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Document of The World Bank Report No: 40088 Public Disclosure Authorized PROJECT BRIEF ON A Public Disclosure Authorized PROPOSED GRANT FROM THE GLOBAL ENVIRONMENT FACILITY TRUST FUND IN THE AMOUNT OF US$ 4.55 MILLION TO THE GOVERNMENT OF ALBANIA AND THE GOVERNMENT OF MONTENEGRO FOR A Public Disclosure Authorized LAKE SKADAR-SHKODER INTEGRATED ECOSYSTEM MANAGEMENT PROJECT May 8, 2007 Sustainable Development Unit Public Disclosure Authorized Europe and Central Asia Region (ECSSD) CURRENCY EQUIVALENTS (Exchange Rate Effective {Date}) Currency Unit = Serbian Dinar (CSD) 70.33 CSD = USD 1 FISCAL YEAR January 1 – December 31 ABBREVIATIONS AND ACRONYMS BLMC Bilateral Lake Management Committee (Albania and Montenegro) CAS Country Assistance Strategy CETI Center for Ecotoxicological Research (Montenegro) EAR European Agency for Reconstruction EIA Environmental Impact Assessment EPA Environmental Protection Agency (Montenegro) EU European Union FAO Food and Agriculture Organization (United Nations) GEF Global Environment Facility GoA Government of Republic of Albania GoM Government of Republic of Montenegro GTZ Gesellschaft fur Technische Zusammenarbeit (Germany) IBRD International Bank for Reconstruction and Development IDA International Development Association IUCN World Conservation Union KAP Kombinat Aluminijuma Podgorica KFW Kredit fur Wiederaufbau (Germany) MEFWA Ministry of Environment, Forests and Water Administration (Albania) MESTAP Montenegro Environmentally Sensitive Tourism Areas Project (World Bank) MTEP Ministry of Tourism and Environmental Protection (Montenegro) MOU Memorandum of Understanding NIVA Norwegian Institute for Water Research NGO Non-governmental Organization OP Operational Policy (World Bank) PAD Project Appraisal Document PDF-B Preparation Development Facility –B grant (GEF) PENP Public Enterprise for National Parks (Montenegro) PA Protected Area PAH Polynuclear Aromatic Hydrocarbons PCB Polychlorinated Biphenyls REC Regional Environment Center SAP Strategic Action Plan SNV Netherlands Development Organization SLMNR Shkoder Lake Managed Natural Reserve SLNP Skadar Lake National Park TDA Transboundary Diagnostic Analysis TA Technical Assistance UNDP United Nations Development Program UNESCO United Nations Educational, Scientific and Cultural Organization USAID United States Agency for International Development Vice President: Shigeo Katsu Country Director: Orsalia Kalantzopoulos Country Manager: Carolyn Jungr Sector Manager Marjory-Anne Bromhead Task Team Leader: Agi Kiss ALBANIA AND MONTENEGRO Lake Skadar-Shkoder Integrated Ecosystem Management Project CONTENTS Page I. STRATEGIC CONTEXT AND RATIONALE ............................................................. 6 A. Country and sector issues....................................................................................................6 B. Rationale for Bank involvement ......................................................................................... 9 C. Higher level objectives to which the project contributes.................................................. 10 II. PROJECT DESCRIPTION ..........................................................................................10 A. Lending instrument ........................................................................................................... 12 B. [If Applicable] Program objective and Phases.................................................................. 12 C. Project development objective and key indicators............................................................ 12 D. Project components........................................................................................................... 12 E. Lessons learned and reflected in the project design.......................................................... 17 F. Alternatives considered and reasons for rejection ............................................................ 18 III. IMPLEMENTATION .................................................................................................... 19 A. Partnership arrangements (if applicable) .......................................................................... 19 B. Institutional and implementation arrangements................................................................ 20 C. Monitoring and evaluation of outcomes/results................................................................ 22 D. Sustainability..................................................................................................................... 23 E. Critical risks and possible controversial aspects............................................................... 24 F. Loan/credit conditions and covenants............................................................................... 25 1V. APPRAISAL SUMMARY............................................................................................. 25 A. Economic and financial analyses...................................................................................... 25 B. Technical........................................................................................................................... 25 C. Fiduciary ........................................................................................................................... 25 D. Social................................................................................................................................. 26 E. Environment...................................................................................................................... 27 F. Safeguard policies............................................................................................................. 28 G. Policy Exceptions and Readiness...................................................................................... 29 Annex 1: Country and Sector or Program Background ......................................................... 30 Annex 2: Major Related Projects Financed by the Bank and/or other Agencies ................. 42 Annex 3: Results Framework and Monitoring ........................................................................ 44 Annex 4: Detailed Project Description...................................................................................... 51 Annex 5: Project Costs ............................................................................................................... 60 Annex 6: Implementation Arrangements ................................................................................. 62 Annex 7: Financial Management and Disbursement Arrangements..................................... 63 Annex 8: Procurement Arrangements...................................................................................... 64 Annex 9: Economic and Financial Analysis ............................................................................. 67 Annex 10: Safeguard Policy Issues............................................................................................ 68 Annex 11: Project Preparation and Supervision ..................................................................... 69 Annex 12: Documents in the Project File ................................................................................. 70 Annex 13: Statement of Loans and Credits.............................................................................. 71 Annex 14: Country at a Glance ................................................................................................. 72 Annex 15: Incremental Cost Analysis....................................................................................... 72 Annex 16: STAP Review ............................................................................................................85 Annex 17: Maps............................................................................................................................94 Annex 18: Strategic Action Plan Summary Action Table........................................................95 I. STRATEGIC CONTEXT AND RATIONALE A. Country and sector issues 1. Lake Skadar-Shkoder, the largest lake on the Balkan peninsula, is located on the border between Montenegro and Albania, south of the Dinaric Alps. The lake measures 60 km by 15 km at its longest and widest points and has an average surface area of 475 km2. It is a particularly fragile water body due to its shallowness and the karstic geology of its basin: the lake’s water quality and ecology are highly sensitive to the quality and volume of inflow from numerous rivers/streams and groundwater. The lake’s outlet is to the Adriatic Sea through the Buna-Bojana River. Due to the flat topography and shallowness of both lake and river, when the river is particularly high as a result of heavy rains the flow reverses temporarily and it becomes an inlet rather than outlet of the lake. Numerous springs located around the periphery of the lake and hydrologically connected to it are used for drinking water and irrigation in surrounding areas. 2. The proposed project area consists of the lake itself and adjacent areas directly served by the lake and its associated springs. The total population of the project area in Albania is about 170,000, living in seven municipalities and rural communes, within three Regions of the Shkodra District. In Montenegro the project area falls within three municipalities with a population of about 12,500 people distributed among 40 small settlements (the larger watershed of the Lake in Montenegro has a population of about 250,000). The
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