Document of The World Bank
Public Disclosure Authorized Report No: 23889 EC
PROJECT APPRAISAL DOCUMENT
ONA
PROPOSED GRANT FROM THE GLOBAL ENVIRONMENT FACILlTY TRUST FUND
IN THE AMOUNT OF SDR 2.86 MILLION (US$ 3.7 MILLION EQUIVALENT)
Public Disclosure Authorized TO THE REPUBLIC OF ECUADOR
AND
A GRANT FROM THE GLOBAL ENVIRONMENT FACILITY
TRUST FUND OF SDR 3.41 MILLION (US$ 4.3 MILLION EQUIVALENT)
TO THE
NATIONAL ENVIRONMENTAL FUND
Public Disclosure Authorized FOR THE
NATIONAL SYSTEM OF PROTECTED AREAS
October 31, 2002
Environmentally and Socially Sustainable Development Bolivia, Ecuador and Peru Country Management Unit Latin America and Caribbean Region Office Public Disclosure Authorized CURRENCY EQUIVALENTS (Exchange Rate Effective US Dollar Ecuador's official currency since September 2000) Currency Unit =
FISCAL YEAR January 1 - December 31
ABBREVIATIONS AND ACRONYMS AOP - Annual Operational Plan CAS - Country Assistance Strategy CBD - Convention on Biological Diversity CCER - Cotacachi Cayapas Ecological Reserve CFPR - Cuyabeno Faunal Production Reserve DBPA - Directorate of Biodiversity and Protected Areas EIC - Environmental Information Center of the Ministry of the Environment EIS - Environmental Information System FAN - National Environmental Fund FAO - United Nations Food and Agriculture Organization GEF - Global Environmental Facility GIS - Geographical Information System GOE - Government of Ecuador GNTB - National Biodiversity Working Group ICR - Implementation Completion Report INEFAN - Ecuadorian Institute of Forestry, Natural Areas and Wildlife IPMU - International Projects Management Unit LAC - Latin America and the Caribbean MAG - Ministry of Agriculture and Livestock M&E - Monitoring and Evaluation MNP - Machalilla National Park MoE - Ministry of the Environment MP - Managerial Plan NSB - National Strategy for Biodiversity NGOs - Nongovernmental Organizations NSPA - National System of Protected Areas OCB - Community-based Organizations OSGs - Second Grade Organizations PA - Protected Area PAD - Project Appraisal Document PAF - Protected Areas Fund PAG - Annual Disbursement Plan PMC - Participatory Management Committees SEC - National System of Education and Training SPNSPA - Strategic Plan for the National System of Protected Areas STAP - GEF's Scientific and Technical Advisory Panel TAC - Technical Advisory Committee-NSPA TAG - Technical Advisory Group UNDP - United Nations Development Program
Vice President: David de Ferrranti Country Director: Isabel Guerrero ESSD Director: John Redwood Team Leader: Gabriela Arcos ECUADOR NATIONAL SYSTEM OF PROTECTED AREAS
CONTENTS
A. Project Development Objective Page
1. Project development objective 3 2. Key performance indicators 3
B. Strategic Context
1. Sector-related Country Assistance Strategy (CAS) goal supported by the project 4 2. Main sector issues and Government strategy 4 3. Sector issues to be addressed by the project and strategic choices 8
C. Project Description Summary
1. Project components 9 2. Key policy and institutional reforms supported by the project 13 3. Benefits and target population 13 4. Institutional and implementation arrangements 14
D. Project Rationale
1. Project alternatives considered and reasons for rejection 17 2. Major related projects financed by the Bank and other development agencies 18 3. Lessons learned and reflected in the project design 22 4. Indications of borrower commitment and ownership 23 5. Value added of Bank support in this project 24
E. Summary Project Analysis
1. Economic 25 2. Financial 25 3. Technical 26 4. Institutional 26 5. Environmental 29 6. Social 30 7. Safeguard Policies 32
F. Sustainability and Risks
1. Sustainability 33 2. Critical risks 33 3. Possible controversial aspects 35
G. Main Grant Conditions
1. Effectiveness Condition 35 2. Other 35
H. Readiness for Implementation 36
I. Compliance with Bank Policies 36
Annexes
Annex 1: Project Design Summary 37 Annex 2: Detailed Project Description 40 Annex 3: Estimated Project Costs 61 Annex 4: Incremental Cost Analysis 62 Annex 5: Financial Summary for Revenue-Earning Project Entities, or Financial Summary 68 Annex 6: (A) Procurement Arrangements 70 (B) Financial Management and Disbursement Arrangements 75 Annex 7: Project Processing Schedule 86 Annex 8: Documents in the Project File 88 Annex 9: Statement of Loans and Credits 89 Annex 10: Country at a Glance 90 Annex 11: Government and Parallel Financing 92 Annex 12: Social Assessment 95 Annex 13: Indigenous People Development Framework 109 Annex 14: Lessons Learned from the GEF Ecuador Biodiversity Conservation Project 113 Annex 15: Environmental Framework 116 Annex 16: Project Institutional Framework 119 Annex 17: Letter of Sector Policy 121 Annex 18: Process Framework for mitigating Potential Livelihood Impacts 124
MAP(S) 32145 ECUADOR National System of Protected Areas Project Appraisal Document Latin America and Caribbean Region LCSEN Date: August 16, 2002 Team Leader: Gabriela Arcos Sector Manager/Director: John Redwood Sector(s): General agriculture, fishing and forestry sector Country Manager/Director: Isabel M. Guerrero (50%), General public administration sector (50%) Project ID: P066752 Theme(s): Biodiversity (P), Environmental policies and Focal Area: B - Biodiversity institutions (P), Other rural development (P) -Project Financing Data [ Loan [ Credit [X] Grant [ ] Guarantee [X] Other: For Loans/Credits/Others: Amount (US$m): 8.0 Financing Plan (US$m): Source Local Foreign Total* BORROWER/RECIPIENT 4.40 0.00 4.40 US: AGENCY FOR INTERNATIONAL DEVELOPMENT 2.49 0.00 2.49 (USAID) BORROWING AGENCY 2.39 0.00 2.39 GLOBAL ENVIRONMENT FACILITY 8.00 0.00 8.00 GERMANY, GOV. OF (EXCEPT FOR BMZ) 5.84 0.00 5.84 NETHERLANDS, GOV. OF THE (EXCEPT FOR 2.34 0.00 2.34 MOFA/MIN.OF DEV.COOP.) INTER-AMERICAN DEVELOPMENT BANK 4.00 0.00 4.00 NON-GOVERNMENT ORGANIZATION (NGO) OF 3.20 0.00 3.20 BORROWING COUNTRY Financing Gap 0.04 1 0.04 Total: 32.70 0.00 32.70 Borrower/Recipient: REPUBLIC OF ECUADOR & FAN Responsible agency: MINISTRY OF ENVIRONMENT AND FONDO AMBIENTAL NACIONAL (FAN) The Republic of Ecuador and Fondo Ambiental Nacional Directorate of Biodiversity (DBPA) Address: Av. Eloy Alfaro y Amazonas-piso 8 Contact Person: Roberto Ulloa Tel: :(593-2) 2506-337 Fax: Email: [email protected] Other Agency(ies): Protected Areas and Fondo Ambiental Nacional (FAN) Address: Mariano Aguilera y Pradera-Edificio Santorini-Piso 6 Contact Person: Samuel Sangueza Tel: (593-2) 2557-691/2 Fax: (593-2) 2557-691/2 Email: [email protected] Estimated Disbursements ( Bank FY/US$m): FY 2002 2003 2004 2005 . : Annual 4.50 1.50 1.00 1.00 Cumulative 4.50 6.00 7.00 8.00 Project implementation period: 4 years Expected effectiveness date: 01/08/2003 Expected closing date: 06/30/2007 OcS PADF.. F- MM 2.
- 2- A. Project Development Objective
1. Project development objective: (see Annex 1) The project's development objective is to ensure the conservation and management of Ecuador's biodiversity for socially sustainable development by strengthening the National System of Protected Areas (NSPA) through improving the legal, institutional and financial foundations and capacities for the integrated, participatory management of protected areas (see Annex 1).
A Strategic Plan for the NSPA (15-year plan) has been developed with the assistance from the GEF Biodiversity Project (GEF Grant 28700-EC), to revert the declining status and sustainability of many protected areas, and taking into account the structural changes occurring in the country's public sector. The long-term vision is to ensure that NSPA is self-sustained, transparent, decentralized, and managed through partnerships with local communities, government at various levels, NGOs and the private sector. The long-term vision and the activities proposed for the project have addressed the major lessons learned from the earlier Biodiversity Protection Project. This strategy has been discussed widely and has been adopted by the Ministry of the Environment.
The proposed 4-year project, is the first phase of the Plan's implementation, and will specifically: a) strengthen the legal and regulatory framework for the co-management of protected areas; b) design and implement management plans for two priority protected areas (Machallila and Cotacachi-Cayapas), pilot concessions for services and develop participatory planning/management models in these areas; c) consolidate a Protected Areas Trust Fund to cover the recurrent costs of up to nine priority protected areas; and d) consolidate the monitoring and information system for the NSPA.
2. Key performance indicators: (see Annex 1) * Protected Areas Fund supports recurrent costs of at least 9 Protected Areas; * NSPA is able to effectively protect ecosystems of global importance for biodiversity conservation contained in the two selected protected areas, through the effective implementation of management plans; * Local communities within and around the selected Protected Areas are actively involved and committed to PAs conservation; through the establishment and operations of the Participatory Management Committees; * Directorate of Biodiversity and Protected Areas capable for resource allocation, regulating, monitoring and supervising the NSPA; * Non-budget revenues of NSPA increase in a gradual and on permanent basis; * Concessions for services in PAs are fully regulated and piloted in the two selected PAs; * NSPA Strategy updated; * Biodiversity Law approved within the next two years and regulations enforced; * A sound evaluation and monitoring system for the effective management of NSPA is functioning in selected PAs.
A more detailed description of performance indicators is presented as part of the project's Logical Framework (See Annex 1).
- 3- B. Strategic Context 1. Sector-related Country Assistance Strategy (CAS) goal supported by the project: (see Annex 1) Document number: R2000-102 Date of latest CAS discussion: June 22, 2000 The most recent CAS Progress Report Ecuador: Country Assistance Strategy Progress Report. June 1, 2000. Report No. R2000-102. alludes to the fact that the Government of Ecuador faces serious environmental issues, and if not tackled, will constrain socially sustainable development in the medium and long term. The most relevant issues identified by the CAS were biodiversity protection and deforestation.
This project would contribute directly to the CAS goal of protection of Ecuador's biodiversity through the conservation and management of Ecuador's biodiversity for socially sustainable development, through implementing key structural and legal reforms that will set the framework for NSPA participatory management and financial sustainability.
The project will support this policy objective by: a) supporting the new NSPA institutional arrangements, including the recently created Directorate of Biodiversity and Protected Areas and the PA administrations through capacity building, and the introduction of modern tools for financial and administrative management; b) the development of legal and institutional arrangements to enable participatory management and co-investment processes within Pas, with a special focus on concessions of services, c) the development of innovative financing mechanisms to help ensure protected areas' sustainability; and d) the establishment of a Protected Areas Trust Fund to cover recurrent costs of the National System of Protected Areas. la. Global Operational strategy/Program objective addressed by the project: The project's objective is consistent with the GEF Operational Strategy for consolidating and improving conservation efforts in priority protected areas. The project is also consistent with Operational Program Number 2: Coastal, Marine, and Freshwater Ecosystems, Operational Program Number 3: Forest Ecosystems and Operational Program Number 4: Mountain Ecosystems. It is particularly relevant to the conservation of globally significant areas and to the on-site conservation of biodiversity at all three levels: genetic resources, species, and ecosystems. It will also support the sustainable and equitable utilization of biodiversity through support for studies and public/private sector initiatives.
The proposed project is consistent with the principles of the Convention on Biological Diversity (CBD), of which Ecuador is a signatory country. The different activities of the project support: conservation of biodiversity, conservation of tropical forests, maintenance of genetic resources, empowerment of main stakeholders, local participation in environmental management, strengthening of national capacity for establishing processes of sustainable development, and the strengthening of in-country scientific capacity in biological diversity.
2. Main sector issues and Government strategy: Biodiversity importance
According to the World Wildlife Fund (WWF), Ecuador is one of the 17 "megadiverse" countries in the world. This richness is exemplified by the density of species estimated to be the highest in the world (9.2 species/1,000 km2, excluding fish) and degree of endemism thought to be second in the world. In terms of flora diversity, the country has an estimated 25,000 species of vascular plants or approximately 10 % of the world's total. Ecuador's rich faunal diversity is illustrated by the estimated 800 species of
- 4- freshwater fish, 450 species of marine fish, 422 species of amphibians (4th in the world), 375 species of reptiles, 333 species of mammals (8th in the world), and 1,618 species of birds (18 % of the world's total). All this biodiversity is sheltered in a country of 256,370 km2, equivalent to 0.18% of the Earth's land surface. Agriculture, one of the pillars of Ecuador's economic development and the basis for food security, and ecotourism, an important source of revenue, depend on this rich biodiversity resource.
The National System of Protected Areas (NSPA), originated in 1976 with the purpose to support the conservation of this biodiversity. Currently, it is made up of 27 natural areas: 23 continental areas, 2 islands and one marine area, covering a land surface area of 4,669,871 ha (approximately 18% of the national territory) and 14,110,000 ha of marine surface area. Currently, the NSPA covers only the State owned PAs, it does not include private owned PAs.
Threats to Biodiversity
Ecuador's ecosystems are fragile and have been exposed to increasing pressures, due to expansion. of agricultural frontier, and natural resources based export production. The demands for land and natural resources by impoverished groups have contributed to the degradation of the biodiversity resources of the country.
State and private interests in the exploitation and extraction of natural resources have been on a collision course with conservation, and in many instances the former have prevailed over conservation interests. Activities such as mining, oil exploitation, major infrastructure works, shrimp farming, fisheries and timber extraction have all contributed to environmental degradation and represent threats to the protected areas.
Habitat alteration, fragmentation and destruction is caused mainly by deforestation stemming from the expansion of agriculture and timber exploitation. Between 1950 and 1996, about 58% of the country's vegetation had already been significantly altered and 95% of the coastal forests have been cut. On average, 2.3 percent of native forest are lost annually. The high demand for luxury products such as lobster, sea cucumbers, furs and skins contributes to the overexploitation of flora, fauna and fisheries. The introduction of exotic species in areas such as the Galapagos islands has jeopardized the survival of native species.
Long term vision and Strategic Plan
A Strategic Plan was prepared under the first GEF financed Biodiversity Protection Project to provide a long-term vision for the management of the NSPA. It identified key elements that follow the current worldwide trends of protected areas management systems and can be summarized as follows: (i) strengthening of the administration of the NPAS; (ii) implementing new regulations and programs that increase the capacity for protected areas management by the private and public sectors in Ecuador; (iii) increasing the public support for protected areas by strengthening government and non-government communication/environmental education programs at the local, regional and national level; (iv) implementing protected areas management plans; (v) establishing a long-term financial mechanisms for protected areas management; (vi) strengthening mechanisms for the participation of communities, NGOs and private sector in the administration of the NPAS; and (vii) implementing new mechanisms for the participation of regional entities (i.e. municipalities) in the management of protected areas. The proposed 4-year project will support the first phase of implementation of the Strategic Plan and will establish the foundations for the consolidation of the long-term management objectives of the NSPA.
- 5- Conflicts with landowners and local communities within PAs Ambiguity in land-holding regimes and a lack of enforcement of the law within buffer zones is the cause for most of the conflicts with conservation of land within protected areas. An absence of strict delimitation of PAs boundaries has created conflicts from encroachment by illegal settlers. The existing PAs land tenure status, where 71% (3,300,131 ha) of land belongs to the State and 29% (1,367,295 ha) to private parties, confirms the importance of carrying out the full delimitation of PAs. The existing legal framework does not recognize the existence of private property inside parks and reserves, however it recognizes the ancestral rights of Indigenous and Afro-Ecuadorian communities (for more details see Annex 12-Indigenous Peoples Development Framework). The presence of small farmers and native communities in the NSPA has been a defacto situation that has not been dealt with and therefore creates additional conflicts that require attention.
Evolving Policy Framework
The frequent changes in the political situation and macro-economic conditions in Ecuador had significant consequences on the environmental sector in recent years. In the last decade, the macro-economic policies have strongly focused on an export-based development model with increasing investments in mining, hydrocarbons and non traditional crops (i.e. flowers, exotic fruits). In 1998, the Ministry of the Environment, as the main agency responsible for the conservation of the country's biodiversity, initiated the preparation of a 10-year National Biodiversity Strategy, with a clear vision of integrating the macro-economic policies and the sustainable management of natural resources.
In 2001, after a participatory and consultation process among representatives of non governmental environmental organizations, governmental institutions, private productive sector, social and grass-root organizations (including indigenous organizations), and the academic sector, the Strategy was approved. In addition, the MMA has consolidated the National Working Group on Biodiversity (GNTB), an ad-hoc group of experts that supports the Ministry in defining policies and resolving conflicts regarding diverse matters relating to biodiversity and that will oversee the implementation of the Strategy.
Evolving legal framework
Ecuador's environmental legislation is very recent, and still evolving. The Environmental Law approved in 1999 gives the Ministry of the Environment (MAE) specific duties such as coordinating, unifying, executing and supervising policies, projects and programs of the diverse institutions and organizations (public and private) whose activities relate to (or have an impact on) environmental management, besides complying with and enforcing the environmental regulations contained in the new Ecuadorian Political Constitution. Regulations to this law are currently under development.
A draft Biodiversity Law which will regulate the NSPA has been developed through a broad process of participation and consultation among different actors of the public sector, the business sector, NGOs, community-based organizations, and the civil society. This draft has been submitted to the Congress in November 2001 and is still under discussion.
Weak Institutional Capacity Frequent changes within the leadership of the sector has led to numerous changes in the institutional framework for environmental management. This, and the limited capacity of the existing institutions, are major constraints to the sustainable management of biodiversity in Ecuador.
-6- The origin of the NSPA goes back to 1976 when the government created a National Parks Unit inside the Forestry Division of the Ministry of Agriculture and Livestock (MAG). A strategy for the protection of wildlifeestablished the need to create 18 protected areas, which was later revised to 24 areas. In 1992, the Ecuadorian Institute of Forestry, Natural Areas and Wildlife (INEFAN) was created as an independent institution under the MAG to administer the NSPA. In 1996, the Ministry of the Environment (MAE) was created and INEFAN was transferred from MAG to the new Ministry. In January 2000, INEFAN ceased to exist and its functions were totally transferred to the Ministry of the Environment.
Recently, the MAE has undertaken major efforts to improve its policy and operational capacities. It has consolidated the National Working Group on Biodiversity (GNTB), an ad-hoc group of experts that supports the Ministry in defining policies and resolving conflicts with diverse issues related to biodiversity. Following these new trends, biodiversity issues are being managed from a holistic point of view, integrating macro-economic policies, productive strategies and sustainable development. Particular importance has been given to on-the-ground conservation through the effective administration of the NSPA MAE is also regulating ex-situ conservation, biological research, and environmental impact assessments. MAE is currently chairing the National Committee of Genetic Resources, which has as main responsibility to regulate the access and use of local genetic resources.
However, the MAE still lacks of an adequate balance of qualified personnel and adequate budget to enforce its policies. It is heavily dependent on the support provided by the international community for its basic operation. Currently, the NSPA employs about 168 staff, accounting for only 60% of NSPA needs. Most of this staff comprises biologists and forestry engineers, however there are no professionals in critical areas such as social development, legal, administration and protected areas planning. As a result, there are serious deficiencies in protected areas mid and long term planning. Currently, 16 of the 22 existing NSPA Management Plans are in effect, while the remaining 6 need to be updated. New Management Plans are needed for four recently created protected areas. Parallel to the need to update these strategic planning documents, their execution is impaired by the lack of funding.
Lack of sustained financing One of the most critical issues Ecuador faces in the implementation PA conservation strategies is the lack of sufficient financial resources. The MAE budget is very limited, and largely insufficient even to cover the most basic recurrent costs; never mind the investments needed to operate the NSPA at a minimal efficiency level. The revenues generated by the protected areas go back to the MAE through a cumbersome bureaucratic process, most of it finances the operation of all the units within MAE and only a small portion is reinvested directly in the NSPA. Up to 1998, an important share of the tourism revenue from the Galapagos National Park was channeled to the MAE, thus financing the NSPA and other needs. However, with the promulgation of the Special Galapagos Law, 95 % of this revenue currently benefits the Galapagos province, and only 5% is channeled to MAE. Consequently, the NSPA is facing a serious deficit and the mainland PAs do not receive sufficient financing to ensure their long-term existence.
The National Environmental Fund (FAN) was established in 1996 as a partnership with the MAE to mobilize sustained, long-term financing to support the environmental policies and strategies of the Government of Ecuador. The FAN has since built capabilities for fund raising and administration, and for the transfer of financial resources to support the activities of the government, private sector and NGOs for the protection, conservation, and sustainable use of Ecuador's natural resources. The FAN is intended to ensure the necessary stability and accountability in the management of economic resources over the long term, based on the national conservation and environmental management goals and priorities.
-7 - 3. Sector issues to be addressed by the project and strategic choices: Local Participation in PA management. The project will develop adequate spaces, mechanisms and institutional /juridical arrangements that facilitate the participation of local stakeholders in PA in the planning, funding and execution of protected area management projects, thus contributing to enforce the Government's modernization and decentralization policies in biodiversity conservation. It will particularly emphasize the preservation of lifestyles and community rights over natural resources.
Taking into account the characteristics of the National System of Protected Areas of Ecuador, the applicable legislation, together with the SNAP policies and management strategies, Ecuador has envisaged mechanisms that guarantee the compatibility of the biodiversity conservation objectives with human presence within the PAs, in such a way that the process of preparation of management plans will be based on the documented consultation and decision making with the local population, represented in the Participatory Management Committees. Such participation will ensure the feasibility of management in the PAs and its social sustainability. For more details on the project's overall participatory strategy, see Annex 12.
In addition, the project will seek to develop a constructive relation with the local indigenous communities living within or nearby the selected protected areas (see Annex 13) and will seek to hannonize the practices of resident and user communities in each PA with the conservation of ecosystems (see Annex 14).
Financial sustainability of PAs. The project will develop a long-term strategy to achieve economic and financial sustainability of the PAs, focusing on mechanisms to value and charge for environmental goods and services, as well as regulations for concessions of visitors centers, services and management activities, and mechanisms to promote reinvestment in the NSPA.
Professional and independent fund management. The project will promote the long term, professional management of funds for the NSPA through an autonomous, transparent and accountable institution, by creating the Protected Areas Fund (Fondo de Areas Protegidas -FAP) under the National Environmental Fund.
Strengthening protected areas legislation. The project will develop legal instruments that will allow the generation of non-budgetary revenues for self-sustaining management of PAs, and promote co-management and participation of different stakeholders in decision-making and PA management. It will also design legal instruments to implementing pilot concessions of services in the two protected areas selected by the project.
Building Institutional Capacity: The Ministry of the Environment started to address the needed institutional reforms, with the creation of the Directorate for Biodiversity and Protected Areas. The project will improve NSPA management, through raising the technical capacity of the personnel, creating mechanisms for improved coordination with government and civil society institutions, establishing a financial and administrative system for the NSPA and creating non-budgetary revenues through concessions of services in PAs.
Decentralized PA Management: The project will support the effective de-concentration and/or delegation of PAs management to local goverments and organizations, through the implementation of the management plans in two selected areas. This will allow for piloting this approach for both a national park (Machallila) and an ecological reserve (Cotacachi-Cayapas) and identify key elements for success of
- 8- such strategy. The Project will identify the most appropriate legal reforms, institutional arrangements and operation mechanisms to consolidate protected areas management at the local level and to effectively ensure its institutional and economic sustainability.
In this regard, some concrete actions towards delegation have already taken place. In December 2001, the Ministry of the Environment signed an agreement with the Consortium of Provincial Councils (CONCOPE) for the transfer of specific environmental management functions. This includes the creation of new protected areas to be administered by Provincial Councils and increased level of local participation in the management of state owned protected areas located within their jurisdiction.
C. Project Description Summary 1. Project components (see Annex 2 for a detailed description and Annex 3 for a detailed cost breakdown): The proposed project will include four components: (1) Institutional Strengthening and Legal Development; (2) Participatory Management of Priority Protected Areas; (3) Sustainable Financing; and (4) Project Monitoring and Evaluation. See Annex 2a for a more detailed description, and Annex 3 for a detailed cost breakdown.
Component 1: Institutional Strengthening and Legal Development (Total Cost: US $ 6.2 M, GEF flnancing: US $ 0.7 M )
This component aims to consolidate DBAP role as the responsible agency for the administration of the NSPA, by strengthening its planning, control and monitoring capacities to ensure effective management of protected areas (PAs). It will also develop the regulatory framework to promote participatory management and co-management of PAs in the country. The implementation of this component will articulate the long-term strategy for protected area management with the national policies and strategies for sustainable development and biodiversity conservation in Ecuador. Sub-components include:
1. Updating the NSPA Strategic Plan to coordinate DBAP long-term actions within the MAE's new decentralized institutional framework;
2. Preparing a financial and managerial system for DBAP and implementing it in nine protected areas of the NSPA;
3. Developing a sustainable financial strategy for the NSPA as to demonstrate its implementation in two protected areas selected by the project. These strategies will include the identification of mechanisms for generating revenues in PAs, such as income from the sale of environmental services, tourism patents, service fees collection, research permits, among others;
4. Implementing pilot concessions of services in the two protected areas selected by the project. These processes will include: identification of possible concessions (services and potential concessionaires), design of legal instruments, development of selection criteria and procedures, preparation of bidding documents, follow-up of concession contracts/agreements, and evaluation of implemented concessions;
5. Designing and implementing a training program for DBAP and PAs technical staff;
6. Strengthening mechanisms for institutional coordination, participation, technical advice, and political
-9- support by the civil society to manage and consolidate the NSPA; and
7. Developing legal instruments that will allow the generation of non-budgetary revenues for self-sustaining management of PAs, and promote co-management and participation of different stakeholders in decision-making and PA management.
Component 2: Participatory management of Priority Protected Areas (Total cost: US $ 17.65 M, GEF financing: US $ 1.6 M)
This component aims to promote the participatory management of two priority protected areas (Cotacachi-Cayapas Ecological Reserve and Machalilla National Park) by developing participatory models according to the specific social and political conditions of each area. For this purpose, the project will support the creation and strengthening of local participatory management committees to facilitate the integration of different stakeholders in the management of PAs. In addition, the project will finance the recurrent costs of the Cuyabeno Wildlife Production Reserve. These priority areas were selected by doing a comparative analysis, using biological, economic and social criteria. The criteria for selection of the priority areas is presented in Annex 2b. GEF support will focus on the following activities within each area:
Cotacachi-CayapasEcological Reserve:
1. Developing a Strategic Management Plan (SMP), which will identify the priority programs and actions, as well as the administrative mechanisms to implement efficient management in this PA. The SMP will be designed during the first year of the project through a participatory consultative process, based on the results of an ecological and socioeconomic assessment of the PA and its buffer zone. The project will provide financial and technical support to carry out this assessment;
2. Creating and strengthening the Participatory Management Committee (PMC) and the Technical. Support Group (TSG) of this protected area, as key mechanisms for the active participation of different stakeholders related to PA management;
3. Operating the Environmental Interpretation Center of Cuicocha, built in 1999 with assistance from the GEF-funded Biodiversity PRotection Project; and
4. Implementing the control and patrolling program, and other priority activities that will be identified in the SMP of this reserve.
MachalillaNational Park:
1. Developing a SMP, which will identify the priority programs and actions, as well as the administrative mechanisms to implement effective management in this PA. The SMP will be designed during the first year of the project based on an update of the current management plan of this protected area, designed in 1998 with the support of the GEF-funded Biodiversity Protection Project. Based on the identified priorities, the SMP will specifically describe the implementation mechanisms to allow the improved management of the PA within the following three years of implementation of the project. 2. Implementing the SMP through strengthening the technical and operational capacities of the national park Technical Unit (TU), responsible for the PA management. Specific activities include: basic operational costs, minimum infrastructure and equipment to ensure effective management and basic
- 10- visitor services, enhancement of protection of critical areas, regulation of compatible production activities (i.e. sustainable tourism and fishing, and extraction of non-timer forest products), training of park personnel, and environmental education and communication in the PA and its surroundings; and 3. Strengthening the Participatory Management Committee (PMC) and the Technical Support Group (TSG) of this protected area, as a key mechanisms for the active participation of different stakeholders related to PA management.
Cuyabeno Wildlife Production Reserve:
1. Financing the recurrent costs of this area during the frst year and a half of the project. After this period, the recurrent costs will be covered by the Protected Areas Fund (PAF) described in Component 3; and 2. Providing basic equipment to support the implementation of the PA control program.
Component 3: Sustainable Financing (Total cost: US $ 11.44 M; GEF Financing: US $ 4.3 M) This component is directed to achieve the consolidation of the ProtectedAreas Fund (FAP), that operates within the National Environmental Fund (FAN) of Ecuador. FAP is a strategic response to a lack of a lonf term funding mechanism to support conservation within the National Patrimony of Protected Areas. Furthermore, once essential recurrent costs of PA's have been covered, any additional resources can then be targeted to more direct support of biodiversity conservation at PA's.
The involvement of FAN as an independent autonomous organization, guarantees greater efficiency in the utilization of resources for conservation. To assure adequate and timely disbursements an Operational Manual, which includes a complete Program Cycle, has been developed in coordination with the MAE.
The Project will help with the consolidation of FAP by allocating $US 7.9 million (US $ 4 million from the GEF, US $ 3.9 million from other donor and the Government of Ecuador) toward capitalization of its endowment. This endowment, through its earned interests, will help cover the essential recurrent costs of Managerial Plans for at least eight eight PA's after the first year of project implementation. It is expected that after or by the end of year two of the Project implementation, an additional protected area will receive resources from FAP to cover the essential recurrent costs of implementing the PA's Managerial Plans, covering a total of nine protected areas from the NSPA.
Matching resources have been secured from the GoE ($US 1 million), and the Govemment of Germany through the KfW ($US 2.9 million). The funds from the German Government will specifically benefit the Sumaco Napo Galeras National Park. This protected area, together with others that will not be covered by the GEF, will become eligible for resources from FAP as the endowment becomes capitalized. This Component will also support the consolidation of FAP by allocating additional $0.325M to cover operational costs and activities planned to implement the fundraising strategy.
Component 4: Project Monitoring and Evaluation (Total cost: US$ 1.4 M; GEF financing: US$ 1.4 M) This component aims to ensure the proper operation of the project, through the establishment of a follow-up system to evaluate and monitor the implementation of planned activities at the administrative and technical levels. This system will include the following aspects:
- I 1 - ProtectedAreas Information System
Implementing the NSPA Information and Monitoring System, including its installation and operation in the 10 Regional Districts of MAE, and a pilot implementation of this system in nine PAs selected by the project (Annex 2b).
Management Efficiency Monitoring
The project will support the development of a methodology to evaluate the efficiency of management of protected areas to be tested in the nine protected areas selected for the project, including the developments key performance indicators.
Social Monitoring
Social monitoring to assess the degree of participation and involvement of stakeholders will take place during the implementation of the project. For this purpose, specific social indicators have been established (See Annex 12). This monitoring will be complemented with two beneficiary assessments, one at the project's mid-term and one at the project completion.
A full-time social development specialist (SDP) will be hired under the project. The SDP will become a key link between the Directorate of Biodiversity and Protected Areas and the managers at the protected areas, and will be responsible for coordinating and supervising the overall design and implementation of Management Plans at the two selected protected areas. The SDP will also have monitoring and evaluation responsibilities regarding overall project's social issues and will follow-up on compliance with the Process Framework and the Indigenous Peoples Development Plan..
Monitoring ProjectActivities
The project will set up a system to monitor the implementation of project activities according to the agreed Project's Implementation Plan. This system will allow the development of annual operational plans and progress reports (technical and financial). A summary of the project's financing by component is presented below.
Table 1-Project's Financial Plan by Component
Indicative Bank %of GEF % of Component costs %of financing Bank financing GEF .______.______(USSUI) Total (USSM) fnancing (USSM) financing Component 1: Institutional Strengthening and 6.20 16.2 0.00 0.0 0.70 8.6 Legal Development
Component 2: Participatory management of 17.67 46.1 0.00 0.0 1.60 19.8 Priority Protected Areas
Component 3: Sustainable Financing 12.93 33.8 0.00 0.0 4.30 53.1 Component 4: Project Monitoring and 1.20 3.1 0.00 0.0 1.20 14.8 Evaluation Contingencies 0.30 0.8 0.0 0.0 0.30 3.7 Total Project Costs 38.30 100.0 0.00 0.0 8.10 100.0 Total Financing Required 38.30 100.0 0.00 0.0 8.10 100.0
- 12 - Parallel Financing In addition to the activities described above, parallel financing will be provided by Netherlands, Germany (KFW), International Development Bank (IDB), the Nature Conservancy (TNC), World Conservancy Society (WCS), Conservation International (CI) and Fondo Ecuatoriano Populorum Progressium (FEPP) for a total amount of US$21.26 million. Most of these resources will be provided in the form of direct support to individual protected areas, including: Yasunf, Sangay, Podocarpus, Manglares Cayapas-Mataje, Sumaco Napo-Galeras, Cuyabeno and Mache-Chindul, all of these protected areas are within the nine that FAN will support for recurrent costs. This resources will be administered by the above listed organizations under their own procedures. For more details see Annex 7.
2. Key policy and institutional reforms supported by the project: The project would support the following key policy and institutional reforms:
Implementation of the National System of Protected Areas Strategic Plan developed with support of the Biodiversity Protection Project.
The functioning of the newly created Directorate for Biodiversity and Protected Areas within the ministry of environment, building its capacities for decentralized management of PAs.
Establishment of strategic partnerships with civil society and the private sector, through the Technical assistance groups.
The decentralization of management and decision-making for protected areas.
Outsourcing of PA management activities through concessions of services.
Increased participation of local and indigenous communities in protected areas management and the sustainable use of their natural resources, through the PA Management Committees.
Strategic partnership between government and environmental organizations to provide financial sustainability to the NSPA and to ensure transparent, independent management of the Protected Areas Fund.
3. Benefits and target population: The global benefit of the project will be the improved conservation of the country's biodiversity, through the conservation of significant PAs with a rich variety of species and significant levels of endemism. The outstanding biodiversity found in the selected protected areas, is the basis for various productive activities an dprovides opportunities for self-sustainability. The. potential for a sustainable use of this bio-diversity is important, with options relating to eco-tourism, medicine production (bio-prospecting), food, development of agroforestry systems in the buffer zones; use of non-timber forest products, and watershed management. The project will provide an important benefit to the Ecuadorian society as a whole, as it will ensure the sustained conservation of PAs that are an integral part of Ecuador's natural and cultural heritage.
Most protected areas of the NSPA are currently inhabited by a variety of local and indigenous communities. The Ecuadorian Constitution recognizes the rights that these populations have to use the natural resources within their territories. The GoeEs National Biodiversity Strategy is consistent with this principle, and proposes actions that are consistent with local communities livelihoods, therefore,
-13- these communities are key constituencies to ensure PA conservation and will be targeted for the potential benefits generated by the NSPA. The indigenous and local communities that inhabit PAS have a great cultural heritage, are generally well organized, and have developed good experiences in sustainable ecosystem management. The interest of the GOE to integrate these populations in the management of PAs will be clearly reflected in their direct participation in the PA Management Committees. The project will also identify and pilot income-generating activities that promote the sustainable use of natural resources by local communities.
Several national and international NGOs are carrying out various conservation and management projects financed through international cooperation agencies. They are strategic partners of the Ministry and the proposed project will help complement all their work.
Local governments such as municipalities and provincial governments will be integrated to the PAs management as strategic partner as their jurisdiction overlap with PAs or their buffer zones. They will also actively participate as members of the Management Committees.
The private sector - enterprises and businesses especially of the tourism sector - that operate or seek to operate within the PAs, will become key partners in developing the consessions for services initiatives.
The Ministry of the Environment, specifically the Directorate of Biodiversity and Protected Areas personnel will be targeted for institutional strengthening and training to more efficiently manage and monitor the PAs.
4. Institutional and implementation arrangements: Overall project management:
The project will be implemented by two institutions: The Ministry of the Environment (MAE) and the Fondo Ambiental Nacional (FAN). The MAE, through the Directorate of Biodiversity and Protected Areas (DBAP) will be responsible for the technical implementation of the project. MAE will be responsible for the implementation of Components 1,2 and 4. FAN will carry out the implementation of Component 3 (Protected Areas Fund).
Ministry of the Environment
On March 2002, through Ministerial Decree No. 034, the Project Coordination Unit (UCP) was created within the structure of the Ministry of the Environment. This Unit was established with the purpose of providing services related to financial management and procurement of loans and grants executed by MAE with financing from bilateral and multilateral agencies.
On May 2002, during Project's Appraisal, the UCP's staff and internal control systems were not in place, for this reason, the project's team was unable to carry out the Financial Management and Procurement Assessments. MAE, FAN and the Bank reached to the agreement that MAE will delegate to FAN, the administration of funds corresponding to Components 1,2 and 4, until UCP is ready to operate under Bank's requirements. For this purpose, an administration agreement will be signed between MAE and FAN, by which FAN will carry out financial management and procurement following Bank's guidelines and procedures.
Under this agreement, MAE will retain the technical leadership, supervision and overaUl responsibility for Project execution through the DBAP. UCP will designate one person who in coordination with FAN
- 14 - will supervise the overall financial management and procurement of project. The coordination between FAN and MAE-UCP will consist .of the following aspects:
1. FAN will follow the agreed Procurement Plan and upon MAE's request will carry out procurement processes. FAN will keep informed UCP's supervisor about these processes.
2. FAN will prepare Financial Management Reports and Withdrawal Requests, UCPs supervisor will review and approve them.
During the first year of the project, UCP will be adequately equipped with internal control systems and administration manuals satisfactory to the Bank. The administration of funds will be transferred from FAN to MAE following an agreed Action Plan consisting of the following steps:
1. FAN will carry out the financial management and procurement of Components 1,2 and 4 until UCP meets Bank's requirements.
2. Once the Bank has qualified UCP, FAN will start transferring the administration following a process that will last approximately two months. During this transition phase, UCP's supervisor will be fully integrated to FAN's administrative team and will be responsible of preparing financial reports and withdrawal requests.
3. During the transition period, UCP will develop in its own accounting system the chart of accounts for Components 1,2 and 4.
4. After this period, financial management and procurement will be totally under UCP's responsibility.
National Environmental Fund
The Protected Areas Fund (financed through Component 3) , will be managed by the FAN through an agreement with the MAE. FAN is an independent autonomous entity that was established through and Executive Decree as a partnership between the public sector and civil society to support environmental management programs in Ecuador. The operational manuals for the MAE and FAN were completed and assessed during Appraisal.
Project coordination:
The technical coordination of the project will be fully integrated within the DBAP tasks and structure. The overall project implementation will be supervised by DBAP's Director. A Project Coordinator will be nominated by the DBAP and hired by the project, to: i) carry out overall project management, ii) provide technical assistance to DBAP's Director, iii) coordinate activities between DBAP's staff and the technical advisors contracted by the project and; iv) act as the interface between DPBA and FAN.
The Project Coordinator will be based at the DBAP's central office in Quito and will have additional administrative support from a small team comprised of: i) an Administrative Assistant that will become the link between MAE and FAN and will follow-up on requests by MAE to FAN of contracts of consultants and purchase of goods; ii) a Team Assistant to the Project Coordinator and techical specialists, and iii) a Messenger/Driver.
DBPA's staff will also receive technical assistance from a team of national technical specialists in the following disciplines: protected area management, social development and participation, sustainable
- 15- finance, and legislation. Budget resources will be provided for other short-termn specialists on an as-needed basis.
Donor coordination:
A Donor's Coordination Group will be established at the initial stage of project implementation. The group will comprise representatives. The Netherlands, GTZ, KFW, IDB, The Nature Conservancy, and other multilateral and bilateral cooperation agencies and international NGOs. This group will be directly involved in the technical and financial planning of the NSPA, will oversee that investments are in compliance with agreements, will help to identify additional financial sources and will provide technical recommendations to DPAP to better address conservation and sustainable management issues within the NSPA. The group will operate through bi-annual meetings organized by DBAP.
Regarding the project, the key objective of meetings will be to review of project's progress; and analyze additional financial support needs. In addition, representatives of bilateral donors (KFW and Dutch Cooperation) with parallel co-financing will join the Bank in the supervision missions whenever feasible, and at least once a year. In the same way, Project's staff will participate on bilateral donors' project supervision to share knowledge and coordinate actions. A follow-up mechanism on donor coordination meetings will be established at DBAP.
Financial management:
Implementing Entities The Ecuador National System of Protected Areas Project will have two implementing units: Fondo Ambiental (FAN) in charge of the financial management arrangements. The Ministry of Environment in charge of the technical implementation. The Bank will separate agreements wih each implementing entity: BIRF -FAN BIRF -MAE Ministrv of Environment - MAE The Ministry of Environment will be responsible of implementing the components 1,2 and 4 through a grant agreement of US$3,675,000. Given that the Ministry of Environment does not have the financial management capacity to manage the US$3,675,000 the Ministry of Environment decided that the Fondo Ambiental (FAN) will manage their funds under its supervision and will enter into an Administration Agreement. Fondo Ambiental - FAN The Fondo Ambiental is responsible of the implementation of the component 3 through a grant agreement of US$325,000 and an endowment of US$4,000.000. The Fondo Ambiental (FAN) an autonomous organization was created through partnership between the private and the public sector established by Registro Oficial No. 865 on January 18, 1996 and was modified on October 2000 through Registro Oficial 195. The Ministry of Environment will sign a contract with the FAN to transfer the administration of the funds to be granted by the Bank under the supervision of the Ministry of Environment.
- 16 - Funds Flow and Disbursementarrangements Disbursements under both grants will be transaction based (ie against Statements of expenditure (SOEs), full documentation, direct payments or special commitments) Deposits into the Special Accounts and replenishments up to the authorized allocation set out in the legal agreement would be made on the basis of Applications for withdrawals accompanied by the supporting documentation in accordance with Bank disbursement procedures.
The Ministry of the Environment will open a Special Account at the Central Bank for the purposes of the Grant Agreement of US$ 3,675,000. To facilitate receipt of funds to cover operational costs of US$ 325,000 the FAN will open and maintain a separate special account in a commercial bank authorized by the Bank
To manage the Endowment funds of US$ 4,000,000 the Fan will appoint an Asset Manager. The funds will be held in a separate investment account in a Commercial Bank. On a quarterly basis the individual protected areas will prepare their requests for funds and submit to the FAN & MAE. These will be reviewed and approved by the Bank and Other Donors and once approved the amounts will be disbursed by the FAN.
Standard disbursement percentages have been established for the project. Project Monitoring and evaluation arrangements The Project's monitoring arrangements will be developed under Component 4. As a condition of effectiveness, a project monitoring and evaluation (M&E) system will be agreed with the Bank. Procedures and M&E reports will be guided by: (a) the Project Design Summary; and (b) the Monitoring Plan. M&E will be conducted through: (a) activities of DBAP; (b) annual progress review during Bank supervision missions; (c) Mid-term Review of project implementation to be carried out jointly by the Government of Ecuador, the Bank and bilateral donors; (d) two beneficiary assessments and, e) other special studies and analysis of the results of the Project Management and Evaluation Component. The Project Coordinator will submit to the Bank progress reports on project implementation and outcomes every six months during the four years of the Project. An Implementation Completion Report (ICR) will be prepared by DBAP (leaded by the specialist in Planning) at the end of the project. In addition, an independent panel will be contracted at the project's mid-term and at the project's completion to evaluate the impacts of the project's actions and compliance with agreed objectives. FAN will be in charge of the administrative monitoring and evaluation of the Protected Areas Trust Fund. Project Implementation Plan (PIP) and Operations Manual (OM): The PIP will be broken down into Annual Implementation Plans (AlPs). The AEP will be the principal tool for coordination between the MAE and FAN. AlPs would be prepared by the DBAP, approved by the MAE and presented to the Bank for the no objection before the beginning of the budget year. The Operational Manuals (OM) would include regulations on the operation of all components of the Project. MAE has developed the OM to implement Components 1,2 and 4 and FAN has developed the OM for Component 3.
D. Project Rationale 1. Project alternatives considered and reasons for rejection: Project with multiple activities oriented towards the entire PA System. One alternative discussed was the design of a Project that would intervene in all PAs by supporting small, key activities in each PA as a means to increase the Project's coverage. Such design was discarded in terms of cost-efficiency and its
-17 - real incidence in provoking better PAs management. Addressing broad coverage instead of targeted assistance, would have lead to: dispersed, low-impact activities in geographically dispersed PAs, and the multiplication of small activities with little or no sustainability beyond the Project's horizon. Consideration was given to priority PAs where maximum impact was expected as a result of Project's activities.
The establishment of a Trust Fund for Protected Areas within the Ministry of Environment, or the financial management of the Account to be managed by the MAE. These two options were rejected due to past experiences with State administrated Funds. In previous experiences, funds administered by State agencies have lacked credibility, have been prone to corruption and political/institutional instability. Hence, the establishment of a privately managed Trust Fund was considered as the best implementation option.
Cuyabeno Wildlife Reserve. This protected area, together with Machalilla National Park and Cotacachi-Cayapas Ecogical Reserve, was initially among the three priority areas selected for intervention. However due the last period of project's preparation, the Government of Ecuador and the InterAmerican Development Bank (IDB) agreed on a loan to finance the "Ecuador's North Amazon Sustainable Development Program", which includes the Cuyabeno Reserve. IDB's program will finance activities related to strategic planning within the Reserve and in its buffer zones, delimitation, land tenure issues in the buffer zone, tourism planning and alternative productive activities, covering most of the aspects that would have been developed under the GEF project.
For this reason, it was a agreed that the GEF project will focus in Cotacachi-Cayapas and Machalilla, while only basic recurrent costs will be provided to Cuyabeno as a strategic compliment to IDB's Loan. The GoE, IDF and the Bank have agreed to coordinate actions in the Cuyabeno Reserve during the implementation of both projects and to apply the same strategic planning methodologies for the development and implementation of PAs' management plans.
Support for a Separate Project Coordination Unit. Special attention was given to the institutional and implementation arrangements for the Project. A coordination Unit external to the Ministry was discarded in favor of an arrangement within the DBAP. This arrangement, will enhance project's ownership and capacity building within the Ministry, which would increase the institutional sustainability of the process - initiated by the project.
A Project with predefined implementation modes and pre-established execution strategie. This was rejected, considering the lessons left by the GEF Pilot Phase Project. Due to the fact that institutional and political change within the country has increased in the past years, the Project was designed with flexible arrangements and operation modes, which if needed to be reform will not pose a great difficulty as in the previous Project.
Individual grants to specific areas by the Bank and bilateral donors. The bilateral projects to individual areas are invaluable and a logical supplement to an integrated national program. They tend, however, to be of short duration, focused on select specific areas, and operate under differing standards. To establish a unified national system requires a more general program of support to provide the framework for additional funding.
Major related projects financed by the Bank and/or other development agencies
The proposed project would be highly complimentary and supportive of the objectives of other
-18 - donor-assisted projects. a) Projectlinkage with other World Bank Projects The proposed project is consistent with the World Bank Country Assistance Strategy, which has as one of its main pillars the promotion of socially and environmentally sustainable development through the support of initiatives on biodiversity protection.
The World Bank is financing the following related operations in Ecuador:
Biodiversity ProtectionProject (GEF TF-28700-EC). This project was completed in 2000 and supported and contributed to the strengthening of the institutional capacity and overall policy and legal framework for the National System of Protected Areas (NPAS). Within Component No.6, the preparation of the Strategic Plan for the National System of Protected Areas was carried out, where a general framework regarding policies and mechanisms for the integration of critical areas for conservation into the NPAS, was established.
Wetland Prioritiesfor ConservationAction Project (GEF MSP TF-022267). The main objective of this project is to assist and promote the conservation of Ecuador's wetlands through the identification, characterization and prioritization of wetlands in the country. Close coordination will be established between the Wetlands Priorities and NPAS teams in order to apply the principles of the framework developed to protect wetlands that occur within the project's 3 protected areas. Choco-Andean Corridor (GEF MSP TF023882). This MSP is helping to preserve the threatened biodiversity of the Southern section of the Choco-Andean ecosystems. Project goals include: (i) enhance effectiveness of the existing protected natural areas; (ii) secure functional connectivity between 2 major ecosystems of NW Ecuador the Choco bioregion and the Andean Cloud forests; (iii) increase awareness of local communities; (iv) investigate and promote environmentally sustainable methods; and (v) influence regional and national policies to support sustainability. Fundaci6n Maquipucuna, the Executing Agency for this MSP, will apply the micro-strategy for conserving the biodiversity of the Choco-Andean Corridor as a part of the larger biodiversity strategy being applied to the NPAS by the Ministry of the Environment. This will in turn affect the conservation priorities for the Cotacachi Cayapas (which is situated in the corridor) and is one of the 3 PAs addressed by the full project. Coastal Albarradas: Rescuing Ancient Knowledge and Sustainable Use of Biodiversity (GEF MSP TF-023977). This proposal combines archeology and ecology to develop an understanding of how ancient peoples in the coastal zone of Ecuador coped with the El Nifno Southern Oscillation (ENSO). The move to adapt technologies to a more modern system could help to conserve the wild relatives more effectively. The objectives of this project are to: (1) increase the understanding about the technologies utilized by the ancient inhabitants of the region to sustainably use the biodiversity of the area in relation to El Nino events; and (2) conserve the wild relatives, traditional cultivars and wild races of crop varieties in this ecosystem. There is no geographical overlap between projects and the strategy for recovering relevant indigenous knowledge will be applied to the participatory management models being applied in the 3 PAs addressed in this full project. Monitoring the Galdpagos Island Project (GEF MSP TF-021769). The project was implemented by Fundaci6n Natura. The main objectives are: (i) to establish a sound monitoring system to measure the well being of the ecoregions of the Galapagos Islands; (b) to monitor key sustainability variables of the Galapagos Islands; and (c) to provide information to local stakeholders and policy makers for the adequate management of the Galapagos ecoregions. Although the project closed on June, 2002, the monitoring tools and methodologies developed under the Galapagos MSP will be used as input for developing monitoring tools for this project
- 19 - Indigenous and Afro-Ecuadorian People Development, PRODEPINE, (EC-40086), implemented by the National Development Council of Indigenous Peoples and Afroecuadorians (CODENPE). Its main objective is to improve quality of life of poor rural indigenous and afro-Ecuadorian communities by providing improved access to land resources and financing for investment subprojects. These investment subprojects will include natural resources management issues and will promote the legalization of a nationally recognized land tenure system for indigenous peoples. To further promote ownership and land stewardship, the project has encouraged indigenous communities to develop local development plans. As an attempt to emphasize consistency nationally and to test the participatory management models that are being promoted through the NPAS project the land tenure system will be recognized and the local development plans will serve as a baseline for developing PA management plans in the 2 PAs as relevant.
b) Coordination with other GEFImplementing Agencies: On February 2000, a meeting took place with representatives of UNDP, The Ministry of the Environment, the National System of Protected Areas Project preparation team and the Bank. The purpose of the meeting was to review the GEF portfolio of both implementing agencies, coordinate actions among proposed projects, identify actual or potential overlapping and reach specific agreements. This exercise strengthened the capacity of the Ministry and both implementing projects to implement GEF projects in benefit of the country in a coordinated way. During implementation of the project, coordination will continue on a regular basis to ensure that complementary exists among the different projects and that there are no overlaps. UNDP is assisting the Ministry of the Environment, Fundaci6n Ecociencia and Fundacion Arcoiris (these two local NGOs are preparing the proposal for Ecuador per request and on behalf of the Ministry of the Environment) in preparing a Conservation of Dry Forests Bi-national full size Project. The main objective is to conserve remnant dry forests along the Pacific Coast and Southern Andean region of Ecuador, giving priority to areas with high endemism, particularly bird endemism. While specific sites have been selected for Peru, the preparation team in Ecuador is still in the process of identification. Sites in Ecuador will be fully identified with the support of a Block B grant which is currently under preparation. Whichever areas are finally selected, the Ministry of the Environment and UNDP agreed that Machalilla National Park will not be included, given that this protected area is already considered under the National System of Protected Areas Project. Although there will be no geographic overlapping between both projects and the scope of work is different, very close coordination will take place during the implementation phase of both projects to ensure that conservation strategies will fall under the Ministry's priorities and the new trends (model) of conservation.
UNDP is assisting Fundaci6n Natura in preparing the Conservation of Mache-Chindul Reserve MSP. The main objective of this project is to develop the Mangament Plans for the Mache Chindul Ecological Reserve and for the indigenous communities-owned protected forest (inserted in the Reserve's territory) and to strengthen the Ministry of the Environment's capacity to manage this protected area. There will be no geographical overlapping with the Protected Areas Project, however close coordinaton will also be necessary in this case given that the Mache-Chindul Reserve is part of the National System of Protected Areas, thus the preparation of the management plans of the Mache Chindul must follow the guiding principles designed under the Protected Areas Project. UNDP is implementing a full size project to control invasive species in the Galapagos Islands. There is no overlap with the current project since Galapagos is not proposed under the current project.
-20 - 2. Major related projects financed by the Bank and/or other development agencies (completed, ongoing and planned). .Latest Supervision Sector Issue Project (PSR) Ratings. ______.-. ______.__.__._____._ (Bank-financed projects only)- Implementation Development Bank-financed Progress (IP) Objective (DO) Loss of biodiversity GEF Biodiversity Protection U U Project (closed on March 31, 2000) GEF Medium Sized Project: S S Wetland Priorities for Conservation Action (under implementation) GEF Medium Sized Project: S S Choco Andean Corridor (under implementation) GEF Medium Sized Project: S S Coastal Albarradas: Rescuing Ancient Knowledge and Sustainable Use of Biodiversity (under implementation) GEF Medium Sized Project: S S Monitoring the Galapagos Island Project (closed on June 30, 2002) GEF Medium Sized Project: Conservation of Biodiversity in Pastaza (under preparation) Environmental management Technical Assistance for S S Environment - PATRA (closed on December 15, 2001 Technical Assistance for S S Mining-PRODEMINCA (closed on December 2000) Indigenous Development Indigenous and S S Afro-Ecuadorian People Development, PRODEPINE (under implementation) Other development agencies Loss of biodiversity Species Landscape (USAID/WCS/Ecociencia) Parks in Peril (USAID/TNC/ Arcoirisl Natura) Control of Introduced Species : ... . in Galapagos Archipelago
-21 - Program (UNDP/FCD/USAID) Sangay National Park Conservation & Management (Netherlands/ Natura) Conservation & sustainable use of Mangroves (Netherlands/ FEPP) Paramo project (Netherlands/ Ecociencia). Condor Bioreserve (TNC/ Antisana) Podocarpus program (Netherlands) PA Community Development SUBIR Project(USAID/CARE/ Ecociencia/Jatun Sacha) Ecuador's North Amazon Sustainable Development Program (1DB) Forestry Esmeraldas Forestry Management (GTZ) Gran Sumaco Tropical Forests (KfW/GTZ) PROBONA (COSUDEIUICN) IP/DO Ratings: HS (Highly Satisfactory), S (Satisfactory), U (Unsatisfactory), HU (Highly Unsatisfactory) 3. Lessons learned and reflected in the project design: The project would build on the following lessons learned under the first GEF Biodiversity Protection Project: Approach to Institutional Development. The project was implemented through the establishment of a Project Coordinating Unit (PCU) within INEFAN. Experience shows that such units become enclave operations. This was one of the main causes of poor ownership of the project by INEFAN and a lack of follow-up on the studies financed by the project. The technical management and administrative monitoring of this project will be undertaken by the DBAP's staff in coordination with staff to be hired under the project. This will ensure ownership and management capabilities, and will enhance sustainability. Community Involvement. The involvement of communities in the planning and implementation of sustainable resource management and biodiversity protection under the first project was shown to be important for the harmonious development of strategic management plans for PAs. The willingness of local communities to undertake this exercise shows that they have positive expectations from the practice. Some of the initiatives listed in Table 2 have also demonstrated that this can be effective to increase local ownership in Ecuador. NGO Collaboration. The project confirmed that the collaboration between public sector authorities, NGOs and bilateral cooperation organizations was important for project for project implementation, but with some nuances. This cooperation became effective to some extent during project execution, with the participation of NGOs in the implementation of key activities. However, the project failed to bring these interests into a structured consultative space, the "consultative committee" that would have been necessary at the central level. If this had been done, civil society might have had a more coherent voice
- 22 - that could have exerted influence at the policy and regulatory level in favor of the reforms that the project sought. A Protected Areas Advisory Committee has been established within the Ministry of the Environment to oversee the implementation of this project. Project Focus: The first project supported many scattered activities, which did not allow for adequate measurement of the overaUl project's effectiveness and impact. This project will focus in two pilot PAs with more limited and targeted objectives, appropriate to the political and social context and current institutional capacity. The project will have measurable results in its own rights as well as making a contribution to the longer term plan. Institutional Sustainability: The first project failed to build a central institutional capacity for managing the NSPA. The proposed project will establish an Advisory Parks Commission (representing aU stakeholders) to steer NSPA activities. At the field level greater involvement of civil society in park management is expected to contribute to long-term PAs viability and social and institutional sustainability. This project will strengthen public-private partnerships and build capacity within partner organizations to implement co-management arrangements in two PAS. Legal framework: The first project resulted in the new Draft Biodiversity Law but did not develop specific legislation to support park management. This project will develop new regulations and incentives to increase civil society involvement in managing protected areas and generating financial resources from and for protected areas. These will be tested in two pilot areas with more favorable conditions for success. Monitoring and Evaluation: The first project undertook assessments, surveys and established databases at the central office to monitor administrative and financial aspects, that were designed to operate under INEFAN's structure. When IEFAN's functions were transferred to the Ministry of the Environment under a new administrative structure, the databases were no longer useful. The first project failed to implement mechanisms to monitor biodiversity impact or PA management effectiveness. This project wiU establish and implement monitoring activities at the two selected protected areas to assess the impact of new management models. Financial Sustainabiity: The first project assessed potential financial mechanisms for covering PA recurrent costs. This project will specifically address financial sustainability in three target PAs by a) developing and implementing innovative financial mechanisms and new participatory management models for 3 PAs that would generate significant profits, from ecotourism and payment for ecosystem services, and will support re-investing mechanisms for protected areas; and b) capitalize the Protected Areas Trust Fund to ensure a regular flow of funding to cover recurrent costs of six other priority protected. A Trust Fund Board has been established and operational manual prepared. The first project financed the remodeling and construction of visitors centers and provided equipment, however it failed to implement a financing strategy to cover basic recurrent costs of the eight PAs it supported, to ensure the long-term operation and maintenance of such goods and infrastructure and the basic operation of the PAs. This project, through the establishment of the Protected Areas Fund, will secure the financing of recurrent cost of at least 9 PAs and by means of its capitalization, will progressively cover additional PAs.
4. Indications of borrower and recipient commitment and ownership: As an indicator of government comrmitment to the project, a letter of endorsement from the Minister of the Environment as Ecuador's GEF focal point was submitted on February 28, 2001. In addition, the Government of Ecuador's commitment to the project is reflected in a series of actions it has recently undertaken, namely:
- 23 - * The project has been identified by the Government of Ecuador as a priority for Bank support;
* It has established an independent protected areas Account within the National Environmental Fund (FAN);
* The Ministry of the Environment has provided US$1.0 M to the Protected Areas Trust Fund as part of the matching funds of the GEF US$4.OM.
* An Environmental Strategy for Sustainable Development for Ecuador has been presented by the Minister of Environment in September 1999 and issued in October 2000
* The draft Biological Diversity Law has been prepared through a highly participatory process and has been passed to the Congress for their review and approval;
* The National Biological Diversity Strategy and its action plans have been completed and approved;
* The Protected Areas Advisory Committee has been established to oversee the implementation of this project and the overall management of the NSPA;
* The Ministry of the Environment has committed an additional US$0.74M in counterpart funds to allow and comlement the timely allocation of GEF resources for the project.
5. Value added of Bank and Global support in this project: * The Bank has several years of experience in supervising similar projects in Ecuador;
* The Bank is supervising other Protected Areas Trust Funds and National Protected Areas System projects in the region. The lessons learned from other projects have been incorporated in the project design and will be further considered during the projects's supervision;
* The Bank has the continuity of staff that will ensure that the project builds on past experience;
* Bank procurement, contracting, disbursement, and disclosure procedures provide a framework for transparency in project activities and participation of other institutions in the implementation of the project;
* GEF funding provides credibility and facilitates the identification of co-funding donors;
* The Bank is well positioned to catalyze additional support over the long term given its role in aid to Ecuador, and its work with donors donors to support trust funds;
* The Bank is presently working with local NGOs in the implementation of GEF medium-sized projects and other projects (PRODEPINE) that would significantly complement this project;
* The value added to the GEF relates to: Its ability to commit permanent endowment funds resources; Its ability to act as catalyst for the mobilization of additional resources and to disseminate lessons learned in the area of global biodiversity conservation.
-24 - E. Summary Project Analysis (Detailed assessments are in the project file, see Annex 8) 1. Economic (see Annex 4): O Cost benefit NPV=US$ million; ERR = % (see Annex 4) 0 Cost effectiveness * Incremental Cost O Other (specify)
The project's general objective is to ensure the conservation and sustainable management of Ecuador's biodiversity by strengthening the National System of Protected Areas through improving the legal, institutional and financial foundations and capacities for the integrated, participatory management of protected areas. The GEF alternative would achieve these outputs at a total incremental cost of $8.0 million.
Under the Baseline scenario, The Government of Ecuador will continue providing support to the NSPA through annual budgetary allocations and SNAP revenues. These will cover basic, but insufficient recurrent costs and will maintain a limited level of support to the operation of DBAP's main office. The Netherlands' program for protected areas in Ecuador will cover recurrent costs of four selected protected areas and the Interamerican Development Bank program in Cuyabeno will finance land tenure in buffer zones and delineation activities. Total expenditures under the Baseline Scenario are estimated at US$6.23 million.
Under the GEF Alternative scenario, Ecuador will be able to establish the basis for sustainability of its NSPA based on long-term planning and social and financial tools and participatory management. This will result in an improved capacity to manage and monitor PAs. Specific outcomes will include:
* Directorate for Biodiversity and Protected Areas capable of resource allocation, regulating monitoring and supervising the NSPA; * Local stakeholders participate more actively in the management of PAs; * PAs have increased capabilities for planning and implementing PA management; * Non-budget revenues of NSPA increase in a gradual and permanent basis.
Total expenditures under the GEF Alternative scenario are estimated at US$ 30.44 million. The total cost of the GEF Alternative is US$30.44, and the cost of the Baseline Scenario is US$6.3 M, resulting in a total incremental cost of US$24.1 M. The Government of Ecuador, KFW - Germany, the Netherlands, the Interamerican Development Bank and international and local NGOs are jointly financing incremental costs for achieving global environmental benefits in an amount of US$24.1 M. Consequently, the GEF funding requested is US$8.0 M.
2. Financial (see Annex 4 and Annex 5): NPV=US$ million; FRR = % (see Annex 4) The total project costs is US $ 32.736.7 million. are divided between investment (US$27.48 million) and recurrent (US$5.21 million) costs. The resources to fund these costs will be provided by a variety of sources: Government of Ecuador (US$ 4.448 million); FAN/FAP (US$ 2.395 million); GEF (US$ 8.00 million); Government of Germany (US$ 5.848.3 million); Government of the Netherlands (US$ 2.34 million); IDB (US $ 4.005.0 million); TNC (US $ 3.2) and other parallel financing form local NGOs (US$ 2.49 million).
- 25 - FAP interest income will be used to finance the recurrent costs of at least 9 priority PAs. The recurrent costs for other areas would be progressively covered, as additional funds are raised by FAN. Even with operation of FAP within the Environmental Fund of Ecuador, the GOE will continue to be the primary responsible for the provision of resources for the PAs of Ecuador. Moreover, it is clear that there is a need for additional resources, on an annual basis, from the GOE through its budgetary assignments to the Ministry of Environment, and from them to the PAs to assure coverage of those expenses that are not eligible under FAP. The GOE has contributed $US 1 Million to the National Environmental Fund of Ecuador that will be used as matching funds for the FAP endowment. Furthermore, the GOE is currently supporting other initiatives through the Ministries of Environment and Finance to further capitalize this endowment.
Fiscal Impact:
3. Technical: Strengthening the legal and regulatory framework and developing participatory mechanisms through the implementation of management plans are essential to ensure the efficient and sustainable management of protected areas. This, coupled with innovative financial mechanisms, income generating activities and the development of good monitoring tools will ensure the institutional and financial sustainability of the NSPA.
An investment strategy for the Trust Fund endowment has been adopted by FAN's Board and the selection of the asset manager will be based on the candidates' response to it, among other criteria. The main considerations in the preparation of the asset management proposal for the NPAS endowment funds are: safety, preservation of principal and maximization of available cash flow. The budget for the endowment fund has been calculated based on the following: (i) The US$ 4 million endowment capital requested from GEF; (ii) matching endowment of $US 4 million from other donors (Germany, and GoE). The US $ 8 million endowment will be invested to support essential recurrent costs of implementing managerial plans of nine priority protected areas.
With the purpose of maximizing the financial support to the NSPA, the investment objectives would place an emphasis on maximizing available cash flow while ensuring the safety of principal. Given the fact that interest rates fluctuate over time, it is not possible to precisely determine the yield on future investments; therefore the investment objectives will seek to maximize the risk-adjusted yields in US dollar fixed income instruments (Ecuador's official currency as well).
The Project has integrated best practices from design of projects aimed at conservation of biodiversity through the management of PAs. It used the principles of participation and empowerment to help communities participate in the management of PAs. The methodologies to be followed have been largely validated in other countries which have implemented projects with a similar objective and components.
4. Institutional:
4.1 Executing agencies: The successful execution of the Project requires a solid mutually beneficial partnership between the MAE and the National Environmental Fund of Ecuador. This type of arrangement is new because it is the first time that the MAE establishes a partnership with a private organization from civil society to promote the implementation of the National Environmental Strategy for Sustainable Development. As result of
-26 - this Project this partnership is expected to become stronger and continue after the Project is over. 4.2 Project management: There has been substantial coordination between both organizations since the start. The MoE participated directly in the consultative processes of the design of the Environmental Fund of Ecuador; furthermore, the Minister of the Environment and technical staff from the MAE also participated in the design of the project cycle for disbursements of the Protected Areas Fund (PAF) which operates within the Environmental Fund of Ecuador. 4.3 Procurement issues: To manage possible misunderstandings during this partnership, some key and basic competencies have been clarified for the implementation of the Program Cycle of the FAP. The MAE is responsible for the technical and political definition of the PAs' priorities through their corresponding Managerial Plans. The Environmental Fund of Ecuador is responsible for the administration of the endowment fund to ensure that the expenditure of its resources fulfill the requirements established by this Project. The MAE remains responsible for funding the PA's line items that have been covering through budgets to date; the role of the Environmental Fund of Ecuador is complementary to this effort and by no means a substitutive. A Managerial Plan will act as the technical planning tool to prioritize activities in each PA. Detailed Operational Plans will be developed for each Management Plan and an annual disbursement plan will guide necessary expenditures of the operational plans. 4.4 Financial management issues: The Project, will have two project implementing units. The Ministry of Environment (MAE) in charge of the technical aspects and the (FAN) in charge of the Financial Management and Procurement aspects. Two grant agreements will be signed. One between the Republic of Ecuador and the International Bank for Reconstruction and Development (where the MAE is responsible for the implementation of the Components 1, 2, and 4), and the second one between the International Bank for Reconstruction and Development and the FAN (where the FAN will implement the Component 3). The total of funds to be managed are US$3,675,000 and US$4,325,000 millions (endowment and operating costs of FAN) respectively.
Given that the MAE does not have the necessary financial management capacity, an agreement will be signed by the MAE and the FAN which delegates full Financial Management responsibility to the FAN, until MAE's UCP is ready to administer the funds. Nevertheless since the MAE will have responsibility for the overall oversight of the Special Account we have proposed basic requirements which must be complied with by the MAE, prior to effectiveness.
Risk Assessment: Both the inherent risk and the control risk of the project have been assessed as Medium.
Inherent risks: Multiple executing agencies, decentralized nature of the projects across nine (9) protected areas and decentralized payment arrangements.
Overall, provided that the action plan is implemented we concluded that the Financial Management arrangements will satisfy the Bank's minimum requirements. Some of the action items will be considered conditions of effectiveness.
Audit compliance: As of the time of finalization of the assessment, there are several audit reports overdue in the portfolio. During the month of July a meeting was held with officials of the Controller General of the State and an action plan was agreed to ensure that audit compliance is improved for Fiscal
- 27 - Year 03.
Flow of funds: Disbursements under both grants will be transaction based (ie against Statements of expenditure (SOEs), full documentation, direct payments or special commitments). Deposits into the Special Accounts and replenishments up to the authorized allocation set out in the legal agreement would be made on the basis of applications for withdrawals accompanied by the supporting documentation in accordance with Bank disbursement procedures.
The Ministry of the Environment will open a Special Account at the Central Bank for the purposes of the Grant Agreement of US$ 3,675,000. To facilitate receipt of funds to cover operational costs of US$ 325,000 the FAN will open and maintain a separate special account in a commercial bank authorized by the Bank.
To manage the Endowment funds of US$ 4,000,000 the FAN will appoint an Asset Manager. The funds will be held in a separate investment account in a Commercial Bank.
On a quarterly basis the individual protected areas will prepare their requests for funds and submit to the FAN & MAE. These will be reviewed and approved by the Bank and Other Donors and once approved the amounts will be disbursed by the FAN.
Project financial reporting arrangements. The semi-annual financial statements will include: (i) the Statement of Sources and Uses by Funding Source (with expenditures classified by budgetary line and/or disbursement category); (ii) Statement of Cumulative Investments (including budget comparison); and (iii) the Special Account Reconciliation Statement. These project financial statements, along with the physical progress and procurement sections of the Financial Monitoring Reports (FMRs), will be submitted to the Bank no later than 45 days after the end of each six-month reporting period FMRs will be used for reporting, not disbursement, purposes.
For Bank purposes, the annual financial statements will include, additionally, the schedule of Statements of Expenditure (SOEs) presented during the year in support of Withdrawal Applications.
The MAE will be responsible for consolidating the reports of the FAN and MAE and submitting one set of FMRs for the project.
Audit arrangements. The FAN does not have a separate internal audit function.
In accordance with the Memorandum of Understanding (MOU) between the Bank and the Controller General of the State (CGE) the CGE will be responsible for contracting independent private auditors acceptable to the Bank under a multiple year contract.
Annual project financial statements will be audited in accordance with International Standards on Auditing, in accordance with terms of reference (TORs) both acceptable to the Bank. The audit opinions would cover at least the project financial statements, Special Account and Statements of Expenditures (SOEs) and the FAN financial statements.
The auditors would perform at least one interim visit per year. After each interim and annual visit, a memorandum on internal controls ("management letter") would be produced, and a copy would be submitted to the Bank. The project annual audit reports will be submitted to the Bank no later than four (4) months after the end of the reporting period (which coincides with the calendar year).
- 28 - 5. Envirommental: Environmental Category: B (Partial Assessment) 5.1 Summarize the steps undertaken for environmental assessment and EMP preparation (including consultation and disclosure) and the significant issues and their treatment emerging from this analysis. Environmental Category: []A [X] B [IC The project aims to achieve the sustainable management of the National System of Protected Areas through strengthening its legal, institutional and financial foundations. The project components are not expected to have significant negative impacts on the environment. Eventually, under the figures of concessions of specific services like tourism, there might be impacts from induced activities developed in buffer zones and inside the PAs, like the construction of ecotourism lodges, access roads and interpretation trails. Natural resources management activities within buffer zones (e.g., agro-ecological production, sustainable harvesting of non-timber products) may also have minor impacts. 5.2 What are the main features of the EMP and are they adequate? To address these impacts, an Environmental Impact Framework was developed and is presented in Annex 15, indicating the procedures to be followed to ensure that the potential adverse impacts of these activities are fully prevented or mitigated. The Directorate of Environmental Control will implement EA in protected areas in coordination with the DBAP and in accordance with the Guidelines for Environmental Assessment that were developed under the Bank-financed Environmental Management Project - PATRA.
5.3 For Category A and B projects, timeline and status of EA: Date of receipt of final draft: March 29, 2002
5.4 How have stakeholders been consulted at the stage of (a) environmental screening and (b) draft EA report on the environmental impacts and proposed environment management plan? Describe mechanisms of consultation that were used and which groups were consulted?
Participationduring preparation: During the preparation phase of the Project, the MAE has been particularly careful in enabling a broad participation by diverse stakeholders in Protected Area management. The participatory scheme included active consultation and consensus building among diverse sectors involved In PAs management (governmental, non-governmental, private, community, international cooperation). It has also provided a solid basis for the implementation phase, as representatives of these sector will become strategic partners in the next four years.
Following the recommendations of the workshop on Protected Area Financing Mechanisms, sponsored by the World Bank in June 2000, the Ministry of the Environment established a "Project Design Advisory Committee". This multi-disciplinary ad hoc working group is made up of experts who carry out activities in diverse protected areas in different regions of Ecuador and belong to organizations with experience in park and reserve management. It was created specifically to guide and accompany the project design process.
In addition, several workshops and informative meeting took place with representatives of International Cooperation Agencies in order to exchange ideas, receive comments and propose mechanisms of direct cooperation with the Ministry of the Environment and specifically with the Project.
Participationduring ProjectImplementation
- 29 - The project will seek the active participation of different stakeholders directly and indirectly involved in the NSPA. Testing out innovative association and participation mechanisms among these stakeholders will be a vital axis during the entire project, since NSPA sustainability depends largely on this.
A Participatory Strategy has been established for project's implementation. This strategy includes the conformation of Participatory Management Committees (PMCs) in the selected PAs. It is expected that PMCs will provide a strong framework for stakeholder participation, establishing concrete mechanisms and goals for this purpose. The PMCs will become the focal points where participatory PA planning processes will be developed. For more details see Annex 12.
MAE's staff, particularly from the DBAP and the two selected PAs, will be direct beneficiaries through training activities that will enhance their capabilities of planning and efficiently managing and monitoring the NSPA.
5.5 What mechanisms have been established to monitor and evaluate the impact of the project on the environment? Do the indicators reflect the objectives and results of the EMP?
6. Social: 6.1 Summarize key social issues relevant to the project objectives, and specify the project's social development outcomes. A Social Assessment (SA) was carried out during the preparation phase. The main objective was to evaluate the development needs of local people and their relationship with the protected areas, and to identify potential development activities that could be supported by the NSPA, based on the existing community organizations, legislation, and the needs of the local population.
The preparation of the SA included: i) information collection and analysis of baseline information (primary and secondary), PA management plans and technical reports of projects implemented by other donors; and ii) participatory in situ workshops to carry out local consultations. The results of these consultations provided the necessary information to design the participatory methodology.
Through local consultations, the project team was able to design operational strategies that are compatible with local and indigenous communities' participatory mechanisms. During local consultations, opinions were obtained from a total of 52 individuals through focus groups and interviews.
According to conservation priorities set up by the Govemment of Ecuador and the results of the participatory selection of Protected Areas, major investments and the planning/participatory activities will be concentrated in Machalilla National Park, and the Cotacachi-Cayapas Ecological Reserve. Other protected areas from the NSPA will be supported by the project under Component 3, specifically through incremental financing of its recurrent costs to allow their basic operation.
Social impacts stemming from the project's actions in terms of actively integrating local and indigenous communities in the management of the protected areas will mainly occur in Machalilla and Cotacachi-Cayapas. There will be no relevant social impacts of project activities in Cuyabeno and other PAs. For this reason, the Social Assessment (SA) and participatory consultations were carried out only in these two priority protected areas.
An important conclusion derived from the Social Assessment carried out during the preparation phase, is
- 30 - that both biodiversity and social degradation within the PAs and their buffer zones have resulted from the inadequate implementation of previous state policies, including those aimed at conservation, due to lack of consideration for long term sustainability and social participation.
Social participation is key for biodiversity conservation and sustainable protected areas management. Stakeholder participation is directly addressed in component 2, by the implementation of PAs management plans and the establishment of the Participatory Management Committees, where the project seeks to develop an efficient mechanisms to ensure sustainable and participatory management within the two selected protected areas. Under components I and 3, social participation is addressed through institutional and financial sustainability. 6.2 Participatory Approach: How are key stakeholders participating in the project? The participation of local communities through the Participatory Management Committees in both the preparation of the PA management plans and the annual action plans is key to ensure that they will benefit from protected areas. In particular, the project will seek to enhance the welfare of these communities by developing and piloting models for income generation within the PAs. The project will seek to develop a constructive relationship with indigenous communities living within or nearby the selected protected areas. An Indigenous Peoples Development Framework (EPDF)-Annex 13, has been prepared to operationalize the participation and to ensure the welfare of indigenous communities through the project's activities. The project will also seek to harmonize the practices of resident and user communities in each PA with the conservation of ecosystems. Concerted strategies will be established aiming at the resolution of potential conflicts associated with the use of natural resources, without affecting the rights of the population while ensuring the objectives of conservation of each PA. For this purpose, a Process Framework (PF)-Annex 14 has been designed. 6.3 How does the project involve consultations or collaboration with NGOs or other civil society organizations? Important stakeholders include several national and international NGOs, that are carrying out various conservation and management projects financed through international cooperation agencies. They will act as strategic partners of the Ministry during the implementation of the project. Private sector enterprises that are currently operating within the PAs, or those who intend to do so, and will eventually implement the pilot concessions for services, are also key stakeholders. 6.4 What institutional arrangements have been provided to ensure the project achieves its social development outcomes? The project will seek the active participation of different stakeholders directly and indirectly involved in the NSPA. Testing out innovative association and participation mechanisms among these stakeholders will be a vital axis during the entire project, since NSPA sustainability depends largely on this. 6.5 How will the project monitor performance in terms of social development outcomes? One of the strategies proposed to make local participation viable is the establishment of Participatory Management Committees in the selected PAs. These PMCs are expected to provide a strong framework for stakeholder participation, establishing concrete mechanisms and goals for this purpose. The PMCs will become the focal points where participatory PA planning processes will be developed.
- 31 - 7. Safeguard Policies: 7.1 Do any of the following safeguard policies apply to the project? Policy Applicability Environmental Assessment (OP 4.01, BP 4.01, GP 4.01) * Yes U No Natural Habitats (OP 4.04, BP 4.04, GP 4.04) C) Yes * No Forestry (OP 4.36, GP 4.36) U Yes *_ No Pest Management (OP 4.09) (U)Yes * No Cultural Property (OPN 11.03) * Yes U No Indigenous Peoples (OD 4.20) * Yes C) No Involuntary Resettlement (OP/BP 4.12) *__Yes U No Safety of Dams (OP 4.37, BP 4.37) _ Yes *_ No Projects in International Waters (OP 7.50, BP 7.50, GP 7.50) U Yes S No Projects in Disputed Areas (OP 7.60, BP 7.60, GP 7.60)* C Yes * No
7.2 Describe provisions made by the project to ensure compliance with applicable safeguard policies.
Integrated SafeguardsData Sheet
Section I - Basic Informnation
Date ISDS Prepared/Updated: A. Basic Project Data (from PDS) COUNTRY: EcuadorPROJECT ID: P066752 PROJECT: National System of Protected Areas TTL: Gabriela Arcos APPRAISAL DATE: 03/25/2002GEF Grant ($m): 8.0 BOARD DATE: 06/25/2002SECTOR: Environment MANAGING UNIT: LCSESSTATUS: Preparation LENDING INSTRUMENTS: GEF Grant Project Objecdves (From PDS) The project's development objective is to ensure the conservation and management of Ecuador's biodiversity for socially sustainable development by strengthening the National System of Protected Areas (NSPA) through improving the legal, institutional and financial foundations and capacities for the integrated, participatory management of protected areas. Project Description (From PDS) The proposed project will include four components: (1) Institutional Strengthening and Legal Development:
This component aims to consolidate DBPA role as the responsible agency for the administration and supervision of the NSPA, trough the strengthening its planning, control and monitoring capacities to ensure effective management of protected areas (PAs). It will also develop the regulatory framework to promote participatory management and co-management of PAs in the country.
(2) Participatory Management of Priority Protected Areas
This component aims to promote the participatory management of two priority protected areas (Cotacachi-Cayapas Ecological Reserve and Machalilla National Park) by developing co-management models according to the specific social and political conditions of each area. The project will also support the creation or strengthening of local councils to facilitate the participation of different stakeholders in the management of PAs. In addition, the project will finance the recurrent costs of the Cuyabeno Wildlife Production Reserve.
(3) Sustainable Financing
This component is directed to achieve the consolidation of the Protected Areas Fund (FAP), that operates within the Environmental Fund of Ecuador. FAPis a strategic response to the everlasting problem of lack of long-term funding mechanism to support conservation within the National Patrimony of Protected Natural Areas. Furthermore, once essential recurrent costs of PA's
- 32 - have been covered, other resources are more likely to be mobilized to support biodiversity conservation at PA's.
(4) Project Monitoring and Evaluation
This component aims to ensure the proper operation of the project, through the establishment of a follow-up system to evaluate and monitor the implementation of planned activities. this system will be based on the rules and procedures of the world bank, and in the design and implementation of annual planning and evaluation processes, including the preparation of operational plans, progress reports (technical and financial), and extemal audits. the project will also perform two management efficiency evaluations and two beneficiary assessments of the project (mid-term and final). Project Location: National level, but will be focused in two PAs: Machalilla National Park: Coastal Province of Manabi Cotacachi-Cayapas Reserve: Northwestem region, at the Provinces of Esmeraldas and Imbabura. B. Check Environmental Classification A [ ], B [x J, C [ ], FI [ 1, TBD [ ] Comments: The LCSES QAT team suggested the environmental category B on March 16, 2001
F. Sustainability and Risks 1. Sustainability: Sustainability is a central issue of the project, and all components are designed to help achieve institutional, protected areas management and financial sustainability, that will be secured through: * The establishment of the Advisory Parks Commission (representing all stakeholders) to steer NSPA activities. At the field level greater involvement of civil society in park management is expected to contribute to long-term PAs viability and social and institutional sustainability. This project will strengthen public-private partnerships and build capacity within partner organizations to implement co-management arrangements in two PAS;
* The establishments of an independent, autonomous and accountable trust fund (PAF- Protected Areas Fund), within the institutional context of FAN, that will manage capital funds in such a way as to provide assured, long-term flows of resources to the protected areas;
* The identification of cost recovery and financing mechanisms which will be used to augment the Government's budgetary allocations for protected areas management;
* The implementation of pilot concessions for services as income generating activities, increasing PAs economic-financial sustainability; * The adoption of participatory planning mechanisms and strategic partnerships with stakeholders, as a means to increase social sustainabiity and ownership by the local institutions/organizations;
* Capacity building and training efforts in order to strengthen the SNAP and DBPA within the Ministry of Environment and achieve sustainable management beyond the Project's scope;
* The creation of long-term innovative partnerships with civil society, the private sector and other national and international institutions in the identification and implementation of sustainable and participatory PA management.
2. Critical Risks (reflecting the failure of critical assumptions found in the fourth column of Annex 1):
,r 'X1 ' --. .','''-'Risk'Risk Rating.. -RiskMitigation Meas ure From Outputs to Objective GoE development policies are not M Environmental policies issued by the MoE have compatible with conservation of received high level political support. protected areas and sustainable development.
- 33 - GoE abandons decentralization policy. M GoE is deeply committed to decentralization and decentralization is supported by strong social pressures. Participation policies are not supported M Project creates specific mechanisms for their by national and local authorities participation in the Participatory Management Committees. Insufficient additional endowment capital M Project will support FAN's fund-raising is raised to ensure full coverage of PA strategy recurrent costs. Full independence and autonomy of M FAN's by-laws will be modified accordingly. decisions and operations of FAN are not guaranteed Controls by local communities and M Local Community members will be hired and patrolling are not effective and sustained. integrated to control and surveillance activities within selected PAs. MAE does not pursue the full execution S Project will support the development of the of the Environmental Information System NSPA Information System to apply to the (EIS) designed by the MAE with the monitoring of selected PAs. support of the Bank-financed PATRA Project and consequently the development of the NSPA Information System. From Components to Outputs Biodiversity law is not approved within S Project will support raising the awareness of the next two years decision-makers and the public on the issues at stake through workshops. Suitable concessionaires for services in M The project will support in the establishment of PAs not identified or interested key partnerships between MoE and private sector to motivate interest in piloting concessions for services. Concessions fees and other revenues M Project will support the development and cannot be reinvested directly in NSPA implementation of innovative mechanisms to secure the reinvestment of PAs revenues. Political commitment to SNAP M Political support wil be secures through a weakened. strategic partnership between the Government and civil society. Staff in the DBPA and at the field level M The project will establish additional incentives do not collaborate with the personnel like training and the financing of basic contracted by the project due to recurrent costs to fully integrate PAs staff into differences in salaries project implementation in spite of salaries differences. Decreased demand for tourism focused in M The implementation of management plans in PAs the two selected PAs will increase management capabilities and provide basic services and infrastructure to motivate private investment. Overall Risk Rating M Risk Rating - H (High Risk), S (Substantial Risk), M (Modest Risk), N(Negligible or Low Risk)
- 34 - 3. Possible Controversial Aspects: The implementation of management plans, as they are mechanisms for planning and regulating activities within the PAS, might cause some resistance among different sectors, local communities or natural resources users. This situation could only be minimized with the application of adequate participatory mechanisms throughout the preparation of these plans and further implementation.
The initiative to increase revenues for PAs, in this particular case through concessions of services, could be seen by some sectors of the civil society as an attempt to privatize PAs and to minimize the role of the State in the administration of PAs. At the same time, as a resource generating activity, it could excessively awaken the interested of productive sectors, who will envision PAs mainly as productive units, ignoring the main objective for their establishment: the conservation and sustainable use of biodiversity.
G. Main GrantConditions 1. Effectiveness Condition Ministry of the Environment:
1. Project coordination mechanisms established within the MAE according to the Implementation Plan. 2. Project Coordinator and technical team (consultants) selected by competitive processes, based on terms of reference approved by the Bank and in process of contracting. 3. Contract for the administration of funds between MAE and FAN signed. 4. Project Activities Monitoring and Evaluation System designed.
FAN
1. Contract with the Asset Manager signed and trust fund account opened. 2. Key staff selected and in process of contracting. 3. Debt swap funds form Germany transferred to FAN/FAP. 4. Audit firm acceptable to the Bank selected and in process of contracting. 5. Financial Management Action Plan implemented.
2. Other [classify according to covenant types used in the Legal Agreements.] 1. Negotiations Conditions:
Implementation Plan completed.
2. Board Presentation Conditions:
* Agreed modifications and approval of FAN's By-Laws to secure its independent and autonomous operation; * MAE's and FAN's operational manual completed, assessed and approved by the Bank. * Implementation Agreement between MAE and FAN approved and signed.
- 35 - H. Readiness for Implementation 0 1. a) The engineering design documents for the first year's activities are complete and ready for the start of project implementation. 1 1. b) Not applicable.
2 2. The procurement documents for the first year's activities are complete and ready for the start of project implementation. 1 3. The Project Implementation Plan has been appraised and found to be realistic and of satisfactory quality. 0 4. The following items are lacking and are discussed under loan conditions (Section G):
1. Compliance with Bank Policies Z 1. This project complies with all applicable Bank policies. OI 2. The following exceptions to Bank policies are recommended for approval. The project complies with all other applicable Bank policies.
arieaArcos lobn Redwood i Team Leader Sector Manager/Director -Country Managet/Director
- 36 - Annex 1: Project Design Summary ECUADOR: National System of Protected Areas Key Performance Data Collection Strategy Hierarchy of Objectives Indicators . Critical Assumptions Sector-related CAS Goal: Sector Indicators: Sector/ country reports: (from Goal to Bank Mission) Country Development Objective * Increased effectiveness of * Analysis of available biodiversity protection within the socio-economic data in districts Ensure the conservation and NSPA with protected areas management of Ecuador's * Increased social support for * Beneficiary assessment biodiversity for socially protected areas as cost-effective sustainable development. tools to achieve sustainable natural resources management * Increased involvement of private sector and civil society organizations in managing conservation of biodiversity
GEF Operational Program: Outcome / Impact Indicators: GEF Goal: * Increased effectiveness of * Analysis of available Promoting goals and objectives of biodiversity protection within the socio-economic data in districts Operational Programs 2, 3 & 4: NSPA with protected areas conservation (in-situ protection of *Increased social support for * Beneficiary assessment biodiversity) and sustainable use protected areas as cost-effective of freshwater, forest and tools to achieve sustainable mountain ecosystems of global natural resources management significance * Increased involvement of private sector and civil society organizations in managing conservation of biodiversity
- 37 - Key Performance Data Collection Strategy Hierarchy of Objectives Indicators . Critical Assumptions Global Objective: Outcome / Impact Project reports: (from Objective to Goal) Indicators: * Strengthening the NSPA *Protected Areas Trust Fund * Project progress reports * Extemal pressures on the PA through improving the legal, supports recurrent costs of at least * FAN/FAP annual reports resources and buffer zones do not institutional and financial 9 PAs; * Independent project evaluations significantly increase foundations and capacities for the * NSPA is able to effectively * Beneficiary assessment *Environmental issues continue integrated, participatory protect a wider range of * Implementation Completion to be a priority for the GOE. management of PAs. ecosystems of global importance Report (ICR) * Donors engage in the long term for biodiversity conservation. financing of NSPA * Local communities within and *Poverty, continued in-migration around the PAs are actively and population growth do not involved and commited to PA preclude achievement of conservation conservation and sustainable use of ecosystems * Directorate for Biodiversity and * Financial/ Administration * Project reports * GOE development policies are Protected Areas capable of management system of the NSPA * Agreements, minutes of compatible with conservation of resource allocation, regulating, installed and operating meetings PAs and sustainable development monitoring and supervising the * Management Committees and * Partnership evaluations and * GOE continues to support NSPA. Technical Assistance Groups agreements decentralization * Local stakeholders participate created and fully operating in 2 *By-laws and regulations for * Participation policies keep in more actively in the management Pas concessions issued place and are supported by of PAs * Concessions for services in PAs * # of staff hired national and local authorities * PAs have increased capabilities are fully regulated. * FAP trust fund financial reports * Sufficient additional for planning and implementing * Regular field staff numbers * FAN annual reports endowment capital is raised to PA management. recommended in Management * NSPA financial reports ensure full coverage of PA * Non-budget revenues of NSPA plans increase to 9 in Machalilla * PA annual work plans and recurrent costs. increase in a gradual and and 13 in Cotacachi budgets * Full independence and permanent basis. * FAP trust fund is fully * Beneficiary assessment autonomy of decisions and operational and its capital operations of FAN are guaranteed endowment has increased to at Controls by local communities least $ 13 million, covering about and patrolling are effective and 14 % of the NSPA recurrent costs sustained
- 38 - :.. . . -. -Key Performance Data Collection Strategy Hierarchy of Objectives Indicators '. Critical Assumptions Output from each Output Indicators: Project reports: (from Outputs to Objective) Component: Component 1: * 36 people trained * Technical reports *The Biodiversity Law is * SNAP Strategy updated approved within the next two * Regulations of Biodiversity Law * At least two Concession * Project progress reports years adopted contract negotiated and signed * Regulations for concessions in * Local participation agreements * Suitable concessionaires for PAs developed and tested * At least one Tourism/ resource services in PAs are identified and * Technical advisory committee management initiatives *Minutes of meetings interested created and operating implemented in each selected PA * Capacity building of personnel *Copies of contracts *Concession fees and other for planning, financial * TF established with $8 million revenues can be reinvested management and environmental and capitalized to $13 milHion by * Copies of agreements directly in NSPA, PAs management the end of project. * Financial/Administration *Financial reports * The political commitment to management tool for SNAP * Biodiversity monitoring NSPA is maintained (central unit and PAs) system operating in 2 PAs; * Financial Sustainability Strategy of the NSPA prepared
Component 2: * Management efficiency * Evaluation reports * Staff in the Directorate of * Implementation of Machalilla increases by 50% in 2 PAs at end Biodiversity and Protected Areas National Park Management Plan of project * Project supervision reports and at the field coUlaborates with the personnel contracted by the * Preparation and implementation * Between 30-50% of basic * Other donors' reports project, in spite of differences in of Cotacachi-Cayapas Ecological operational costs is covered in the salaries Reserve Management Plan selected PAs.
Component 3: * There is an increasing demand * FAN/FAP Trust Fund for tourism in Ecuador with focus established and fully operational on PAs
Comnponent 4: * Project coordination operational * Environmental Informnation System for Protected Areas: SIAM/SGAN implemented * Management efficiency evaluation process established and tested * Biodiversity Monitoring System in PAs established and tested
Project Components / Inputs: (budget for each Project reports: (from Components to Sub-components: component) Outputs)
- 39 - Annex 2: Detailed Project Description ECUADOR: National System of Protected Areas By Component:
Project Component 1 - US$0.63 million Institutional Strengthening and Legal Development
(GEF contribution: US$0.633 million) This component is aimed at strengthening DBPA's administrative and supervision capacity to effectively plan, control and monitor the management of protected areas (PAs). Specific activities include: (i) updating the NSPA Strategic Plan to coordinate DBPA long-term actions within the new MoE's decentralized institutional framework; (ii) preparing a financial and managerial system for DBPA and implementing it in nine protected areas; (iii) developing a sustainable financial strategy for the NSPA as well as for the two protected areas selected by the project; (iv) implementing pilot concessions of services in the two protected areas selected by the project; (v) designing and implementing a training program for DBPA and PAs technical staff; (vi) strengthening mechanisms for institutional coordination, participation, technical advice, and political support by the civil society to manage and consolidate the NSPA; and (vii) developing legal instruments that will allow the generation of non-budgetary revenues and promotion of co-management and participation of different stakeholders in decision-making and PA management.
The origin of the NSPA can be traced back to 1976, when the government created a National Park Unit inside the Forestry Division of the Ministry of Agriculture and Livestock (MAG). The Unit was created to implement the strategy for protection of wildlife, which required the creation of 18 protected areas (later increased to 24). In 1992, the Ecuadorian Institute of Forestry, Natural Areas and Wildlife (INEFAN) was created as an independent institution under MAG to administer the NSPA. In 1996, the Ministry of the Environrment (MoE) was created and INEFAN was transferred to the new Ministry. In January 2000, INEFAN was abolished and its functions were subsumed under XXX department of MoE. While currently, the NSPA employs about 168 staff, their qualification is much lower than the desired level and constitute only 60% of NSPA needs.
The current organizational structure of the MAE is the result of a technical and administrative analysis oriented to achieve a higher degree of administrative efficiency. MAE's organic structure was approved through Official Register No. 354 of June 12, 2001. The Directorate of Biodiversity and Protected Areas (DBAP), the project's executing unit, is located under the Subsecretariat of Natural Capital. DBAP is responsible for the administration of the NSPA, the sustainable use of wildlife, the regulation of the access to genetic resources and the rehabilitation of fragile ecosystems. To carry out these duties, the following operational units have been established: protected areas; wildlife and fragile ecosystems; biosecurity and access to genetic resources.
At the field level, the MAE has established 10 regional districts, to carry out the decentralization processes at the provincial level. Each regional district could comprise one to three provinces and are leaded by a Regional Director. Each district is a financially decentralized unit, capable of managing their own budget allocated through operational plans.
The National Environmental Fund (NEF) was established in 1996 as a partnership with the MoE to mobilize long-term financing for implementing the environmental policies and strategies of the GOE. The NEF has become successful in building its capacity in fund raising, financial administration, and
- 40 - transfer of financial resources to support activities in protection, conservation, and sustainable use of Ecuador's natural resources. As part of this project, the NEF would ensure the necessary stability, continuity and accountability in the management of economic resources. The activities included under the different subcomponents are described below. A. Updating the NSPA Strategic Plan The NSPA Strategic Plan (SPPA Define SPPA) was designed in 1999 by the GEF-funded Biodiversity Protection Project, as a planning tool to guide DBPA's long-term activities. The plan identified priorities in consolidation of the established systems, policies and strategies Although most of the elements of strategic plan are still valid, it needs updating to the new economic and institutional policies of the country and specially to the new MoE' s decentralized structure. The NSPA Strategic Plan will be updated through a consultative and participatory process to ensure that the Plan reflects the current social, economic and institutional arrangements in Ecuador. This plan will consider the needs and priorities of different stakeholders, in order to promote the participatory management of PAs and NSPA's consolidation as key elements in biodiversity conservation and sustainable development in Ecuador. The project will also support the creation of Technical Advisory Committee, which will provide technical assistance to DBPA in the implementation of NSPA's Strategic Plan. This Committee will be part of the National Biodiversity Working Group (NBWG) and will include several specialists in PA management, from the academia and NGOs, including members (representatives?) of IUCN Commission on National Parks and Protected Areas.
B. Finance and Managerial System
Under this subcomponent, the project will provide technical and financial assistance for the design and implementation of a financial and managerial system. This system would improve resource allocation, regulation , monitoring and supervision capacities of DBPA for effective management of the NSPA. The design of the system will be based on the result of the assessment of DBPA's current administrative procedures and needs, which considers the decentralization processes that MoE has under implementation. The development of this financial and managerial system would include the preparation of operational manuals and other administrative tools. The system will be deployed at the DBPA's central office and would be piloted , in the nine PAs selected by the project (Annex XX). In order to implement the system, consultants will hired to provide training in follow-up, and evaluation techniques, both at DBPA's central and regional offices. C. Sustainable Finance Strategies This subcomponent is composed of two main activities: identification of revenue generating mechanisms, and implementation of pilot concessions.
C.1 Identification of mechanisms for generating revenues:
The project would finance a study to: (i) identify alternatives revenue generating activities; (ii) evaluate experiences in decentralized management of PAs; and (iii) assess the economic value of NSPA.
- 41 - Analysis of alternatives: The study will include an analysis of current and potential funding sources and specific mechanisms for generating non-budgetary revenues, such as income from the sale of environmental services, tourism patents, service fees collection, and research permits. Requirements needed for a successful implementation of the different financial instruments and mechanisms in Ecuador will also be covered by the study. Evaluation of decentralized management experiences: Under this section the study would analyze and evaluate experiences in decentralized management of PAs in the country, that would guide the decentralization and co-management processes of the NSPA. Among experiences that could be analyzed are the managements of: the Cajas National Park by a municipal agency; the Pasochoa Wildlife Refuge by an environmental NGO; and the Cofan Bermejo Ecological Reserve by an indigenous people's organization. Economic valuation of the NSPA: The economic valuation of PAs in Ecuador will quantify, communicate and monitor the revenues generated and its contribution to the national economy. The result of this analysis is expected to be an important input in the negotiation for an increase in the national budget allocated for NSPA management and in the approval of new legal tools that will facilitate the generation of non-budgetary revenues in PAs. C.2 Pilot implementation of concessions The project would promote the implementation of at least one concession of services in the two priority PAs (Cotacachi-Cayapas Ecological Reserve and Machalilla National Park). The implementation of concession of services will include: identification of possible concessions (services and potential concessionaires); design of legal instruments; selection of criteria and procedures; preparation of bidding documents; establishing system of follow-up of concession contracts and agreements and evaluation of implemented concessions.
In order to define regulatory guidelines for implementing concession systems in more PAs, an evaluation of the pilot concession would be conducted by DBPA with technical support from project specialists. Based on the result of the evaluation of the experience in the pilot areas, the project would finance the development and implementation of a Sustainable Financial Strategy for the NSPA. The strategy is expected to identify funding priorities, sources of finance, fund raising and revenue generation mechanisms. The project would provide TA for designing and implementing sustainable financial strategies at local level for the two priority PAs.
By designing and implementing these strategies the DBPA will increase self-sufficiency of the NSPA, specifically the sustainability of the two selected PAs, with the overall framework of maintaining NSPA's integrity. The idea is to ensure that revenues of all PAs goes to a common fund pool to finance areas with lower revenues to finance their activities. The strategy is also aimed at reducing PAs dependence on external funding, by increasing their revenue generating capacity. This activity is closely linked to Component 3 of the project, which aims to improve the procedures and mechanisms for the financial management of all non-budgetary revenues generated by the PAs.
D. Training The project would provide training for technical staff of DBPA and PA managers in the administration of NSPA. To implement the training program, a need and priorities assessment would be carried. The program will be focused on building capacities to ensure the proper implementation of the SMPs. The training program will include two courses annually taught jointly by an international and a national instructors. Ten annual international internships for PA's managers and park rangers, and two additional internships for DBPA's technical staff would be impmented. These internships would focus on-field
- 42 - training for the NSPA's personnel and would be implemented through cooperation agreements between the DBPA and PAs institutions in the region. The PAs would be selected based on defined set of characteristics and problems to facilitate the exchange of information and experiences about PA management. In addition, the program would include training for NSPA's staff for which a specialist would be hired by the project.
E. Development of Legal Instruments The project will support DBPA in the design and implementation of legal and regulatory instruments for generating revenues to increase the self-sustainability of the areas, and for facilitating co-management and participation of different stakeholders in PA management. For this task, the DBPA will receive technical assistance from a legal advisor. This person will develop regulations and legal procedures, with the support of DBPA's staff and the other specialists hired by the project, to implement the new Biodiversity Law and the updated NSPA Strategic Plan. The legal advisor will also assist DBPA in formulating or updating other environmental regulations and norms for decentralized management of the NSPA. In particular, he/she will develop the legal instruments to implement pilot concessions in two PAs (see Component l.C.2). Additionally, the legal advisor will oversee the work done by specialized legal consultants hired by the project to develop other specific regulations.
In order to develop specific regulations, DBPA will receive additional support by specialized legal consultants to develop specific regulations for key aspects related to PA management, such as: tourism operation, scientific research, extraction of non-timber products, access to genetic resources, introduction of exotic species, and protection of endangered species, among others.
At local level, the legal advisor will assist PA's Technical Units in designing and implementing specific legal instruments to regulate and facilitate the generation of non-budgetary revenues in the areas, and to promote participation of different social actors in PA management, specially in the two PAs selected to implement Component 2.
Project Component 2 - US$17.67 million Participatory Management of Priority Protected Areas
(GEF contribution: US$16.06 million) This component aims to facilitate participatory management in two priority protected areas of Ecuador (Cotacachi-Cayapas Ecological Reserve and Machalilla National Park), by developing co-management models according to the specific social and political context on each area, and promoting the creation or strengthening of the Participatory Management Committees (PMCs) and the Technical Support Groups (TSGs) to promote the participation of different stakeholders in the management of the selected PAs. These priority areas were chosen by doing a comparative analysis, using biological, economic and social criteria, which are described in Annex 2C.
The project will provide financial and technical assistance to ensure effective management of the two areas selected by the project. The specific activities on each area will be defined during the first year of the project, through the preparation of a Managerial Management Plan (MMP) for each PA, which will be based on the strengths, opportunities, threats and weaknesses of the selected areas. The design and implementation of the MSMPs will be coordinated by the PA's Technical Units of each area, with technical and follow-up support provided by DBAP's permanent staff and the team of advisors hired by the project. The members of the Technical Advisory Group (TAG) as well as other relevant members of the Participatory Management Committee (PMC) of each area, will also participate in the design and implementation of the SMPs.
- 43 - The project will finance the recurrent costs, basic equipment, implementation of different productive activities compatible with PA's management objectives (i.e. ecotourism, sustainable fishing and extraction of non-timber forest products), and environmental education and public awareness activities in the two selected PAs and their buffer zones. It will also finance the recurrent costs of the Cuyabeno Wildlife Production Reserve, during the first year and a half of the project. After this period, the recurrent costs will be covered by the Protected Areas Fund (PAF) described in Component 3. More detailed information on GEF supported activities is presented below:
Cotacachi-Cayapas Ecological Reserve Designing the Strategic Managent Plan: The project will provide financial and technical assistance to DBPA for the preparation of the reserve's SMP, which will identify the priority programs and actions, as well as the administrative mechanisms to implement an effective management in this PA. The SMP will be designed during the first year of the project based on the results of an ecological and socioeconomic assessment of the PA and its surroundings. In order to ensure public participation during the SMP's design, the DBPA will organize several workshops with different stakeholders related to this PA, including the local communities that live inside or around the area, and the productive sectors (i.e. tourism, forestry, mining, and agricultural) which use the natural resources of the area and its buffer zone.
Strengthening ParticipatoryMechanisms: The project will support the creation and strengthening of a Participatory Management Committee (PMC) and a Technical Support Groups (TSGs) to enhance coordination and communication among different stakeholders related to the PA management.
Operating the Environmental Interpretation Center of Cuicocha: The Environmental Interpretation Center, located in the upper zone of the reserve, was designed and built in 1999 by the GEF-funded Biodiversity Protection Project. The Cuicocha lagoon receives approximately 100,000 visitors per year, which makes the Cotacachi-Cayapas Ecological Reserve the NSPA's more visited area, and the Interpretation Center a key site for developing environmental education and communication activities. The project will provide financial and technical assistance for operating the Interpretation Center and implementing an intensive environmental education and interpretation program in this area (which will be part of the SMP) to communicate the ecological and cultural importance of this reserve and the NSPA. The project will finance the basic equipment for the Center and the building of interpretation trails around the lagoon to develop the program. This Center is a possible candidate to implement the concessions of services in PAs (see Component 1.C). Implementing the control and patrolling program: The project will strength the technical and logistical capacity of the reserve's staff for implementing and effective control and patrolling program, as well as other priority actions that will be identified in the SMP, trough hiring additional park rangers and financing basic patrolling equipment for this area (field equipment, uniforms, motorcycles, vehicle, and canoes), and signs to clarify the limits of the PA in critical zones. The project will also finance the recurrent costs of this area during the first year and a half. After this period, the recurrent costs will be covered by the Protected Areas Fund (PAF) described in Component 3.
- 44 - Machalilla National Park Designing the Strategic Management Plan: The project will provide financial and technical assistance to DBAP for the preparation of the park's SMP, which will identify the priority programs and actions, as well as the administrative mechanisms to implement an effective management in this PA. The SUP will be designed during the first semester of the project based on the current management plan of this area, designed in 1998 with the support of the GEF-funded Biodiversity Protection Project. This plan will be updated considering the current economic situation of the country and the decentralization processes promoted by the MAE.
To ensure public participation during the SMP's design, the DBAP will organize several workshops with different stakeholders related to this PA, including the local communities that live inside or around the area, and the productive sectors (i.e. tourism, fishing, and agricultural) which use the natural resources of the area and its buffer zone.
Implementing the Strategic Management Plan: The project will support the implementation of the SMP of this area, by strengthening the technical and operational capacities of the national park Technical Unit (TU), responsible for the PA management. This plan will include, among other activities, the protection of land and marine biodiversity and cultural resources, environmental and social research and monitoring, control and patrolling, education and public awareness, and promotion of tourism and recreation in the PA.
In addition, the project will finance park infrastructure (ranger stations and minor tourism facilities), basic equipment, (field equipment, GPS, radios, computers, motorcycles, navigation and communication equipment) and hiring additional technical personnel and park rangers to ensure the effective management of this park.
Strengthening ParticipatoryMechanisms: The project will support the creation and strengthening of a Participatory Management Committee (PMC) and a Technical Support Groups (TSGs) to enhance coordination and communication arnong different stakeholders related to the PA management.
Cuyabeno Wildlife Production Reserve This PA will receive funding by the Interamerican Development Bank for the design and implementation of its SMP. Therefore, this project will strategically complement the activities to strength the control and patrolling actions in the reserve, trough financing the recurrent costs during the first year and half of the project. After this period, the recurrent costs will be covered by the Protected Areas Fund (PAP) described in Component 3. The project will also finance field and transport (canoes) equipment for this protected area.
Project Component 3 - US$ 12.93 million Sustainable Financing
(GEF contribution: US$ 4.325 million) This component will promote the consolidation of the Protected Areas Fund (PAF), that operates within the Environmental Fund of Ecuador. PAF is a strategic response to the perpetual problem of lack of long-term funding to support conservation of PAs. It is believed that once essential recurrent costs of PA's have been covered, other resources are more likely to be mobilized to support biodiversity conservation at PA level.
- 45 - The involvement of FAN as an independent autonomous organization, guarantees direct accountability and greater efficiency in the utilization of resources. To assure adequate and timely disbursements an Operational Manual, which includes a complete Program Cycle, has been developed in coordination with the MAE.
The Project will help to the consolidation of FAP by allocating $US 4 million towards the Fund's endowment; which, through earned interests, will allow coverage of the essential recurrent costs component of Managerial Plans of at least eight nine PA's. Matching resources have already been secured from the GOE ($US 1 million), and the Govemment of Gemiany through the KfW ($US 2.9 million). The funds from the German Govemment will benefit directly the Sumaco Napo Galeras National Park. Other protected areas, in addition to those ones covered by the GEF contribution and the one covered by the funds from Germany, will become eligible for resources from FAP as the endowment becomes capitalized. Component three will further support the consolidation of FAP by allocating additional resources to cover operational costs and activities planned under the fundraising strategy. It is expected that by year two of the implementation of the Project, nine protected areas will be receiving resources from the FAP to cover the essential recurrent costs component of implementing the PA's Managerial Plans.
Project Component 4 - US$1.14 million Project Monitoring and Folow-up
This component aims to ensure the proper operation of the project, through the establishment of a follow-up systems to evaluate and monitor the implementation and impact of planned activities. This project system will support the following aspects: i) design and implementation of a system to monitor the implementation of project activities according to the Implementation Plan; ii) establishment of the NSPA Information System; iii) development of a methodology to monitor Protected Areas management efficiency; and iv) development of a methodology to monitor the status of biodiversity in the NSPA and pilot implementation in Machalilla and Cotacachi-Cayapas and; v) establishment of a system to monitor the implementation of Managerial Plans at protected areas.
In addition, the project will perform two beneficiary assessments of the project (mid-term and final).
Monitoring System and Evaluation Based on the Procedures of the World Bank, the Implementation Plan, annual operational plans for the project, progress reports (technical and financial), and external audits, the project's technical team will assess the implementation of the activities proposed under each component in relation to the agreed Implementation Plan.
Monitoring System and EvaluationNSPA Information System
The project will provide technical assistance to MAE's Environmental Information Center (EIC) for the implementation of the NSPA Information and Monitoring System, as a very important tool for the project planning and monitoring and evaluation, and to oversee the implementation of the NSPA strategic plan. The information generated by this system will be used to structure the monitoring systems described below.
The NSPA Information and Monitoring System, will be is part of the Environmental Information System (EIS) designed by the MAE with the support of PATRA, a World Bank-funded environmental management project. This The main goal of this system is to gather and manage information for the
- 46 - different processes involved in PA's management. The system is designed to collect and disseminate information through Internet and includes a spatial component, with a geographic information system, to manage digital geographic information. The data basis currently designed include detailed geographic, ecological and socioeconomic information, as well as data on staff, infrastructure, equipment and management plans of each area. The system will also includes information about the status of biodiversity, tourism attractionsactivities, and revenues generated by PAs, and administrative procedures on each area (such as research permits, tourism patents, and visitor records).
For the operation of the NSPA Information System and the Monitoring Systems, Sysuem, at central and local levels, the project will specifically finance: installation and operation of databases in the 10 Regional Districts of MAW and nine PAs, digitalization and edition of geographic information of the nine PAs, development of additional modules for evaluating and monitoring management efficiency and biodiversity in the NSPA, information gathering on data basis, staff training, and publications (digital and printed), computer equipment and software.
Monitoring Management Efficiency in ProtectedAreas
The project will support DBAP for developing and implementing a methodology to evaluate the management efficiency in PAs. This methodology will be designed based on different proposals developed by other institutions that work on PA management in the region. The project will implement this methodology through two evaluations assessments (initial and final) to measure the management efficiency in the nine PAs selected by the project.
Biodiversity monitoring in PAs: Monitoring of Biodiversity in ProtectedAreas
The project will provide technical assistance to DBAP for developing methodologies to monitor biodiversity in the NSPA, and for its pilot implementation in the two PAs supportedselected by Component 2. Criteria and indicators will be identified to evaluate project's impact and NSPA strategic plan's efficiency for biodiversity conservation and sustainable use in PAs. In addition, biodiversity monitoring will be part of the NSPA Information and Monitoring System.
Beneficiary Assessments
The project will also develop two beneficiary assessments (mid-term and final) to analyze the perceptions of different stakeholders in relation to the project. These evaluations will be implemented through interviews and workshops with representatives of local organizations, NGOs, authorities and local inhabitants, park personnel, private sector, visitors and other stakeholders in the PAs. These evaluations will also include interviews with other beneficiaries at the central level (Quito) to analyze overall project's impact on the NSPA and DBAP.
Project Coordination
The technical coordination of the project will be fully integrated within the DBAP tasks and structure. The overall project implementation will be supervised by DBAP's Director. A Project Coordinator will be hired by the project and selected following a competitive process acceptable to the Bank, to: i) carry out overall project management, ii) provide technical assistance to DBAP's Director, iii) coordinate activities between DBAP's staff and the technical advisors contracted by the project, and iv) act as the interface between DPBA and FAN.
The Project Coordinator will be based at the DBAP's central office in Quito and will receive additional
- 47 - administrative support from a small team comprised of national technical advisors hired by the project that include specialists in the following areas: protected area management, social development and participation, sustainable finance, and legislation. Budget resources will be provided for other short-term specialists on an as-needed basis. An administrative assistant, a team assistant and a messenger/driver will provide logistic support to the technical team.
DBAP will also be responsible for coordinating donors to solicit advise and harmonize technical and financial cooperation related to the NSPA. The donors coordination meetings will review the project's progress and analyze the need for additional financial support to NSPA. In addition, representatives of bilateral donors (KFfW Dutch Cooperation) providing parallel financing will join the Bank, at lease once in a year, in supervision missions. A follow-up mechanism on donor coordination meetings will be established at DBAP. In addition, parallel financing will be provided by bilateral donors, IDB, local and international NGOs for a total amount of US$21.26 million. Most of these resources will be provided in the form of direct support to individual protected areas, including: Yasuni, Sangay, Podocarpus, Cayapas-Mataje, Sumaco-Napo Galeras, Cuyabeno and Mache-Chindul. For details see Annex 7.
-48 - Annex 2b: Priority Protected Areas Supported by the GEF Ecuador: National System of Protected Areas A participatory process was undertaken to select the Protected Areas requiring priority attention within the NSPA as well as for those ones to be covered under the project. Definition of Selection Criteria The first step in the process was the identification of selection criteria, predominantly those of bio-diversity. Other selection criteria developed were related to social, economic and political issues occurring within the NSPA. Biodiversity and PA management Criteria The study "Estado de Conservaci6n de la Biodiversidad en el Sistema Nacional de Areas Protegidasdel Ecuador Continental" (Biodiiversity Conservation Status in Continental Ecuador's National System of Protected Areas), developed by Campos et al. (2000) "Estado de Conservaci6n de la Biodiversidaden el Sistema Nacional de Areas Protegidas del Ecuador Continental", 2000 (not published). Campos F., Cano, V., & M. Rodriguez. Preparation for the project "Ecuador: Sistema Nacional De Areas ProtegidasSNAP- Gef II Fase" Ministry of the Environment - FAN., was developed and used as a basis to prioritize the criteria of bio-diversity and protected areas management. The main purpose of the study was to systematize existing information on the protected areas of continental Ecuador, at the level of species diversity (birds, mammals and amphibians) and landscape diversity. In addition, the study was based on the plant classification system for Ecuador proposed by Sierra et al (1999). The following criteria of bio-diversity and protected area management were considered: * Representation of the ecosystem * Presence of natural vegetation * Diversity of ecosystems * Diversity of species * Presence of endemic species * Presence of endangered species * Importance due to remnants * Size of the PAs * Protection of ecosystems * Efficiency of protection * Level of pressure on area Social Criteria Based on the findings of the study "Evaluaci6n Social de las Areas Protegidas del Ecuador en el Contexto de un Nuevo Proyecto GEF" (Social Assessment of Ecuador's Protected Areas within the Context of a New GEF Project-see Annex 12a for more detail), PAs were prioritized and validated, applying key social criteria. Upon the most relevant issues considered were the following:
* Existing population inside and outside of the PAs * Level of development of natural resources * Economnic intervention processes and existence of local capacity * Potential for replicating a demonstration in other protected areas Economic and Administrative Criteria It was important to analyze different economic and administrative criteria during the selection of protected areas. The criteria studied were:
-49 - * Efficiency in NSPA management * Possibilities to develop eco-tourism programs in the PAs * Levels of investment by international cooperation in the PAs
The analysis of NSPA management efficiency took into account the finding of the study "Evaluaci6n de la Eficiencia del Manejo del Sistema Nacional de Areas Protegidas del Ecuador" (Management Efficiency Assessment of Ecuador's National System of Protected Areas) {Evaluacon de la Eficiendia del Manejo del Sistema Nacional de Areas Protegidas del Ecuador. 1999 (not published). Valarezo V., Andrade R., Dfaz R., C6lleri Y., & J. Gomez. Strategic Plan for the National System of Natural Protected Areas. Bio-diversity Protection Project GEF 1.) developed by the Bio-Diversity Protection Project. This study, based on assessment methodologies designed by Farias and Izurieta for Costa Rica, considers the analysis of 124 variables and assigns a percentage point to the management of each of the protected areas in the NSPA. The percentage points assigned were:
0-30 % Unsatisfactory management 31 -50 % Slightly satisfactory management 51 -70 % Satisfactory management 71 -90 % Very satisfactory management 91-100 % Ideal management
The possibility of developing PA eco-tourism programs was analyzed based on the Management Efficiency study mentioned above, considering the following variables: Number of visitors per PA; Number of tour operators per PA; Existing infrastructure per PA, and Tourism revenue generated per PA (# of visitors + operation patents). Another variable that was considered was the levels of investment per PA (June 2000), an analysis developed to calculate incremental costs in designing the project "Ecuador: National System of Protected Areas NSPA- GEF Project". Political Criteria Political criteria included: * Opportunity to develop other GEF projects in PA * Regional representation (1 PA selected per geopolitical region - Coast, Andes, Amazon) * Support for PA de-concentration and decentralization processes Results of the Protected Area Pre-selection Workshop Based on the criteria defined and prioritized, a Protected Area Pre-selection Workshop was held on July 2000 with the participation of 33 experts in protected area management, including members of the Project Design Advisory Group, park managers, and Ministry of the Environment's authorities. The objectives of this workshop were to present the preliminary results of the criteria analysis, complete their final validation, and pre-select the protected areas to be considered both for investments and to cover recurrent costs, in accordance with the plan proposed during the project design.
The criteria were discussed and validated, after all the participants were asked to fill out a survey individually. Finally the data was analyzed and systematized, giving as result the foliowing 20 pre-selected PAs:
- 50 - Table 1.- Pre-selected PAs PROTECTED AREAS Score 1 CUYABENO WILDLIFE RESERVE 450 2 COTACACHI CAYAPAS ECOLOGICAL RESERVE 446 3 MACHALILLA NATIONAL PARK 426 4 SANGAY NATIONAL PARK 419 5 YASUNI NATIONAL PARK 417 6 PODOCARPUS NATIONAL PARK 401 7 CAYAMBE COCA ECOLOGICAL RESERVE 397 8 SUMACO NAPO GALERAS NATIONAL PARK 396 9 MANGLARES-CHURUTE ECOLOGICAL RESERVE 361 10 MACHE-CHINDUL ECOLOGICAL RESERVE 355 11 COTOPAXI NATIONAL PARK 353 12 MANGLARES CAYAPAS MATAJE ECOLOGICAL 350 RESERVE 13 ANTISANA ECOLOGICAL RESERVE 342 14 LIMONCOCHA BIOLOGICAL RESERVE 338 15 LLANGANATES NATIONAL PARK 329 16 LOS LINIZAS ECOLOGICAL RESERVE 323 17 CAJAS NATIONAL PARK 317 18 EL ANGEL ECOLOGICAL RESERVE 295 19 PULULAHUA GEO-BOTANICAL RESERVE 294 20 CHIMBORAZO FAUNA RESERVE 284
These results were presented to the authorities of the Ministry of Environment for approval, and considering the workshop results, project design and funds available from other sources, some adjustments where made to Table 1 including:
* Cayambe Coca Ecological Reserve was placed further down the list considering that another mid-size GEF project was being prepared for this area which also includes the Antisana Ecological Reserve; and * Manglares Cayapas Mataje Ecological Reserve replaced Manglares Churute Ecological Reserve because the former is currently receiving funds from The Netherlands to cover recurrent costs through FAN.
Table 2 below lists the 9 protected areas supported by this project with the following considerations: i) Machalilla and Cotacachi-Cayapas will receive funds to cover their basic recurrent costs and to finance the implementation of their management plans; ii) Cuyabeno will be supported with basic recurrent costs and small investments to improve control and surveillance activities; and iii) the remaining 6 PAs will receive funds to cover basic recurrent costs only.
Table 2: Protected Areas supported by the Project SELECTED PROTECTED AREAS Investment and Recurrent Costs CUYABENO FAUNA RESERVE COTACACHI CAYAPAS ECOLOGICAL RESERVE MACHALILLA NATIONAL PARK
-51 - Recurring Costs Only SANGAY NATIONAL PARK YASUNI NATIONAL PARK PODOCARPUS NATIONAL PARK SUMACO NAPO GALERAS NATIONAL PARK MANGLARES CAYAPAS-MATAJE ECOLOGICAL RESERVE MACHE-CHINDUL ECOLOGICAL RESERVE
Additional Considerations of the PA Selected for Investment These areas provide good opportunities to develop sustainable management programs, with options related to eco-tourism, medicine production (bio-prospecting), agro-forestry systems in buffer zones, use of non-timber forest products, among the most important. There are several indigenous communities in the areas, with great cultural wealth, well organized, and that have developed management capabilities and experience in sustainable ecosystem management. In addition, several NGOs are carrying out various conservation and management projects financed through international cooperation agencies that act as strategic partners of the Ministry. (Investment and social analysis). In addition, these PAs have developed a series of governmental administration and management that enable their long-term conservation (NSPA management efficiency evaluation). There are however several pressures and threats on the resources of these areas, such as the development of infrastructure works with no appropriate environmental and social impact studies, accelerated deforestation caused by the expansion of agricultural frontier, oil exploitation, and mining and timber activities, to mention the most relevant. Of particular attention is the armed conflict taking place in the Colombian border, this issue has become one of the major threats to the Cuyabeno Wildlife Reserve's, which among other things, has increased the migration of populations towards the buffer zones and also within the reserve's north and west boundaries areas which lack of appropriate delimitation markers, as well as patrolling and control infrastructure. This condition has also caused a significant decrease in tourism activities. For this reason, a strategic decision has been taken in terms of investing most of the funds under this project in Machalilla and Cotacachi-Cayapas, while Cuyabeno will be supported with basic recurrent costs and control and surveillance activities. Critical investments at Cuyabeno will be covered by IDB through a loan currently under preparation with the Government of Ecuador. This loan will finance several activities to address such threats and will include among others delimitation, land tenure issues, tourism activities planning and alternative productive projects.
- 52 - Annex 2C: Description of the FAN/FAP Ecuador National System of Protected Areas Project
Introduction
An important component of the proposed GEF project is the endowment of a Protected Areas Fund ( Fondo de Areas Protegidas- FAP) within the National Environmental Fund (Fondo Ambiental Nacional - FAN) as a mechanism to ensure long-term coverage of the essential recurrent-costs of protected areas (PAs).
The creation of FAP stems from a recent change in the distribution of the resources generated by the Galapagos National Park, where most of its revenues have been reallocated to the Municipalities of Galapagos, Provincial Council, the Galapagos National Institute (INGALA) and the Galapagos National Park. Consequently, the contribution from Galapagos National Park to the NPAS was reduced from 80% to 5% of its own revenues. This created a major financial deficit for the Ministry of Environment, and in particular for in-situ biodiversity conservation through the NSPA.
Therefore, the MAE and FAN have identified the need to create an additional funding mechanism to support the NPAS, and decided to create the FAP, as a viable endowment fund mechanism. The proposed design is the result of a highly participative process, involving the FAN Board of Directors and membership, the project's Advisory Committee, and extensive consultations with conservation organizations, local community representatives, private businessmen, government officials, managers of similar funds in Latin America and donors, which included over 30 workshops in the past two years.
The range of issues covered during the FAP preparation include: (a) establishing organizational and operational arrangements; (b) reviewing internal legal documents; (c) eligible activities and procurement guidelines; (d) designing the project cycle and (e) determining institutional responsibilities among MAE, the Biodiversity and Protected Areas Directorate (DBAP), and the FAN. This Annex presents a summary of the key features of the proposed FAP; and they are also described in detail in the FAN's Operational Manual (available in project files).
Ecuador's National Environmental Fund
The National Environmental Fund (FAN) was established in 1996 as an autonomous, non-profit organization, in accordance to the Ecuadorian Civil Code. The objective of the FAN is to provide stable, long-term financing for the conservation and sustainable development of Ecuador's critical natural resources, within the framework of the national environmental priorities (Environmental Strategy for Sustainable Development). However, the political and economic situation of the country between 1996 and 1998 was not conducive to starting FAN's operations. In 1999 the Ministry of Environment undertook a thorough consultative process to determine whether an environmental fund was still a viable financial mechanism to support conservation efforts in the country. The results of this inquiry ratified the need of a government-civil society partnership aimed at providing innovative alternatives to finance conservation in Ecuador.
The FAN is supervised by a Board of Directors, and managed by an Executive Director supported by technical staff. The Board of Directors is responsible for defining the general policies of the organization and is the ultimate authority in the organization's governance structure. The Board has seven members with one vote each. Three "elected members" are selected as representatives of the academic sector, the private sector and the NGOs. One member represents the Ministry of the
- 53 - Environment. The Board also appoints three additional members, selected among individuals with particular expertise that may be needed within the Board. To assure proper national representation, the appointed members and their alternates must be from different cities in Ecuador. The MAE representative and the Executive Director are members ex-officio and therefore cannot be elected to the Presidency of the Board. To assure adequate oversight, the Board of Directors has also created an advisory committee - the Comite de Gesti6n de Recursos - that includes three members of the Board with the mandate to closely oversee all financial matters under the responsibility of the FAN.
The general operations of FAN are the responsibility of an Executive Director, appointed by the Board. The Executive Director also acts as the Technical Secretary of the Board. To carry out the daily operations, the Executive Director is assisted by operational staff in charge of three areas: Finance & Administration, Fund Raising and Communications and the Protected Areas Program. The latter will directly supervise the operation of FAP.
The Protected Areas Fund (Fondo de Areas Protegidas - FAP)
Objectives
The main objective of the Protected Areas Fund (FAP) is to provide additional resources to the National Protected Areas System, to ensure an adequate level of management of the protected areas in the long term. It consists of a trust fund whose interests will be used to finance the basic operational costs of the PAs. The fund will grow through fundraising efforts by FAN, and donors' contributions.
The FAP is flexible enough to incorporate resources from other donors to the endowment as either "unrestricted funds" or as funds directed to a specific protected area. The FAN will manage the distribution of the funds to maximize coherence of strategies, uses, monitoring, and reporting procedures among the funds from different donors.
The initial endowment of the FAP trust fund will amount to about US$8 million, to cover the essential recurrent costs of five priority protected areas. This number will increase to 9 protected areas by the end of the project, with the progressive coverage of the 4 PAs currently funded by the Dutch Cooperation. Additional PA's will be included according to the order of prioritization defined by MAE, as the trust fund grows.
Composition of the initial endowment
The FAP trust fund will be capitalized by a GEF contribution of US$4 million, matched by contributions by the Government of Ecuador and other donors. The GOE has already contributed with US$ 1 million in Ecuadorian Treasury bonds. A debt-for-nature swap with the German Government of $US 2.9 million equivalent has been negotiated and is being transferred to FAP. In addition, the US$ 0.7 million equivalent sinking fund established by the Dutch Cooperation to cover the recurrent costs of 4 PAs is also managed under FAP.
Capitalization Targets
The Environmental Fund of Ecuador will undertake a fund raising campaign directed to increase the initial endowment of the FAP by additional US$4.0 million. It is expected that by the end of the project the FAP trust fund would reach approximately US$12 million. Potential donors include bilateral and multilateral institutions, public and private foundations, corporations and individuals. The following
- 54 - table presents referential targets by year and source.
Annex 2C-Table A: Targets for the capitalization of the PAF Endowment (in thousand $US)
Source 2002 2003 2004 2005 2006 Total Bilateral/Multilateral 1,000 1,000 1,000 3,000 Foundations/Corporations/lndividuals, etc. 50 200 300 450 1,000 Total 50 1,200 1,300 1,450 4,000
Fund Raising Strategy In order to meet the capitalization targets set for the Project, the Environmental Fund of Ecuador is developing a fund raising strategy aimed to: * Increase the endowment of the FAP trust fund. * Secure other resources, such as sinking funds, to cover basic recurrent costs in the PAS whilst the endowment is being capitalized. * Obtain complementary resources to support sustainable conservation of the PAS.
A detailed fund raising strategy will be developed under the project. It will take into account the involvement of key actors (FAN Board of Directors, MAE, beneficiaries, etc.), a market survey of potential donors and the long-term strategy and vision for the NPAS. Potential sources for the FAP are the multilateral and bilateral cooperation, private foundations, corporate donors, and individuals. The Government of Ecuador, through the MAE, would facilitate negotiations with bilateral and multilateral donors; whilst the FAN will play a leading role in raising funds from corporate sources in Ecuador and abroad. The fundraising strategy will be supported by a platform of Information Technology tools such as databases and a Web page to reach wider segments of the market with information about the FAN and FAP, and their role in supporting the conservation of globally significant biodiversity in Ecuador.
Financial Management Financial management of the FAP trust fund will be conducted to assure the safety of the endowment while meeting the cash flow needs of the PAs covered by the fund. The management of the resources will depend on whether they are to be invested offshore or locally, according to the donor's preferences. For each particular case, clear investment guidelines will be established to the satisfaction of donors, and a transparent process of selecting the asset manager will be undertaken.
Investnentpolicy and asset allocation of the FAP trustfund: The main considerations in defining the investment policy and objectives for the FAP/GEF account are: safety, preservation of principal and maximization of available cash flow. Given the fact that interest rates fluctuate over time, it is not possible to precisely determine the yield on future investments. Given that Ecuador has dollarized its economy, the investment objective is to maximize the yields in US dollars-equivalent through fixed-income instruments.
Asset Allocation: Range Fixed income 80-90 % Variable income 20-10 % Note: No cash exposure
- 55 - Considering the current valuations in fixed income markets and utilizing the asset allocation mentioned above, the expected cash flow yield for the GEF funds would be of approximately 5% per annum. Thorough investment guidelines following the main considerations presented above will be developed to the satisfaction of GEF/WB before starting the selection process of the asset manager.
It is important to note that other contributions raised by FAP may be invested in a different manner than the GEF funds. In particular, some of the initial matching funds will need to be invested in Ecuador due to current statutes which regulate funds that originate from government budget (such as in the cases of debt-swaps). These will be invested in US dollar instruments in the local markets of Ecuador. At current levels, the expected returns are around 7% in short term fixed income instruments (three to six months). Therefore, the average projected yield for the initial endowment is estimated at about 6 percent.
Asset Manager: The FAN will hold the FAP trust fund with an asset manager of the highest quality and rating, preferably one which understands the nature of an environmental fund and is willing to serve as a custodian. The selection of the asset manager for the FAP will take in to account the following criteria:
Criteria Description Organization * Investment professionals of 500 plus * Investment accounts - more than 10,000 with at least 5 % relevant to mandate * Assets under management of 1 billion or plus * Experience in managing similar endowments Investment process & philosophy * Conservative to moderate style Decision making process- mix of committees and vestment professionals * Disciplined risk management - in line with industry * Sound legal history - no major allegations/suits Key personnel for mandate * Experience of 15 years + in field and firm * Coverage of account by manager assigned to mandate and representative. Client relationship Quarterly review in line with industry Monthly statement * Internet access of accounts Performance Top quartile for relevant indices *S &P500 * MSCI world * Lehman Corporate & Govt. Bonds * JP Morgan Emerging Market Bonds Index * Minimum 5 year track record of meeting /exceeding idices, net of market average administrative costs Cost structure * Maximum mark-up of 1/8 of 1 % for fixed income instruments * Maximum annual charge of 50 basis points on equity funds * Not to exceed average for administrative costs for some type of investments in the market
- 56 - Benchmark for FAP trustfund: In order to properly evaluate and monitor the investment performance of the actual investment portfolio for the FAP, a benchmark portfolio will be utilized. Such benchmark would consist of a weight of 30% Lehman Intermediate Government Bond Index, a 45% Lehman Corporate Fixed Income Index and a 25% JP Morgan Emerging Market Bonds Index.
Transfer of FAP resources to the protected areas
Defining Priority PAs: The Priority Protected Areas matrix adopted by the MAE guides the initial selection of PAs to be supported by the FAP, and the subsequent phasing-in of additional PAs. This matrix is presented in Annex 2B.
The amount of resources available for the protected areas through FAP is additional to the MAE budget allocations, and will depend on the interest rates' fluctuations in the financial markets. The following phasing-in scenario is based on the assumption that supporting each PA's recurrent costs will average USD 45,000 a year.
* Year 0-1-November 2002-December 2003: Currently, FAP is managing a US$ 0.7 million sinking fund from the Dutch Cooperation to cover basic operation costs of four PAs between 2002-2005; these are: Sangay National Park, Yasuni National Park, Podocarpus National Park, and Manglares Cayapas Mataje Ecological Reserve. The Sumaco Napo-Galeras supported by KFW (Germany) will start from January 2003. The total amount of the initial endowment will be invested to generate the projected financial yields, and therefore, no other reserves will be supported through FAP during this period.
Year 2 and 3- 2004-2005: Funding of the three selected PAs supported by the GEF project (Cuyabeno, Machalilla and Cotacachi-Cayapas) . Depending on the revenues obtained during year 1, a fourth PA - the Mache-Chindul Ecological Reserve - could be phased in.
Year 4- 2006: According to the financial projections that consider both the capitalization and the yields obtained by investing, the FAP trust fund will be able to partially cover the costs of the four areas initially funded by the Dutch cooperation. The FAP capitalization target should have been met at the end of 2005, and therefore all the 9 priority areas should be fully covered by the FAP revenues until mid-2006.
The following table summarizes the protected areas phasing-in for the GEF project's duration (2002-2006):
- 57 - The following table summarizes the protected areas phasing-in for the GEF project's duration (2002-2006): PHASING - IN Priority Protected Areas 2002 2003 2004 2005 2006 Reserva Faunistica Cuyabeno - -
Reserva Ecol6gica Cotacachi Cavapas
Parque Nacional Machalilla -
Parque Nacional Sangay
Pargue Nacional Yasuni
Pargue Nacional Podocarpus
Parque Nacional Sumaco Napo Galeras
Reserva Ecol6gica Mache-Chindul U
Reserva Ecol6gica Manglares Cavapas Mataje
FAP/GEF FAP/Dutch Coop. until 2005: then FAP trust fund FAP/KfW
FAP Project Cycle for the Transference of Resources
The FAP project cycle has been designed for the planned disbursment, administration and control of the funds to be transferred to the protected areas to cofinance - in partnership with the MAE- basic operations costs. It aims at establishing a process that is transparent, flexible and with a high degree of institutional continuity. The FAP project cycle has been designed under the following guiding principles:
1. Planned fund disbursment: the activities and investments to be covered are those in the Annual Disbursement Plans (PAG) which shall be based on the PA's Managerial Plans. 2. Local institutional and capacity building: administrative and financial strengthening of the PA's is required to generate accountability. 3. Efficient and prompt control and monitoring mechanisms will be deployed as part of a financial and administrative accompanying process.
The preconditions for FAP disbursements that have to be met by the PAs include:
-58 - a) presenting to the National Environmental Fund an Annual Disbursement Plan (PAG), elaborated, supervised and approved by the pertinent PA and MAE personnel, b) the PAG must be based on the Annual operations Plan (Plan Operativo Annual - POA) and be referenced to a longer term planning process such as the PA Management Plan, c) the PA must enroll minimum personnel (accountant, management assistant) to oversee and control the PAG execution in close coordination with the PA manager.
The PAG is the basic tool for the financial management of PAs, and will include all the resources available for the execution of the POA. The FAP/FAN will initially provide support for basic operation costs (recurrent costs) of the selected PAs, additional to MAE budgetary inputs. The following table shows the types of expenses that could be covered under the FAP/FAN resources:
COMPONENTS SUBCOMPONENTS ELIGIBLE ACTIVITIES 1. Protected Area Management I.l.Operation Salary for Administrator-Accountant, office materials, phone, fax, mail, licenses, insurance and equipment maintenance, among others 1.2. Basic Equipment Radio-communication, audiovisuals, field, protection garments, measuring nstruments, tools, spare parts and accessories, furniture and office equipment 2. PA Management Strengthening 2.1. FAP Cycle implementation PA personnel training, professional updating courses, workshops and per .______diem related to training, among others 2.2. Training 2.3. Institutional Coordination Agreements, alliances, local management .______councils, workshops, among others 2.4. FAP cycle implementation, Salaries for personnel, FAP audits, PA monitoring and evaluation administrator-accountant training costs, administrative-financial monitoring and follow-up costs 3. Conservation and management 3.1. Control, protection and vigilance Park rangers salaries, supervision and assistance personnel, fuel and vehicle maintenance, fire control, minor nfrastructure construction, among others
3.2. Environmental rehabilitation and Management of environmental restoration vulnerable sites, rehabilitation and restoration activities, among others 3.3. Physical consolidation of the PA Landmarks, signs paths, etc. 3.4. Control, protection and monitoring Per diem, transport costs, fuel and .______of key species vehicle maintenance 3.5. Environmental supervision and To be contracted in accordance to monitoring MAE's guidelines 4. Environmental Education 4.1 Environmental Education and Events directed to community base Interpretation groups, students, etc.; preparation and acquisition of didactic material, bonus, transport costs for communal promoters, among others 5. NPAS Strengthening 5.1. Monitoring and technical Evaluation and technical monitoring, evaluation environmental audits, specialized consultancies
-59 - At this stage, the FAP/FAN will not finance the following items: * PA basic personnel (e.g. PA director); * PA Management Plans; * Research; * Large-scale infrastructure.
The distribution of FAP/FAN resources will take place through an annual cycle, whose main steps are:
* Preparation of the POA and PAG by each PA management committee, together with the PA director; * Review and consolidation of all POAs and PAGs by the MAE General Directorate for Biodiversity and Protected Areas; * Presentation of consolidated POAs/PAGs to the FAP/FAN trust fund administration; * Definition of the resources available for the PAs for the next year, by the FAP/FAN Secretariat; * Review and approval of allocations for each PA, based on their specific POA/PAG, by the FAN Board of Directors; * Quarterly disbursement of resources; * Continuous monitoring and follow-up.
- 60 - Annex 3: Estimated Project Costs ECUADOR: National System of Protected Areas
Local Foreign Total Project Cost By Co6mponent US $million US $million US $million A. Institutional Strengthening and Legal Development 4.96 1.24 6.20 B. Participatory Management of Priority Protected Areas 15.96 1.69 17.65 C. Sustainable Financing 3.39 8.06 11.45 D. Project Monitoring and Follow-up 1.05 0.35 1.40 Total Baseline Cost 25.36 11.34 36.70 Physical Contingencies 0.25 0.11 0.36 Price Contingencies 0.00 0.00 0.00 Total Project Costs' 25.61 11.45 37.06 Total Financing Required 25.61 11.45 37.06
..r . . . Local. Foreign Total Project Cost By Category US $million US $million US $million Goods 0.28 0.12 0.40 Works 0.16 0.04 0.20 Consultants Services and Training 18.77 2.09 20.86 Operating Costs 3.80 0.00 3.80 Protected Areas Fund 4.64 6.81 11.45 Total Project Costs 27.65 9.06 36.71 Total Financing Required 27.65 9.06 36.71
Identifiable taxes and duties are 0 (US$m) and the total project cost, net of taxes, is 32.7 (US$m). Therefore, the project cost sharing ratio is 24.46% of total project cost net of taxes.
- 61 - Annex 4: Incremental Cost Analysis ECUADOR: National System of Protected Areas
Overview The project's general objective is to ensure the conservation and sustainable management of Ecuador's biodiversity by strengthening the National System Protected Areas through improving the legal, institutional and financial foundations and capacities for the integrated, participatory management of protected areas. The GEF alternative would achieve these outputs at a total incremental cost of $8.0 million.
Context and Broad Development Goals The origin of the NSPA goes back to 1976 when the government created a National Park Unit inside the Forestry Division of the Ministry of Agriculture and Livestock (MAG), In 1992, the Ecuadorian Institute of Forestry, Natural Areas and Wildlife (INEFAN) was created as an independent institution under the MAG to administer the NSPA. In 1996, the Ministry of the Environment (MoE) was created and INEFAN was transferred from MAG to the new Ministry. In January 2000, INEFAN ceased to exist and its functions were transferred to the Ministry of the Environment.
The MAE has undertaken major efforts in improving its policy and operational capacities. It has consolidated the National Working Group on Biodiversity (GNTB), an ad-hoc group of experts that supports the Ministry in defining policies and resolving conflicts regarding diverse matters relating to biodiversity. The current structure of the MAE is the result of a technical and administrative analysis oriented to achieve a higher degree of administrative efficiency.
With a clear definition of the institutional structure, great opportunities for medium-term institutional development could be generated. This will be accomplished through the definition of a clear and efficient regulatory framework for the administration and management of the NPAS and its biodiversity.
The Fondo Ambiental Nacional del Ecuador (FAN) was established in 1996 as an autonomous, non-profit organization, in accordance to the Ecuadorian Civil Code. The objective of the Environmental Fund of Ecuador is to provide stable, long-term financing for conservation and sustainable development for the country's critical natural resources, within the framework of national environmental priorities.
Baseline Under the baseline scenario, grant agreements between the GoE and international cooperation agencies and NGOs (local and international) have provided the main source of funding for protected areas in the past ten years. The GoE has covered basic operational costs and limited investments costs, but this has not been enough to substantially improve management within the NSPA. In this context, Ecuador has been able to manage the NSPA, giving more emphasis to PAs where bilateral donors and NGOs have invested, but insufficient to ensure an operational and financial sustainability.
The most outstanding investments in the NSPA in the last ten years have consisted of the following:
- 62 - Yasuni National Park- Fondo Ecuatoriano Populorum Progressio: i) Implementation of management plan; ii). training to technical staff and park guards; iii)purchase and maintenance of equipment; iv) design and implementation of community management plans for sustainable forest ; v) agriculture management; vi) localized fauna and flora inventories as a basis for management zoning; vii) reforestation programs at buffer zones.
Sangay National Park-Fundaci6n Natura: i) socio-environemnatl monitoring; ii) design and implementation of alternative productive projects; iii) Establishment of local management and supervision committees; iv) training park staff and strengthening of root grass organizations.
Sangay National Park-GTZ: reforestation and productive projects.
Podocarpus National ParkFundaci6n Arcoiris-The Nature Conservancy-USAID-Netherlands: i) research on migratory bird species; ii) Environmental education; iii) conservation and management programs in selected sites; iv) zoning and management plans; v) basic vistors/administrative infrastructure; vi) design of a strategy for the sustainable development of the park and buffer zone; vii) Technical assistance and training to organizations that will implement conservation projects.
Cotacachi-Cayapas Ecological Reserve Buffer Zone- CARE-SUBIR: i) agroforestry programs; ii) sustainable management of animal wild species; iii) sustainable forestry management plans; iv) training on biological and legal issues related to Reserve's management; v) legalization of land tenure; vi) community ecotourism.
Machalilla National Park- Fondo de Contravalor Ecuatoriano-Suizo (FOES)- Comitato Internazionale per lo Sviluppo dei Popili-Italy- Fundacion Natura-TNC-USAlD: i) Integrated forest and agroeclogic management; ii) communal strengthening at buffer zone; iii) technical assistance for sustainable artisanal fishing; iv) technical assistance on artisanal fishing within the park; v) communal development and productive alternatives.
Cuyabeno Wildlife Reserve-PETRAMAZ Project-European Community: i) design of legal framework for oil explotation under environmental safeguards; ii) equipment to monitor water and soil pollution caused by oil exploitation; iii) design of an automatized-GIS integrated monitoring system to minimize environmental impacts caused by oil exploitation; iv) design and implementation of sustainable productive projects; v) training to local communities in the formulation of alternative natural resources management projects.
The World Bank financed GEF Biodiversity Protection Project, provided the foundations of the strategic planning for the NSPA. The main objective of the Project was to support the restructuring and strengthening of the institutional capacity and overall policy and legal framework for the adequate management of the NSPA. The total GEF funding provided through this project was US $ 7.2 M.
The main achievements of this project were the following: i) basic policy framework for the administration of protected areas; ii) the Strategic Plan for the National System of Protected Areas; ii) management plans for selected Protected Areas; and iv) a training system for NSPA staff and members of communities living within and in buffer zones of selected PAs. See Annex 16 for more details regarding the achievements and lessons learned of this project.
Under the Baseline scenario:
- 63 - Taking into account the results of the Biodiversity Protection Project, considering the importance of in-situ biodiversity conservation and given the current financial deficit experienced by the NSPA, the MAE and Environmental Fund of Ecuador decided to create the Fondo de Areas Protegidas (FAP) within FAN as a mechanism to ensure long-term coverage of the essential-recurrent-costs component of the implementation of management plans of protected areas.
1) The Government of Ecuador will continue providing support to the NSPA consisting of annual budgetary allocations ($ 2.7 M) and SNAP revenues ($ 0.4 M). These will cover basic, but insufficient recurrent costs and will maintain a limited level of support to the operation of DBAP's main office. The total financing provided by the GoE will be $ 3.1 M; 2) The Netherlands' program for protected areas in Ecuador will contribute with $ 0.757 to cover recurrent costs of four selected protected areas; 3) The International Development Bank program in Cuyabeno will finance land tenure and delimitation activities costing $ 2.4 M.
Total expenditures under the Baseline Scenario are estimated at US$ 6.3 million. Implementation of the Baseline Scenario will result in:
1. Consolidation of methodologies for strategic planning of the NSPA; 2. Development of basic planning tools for management of the system and some short-term protection of biodiversity of global significance; 3. Some level of community work and maintenance of the current levels of revenue generation from protected areas; 4. Raising some funds from donors to finance a portion of recurrent costs.
Global Environmental Objectives According to WWF, Ecuador is one of the 17 "megadiverse" countries in the world. This richness is exemplified by the density of species estimated to be the highest in the world (9.2 species/1,000 km2, excluding fish) and degree of endemism thought to be second in the world. In terms of flora diversity, the country has an estimated 25,000 species of vascular plants or approximately 10 % of the world's total. Ecuador's rich faunal diversity is illustrated by the estimated 800 species of freshwater fish, 450 species of marine fish, 422 species of amphibians (4th in the world), 375 species of reptiles, 333 species of mammals (8th in the world), and 1,618 species of birds (18 % of the world's total). All this biodiversity is sheltered in a country of 256,370 km2, equivalent to 0.18% of the Earth's land surface. Agriculture, which is one of the pillars of Ecuador's economic development and the basis for food security, and ecotourism, an important source of revenue, depend on this rich biodiversity resource. The National Protected Areas System (NSPA), originated in 1976 with the purpose to support the conservation of this biodiversity. Currently, it is made up of 27 natural areas: 23 continental areas, 2 insular areas and 1 marine area, covering a land surface area of 4,669,871 ha (approximately 18% of the national territory) and 14,110,000 ha of marine surface area . The current NSPA covers primarily the State protected areas. A consolidated and sustainable NSPA will help conserve a large proportion of this biodiversity and to maintain ecological and evolutionary processes of unique global importance.
-64 - GEF Alternative Under the GEF Alternative scenario, Ecuador will be able to set the basis for sustainability of its NSPA based on long-term planning and social and financial tools and participatory management. This will result in an improved capacity to manage and monitor PAs. The GEF Alternative will result on a joint support provided by GEFANd the Government of Ecuador. In addition, parallel financing will be provided by bilateral donors, the International Development Bank, local and international NGOs. Most of these resources will be provided in the form of direct support to individual protected areas, including: Yasunf, Sangay, Podocarpus, Cayapas-Mataje, Sumaco Napo-Galeras, Cuyabeno and Mache-Chindul.
The GEF Alternative will comprise the following:
1) The agreed incremental activities included in this project amounting $ 8.OM; 2) FAN/FAP revenues through the endowment to finance recurrent costs of selected protected areas, totaling $ 2.5 M; 3) The Government of Ecuador will contribute an additional $ 0.74 as counterparts funds for investments in three selected protected areas; 4) The GoE's contribution to the FAN/FAP amounting $ 1.0 M; 5) Parallel financing that will be provided as follows:
* Netherlands to consolidate the management of the Yasuni National Park, consisting of $ 1.6 M; * The KFW Germany will allocate $ 2.9 M in the FAN/FAP to finance recurrent costs of the Sumaco National Park and $ 5.4 to finance investments activities in the same protected area; * The program supported by the International Development Bank in Cuyabeno will finance the Reserve's Management Plan and productive activities in its buffer zones. These activities will cost $ 2.6 M; * Local and International NGOs will provide additional support to finance specific activities in selected protected areas. These activities will cost $ 5.7 M.
Specific outcomes will include:
* allow the continuation and consolidation of the training system initiated in the first phase. Training limited to few protected areas during phase I will be expanded to a broader number of protected areas. New concepts of management and other relevant issues will be included in the training program to allow the achievement of an effective participative management of the protected areas. Building on the successes of the education program of the pilot phase, state-of-the art dissemination materials will be tested, in order to adjust them to the new management criteria that will be applied to the National Protected Areas System;
* the design and implementation of a public awareness/communication strategy to promote biodiversity conservation in the National System of Protected Areas. This communication strategy will increase public participation in protected areas management and will involve communities living around them; allowing the establishment of conflict resolution mechanisms among key stakeholders and facilitating open consultations on management issues within protected areas;
* the strengthening of the three selected protected areas and the application of the new institutional
- 65 - mission and long-term vision for the NPAS. Specific co-management and co-investment mechanisms will be identified to incorporate the concept of integrated management and collaborative participation of stakeholders.
* the establishment of a Protected Areas Trust Fund to cover the recurrent cost of six priority protected areas, allowing a long-term financial sustainability. Tis will allow to finance three relevant components: 75 to 82 percent of annual Funds program expenditures be devoted to PA's conservation programs at the reserve level; 9 to 12 percent to central coordination activites managed at the national level; and 9 to 12 percent to the Funds administration;
* the design and implementation of a monitoring system to be applied to selected protected areas within the System. Among other relevant issues, the following will be monitored: (i) status of biodiversity; (ii) management efficiency; (iii) implementation of management plans; (iv) behavior and actions of local communities regarding conservation issues:
1. Directorate for Biodiversity and Protected Areas capable of resource allocation, regulating, monitoring and supervising the NSPA; 2. Local stakeholders participate more actively in the management of PAs; 3. PAs have increased capabilities for planning and implementing PA management; 4. Non-budget revenues of NSPA increase in a gradual and permanent basis.
Total expenditures under the GEF Alternative scenario are estimated at US$ 30.44 million.
Incremental Costs The total cost of the GEF Alternative is US $ 30.44, and the cost of the Baseline Scenario is US $ 6.3 M, resulting in a total incremental cost of US$ 24.1 M. the Government of Ecuador is providing co-financing for this project, KFW- Germany, the Netherlands, the International Development Bank and international and local NGOs are providing parallel financing to finance incremental costs for achieving global environmental benefits in an amount of US $ 24.1 M. The GEF funding requested is US$8.0 M.
-66- Incremental Cost Matrix for GEF Funding
Cost US$ Component Cost Category nillion Domestic Benefit Global Benefit 1.Institutional Baseline 0 Basic tools for the effective Some short-term protection of Strengthening management of a limited number of biodiversity of global importance protected areas. GEF Alternative 0.6 Integrated management approach for Long term protection of priority SNAP that responds to broader social, ecoregions of global importance economic, and political realities Incremental 0.6 2.Participatory Baseline 16.07 Some level of community work and Short-term protection of biodiversity Management of technical assistance activities unlikely to of global importance Protected Areas achieve financial sustainability of selected areas. GEF Alternative 17.67 Definition of long-term management Greater coverage of globally needs, increased public participation in significant areas management and better resource lallocation Incremental 1.6 3.Susutainable Baseline 8.63 Very limited or non-existent suppport of Short-term protection of biodiversity Financing donors to finance some recurrent costs of global importance of management and Minimum level of revenue generation. GEF Alternative 12.93 Establishment of financial mechanisms Established basis for sustainability at that will reduce burden to state and all three levels (social, financial, and increased community participation and ecological) lownership. Incremental 4.3 4.Monitoring Baseline 0 Development of monitoring and and Evaluation evaluaction systems at few portected System areas GEF Alternative 1.2 Development of a methodology and Improved biodiversity monitoring in implementation of a biological PAs. monitoring system applicable to the NSPA Incremental 1.2 TOTAL Baseline 24.7 Management of selected protected areas, Short-term protection of biodiversity and maintenance of adequate level of of global importance support to the central unit EF Alternative 32.7 Setting the basis for sustainability based An efficient long -term management on long-term planning and social and of selected protected areas which financial tools conserve ecoregions of global _importance ncremental 8.00
- 67 - Annex 5: Financial Summary ECUADOR: National System of Protected Areas Years Ending December 31
I Year I Year 2 Year 3 Year 4 Year 5 _ Year 6 1 Year 7 Total Financing Required Project Costs Investment Costs 9.2 10.3 4.1 4.1 0.0 0.0 0.0 Recurrent Costs 0.7 1.4 1.6 1.6 0.0 0.0 0.0 Total Project Costs 9.9 11.7 5.7 5.7 0.0 0.0 0.0 Total Financing 9.9 11.7 5.7 5.7 0.0 0.0 0.0 Financing IBRDfiDA 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Government 1.5 1.1 0.9 0.9 0.0 0.0 0.0 Central 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Provincial 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Co-financiersOther 0.8 1.2 0.3 0.3 0.0 0.0 0.0 Parallel FAN/FAP 0.3 0.5 0.8 0.8 0.0 0.0 0.0 GEF 4.5 1.5 1.0 1.0 0.0 0.0 0.0 IDB Parallel 0.0 2.0 1.0 1.0 0.0 0.0 0.0 Germany Parallel 0.7 3.6 0.7 0.7 0.0 0.0 0.0 Netherlands Parallel 1.2 0.8 0.2 0.2 0.0 0.0 0.0 TNC Parallel 0.8 0.8 0.8 0.8 0.0 0.0 0.0 Total Project Financing 9.8 11.5 5.7 5.7 0.0 0.0 0.0
YYear I Year 2 I Year 3 I Year 4 f Year 5 T Year 6j Year 7 Total Financing Required Project Costs Investment Costs 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Recurrent Costs 0.0 0.0 0.0 1.6 1.6 1.6 Total Project Costs 0.0 0.0 0.0 0.0 1.6 1.6 1.6 Total Financing 0.0 0.0 0.0 0.0 1.6 1.6 1.6 Financing IBRDIlDA 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Government 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Central 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Provincial 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Co-financiersOther 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Parallel FAN/FAP 0.0 0.0 0.0 0.0 0.0 0.0 0.0 GEF 0.0 0.0 0.0 0.0 0.0 0.0 0.0 IDB Parallel 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Germany Parallel 0.0 0.0 0.0 0.0 0.0 0.0 0.0
-68- Annex 6(A): Procurement Arrangements ECUADOR: National System of Protected Areas Procurement
Procurement will be carried out in accordance with World Bank' "Guidelines: Procurement Under IBRD Loans and IDA Credits", published in January 1995 (revised January/August 1996, September 1997 and January 1999); and "Guidelines: Selection and Employment of Consultants by World Bank Borrowers" published in January 1997 (revised in September 1999, January 1999 and April 2002), and the provisions stipulated in the GEF-Grant Agreement.
Capacity Assessment to Implement Procurement and Responsibility
Responsibility for procurement actions rests separately with the two Grant executing entities, as the recipients of funds: (i) Ministry of Environment (ME) for components 1, 2 and 4; and (ii) Fondo Ambiental Nacional (FAN) for component 3, the Trust Fund and its related activities.
MAE would sign an implementation agreement with FAN to carry out procurement and to administer funds under components 1, 2 and 4, while retaining technical leadership, supervision and overall responsibility for Project execution through its Direcci6n de Areas Protegidas.
FAN is a well-organized NGO that has a basic administrative infrastructure to manage small programs. In order to assume its*tLiZational responsibilities under the Project, FAN will contract two administrative staff.
A procurement capacity assessment, cleared by the Regional Advisor's Office on June 17, 20(X2, rates the risk as AVERAGE.
The following action plan is recommended:
FAN should have hired an accountant and an administrative assistant by Grant effectiveness.
FAN's Operational Manual, including specific procurement procedures applicable to the Project, should be submitted to the Bank by the time of Grant negotiations.
Presentation of the updated FAN's Manual for Recurrent Costs for Protected Areas specifying eligible expenses, required procedures and controls. The Manual, in final form, should be presented to the Bank by the time of Grant negotiations.
Presentation of an updated specific Procurement Plan for the first year of project implementation, for each implementing agency, by the time of Grant signing. Subsequent Plans would be prepared annually together with the Anual Work Plans.
Training session on Bank procurement requirements to be provided before or at Project initiation.
FAN should select an asset manager for the Trust Fund in a competitive manner with the
- 70 - Netherlands Parallel 0.0 0.0 0.0 0.0 0.0 0.0 0.0 TNC Parallel 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Total Project Financing 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Main assumptions:
- 69 - assistance of a financial advisor. Such a selection would be subject to Bank's prior review.
Procurement Methods
The methods described below and their estimated amounts are summarized in Table A. Items to be financed by co-financiers are in the process of being defined; thus, amounts appearing under non-Bank financing are preliminary estimates. The selection methods for Consulting and Training services are discrimited in Table Al. The threshold contract values for the use of each method are fixed in Table B.
Works. Civil works include small contracts for park ranger stations and other non-typical works such as solid waste management, opening paths, etc. Individual contracts are expected to range from $10,000 to $40,000; these will be contracted through shopping procedures. Goods. Goods to be procured include computers, boats, vehicles, field equipment for the national reserves, and small office equipment. Contracts would range from $5,000 to $80,000. NCB would be used for contracts of $50,000 and above, and shopping procedures for smaller contracts. Consultant Services and Training. Typical consulting services include technical assistance for preparation of master plans, strategic studies, and other assistance related to participatory management of protected areas. Other services include promotional campaigns, publicity and provision of training. Contract size would range between US$5,000 and US$150,000. Local NGOs and institutions with presence in the communities within the Project area are expected to provide a significant part of the services. Training services would include the financing of rents, materials, meals and transportation expenses for participants.
Firms and NGOs. Contracts for technical assistance estimated to cost US$100,000 or more would be selected through the Fixed Budget method. The same services estimated at less than US$100,000 would be procured using Selection Based on Consultants' Qualifications method, up to an aggregate of US$600,000. Other services of a straightforward nature (audit, some training, publicity, logistics, etc.) would be contracted on the basis of Least Cost Selection method.
Individuals. Individual consultants would be selected in accordance with the provisions of paragraphs 5.1 through 5.4 of the Consultant Guidelines.
Protected Areas Trust Fund. The Project includes a US$4 m. contribution to a Trust Fund to be invested to generate income. An asset manager would be selected on a competitive basis to invest the funds in an optimal manner; the National Environmental Fund (FAN) would receive the GEF funds directly as executing agency of the Fund. Interest income earned would finance recurrent costs of three identified protected areas. Additional protected areas would be added as the fund increases its capital and generates additional earnings. Specific guidelines for financing and reporting recurrent costs to the protected areas would be contained in an Operational Manual for Recurrent Costs for the Protected Areas.
- 71 - FAN would also be responsible for implementation of activities related to administration of the Trust Fund included in component 3. The total amount allocated for such activities is $350,000. Recurrent Costs: These include (a) Project administration operating expenditures such as, office supplies, utilities, transportation, per diems, and other administrative expenses; and (b) recurrent expenditures for three protected areas for a maximum period of 18 months, until interest starts to be generated by the Trust Fund.
Procurement methods (Table A)
Table A: Project Costs by Procurement Arrangements (US$ million equivalent)
Procurement Methodi Expenditure Category ICB NCB Other. - N.B.F' TotilCost 1. Works 0.00 0.00 0.23 3.00 3.23 (0.00) (0.00) (0.20) (0.00) (0.20) 2. Goods 0.00 0.24 0.23 3.75 4.22 (0.00) (0.22) (0.21) (0.00) (0.43) 3. Services 0.00 0.00 2.90 6.00 8.90 Consulting Services and Training (0.00) (0.00) (2.55) (0.00) (2.55) 4. Operating Costs 0.00 0.00 1.00 4.00 5.00 (0.00) (0.00) (0.82) (0.00) (0.82) 5. Protected Areas Fund 0.00 0.00 4.00 7.00 11.00 (0.00) (0.00) (4.00) (0.00) (4.00) 6. Block B Preparation 0.00 0.00 0.35 0.00 0.35 (0.00) (0.00) (0.35) (0.00) (0.35) Total 0.00 0.24 8.71 23.75 32.70 (0.00) (0.22) (8.13) (0.00) (8.35) vFigures in parenthesis are the amounts to be financed by the Bank Grant/Other (Specify). All costs include contingencies. 2 'Includes goods to be procured through national shopping, consulting services, training, and incremental operating costs related to staff managing the Project, and travel and perdiem for this staff, operation and maintenance of equipment and vehicles, office supplies, and basic services.
- 72 - Table Al: Consultant Selection Arrangements (optional) (US$ million equivalent)
-.- ,Selection Method - Consultant Services Expenditure Category .aCBS aBS SFB LCS CO Other' N.B.F. Total Cost A. Firms 0.00 0.00 0.22 0.48 0.60 0.65 4.00 5.95 (0.00) (0.00) (0.18) (0.45) (0.56) (0.56) (0.00) (1.75) B. Individuals 0.00 0.00 0.00 0.00 0.00 0.95 2.00 2.95 (0.00) (0.00) (0.00) (0.00) (0.00) (0.80) (0.00) (0.80) Total 0.00 0.00 0.22 0.48 0.60 1.60 6.00 8.90 (0.00) (0.00) (0.18) (0.45) (0.56) (1.36) (0.00) (2.55) Including contingencies Note: QCBS = Quality- and Cost-Based Selection QBS = Quality-based Selection SFB = Selection under a Fixed Budget LCS = Least-Cost Selection CQ = Selection Based on Consultants' Qualifications Other = Selection of individual consulants (per Section V of Consultants Guidelines), and direct contracting of most of the training-related items. N.B.F. = Not Bank-financed Figures in parenthesis are the amounts to be financed by the Bank Grant/Other (Specify).
-73 - Prior review thresholds (Table B)
Table B: Thresholds for Procurement Methods and Prior Review'
Contract Value Contracts Subject to Threshold Procurement Prior Review Expendituris Category (U.S$ thousands) Method_ (US$ millions) 1. Works Shopping First contract <50 (0.04) 2. Goods >50 NCB First contract (0.07) <50 Shopping None 3. ServicesConsultants >100 Fixed Budget All and Training: Firms (0.18) <100 Consultant's Qualification First contract through or LCS Consultant's Qualification Individuals (0.04) >50 Section V AU (0.10) <50 Section V Project Coordinator Consulting firms and (0.03) individual consultants >20 All Terms of Reference (1.10) 4. Miscellaneous 5. Miscellaneous 6. Miscellaneous
Total value of contracts subject to prior review: $1.56 m. Overall Procurement Risk Assessment: Average Frequency of procurement supervision missions proposed: One every 12 months (includes special procurement supervision for post-review/audits)
IN Thresholds generally differ by country and project. Consult "Assessment of Agency's Capacity to Implement Procurement" and contact the Regional Procurement Adviser for guidance.
- 74 - Annex 6(B) Financial Management and Disbursement Arrangements ECUADOR: National System of Protected Areas
Financial Management 1. Summary of the Financial Management Assessment
2. Audit Arrangements
3. Disbursement Arrangements
Allocation of grant/other (specify) proceeds (Table C)
Country Issues
The Government has made significant progress in the area of procurement through procurement law which was drafted with the assistance of an IDF grant. The law increases transparency and simplifies processes and is supported by standard bidding documents. In 2000 the bank conducted a Country Procurement Audit Review and an action plan was agreed upon and is in process of implementation.
A Memorandum of Understanding (MOU) has been in effect with the Controller General of the State aimed at improving the timeliness and quality of audit of Bank financed projects. The MOU is currently being revised and expected to be reissued in August, 2002.
It is contemplated that during Fiscal year 03 the Country Financial Accountability Assessment will completed. Notwithstanding there is a Project Preparation Facility - The Public Sector Financial Management project currently in implementation, whose development objective is to improve effectiveness and transparency in financial management in the government sector and to contribute to better governance through greater transparency, attained by the independent verification of the integrity of government financial reporting.
There are six project components. The first finances the completion of the programming, testing, and implementation of the Integrated System of Management and Financial Information (SIGEF GLOBAL); completion of implementation support in Central Ministries for all modules and the provincial offices of the line ministries. The second component expands coverage of SIGEF throughout the public sector, including public universities and municipalities. The third component upgrades SIGEF' s technological base by establishing a public data network and converting selected SIGEF services to web-based technology. Component 4 builds external financial audit capacity. Component 5 ensures organizational and functional support for the Integrated Financial Management System (IFMS) approach, which comprises macroeconomic forecasting and management, budget preparation, and tax administration. The sixth component supports project management, monitoring, supervision, and impact evaluation at the different levels of the system.
Summary of Financial Management Assessment
The Project, will have two project implementing units. The Ministry of Environment (MAE) in charge of the technical aspects and the (FAN) in charge of the Financial Management and Procurement aspects. Two grant agreements will be signed. One between the Republic of Ecuador and the International Bank for Reconstruction and Development (where the MAE is responsible for the implementation of the components 1, 2, and 4), and the second one between the International Bank for Reconstruction and Development and the FAN (where the FAN will implement the component 3). The total of funds to be
- 75 - managed are US$3,675,000 and US$4,325,000 millions (endowment and operating costs of FAN) respectively.
Given that the MAE does not have the necessary financial management capacity, an agreement will be signed by the MAE and the FAN which delegates full Financial Management responsibility to the FAN.
This arrangement will take place until MAE is ready to administer the funds. Nevertheless since the MAE will have responsibility for the overall oversight of the Special Account we have proposed basic requirements which must be complied with by the MAE, prior to effectiveness.
Risk Assessment: Both the inherent risk and the control risk of the project have been assessed as Medium.
Inherent risks: Multiple executing agencies, decentralized nature of the projects across nine (9) protected areas and decentralized payment arrangements.
Overall, provided that the action plan is implemented we concluded that the Financial Management arrangements will satisfy the Bank's minimum requirements. Some of the action items will be considered conditions of effectiveness.
Strengths and Weaknesses
Strengths: o Adequate organizational structure with experienced staff. O Adequate planning and monitoring activities. o The information system is capable of providing the basic financial information which is required and is supported by acceptable information security practices. o The FAN has previously managed at an acceptable level, a Global Environment Facility (GEF). O Acceptable internal control environment with documented manual of procedures and controls. Weaknesses: o Inadequate systems to ensure accounting for and safeguarding of fixed assets. o Lack of comprehensive training plan to ensure that staff are proficient in recent relevant legal and taxation changes. o Notes to the financial statements are not complete and do not fully comply with local and international norms. o The accounting system does permit information to be segregated by project.
Impkmenting Entities
The Ecuador National System of Protected Areas Project will have two implementing units:
Fondo Ambiental (FAN) in charge of the financial management arrangements. * The Ministry of Environment in charge of the technical implementation.
The Bank will separate agreements with each implementing entity:
* BIRF - FAN
- 76 - BIRF - MAE
Ministry of Environment - MAE
The Ministry of Environment will be responsible of implementing the components A, B and D through a grant agreement of US$3,675,000.
Given that the Ministry of Environment does not have the fmnancial management capacity to manage the US$3,675,000 the Ministry of Environment decided that the Fondo Ambiental (FAN) will manage their funds under its supervision and will enter into an Administration Agreement.
Fondo Ambiental - FAN
The Fondo Ambiental is responsible of the implementation of the component C through a grant agreement of US$325,000 and an endowment of US$4,000,000. The Fondo Ambiental (FAN) an autonomous organization was created through partnership between the private and the public sector established by Registro Oficial No.865 on January 18, 1996 and was modified on October 2000 through Registro Oficial 195.
The Ministry of Environment will sign a contract with the FAN to transfer the administration of the funds to be granted by the Bank under the supervision of the Ministry of Environment.
Funds Flow and Disbursement arrangements
Disbursements under both grants will be transaction based (ie against Statements of expenditure (SOEs), full documentation, direct payments or special commitments) Deposits into the Special Accounts and replenishments up to the authorized allocation set out in the legal agreement would be made on the basis of Applications for withdrawals accompanied by the supporting documentation in accordance with Bank disbursement procedures.
The Ministry of the Environment will open a Special Account at the Central Bank for the purposes of the Grant Agreement of US$ 3,675,000. To facilitate receipt of funds to cover operational costs of US$ 325,000 the FAN will open and maintain a separate special account in a commercial bank authorized by the Bank
The Bank may require withdrawals from the FAN GEF Trust Fund Grant Account to be made on the basis of statements of expenditures for: a) goods; b) consulting firms under contracts costing less than $ 100,000 equivalent; c) individual consultants under contracts costing less than $ 50,000 equivalent; d) training; and e) FAN Incremental Recurrent Costs.
- 77 - To manage the Endowment funds of US$ 4,000,000 the Fan will appoint an Asset Manager. The funds will be held in a separate investment account in a Commercial Bank. On a quarterly basis the individual protected areas will prepare their requests for funds and submit to the FAN & MAE. These will be reviewed and approved by the Bank and Other Donors and once approved the amounts will be disbursed by the FAN.
Standard disbursement percentages have been established for the project. Accounting Policies and Procedures
Each protected area constitutes a sub-unit, which will be responsible of management of the funds disbursed by the FAN. Besides each protected area would be headed by a Coordinator whose qualifications will be in line with the requirements of the Ministry of Environment and an Accountant who will be selected by the FAN.
The DBAP and the Protected Areas will be responsible for maintaining project management arrangements acceptable to the Bank including accountant standards, accounting information, internal controls, financial reporting, compliance system, auditing requirements, preparation of SOEs and a qualified staff.
The accounting policies utilized by FAN are based on the Ecuadorian Accounting Standards (Normas Ecuatorianas de Contabilidad -NEC), that are in accordance with internationally accounting principles and practices satisfactory to the Bank (IAS). The Project utilizes the Modified Accrual Basis, which records expenses when they are received or used while revenue is recorded on a cash basis.
The project complies with the Ecuadorian framework established in the "Reglamento de Aplicaci6n de la Ley de Rdgimen Tributario Interno". The project is subject to value added tax and income taxes, although they covered VAT through a monthly claim to the National Tax Authority.
The present accounting policies, which regulate the project development, are designed for the management of the endowment interest and US$325,000 dollars, however it needs to define accounting policies and procedures for management of the US$3,675,000 dollars.
The most important policies are as follows:
Budgeting System
* Each direction will prepare its own budget no later than the third week of December, in each year and submit to the Financial Director for review and approval.
* The consolidated budget will be approved the first week of January, by the Executive Director and the FAN Board.
Expenditure Authorizations
* The Executive Director and each Direction will authorize any kind of expenditure.
* Before expenditure was approved, it must have been contemplated in the annual budget.
- 78 - Pa ment Authorizations
The Executive Director is responsible of payment authorizations. The following procedure is applied prior to approval
* Review all original support documentation. * Review the invoice and determine if it complies with local standards demanded by SRI.
For payments:
* Confirm that the bank account has the enough funds. * Review the checks. * Authorized signatures: Executive Director and Financial Director (to cover FAN expenses; Director of Protected Areas and Financial Director (to cover Project expenses).
Cash and Bank
* All bank transactions must be authorized by two signatures registered at the banks. * All bank account sub ledgers have to be updated daily. * The bank reconciliation are done as soon as the Bank Statement arrives. * The bank reconciliation will be reviewed by Financial Director
Support Documentation
All transactions must be supported adequately and will be maintained one year after the closing date.
Segregation of duties: The accounting procedures support and adequate segregation of duties.
Budgeting: To channel the funds from the endowment, each Protected Area will be in charge of preparing PAG's (Annual Expenses Plans). This format will be unique and be prepared for quarter periods; the PAG will include the project component, and expenditure category. The PAG (budget proposal) will be elaborated by each Protected Area Coordinator and by the Regional Director, and will be revised by the Protected Areas Direction (FAN) and Biodiversity Direction (MAE). The PAG will also be used as support documentation for disbursements to Protected Areas.
Accounting: The FAN will establish and maintain project accounts to record all project transactions from the beginning of the project execution. The Fondo Ambiental accounting system is "TMAX 2000", this system is considered adequate to manage the project however it does not have a budgeting module which could help to prepare financial statements required by the bank. The Statements of Expenditures are prepared manually.
In accordance with the Auditing of the PDF Block B (preparation of the project) was carried out by the Fondo Ambiental (FAN), its accounting system, internal controls and adequate supporting documentation were adequate.
The Fondo Ambiental accounting system generates a trial balance consolidated for all the projects managed by the Fondo Ambiental. The accountant prepare financial statements by project through excel.
- 79 - This procedure could be enhanced by a separate accounting and controls by each project at the financial management system to avoid future confusion and mistakes.
Internal Controls: The internal controls, which are already in place under project preparation, are adequate. These include: a) a clear separation of functions; b) authorized signatures for payments; c) pre-numbered documents; d) verification of budget allocation and availability of funds, e) preparation of reconciliation of bank accounts in a monthly basis; f) reconciliation between sub-ledgers and financial statement balances; g) counting of assets and h) continues monitoring process by the Financial Director and the Fondo Ambiental Board. Likewise, during the Project Preparation Facility, they have prepared an operational manual, which includes a summary of principal internal controls to be followed by the Project.
Safeguard over assets: The FAN does not have a fixed asset management policy. Subsidiary fixed asset ledgers are not maintained, physical inventories are not taken. A coding system is not used to identify assets. There is no insurance coverage to further safeguard assets.
Internal Audit The FAN does not have an internal control unit as part of its organizational structure. The internal control environment supported by the accounting procedures are however considered adequate.
Audit arrangements
In accordance with the MOU between the Bank and the Controller General of the State (CGE) the CGE will be responsible for contracting independent private auditors acceptable to the Bank under a multiple year contract.
Annual project financial statements will be audited in accordance with International Standards on Auditing, in accordance with terms of reference (TORs) both acceptable to the Bank. The audit opinions would cover at least the project financial statements, Special Account and Statements of Expenditures (SOEs) and the FAN financial statements.
The auditors would perform at least one interim visit per year. After each interim and annual visit, a memorandum on internal controls ("management letter") would be produced, and a copy would be submitted to the Bank. The project annual audit reports will be submitted to the Bank no later than four (4) months after the end of the reporting period (which coincides with the calendar year).
FAN will submit the Terms of Reference to hire independent private auditors satisfactory to the Bank under a multiple year contract to audit on an annual basis the financial statements, the Special Account and SOEs. Copies of the audit reports shall be provided to the Bank within 4 months at the end of each fiscal year.
The table below summarizes audit requirements:
Audit Report Due Date Entity- FAN 4 months after the end of the reporting period (coincides with CY) Project financial statements same as above SOE same as above Special Accounts same as above
- 80 - Reporting and Monitoring
FinancialStatements to be prepared
Each implementing entity will issue separate financial statements. The Financial Statements to be prepared by each one are:
* Statement of Sources and Uses of Funds * Statement of Cumulative Investments * Special Account Reconciliation Statement
The financial statements will be prepared for the current fiscal year as well as for the previous year or period. Also they will be prepared in local currency and in accordance with the accounting principles of the country, that should be compatible with IASCs (internation accounting standards).
The financial statements should include all funding sources as a whole project, not just the Bank loan. The Bank requires that the basic financial statements report project expenditures by main disbursement categories.
Periodicitv of the FinancialStatements
Although the Bank requires annual audited financial statements, this does not mean that more frequents financial statements should not be prepared. This practice would promote good project management and facilitated decision making since timely information would be available.
FAN Accountin-g System
The accounting system of FAN generates the following financial statements: trial balance, balance sheet, and income statement. Sources and uses of funds statement, accumulative investment statement are not generated by the system, however they are prepared in excel, the system also generates accounting journals and, expenditure vouchers. All of these reports would provide clear information and will be available to any time for review of Government, World Bank Missions, Ministry of the Environment, other Counterparts and Independent Auditors. There is also an operational Manual, which includes a specific chapter (m) for financial management.
Each Protected Area will be in charged of preparing Annual Expenses Plans (PAGs). This format will be unique and have to be prepared for quarter periods; the PAG will include the project component, and expenditure category. The PAG (budget proposal) will be elaborated by the Protected Area Chief and by the Regional Director, then the PAG will be cleared by the Protected Areas Fund Director (FAN) and the Biodiversity and Protected Areas Director (Ministry of Environment).. FAN will report periodically on the performance and use of the capital contribution made by GEF under the project and will follow record keeping and control procedures. To supervise the flow of funds generated by the endowment to PAs, FAN, in consultation with the MAE, will hire two persons per PA: a general coordinator and an administrator/accountant that will be based at each PA administrative center. These persons will directly oversee disbursements and use of funds as agreed in Annual Expenses Plans described below.
- 81 - MAE Accounting System
The financial statements of components A, B, D will be prepared by the FAN.
Consolidation of FinancialStatements
The FAN will be responsible of preparing consolidated financial statements (whole project). These financial statements and other supplementary financial information will be available for auditing.
Generation of FMRs
Bank Policy requires that projects be supervised to ensure that loan proceeds are use only for the purposes for which the loan was granted. Furthermore the Bank introduced a requirement for borrowers to prepare financial monitoring reports (FMRs). These reports include, financial reports, physical progress reports, and procurement reports. The frequency of FMRs will be semiannually.
FinancialInformation - Asset Manager
The Asset Manager should have records, accounts and financial statements related to the management of the GEF trust fund. They would be sent to the FAN on a monthly basis as possible. Moreover the Asset Manager should have its own records and financial statements audited in accordance with appropriate auditing principles consistently applied, by independent auditors acceptable to the Bank. The Asset Manager will provide any other useful information required by the FAN.
Information Systems
The Implementing Unit (FAN) will use the financial management system TMAX 2000, which comprises the following modules:
* System Administration * Information System * Budgeting * Accounting * Treasury * Inventories
The system is supported by acceptable information security policies and procedures.
- 82 - Financial Management Action Plan and Effectiveness conditions
Action Responsibke ompletion Date Entity Implementation of a Fixed Asset Management FAN Prior to effectiveness system with adequate supporting documentation, coding system, physical inventory procedures,. monthly reconciliation of fixed asset subsidiary ledgers and appropriate insurance coverage. Tailoring of the accounting system to ensure thal FAN Prior to effectiveness data is captured and financial statements can be generated by expenditure category and source of financing. Definition of Budgeting procedures to manage the FAN Prior to effectiveness endowment Strengthening of the Financial Management MAE Prior to effectiveness Capacity of the MAE so as to efficiently manage the special account. See Annex I. Inclusion of appropriate notes to the Financial FAN Prior to effectiveness Statements in compliahce with local and international accounting standards. Establishment and signing of the Administration FAN/MAE Prior to effectiveness agreement between the FAN and MAE Development of training plan to maintain FAN December 31, 2002 currency with legal, regulatory and accounting changes.
-83 - Supervision Plan
The Ecuador National System of Protected Areas Project will be monitored by at least one (1) supervision visit each year.
The audit report review reports will ascertain the adequacy if internal controls, generation of accurate and timely financial statements, and confirm that funds and the special account are used for the intended purposes pointed out in the Grant Agreement.
Financial Management Supervision will also include on-site visit with the following TORs:
* Understanding of the project activities; * Determination of adequacy of internal controls; * Assessment of financial management system; * Review of flow of funds; * Review SOES on a sample basis; * Review of the special account and authorized allocation reconciliation.
Based on our supervision activity recommendations will be made to the Task Team Leader concerning the FM rating in the Project Status Report.
Retroactive Financing
Retroactive Financing will be authorized to FAN up to an amount of $ 32,500.
Allocation of Grant Proceeds
The proposed GEF grants (one to MAE and one to FAN) would be disbursed against the following categories:
GEF Grant to MAE
1. Works: consisting of administrative centers and visitors trails financed 85% by the Grant;
2. Goods: consisting essentially of vehicles, boats, field equipment, computer equipment, and office equipment; financed 100% of foreign expenditures and 85% of local expenditures by the Grant;
3. Consulting Services: consisting of consultant services and technical assistance under Components 1, 2 and 4, financed 85% by the Grant;
4. Training: consisting of local and international courses for selected protected areas staff, financed 85% by the Grant;
5. Operating Costs: comprises the operating expenses of the Directorate of Biodiversity and Protected Areas, Project Coordination, as well as the cost of the external audit. For the DBAP, these costs will be financed 85% by the Grant.
- 84 - GEF Grant to FAN
1. Capital Endowment: comprises a $4,000,000 contribution to the Protected Areas Fund, financed 100 % by the Grant; 2. Goods: consisting of computer and office equipment; financed 100% of foreign expenditures and 85% of local expenditures by the Grant;
3. Consulting Services: comprises technical assistance under Component 3, financed 85% by the Grant;
4. OperationalCosts: comprises operating expenses of FAN financed 85% by the Grant.
Table C: Allocation of Grant/Other (Specify) Proceeds
Expenditure Category Amount in US$million Financing Percentage . Grant to Ministry of Environment
1. Works 0.19 85% 2. Goods 0.40 85% 3. Consulting Services and Training 2.15 85% 4. Operating Expenditures for Project 0.20 85% Management 5. Operating Expenditures for Areas 0.50 85% Protegidas 6. Unallocated 0.23 7. Block B Preparation Advance 0.35 0.00 Grant to FAN 1. Protected Areas Fund 4.00 100% 2. Goods 0.01 100% 3. Consulting Services 0.32 100% Total Project Costs 8.35
Total 8.35
Use of statements of expenditures (SOEs): n/a
Special account: n/a
-85 - Annex 7: Project Processing Schedule ECUADOR: National System of Protected Areas
Project Schedule Planned Actual Time taken to prepare the project (months) 18 26 First Bank mission (identification) 02/15/2000 06/15/1998 Appraisal mission departure 03/25/2002 03/18/2002 Negotiations 04/02/2002 08/14/2002 Planned Date of Effectiveness 01/08/2003
Prepared by: Gabriela Arcos, TM
Preparation assistance: GEF Block B grant of US$350,000
Bank staff who worked on the project included: Name: Speciality Gabriela Arcos Task Manager Elizabeth Monosowski Environmental Specialist Claudia Sobrevila Biodiversity Specialist Gonzalo Castro Biodiversity Specialis Karin Shepardson Global Environment Coordinator, LAC Theresa Bradley Operations Officer David Varela Legal Specialist Alberto Ninio Legal Specialist Gunars Platais Environmental Economist Carmen Palaco Nielsen Procurement Specialist Paul Edwin Sisk Financial Management System Ana Lucfa Jimenez Financial Management Samuel Taffesse Operations Analyst Marcelo Romero Procurement/Financial Management Pilar Larreamendy Social Development Specialist Santiago Sandoval Task Team Assistant
- 86 - Ecuadorian Counterparts who worked on the project included:
Lourdes Lugue Minister of the Environment Roberto Ulloa Director of Biodiversity and Protected Areas Domingo Paredes Advisor to the Minister of the Environment in Protected Areas Edgar Rivera Protected Areas Specialist-Directorate of Biodiversity and Protected Areas amuel Sangueza Executive Director-National Environmental Fund (FAN) eyna Oleas Former Executive Director-FAN igrid Vazconez Social Development and Protected Areas Consultant argarita Cisneros Financial Management Director-FAN cely Salazar Administrative Assistant-Ministry of the Environment
- 87- Annex 8: Documents in the Project File* ECUADOR: National System of Protected Areas
A. Project Implementation Plan * Strategic Plan for the National System of Protected Areas * Machalilla National Park's Management Plan * Machalilla National Park's Tourim Study * Machalilla National Park's Environmental Education Plan * Machalilla National Park's Environmental Interpretation Plan * Cuyabeno Conservation Center Project * National Biodiversity Conservation Strategy and Policy * Ecuador's Biodiversity Country Study * FAP Operational Manual
B. Bank Staff Assessments * Socio-Economic Assessment of the NSPA * Institutional Assessment of the Ministry of the Environment * Proposal for Public Participation in NSPA management * Assessment of Management Effectiveness of the NSPA * Information Gathering about Conservation Projects in the NSPA * Implementation Completion Report-Biodiversity Protection Project-GET Grant TF20700-EC
C. Other * Summary of Funding of Individual Protected Areas * Status of Biodiversity Conservation in Protected Areas in Ecuador * Projection of Financial Needs of Individual Protected Areas * Focal Point Letter *Including electronic files
- 88 - Annex 9: Statement of Loans and Credits ECUADOR: National System of Protected Areas 01-Mar-2002 Difference between expected and actual Original Amount in US$ Millions disbursements Project ID FY Purpose IBRD IDA Cancel. Undisb. Orig FmmRev'd P063844 2002 Power&CommSetors Modemiz.&Rural Servl 23.00 0.00 0.00 23.00 0.00 0.00 P039437 2002 RURAL POVERTY (PROLOCAL) 25.20 0.00 0.00 25.20 0.00 0.00 P049924 2001 Rural Water Supply &Sanitaton 32.00 0.00 0.00 30.61 -1.39 0.00 P064045 2000 Fin SactrTALn 10.00 0.00 0.00 8.84 4.50 0.00 P070337 2000 EC-SAL 151.52 0.00 0.00 80.00 80.00 20.00 P040108 1998 INTLTRDEANTEGRATIO 21.00 0.00 0.00 5.74 3.74 0.00 P039084 1998 EC- HEALTH SERVICES MODERNIZATION PROJ. 45.00 0.00 0.00 34.21 19.25 0.00 P007135 1998 AGRICCENSUSBINFO 20.00 0.00 0.00 1.49 0.03 0.00 P040086 1998 INDIGENOUS PEOPLES 25.00 0.00 0.00 3.43 2.41 0.00 P007131 1997 AG RESEARCH 21.00 0.00 1.20 12.08 4.55 4.28 P036056 1997 EC JUDICIAL REFORM 10.70 0.00 0.00 0.58 0.22 0.00
Total: 384.42 0.00 1.20 225.17 113.32 24.28
ECUADOR STATEMENT OF IFC's Held and Disbursed Portfolio Jan - 2002 In Millions US Dollars
Committed Disbursed IFC IFC FY Approval Company Loan Equity Quasi Partic Loan Equity Quasi Partic 1997 Agrocapital 3.50 0.00 0.00 0.00 3.50 0.00 0.00 0.00 1969nn73 81/82J87 COFIEC 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1998 Concessionaria 11.50 1.30 0.00 15.00' 2.93 0.33 0.00 3.82 1999 FV Ecuacobre 4.69 0.00 4.00 0.00 4.69 0.00 4.00 0.00 1998 Favorita Fruit 8.89 5.00 0.00 0.00 8.89 5.00 0.00 0.00 1999 La Universal 8.20 0.00 5.00 0.00 8.20 0.00 5.00 0.00 1993 REYBANPAC 3.59 0.00 0.00 0.00 3.59 0.00 0.00 0.00 Total Portfolio: 40.37 6.30 9.00 15.00 31.80 5.33 9.00 3.82
Approvals Pending Commitment FY Approval Company Loan Equity Quasi Partic
Total Pending Commitment: . 0.00 0.00 0.00 0.00
- 89 - Annex 10: Country at a Glance ECUADOR: National System of Protected Areas Latn Lower- POVERTY and SOCIAL America middle- , ,Ecuador, &Carib. Income Development diamond 2000 Population, mid-year (millions) 12.6 , 516 2,046 Lite expectancy GiNIpercapita(A4tas method,US$) 1,210- 3,680 1,140 GNI (Atlas method, US$ billions) 15;3 1,895 2,327 Average annual growth, 1994-00 , Population (%) 2.0 1.6 1.0 Labor frce (X) 31 2.3 1.3 GNI Gross per primary Most recent easmate (latest year avallable, i994-00) capfta enrollment Poverly (%of population below national poverillne) 35 Urban population (%of total population) 65 75 42 Life expectancy at birth (years) 69 70 69 Infant mortality (per 1.000 live births) 28 30 32 Child malnurition (%of children under 5) ., 9 11 Access to Improved water source Access to an Improved water source (%of population) - 71 85 80 Iiiteracy (%of population aoe'15+) 9 12 15 Gross primary enrollment (%of school-age populaton) . 127 113 114 Ecuador Male 134 - 116 Lower-middle-income group Female - 119 114 KEY, ECONOMIC RATIOS and LONG-TERM TRENDS 1980 1990 1999 2000 Economic ratios GDP (US$ billions) 11.7 10.7 19.0 13.6 GrossdomesticinvestmentVGDP 26.1 17.5 12.9 16.8 Trd Exports of goods and services/GDP 25.2 32.7 37.1 42.4 rade Gross domestic savings/GDP , 25.9 22.9 24.2 28.4 br6ss nationalsavIngds/GDP 21.1 15.1 20.3 29.4 Current account balance/GDP, -4.5 -3.4 5.0 9.0 : DomesUc F Interest payments/GODP 3.1 3.9 4.0 5.0 ostic Investment Total debt/GDP 51.1 113 3,n 76.4 1047g Total debt service/exports 42.5 33.0 25.5 Present value of debtVGDP , ,,L 71.0 Present value of debt/exports - . 208.6i - - , - , ~~~~~~~~~~~~~~~~~~~~Indebtedness 1980-90 1990-00 1999 2000 2000-04 (average annual growth) 2 GDP -4.5 Ecuador GDP per capita -0.6 -0.3 -9.0 .0.4 2.6 Lower-middle-income group Exports of goods and services 5.4 4.1 -0.4 -0.2 5.9
STRUCTURE o1 the ECONOMY 1980 1990 1999 2000 Growth o investment and GOP (%j (%of GDP) Agriculture 12.1 13.4 12.2 10.0 100 Industry 38.1 38.0 37.5 40.2 so Manufacturing 17.7 19.4 21.3 16.9 o Z Services 49.8 48.6 50.4 49.8 a9 Private consumption 59.6 68.5 65.5 62.1 -100 General govemment consumption 14.5 8.6 10.4 9.55 G Imports o1 goods and services 25.4 27.4 25.8 30.8
1980-90 1990400 1999 2000 Growth of exports and imports (%) (average annual growth) Agriculture 4.4 1.7 -1.3 -5.3 0 Industry 1.2 2.7 -3.7 4.9 20 Manufacturing 0.0 2.1 -7.2 5.2 o'5 Services 1.7 1.3 -11.7 3.4 20 9 2 97 Private consumption 1.9 1.3 -9.7 2.2 0 General govemment consumption -1.4 -1.8 -15.5 -1.3 o Gross domestic Investment -3.8 -0.5 -52.9 48.0 Exports Ilmports Imports of goods and services -1.4 0.4 -39.0 18.7
Note: 2000 data are preliminary estimates. The diamonds show four,key indicators In the country (in bold) compared with Its income-group average. if data are missing, the diamond will be Incomplete.
- 90 - Ecuaador
PRICES and GOVERNMENT FINANCE 1980 1990 1999 2000 Inflation%)
(%diarigs) *50- Consumer piloes 13.0 48.5 52.3 96.1 100.1 Implicit GDP deflator 19.5 54.0 62.0 105.9 Govermment finan.6 (%of GDP, incdudes cutrrnt grants) o Current revenue .. 18.2 19.4 22.8 s5 9s 97 08 99 00 Current budget balance .. 6.3 1.9 3.7 - GDP deflator - 0 CPI Overall surplus/deficit .. 3.7 -3.4 -1.1
TRADE
(US$ millions) 1980 1990 1999 2000 Export and hnport wvels (US$ miii.) Total exports (fob) 1,901 2,724 4,451 4,927 e.ooo Oil 1,021 1,268 1,312 2,144 Bananas 162 471 954 821 4 0*0 Manufactures *- 380 1,063 1,229 Total Imports (cif) 1,750 1,865 3,017 3,721 Food 2,000 Fuel and energy 73 95 244 298 Capital goods 631 609 815 942 0.
Exporlt price ndex (1995--100) 171 116 100 131 9 ss 07 U U 00 Import price index (1995-t00) 102 100 84 85 MExports *Imports Termsof trade (1995--100) 168 116 119 153
BALANCE ot PAYMENTS
(US$ millions) im8 1990 1999 2000 Cwent acount baance to GDP (%) Exports of goods and services 2,303 3,262 5,263 5,900 10 Imports of goods and services 2,426 2,519 4,090 4,809 Resource balance -123 743 1,173 1,091 5 Net income -424 -1,210 -1,319 -1,227 - ,I: Net current transfers 23 107 1,101 1,360 4 i e8 - 00 00 Current account balance -524 -360 955 1,224 -10 Financing items (net) 761 760 -1,377 -916 Changes In net reserves -237 400 422 -08 -1 memo: Reserves including gold (US$ mfilions) 1,031 1,004 1,888 1,179 Conversion rate (DEC, hxcal/US$) 25.0 767.8 8,496.1 24,988.0
EXTERNAL DEBT and RESOURCE FLOWS 1980 1990 1999 2000 (US$ millions) Composion of 2000 debt (USS mill.) Total debt outstanding and disbursed 5,998 12,108 14,506 14,251 IBRD 109 816 861 86 G- 1157 A 8e2 IDA 36 32 22 21 s:21
Tota debt service 1,008 1,084 1,645 .. IBRD 19 103 140 132 /D:a375 IDA 1 1 1 1 Compositon of net resource flows Official grants 7 53 53 Officialcreditors 224 53 171 180 E: 2,223 Prvate creditors 524 57 254 -320 Foreign direct investment 70 126 690 720 F:7,61 Portfolio equity 0 0 0 0 World Bank program Commitments 106 50 20 0 A -IsRD E -Bilateral Disbursements 34 47 90 90 B -IDA D -Other multilateral F -Private Principal repayments 10 42 83 83 C -IMF G -Short-term Net flows 24 4 7 7 Interest payments 9 62 58 50 Net transfers 15 -57 -51 43
Development Economics 10/9/01
- 91 - Additional Annex 11: Government and Parallel Financing] ECUADOR: National System of Protected Areas
Introduction
GEF financing for the project is complemented by several local and international funding sources. These include: (1) government funding; (2) revenues generated by the FAN/FAP trust fund and (3) parallel financing from multilateral agencies, bilateral donors and local and international NGOs. Together, these additional sources of funding amount to US$28.60 million over the four years of the project. Combined with the US$8.0 milion GEF grant this results in a total project financing of about US$36.6 million.
Summary of Government and ParaDel Financing
Table 1 presents a summary of the various sources of government and parallel financing for the project. Over the four years of the project, US$4,86 million is committed by the GoE, US$2.48 miUlion correspond to the FAN/FAP trust fund revenues to be transferred to the PAs, US$2.34 million will be provided by the Netherlands, US$8.33 milion will be provided by Germany, US $ 5.00 million will be provided by IDB; US $ 3.2 million will be provided by TNC and US$2.49 will be provided by local NGOs. Together, these sources of government and parallel financing total US$28.60 million accounting for 78 percent of the total project financing (the US$8.0 million GEF grant accounts for 22 percent of total project financing). Government Financing
The Government of Ecuador committed to continue providing funding to the NSPA from 2002 to 2006 for a total of US$4.05 million. Additional funding as specific counterpart for the project will amount to US $ 0.74 million. This implies a total government counterpart of US$4.86 million. The GoE contribution will come from three sources. First, revenues generated from the protected area system (estimated at about US$0.40 million) will count towards the government's counterpart contribution. Second, the government's general budget for NSPA (an estimated US$2.72 million over four years). Third, the contribution to the initial endowment of FAP for US$ 1.0 million. The annual government financing will be available to NSPA to cover both investment and recurrent costs and wiUl be allocated based on PAs annual operational plans.
FAN/FAP Revenues The total amount of revenues generated by the FAN/FAP trust fund is estimated at US$2.76 million. This figure is based on the following assumptions: (i) an initial endowment of US$7.90 million; (ii) a capitalization of additional US$4.00 million over four years; (iii) an estimated annual rate of return on investments of about 6 percent.
92 - Parallel Financing Parallel financing will be provided by bilateral donors, IDB, local and international NGOs for a total amount of US$21.26 million. Most of these resources will be provided in the form of direct support to individual protected areas, including: Yasunf, Sangay, Podocarpus, Cayapas-Mataje, Sumaco Napo-Galeras, Cuyabeno and Mache-Chindul. Netherlands Parallel Financing The majority of the Dutch resources will be provided to finance management activities at the Yasuni National Park (US $ 1.58 million), while US$0.76 million constitute a sinking fund under FAN to cover the recurrent costs of four protected areas: Yasuni, Sangay, Podocarpus and Cayapas-Mataje. German Parallel Financing The government of Germany is providing support to MAE and FAN through both GTZ and KfW to develop activities in Sumaco Napo Galeras. The GTZ program will provide US$2.94 million for natural resource management in the Sumaco Napo Galeras Park and its buffer zones, through community participation and US $ 2.49 for targeted financial assistance. This Park will not be supported by the GEF grant. The KfW is providing a contribution of US$2.9 million through a debt-swap mechanism for the initial endowment of the FAN/FAP trust fund. This FAP sub-account is targeted to finance the recurrent costs of the Sumaco Napo Galeras Park and to strategically complement GTZ investments. In addition, it is providing Inter-American Development Bank IDB support will be provided under the US$5.0 million Management of Natural Resources in the Northern Border-UDENOR/BID Program, which will finance the legalization of land tenure, management planning and implementation for the Cuyabeno Wildlife Reserve, and alternative productive projects at the Reserve's buffer zone. NGOs and local donors A number of international and local NGOs are contributing to the NPAS, mainly through projects in priority protected areas. These include: (i) The Nature Conservancy's Parks in Peril Program, which supports a US$3.2 million project at the Condor Bioreserve; (ii) The support to Yasuni National Park management by the World Conservancy Society (US$1.0 million) and Fondo Ecuatoriano Populorum Progressium (US$216,000); and (iii) the US$1.28 million Conservation International project in the Mache Chindul Ecological Reserve.
- 93 - Table 1. Summary of Government and Parallel Financin FINANCING SOURCE 2002 2003 2004 2005 2006 TOTAL
Government of Ecuador MAE's budget for NPAS 317,000 686,000 686,000 686,000 345,00( 2,720,000 Additional MAE to GEP 100,00( 240,OOC 150,00C 150,0CK 100,0C( 740,00 SNAP revenues 80,00( 80,0C 80,00( 80,00t 80,00( 400,00 Contribution to FAN 1,000,00( _ 1,000,00 FAN/FAP revenues 213,00( 539,OOC 631,00t 733,00t 361,00( 2,476, Netherlands Mid-term support to PAs- FAN 188,00( 189,00 190,000 190,000 757,00 Yasunf National Park and buffer 840,00( 740,00t 1,580,00C Izones Germanyl KfW-debt swap Gr. Sumaco/ FAN 2,900,00( 2,900,00 GTZ- TA Gran Sumaco 600,00( 600,00( 600,00C 600,00( 540,00( 2,940,00 KfW Financial Assistance I 490,00( 500,00( 500,00C 500,00( 500,0CK2,490,00
Cuyabeno PA Management = 400,00( 200,OOC 200,00( 200,00 1,000,00 Cuyabeno-Land tenure 600,00( 600,0C 600,00( 600,00( 2,400,001 Productive projects in buffer zone 400,00( 400,00C 400,00t 400,00( 1,600,001 C -Parks in Peril- Condor 800,00( 800,00( 800,00C 800,00( 3,200,00q WCS - Yasuni 250, 250,00( 250,00 250,00( 1,000,00 CI - Mache Chindul 500,00( 775,00( 1,275,00( FEPP-Yasuni National Park 80,00( 136,00( 216,00 TfrOTAL 5,458,00 9,735,00 5,087,00C 5,189,00( 3,126,00( 28,694,00(
-94 - Additional Annex 12A: Social Assessment ECUADOR: National System of Protected Areas
Project Summary Description
The Ecuador National System of Protected Areas Project will include four components: (i) Institutional Strengthening and Legal Development; ii) Participatory Management of Priority Protected Areas; (iii) Sustainable Financing; and (iv) Project Monitoring and Evaluation. The project will be executed by two agencies: the Ministry of the Environment (MAE) and the National Environmental Fund (FAN). Each component will finance specific activities as follows:
Component 1: Institutional Strengthening and Legal Development
This component aims to consolidate the Directorate of Biodiversity and Protected Areas (DBAP) role as the responsible agency for the administration and supervision of the National System of Protected Areas (NSPA), through strengthening its planning, control and monitoring capacities to ensure effective management of protected areas (PAs). It will also develop the regulatory framework to promote participatory management and co-management of PAs in the country. The implementation of this component will articulate the long-term strategy for protected area management with the national policies and strategies for sustainable development and biodiversity conservation in Ecuador.
Component 2: Participatory Management of Priority Protected Areas
This component aims to promote the participatory management of two priority protected areas, Cotacachi-Cayapas Ecological Reserve and Machalilla National Park. The specific activities on each area will be defined during the first year of the project, through the preparation of the Managerial Management Plan (MMP) for each PA, which will be based on the strengths, opportunities, threats and weaknesses of the selected areas. The design and implementation of the MMPs will be coordinated by the PA's Technical Units of each area, with technical and follow-up support provided by the Directorate of Biodiversity and Protected Areas permanent staff and the team of advisors hired by the project.
The participatory management will start with the creation or strengthening of the Participatory Management Committees (PMCs), composed of representatives of local organizations, local governments, NGOs working in the PAs and other stakeholders identified in the social assessment. In addition, Technical Support Groups (TSGs) will be established to provide technical assistance to the PAs authorities and PMCs during the preparation of Management Plans and the further implementation of activities selected form the Management Plans. The PMCs abd TAGs will participate in the design of the MMPs and will monitor their implementation.
The project will also provide specific support to the Cuyabeno Wildlife Production Reserve, financing its recurrent costs and equipment for its basic operation.
GEF support will focus on the following activities in each protected area:
Cotacachi-CayapasEcological Reserve: 1) Development of a Strategic Management Plan (SMP); ii) Creating and strengthening the Participatory Management Committee (PMC); iii) Operating the Environmental Interpretation Center of Cuicocha; and iv) Implementing the control patrolling program;
- 95 - v) training the Reserve's personnel, and vi) environmental education and communication in the PA and its surroundings
Machalilla National Park: i) Development of a Strategic Management Plan (SMP); ii) Strengthening the Participatory Management Committee (PMC); iii) Implementing priority activities of the SMP through strengthening the technical and operational capacities of the Park; iv) training the Reserve's personnel, and v) environmental education and communication in the PA and its surroundings
Component 3: Sustainable Financing
This component is directed to achieve the consolidation of the Protected Areas Fund (FAP), that will operate within the FAN. The FAP is a strategic response to the everlasting problem of lack of long-term funding mechanism to support conservation within the NSPA. The Project will help to the consolidation of FAP by allocating $US 4 million towards its endowment; this, through earned interests, will allow coverage of the essential recurrent costs component of Managerial Plans of at least eight PA's during the first year of project implementation. Matching resources have already been secured from the GOE ($US 1 million), and the Government of Germany through the KFW ($US 2.9 million). The funds from the German Government will benefit directly the Sumaco Napo Galeras National Park. Other protected areas, in addition to those ones covered by the GEF contribution and the one covered by the funds from Germany, will become eligible for resources from FAP as the endowment becomes capitalized. This component will further support the consolidation of FAP by allocating additional $ 0.325M to cover operational costs and activities planned under the fundraising strategy. It is expected that by year two of the implementation of the Project, an additional protected area will be receiving resources from the FAP to cover the essential recurrent costs component of implementing the PA's Managerial Plans, covering a total of nine protected areas from the NSPA.
Component 4: Project Monitoring and Evaluation
This component aims to ensure the proper operation of the project, through the establishment of a monitoring system to evaluate and monitor the implementation of planned activities at the administrative and technical levels. This system will include the following aspects: i) Monitoring Project Activities; ii) Protected Areas Information System; iii) Management/Efficiency ; iv) Monitoring Monitoring of Social Issues and Beneficiary Assessments The project will carry out two beneficiary assessments, one at the mid-term and a final to complement the monitoring of the social aspects.
In addition to the activities described above, parallel financing will be provided by bilateral donors, IDB, local and international NGOs for a total amount of US$21.26 million. Most of these resources will be provided in the form of direct support to individual protected areas and will strategically complement the activities financed under this project. Parallel financing supporting the implementation of this project will be as follows:
1. Netherlands Parallel Financing The majority of the Dutch resources will be provided to finance management activities at the Yasuni National Park (US $ 1.58 million), while US$0.76 million constitute a sinking fund under FAN to cover the recurrent costs of four protected areas: Yasuni, Sangay, Podocarpus and Cayapas-Mataje. 2. German ParaUel Financing The government of Germany is providing support to MAE and FAN through both GTZ and KfW
- 96 - to develop activities in Sumaco Napo Galeras. The GTZ program will provide US$2.94 million for natural resource management in the buffer zones, through community participation and US $ 2.49 for targeted financial assistance. This Park will not be supported by the GEF grant. The KfW is providing a contribution of US$2.9 million through a debt-swap mechanism for the initial endowment of the FAN/FAP trust fund. This FAP sub-account is targeted to finance the recurrent costs of the Sumaco Napo Galeras Park and strategically complement GTZ investments. 3. Inter-American Development Bank IDB support will be provided under the US$5.0 million Management of Natural Resources in the Northern Border-UDENOR/BID Program, which will finance the legalization of land tenure, management planning and implementation for the Cuyabeno Wildlife Reserve, and alternative productive projects at the Reserve's buffer zone. 4. NGOs and local donors A number of international and local NGOs are contributing to the NPAS, mainly through projects in priority protected areas. These include: (i) The Nature Conservancy's Parks in Peril Program, which supports a US$3.2 million project at the Condor Bioreserve; (ii) The support to Yasuni National Park management by the World Conservancy Society (US$1.0 million) and Fondo Ecuatoriano Populorum Progressium (US$216,000); and (iii) the US$1.28 million Conservation International project in the Mache Chindul Ecological Reserve.
Social Assessment Introduction According to conservation priorities set up by the Government of Ecuador and the results of the participatory selection of Protected Areas, both aspects reflected in the project design, major investments and the planning/participatory activities will be concentrated in Machalilla National Park, and the Cotacachi-Cayapas Ecological Reserve, and in less degree, in the Cuyabeno Wildlife Production Reserve. Other protected areas from the NSPA will be supported by the project under Component 3, specifically through the financing of its recurrent cost to allow its basic operation.
While relevant social impacts stemming from the project's actions in terms of actively integrating local and indigenous communities in the management of the protected areas will mainly occur in Machalilla and Cotacachi-Cayapas, in Cuyabeno and the other protected areas there will be no relevant social impacts of project activities. For this reason, the Social Assessment (SA) and participatory consultations were carried out only in these two priority protected areas.
The assessment comprises the following aspects: i) an analysis of the social and economic profile of the settlers at the National Park of Machallila and the Cotacachi-Cayapas Ecologial Reserve; ii) a description of the main identified social issues and the account of the institutional context for each protected area; and, iii) results of the local consultations, and the methodologies to accomplish with a participatory process during project implementation. The SA was carried out in accordance with World Bank's OP/BP/GP 4.04, OD 4.20, OD 4.30 and OPN 11.03
Objective and Methodology
The main objective of the Social Assessment was to evaluate the development needs of local people and their relationship with the protected areas, the SA identified potential development activities that could be supported by the SNAP, based on the existing community organizations, legislation, and the needs of the local population.
- 97 - The methodology applied could be suMAErized as follows:
1. Information systematization and analysis, comprising: baseline information (primary and secondary), PA management plans and technical reports of projects implemented by other donors;
2. Participatory in situ workshops to carry out local consultations. The results of these consultations provided the necessary information to design the participatory methodology described further in this Annex and to make project's strategies compatible with those promoted at the local level.
Through the local consultations, the project was able to make its operational strategies compatible with the local and indigenous communities' participation mechanisms. During local consultations, opinions from a total of 52 individuals through focus groups and interviews were obtained. In the case of Cuyabeno, local consultations were carried out in three communities with the participation of 22 individuals. The following table suMAErizes the local consultations carried out:
Protected Area No. of participants in the Focus Groups Individual Interviews
Cotacachi-Cayapas 24 5 Machalilla 15 7 Cuyabeno 3 (communities) 6
3. Identification of key social and institutional actors and non-formal groups within the PA and in the buffer zones. This involved an analysis of participation schemes and partnership arrangements the project will establish to ensure compliance with the World Bank's OD 4.20 and OD 4.30 and allowed the construction of a stakeholder map.
Importance of the Social Assessment to the Project Design
The social assessment was carried to define a set of social principles that could guide the project's intervention and has become a key contribution for confirming the social criteria to select the two priority PAs.
It helped to identify a series of strategies that the Project will consider in order to enhance local/community participation in PA management as well as to guarantee indigenous population rights. The SA also contributed to build a detailed stakeholder map and allowed to obtaine baseline information for the further conformation of the Participatory Management Committees.
Main rmdings of the Social Assessment and Priority Aspects that will be Addressed by the Project.
Summary
* The SA shows the lack of both long term conservation objectives and stakeholders participation, this condition has contributed to the increase of threats for biodiversity conservation in each protected area. In addition, biodiversity degradation within the PAs and their buffer zones result from the
- 98 - inadequate implementation of previous state policies, including those aiming at the conservation of natural resources. In order to address these threats, joint actions between the economic, social and environmental sectors are required. Therefore, it implies that the national development agenda and its correspondent policies and strategies observe a sustainable natural resource management.
* The project will seek to establish mechanisms whereby these threats could be reduced and mitigated such as the establishment of alliances among public and private stakeholders for consensual decision-making. The project's overall strategy for the PAs management incorporates co-management and local stakeholder participation.
Machalila National Park Socio-economic proflk
This Park was created in 1979, comprising an area of 55.059 hectares, located at the south-western edge of the Province of Manabf and incorporates three main ecosystems: terrestrial (continental), marine and islands, located within an altitudinal range from 0 to 850 meters o.s 1. The Park's marine area stretches two miles into the ocean and includes the Islands of Salango and de la Plata. The Park's ecological biodiversity is determined by three main factors: a) the Humboldt Cutrent, b) The El Nifo Southern Oscillation and c) the Chong6n-Colonche coastal mountain range. These factors have allowed the proliferation of dry tropical forest with species adapted to severe water restrictions and saline soils, whereas the highlands house tropical humid forest.
The SA confirmed that 13 local and indigenous communities are settled within the Park's and 4 in its buffer zone, the majority are non-indigenous or mestizos . As shown in Table 1, the number of population settlers within the MNP is larger if compared with the number of the buffer zone. The population growth in the area is 6%, a percentage that is significantly higher than the national average. Las dinamicas migratorias en el PNM y los efectos en el uso de los recursos naturales. Informe Tecnico Fundaci6n Natura, Quito, mayo 2000, but balanced due to a high rate of migration which amounts to 24.68%.
Table 1: Population distribution in Machalilla National Park and its buffer zone
Communities Inside the Park No. of Families Total Population Agua Blanca 40 236 Soledad 13 81 Carrizal 6 40 Vueltas Largas 6 30 Pueblo Nuevo 22 120 Salaite 9 7_1 El Rocfo 2 11 Las Pampas 2 13 La Mocora 5 14 Matapalo 17 76 Rfo Platano 7 40 San Sebastian 1 2 Casas Viejas 11 61 Total 141 799
-99 - Buffer Zones No. of Families Total Population Casas Viejas 14 79 Las Peinas 21 119 Rfo Blanco 18 87 La Encantada 10 40 Total 63 325 Source: Ministry of the Environment
According to the SA the illiteracy level amounts to an approximate of 11.78 %. The majority of the population has primary schooling (69.4%), which corresponds to 79.1 % in the rural areas and 59.7% in the urban centers. There are 55 education centers distributed within the Park, 33 are public (state) and 22 are privately managed.
Main ProductiveActivities
Approximately 63.5% of the population main productive activities, in both rural and urban areas, are fishing, agriculture and small-scale handcraft production. By 1995, 50% of the economically active population was employed by the fishing sector, which is comprised of mainly small-scale (artisan) subsistence fisheries. Other important activities are agriculture and cattle ranching, both of these practiced at subsistence levels in the rural areas due to restrictions on irrigation.
Since 1990, tourism has become a complementary activity for the population. In 1996, 24.187 persons visited the Park where, while in 1998 a severe decline in tourism was experienced (10.661 registered visitors) due to the "El Nino" phenomenon 1998,Protected Areas Unit Information.. In spite of the increase of this activity, tourism still employs only about 4% of the local population. Such low percentage relates to lack of skilled and trained local labor for tourism services in the area.
However, over the past years, there has been an expansion in tourism infrastructure throughout the region. Currently, there are over 11 lodging services (hotels, hostels, guest houses, etc.) with an occupancy capacity of 508 beds, which during the months of hump-back whale sightseeing (June-September) is completely utilized. Most of the tourism is handled by operators in Puerto L6pez and thus associated services are concentrated in the urban centers.
Main problems and threats to the conservation of biodiversity
The SA identified unsustainable fishing and unplanned tourism practices as the two most relevant problems that are threatening the PNM integrity.
The SA evidences that it has been a gradual increase of fishing production (processing and trading as well) which has impacted the catchments volume, especially in the areas nearby the coastline. Moreover, the lack of regulation for fishing activities has become an important threat for the MINP conservation. It is estimated that over 60% of the fishermen are "illegal" as they are not registered in any of the existing associations. Field information, interview with CISP, 2001. Thus, the Park's administration has problems controlling their activities (catchment's volumes, fishing arts and techniques used, species captured, etc.) on behalf of the Park's administration. Efforts to enhance the regulation of fishing activities towards sustainable use are taking place through state, international cooperation and NGOs programs.
- 100 - Although MNP has a great potential for tourism and thus sustainable management of natural resources, tourism expansion is becoming a threat to conservation. Tourism expansion has gone unregulated, and the MNP administration has not been able to effectively control it. At the moment, there are problems with an excess of visitors and tours to the Isla de la Plata, which is altering the ecosystem's carrying capacity. This is especially important, considering that Isla de la Plata, is the main point from where to observe the hump-back whales.
Another problem related to tourism in the Park has been its unequal benefit distribution among the local communities. This situation is paired with a severe lack of reinvestment in the protected area. Such reinvestment, complementary to local capacity building will contribute to regulate and plan the tourism activities in benefit of the local communities and the protected area sustainable management. Currently, there are efforts from the local population to organize themselves as community tourist operators and naturalist guides associations, as a means for local capacity building in tourism and a more equitative sharing. These efforts, as spelled in the project participatory strategy will be strengthened during the project execution.
PriorityAspects Covered by the Project
From the situation described above, the project confronts a complex socio-economic scenario. There are increasing pressures towards the Parks' administration over administrative and financial management issues. In response to the social dynamics taking place, the Protected Areas Unit of the Ministry of Environment has initiated a participatory process in the Park, aiming to reduce these pressures and generating consensus building and accountability. This process is being lead by the Local Management Committee, created on March 2001. This Committee groups the main local stakeholders (public and private institutions, NGOs, community-based organizations and associations) involved in the PA management. In order to guarantee the sustainability of this participatory effort, the project will strengthen the local management committee through facilitating and coordinating negotiation between the local actors. In addition, the project will support training the Park's technical team on negotiation, conflict resolution and participatory methodologies so to enable its role as a facilitator.
Regarding the communities and local fishing associations, the SA found critical weaknesses that need to be addressed. There is a need to support communal organization based on participatory and equity mechanisms. The project will strengthen communal organizations by encouraging their leaders/representatives to become active members of the PMCs. The strategic allies in this effort will be local NGOs and the international cooperation programs already working in the Park.
In relation to the main pressures to the Park's natural resources: unplanned tourism and unsustainable fishing practices, the project will invest in the development of sustainable plans as one of the main components of the Management Plan. Thus, the project will facilitate coordination among the private stakeholders involved in tourism and fishing and to appropriate and sustainable co-management schemes. Finally, in order to successfully implement the participatory plans for both tourism and fisheries, the project will facilitate the development of a locally based control and monitoring system as well as initiatives that seek local sustainability.
- 101 - Cotatachi-Cayapas Ecological Reserve Socio-economicprofile
This protected area has an area of 204.000 has., located in the provinces of Esmeraldas an Imbabura. It has an altitudinal range between 100 and 4500 meters over sea level, thus it has Andean and tropical ecosystems. There are a number of rivers with their origin in the Reserve: Mira River, Guayllabamba River, Ambi River.
The Reserve is characterized by a solid wall with various and continuous ecological levels. The slopes are especially pronounced and deep in the eastern Andean and northern edges. Such an ecological diversity has is parallel in the wide cultural variety in the protected area. Given the Reserve's extension and diversity, the project will focus its intervention in the upper portions. This includes a number of cantones and parroquiasand their buffer zones:
Cantones Parroquias Cotacachi Imantag, Apuela, Cuellaje, Peniaherrera, Garcia Moreno, Cuellaje, Quiroga, Cotacachi, Urcuqui Urcuqui, San Blas, Tumbabiro, La Merced de Buenos Aires, Lita, Cahuasqui Antonio Ante Atuntaqui
Lita River Basin (northern zone)
This zone borders towards the east with Atuntaqui and Ibarra, both of them urban centers with an important economic dynamism. Although good road access is restricted, the area provides with sugar cane and cattle to the urban centers. For the populations living at the highlands, the Reserve is an important source of grassland, water and wildlife (rabbits).
Intag River Basin
There is approximately 16,000 people living in this area. The main products are a wide variety of grains, coffee, sugar cane. This area borders with the Toisan mountain range that serves as a natural barrier for further encroachment within the Reserve's limits.
Quiroga-Cotacachi-Urcuquf
There are approximately 65 indigenous communitties settled in the highland ecosystems "pArarnos" within the Reserve (Cuicocha and Piiinn areas). On average each community has 30 families or less. Water resources and associated environmental services the Reserve provides are recognized by the local population as an important issue. At the moment, there are different strategies developed by the local government authorities and the communities on how to manage water resources.
The area's population dynamic is influenced by the high levels of migration (temporal and permanent). An estimated of 65% of the population either migrates occasionally and with certain seasonal periodicity.
- 102- Main ProductiveActivities
Most of the population is involved in agriculture and cattle-ranching mainly at a subsistence level. The main products are a wide variety of grains, coffee, sugar cane. Commercial forest logging takes place in this region and represents an important threat to the Reserve's resources.
Although it is an old colonization region dating back to 100 years, there is still an important forest logging and timber trade activity. Most of the population is involved in agriculture and cattle-ranching mainly at a subsistence level.
The main activity of the indigenous population is sheep breeding, which their main source of income. There are a number of tourism operators that work within the Reserve without proper registration and permits, mainly organized around wildlife hunting. Local communities do not participate in these activities and therefore are not benefiting from tourism.
Main problems and threats to the conservation of biodiversity
Ten years ago, the northern area had not experienced major colonization, due to the bad road access. However, colonization pressures and therefore a rapid expansion of the agricultural frontier have intensified in Lita and Alto Tambo.
Forest logging continues to be an important activity, thus a threat to the sustainable use of natural resources. The potential extraction of mineral deposits, constitutes an important threat to this area's sustainable management.
The pressure over natural resources (pasture, wildlife hunting, and firewood) is not highly significant. In the area of Urcuquf. There are a few "haciendas" involved in cattle-ranching. In contrast, unregulated tourism activities do pose a major threat to the Reserve's sustainability.
PriorityAspects Covered by the Project
The CCER local participation on conservation and sustainable management of the protected area involves dynamic socio-political scenarios. In the past years, in the area an innovative democratic process is taking place leaded by the Municipality of Cotacachi. This process has been able to foster active local participation - through the establishment of a Civil Assembly - in local decision-making. In addition to the Assembly, there is a strong indigenous organization (UNORCAC) which has gained political and social legitimacy within the local population.
For the project these are two key allies with whom to generate co-management and participation schemes in benefit of the protected area. PRODEPINE, is also an important actor with whom the project will seek close coordination. With this program's support, the indigenous communities associated within the UNORCAC have developed a series of activities to PA participatory management.
Civil society's empowerment in the region is particularly strong, and thus there are demands towards greater benefit sharing from conservation and sustainable natural resource management. The project will incorporate these demands during the preparation of the Management Plan and the implementation of the PMC, through a process of active negotiation and consensus building.
However, according top the SA, most local actors perceive weaknesses on the Reserve's administration
- 103 - (administrative and financial management, lack of trained personnel especially in participatory methodologies, etc.). The project, through components 1 and 2 will strengthen the Reserve's management emphasizing the development of coordination .and collaboration schemes with the local actors. Furthermore, the project will work in conjunction with the local institutions -specifically the Provincial Tourism Chamber- to establish accountable mechanisms for third party involvement (either by concessions or co-management) in nature tourism activities within the PA.
In relation to sustainable natural resource management, the project will pay close attention to the Reserve's buffer zones with major pressures. Here, as identified by the, the project needs to coordinate between local communities, NGOs and public institutions. In doing so, the project will concentrate on capacity building of the Protected Area's team and key local actors to lead initiatives for sustainable natural resource management. There are a number of local groups involved on sustainable production (i.e. organic coffee, permaculture, ecotourism) and environmental education, initiatives that the project will enhance.
Project's Social Participatory Strategy Taking into account the characteristics of the National System of Protected Areas of Ecuador, legislation, together with the SNAP policies and management strategies, Ecuador has envisaged mechanisms that guarantee the compatibility of the biodiversity conservation with human presence within the PAs. The preparation process of management plans will be based on the documented consultation and decision making with the local population, represented in the Participatory Management Committees. This seeks to ensure management feasibility in PAs and its local sustainability.
The project will seek to develop a constructive relation with the local indigenous communities living within or nearby the selected protected areas. The preparation of the PAs management plans will give especial importance to the integration of the priorities and demands established by the indigenous population through their development plans. An Indigenous Peoples Development Framework (IPDF) has been prepared to operationalize the participation and to ensure the welfare of indigenous communities through the project's activities. The detailed IPDF is presented in Annex 13.
The project will seek to harmonize the practices of resident and user communities in each PA with the conservation of ecosystems. Concerted strategies will be established aiming at the resolution of potential conflicts associated to the use of natural resources, without affecting the rights of the population while ensuring the objectives of conservation of each PA. For this purpose, a Process Framework (PF) has been designed. The detailed PF is presented in Annex 14.
Participatory management in the two priority protected areas will take place by developing co-management arrangements according to the specific social and political context on each area, in which local and indigenous communities will have a relevant role. The process will start with the creation or strengthening of the Participatory Management Committees (PMCs). The PMSc will be contituded by representatives of local and indigenous communities, local governments, NGOs working in the PAs and other stakeholders identified in the social assessment. In addition, Technical Support Groups (TSGs) will be established to provide technical assistance to the PAs authorities and PMCs members during the preparation of Management Plans and the further implementation of activities selected from the Management Plans. The TSGs will be composed of technical experts selected from local NGOs and other organizations with proven experience in the selected PAs.
To implement the participatory mechanisms under the project, a full-time social development specialist
-104 - (SDP) will be hired under the project. The SDP will become the key link between the Directorate of Biodiversity and Protected Areas and the managers at the PAs. It also will be responsible for coordinating and supervising the overall design and implementation of the Protected Areas Management Plans in Machalilla and Cotacachi Cayapas.
This SDP will also have monitoring and evaluation responsibilities regarding overall project's social issues and will follow-up on compliance with the Process Framework and the Indigenous Peoples Development Plan.
Other two full-time social specialist will be hired to provide direct assistance to the Machalilla and Cotacachi-Cayapas managers. These specialists will be responsible for: a) Prepare the initial proposal for the structuring and operation of the Participatory Management Committees (PMCs); b) Organize and carry out consultation meetings to select members and regulate the operation of the PMCs; c) Organize, participate and report on the regular meetings of the PMCs; d) Facilitate planning process and implementation of PAs Management Plans; e) Supervise the implementation of project activities in compliance with the Process Framework and Indigenous Peoples Development Framework; f) Overall conflict management and resolution; g) Issuing reports for the monitoring and evaluation of project's social issues.
The participation plan for the implementation of project's activities in each of the selected PAs include the following steps:
1) A workshop with the participation of stakeholders identified in the Social Assessment will be organized at the start-up phase of the project. Officers of the Ministry of the Environment will make an overall presentation of the project and of the implementation plan of the protected area. This presentation will conduct to the consultation and selection of the persons that will represent local communities and other stakeholders in the PMCs. The overall operational mechanisms of the PMCs will also be discussed an agreed;
2) Based on the results of the workshop, the Ministry will prepare a strategy and timetable for sharing information and consulting with the PMCs during various phases of the project;
3) The social specialist in coordination with the legal consultant will prepare the by-laws for the operation of the PMCs. Among other relevant issues, the by-laws will specify the objectives, roles of the PMCs, operational mechanism, composition of the PMC, procedures for the prioritization and follow-up of the implementation of activities, reports to be submitted to the local communities and to the park authorities. The by-laws will be presented and agreed with the PMCs;
4) Specific training will be provided to the members of the PMCs regarding: i) planning
-105 - methodology to prepare the Management Plans; ii) conflict resolution; iii) monitoring and evaluation procedures to follow-up on the implementation of selected activities. Action Plan for the Implementation of the Social Strategy Approximately 20 % of the budget allocated to Component 2 will be dedicated to implement the Social Strategy as indicated in Table 2 below. The following is a preliminary Implementation Plan that will be developed in more detail when the PMCs are properly structured and Management Plans are completed. Annex 12-Table 2: Social Strategy Implementation Plan
Activities 1 Stakeholders Involved Budget YRI YR 2YR 3YR 4 Paticipation on design/updating of MAE, local and 20,000 Management Plans indigenous communities, - - ocal governments Structuring and Operation of MAE, local and 72,000 PMCs ' indigenous communities, i I :*local governments, local NGOS and other donors Socio-environmental Monitoring Cs 60,000 Community Training (planning, digenous and local 60,000 environmental issues concesions ommunities for services) _ Implementation of * AE, local and 200,000 projects/concessions to be ;indigenous communities, selected form Management local governments
Plans ______Environmental Education MAE, local and 18,000 Programn, , indigenous communities, : :, . ~ocal govemrnments Monitoring of implementation 1 PMCs 50,000 of Management Plans_ _ TOTAL ESTIMATED _ _ 480,000 BUDGET_
The following indicators have been established to monitor the implementation of the project's social strategy: a) number of representatives of stakeholder groups identified in the Social Assessment delegated as members of the PMCs; b) number of PMCs delegates participating in the design/updating of the Management Plans; c) number of co-management agreements signed between local governments and NGOS and the Ministry of the Environment; d) number and type of concessions for services implemented by local governments, NGOS and other organization from the private sector;
- 106 - e) number of meetings held per year by the PMCs to monitor the implementation of the PAs Management Plans.
Annex 12-Appendix 1: Consultations Carried Out During Project Preparation
The proposed project has been formulated with an ample participation of the different stakeholders involved in Protected Areas management in the country.
Such effort was carried out to validate the project's proposed intervention (components) in the PAs. For the project's design, consultations were carried with actors from both the public and private sector: Ministry of Environment, NGOs, cooperation programs and projects in the selected protected areas, local and indigenous communities and other interested stakeholders.
Following the recommendations of the workshop on Protected Areas Financing Mechanisms, developed under the sponsorship of the World Bank in June 2000, the Ministry of the Environment established the "Project Advisory Committee" (PAC) to provide technical assistance during the preparation of the project. The participation of Advisory Committee members in various discussion workshops has been fundamental to clarify, structure and come to consensus on fundamental design issues, such as the NPAS strategic mission and vision, the definition of institutional objectives and selection of the protected areas to be benefited by the Project. Following, several workshops, surveys and consultations were carried for the selection of the protected areas to be supported by the project. This process is described in more detail in Annex 2B.
At the local level, the preparation team carried out four workshops in Cotacachi Cayapas with the participation of 28 organizations. Two were in the Andean region and two in the coastal region of the park. In addition one workshop with local inhabitants and governments as well as NGOs was carried out in Machalilla. For the Cuyabeno Reserve, the workshop included representatives of the indigenous organizations, local municipal governments and NGOs. A list of participants is available on Appendix 2. Specific consultations were carried out with indigenous communities at each protected area to define better the participation strategy to be carried out during implementation.
To complete these consultations, to build the social context of the project and to confirm the critical areas of intervention of the project, the social assessment was carried out in the three selected PAs
Once the project activities were defined, the project's logical framework was designed. With all these inputs, the project team at the Ministry of the Environment prepared a draft Project Concept Document that was presented to the PAC and discussed in a workshop in which key stakeholders from the selected PA participated.
In addition, several workshops and informative meetings were held with representatives of International Cooperation Agencies in order to exchange ideas, receive comments and propose mechanisms of direct cooperation with the Ministry of the Environment, specifically for the implementation of the Project.
- 107 - Annex 12-Appendix 2: List of Stakeholders Consulted during Project Preparation
CEDENMA (Comite Ecuatoriano para la Defensa de la Naturaleza y el Medio Ambiente) Agrupa la mayorfa de ONG' s ambientalistas del Ecuador. Fundaci6n Natura - Nacional y el Capitulo Guayaquil Fundaci6n EcoCiencia Fundaci6n Arco Iris - Loja Fundaci6n Ecol6gica Andrade - Guayaquil Fundaci6n Machalilla - Puerto L6pez Fundacion Sinchi Sacha Fundacion Ambiente y Sociedad Fundaci6n BIOPARQUES Fundacion Cuyabeno Red de Bosques Privados del Ecuador WWF - Ecuador The Nature Conservancy TNC Asociaci6n de Servidores Turfsticos del Parque Nacional Machalilla Asociacion Ecuatoriana de Ecoturismo Asociaci6n de Comunidades Pesqueras de la Costa de Manabi Municipio de Puerto Lopez Municipio de Cotacachi ETAPA Empresa Municipal de Agua de Cuenca Plan Choco Proyecto PETRAMAZ Proyecto Conservaci6n de la Biodiversidad del Ecuador CBE Proyecto Gran Sumaco - GTZ Proyecto SUBIR Proyecto Podocarpus Proyecto PRODEPINE Programa de Manejo de Recursos Pesqueros PMRC Proyecto Paramos (agrupa 32 organizaciones miembros) CISP - Italia - Machalilla Carlos Viteri-Coordinador Subgrupo Temas Indigenas Grupo Nacional de Trabajo de la Biodiversidad GNTB Ampam. Karakras Confederacion de Nacionalidades Indigenas del Ecuador CONFENIAE Uni6n de Organizaciones Campesinas de la Cuenca Alta de Cotacachi UNORCAC Leonardo Viteri Organizacion de Pueblos Indigenas del Pastaza OPIP Renato Valencia Director del Herbario de la Pontificia Universidad Cat6lica del Ecuador Gunther Reck ECOLAP Laboratorio de Ecologfa Aplicada Universidad San Francisco de Quito SEC - Sistema Ecuatoriano de Capacitaci6n- DINICE Herrmann y Asociados Futura Asociados
- 108 - Additional Annex 13: Indigenous People Development Framework ECUADOR: National System of Protected Areas
Background
As other social actors, indigenous social groups are complex and in constant and dynamic change. Currently, they are an important socio-political force in the national scenario. However, this protagonist role has been achieved through a gradual empowerment process based, among other things, on cultural affirmation, traditional knowledge and practices revitalization, territorial and collective rights' recognition. It is important to note that their constitution as social subjects has taken place amidst a national scenario filled with exclusion and racism.
In the past decade, the Ecuadorian indigenous movement has gained strength in its intermediation with the national state. Through this political intermediation, the indigenous populations have been recognized as separate nationalities sharing the Ecuadorian citizenship.
Today, the indigenous movement has embarked in a capacity building effort that begins at the lowest level of organization: the commune. The strategy undertaken transcends the old resistance logic, in that it is proactive and reinforces civil society's consolidation. Because of its importance, any intervention in the protected areas system needs to consider the indigenous populations as key stakeholders.
The National System of Protected Areas Project comprises four components: : (i) Institutional Strengthening and Legal Development; ii) Participatory Management of Priority Protected Areas; (iii) Sustainable Financing; and (iv) Project Monitoring and Evaluation. Component 2 will support the activities concerning indigenous issues within the framework of PAs Management Plans, to be developed with the active participation of indigenous and local commnunities. The Project will address all indigenous issues in accordance with the World Bank's Safeguard Policies on Indigenous Peoples (OD.4. 20) as well as with the Ecuadorian Law. The project will work under the current policy and legislation that pertains to indigenous and local population. In addition to this framework, the project ratifies the collective rights included in the Constitution (1998). The project seeks to develop a constructive relation with the local indigenous conmmunities living in the selected protected areas, as well as with their national representation entities: CODENPE - within the public sector and CONAIE as their main social organization.
Currently, the GOE is promoting the formulation of Local Development Plans through participatory mechanisms given the mandate of the National Planning System ratified in the Constitution in 1998. In the case of indigenous peoples and afro Ecuadorians, both CODENPE and CODAE have been actively pursuing the formulation of participatory development plans based on the recognition and maintenance of cultural identity and territorial issues.
The project will work in close coordination with CODENPE, which is established as a decentralized and participatory entity, whose mandate is ratified in the Constitution and pursues the following objectives:
* Elaborate State Policies that will influence the development of plans, programs and projects with the participation of the indigenous nationalities and people. * Design the National Sustainable Development Plan for the Indigenous Nationalities and People. * Establish financial mechanisms that will allow sustainable development.
- 109- * Promote inter-culturality and pluri-nationality as essential elements for sustainable social relations, the maintenance of cultural diversity and equity. * Establish inter-institutional coordination with public and private non- profit organizations in benefit of the indigenous nationalities and people.
In addition, CODENPE is elaborating a proposal for a National Territorial Reorganization that recognizes ancestral and indigenous territories as autonomous jurisdictions. It is also drafting the Law for Indigenous Nationalities and People.
CODENPE is the executing agency of PRODEPINE - Proyecto de Desarrollo de los Pueblos Indigenas y Negros del Ecuador (Prestamos BIRF 4277-EC; FIDA 464-EC). PRODEPINE's line of action is to strengthen the community-based organizations' capacity to formulate and administrate their own projects and resources. It focus on cultural, productive and infra-structure provision projects. This project comprises four components: a) Strengthening of Nationalities, People and Organizations; b) Legalization of the lands and waters. The project will seek close collaboration and synergies with both CODENPE and PRODEPINE in indigenous issues within the selected protected areas.
Land tenure issues
According to the Forest Law of August 1981, its article number 70 defines seven categories as protected areas for biodiversity conservation purposes. Article 71 states that the territory within the limits of protected areas is "inalienable", thus, land titling is not allowed. There are however other categories under the state patrimony that are not part of the NSPA, which are: Protector Forests and Forestry Patrimony. Both figures defined as the state patrimony could be adjudicated for non-state titling. In the same Forest Law, the article 71 states that, for the state patrimony to be titled it requires management plans.
In 1994, a legal resolution ratified on July 1996 allowed the state to adjudicate its land under the status of state patrimony, on exceptional cases. In 1998, an agreement between INEFAN and INDA, as an exemption, allowed to adjudicate Protector Forests, to indigenous and afro-Ecuadorians due to their ancestral settlers condition. Thus, in this cases, the land is detached from the state patrimony and the ancestral settlers could be titling it, as global titled land. The procedure of this global titling is regulated by the INDA and INEFAN institutions. The INEFAN (Ministry of Environment) regulates the type and contents of the Management Plans that have to be produced previous to the correspondent tiling.
It is important to highlight that PRODEPINE has titled 17.000 hectares of the Forest Patrimony among afro-Ecuadorians and indigenous Chachi's communities. The Management Plans produced have been participatory . PRODEPINE has have the technical support of NGOs for the global titling accomplishment such as CARE, FEPP and FEPICOM.
The Project will not engage directly in activities related to the regularization of land tenure issues within the PAs. However emerging land issues will be dealt through the Ecuadorian Constitution. and the indigenous "collective rights" regulations. The 1998 Ecuadorian Constitution (Articles 83 through 85) defined indigenous and afro-Ecuadorian people, and recognizes the indigenous "collective rights"; the indigenous ancestral communitarian territories; the right for indigenous participation on the natural resources management; and finally, it supports the promotion of cultural practices on the biodiversity management and conservation. It also establishes that no further land titling will take place within the demarcated protected areas.
- 110- In addition, to the described legal framework, the recognition of ancestral indigenous territories will be enforced by the actions undertaken by the PRODEPINE project. As established in their Annual Operation Plan (2001), emphasis will be given to the regularization of property rights of indigenous nationalities in highly vulnerable situations.
Based on this legal framework, the Ministry of Environment has confirmed the principle of "parks with people" in all aspects of NPAS management. To guarantee the territorial integrity and biodiversity conservation in the NSPA, previous the declaration of any territory as a protected area where indigenous, afro-Ecuadorian, and local populations reside, the MAE will recognize and allocate communal rights to these lands through collective adjudication processes established by the 1998 Constitution.
The framework described above provides sufficient protection to traditional indigenous territories within Protected Areas. The preparation of management plans will clearly follow a bottom-up approach having as the main instance for discussion and decision-making the PMCs. This condition will ensure the integrity of indigenous peoples territories.
In the case that land tenure issues emerge during the preparation of Protected Areas Management Plans, the project will coordinate and establish synergies with other institutions and programs that are currently managing indigenous communities-related land tenure issues (such as CARE and PRODEPINE), to ensure the recognition of legitimate rights of indigenous peoples on traditional territories within Protected Areas.
Integration of indigenous peoples development needs and PA management plans PA management plans in the selected PA will recognize the existing local development plans and/or indigenous development plans as a key step towards the recognition, valorization and protection of cultural resources and ancestral knowledge of the local and indigenous populations.
In the formulation and/ or update of the PA management plans especial importance will be given to the integration of the priorities and demands established by the local and indigenous population through their development plans. Toward this end, the project will work in close coordination with PRODEPINE, who is sponsoring indigenous development plans throughout the country. The project will seek technical assistance agreements to ensure the integration of indigenous peoples' demands in PA management.
Currently, in the Cotacachi-Cayapas Reserve there is a local development plans which will be considered when the PA Management Plan will be updated: Plan de Desarrollo Local de la Union de Organizaciones Indigenas de la Cuenca Alta de Cotacachi UNORCAC.
Throughout the implementation of the PA Management plans the project will ensure the incorporation of indigenous and local populations' knowledge, as well as sponsor sustainable natural resource use and production systems compatible with biodiversity conservation and management.
The project will ensure to respect the local indigenous organization as well as their representation levels when establishing working agreements. It will seek coordination with both CODENPE, CONAIE and FENOCIN whenever necessary as these are entities with national legitimacy among the indigenous population. At all moments, the project will respect the communities decision-making processes and practices when establishing cooperation agreements. It will foster continuous consultation and
- 111 - socialization of the agreements and results through assemblies and ample community participation.
Budget The Ecuador National System of Protected Areas Project will include four components: (i) Institutional Strengthening and Legal Development; ii) Participatory Management of Priority Protected Areas; (iii) Sustainable Financing; and (iv) Project Monitoring and Evaluation. The budget for the implementation of the IPDF is embedded in the budget allocated to Component 2 that will include the preparation and implementation of the two Protected Areas Management Plans. The total amount allocated to this component is US $ 1.6 million.
Specific budget in each of the selected protected areas will be defined in detail once the Management Plans are completed and the priority activities to be implemented by indigenous communities and/or organizations are agreed upon. However, based on the preliminary Implementation Plan for the project's social strategy shown in Annex 12, it is estimated that 50% of the total cost of the strategy will be allocated to activities specifically with indigenous communities, this amount is about US $ 240,000.
Monitoring and Evaluation
The monitoring of the project's activities that will benefit specifically indigenous communities will be part of the overall monitoring and evaluation system described under Component 4. This monitoring will comprise the following aspects:
Baseline data. will obtained from the information already collected for the preparation of the Social Assessment. The baseline data shows the current status of the use of natural resources by indigenous communities within or nearby PAs and their current socio-economic situation. It will allow to identify the specific issues that could be addressed under management plans to benefit these communities while conserving biodiversity.
Indicators. the following indicators have been preliminarily identified to assess the benefits to indigenous communities and the overall implementation of the IPDF: a) number of local communities represented in the PMCs; b) number of co-management agreements signed between indigenous communities and the Ministry of the Environment; c) number and type of concessions for services implemented by indigenous communities; d) increase in the number of meetings held by indigenous peoples per year to discuss PAs management issues during the project implementation period; e) increase in practices to sustainably manage natural resources by indigenous communities within PAs; f) number of workshops held per year to share information on innovative practices to manage natural resources.
Monitoring arrangements: the above indicated indicators will be monitored twice a year through regular supervision missions and additionally through the two beneficiary assessments planned under the project.
- 112- Additional Annex 14: Lessons Learned from the GEF Ecuador Biodiversity Conservation project ECUADOR: National System of Protected Areas
The project was completed and closed on March 31, 2000. At that time 24 of the 35 planned activities had been fully or partially completed, and 11 had only been partially undertaken, these related mainly to the actions for the Galapagos National Park.
An independent evaluation of the Biodiversity Protection project was completed in August 1999, to assess the project results and impacts. The panel of evaluators was carefully chosen among experts in protected area management and biodiversity conservation in Latin America. The results of the evaluation can be found in a report published in September 1999 (available in project files).
Main Achievements
Institutional Strengthening .A significant effort was devoted to diagnosis the management and training needs of the Ecuadorian Institute of Forestry and Protected Areas (INEFAN) and its key staff responsible for protected areas management and biodiversity protection. Several operational manuals covering all aspects of managing the technical, financial and administrative systems, deemed applicable to managing biodiversity were produced. An extensive training program was also designed and conducted for about 200 staff on the use of these tools.
Strategic Studies. Four important strategic studies were completed. These covered development of a proposed policy for the management of the NSPA that benefited from the advice of several NGO, managers of protected areas and independent consultants; a proposed Strategic Plan for managing the NSPA which would increase reliance on decentralization/regional management and a mechanism to increase areas under protection; proposed revised policies for tourism in protected areas and a strategy for the sustainable use of biodiversity (wildlife); and a preliminary evaluation of the economic value of biodiversity as a basis for the justification of protection activities.
Management Plansfor ProtectedAreas. A technical unit was establish to coordinate the preparation of management plans. In addition to management provisions, each plan contained a set of projects aimed at increasing revenues to local communities, while promoting the sustainable use of biodiversity. Plans were concluded for the following parks/reserves: Machalilla, Sangay, Yasuni and Cayapas-Mataje. Partial support was provided for specific components of the Cayambe-Coca, Antisana and Galapagos Marine Reserve plans. As part of this process, a conflict resolution methodology was developed and applied as well.
Biodiversity Information Center. To support further interventions in the area of protection, and the public's need for information, a Biodiversity Infornation Center (BIC) was established with the main purpose of providing updated information about the situation of biodiversity in the country as one of the most important tools for decision making on actions addressed to its sustainable use and conservation. For this purpose, INEFAN signed agreements with several public and private research institutions, ensuring a transparent transference of biodiversity information. The development of cooperation relations between these research institutions an the government has very positive effects in terms of providing a strong basis for future coordination and support to the improved management of the NSPA.
- 113- Legal Regulatory Framework. A compilation of regulations for the administration of protected areas and biodiversity and specific mechanisms for applications was completed. Other specific regulations were developed and were specifically related to: a) operation of non-governmental organizations in protected areas, and ii) tourism operations in protected areas and grant of operating permits.
Outreach activities. Public awareness campaigns were considered as the most effective vehicle for mobilizing public support for biodiversity protection. A communication strategy to support biodiversity protection was completed and communication materials were produced.
Construction of visitors centers and equipments. As a tangible part of the building of local capacity and ownership of biodiversity protection, the project financed construction and remodeling of visitor and information centers in several protected areas. Surveillance, mobilization, computers and office equipment was provided to the eight protected areas covered by the project. This equipment facilitated the overall management of protected areas in a significant way.
Lessons Learned
Approach to Institutional Development. The project was implemented through the establishment of a Project Coordinating Unit (PCU) within INEFAN. Experience shows that such units become enclave operations. This was one of the main causes of poor ownership of the project by INEFAN and a lack of follow-up on the studies financed by the project.
Community Involvement. The involvement of communities in the planning and implementation of sustainable resource management and biodiversity protection was shown to be important for the harmonious development of strategic management plans for PAs. The willingness of local communities to undertake this exercise shows that they had positive expectations from the practice.
NGO Collaboration.The project also confirmed earlier lessons that the participation and collaboration between public authorities and the NGO and bilateral community was important for project for project implementation, but with some nuances. Representatives of leading local NGOs were involved in the preparation phase, form the discussions, consultations, joint review and agreement of proposals and of close cooperative efforts between Governmnent authorities and NGO's representatives. This cooperation continued during project execution, with the participation with NGOs in the implementation of key activities. However, the project failed to bring these interests into a structured consultative process, the "consultative committee" that would have been necessary at the central level. If this had been done, civil society might have had a more coherent voice that could have exerted influence at the policy and regulatory level in favor of the reforms that the project sought.
Flexibility and Execution. The project was acknowledged to be experimental in various aspects, including the application of concepts of community participation in the protection of individual NSPA sites, and the process of building implementation capacity within a legally constructed but non-functioning institution. The project specified numerous activities that it was committed to undertake so that its flexibility was limited to how this was implemented. Throughout the project, the question of not whether these or other activities would have been more effective in achieving the project's objectives was not addressed. In spite of repeated evidence that INEFAN was not developing as intended, no activity was dropped or modified, and no new activity was introduced that might have improved the project's efficacy. This experience illustrates that when the project is experimental in nature, and would demand flexibility in its implementation, the design should emphasize and be guided by anticipated results, not detailed components for action.
- 114- Monitoring and Evaluation. The project would have been strengthened if the monitoring and evaluation system had been functional before the project began, through such actions as conducting baseline surveys or pre-project assessments of INEFAN's performance. This would have focused attention on the project's expectations for results. As there were no explicit performance goals, the emphasis of the system was to monitor the implementation of the project's actions. While this was valuable for the purposes of project administration, it did not serve to flag shortcomings in achieving the institutional development outcomes that might otherwise have permitted the Bank and the recipient to adjust the project's design.
Strategic Vision of the NSPA. The experience of this project illustrated the weaknesses in implementation that may arise when concrete priorities for biodiversity protection, the ultimate purpose of the project, are not outlines ex ante. Without a unifying vision of the NSPA as an ensemble, there was not an efficient way for assessing the efficacy of the project's disperse actions. Instead, the project focused on setting necessary conditions among which it is more difficult to establish explicit priorities. Under these conditions, accountability for results was hard to assign.
Financial Sustainability. The first project assessed potential financial mechanisms for covering PA recurrent costs. This project will specifically address financial sustainability in three target PAs by a) developing and implementing innovative financial mechanisms and new participatory management models for 3 PAs that would generate significant profits, from ecotourism and payment for ecosystem services, and would be re-invested in the protected areas; and b) capitalize the Protected Areas Trust Fund to ensure a regular flow of funding to cover recurrent costs of six other priority protected. A Trust Fund Board has been established and operational manual prepared. The first project financed the remodeling and construction of visitors centers and provided equipment, however it failed to implement a financing strategy to cover basic recurrent costs of the eight PAs it supported, to ensure the long-term operation and maintenance of such goods and infrastructure and the basic operation of the PAs. This project, through the establishment of the Protected Areas Fund, will secure the financing of recurrent cost of at least 9 PAs and by means of its capitalization, will progressively cover additional PAs.
- 115 - Additional Annex 15: Environmental Framework ECUADOR: National System of Protected Areas
Introduction
The proposed GEF supported National System of Protected Areas in Ecuador Program aims at strengthening the NSPA through improving the legal, institutional and financial foundations and capacities for the integrated, participatory management of PAs. The project components are not expected to have any significant negative impacts on the environment. Field construction carried out by PAs staff are small scale, involving the construction of offices, campsites, visitor services, housing for the park rangers and maintenance of tourist trails. Once concessions of services such as tourism take place, there may be impacts from the construction of ecotourism lodges, improvement of access roads and interpretation trails. Natural resources management activities (e.g. agro-ecological production, sustainable harvesting of non-timber products such as medicinal plants activities) are not expected to have any significant impacts, since they will be developed to recover degraded areas and to ensure native forest conservation.
Although the construction of small infrastructure will not cause major impacts, it is desirable to follow basic procedures to measure such impacts and implement mitigation measures and it will require careful planning and zoning.
Potential Environmental Impacts
Small Infrastructure
Specific civil works will be undertaken in the PAs to build management offices, main and support campsites to set up surveillance, housing for rangers, tourist lodging. Most of them involve small constructions and basic infrastructure, and will be usually located in the buffer zones of the protected areas.
Natural vegetation is one of the most sensitive elements affected by building and infrastructure works. The existing vegetation has to be cut down and rooted out in the construction sites. However this will have a limited impact in the Protected Areas, because of the small scale of the proposed infrastructure.
Road and Trail Maintenance
The repair of existing access roads and trails could lead to limited deforestation of the natural vegetation and might also potentially affect wildlife.
Ecotourism
The impacts of ecotourism in Protected Areas could be significant, if uncontrolled. These activities target the most beautiful landscapes, which normally also happen to be the most vulnerable sites from an environmental standpoint. This affects areas of high natural and visual value due to footsteps and stomping, all-terrain vehicle tracks, defacing of sites and monuments, illegal removal of plants and wildlife, materials and artifacts, and crowding. The construction of facilities for visitors in Protected Areas can attract investment in tourism and camping infrastructures, thus increasing the level of economic activity and its consequent impacts in the surrounding buffer zones.
- 116- Environmental Procedures
Zoning of Management Plans
The environmental impacts described above, should be addressed through the zoning established in Protected Areas Management Plans. In the case of the Machalilla National Park, the Management Plan includes zoning maps with a clear identification of sites where small infrastructure could be constructed. The existing infrastructure such as the visitor center and the administration office have been constructed in state-owned land located at the buffer zone of the Park, thus, there has been no direct affectation to private owners or local communities. New infrastructure will be developed carefully observing the sites identified in the Management Plan and if new sites are to be identified, the site selection criteria described below will be followed.
In the case of the Cotacachi-Cayapas Ecological Reserve, a new Management Plan will be developed under this project. Following a participatory methodology for the preparation of the management plan, the zoning of the Protected Area will also be subject to consultation with stakeholders and the sites identified for small infrastructure will be geographically described and mapped.
Site Selection Criteria
Will include the following steps:
Consultation with local stakeholders. will be part of the overall participatory methodology applied for the preparation of management plans.
Environmental Screening. The sites identified for the construction of small infrastructure will be screened for the following aspects: a) Encroachment or reduction of natural vegetation; b) Potentially unacceptable nuisances such as dust, solid and liquid wastes, construction machinery; and c) Potential issues related to natural hazards such as floods or instability.
As far as possible, selected sites should provide opportunities for environmental enhancement and the promotion of environmentally sustainable technologies and concepts. The architectural designs should incorporate and reinforce the criteria of environmentally friendly buildings. The feasibility of incorporating these aspects into the design should be analyzed during the architectural end engineering designs.
Identhfication of Impacts and Mitigation Measures: In order to significantly reduce adverse environmental impacts, the most feasible and cost-effective measures will be proposed. This will allow to: i) identify all anticipated significant adverse impacts; and ii) describe and develop technical details of each mitigation measure, including an estimation of potential impacts of these measures.
Environmental Rules for Contractors Environmental rules will be incorporated in the bidding documents or contracts and will cover the following aspects:
a) the maintenance of systems of collection and disposal of solid and liquid wastes; including recycling systems and the classification of materials;
- 117- b) materials procurement guidelines to avoid environmentally hazardous materials of the collection of construction materials from sensitive areas; and c) prohibition of hunting, fishing, animal capture, plant collection or burning of vegetation.
Institutional Arrangements
The Directorate of Environmental Control (DEC) in coordination with the DBPA will be responsible for screening, approving and monitoring small infrastructure construction in the PAs, according to the following procedures: a) the DBPA and staff of the two protected areas were construction of infrastructure will take place will first identify and must establish the infrastructure needs for each protected area (housing, interpretation centers, roads, etc.), following the Management Plan. Then, together they will define the priorities for construction, and evaluate the budget available for the planned infrastructure works. b) the alternative locations (at least two) for the infrastructure construction, evaluated on their technical and financial merits will be submitted to the consideration of the DBPA authorities and to the DEC at the Ministry of the Environment for final approval. c) the DBPA jointly with the DEC will supervise compliance with environmental procedures. They will approve the studies done within the environmental analysis framework and supervise the implementation of the mitigation measures agreed upon.
- 118 - Additional Annex 16: Project Institutional Framework ECUADOR: National System of Protected Areas
Introduction
In order to promote the conservation and sustainable use of Ecuador's biodiversity, the Ministry of Environment has undertaken an institutional reform. This institutional re-organization effectively began with the integration of INEFAN with the Ministry in 1999. To achieve a greater degree of efficiency in NPAS administration, the Ministry established the Biodiversity and Protected Areas Directorate to replace the Natural Areas and Wildlife Directorate (NAWD) as the entity charged with formulating and applying the state policies on the matters relating to biodiversity and in-situ conservation. Changes have also occurred in the policy and regulatory framework since the integration of INEFAN and the MAE.
Towards a new model of administration
The organic structure of the MAE is the result of a technical and administrative analysis oriented to achieve a higher degree of administrative efficiency. MAE's organic structure was approved through Official Register No. 354 of June 12, 2001.
The Directorate of Biodiversity and Protected Areas (DBAP), the project's executing unit, is located under the Subsecretariat of Natural Capital. DBAP is responsible for the administration of the NSPA, the sustainable use of biodiversity, the regulation of the access to genetic resources and the rehabilitation of fragile ecosystems. To carry out these duties, the following operational units have been established: protected areas; wildlife and fragile ecosystems; biosecurity and access to genetic resources.
At the field level, the MAE has established 10 regional districts to carry out the decentralization processes at the provincial level. Each regional district ccomprises one to three provinces and are leaded by a Regional Director. Each district is a financially decentralized unit, capable of mananging their own budget allocated through operational plans.
The PAs administrative units report to the corresponding Regional Director. This structure has ensured the integrity of PAs that face territorial segregation supported by political interests at the provincial level.
A clear definition of the institutional structure provides great opportunities for medium-term institutional development. With these opportunities in mind, this project will support the continuation of the policy and legal reform process undertaken by the Ministry. This will be accomplished through the definition of a clear and efficient regulatory framework for the administration and management of the NPAS and its biodiversity. Support in the transformation of the regulations will not only be developed at the macro level, but also at a local and regional level. The institutional arrangements for the implementation of the project are illustrated in Figure 1.
-119- Figure 1-Project Implementation Arrangements
MINISTER OF GEF GLOBAL ENVIRONMENTAL FACILITY |NVIRONMTENTorrPA PROTECTED AREA ENVIRtONMENT rPc PARTICIPATORY MANAGEMENT COMMITTEES TAG TECHNICAL ADVISORY GROUPS
WORLD UANK (GEF)
INTERNATIONAL AffIS AREA
PONDO A-DlUtTAL KACIONAL (AN) TRUST FUND UND CCGIA l OF NATURA^L CAPITAL\
, ~~L~ L\
INTERNATIONAL PROJEC AANAUEINT UNIT
PROJECT FINACIAL ANAMENT AND PROCUREMENT
/ ODIV UMITYAND1/0- PROTECMD AR/E"
- 120 - Additional Annex 17: Letter of Sector Policy ECUADOR: National System of Protected Areas
Minitterlk del amblente
OFicio No. 265 l.)MA1: - MAL Qulito. 26 de febr;:ro de 2002
SFiciora ISABEL GUERIRERO l)irceliora lReglional 13olivia, Ecua0dor y Per( l3ancio Mundlial l'rcsentc.-
EJ- MiniStcrit) deI Amnhiante esit4aclivainente comprornetido en la foromilaci4n y pucsta et unarLhlia de politit as para la- conseoariCai6n del ainbiente y cl uso.su.stentable de los recursos nalurales, coano pilares fundamentales para ahkanzar el idesarrollo susientAble del Ecuador. 1l desarrllo sin Ia1 conservaeitSn Cs iin proceso cque agudiza ei detwrioro del amnbientc, la destruct;Mn de los bosques y in degradaci.in de la biodiversid1ad:. La coniservaei6n sloi el (lesarroilo cs simplemente tin discursto que, de hacerse realidad, wondenaria a la miseiia awmiles-dc ecuialorianos cquc viven en el umbral tie la pobreza c.itica.
In este senti.4ob In pobreza no podrd ser superada si nl ml:ia uiia pliticaalternativa de investigae,i, ahorro y p;idtiCti6rfn de CxcedentqSe ci el inarco .de desarriollo suste ntable. Eslo demaniinda, e un cOntexto tie globalizaci6n .cleraida, ! sufrciet-e sensibilidad y destreza de ser ooinpetititos y, si no lo .solnos, esforzarnos poKr serko. Es por ello que para no itifluir n&gativaiimitc en !I lucha conira la pobreza. ia politica ainbieital de protecci6n .y conservacidn del capital natural tionar4 sieimpre en consideraci6n a Ia poblai0i6i. cuya subsistencia de,pendo e1 dichus r leursos. El- Ecuadori- ratitic6 el ('1nvenlo de lDiversidad Biologica en dicietrbre de 1993. Cuniplietido coni esle Amflmnuiiiciial campronisto adquii ido, el Minisurio dcil Ambiente se enn.,uentra implementando esta COnvenci6ai a nivel nacional. Pi cunliliphlientoi de las obliga6mioncs dei- Convcnio se findamea'ta en dols speotos esenciales: cl priinreo eS el entend iimiento) de qute el Ecuatior ha sido caIalhogadora p'r la ecihiuniWadl cienlilka naional C interna Cional; etniO UnoiX Je los paiNes -megadivcrs*s y ostiuiye el Intis biodiverso dcl *nndoe si Se relaciona el nmimero de especies de Vertebrados por cada I.000 kii2. Ser un pals Aiwo ent biodiversidad si niiica que elei ci'adr.cuen1ia con las imlhs varkidits fbrmnas de AVida expresadas en su onora, fauna y microorganisinos, eii sit diversidad gendt5ica, y el unna significativa variedad de ecosisteilass q4te se formia graucias a las partictilares y bnic.as !c(onJicianos geogrclicas de ubicaci6t, relieve y clina.
El segij-kdo aspetowesenciai se basai en cl recornocimiento de quiie 1a kiodiversidad constittnye tin r - 121 - mtni;terlo dlel ambienIte pb. da § ^ exportaciones y la seguridad alimnentaria. Asi 'nismo, considero que es posible ainpliar y diversificar estas oportunidades, particularmente generando uiuevos niercados; comro el de los recursos gendticos y oLtros p(Juctos provenientes de la vida silvestre, el de los ervicios ainbientaless o prornoviendo el lurismo responsable orientado prinicipalmente hacia la nlaturaleza. I.as accionies de conservaci6n y uso susten1able de recursos naturales no podrAn establecerse si no se garantizan los derechos individuales y colectivos de todos los ciudadanos y ciudadanas del pais, especialisuente de cornunnidades locales, indigenas y afroecuatorianos. Es tlrea fundamental de esta Cartera de Estado el impulsar la participaci6n de amplios sectores sociales en Ia toma de decisionies, ett cl manejo de sits territorios y la biodiversidad alli existente, promnover la distribucion justa y equitativa de los beneficios derivados y el acceso a los recursos potr parte de las generaciones vexiieras. Conisideranido eslas prenmisas. el Ecuador lia desarrollado su Pollikicer v- Esfrategit I niional de lilodiversidtral 200 1-201 0, la cual responde a un proe so social participaltivo de generaci6n de frlilicas de largo plazo. que considera y prioriza las necesidades del paks, que coniempla esirechos viniculos con otras politicas del Estado y que hace viable el establecimiento de alianzas csirat4gicas con diversos sectores. Entre los procesos priorizados en la Estrategia se mehcionan: el flrlalecirniento de la autoridad ambiental como entidad responsable de diseniar y promover la Estrategia y facililar la arliculacifn de los sectores p6blico y privado; la discusi6n y aprobaci6n de la pro>puesla de LLey de Biodiversidad, preparada dentro del zmareo de la Estrategia. y que. conjuntainellte coni la propuesta de Ley Forestal, proporcionaria el marco legal adecuado para la eonservaci6n y el uso sustenitable.de recursos naturales en el pais. Un ejeinplo concreto de esta articulaci&n eon el sector privado es el establecimiento del lFondo Ambiental Nacional, como una entidad aut6nomna e independientc para la consecuci6n de fondos para la gesti6n ambiental en el Ecuador. tIn proceso fundarnental en la Estrategia es la consolidaci6n de actividades de conservaci n in situ, especialmente del Sisceina Nacional de Areas Prolegidas (SNAIP) del L uador, t11 SNAP esta' conformado actualmenle por 27 ireas de diversas categorias de manejo, quse cisbren aprpxirnadamente el I B %Ode la superftcie dcl pais. Eista consolidaci6O esti cntitcada hacia Ia sustentabilidad social, frnsan,ciera e imstilucional del SNAP. Adiionalmnenite. es rarea a mediano plazo, disminuir la depenedeticia del SNAP de fondfos de cooperaci6n externos, isnptiementazLldo mecanismnos financieras comtio: la capitalizaci6n de fondos fididciarios, la administracion privada de esius fI?nd0s, el desarrollo de canjes de deuda por conservaci6n de Areas protegidas, Ia creaci6n de recursos exlra presupuestarios para las Areas por cobros de entradas. ofirta de servicios, principalmente turisticos, y bienes ambientales, entre ios zins significativos. - 122- *ntnistcrio del ambiente A.pC^a1 Ecu.~ En este senttdo elCi dobierno del l'cuador representado por el Ministerlo del Ambiente, considera prioriiaria la ej euci&n del P1royecto 'Sistema Nacional de Areas Proicgidas del Ecuadoer". Este Proyecto pernitira principalmente. en un periodo de tres ailos y medi* IR eonsolidaci6n, &cl Sistema Nacional de Areas Prolegidas y. Ia materializaci6n de las politicas y estrategias que han sido desarrolladas por el ECtiadOr en esta materia. tISspeciflcarente el pro?yceto apoyaritt el fo6alecimiehto 'de la capacidad de gesti6n 4e la Direcci6n de Biodiversidad y Areas Protegidas, encargada de. la supcrvisi6n del Proyecto; Ia consolidaci6n del manejo participativo de dois de las mnh%s importantes 4reas del pais; la capitalizaci6n del Fondo dle Areas Protegidas (l-AP) comro mecanismo efectivo para la cobertura de co'stos recurrentes de ireas protegidas dcl SNAP; ia creacien de recursos financieros provenientes de cobros de eiitradas, s6rvicios turisticos y bienes aibnientales que fortalezsan el fifianciamriiento del SNAP y el imptlso a li gesti6n descentralizada del SNAP. A este respecto. eii representaci6n del Cobierno Nacional, nos c mprornetemnos a cohtinuar con el financiamiento de los vostis administr&tivo-, del Sistema Nacioral de Areas Protegidas y a aportar con rceursos.de contrapartida efecliva por un total de US $ 740,000 adicioniales, de los cuales UES $ 100.000)ya se encuentran asignados en el presupuesto del Ministerto del Ambiente para el atlo fiscal 2002. Estos fondos serin asignadeos par lalaJejuCi6n del proyeblo de Ia sieuicnte manera: Aflo 2002: US $ 100,000; Aflo 2003: US $.340,000;, afo 2004: US $ 150,000; aflo 2005: US $ 150,000. Fn el niarco del Proyecto, el Ciobierno del &eua1dor contribuy6 con U1S $ 1,o006.000 en bonos del E:stado para la capitalizaci6n inicial del FAP, Nuestro compromiso es el de conitintar decididamente apoyando al Fondo Ambiontal Nacional .como entidad ejeciutante, aut6noma e independiente, para la c6pitalizaciOn del FAI. de acuerdo a los escenarios plarifticados para tal efec;to. Por todas las razones anteriormente indicadas, el Ministerio del Ambiente reconoce el apoyo del Banco Mundial y del GEF en Ia consecuci6rn de los objetivos estrategicos del pals eni el campo ambiental y raiiflca ss compropnetimiehto formal con el desarrollo del Plryecto "Sistema Nacional de Areas Protegidas del Ecuador". Atenltarnente. LRA4 Minisara del Ambienib - 123 - Additional Annex 18: Process Framework for mitigating Potential Livelihood Impacts ECUADOR: National System of Protected Areas Summary. The project National System of Protected Areas seeks to consolidate and improve conservation efforts in two priority protected areas. The activities supported by the project for the conservation of biodiversity and tropical forests involve the empowerment of main stakeholders throughout local participation on environmental management and strengthening the natioanal capacity for establishing process of sustainable development. Teh main goals of this project are to support new institutional arrangements and the administration through capacity building on financial and administrative management; to develop institutional arrangements to enable participatory management; to introduce financing mechanisms to help ensure sustainability; and to establish a Protected Areas Trust Fund to cover recurrent costs of the National System of Protected Areas. No Physical Displacement. No involuntary physical displacement or relocation of people would be required to successfully implement NSPA, and none will take place as part of the project implementation. This is consistent with the government practice on Protected Areas management. Potential Impacts on Livelihoods. The possibility remains that in order to consolidate and renew protected areas management some NSPA activities might affect the current livelihoods of people living within the PAs, or in their buffers zones. This Process Framework delineates the criteria and measures which NSPA will follow in such cases to ensure that the entitled, affected persons are assisted to restore, replace or improve their livelihood in a approach which maintains the environmental sustainability of the Protected Areas. In all such cases, the NSPA will assure that the peoples' livelihoods will be consistent with the World Bank Safeguard Policies on Involuntary Resettlements ( OD.4.30), Indigenous Peoples (OD 4.20) and Natural Habitats ( OP 4.40) and also the Ecuadorian Law. Indigenous Territories and protected Areas. Component 2 of the project will promote the participatory management according to the specific social and political conditions of each protected area. The Project will address all indigenous issues in accordance with the World Bank's Safeguard Policy on Indigenous Peoples ( OD 4.20) as well as with the Ecuadorian Law. The project will seek to develop a constructive relation with the local indigenous communities living in the selected protected areas. The preparation and/ or update of the PA management plans will give especial importance to the integration of the priorities and demands established by the local and indigenous population through their development plans. More details are provided in Annex 13: Indigenous Peoples Development Framework. Impact Scenarios consideredRuled Out. Based on the social assessments' findings conducted during the project preparation, the implementation of NSPA could materially affect the existing livelihoods of non-indigenous (such as colonists) Ecuadorians (such as colonists), which live within the boundaries of protected areas and that use their natural resources. This Framework process focuses primarily on explaining how the project would address the livelihood issues of non-indigenous people living within PAs or in the protected areas buffer zones. Other livelihood related issues were addressed during the project preparation and established as non-relevant for the case of the project's Process Framework. These ruled-out scenarios include: a. Small and medium size agricultural activities adjacent to or nearby the protected areas could affect the sustainable management of the protected areas in the long run. The NSPA project design includes a number of activities that will foster participation and benefits to local communities on through the management of sustainable plans???, according to the each context. However the NSPA would not impose involuntary restrictions on land uses outside the protected areas; - 124 - b. The project will work with cooperatives of livelihood fisheries in Machalilla National Park; the intervention of NSPA will underline the principle of strengthening self-sustained management; c. The project will support pilot concessions for services that could improve the incomes of local communities. Training and technical support will be provided to local committees and community members for capacity building on resources management and follow- up pilot activities. All these activities will be monitored to permit an objective assessment of its usefulness. Non-indigenous people within Protected Areas. The procedures below will apply to non-indigenous people who have occupied PAs land. The NSPA will support participatory mechanisms: the Participatory Management Committee (PMCs) and Technical Support Groups to enhance the communication and coordination among local stakeholders. This mechanism will provide the project information concerning to support or deny non- indigenous occupants regarding livelihood issues?????. When and the pertinent thematicissuesconsidered they will be part of the consensual. Management Plans. During the preparation of the Management Plans, the PMCs' members will discuss and define the eligibility to receive project-funded, livelihood-related benefits. Procedure for Consolidation of Protected Areas. The Management Plans will include all the pertinent information related to the local livelihood issues of the non-indigenous people. ????. Once the Management Plans are adequately completed and agreed among stakeholders they would not be reviewed during the project implementation. The following are the main steps identified: a. Active participation of different stakeholders directly and indirectly involved in the NSPA will be sought. b. The Participatory Management Committees MCs??? will become focal points where participatory process will be developed. c. All primary beneficiaries will have the opportunity the become part of the PMCs. Primary beneficiaries will. be those directly responsible for the implementation of selected activities within the framework of Management Plans. They will be initially identified through the preparation of the MPs and will be selected once the programs/activities to be implemented are agreed upon. d. Management Plans will be implemented, in the case of Machalchilla National Park, and designed and implemented in the case of Cotacachi- Cayapas) during the first year based upon ecological and socio-economic assessments of the protected areas and the buffer zones. The participatory Management Plans will include: i) conservation and management objectives of the protected areas; ii)co-management arrangements; iii) procedure for negotiating any future participatory co-management agreements; iv) the rules concerning the natural resources use and restricted activities on identified zones; v) other pertinent information. e. The co-management arrangements will depend upon the local circumstances and framework of the project NSPA activities in each PA, it will include: i) definition of the pilot activities; and ii) technical assistance or other to eligible people pursuing alternative livelihoods which do not damage the protected areas. -125 - Conflict Resolution Mechanisms. An assessment of existing and potential conflicts related to the use of natural resources within or nearby the selected protected areas will be carried out prior the preparation of Management Plans. This evaluation will allow the design of mechanisms for resolving the identified conflicts, which will be discussed and defined under by the PMCs. The early establishment of the Participatory Management Committees will foster a systematic discussion related to the use of natural resources at an early stage of project implementation. These PMCs will serve as spaces for the development of coalitions and social alliances for protected areas conservation and will work in the establishment of a shared vision in regards to the protected area. This vision will be elaborated through an ample local dialogue that should result in participatory and equitable strategies. As a result of this process, the Management Plans will be implemented under the principle that the conservation and sustainable use of natural resources within or nearby Protected Areas is a joint effort between the Ministry of Environment (MAE) and the local communities as important and strategic partners. Implementation responsibilities. Depending on the specific tasks, the government responsibilities outlined above will be carried out either by NSPA staff or consultants, and the National Environmental Fund (FAN) in partnership with the MAE.. The environmental studies for small works in protected areas will be contracted and supervised by the MAE. The technical assistance for alternative livelihoods will be provided by consultants or NGOs appointed by the MAE, and/or supported by specialized government agencies in close coordination with MAE.. Monitoring and Evaluation . NSPA would monitor de progress of the specific steps noted above in the selected protected areas. The National Environmental Fund (FAN) will carefully review the progress achieved, in consultation with the MAE and the World Bank, and will make any appropriate adjustments during the Mid-term evaluation. The World Bank has also indicated its intention to monitor closely the livelihood-related and other social aspects of NSPA; it is anticipated that both environmental and social specialists from the World Bank will make at least two supervision visits per year. Two beneficiary assessments will be undertaken, at mid-term and at the end of project implementation. In addition, "ad-hoc" interviews will be conducted with local leaders during supervision missions. More specifically, the social monitoring will include two key aspects to be measured during the period of implementation of the project: a. Significant (beneficial or adverse) project-related impacts on local livelihoods. This information will be directly provided by representatives of local communities to the PMCs; b. Outcomes of livelihood-related measures agreed during the preparation of Management Plans and reflected in co-management agreements. - 126- GALAPAGOS ISLANDS 90E A ARCHIPIELAGO ISLAPINTA ECUADOR DECOLON SIAAMENARC5EA NATTONAL SYSTEM OF PROTECTED AREAS . PROTECTEDAREAS (SEE LIST) 4 AIRPORTS iSLA ISA SAN SALVADOR FERNANDINA - PORTS .SLASANTA CRUZ PAVED ROADS RIVERS ISLALSLA SAN OTHERALL-WEATHER ROADS PROVINCEBOUNDARIES o ,leU - RAILROADS INTERNATIONAL BOUNDARIES 50 5- 75 _10 SI1ASANTA MARiA KILO.ETERtS - SLA 91 9W0 ESFASO0LA 81- S0 ZR' 78° 77' 76' ScnLorctS'oL y Th'v5 r-". ESMERAIDAS - '¢ 4 , /\2,.o . a 9, / +, ~~~~~C OL OM B I A ESMERALDAS- - ate>_ -- J IEAERA ( i*0 I.- B.,1'~~~~~~~~~~ ro de C.,,5p.intoy bCrr ucoerlo>.1t oslrnA~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~A S , / 2~~~ 2-~~fi- -g>,J ~t 2'~~~~~~~~~~~70~~~ ~~~ A Y1 S *A P_ coU$E; R RI~~ ~ ~ ~ ~ ~ P R s~~~~~~~~~~~~~~~~~~~~~~~ A'N^SIA G "" 76W PROTECTED AREAS: 1 Porquc Naciono. Coias SAN" CLARA~~~~~~~~~~~~~~~~~~~~ ~2.Parque Nacioncl Cotapaxi 3.Parque Nacionol Galapagos iERLI uiAs m q > ) ^ 5 % A4.Parque Nacionoi Llon9anotes 5.Parque Nocioncl Macholillo R ~~~~~~~~~~~~~~~~~~~~6.P'nrqueNacional Poclacarpus 7.F que Nacionol Songay 8 ;-rque Nacionol Sumaco 9.Parque Nacional Yasuni 10. Reservc Slologica Marina de Galapagos J 11. Reservo Ecologica Arenillas G $ (p 2ercocb,ga Q r2AMORAX 12. Reserva Ecologica Antisana A ~~~~~~~~~~~~~~~~~~13.Reservo Ecologico el Angel C / f' / ~~~~~~~~ lo j / -- Jf u ~~~~~~~~~25 50 7~5 100 1 4. Reserva Ecologica Cayambe Coca in.KILOh4ETERS 1 5 .Reserva Ecologica Manglares Cayapas Mtaaje 16. Reserva Ecologica Cofkin Bermejo 17. Reserva Ecologica Catachcii Cayapas 18. Reserva Ecologica Los Illinizas Thi;smop wsproducedby the 19. Reserva Ecologica Macihe Chindul TMp Dess-9 C9Stf The WorIddon- 20 Reserva Ecoaogico Macglares Churute Tire borndor;es,retors denoerearioos 21 Reserva Biologica Limoncoclra S end -ryorhar in-r.•- sho-en Geabotonica PuJulohua -5. P E R U th.sT mop do r-timply, n port f -- 22. Reserva hn World RookGroup, nyjudgm-nt 23. Reserva Founistica Cuyabeno on tIre Igolstosus of ooy I-rrirwyor 24. Reserva Founisfica Chimborazo onye doroe-erortecpont-ce of 25. Refugio de Vida Silvestre Posochoo s uchIouod,eris. 26. Area Nocional de Recreacion el Boliche r 27. Refugia de Vida Silestre lsla Santo Clara RI' ~~~~~~~~~~85' 79e- 28. Parque Binacional el Condor A