PRE-CONCEPT FOR A REGIONAL PROJECT/PROGRAMME

PART I: PROJECT/PROGRAMME INFORMATION

Title of Project/Programme: Enhancing the climate resilience of local livelihoods through nature-based tourism in the Caribbean communities of Limon, Costa Rica, and Bocas del Toro, Panama Countries: Costa Rica and Panama Thematic Focal Area1: Disaster risk reduction and early warning systems Type of Implementing Entity: International Implementing Entity: United Nations Environment Programme (UNEP) Executing Entities: Fundecooperación para el Desarrollo Sostenible (Costa Rica) and Fundación Natura (Panama) Amount of Financing Requested: 10.693 million (in U.S Dollars Equivalent)

Project / Programme Background and Context: Limon and Bocas del Toro are bordering provinces in the Caribbean coast of Costa Rica and Panama. Communities in northern part of Limon province are based on tourism and port activity, while the predominant activity in the centre and southern part is agriculture. For Bocas del Toro province, the main source of job generation is the services sector, centered mainly in retail and tourism, followed by the primary sector including agriculture, livestock and, with a more residual participation, fisheries. Agriculture in both provinces is mostly based on banana production for export -with main investments belonging to large companies- and in a lower extent, oil palm. Since agribusiness is the predominant model for the agriculture sector and practices are not generally climate-resilient, the availability and quality of natural resources, especially water, is affected.

The area is also homeland of the Naso Tjër-Di, Gnabe Bugle, Chorotegas, Cabécar and Bri Bri indigenous peoples, and it includes transboundary natural sites such as La Amistad Natural World Heritage Site and La Amistad Biosphere Reserve and other key areas for tourism, such as beaches, coastal and reef areas and islands, considered biodiversity hotspots encompassing high value natural ecosystems. These ecosystems sustain well-known touristic destinations in the targeted areas, which provides tourism with the potential to work with local production and services, and local communities, empowering them. However, current tourism investments do not integrate nor benefit local communities or small producers to the extent it should.

Climate change is affecting communities and ecosystems in the region. More recurrent floods by heavy rainfall and other extreme weather, including consequent sea surges, are impacting the communities, their crops and other livelihoods, such as familiar tourism facilities. For example, last November 2020, the collateral effects of hurricane Eta (Cat 4) and two weeks later hurricane Iota (Cat 5), mainly floods and landslides, killed 19 people in Panama and isolated thousands in the Bocas del Toro region. Temperatures are projected to increase between 2-3 Celsius degrees by 2050, which would affect the crop and livestock production, as well as human well-being and health, by reducing comfort and causing the spread of mosquito borne diseases. The sea level rise aggravates the recurrent sea surges and puts at risk the coastal settlements and facilities.

Moreover, provincial development as well the tourism and the primary sectors in the area, are characterized by limited enforcement of land-use planning, lack of climate and event data mainstreamed into policies and plans, lack of climate change effects knowledge and awareness among the local people, and socioeconomic inequalities among indigenous, Afro-Antillean and other local communities. Hence, it is necessary to reduce

1 Thematic areas are: Food security; Disaster risk reduction and early warning systems; Transboundary water management; Innovation in adaptation finance. 1

the vulnerability in the region through integrated development plans informed by climate risk scenarios that incorporate sea level rise effect, territorial planning sensitive to climate change and risk of disasters, and a set of adaptation measures to increase the resilience of the communities. Tourism shall ally with climate-resilient supplies, climate-resilient services, and plan their facility areas considering risk, climate and human well-being and security, integrating small producers who must consider the climate and relative production scenarios, and select the most suitable areas, and techniques. For that Nature based Solutions are among the most effective, accessible and affordable adaptation option for the small-scale holders and families.

In a post-COVID climate change context where family economies have been seriously affected, especially those reliant on tourism, there is a big opportunity for livelihoods in the region to be strengthened and diversified through nature-based tourism, whether directly working in the tourism sector, or indirectly by providing it with goods (from agriculture, fishing, handicraft), or services (assets being inserted into touristic itineraries, such as ecological farms or protected areas). Unlike the current scheme that threatens natural values, a climate-resilient nature-based sustainable tourism would benefit communities, strengthen their livelihoods and boost the natural capital on the targeted areas, allowing Costa Rica and Panama to start building back tourism better and more sustainably.

Project / Programme Objectives: The project aims to reduce the vulnerability of communities along Limon and Bocas del Toro Caribbean provinces to flooding and risk caused by extreme events, and sea level rise by unlocking the potential for diversification of local livelihoods through a nature-based tourism, and by mainstreaming climate data and adaptation measures into policy and planning.

Project / Programme Components and Financing:

Project/ Expected Amount Programme Expected Outputs Countries Outcomes (US$) Components

1. Integration of 1.1 Reduced 1.1.1 Shared binational technology and information Costa Rica US$2.5m risk exposure and system (data sharing) on climate change and management sensitivity to impacts and climate forecasts, including sea Panama for community- climate change level rise, operating and providing information based activities and increased to the local level, emphasizing tourism adaptive dependent local communities. capacity of the 1.1.2 Assessed sea level rise and its effects for the targeted areas. targeted areas, including high tech systems such as tide gauges, development scenarios and coastal risk models. 1.1.3 A DRR management plan and early warning system developed and implemented in the targeted areas, including vulnerability assessments and climate risk maps, with emphasis in tourism related activities. 2. Local 2.1 Increased 2.1.1 Implemented ecosystem-based adaptation Costa Rica US$4.5 livelihoods resilience of measures, identified by national and sub- and strengthening ecosystems national governments, including measures Panama and and their for protected areas. diversification services 2.1.2 Implemented solutions for integrated through pilots through the management of water resources with and implementation community participation and leadership. implementation of NbS of adaptation measures in measures response to 2.2.1 Climate-resilient agricultural and fishing climate change. practices implemented, based on good practices and on local, indigenous, and traditional knowledge.

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2.2 Diversified and 2.2.2 Pilots implemented for diversification of strengthened tourism activities, like tourism facilities and local livelihoods itineraries, and activities that contribute to the and sources of local tourism value chain such as agriculture, income for the fishing and handicraft, towards a more communities in resilient range of livelihoods and economic the nature- structure with integration of local goods and based tourism services into tourism. sector. 2.2.3 Pilots implemented for enhancement and accreditation of sustainability and water and carbon footprint of tourism related goods and services. 2.2.4 Vulnerable groups, such as indigenous and Afro-Antillean people, women, and youth, supported on access to finance for promoting resilience in tourism and related sectors. 2.2.5 Comprehensive climate-resilient nature- based tourism training programme developed, targeted to government staff and local communities affected by climate change, to envision the possibilities for livelihood diversification and tourism sustainability. 3. Enabling 3.1 Improved 3.1.1 Climate change adaptation mainstreamed Costa Rica US$1m conditions for policies and across local planning, management tools and and community regulations to decision-making processes (e.g. land zoning Panama engagement promote plans such as “planes reguladores” and and ownership resilient “planes de ordenamiento territorial”, local livelihoods and development plans at municipal and cantonal tourism. levels, and tourism development instruments). 3.1.2 Adaptation and resilience guidelines and measures for integrated coastal marine management, as well as mechanisms to improve compliance with the legislation in the Maritime-Terrestrial Zone, implemented to reduce the vulnerability of coastal communities. 3.1.3 Protected areas (PAs) management plans enhanced by comprising climate change data and actions, and by incorporating NbS, to promote community engagement and the integration of PAs into community-based tourism circuits. 3.1.4 Tourism sustainability standards adjusted to include climate change, disaster risk and carbon and water footprints. 4. Stakeholder 4.1 Experiences 4.1.1 An experience-exchange programme, Costa Rica US$1m collaboration and lessons between tourism related stakeholders, and and knowledge learned shared designed and developed, focusing on Panama management and livelihood diversification and climate-resilient disseminated to planning. increase 4.1.2 A climate-resilient nature-based tourism resilience and communication strategy designed and promote implemented, including awareness-raising, collaboration centered on the Caribbean communities of among tourism Costa Rica and Panama. 3

related 4.1.3 Innovative schemes and tools shared to stakeholders. support resilient community-based livelihoods (e.g.: Microfinances for Ecosystem based Adaptation - MEbA manuals, and Eco-Criteria for Community DRR, among others), with a focus on tourism in the targeted sites. 6. Project/Programme Execution cost (9.5%) 0.855 M 7. Total Project/Programme Cost 9.855 M 8. Project/Programme Cycle Management Fee charged by the Implementing Entity (if applicable) (8.5%) 0.838 M Amount of Financing Requested 10.693 M

Project Duration: 4 years (48 months)

PART II: PROJECT / PROGRAMME JUSTIFICATION

Project components: The project is divided into four components focused on reducing the communities vulnerability and helping them adapt, with activities that combine integrated risk management (IRM) and Nature based Solutions (NbS), including Ecosystem based Adaptation (EbA) measures, by: i) Integrating risk management for community-based activities; ii) Strengthening and diversifying local livelihoods through pilots and implementation of adaptation measures; iii) Enabling conditions for community engagement and ownership; and iv) Fostering stakeholder collaboration and knowledge management. Project geographical scope is significant, encompassing the entire Caribbean coast of Costa Rica (Limon province); while covering the Province of Bocas del Toro in Panama, reaching indigenous peoples of the Gnabe Bugle reserve, and engaging the Naso and Bri Bri indigenous peoples. Consequently, the beneficiaries include indigenous communities in both countries.

The project builds added value through the regional approach because of the extensive opportunities to exchange experiences and data between the two countries, allowing for an enhancement and alignment of policies, practices, and collaborative schemes. For example, regarding adaptation planning, Panama can take advantage of lessons learned from the adaptation planning process of Costa Rica. Despite both countries being in different stages of their National Adaptation Planning processes, the project will benefit from a broader adaptation perspective already defined by both Ministries of Environment. Likewise, the recent creation of the Naso Teribe territory in Bocas del Toro in Panama will provide an updated frame for the dialogue with indigenous communities in both countries. Previous experience of bi-national work through the Sixaola River Bi-national Commission will facilitate harmonization processes for shared sustainable tourism schemes. The fact that both provinces have similar climate risks, that their socio-economic structure and cultural diversity is similar, and that they both have a potential for a nature-based tourism that supports resilient livelihoods, calls for a regional approach.

Innovative solutions: The project has a strong consolidation potential by building upon the results of previous projects, while bringing specific innovative features related to a resilient nature-based tourism model, such as an introduction and guidelines for microfinance schemes for NbS in tourism and updated tourism sustainability standards to include climate criteria. Paradigm shift potential is achieved by setting the conditions to consolidate a resilient nature-based tourism model, including its relation to resilient goods and services). Innovation resides in the ambition of mainstreaming climate change data into tourism and related activities for strengthening the livelihoods of communities, while promoting a multisectoral perspective.

Cost effectiveness: Besides from the well-known nature-based solutions’ cost-effectiveness, the regional approach is key to increase the scope of the expected benefits. Both countries will share expertise and technical support on integrated risk management to address transboundary climate change challenges that affect their Caribbean coastal area. By sharing and learning from each other’s experiences, resources will be optimised. Similarly, at the community level, it will be cost-beneficial to implement, in parallel, similar or complementary pilots and policies to strengthen and diversify livelihoods, promoting opportunities for scaling- up and replication.

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Consistency: The project is complementary to other related national and binational government efforts, led by national entities of both countries including the Ministries of Environment (MINAE Costa Rica and MiAmbiente-Panama), the Tourism authorities (ATP-Panama and ICT Costa Rica) and local authorities, such as the efforts: 1) Towards the transboundary Integrated Water Resource Management (IWRM) of the Sixaola River Basin shared by Costa Rica and Panama (GEF project implemented by UNDP); 2) Central American Strategy for Rural Territorial Development (ECADERT) of the Central American Integration System (SICA), Binational pilot project CBCRS “Fincas Integrales” (Integrated farms); 3) Sixaola Binational Commission working programme and the implementation of the Strategic Plan for Transboundary Territorial Development (2017-2021); 4) Development of Sub-national Capacities for the Implementation of the National Adaptation Plan in Costa Rica, implemented by MINAE and UNEP, framed within the Readiness program of the Green Climate Fund, advancing adaptation planning and risk analysis for 20 pilot cantones, including the cantons of Talamanca, Siquirres, Matina and Pococí; 5) the Sustainable Tourism Master Plan of Panama; 6) the Integrated Urban Development of Cities with a world-class tourist destination Programme financed by the IDB (Panama); 7) Conduction of a Climate Vulnerability Assessment and identification of key adaptation measures for the tourism sector, conducted as part of Costa Rica’ Fourth National Communication to the UNFCCC (CR), and the tourism sustainability standards in both countries. Building upon these initiatives, the project aims to operate from various entry points: policy, planning implementation, and local communities’ livelihoods. Adoption of NbS measures will directly contribute to the long-term resilience of ecosystems and communities. Selection of NbS measures will be based in climate and planning instruments at different levels, including National Adaptation Plans and territorial diagnoses, observing a participatory approach to secure ownership of the adaptation process, with a particular emphasis on indigenous people’s engagement.

Learning and knowledge management: The project proposes component 4 to capture and disseminate lessons learned with local and regional stakeholders.

Consultative process: The Concept Note and full proposal processes will require consultation processes which will benefit of previous binational schemes operating for the Sixaola Watershed and La Amistad International Park Binational Site, facilitating national and local institutions engagement. Because of the presence of indigenous peoples in both countries, Free, Prior and Informed Consent processes as well as Ramsar Sites guidelines will be considered. A gender-sensitive approach will guide the process, including development of a gender action plan.

Sustainability: Activities will be designed ensuring community and country ownership to guarantee sustainability. For example, guidelines for a mechanism based on adaptation microfinancing will be shared in the territories and will serve vulnerable communities beyond the project scope. Additionally, since the project aims to strengthen the livelihoods of local communities, including the productive linkages among tourism- agriculture-fisheries and other dynamic sectors to increase resilience, as well as applying climate data to policy planning and implementation, the project’s sustainability is secured after project completion. NbS implementation will provide social and environmental benefits, while the enhancement of ecosystem services will contribute to improve management effectiveness. PART III: IMPLEMENTATION ARRANGEMENTS

Project implementation arrangements include overall guidance provided by UNEP as Implementing Entity. Accredited NIEs of both countries, Fundecooperación para el Desarrollo Sostenible (Costa Rica) and Fundación Natura (Panama), are expected to be the Executing Entities, supported by the national environmental and tourism authorities of both countries: Ministry of Environment (MiAmbiente), Tourism Authority of Panama (ATP), Ministry of Environment and Energy of Costa Rica (MINAE), and Tourism Institute of Costa Rica (ICT). Implementation of adaptation measures will require strong engagement of local authorities: Municipalities (Municipalities of Bocas Del Toro, Chiriqui Grande and Changuinola in Panama, and Limón, Talamanca, Matina, Siquirres, Pococí in Costa Rica), as well as traditional and indigenous authorities. Project also envisions involvement of binational instances. Project architecture includes a binational steering committee, implementation unit, and technical support from government entities, local NGOs, as well as private sector engagement and local community groups and organizations, including indigenous ones. 5

PART IV: ENDORSEMENT BY GOVERNMENTS AND CERTIFICATION BY THE IMPLEMENTING ENTITY

A. Record of endorsement on behalf of the government Milciades Concepción, Minister, Date: January 5, 2021 Ministry of Environment, Panama Patricia Campos, Director, Direction of Climate Change, Date: January 18, 2021 Ministry of Environment and Energy, Costa Rica

B. Implementing Entity certification I certify that this proposal has been prepared in accordance with guidelines provided by the Adaptation Fund Board, and prevailing National Development and Adaptation Plans and subject to the approval by the Adaptation Fund Board, commit to implementing the project/programme in compliance with the Environmental and Social Policy of the Adaptation Fund and on the understanding that the Implementing Entity will be fully (legally and financially) responsible for the implementation of this project/programme.

Gustavo Máñez Implementing Entity Coordinator Date: January 18, 2021 Tel. and email:+50761406202 / [email protected] Project Contact Person: Marta Moneo Lain Tel. And Email: +50760388570 / [email protected]

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