- and medium-scale producers. Plantation management contributes significantly to financial rates o f return and registers well with the project objectives o f improving plantation management through research and extension, and through technical assistance and training to producers. 27 81. The results o f the economic analysis o f agro-forestry efforts has also shown promising returns in Argentina, with ERRSup to 29% in some areas such as Misiones and Neuqukn on plots having a minimum o f 2.5 ha. Systems include a mixture o f trees, crops and animals, depending on local markets, cultural preferences and growing conditions and have the benefit o f diversifying producers' incomes. Even so, viable models do not exist in Argentina for all areas, and research and piloting o f new systems is needed in some areas such as the Chaco ecosystem and the Yungas. The project will build on the use o f the models already identified as viable, and finance research to further the development o f new ones. 82. National Parks in Argentina provide a two-fold return on investment by generating both biodiversity conservation and economic growth. Given the natural beauty o f the diverse ecosystems o f this country, including glaciers, desert, and jungle, compounded by favorable exchange rates, it has become one o f the most attractive destinations in Latin America. Visitation has grown from 1 million visitors in 1996 to some 2.5 million in 2006. Income from the national parks system has tripled since 1992 providing US$10 million for the system and almost a third o f the budget. Bank investments in the national parks system along with GEF funding have accompanied and played an important role inthis growth. 83. The proposed investments will allow the parks to be adequately protected in the face o f this growth in visitation, generate income for impoverished local communities and increase the importance and incentives for conservation. Data has been collected and analyzed regarding the estimated returns on the investmentsto be made, and these indicate good rates o f return. 2. Technical 84. Increasingnational and international demand for agricultural products, wood and fiber, as well as Argentina's favorable environmental conditions are likely to combine to favor strong growth in the forestry and agricultural sectors over the next ten years. While this growth will be advantageous to the economy it must be balanced to ensure environmental sustainability and social inclusion, especially o f the rural poor. Ecosystems o f regional and global importance are also threatened by unsustainable growth patterns in the natural resources sector, so there i s a need to increase habitat protection and maintain connectivity between protected areas for long- term conservation o f biodiversity. These areas are increasingly being recognized as providing important environmental services for productive sectors and as a source o f genuine economic growth through increased tourism and income generation for local communities. Recognizing the demanding outlook and limitations o f current capacities at the national and provincial levels o f government, the Argentine Government has requested the Sustainable Natural Resources Management Project to help it address these concerns. 85. Inorder to help the country achieve the needed balance, the project will endeavor to (i) improve the policy framework; (ii)strengthen institutional capacity at federal and provincial levels; (iii)invest in park management capacity, infrastructure and sustainable development opportunities for communities around parks; (iv) improve information delivery services inregard to natural resource management and land-use; (v) facilitate the involvement o f small and medium-scale farmers, land owners and producers in environmentally-sustainable forms o f forestry, agriculture and agro forestry; (vi) by institutionalizing environmental safeguards and 28 incorporating best practices into activities which draw on the natural resource base, (vii) strategic planning; and (viii) encouraging more private-sector involvement in service provision. (Additional information is found inAnnex 4.) 3. Fiduciary 86. Financial Management Risk. The financial management arrangements for the proposed project meet minimum Bank requirements. All executing agencies have qualified and experienced staff in World Bank-financed activities, capable o f undertaking the financial management functions for the project. There is a moderate element of risk due to the fact that 3 independent entities will be involved in project implementation. However, proposed mitigating measures will adequately cope with the identified risks.A detailed risk assessment i s provided in annex 7. 87. Procurement Risk. With respect to procurement, an assessment o f the Borrower's capacity was carried out by the team and a detailed action plan was prepared to address all risks identified, as discussed in Annex 8. The overall procurement risk has been rated as substantial. The key features o f the procurement risk mitigation strategy for this project are fully consistent with the Fiduciary Action Plan (FAP) agreed upon the Government of Argentina and the Bank and include: (i) Agreement includes Special Procurement Conditions aimed at increasing Loan transparency, competition, and civil society monitoring (e.g. publication on the web o f procurement documents and feeding the Bank publicly accessible Procurement Plans Execution System, known as SEPA), (ii) review thresholds consistent with the assessed level o f risks prior were chosen for each implementation agency, and (iii)joint FM-Procurement supervision missions will be conducted twice a year in order to produce Integrated Fiduciary Performance Assessments (IFPAs). 4. Social 88. In preparation for the project components, specifically the national parks and the productive forestry components (components 2 and 3), Government Counterparts (from APN and SAGPyA) have undertaken a systematic social assessment based on good practice standards. This has focused on an analysis o f social context, diversity and gender; an analysis o f formal as well as informal institutions in the project areas; a detailed stakeholder analysis; a structured consultation and participation framework and process; and a comprehensive analysis o f social risk, both risks potentially emanating from the project and risks to the project from the social context. 89. Expected Social Outcomes. The APN and Secretariat o f Agriculture have identified key areas where the project is expected to contribute positively to social development outcomes. Indicators for each component o f the project will be developed for these key outcomes and monitoring and supervision will track progress in these areas, disaggregated by social groups including indigenous communities and gender. These outcomes include: (a) Social inclusion: Improved protected areas management and sustainable plantation forestry are expected to reduce the current situation o f marginalization 29 and social exclusion, by providing better access to practices and technologies for biodiversity conservation, sustainable use and forest management. The necessary frameworks for Indigenous Peoples and Resettlement as set forth in the safeguards are being prepared for these areas and will be part o f the operational manuals and contemplated inthe project investment subcomponents; Empowerment: The project is based on a demand-driven approach to subprojects for sustainable use and forest management. With strengthening both o f local communities and producers organizations and individual small and medium farmers to articulate demand and hold institutions accountable for providing services, along with technical assistance, improved transparency and capacity building at different levels, the project is expected to strengthen empowerment processes in 11 protected areas and forested areas selected for project implementation; Security: The project will reduce physical vulnerability as well as allow local communities, producer's organizations and individual small and medium farmers to broaden their asset base through better access to technical services, markets, and capacity building activities; and Gender equity: Provision o f capacity building activities, particularly in buffer zones o f the 11 protected areas and forestry areas, has direct and positive benefits particularly for women. The project will also seek to enhance women's participation inproductive activities and decision making. Additional information can be found inAnnex 10 regarding Safeguard Policy Issues. 5. Environment 90. The Borrower has prepared environmental assessments (EA) for Components 2 (Sustainable Plantation Forestry) and 3 (Protected Areas and Corridors), but the impact o f the project on the environment is expected to be overwhelmingly positive given the nature o f the investments and emphasis on sustainable natural resource management. 91, Some risks do exist, primarily related to infrastructure in the national parks and potential impacts from growth in tourism, income-generating activities around protected areas and small- farmer projects under the forestry component. Provisions for these potential impacts have been made and the project design has incorporated these issues. As an added safeguard, an environmental management plan (EMP) i s being prepared for the two major components to define mitigating measures and to ensure compliance with Bank standards and operational policies. The EMP includes a budget and institutional responsibilities for implementation and monitoring. Some o f the national parks to be supported under Component 3 include important cultural and historic properties. This aspect has been included in the preparation o f the EA and guidelines will be included inthe EMP as well as inthe operational manuals regarding potential works and project activities inthese areas. 30 Additional informationcan be found inAnnex 10: SafeguardPolicy Issues. 6. Safeguard Policies Safeguard Policies Triggered by the Project Yes No Environmental Assessment (OP/BP/GP 4.0 1) [XI [I Natural Habitats (OP/BP 4.04) [XI [I Pest Management(OP 4,09) [XI [I Cultural Property (OP 4.11) [XI [I Involuntary Resettlement (OP/BP 4.12) [XI [I Indigenous Peoples(OP 4.10) [XI [I Forests(OP/BP 4.36) [XI [ I Safety of Dams(OP/BP 4.37) [I [XI Projects inDisputedAreas (OP/BP/GP 7.60)* [I [XI Projects on International Waterways (OP/BP/GP 7.50) [I [XI 92. The project is classified as Category "B", requiring an Environmental Assessment (EA). In accordance with OP 4.01, an Environmental Assessment has been carried out and an environmental management plan is being developed for the project and will be included in the operational manuals. Important findings and useful recommendations from the EA are integrated into project design (see Annex 10). 7. Policy Exceptions and Readiness 93. The project meets the regional criteria for readiness for implementation. The fiduciary arrangements are in place. Key project staff and consultants can be quickly mobilized upon project start up. Adequate monitoring and evaluation capacity is available. The Environmental Analysis was disclosed in the country and is available at the Bank's Infoshop and on relevant web sites. 'Bysupportingtheproposedproject,theBankdoesnotintendtoprejudicethefinaldeterminationof theparties`claimsonthe disputedareas 31 Annex 1: Country and Sector Background ARGENTINA: SustainableNatural Resources ManagementProject Background 1. Argentina i s rich in number and types o f ecosystems with 18 ecoregions identified within the country. Eight o f these ecoregions have been classified as among the highest priorities for conservation in the Neotropic~.'~The high levels o f biodiversity and urgent threats to the Atlantic Forest and the Valdivian Forests have led Conservation International to include these ecoregions among the 5 "hotspots" o f South America, placing them among the highest global conservation priorities. There are some 42 endangered species currently listed by IUCN for Argentina from all types o f terrestrial and marine habitat~.'~ 2. A recent World Bank co-sponsored publication Argentina: State of the Environment 2005,15 concluded that "According to the sustainable development indicators published by the Secretariat o f the Environment, the major environmental trends are still o f great concern." These trends include increased deforestation and its consequent loss o f biodiversity; erosion and water contamination from intensive agriculture and grazing; and depletion o f fisheries in Patagonia, among other issues o f environmental concern. On the positive side, recent improvements inthe Argentine economy, although increasing pressures on the natural resource base, also should permit increased capacity to tackle longer-term issues such as the sustainable use o f its natural resources. Land 3. From an economic perspective, the ecosystems (marine and terrestrial) o f this country are highly productive. The Argentine economy derives some 16 YOo f GDP from primary production based on its natural resources, along with 50% o f exports and 36% o f employment. The Humid Pampas were transformed into the most important agricultural region o f the country at the beginning o f the 20thcentury and expanded northwest in the 1980's, reaching into the Chaco ecoregion with the soybean boom that continues to this day. Tea, yerba mate production and forestry plantations impact the Upper Parana Atlantic Forest regions while sheep grazing degrades the Patagonian Steppe. Tobacco and sugar cane advance on the Yungas and cattle i s widespread in dryer ecosystems throughout the country. An estimated 250,000 hectares of natural habitat are transformed per year for expansion o f production. In particular, the phenomenal growth o f soybean production that has happened throughout the South American continent has also reached Argentina. Soybean cultivation has expanded from 5 million hectares in 1990 to almost 15 million hectares in 2005 with estimates of expanding several million hectares more within the next decade.I6 This expansion and productivity i s not without its impacts as noted previously. Twenty percent o f Argentina's soils (or an estimated 60 million ha) l3Dinnerstein, E. et al. (1995). A ConservationAssessment ofthe TerrestrialEcoregionsof Latin America andthe Caribbean. Washington, DC. WWF-World Bank. l4IUCN2006. 2006IUCN RedList of ThreatenedSpecies. www.iucnredlist.org. Brown, A. et al. 2006. La situacidn ambiental argentina 2005, FundacibnVida Silvestre l6Corcuera, J. and Martinez, U.2007. La Expansion Agricola y el Ambiente en el Context0 Global. In FVSA-INTA. 2007. Produccion Agropecuaria y Medio Ambiente. Ed. Martinez, U. FVSA. Buenos Aires 32 are considered to be moderately or severely eroded at present. Each year an additional 0.6 million ha of degradedsoils are added to this t0ta1.I~ 4. The rising trends in land degradation is closely linkedto another growing environmental problem; deforestation. Inparts of the country, especially the Chaco and parts of the Pampas and Patagonia, changes in land use and agricultural cropping, which in turn has been fundamentally driven by the steady expansion of soybean production is the motor of deforestation. The denuded land is then subject to greater erosion from wind and water as well as salinization from the greater evaporation rates and increasingly; fire. Within the Chaco Ecosystem, one of the most fragile inthe country given its arid to semi-arid nature, a recent tri-national priority setting exercise carried-out with national and international experts indicatedthe expansion of agriculture and livestock, commercial forestry (of native forests), hunting and fire among the most important threats to the ecoregion biodiversity.'* Forests 5. Argentina has six major forest ecosystemsthroughout the country. These are the Yungas, Dry Chaco, Monte, Espinal, Upper ParanaAtlantic Forest, and the ValdiviadPatagonian Forests. These ecosystems cover just over 160 million hectares. The first official estimates of forest cover for Argentina around 1915 indicated approximately 100 million hectares of forests. By 2005, some 90 years later, the area was reduced by two-thirds to 31 million hectares with the following distribution": Ecosystem RemainingForest(ha) Upper Parana Atlantic Forest 1,453,381 Yungas 3,732,985 ValdividPatanonian Forests 1.895.254 Y , , Dry Chaco Forests 21,705,506 Monte2* Espinal 2,656,747 Total 3 1,443,873 6. Forests therefore cover under 12% of the country, of which approximately 3% (1.2 million ha) constitute plantation forests, primarily exotic pines and eucalypts. As can be noted from the table above, over 76 % of the native forests are located in the arid, semi-arid and sub- humid "Bosque Chaqueiio" (or Dry Chaco). The remaining native forests outside the Chaco are situated in isolated formations in different extremes o f the country (see map in Annex 19). The fate o f these forest ecosystems have differed somewhat based on the development factors described previously. Within the UPAF and ValdividPatagonian Forests where forestry "PerezPardo,0.2006.LaDesertlficacion enlaRepublicaArgentina.InBrown,A.etal.2006.Lasituacidn ambiental argentina 2005, FundacionVida Silvestre Argentina. 18 The NatureConservancy.2005. Reporte Tecnico. Evaluacion Ecoregional del Gran Chaco. Ed.Oren, D. and Zavala, S. *'SAyDS. ' 9 2001. Primer Inventario Nacional de Bosques Nativos. Informe Nacional. BuenosAires It shouldbenotedthat the inventory indicatesalmost 43 millionhectaresof degradedscrub forests inthe remainingMonteecosystem. 33 activities are traditionally an important part o f the economic activity, important protected areas have been established and an important percentage o f these ecosystems are conserved. Remaining portions o f both these ecosystems are the most important forest as compared to neighboring countries that share the ecosystems (Chile, Paraguay, and Brazil). This i s not the case however with the other forest ecosystems that have succumbed initially to grazing, agriculture, and in the case o f the Dry Chaco, for extraction o f tannin and production o f railroad ties. 7. The importance and value o f forests ecosystem services are poorly understood in Argentina. They provide a wide range o f natural habitats for endangered, endemic, or commercially valuable species while protecting valuable soil and water resources. With the exception o f National Parks and small areas o f provincial lands (tierras$scales), all forests and plantations inArgentina are privately owned. 8. From an economic standpoint, as a major element o f the natural resource base, forestry activities currently employ about 500,000 people (24,000 o f which are small producers) and represent about 2% o f GDP. Deforestation 9. The national average deforestation rate has been 0.6-0.7% over the past ten years, or twice the Latin American average. Recent updates to the year 2006 by the SAyDS indicate that almost 1.2 million hectares have disappeared over the last four years alone within the Yungas and Dry Chaco Ecosystems. Loss i s currently occurring at an average annual rate o f 1.35% in this area and up to 2.5% in the Province of Santiago del Estero.21 Most forest loss (75%) is taking place in the Chaco, due to massive industrial-scale clearing for the cultivation o f soy, cotton and other crops. Deforestation in these areas i s often accompanied by social impacts, when the rural poor, many with historical ties to the land but without formal title, are either fenced out o f their traditional holdings on which their survival depends, or forced out o f their homes. 10. Forest loss also affects the hydrologic cycle, destroys biodiversity, and can lead to accelerated soil erosion and loss o f soil fertility. The Chaco i s also highly degraded as a result o f decades o f over harvesting o f timber, woodland grazing and fires. Measures by the national and provincial governments to reduce deforestation and illegal harvesting inthe Chaco have had little effect, and cooperation between federal, provincial and local authorities i s lacking. Forests are regulated for management and protection primarily through provincial laws. Not all provinces adhere to the same standards throughout the country, nor are they effectively enforced given the low capacity and funding available for this effort to the provincial authorities and forestry departments. Recognizing the serious environmental and social implications o f uncontrolled land conversion, the government moved quickly to contain the situation in 2007 through the new Ley de Bosques. This law should bring a halt to indiscriminate deforestation through the introduction o f a moratorium on deforestation pending the introduction o f provincial land use plans. It should also stimulate moves towards the sustainable management and conservation o f 2'SAyDS. 2007. Monitoreo de Bosque Nativo. Period0 2002-2006 (Datos Preliminares). Buenos Aires. www.ambiente.gov.ar 34 native forests through the provision o f incentives. Concerted action is now needed at several levels of government to enforce existing laws and regulations to protect priority areas of native forests, with this being accompanied by outreach programs and incentives aimed at promoting practices that are environmentally sustainable and productive. Plantation Forests 11, Plantations extend to 1.2 million, mostly composed of exotic tree species of pines and eucalypts. The progression of plantation forestry was initially slow in Argentina, but has been gathering momentum over the past decade. O f the 1.2 million ha of plantations, over 500 thousand ha have been created inthe past 12 years. Prior to the financial crisis in 1998, 102,900 ha were planted. While this dropped to about 20,000 ha per year in 2002 and 2003, it increased to 32,700 ha per year in 2004. Giventhat lands suitable for supporting forestry purposes are vast and there is considerable area for the expansion of plantation forests in Argentina, the most productive of which is located inthe grasslands of Corrientes, Entre Rios, Buenos Aires and the Andeanregion of Patagonia. 12. Tree plantations are located mainly in the provinces of Misiones, Corrientes, Entre Rios, Buenos Aires and Santa Fe, with much smaller areas being located inthe provinces of Neuquen, Rio Negro, Chubut and SaltdJujuy. The provinces of Corrientes and Misiones represent about 85% of the recent expansion in plantation forests. There has also been important growth in the Entre Rios province, Patagonia (especially Neuquen and Rio Negro) and increasingly Buenos Aires province, which has close proximity to markets and ports. Santa Fe, Salta, and Jujuy provinces have also registered growth inplantations inrecent years. 13. Planted forests offer excellent commercial potential for the forestry sector, even though native forests far exceed plantations in physical area. The plantations however offer an alternative to native forests for wood supply in the country and can provide environmental benefits in degradedareas by protecting soils and reducing erosion. The export o f wood products i s also increasing, having risen to a high of US$653 million (or 4.9 percent of all exports) in 2003, in part to the devaluation of the peso. Because of this growth, small and medium-sized forestry enterprises have begun investing inmachinery and infrastructure again. 14. Projections show that the production o f timber from plantation forests is expected to increase sharply over the coming decades. Internal demandfor wood products is also expectedto increase, from 1.8 milliontons of paper in 2001 to 3.1 million in 2020, and from 1.3 million m3 of timber in 2001 to 1.6 million in 2020. However, plantation forestry also has potential to impact biodiversity ifnot properly planned and executed, particularly ingrasslandhabitats. One NGO estimates that 40 percent of the country's most important grasslands are threatened by plantation forestry.22A primary concern is that without proper planning, habitat loss because of plantation forestry could lead to increasing losses of biodiversity throughout many parts of the Argentina. Therefore, it is important to ensure greater sustainability in plantation practices and incentives provided by the government forestry institutions. The country has recently developed, but is in the early stages of implementing, a more ambitious plantation forestry strategy that Bilenca, D.and Minarro, F. 2004. Identificacionde Areas Valiosas de Pastizalen las Pampasy Campos de Argentina, Uruguayy Sur de Brasil.FundacionVida SilvestreArgentina. 35 includes a greater focus on environmental sustainability. Other issues such as potential for mitigation and adaptation to climate change, fuelwood supply, plantations with native species, and agro-forestry are issues o f importance that also should be analyzed and included in future sector strategies and programs. 15. World demand for paper products is expected to increase about 2.1 percent annually through 2020, while demand in Latin America i s expected to increase about 3 percent during the same period, or the equivalent o f about 12 million tons. Considering that a resource base o f between 90 to 200 thousand hectares o f plantations are required to provide the fiber necessary to generate one million tons o f pulp, about 2 million ha o f new plantations would be required to support the regional demand alone. Moreover, several international industries from Europe and North America are relocating their pulp and processing facilities inthe region in order to supply products to international markets. Such facilities require fiber to supply their plants, most of which will come from plantations. (In the past three years, neighboring Uruguay has attracted more than $3.5 billion in forestry investments, including three new pulp mills and five major sawmills.) 16. Argentina is expected to respond to this opportunity and increased global demand for fiber. The country has strong comparative advantage in plantation forestry due to its very favorable growing conditions, an abundance o f good quality land with low opportunity cost, large land holdings which favor economies of scale, a reliable system o f land titling and good infrastructure. Despite these obvious assets, relative to its potential, plantation forestry in Argentina i s still in its infancy. There are a number o f barriers to growth, with one o f the most important beingthe absence o f an adequate institutional and policy framework at the institutional levels, including environmental concerns. ProtectedArea Management 17. The national protected areas system of Argentina, managed by the Administracion de Parques Nacionales, is the oldest in South America, covers 3.5 million hectares, and includes 36 protected areas and 4 "natural monuments". These protected areas include mountains, forests and glaciers in Southern Patagonia and Tierra del Fuego, a small fraction o f the highly threatened Chaco forests, sub-tropical rainforests inthe Yungas and Upper Parana Atlantic Forest including the spectacular waterfalls o f Iguazu National Park. Still, park areas comprise only 1.3% o f the country, falling far short o f the internationally accepted minimum o f 10% required to ensure long-term maintenance o f these ecosystems while many ecosystems are underrepresented within the National Protected Areas System (SNAP). 18. The Federal Protected Areas System (SIFAP) i s constituted under a voluntary interinstitutional agreement which i s broader inits coverage including provincial, municipal, and private protected areas. Together with the national areas they helpto increase the protected areas coverage by another 4.5 percent. Almost 19 million hectares are protected within the SIFAP's over 360 protected areas.23 Standards for conservation in these areas are however are much lower than the federal protected areas ingeneral. Problems range from lack o f park guards, clear 23Burkhart,R.2005. Las Areas Protegidas de la Argentina inBrown, A. et al. 2005. Situacidn Ambiental de Argentina 2005. FundacionVida Silvestre Argentina. 36 tenure, and demarcation to the extreme o f delisting protected areas for transformation to agriculture. Only a quarter o f these areas are declared under strict conservation categories, therefore it i s imperative to strengthen the capacity for conservation o f biodiversity while sustaining human livelihoods in those areas where human populations and protected areas co- exist. Private reserves efforts have also been limited and existed mainly thanks to NGO's (most notably Fundacidn Vida Silvestre Argentina, Conservation Land Trust and Fundacion Habitat y Desarrollo) and individual efforts. The incentive structures established to sustain these private conservation efforts are few and lack sufficient financial backing and sustainability, as well as technical capacity for their implementation, oversight, and dissemination. The use o f payment for environmental services (PES) systems or programs have had limitedapplication in Argentina to finance public and private conservation efforts. Efforts must move beyond the more academic studies that have been done toward more concrete experiences with PES for watershed and biodiversity conservation, as well as other areas such as carbon sequestration and landscape protection. 19. Conservation corridors are also needed to maintain the integrity o f ecosystems, ensuring protection o f a diversity o f habitats, avoiding genetic isolation of plant and animal populations, and avoid fragmentation. Few corridors have been established to date inArgentina, most notably the Corredor Verde in the Upper Parana Atlantic Forest. There is however interest in establishing corridors within the Andean Patagonian-Valdivian Forest ecoregion (potentially transboundary with Chile) and the Chaco (that should link with important conservation efforts in Bolivia and Paraguay) ecoregion. The technical studies and proposals are well advanced for both o f these ecoregions. Other areas o f interest for corridors include the Yungas, the Patagonian Atlantic coast and the Parana and Delta waterway.24 The implementation o f these efforts has been minimal in terms o f on-ground interventions and requires capacity-building and political will as well as the strengthening o f core protected areas that serve as "anchors" for the corridors. Tourism 20. One o f the brightspots for conservation inArgentina is inregardto tourism andvisitation to the national parks system. National parks are some o f Argentina's major tourist attractions. Glaciers and waterfalls provide a spectacular backdrop for tourism and leisure activities in some cases since the late 19`h century. Since 2002, tourism in Argentina has shown dramatic growth thanks to its favorable currency exchange, relatively safe travel conditions and a diverse and beautiful countryside and capital city among other advantages. In2004 statistics indicate that 3.4 million non-resident tourists spent US$2.5 billion, equivalent to approximately half o f total service exports. At the same time this has had a positive impact on the finances o f APN. The following chart shows the budget for the parks agency and its distribution by source. 24Frassetto.A. et al. 2005. Los Corredores Ecologicos en la Argentina in Brown, A. et al. 2005. Situacidn Ambiental de Argentina 2005. Fundacion Vida Silvestre Argentina 37 Table 1.1APN Budget(in AR$) Year APN Income NationalBudget Other Sources Total 2002 9.625.000 16.242.000 2.743.350 28.610.350 2003 8.274.000 17.236.924 13.657.040 39.167.964 2004 17.597.000 16.551.958 17.217.000 5 1.365.958 2005 24.041.000 33.161.619 24.996.948 82.199.567 2006 30.296.264 25.589.664 3 1.539.000 87.424.928 2007 30.225.000 37.356.825 22.155.600 89.737.425 21. Income from its own sources (including important income from visitation) has more than tripled over the last five years as has the budget for the parks system as a whole. 22. Several o f the oldest parks are well endowed with infrastructure and human resources, however many are reaching their limits to support tourism sustainably. Other parks are receiving increased levels o f tourism but are unable to maintain adequate levels o f protection under these circumstances due to a lack o f infrastructure, user services and human resources for management. There is also an increasing recognition and need for more inclusive development o f the parks to incorporate local communities and indigenous groups inthe economic benefits o f these protected areas. 23. Investment inprotected areas infrastructure, local development and service provision, as well as capacity-building and environmental education are needed to both stimulate tourism and growth in rural areas and sustain conservation efforts at the same time. Several areas of the country have potential to benefit from this increase in tourism however, there i s still a need to improve coverage and strengthen the conservation o f representative ecosystems. This needs to be done by filling gaps in the protected areas system, which, despite its extensive coverage, still lacks representation within several ecosystems, especially in the Chaco, the grasslands o f the Pampa, and marine and coastal areas o f the Atlantic. 38 Annex 2: Major RelatedProjects Financedby the Bankand/or other Agencies ARGENTINA: SustainableNaturalResourcesManagementProject 1. The Forestry Development Project was the first IBRD loan for forestry inArgentina. The US$16 million was implemented by SAGPyA and completed successfully in 2006. It was evaluated by the Bank during routine supervision missions and an Implementation Completion Report is presently under preparation. The project will achieve most of its development objectives, and generated important advances in plantation research, small producer development/agro-forestry and forestry extension. The project also provided important lessons, especially on policy and institutions. The proposed new project will build upon this experience by addressing the main constraints to more sustainable and equitable growth in the sector, including integrating environmental and social sustainability as a cross-cutting theme for sectoral strengtheningand economic growth. 2. The Native Forests and Protected Areas Project was the second IBRD loan for forestry (and conservation) in the country. The main focus of the US$19.5 million loan was sustainable management and conservation of native forests, the improved management of four national parks andthe strengtheningof the National Parks Administration. The project closed inJune 2007, and despite an accumulation of implementation delays, it achieved most of its objectives. The main problems encountered were implementation delays caused by bureaucratic inertia, economic instability and a shortage of counterpart funds. 3. The Biodiversity Conservation Project is an US$lO.1 million GEF project associated with the Native Forest and Protected Areas Project. It aims to create five new protected areas, create a biodiversity information system, and establish a system of biodiversity monitoring. The project is due to end in 2008, and is showing good progress. The project will enable better landscape, protection, and biodiversity planning and monitoringat national and provinciallevels. The proposed new project would build upon the important advances in recent years and interest indeveloping corridors as well as strengthenother core areas and increaselocalinvolvement and financial sustainability of protected areas through tourism. 4. The Assistance to Medium and Small Scale Forest Enterprise project (PyMEs) is a four year, US$20 million operation funded by the EU which covered mainly small scale forest industries.Its geographical focus is the wood producing areas of Mesopotamia, the Chaco, NOA and Patagonia. The objective of the project is to improve the competitiveness of PyMEs through technology transfer, training, skills upgrading, the creation of producer associations, and certification. The proposed new project would complement the PyME project by providing assistance to growers rather than processors for greater equity. 5. The US$75 million PROINDER was funded through an IBRD loan scheduled to close in December 2006 and extended through additional Jinancing on July 17, 2007, and has a strong poverty alleviation focus in rural areas - its target is to include 127,565 poor families. It has three components, namely a Rural Initiatives Fund, Support Services (training, marketing, planning) and an Implementation Unit.The mainthematic focus is agriculture, though some agro forestry was also included. The proposed project would be complement and follow on from PROINDER. Inparticular, the design of Component 2 would draw extensively on the experience 39 obtained through PROINDER in dealing with small producers. However, the proposed new project would focus more on providing support to associations o f small and medium scale producers interested inbecoming wood producers. 6. The US$300,000 Technology Transfer to Small Forestry Producers Organizations project i s jointly funded by SOCODEVI, a Canadian NGO, and INTA, and will close in 2006. It focuses strongly on technology transfer, training and the creation o f forestry producer associations, the overall objective being to enable small producers to upgrade the quality o f their product, improve their marketing skills and facilitate their entry into the value chain The project also provides training to individuals who wish to establish forestry extension cooperatives/associations. The proposed project would aim to upscale this type o f intervention elsewhere. 7. The US$33 million Improvement of the Competitiveness of Tourism project i s funded by the IADB. It supports further development o f two o f Argentina's most popular tourist circuits, the Patagonian Lakes and the Iguazu Falls and Jesuit Missions o f the Northeast, with the goal o f increasing the number o f foreign visitors by 177,000 by the year 2010. Program activities include improving management and conditions o f tourist attractions, offering more information for a better distribution o f flows o f visitors and extended stays, developing tourist products and their international marketing; and optimizing the organization and management o f the Secretariat o f Tourism, which i s incharge o f the program. 40 TableA2.1. Status Project Name Country Status Latest IP Latest DO Rating Rating Forestry P006040 Development Project Public-Private 0.75 GEF PO58299 Chile Closed Satisfactory Satisfactory Mechanisms for Biodiversity --+--I---- Conservationinthe Valdivian Forest Biodiversity 10.0 GEF PO39787 Argentina Open Satisfactory Satisfactory Conservation Project IntegratedNatural 30.0 GEF PO70653 Uruguay Resourcesand Biodiversity Management Santiago Foothills: 0.73 GEF PO70654 Chile Closed Mountain Ecosystem ConservationMSP I Native Forests and 19.5 IBRD PO40808 Moderately I Moderately ProtectedAreas Mainstreaming 11.2 GEF PO94425 Biodiversity into by Board Productive Forestry June 2007 Landscapes I Paraguay Forestry 25.0 IBRD PO85335 NIA NIA Development I Biodiversity 22.0 GEF PO94715 N/A NIA Mainstreaming and Institutional Consolidation I Table A2.2. Other Major RelatedProjects in the ProjectArea I Name Amount Financier Years Start Country (US$ Date Million) Regional Public Goods Chaco 2.038 IADBITNC 3 2007 Arg.lPy.1Bo. Pilcomayo Watershed Project 23 European Union 6 2002 Arg.lPy./Bo. Paraguayan Wildlands Initiative 8.8 GEFAJNDP 7 2001 Paraguay Decentralized MSP Program 1 GEF 2 2006 Argentina 41 Annex 3: Results Frameworkand Monitoring ARGENTINA: SustainableNatural Resources ManagementProject Results Framework ProjectDevelopment OutcomeIndicators Use of Outcome Objective Information Improve the sustainable and Policies, regulatory frameworks, and YO2 -03 Indicatesthat government efficient management of forest promotion programs inplace; commitment to project objectives is resources, conserve biodiversity in consensus obtainedon new strong, and that the conditions are protected areas and forest institutional arrangements and favorable to moving ahead with landscapes, and integrate small partnerships neededto execute sustainable and equitable producers into forestry policies; regional environmental development in the forestry sector, development and conservation. strategies prepared,; funds available and to the conservationof to small producers for conservation, biodiversity. tree planting and SFM. The national parks system and YO4 - Monitoring indicates surrounding communities are increasedincome from sustainable benefiting from improved activities in communities and management capacity and increased increase in park personneland tourism budgets. Chaco regional office functioning, YO2 -03 Technical packages priority areas identified and available to improve conservation information generated supportive of and forest productivity. feasible SFM models and plantation forestry. National and provincial governments YO4 - Implies that the project is increasebudgetsand programs catalyzing political momentum dedicated to SFM, tree planting and conservation. IntermediateResults Results Indicatorsfor Each Use of ResultsMonitoring One per Component Component Component 1: Proposal for the sustainable use Project formulation unit created and Indicatesthat project preparation is and protection of native forests and operational advancing biodiversity prepared in collaboration with stakeholders, Workshops plannedand executed Confirms participation of local and institutional field capacity actors in SFM process strengthened through studies and pilot field activities Project concept document prepared Indicatesthat consensus reached on based on workshops and project concept consultancies Pilot field activities and studies Confirms participation and carried out provincial commitment to SFM and conservation Component 2: Sustainable and equitable Plantation owners increase, Confirms that owners are development of plantation and conservationtargeted interventions mainstreaming conservation into agro forestry on their planted areas plantation management Regional environmental strategies Confirms that sustainablepractice is 42 ProjectDevelopment Outcome Indicators Use of Outcome 0biective Information available and in use being adopted There is a significant rise in the area Providesconfirmation that of plantationscertified as managed sustainablemanagement meets responsibly international criteria Increase in Small and Medium Confirms that Small and Medium Producerassociations Producerswill be better preparedto enter the value chain Increasedprovincial support for Indicatesthat stakeholdersare taking forest plantations, enrichment control and that development is planting and conservation being decentralized Component 3: Protected areas system core areas 11 protectedareas strengthenedin Indicatesthat biodiversity inkey and institutional capacities management capacity, infrastructure areas is being protected. strengthened for long-term and tourist facilities. sustainability, corridors established in critical ecoregions and synergy Increase in economic benefit to local Suggeststhat conservationactivities between forestry and conservation communities and indigenousgroups are sustainable initiatives created. from tourism and sustainable-use activities Chaco corridor designedthrough a Confirms that conservationefforts in participatory process with pilot the Chaco enjoy broad support, that initiatives for implementation approachesto sustainableforest land advanced in all provinces involved, use are being developed, and that and in close collaboration with key institutions are working towards Component 1 common goals 43 t- -0 B /E 0 0 N m z z ly, 0 0 e r 4 d 2 IC1 VI 0 c r4 W 0 N t-- gI- a rcl -.-P 0 W m .-e -E m m -P ---t-t- I I i i -L I0f I0f 2 2 'I) s HI g 0 j k0 s s 0 LA 2: t I t -I--- ;-1 N g ;.j N m g 3m m N c Ba Q 8 e, @ -8 Q 8 e, E -8 j s 0 m 1 g IC) I 5 3 534 B 9 k3 . 111 n 1. E, k E, k3 . I 8 - I 2 I P - U x 3 N a h n un M v, 9 : 0 m W 0 5 W i! I 2 I I /N Y 5B 5 m II , 3 2w vl l I I I ' F I I I d E 4 -t I L 0 0 a 0 0 - 00 2 0 0 0 " 0 O - 0 - 0 4 T " 0 0 E - m s - 00 - - 0 1 m z 0 +-- _I_ - 0 - 0 - z 1 I c 5a:e,% ) Z I / a I E 5 3m - m vi 3:: z rn m m NI % c < V V ez ' 2 e 0 0 0E: 0 0 0 0 0 0 E: 0 0 0 E: 0 0E: E 0vi 0 0 E > ? 3 O 0 0 0 0 vi -aS w c Fi C I c 6A I v v - 2 2 % 30 :e ) Z ,! 53 - ua: 0 0 041 041 0 0 0 0 0 0 E 0 \o E Annex 4: Detailed Project Description ARGENTINA: Sustainable NaturalResources Management Project Background 1. Argentina harbors significant levels o f biodiversity thanks to its broad range o f geographic, altitudinal, and climatic regions. Over 10 percent o f the 178 terrestrial ecoregions identified for Latin America and the Caribbean lie wholly or partially inArgentina (Dinnerstein, et al). Thanks to these abundant natural resources, the country has a thriving primary production sector. Agriculture (including livestock) and forestry represent 10% and 3% o f GDP respectively. In addition, tourism has become the second most important source o f export income and represents approximately 2.8% o f GDP at present.27 2. The proposed project will focus on the sustainable management o f forests and its biodiversity. It will take a balanced approach that combines conservation and sustainable use (both productive and non-consumptive) with improved governance, participation, and equity. The proposed components are focused on priority areas and will aim to improve capacities at national, provincial, and local community levels to spearhead development - with a strong emphasis on economic, social, and environmental sustainability o f the investments. 3. Component 1. Native Forests and Biodiversitv (Executiw Agency: SAyDS) (Total Cost US$4.75 Million). The native forest and biodiversity component will be implemented by SAyDS and comprise a short, two-year operation designed to prepare the way for heavier and clearly targeted investments thereafter. It would concentrate primarily on the Chaco ecoregion where pressure and environmental degradation is most intense, and would focus on the 'preparation o f detailed proposals for a follow-on investment project aimed at increasing SFM. Together with stakeholders, the component will review the structure and mandate o f the Native Forests Directorate o f SAyDS, the aim being to identify an appropriate future role and structure for the institution. Lines o f cooperation and collaboration would also be worked out with the provinces for native forest management, in order to ensure a cohesive and effective working relationship between SAyDS (as a regulatory agency) and those o f the provinces (also regulatory but with greater roles in implementation and enforcement). The policy and regulatory environment o f the provincial offices responsible for forestry would also be critically analyzed and, where necessary, adjustments made to ensure that they harmonize with federal policies. Support would also be provided for strategic planning aimed at identifying priority areas for intervention, and to strengthen selected provincial forestry administrations where the management o f native forests i s an issue. Complementary to this, it would make funds available to provinces who wish to undertake related activities supportive o f project objectives, an example being provincial land use plans as required by the new Ley de Bosques. It would also support the design and creation o f an incentive system supportive o f forest conservation and sustainable forest management in critical areas. SAyDS and SAGPyA would also be assisted to develop mechanisms to coordinate with provincial and local actors, NGOs, producers and private 27Argentina - Travel and Tourism: Navigating the RoadAhead, World Travel and Tourism Council (2007). http://www.wttc.org/eng/Research/Tourism_SateIlite_Accounting/TSA_Country_Reports/Argentina/index.php 61 investors, the aim being to prepare the way for a "national forestry program" designed to bring focus and coherence to the country's forestry program.. 4. Subcomponent 1.1: Formulation of a Native Forests and BiodiversityProject (Total Cost US$1.65 Million). Developing a project proposal for sustainablenative forest management and biodiversity conservation in Argentina is a complex undertaking. Initially, it requires that a series of institutional, policy, regulatory, and political issues be tabled for discussion. SAyDS has made the decision to do this before advancing to a fully fledged project. The groundwork undertaken at national and provincial levels should ensure that future operations move forward harmoniously and effectively, and that key problems are approached with greater support from stakeholders. 5. To achieve the above, the subcomponent will provide support to SAyDS to prepare a Native Forests and Biodiversity Project in a collaborative manner. To do this a 6 person Preparation Unit will be established under the National Director of Native Forests in SAyDS. The preparation group will comprise a Coordinator and 3 subject matter specialists (a policy specialist, a forestry management specialist, and a specialist in extension and technology transfer). Short term subject matter specialists (consultants) would also be catered for, as would be specialists for data gathering, monitoring, procurement and auditing. 6. Specific outputs from this subcomponent will comprise a detailed technical and operational proposal aimed at improving native forests management and biodiversity conservation inArgentina, with special emphasis on the Chaco. 7. Subcomponent 1.2: Pilot Activities, Studies and Outreach (Total Cost US$3.10 Million). Pilot activities, most of which would be focused in the Chaco, would be included to prepare the way for an investment operation. Pilot activities would aim to establish a basis for dealing with the critical issues surrounding deforestation and forestry management with emphasis in the fragile Chaco ecoregion. Activities would include consultation with regional and national stakeholders for the establishment of a regional office of the SAyDS inthe Chaco to more adequately interact with local levels of forestry management. The development of a regional strategy for sustainable development and SFM would be prepared for the ecoregion in support of SAyDS and other institutional efforts in mainstreaming sustainability and generating synergy. The Forestry Directorate of SAyDS has proposed a framework for a native forests promotion and incentive system to be implemented in the future. However, the institutional mechanismsneededto effectively administer this program are lacking. To address this issue the subcomponent will fund a study of basic information, human resources, and infrastructure needs as well as identifying what supervisory, auditing, and monitoring functions will be needed to effectively monitor the program. To develop working partnerships with the provinces in the Chaco, the project will finance provincial initiatives supportive of project objectives, these being made available to them on a competitive and demand-driven basis (see Annex 17). These might include land use plans, training, environmental campaigns and the like. Activities to be included are: (a) The implementation of a publicity program on the aims and objectives o f the component; 62 (b) The identification o f critical forestry areas for intervention intwo provinces o f the Chaco; (c) The design o f SFM models for the Chaco; (d) The designo f a log-tracking system for forestry products inall native forest types; (e) The design o f suitable delivery mechanisms for forestry incentives; (0 The preparationo f BMP manuals for all native forest types; (g) An evaluation o f carbon sequestration potential as a tool for mitigating deforestation and climate change through a system o f incentives and PES programs; and (h) Activities for provincial participationineligible project activities. 8. Component 2. Sustainable Plantation Forestry (Executing; agency: SAGPvA) /Total Cost US$31.85 Million). The aim of this component would be to (i)establish institutional and policy frameworks conducive to sustainable and shared growth inthe sector; (ii) raise forestry sector productivity through efficiency gains inthe generation, analysis and transfer o f strategically important information; (iii)put in place regional environmental strategies and training program for plantation forestry; and (iv) support the integration o f smallholders and small producers into the plantation and agro forestry production cycle while promoting more sustainable practices among medium and large producers. The component would aim to improve cooperation and policy consistency between SAGPyA and the native forests agency SAyDS, as well as with the provinces which retain front-line responsibility. In addition, the component is complemented by, and closely coordinated with the GEF-funded(US$7 million), Biodiversity in Productive Forestry Landscapes Project, that will be implemented through SAGPyA's Forestry Directorate, and which seeks to mainstreambiodiversity conservation into plantation practices. 9. The component would be implemented by the Forestry Directorate o f SAGPyA. Initially it would focus in areas with a proven potential, and in those with a strong commitment to sustainable forestry development, that is, Mesopotamia, Pampeana, Delta, Mendoza-Cuyo, Patagonian Andes and Grandes Valles, and the Northwest (NOA). Subject to a satisfactory mid term review it would include other areas. The component would help re-position and re-focus federal and provincial administrations responsible for plantation forestry; improve and harmonize the policy frameworks at federal and provincial levels; foster closer links between the federal and provincial forestry administrations, and between them, the private sector and civil society; provide support to demand-driven and competitive research programs; support the expansion o f private sector forestry extension services; facilitate the entry o f small producers into the supply chain; and promote best practices among all producers. The subcomponents are as follows: 10. Subcomponent 2.1: Institutional and Policy Development (Total Cost US$8.51 million) This component will aim to reform the Direccidn de Forestacidn (DF) into a higher- level policy and regulatory body in the government hierarchy and to strengthen its capacity to discharge its new functions, especially inareas related to strategic planning, policy, conservation and equity. This it would do by reviewing and adjusting its mandate,, upgrading its facilities and infrastructure, filling skills gaps, and providing training - the aim being to better equip it to take the lead inthe sector. Insupport o f this, the project will also provide training and equipment to 63 provincial forestry administrations inthe main plantation areas to improve their capacity to foster environmentally sustainable plantation forestry and equitable growth o f the sector. The main inputs at federal and provincial levels would consist o f technical assistance, equipment and training in sector analysis, strategic planning, land use planning, policy formulation and monitoring. It will also improve the capacity o f participating institutions to gather and share information, better communicate with stakeholders through workshops and improve communication between stakeholders by creating federal and provincial Mesas Forestales. 11. To address environmental concerns, the project would fund the preparation o f a plantation related Environmental Management Strategies in the 7 forest ecoregions. In conjunction with the associated GEF project, it would also identify and map sensitive areas vulnerable to disturbance through planting, and incorporate this information into the DFs' data base (which is available to the public through the internet). This way, sensitive areas could be excluded from receiving incentives available under Law 25,080. The project would also review the efficiency of the subsidy program (Law 25 OSO), and prepare and disseminate Best Management Practice (BMP) to ensure that soil, water and micro climate are afforded adequate protection from plantation forestry. 12. Support will also be provided to improve the quality o f training and upgrade training facilities and capacity in up to 7 universities dealing with plantation forestry. Post graduate training would also be made available for to researchers. 13. To encourage provinces to take a more active role in promoting plantation forestry, the component would include financing to partner provincial initiatives/proposals supportive o f project objectives (see Annex 17). 14. Key activities include: (a) Strategic Planning, Policy Reform, Institutional Support and Communications; (b) Human Resources Development; (c) Information Systems Strengthening; (d) Environmental Planning; and (e) Financing o f provincial participation for eligible project activities. 15. Subcomponent 2.2: Research, Technology Transfer (TT) and Extension (Total Cost US$11.19 million). To efficiently fill information gaps in the sector, the project will aim to create a working model o f demand-driven, competitively-funded research projects (see Annex 20). Once a year, the project would fund a dialogue (seminar) with the private sector (small and large producers) and other interested parties to identify research priorities for the coming year. Thereafter, it will draw up a list o f priority research topics eligible for funding. Proposals to undertake this research will be invited through advertisements in the press, with the best proposals being selected through a system o f competitive system. An inter-institutional evaluation committee will select the winning proposals and the project will thereafter enter a contract with the winning participants. It will also fund a system o f independent monitoring o f results to asses quality and usefulness to end users. Should research on genetic material raise intellectual property rights issues, such work would be undertaken by state institutions such as 64 INTA. Where possible, the private sector will be encouraged to co finance research projects. To strengthen TT and best practice, the project will fund events such as `open days', research workshops, media presentations, web access to research data bases, and networking with other countries in the sub-region. It will also fund publications to ensure that research information i s easily accessible for users. 16. A major thrust o f the project will be to support the growth o f good quality private extension services. First, 12 Forestry Development Officers (FDO) will be recruited, trained and posted to the main plantation areas, 7 locations inall. They will consult with the private sector to determine their forestry extension needs. The FDOs will then use this to design a training program for forestry extension in their area. Once reviewed and approved by the project's TFO, the FDOs and the TFO will contract consultants to organize a program o f short courses for private extension agents on priority topics. Instruction will be offered free-of-charge, but transport and subsistence costs will be covered by the individual or, more likely, the employer o f the extension agent. Those successfully completing the course will be accredited by the project. An independent system o f monitoring will ensure that the quality o f extension work was satisfactory and relevant to user needs. During the mid-termreview, prospects for privatizing the training o f extension agents will be examined, the hope being that producer associations will see the value of the service, and be prepared to take it on under the overall guidance of the state. To ensure sustainability, INTA and provincial administrations would be encouraged to assume responsibility for the FDOs in the second half o f the project. To promote the use o f innovative and promising privately financed extension models, the project will evaluate these in detail and disseminate the results to other producers (see Annex 19 for details). 17. To improve communications between stakeholders in the field, the project will, through the FDOs, actively promote Mesas Forestales (roundtables) which will serve not only to articulate stakeholder views to both provincial and federal authorities, but also serve as discussion fora for the stakeholders themselves. By the mid term review, local stakeholders would be expected to assume responsibility for the mesas. 18. To help focus attention on environmental issues, the project would also promote the inclusion o f plantation forestry in ongoing environmental education programs in schools, and promote broad-based plantation orientated environmental education programs at regional and provincial levels. 19. The subcomponent will include the following activities: (a) Plantation Forestry Research; (b) Technology Transfer and Promotion o f Best Practice; (c) Support to Private Forestry Extension Services; (d) Communications and Outreach (Mesas); and (e) Environmental Education. 20. Subcomponent 2.3: Assistance to Small and Medium Scale Sustainable Forestry (Total Cost US$10.19 Million). To promote the involvement o f small and medium-sized producers intree planting and small-scale wood processing, the subcomponent would help intwo 65 ways (Annex 16). First, it would provide technical assistance, training, and funding to help small producers set up producer groups such as associations, cooperatives, and unions. It would also help strengthen existing groups. At present there are 90 small- and medium-sized forestry producer groups (PyMEs) in Argentina with 5,500 members - or 60 members each on average. The project would aim to create at least 25 new producer groups or associations. Second, working within the Best Management Practice (BMP) framework and Law 25,08O/Resolution 800/2005, which provides grants for tree planting and plantation management, the subcomponent will assist small and medium sized producers to undertake plantation management and harvesting. Assistance would only be provided to producer groups, or individual producers willing to join such groups. 21. Eligible activities would include nursery management, tree planting, agro forestry, plantation management, fire protection, harvesting, wood preservation, small scale processing, marketing o f plantation products and safe working practice (see Annex 16). No funds would be allocated for actual planting, as grants for this purpose are already available under Law 25,080. Rather, the project would aim to help recipients to make better use o f the funds and help the DF better promote, administer and monitor this program o f assistance. It would also assist small producers to undertake silvicultural operations themselves by providing them with hand tools for such operations as pruning, thinning, felling, extraction and fire protection. To help small producers develop small-scale wood and non-wood products processing, limited funds (US$250,000 total) would be provided to pilot these on a cost sharing basis. The aim would be establish viable demonstration models which other producer groups might wish to replicate. The subcomponent would be implemented through partner arrangements with qualified institutions such as NGOs, academic institutions and provincial institutions who would work directly with the small producers. However, during years 1 and 2 the possibility of working directly with producer organizations who may wish to select their own service provider would also be examined. 22. Each year the project would invite (through the press) pre qualifying organizations to submit project profiles inthe project area (see Annex 16). Submissions would then be evaluated by an inter-institutional commission. Institutions submitting eligible profiles would then be invited to submit detailed proposals for evaluation. Using eligibility criteria as a reference point (see Annex 16) the commission would then evaluate and select winning submissions. Thereafter, a contract would be entered into with the institution concerned. The contracted entity would undertake the approved development proposals as a package with the small producers. An upper limit o fUS$1,800 would apply to assistance providedto individual beneficiaries ina group, with an upper limit o f US$lOO,OOO being applied to more advanced groups who wish to undertake pilot forest product processing operations. Each producer group would qualify to receive funds on a one-time-only basis. A cap o f US$300,000 would be placed on activities to be financed by anyone co executor in any one funding period (convocatoria). The subcomponent would aim to provide assistance to 5,000 small and medium sized producers. Technical auditing and impact evaluation would be carried by independent consultants contracted through the project. 66 23. The subcomponent will include the following activities: (a) Organizational and Small Business Management; (b) Assistance for Productive Plantation Activities (Annex 16); and (c) Promoting sustainable practices. 24. Subcomponent 2.4: Project Administration, Monitoring and Evaluation(Total Cost US$1.96Million). This subcomponent will support the efficient and effective implementationo f the component, including the administration of loan and counterpart funds, execution of technical activities financed under the project, and procurement o f goods and services. This subcomponent will permit the hiring of a core project teams (see Annex 6 for details) to execute the project. The teams will also be responsible for maintaining relations with national and provincial governments, private sector organizations, and NGOs; participating in relevant national and international events; and disseminating information on the project and its achievements. This subcomponent will also support the design and implement a program to collect baseline data, monitor the outcomes o f project activities, evaluate the results, and incorporate the findings into the implementation o f the project. The subcomponent will include activities relating to the mid-term review and final evaluation o f the project. The results o f ongoing monitoring and evaluation will be disseminated at local, national and global levels to support the goals o f sustainability. 25. Included under this subcomponent are: (a) Hiringo fcore project administration teams; (b) Financial administration o f project funds; (c) Technical administration o f project activities and procurement activities; (d) Development and implementation o f a monitoring and evaluation program; and (e) Mid-term review and final evaluation o f project. 26. Component 3. Protected Areas and Conservation Corridors (Executing Agency: APN) (Total Cost US$35.05 Million). This component would have the twin objectives o f strengthening APN's capacity to manage existing national protected areas and to set the stage for expanding protection to the insufficiently protected and highly-threatened Chaco ecosystem. Specifically, it aims to strengthenmanagement capacity o f eleven priority protected areas and to upgrade APN's institutional capacity and outreach in Buenos Aires. Infrastructure, training, equipment and incremental costs would be financed in the existing parks, along with the renovation and modernization o f one o f APN's historic buildings in Buenos Aires. Park investments would be complemented and enhanced by sustainable development activities that will involve communities around the protected areas in conservation and income-generating activities. 27. The specific Chaco regional focus would bring APN, in cooperation with SAyDS, SAGPyA (including INTA) and the provinces, together in a process to establish a biological- sustainable use corridor within the Argentine Chaco with potential links to the Paraguayan and Bolivian Chaco. Through a process that involves participation by regional stakeholders, support would include developing the legal and policy basis for landuse planning within the corridor (at 67 the local and sub-provincial levels) to secure the integrity, viability, and long-term conservation of core areas. 28. This component consists of the following subcomponents: Subcomponent 3.1: Strengthened Management of Protected Areas (Total Cost US$32.40 Million). This subcomponent will build upon the important advances and experiences of the APN in strengthening park management. Eleven existing protected areas have been pre-selected for strengtheningbased on the criteria of increasing representativity of ecosystems within the SNAP system and potential to improve local livelihoods by increasing economic opportunities through tourism and sustainabledevelopment activities. The protected areas selectedinclude: Calilegua National Park (Yungas); Los Cardones National Park (Monte and Puna); Campo de 10s Alisos National Park (Yungas); Rio Pilcomayo National Park (HumidChaco); Sierrra de las QuijadasNationalPark (Monte and Dry Chaco); TalampayaNational Park (Monte and Dry Chaco); BosquesPetrificados National Monument (Patagonian Steppe); Perito Moreno National Park (Patagonian Steppe, Magellanic Subpolar Forests, and Glaciers); Campos del Tuyu ProtectedArea (Pampas Grasslands);28 BarituNationalPark and ElNogalar Reserve (Yungas); and Tierra del FuegoNationalPark (Magellanic Subpolar Forests). 29. Strengthening activities includeinfrastructure for basic managementincludingpark guard facilitieshousing, storage and maintenance infrastructure, information and outreach centers, research facilities, and improvements for park access. Other activities include updating baseline information for enhancing management plans for the parks, training and capacity-building for personnel, boundary measurements and demarkation for four parks and increasing local- community involvement through support for sustainable development and conservation activities. These activities will improve the park management and benefit-sharing from the opportunities that increased tourism and other sustainable activities can bring the communities if properly designed and executed. The managementplans establish the programs to be carried-out ineachparkandinvolve local-communities andother stakeholdersintheir preparation. 30. In addition this component will include the restoration and upgrading of the main APN office inBuenos Aires. This historic building set inthe principal tourist thoroughfare of Buenos Aires, provides the ideal backdrop for outreach and introducing national and international tourists to the national park system as well as provide opportunities for environmental education and information to citizens of the capital city. A state-of-the-art information and outreach center will be incorporated into the building for this purpose. Inaddition, the upgrading of offices will also improve the functional use and distribution of space within the building for optimal service provision to the parks system. The Campos de Tuyu protectedarea is being donated to the APN by aprivate foundation. Once the donation is finalized and the legal ownership is transferredto APN, the new protectedarea would be eligible for the hndingof infrastructureworks. 68 3 1. Subcomponent 3.2: Institutional Strengthening for Improved Outreach and Management (Total Cost US$0.57 Million). The APN has a long tradition o f park management in relation to other countries o f Latin America. Ninety-eight percent o f the parks have APN presence and relatively effective management which i s almost unique for developing countries. However, the institution is inneed o f updating its admininstrative and communication capacities. Current administrative systems are outdated, with minimal use o f information systems and distributed in many different parts o f the capital city and the country. This in turn diminishes the capacity to provide effective and efficient support to the parks system. At the same time the image and communication o f APN follows along this same line. The corporate image i s in need o f updating to provide effective outreach with the different target groups that range from decision-makers to the individual citizen and the international tourist. 32. Regarding communication, the internal flow o f information i s inefficient and access by decentralized users and personnel i s limited. Access to databases o f different types including the Biodiversity Information System (supported under the current GEF project) and the accounting system is limited. In addition the databases are not linked to other sources o f information to make them more user-friendly and more useful to parks personnel, external stakeholders, and cooperating institutions. 33. This subcomponent aims to achieve these institutional improvements this through two key improvements within the structure o f the institution. The first activity involves improving the corporate image and communication system. The second activity will establish a modern, integrated information management system for the institution designed with the internal and external user in mind for greater effectiveness in the park system management and greater outreach. 34. Investmentsunder this subcomponent would include: (a) Consultancies for developing both the communication and corporate image strategy and the internal information management needs analysis; (b) Investments in information systems, corporate information and communication materials; and (c) Training and capacity buildingincommunication. 35. Inaddition the monitoring and evaluation functions under this component should review the effectiveness in regard to improvements in corporate image, the use o f the information systems, and gains inefficiency. 36. Subcomponent 3.3: Consolidationof the Gran Chaco ConservationCorridor (Total Cost US$0.30 Million). APN has a traditional management approach regarding the national park system. Most protected areas under the SNAP fall within categories Ito IV o f the IUCN system, indicating strict conservation measures with little intervention and use within the boundaries o f declared protected areas. Given the expanding productive landscape, the core areas o f the SNAP are becoming isolated and require the establishment o f conservation corridors in order to maintain the gene flow between the areas, reduce fragmentation, and provide some 69 hedge for adaptation o f biodiversity to climate change. APN has also recognized the need and potential to increase conservation areas through greater integration o f the landscape within the system under new categories with more flexible management regimes. These regimes include the people that are part o f the landscape and their economic and cultural activities within this context. 37. Giventhe critical state o f the Dry Chaco ecosystem in regard to deforestation trends and the limited number o f protected areas, APN has decided to embark upon the establishment o f a Gran Chaco Conservation Corridor that would link the existing and potential future core areas among themselves and with the Bolivian and Paraguayan parks systems that are currently establishing transboundary links. Certain advances have been made by APN to date in conjunction with the SAyDS, NGOs, and local provincial governments o f the Chaco. Workshops and some technical design work identifying important conservation areas and potential corridors have already been advanced.29 38. This subcomponent would provide a more formal platform for advancing the corridor through: (i)increased dialogue with and among the Chaco provinces (ii)signing o f memorandums-of-understanding with the provinces o f Formosa, Chaco and Santiago del Estero, (iii)consensus-building amongthe stakeholders, nationalandprovincial institutionsregarding the boundaries and conservation priorities within the corridors inthese provinces; (iv) a strategy for the effective conservation o f these corridors including conservation incentives, policy and legal implications as well as the potential establishment o f new conservation or multiple-use areas. 39. Subcomponent 3.4: Project Administration, Monitoringand Evaluation (Total Cost US$1.78 Million). This subcomponent will support the efficient and effective implementationo f the project, including the administration of loan and counterpart funds, execution of technical activities financed under the loan, and procurement o f goods and services. This subcomponent will permit the hiring of a core project team (see Annex 6 for details) to execute the project. The team will be responsible for maintaining relations with national and provincial governments, private sector organizations, and NGOs; participating in relevant national and international events; and disseminating information on the project and its achievements. This subcomponent will also support the design and implement a program to collect baseline data, monitor the outcomes o f project activities, evaluate the results, and incorporate the findings into the implementation o f the project. The subcomponent will include activities relating to the mid-term review and final evaluation o f the project. The results o f ongoing monitoring and evaluation will be disseminated at local, national and global levels to support the goals o f sustainability. 40. Included under this subcomponent are: (a) Hiringof core project administration teams; (b) Financial administration o f project funds; (c) Technical administration o f project activities and Procurement activities; (d) Development and implementation o f a monitoring and evaluation program; and 29APN y Provincia de Formosa. 2005. Diseiio de una Estrategia Regional de Corredores de Conservacidn en el Gran Chaco Argentino. UICN/Emb.Britanica. 70 (e) Mid-termreview and final evaluationof project. Annex 5: ProjectCosts ARGENTINA: SustainableNatural Resources Management Project Local Foreign Total Project Costs By Component us us us $million $million $million 1. Native Forests and Biodiversity (Technical 4.24 0.13 4.37 Assistance) 1,l Formulationof aNative Forests and 1.43 0.01 1.44 Biodiversity Project 1.2 Pilot Activities. Studies and Outreach 2.81 0.12 2.93 2. Sustainable Plantation Forestry 27.54 0.91 28.45 2.1 Institutional and Policy Development 6.68 0.68 7.36 2.2 Research, Technology Transfer (TT) and 10.27 0.2 10.47 Extension 2.3 Assistance to Small and Medium Scale 9.04 9.04 Sustainable Forestry 2.4 ProjectAdministration, Monitoring and 1.55 0.03 1.58 Evaluation 3. Protected Areas and Conservation 26.96 0.07 27.03 Corridors 3.1 StrengtheningManagement of Protected 24.83 0.05 24.88 Areas 3.2 Institutional Strengtheningfor Improved 0.47 0.01 0.48 Outreachand Management 3.3 Consolidation of the Gran Chaco 0.26 0.26 Conservation Corridors 3.4 ProjectAdministration, Monitoring and 1.40 0.01 1.41 Evaluation Baseline Costs 58.74 1.11 59.85 PhysicalContingencies 1.94 0.03 1.97 Price Contingencies 9.74 0.09 9.83 Front-end Fee 0.15 0.15 Total Project Costs 70.42 1.38 71.80 71 Annex 5: ProjectCosts Table 5-2Project Financing by Components and Subcomponents Components/ Total IBRD Government Beneficiaries subcomnonents I I $ YO $ YO $ YO 1. Native Forests and 100 3.77 79 0.98 21 Biodiversity - 1.1 Preparation Unit 100 1.29 78 0.36 22 for Program Development - 1.2 Pilot Activities in 1 3.10 100 2.48 80 0.62 20 Best Management Practices, PES, and - 100 26.49 83 2.33 Forestry - 2.1 Institutional and 8.5 1 100 8.46 99 0.05 Policy Development - 2.2 Research, 11.19 100 11.08 99 0.11 1 Technology Transfer (TT) and Extension - 2.3 Assistanceto Small 10.19 100 5.13 50 2.03 20 and Medium Scale I - 2.4 Project 1.96 100 1.82 93 0.14 7 100 29.59 84 5.46 16 Conservation Corridors - 100 28.01 86 4.39 14 Managementof ProtectedAreas - 3.2 Institutional I 0.57 100 0.36 64 0.21 36 Strengtheningfor ImprovedOutreach l and Management - 3.3 Consolidationof I 0.30 62 0.11 38 the Gran Chaco Conservation Corridor - 3.4 Project 57 0.75 43 Administration,M&E - I Front-end Fee .- 100 TOTAL I 71.80 100 I 60.00 84 8.77 12 72 Annex 6: ImplementationArrangements ARGENTINA: SustainableNatural Resources ManagementProject InstitutionalArrangements 1. The Project will be financed by a US$60 Million loan from the the World Bank to the Government o f Argentina. The loan funds will be deposited directly into three special accounts in the Banco de la Nacidn. The national counterparts for the project are: The Secretariat o f Agriculture, Livestock, Fishing, and Food (Secretaria de Agricultura, Ganaderia, Pesca y Alimentos, or SAGPyA) and its Forestry Directorate, The Secretariat o f Environment and Sustainable Development or SAyDS, and the National Parks Administration or APN (financial management and procurement arrangements can be found in full detail in Annex 7 and 8, respectively.). 2. Given the three different institutions involved, each component will require slightly different institutional arrangements for execution given the different approaches and differential capacities ineach institution. Institutional Arrangements Sustainable Natural Resource Management Exec. Agency Coord. -+ World Bank Note For flnanaal flow diagram, see Annex 1 Committee I Service Providers & Executing Agents Including NGOs, governmental orgs., universities, consulting firms I 1,?, T l lnstitutionai' ' , I Small and Medium and Large Beneficiaries/ Producer/Communities Provinces Subprojects 73 ExecutingAgencies 3. The Project will be implemented by the primary national agencies o f the Government o f Argentina with responsibility for native forests, planted forests, and national parks. Component 1, Native Forests and Biodiversity y, will be implemented by the Native Forests Directorate o f the Secretariat o f Environment and Sustainable Development. Component 2, Sustainable Plantation Forestry, will be implemented by the Forestry Directorate (FD) o f the Secretariat o f Agriculture, Livestock, Fisheries and Food (SAGPyA), and the National Parks Administration will be responsible for Component 3, Protected Areas and Conservation Corridors. Each agency will have its own technical and administrative unit that will be responsible for the technical, financial, procurement and administrative oversight o f their component. Technical teams located in each agency unit will be responsible for the direct implementation o f project activities. Service providers will be contracted for different subcomponents and activities under the conditions described below. Consultativeand Advisory Bodies 4. The project will take advantage o f existing consultative mechanisms, and where necessary create new mechanisms. In the case o f component 2 Forestry Roundtables are envisioned to incorporate stakeholder perspectives into the official forestry dialog. Inthis way a diverse set o f actors involved in the plantation forestry sector are incorporated into project implementation, as well as allow a more effective dissemination o f project information and results among different stakeholder groups. Other governmental institutions such as the Institute for Agricultural Technology (INTA), universities, and NGOs will play an advisory role for relevant aspects o f the project, as they did during project preparation and may play a role in implementation through subprojects and research in forest genetics. In addition, SAGPyA involves INTA as a co-executor for one single activity on Genetic Improvement, as the state needto retain control o f the intellectual property rights for improved genetic material. 5. Protected Areas also have management committees to incorporate stakeholder views in regard to parks management. A coordination mechanism is being established in regard to the Chaco Corridor as well in the context o f Component 3 given the need to link activities outside the core areas with provincial, municipal governments as well as communities and other national-level institutions. TechnicalAdvisory Committees 6. Technical Advisory Committees may be established to advise the project on specific matters relating to project implementation, including monitoring and evaluation, reviewing subproject proposals, and provide scientific and technical guidance where deemed necessary. Members will be recognized leaders in the fields o f natural resource management and biodiversity conservation ineach o f the target regions o f the project. 7. Committee members will be proposed by academic institutions, extension agencies and others involved in land and or plantation management during the first six months of the 74 project. The agencies will review the proposed candidates and select those with the most appropriate profiles for the work to be on the committee. 8. Among the functions o f this Technical Advisory Committees will be to: (a) Review the semi-annual and annual reports provided by the monitoring and evaluation activity and conduct interviews with project and agency specialists involved inthe various components; (b) Provide feedback to the monitoring and evaluation process and make recommendations for adjustment o f monitoring techniques, as may be required, in order to enable the effective use o f the monitoring system to guide project implementation; and (c) Advise the administrative unit on the results o f the monitoring assessment, and their potential impact on measures needed to improve execution. 9. The committee will provide feedback within one month o f the receipt o f the monitoring reports and conduct a formal meeting with the administrative unit to discuss their findings. A brief joint report o f the evaluation containing the major issues and recommendations will be elaborated and included as an annex to the periodic progress reports submitted to the Bank. Associated Project 10. The Project i s partially blended with the GEF Biodiversity Conservation in Productive Forest Landscapes project. The two projects were designed together, (particularly component 2) and will be implemented inclose coordination by the same project team working out o f the same office as the Sustainable Plantations Component. This will increase the synergies between the projects, allowing for close coordination of activities while reducing costs. 11. The Global Objective o f the GEF Biodiversity Conservation in Productive Forest Landscapes project i s to increase the integration o f biodiversity-responsible practices and policies into the plantation-forestry sector at the national level and in select provinces. It will do this by will promote the mainstreaming o f biodiversity conservation into plantation forestry practices, thus creating productive options that are both economically and ecologically viable. The project will show that, when properly established and managed, plantation forests do not compromise biodiversity and do provide multiple values: restoring degraded and fragmented landscapes; creating conditions in soils and the understory favorable to biodiversity; and providing critical ecosystem services, such as watershed protection and carbon secuestration. By piloting innovative planning and management techniques and supporting their inorporation into both government regulations and private sector practices, the project will help ensure that the future economic contributions o f the forestry sector go hand in hand with the protection o f globally and regionally important biodiversity in Argentina. B y integrating and institutionalizing conservation into plantation development and providing the tools, knowledge, and incentives to land owners and policy makers, this project will contribute to Argentina's national development, while fostering environmental sustainability and biodiversity conservation. 75 12. Project efforts would focus on (i) federal and provincial forestry agents, extension agents, and other civil servants working with plantation forestry, as well as independent researchers; (ii) large-scale producers seeking to adopt conservation best practices; and (iii) small- and medium- sized producers integrating biodiversity-friendly techniques into forestry and agroforestry operations. A summary o f the project objectives, main components, and outputs i s included in annex 18 o f the PAD. ImplementationArrangements 13. The proposed Sustainable Natural Resources Management Project will be implemented by SAGPyA, SAyDS, and APN. The three institutions are familiar with the technical and institutional requirements o f the proposed projects, which are similar to those o f the recently closed Forestry Development Project, Native Forests Project and Protected Areas Project. By utilizing established human capacity, systems, and procedures, these arrangements will greatly reduce the initial training and costs required to correctly implement the project and will assure much higher quality administration and management. The technical and supervisory capacity o f these institution execution units has been evaluated and found to be sound. 14. During implementation, three small TFO's will focus specifically on execution o f the components and be tightly integrated into line functions o f the institutions to avoid building parallel structures. These units are to be established with a basic structure consisting o f a National Director from the line agency, an Executive Coordinator responsible for oversight o f the entire unit and its operations, with individual thematic specialists acting as managers for the technical components o f the projects. Consultants will also be recruited to fill knowledge gaps as they arise. A team composed o f an accounting specialist, accounting assistant, procurement specialist, and administrative assistants will support the technical teams. 15. All other staff working on the project in the different subcomponents will be financed through counterpart funds. The loan will finance the incremental costs o f additional Forestry Directorate Agents in the case o f component 2 for the first three years; after that costs will be absorbed by the national and provincial governments. 16. The Coordinators will provide overall technical leadership to the components, direct the activities o f the technical specialists; serve as contact points for international organizations, the national government, NGOs and private industry and the participating provincial governments; backstop the work o f the technical advisory committee; and; in cooperation with thematic specialists prepare the required documentation for the mid-termreview and final evaluation at the end o f the project's tenure. 17. The administrative unit teams will be responsible for project coordination, administration, and management, as well as for procurement and financial management. (For full details about these last two functions, please see Annexes 7 and 8.) This includes executing o f national and provincial activities, coordinating with national authorities, establishing relationships with related projects and organizations, representing the project at relevant events, hiring consultants, monitoring results and impacts, and interacting with civil society. Other responsibilities include 76 fostering cooperation with other partners, promoting the exchange o f natural resource management and conservation information, and coordinating and recording counterpart financing. The administrative unit will also prepare annual budgets, annual operating plans and procurement plans, as well as technical project reports, for submission to the Bank. 18. Specialized consultancies may also be hired to supplement the TFO in the implementation o f specific activities. 19. Specialized consultancies will be hired for independent monitoring and evaluation o f project activities, in order to guarantee the objectivity o f this oversight. The Coordinators will be responsible for assuring that the results o f project monitoring are incorporated into the project strategy and that any modifications needed inthis strategy are made, while the technical staff, in coordination with the administrative staff, will be responsible for incorporating the results o f the monitoring consultancy into regular project reports. The monitoring and evaluation o f project results will also draw on the resources and experience o f institutions with specific capacity in monitoring, evaluation and systematizing information within each executing agency (such as the SAGPyA geoprocessing and the SAyDS Native Forest Inventory offices among others), as well as other organizations including the academic sector, research institutions, and specialized NGOs. The results o f ongoing monitoring and evaluation will be disseminated at local, national and global levels to support the goals o f sustainability, and will be incorporated as necessary into the project implementation strategy. 20. Subproiect Implementation. Implementation for the small- and medium-sized producers/local community subprojects (components 2 and 3) will be as follows: The executing agents would disseminate, via the press and other means, information on the subproject program, including objectives, guidelines, and criteria. Then, the executing agencies will invite interested institutions and organizations in the project area to apply for pre qualification according to criteria established in the Operational Manual. This will allow interested pre qualifying institutions to contact small producers and develop proposals with them jointly. Once this i s done, a call for proposals will be issued once a year in the press. Pre qualifying institutions (NGOs, academic institution, INTA and provincial institutions) will be eligible to apply for subprojects. Proposals will be submitted first to the local committees for screening. Once an initial feasibility screening has been done, the proposals will be sent to their respective TFO's. The TFO's will constitute a panel of TFO staff, provincial officials, regional staff, and subject matter experts to evaluate and select proposals for financing. Contracts will be signed between executing agencies (SAyDS, SAGPyA or APN) and the selected executing agents. Financing for the subprojects will be transferred to the executing agent, and they inturnwill provide the small or medium producers with the services described in the proposal. The FDOs will provide some support for oversight and monitoring o f subproject implementation, with the TFO's overseeing the entire program and monitoring a representative sample o f subprojects through technical audits and impact evaluations. 77 Annex 7: FinancialManagementand DisbursementArrangement ARGENTINA: SustainableNaturalResourcesManagement Project ExecutiveSummary and Conclusion 1. A Financial Management (FM) Assessment o f the arrangements for the proposed roject was performed in accordance with OP.BP 10.02 and in line with Bank specific guideline$'. The objective o f the assessment i s to determine whether the FM arrangements for the proposed operation are acceptable to the Bank. The entity's arrangements are considered acceptable if its budgeting, accounting, internal control, funds flow, financial reporting and auditing arrangements: (i) are capable o f correctly and completely recording all transactions and balances relating to the project; (ii)facilitate the preparation o f regular, timely and reliable financial statements; (iii)safeguard the project's assets; and (iv) are subject to auditing arrangements acceptable to the Bank The assessment conclusion is that the financial management arrangements are acceptable because they meet minimum Bank requirements. Every executing agency have qualified and experienced staff in World Bank-financed activities, capable o f undertaking the financial management functions for the project. 2. There i s a moderate element o f risk given the fact that 3 independent entities will be involved in project implementation. However, proposed mitigating measures will adequately cope with the identifiedrisks.A detailed risk assessment i s provided on the Risk Section. 3. The total project costs are US$71.80 million, o f which, IBRD financing comprises USD 60 million (84%), and government and beneficiary financing amounts to US$l 1.8 million (16%). According to the Country Financing Parameters approved for Argentina on May 11,2005, by the Regional Vice President, and noted in Annex J o f the current Argentina CAS, dated May 4, 2006, the Bank may finance up to 100% o f project expenditures in exceptional circumstances. However, OM average, it i s anticipated that Bank's financing share in future projects i s expected to continue at the current limit o f 60%. 4. Advanced versions o f the three operational manuals (OM) comprising the chart o f accounts for all the components o f the project; draft formats o f interim and annual financial statements and a FM Section with administrative procedures and processes for the project implementationwere submitted, reviewed, and found acceptable to the Bank overall. CountryIssues 5. The Argentine CFAA indicates that overall control risk of public finances at federal level could be considered moderate. The overall Bank portfolio fiduciary risk has increased from 30Financial Management Practices in World Bank-Financed Investment Operations; document issued by the FM Board on November 3,2005 78 moderate at the time o f the 2004 CAS to substantial in late 2005. The Country Assistance Strategy 3'(CAS) states that at federal level the FMportfolio risk i s moderate. 6. Fiduciary Action Plan. The Argentina CAS includes a Fiduciary Action Plan (FAP) to help strengthen the operating environment for Bank projects in Argentina. The FAP basically consists o f three components: raising public awareness, bolstering Bank fiduciary monitoring and increase transparency and competition practices in public procurement. Regarding FM the Plan aims at: (i) improving timeliness o f external audit compliance for Bank-financedoperations; (ii)increasing strategic focus and coverage of supervision tools assessing fiduciary risk in operations; and (iii) complementary actions such as support streamlining and harmonization o f fiduciary processes and reliance on country systems when these meet adequate fiduciary standards. 7. Project fiduciary measures link to the obiectives o f the FAP. The following measures are part o f the project FMarrangements to contribute to meeting the objectives o f the FAP: (a) Use o f country system. The National Government system specially designed for the execution of multilateral financed operations, which is legally required (UEPEX) will be utilized to maintain the project accounts o f the 3 components. UEPEX is compliant with Bank requirements, provides a good ex-ante internal control framework and i s in line and better integrated with the national budget execution process; (b) Administrative procedures comprising roles and responsibilities o f each implementing agency relating to fiduciary aspects o f the project are clearly defined in the Operational Manuals (OM) o f each component and are acceptable to the Bank as well; (c) Continuous support to AGN efforts to ensure timely audit compliance for the project. Upon audit findings, follow up on the implementing agencies' action plans to address the auditors' recommendations; and (d) FM supervision to ensure continuous adequacy o f financial management arrangements, evaluate project internal control and update assessed risk. At least one on-site visit integrating the project team i s planned for the first year. RiskAssessmentandMitigation 8. The risk assessmentprocess aims at identifying FMrisksso as to take appropriate measures mitigating identified project risks. This enables the Bank make decisions on the appropriate level o f supervision intensity allocating FMresources ina manner consistent with assessedrisks. While every effort has been made to minimize risk stemming from financial management, certain risks exist ina project o f this type. However, proposed mitigating measures will adequately cope with the identifiedrisks. 3 'Argentina Country Assistance Strategy. Period2006-2008; May 4,2006. B. Fiduciary Assessment. Financial Management 79 Table A7-1 RiskAssessment and Mitigation Measures Risk Risk RiskMitigatingMeasures Condition Rating(*) embedded in Project Design 1 Country Level Modest FiduciaryAction Plan(FAP) No 1 EntityProject Level Modest No All ofthe implementingagencies have qualifiedand experienced staff in WB-financedoperations. I Budgeting Low - A specific line for the project No inthe implementingentities' annual budget will be created and maintainedduring project implementation 1 Accounting Modest - Use of Government system No (UEPEX) designed for multilateralfinancedprojects. - 1 InternalControl Modest No 1 Funds Flow Modest - Specific procedures acceptable No Multiple implementingagencies to the Bank includedinthe may pose some fiduciary risk. Operational Manualto ensure hnds are used for the intended purposes.Close FM supervision during start up period. - Payments for eligible expenditures inthe Provinces Subcomponent 1.2/ 2.1 will flow directlyfrom SAYDS/SAGPyA to beneficiaries. There will be no advances to provincial agencies. 1 FinancialReporting Modest - Use of Government system No (UEPEX) designedfor multilateralfinanced projects 1 Auditing Modest Continuous support to AGN to No ensure timely audit compliance Overall ResidualRisk rating IModest (*) L= Low M= Modest S= SubstantialH= High 9. Prior to the awarding of subprojects and to the first disbursement to any intermediary agent, the executing agencies would carry out a fiduciary assessment of the proposed intermediary agent, satisfactory to the Bank, for awards up to US$250,000 Inthe case of awards exceeding US$250,000 the Bank would conduct said assessment. The maximum balance, at any given time, advancedand unaccountedfor, to each intermediary agent, for the implementation of subprojects shall not exceedthe equivalent to US$lOO,OOO. 80 10. In respect to the proposed subprojects to be implemented by SAGPyA (Component 2) and APN (Component 3), the borrower, through its executing agencies, will design, implement and thereafter maintain during the execution o f the Project, a fiduciary monitoring program acceptable to the Bank for the purposes o f producing quarterly (or any interval acceptable to the Borrower and the Bank) reports on the fiduciary aspects and physical performance o f the Subprojects financed under the Project. Strengths and Weaknesses 11. Strengths. Major strengths on FM are: i)all implementing agencies have skilled staff capable o f fulfilling the project needs. Previous experience in implementation o f WB-financed projects can also count as an asset; ii)use o f the Government tool for multilateral-financed projects (UEPEX system) to maintain the project accounting records. 12. Weaknesses. The fact that project implementation will be shared by three separate entities may dilute control and pose some risk. ImplementingEntities 13. The proposed Sustainable Natural Resources Management Project will be implemented by SAGPyA, SAyDS, and APN. The three institutions are familiar with the institutional and fiduciary requirementso f the proposed project, which are similar to those o f the recently closed Forestry Development Project32 and Native Forests and Protected Areas Project and the Biodiversity Conservation Project33as well. B y utilizing established human capacity, systems, and procedures, these arrangements will greatly reduce the initial training and costs required to correctly implement the project and will assure much higher quality administration and management. 14. Each agency will be responsible for the FM functions o f the component which is to be implementedby the same; comprising budgeting, accounting and reporting including preparation o f interim unaudited financial reports (IFR), which will include counterpart contributions, internal control, flow o f funds and external auditing. Each entity will be accountable for the financial management arrangements o f the component under its implementation responsibility and will produce a set o f interim and annual financial statements. Thus, there will be three segregated sets o f interimreports and annual financial statements to be audited separately. 15. The Instituto Nacional de Tecnologia Agropecuaria (INTA) is proposed to act as co- executor o f Subcomponent 2.1.3 for an amount o f approximately 1.8 million o f IBRD funds. An implementation agreement will be signed between SAGPyA and INTA, and will include the required FM arrangements acceptable to the Bank to ensure that funds are used for the purpose intended. A section describing detailed FM procedures for this subcomponent and acceptable to 32Forestry Development Project (PO06040 Loan 3948 AR). 33GEF- Biodiversity Conservation Project (PO39787 TF 28372 AR). Native Forests and ProtectedAreas Project (PO40808 Loan 4085-AR) 81 the Bank as well, will be incorporated into Component 2 Operational Manual once the SAGPyA- INTA agreement is signed. Budgetingand Accounting 16. Budget execution in Argentina is recorded inthe Federal Government integrated budget and accounting system (SIDIF, Sistema Integrado de Informacibn Financiera) and subject to control over the budgetary execution process. All o f the units have skilled and experienced financial management staff capable o f fulfilling the budgeting project needs. It i s required that a separate budgetary line in APN, SAyDS and SAGPyA annual budgets be set to allocate budgetaryresources and keeptrack o fthe project execution specifying the sources o f funds. The UEPEX system will be used to maintain the project accounting records, it i s an in-house information tool developed by the Federal Government which use i s mandatory for multilateral financed operations at federal level and i s considered adequate for accounting purposes. The project chart o f accounts will reflect disbursement categories, project components and sources o f financing. The cash basis o f accounting will be used for recordingthe project transactions. Internal Control and Internal Auditing 17. The Government entities in Argentina are subject to internal audit o f the General Syndicate o f the Nation (SIGEN) which is the Federal Government's internal audit agency under the jurisdiction o f the executive branch. SIGEN supervises and coordinates the actions o f Internal Audit Units (IAUs) in all federal agencies, approves their audit plans, conducts research and independentaudits, systematizes the information from its own reports and those produced by the IAUs. If necessary, the internal audit reports on the project performance will be reviewed duringproject supervision. FundsFlow and DisbursementArrangements 18. The following DisbursementMethods may be usedunder the Loan: (a) Reimbursement; (b) Advance; and (c) Direct Payment. 19. To facilitate project implementation each o f the agencies will operate a segregate Designated Account (DA) in US dollars. As it i s the normal procedure in Argentina, the Designated Accounts will be open in Banco de la Nacidn Argentina (BNA). Every administrative unit o f the 3 entities will manage the DA for its components and will be also responsible for preparing the bank account reconciliation on a monthly basis. Funds deposited into the DAs as advances will follow the Bank's disbursementoperating policies and procedures described inthe Disbursement Letter. Withdrawals from the Designated Accounts will be solely made for payments o f eligible expenditures. As eligible expenditures arise, funds will be converted to local currency and deposited into a dedicated payment account open in BNA in 82 pesos from which payments will be made as incurredby each agency. The proposedceilings for advances and supporting documentation that should be provided to the Bank for reporting on the use of advances of each component are described inthe paragraphfollowing this. 20. Component 1. Native Forests and Biodiversity; implementing agency SAyDS. The proposedceiling to be on deposit to the designatedaccount is US$250,000. (a) Supporting documentation for documenting project expenditures of Component 1 under the advance and reimbursement methods will be Statements of Expenditures (SOEs) for all expenditures below the following thresholds: Payments for Goods against contracts valued at less than US$200,000; payments for Consulting Firms against contracts valued at less than US$100,000; payments for Individual Consultants against contracts valued at US$50,000 or less. All consolidated SOEs documentation will be maintained by each agency for post- review and audit purposes for up to one year after the final withdrawal from the loan account; (b) Records evidencing eligible expenditures (e.g., copies of receipts, suppliers/contractors' invoices) for payments for Goods against contracts valued at US$200,000 or more; Consulting Firms against contracts valued at US$lOO,OOO or more; and Individual Consultant against contracts valued at US$50,000 or more; (c) Direct Payments supporting documentation will consist of records (e.g.: copies of receipts, supplier/ contractors invoices). The minimum value for applications for direct payments and reimbursementswill be US$50,000. 21. To avoid additional complexities and increase control over the uses of funds, payments for goods, and consultants' services under Subcomponent 1-2, (development of working partnershipswith the provinces inthe Chaco) will be made by SAyDS directly to beneficiaries. 22. Component 2. Sustainable Plantation Forestry; executing agency SAGPyA. The proposed maximum amount for advancesto the designatedaccount is US$2,600,000. 23, Supporting documentation for documenting project expenditures of Component 2 under the advance and reimbursement methods will be: (a) Statements of Expenditures (SOEs) for all expenditures below the following thresholds: Payments for Goods against contracts valued at less than US$200,000; payments for Consulting Firms against contracts valued at less than US$lOO,OOO; payments for Individual Consultants against contracts valued at US$50,000 or less; payments for Subprojects (customized SOE) and payments for Civil Works against contracts valued at US$300,000 or less. All consolidated SOEs documentation will be maintained by each agency for post-review and audit purposesfor up to one year after the final withdrawal from the loan account; 83 (b) Records evidencing eligible expenditures (e.g., copies o f receipts, suppliers/contractors' invoices) for payments for Goods against contracts valued at US$200,000 or more; Consulting Firms against contracts valued at US$l00,000or more; and Individual Consultant against contracts valued at US$50,000 or more, and Civil Works against contracts at US$300,000 or more; and (c) Direct Payments supporting documentation will consist of records (e.g.: copies of receipts, supplier/ contractors invoices). The minimum value for applications for direct payments and reimbursements will be US$500,000.To avoid additional complexities and increase control over the uses of funds, payments for goods, services and training expenses under Subcomponent 2.1, (institutional strengthening of provincial forestry administrations) will be made by SAGPyA directly to beneficiaries. The Instituto Nacional de Tecnologia Agropecuaria (INTA) is proposedto act as co-executor of Subcomponent 2.1.3 for an amount of approximately 1.4 million of IBRD funds. An implementation agreement will be signed between SAGPyA and INTA, and will include the required FM arrangementsacceptable to the Bank to ensure that funds are used for the purpose intended. A section describing detailed FMprocedures for this subcomponent and acceptable to the Bank as well, will be incorporated into Component 2 Operational Manual once the SAGPyA-INTA agreement i s signed. 24. Component 3. ProtectedAreas and Conservation Corridors; executing agency APN. The proposed ceiling for advances to the designated account is US$2,800,000. Supporting documentation for documenting project expenditures of Component 2 under the advance and reimbursementmethods will be: (a) Statements of Expenditures (SOEs) for all expenditures below the following thresholds: Paymentsfor Goods against contracts valued at less than US$200,000; payments for Consulting Firms against contracts valued at less than US$lOO,OOO; payments for Individual Consultants against contracts valued at US$50,000 or less; payments for Subprojects (customized SOE) and payments for Civil Works against contracts valued at US$300,000 or less. All consolidated SOEs documentation will be maintained by each agency for post-review and audit purposes for up to one year after the final withdrawal from the loan account; (b) Records evidencing eligible expenditures (e.g., copies of receipts, suppliers/contractors' invoices) for payments for Goods against contracts valued at US$200,000 or more; Consulting Firms against contracts valued at US$lOO,OOO or more; and Individual Consultant against contracts valued at US$50,000 or more; and Civil Works against contracts at US$300,000 or more; and (c) Direct Payments supporting documentation will consist of records (e.g.: copies o f receipts, supplier/ contractors invoices). The minimum value for applications for direct paymentsand reimbursementswill be US$500,000. 84 25. The following flow chart presents the flow of funds from the Loan Account to the project's three designated accounts and operational accounts. Loan Funds Direct Payments Account D.A.in BNA SAGPyAIAPNlSAyDS 1 Local Funds Admin Units Account Account Paymentsof Project EligibleExpenditures.I 26. Subproject funds to small producers and other beneficiaries under Components 2 and 3 will be disbursedas per provisions included inthe sub project agreements. It is envisioned that the first installment will be disbursed upon signature o f subproject agreement, and additional installments will be made on the basis o f documented expenditures and or the achievement o f targeted outcomes. 27. The project Operational Manual incorporates specific arrangements to ensure the adequacy o f the administrative unit control over uses o f funds for Subprojects for non- governmental organizations (NGO) under Components 2 and 3. Those procedures prepared by the SAGPyA and APN, were reviewed in appraisal and found acceptable to the Bank. 28. The proceeds of the Loan would be disbursed against the following disbursement categories: 85 Table A7-2 Disbursementsper ExpenditureCategory Category Amount of the Loan Percentage of Expenditures to be Allocated financed (expressed in USD) (1) Goods, works, consultant's services, 3,000,000 100% and OperatingCosts under Part 1 of the Project. (2) Goods, works, consultant's services, 16,000,000 100% and OperatingCosts under Part 2 ofthe Project. (3)Goods, works, consultant's services, 25,000,000 100% and OperatingCosts under Part 3 of the Project. (4) Goods, works and consultant's 9,000,000 100% services for the carrying out of Forestry Research Subprojectsand Sustainable Forestry Subprojects under Part 2 of the Project. (5) Goods, works and consultant's 1,800,000 100% services for the carrying out of Sustainable Developmentand ConservationSubprojects under Part 3 of the Project. (6) Premia for Interest Rate Caps and -0- Amount due under Section2.07 of Interest Rate Collars the Loan Agreement (7) Front-endFee 150,000 Amount payable pursuantto Section 2.03 of the Loan Agreement in accordance with Section2.07 (b) of the General Conditions (8) Unallocated 5,050,000 TOTAL AMOUNT 60,000,000 29. The three project units will continue to access Bank's Client Connection web page to get the Withdrawal Form from the web and to perform on a periodic basis the reconciliation between its bank account and resources received from the different sources. FinancialReporting 30. Each entity will produce the interim financial reports and annual financial statements o f their components separately. 31. The UEPEX system will be used by the 3 agencies to produce the requisite financial statements following public sector accounting standards in Argentina. The public sector accounting rules are comprehensive and consistent with international public standards. Said standards are set by the Accountant General Office, ContaduriaGeneral de la Nacibn (CGN). 32. A draft format o f the annual financial statements to be prepared by each component o f the project and acceptable to the Bank is part of the Operational Manuals. Inaddition, the three 86 Units shall also prepare semiannual Interim Financial Reports (IFRs) for monitoring and evaluationpurposes that will be part o f the Project progress reports, as follows: (a) A financial section stating for the period and cumulatively (project life) cash receipts by sources and applications by main expenditures classification as well as beginning and ending cash balances o f the project and a statement of accumulated investments by project component with a comparison between actual and plannedexpenditures; (b) An output monitoring section that: (a) sets forth physical progress in project's implementation, and (b) explains variances between the actual and previously forecast implementation target; and (c) IFRsreview will be conducted by the assigned FMS during project supervision missions. External Auditing Arrangements 33. The three sets o f annual financial statements of the project will be audited by an acceptable auditor, following terms o f reference and conducted in accordance with auditing standards acceptable to the Bank as well. It is proposed that Argentina's Supreme Audit Institution, Auditoria General de la Nacibn (AGN) be the external auditor for the project. The annual audits will cover all funding and expenditures reported inthe project financial statements and will be submitted to the Bank within six months after the end o f the reported period. For audit purposes the fiscal year will be the calendar year. Acceptable audit reports were submitted to the Bank in previous projects implemented by SAGPyA, SAyDS and APN while Bank requirements were generally complied with. The following chart identifies the audit reports that will be requiredto be submittedby the project and the due date for submission. Table A7-3 Audit Reports' Schedule Audit Report Due Date 1) Project Financial Statements June 30 of eachyear 2) SpecialOpinions June 30 of each year SOE an opinion on the eligibility of expendituresreportedand the correct Loan funds 0 DesignatedAccounts Details on the audit results o f previous projects implemented by APN, SAyDS and SAGPyA are presented inthe full FMAssessment Report (FMA). 87 SupervisionPlan 34. Prior experience in implementing Bank financed operations has been taken into consideration to define the F M supervision plan. Supervision scope will be adjusted by the assigned FMS according to the fiduciary performance and updated risk. The table below shows the FM supervision objectives, tasks and timing planned for this project. Table A7-4 FinancialManagementSupervisionPlan Mechanism Objective Integrating project team Review FM system. and controls supervisionmissions. Update assignedrisk Review DA Reconciliations. Uses of funds. Follow up on External Audit issues. Review IFR information consistency SOE review as needed. I Audit Revie Annually Over the Audit Report Review Audit Report. submittedto the Bank Action Plan 35. Pending steps to complete the financial managementassessment are included inthe action plan presentedinthe table below. Table A7-5 FinancialManagement Action Plan Action ResponsibleEntity Completion Date 1. Requesta specific budgetary line in APN, SAyDS and Administrative Units of Completed SAGPyA annual budget to follow Project execution. SAyDS; SAGPyA and APN 2. Finalize Administrative Sectionof Operational Manual Administrative Unitsof Versions of the 3 Op. Manuals which will include inter alia: SAyDS; SAGPyA and were preparedand reviewed and a) Chart of accounts; APN are acceptableto the Bank. b) IFR format agreed with the Bank; c) Formatof the Annual Financial Statements d) Specific Fundsflow proceduresfor Subprojects 3. CustomizedSOE design for subprojects Administrative Unitsof Completed Under components 2 and 3 SAGPyA and APN 88 Annex 8: ProcurementArrangements ARGENTINA: SustainableNaturalResourcesManagementProject General 1. Procurement for the proposed project would be carried out in accordance with the World Bank's "Guidelines: Procurement Under IBRD Loans and IDA Credits" dated May 2004 - Revised October 2006; and "Guidelines: Selection and Employment o f Consultants by World Bank Borrowers" dated May 2004 - Revised October 2006, and the provisions stipulated in the Legal Agreement. The various items under different expenditure categories are described in general below. For each contract to be financed by the Loadcredit, the different procurement methods or consultant selection methods, the need for pre-qualification, estimated costs, prior review requirements, and time frame are agreed between the Borrower and the Bank in the Procurement Plan. The Procurement Plan will be updated at least annually or as required to reflect the actual project implementation needs and improvements in institutional capacity. 2. ProcurementImplementation.Each of three component will implemented by a separate executing agency (SAyDS, SAGPyA and APN) and have its own internal TFO and procurement specialist. However, the activity for Genetics Research (Component 2) will be implemented by INTA as co-executing agency butthe procurement activities will be carried out by SAGPyA. 3. Procurementof Works. The procurement o f works would consist o f the construction of small buildings (park guard housing and administration centers, visitor centers, control points), rehabilitation of park access roads, new roads within parks, trails, and observation points and renovation o f two historical buildings inBuenos Aires. The use o f ICB i s not foreseen. Contracts for works would be procured using N C B and SBD satisfactory to the Bank. When the estimated cost i s less thanUS$350.000 may be procured using shopping. 4. Procurementof Goods. Goods procured under this project would include IT equipment, office furniture, vehicles, books and other items. The use of ICB i s not foreseen. The procurement will be done using NCB and SBD satisfactory to the Bank. Contracts for goods estimated to cost less than $100,000 per contract, may be procured using Shopping. 5. Procurement of Non-consulting Services. all contracts for services not related to consultant services (logistics, organization o f seminars, workshops, printing services) may be procuredunder the same methodologies and thresholds specified for goods. 6. Selection of Consultants.Consultant services procured under this contract are expected to include:(i) under Component 1:identification ofcritical forestry areas, designo f forestry plan, elaboration o f manual for native forest types, (ii)under Component 2: environmental strategy evaluations, design o f training programs for DF and DB, diagnostic and design of information system; (iii)under Component 3: design the communication and corporate image strategy and the internal information systems, elaboration o f baseline. Consulting Services under this project would also include services to be provided by individuals, such as: (i) technical assistance, (ii) 89 supervision o f works and iii)training. All contracts will be procured using Bank'sGuidelines for the hiringo f consultants. 7. Short lists of consultants for services estimated to cost less than $500,000 equivalent per contract may be composed entirely o f national consultants in accordance with the provisions o f paragraph 2.7 of the Consultant Guidelines. Specialized advisory services would be provided by individual consultants selected by comparison o f qualifications of at least three candidates and hired in accordance with the provisions of paragraph 5.1 to 5.3 of the Consultant Guidelines. Individual consultants may be selected sole-source with prior approval o f the Bank inaccordance with provisions ofparagraphs 5.4 ofthe Consultants Guidelines. Others 8. In addition to procurement of works, goods, non-consultant services and consultant services to be conducted by SAyDS, SAGPyA, APN and INTA as discussed above, the following will be financed by the project: 9. Scholarships. Would be financed under Component 2 in accordance to the provisions o f the Operational Manual. 10. CDD Procurement. Subprojects would be financed through competitive procedures under Component 2 and 3. Subprojects include the purchase of goods, works and services procured in accordance with the procedures set forth in the Operational Manual. The chart below summarizes the main features of the proposal: Component/ Aggregate Ceiling Procurement Beneficiaries Subcomponent project Amount Amount per Agents Description Methods Subproject (US%) 2 12.2 Large agro- Qualified Annex 20 CDD General forestry: researchersor public, US$250,000 institutions; researchers, million joint ventures or forestry Pest Control: agreements with producersand $100,000 private co- wood sponsors, producers All others: regional INTA US $75,000 2 12.3 Assistance Small Small Annex 16 CDD Small and to Small producers: producers: universities, medium-scale and US$3.6 mill us$100.000 cooperatives, producersand Medium producer small-scale Scale Medium Medium associations, wood I non- Producers producers: producers: Regional INTA wood US$750.000 us$100.00 processors Small-scale Wood and wood and non-wood non-wood processors: producers: us$I00,000 US$250.000 3 13.1 Strengthen Sustainable US $50,000 NGOs, Annex 16 CDD Small-scale Mgt. of Development universities, producers and 90 protected Activities cooperatives, communities Areas- US$1.8 producer near eligible Sustainable million associations, nationalparks Dev. qualified Activities community organizations, RegionalINTA *INTA will serve as co-executor for research in the area o f Genetic Improvement subprojects. The amounts in the table for subprojects 2.1 include an estimated US$1.8 million for this activity. Procurement procedures for subprojects managed by INTA will be specified inter alia in a Letter of Agreement acceptable to the Bank, between SAGPyA and INTA prior to the execution o f the work. 11. Operating Costs. Would be procured using the implementing agency's administrative procedures, which were reviewed and found acceptable to the Bank. This includes transportation fares, travel expenses and per diem, either related to training or supervision activities. The project will finance the incremental costs o f additional Forestry Directorate Agents in the case o f component 2 for the first three years; after that costs will be absorbed by the national and provincial governments. Assessment of the Agency's Capacityto ImplementProcurement 12. Procurement activities will be carried out by a separate executing agency for each o f three components: SAyDS, SAGPyA, INTA and APN. 13. An assessment of the capacity of the Implementing Agencies to implement procurement actions for the project was carried by the Bank's procurement team. The assessment reviewed the organizational structure for implementing the project and the coordination among the different institutions that would be participating inthe project implementation. 14. The key issues and risks concerning procurement for implementation o f the project have been identified and include: (i)staff without knowledge in Bank procurement procedures in SAyDS and SAGPyA, and (ii)one o f the subcomponent would implemented by INTA as co- executing agency without an experienced procurement specialist. 15. To address these, the following measures have been agreed upon: (i) SAyDS and the SAGPyA would hire a procurement consultant knowledgeable o f Bank procurement policies and procedures (with a minimum o f 3 years o f experience), (ii) project operational manual was a developed and includes the implementation arrangements and the procurement procedures, and (iii)Procurement staffwouldattendaprocurementseminardeliveredbytheBankonceayear and (iv) the procurement activities for INTA would be carried out by SAGPyA The overall project risk for procurement i s Average per the following detail: 91 Agency Risk SAyDS, SAGPyA & INTA (Components 1 High and2) ProcurementPlan L 16. The Procurement Plans of each component of the project for the first 18 months were discussed during Appraisal and the final version was approved on January 8,2008. 17. The Procurement Plan approved will be available at the SEPA (www.iniciativasepa,org) no later than 30 days from effectiveness date. The Procurement Plan will be updated in agreement with the Project Team annually or as early as required to reflect the actual project implementation needs and improvements ininstitutional capacity. Frequency of Procurement Supervision 18. In addition to the prior review supervision to be carried out from Bank offices, the capacity assessment of the Implementing Agency has recommendedannual supervision missions to visit the field to carry out post review of procurement actions. The number of contracts signed by each implementing agency that will be subject to Bank post review is displayed in the table below. Joint FM-Procurement supervision missions will be conducted in order to produce Integrated Fiduciary PerformanceAssessments (IFPAs) inthe framework o f the FAP. Agency Risk SAyDS, SAGPyA & INTA (Components 1 1:5 and 2) APN (Component 3) 1:lO Detailsof the ProcurementArrangementsInvolvingInternationalCompetition 19. Goods, Works, and Non ConsultingServices (a) Not envision the need for ICB; and (b) For Components I and 2: Contracts for Works estimated to cost above US$500.000 per contract, contracts for Goods and Non-Consulting Services estimated to cost above US$lOO,OOO, the first two (2) processes procured under each procurement method and all direct contracting will be subject to prior review by the Bank For Component 3: Contracts for Works estimated to cost above US$l.OOO.OOO per contract, contracts for Goods and Non-Consulting Services estimated to cost above US$300,000, the first process procured under each procurementmethod and all direct contracting will be subject to prior review by the Bank. 92 20. Consulting Services (a) The project will not finance consulting assignments with short-list o f international firms, since short lists o f consultants for services estimated to cost less than US$500,000 equivalent per contract may be composed entirely o f national consultants in accordance with the provisions o f paragraph 2.7 o f the Consultant Guidelines; and (b) For Components 1 and 2: Consultancy services estimated to cost above US$lOO,OOO per contract, the first two (2) processes under each selection method and all single source selection o f consultants will be subject to prior review by the Bank For Component 3: Consultancy services estimated to cost above US$200,000 per contract, the first process under each selection method and all single source selection o f consultants will be subject to prior review by the Bank. Special Procurement Provisions 21. The following shall apply to procurement under the project: All procurement shall be done using standard bidding documents, standard requests for proposals, model bid evaluation forms, model proposal evaluation forms and contract forms previously agreed with the Bank. As for consultant services contracts, only the types of contracts listed in Section IV o f the Consultant Guidelines may be used; Foreign and local contractors, service providers, consultants and suppliers shall not be required: (a) to register; (b) or establish residence in Argentina; (c) or enter into association with other national or international bidders as a condition for submitting bids or proposals; The invitations to bid, bidding documents, minutes o f bid opening, requests for expressions o f interest and summary reports o f award o f all goods, works and services (including consultants' services), as the case may be, shall be published inthe web page of Oficina Nacional de Contrataciones ina manner acceptable to the Bank. The bidding period shall be counted from the date o f publication o f the invitation to bid or the bidding documents, whichever i s later, to the date o f bid opening; The Borrower: (a) will feed the Bank publicly accessible Procurement Plans Execution System (SEPA) within 30 days o f Negotiations with the information contained inthe initial Procurement Plan, (b) will update the Procurement Plan at least biannually or as requiredto reflect the actual project implementation needs and progress and will feed the Bank Procurement Plans Execution System (SEPA) with the information contained in the updated Procurement Plan immediately thereafter; 93 (e) Bidders or consultants shall not be allowed to review or make copies or others bidders' bids or consultants' proposals, as the case may be; (0 Contracts o f goods and services -other than consulting services- shall not be awarded to the "most convenient" bid but to the one that has been determined to be substantially responsive and the lowest evaluated bid, provided that further the bidder i s determined to be qualified to perform the contract satisfactorily; and (g) All Civil Works contracts will contain the price adjustment methodology agreed upon the Bank and the Government o f Argentina. Procurement-related Covenants Inorder to disseminate project implementationrequirements and procedures, and define roles, responsibilities, mechanisms, schedules and accountability arrangements, the Borrower will prepare a Project Operational Manual, to be submitted to the Bank at Loan negotiations. It will include, inter alia, the project's institutional arrangements and operational, accounting, procurement and disbursementprocedures; Each TFO will be staffed at all times by a Procurement Specialist acceptable to the Bank.They shall be hired within 30 days o f effectiveness; The Project will contract a concurrent audit, both for administrative and physical control o f subprojects, under TORS satisfactory to the Bank. The hiring o f the concurrent audit firm shall take place prior to the approval o f the first Subproject to be financed with Loan proceeds; Within one (1) year counting from Loan Effectiveness, each TFO will implement an integrated project management system acceptable to the Bank, including internal administrative steps tracking, project progress monitoring and consultants performance evaluation; and Within one (1) year counting from Loan Effectiveness, the Project will create a web page acceptable to the Bank to disseminate its most significant project information. 94 Annex 9: Economic and FinancialAnalysis ARGENTINA: SustainableNaturalResourcesManagementProject GeneralIntroduction 1. The Project Development Objective is to: Improve the sustainable and efJicient management of forest resources, conserve biodiversity in protected areas andforest landscapes, and integrate small producers intoforestry development and conservation. The objectives would be achieved by: (i)improving the policy and planning frameworks; (ii)strengthening institutional capacity at federal and provinciallevels; (iii) upgrading management capacity of the National Park Administration, infrastructure and sustainable development opportunities in and around parks; (iv) improving and promoting private forestry information delivery services; (v) assisting small and medium-scale farmers, land owners and producers to adopt sustainable forms of forestry, agriculture and agro forestry; (vi) institutionalizing environmental safeguards and incorporating best practices; and (vii) by encouragingmore private-sector involvement inservice provision. 2. The project includes three components: (i)Native Forests and Biodiversity; (ii) Sustainable Plantation Forestry; and (iii)Protected Areas and Conservation Corridors. The following analysis is focus on the components 2 and 3. (Since the main activities of the component 1 are studies and training for the formulation of a follow-up investment, neither economic analyses nor financial analyses were carried out for that particular component.) Component2. SustainablePlantationForestry Introduction 3. Forestry plantations cover only 3.2% of the country's forest area (the remaining areas are covered by natural forest) or 1.2 million hectares, and millions of ha have environmental conditions favorable to tree growth. Plantation forests are especially important for the macro- economy because wood from plantations accounts for about 90% of Argentina's industrial wood output. Plantation forests and the processing plants that depend on them employ some 500,000 people; the informal sector accounts for an additional 100,000 people. Wood from plantations accounts for 90% of all wood exports (with an annual value of around US$684 million, or 4.9% o f total exports). 4. The development objective related to Component 2 is to support the sustainable and equitable development of forestry plantations in areas of high forestry potential. Specific objectives would be to: (i)establish institutional and policy frameworks conducive to sustainable and shared growth inthe sector; (ii) increaseplantation productivity through efficient gains inthe generation, analysis, and transfer of strategically important information through research and extension; and (iii) support the integration of smallholders/producers into the plantation product supply chain. 95 5. The development objective would be achieved through four subcomponents: (i) Institutional and Policy Development; (ii) Research, Technology Transfer, and Extension; (iii) Assistance to Small- and Medium-Scale Sustainable Forestry; and (iv) Project Administration, Monitoring and Evaluation. 6. The project's expected outcomes/outputs would be: (i)contributing to the updating o f forestry sector policy and law (e.g., drafts for the Law 25-080 for forest plantation development); (ii)improvement of the forestry information system including the statistical database and inventory database at national and provincial levels; (iii)updating o f forestry sector staff knowledge and skills; (iv) establishment o f a demand-driven and competitive forestry research program and a public-private partnership extension system; and (v) improvement o f forest plantationmanagement interms o f environmental conservation and efficiency. 7. The present economic analysis evaluates the project's economic benefit to the sector and to producers. Since most o f economic benefits are not monetarily measurable, the cost- effectiveness analysis method will be applied. 8. The financial analysis is based on two sources. The first is an existing analysis performed by Professor F. Cubbage and others (2006) on "Timber Investment Returns for Plantation and Native Forests in South America and the Southern United States," which includes four Southern Cone countries (Argentina, Brazil, Chile, and Uruguay). The analysis was based on (i)several previous studies; (ii)actual field data; and (iii)interviews with various experts. The second source is an analysis conducted by a national consultant for the borrower. His analysis includes field data and information generated through Farmod to estimate the financial rate o f return(FRR). Economic Analysis IdentiJLing Economic Benefts 9. Forests are important for providing economic opportunities, such as generation o f revenuethrough the sale o f timber and non-timber forest products. They are also valued for their contribution to regulating the natural environment - by protecting watersheds forests reduce soil erosion and the loss o f soil fertility, preventing flooding and consequently slow the sedimentation o f reservoirs. Forests also contribute to the regulation o f atmospheric gasses which maintain the global climate. 10. From a strictly economic perspective, forest plantations are much more productive than natural forests. Because plantations favor the growth o f a very small number o f species (often only one), they are able to produce wood faster within a smaller spatial area than natural forests, which increases their yield. This can lead to important social benefits for small- and medium- scale producers, and the increased income can help to alleviate rural poverty. The government also benefits from increased timber production by collecting value-added tax (VAT) on timber sales, as well as export tariffs. While plantations can also be very efficient in the sequestration o f carbon and inerosion control efforts, they are less biologically diverse and thus do not provide the rich habitats characteristic o f most natural forests. 96 11, Despite Argentina's comparative advantage inproducing plantation-grown wood and the availability o f suitable land to expand plantation area, the sector has underperformed compared to its potential. The project would help the government to change this situation and establish an environmentally, socially and economically sustainable forestry sector based on plantation forestry and thereby capitalize on its comparative advantage in producing high quality low-cost plantation-grownwood. 12. Because forestry i s a long-term endeavor, a good policy and regulatory environment i s essential for providing the legal and institutional framework for the sector's development. However, actual implementation o f policies, as well as the enforcement o f regulations depends on the government's institutional capacity. This includes its capacity to carry out research and conduct technology transfer through extension, which are both needed to ensure that state-of-the- art management techniques are both developed and applied by producers. Improving the Policy Environment 13. Although the government's various economic incentives programs have produced results on the ground important shortcomings have been detected. Despite the fact that over 30,000 ha o f new plantations are established each year, the government's plantation forestry policy is biased toward large producers, with small- and medium-scale producers being largely neglected, and strategic planning for the sector i s completely absent. 14. The project aims to assist the government in improving the policy environment for the sustainable development o f the sector through a comprehensive review o f the policy environment and recommendations for reform, technical assistance, and training o f policy makers. An evaluation o f the impact o f existing legislation will be carried out, especially as it relates to the costs, benefits and impacts o f the various incentive programs. It would also carry out a study on environmental impacts, so that new regulations would avoid causing harm to the environment. The evaluation is expected to provide guidance and recommendations for improving laws and providing a basis for which adjustments to incentive programs could be founded. 15. Technical assistance programs would work in the development o f models that include small and medium producers. Input gathered from these models would be used to help further adjustments to policies and incentives, so they would be more inclusive and provide increased opportunities for small and mediumproducers. Environmental education would be an important element to be blended into the backdrop o f targeted activities and would provide outreach to government officials, extension agents, and producers. 16. The environmental education program would specifically aim to address biodiversity considerations inplantation management, so as to further the mainstreaming o f conservation into plantation management. The economic benefits o f conservation are not easily measured due to the long-term horizon o f forestry activities. However, because remedial activities are almost always more costly than prevention, the economic value o f ensuring the environmentally sustainable growth o f the sector is unquestionable. 97 Human Resource Development 17. Human capital improvement cannot be measured directly. However, the efficiency o f competent versus unskilled workers can be compared. Improved efficiency would result from performing the same task in less time and with higher standards; this inturn would save financial resources (less time spent working for an equivalent output). Currently, DF and DB personnel need to update and improve their skills in order to carry out their work efficiently. The project would finance various training courses for DF and DB staff. Training would cover broad subjects such as development strategy and planning, improvement of institutional structure, administration, financial management, natural resource management, and environmental conservation. 18. Human resource development creates invisible capital/assets for the country and the investment in human resources always has a high return. Economic development depends greatly on human resources. DF and DB staff members are expected to play a very important role inproviding advice to policy makers, managing sector activities, and servingproducers. Strengthening the Information System 19. Accurate information is important for policy makers in formulating regulations and programs to assist producers. Yet, the information system for the plantation sector, including inventory and the statistical database, is currently incomplete. Inventory information i s only available at national level and changes inplantation area, volume and species composition i s still lacking. In addition, market information i s not available in a timely manner. Consequently, the government i s unable to plan or manage plantation resources strategically, and producers do not have access to market information needed to make key decisions which affect their economic welfare. 20. The project aims to support the enhancement o f the plantation inventory and statistical information system by updating equipment and computer software, training, and technical assistance in database development. Information on national and provincial plantation resources state and changes, and periodically updated market information will be made available to the public through the project. In addition, the project would finance the development o f a sector directory, to include all stakeholders. Establishment of a Demand-driven Competitive ResearchProgram 21. InArgentina, agricultural research is still supply-driven, and forestry plantation research is relatively weak. Government funds from agricultural export taxes are almost exclusively allocated to INTA. Other institutes and universities do not have access to these funds. This lack o f a competitive system discourages efficiency and innovation in forestry research. In addition, research topics are presently determined by a committee, not from the results o f field and producer surveys. The adoption rate o f research results i s low, and producers have not applied efficient plantation management that incorporates environmental concerns. In order to correct this situation, the project would establish a competitive fund and invite all research institutes, including the private sector and universities, to compete for funding by designing research 98 subprojects. The criteria o f the subprojects would be to: (i)resolve through scientific analyses and trials identified problems and constraints; (ii)develop environmentally sustainable techniques for forestry applications; (iii)generatehmprove economic benefits; and (iv) carry out research at lowest costs. This would encourage efficient use o f financial and human resources. 22. The overriding concept o f demand-driven research is to ensure the adoption o f successful new techniques inproduction ina timely manner and at a highrate. 23. The importance o f establishing the competitive fund is to help move the government toward the use o f this model in its agricultural research system, which is now supply driven. Experience in other Latin American countries (such as Colombia and Peru) has shown that the introduction o f a competitive mechanism has improved the efficiency o f using limited financial and humanresources. Establishment of a Forestry Extension System 24. This important mechanism would be introduced under the project to encourage private service providers to participate in extension activities. Under the completed Forestry Development Project, seven Forestry Extension Nodes (NEFs) were established to strengthen extension work in the field. The NEFs will be transformed and evolved into Forestry Development Offices (FDOs), which will act as the DF agency at local level. FDOs would organize stakeholders (in committees) to identify producers' extension needs and research priorities. Duringproject implementation, FDOs would also organize training for private service providers in plantation management, natural resource management, environmental conservation, and business development. Private-service providers would participate actively in providing technical services to plantation producers. 25. Timely, quality services would reduce unnecessary losses caused either by poor plantation management or by disease or pests. For small- and medium-scale producers, receiving services i s especially important: because o f their smaller scale o f production, improved efficiency (input/output ratio) would bring higher return. 26. Extension services also serve as a bridge between research and production. Without timely extension, the practical application o f research results would be delayed. Supportfor Small and Medium Producers 27. The project would support training, technical and financial assistance to small- and medium-scale farmers through government subsidies to plantations. These would help producers to use their land resources efficiently and to create environmental awareness that no activities harmful to the environment would be undertaken during the plantation production practice. Producers would also benefit from an environment where risks o f pests and disease are lowered. 28. It is likely that small producers would continue to plant exotic species with faster growth rates and good financial rates o f return. Since native species take much longer to generate income, producers are unlikely to plant them voluntarily. The pilot program for technology 99 transfer and extension services would improve the plantation, thereby increasing yields and shortening the maturation period. 29. In summary, the economic benefit may be defined as follows: (i)efficient use of land resources by producers for forest plantation with government financial and technical support; (ii) environmental improvements that reduce production costs and provide a sustainable production foundation; and (iii)improvement o f income o f small and medium producers due to government financial support and technical assistance. Fiscal Impacts 30. To evaluate fiscal impacts i s to compare the project investment costs that the public fund from the government would cover and fiscal revenue which would be generated from the output the project supported activities through tax collection from wood sales (VAT) and exports tariffs. Currently the annual tax revenue from forestry sector i s expected to increase by 10-15% in the next ten years. Financial Analysis Introduction 31. The financial analysis is to evaluate agro-forestry plantation o f small and medium producers. 32. The project would support small- and medium-scale forest plantation producers in adopting sustainable plantation management. The activities include training in various subjects, best practices o f plantation demonstration and adoption, technical assistance, and funding (government counterpart funds under Law 25-080 issued by DF) for production inputs (mainly seedlings). 33. The following analysis will integrated the main findings o f a consultant's work and the results drawn on the research conducted by North Carolina State University, the University of Georgia, and several universities and research institutes inBrazil, Argentina, Uruguay, and Chile carried out research, led by Professor Frederick Cubbage, on "Timber Investment Return for Plantations and Native Forests in South America and the Southern United States." The research estimated timber investment returns for the principal exotic and selected native plantation species inthe Southern Cone o f Latin America and inthe Southern UnitedStates. Argentina was one o f the Southern Cone countries selected. Identifi Project Costs 34. The project costs include investment costs and operation costs. The investment costs would mainly cover studies, training/workshops, technical assistance, various office equipment, and computer software to improve the information system. Special funds would be set up for supporting small and medium producers in agro-forest plantation forestry research, and incremental operation costs of administration o f the project. Inaddition, the rehabilitation of DB 100 and DF offices (civil works) would be also financed. However, in the financial analysis models that the consultant carried out, the investment costs only include direct cost related to forest plantation. 35. The operation costs are the production costs o f plantation o f small and medium producers. Method and Results 36. The Research, led by Professor Frederick Cubbage. The species selected for analysis included loblolly pine and eucalyptus as exotic species, and Aracauria as a native species in Argentina. The management regime i s shown inthe following table: Species Rotation Thinningand Growth Total Yield (year) Harvests (years) (m3/ha/year) per Rotation (m3) Loblolly pine- 20 5, 8, 12,20 30 600 Misiones Loblolly pine- 20 5, 8, 12,20 35 700 Corrientes Eucalyptus 14 5, 14 40 560 arandis Aracauria 28 10, 15,21,28 15 420 angustfol ia Native forest: 80 20,40,60,80 1 20 unmanaged Native forest: 80 1 20,40,60,80 I best management 6o 37. Plantation techniques vary by species, land quality, climate, timber markets, and capital, among other factors. The table shows the common practices based on research experience and previous research results. 38. Planting and management costs o f US$500 and US$20 per hectare, respectively, were used to calculate the rates o f return. The output price used timber stumpage prices (valor de madera en pie). Analysis indicators include net present value (NPV), land or soil expectation value (LEV, SEV), internal rate o f return (IRR), equivalent annual income (EAI), and benefit:cost ratio (B:C). After the results were estimated, the other experts also reviewed and compared them with other analysis results to ensure that the input and output data represented reasonable scenarios. Net Present Land Annual Benefit: Internal Species Value Expected Equivalent Cost Ratio Rate of ($/ha) Value Value Return (YO) ($/ha) ($/ha) Loblolly pine- 1,148 1,462 117 1.73 12.9 Misiones 101 management 39. The results show that exotic species are relatively profitable, but native species are not. Eucalyptus is a fast-growing species and has the highest return; at present it commonly grows in northern Argentina. 40. Comparedto other SouthernCone countries, the researchreport indicatedthat "Argentina has excellent growth, technology, and well defined markets, but fairly low prices. This may be attributed to a lack of many large firms and a relatively large amount of fiber supply. High-risk premiums for borrowed capital and the long distance from the fertile timber-growing regions of Misiones and Corrientes to major international markets also contribute to lower residual-value timber prices." 41. The sensitivity analysis included: (i) withdrawal of some land from the plantable land the area because of environmental restrictions, operating difficulties, or standard practices; (ii)the inclusion of land costs as a factor of production; (iii) the combination of (i) (ii); the use and (iv) of state subsidies for planting, as available; and (v) the case of higher yields andprices. 42. The following table shows the result of a sensitivity analysis of loblolly in Misiones with landcosts and subsidy payment-interest rate (%) and landexpectation value (US$/ha, 8%). Base without Basewith Basewith Basewith Basewith Basewith land costs reduced land costs land costs, subsidy highyields, plantable reduced payment prices area area 12.9 11.7 9.9 8.3 15.9 19.8 1,462 808 762 108 1,958 4,929 43. The results of sensitivity analyses on the effects of land, timber growth and prices, and policy subsidies (Law 25080) provide important perspective and balance with regard to comparative returns. The fast growth rate and good timber prices for exotic species on existing plantations provide the highest rate of return (20%). Policy interventions/subsidies are another attractive factor. Landand capital costs would reducethe profit. 102 44. Results from the analysis carried out by the borrower's consultant. The analysis was based on the field studies in the province o f Misiones. The species included in the cash-flow model were exotic species (e.g., pine). The FARMOD software was used for calculations. The analysis used the proposed investment project costs inthe models and the production costs were received from the producers visited/interviewed. The government subsidy for forest plantation was included. The analysis evaluated individual and group o f small forest producers. The results were positive and promising. 45. The financial rate o f return (FIRR) for small producer plantation was 10 percent and net present value per hectare in 20 years was US$3,019. For group of small forest producers, the FIRR was very high and reached to 156 percent. This impliedthat production by groups would achieve a higher economy o f scale interms o f efficient landuse and labor resources. Comparing net income "with the project" and "without the project", the former was 32 percent higher than latter. 46. The sensitivity analysis shows that ifthe costs increased by 12 percent, and income falls by 10 percent, the project would still be viable. The implication o f this finding is that market price variation could significantly affect the producers' income. Diversifying production by integrating other production activities, e.g., livestock production, crop production, etc would therefore be recommended to the project beneficiary producers and i s one o f the goals o f the project. 47. The consultant also conducted an analysis o f the economic rate o f return o f the now closed Forestry Development Project Is agro-forestry systems. The analysis was based on data collected through interviews and from local technicians in the field (Misiones, Chaco, and Formosa, Yungas de Salta, and Neuquen) and processed with FARMOD software. The economic rate of return for the project as whole and for four provinces/regions i s shown in the following table. Economic Rate of Net Present Value Total Incremental Annual Return (ERR) (NPV) (AR$) Income for 35 Incremental (%I Years (AR$) Income (AR$) The Project 28.8 7,969,648 135,300,000 3,865,710 Misiones 41.6 7,909,640 114,398,650 3,268,400 Agriculture 20,584 588,000 Livestock 21,417 611,900 Forest 72.396.750 2.068.500 103 48. From the results o f the economic analysis, it can be concluded that the performance o f the agro-forestry efforts o f the Forestry Development Project was excellent. The economic feasibility o f agro-forestry, was validated, as the investment generated a net present value (NPV) o f AR$8 million, and the ERR totaled 29%. However, the ERRSfor Chaco/Formosa and Yungas de Salta were below the discount rate o f 12% (10.4% and 7.4%, respectively), which implied they were not economically viable. In Chaco/Formosa, the main explanation for the low ERR was that the agricultural production earned negative income; cotton production mainly contributed to this, with a negative increase o f 20%. InYungas de Salta, the small average land holding per family (2.2 ha) would make it difficult to support all agriculture, livestock, and forestry. Livestock production in the province was not very profitable and could not compensate forest activities which generate income very slowly. 49. The financial rate of returnwas also estimated by different types of crop models ineach province. The estimated results are shown inthe following table: I---- Model Financial Net Present FRR(%) Value US%) Incremental Incremental MisionesSmall Producer (22 85.3 23,864 ha) Pine Agro-silvo-pastoral with 19.6 2,087 family labor PineAgo-silvo-pastoral without 48.7 5,046 family labor Agriculture 24,800 709 Livestock 27,900 797 Forest 87,225 2,492 Chaco and Formosa Small 219710 I 620 I 19.0 785 labor 34.2 1,565 familv labor Agriculture -4,550 I -130 I Livestock 17,360 I 496 Forest 8.900 I 254 Yungas de Salta Small Producer 28.9 2,2 I4 20,024 572 (2.2 ha) Aloe forest with family labor 12.8 330 Aloe forest without family labor 28.4 4,027 Agriculture 15,859 453 Forest 4,166 119 NeuquCn Small Producer (500 155 11,041 76,966 2,199 ha) Pine forest with family labor 12.2 30 Pine fnreqt without familv lahor I 1 5 5 I 343 I I I Livestock (forage) 55,986 1,600 Forest 20,980 II 599 104 50. The results shown in the above table indicate that all FRRs were viable, meaning that farmers or producers earned a profit from project activities. In general, livestock generated higher incomes than agricultural and forest activities except in Misiones, where forest activities earned the highest income because pines (trees) have a higher value than the other crops (carob and aloe) planted under the project. The explanation for the high FRRs o f the small producer model was that the family labor available and used inproduction was not included in investment costs or included in operating costs. Moreover, the subsidy was counted as part o f the income. In Misiones, the subsidy from the project was AR$3,100, in Chaco/Formosa AR$3,150, and in Yungas de Salta AR$3,900; inNeuquenAR$4,540 was from the project and AR$630 was from the provincial government. Conclusion 51. From the results, the research concluded that "Argentina has excellent growth rates but only moderate prices. Better markets and higher prices could enhance their returns. With fairly plentiful and cheap land in Misiones and northern Corrientes, Argentina offers attractive investment returns, especially ifmore wood processing capacity i s added." 52. Rates o f return for native species plantations without land costs inArgentina were rather low. The key to receiving good investment returns for native species was reasonable growth rates, o f at least 5 m3per ha per year. These rates o f return are comparable to those o f other capital assets, excluding land costs. 53. Land costs, government subsidies, and reserve areas affect timber investment significantly. State subsidies generally increase the rates o f return by about 2% to 3% when they are available, or land expectation values by about US$300 to US$500, Le., the share o f establishment costs. Forest reserve areas decrease rates o f return by about 1% excluding land costs. 54. The conclusion indicates that investments in plantations, at least o f exotic species, in Argentina are profitable, even for small- and medium-scale producers. Plantation management contributes to financial rates o f return. This i s what the project proposes to do by improving plantation management through research and extension, and through technical assistance and training to producers. In addition, by advancing the use o f agro-forestry systems, and silvo- pastoril systems, the project provides a means o f diversifying the producers income. 105 Component3. ProtectedAreas and ConservationCorridors Introduction 55. The objectives of the component are to: (i)strengthening APN's capacity to manage existing national protected areas; and (ii)set the stage for expanding protection to the insufficiently protected and highly-threatened Chaco ecosystem. The component includes four subcomponents: (i)Strengthened Management of Protected Areas; (ii)Institutional Strengthening for Improved Outreach and Management; (iii) Consolidation of the Gran Chaco Conservation Corridor; and (iv) Project Administration, Monitoring and Evaluation. 56. The following economic analysis would be carried out in cost-effectiveness, which mainly evaluates qualitative benefits. The financial analysis would evaluate rate of return through cash-flow analysis. Economic Analysis IdentiJjiing Expected Economic Benefits 57. Argentina was the first country in the Latin America region to create protected areas to protect the environment. The nation's first national park was established with a donation of some 7,500 ha of private land to the State in 1903. The National Parks Commission was formed in 1934, and the national protected areas system (MPAS) was created in 1986. The national parks under the governance of national and provincial governments and private owners play an important role in biodiversity conservation, as well as economic resources as they are major tourist attractions which provide significant source of income. 58. The World Bank has two on recent projects addressing protected areas, (i)the Biodiversity Conservation Project financed by GEF (under supervision), and Native Forests and Protected Areas Project financed by IBRD (closed in December 2007). The objective of the IBRD intervention was to support the modernization of APN and to put it on a track toward developing a world-class park management organization, and increase the capacity of four national parks inthe Patagonia region. The proposedproject would continue to support the park systemthrough scaling up and complementary activities. 59. The expected economic benefits would be generated mainly from revenue generated by tourism. Argentina is one of the most attractive tourist destinations in the world. Based on estimates by the World Tourism Organization's, by 2020, the number of international tourists would reach to 1.6 billion, 2.5 times of that in 1990s. There are two primary sources of tourist income: (i) revenues from tourist services (entrance fee, transportation, etc.) and (ii) expenditures by tourists on accommodations, foods, services, etc. during their visits. It was estimated that the economic income would reachto US$2 trillion annually with daily expenditure of $5 billion. 60. The tourism sector in Argentina has expanded rapidly since 2001. This is due in part to, the depreciation of Argentina peso and the improvement of facilities which cater to tourists. 106 Foreign tourism increased dramatically from 2.2 million tourists in 2001 to 4.2 million in 2006. The hightourist season is during the Argentine summer o f December through March. This is an attractive time o f the year for many American and European tourists, seeking to escape the colder climate o f the northern hemisphere. 61. The national parks are the one of Argentina's most important tourist attractions, especially in Patagonia region. Since 2001, every year the park system has received more tourists. In 2006, the national parks were visited by over 3 million tourists; three times the number ofvisitors in2001. This trend is expected to continue. 62. The project would continue to assist APN in its efforts toward developing a world-class park system, increase revenues and contribute to the protection o f environmental goods and services. This it aims to achieve by strengthening park management in eleven pre-select national parks, some o f which currently are not able to receive visitors due to the absence o f adequate facilities. Proposed project activities include improvement o f physical infrastructure for management (guard houses, storage facilities, etc) and for tourists (information and outreach centers, sanitation facilities, park access, etc). The improvement o f information provision to tourists and researchers and the enhanced capacity o f park administration personal in order to increase quality o f services will help the agency to meet its goals o f tourist development and conservation. Better physical facilities and improved services will proffer new opportunities for tourists and contribute to increasingthe number o f visitors to the national parks. 63. The increased economic benefit would also contribute to improving the income of local communities, and the project would work to increase local community involvement in park management and conservation activities. Their involvement is essential, and will help to deter destructive activities such as poaching and deforestation, thereby enhancing the long-term sustainability o f the parks and the habitats they protect. At the same time, the local communities would increase income by providing services and engaging incommercial activities (tour guides, restaurants, handicraft shops, etc.) through tourist-related activities. 64. The supporting Grand Chaco Conservation subcomponent would aim to help provide the foundation for enhancing ecosystem stability o f this highly threatened ecosystem. At the global and regional level, this has implications for mitigating climate change. At the local level, improved ecosystem management reduces the incidence o f natural disasters, such as serious erosion and changes to the hydrologic cycle, which has the potential to result in millions o f dollars o f economic loss. At the same time, improved ecosystem stability provides a better environment for productive activities and livelihoods Fiscal Impact 65. The government benefits from increasing number o f visitors to the national parks and commercial activities o f the local communities. The exact revenue from tax collection could not be determined, as APN is semi-autonomous institute, and the government treasury allocates a partial (66 percent) budget annually. However, as revenues from entrance fees increase, the percentage o f government treasury financing would be reduced, which is an acceptable 107 alternative for calculating fiscal impact. For local communities' service and commercial activities, the government will also collect value-added tax (VAT). Financial Analvsis 66. Financial analysis was carried out for the pre-selected 11 national parks the project would support. A cash flow model was applied for the analysis, and the project incremental revenues would be evaluated with and without-project. The incremental income and costs were calculated over a twenty-year period including an estimated five-year period for project implementation. A discount rate o f 12 percent i s used for the estimation. MainAssumptions 67. Incremental revenues o f the parks. The revenue sources for the parks are from the entrance fees. Based on the current statistics, data on the number o f visitors to the national parks in recent years and the actual data from the Native Forestry and Protected Areas Project, the annual increase in visitors "without the project' is assumed to be 4.5 percent. The increased rate o f visitation "with the project" i s estimated to be 10 percent, and i s based on worldwide projections in tourism for the next ten years estimated by the World Tourism Organization, as well as the projection o f increases intourists by the Argentine Tourism Ministry. 68. Charge fee for entrance. B y law, the entrance fee is different for foreigners and domestic visitors, as well as for adults and minors. The data used in the entrance fee was based on the parks' fees for foreigners at 30 pesos, for Argentine adults at 7 pesos and for minors at 4 pesos. 69. Three scenarios. Three scenarios were used for the analysis (high, medium and low). The scenarios were based on the results o f analyses carried out visitation to the 11 parks over the past five years. The medium scenario was based on an increased annual visitation rate o f 10 percent. The high scenario was 14 percent, while the low scenario was 4.5 percent (which was equal to the rate "without the project"). Identifj,Project Costs 70. The project costs include investment costs and operational costs. The investment costs include civil works, equipments, consulting services, training and workshops, other consumable goods, and project management. The operational costs include park administration staff salary, rent, utilities, maintenance and repair of buildings, equipment and vehicles, insurance of vehicles, and tax. 71. The indirect investment costs, such as special studies and surveys, were not included in the cash flow calculation. The direct investment would be AR$63 million, equals to US$20.3 million. 108 Results of Financial Rate of Return 72. The results o f the cash flow calculation show that the medium scenario and highscenario have robust rate o f return of 16 percent and 21 percent respectively, while the low scenario was not financial viable (9.6 percent) because the huge investment costs and the revenue would not be able to cover. The sensitivity analysis shows that the rate o f return is very sensitive to revenue variation, when the revenue dropped by 10 percent, the model i s not financial viable. The operational costs are less sensitive than the income, and the investment costs are the least sensitive. Results o f Financial Analysis for the National Parks Scenario FRR (Yo) NPV (US$) Total Net Revenue (US$million) Medium 15.4 3,326,958 49.3 High 20.5 10,653,536 90.0 Low 9.6 -1,781,863 21.1 Conclusion 73. The analysis was conducted on the assumption that tourists would visit the national parks. The result o f cash flow analysis is very promising. The economic revenue would be used for reinvestment in park infrastructure and other upgrades which would attract more visitors. The government fiscal impact is also positive and implies that the investment in the National Parks system is economically viable. The park system's tourism development would also include an outreach strategy to attract new visitors. The strategy would include, inter alia, advertising of Argentina's National Parks through TV, newspapers or other venues (such as participating in international conventions and symposia on tourism) nationally and internationally. 109 Annex 10: Safeguard Policy Issues ARGENTINA: SustainableNatural Resources ManagementProject EnvironmentalAssessment 1. The project is classified as Category B, requiring an Environmental Assessment. Environmental Assessments (EA) have been prepared for the National Parks and Productive Forestry components, and have been publicly disclosed. Similarly, an environmental review has beenprepared for the Native Forests component, as it involves technical studies and preparation work. Although the project is focused on environmental sustainability and its impacts are designed to be positive, environmental management plans (EMP) have been prepared based on the EA findings. These findings are summarizedbelow: ExpectedEnvironmentalImpacts 2. The project stated objective is to "Improve the sustainable and efficient management of forest resources, conserve biodiversity in protected areas and forest landscapes, and integrate small producers into forestry development and conservation" It is expected therefore that environmental impacts will be positive and generated through both conservation and sustainable production. Activities and investments supported in the protected areas and their ruralhrban surroundings are conducive to improved governance regarding use and conservation o f natural resources, and designed to provide incentives so that communities may benefit from protection activities as well as mainstream biodiversity into the productive landscapes throughout Argentina. Following are details of the components and expected impacts: 3. Component 1 - Native Forests and Biodiversity: Impacts are expected to be positive or neutral given the focus on preparing technical, policy, and legal analyses that will provide the platform for improved management and incentives for adoption of sustainable forestry at national and provincial levels. The preparation activities will be designed to ensure broad stakeholder participation including local and national NGO's, provincial governments, producers, indigenous communities, and the academic sector. 4. Component 2 - Sustainable Plantation Forestry: Impacts will be positive or neutral from an environmental standpoint. The component seeks increased productivity in the sector and reduced environmental impacts of forest planting, rather than expansion of the planted area. Activities to improve efficiency include dissemination of best management practices, improved technology to increase productivity, strategic environmental assessments to guide planting away from sensitive areas (socially and environmentally), as well as production diversification alternatives for small farmer groups that generate positive environmental impacts. Potential limited negative impacts could result from developing poor forestry policy and promotion programs as well as from small-producer activities (including pest-management issues), however the basic design of activities includes environmental themes and sustainability along with capacity building programs. In addition the project has incorporated an environmental management plan specific to this component that addresses the need to screen small-farmer activities and prepare strategic environmental assessments as a tool to guide planting and 110 promotion. In addition, SAGPyA is implementing a GEF-funded project to mainstream biodiversity in to production forestry that will also be closely coordinated with the present project component for maximum positive impacts to the environment. 5. Component 3 - Protected Areas and Conservation Corridors: Impacts are also expected to be positive as a result o f the investments that provide for: (i) improved protectiono f core areas (ii)improvedgovernance andcommunity participationthroughupdatedhclusive management plans (iii)increased income-generating opportunities and greater community support for conservation through sustainable development projects around the protected areas. Minor negative impacts could result from poorly designedand executed infrastructure within the parks, and indirectly from increased tourism or increased resource pressure from sustainable development activities. To avoid these potential impacts, an environmental management plan and operational manuals are being prepared for use and guidance during project implementation to ensure compliance with national legislation and APN policies as well as pertinent Bank safeguards (see below). 6. The detailed safeguard policy studies will be made available in the project files. In accordance with the Bank's Information Disclosure Policy (BP 17.50), copies o f the Environmental Analysis report in Spanishwill be available for public view at the Bank's Public Information Centers in Argentina and on relevant websites. A copy o f all final documents will also be forwarded to the World Bank's Infoshop. 7. The sections below briefly consider each of the safeguard policies that are triggered by the project. EnvironmentalAssessment (OP 4.01) 8. No large-scale adverse impacts are expected given the project's focus on sustainable management o f natural resources and conservation; impacts are expected to be overwhelmingly positive or neutral. EAs have been prepared for the Protected Areas and Plantation Forestry components, while an environmental review was carried out for the Native Forests component. These documents were disclosed prior to appraisal 9. The EAs for the Protected Areas and Plantation Forestry components will serve to develop appropriate mitigation measures for any negative impacts, and to recommend enhancement measures for positive impacts, as needed or required. These mitigation and enhancement measures are summarized in Environmental Management Plans (EMP) specific to each component that will include screening criteria and environmental procedures. The EAs also evaluate whether other environmental safeguards are triggered, and develop appropriate procedures, when necessary. Components 1 (Native Forests and Biodiversity) and 2 (Sustainable Plantation Forestry) include capacity building at national and provincial levels and support sustainable forestry policy and regulatory activities which will strengthen capacity for environmental assessment and increase enforcement. The project design includes mechanisms for participation by local communities in Component 3 (Protected Areas and Conservation Corridors). Local participation will enhance the component's conservation objectives and the overall project development objective, sustainability, and economic impact. The National Parks 111 Administration (APN) has its own regulatory framework regarding environmental assessment and management, and for the protection o f cultural resources, which will reinforce Bank safeguards. 10. The Native Forests component i s not subject to a specific EA given that it i s a preparatory component which advances the participatory mechanisms and technical basis for establishing sustainable forestry policies for the sector. Activities in this component also focus on information dissemination, studies on potential for environmental services and capacity building, all tending towards sustainability and reducing impact from forestry activities. Natural Habitats (OP 4.04) 11. The primary focus o f the Protected Areas and Conservation Corridors component is the protection o f natural habitats. All activities under this component seek to increase the conservation capacities o f government-level institutions while enhancing community involvement and benefit-sharing from park improvements, infrastructure investments and increases in tourism. If not properly designed and complemented by capacity-building of institutional and community stakeholders, increased tourism could impact natural habitats negatively by creating uncontrolled use and intrusion. Increased visitation may also put a strain on existing services and infrastructure serving the tourist industry (lodges, handicrafts, hunting, fishing, etc). Potential impacts on natural habitats from increased tourism and community-based activities are part o f the EA analysis which has been carried out. This analysis i s in addition to assessments which were performed previously by the National Parks Administration for the preparation o f park management plans. The National Strategic Plan for Sustainable Tourism recently implemented also sets forth guidelines for the management o f this aspect inregard to the SNAP. Infrastructure works in national parks will incorporate Bank standards for EA and EIA for relevant activities. Based on recent project activities (PO39787 and P040808/Ln. 4085 AR) APN has shown excellent compliance with Bank standards, and has a set o f protocols for works inParks which are comparable. 12. The project will support environmentally sustainable forestry activities designed to increase productivity inthe sector while integrating sustainable and best-management production practices into national development without adversely impacting natural habitats. Institutional strengthening activities will be carried-out by the project at federal and provincial levels o f government to promote greater governance and enforcement o f environmental regulations including those that protect and conserve natural habitats. The EA for the project ensures that proposed actions are consistent with the policy and specifically address the issue o f natural habitats, and be used to guide the final project design in the use o f best practices. Small-holder forestry activities supported under the Sustainable Production Forestry component will be subject to an Environmental Management Framework in order to ensure compliance with Bank safeguards including natural habitats. Pest Management (OP 4.09) 13. The EA for the Sustainable Plantation Forestry component examined the potential use o f pesticides in the context o f its activities with small producers, and has developed concrete 112 guidelines for pest management, with emphasis placed on integrated pest management consistent with the pertinent Bank safeguard requirements in this regard. These guidelines form a Pest Management Plan, which has been included as part o f each components' Environmental Assessment. Guidelines and specific budgets for implementation included in the plan will be incorporated into the Operational Manual. Per the requirements o f OP 4.09, any pesticides procured under the project would require prior review and must be approved by the Bank during project implementation. Forests (OP 4.36) 14. The project conforms to this safeguard. Forest plantations will be established only on small-holder lands under the Sustainable Plantation Forestry component, with an estimated average size o f 3.5 hectares. The direct beneficiaries are the rural poor. About 4000 ha o f land are estimated to be forested under this component. N o industrial-scale commercial planting or harvesting i s planned under the project. The EA specifically addresses the issue o f forests, and ensures that the project is consistent with this concept incorporating subcomponents that seek increased sustainability in policies, planning, and institutional capacities. Buffer-zone and sustainable use activities will be subject to the Environmental Management Framework prepared for individual subprojects under the Protected Areas and Conservation Corridors component. This will help insure that there are no adverse effects on forests and that there is a focus on the promotion o f sustainable uses o f forest resources. Per the requirements o f OP 4.36, forest plantations supported under the project would not cause the loss or degradation o f critical natural habitats, which include protected areas plus other areas o f highconservation value. CulturalProDerhr (OP 4.11) 15. Several o f the 11 parks that are considered for strengthening within the Protected Areas and Conservation Corridors component o f the project have important cultural property protected within and around their boundaries. The Bosques PetriJicados National Monument site is important for its protection o f fossils while Talampaya National Park and others contain archeological sites that are included among UNESCO World Heritage sites. 16. Both the Protected Areas and Conservation Corridors and the Sustainable Plantation Forestry components will restore and upgrade historic buildings indowntown Buenos Aires. The project i s consistent with the safeguard in that it seeks to directly improve protection o f these cultural properties. The Environmental Assessment carried-out by APN for project preparation identifies relevant issues which have been incorporated into the EMP for the component, including the relevant local and national laws and regulations in regard to cultural property and restoration. Social Assessment 17. In preparation for the project components, specifically the Protected Areas and Sustainable Plantation forestry components (components 2 and 3), Government Counterparts (from Parques Nacionales (PN) and Agriculture) has undertaken a systematic social assessment based on good practice standards. This has focused on an analysis o f social context, diversity 113 and gender; an analysis o f formal as well as informal institutions in the project areas; a detailed stakeholder analysis; a structured consultation and participation framework and process; and a comprehensive analysis o f social risk, both risks potentially emanating from the project and risks to the project from the social context. 18. Expected Social Outcomes. PN and Agriculture has identified key areas where the project i s expected to contribute positively to social development outcomes. Indicators for each component o f the project were developed for these key outcomes and monitoring and supervision will track progress in these areas, disaggregated by social groups including indigenous communities and gender. These outcomes include: Social inclusion: Improved protected areas management and more sustainable approaches to forest development are expected to reduce the current situation o f marginalization and social exclusion, by providing better access to practices and technologies for biodiversity conservation, sustainable use and forest management. The necessary frameworks for Indigenous Peoples and Resettlement as set forth inthe safeguards are beingprepared for these areas and will be part o f the operational manuals and contemplated in the project investment subcomponents; Empowerment: The project is based on a demand-driven approach to subprojects for sustainable use and forest management. With strengthening both o f local communities and producers organizations and individual small and medium farmers to articulate demand and hold institutions accountable for providing services, along with technical assistance, improved transparency and capacity building at different levels, the project is expected to strengthen empowerment processes in 11 protected areas and forested areas selected for project implementation; Security: The project will reduce physical vulnerability as well as allow local communities, producer's organizations and individual small and medium farmers to broaden their asset base through better access to technical services, markets, and capacity building activities; and Gender equity: Provision o f capacity building activities, particularly in buffer zones o f the 11 protected areas and forestry areas, has direct and positive benefits particularly for women. The project will also seek to enhance women's participation inproductive activities and decision making. 19. Social Diversity. The project will operate in an extraordinarily rich, complex and diverse social context (1 1 protected areas and forestry areas), making flexibility and ongoing learning essential. Argentina has different biophysical environments and i s also rich in social diversity and historical background. There is wide regionalvariation from the Northwest to Patagonia and from the central region to Mesopotamia. The social assessment reports provide a detailed description o f these characteristics in the different project areas and provinces. Economic adaptation varies a great deal from group to group and region to region: Inthe 11 protected areas 114 selected for biodiversity conservation, hunting and gathering has been common, while in the forested areas local farmers are mainly agriculturalists and in small scale cattle producers. Gender relations also depend on cultural background and are determinate by the economical activities and local traditions. While buffer zones economic activities depend on sustainable use production with women's' participation, in most cases men dominate political, social and economic decision-making and resources management, especially in forested areas. Women's work tends to be focused around domestic activities, including provision o f wood and water. In some localities around protected areas they produce or sell handicrafts. 20. Formal and Informal Institutions. Rural communities and individual families located in the project areas display a wide variety o f organizational structures and institutional relationships. Many o f them are characterized by a focus on the collective (cooperatives and associations) and individual small and medium farmers; decision making through collective consultations and consensus. The social assessment reports summarize a typology o f organizations which are located inthe protected areas system and in forested areas with different levels o f capacity from strong organizational skills to poor. 21. These organizational typology structures constitute an alternative for the project to focus financial investmentsand develop the basis for long term sustainability. Beyond the community, the social assessment study has also analyzed rules, organizational structures and competencies o f provincial state authorities and agencies, and municipal and local groups. 22. Stakeholder Analysis. Based on the overall analysis o f institutional actors, the social assessment includes a systematic stakeholder analysis. This i s not limited to beneficiaries or those directly affected by the project. It also includes groups who may influence the outcome o f the project, directly or indirectly. As with the analysis o f social diversity and gender, the social assessment highlights the heterogeneity o f actors and interests in different states and settings. For each o f the stakeholder groups, the analysis contains a description o f the stakeholders and their key characteristics, as well as their interest or stake in the project and their level o f influence over outcomes. The purpose o f this is to identify winners and losers, champions and potential opponents. Some o f the broad categories groups analyzed are (i)communities; (ii) cooperatives and organizations; (iii)provincial authorities; (iv) federal government; civil society organizations including NGOs and Academic institutions; (v) private sector; and (vi) others. Each o f these categories i s broken down into specific actors. 23. From the stakeholder analysis, the clear conclusion is that the project i s demand driven and enjoys broad support among many different actors and should be used as a co-executing agencies inthe protected areas and forested areas. The key risk factor lies inforested areas with the interface between the small farmers and the project in the form o f academic and NGOs as a co-executing agencies: The analysis points out that "their interest is not with achieving the objectives o f the program" from a sustainability perspective. Transparency and oversight in technical assistance and the dependency from services i s therefore essential, and the social assessment provides guidance on how communities can be assisted in this through access to information on budgets, norms and standards, as well as strengthening o f the local communities and institutions. 115 24. Participation and Consultation Process. The National Parks Administration and the Secretariat o f Agriculture as institutions have developed a systematic participation and consultation framework in 2001 and continued during project preparation. The elaboration o f management plans for protected areas and forests requires strong consultation participation from local communities and organizations. The social assessment reports all consultation and participation carried out since 2001 at different levels (national, provincial and within the project areas). 25. At local level, there are experiences from both protected areas and forestry executing projects and they know very well the project cycle for subprojects, and it have been identified that a systematic consultation and participationprocess built inat different stages. This includes: (a) Expressiono f demand; (b) Social auditing and control; (c) Participation indesign decisions; (d) Formal handover o f protected areas and forest management; and (e) Ongoing access to information throughout the project cycle. 26. Social Risk. The social assessment report contains a comprehensive analysis o f risks related to the social context. The report notes that there are various reasons or sources for these risks, including the heterogeneous nature o f many actors in the project area, specifically in protected areas; lack o f technical knowledge related to protected areas management and parks boundaries; conflicts over parks demarcations specifically between the protected area and the indigenous communities. A number o f institutional risks have also been identified, including: (a) Lack o f resources; (b) Weak planning, implementationand monitoring at the project area; (c) Different capacities among different agencies; (d) Difficulties inapplying financial and technical norms; and (e) Communication problems. 27. Overall, risks and opportunities have been very well identified as part o f the social assessment. An action plan to address and coordinate these aspects is included inthe final Social Assessment reports. 116 Indigenous Peoples (OP 4.10) 28. Four (4) protected areas to be strengthened under the Protected Areas and Conservation Corridors component have indigenous groups within and around them (Baritu, Calilegua, Sierra de las Quijadas and Pilcomayo). In order to comply with the Indigenous Peoples Policy, APN has prepared a Social Assessment that incorporates an Indigenous Peoples Plan. This IPP has been integrated into the project design and will be included in the operational manual. The Sustainable Plantation Forestry Componentproposed project sites (Mesopotamia and Patagonia) are inhabited by indigenous groups in specific cases, and the identified project activities have beenevaluated and determined not to have any direct impact, positive or negative, on indigenous people. However, indigenous groups might choose to participate in the demand-driven aspects o f the project. In order to address this possibility, an Indigenous Peoples Development Framework was prepared. This framework will guide work with any indigenous group that may wish to participate inthe project. Involuntary Resettlement (OP 4.12) 29. Although no involuntary resettlement i s planned under any o f the components, there is potential for activities under the Protected Areas and Conservation Corridors component to diminish access to natural resources by surrounding communities. In order to avoid adverse impacts in this regard and in compliance with Involuntary Resettlement Policy, a Process Framework was developed to ensure proper consideration before and during execution o f protected area strengthening activities and forestry management. All work toward establishment o f corridors and/or new protected areas will consist only of baseline surveys and participatory planning processes with stakeholders - not their actual establishment. Policies NOT Triggered 30. It has been determined that the following Safeguard Policies have not been triggered by the proposed project: Safety of Dams (OP 4.37) 31. The project does not involve any dams. Projects on International Waterways (OP 7.50) 32. The project does not involve internationalwaterways. Projects in Disputed Areas (OP 7.60) 33. The project does not involve disputedareas. 117 Annex 11: ProjectPreparationand Supervision ARGENTINA: SustainableNatural ResourcesManagementProject Planned Actual PCN review* April 13,2007 April 13,2007 Initial PID to PIC* April 14,2007 June 26,2007 Initial ISDS to PIC* April 14,2007 October 24,2007 Appraisal December 7,2007 December 7,2007 Negotiations January 18,2008 January 23,2008 Board/RVP approval March 18,2008 Planneddate of effectiveness June 18,2008 Planneddate of mid-termreview July 30,201 1 Plannedclosing date March 31,2014 Key institutions responsiblefor preparation of the project: Secretariat o f Agriculture, Livestock, Fishing, and Food (SAGPyA) Secretariat of Environment and Sustainable Development (SAyDS) National Parks Administration (APN) Bank staff and consultantswho worked on the project included: Name Title Unit RobertRagland Davis TTL, Senior Forestry Specialist LCSAR Zhong Tong Agricultural Economist LCSAR George Ledec Lead Ecologist LCSEN Jorge Uquillas Sr. Social Specialist LCSEO Juan Martinez Sr. Social Specialist LCSEO Eduardo Morales Extension Consultant FA0 GlennMorgan Lead Environment Specialist LCSEN Erick C. M.Femandes Adviser ARD Gerard0Segura Sr. Rural Development Specialist LCSAR James Carle Sr. Forestry Specialist FA0 James Smyle Sr. Natural Resources Mgt. Sp. LCSAR David Cassells Sr. Forestry Specialist ENV Carter Brandon Lead Env. Specialist LCSEN Richard Owen Senior Forestry Officer FA0 Marcel0 Acerbi Environmental Specialist, ETC LCSEN Random Dubois Sr. Biodiversity Officer FA0 Guillermo Rodriguez Consultant, Institutions F A 0 Ricardo Larrobla Consultant, Forestry Specialist LCSAR Florencia Reca Institutional Specialist, STC LCSAR Mariana Montiel Sr. Counsel LEGLA Ana Grofsmacht ProcurementAnalyst LCOPR 118 Alejandro Solanot Financial Management Analyst LCSFM Natalia Bavio Financial Mgt. Consultant LCSFM Francis Fragano Environmental Consultant, STC LCSAR Xiomara Morel Sr. Finance Officer LOAFC Jose Janeiro Sr. Finance Officer LOAFC Lyle Morton Junior Professional Associate LCSEN Diana Rebolledo Language Program Asst. LCSAR Maria Emilia Smirks Team Assistant LCC7C Bank funds expendedto date on project preparation: 1. Bank resources: US $250,000 2. Trust funds: 3. Total: US $250,000 EstimatedApproval and Supervisioncosts: 1. Remainingcosts to approval: US$25,000 2. Estimatedannual supervision cost: US$88,000 (each year for 5 years) 119 Annex 12: Documents in the Project File ARGENTINA: Sustainable NaturalResources Management Project 1. Brown, A. et al. 2006. La situacidn ambiental argentina 2005, Fundacion Vida Silvestre Argentina 2. Argentina Country Assistance Strategy, May 4,2006, Report No. 34015-AR, pg. 146 3. Dinnerstein, E. et al. (1995). A Conservation Assessment of the Terrestrial Ecoregions o f LatinAmerica andthe Caribbean. Washington, DC. WWF-World Bank 4. IUCN2006. 2006 IUCNRed List of ThreatenedSpecies.www.iucnredlist.org 5. Corcuera, J. and Martinez, U.2007. La Expansion Agricola y el Ambiente en el Context0 Global. In FVSA-INTA. 2007. Produccion Agropecuaria y Medio Ambiente. Ed. Martinez, U.FVSA. Buenos Aires 6. The Nature Conservancy. 2005. Reporte Tecnico. Evaluacion Ecoregional del Gran Chaco. Ed.Oren, D.and Zavala, S. 7. SAyDS. 2007. Primer Inventario Nacional de Bosques Nativos. Informe Nacional. Buenos Aires 8. Bilenca, D. and Minarro, F. 2004. Identificacion de Areas Valiosas de Pastizal en las Pampas y Campos de Argentina, Uruguay y Sur de Brasil. Fundacion Vida Silvestre Argentina 9. APN y Provincia de Formosa. 2005. DiseAo de una Estrategia Regional de Corredores de Conservacidn en el Gran Chaco Argentino. UICN/Emb. Britanica 10. Aguerre, M. 2006. Analisis de la vision de 10s inversores externos y nacionales sobre las oportunidades y riesgos del negocio foresto-industrial en Argentina. FAO. Rome. 11. Braier, G. 2006. Estudio para identificar la competitividad y las ventajas comparativas de Argentina en el sector forestoindustrial basado en plantaciones.FAO. Rome 12. Burgos, Adriana. 2006. Componente Entrenamiento y Construccion de Capacidades. Educacion ambiental y Alcance. SAGPyMPFD. BuenosAires. 13. De Negri, Gerard0 and Gonzalez Alejandro. Catedra de Economia Forestal. Universidad Nacional de La Plata. 2006. Evaluacion economica de modelos forestales productivos que apliquen practicas favorecedoras o conservadorasde la biodiversidad y analisis de la actual politicade incentivos para estas actividades. SAGPyMPFD. Buenos Aires. 120 14. Elizondo, Mario. 2006. Analisis Institucional - legal en relacion con la biodiversidad en plantaciones forestales. SAGPyNPFD. Buenos Aires. 15. Morales, Eduardo. 2006. Research, Technology Transfer and Extension-Forest DevelopmentProject Argentina-Final Report. FAO. Rome. 16. Programa de Ecologia Forestal .Depto de Ecologia y Ciencias Ambientales. Universidad Maimonides. 2006. Linea de Base en Biodiversidad en las provincias de Misiones, Corrientes y Entre Rios. SAGPyNPFD. BuenosAires. 17. Wood, G. 2005. Evaluacibn Economico-Financiera Del Componente "C" Del Proyecto ForestalDe Desarrollo. SAGPyNPFD. Buenos Aires. 18. Rodriguez, Guillermo. 2006. Preparation Stage o f the Sustainable Forest Management Project inArgentina Institutional Strengthening Component Final Report. FAO. Rome. 19. Wood, G. 2005. Evaluacion Economico-Financiera Del Componente "C" Del Proyecto ForestalDe Desarrollo. SAGPyNPFD. Buenos Aires. 20. APN. Management Plans: Pilcomayo NP, Tierra del Fuego NP, Sierra de las Quijadas NP, 21. E. Andenmatten; H. Herrera. 2006. "PDFS-SAGPyA: Propuesta para el Componente "B": Generacion y diseminacion de conocimientos para el desarrollo sustentable". SAGPyA, informe de consultoria, inedito.61 p. 13 ANEXOS. 22. P. Peri; L. Colcombet; S.M. Lacorte. 2005. "Programa de desarrollo de Sistemas Silvopastoriles". En Andenmatten y Herrera "Propuesta para el Componente "B", PDFS- SAGPyA. 62-89. 23. M.Marco. 2005. "Programa de domesticacion y mejoramiento de epecies forestales para usos de alto valor". En Andenmatten y Herrera "Propuesta para el Componente "B", PDFS-SAGPYA.89-107. 24. J. Corley. 2005. "Programa de Sanidad Forestal. Validacion de tecnologias de control". En Andenmatten y Herrera "Propuesta para el Componente "B", PDFS-SAGPyA. 108- 115. 25. H. Herrera. 2005. "Extension rural y TICS".En Andenmatten y Herrera "Propuestapara e l Componente "B", PDFS-SAGPyA. 116-120. 26. H. Herrera. 2005. "AACREA: Asociacion Argentina de Consorcios Regionales de Experimentacion". En Andenmatten y Herrera "Propuesta para el Componente "B", PDFS-SAGPYA. 121-130. 121 27. R. Trudel. 2005. I'El modelo de gestion asociada. Propuesta de SOCODEVI". En Andenmatteny Herrera "Propuestapara el Componente "B",PDFS-SAGPyA. 131-154. 28. S. Massoni. 2005 . "Desarrollo de un Plan Comunicacional". En Andenmatten y Herrera "Propuesta para el Componente "B", PDFS-SAGPyA. 155-156. 29. H. Herrera. 2005. "Criterios para seleccionar y priorizar recursos humanos, para asignacionde recursos de capacitacion relacionados a investigacion". 30. M.Marc& 2005. "Programa de domesticacion y mejoramiento de epecies forestales para usos de alto valor". En Andenmatten y Herrera "Propuesta para el Componente "BI', PDFS-SAGPYA. 157-163. 31. Rusch, V. (INTA); y A. Vila (WCS). Informacidn de base sobre biodiversidad y plantaciones forestales: Modulo N O de Patagonia. Proyecto de Investigacion Apliacada (PIA 04/05). INTA EEA Bariloche; y APN Delegacion Regional Patagonia, Rio Negro, Argentina. 2005. 281 p. 32. Zuleta, G. A.; Bellocq, M. I.;Torrusio, S., Varela, D.; Rey, N.; Scandalo, R.; Pitluk, R.; Niklas, C.; Monjeau, A,; Rescia, A.; Perez, A.; Otero, J.; Erice, F.; Torti, S. y Cseh, C. 2005. Recopilacion y analisis de datos para la elaboracion de guias de buenas practicas forestales relacionadas a la conservacion de la biodiversidad con enfasis en ecoregiones de Mesopotamia 33. Informe Final. Universidad Maimonides, Programa de Ecologia Forestal, Depto de Ecologia y Ciencias Ambientales-CEBBAD. Buenos Aires, Argentina. 2005. 164p. 34. Kopta, R. Diseiio de Campaiias de Educacion Ambiental. Informe Final. Secretaria de Agricultura, Ganaderia, Pesca y Alimentos. Fundacion Ambiente, Cultura y Desarrollo - ACUDE. Cordoba, Argentina. 2006. 30 p. 35. Righetti, P. y Zucchini, H. Evaluacion Ambiental del Proyecto de Desarrollo Forestal Sustentable. Direccion de Forestacion. Secretaria de Agricultura, Ganaderia, Pesca y Alimentos. Argentina 2007. 36. Nanclares, M. Evaluacion Social del Proyecto de Desarrollo Forestal Sustentable. Direccion de Forestacion. Secretaria de Agricultura, Ganaderia, Pesca y Alimentos. Argentina 2007. OtherDocuments Consulted 1. CEDLAS. Argentina Socioeconomic Statistics. http://www.depeco.econo.unlp.edu.ar/cedlas/monitoreo/monitoreo-arg .htm 2. Cubbage, F. et al. 2006. Timber Investment Returns for Plantations and Native Forests in the Americas. USA. 122 3. Economist Intelligence Unit.Argentina Country Report August 2006. London. 4. Forest Stewardship Council. 2004. Norma de Manejo Forestal. Primer Borrador. Fundacion Vida Silvestre Argentina. Buenos Aires. www.vidasi1vestre.org.ar 24 May 2005. 5. Forest StewardshipCouncil (2004) Perspectives on Plantations. A review of issues facing plantation management. Bonn, Germany. FSC. Accessed at www.fsc.org 22 February 2005. 6. Inter-American Development Bank. Estudio sobre inversion directa en negocios forestales sostenibles. Washington, D.C., 2004. 7. Secretaria de Agricultura, Ganaderia, Pesca y Alimentacion. 2001. Argentina, Inventario Nacional de Plantaciones Forestales. Proyecto de Desarrollo Forestal. Buenos Aires. 8. World Bank.ArgentinaData At-A-Glance. http://devdata.worldbank.ordAAG/argaaa.pFD 9. Secretariat of Tourismof Argentina: http://w,turismo.gov.ar 10. World Wildlife FundTerrestrial Ecoregions http://www.worldwildlife.or~/wildworld/profiestrialnt.htm1 11. National Parks Administration o f Argentina: http://www.parquesnacionales.gov.ar 123 Annex 13: Statement of Loans and Credits SustainableNatural Resources Management Project ~~~~ Difference between expectedand actual Original Amount in US$ Millions disbursements Project ID FY Purpose IBRD IDA SF GEF Cancel Undisb Orig Frm Rev'd PO71025 2004 AR-Provincial Maternal-Child Hlth Inv Ln 135 80 0.00 0.00 0.00 0.00 135.80 3.83 0.00 PO72637 2004 AR-Prov Maternal-Child Hlth Adj 750 00 0.00 0.00 0.00 0.00 150.00 50.00 0.00 PMCHSAL PO78143 2004 GEF AR Enabling Act Conv Climate Cha 0 00 0.00 0.00 1.14 0.00 0.93 0.27 0.00 PO88153 2004 AR National Highway Asset Management 200 00 0.00 0.00 0.00 0.00 200.00 0.00 0.00 PO83982 2004 AR ECONOMIC RECOVERY 500 00 0.00 0.00 0.00 0.00 500.00 83.33 0.00 SUPPORT SAL PO73578 2003 Social Protect V I (AR-Jefes de Hogar) 600 00 0.00 0.00 0.00 0.00 77.55 77.55 0.00 PO70374 2002 AR PROFAM LIL 5 00 0.00 0.00 0.00 0.00 3.48 3.28 2.96 PO69913 2002 AR Santa Fe Provincial Reform 330 00 0.00 0.00 0.00 0.00 126.70 126.70 0.00 PO49012 2001 GEF AR-Marn Poll Prevention 0 00 0.00 0.00 8.35 0.00 8.36 4.11 3.92 PO44447 200I AR CatamarcaProvincial Reform 70 70 0.00 0.00 0.00 0.00 24.30 25.00 0.00 PO64614 2001 AR- Second SecondaryEducationProject 56 99 0.00 0.00 0.00 0.00 23.34 -33.65 0.00 PO68344 2001 AR Cordoba PRL5 303 00 0.00 0.00 0.00 0.00 75.00 75.00 0.00 PO57473 2001 AR INDIGENOUS COMMUNITY 5 00 0.00 0.00 0.00 0.00 4.09 4.09 0.00 DEVELOPMENT LlL PO55482 2000 AR-Pub Hlth Sum & Disease Control 52 50 0.00 0.00 0.00 0.00 15.21 15.21 -23.63 PO57449 1999 AR State Modernization 30 30 0.00 0.00 0.00 0.00 20.08 20.08 0.00 PO06043 I999 AR RENEW ENERGY R MKTS 30 00 0.00 0.00 0.00 0.00 26.20 26.07 4.03 PO06046 1999 AR WATER SCTR RFRM 30 00 0.00 0.00 0.00 0.00 19.07 19.07 19.07 PO06058 I999 AR-Social Protection 4 90 80 0.00 0.00 0.00 0.00 16.52 16.52 -1.24 PO45048 1999 GEF AR-RENEWABLE ENERGY IN 0 00 0.00 0.00 IO.00 0.00 9.58 8.80 2.17 RURAL MARKETS PO39787 1998 GEF AR-BIODIVERSITY 0 00 0.00 0.00 10.10 0.00 7.58 6.18 I.64 CONSERVATION PO06050 1998 AR POLLUTION MGT I 8 00 0.00 0.00 0.00 12.00 0.19 12.19 6.19 PO0604I 1998 AR SMALL FARMER DV 75 00 0.00 0.00 0.00 0.00 25.90 25.90 25.90 PO50713 1998 AR MODEL COURT DEV 5 00 0.00 0.00 0.00 0.00 2.05 2.05 1.50 PO55935 1998 AR EL N M O EMERGENCY FLOOD 42 00 0.00 0.00 0.00 0.00 4.88 4.88 4.35 PROJECT PO52590 1998 AR NAT HWY REHAB&MAINT 450 00 0.00 0.00 .o.oo 0.00 67.43 67.43 33.91 PO06010 I997 AR PROV AG DEVT I 125 00 0.00 0.00 0.00 0.00 71.18 71.18 71.18 PO05980 1997 AR PROV ROADS 300 00 0.00 0.00 0.00 0.00 88.72 88.72 82.05 PO06052 1997 AR FLOOD PROTECTION 200 00 0.00 0.00 0.00 0.00 40.81 40.81 -9.68 PO06059 1997 AR-Maternal &Child Hlth & Nutrition 2 100 00 0.00 0.00 0.00 0.00 13.31 13.31 0.00 PO39584 1997 AR B A URB TSP 200 00 0.00 0.00 0.00 0.00 62.46 62.46 26.79 PO40808 1997 AR NFOREST/PROTC 19 50 0.00 0.00 0.00 0.00 9.43 8.90 0.00 PO06040 1996 AR FORESTRY/DV 16 00 0.00 0.00 0.00 0.00 3.35 3.35 3.35 PO37049 1996 AR PUB INV STRENGTHG 16 00 0.00 0.00 0.00 5.50 2.46 7.96 1.16 PO06018 1995 AR PROV DEVT II 225 00 0.00 0.00 0.00 0.00 7.1I 7.11 5.90 PO06060 1995 AR MUNlC DEVT II 210 00 0.00 0.00 0.00 4.08 15.26 19.34 15.26 Total: 5,191.59 0.00 0.00 29.59 21.58 1,858.33 967.03 276.78 124 ARGENTINA STATEMENT OF IFC's Heldand DisbursedPortfolio InMillionsofUSDollars Committed Disbursed IFC IFC FY Approval Company Loan Equity Quasi Partic. Loan Equity Quasi Partic 2000 ASF 20.00 0.00 0.00 20.50 20.00 0.00 0.00 20.50 I998 AUTCL 3.64 0.00 0.00 0.00 3.64 0.00 0.00 0.00 2002104 Aceitera General 30.00 0.00 20.00 0.00 0.00 0.00 0.00 0.00 1995197199 Acindar 24.64 0.00 0.00 0.00 24.64 0.00 0.00 0.00 1994195 Aguas 18.82 0.00 0.00 44.63 18.82 0.00 0.00 44.63 1999 American Plast 2.90 0.00 0.00 0.00 2.90 0.00 0.00 0.00 2000 BACS 7.46 12.50 0.00 0.00 7.46 12.50 0.00 0.00 1999104 BancoGalicia 7.50 0.00 0.00 0.00 3.75 0.00 0.00 0.00 I996 Bansud 0.38 0.00 0.00 0.00 0.38 0.00 0.00 0.00 2000 Bco Hipotecario 15.54 0.00 0.00 26.10 15.54 0.00 0.00 26.10 I996 Brahma - ARG 0.71 0.00 8.50 0.00 0.71 0.00 8.50 0.00 1997 Bunge-Ceval 5.36 0.00 5.00 0.00 5.36 0.00 5.00 0.00 1996 CAPSA 3.54 0.00 3.24 8.99 3.54 0.00 3.24 8.99 1999 CCI 0.00 5.00 0.00 0.00 0.00 5.00 0.00 0.00 1995 CEPA 3.00 0.00 0.00 1.20 3.00 0.00 0.00 1.20 2000 Cefas 5.13 0.00 1.61 0.00 5.13 0.00 1.61 0.00 1994 EDENOR 3.75 0.00 15.00 0.00 3.75 0.00 15.00 0.00 1998 F.V.S A 5.25 0.00 4.00 0.00 5.25 0.00 4.00 0.00 2000 FAPLAC 9.21 0.00 5.00 0.00 9.21 0.00 5.00 0.00 I996 Grunbaum 2.50 0.00 0.00 3.33 2.50 0.00 0.00 3.33 Grupo Galicia 0.00 3.06 0.00 0.00 0.00 3.06 0.00 0.00 I998 HospitalPrivado 8.49 0.00 0.00 0.00 8.49 0.00 0.00 0.00 1992 Huantraico 0.00 27.00 0.00 0.00 0.00 0.00 0.00 0.00 2004 Jumbo Argentina 0.00 40.00 0.00 0.00 0.00 7.50 0.00 0.00 I992 Malteria Pampa 2.00 0.00 0.00 0.00 2.00 0.00 0.00 0.00 I997 Milkaut 0.00 5.03 0.00 0.00 0.00 3.80 0.00 0.00 1996199 Minetti 10.64 0.00 0.00 20.56 10.64 0.00 0.00 20.56 1993194103 Molinos 30.00 0.00 0.00 30.00 30.00 0.00 0.00 30.00 1995 Nahuelsat 4.11 0.00 0.00 0.00 4.11 0.00 0.00 0.00 1996199 NeuquenBasin 0.00 5.00 0.00 0.00 0.00 0.00 0.00 0.00 1993 Nuevo Central 0.00 3.00 0.00 0.00 0.00 3.00 0.00 0.00 1998 Patagonia I.76 0.00 I.oo 0.00 1.76 0.00 I.oo 0.00 I998 Patagonia Fund 0.00 14.97 0.00 0.00 0.00 8.00 0.00 0.00 1992 Rioplatense 3.00 0.00 0.00 I.67 3.00 0.00 0.00 I.67 I999 S.A. San Miguel 6.23 0.00 0.00 0.00 6.23 0.00 0.00 0.00 I995 SanCor 8.75 0.00 20.00 0.00 8.75 0.00 20.00 0.00 1995 Socma 6.26 0.00 0.00 15.00 6.26 0.00 0.00 15.00 I998 Suquia 0.00 0.00 10.50 0.00 0.00 0.00 10.50 0.00 1997 T61 5.00 0.00 5.00 9.38 5.00 0.00 5.00 9.38 1996197 Terminal6 5.00 0.00 0.00 4.06 5.00 0.00 0.00 4.06 125 1995 Terminales Port. 2.00 0.00 0.00 0.00 2.00 0.00 0.00 0.00 1995/00 Tower Fund 0.00 5.00 0.00 0.00 0.00 4.13 0.00 0.00 I995 Tower FundMgr 0.00 0.05 0.00 0.00 0.00 0.05 0.00 0.00 1996 Transconor 20.29 0.00 17.87 157.58 20.29 0.00 17.87 157.58 2001 USAL 9.98 0.00 0.00 0.00 7.98 0.00 0.00 0.00 1997103 Vicentin 30.00 0.00 0.00 30.00 30.00 0.00 0.00 30.00 1993 Yacylec 0.75 5.04 0.00 0.00 0.75 5.04 0.00 0.00 Total portfolio: 323.59 125.65 116.72 373.00 287.84 52.08 96.72 373.00 Approvals Pending Commitment FY Approval Company Loan Equity Quasi Partic. 2004 AGD - Expansion 0.02 0.00 0.00 0.03 1999 AmericanPlast 0.00 0.00 0.00 0.00 2000 ArgentinaSMMC 0.00 0.00 0.00 0.45 2004 Banco Rio TFF 0.02 0.00 0.00 0.05 2004 FIDEX 0.03 0.00 0.00 0.00 2001 Gasnor 0.02 0.00 0.00 0.02 2001 ITBA 0.01 0.00 0.00 0.00 Total pendingcommitment: 0.I O 0.00 0.00 0.55 126 Annex 14: Country at a Glance Sustainable Natural Resources Management Project Lath Upper- POVERTY and SOCIAL America mlddle- Argentina i% Carib. Income 3evelopment diamond' 2006 Population,mid-year (mililons) 39 1 556 810 GNI per capita (Atias method, US$) 5,150 4,767 5,913 Life expectancy GNI (Atias method, US$ billions) 201 5 2,650 4,790 T Average annual growth, 2000-06 Population(%) 1 0 1.3 0 8 Labor force (%) 2 4 2.1 1 3 GNI Gross per primary Most recent estimate (latest year available, 2000-06) capita enrollment Poverty (% ofpopuiationbelow nationalpoverty line) Urban population(% of totalpopulation) 90 78 75 Life expectancyat birth (years) 75 73 70 I Infantmortality (per 1.000live births) 15 26 26 Chiid malnutrition(% of childrenunder 5) 4 Access to improvedwater source Access to an improvsdwater source (% of population) 96 91 93 Literacy (% ofpopulation age IS+) 97 90 93 Gross primaryenrollment (% of school-age population) 113 118 112 ---Argentina Male 113 120 106 UDDer-mlddle-lnCOmegrow Female 112 116 104 KEY ECONOMIC RATIOS and LONG-TERM TRENDS 1986 1996 2006 2006 GDP (US$ billions) 110.9 272 1 183.2 214 1 Gross capital formationlGDP 17.5 18 1 21.5 20 9 Exportsof goods and serwcesiGDP 8.2 10 4 24.6 23 3 Trade Gross domestic sawngslGDP 19.3 17 4 27.0 25 4 Gross nationalsavingsIGDP 15 6 24.0 23 2 Current account balancelGDP -2.6 -2 5 3.1 2 9 Interest paymentslGDP 3.3 1 7 1.2 Total debWGDP 47.3 40 8 62.4 Total debt servicelexports 82 8 39 4 21.o Present value of debWGDP 58.9 Present value of debweworts 214.7 Indebtedness 1986-96 1996-06 2006 2006 2006-10 (average annual growth) --_ GDP 3.3 1.1 9 2 8.5 3 6 ~ArgentJna GDP per capita 1.9 0.1 8 1 7.4 2 5 Upper-mJddle-incomegroup Exportsof goods and servlces 7.8 5.6 13 5 11.6 4 8 STRUCTURE of the ECONOMY I Growth (% of GDP) 1986 1996 2006 2o06 of capital and GDP ( O h ) Agriculture 7.8 5.0 9.4 9.0 Industry 37 4 28.4 35.6 35.4 Manufacturing 27 4 18.7 23.2 23.2 0 Services 54.8 65.6 55.0 55.6 Householdfinal consumptionexpenditure 70 1 61 1 66 3 -501 General gogt final consumptionexpenditure 12 5 11 9 8 3 ---=GCF - O - G D P 1986-96 1996-06 2o06 2o06 I Qrowth (average annual growth) of exporta and Imports ( O h ) Agriculture 3 1 2 5 11 1 8 0 h Industry 2 3 1 0 9 2 8 0 Manufacturing 1 9 0 6 7 5 8 0 Services 3 4 0 8 8 2 8 8 Household final consumptionexpenditure 0 2 7 0 7 4 General govt final consumptionexpenditure 1 1 6 2 8 0 -"-_--worts -75 5 0 j Gross capital formation 5 1 -0 1 22 7 12 0 --O-lmporta Importsof goods and serwces 17 5 -1 3 20 1 12 3 Note 2006 data are preliminaryestimates This table was producedfrom the Development Economics LDB database * The diamonds show four key indicatorsin the country (in bold) compared with its income-groupaverage If data are missing, the diamond will be incomplete 127 PRICES and GOVERNMENT FINANCE 1986 1996 2005 2006 Domestic prices (% change) Consumer prices 90.1 0 2 9.6 6.6 Implicit GDP deflator 74.5 -0 1 8.8 13.4 Governmentfinance (% of GDP,includes current grants) Current revenue 0.0 16 9 23.7 23.8 Current budget balance 0.0 -0 9 3.6 3.9 i GDP deflator +CPl 1 Overall surplusldeficit 0.0 -2 0 1.8 1.4 1TRADE 1986 1996 2005 2006 I--. (US$ millfons) Export and import lavels(US$ mill.) I Total exports (fob) 23.811 32,825 33.908 140 000 - Food 2,560 2,902 2.998 1 , Meat 1,074 1,166 1,204 Iz0 130000 Manufactures 6 234 9,780 10,102 Total imports (tin 23,733 22,603 23.484 000 Food Fuel and energy 922 647 672 Capital goods 10.914 10,546 10.957 I I 01 I Export price index (2000=100J 00 02 03 04 05 06 103 110 110 1 Import price index (2000=100) 118 99 99 i @I Exports Terms of trade (2000=100) w Imports 88 111 111 BALANCEof PAYMENTS 1986 1996 2005 2006 1 Current (US$ millions) account balance to GDP (oh) r Exports of goods and services 8,433 28,394 46,204 50,983 Imports of goods and services 6,486 30,197 34,903 39,988 Resource balance 1,947 -I,803 11,301 10,995 Net income -4,808 -5,491 -6,208 -5,438 Net current transfers Current account balance -2,859 -6,810 5,705 6,220 Financing items (net) 1,976 -5,705 -6,220 Changes in net reserves 883 0 0 Memo: Reserves including gold (US$ millfons) 2.718 18,104 Conversion rate (DEC, local/US$) 9 00E-5 1 0 2 9 3 1 EXTERNAL DEBT and RESOURCE FLOWS 1986 1996 2005 2006 (US$ millions) :omposition of 2006 debt (US$ mill.) Total debt outstanding and disbursed 52,450 111,085 114,335 IBRD 1,140 5,372 6,881 6,206 IDA 0 0 0 0 Total debt service 7,323 12,940 10,546 IBRD 210 608 1,216 1,480 IDA 0 0 0 0 Composition of net resource flows Ofticial grants 3 27 25 Official creditors 268 26 -525 Private creditors 375 11,519 1.048 Foreign direct investment (net inflows) 574 6,949 4,730 Portfolio equity (net inflows) 0 867 -48 F' 65.177 World Bank program Commitments 725 946 200 0 4 IBRD E Bilateral Disbursements 408 1,077 362 459 I--IDA D Other multilateral - F Private Principal repayments 134 282 928 1,134 > -IMF G Short-term --- Net flows 273 795 -566 -675 Interest payments 75 326 288 346 Net transfers 198 469 -854 -1,021 1 Note: This table was produced from the Development Economics LDB database. 9/28/07 128 Annex 15: Detailed Park Descriptions ARGENTINA: Sustainable Natural Resources Management Project Name: Calilegua National Park Established: 1979 Size: 76,306 hectares Location: Jujuy Province Visits: 10,l 12(2006) Management Plan: Under development Ecosystem: Yungas Entrance Fee: No Legal Possession: APN (National decree 1733/79) (Cadastral survey complete) Outstanding Characteristics 1. Established in 1979, Calilegua National Park is the largest national park in northwestern Argentina. The park was created to preserve a representative section of the Yungas ecosystem and to protect the upper watershed and water supply of an important fruit-producing region of Jujuy Province. At its highest elevations, the park's ecosystems include montane pine, alder forests and grasslands. Evergreen forests, highly diverse in plant an animal species, predominate at the park's lower elevations. An estimated one-third of the tree species known in Argentina can be found in Calilegua as well as some 377 bird species, including 14 threatened species and 10 range-restricted species of the Yungas. Thanks to its relatively large size, it helps protect mammals such as the Jaguar (Panthera onca), Lowland Tapir (Tapirus terrestris) and some of the last populations of the Northern Andean Deer (Hippocamelus antisensis) in the high pastures near the snowline. Calilegua NP is a designated"core area" of the Yungas Biosphere Reserve, which was created within the UNESCO Man and Biosphere Programme (MAB). Declared in 2002, the reserve covers 1.3 million hectares of the ecoregion. Key Threats (a) Sugar cane and soy farming at the park borders have fragmented and reduced native habitats, putting at risk the viability of species in need of large areas; (b) Forest fires of anthropogenic origin, principally from farmers; and (c) Illegal hunting. SociaVLegal Issues (a) There are 32 communities in the immediate vicinity o f the park, including Guarani and Koya communities. The majority of the Guarani in the area are involved in the sugar mills; (b) Local populations are represented by a variety of civil society organizations, including indigenous organizations and productive associations; and (c) Park is the source of irrigation water for cultivation of cane sugar and fruit plantations. 129 Name: Los CardonesNational Park Established: 1996 Size: 64,150 hectares Location:Salta Province Visits: 9,613 (2006) Management Plan: No Ecosystem: High Andes; Puna; Monte; Yungas Entrance Fee: No LegalPossession:APN (Provincial law no6.805; National law no24.737) (No cadastral survey) Outstanding Characteristics 2. Los Cardones National Park was created in 1996 to preserve one o f the largest stands o f "Cardon" cactus in the country. The park`s 64,117 hectares see upwards o f 10,000 visitors per year, many o f whom come to hike this popular area o f the Calchaqui valley tourist circuit. The park is notable for its diverse and dramatic landscapes, as it covers no less than three biomes, all o f which were underrepresented inthe Argentine park system: the HighAndes, the Puna, and the Monte. Seasonal bodies o f water, shallow and sparsely vegetated, dot the landscape. The climate i s cold and dry, and a frost can come at any time o f year. In the east there i s a small section o f high Yungas biome, including the alpine meadows o f the Valle Encantado. 3. The wildlife in Los Cardones includes several threatened and endangered species, including the Northern Andean Deer (Hippocamelus antisensis), the Pampas Cat (Oncifelis colocolo) and the Tucuman Mountain Finch (Poospiza baeri).. Los Cardones i s also home to some o f the most emblematic species o f the region: the Condor (Vultur gryphus), the Puma (Puma concolor), and the Guanaco (Lamaguanicoe). The park has a rich paleontological record, including dinosaur footprints estimated to be 70 million years old. Key Threats (a) Exotic plants introduced for agriculture or for landscaping; (b) 4x4 and all-terrain vehicle access; (c) Incursion of miningprospectors; (d) Firewood extraction and livestock grazing; and (e) Reactivation o f uranium mininginside the protected area. SociaVLegalIssues (a) APN holds land title but there are families living inside the park; and (b) Park inhabitants (approx. 150 in 1997) are subsistence farmers with little access to markets. Los CardonesNationalPark -Proposed Infrastructure Investments I 1-i: Categoy .- Details .- Amount USD$ Management Constructionof aclministrativcoffices, ofliciaf 1 I-Facilities .-- residences. .I._.--. $687,097 2. User Facilities Constructionof basic sanitation facilities, trails, intcrpretive signage. $72,903, 13. Access . Parkentrance@e, toll booth, parkingarea, $80,645 Name: Campo de 10s Alisos National Park Established: 1995 Size: 10,66 1 hectares Location:Tucuman Province ManagementPlan: N o Entrance Fee: N o Outstanding Characteristics 4. Campo de 10s Alisos NP was established in 1995 to preserve both ecosystems and archeological heritage. Located on the western slope of the Nevados de Aconguija volcano, the park ranges in altitude from 847 to 5,200 meters above sea level. Though a complete survey has yet to be conducted, the park boasts significant biodiversity. Endemic species like the rare Andean Cat (Oreailurusjacobita) and Montane Frog both can be found at Campo de 10s Alisos, along with over 125 identified vertebrates. Endangered species such as the Ocelot (Leopardus pardalis), Northern Andean Deer (Hippocamelus antisensis) and the Long-tailed Otter (Lontra longicaudis) also call the park home. The vegetation o f Campo de 10s Alisos also deserves mention; particularly the Yungas tree tomato, or "tamarillo" (Solanum betaceum). In addition to its unique and threatened flora and fauna, the park is home to one o f the most important Incan ruinssouth ofLake Titicaca. Key Threats (a) Damage to archeological sites including removalitheft of archeological items; (b) Livestock grazing; (c) Presence of exotic flora and fauna, including rabbits, and invasive ornamental plants; and (d) Illegal hunting, particularly in certain areas between the Jaya River and Los Chorizos. SociaYLegalIssues (a) Small agricultural producers inthe park's buffer zone. Campo de 10s Alisos National Park-Proposed Infrastructure Investments ' I Category __ _I Details Amount USDS t l.l\Tanagement Constructionof aciministrati\.eoffice, visitors centcC- FadIities i $445,161 c mountain refuge,equipmentgarages 2. User Facilities A- I Construction of basic sanitationfacilities, trails, cooking $93,613 I Areas and tables 1 riII___ ll.l - - .. ._ I --_I____I_ II I TOTAL $538,774 131 Name: Rio Pilcomayo National Park Established: 1951 Size: 50,4 17 hectares Location: Formosa Province Visits: 7,683 (2006) Management Plan: Yes Ecosystem: Humid Chaco Entrance Fee: No Legal Possession: APN (National law 14.073) (Cadastral survey complete) Outstanding Characteristics 5. Rio Pilcomayo National Park was created in 1951, protecting 47,754 hectares o f marshes, lakes, palm groves, gallery forest, gorges, lagoons and grasslands typical o f the Humid Chaco ecosystem, a poorly protected ecosystem at a regional level. The park i s included on the list of internationally important wetlands (Ramsar Convention). The area i s subject to alternating periods o f flood and drought, with an average o f 1,200mm o f rain annually. 6. Rio Pilcomayo i s important interms o f biodiversity, including nearly 300 species o f birds (approximately 30% o f Argentina's total). Endangered species o f mammals such as the Maned Wolf (Chrysocyon bracyurus), the Giant Anteater (Myrrnecophaga tridactyla) and the Long- Tailed Otter (Lontra Zongicaudis) inhabit the park. Vegetation in the park is similarly diverse. Wetlands are abundant in aquatic vegetation while grasslands spotted with Caranday palms (Copernicia alba) predominate in less flood-prone zones with islands o f Dry Chaco-type forest, covered inQuebracho (Schinopsis spp.) and Guayacan trees. Key Threats (a) Native fauna i s constrained by surrounding ranches; no buffer zone; (b) Livestock grazing; and (c) Illegal logging and poaching. Social/Legal Issues (a) Indigenous communities and settlements at the border of, and within, the park; overlapping land titles heldby APN and indigenous communities; (b) Various towns surround the park, including Palma Sola, Laguna Naick Neck, Laguna Blanca and Colonia Buena Vista; (c) The expansion o f the agricultural frontier has displaced small landholders and indigenous peoples in and near the park, producing an exodus from the area; and (d) The area is home to a large number o f cooperatives representing small producers as well as active NGOs. Amount 132 Name: Sierra de las Quijadas National Park Established: 1991 Size: 150,000 hectares Location: San Luis Province Visits: 19,834 (2006) Management Plan: Yes Ecosystem: Monte, Dry Chaco Entrance Fee: Yes Legal Possession: San Luis Province (Cadastral survey in progress) (Provincial Law no. 4.844, National Law no. 24.015. and Presidential Decree no. 393.) Outstanding Characteristics 7. Established in 1991 to conserve this striking example o f Dry Chaco and Lowland Plains Monte ecosystems/ecoregions, Sierra de Las Quijadas National Park occupies 150,000 hectares o f the most arid landscape in all o f Argentina, receiving between 500-700mm o f rainfall per year. The most distinguished geologic feature o f the park is the Potrero de la Aguada, an enormous natural amphitheater carved out o f the abruptly rising sandstone walls. The flora, meanwhile, demonstrates its adaptation to the harsh local environment. The endemic and slow-growing Gran Cuyo tree is an example o f the unique flora of the region. This arid land is also home to an abundance o f animals, including the Guanaco (Lamaguanicoe), Puma (Puma concolor) and Collared Peccary (Pecari tajacu). Endangered species found in the park include the Peregrine Falcon (Falcoperegrinus), the Crowned Eagle (Harpihaliaetuscoronatus), and the Yellow Cardinal (Gubernatrix cristata). 8. The Sierra de las Quijadas is also notable for its archeological and paleontological value. Dinosaur tracks are scattered across the park, while human traces, in the form of the carved-out "ovens" o f the Huarpes people, used for cooking and firing their clay pots, can be found near the entrance at Hualtaran. Key Threats (a) Overuse of land for livestock; (b) Presence o f exotic species; (c) Extraction of wood; and (d) Multiple uses of park's water resources and mismanagement o f water. SocialLegal Issues (a) Land title currently held by San Luis Province: (b) There are numerous communities within the buffer zone and at the park's boundaries; most have very basic infrastructure and many are without water or electricity; economic activity is subsistence farming and livestock; and (c) Improve dialogue with local populations on resource management, including livestock. 133 Name: Talampaya National Park Established: 1997 Size: 215,000 hectares Location: L a Riojaprovince Visits: 56,520 (2006) Management Plan: Yes ,Ecosystem: Northern Monte, Dry Chaco Entrance Fee: Yes Legal Possession: APN (National law no24.846; Provincial law no6.192) (Cadastral survey in 1progress) Outstanding Characteristics 9. Created in 1975 as a Provincial Park, Talampaya National Park borrows its name from the Talampaya river, which carved the park's dramatic desert formations. Talampaya became a National Park in 1997 and in 2002, Talampaya and neighboring Ischigualasto Provincial Park were added to the UNESCO World Heritage list. The two parks contain the world's only complete sequence o f fossil-bearing continental sediments, representing the entire Triassic Period o f geological time. Some 100 species o f fossil plants have been identified. In addition to its richness in fossil remains, the park i s also home to important archeological sites, evidence o f early human inhabitation o f the area. The ecosystems represented within the park include the Monte and Dry Chaco. Animal species o f conservation importance include the Andean Condor (Vultur gryphus), Puma(Puma concolor), and Guanaco (Lamaguanicoe). Talampaya has sparse vegetation, characterized by xeric shrubs and cactus, and mesquite and quebracho trees. Key Threats (a) Presence o f livestock and other exotic species within the park remains a threat to native habitats and create competition with native species; and (b) Preservation o f the fossil remains is the primary management concern, and overuse by visitors must be mitigated. SociaULegal Issues (a) The towns of Pagancillo and Villa Union are both approximately 30 km. from the park and lay within the buffer zone, along with a few smaller settlements. Local populations expect that increased tourism will create new opportunities; and (b) Local settlements lack adequate sanitation intheir homes. /I Talarnpaya National Park-Proposed Infrastructure Investments I I I $2.505.484 11 134 Name: Perito Moreno National Park Established: 1937 Size: 115,000 hectares Location: Santa Cruz Province Visits: 1,327 (2006) Management Plan: Underdevelopment Ecosystem: Patagonian Steppe, Subpolar Forests, Entrance Fee: N o Glaciers Legal Possession: APN (Decree no105.433) (No cadastral survey) Outstanding Characteristics 10. Perito Moreno National Park was created in 1937 inorder to preserve the vast and varied resources o f the region, including "lenga" (South American Beech or Nothofagus spp.) forests, two important lake systems, fossil remains, and unique fauna. The Park's expanse covers two eco-regions: the Patagonian Steppe and the Magellanic Subpolar Forests. 11. A wild and mountainous region dotted with lakes and scoured by harsh winds and severe temperatures o f the Patagonian Andes. Despite the difficult terrain, wildlife is diverse and rich in the park. Herds of Guanacos (Lama guanicoe) range the park while predators such as the Puma (Puma concolor) and two fox species can be found. The Andean Condor (Vultur gryphus), Magellanic Woodpecker (Campephilus magellanicus) and Firecrown Hummingbird also are part o f the birdlife in the area. The lakes and streams o f Perito Moreno are also notable for something they do not have, namely nonnative trout species. Absent the predatory trout, the lakes o f Perito Moreno are replete with the nativepuyen andpaladilla, species that have been all but eliminated throughout the region. Key Threats (a) Domesticated livestock impedes the regeneration o f native flora and interferes with native fauna; (b) Unauthorizedvisits to particularly sensitive areas; and (c) Perito Moreno i s the only national park in Argentina without exotic fish species; increased levels o f visitor's increases the risk o f the introduction o f such species. Social/Legal Issues (a) Local private ranches are increasingly turning to tourism, increasing visitation levels to the area. /I Perito Moreno National Park -ProDosed Infrastructure Investments I U 135 Name: Campos del Tuyu National Park (Future) Established: 1979 (private) Size: 3,040 hectares Location: Buenos Aires Province Visits: NIA Management Plan: N o Ecosystem: Pampas Grasslands Entrance Fee: N o Legal Possession: Private (Provincial law 13.681 passed; awaiting national law accepting the lands transfer and the creation o f the national park) (No cadastral survey) Outstanding Characteristics 12. Currently a privately owned (Fundacion Vida Silvestre Argentina) and managed coastal grasslands reserve (Reserva de Vida Silvestre), Campos del TUN i s in the process o f being donated to the government, and will be the first national park which preserves original pampas grasslands. Located in the Province o f Buenos Aires, the area i s just 300 km from the city o f Buenos Aires and covers 3,040 ha o f pristine pampas grasslands. 13. The grasslands and salt marshes o f Campos del Tuyu is the native habitat o f the Pampas Deer (Ozotocerus bezoarticus) and consist o f low-lying grassland plains with small elevations o f land where patches o f a native tree called "tala" (Celtis tala) thrive. The area has a complex environmental system inwhich water (tides) plays a central role. Key Threats (a) Threatened and endangered species include the Pampas Deer and the Greater Rhea (Rhea Arnevicana). Hunting and domesticated livestock have adversely impacted both species; (b) Illegal huntingand fishing by residents o f the adjacent cities; (c) Presenceo f domesticated livestock and exotic species; and (d) Heavy use o f adjacent agricultural lands and lack o f buffer zone. SocialLegal Issues (a) Handover o f land from private foundation to APN not complete; (b) The town of General Lavalle, 6 km from the protectedarea, stands to benefit from the creation o f the park, with increased tourism and commercial activities; (c) The disposal of waste from nearby towns, including General Lavalle, is increasingly an issue inthe interior and along the coast; and (d) The park's buffer zone is becoming increasingly overcrowded. 11 Catemrv Details IAmountUSDS a A"- -- I -1 ~ 1. Management Facilities Construction (ifadministratibe office, interpretive center, 8503,226 ._"--,park guard hnusing. garage- :: / p > e r Facilities Constrricfion of basic sanitation facilities, increasedsignage __ $4,839 I E;: .-- Cowtruetion of park gate and toll booth. I $1 1,290 - "_ --I.- -- so i Name: Tierra del Fuego National Park Established: 1960 Size: 68,909 hectares Location: Tierra del Fuego Visits: 246,803 (2006) Management Plan: Yes Ecosystem: Sub-polar Magellanic Forests, Entrance Fee: Yes marine habitat Legal Possession: APN (National law no15.554) (Cadastral survey inProgress) Outstanding Characteristics 14. Tierra del Fuego National Park was established in 1960 and until recently was the only Argentine park protecting the sea shore. Sitting at the tip o f the continent, the park marks the spot where the Andes fall into the sea. It i s a landscaped filled with lenga forest, glacial lakes, peat-bogs and peaks. The park also protects numerous archaeological sites and i s rich with activities for the outdoor enthusiast. The parks forests cover 25,000 hectares and constitute nearly 4% o f the wooded area inthe entire province of Tierra del Fuego. Peat-bogs o f Sphagnum magellanicum moss are characteristic o f Tierra del Fuego, lining the bottom o f the park's glaciated valleys. Emblematic species o f the park include the Fueguian Red Fox (Lycalopex culpaeus magellanicus), endemic to the park's islands. Guanaco (Lama guanicoe) and southern sea otter can also be spotted. The park is also a fantastic place for birdlife. Key Threats (a) Increased levels o f visitors are near the physical capacity o f the park and its infrastructure; (b) Non-native species, such as the European rabbit, the Grey fox, and beavers threaten the native flora, fauna and landscape; (c) Public roads, forest activities and a high concentration o f recreation sites threaten the south coast o f the Lago Fagnano; (d) The park's boundaries do not include important adjacent marine areas, increasing potential threats from fishing, aquaculture or other activities; and (e) Archeological sites within the park are deteriorating from excessive pedestrian traffic. SociaYLegal Issues (a) Growth o f the city o f Ushuaia at the park's eastern border threatens the integrity o fthe park boundary as well as wildlife; and (b) Pressure from tourism peaks duringthe spring-summer season. __._.ll_l"Catemrv . . .""- _--._I_ AmountUSDS II.. Details ...~~. '-I . .- ~ ~ - .._l_l_ ~~ I of administrative offices, park guard and staff 1. Management garage. Renovation of guest house and $1,704,I29 emergency services offices (firefighters). 1 1 r , 2. User Facilities Construction of sanitation facilities, hiking trails, signage, fire $229,355 /I-.. -. _ _... .-_.-l Pitsand Pedestrk!k!dge. .. -- - - 4 137 Name: Bosques PetrificadosNational Monument Established: 1954 Size: 61,228 hectares Location: Santa Cruz Province Visits: 9,502 (2006) Management Plan: N o Ecosystem: Patagonian Steppe Entrance Fee: N o Legal Possession: APN (Decree 7252) (Cadastral survey inprogress) Outstanding Characteristics 15. Bosques Petrificados National Monument preserves Argentina's finest example o f fossilized flora, set among the cold and dry climate of the Patagonian Steppe. Created in 1954, the original Monument includedjust 10,000 hectare. With the acquisition o f private ranches as well as the inclusion of adjacent provincial and federal lands, the park now encompasses an important tract o f Patagonian Steppe ecosystem, currently underrepresented in Argentina's protected areas system. Bosques Petrificados has a remarkable collection of fossilized trees - the unique result of the uplift of the Andean mountains and volcanic activity. The park also has abundant wildlife, including Guanacos (Lama guanicoe), grey foxes and threatened birds including the Hooded Grebe (Podiceps gallardoi), the Chilean Flamingo (Phoenicopterus chilensis) and the Andean Condor (Vultuv gryphus). Key Threats (a) Endangered species, including threatened bird species that can be found onhear the access road; (b) Illegal removal o f fossils; and (c) Increased visitors and low management capacity threatens the integrity o f the paleontological sites. It also creates increased erosion on heavily usedpark trails. SocialLegal Issues (a) The park has yet to complete the formal handover of two private estancias which have been annexed to the park; and (b) Agricultural operations inthe park's buffer zone. Bosques Petrificados National Monument - Proposed Infrastructure Investments 138 Name: Baritu NP; ElNogalar Reserve (Future) Established: 1974 Size: Baritu: 72,439 ha; ElNogalar: 3,300 ha Location: Salta Province Visits: 25 (2006) Management Plan: N o Ecosystem: Yungas Entrance Fee: No Legal Possession: APN (National law no 20.656, Decree 4.559/73) (Cadastral survey in progress) Outstanding Characteristics 16. Baritu - Baritu National Park was created in 1974, protecting over 72,000 hectares o f pristine Yungas forest ranging from 400-3,000 m. Its remote location at the Bolivian border combined with its rugged landscape makes this largely untouched territory incomparably rich in flora and fauna. Emblematic species o f the park include the Chunta (a forest palm), gigantic cedars (Cedrella spp.)and enormous Strangler Fig (Ficus Maroma). A wealth o f animal life is protected by the park, including the endangered Military macaw ( h a militaris). 17. El Nogalar - El Nogalar National Reserve, a 3,240 hectare area of montane woods and upland grasslands, is located near Los Toldos, to the north o f Baritu NP. The hture reserve was donated by the company Gasoducto Noraytdino, as part o f a mitigation package for the impacts caused by building a gas pipeline in the region. El Nogalar will form part o f the Yungas biological corridor and will be a core area o f the Yungas Biosphere Reserve. The Reserve includes areas o f mountain forest o f pine and alder, vegetation not found in the nearby Barit6 National Park. Key Threats (a) Low impact o f livestock and agriculture to date, due to low human presence; (b) Oil and gas exploration is a growing issue; and (c) New roads bring logging (legal and illegal), hunting and poaching, and have a negative impact on the forest structure and fauna. SociaVLegal Issues (a) Populations living seasonally inthe park; subsistence farming with little access to markets. Koya and Guarani communities living inthe park's buffer zone. (b) Extremely low infrastructure and very limited access: accessible only through Bolivia. ll Baritu NationalPark - Proposed Infrastructure Investments I 139 Annex 16: SubprojectImplementationArrangements ARGENTINA: SustainableNaturalResources ManagementProject Component2 - SustainablePlantationForestry Subcomponent 2.3 -Assistance to Small and MediumScale Producers Overview 1. The main focus of the component will be Small and MediumScale Producers (SMSPs) in the region of Mesopotamia, the Provinces of Buenos AiredDelta and the Pampeana, the North East Region (NOA) and the Andean region of Patagonia. Small producers are defined as those being dependent on agriculture and who (i) directly on their forest operations; (ii)depend work entirely on their own or family labor to undertake forestry operations; (iii) no permanent have employees and (iv) have assets (excluding land) not exceedingU$20,000 invalue. Mediumsized producers are defined as those who have non-land assets exceeding U$20,000 but who lack the ability to improve their productivity and quality of product for lack of technical assistance and credit. 2. The sub component will focus mainly inthe Provinces of Misiones, Rio Negro, Neuquen, Salta and Jujuy where most small forestry producers and would-be producers are located. The main objectives will be to help small and medium size producersto (i) producer groups and form associations, (ii)help members of such groups to access the resources and know-how to undertake sustainable productive plantation forestry/agroforestry; and (iii)improve the sustainability and value added of existing operations. Funds for actual planting and plantation management are already available through Law 25.080 and Resolution 800/2005, and one of the aims of the sub component would be to help small producers to access these and apply best practice in the field. The legal provisions of Resolution 800/2005, which defines activities and maximum areas to be planted (10 ha of new planting and 50 ha for management and maintenance of existing areas) would apply. 3. Eligible activities would include nurseries, tree planting, agroforestry, pruning, thinning, felling, extraction, protection, small-scale processing, wood drying, wood preservation, non wood forest products and marketing. Assistance would take the form of technical assistance, training, hand-tools for field work and basic equipment for value added activities. The subcomponent would also, where feasible, help producer groups enter the carbon trading market. It would aim to create 25 new producer associations and provide assistance to around 5,000 small producers who are members of groups. Assistance available to Medium Size producers would be capped at U$750,000 with the rest being made available to Small Producers. Implementation would be the responsibility of the Secretariat o f Agriculture, Livestock, Fisheries and Food (SAGPyA) which has gained considerable experience with such activities under the previous project. 140 ImplementationArrangements 4. The subcomponent would be executed through qualiJed third parties (co executors or partners) with a demonstrated capacity to carry out such work. These would include NGOs, government institutions, cooperatives and producer associations. The project would also review and test promising alternative mechanisms such as working directly with producer groups who wish to select their own service provider. The steps would be as follows. IdentifyingPotentialTarget Groups and Co Executors- 3 months 5. Field surveys would be carried out inthe project areas to identify the location o f potential beneficiaries, obtain a socio-economic profile o f individuals and groups, assess demand for project services and gauge interest ingroup formation. It would also aim to identify potential co- executors. Much o f this information is already available from the previous project and the social assessment o f the project proposal. Pre Qualificationof Co Executors-2 months 6. Through adverts in the press in the project areas and beyond, the project would invite interested partners to apply for pre qualification status as co-executors o f the subcomponent. Parameters for pre qualifying co-executors are well established in SAGPyA who have worked through this type o f model before. PublicityCampaignsin ProjectAreas - 1month 7. To prepare the way for implementation, and to help potential beneficiaries and co- executors prepare themselves, the project would publicize the objectives o f the sub component in the press and explain eligibility requirements etc during seminars and workshops in the project areas. Invitationsto Bid or Convocatorias' 3 months ' - 8. Through the press, pre qualifying institutions would be invited to submit project profiles to the project TFO for screening. Profiles not qualifying would either be rejected or returned to the originator with suggestions for amendments. Institutions submitting acceptable profiles would then be invited to submit detailed proposals. This process would occur once a year. Evaluationof Proposals 9. After the closing date for proposals the project TFO would establish an ad hoc commission to evaluate eligible proposals. This commission would comprise staff from the TFO, SAGPyA and subject matter specialists as consultants. Institutions submitting proposals lacking in detail or clarity would be invited to submit amended proposals. Using a points system, qualifying proposals would then be ranked based on Technical, Financial, Environmental, and Social eligibility criteria. Following the evaluation, the commission would prepare and publish a list o f approved projects. 141 Issue of Contracts 10. Three year contracts would be entered with institutions submitting successful proposals. An upper limit of U$l,SOO would apply to individuals in groups, and U$100,000 to pilot wood processing activities such as portable sawmills with groups. A time limit o f three years would apply to each intervention, and assistance would be available on a one-time- only basis. An upper limit o f U$300,000 would be placed on the total value o f projects being implemented by co-executors at any one time. Auditing 11. Periodic technical and financial auditing, together with impact evaluations, would be carried out through consultants recruited by the project. 142 Activity Flow Chart Identify target groups andco - executors Publicity campaign I Financial and Submissionof I technical auditing, projectprofiles impactevaluation I r Unsatisfactory submissions returned Screeningby commission detailed proposals Winning proposals selected r - l Contracts awarded I Component3 -ProtectedAreas and ConservationCorridors Subcomponent 3.1 -StrengthenedManagement of ProtectedAreas SustainableDevelopmentActivities Overview 12. This component focuses on the strengthening o f the protected areas while engaging the communities within and around them as partners in conservation efforts. The APN has developed an activity within this context for implementing small-scale community development 143 and income generating activities that are compatible with conservation of biodiversity, in particular those that complement many o f the tourism activities that are focused on the 11 parks under this component. The proposed activities are consistent with national and international conservation and development policies, agreements, and legislation in the areas o f biodiversity, indigenous peoples, and sustainable development. 13. Recognizing that there are different levels o f capacities and needs at local levels within communities as identifiedthrough the social and environmental assessment process, the project design has incorporated different levels o f investments possible under this subcomponent based on these differentiated capacities and potential for successful implementation and sustainability. For improved impact and focus o f projects, four different models o f community activities have been developed in this regard. Following are the four different approaches to implementation as well as some o f the types o f activities: Improvement o f socio-economic systems through the development o f sustainable agro-ecological models; a Transfer o f environmentally sustainable technology for small producers and small informal/itinerant farmers. a Incorporation o f new lines o f production based on the sustainable use o f native natural resources. a Classification o f environmentally destructive and low efficiency production activities. Diversification o f farm and community economic activities, promoting the production o f crafts and the development o f low-impact, economically viable tourist services; a Support for the development of tourist services (training and capacity- building). a Provision o f infrastructure and equipment for new tourist services. a Support for the production and sale o f handicrafts (training and capacity- building). a Promotion o f methods for the creation o f cultural-based economic activities. Strengthen the capacity o f community organizations; and a Training in organization, planning and management o f community productive activities. a Facilitate access to new information and communication technologies, including the provision o f goods and services. Promote cultural values o f criollo communities and indigenous peoples; a Recovery o f urban and rural criollo history. 144 Support for cultural activities o f original peoples (oral tradition, written tradition, native languages, etc.). Facilitate access to new information and communication technologies, including the provision o f goods and services. ImplementationArrangements 14. Component activities will be supported by one o f the three following categories o f investment, according to the capacity and needs of each organization and/or community which it supports: (a) Technical assistance (including technical strengthening activities); (b) Pre-investment activities (finance o f consultancies for project development and the development of business plans, etc.); and (c) Direct investment. 15. Inorder to ensure that activities are inaccordance with APNpolicies and benefit from the institution's experience, APN will coordinate with the DNCAP Programa de Pobladores on this subcomponent. 16. In each of the Protected Areas involved in this Component, a participative diagnosis to identify potential beneficiaries and local issues (environmental, organizational, productive and social aspects) will be carried out and lead by DNCAP. 17. Through media spots and advertisements in the project areas and beyond, APN would inform about subcomponent objectives and invite interested partners to apply for pre qualification status as co-executors o f the subcomponent. Evaluation criteria will be established and included inthe Operational Manual. 18. The subcomponent would be executed through qualiJied third parties (co-executors or partners) with a demonstrated capacity to carry out such work. These would include NGOs, government institutions, cooperatives and producer associations. 19. An upper limit of US$lOO,OOO and two years would apply to subprojects. 20. The subproject cycle includes the following.steps: (a) Identifying Potential Target Groups and Co-executors; (b) Call for proposals; (c) Evaluation o f proposals, including safeguards reviews, by DNCAP, including Regional Delegations; (d) Final revision and approval by UEP and APN's Directorate; (e) Sign subproject agreement (Beneficiaries must have both an updated business plan and a bank account); (0 Transfer o f funds based on the approved disbursement plan; and (8) Technical and financial Auditing. 145 EligibilityCriteria for Activities under components2 and 3 21. General eligibility criteria for the inclusion of both component 2 and 3 activities would be Supportive of component and sub component objectives; Potentially financially viable, or supportive of activities that would contribute directly or indirectly to conservation of biodiversity, viable and sustainable plantatiodagroforestry production, or supportive of the development and consolidation of producer groups whose aim it is to practice viable, sustainable forestry; Good prospects for sustainability beyondthe assistanceperiod; High value added potential; Good prospects for replication; Availability of co financing (incashor inkind)from beneficiaries; Comply with World Bank safeguard policies; Comply with legislative and normative framework for environmental conservation and protection; Comply with and supportive of approved environmental strategies including the negative list of activities that may not be financed; Comply with health-and-safety-at-work requirements; Supportive of federal and provincial conservation and forestry development initiatives (policies, laws and plans); Located around protected areas or within areas with high potential for plantations, agroforestry, non wood forest products or carbon sequestration; Located inareas free of conflicts vis-a-vis property rights and land tenure; and Takes account of gender issues; 146 Annex 17: PartneringProvincialInitiatives ARGENTINA: SustainableNatural Resources Management Project 1. The objective o f the Sustainable Natural Resources Management Project is to: Improve the sustainable and efJicient management of forest resources, conserve biodiversity in protected areas and forest landscapes, and integrate small producers into forestry development and conservation. The project has three main components, namely Native Forest and Biodiversity, Sustainable Plantation Forestry and Protected Areas and Conservation Corridors. Responsibility for project execution will rest with three separate federal institutions, that is, the Native Forests Directorate o f the SAyDS, the Afforestation Directorate o f the SAGPyA and the National Parks Administration o f the Ministry o f Tourism. 2. With the exception o f National Parks, responsibility for natural resources management and conservation lies with provincial governments, but most lack the institutional capacity and funding to comply with their mandate. To help address this issue, the project will help in two main ways. First it will provide support to strengthen provincial institutions and policy/planning frameworks. Second, it will include a partnership fund in each component which provinces can access on a competitive basis to finance initiatives o f their own choosing which support project objectives. The aim will be to deepen the involvement o f the provinces inthe project, foster local initiative, encourage the main-streaming o f sustainable forestry and conservation into their development frameworks and strengthenprovincial capacity to take the lead in such matters in the future. The GuidingPrinciplesof the PartnershipFund 3. The guiding principles will be that the initiative must be locally conceived, be approved and submitted by the provincial government, be strongly supportive o f project objectives and, where relevant, be sustainable beyond the project period. QualifyingCriteria and Triggers 4. Individual proposals will be funded on a `one time only' basis and would need to meet the following criteria: (a) Should be located only inthose provinces covered by the project; (b) Should include at least a 20 to 25% in-kind counterpart contribution from the provincial government; (c) Should not exceed US$200,000excluding counterpart; (d) Should be contractually executed by SAyDS or SAGPyA's TFOs on behalf of the province. SAYDS and SAGPyA will ensure the inclusion of the selected provinces inthe technical and operational aspects o f the activities; (e) Should terminate 3 months prior to the closing date o f the project component; (f) Should not exceed two years duration; (g) Should not duplicate other project initiatives; 147 (h) Should, ifapplicable, involve only areas where land tenure and property rights are secure and unambiguous; (i) Should not be injurious to the environment; (i) Should not be prejudicial to the interests o f local people, especially indigenous people; (k) Should comply with the necessary safeguards o f the World Bank; (1) Should comply with all legal and regulatory requirements; (m) Should not include the harvesting, processing, transport or sale o f forest produce; (n) Should not include purchase o f vehicles; and (0) Should include the costs o f separate annual financial and technical audits. 5. Triggers to enable provinces to participate would include (i)active participation in the provincial Mesa Forestal; (ii)the existence o f a provincial or local level (municipal or community) development pladstrategy which reflects the objective o f the proposal; (iii)the existence o f adequate institutional capacity and environmental instruments capable o f monitoring/mitigating the impact o f the proposal; (iv) the existence o f an up-to-date Annual Plan o f Operations inthe provincial Direccidn de Bosques; and (v) the existence o f adequate numbers o f qualified staff in the provincial office capable o f successfully implementing the proposal, either directly or indirectly. Format and Submission of Proposals 6. Proposals should not exceed 10 pages in length plus appendices, and will contain the following sections: Trends inforestry development and conservation inthe province; The institutional andpolicy frameworks; The main challenges being faced; A justification for the proposal; A precise description ofthe proposal's objective; A description of the activities to be financed; A detailed cost estimate o f activities; A procurement plan; An estimate o fexpected benefitdimpacts; A description of institutional responsibilitiesfor implementation; A sustainability plan; and Arrangements for reporting. 7. Proposals should be submitted to the Coordinator o f the relevant project component in Buenos Aires for evaluation. Evaluationand Approval of Proposals 8. Proposals will be evaluated by an ad hoc committee o f not less than 5 professionals with a minimum o f 10 years o f experience in forestry and/or conservation inArgentina (depending on the component). Committee members will be selected by the Project Coordinator from either 148 staff in the responsible institution (the Forestry Directorates in SAGPyA and SAyDS), the project, or through consultancies with subject matter specialists. 9. Proposals will be evaluated using a pre determined points system to be prepared by the TFO of each project component. The result o f the evaluation will be made available to those provinces submittingproposals. 149 Annex 18: BiodiversityConservationin ProductiveForestryLandscapes Project ARGENTINA: SustainableNatural Resources Management Project GEF FocalArea: Biodiversity: Mainstreaming Biodiversity into Productive Landscapes and Sectors Approved: June 28,2007 (GEF Council approved: August 1,2006) ImplementingInstitution: SAGPyA 1. The Biodiversity Conservation in Productive Forestry Landscapes Project is partially- blendedwith the IBRD Sustainable Natural Resources Management Project. The GEF-financed project's Global Environment Objective (GEO) i s to increase integration o f biodiversity- responsible practices and policies into the plantation-forestry sector at the national level and in select provinces. 2. To address the need to integrate biodiversity into plantations development, the project has four components as follows: 3. InstitutionalStrengtheningand CapacityBuilding: This component aims to create the required capacity at federal and provincial levels o f government within environmental and forestry agencies to spearhead the biodiversity mainstreaming process. The component will also update the legal and policy frameworks needed to improve sustainable plantation planning and establishment, and invest in tools critical to biodiversity-friendly plantation location and design. Through broad stakeholder participation and technical analysis, maps and ecoregional planning tools will be produced and disseminated for guiding government plantation promotion as well as for orienting ongoing private sector investments. Key activities include: Capacity Building for plantation related biodiversity conservation, planning processes, support for establishment o f national and provincial policies for biodiversity mainstreaming in plantations and protection o f globally important ecosystems or priority areas within these ecosystems, provision o f information systems and integration o f native forests and plantations databases for monitoring habitat changes, and study tours o f national and provincial forestry officials to observe best practices and ecoregional planning and management. 4. Development and Dissemination of Biodiversity-FriendlyPlantation Practices and Technology Transfer: This component will document and disseminate improved forestry practices that integrate conservation with production. A special focus will be placed on practices for establishing native and mixed species plantations (within forest ecosystem settings), opening up the understory to the surrounding ecosystem, re-establishing critical corridors, and creating set asides among approaches that maintain or enhance native ecosystem biodiversity. Native seed banks and nurseries will be supported, and field trials carried out to analyze different management approaches. Multisectoral roundtables will be established to discuss the establishment o f standards for biodiversity-friendly practices in the forestry sector and to disseminate best practices drawn from studies and field trials. The dialog on best practices will be continued and expanded at a major international workshop linked to the World Forestry Congress to be held in Argentina in 2009, which will disseminate the mainstreaming approaches advanced with the GEF supported project. 150 5. Support for Adoption of Biodiversity-FriendlyPlantationForestry Practices: Under this subcomponent, SAGPyA and its counterpart institutions will undertake activities designed to identify and test biodiversity-responsible land use practices in high priority areas, or targeting threatened biodiversity, in the production landscape. Specifically, resources will be made available to support activities intended to promote changes in the production landscape in target areas, leading to maintenance or enhancing biodiversity o f global importance and sustained economic development that i s compatible with conservation objectives. The subcomponent will support improved community and land-holder practices through targeted interventions that revolve around plantation forestry concerns, and will seek to ameliorate threats to globally important biodiversity through environmental education and field extension. A demand-driven subproject fund will support owners who are piloting the inclusion o f biodiversity-responsible practices in their production landscapes. These activities would be promoted on land already in use for agriculture or forestry, and not for newly-converted or land or natural ecosystems. The component will also facilitate dialog with large producers on conservation practices, standards, and certification, and provide technical assistance (though not financing) needed to promote the inclusion of biodiversity-responsibletechniques. 6. Project Implementation, Monitoring and Evaluation: This component includes incremental costs associated with the project implementation, as well as with setting up a system o f monitoring and evaluation o f outcomes. ProiectArea 7. The project sites have been selected based on two key criteria: in areas where a) plantation forestry i s important or potentially important; and b) presence o f globally significant biodiversity o f conservation importance. In addition, the baseline biodiversity studies looked at endangered and endemic species distribution as well as critical habitat within globally important ecosystems. Specifically, the project will work in Misiones, Corrientes, Entre Rios, and Buenos Aires provinces, and will include clearly focused target activities in the Patagonian provinces of Neuquen, Rio Negro, and Chubut. Among the ecosystems represented within the project area are the Interior Atlantic Forest, Humid Chaco, Humid Pampas, Parana Flooded Savannas, and Southern Cone Mesopotamian Savannahs. ProiectCosts US$Million Project Cost By Component and/or Activity GEF Govt. IBRD Total 1) Institutional capacities strengthened 1.99 0.48 1.79 4.26 2) Dissemination and technology transfer 1.09 0.27 0.75 2.11 3) Biodiversity-responsible plantation forestry practices 3.58 3.73 1.60 8.91 4) Project implementation, monitoring & evaluation 0.28 0.24 0.52 Unallocated 0.06 0.02 0.08 Total Project Costs 7.00 4.74 4.14 15.88 *Government cofinancing includes both in-kind and cash cofinancing. Beneficiary cofinancing for subprojects has been included inthe government cofinancing. 151 Annex 19: PlantationExtensionand Technology Transfer (TT) ARGENTINA: SustainableNaturalResourcesManagementProject 1. In most countries, forestry extension is delivered in three ways; a) through universities and research institutions alongside teaching and research, and b) through State organizations along with the administration and control activities, and c) through the private sector. Unfortunately, state delivery mechanisms have rarely proved successful because o f the low priority normally accorded to forestry. In this respect, Argentina i s no exception. Even though extension i s a responsibility o f INTA, its extension program falls far short o f satisfying the needs o f the main forest areas. Where successful extension programs exist, they are usually privately operated. 2. In Argentina, private extension covers a wide range o f approaches. Some of the more successful include producer groups such as consortiums, associations or cooperatives. Among the best structured is the Asociacion de Plantadores de Tabaco APTM. 3. With regard to TT, INTA and the universities are the main institutions responsible, but neither has beenvery active inthe field. Types of PlantationExtensionProgramsand TT which Exist Public Sector Extension 4. Government support to extension at federal level i s provided through SAGPyA who have seven NEFs (Nuclei de Extension Forestal - Forestry Extension Nuclei) and INTA. The NEFs play an intermediary role between the state and the private sector, and are key elements in the whole structure. However, in the case o f Mesopotamia, which i s the main plantation area, there are only two NEFs for the entire area. Intheory, INTA also provides forestry extension through its field stations, but in practice research i s their priority and, as a result, forestry extension is very weak, and limited inits coverage (see below) 5. As can be seen from the figure below, some provincial governments (Misiones) also play a role. However, the disadvantage o f this i s that it often results in extension agents being appointed as political favors. 6. The structure o f the public extension structure is shown below. The overlaps and links betweenthe several entities and organizations involved are well shown. 152 FIGURE 1. ThePublic Extension Structure GOBIERNO PROVINCIAL INTA SAGPyA PROYECTO DESARROLLO FORESTAL 1 UNIVERSIDAD I NEF I EMPRESAS / EXTENSIONISTAS SERVICIOS PRIVADOS I I Pequeiios Propietarios Propietarios noLoop!xadosAsociaciones Cooperados Asociaciones 7 Where the state assists the private sector under the above arrangements, private companies meet the costs of their 0-wn extension agents or Servicios Te'cnicos (Technical Assistance) who often assist, as a goodwill gesture, mid and small size forest owners (see bottom of Figure). 153 Small Private Sector Extension Cooperatives - 8. The Asociacidn de Plantadores de Tabaco de Misiones APTM is a typical arrangement for small cooperative owners. As a private organization, APTM finances the extensionists and the materials required by the land owners (members) to plant trees, thereafter APTM recovers its expenses from planting subsidies provided by SAGpyA under Law 25, 080. It depends on the flow of subsidies (Federal funding) to keep the extension program going, and over the last few years the flow of subsidies has not been stable and this has hampered success. The way it works i s as follows: FIGURE2. Asociacih de Plantadores de Tabaco APTM Scheme p$-l Trains I Extensionist 4 4 Producer- Land owner I Planting 1 APT Collects Subsidv 9. This is a totally private initiative, the only public component is the subsidy, which is the driver for the initial investment. Large Private Sector Extension Programs 10. Argentina also has large scale privately operated forestry extension programs, which involve national and international entities, private and state organizations in a fully integrated way. 11. Two such schemes are Bosques del Plata and SOCODEVI. The figure below shows the Bosques del Plata model. This model has linkages to foreign universities, both in South and North America, to two national universities, andto private organizations. 154 FIGURE 3. Bosques del PlataScheme Florida University North Carolina University U SantaCatalina Private I Prnducer- 1.andOwner I 155 12. The SOCODEVI Program is supported by the Canadian Sociedad de Cooperacion para el Desarrollo Internacional (International Development Cooperation Society) along with the Quebec Conference of Forestry Cooperatives, the School de Duchesnay and CIDA (Canadian International Development Agency). FIGURE 4. SOCODEVIScheme International& Domestic Markets I I Forest ForestWorkers Industry Contractors t Planning Units Units I I Producer Groups and Land owners 13. There are also other arrangements involving cooperatives and consortiums where INTA and/or SAGPyA participate as supporting institutions. Technology Transfer 14. INTA and the Universities are the main institutions responsible for TT, however both are sadly lacking in their capacity to deliver technology innovation, even though INTA has a considerable body of information at its various research stations. As was mentioned under Research, supply driven researchis a severe impediment to providingeffective TT. Main Weaknesses in TT and Extension 15. Very little Technology Transfer (TT) takes place in forestry in Argentina, and forestry extension is weak, under funded and limited in its coverage. Both these factors severely limit the country's capacity to improve productivity and become competitive on world markets. Ifthe lack 156 of access to information on best practice and innovation is not addressed, it is unlikely that plantation forestry inArgentina will ever realise its true potential. 16. On TT, one of the problems has been created by the fact that research has been supply driven by researchers, with the result that TT packages which result are often irrelevant to local needs, and of limited use to end users. As a result, larger investors have resortedto importing TT packages from Chile, South Africa, Australia and the US, further hindering the development of Argentina's capacity to innovate. It has also helped create a mismatch between what the forests produce and what the industry needs, both inthe area of small scale tree farming and large scale industrial plantations. 17. A lack of continuous Capacity Development and Training programs for extension agents also weakens the impact of extension, while an accumulation of large quantities of un- disseminated knowledge in INTA and the Universities has prevented extensionists from being exposed to innovative developments in the sector. These factors have combined to have a negative impact on the development of the sector generally, which has inturn contributed to high costs and low quality of product. 18. The root of the problem is that there has been no clear strategy on how best to deliver forestry extension inArgentina, a problem compoundedby a shortage o f government funding for the activity. As a result, there are no meaningful state supported Extension Programs, and very little capacity to carry them out. As a response to this, producers have developed an ad hoc system to fill the gap. However, it has to be recognized that Argentina is a large country, forest areas are highly dispersed, and that information delivery to users is logistically challenging and costly. This raises the question of what type of delivery mechanism is needed to address information needs inplantation forestry ? StrengtheningForestry Research and Technology Transfer 19. Experience has demonstrated that if forestry extension inArgentina is to be effective and sustainable, it has to be driven largely by the private sector. The main thrust of the intervention will therefore be to create such as system, building on the experience of such systems gained to date. 0bjective 20. The main goal will be to raise the quality and productivity of planted trees by facilitating access to up-to-daterelevant informationon best practice and innovation inplantation forestry. 21. To achieve these goals, partnerships between the state and the private sector will be actively promoted. The role of the state will be to seek consensus on priority setting, provide training on priority themes, set and maintain standards, and monitor quality. The role of the private sector will be to articulate its informationneeds to the state, provide efficient information delivery services to plantation owners and tree planters, and provide feed back on the quality of extension and TT. The essential features of the proposal will be the creation of a body of well trained, certified private service providers or extension agents, and the creation of effective systems for TT. 157 Details of the Proposal Structure o f the Extension and TT Program 22. The program will operate at three levels, that is: (a) Federallevel - through the project Coordinator and Extension Specialist; (b) Regional / Provincial level - through the project Forestry Development Officers; and (c) Field level-through the application of project training. 23. Essentially, the program will consist of identifying priority extension needs with stakeholders in each province, designing and providing training courses for private service providers (PSPs), certifying qualifying PSPs, monitoring the quality of services provided by PSPs and identifying and evaluating other models that may exist. It would also help INTA and the Universities to disseminate new technology and ideas through open days, workshops, seminars, TV programs and the like. The program will be managed by the project coordinator, with the 12 Forestry Development Officers (FDOs) having the key role of identifying extension priorities through the mesas forestales, organising training courses for PSPs in such centres as INTA and monitoring progress. Consultants, consulting firms or gualzj?edinstitutions would be recruited by the project to train the PSPs. Training would be provided free, but PSPs would be expected to meet their own transport and basic accommodation costs. PSPs successfully completing the course and competencetest will receive a certificate. 24. In the following sketch Operational Scheme of the Forestry Extension Program is depicted: Federal Level 25. Project Extension Committee : Representatives of SAGPyA - INTA - and the project 26. Extension and ResearchSpecialist : Personresponsible for extension inproject At the RegionaYProvincial Level Forestry Development Twelve Forestry DevelopmentOfficers Officers (12) responsible for the Extensionprogram intheir respective region or province. They report to the project Extension and ResearchSpecialist INTA The FDOs will be accommodated in INTA or the provincial administration 158 Mesa Forestal : Civil society representatives involved or concerned with forestry activities. Provide inputs as a consulting forum to the PDOs. Trainers (7/year) Independent Entities or Professionals, experts inextension (subject matter specialists, or training hired as consultants to train private service consultants) providers in specific activities At the Field Level Private Service Providers Private specialized extensionists trained by project and who work with tree planters and producers 27. At the federal level the Coordinator and his Extension specialist would be responsible for managing the program. The Extension officer will be responsible for ensuring that the FDOs are carrying out the program in a timely and efficient way -paying special attention to the quality o f training being provided. The Extension officer will also be responsible for evaluating proposals from consultants to undertake training work and for awarding contracts. Individuals may also be recruited directly on short term contracts to carry out the training should this prove more effective. In addition to routine supervision carried out by project staff, the Extension specialist will contract technical auditors and consultants to carry out independent evaluations o f the work beingdone, and inthis respect the Mesas Forestales will play an important role. 28. At the Regional / Provincial level 12 Forestry Development Officers (FDOs) who will manage the Extension program. They will be responsible for the program execution and the monitoring o f performance in each Province or Region. It i s important that the program be a sharedventure between participating institutions, inwhich the FDOs are key facilitators. 29. The Regional Mesa Forestal, which will comprise the main stakeholders in the sector, will also play a key role in identifying knowledge gaps and inproposing topics to be covered in the annual Operational Plan to be prepared by the FDO and the project extension specialist inBs As. 30. To carry out the Extension Training Program, Training Specialists will be hired as short term consultants in specific topics suggested by the Mesas Forestales. These Specialists will be the main operating agents of the project, it is probable that they will be University instructors; experienced Extension specialists; INTA staff, contractors, Cambio Rural technicians and people o f similar background. 159 The flow chart below shows how the systemwould operate. FIGURE 7. STRUCTUREOF THE FORESTRY EXTENSIONPROGRAM -- --- ----, Project Extension Specialist - I Bs As I I I I I Competence I I Test I I I FORO REGIONAL - - - - - - Forestry Development I Mesa Forestal Officer in Region I I I I I I I - - - - _ - - I ;-+ Consultants I l I I I I I I I I Certification I I I I v I I-+ Private Service 4 I Providers I 31. As the program develops, a body of competent the private service providers will be created, with all certified providers being includedon a project roster of Certified Providers. The Roster will act as point of reference for potential clients who wish to be assured that a PSP has 160 the required qualifications. It is intended that the entire program will be assumed by JNTA beyond the project period. 32. To promote innovation, the project will also aim to evaluate new and innovative extension models in Argentina, and disseminate the results o f these evaluations to end users. Replication o f models could either be done through applied research or through subcomponent 3 -AssistancetoSmallandMediumScaleProducerGroups. Territorial Coverage 33. To avoid the risk o f spreading project interventions too thin, the program will start infew well-defined areas, taking account o f the fact that the project aims at improving plantation forestry productivity, promoting rural development and enhancing the environmental values o f plantation forestry inArgentina, the following areas offer the most potential: 0 Misiones; 0 Corrientes; 0 EntreRios; 0 Buenos Aires; 0 Pampeana; 0 Cuyo; and 0 Patagonia. 34. However, once the program i s well established and working well in these areas, additional areas with plantation potential maybe added. Program Evaluation 35. Adopting the concept o f continuous improvement, the project will recruit short term consultants to monitor the quality of the program using the Standard, Principles, Criteria and Minimum Requirements principle. The application o f such Standard will allow for an annual evaluation o f program performance, and if deficiencies are detected, course corrections can be made. Inthis regard, the Mesas Forestales will be expected to play a key role. Impact 36. Using experience gained under other extension projects in Argentina, it has been estimated that some 1,500 PSPs will be trained under the project, and that some 17,000 producers will receive technical assistance on best practice thereafter. 161 Annex 20: Plantation Forestry Research ARGENTINA: SustainableNaturalResources Management Project ExistingSituation 1. Plantation forestry research in Argentina is largely supply-driven by researchers in the leading scientific institutions, with insufficient attention being paid to the needs, priorities and requirementsof forest owners andthe forest industry. 2. Forestry researchto a very large extent is carried out by INTA, and to a lesser extent at the Universities. Researchprograms are identifiedby the Main Board or the Consejos Directivos Regionales of JNTA, and very occasionally by the researchers themselves; as a result they are not necessarily addressing field problems, and often create a gap between what is required and what is supplied. 3. Furthermore, the knowledge generated by research is not disseminated in a timely way, or not at all, thus adding to the problem in that knowledge and informationdo not get out to the end users. 4. To solve this problem, a system of "Competing Funds" (Fondos Consursables) is needed to ensure that research is demand driven and open to a wider spectrum of scientists. This could be achievedby: (a) Making plantation researchprograms competitive and participatory; (b) Allowing smaller research institutions to compete with the larger and more structured organizations and scientists on the basis of track record, merit and originality of their proposals; (c) Promoting and inviting other private institutions and universities to submit proposals on new lines of research, such as economics and marketing; (d) Promoting and placing a premium on Project proposals submitted by jointly by researchersor inter institutional partnerships, particularly ifone of the participants i s a foreign organization or researcher; and (e) Publishing researchfindings, and protecting ifrequired, those results that could be marketed at the industry level or which could meanan important step forward and a temporary advantage for the industry or the country. 5. The above should, in part, address the problem of supply-driven research which is only partly useful, and the problem of a lack of private participation, for example the industry, land owners and tree growers. It should also help disseminate the large body of scientific knowledge inINTA andthe Universities, which has not yet beenplaced inthe public domain. 162 6. Most research projects are proposed by INTA staff (Consejos Regionales), the universities or government institutions, resulting in supply driven projects, with little or no private participation, either institutions, land owners or forest growers. If they do participate, they are not requiredto share the costs o fthe project, so their interest inthe results is limited. 7. The total absence o f research in Forestry Economics, Marketingand Market Structure is also remarkable. This i s partially a result o f the supply driven nature o f research and relative scarcity o f Forest Economics in Argentina and the poor quality o f information on the resource, production and forest products trade. 8. The difference inpriorities between "public" institutions and the industry has caused two problems: at the resource level where tree quality does not match end use; and at the industrial level, where tree quality does not match tree processing needs. That is, there i s a lack o f technological blend between the raw material, silvicultural practice in the field, and wood processing. The public sector concentrates mainly on the silviculture o f tree farming systems (silvopastoral schemes) rather than the silviculture o f industrial planted forest, and this could result in the loss o f competitiveness in world markets, which is increasingly looking at Latin America as the source o f fiber. Argentina should take note o f this now that it i s facing competition form abroad, with this intensifying with three new pulp mills planned inneighboring countries. The M a i n Consequences Associated with Weaknesses in Research, and their Costs 9. The scientific and technological impacts o f a lack o f a weak and unresponsive forestry research system are far reaching. Globally, every nation i s seeking competitive advantage, with the leaders gaining the opportunity advantage, and advantage leadership in research i s a huge asset. As scientific knowledge i s accumulative, and some o f it disposable, it is essential that a nation be fully aware o f what type o f "applied research" is needed. 10. Some o f the consequences associated with the weaknesses inresearch are as follows: Scientific and Technological Impacts 11. A lack o f new knowledge and the application o f new technologies derived from research impacts directly onto the primary forest industry, and can account up to 10% o f the current exports value. 12. Gaps are created in human resources formation, which would otherwise lead technological change and become aware o f new knowledge advances elsewhere. This could be measured in time lost, or time needed to recover, and can be as high as 25 to 50 years or two generations o f researchers. 13. The postponement o f scientific infrastructure development is a further impact. Its corollary i s a lack o f technological leadership in areas where it should be present. This means that, even though a country has a comparative advantage, it can never they become globally competitive, and this could account for up to 15% o f the export values. 163 14. Weak interaction between private and public organizations in Argentina has limited the possibility o f creating mutually strengthening research groups with diverse visions and capacities. It has also prevented the creation o f links with other research groups injoint (remote) projects, and o f course active links with the industry (local or remote) 15. Research and TT development has been constrained by the inability to establish links with other research groups overseas, something that can only be achieved through well-founded, solid projects with interests and experience which extend beyondthe local forestry scene. Economic and SocialImpacts 16. The Economic and Social Impacts of research and TT projects are diverse. Their impacts are related to the real economic flows that stem from the ability to transfer each result into the market. The overall economic value o f these projects impacts i s the NPW o f each o f them. 17. According to conventional wisdom, the ex-ante economic valuation o f the Economic and Social impacts o f the R&D projects has an expected return o f 5.1 pesos per each invested. Ex- post evaluations indicate that they surpass the ex-ante evaluation. The IRR o f the successful projects normally average 34%. 18. Due to technological innovation, this wealth creation can be distributed unevenly, which i s due to a combination o f various elements. Among them the following should be underlined: the nature o f the different sub areas (forest management, industrial development, market and marketing, among others) and the kind, type and rigor o f the competing projects. 19. It would not be surprising that natural resources based projects account for most future interventions. This is due to the culture o f INTA, which i s basically natural science oriented, and an effort must be made to expand research to industrial and market projects. This latter could be achieved by placing a "premium" on industrial and marketing research. Although, today, most industries are provided with research packages, innovative industrial projects are required to tune technologies to the raw material available. InstitutionalImpact 20. A very important dimension of the Science and Technology investment is institutional development, which provides the system with strength and stability. The following are the impacts and benefits to be expected: (a) Strengthening and consolidation o f strategic research lines in institutions, independent scientists and research groups; (b) Identifying and defining new strategic lines o f R&D in institutions, scientists and research groups; (c) Expanding and improving the scientific and technological capacity o f institutions, scientists and research groups, and improving their international ties; 164 (d) Improving capacity to formulate and execute multidisciplinary projects; (e) Increasing synergies and coordination among institutions, scientists and research groups; (0 Increasing ties between institutions, scientists, research groups and the industry, and entrepreneurial productive groups; (g) Increasing ties with international institutions and international research centers; and (h) Increasingtechnology management skills; These impacts can be realized inlarge, medium sized and small research groups StrengtheningPlantationForestryResearch Objective 21. The main goal will be to increase the relevance and cost-effectiveness of forestry research, and strengthen the capacity o f institutions involved in forestry research, especially applied research. DeliveryMechanismsand Priorities 22. Demand driven mechanisms are the best way to meet the challenges posed by competitive markets, particularly if Argentina i s to be a serious player inthose markets. Through consultations which SAGPyA carried out with the provinces, professionals, private companies, and NGOs, the topics appearing below were identified as priorities for the first year o f the project. These will need to be reviewed each year by the Research Committee in close collaboration with the regional Forestry Development Officers (PDO) o f SAGPyA and the Mesas Forestales at federal and provincial levels. (a) Modeling - Supply Simulation Models; (b) Forest products marketsand products development; (c) Genetic improvement and genomics; 34 (d) Wood products technology; (e) Pest Control; and (0 Fire Control. 23. Another area in which research i s badly needed i s Forestry Economics and the evaluation o f alternative management options to Silvopastoral or Tree Farming Systems. Evaluation 24. An external, independent Program Evaluation entity is essential to promote continuous improvement. To ensure this, an independent evaluator will assess the program's progress by means o f a standard, comprising Principles, Criteria and Minimum Requirements o f 34Due to issues o f intellectual property rights, the government institution INTA will conduct the research on genetics. For this specific theme INTA will serve as a co-executor to the project. 165 accomplishment. The application o f such standard will allow evaluating the program performance annually as well as taking the corrective measures in case o f deviation. Inthe event, a committee member i s affiliated with an organization submitting a proposal they would recuse themselves from evaluating that particular proposal(s). All evaluations will be made accessible to the public and a record kept o f evaluators for specific proposals to ensure transparency o f the process. Beneficiaries 25. The main beneficiaries o f the research program will be the public, producers, wood industry, and scientists at INTA and the Universities, and well-established independent Research Groups able o f submitting innovative well founded applied research projects. Financing Thresholds 26. Ceilings for work to be carried out under the research subcomponent will be subject to the following thresholds per subproject; $250,000 for large agro-forestry research subprojects, $100,000 for pest control research subprojects, and $75,000 for all other types o f research subprojects. Details of the Proposal Structure of the Proposed Plantation Research Program 27. The essential features of the proposal will be a collaborative mechanism to define research priorities, and a Competitive Fund open to qualified researchers or institutions; joint ventures or agreements with private co-sponsors willing to contribute to the project would be encouraged. 28. The program will be managed by a Research Committee which will be chaired by SAGPyA and composed o f senior representatives o f the following institutions who maybe assisted by subject matter specialists as the need arises: (a) The Project Coordinator; (b) SAGPyA; (c) Directionde Forestacion; (d) National Council o f Science and Technology; and (e) Private Sector. 166 The following chart depicts the way the system would work: Structure of Competitive Funded ResearchProgram 1 I I II II I I I I I II IIII I I I I I I II I I I I I I I I I I I I III I I PDO Regional Workshoe, External Evaluation Mesa Forestal L III I I I I ProjectsProposalsSubmission Format 29. It is important that a common format is used to compare and evaluate the project proposals; the following i s a summarized list of contents of such submission Format: I TheProblem 1.1 Definingthe Problem or Opportunity for improvement 1.2 What is the solution? 1.3 What is the Project hypothesis? I1 State of the Art 2.1 State of the art Analysis 2.2 Leading agents inthe innovation area. What is their collaboration going to be? I11 Methodology 3.1 Experimental Method and Technique 167 3.2 How are the results going to be achieved? H o w will the difficulties be solved, ifany? What will the alternatives be incase o f difficulties? IV Product and Service description 4.1 Product, service, technological package description 4.2 How will results be protected? Invention, plant variety, gene, etc, 4.3 Users markets 4.4 Products markets V Technology Transfer 5.1 Technology Transfer Mechanisms 5.2 Technology Transfer Methodologies VI Economic Evaluation (Ex ante) 6.1 Private Economic Evaluation. 6.2 Social Economic Evaluation 6.3 Project Horizon and Adoption Curve (a) The without / with project case (b) Non quantified Social Costs / Benefits (c) Regional impact 30. Looking at the figure above, one will see that the PDO, Regional Workshops and Mesas Forestales, will have a key role in identifying research priorities. Even though their opinion will not be final, they but will provide the project designers with the opportunity o f expressing their views on problems and priorities for research. The operational sequence is shown below: Research Activity Flow Chart Committee with inputs from Mesas Forestales etc identify Project Coordinator Prepares -b Submission Format I.......................................................................................................................................... I I I .......................................................................................................... I I I I Project Coordinator I I I I I ........................................................................................................................................ I... ........................................................................................................ I L ---- ---- Proposing Institution 168 Project Receives Project Support Staff Proposals & Check for Eligibility I or rejects U Introduces modifications Scientist or Accepts Project Proposing Institution 4 Research Committee 1 Reviews Short List Project Coordinator funded and contacts 31. The upper part of the figure refers to initial parts of the process, mostly administratively. The researchCommittee will be responsible for evaluating the scientific quality and consistency of the project proposal, will examine every project. The Committee may be assisted by subject matter specialist (consultants) as the needarises. " 32. After the project proposals have been screened and accepted as valid, they will be passed on to the Committee for evaluation. They will be responsible for examining the viability of the project proposals and evaluating them ex-ante to determine their merit or contribution. This will allow the ranking o f the proposals in light of their anticipated impacts. Evaluation will be carried through consultancies with subject matter specialists. 169 IBRD 35976 70°W BOLIVIA 60°W 50°W PARAGUAY JUJUYJUJUY Pilcomayo San Salvador De Jujuy S A L TA Salta FORMOSA FORMOSA ARGENTINA CHILE Salado CHACO CHACO Formosa TUCUMÁN TUCUMÁNSan Miguel De Tucumán Paraguay Paraná CA AMARCA CATAMARCA SANTIAGOSANTIAGO Resistencia Posadas MISIONESMISIOay NES Santiago Del Estero Corrientes DEL ESTERO DEL ESTERO Urugu Catamarca CORRIENTESCORRIENTES La Rioja OCEAN B R A Z I L LALA S A N TA Laguna F E 30°S Mar Chiquita RIOJARIOJA SANSAN Cordoba JUANJUAN San Juan Paraná Santa Fe Paraná Desagu CORDOBACORDOBA 30°S E N T R E ACIFICP Mendoza adero R Í O S San Luis URUGUAY ATLANTIC MENDOZAMENDOZA SAN SAN LUIS LUIS BUENOS AIRES OCEAN Salad B U E N O S Santa Rosa Colorado o A I R E S L A PA M PA NEUQUEN NEUQUEN ARGENTINA Neuquén Negro SUSTAINABLE NATURAL RESOURCES 40°S RIO NEGRO RIO NEGRO Viedma MANAGEMENT PROJECT 40°S ChubutC H U B U T FORESTS AND OTHER ECOSYSTEMS: Rawson ALTOS ANDES ESTEROS DEL IBERÁ PUNA CAMPOS Y MALEZALES MONTE DE SIERRAS Y BOLSONES DELTA E ISLAS DEL PARANÁ Chico SELVA DE LAS YUNGAS ESPINAL CHACO SECO PAMPA CHACO HÚMEDO MONTE DE LLANURAS Y MESETAS Deseado SELVA PARANENSE CHILE ESTEPA PATAGÓNICA BOSQUES PATAGÓNICOS S A N TA C R U Z Chica PROVINCE CAPITALS NATIONAL CAPITAL 50°S RIVERS Río Gallegos PROVINCE BOUNDARIES INTERNATIONAL BOUNDARIES 50°S FALKLAND ISLANDS (ISLAS MALVINAS) A DISPUTE CONCERNING SOVEREIGNTY OVER THE ISLANDS EXISTS BETWEEN ARGENTINA WHICH CLAIMS THIS SOVEREIGNTY AND THE U.K. WHICH ADMINISTERS TIERRA TIERRA THE ISLANDS. DEL FUEGO DEL FUEGO 0 100 200 300 400 500 Kilometers Ushuaia This map was produced by the Map Design Unit of The World Bank. The boundaries, colors, denominations and any other information 0 100 200 300 Miles shown on this map do not imply, on the part of The World Bank 80°W Group, any judgment on the legal status of any territory, or any 70°W 60°W 50°W endorsement or acceptance of such boundaries. FEBRUARY 2008