Document of The World Bank

Report No: 17333-IND Public Disclosure Authorized

PROJECT APPRAISAL DOCUMENT

ON A

PROPOSED LOAN

IN THE AMOUNT OF US$6.9 MILLION

AND A Public Disclosure Authorized GRANT FROM THE

GLOBAL ENVIRONMENT FACILITY TRUST FUND

IN THE AMOUNT OF SDR 3.1 MILLION (US$4.1 MILLION EQUIVALENT)

TO THE

REPUBLIC OF INDONESIA

Public Disclosure Authorized FOR A

CORAL REEF REHABILITATION AND MANAGEMENT PROJECT

IN SUPPORT OF THE FIRST PHASE OF THE

CORAL REEF REHABILITATION AND MANAGEMENT PROGRAM

MARCH 4, 1998 Public Disclosure Authorized

Rural Development and Natural Resources Sector Unit Indonesia Country Management Unit East Asia and Pacific Region CURRENCYEQUIVALENTS

(As of February13, 1998)

CurrencyUnit = IndonesianRupiah Rp. 1.0 = US$0.0002 US$1 = Rp. 5,000

FISCALYEAR

Governmentof Indonesia: April 1-hlarch31 IBRD: July 1-June30

TO THE MEMORY OF DR. THAMRIN NURDIN

Vice President:Jean-Michel Severino, EAP CountryDirector: Dennis de Tray, E-ACIF Sector Manager:Geoffrey Fox, EASRD Task Team Leader: Sofia Bettencourt,EASRD KEYABBREVIATIONS AND ACRONYMS

Adat Traditionalorganization or practice IUCN WorldConservation Union ADB AsianDevelopment Bank JICA JapanIntemational Cooperation Agency AIG AltemativeIncome Generation KAMLA EnforcementAuthorities, including Navy AMDAL Environment.Impact Assessment Procedure andPolice KEHATI IndonesiaBiodiversity Foundation AMSAT AustralianMarine Science Consortium KepMen MinisterialDecree ANDAL EnvironmentalAssessment KOMDA ProvincialAMDAL Commission APL AdaptableProgram Loan Latupati MalukuTraditional Inter-village Council AusAID AustralianAgency for International LH Ministryof Environment Development LCC LiveCoral Cover BAPPEDATk. I ProvincialDevelopment Planning Agency LIPI IndonesianInstitute of Sciences BAPEDAL EnvironmentalImpact Management Agency LKMD VillageDevelopment Council BAPPEDALDA ProvincialPollution Control Agency LSM LocalNon-Govemmental Organization BAPPENAS NationalDevelopment Planning Agency MMTI MarineMarket Transformation Initiative Bendaharawan Treasurer MOF/KPKN Ministryof Finance/DirectorateGeneral BPKP CentralAudit Bureau MOU of Budget Memorandumof Understanding Bupati DistrictRegent MPA MarineProtected Area CAS CountryAssistance Strategy MSY MaximumSustainable Yield CBM CommunityBased Management NGO Non-GovemmentalOrganization CD-IRom CompactDisk Software NPV NetPresent Value CMI CoralMortality Index PCD ProjectConcept Document COREMAP CoralReef Rehabilitation and Management PerDa PerhaturanDaerah (Provincial Regulation) Program PHPA DirectorateGeneral of ForestProtection andConservation COREMAPI COREMAPFirst Phase (Initiation) Pimpro PimpinanProyek (Project Manager) COREMAP11 COREMAPSecond Phase (Acceleration) PIP ProjectImplementation Plan COREMAPIll COREMAPThird Phase (Institutionalization) PMO ProjectManagement Office CRITC CoralReef Information and Training Center PR PublicRelations (Firm) CRMS CoralReef Monitoring System PRA ParticipatoryRural Appraisal DG Budget DirectorateGeneral of Budget POKMAS VillageGroups DGF DirectorateGeneral of Fisheries QBS Quality-BasedSelection DinasPerikanan ProvincialFisheries Agency QCBS Qualityand Cost-Based Selection DIP DevelopmentBudget Allocation Repelita FiveYear (National) Development Plan DKN NationalMarine Council S&E Surveillanceand Enforcement System ERR EconomicRate of Retum Sarlita SectoralDevelopment Plan FRR FinancialRate of Return Sasi MalukuTraditional Management Practices(Closures) GAAP GenerallyAccepted Accounting Principles SBKSDA Bureaufor ForestProtection and Conservation GEF GlobalEnvironment Facility SDR SpecialDrawing Rights GRT VesselGross Tons SK SuratKeputusan (Decree) GOI Govemmentof Indonesia SOE Statementof Expenditure IBRD IntemationalBank for Reconstructionand SPABP/lnpresGrant from Central to RegionalGovemments Development TA TechnicalAssistance InpresPengendalian Specific Environmental Block Grant from the TBR TakaBone Rate National Park DarnpakLingkungan Nationalto RegionalGovemments TVRI IndonesianNational Television Channel HF HighFrequency (Radio) UNDP UnitedNations Development Program ICE IntemationalCompetitive Bidding US$M MillionUnited States Dollars ICR ImplementationCompletion Report UYHD GOI'sForce Account Payment System ICZM IntegratedCoastal Zone Management VHF VeryHigh Frequency (Radio) I

I Indonesia Indonesia: Coral Reef Rehabilitationand ManagementProject

CONTENTS Page

A. F'rogramand ProjectDevelopment Objective 2 1. Programdevelopment objective and key performanceindicators 2 2. Projectdevelopment objective, global objective, and key performance indicators 3

B. S;trategicContext 3 1. Sector-relatedCAS goal and GEF Operational Program supported by the program 3 1.a Sector-relatedCountry Assistance Strategy (CAS) goal supportedby the program 3 1.b GEF OperationalStrategy/program objective addressed by the program 3 2. Main sector issuesand Governmentstrategy 4 3. Sector issuesto be addressedby the programand strategicchoices 4 C. Programand ProjectDescription Summary 5 1. Programand ProjectDescription Summary 5 1.a The IndonesiaCoral Reef Rehabilitationand ManagementProgram 5 1.b The Coral Reef Rehabilitationand ManagementProject - ProjectComponents 7 2. Key policyand institutionalreforms supported by the project 7 3. Benefitsand targetpopulation 8 4. Institutionaland implementationarrangements 8 D. ProjectRationale 10 1. Projectalternatives considered and reasonsfor rejection 10 2. Major relatedprojects financed by the Bank,GEF, and otherdevelopment agencies 11 3. Lessons learnedand reflectedin projectdesign 11 4. Indicationsof borrowercommitment and ownership 12 5. Valueadded of Bankand Global supportin this project 12 E. SummaryProject Analysis 13 1. Economic 13 1.a EconomicAnalysis 13 1.b IncrementalCosts 13 2. Financial 14 3. Technical 14 4. Institutional 15 5. Social 15 6. EnvironmentalAssessment 16 7. ParticipatoryApproach 17 F. Sustainabilityand Risks 17 1. Sustainability 17 2. Critical risks 18 3. Possiblecontroversial aspects 18 Indonesia Indonesia: Coral Reef Rehabilitationand ManagementProject

CONTENTS Page

G. MainLoan Conditions 19 1. BoardConditions 19 2. DisbursementConditions 19 3. OtherConditions Agreed at Negotiations 19 H. Readinessfor Implementation 20 1. Compliancewith BankPolicies 20 ANNEXES Annex1. Programand Project Design Summary 21 Annex2. DetailedProject Description 25 Annex3. EstimatedProject Costs 37 Annex4 EconomicAnalysis Annex4.1 Cost-BenefitAnalysis Summary 38 Annex4.2 IncrementalCost Analysis 44 Annex5. FinancialSummary 49 Annex6. Procurement,Disbursement and Financial Management Arrangements 52 TableA. ProjectCosts by ProcurementArrangements 57 TableAl. ServiceSelecbon Arrangements 58 TableB. Thresholdsfor Procurement Methods and Prior Review 59 TableC. Allocationof Loanand Grant Proceeds 60 Annex7. ProjectProcessing Budget and Schedule 61 Annex8. Documentsin the ProjectFile 62 Annex9. Statementof Loansand Credits 64 Annex10. Countryat a Glance 66 Annex11. SocialAnalysis and Participatory Approach 68 Annex12. SummarySite Assessments and Implementation Strategy 70 Annex12.1 LeaseIslands Site 70 Annex12.2 TakaBone Rate National Park Site 71 Annex12.3 ConflictResolution Framework for TakaBone Rate 72 Annex12.4 SitesProposed for GEFFinancing during COREMAP II 76 Annex13. Letterof DevelopmentProgram from the Govemmentof Indonesia 77 Annex14. Summaryof ProposedAdaptable Program Loans and GEF Grants 79 Annex14.1 CoralReef Rehabilitation and Management Project (Initiation Phase) 80 Annex14.1.a Checklistfor Evaluationof Fullfillmentof Conditionsto Proceedto COREMAPII 82 Annex14.2 SecondCoral Reef Rehabilitation and Management Prcject (Acceleration Phase) 84 Annex14.3 ThirdCoral Reef Rehabilitation and Management Project (Institutionalization Phase) 86 Map Indonesia Coral Reef Rehabilitationand ManagementProject Project Appraisal Document EastAsia and PacificRegion Date: March4,1998 Task Team Leader: Sofia Bettencourt NaturalResource Economist, EASRD CountryDirector: Dennisde Tray, EACIF SectorManager: Geoffrey Fox, EASRD Project ID: ID-PE-36048 Sector: Environment ProgramObjective Category: Environmental.Sust. Dev. GEF Supplement ID: ID-GE-40062 Focal Area: Biodiversity LendingInstrument: AdaptableProgram Loan (APL) Programof TargetedIntervention: [X] I Yes [ No

Program Financing Data (US$ Million Equivalent) IBRD/GEFFinanced Projects Other Donor Financed Total COREMAP Program Projects* Program Phases IBRD APL GEF GOI Total Donors GOI Total US$M % US$M % US$M % US$M % US$M US$M US$M US$M

COREMAPI 6.9 54 4.1 32 1.8 14 12.8 100 13.3 7.0 20.3 33.1 COREMAPII 25.0 59 7.5 18 10.0 23 42.5 100 57.5 10.0 67.5 110.0 COREMAPIII 35.0 70 .... 0 15.0 30 50.0 100 55.0 15.0 70.0 120.0

Total 66.9 64 11.6 11 26.8 25 105.3 100 125.8 32.0 157.8 263.1

Type Loan Grant Loan/

L __ _ _I I_ __ I___ _ I_ I _ __ _I_ _ G rant ______Otherdonors expected to includeADB and AusAlD, and JICAin phase 1/. Otherdonors' financing is estimated.

ProjectFinancing Data [X] Loan [] Credit I ] Guarantee [xl Grant [ Other Amount(US$m): US$6.9 million IBRDLoan SDR 3.1 millionGEF Grant(US$4.1 millionequivalent) Proposed terms: [ Multicurrency [x] Singlecurrency, US$ Graceperiod (years): 3 [] StandardVariable [x] Fixed (1 LIBOR-based Yearsto maturity: 15 Commitmentfee: 0.75% Servicecharge: Nil Financingplan (US$M): Source Local Foreign Total

Government 1.5 0.3 1.8 GEF 2.1 2.0 4.1

...... IBRD ...... 3.6 3.3 6.9 Total 7.2 5.6 12.8 Borrower: Republicof Indonesia Recipient: Republicof Indonesia Responsibleagency(ies): NationalDevelopment Planning Agency (BAPPENAS) - CoordinatingAgency IndonesianInstitute of Sciences(LIPI) - ExecutingAgency Eslimateddisbursements, IBRD Loan (BankFYI USS M) 1999 2000 2001 Annual: 1.0 4.0 1.9 Cumulative: 1.0 5.0 6.9 Estimated disbursements, GEF Grant (Bank FY/USSMequivalent): 1999 2000 2001 Annual: 0.6 2.0 1.5 Cumulative: 0.6 2.6 4.1 Projectimplementation period: 3 Years Expectedeffectiveness date: May 31, 1998 Expectedclosing date: October 31, 2001

OSD PAD Form: July 30, 1997 Page2 Indonesia:Coral Reef Rehabilitationand ManagementProject

A: Program and Project Development Objective

1. Program development objective and key performance indicators (see Annex I and 14): The developmentobjective of the Coral Reef Rehabilitationand ManagementProgram (COREMAP)is to establishviable, operational,and institutionalizedcoral reef managementsystems in priority coral reef sites in Indonesia. The program will be implementedin three phases: Initiation (COREMAP I), Acceleration (COREMAPli) and Institutionalization(COREMAP l1l). The benchmarkindicators are outlinedbelow:

COREMAP Phase I Phase II Phase IlIl Program Phases Initiation Acceleration Institutionalization

Years 1998-2001 2001-2007 2007-2013

Development Viableframework for a nationalcoral Viablereef managementsstems Viable reef managementsystems Objective reef sysam in Indonesiaestablished. establishedin orioritysLii in ten establishedin prioritysites, provinces opgraigonal,fully decentralizedto regionalgovemments and institutionalized,

KeyProgram Nationalprogram framework and pilot Expansionof site managlement Programinstitutionalization and Outputs: site management full decentralization

Benchmarks for 0 NationalCOREMAP program 0 Satisfactoryinstitutional capacity at 0 COREMAPprogram strategy Subsequent strategylpolicydiscussed with key provincialand district levels incorporatedinto nationalpolicy Adaptable Loan and stakeholders;BAPPENAS Grant Financing MinisterialLetter issued, 0 Compliancerates increasing 0 Site planningand recommendingstrategy to involved implementationfollowing agencies; COREMAPII sites 0 Decliningtrends in mobilethreats programstrategic priorities, and designedin accordancewl strategy anddestructive practices fully decentralizedto regions

0 Institutionalcapacity evaluated as 0 Coralreef plans implemented 0 Programsustainability ensured sufficientto expand program satisfactorilyaccording to program (e.g.through block grantsto indicatorsin > 60 % of sites. regionalgovernments tied to 0 Compliancerates > 10%in pilot sites local performance) 0 75% of outputsand disbursements 0 Community-basedmanagement reached;COREMAP II satisfactory. 0 At 75% of sites, coralreef pilots evaluatedas workablemodels managementplans endorsed by local authoritiesand 0 75%of outputsand disbursements implementedsatisfactorily by reached; COREMAPI satisfactory. local communitiesaccording to programindicators. '-Seealso Annex 14.1.a 'Checklist forEvaluation of Conditions to Proceedto COREMAPir.

In additionto the above milestones, detailedecological and socio-economicimpact indicatorswill be appliedto PhasesII and Ill. The key indicatorsare as follows: Indicator Type ExpectedChange ______(Average for all sites)

CoralReef Mortality Index (CMI) Coral rehabilitationindicator Deadcoral cover decreasingby 1% peryear Butterflyfish counts for existingspecies Biodiversityindicator 21)% increaseover 10 years Averageincome per capita of targetcoastal Welfareindicator 5 % increasein realterms per year communitygroups

Averageproductivity of targetspecies such Sustainableuse indicator 65 % increaseover 10 years asgroupers (catch per unitof effort) Page 3 Indonesia: Coral Reef Rehabilitation and Management Project

2. Projectdevelopment objective, global objectiveand keyperformanceindicators (see Annex 1):

The developmentobjective of the first Coral Reef Rehabilitationand ManagementProject, which is also the projects global objective,is to establisha viable frameworkfor a nationalcoral reef managementsystem in Indonesia. End-of-projectindicators are shownas the benchmarksfor PhaseI in the previoustable.

B: Strategic Context

1(a).Sector-related Country Assistance Strategy (CAS)goal supported by the program (see Annex 1):

CAS document number: 16691-IND Date of latest CAS discussion: June 13, 1997

The CAS and global goal supportedby the programis the protection,rehabilitation, and sustainableuse of coral reefs and associatedecosystems in Indonesiawhich will, in turn, enhancethe welfareof coastal communities. The programmeets the CAS objectiveto enhanceequitable and sustainabledevelopment, through sustainable marine resource management. Its focus on policy and legal reform, strengthened enforcement, site management,and close collaborationwith other donors and non-governmentalorganizations (NGOs) are consistentwith the CASstrategy.

I (b). GEF Operational Strategy/programobjective addressed by the program:

GlobalImportance

Indonesiais the world's largestarchipelago, with more than 17,000islands and an 81,000 km coastlinerich in coral reefs,seagrasses, and mangroves. It contains2,500 species of mollusks,2,000 species of crustaceans,6 species of sea turtles, 30 marine mammalsspecies, and over 2,000 fish species.Indonesia has approximately 75,000 km2of coral reefs,or 12 to 15 percentof the world's total. With 362 scleractinian(hard) coral species and 76 generarecorded, Indonesia lies at the epicenterof the world'scoral reefdiversity.

Despitetheir importance,Indonesia's coral reefs are believedto be under seriousthreat from poisonand blast fishing, over-fishing, and sedimentationand pollution. In a 1994 survey of 371 national transects, the IndonesianInstitute of Sciences(LIPI) found 70 percentof the sites to be in poor to fair condition. The only known study of coral reef degradationover time, in Pulau Seribu off Jakarta Bay,shows a steadydecline of 3-6 percenta year in live coral cover (LCC)since 1969. Urgentmanagement interventions are thereforeneeded to protectIndonesia's reefs.

Consistencywith the GlobalEnvironmental Facility (GEF) Strategy The proposedprogram is consistentwith GEF's OperationalStrategy, in particularthe OperationalProgram on Marine,Coastal and FreshwaterEcosystems. It supportsin situ conservationand sustainableuse of biodiversity consistentwith Article 8 of the Conventionon BiologicalDiversity and Agenda21. It respondsto guidancefrom the SecondConference of Partiesand the Jakarta Mandate'sfocus on coastaland marineecosystems. It also follows the guidanceof the Third Conferenceof Partieswith innovativemeasures to conserveand sustainably use biodiversity,such as economic incentives,strengthened involvement of local communitiesin coral reef management,and integrationof social dimensionsrelated to poverty.

The programfocuses on a priorityecosystem identified in Indonesia'sNational Biodiversity Action Plan, and will supportconservation and managementof globally importantreefs identified in Indonesia'sMarine Conservation Atlas and the World ConservationUnion (lUCN)'s GlobalRepresentative System of Marine ProtectedAreas. In additionto coral reefs, the programwill contributeto the conservationof other marine species, and address issues affecting endangeredfish populationsas part of an intemationalcampaign against cyanide fishing. Finally, the programwill help managean areawhich is believedto containthe richestcoral reef,fish, and marine invertebratebiodiversity in the world. The programhas been endorsedby Indonesia'sGEF focal point,the GEF Page 4 Indonesia: Coral Reef Rehabilitation and Management Project

Councilin May 1997,and the GEF ChiefExecutive Officer on March3, 1997.

2. Mainsector issues and Govemment straegy: SectorImportance

Coral reefs are a major productiveand aestheticasset in Indonesia,p,laying a key role in fisheries,marine tourism and coastal protection. Healthy reefs can produce manne products worth on average US$15,000/km2/year,and are an importantsource of food and economicopportunities for some 67,500coastal villages. Coral reefs play also an importantrole in marine-basedtourism, attractingdivers and providingthe source of white sand for Indonesia'sbeaches. The tourism value of coral reefs has been estimatedat US$3,000/km 2 in low potentialareas, to nearlyUS$500,0001 km2 in high potentialsites. Fringingcoral reefs also play key roles in dissipatingwave energy,thereby protecting coastal lands from storms and wave erosion. The net benefitsof coastalprotection are estimatedat US$25,000to US$550,000per km2 of reef, dependingon the value of coastalinfrastructure'. KeyIssues

The key issues affecting Indonesia'scoral reefs are (i) poor managementof existing threats; (ii) unclear institutionalmandates and inadequateinstitutional capacity; (iii) a weak policy and legal framework;and (iv) insufficientinformation. Overfishing,destructive practices (bombing and cyanidefishing) and mining are the main threats identifiedin the COREMAPI pilot areas. These threats are exacerbatedby a high demandfor marine products,opportunities for substantialprivate gains, weak enforcementof existing laws, and an open access regime that discouragescommunity action. Responsibilityfor managing Indonesia'smarine areas remainsdispersed through numerousgovemment agencies, and adequate institutionalcapacity has yet to be developed. Policiesand regulationstend to followsectoral priorities, and tail to properlyaddress coastal issues. Legal loopholessuch as prohibitingcyanide fishing but allowing its use to tranquilizefish make it extremely difficultto enforceexisting jaws. Finally,information required for marine rnanagementremains fragmented, not standardized,and difficultto access.

GovemmentStrategy

The Govemmentof Indonesia(GOI) has identifiedcoral reef managementas a nationalpriority. In 1992,the Ministry of Environment(LH), produced a National Strategy and Action Plan for Coral Reef Ecosystem Conservationand Management,which recommends: (i) communityawareness and participation;(ii) improved managementof existing marineconservation areas and expansionto new sites; (iii) improvedspatial planning and zonation;(iv) institutionalcoordination; and (v) a researchprogram for coral reefs. Both the Indonesian BiodiversityAction Plan (1993) and Indonesia's Agenda 21 (1996) emphasizecommunity-based marine resources management. GOI has also launched several recent sectoral initiatives, including the 1992 SustainableMarine Program (ProgramLaut Lestan), and a new, high-level,inter-ministerial National Marine Council (DKN), establishedin 1997 to coordinate marine managementin Indonesia. Fisheries and coastal tourism have been identifiedas priorityprograms for the next five-yeardevielopment plan, commencingin 1998. Regulationsare also being consideredto decentralizecoastal resources'jurisdiction to provincialgovemments, an initiativethat shouldimprove the managementof highlymobile threats. Intemationally,Indonesia has played an active role in marinebiodiversity issues, hosting the Experts' Meetingof the Jakarta Mandateon Marine and Coastal BiologicalDiversity in March 1997,and winningthe bid to host the Year 2000 IntemationalCoral Reef Symposium.

3. SectorIssues to be addressedby theprogram and sftrategic choices:

There is a growingrealiation in Indonesiathat Govemmentagencies cannot effectively manage such extensive reef areaswithout the close involvementof coastalvillages. A community-basedmanagement (CBM) approach

SeeCesar 1996: Economic Analysis of IndonesianCoral Reefs. The amounts represent net presentvalue over 25 years. Page 5 Indonesia: Coral Reef Rehabilitation and Management Project

cannot be successful, however, without a supporting framework to contain external threats. This framework needs to include: (i) an effective national strategy for coral reef management; (ii) secure user rights for coastal communities; (iii) effective enforcement to protect communities against external threats; (iv) increased awareness amongst decision makers of the threats facing the reefs; and (v) strengthened management capacity. The COREMAP program has made the strategic choice to address these basic requirements during the initiation ph-as, and phase interventions at the site level over a period of 15 years. Proceeding cautiously and using a process approach, the program will ensure that the lessons learned from pilot locations are applied to a later, expanded acceleration phase. C: Program and Project Description Summary

I (a) The Indonesia Coral Reef Rehabilitation and Management Program (see also Annex 14)

The national COREMAP program will cover priority locations in ten provinces in Indonesia (South, North and Southeast Sulawesi, Riau, North and West Sumatra, Maluku, Irian Jaya and East and West Nusa Tenggara), during a period of 15 years. The program is being supported by the World Bank, GEF, the Asian Development Bank (ADB), the Australian Agency for Intemational Development (AusAID), and the Japan International Cooperation Agency (JICA), with GEF providing funding for Phases I and il. The respective donors' roles in the 2 COREMAP program have been specified over the course of two joint missions in 1997 . Even though the adaptable program loan (APL) and grant conditions apply only to the Bank and GEF funded portion of the program, ADB, AusAID and JICA plan to fund complementary projects under the COREMAP program umbrella. The donors would operate under a collaborative arrangement, and jointly evaluate the results of the Initiation phase prior to proceeding to Phase il.

The adaptable program financing will closely match the program's investment needs, which are expected to decrease progressively from approximately 92 percent of the total costs during Phase I to 70 percent during Phase Ill. At program conclusion, the majority of the costs will be recurrent. Major capital expenditures in surveillance, technical assistance and capacity building will be phased out as the program matures, and be replaced by a supporting framework for reef management at the site level, funded primarily by GOI (see Phase Ill description). GOI will fund the bulk of recurrent expenditures under all program phases (including an estimated 74 percent during Phase I).

COREMAP Phase I (Initiation, 3 years):

The Initiation phase will establish the national framework for the COREMAP program, test community-based management in four sites (in Maluku, South Sulawesi, Riau and East Nusa Tenggara), carry out initial program activities in the other six provinces, and prepare for the Acceleration Phase.

The Bank/GEF will support, under the first Coral Reef Rehabilitation and Management Project:

* A strengthened COREMAP program policy, strategy, and action plan. * A strengthened legal framework for coral reef management in Indonesia; * A national awareness and social marketing campaign; * A surveillance and enforcement system tested at the national level and in three target provinces; * Pilot community based management in two sites (Taka Bone Rate National Park in South Sulawesi and Lease Islands in Maluku).

2 - 'Aide Memoireof the JointDonors Coordination Mission for CoralReef Rehabilitationand ManagementProgramm 21 April 1997. Page6 Indonesia:Coral Reef Rehabilitation and ManagemenetProject

OtherDonors would support(under parallelprojects): * A nationalcoral reef information,research and monitoringsystem, and Coral ReefInformation and TrainingCenters (CRITCs) in Jakarta,Riau, Maluku, South Sulawesi and EastNusa Tenggara (fundedby ADB); * Nationalcapacity building and training(funding requested from AusAID); * Pilot community-basedmanagement and enforcementin SenayangIslands, Riau (funded by ADB), and KupangBay, EastNusa Tenggara (funding requested frorn AusAID); * Initial CBMactivities in six provinces(funded separately by GCII).

COREMAPPhase 11 (Acceleration, 6 years): The AccelerafionPhase would expand viable community-basedmanagement systems to priority sites in ten provinces,according to their degree of readiness. Supportingactivities are expectedto include integrated planning, a reef monitoring and evaluation system, expanded site surveillance, and a progressive decentralizationof programmanagement to regionalgoveMments. The Bank/GEFwould likely support, under the Second Coral Reef Rehabilitation and ManagementProject, the followingactivities in Maluku,South Sulawesi, Southeast Sulawesi and IrianJaya: * Managementof prioritycoral reefsites (includingglobally important areas such as the Wakatobi, Spermonde,and PadaidoIslands); * Strengthenedsite surveillanceand containmentof nationalmobile threats; * Strengthenedprogram management capacity at the districtand provinciallevels; * Regionalawareness and participation;and * Preparationfor COREMAPIll.

OtherDono wouldlikely support (under parallel projects):

* Site managementand program support in North Sumatra, West Sumatra, and Riau (funding requestedfrom ADB), East and West Nusa Tenggara(funding requested from AusAID),and North Sulawesi(funding likely to be requestedfrom bilateraldonors). * Expansionof CRITCsto all programprovinces (funding requested from ADB); * Researchcenter in Lombok(funding requested from JICA);

COREMAPPhase Ill (Institutionalization, 6 years):

Duringthis phase,the COREMAPprogram would be fully institutionalizedat the regionallevel, with sustainability ensured through a combination of local govemment financing, specific:block grant transfers to regional govemments(Inpres Pengendalian Dampak Lingkungan),and user pay schemesat the site level. Phase Ill wouldcontinue to expandthe programto other prioritysites in Indonesia. The focus of capacitybuilding efforts wouldbe on districtgovemments.

The Bankwould likelysupport, under the Third Coral ReefRehabilitation and ManagementProject:

* Expansionof COREMAPProgram to further prioritysites in Eastem Indonesia.

* Local capacitybuilding and developmentof sustainablefinancing mechanisms.

Other Donor would likely support COREMAPprogram expansion to priority sites in Western Indonesiaand NusaTenggara. Page 7 Indonesia: Coral Reef Rehabilitation and Management Project

I (b) The CoralReef Rehabilitationand ManagementProject - ProjectComponents (see Annex 2 for a detailed description and Annex 3 for a detailed cost breakdown):

Component Category Total Cost Bankfinancing GEF financing (incl. ngen_n_ (US$M) % of (US$M of Us$M) %Mof iotal Bank fin. GEFfiL

PrcogramStrategy and Management 2.9 22.5 10 15.3 08 20.4 NationalProgram Strategy Policy 0.7 5.4 0.4 6.4 0.2 6.1 Legal Framework Policy 0.3 2.0 0.2 2.4 0.1 2.2 F'rojectManagement ProjectMng 1.2 9.4 0.1 1.7 0.1 2.3 COREMAP1 Evaluat &Phase II Preparation Other 0.7 5.7 0.3 4.8 0.4 9.8

Pu,blicAwareness 39 30.3 2X a. 12 28.7 NationalAwareness Campaign Other 2.9 22.9 2.0 29.7 0.9 21.4 RegionalCampaigns Other 0.7 5.5 0.4 5.3 0.2 3.8 COREMAPDisseminat. & PublicRelations Other 0.2 1.9 0.1 1.4 0.1 3.5 ~~~~~~~~~~~~~~~~~...... Sunrveillance and Enforcement 4.0 31.5 2.X 2. 0 2 ANationalSurveillance & Enforcement Physical&Policy 1.0 8.1 0.7 10.1 0.3 7.5 Sites Surveillance& Enforcement: Physical TakaBone Rate 1.2 9.7 0.3 4.8 0.6 15.0 LeaseIslands 0.3 2.3 0.2 3.1 - - Irian Jaya 1.2 9.7 1.1 16.5 _ SurveillanceTraining Instit.Building 0.2 1.6 0.1 1.8 _ ~~~~~~~~...... ,...... Community-BasedManagement 2.0 1J 0Q8 121 12 28.3 Site Support: Inst. Building TakaBone Rate 0.9 6.9 - - 0.9 21.1 LeaseIslands 0.4 3.2 0.4 5.8 - - CommunityPreparation: Inst.Building TakaBone Rate 0.1 0.9 - - 0.1 2.8 LeaseIslands 0.2 1.2 0.2 2.3 - - Site Management: Physicaland TakaBone Rate Financial 0.3 2.3 0.1 1.6 0.2 4.5 LeaseIslands Mechanism 0.2 1.3 0.2 2.4 -

______Total 12.8 100.0 6.9 100.0 4.1 100.0 * Componentswih global benefitsare italicized. Numbersmay not add up due to rounding.

2. Keypolicyand institutionalreforms supported by the project:

The project will support:

* Strengthened policy, strategy, and guidelines for a national coral reef program in Indonesia. * A strengthened legal framework for reef management, comprising: (i) draft regulations to curb destructive practices on reefs; (ii) preparation and evaluation of coral reef legislation in Maluku, taking into account local cultural assets including customary user rights over reef areas; and (iii) development of mechanisms to recognize community-based management (CBM) plans; * Development of an effective management framework for Taka Bone Rate National Park. * A national awareness campaign targeting decision makers and key stakeholders, aimed at rallying public support for coral reef management. * A pilot site surveillance system involving joint agency patrols, linked with community-based prevention (Reef Watchers'system). Page8 Indonesia:Coral Reef Rehabilitation and Management Project

3. Benefits and target population: Project benefitswill be of three types: (i) global benefits will accrue from all project components;(ii) national componentswill benefitIndonesia at large,laying the foundationfor future coral reef managementsystems to succeed;and (iii) the site managementcomponent will benefitprimarily the coastalcommunities of Taka Bone Rate and LeaseIslands:

Outputs Key BenefitsExpected Time TargetPopulation ______F ram e ______* NationalCOREMAP * Guidelinesfor futuresite selection Long-terrn * COREMAPprogram managers ProgramStrategy and management; * Inputto nationalpolicy. Long-term * Indonesiaat large * Supportto localuser rights * Strengthenedincentives for localreef Long-temi * Coastalcommunities in Malukuand and managementplans management; TakaBone Rate (initially). * Keylegislation review * Strengthenedlegal basis for controlof * Coastalcommunities in Indonesia poisonand explosives fishing. * iubicawareness * Raisedawareness among decision Long-term * Coastaicommunities, policy mak ers, campaigns makers,leading to publicpressure for enforcementauthorities, key moreeffective reef management govemmentagencies, and public at ...... I...... * Establishedsurveillance * Declinein illegalfishing practices; Shortand * Traditionalfishing communities in andenforcement systems medium- Lease,Taka Bone Rate and Padaido term (IrianJaya). * Increasedcapacity and effectiveness * DirectorateGeneral of Fisheriesand of surveillanceoperations. provincialenforcement authorities in ~~~~~~~~~~...... I...... e...... pilotsites...... ioe * Sitem anagement * Protectionof biodiversity; Mediumto * TakaBone Rate: 5 coastalvillages * Fisheriesrecovery; long-term (population:4,200) * Strengthenedlocal management * LeaseIslands: 7 coastalvillages capacity (population:9,300) a Provincialand district govemments _ andnon-govemmental organizafions Long-term: COREMAP11 and IIJ Shortand Medium-Term:COREMAP 1. 4. Institutional and implementation arrangements: ProgramCoordination

The program'sinstitutional arrangements will be used as a basisfor project managementduring COREMAP1. The National DevelopmentPlanning Board (BAPPENAS)will be the program's coordinatingagency. A COREMAPSteering Committee headed by Deputy IV for HumanResources will provide programguidance and policy coordination. The Committee will include representativesfrom agencies involved in coral reef managementas well as eminentpersons representingthe non-governmentaland private sectors. A National Secretariatchaired by BAPPENASwill coordinatethe program'soperational inputs. The Secretariatwill be assisted by a Project ManagementOffice (PMO) responsiblefor day-to-day project planning, budgeting, monitoring,and reporting. The PMO will be staffed by a highly qualifiedfull-Ume Director seconded from BAPPENAS, a Deputy Director, a Secretary and Project Manager (PimpDro)from LIPI, and the project's TechnicalAssistance (TA) team. The key PMO staff will be subjectto annualperformance reviews. In South Sulawesiand Maluku, a ProvincialSteering Committeecoordinated by the Provincial DevelopmentPlanning Agency (BAPPEDATk. 1),will be responsiblefor operationalguidance, site monitoring,capacity building,and legal and enforcementsupport. A DistrictSecretariat chaired by the Regent(13upat,) will coordinatethe planning and implementationof field activities.The evolutionof institutionalmandates will be monitoredclosely during COREMAPI to enablethe programto be alignedwith the agency most likely to be given a future mandatefor coastalmanagement in Indonesia.

To facilitate programcoordination, COREMAP I donors will collaboratein followinga commonimplementation plan and facilitatereporting requirements. Page9 Indonesia:Coral Reef Rehabilitation and ManagementProject

I'rojectImplementation The PMODirector, assisted by the TA TeamLeader, will be responsiblefor strengtheningthe COREMAP programstrategy. The PMODeputy Director will be responsiblefor the legalframework, assisted by a legal consultantand experts from LH. Thenational and regional public awareness campaigns will be contractedout to a professionalpublic relations (PR) firm. The PMOwill remainresponsible for disseminationand public relations. The PMODirector will coordinatethe surveillanceand enforcement (S&E) component, assisted by specialized consultants.The projectwill establish a nationalcoral reef S&Eunit at the DirectorateGeneral of Fisheries,to issueguidelines to fieldunits, carry out S&Etraining, and analyze data. Provincialcoral reef S&E units will be establishedin SouthSulawesi, Maluku, and Irian Jaya at the ProvincialFisheries Offices, reporting to the F'rovincialSteering Committee. The unitswill operatesurveillance patrols in collaborationwith enforcement authorities(the Police,the Navy,and, in Taka Bone Rate,the park's Bureaufor ForestProtection and C(onservation),and will coordinatevillage Reef Watchers, who will be trainedto observeand report destructive cctivitieson reefs.All surveillanceequipment will be procured centrally by thePMO. Oualifiednon-governmental organizations (LSM) and local Universities- the CommunitySupport Group - will help implementthe community-basedmanagement component, under a sub-contractto the TA team. The groupswill deploya SeniorField Manager working under the Bupati'soffice, reporting directly to thePMO, and experiencedField Managers (facilitators) stationed at the targetvillages. The FieldManagers will assist village organizationssuch as the VillageDevelopment Council (LKMD) and traditionalcouncils in developingand implementingcommunity-based coral reef management plans. The planswill be assessedby the PMOagainst projectcriteria (Annex 2), triggeringthe releaseof villagegrants in supportof managementplan implementation, altemativeincome generation and infrastructure directly tied to reefmanagement. FundingArrangements LIPIwill be the sole executingagency for the project. Fundingfrom the centralgovernment, including loan, grant,and counterpart funds, will be allocatedto LIPI'sbudget (DIP). All projectcontracts will be managedby the PMOfollowing approval by the PMODirector and the ProjectManager. Fundsfor the nationalcoral reef S&E unit will be channeledby LIPI to the DirectorateGeneral of Fisheriesbased on a Memorandumof Understanding(MOU). Fundsto the provincesand districtswill be similarlybased on an MOUbetween the NationalSteering Committee and the ProvincialCommittees, and between the NationalSteering Committee and the Bupatiat the districtlevel. The MOUswill representa contractualagreement for LIPIto provideproject funding,and for regionalgovernments to implementthe agreed outputs. The MOUs will includesufficient details of theexpected work program, as wellas theterms and conditions for fundutilization. Disbursement against the contractswill be phasedin stages,based on achievementof workprogress and financial reports certified by the S,eniorField Manager and the PMO.This outputbased 'contract' is an innovativedeparture from the standard inputfinancing to regionalgovemments (SPABP/lnpres), which will enablegreater flexibility in adjustingprogram fundingto field needs. Loanand grantfunding for surveillanceoperation and maintenance(at provinciallevel), as well as for village funds(at districtlevel) will followthe abovemechanism. The loan/grantfunds will beauthorized by the Ministry of Finance/DirectorateGeneral of Budget(MOF/KPKN) office, following submission of a requestfor paymentby the ProjectManager under GOI's force account payment system (UYHD), whereby GOI funds will be provided for advancepayments to an accountcontrolled by the BappedaTk. I chiefat the provinciallevel, and the EBupati'sdesignated representative at the districtlevel. Basedon workprogress and financialreports, the accountswill be replenishedthrough reimbursement from the loan and grant specialaccounts at Bank Indonesia.Village grants will be similarlyadvanced by GOIand reimbursedfrom the loan'sspecial account. Compliancewith the agreed village grant criteria will be first certified by theSenior Field Manager and verified by the PMO.The ProjectManager will then authorize disbursement of thefunds to a districtaccount earmarked for aldirect cash transfer to the LKMD.A firstpayment of upto 30percent of thevillage grants will be madeupon the productionof a draft reef managementplan and/oraltemative income generation plan meetingproject gluidelines.Other payments will be releasedto the LKMDbased on achievementof subsequentbenchmarks, satisfactorywork progress, and accountability reports on the useof thefunds. Thefund transfers will be verified by theSenior Field Managers at thedistrict level, and the Field Managers at thevillage level. Page 10 Indonesia: Coral Reef Rehabilitation and Management IProjedt

Accounting,Reporting, and Auditing

The projectaccounting, financial reporting and auditingwill be done in accordanceto standardsacceptable to the Bank (Annex 6). Annual project plans will be preparedprior to the conclusionof each calendaryear. Projectaccounting will follow GOI's accountingsystem, in line with GenerallyAccepted Accounting Principles (GAAP). Financialstatements will includea projectaccount report preparedby the PMO in accordancewith the format specified in the Project ImplementationPlan, and a special account/statementof expendituresreport preparedby the DirectorateGeneral of Budget. The PMO, provincialand district offices and LKMD will establishand maintainseparate accounts. At the villagelevel, the LKMDand assignedField Managerwill keep a record of all village grants' financial transactionsin a blackboardor accountingbook placed in a central location,accessible to projectstaff and interestedcommunity members. A progressand financialreport will be preparedquarterly. At the district level, the Bupati'srepresentative, with the assistancefrom the Senior Field Manager,will consolidatethe LKMD reports with other district-levelexpenditures on a quarterly basis. The provincialproject units will similarlyprepare quarterly reportsfor expendiituresincurred at the provinciallevel. The PMO's project manager will consolidatethese reports with national-levelexpenditures, and submit the consolidatedproject report to the Bank quarterly. Projectaccounts, including Statement of Expenditures(SOEs) and Special Accounts will be audited annually by the Central Audit 13ureau(BPKP) in accordance with proceduressatisfactory to the Bank. Copies of the annualfinancial statements,audited reports, and progress reportswill be fumished to the Bank within six months of the end of the!fiscal year. The format for MOUs, progressand financialreports, and criteriafor disbursementto the field have beenagreed with the Bank and the systemwill be readyfor implementationby the time of projecteffectiveness. Monitoringand Evaluation

Bank supervisionmissions will monitorcompliance with the agreedproject indicators. A mid-termreview will be fielded during the second year of implementationto assess progress and allow for necessarycorrections in adaptableprogram processing. An independentevaluation will be conducl:edduring the last year of the project to evaluatelessons of experienceand determinereadiness for COREMAP11 (Annex 2). The COREMAPdonors will collaborateclosely during these benchmarkreviews. Lessonsof experiencewill be assimilatedin future programdesign and disseminatedto COREMAPprogram sites, as well as to intemationalfora such as the IntemationalCoral Reef Initiativeand the Year2000 Coral ReefSymposium. D: ProjectRationale 1.ProJect altematves considered and reasons for rejecton: Scope: The projectwas initiallydesigned to supportsite managementin five Eastem Indonesiaprovinces, using a conventional,5-year projectcycle. ADB was to finance a parallelproject in five additionalprovinces. This scopewas consideredtoo ambitiousin the absenceof a nationalframework to supportcommunity-based reef management. A 15 year, three-phaseprogram, enabling field activitiesto be graduallyexpanded as lessonsof experienceemerged, was thereforeselected.

ExecutingAgencies: The project consideredthe option of multiple executing agencies. A unified financing mechanism,executed by LIPI and managedby a strong PMO, was consideredpreferable to ensure delivery durng the project's short implementationperiod. Similarly,an output based MOU with regional govemments was deemedpreferable to SPABPfinancing, due to greaterflexibility and outputaccountability.

SedimentationIssues. The projectteam consideredaddressing large-scale sedimentation problems but these were not foundto be an issue at the projectsites. Hence,a threat minimizationapproach was adoptedas the appropriatestrategy to deal with the acute threats affectingthe sites. It was agreedthat COREMAPI would addresssedimentation insofar as it is pertinentto the projectsites, and amenableto local control(e.g. mangrove restoration).This issuewill be revisitedfor COREMAP11 sites. Page 1 1 Indonesia: Coral Reef Rehabilitation and Management Project

2. Majorrelated projects financed by the Bank,GEF, and other developmentagencies (completed, ongoing and planned): LatestSupervision Sectorissue Project (Fomi590) Ratings (Bank-financed projecs only laink-financed. IP DO

* FParticipatorycoastal Philippines:'Central Visayas Regional Project MS resources Mozambique:Coastal and Marine Biodiversity Conserv. Project (underprep.) nnanagement Indonesia:Kerenci Seblat Integrated Development and Conservation Project S S * Envir. management Indonesia:BAPEDAL Development Technical Assistance Project S S * Coastalzone Seychelles:Biodiversity Conservation and Marine Pollution Abatement HS HS management Egypt:Red Sea Coastal and Marine Resources Management S S Jordan: Gulfof AqabaEnvironment Action Plan S S Indonesia:Maluku Conservation and NaturalRes. Project (underpreparation) China: SustainableCoastal Resource Development Project (underpreparation) Thailand:Coastal Resources Management Project (underpreparation)

OiherdeveloRmoret ADB: agiencies * Coastalzone planning Indonesia:Marine Resources Evaluation and Planning(1992) andinformation * Participatorycoastal Indonesia:Coastal Communities Development and FisheriesResources resourcesmanagement Conservation(1997) USAID: * Coastalzone mng; Indonesia:Coastal Resources Management Project (1997) * Participatorymapping Community-basedMarine Resource Mng't in CentralMaluku, Irian Jaya (1997) *Marineresources CIDA: managementand policy Indonesia:Environmental Management Development (Phases 1-3)

IP - ImplementationProgress. DO - DevelopmentObjective. IPIDO Ratings: HS (HighlySatisfactory), S (Satisfactory), U (Unsatisfactory),HU (Highly Unsatisfactory);MS (MarginallySatisfactory - Project CompletionReport Rating).

3. Lessons leamedand reflected in the project design:

COREMAPwill be the first Bank projectspecifically devoted to coral reef management. However,the Bank has supportedmore than 50 projectsand programsworldwide with a marineand coastalfocus. Most operationsare too recent to extract lessonsof experience. The PhilippinesCentral Visayas RegionalProject, closed in 1992, includeda CBMcomponent which establishedsmall reefsanctuaries. The ProjectCompletion Report (PH-2360) concluded that (i) CBM was effective in increasingcoastal fishers' productivityand income; but that (ii) sustainabilitywas doubtfulwithout legal meansto control access to resources. Subsequentinitiatives have acldressedsome of the early shortfalls,and the projectis now considereda modelfor other local initiatives. The SeychellesBiodiversity Conservation and Marine PollutionAbatement Project (SC-GE-2377), started in 1993, has successfullychanged exploitation patterns for a traditionallyhunted resource(sea turtles) that was rapidly becomingextinct, through a combinationof publicawareness and legislation.

Lessonsof experiencefrom similar programsin the regionindicate that:

* Habitat managementin the form of reef sanctuaries(no-take zones), allowing regenerationof fishery resources to surrounding areas where fishing pressure is regulated, is generally more effective than managementaimed at specific stocks. All reef fishery management regimes, however, require a replacementof open accessconditions by limitedaccess or catch control. * Reef managementhas been most successfulwhere communitieshave been organizedand empoweredto managelocal reef resources. Local govemmentendorsement of managementplans and recognitionof communityuser rightsis essentialto ensurethe sustainabilityof CBMinitiatives. Page12 Indonesia:Coral Reef Rehabilitationand Management Project

* Many CBM initiativeshave failed becauseof inadequateattention to powerfulextemal threats. These need to be addressedthrough effective enforcement and coordinatedsite developmentplans. * Reef managementsystems should be kept flexibleand adaptable,buillding upon local ecologicalknowledge and traditionalmanagement systems; * Local supportshould be establishedfirst for a limited set of clear and'achievable goals of direct interest to local people. Early successin achievingthese goals helps buildcapacity to addressmore complexissues, suchas land-basedthreats. * Reef managementhas been most successfulwhen local stakeholdersderive quick and direct economic benefits from reef management,such as improved fisheries productivity or tourism spin-off benefits. Altemative income generation needs to be closely tied with managementgoals, and should be complementedby awarenessprograms, training in non-destructivepractices, improvements in local access to credit,and establishmentof privatesector links. * Reefmonitoring systems should be introducedfrom the outsetto permitan early evaluationof impact,and a rapidadjustment of managementrules.

These lessonshave beenincorporated into projectdesign. The strongerfocus on legalframework, enforcement, and a slower phasingof site managementreflect the recommendationsof projectreviewers, including a Scientific and TechnicalAdvisory Panel expert review at the projectconcept document (July 21, 1997)and GEF Council submission(May 1, 1997)stages.

4. Indications of borrower commitment and ownership: GOI is highlycommitted to the COREMAPinitiative. To date, it has allocatedan equivalentof US$8million to activitiesrelated to COREMAP'spreparation. GOI has fundedextensive scocio-economic and ecologicalsurveys in priority program sites, and managed the technical assistance for project preparation. GOI has also establishedan inter-agencypreparation team in February 1995 and, mIorerecently, a national COREMAP Steering Committee. Working groups were establishedin all ten program provinces in 1996, including representativesfrom variousagencies, Universities and local non-govemmentalorganizations. In recognitionof the need to strengthenproject guidelines and finalize preparation,GOI allocatedUS$4.7 million equivalentin counterpartfunds for pre-implementationactivities during fiscal year 1997-98. These have funded a new COREMAPbuilding, the draftingof programguidelines, pilot field facilitators.'training, and stockassessment.

S. Value added of Bank and Global support in this project: The donors' roles in the COREMAP program have been carefully considered to take into account their comparativeadvantages. The Bank and GEF are well positionedto supportthe COREMAP'sstrategy: the Bankwas one of the key agencieslaunching the 1995 GlobalRepresentative System of MarineProtected Areas (MPAs),which identifiedworld-wide priorities for MPA interventions.The Bank's Marine MarketTransformation Initiative(MMTI) is collaboratingwith extemalpartners in findingsolutions for the live reef fish trade in EastAsia and Pacific,one of the most importantthreats to Indonesia'sreefs. The Bank has also recentlysponsored two Coral Reef Conferenceswhich helpedbring together best practicesand lessons of experiencefrom coral reef managementaround the world. The 1996Economic Analysis of IndonesianCoral Reefs, completedas part of the project preparation,has been disseminatedwidely and is expectedto becomean importanttool for policy dialogue in Indonesia. The Bank has also, since 1990, assisted GOI in strengtheningits environmental protectioncapacity. These efforts have contributedto the establishmentof provincialpollution control agencies (BAPEDALDA),and to a new nationallaw on environmentalmanagement. COREMAPis further expectedto benefitfrom the Bank'sinvolvement in regionaldevelopment in Sulawesiand Maluku.

GEF's supportwill help raise visibility and globalsupport for the managementof the most biologicallyimportant coral reef ecosystems in the world. GEF funding will also help ensure that areas of global biodiversity importance, which may be isolated and of limited priority to regional govemments,are included in the COREMAPprogram strategy. Page13 Indonesia:Coral Reef Rehabilitation and ManagementProject

IE: SummaryProject Analysis(Detailed assessments are in the projectfile, see Annex8) lI.a EconomicAnalysis (supported by Annex4): [xlCost-Benefit Analysis Site Managementin: TakaBone Rate: NPV= US$5.0million; ERR (quantifiable) = 14% LeaseIslands: NPV= US$0.8million; ERR (quantifiable) = 15% COREMAPprogram benefits will ariseprimarily from removal of threatsto the reefs,in particularpoison fishing, explosivesfishing, coral mining, overfishing, and sedimentation. While these unsustainable practices can yield largebenefits to individuals,they impose high costs to Indonesiain theform of lostfisheries productivity, tourism value,and coastal protection. The netimpact of these practices is summarizedas follows(see Annex 4.1): Threatsto Reefs Benefitsto Individuals Coststo Society Netcosts to Soclety'

PoisonFishing 33 43-476 10-443 ExplosivesFishing 15 98-761 83-746 CoralMining 121 176-903 55-782 Sedimentation(logging) 98 273 175 Overfishing 39 109 70 " Presentvalue, 10% discount rate, 25 year time-span in US$'000per km' of reef. Therange in value takes into account vaiations in bounsmpotential and coastal protecion across sites. See Cesar (1996) 'Economic Analysis of IndonesianCoral Reefs'.

A detailedeconomic analysis was carried out for thetwo projectsites, taking into consideration existing threats, coral reef condition,fishing practices, and tourism and coastalprotection values (Annex 4.1). ForTaka Bone Rate, the estimated quantifiable ERR is 14 percent, with an NPV of US$5 million over 25 years. For the Lease Island site, the estimated ERR is 15 percent (NPV US$0.8 million). A sensitivity analysis, taking into account the extreme possibility that the sites will require a doubling in enforcement costs after COREMAP I, resulted in an ERR for Taka Bone Rate of 12 percent, and for Lease Islands of 11 percent. The relatively low ERR takes into account the higher site support costs required for COREMAP I, expected to decrease during Phase II as final program guidelines become available. A sensitivity analysis performed on the Lease Island site assuming an extreme (75 percent) devaluation of the Rupiah from February 1998 levels results in an ERR of 19 percent, confirming the continuing viability of the project under deteriorating economic conditions.

The benefits of national components such as the COREMAP program policy. legal framework, and public ;awarenesscampaigns, while not directly quantifiable, are judged to be substantial. In Indonesia, the benefits of reducing fishing pressure from an open access situation to opfimal management are esfimated at US$70,000 in net present value per km2 of reef. In Palau, the success of marine protected management is attributed largely to a well directed public awareness campaign. The national surveillance and enforcement sub-component is esxpectedto include an action plan to address mobile threats (particularly poison fishing), which would be implemented during COREMAP II or by parallel Government programs. The estimated net benefit of replacing large-scale poison fishing in Indonesia by sustainable alternatives is US$370 million.

1.b. Incremental Costs The incremental costs associated with global benefits are estimated at US$11.6 million for the COREMAP program, of which US$4.1 million represents the costs for COREMAP I (see below). The detailed incremental cost analysis for the program is presented in Annex 4.2.

ProjectComponents Baseline Scenario GEF Altemative Incremental Costs (USSMillion) (US$ Million) (US$ Million) ProgramStrategy and Management 2.1 2.9 0.8 PublicAwareness 2.7 3.9 1.2 Surveillanceand Enforcement 3.1 4.0 0.9 Site Management 0.8 2.0 1.2

Total 8.7 12.8 4.1 Vumbersmay not add up due to rounding. Page14 Indonesia:Coral Reef Rehabilitation and Management Project

The baselinescenario would target the rational use of Indonesiancoral reef resourcesaccording to national developmentgoals. It would also lead to greater institutionalcapacity and general public awareness. The baselinescenario would, however,be insufficientto ensure that sites of high biodiversityimportance (such as Taka Bone Rate NationalPark) are includedin the COREMAPprogram strategy, since these areasare often of limited regionaldevelopment priority. The GEF altemativewill help developan effectivesurveillance system in Taka Bone Rateto protect the park from extemalthreats, improvepublic participationand involvementof non- govemmentalstakeholders in field activities,strengthen the legal frameworkin supportof traditionaluser rights, and supportawareness campaigns likely to benefitcoral reef protectionthroughout Indonesia.

2. Financial (seeAnnex 5): NPV=US$21,600(per village package); FRR=39% VillageMicro-Enterprise Viability A detailed financialanalysis was carried out for altemative income generationmicro-enterprises likely to be supportedunder the project. The financial analysis estimated requirementsfor (i) capital investmentand working capital;(ii) profitand loss statement;and (iv) financialplanning cash flow. The financialrates of return range from 28 to 59 percent,with 39 percent for a representativepackage of micro-enterpriseinvestments. When risk factors over and beyond normal businessrisk were added, the switchingvalues - the values for which the FRRequals the opportunitycost of capital - were obtainedat a 15 percentdecrease in revenuesand at a 70 percentincrease in investmentcosts. Justificationfor VillageSubsidies and Fiscal Sustainabilityof Community-BasedReef Management Providedthat user rightsand reef managementregimes can be effectivelye,nforced, reef managementcan yield benefits relativelyquickly through increasedfisheries productivity (see TechnicalAnalysis). Reef sanctuaries can typically benefitsurrounding fishing areas within a period of 3-7 years. The financial rate of return for averagereef sanctuariesin the Philippinesis 28 percent,indicating that reicurrentexpenditures are more than offset by managementbenefits. Nonetheless,reef sanctuariesresult in closuresof 20-30 percent of the reef area, imposingshort-term costs to traditionalfishers. In Taka Bone Rate, these losses are estimatedat an equivalentof US$28,000per villageover a periodof two years,using conservativeassumptions of reef recovery (see Annex 5). Hence, an initial subsidy equivalent to US$25-30,000per village for altemative income generationand reef-caringinfrastructure, as determinedby the project,is consideredjustified. FiscalImpact GOI will finance approximatelyUS$1.8 million of total project costs, primarily for project management, surveillanceoperation and maintenance,local govemment support, and taxes. Most of GOI's contributionwill be in the form of centralGovemment expenditures and thus is not expectedto result in a significantfiscal impact due to the small projectsize. Shouldthere be an extremedevaluation of the currency-75 percentfrom the negotiationperiod estimates-, GOI and the Bank would consider,at mid-term review,whether to cancel the unutilized funds or to re-allocatethem to incrementalproject outputs. The savings under this scenariowould amountto US$1.7million in loan fundsand US$0.9million in grant funds. 3. Technical: The impact of closuresin replenishingfish populationsis well documented. There is increasingevidence that this type of habitatmanagement is preferableto species-specificmanagement in tropicalareas, given species interactions. Closed areas (permanentno-take sanctuaries)are also easier to enforcethan effort or quota regulations. Reef sanctuarieshelp replenish adjacentfishing areas in two ways: first, by increasinglarvae 3 survival; and second,by serving as reservoirs for fish straying into surroundingareas . This replenishment effect is believedto take 3 to 7 years. The use of sanctuariesfor fisheries replenishmentis enhancedby a system of relativelysmall, inter-connectedprotected areas, comprisingapproximately 20 to 30 percent of the reefs. These areasshould protect spawningsites and be accompaniedby limited entry on surroundingfishing grounds. For biodiversityprotection purposes, much largerprotected areas are recommendedto accommodate the range of target conservationspecies. These principleswill be taken into considerationby the COREMAP program.

3Roberts,Callum, personal communication, June 1997. Page 15 Indonesia: Coral Reef Rehabilitation and Management Project

The projectwill rely on naturalregeneration of coral reef areas. Artificialreplenishment, including artificial reefs and coral transplantation,will in principlenot be supported given their controversialvalue as habitatenhancers. Restockingprograms, similarly, will only be consideredonce managementregimes are firmly in place.

Alternativeincome generatingactivities will be screenedto ensure that technologiesare commerciallyviable, have a developedmarket, and are ecologicallysound. Experimentaland risky mariculturesuch as sea cLicumberand grouper culture would therefore not be encouragedat the village level until the technology becomesestablished.

4. Institutional: Executingagency: LIPI has executedtwo project preparationgrants, and has thereforeexperience with the Bank's consultant contract guidelines. There were concerns that the LIPI project manager may be over- burdenedwith procurementrequirements during implementation,particularly given the short duration of the project,and parallelCOREMAP initiatives funded by other donors. GOI hasaddressed some of these concems by ensuringthat contractingwill be assignedto experiencedPMO staff, and that advancedaction is taken on technicalassistance mobilization.

Project management: COREMAPworking groups at the central and provincial levels have been actively involvedin projectdesign. Coordinationproblems were experiencedduring preparationdue to a weak flow of inlformationbetween the large numberof stakeholdersinvolved. This weaknesshas been recognizedand will be addressedby the project through (i) concentratingproject managementresponsibilities into one centrally managedunit (PMO),staffed by highlyqualified, full-time secondments;(ii) deployinga Senior Field Managerat the districtlevel, responsiblefor linkingfield activitieswith the PMO;and (iii) installingINTERNET communicafion in all regionaloffices. Projectcomponents requiring specialized knowledge (e.g. surveillanceand awareness) will be assistedby extemalconsultants.

The capacityof the DirectorateGeneral of Fisheries (DGF) in surveillanceremains untestedand will be piloted during the project. However, DGF is currentlyconducting an extensiveupgrading program for enforcement officers,and will benefitfrom a newmonitoring, control and surveillancesystem supported under ADB's Coastal CommunitiesDevelopment and Fisheries Resources ConservationProject The district govemmentshave weak capacityto supportCOREMAP activities. However,as the future focus of the nationalprogram, they will needto be involvedfrom its early stages. It is expectedthat muchof the CBM site supportduring COREMAPI will be providedby LSM/Universitygroups. Competent LSMs are alreadyactive at both projectsites, and they shouldbe able to providethe requiredsupport with limited TA assistancein specializedareas. The capacityof viflagesto implementreef managementplans will be tested during COREMAP1. An on-goingLSM programis assistingvillages at the LeaseIsland site in strengtheningtraditional management, and providedthat customary leadersare effectivelyinvolved, no significantcapacity problemsare envisaged. Taka Bone Rate communities lack coastalmanagement traditions and are subject to a higher incidenceof externalthreats. Their capacityto manage reef resources will be tested through adaptable managementand a careful phasing of project interventions.

5. Social: The majorsocial issuesfaced by the projectinclude: * Break-downin customarycommunity resources management systems due to lack of user rights'recognition; * Destructivepractices such as reefbombing, due to limitedeconomic opportunities in remotesites; * Dependenceon tradersand middlemenfor marketingof products; * Limitedcapacity of local communitiesto enforceuser rightsagainst external fishers; * Limitedcapacity of villageinstitutions such as LKMDsto manageand implementfield activities; * Intemalconflict within and betweenneighboring communities on accessto limitedreef resources. * Ethnicand culturalheterogeneity among resident fishing populationsin Taka BoneRate (Buginese and Bajaucommunities); Page 16 Indonesia:Coral Reef Rehabilitaton and Managemeint Project

Eachof these issueswill be addresseddirectly by the projectdesign: the projectwill evaluatelocal regulationsin Maluku in support of local communityuser rights over reef resources. Poverty will be addressedthrough community-basedfisheries management aimed at restoringthe productivepotential of coral reefs. The project will also assist poor fishers involved in destructiveactivities in achievingmore sustainableincome through altemative micro-enterprises. Community preparation activities will include strengtheningvillage groups, improvingaccess to credit,and strengtheningterms of trade with existingmiddlemen. The projectwill supporta major surveillanceand enforcementcomponent to curb extemal threats. Field facilitatorswill work with both formal (LKMD) and informal organizations(adat, fishers', and women's groups) to help strengthen their institutionalcapacity. The Bupatisand the CommunitySupport Group will play a key role in resolvinginter- communityuser conflicts. The projectwill also help strengthentraditional inter-village councils (Latupatr) at the LeaseIsland site in Maluku. Considerableinvestment has goneinto socialanalysis and datacollection to ensure developmentof culturally appropriatemanagement plans. This will be! further ensured by the use of LSMs familiarwith localcultural practices.

Gender Issues- Women in target projectcommunities play a key role in processingfish, marketingproducts, and reef gleaning. The project will directly assist women through tairgetedmicro-enterprise development, improvedaccess to credit, and gendersensitive activities. Women groupswill be one of three key community groups targetedunder the CBM component(see Annex 2). The projectmay affect women as it may restrict collectionof certaintypes of invertebratesand destructivereef gleaning- however,this decisionwould be taken jointly by the communityas part of local reef managementplans, and the possibleloss of incomeand food would be directlycompensated by the higherincome obtained from reef recoveryand altemativeincome sources.

Borrower's Commitment - GOI has demonstratedconsiderable commitment towards social issues by (a) financingthe Social Assessmententirely from counterpartfunds; (b) contracting LSMs to assist with project preparation;and (c) recognizingcommunity empowerment as a vital elementof the COREMAPstrategy.

Other Social Issues - At present there are no resettlementissues envisagedat the two project sites. Resettlementmay becomean issue in COREMAPII as the programexpands to new sites, particularlyin areas wherefuture privatesector tourism development may lead to land acquisilionand resettlement(Irian, Maluku) or where expansionof miningactivities may lead to displacementof coastalcommunities (Lease Islands,Maluku). This wouldbe addressedduring the designof COREMAPII.

The Bank's policyon isolatedvulnerable people will apply to the projectsites. Sincethe projecthas integrated the strengtheningof communityrights to local resources,and improveddevelopment benefits through income- generationactivities, there will be no need for a separate isolatedcornmunities' action plan. The issue of nomadicfishermen such as the Bajau is difficultto address as their access to fishing rights could decrease through the implementationof local managementplans. In Taka Bone Rate, however,traditional fishers are allowedto operatein the park outsidestrict conservationareas, and providedthese rulesare adheredto during project implementation,no major adverse impact is expected. Possible user conflicts between Bajau and Buginesefishers would be addressedthrough the proposed conflict resolutionmechanism outlined in Annex 12.3,and throughspecial mitigationmeasures to ensure that Bajau communitiesbecome direct beneficiariesof reef managementand altemativelivelihood.

6. Environmental assessment EnvironmentalCategory [] A [x] B [] C

With the possible exceptionof micro-enterprisessupported under the CEIMcomponent, the projectwould not have any adverseenvironmental impacts. An extensivereef monitoringsystem, capable of detectingchanges in coral environmentalconditions, will be put in place in all COREMAPI sites under separate ADB financing. Communityproposals will be specificallyscreened to excludeany activitieisthat may adverselyaffect the reefs by causing physical disturbancein coral communities,turbidity or sedimentation,or untreated dischargeof pollutants. Eco-tourismactivities will be assessedbased on the sites' carryingcapacity.

Of muchgreater concem is the possibilitythat the projectmay loseits benefitsthrough non-COREMAP activities Page 17 Indonesia: Coral Reef Rehabilitation and Management Project

undertakenby publicand privateagencies. This could includeexpansion of miningexploration concessions into Saparua(Lease Island site), and a possiblelive fish exportcenter and oil refineryin Selayar,South Sulawesi. To minimizethis risk, BAPPENASand BAPPEDATk. I will closely monitor proposed investmentplanning and changesin land use in projectareas, to minimizethe potentialfor conflictswith projectobjectives. Wheresuch conflict may exist, COREMAP will rely on environmental impact (AMDAL) regulations requiring a full environmentalassessment (ANDAL) for any activityin, adjoining,or changingthe characteristicsof a coral reef area. The Chairmenof BAPPEDATk. I in South Sulawesiand Central Malukuwill ensure that (i) the ANDAL terms of reference,reports and managementand monitoringplans satisfactorilyaddress the potentialimpacts on COREMAP sites, using appropriate quantitative techniques; (ii) LSMs and representativesof affected communitiesparticipate in the provincialAMDAL commissions' (KOMDA) meetings; and that (iii) other members of the provincialSteering Committee, National Secretariat, and PMO are consultedduring the review process. The Bank would be given an opportunityto reviewcopies of the ANDALterms of referenceand reports before they are finalized and would provide technical advice for use by the National Secretariatand/or Provincial SteeringCommittees in their reviews. The aboveprocedure has been agreedduring project negotiations.

7. Participatoryapproach [key stakeholders,how involved,and what they have influenced] (For furtherdetails, see Annex 11 and 12):

Stakeholders Identification/PreparationImplementation Operation

a. PnmaryBeneficianes: CommunityGroups CON COL COL b. OtherKey Stakeholders: IntermediaryNGOs COL COL COL AcademicInstitutions COL COL COL LocalGovemment COL COL COL Navy,Police CON COL COL Privatesector IS CON COL Otherdonors COL COL COL CON- Consultation;COL - Collaboration;IS - InfornationShaning.

F: Sustainabilityand Risks

1. Sustalnability

COREMAPProgram. Programsustainability would be a specificfocus of COREMAPIll. By the conclusionof that phase,it is expectedthat programfinancing would be ensuredthrough specificblock grant transfersfrom the centralgovemment earmarked for environmentalmanagement. Most expendituresduring the post-program phasewould be recurrent(see Annex5).

COREMAPI Project. The legal and policyreforms introduced by the project- particularlythe strengtheningof user rights, and legislationon poison and explosivesfishing - are expected to provide incentivesfor future behavioralchange, with little requirementsfor follow-upfinancing. Similarly,reef managementinterventions can pay off for themselvesin the form of higher fisheries and tourism value, providedthere is compliancewith managementrules. Surveillanceand enforcementoperations will constitute by far the largest follow-up expenditureat the site level. This fundingwill need to be providedby the IndonesianGovernment in perpetuity, as part of its sovereignduties over archipelagicwaters, and is expectedto declineas a more effectivevessel registrationand monitoringsystem is put in place, complementedby market incentivessuch as poisontesting and certification. These interventionswill be addressedin stagesby subsequentCOREMAP projects.

L Page18 Indonesia:Coral Reef Rehabilitation and Management Project

2. Critical Risks (reflectingassumptions in the fourth columnof Annex 1):

Becauseof its innovativeand experimentalnature, the projectwill involvesignificant risks. However,these will be balancedby the potentialhigh benefitsof establishingan effectiveframework for managingcoral reefs in Indonesia.The projectsmall size (US$12.8 million) and adaptable programframework reflect a 'leaming by doing'strategy designed to managepotential risks. KeyRisk Risk RiskMinimization Measure Rating Annex1, cell "from ProgramDevelopment Objectiveto CASGoal" * Sufficientpolitical will to enforceexisting regulations S to H * Raisedpublic awareness; judicial seminars involving andcontain mobile threats legal,enforcement, policy and judicial staff. * Nomajor development activities threatening sites' Mto S * Covenantrequiring strengthened compliance with viability environrnentalassessment procedures. * Economiccrisis does not leadto an overwhelming S * GOI'sdraft letter of developmentpolicy for the increasein destructivepractices on reefs upcomingStructural Adjustment Loan commits to implementa nationalmonitoring, control and surveillancesystem within two years. Ane,.n ...cell ...... "from ProjectDevelopment I...... Objective ...... I...... I...... to ProgramDevelopment Objective" * Agenciesand key stakeholders are able to cooperateM to S * Oneexecuting agency and strong, centralized PMO. effectively Publicrelations unit at PMOresponsible for informationdissemination on project guidelines...... I...... INTERNIET...... communication in all projectunits. Annex1, cell "from Outputsto Project DevelopmentObjective" * Govemmentis committedto empowercoastal S to H * Malukuregulation support specifically identified as communities,recognize user rights, and enact key outputin ProjectImplementation Plan. Projectto legislativereform proposed by the project discussenactment procedures with key agencies. * Keystakeholders effectively change their behavior M * Awarenesscampaign handled by highly qualified towardscoral reefs publicrelations firm. * Chosenfacilitators have the required qualifications to M * Agreedcriteria for facilitators'selection requires prior beeffective in the field experiencein CBM. * Communitiesadopt altemative income activities M * SpecializedTA contractedto assistin identification whicheffectively reduce pressure on reefs and monitoringof micro-enterprises. W W .I...... I...... Annex1, cell "from Componentsto Outputs" * Govemmenttakes advance action on procurement M to S Short-list,letter of invitationand draft contract finalized priorto Boardpresentation. * AusAID-fundedtraining program is implementedand M Bankto monitorprogress with AusAID on criteria, is effectivein buildingcapacity for the program scheduleand progress of trainingprogram. OverallRisk Rating S Risk Rating- H (HighRisk), S (SubstantialRisk), M (Modest Risk),N (Negligib or Low Risk)

3. Possible Controversial Aspects

In Taka Bone Rate,the projectwill test a combinationof deterrentand preventivesurveillance. The area is now the focus of extensiveextemal fishing, originatingfrom as far away as Flores, SoutheastSulawesi and Ujung Pandang. Much of this extemalfishing, involvingpoison and explosives,iis illegal. For legalfishers, the rules of entry into the park remain unclearin the current park managementplan, and requirefurther clarification before an effectiveenforcement system can be introduced. The projectwill use Etconflict resolution framework such as outlinedon Annex 12.3to managepotential conflicts between fishing groups,and betweenthese groupsand the park. Aerial surveillanceover Taka Bone Rateis also expectedto ease the possibilityof on-the-groundconflicts. Anotherpotential controversialissue is the reportedabuses of authority and rent seeking behaviorcurrently reportedin Taka. The introductionof joint patrolswith civilian agenciesworking side by side with enforcement authorities,and a backgroundchecking system to determinethe effectivenessof actions taken in responseto violationreports are expectedto improvethe transparencyof surveillanceoperations. Page 1 9 Indonesia: Coral Reef Rehabilitation and Management Project

At present,the only known planesequipped to provideaerial surveillanceover Taka BoneRate are the NOMAD aircraft of the IndonesianNavy in Ujung Pandang. These costs, expectedto include primarilyfuel and air maintenancecosts, will be coveredby counterpartfinancing. Conflictsover resourceuse are not expectedto be as pronouncedin the LeaseIsland site, due to strongcustomary rights' traditions. G: Main Loan and Grant Conditions

1. Board Conditions: The Governmentof Indonesiahas met the followingBoard conditions: * Villagegrant guidelines have beenfinalized and issuedby LIPI. * Guidelinesfor MOUswith regionalgovernments, including formats and proceduresfor financialand work plan reporting,and criteriafor fund disbursement,have beenfinalized. * The PMO has been established,and the qualificationsand annualperformance review criteria for individuals proposedfor key PMO positionswere agreedwith the Bankduring projectnegotiations. 2. Disbursement Conditions * Disbursementof loan and grant funds for the surveillanceand enforcementcomponent will be subjectto the completionof an OperationalManual describing the site surveillancesystem, equipment required, standards for patrolling,reporting, recording and monitoring,staffing, and trainingproposed. 3. Other Conditions Agreed at Negotiations: * GOI will maintain,until projectcompletion, a PMO with competentfull-time staff, includinga PMO Director secondedfrom BAPPENAS,a DeputyDirector, and a Secretaryand ProjectManager from LIPI. e National and provincialcoral reef surveillanceand enforcementunits will be establishedby June 30, 1999 under,respectively, the DirectorateGeneral of Fisheriesand the ProvincialFisheries Offices. A highly qualifiedtechnical assistance and public relationsfirm will be selectedin accordancewith agreed criteria and mobilizedby December31, 1998. The technical assistancefirm will employ qualified non- governmentalorganizations and Universitiesby February15, 1999. * A draft COREMAPprogram strategy, policyand guidelineswill be completedby September30, 2000, and discussedwith key govemmental,non-governmental and privatesector stakeholders. * GOI will ensurethat legislationdrafted under the projectis completedby January1, 2000and submittedon a timelymanner to the responsibleauthorities for enactment. The legal and enforcementstudies will be completedby April 30, 2000, and follow up action plans will be preparedby July 31, 2000. * GOI will ensure that disbursementunder village grants complieswith the agreed guidelines,provided that thesecan be adjustedperiodically to reflectlessons learned during project implementation. * GOI will take the necessarymeasures to ensurethat any developmentproject proposed to be carriedout in, or in the vicinity of the project sites, will only be permittedif satisfactoryenvironmental studies have been completedand haveshown that any adverseeffects on the site will be avoidedor mitigatedin full compliance with GOI'sregulations. GOI will take appropriatesteps to (i) protectthe customaryuser rightsof isolatedvulnerable people in project areas; (ii) through a processof informedparticipation, involve isolated vulnerable people in the design and implementationof coral reef managementplans; (iii) ensurethat projectbenefits are in accordancewith their economic,social and culturalpreferences; and (iv) mitigateor avoid any possibleadverse effects causedor likelyto be causedby the project. * GOI will establishan independentevaluation panel and facilitatetheir evaluationof the projectby October 1, 2000; Page20 Indonesia: CoralReef Rehabilitationand Management PrOject

H. Readinessfor Implementation

] The engineeringdesign documents for the first year's activitiesare completeand readyfor the start of project implementation.[x ] Not applicable. [xl The procurementdocuments for the first year's activities(technical assistance contract and awareness servicecontract) are beingcompleted and will be readyfor the start of projectimplementation. [x] The draft ProjectImplementation Plan (PIP) has beenevaluated and foundto be realisticand of satisfactory quality. The final PIP will be completedprior to Board presentation. [ ] The followingitems are lackingand are discussedunder loan conditions(Section G): Not applicable.

1. Compliancewith BankPolicies

[X] This projectcomplies with all applicableBank policies.

Task TeamLeader Sofia Bettencourt(EASRD)

CorMianaget DenniseyFox (EASRD)

CountryDirector Dennisd a(EACIF) -21- Annex 1 Program and Project Design Summary

Narrative Summary Key Performance Indicators Means of Critical Assumptions Verification

CtountryAssistance Strategy Goal: (From Goal to Bank At COREMAP sites, between Phase 11 National reef Mission) 7o protect, rehabilitate and achieve and endof Phase 11*: monitoring zLustainable use of coral reefs and program Sustainable use of coral associatedecosystems in Indonesia, * Coral Mortality Index (CMI)/dead reefs (for tourism and which will, in tum, enhance the coral cover decreasing by an fisheries) will benefit welfareof coastalcommunities average of 1% per year (coral coastal communities and rehabilitationindicator) serve as an important * Butterfly fish counts for existing vehicle for poverty speciesincreasing by an average of development in the Outer 20 % (biodiversityIndicator) over 10 Islands. years * Averageincome per capita of target groups of coastal communities CRITC increasingby 5 % per year in real surveys terms (welfareindicator) * Average productivity of target spediessuch as groupers (catchper unit of effort) increasingby 65 % in managed reefs over 10 years (sustainableuse indicator)

Program DevelopmentObjective: lndicative End-of-ProgramIndicators (by 2011) 7: Economic crisis will not Viable reef management systems lead to an overwhelming established, operational, and increase in destructive institutionalizedin priority coral reef Independent practices sites. Evaluations A Coral Reef Monitoring COREMAPPhase I (Initiation): * Program strategy incorporated into National System (CRMS) is Viable frameworkfor a national coral nationalpolicy. policy established through a reef systemin Indonesiaestablished. documents parallel project funded by * Site planning and implementation (Repelita/ ADB, enabling effective COREMAPPhase I (Acceleration): follow the program's strategic Sarlita) monitoring of ecological Viable reef management systems priorities and action plan, and are and social impact. established in priority sites in ten fully decentralizedto regions. COREMAP provinces (South, Southeast and IlIl implemen- Large scale sedimentafion North Sulawesi, Maluku, Irian Jaya, * Program funding allocated through tation can be effectively curbed Riau, North and West Sumatra, East special block grants (Inpres completion by parallelinterventions. andWest NusaTenggara). Pengend. Damp. Ungkungan), and evalua- linked to programpriorities and local tion reports Enforcement of existing COREMAPIt (Institutlonalization): performance. regulations and containment of mobile Viable reef management systems * At 75 % of COREMAP sites, coral threats is effectivelycarried established in priority sites, reef managementplans endorsedby out operational, fully decentralized to local authorities, and implemented regional govemments, and satisfactorily by local communities No extemal developments institutionalized (through specific accordingto CRMS indicators. threatening the viability of block grants to regional the sites. govemments). No majorstorm destruction, natural bleaching, or diseaseevents. - Programindicators are indicative,and will be definedfurtherduring Phase L -22 -

Narrative Summary Key PerformanceIndicators Means Critical of Verification Assumptions

Project Development To be met before effectfvenessof Phase n Objective (COREMAPI) (April2001) Independent Agencies and key evaluation stakeholders are To establish a viable * Completed national COREMAPprogram policy able to cooperate frameworkfor a national coral and strategy discussedwith key stakeholiders. Implementation effectively reef management system in Ministerial leKter from BAPPENAS issued, Completion Indonesia recommending the implementation of the Report (ICR), Lessonsof strategyto the involvedagencies. COREMAPII and draftPIP experience with sites and designin accordancewith the strategy. pilot sites are Supervision representative of * Institutional capacity evaluated as sufficiently reports the range of improved to enable expansion of COREIMAP conditionsencoun- program. Surveillance tered in coral reef and systems in * Compliance rates (no. of patrol days without enforcement Indonesia to violations/totalpatrol days) increasingby 10 % reports enable expansion in pilot sites, following introduction of S&E of the program. system. Evaluation COREMAP * Community-basedmanagement (CBM) pilots reports program strategy evaluatedas workablemodels, and lessons of can be converted experienceincorporated into design of PhasesII. into national policy Supervision without major * 75 % of outputs and disbursementsreaclhed. and project delays. COREMAPI implementedsatisfactorily. completion reports Outputs: By FY00-Q1 1. Strengthenednational * COREMAP program strategy and national National policy Govemment is policy,strategic planning and actionplan approvedby SteeringCommiKtee; and strategy committed to legalframework for coral reef document empower coastal management * Matrix of draft revisions of key legislaition communities and submifted to the appropriate authorities for recognize user enactment; rights

* Academic draft of PerDAs, Kepmen, or Sks Sufficient political supportiveof CBM completed; Draft legal will exists to enact documentsand key legislative * Draft managementframework for Taka Bone legal specialist reform proposed Ratecompleted. report. by the project

* Guidelines on illegal and destructive activities releasedby ProjectSecretariat

2. StrengthenedProject By December1998: management * Qualified counterpartstaff mobilizedat national SKs issued at and provincial levels, with defined performance each level. goals.

* Office equipment and fumiture, adequate to Procurement Projectactivities, procured and distributed. records

* TA and awarenessPR firm mobilized. Contract copy and evaluation * Qualified NGO/University mobilized for reports I Lease/TBR sites. _II I - Seealso Annex 14.1.a. Checklistfor Evaluation of Conditionsto Proceedto CO,REMAPII. - 23 -

Narrative Summary Key Performance Indicators Means of Critical Assumptions Verification 3. National and local By FY99-.0: public awareness * Awareness campaign design accepted by Project Annual and Key stakeholders campaigns for coral reef Secretariat. supervision effectively change their management designed reports. behavior towards coral and launched * National awareness campaign and provincial reefs. campaignsin 4 provinceslaunched

* COREMAP newsletter produced and Web page updated3 x/year.

By FYOO-01: * COREMAP program awardsfor community,school, thesis, and reefwatch designed. Annual and supervision . Materials distributedto 10 provinces. reports

* 30% of targeted audience (policy makers, enforcement, private sector, local gov., villagers) Independent familiar with coral reef issues. survey 4. Models of coral reef surveillance and By FYOO-01: Surveillance enforcement tested and * Surveillanceframework for 4 pilot sites produced. consultant's There is sufficient evaluated and annual politicalwill to effectively * Enforcementtraining completed(195 orientation;140 reports apply the enforcement reef watchers;80 enforcementofficers) system to all violators, not just a few. * Provincial S&E units establishedin TBR and Lease Supervision Islands,with violationand incidencereports available reports. Reef watchers are for monitoring. preparedto report illegal activities without fear of * Surveillance equipment according to acceptable Annual and repercussions. designspecifications procured and distributed. supervision reports. * Action plan for externaland mobilethreats produced, accepted by COREMAPSecretariat and included in Specialist nationalaction planfor coral reefs. report, and copy of action plan. 5. Pilot community By FY98/99: Field manuals are based managementplans * Field manualsreleased to the field. Copy of field effectivelydesigned. in two sites designed and manual. tested: * Qualified village motivators appointed in all 12 Annual and Sufficient institutional priority villagesin Leaseand TBR. supervision coordination to allow * Taka Bone Rate reports. efficient back-stoppingof National Park, as an ByFY99100: field operations. globally importantsite * Coral reef managementplan draftedfor Lease and Copy of draft for biodiversity Taka Bone Ratepilot sites. plans Chosenvillage facilitators conservation; have the qualificationsto By FYOO/01: be effectivein the field. * Lease Islands * At least one community grouphillage working with Field mngs COREMAPprogram. reports and Sufficient political will at annual local level to support * Draft management plans accepted by local reports. community-basedplans. govemment for implementation, and key plan componentsstarted. Supervision Communities adopt reports. altemative income * Lessons leamed documented on Web page and activities effective in newsletters. All motivatorswill have visited at least Annualreports reducing pressure on ______one other site. I _I reefs. -24 -

6. Designof COREMAP11 Project completed By end of PEroet

* Site assessments Site reports. completed;

* Independentevaluation Evaluation of COREMAP I ireport. completed.

* Project completion Project report completedwithin completion 3 monthsof completion report. date.

* Projectimplementation Draft PIP. plan, acceptable to GOI and donors, completed. _ Project Components: Inputs (budget): Govemment takes Quarterly and advance action on TA 1. PoGRAMSTRATEGYANDMANMAnGEMEN US$2.9million annual reports. and procurement Disbursement contracts to enable 1.1 COREMAPProgram Strategy US$0.7million reports. TA/PRfirm to mobilizeon time. 1.2 LegalFramework US$0.3million Training program 1.3 ProjectManagement US$1.2million supported by AusAID funds are effective in 1.4 COREMAPI Evaluationand Preparationof US$0.7million building institutional COREMAPII capacityfor the program

Highly qualified counterpart staff can be 2. PuBLicAWARENESS USS3.9million assigned to work on a nearto full-termbasis 2.1 NationalAwareness Campaign US$2.9million

2.2 RegionalAwareness Campaigns US$0.7million LIPIbuilding is completed 2.3 COREMAPDissemination and Public Relations US$0.2million and ready for occupancy by start of project.

3. SBMhVIELANEANDENEoRcEMENNT USS4.0million Sufficient progress and monitoring informafion 3.1 NationalSurveillance and Enforcement US$1.0million exists in three years to identifykey lessonsto be 3.2 Site Surveillanceand Enforcement US$2.7million identified and disseminated 3.3 SurveillanceTraining US$0.2million

4. COMMUN7r BASED MANAaEmE US$2.0millioln

4.1 Site Support US$1.3million

4.2 CommunityPreparation US$0.3million

4.3 Site Managerment J US$0.5million _ * - Numbersmay not add up due to rounding. -25 - Annex 2 Indonesia:Coral Reef Rehabilitationand ManagementProject DetailedProject Description

Project Component I - Program Strategy and Management(US$2.9 million)

The Program Strategy and Management Component will lay the foundation for the COREMAP program. It will produce (i) the policy and strategic framework for the program; (ii) a strengthened legal framework for coral reef management in Indonesia; (iii) project management, and assessment of lessons leamed; and (iv) an independent evaluation of COREMAP I and preparation for COREMAP II.

Sub-Component1.1: National COREMAPProgram Strategy (US$0.7million)

The project will fund technical assistance and discussion workshops to strengthen the national policy for coral reef management, and finalize the strategy, operational guidelines and action plan for the COREMAP program. This consolidated program strategy will be discussed with key stakeholders during its development, including government, non-government and private sector representatives. The final strategy will be presented to the COREMAP Steering Committee for approval during the third year of implementation and will receive a Ministerial recommendation from BAPPENAS:

Fig. 1: COREMAP Program Strategy Development During Phase I

Draft Draft Strategy/ Policy Action Plan

Year 2 I ...... of rporationl essonsleamed: .. .

Awareness Surveillance Monitonng CpayBuilding Yer3......

Discussionat StakeholderFora

Final Program Policy, Strategy, and Action Plan

Endorsementby SteeringCommittee MinisterialRecommendation

The key elements of the COREMAP program strategy will include:

* A strengthened national policy for coral reef protectUon and its sustainable use, specifying the rationale for the policy, general policy statements and measures to be adopted, and implications for future national development. The policy will help consolidate and update key aspects of LH's 1992 National Coral Reef Strategy, as well as the 1996 Indonesia's Marine Environmental Policy. -26-

* A natonal COREMAPprogram strategy, including guidelines for programsupport. The strategy will clearly specify the (i) the nationalcommitment to the program,(ii) its goal and objectives,(iii) the operational and institutionalframework, (iv) criteria fcr site prioritization;(v) criteria for stakeholderinvolvement, (vi) and operationalguidelines for program implementation. Strategy developmentwill be iterative, buildingupon lessonsof experiencefrom the InitiationPhase. The strategywill also strengthenthe program'ssite selectionin accordancewith emerginginformation on the status of coral reefs in Indonesia. * Short-term(5 years) and long-term(25 years) action plan for the COREMAPprogram clearly specifyingpriority objectives, actions, geographical focus, and expectedperformance benchmarks.

Responsibility: PMODirector and Deputy Director,assisted by the TA Team Leader.

Sub-Component1.2: LegalFramework for CoralReef Management (US$0.3 million)

The legalframework sub-component will help draft new regulationsand improveand clarify key existing regulationsaffecting reef managementin Indonesia. The projectwill supplytechnical assistance, studies andworkshops in supportof the followingactivities:

* Review and rationalizaton of key national legislationaffecting coral reefs. This will be done throughboth proposednew legislation,as well as interpretationof existinglaws. The review will focus on legal measuresto controldestructive practices on reefs, namelyby drafting regulationsprohibiting the transportationand use of explosives or poisonoussubstances aboard vessels, as well as the possessionof illegallycaught fish. Other regulationsin support of the enforcementcomponent, such as a possibleban on scuba or hookahgear in protectedareas, could also be considered. The review will also help harmonizethe definitionsand contentsof key laws (e.g. NationalFisheries Law No. 9, 1985and ConservationLaw of Ministryof ForestryNo. 5, 1990)to providefor their consistent interpretation. Finally, the review will investigatehow existing laws (e.g. Law No. 5 of 1960 on BasicProvisions for Agrarian Law, Law No. 5 1990on NationalResources Conservation of Floraand Fauna,Law No. 24, 1992on SpatialPlanning, Law No. 5, 1996on IndonesianTerritorial Waters, and Law No. 23, 1997on EnvironmentalManagement) could be used in supportof reef management.

* Strengthenedlegal frameworkfor community-basedmanagement and marineprotected areas. This will include (i) provision of assistance to the Maluku regional govemment in evaluating and preparingdraft regionalregulations (PerDa) on coral reefs, particularlyon customaryuser rights, and taking into account local cultural assets; (ii) assisting the district governmentsat project sites in issuing Letters of Endorsement(Surat Keputusan Bupati or PerDa) to community-basedreef managementplans; and (iii) drafting and discussingthe legal, managerialresponsibilities and fiscal frameworkfor a conservationmanagement authority for Taka Bone Rate.

* Legal Studies. The projectwill investigatethe type of evidenceadmissible in court to prove major destructivepractices to coral reefs, and translate it into guidelinesfor collectionof evidenceto be used as a basis for surveillancetraining. Additionallegal stu(dies,in particulara study on legal aspectsof conflictresolution, could also be financedif requiredfor the legal frameworkdevelopment.

Responsibility: The legal framework will be the responsibilityof the PMO Deputy Director and LH/BAPEDALstaff secondedto the PMO,assisted by a long-termlegal consultant. The key output will be a matrixof proposeddraft legislation,submitted to the relevantinstitutions for enactment. Guidelines for Surat Keputusan, PerDa, clarification of existing legislation, and collection of evidence will be disseminatedthrough the public awarenesscomponent, and their key elements incorporatedinto the COREMAPprogram guidelines.

Sub-Component1.3: ProjectManagement (US$1.2 million)

The project will fund office and field equipment,workshops, incremental staff, travel, and general operationand maintenancefor the PMO and regionalproject units. Ulnderthis sub-component,the PMO -27- will (i) assign and mobilizekey counterpartstaff; (ii) manageall procurementcontracts; (iii) conduct the projectlaunch, and projectplanning, review, and evaluationworkshops; (iv) prepareproject accounts and reports; (v) conductworkshops for field facilitatorsand regionalproject staff, (vi) carry out comparative studies; and (vi) coordinateall project activities. The PMO will also ensure the disseminationof emerginglessons of experienceacross COREMAPsites.

Capacity building and institutionalstrengthening is expected to be funded separately by AusAID. The projectwill, however,include a small budgetfor trainingand cross visits at the provinciallevel. In South Sulawesi, this will include a pilot radio open education program aimed at highly mobile fishing communities,as well as training directly related to site support. The training in Maluku will involve primarily site support and cross visits. With the exceptionof major workshops,project management activitieswill be financedby counterpartfunds.

Sub-Component 1.4: Evaluationof COREMAPI and Preparationfor COREMAP11 (US$0.7 million)

IndependentCOREMAP I evaluation: In additionto routine evaluations,the projectwill commission, six months prior to completion,an independentevaluation of COREMAPI. The evaluationwill assess progress in achievingthe benchmarkindicators for the InitiationPhase (Annex 14.1.a),and recommend future programadjustments. It will be carriedout by an independentpanel of highly qualifiedexperts, of which half will be nominatedby GOI (and approvedby the Bank, in consultationwith other COREMAP donors), and half by the World Bank EnvironmentalSector Board (approved by GOI). The World ConservationUnion (IUCN)would be selectedto managethe panel, and would be able to commenton its;composition. The independentpanel will discuss their findingswith the COREMAPSecretariat prior to the conclusionof the evaluation. Their uneditedopinion, together with GOI's own evaluation,will be furnishedto the Bank within 30 days of the assignment. The terms of referencefor the independent panel will be definedwith GOI at mid-termreview.

P-reparationfor COREMAP11: The projectwill allocate incrementaltechnical assistance to completethe design of COREMAPII and prepare a draft a Project ImplementationPlan in accordancewith GOI, World Bank and GEF requirements. Subject to a satisfactoryindependent evaluation of Phase I, the W'orld Bank and GEF would support the managementof priority coral reef sites in South Sulawesi, SoutheastSulawesi, Maluku and Irian Jaya during COREMAPII (see Annex 14.2). Detailedecological and social assessmentsfor these sites will be carried out by the Coral Reef Informationand Training Centers(CRITCs) under separate ADB financing.

Project Component2 - Public Awareness (US$3.9million)

The main purpose of this componentwill be to educate the public on the nature of coral reef threats, foster public stewardship towards Indonesia's reefs, and change destructive behavior. The overall principle will be to have a single national COREMAPawareness strategy, with a consistentmessage across all COREMAPprovinces and sites. The projectwill provide services,workshops, publications, awarenessmaterials, surveys, and awards in support of (i) a nationalmulti-media awareness campaign; (ii) regionalcampaigns in COREMAPI pilot provinces;and (iii) public relations and disseminationof programguidelines. Target audienceswill includereef users (primary),development planners, decision miakers,local leaders,NGOs and school children(see Table below).

Rlesponsibilities:National and regional campaignswill be carried out by a highly qualified public relationsmedia firm familiarwith the Indonesiansetting, under contractto the PMO. The firm will enlist the support of NGOs and local groupsand help buildtheir capacityin regionalcampaign implementation. The PMO,assisted by a secondedstaff from the DirectorateGeneral of Tourism, will be responsiblefor disseminationand public relations. A limited number of awareness activities are expected to be implementedby the provincialproject units, in collaborationwith LSMs(see Component2.2). -28 -

Target Audiences for Public Awareness Campaigns:

9>+00^-ScopeAudienes0CiD;; f-:f;VC Typey;f;X;0;tf;-;;;f;00:00. Behaviors Targeted P-Plrimary

SSc ndary. ______National Ministryof Environment S Unclearnational policies DGFisheries Weakfisheries regulatory and incentive Tradeand Industry representatives framework PHPA Lackof commitmentto enforcement Enforcementand Judiciary Authorities Nonational recognition of traditionaltenure NGOs Illegaluse of cyanideand encouragement of IndonesianCoordinating Body for ASEAN regionaltrade ...... ~~~~~~~...... Regional COREMAPProject Staff P Unclearunderstanding ofprogram strategy (forprogram guidelines dissemination) LocalFishers (including women) Unsustainable/illegalfishing practices Middlemen/Traders Encouragementof illegal trade ForeignFishing Boat Owners Cyanide,large scale explosives, overfishing TraditionalLeaders (Kewangs) Disempowerment ...... NGOs S Limitedknowledge of coralreef ReligiousInstitutions management GovemmentAgencies Vehiclefor behavioralchange SchoolChildren Weakenforcement commitment EnforcementAuthorities .

Component2.1 NationalAwareness Campaign (US$2.9 mil/ion)

The NationalAwareness Campaign will be implementedthrough mass media such as television,radio, and newspapers. It will also develop multi-mediaawareness instrurnents for the COREMAPprogram. Projectactivities are expectedto include:

Television: * 10 short featureCOREMAP programs for stationssuch as SeputarIndonesia. * A 20 minuteinformational video on COREMAP. * A 30 second TV spot production on Indonesia'scoral reefs, to be aired on national TV, and acquisitionof airtimein localTVRI programmingin the COREMAPprogram provinces. OtherMedia: * A bi-lingualWorldwide Web page providingregular information on the COREMAPprogram. * A COREMAPnewsletter bulletin. * Target radioprograms. * Developmentof simpleCOREMAP program guidelinesfor localgovemments and communities. * A popularcoral reef programtargeting children. * A collaborativeprogram targeting industrieswith impacts on reefs, designed through a series of seminarswith chamberof commerceand industrialassociations. * An illustratedguide for coral reef ecosystems(published in BahaseaIndonesia). * Underwatercoral and reef fish identificationplates for recreationaldivers and snorkelers. * COREMAPpromotional T-shirts, to be distributedat specialevents. * A CD-Romleaming support and multi-mediapresentations on Indonesia'scoral reefs. * Developmentof miscellaneousvisual materials,involving local writers,producers and artists. Trainingand Workshops * A nationalcampaign conference to promotethe COREMAPprogram throughout Indonesia, targeted at key nationaland localstakeholders. * Visual materialsdevelopment training, focusing particularlyon local and nationalNGOs, and relevant govemmentinstitutions. * Trainingand site visits for joumalistsand media reporters. -29- An independentsocial marketingresearch survey will be commissionedto evaluate the results of the campaign,prior to and after its implementation.The resultswill be used by the PR firm to optimizethe use of the variousmedia duringthe campaign.

Component 2.2: Regional Awareness Campaigns (US$0.7million)

RegionalAwareness Campaigns will be implementedin the four pilot COREMAPI provinces(South Sulawesi,Maluku, Riau and East NusaTenggara). Activitiesto be supportedwill include:

* Childrencompetition for COREMAPlogo design. * Billboardspromoting coral reef conservation. * Radio production,spots and programsin local stations. * A local informationcampaign on coral reef regulationsand fines associatedwith reef damage. * Flipchartstargeted at key stakeholdersshowing the impactof destructivepractices on reefs * Designand printingof local COREMAPprogram leaflets * Bantersand buntingsassociated with specialevents. * Educationmaterials for localschools. * Awards for local schoolspreparing the best display/posteron coral reef conservation.

The following activitiesare expectedto be implementedby the South Sulawesiand Maluku provincial projectunits underseparate counterpart financing:

South Sulawesi Maluku * Koranictext onenvironmental conservation, . Localmaterials - includingposters and disseminatedthrough radio slidesfor localcinema * Portableinformation kiosks on COREMAP a Schoolcompetitions . LocalTVRI slot on coralreef conservation . LocalTV andradio spots . Awardsto communityleaders . Awardsto communityleaders . Localposters, calendars, T-shirts, bulletins and brochures . Localleaders' workshops U Annualseminars . Trainingand briefing for localjoumalists

Sub-Component 2.3: Public Relations and Dissemination (US$0.2million)

T he sub-componentwill fund:

* COREMAP program disseminaton including distribution of COREMAP program guidelinesto relevant COREMAP stakeholdersin all ten program provinces,comparative studies, and regular updating(3 times a year) of the COREMAP'snewsletter and Web site. The PR firm will also ensure that awarenessmaterials are madeavailable to NGOs, schoolsand othereducation institutions.

* Public relations, includingnational workshops and lobbyingof decisionmakers, production of press briefs, press conferences,consultations, and awarenessmaterial distribution at public events. e Public awards, including a national Reef Watchers' day, national competitionfor best managed COREMAPsite, writing contests and awards to journalists,and developmentof other competitive awardsrewarding outstanding performance by villages,groups, or individualsin reef conservation.

ProjectComponent 3 - Surveillanceand Enforcement(US$4.0 million)

The purposeof this componentwill be to curb destructivepractices on coral reefs. The projectwill fund specializedtechnical assistance,surveillance equipment, studies, surveillanceoperations, workshops, and incrementalstaff costs in supportof (i) a nationalsurveillance and enforcement(S&E) unit (ii) S&E operationsat targetproject sites; and (iii) surveillancetraining. -30-

Destructivefishing practices- primarily explosivesand poison - originatefrom two sources: (i) well organized,powerful fishing cartels; and (ii) resident and transient fishers. The first source includes foreign vessels fishing illegally in Indonesia as well as highly mobile domestic vessels, frequently targetingremote reefs. The second,small-scale group often recognizestheir impacton traditionalfishing grounds,but is driven to destructivepractices by economicnecessity and increasingresource scarcity. The projectwill developdistinct strategies to deal with these groups:

* Large-scale pressures: The proposedstrategy involvesa combinationof legislativereform, and full deterrentenforcement. First, the projectwill help draft leigislationshifting the burden of proof from fishers to middlemen encouragingillegal practices (see Sub-Component1.2). Second, the project will support a study on poison testing and certificationfollowed, if sufficient progress is achievedon the legal front, by a pilot certificationscheme. Finally, the projectwill strengthenthe capacity and effectiveness of deterrent enforcement by piloting a rapid response system, encouragingjoint patrols between local govemment and enforcementagencies, and developing checksand balancesin violations'recording.

* Small-scale, resident pressures: The proposed strategy involves a combinationof awareness, community-basedmanagement, and alternative income generation. The project will stress preventiveenforcement, through a village Reef Watch program linked to promotion of community stewardshiptowards the reefs.

Responsibilities: The PMO Director will have overall responsibilityfor the component. The Directorate General of Fisheries (DGF) will be the component's implementingagency. DGF will establisha nationalunit to operatea coral reef enforcementand surveillancesystem (National Coral Reef S&E Unit), working in close collaborationwith the Ministry of Environment(LH) and DKN, for policy coordination,and the Navy, Police,and Departmentof Sea Communications,for enforcementoperations. At the site level, Provincial Coral Reef S&E Units will be coordinated by the Provincial Fisheries Agencies(Dinas Perikanan),under guidance from and reportingto the COREMAPSteering Committee. Joint patrols will be organized by Dinas Perikananwith the local conservationunit (SBKSDA) and enforcementauthorities (KAMLA). The unitswill also be responsiblefor the ReefWatch program at the site level, in close collaborationwith the communitysupport group assisting the CBM component.

Sub-Component3.1: NationalSurveillance and Enforcement Component (US$1.0 million)

This sub-componentwill includethe followingactivities: * Developmentof an operationalmanual for field surveillanceand enforcementoperations, includinga descriptionof each site's operationalsystem, equipment requirements, detailed guidelines and standardsfor patrolling,reporting, recording, monitoringand evaluation,staffing, and training proposed. The manualwill take into accountfield conditionsto ensurethe flexibilityand efficiencyof surveillanceoperations. It will be adjusted at the end of COREMAPI based on lessons of experiencefrom the field pilots,and incorporatedinto the final COREMAPprogram guidelines. * Procurementand distribution of surveillanceequipment Basedon the pilotsite requirements, the technicalassistance will help the PMOprocure and distributesurveillance equipment to the S&E units (sub-component3.2). Patrol vessel specificationswill vary from site to site, dependingon the capabilityof commercialvessels and sea conditions. Communicationequipment will be standardized acrossall S&E units. The projectcould also help pilot relevantnew surveillanceequipment, such as underwaterrecorders for blastfishing. * Establishment of a National Coral Reef S&E Unit, to operate a surveillanceand enforcement system for the project. The unit will be responsible for daita information collection, analysis, interpretationand dissemination; support to field units; and monitoringand evaluation of field activities.The unit will be closely linkedto DGF's MCS system, developedunder the ADB Coastal CommunityDevelopment and Fisheries Management Project. * Special Workshops. The projectwill supportworkshops for judges, policymakers, prosecutors and senior enforcementofficials, and nationaland internationalworkshops on coral reef protectionfrom - 31 - destructiveactivities. The workshopswould discuss issues of concern, actions to be taken, and lessonslearned in curbingdestructive activities in coral reef areas. * Poison Testing Study. This study will develop an action plan to introduce poison testing in Indonesia. Providedlegislation is enactedoutlawing the use of cyanidein tranquilization,the project could initiate a pilot test and certificationscheme in Taka Bone Rate. Full-scale testing and certificationcould be consideredduring COREMAP 11. Sub-Component3.2: Site Surveillanceand Enforcement(US$2.7 million)

Thie site surveillanceand enforcementsub-component will be implementedin Taka Bone Rate, Lease Islands,and PadaidoIslands (Irian Jaya). Site surveillancewill rely on a combinationof deterrentand ,r ventive approaches(Fig. 2): Fig. 2: ProposedSite SurveillanceStrategy

-. Coral'''' '' ' ''' PeriodicAudit of Reportand Action Records Action RECORDS

RAPIDRESPONSE SYSTEM (radio)

(dtrentnocment) Bupat :>_/REPORT Bupati~~~ (radio) Weekly RECORDsw

FieldManager

Reo-W-thr OBSERVE (hpreveneenoement)

SITE ACTION > Record - Action - > SystemCheck

The projectwill establisha Coral Reef S&E Unit at the provincialfisheries offices, responsiblefor patrol scheduling, operation and reporting. The units will operate joint patrols between Dinas Perikanan, SBIKSDAand KAMLAagencies. At the field level, groups of communityReef Watchersequipped with haind-heldradios will monitor reef activitiesand report any violations to the S&E unit. The unit's radios will be tuned at all times to the Reef Watchers'frequency, and rapid responsepatrols will be deployedif full enforcementaction is found warranted. Upon completionof their patrols, the Reef Watchers and paitrolunits will fill in activity sheets,which will be assembledindependently into weekly observationand z,km records. Copiesof the recordswill be sent to both the ProvincialS&E unit and the Bupati's office. The recordswill be auditedyearly by the NationalS&E Unit to determinethe effectivenessof the actions taken in responseto violationreports. The resultswill be used as an input to the incentivesand rewards programdesigned by the public awarenesscomponent. -32-

Reef Watchersshould: (a) be membersof and selected by the local communities;(b) have good verbal and written communicationskills; and (c) have good knowledgeof the local reef system and reef practices.Consideration would be given to engagingformer expllosivesand poison fisherswho have eamed the respectof their communities. The ReefWatchers willI report to the S&E Unit and receivean honorariumof Rp. 20,000 per day of patrol. ReefWatcher stationswill be positionedstrategically along the coast, and be equippedwith radio communicationsand minor field equipment(e.g. binocularsand cameras). The ReefWatchers will nQIcarry out arrests due to concemsabout personalrepercussions, but confinetheir dutiesto observation,recording and reporting.

Taka Bone Rate National Park Due to the remotenessof the park (15-18 hours from Ujung Pandang),and level of extemal threats (70-80 percentof the fishing effort), the projectwill support a full deterrent and preventivesurveillance strategy aimed at controllingthe park's four access gateways (Rajuni Kecil; Tarupa, Jinatu,and Pasitalu). A total of eight Reef Watcher stationswill be established, one in each of the inhabitedislands, supplied with HFNHF basesand hand held VHF radios. Four patrol boats with outboard,twin, 60 horsepowerengines will be stationeclat the park's entry gates, supported by a 65-70 feet transport vessel with a range of 500 nautical miles and three days of sea-keeping capacity. Miscellaneousequipment for patrol and Reef Watcher stations (includingglobal positioning systems, vessel safety equipment, loud hailers, signal flares, binocularsand cameras) will also be provided. The groundpatrols will need to be supportedby an estimated10 hours/weekair surveillance, which will be leasedlocally from Navy NOMADaircraft stationedin Ujung Pandangand funded by GOI. Dependingon the progressof field operations,the project could ailsohelp support a vessel registration system in the park. Vesselsunder 5 gross tons (GRT)would be issued a free licenseand fishers' permit. Vessels of 5-10 20 GRT with a history of fishing in the park, would operateunder a traditionalfishers permit and a paid license. Vessels above 20 GRT, which are not permittedto enter or fish in the park, would be the main target of park surveillanceefforts. The followingaspects will requireclose attention during the developmentof a surveillancesystem for the park: (i) clairificationof the rules of entry into the park, whichremain unclear under the currentmanagement plan; (ii) a fuller understandingof use pattems within the park, includinginteractions between extemal and internal fishers; and (iii) effective conflict resolution,following a frameworksimilar to that of Annex 12.3.

Lease Islands: The Lease Islands site (Saparuaand Nusa Laut islands) has strong traditions of marinecustomary management The project strategyfor this site will focus on preventiveenforcement (Reef Watch System), which could be expanded during COREMAP II to a deterrent approach if warranted. The project will provide communicationequipment (FIFNHF base radios,VHF hand-held radios,motorcycles) and minor field equipmentto nine ReefWatcher stations locatedstrategically around the two islands, and help expandthe existing Nusa Laut coast watch system to Saparua. In order to facilitatefollow-up and preparefor COREMAPII, a ProvincialCoral Reef S&E Unit will be establishedat the ProvincialFisheries Agency in Ambon.

filanJaya (Padaido Islands): Even though site supportto Padaidois not expectedto be includeduntil COREMAPII, GOI has requestedthat surveillancefor Irian Jaya be introducedto counterbalancean expectedshift of mobilethreats from South Sulawesiand Maluku. F-undingfor surveillanceoperations in this site would be conditionedupon a satisfactorysurveillance needs assessmentduring COREMAPI.

Sub-Component3.3: SurveillanceTraining (US$0.2 million)

The project'sconsultants will assist the PMOin developingand conductinga nationaltraining module for S&E operations. The training will first be implementedat the national level, shifting to the provinces during the last two years of implementation. Three training modulesare envisaged: Orientation,Reef WatchersTraining, and Law Enforcement.The key topics and target audiencesare as follows: - 33 -

TrainingCourse TargetGroups Duration No. Topics

Orientation Targetgov't 2 days 3 national Ocean/coastalmanagement; officials,NGOs and 3/province Basicintroduction to Surveillanceand Enforcement fishers ReefWatchers Community,NGOs, 3 days 1 national Observation;report writing; patrol scheduling and andtargeted gov't 1/province implementation;peer pressure compliance techniques; officials publicspeaking; basic personal protection; radio operation; equipmentoperation and maintenance.

Law Enforcement Law enforcement 10days 7 national ReefWatchers course officers 3/province Marinelaws; evidence gathering and preservation;boarding at sea; inspectiontechniques; detention and arrest;court andwitness preparation; patrol scheduling, implementation and safety;report writing; equipment operation and maintenance. Project Component4 - Community-BasedManagement (US$2.0 million)

The community-based management (CBM) component will seek to improve the condition of coral reef ecosystems in two pilot sites (Taka Bone Rate and Lease Islands), through reef management plans designed, implemented and monitored by local communities. The project will provide technical assistance, community support services (travel, per diem, remuneration, and minor field equipment for field facilitators), workshops, training, and village grants to empower communities in this task. Recommended interventions include reef sanctuaries, restrictions on fishing access, catch or effort, and local activities reducing threats to reefs. The component will be closely linked to the legal framework, to enisure legal backing of reef management plans of traditional user rights. The project will also fund a study in each site on the optimal location of conservation zones and reef sanctuaries.

Of all project components, the CBM component remains the most untested. The few lessons of experience argue for a focus on process and flexibility, where field activities can be continuously adapted. The project's focus on only two sites and 12 villages is well suited to this approach. Lessons of experience will be evaluated at the end of the project, and incorporated into program guidelines. The CBM approach proposed below is therefore indicative and subject to adjustments during implementation.

Responsibilities: The CBM component will be facilitated by a highly qualified local LSM or a consortium bletween a local University and an LSM, operating under a sub-contract to the Technical Assistance (TA) team. This Community Support Group will deploy a Senior Field Manager at the district level, and Field Mlanagers (facilitators) at the village level. The Senior Field Manager will serve as the key link between the PMO and the District Secretariat and will supervise the work of Field Managers. Field Managers will carry out the initial socialization, assist the communities in preparing the reef management plans, and help establish the Reef Watch program. Village Motivators chosen from within the communities will assist Field Managers in strengthening village groups (POKMAS) (Fig. 3). Due to the isolation of the project sites, a ratio of three Motivators and one Field Manager per village will be used, although it is expected that the Field Managers will operate in groups to maximize technical support. Assistance in specialized fields will be provided by the project's TA.

Fig. 3: CBMImplementation Support

= Reporting Responsibility _ _ _ _i__ _ _ ~contractual Responsibility, t

ALA,

fM9A, v -34- Sub-Component4.1: Site Support(US$1.3 million)

This sub-componentwill fund site managementTA and communitysupport services. The TA will include a coral reef managementspecialist assisting both pilot provinces,shorl term technicalspecialists, and a marine park managementspecialist in Taka Bone Rate. Both projectsites have LSM and University programs,and to the extent possible,these would continue to be supported under COREMAP.The agreedcriteria for selectingthe CommunitySupport Groups and their key membersare outlinedbelow:

CommunitySupport SeniorField Field Managers* VillageMotivators* Group Managers* . Meetsagreed criteria for an . 5 Yearsof project . Previousexpenence in . Memberof target establishedLSM: management CBMcoastal programs at community; - Legallyestablished for at least two experience the projectsites; years,with clear goal, Director, and * Highlymotivated to Listof Trustees.g Backgroundin . Backgroundin coastal organizeand coastalmanagement managernentand/or AIG strengthencommunity - Previousexperience managing or CBM development(minimum groups; extemalfunds. qualificationSarjana or 3 - Withfull-time staff willing to reside . Excellent yearspralctical * Highlymotivated to at villagelevel. communicationskills experience); reefconservation; - Noteligible are Govemment . Demonstrated . Provenfacilitation and . Respectedwithin the agencies",industry, labor, political, experience communicationskills at community militaryorganizations, and Gov't facilitating thevillage level, and sponsoredcooperatives and stakeholderfora, abilityto stayon-site for associations. includinggov't and prolongedperiods * Provenexperience in LSMcollaboration). community-basedcoastal . Acceptableto target resources communities * Preferablywith previous experiencein projectsite***. * Acceptableto targetcommunities andendorsed by Bupati *- Undercontract to, and managed by thecommunity support group. **--Institutions of higherleaming or researchorganizations would be eligible but wouldbe encouragedto associate witha qualifiedLSM to ensureavailability of full-timestaff at the villagelevel. *"- Thiscriteria could be relaxed if the LSMdemonstrated exceptional qualifications in comparable sites.

Supportto the CBM componentwill follow the agreedguidelines for villagegrants. The PMO will carry out training of Field Managers prior to their deployment. The project will also carry out annual facilitators' workshops and cross visits, and produce a COREMAP bulletin to disseminate lessons leamedunder the programstrategy and awarenesscomponents.

Field Managerswill be subject to annualperformance reviews, and evaluatedbased on theirability to (a) develop an active interactionbetween communitygroups, local govemmentagencies and the private sector,(b) engage communitymembers in participatorytraining activities; and (c) willingnessto live at the village level throughout their assignment. Success in drafting reef management plans and establishingaltemative income generation will also be considered,although mitigating factors outside the controlof the Field Managerwould needto be taken into account.

Sub-Component4.2: CommunityPreparatfon (US$0.3 million)

This sub-component will fund initial community socialization (village workshops, group formation, comparativestudies, training,village awareness, and participatorymapping), leading to the development

Thistraining is expectedto befunded separately by AusAIDfor all pilotCOREMAP I sites. -35 - of CBM plans. The budget for this sub-componentwill be included in the CommunitySupport Service contracts. The followingactivities will be supportedunder the project:

* Social Preparation, including (a) problem assessment, consultation and awareness raising; (b) community training and extension on coral reef management,conservation awareness, micro- enterpriseneeds analysis,and basic technicaland managementskills (includingbook-keeping); and (c) groupstrengthening. The latter will includestrengthening village groupsand villageinstitutions in three key areas: Conservation(coastal habitat protection),Production (income generation through micro-enterprisedevelopment linked to reef management)and Women's' groups. In the Lease Island site, the projectwill also help strengthen inter-villagetraditional councils (Latupat,) to help resolvevillage disputes and lead to the developmentof island-widemanagement plans.

* Formulation of Coral Reef Management Plans. Draft reef managementplans will be developed by the communitiesin close consultationwith specialist TA and the Coral Reef Informationand Training Centers (CRITC)which will providetechnical and scientificback-up. Indicativeguidelines for reef managementplans and reef sanctuariesare given below:

Guidelines for Information to be Included in Technical Guidelines for Reef Sanctuaries Draft Reef ManagementPlans: O Sanctuariesshould be strict no-take zones O> Keyproblems, and strategyproposed; (no extractionof marine products at anytime); 4> Communitymapping; O Recommendedsize: 20-30% of the totalreef area; 4) Usernghts; O Sanctuariesshould protect spawning aggregation o Mapof proposedmanagement units (e.g. sanctuaries); sitesfor targetspecies; o) Proposedmanagement rules andsanctions; O Areassurrounding sanctuaries should be restricted O Local institutionsresponsible for themanagement plan; for the useof traditionalcommunities. O Infonnalmonitoring proposed; o Descriptionof localReef Watchsystem; o Conflictresolution mechanism proposed (if applicable) o Estimatedfunding and community contribution Not:The Plan must be endorsedby villageauthorities

The project will in principle not fund artificial rehabilitation schemes such as artificial reefs. Transplantationand restockingschemes will only be considered after the establishmentof effective managementrules.

* Facilitating the Development of Alternative Income Generation (AIGs) Activities. AIG activities will be aimed at reducing pressure on reef resources. Two types of AIGs will be considered(a) those providingcommunities with a direct stake in sustainablereef management;and (b) substitutionAiGs, to replacedestructive or over-fishingpractices on reefs. To the extent possible,the Field Managers will help establishpartnerships between communities and privatesector, to facilitatemarketing and ensure AIG sustainability. The feasibilityof potential AIGs will be assessed by the Production village group, assisted by the field managers,TA and relevantdistrict agencies. The criteria for AIGs to be supportedby the projectis outlinedbelow.

CriteriaforAlGs: Unprovedtechnologies (such as grouper grow- out dependent on wild fingerlings), fishing * Befinancially feasible (18% minimum rate of retum) boats, and gear (except as required for . Involvelow risk substitutionof destructivefishing practices)will . Haveproven technology not be supported by the project, due to high * Involvelow capital and operational costs risks and poor sustainability. AIGs which * Havedeveloped markets . Mustbe 'reef friendly', i.e. leadto reductionin might have environmental impact will be pressuresto reefs evaluated against the sites' carrying capacity * Nosignificant environmental impact. and any mitigation measures proposed. Examplesof AiGs whichcould be supportedby the project include user pay schemes with diving groups and promotionof diving tourism, -36 - eco-tourismbased services,replacement of poisonand blastfishing by sustainablegear (e.g. hook and line), fish processing,and maricultureof nativemollusks and seaweedwhere local marketingis ensured. Field Managers will have a discretionary budget of US$5,0010to support AIGs requiring rapid implementation.The projectwill also providetraining to potentialAIIG beneficiaries in basic technicaland financial management. Finally, the sub-component will provide information on existing credit mechanisms,or (if no such credit is available)train communityrnembers in establishingsavings and credit schemes.These are expectedto be informal,and not result in officialcooperatives.

Sub-Component4.3: Site Management(US$0.5 million)

Once coral reef managementplans and AIGs are identified,the communitieswill become eligible to receiveblock grants from the project,up to a maximumof Rp. 150 millionper villagein Taka Bone Rate and Rp. 100 million per village in the Lease Islands site. The grants will be providedin cash to the village's LKMD,following certification of eligibilitycriteria by the Senior Field Managerand verificationby the PMO.Eligibility for the grantswill be tied to the communitiesachieving the followingmilestones: * A Draft Coral Reef Management Plan, formulatedand adopted by the communitiesaccording to projectcriteria, releasing up to 30 percentof the grant. * Compliancewith the above and formulationof an AIG Plan meetingproject criteria, releasingup to an additional30 percentof the grant * Appropriateinitial Implementation of the Management Plan, where informalmonitoring indicates that managementrules are being adheredto by the community,releasing the remainderof the grant.

The Block Grant can be utilizedfor the following:

* Incrementalcosts associatedwith implementationand monitoringof coral reef managementplans. * Establishmentof a local saving and credit scheme where alternative credit is unavailable5. The maximumgrant contributionwould be 50 percent,against an equal amountin communitysavings. * A maximumof 1:1 matchinggrants against loansapproved under a villagecredit schemeor against villagers'contributions, for AIGs meetingproject criteria. * Grantsfor 'reef caring infrastructure'up to a maximumof 80 percent againsta 20 percentcommunity contribution,for (i) approved infrastructureor equipmentto implementreef managementplans; (ii) infrastructurerelieving pressure on reefs; or (iii) infrastructurerequired to supportAIGs. Disbursementof village grants will follow agreed guidelines,which could be adjusted periodicallyin consultationwith the Bank accordingto lessonsof experiencefrom the field. The funds transferwill be certifiedby the SeniorField Managersat the districtlevel, and by the Field Managersat the village level.

In additionto CBM, the projectwill support a park zonation study for Taka Bone Rate, implementedby the CRITCat HasanuddinUniversity in collaborationwith the park's conservationauthorities. The study will optimizethe locationof conservationareas (Zona Inh) and reef sanctuariesin light of the most recent informationon breedinggrounds, species habitats,and coral distributionpattems. The projectwill also supporta small reef sanctuaryzoning study in the Leasesite, undercontract to the CRITC in Ambon.

The followingaspects will need to be closely monitoredduring CBMlimplementation, to enableperiodic adjustmentsto projectdesign: (i) the effectivenessof the selected AIGs and village grants in changing the behaviorsof villagersinvolved in reef exploitation; (ii) compatibillitybetween the total fishing effort of resident fishers with reef managementgoals; (iii) fishing effort shifts to non managedareas; (iv) user conflicts;and (v) the extent to which user rights of local communitiesare being protected.

Supportto savings'schemes can only be reimbursed by theloan if usedto fundproductive activities. - 37 -

Annex 3 Indonesia: Coral Reef Rehabilitation and Management Project Estimated Project Costs PrQiectcomponent Local Foreign Total . US$ million g

1. Program Strategyand Management 1.5 1.1 2.6 1.1 NationalProgram Strategy 0.2 0.5 0.6 1.2 LegalFramework 0.2 0.0 0.2 1.3 ProjectManagement 1.0 0.1 1.1 1.4 COREMAPI Evaluation and Preparation for COREMAP II 0.1 0.5 0.7

2. iPublicAwareness 26 1.0 3.6 2.1 NationalAwareness Campaign 1.8 0.9 2.7 2.2 RegionalAwareness Campaigns 0.6 0.1 0.7 2.3 PublicRelations and Dissemination 0.2 0.0 0.2 3. Surveillanceand Enforcement 1.4 2.3 3.7 3.1 NationalSurveillance and Enforcement 0.5 0.5 1.0 '3.2 RegionalSurveillance and Enforcement 0.7 1.8 2.5 3.3 SurveillanceTraining 0.2 0.0 0.2 4. Community-BasedManagement 1.2 0.6 1.8 4.1 SiteSupport 0.5 0.6 1.2 4.2 CommunityPreparation 0.2 0.0 0.2 4.3 SiteManagement 0.4 0.0 0.4 TotalBaseline Costs 6.6 5.1 11.7 PhysicalContingencies 0.3 0.3 0.6 PriceContingencies 0.3 0.2 0.5

Isttad umay de not o oudig.5. 12.8

rNote:Totals may not add up due to rounding. -38- Annex4 Indonesia:Coral Reef Rehabilitation and IManagement Project EconomicAnalysis

Annex4.1: CostBenefit Analysis Summary

A. General. A detailedeconomic analysis of coralreel degradationin Indonesiawas carried out as part of projectpreparation . The summary,given in the table below,highlights the trade-ofFs betweenshort-term financial gains to indiiidualsdoing destructive activities, and the coststhey impose on society.The table clearly shows the devastatingeconomic consequences of a 'policyof inaction'.For noneof the threatsdo the shortterm financial gains to individuailsapproach the longerterm costs to society. For example,coral mining is estimatedto yield net benefitsto individualsof US$121,000 per km2 of reefin netpresent value terms versus total quantifiable costs to societyranging from US$180,000 to US$900,000/km2 of reef. Thesecosts are affributedto a foregonenet fisheries income equivalent to US$94,000/km2, loss of coastalprotection functions, valued at US$12,000to US$260,000,foregone tourismnet revenuesof US$3,000to 480,000and forest damage due to collectionof fire woodfor lime processingof US$67,000/ km 2. The rangesin economiclosses ior coastalprotection and tourism are attributedto variationsin landuse and tourism potential. These costs refer to quantifiablebenefits only. Otherecosystem function losses related to intrinsicbiodiversity, coral spawningsources, and option valueshave not been monetized. TotalNet Benefitsand Losses Resulting from Coral Reef Threats in Indonesia (presentvalue, 10% discount rate, 25 year time-span, in US$'000per squarekilometer of reef): Threats Net-Benefits NetLosses to Society Total Net toIndividuals Losses. Fishery Coastal Tourism Others Protection

PoisonFishing 33 40 0 3-346 n.q. 43-476 Blast Fishing 15 86 9-193 3-482 n.q. 98-761 Coral Mining 121 94 12-260 3-482 > 67* 176-903 Sedimentation(logging) 98 81 _ 192 n.q. 273 Overfishing 39 109 n.q. n.q. 109 n.q. - Non quantifiable * - Forestdamage due to collectionof wood for limeprocessing. B. Taka BoneRate (South Sulawesi). The followingassumptions were madefor the economicanalysis. The total area of Taka Bone Rate (TBR) is around 2,200 ki 2 , althoughthe actual park area is only 530 km2 . The reef area up to 25 meter depth - the basis for the calculations- is estimatedat around500 km2 .The actualcoast line areaof the atoll is unknown.However, only 7 islands are inhabited.The total coastlineof these 7 islandsis estimatedal: around 25 km. The coastlineis 100 percent rural with limitedvillage infrastructureand agriculturalland (palm trees). Coral cover and coral mortality are reported for different sites in TBR by LIPI and Woild Wildlife Fund. Blastingand other destructivefishing techniques have resultedin major damageto the reefs. Coral destruction,as defined by the mortalityindex, is currentlyat around 60 percent, as confirmedby LIPI officials,with live coral cover rangingfrom poor to fair.

The current fishing effort in TBR is not exactly known. Around 70 percent of fishing pressure is from outside the Park;some fishersfrom TBR also fish outsidethe Park,and there is a de facto open access situation.However, due to the distanceto the main marketand low populationdensity in the Park (around 4,200 inhabitants),catches are higher than the averagefor other siites.Still, presentresource rents are assumedto be zero, except for destructivefishing. The currentmaximum sustainable yield (MSY) and open accessequilibrium are estimatedat 6 and 3 mtlkm2lyr respectively.

6 SeeCesar (1996) 'Economic Valuationof IndonesianCoral Reefs', for thedetailed assumptions used. - 39 -

Due to lack of fresh water, the local populationdoes not have ice to preservefish and hence dry the fish o,r use it for home consumption. Groupers are an exception: they are either caught by hook-and-line (IRajuniKecil), or by traps and/orcyanide (doneby outsidersand some locals), and kept alive in floating cages. The larger scale external operations use ice to bring fish to the markets in Ujung Pandang, ';alayar and elsewhere.Prices are roughlyUS$ I per kg for fresh fish, US$ 0.66 per kg for blastedfish, aind US$ 0.40 for dried fish. Groupersfetch aroundUS$ 5/kg, but this dependson the size and species, with top of the line, the Sunu 'super'worth nearly US$ 7/kg. Thoughit was confirmedthat blast fishingis practiced in TBR, the extent of this practice is unclear. It is estimatedthat in Ujung Pandang,10-40 percent of reef fish landingsoriginate from blast fishing. Here, we assume that 10 percentof catch is from blast fishing.Accounts of cyanideuse for groupersvary enormously.It seems that the large scale operations (20 people) are increasinglymoving to Maluku and Irian Jaya. However, medium-size operations(4-5 people) continueto operate in TBR. The stock of groupers in TBR seems to be rapidly clepleting:three years ago, fishermenin Rajuni Kecil, using hook-and-line,would catch on averagefive groupers each or around 2 kg per day. Current catch rates in 'good' fishing days are one grouper of around 0.6 kg average.This shows severe over-exploitationof the top reef predators.It is assumed herethat 6 2/3 percent of the total catchconsists of groupers,and that 90 percentof this catch is caught with cyanide.

Coastalerosion, probablydue to past coral destruction,is widespreadin TBR. In RajuniKecil, about 10 rnetersof coastline(or one row of houses)have been lost to the sea over the last 20 years. Assumptions on the relationshipbetween coral destructionand coastal erosionare: (i) extensivedamage leads to a 50 crmdestruction per year; (ii) 1 percentloss in coral destructionleads to 1 percentcoastal erosionwithout a threshold. Given the absenceof fresh water, pristine reefs,and few non-reefrelated tourism attractions in TBR, it is assumedthat the tourism potentialof the Park is low. In Rajuni Kecil, there is one losmen, but it is only used occasionally.Though tourism will probably never be a large source of alternative incomegeneration, it is currentlyat close to zero percentof its potential.

Trends: Trends for each of the above key variablesover 25 years are difficultto estimate.In the 'with' scenario,it is assumedthat over the three years of COREMAPI implementation,enforcement and surveillancewill bring blast and poisonfishing graduallyto a near stand-stilland that the currentlevels of coral destruction,fishing yields, coastal protectionand tourism potentialwill stay put for 3 years, after which corals will recoverquickly to 25 percent coral destructionin 10 years time, as confirmedby LIPI eBxperts.The expected recoverywill be relativelyquick due to the predominanceof Acroporaspp. It is assumed that fishery yield and coastal protectionwill return to 50 and 75 percent of their potential, respectively,up from 20 and 40 percent. It is further assumedthat blast fishing will come to a complete stop 10 years after the end of COREMAPI. Also, it is assumedthat the grouperfishery will stay at 6 213 lpercent of total catch, but that it will be caught through non-destructivetechniques. Tourism potential, thoughlow, would graduallymove to full capacity.In the 'without'scenario, it is assumedthat blast and cyanidefishing are continuingat presentlevels, leading to a increasein coral destructionof 75 percentin :25years, up from 60 percent.This would imply a drop in fisheryyield to 12.5 percent of its potential,and a drop in coastal protectionto 25 percentof capacity(see projectfiles for detailedassumptions). Tourism potentialwould stay at 0 percent.

Results: Giventhese assumptions,the quantifiableincremental benefits are estimatedat US$13.5 million in net present value terms. These benefits are mainlydue to a recoveryof fish yield due to the establishmentof sanctuariesand the eradicationof destructivefishing practices.The total costs over 25 years are very difficultto measure,as far-reachingassumptions need to be made concerningthe costs beyond COREMAPI. Two scenario'sare considered.The first scenario is that GEF would provide US$500,000 during COREMAP II, consistent with current plans. IBRD would fund an additional US$350,000.It is assumed that GOI would support the costs of aerial surveillance,the reef watchers program, and legal prosecutions,while keeping its staff involvementat provincial and district level in place. Note that GOI has additionalcosts both in COREMAPI and beyondfor park rangers and their transportation,not included in project costs but still part of the economic analysis. Also, for the calculations,only a part of district (75 percent) and provincialcosts (25 percent) are attributedto the costs of managingTaka Bone Rate. A sensitivity analysiswas performedfor a 'higher cost' scenario, where it was assumed that in order to achieve the eradicationof illegal and/or destructivefishing, a -40 -

doublingof enforcementexpenditures would be needed. In the 'stand;ard'scenario, the net presentvalue of net incrementalbenefits is US$ 5.0 millionwith an ERR of 14 percent.In the 'higher' cost scenario,the net incrementalbenefits would drop to US$3.5 millionwith an ERR of 12 percent. AssumedTrends in the 'Without'Scenario AssumedTrends in the With' Scenario

80% ______1__

80.

~~~20% 4~~~~~~~~0% 40%. 113 1 5 37 9 11 13 15 17 19 21 23 25 ______time_ 1 3 5 7 9 11 13 15 17 19 21 23 25 corades-.--..-tr- tion (19 -0--cor8lfi&eryyie1d (94 time coastelprotectionfution (9 -- fttLretotismpotertial (g ...... coreldes-trtr-tion (i -- coralfiswhyyidd (3 l ______l coastalprtectionfuionointdprot~t n ( toispotal (

From GOI's perspective,its perceivedrate of return could be thought of as not includingGEF grant funds. Excluding GEF costs, the ERR would become 17 percent in the 'standard' scenario and 15 percent in the 'higher cost scenario. This can be interpreted as the economic rate of return for Indonesianpolicy makers.It indicatesthe rationalefor GEF involvement,since under scarce resources, the baselinescenario (with an ERR of 17 percent)would be more attractivefor GOI than a projectwith an ERRof 14 percent(the GEF alternative).This analysisexcludes the biodiversityvalue and other non- quantifiableecosystem functions of Taka Bone Rate NationalPark.

SummaryTable for the EconomicAnalysis of Taka Bone Rate (US.$million; 25 year horizon) standardscenario highercost scenario IncrementalBenefits (NPV; @10%) 13,500 13,500 Costs(Coremap l; sum) GEF 2,200 2,200 IBRD 700 700 GOI 2,600 2,600 Costs(Coremap Il; sum) GEF 500 1,000 IBRD 3!50 700 GOI 4,300 5,400 Costs(after 11; annual) GEF 0) 0 IBRD 0) 0 *-.--_ii G . w .d ~ ...... GOI 700a d...... 900 NetBenefits (NPV; @10%) 5,1000 3400 ERR 14% 12% ERR(excluding GEF funds) 17% 15%

C. Lease Islands (Maluku). The following assumptions were made for the economic analysis. For the purpose of the analysis, the coral reef area is defined as the reefs surroundingthe island groups of Saparua and Nusa Laut. No official estimatesare availablefor this figure and local conditionsvary dramatically,with shallow reef fiats both in North and South Saparuaand steep drop-offs very close to the shore in Nusa Laut. Our own preliminaryestimates, based on field observationsand site maps,are given in the table below.The Lease Islandsare 100 percentrural, with mostly agriculturalland and modestvillage coastal infrastructure.

Location Area (kmin) Length coastlline (km) Coastal activities

1. Saparua 7.5 25 100%rural 2. Nusa Laut 42.5 75 100% rural Total 50.0 100 100%rural -41 - Coral conditionsin the Lease Islands vary quite dramatically,depending on local threats.According to a recentLIPI survey, coralconditions rangefrom 'good to excellent'(Akoon, Nusa Laut), 'good' (Titawai, Nusa Laut),'fair (Ameth,Nusa Lautand most of Saparua)and 'poor' (Ihamahu,Saparua). However, field observationsand personalcorrespondence with marinescientists indicate that reef conditionsin Ameth appearto be better than 'fair'. As a roughestimate for the purposesof the analysis,a 50 percentcoral destructionand 'fair' conditionsare assumed.

Current fishing effort varies considerablyper location. Gleaningin Northern Saparuahas led to a near depletionof small mollusks on the reef flat. The situation is far beyondopen access equilibrium.With respectto near shore fisheries,the de facto fishing situationis one of open access,though the yieldsare higherthan what would be expectedgiven the 50 percentreef destructiondiscussed above. The reason might be a fairly low populationpressure and other economicopportunities in agriculture. We assumed here that for a 50 percent destructionand the quoted catch per day, the yield is 5 mtlkm2 Iyr for a scenario in between open access and maximumsustainable yield (MSY) (1/3 above open access) or 33.3 percentof the MSY for an intact reef. Average ex-vesselprices receivedfor fresh reef fish ranges from US$0.8to US$1.2per kg dependingon species,season, size, conditionand supply and demand. Therefore,US$ 1/kg was taken as the average.There is a marketfor grouperand other highly prizedfish due to the vicinity to Ambon and live grouper cages on Ambon island. Grouperprices for fishers vary dependingon location and middleman.An average of US$ 5 per kg of grouper was assumed. For explosivefishing, no data were confirmedin Ambon, and a blasted fish price of US$ 0.66/kg,as per Ujung Pandang,was selected.

It was confirmedthat blast fishing is practicedin North Saparuaby fishersfrom nearby villages.Though there are no exactfigures, it seemsthat blast fishing is practicedless than in other parts of Indonesia.A preliminaryestimate of 5 percent of catch from blast fishing was selected. There is allegedlysome cyanide live-fisherygoing on. Given the proximityto the live cages in Ambon Island,live grouper catchis indeedlikely, though no estimatesof market share could be obtained.Hence, a generalaverage of 1/15 of catch as given by Cesar (1996) was assumed.Other threats to coral reefs in the area include coral mining,though this is very limited in scope. The extent of coral destructionsuggests some evidenceof coastal erosion. However, most of Nusa Laut and parts of Saparua have naturally robust stony coastlines,so that the impactof reef destructionis very limited. Besides,the area is predominantlyrural. Therefore,coastal erosionwas assumedto be small (Cesar, 1996; 'low' scenario).Given its proximityto Ambon with internationalflights to Australiaand proximityto the famousresort island of Banda,the Lease Isilandshave a reasonabletourism potential. However,the lack of infrastructureand absenceof other facilities render the Islands mostly unknownto tourists. Here we assumed that tourism potential is moderatewith a net presentvalue of US$ 100 thousandper km2 of reef. It was further assumed that the Lease Islands are presentlyat around 5 percent of this potential,with limited diving tourism in Ameth (Nusa Laut)and a few losmenon Saparua.

Trends: Trends for each of the key variables over 25 years are difficult to estimate. It was assumedin the 'with' scenariothat over the three years of COREMAPI, enforcementand surveillance would bring blast and poison fishing gradually to a stand still and that the current levels of coral destruction,fishing yields, coastal protectionand tourism potentialwould then remain stable for 3 years. AIter this, corals would re-buildslowly and achieve full recoveryin 25 years. FollowingCesar (1996), it was assumedthat the pressure on the reefs would decline gradually(to 1/3 below MSY at the end of COREMAPIll and to MSY after 25 years). Grouperyields would stay at 1/15 of total catch and blast fishing would stop during COREMAPII. Tourism potentialwould grow gradually, reachingfull potential after 25 years. In the 'without'scenario, it was assumedthat blast and cyanidefishing would continueat present levels, leadingto an increasein coral destructionof 60 percentin 25 years. The fishery yield would thereforedrop to 20 percentof its capacity(open access and 60 percent;for assumptions,see Cesar, 1996). Blast fishing would grow to 10 percentdue to Malthusianoverrishing, and groupercatch would graduallydecrease to 0 percentin 25 years. Tourism potentialwould stay at 5 percent.

Results: Given slow coral recovery,and hence slow restorationof the functions of coral reef ecosystems,most benefitsaccrue after completionof COREMAPI. The quantifiableincremental benefits are estimatedat US$2.4million in presentvaiue terms. In the longerrun, in particular,annual incremental benefitsare expectedto be large: around US$ 1.0 million per annum in year 25, due to much higher -42 - fishery rents and tourism revenues.However, the interventioncosts alter 3 years, both incurred by the Govemmentand throughCOREMAP II and l1l,need to be taken into accountto computethe ERR.Given the large uncertaintywith regard to the success of the pilot phase,these future interventioncosts are unknown. As per Taka Bone Rate, two scenario'sare presented:the 'standard' scenarioassumes that GOI continueswith the enforcementexpenditures of COREMAPI. The correspondingERR is estimated at 15 percentresulting in net incrementalbenefits of US$0.8 in net present value terms over 25 years (see table).This can be comparedwith a 'highercost' scenariowith an ERR of 11 percent,in the unlikely event that enforcementcosts will need to doubleafter COREMAPI in order to achievethe eradicationof destructivefishing in the area.

Assumed Trends in the 'Without' Scenario Assumed Trends in the 'With' Scenario '-F 180%1/0 -D/ 00/o ~~~~~~~~~~~~~~~~~~~~~0/

1 3 5 7 9 1 131 1719212325 0/ 1 3 5 7 9 11 13 15 17 19 21 23 25 time time t x~~~~~radstnotton(14 o Dralfish eryyield (0 l l coreldowtrmtion (14 a MrdfifryyieXd ( l l - aZa proteaionfLrtion (O ...... flkustoursmpotetigi (34 | l alprotecionfur:tion (S ...... fttetouisnpoterid (O

Summary Table of Economic Analysis for Lease Islands ('000 US$) yr. 1 2 3 4 5 6 7 8 9 10 25 NPV

Quantifiablebenefits 'with' fisheries 63 62 61 72 82 93 103 114 124 135 380 1,185 coastalprotection 94 94 94 99 103 108 113 118 122 127 141 1,049 tourism 28 28 28 42 56 69 63 97 111 125 556 1,174 netbenefits AIG 50 50 50 50 50 50 50 50 50 50 50 454 Totalquantifiable benefits 235 234 233 262 291 321 350 379 408 437 1,127 3,862 ......

Quantifiablebenefits 'without' fisheries 61 59 57 54 52 50 47 45 42 40 4 397 coastalprotection 93 93 92 91 91 90 89 88 88 87 76 799 tourism 28 28 28 28 28 28 28 28 28 28 28 252 Totalquantifiable benefits 183 180 176 173 170 167 164 161 158 155 108 1,448 ...... lncr. benefitsover 25years 52 55 57 89 121 153 186 218 250 282 1,019 2,414 ......

InterventionCosts (COREMAP I and expectedcosts afterwards) GOI 62 183 130 43 43 43 4:3 43 43 43 43 588 IBRD 167 617 492 0 0 0 o 0 0 0 0 1,032 TotalCosts Lease Islands 229 800 622 43 43 43 43 43 43 43 43 1,620 ......

Net Benefits(NPV) -176 -745 -565 46 78 110 143 175 207 239 976 794 ERR (standard scenario) 15% 794 ERR (highercost scenario) 11% -43 -

D. SensitivityAnalysis of an UnfavorableExchange Rate Scenario. Theanalysis shownabove was performed under the prevailingeconomic conditions at pre-appraisalstage (July 1997) whenthe exchangerate was Rp. 2,500to the US dollar. The deepeningfinancial crisis in Indonesia requires,however, that a sensitivityanalysis be performedon a extremelyunfavorable exchange rate and domesticinflation scenario. The assumptionsfor this 'ExtremeContingency Case' are presented below:

______Assumptionsunder an ExtremeContingency Scenario GOl'sFY InflationRate ExchangeRate UnskilledLabor Blasted Fish Grouper Other Fish (Rp/US$) (US$Iday) Prices(US$) Prices(USS) Prices(US$)

1998/99 50 % 16,000 1.00 0.67 5.0 1.0 1999/00 20 % 20,000 0.33 0.33 4.0 0.5 2000/01 7.5 % 22,250 0.38 0.40 3.5 0.6 2001/02 5 % 23,000 0.40 0.45 3.5 0.7 2022/23 2.2 % 25,000 1.00 0.67 5.0 1.0

A diramaticdepreciation of the Rupiahwould substantiallydecrease project costs in US dollar terms (see Annex 5). However, it would affect incremental benefits only marginally,and thereforethe ERR is expected to increaserelative to pre-appraisalestimates. Only non-tradablegoods (mainlylabor and localfish products)affect the ERR,since ERRs are at constantworld parity prices and are thereforenot sensitiveto inflation,or exchangerates on any tradableinput or output. The economicprices for unskilledlabor and localfish productsin US dollarterms would decrease, however, and otherprices wouldstay constant. Thisoccurs both in the 'withproject' and the 'withoutproject' scenarios. The tablebelow shows the impactof this extremecontingency scenario on the economicanalysis of the Lease Island site. The ERR would go up to 19 percentas comparedto 15 percent computedat pre- appraisal.

LeaseIslands Site Comparisonof EconomicRates of Retumfor Base Case and ExtremeContingency Case BaseCase ('000 US$) ExtremeContingency Case X______('000US$)

Quantifiable Benefits 'with project' Scenario 3,862 3,869 Quantifiable Benefits 'without project' Scenario 1,448 1,613 IncrementalBenefits 2,414 2,256 Intervention Costs 1,620 1,094 NeitPresent Value (NPV) 794 1,162 Economic Rateof Retum (ERR) 15 % 19 %

Thiis analysis, however, abstracts from real economic pressures faced by individual fishers: under unfavorable economic conditions, unemploymentand poverty are likely to rise, social unrest may intensify,and these factorscombined may result in a higher likelihoodof unsustainablefishing practices. This could further increasethe ERR, assumingthat enforcementworks well. However,it could also pose a substantialrisk to the projectif enforcementis ineffective. This added risk factor is recognizedin the project'slogical framework and criticalrisks matrix (SectionF.2 of the PAD).

T-heinflation, exchange rate and labor costs untilyear 2001/02 for this extremecontingency scenario are from VikramNehru. Otherfigures are roughestimates. Tradablegoods are assumedto fall in value due to the economiccrisis in importingcountries, but less than non-tradablesin US dollar terms. -44-

Annex 4.2: IncrementalCost Aknalysis

Context and Broad Development Goals:

Coral reefs and their associatedmarine life are one of the greatest natural treasuresof Indonesia.The countryis locatedat the centerof the world's coral reef diversity. Inidonesia'scoral reefs are estimatedat 50,000 to 100,000 kin2, or approximately 12 to 15 percent of ithe world's reefs8. The quality of Indonesianreefs is, however,declining rapidly and even remote reefs are not free from man-induced deterioration.It is currentlyestimated that less than 30 percentof Indonesia'sreefs are in good condition, with live coral cover above 50 percent. The main threatsto the COREMAPProgram sites are destructive fishing practices(bombing and cyanide),coral mining,overfishing, isettlement pollution,and uncontrolled tourism development.Without immediate interventions,it is likely that large areas of reefs will suffer irreversibledamage in the nearfuture.

The COREMAPProgram will consist of three phases, implemenitedover 15 years. IBRD and GEF fundingwill followthe Bank's newAdaptable Program Lending (APL) framework. GEF fundingwill assist the first two phases of the program. By the third phase, institutionalizationof the project should have reacheda levelwhere GEFfinancing is no longer necessary.ADB, AusAIDand JICA are expectedto be involvedin supportingparallel projects under the COREMAPprograirn umbrella.

The proposed program is consistent with Indonesia's BiodiveirsityAction Plan, Agenda 21, the Convention on BiologicalDiversity, GEF's Operational Programon Marine, Coastal, and Freshwater Ecosystems,and guidancefrom the three Conferenceof Parties. It specificallyresponds to the Jakarta Mandate stressingconservation and sustainable use of marine eicosystems.By focusing on Eastem Indonesia,the proposed program portionsexpected to be supported by the World Bank and GEF will help conserve an area which is believedto contain the richest coral reef, fish, and marine invertebrate biodiversityin the world.

Baseline Scenario for Phases I and 11

Scope and Costs: Under the baseline scenario, GOI would begin implementationof COREMAP initiativesin the provincestargeted for World Bank and GEF financing.The BaselineScenario would focus on interventionshaving direct or indirectimpact on livelihoodopportunities for reef-dependentlocal communities. While these sites are under severe stress, they aire often unrelated to areas of high biodiversityimportance. The baselinescenario would thereforecomprise four major elements:

(a) Community Based Managementin two Provinces(Maluku and South Sulawesi),expanding to four Provincesin PhaseII (Maluku,Irian Jaya, South and SoutheastSulawesi). Activitieswould include reef managementplan preparation and implementation; local awarenessraising and community training; altemativeincome generation to reduce pressureon coastal resourcesand enhancetheir sustainableuse; strengthenedlinks with enforcementnetworks; and 'reef-caring' infrastructureto relievesettlement impact on reefs.The baseline costs for this componentare estimatedat US$0.8 millionfor PhaseI andUS$ 12.0 million in Phase11.

(b) Surveillance and Enforcement at the national, regional ancl site levels. The componentwould include training, workshops, surveillance equipment, and operational enforcement costs. The baselinecosts for thiscomponent are estimatedat US$3.1 millionand US$ 6.0 millionin PhaseI.

(c) Program Strategy and Management. Under this component,GOI would developthe COREMAP program strategyand guidelines,carry out project management,complete a legal review in support

S M. Spalding,personal communication, based upon a WorldConservation Monitoring Center study. -45 - of reef management,and carry out preparatoryactivities for Phase II. The baseline costs are estimatedat US$ 2.1 million,including technical assistance, and US$ 10million in PhaseII.

(d) PublicAwareness, at the nationaland regionallevel. This componentwould include mass-media campaigns, outreach programs and materials, dissemination of COREMAP guidelines and awarenessbuilding workshops. Baseline costs in the range of US$ 2.7 million are foreseen for Phase I and US$ 7.0 millionfor PhaseII.

Benefits. Implementationof.the Baseline Scenarioinvestment program will be importantfor the rationaluse of Indonesiancoral reef resources,both at the site level as well as for the countryin general. It is estimatedthat, at the nationallevel, sustainablehook-and-line live-grouper fishery (as opposedto cyanide fishing),could createjobs for an estimated10,000 Indonesian fishers and generatenet benefits on the order of US$321,800million in presentvalue terms. Likewise,should blast fishing be prevented, gains of up to US$482,000per km2 in areas of high tourismvalue could be obtained.Should altemative income generation and enforcementof traditional property rights be successful in reducing fishing pressure from an 'open access' situation to an 'optimal sustainableyield', coral reef fisheries could producean additionalUS $70,000in net presentvalue per km2of reef. The BaselineScenario would also lead to greater institutionalcapacity, general public awareness,and a stronger framework for reef managementin Indonesia.

The Baseline Scenario would, however, be insufficient to ensure the effective conservation and managementof sites of high biodiversityimportance, since from both local communities as well as regionalgovernments' perspectives, these areas are often isolatedand of reducedregional development priority. Hence, the GEF Baselinewould not be sufficientto ensurethat high priority conservationareas are included in future nationalCOREMAP program strategies. The BaselineScenario would also be insufficientto ensure effectiveenforcement in sites of high biodiversityimportance, effective involvement ocfNGOs in field activities,and a publicdissemination of lessonsof experience,particularly amongst non- giovernmentalstakeholders.

GlobalEnvironmental Objectives

The global environmentalobjective of the GEF Alternative is to protect, rehabilitate, and achieve sustainableuse of coral reefs and associatedecosystems in Indonesia.The Indonesianreef ecosystem is believedto containthe richestcoral reef, fish, and marineinvertebrate biodiversity in the world. Given their possiblelinks, protectionof Indonesiancoral reefs would also assist coral reef regenerationin other partsof the Indo-Pacificregion.

GEF Alternativein PhasesI and If

Scopeand Costs. Under the GEF Alternative, an expanded program will be undertaken, comprisingactivities focusing on both coastal povertyalleviation/ development through the rationaluse of reef resources(generating domestic benefits), as well as protectionof coral reef ecosystemsof global significance.Note that the estimatesfor Phase li are still preliminarygiven the natureof the adaptable programframework. Currently, it is foreseenthat the GEF altemativewill supplementthe componentsof the BaselineScenario in the followingways:

(a) CommunityBased managementof one additional site in Phase I and three additional sites in Phase Il:

The PhaseI site will be the Taka Bone Rate NationalPark in the Flores Sea, whichhas been identified as a first priority area for conservation under Indonesia's Marine ConservationAtlas, as well as a priority under the Global RepresentativeSystem of Marine Protected Areas. Taka Bone Rate is the world's third largest atoll, and Indonesia's largest. The foreseen GOI expenditures over the coming 5 years are consideredinsufficient to effectivelyprotect the park from externalthreats, and maintain core areas as sanctuaries. GEF incrementalfunding of approximatelyUS$ 1.2 millionin Phase I and US$0.5million in Phase II are estimatedto be required. -46- * The first proposedPhase II site is the Wakatobi(Tukang Besi) NationalMarine Park, which is locatedin the Wallacearegion (SoutheastSulawesi) and is COREMAP'sclosest site to the perceived center of global marine 1biodiversity. It was identified as a conservation priority under Indonesia's Marine (Conservation Atlas, and declared a nabtonalpark in 1996. Up to 70 percent of the reefs remain in excellent condition,but increasing threats - especially from commercial bombing, cyanide, mining and overfishing- make it a priorityfor urgentconservation. The site has been managedby a non-profit partnershipgroup (OperationWallacea) involving the private sector, NGOs and govemmentagencies. This group has succeededin raising intemationalattention for the site, and is expected to raise US$6010,000over the next six years in sponsorships,paying diving volunteers, and entrance fees. This level of support is, however,insufficient to effectivelymanage and protectthis remotearchipelago, and GEF incrementalfunding of US$1.0million is estimatedto be required(for PhaseII only). * The secondproposed Phase II site is the PadaidoIslands, located southeast of Biak in northem Irian Jaya. This site has extensive and very diverse reefs, and is believedto contributeto coral reef maintenancein Westem Papua New Guinea. It has suffered bombing and recent earthquakedamage, but is reportedly recovering due to local initiatives to stop destructivefishing practices. IncrementalGEF funding of US$ 1.0 millionis proposedfor the site (for PhaseII only).

* The third proposed Phase Il-site is the Spermoiide Islands, located in the eastem border of the MakassarStraits. This site has the highestcoral reef diversity recordedin Indonesia(over 250 coral species)and one of the highestrecorded in the world. GEF- financing of this site would be conditionalon rationalizationof project locations and activitiesto adequatelyaddress sustainable use across the reef ecosystem. The level of support plannedfor the above sites during the project life is insufficientto ensure their effective management,and incrementalGEF fundingof US$ 1.0 million is proposed(for PhaseII only). Includingthe abovefour siteswill add to the scopeof what would otherwisebe feasible underthe project. For all four sites, GEF financingwill make possiblethe deploymentof field facilitators and site managers,training, awareness, preparation and implementationof managementplans, and limited equipment. Alternative income generation,a productiveactivity expected to bring direct benefits to project villages, will be funded under the IBRD loan. The estimated GEF contributionto cover incrementalcosts in Phase I is estimatedat US$1.2 million out of a total GEF Altemative Cost of US$ 2.0 million. For Phase II, the!corresponding figures are US$ 3.5 millionout of a total of US$ 15.5million. Surveillance and Enforcement. Additional financing under this componentwill increase the assistance to GOI in developinga national reef surveillancestrategy focusing particularlyon mobile threats (poisonand blast fishing), includinga study and pilot certificationfor introduction of poison testing in Indonesia,and seminarsto developstrategies to curb reef destruction.The GEF altemativewill also help efforts to strengthen the mcnitoring,control and surveillanceof GEF target sites. It is estimatedthat GEF will provideincremental costs amountingto US$ 0.9 millionin PhaseI and US$ 2.0 millionin Phase II, out of a total GEFAltemative costs of US$ 4.0 millionand US$ 8.0 millionrespectively. * ProgramStrategy and Management.Additional financing under this componentwill increase the assistance to GOI in preparing a national COREMAF'program strategy with a stronger emphasis on conservation area protection. Supplementary legal support, especially in strengtheningcommunity user rights' systems, will also be provided. The GEF Altemativewill also support an independentpanel evaluation of Phase I results, which would be used to disseminatelessons of experiencefor subsequentprogram phases. Additionalitems in the GEF Altemative will include final preparation of globally signiificantPhase II sites, as well as incrementalproject management assistance necessary to supportGEF activities. GEF financing for this componentwould be quite limited,in the order of US$ 0.8 millionin Phase i and US$ 1.0 in Phase II, resulting in a total GEF Altemative cost of US$ 2.9 million and US$11.0 million, respectively. -47- * PublicAwareness. GEF funds are envisagedfor enhancednational and regional-levelcoral reef campaigns,as well as increasedinvolvement of local groups and NGOs; incrementalsupport for a system of yearly awards and public recognitionto outstandingCOREMAP participants; and increasedemphasis on decisionmakers' involvement and press coveragelikely to benefitcoral reef protectionthroughout Indonesia. GEF incrementalfunding for this componentis estimated at US$ 1.2 million (PhaseI) and US$ 1.0 million (PhaseII), out of a total GEFAltemative cost of US$ 3.9 and 8.0 million,respectively.

Benefits

In addition to the national benefits associatedwith the BaselineScenario, global benefitsof the GEF Alltemativeinclude:

* Protectionof globallysignificant biodiversity in priority coral reef ecosystems; * Improvedmanagement of Take BoneRate (PhaseI) and Wakatobi(Phase 11)Marine NationalParks; * Opportunityto test and expand community-basedmanagement both inside and outside protected areas; * A strengthenedlegal frameworkfor coral reef managementin Indonesia; * Improvednational policy and enforcementstrategy for coral reef management; * Enhancedparticipation and publicawareness amongst decision makers and the publicat large; * Enhancedcapacity building for coral reef management,particularly amongst NGOs;

In(crementalCosts

The total costs of the BaselineScenario are estimatedat US$ 8.7 millionin PhaseI and US$ 35.0 million in Phase II. The GEF Alternative is estimatedat US$ 12.8 million in Phase I and US$ 42.5 million in Phase2. The incrementalcosts of the GEFAlternative are thereforeestimated at US$4.1 million(Phase I) and US$ 7.5 million(Phase II). The Asian DevelopmentBank, AusAID and the JapaneseIntemational DevelopmentAgency (JICA) are involved in financing parallel projects within the COREMAPprogram that would amount to an additionalfinancing of approximatelyUS$13.3 million in Phase I and US$ 57.5 millionin Phase II. These contributionsare additionalto the estimatedBaseline Scenario for the current project. GEF funds are not expectedto be requiredduring Phase l1l,as the programwill have matured to the point where most global benefitswould also be expectedto result in domesticbenefits. A GEF grant of US$ 11.6 million (US$ 4.1 million in Phase I and US$ 7.5 million in Phase II) is therefore requestedto supportthe COREMAPProgram. -48 -

INCREMENTALCOST MATRIX - COREMAP PHASE I AND PHASE 11 Component Cost PhaseI PhaseII DomesticBenefit GlobalBenefit Sector 2!! : (USSM)(US$M) .. Community Baseline 0.8 12.0 Revenuescreated from rational use of Based renewablereef resources; Management Increasedknowledge of rational utilization of coral reef ecosystem. Wth GEF 2.0. 15.5 Improvedmanagement of twomarine Protectionof globally Altemative parks(Taka Bone Rate in PhaseI significantbiodiversity; andWakatobi in PhaseII); Pilotdemonstrations, Expansionand testing o)mmunity replicableelsewhere in basedcoral reef resource SoutheastAsia. managementin sitesof global importance(Spermonde, Padaido). Incremental 1.2 3.5 _ Surveillance Baseline 3.1 6.0 Establishmentof nationaland and provincialenforcement systems for Enforcement coralreefs. Wth GEF 4.0 8.0 Improvedenforcement strategy for Contributionto intemational Altemative coralreef management (e.g. poison effortsto tacklepoison fishing; testing); Betterprotection and Relevantenforcement sLupport, managementof globally speciallyfor protectionolf traditional significantsites. rights; Improvedenforcement in GEF-funded ______sites. Incremental 0.9 2.0 Program Baseline 2.1 10.0 Improvedguidelines and strategy for Improvednational strategy and Strategyand coralreef management; strengthened legalframework for effective Management legalframework; Increased public protectionof the world'srichest sectorcapacity to supportcommunity coralreefs. based coastal resource riianagement. WithGEF 2.9 11.0 Participatorydevelopment of Strengthenedfocus of Altemative COREMAPProgram strategy, through COREMAPprogram on high discussionwith key stakeiholders; priorityconservation sites. strengthenedprotection of community Enhancedcapacity of NGOs; userrights; independent evaluation of Phase I. Incremental 0.8 1.0 _ Public Baseline 2.7 7.0 Raisingpublic awareness of Awareness significanceof coralreef tecosystems and their functions. WithGEF 3.9 8.0 Increasedintensity of public Increasednational and Altemative awarenesscampaign; intemationalpublic pressure to Increasedinvolvement of localgroups stopinternational mobile andNGOs in campaign; threatssuch as cyanide fishing; Increasedexchange of regionallessons of experience oneffective coral reef management. Strengthenedpublic constituencyto protectworld's richestcoral reefs. Incremental 1.2 1.0

Totals Baseline 8.7 35.0 _ WIh GEF 12.8 42.5 Alternative Incremental 4.1 7.5 Total GEFIncremental Costs (COREMAP 1+11) 11.6 ___ -49 - Annex 5 Indonesia: Coral Reef Rehabilitationand ManagementProject FinancialSummary

A. Investmentand RecurrentExpenditures for Programand Site Investments (in US$million)

Implementation Period Operational Period COREMAPI COREMAPII COREMAPIlIl Post-Program (total,3 years) (total, 6 years) (total, 6 years) (average per year) ProcgramCosts TotallProgram InvestmentCosts 11.9 (92%) 34.0 (80%) 35.0 (70%) Recurrent Costs 0.9 (8%) 8.5 (20%) 15.0 (30%) 3.9 (100%) ...... Total ...... 12.8...... (100%X) ...... 42.5 ...... (100%) ...... 50.0 (100%)...... 3.9(100%) ...... COREMAPSites (Average/site) InvestmentCosts 1.3 0.7 - RecurrentCosts 0.2 0.9 0.9 0.2 Total 1.5 1.6 0.9 ...... 0.2 Financing Sources (%of total pripertcosts) IBRD 6.9 25.0 35.0 _ GEF 4.1 7.5 - - Government 1.8 10.0 15.0 3.9 Total 12.8 42.5 50.0 3.9 per year

Mainassumptions: Post-projectexpenditures were estimatedfor both programcosts, and individual COREMAP sites. COREMAP II and IlIl are expected to focus primarily on geographical (site) expansion, thus involving a relatively high (but decreasing) proportion of investment costs. Phases II and IlIl are estimnatedto involve an additional 10 to 14 sites at an investment cost of US$2.0 to US$2.5 million per site, including enforcement. The remaining investment expenditures would be spent on program management, capacity building, expanded surveillance activities, and continued awareness. Site expansion would cease at the conclusion of the program, leaving recurrent expenditures (primarily related to surveillance) averaging US$200,000 per site per year. At the conclusion of Phase IlIl, all recurrent program expenditures would be expected to be financed by GOI under a block grant transfer to regional govemments. Investment costs account for an estimated 92 percent of average site expenditures during COREMAP I. Site investment would continue to be required for 2-3 years following conclusion of Phase I, and would theretfore be included in COREMAP II funding. Recurrent expenditures estimated at US$200,000 per site per year, would be needed in perpetuity to cover surveillance operation costs. These would be covered by GOI as part of its sovereign duties in archipelagic and territorial waters.

B. FinancialAnalysis of Village Micro-EnterpriseActivities

A detailed financial analysis was performed on prospective altemative income generation (AIG) activities supported by the project. Eight representative microenterprise models were identified as possible AIGs. These include: (i) bag-making; (ii) brick-making; (iii) kerupuk ikan (fish crackers) processing; (iv) terasi processing; (v) pearl oyster culture; (vi) seaweed culture and drying; (vii) snorkelling and fishing equipment rental; and (viii) seabass floating cage culture. The details of the financial analysis of each microenterprise are included in the Project Implementation Plan. Since the project will be demand driven, livelihood projects not included in the analysis could be chosen by beneficiaries after review by the project team. Hence, the enclosed analysis should be regarded as indicative. - 50- The financialanalysis of each of the microenterprisescovered a period of six years, includingan establishmentperiod of oneyear andan operationperiod of five!years. The financialassessment was basedon severalfinancial indicators including: (i) investmentcosts; (ii) workingcapital requirements; and (iii) annualoperating costs. Operatingcost items includedwages, production materials, repair and maintenancecosts, depreciationand interest payments.The results of the financialanalysis are summarisedin the two tablesbelow. The first table summairisesthe analysisof individualmicro- enterprises. The aggregateresults of the secondtable takes into accountthe total costsand benefits weighedby theassumed adoption rate for individualenterprises, as displayedon the'# of activities"column of thefirst table. Theresults indicate financial rates of return(FRR) ranging from 28 percentto 59 percent, well abovethe estimatedweighted average capital cost of 18 percent.The benefit-costratios for the activitiesrange from 1.08 to 1.26. The Net PresentValue (NPV) for the various activitiesvaries considerablyfrom US$748to US$4,380.For the assumedaggregate package of a total of 50 microenterprisesand an investmentof US$35,000by a groupof 387 investors,the estimatedFRR is 39 percent,the benefit-cost1.17 and the NPVUS$ 21,600.

Financial Analysis of Representative AIGs Microenterprise Investment FRR NPV BIC # of Switching Values ratio activities (US$) (%) (@12%;USS) Benefits Investment Costs (for 12%) (for 12%)

Brickmaking 403 41% 249 1.19 110 16% 70% Kerupukikan 230 59% 254 1.13 110 12% 125% Terasi processing 682 31% 322 1.26 10 20% 53% Bag making 1,069 28% 388 1.08 5 7% 40% Pearloyster 1,042 45% 757 1.24 5 19% 80% Seaweed 1,179 43% 780 1.21 25 18% 75% Snorkeling 315 46% 266 1.09 :3 9% 95% Seabassculture 2,309 44% 1,460 1.24 :2 19% 70%

TotalPackage: 35,166 39% 21,598 1.17 50 15% 70%

Financial Analysis;for an A regateAIG _Package: ____i Item: YrOr Yr: . YrI2 Yr3 Yr4 Yr5R

______:______(USS'QO) (USu000) ) (us'000) (uS$'00)VUS$'000) (US$'000)

Capital Costs Investment 26.3 0.0 0.0 4.6 0.6 0.8 WorkingCapital 8.9 0.0 0.0 0.0 0.0 0.0 Total Capital Costs 35.2 0.0 0.0 4.6 0.6 0.8 Variable costS Labor Costs 0.0 7.4 7.5 7.6 7.6 7.6 OtherCosts 0.0 13.1 22.5 23.0 23.0 23.0 Total Variable Costs 0.0 20.4 30.0 30.6 30.6 30.6

Total Costs 35.2 20.4 30.0 35.2 31.3 31.4

Total Revenues 0.00 42.3 44.9 47.2 47.4 47.4 NetBenefits -35.2 21.9 14.9 12.0 16.1 16.0

FIRR 39.4% NPV@ 12%(US$S000) 21.6 Benefit-Cost Ratio 1.17:1 - 51 - C. Justificationfor Village Subsidies

Rieefsanctuaries and other fisheries management interventions can be expectedto yieldbenefits relatively quicklyin the form of increasedfisheries productivity. Reef sanctuaries,for example,can typically replenishsurrounding fishing grounds within a periodof 3-7years. The financialrate of returnfor average reefsanctuaries in the Philippinesis 28 percent,indicating that recurrent expenditures are morethan offset by the benefitsof management.Nonetheless, reef sanctuaries involve an initialclosure of 20-30percent of the reef area, imposingshort-term costs to traditionalfishers; hence a short-termsubsidy is likelyto be justified.The estimates below are for TakaBone Rate: the calculationsassume a closureof 30 percentof the area,leading to a shortterm drop in catchof 30 percent,which would recover to pre-sanctuarylevels aroundyear three. The catchwould continue to graduallyincrease until leveling off after7 yearswith a doublingof the initialcatch. These assumptions are in line with recentrecovery rate studiesof marine reserves.The initialcatch by localfishers is assumedto be worth US$450,000per year, basedon the assumptionthat localfishers operate in 30 percentof the area(70 percent of the fishingeffort in the parkis external),or 150km 2 of reef. Thereare five villagesin the projectsite.

As indicatedin the tablebelow, the lossesin the firsttwo years amount to aboutUS$28,000 per village over a periodof two years,using the assumptionsoutlined above. Hence,an initialsubsidy of US$25-30,000 equivalentper villagefor alternativeincome generation activities and villageinfrastructure 'reef-caring' investments,as determinedby the project,is consideredjustified.

Benefitsfrom Sanctuaries to Villagersin the TakaBone Rate Park Y1!!r_S_ 0 1 2 3 4 5 6 7 fishyields ('000 $) 360 252 330 408 486 564 642 720 benefits -108 -30 48 126 204 282 360 benefitsper village: -22 -6 10 28 41 56 72

D. Impact of an UnfavorableExchange Rate TheTable below illustrates the impactof a scenariowhere the Indonesian economic crisis would deepen to extremeconditions. Under the assumptionsbelow, the unusedfunds would amountto approximatelyUS$1.7 million in loanfunds, US$0.9 million in GEFgrant funds, and US$0.5million in GOIcounterpart financing. Shouldsuch a scenarioarise, the Bankwould discuss with GOI at mid-term reviewwhether to cancel the expectedproject savings, or reallocatefunds to incrementalproject outputs.

Comparisonof ExchangeRate and Local Inflation Rates between Base and Extreme Contingency Case -lExchange Rato- LocalInflaton Rates '''' 'i...... 9...... '...... ______otlatln 98199 99100 00101 Negotiations 98199 99100 ...... 00101

Base Case 5,000 5,378 6,041 6,525 0.0 % 17.5% 12.5% 8.5 % Extreme Case 8,000 16,000 20,000 22,250 50.0% 50.0% 20.0% 7.5 % Impactof ExtremeContingency Scenario on ProjectCosts (US$ Million) -Base Cas -Extreme Contingency Case Component Toa BD GF c~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~-01Total...... IBRD...... #...... ¢...|..''''''''D-...... G. GEF *...... 001

ProgramManag't 2.9 1.1 0.8 1.0 2.2 1.0 0.7 0.6 PublicAwareness 3.9 2.5 1.2 0.2 2.5 1.5 0.8 0.2 Enfarcement 4.0 2.5 0.9 0.6 3.5 1.9 0.9 0.7 CBM 2.0 0.8 1.2 0.0 1.5 0.7 0.7 0.0 TotalProject Costs 12.8 6.9 4.1 1.8 9.7 5.2 3.2 1.3 Differencefrom 3.1 1.7 0.9 0.5 Basecase -52-

Annex 6 Indonesia: CoralReef Rehabilitationand ManiagementProject Procurement,Disbursement, and FinancialManagement Arrangements

A. Procurement

Procurementmethods (Table A)

Procurementof goodsand serviceswill followthe WorldBank's 'Guidelines for Procurement underIBRD Loans and IDA Credits" datedJanuary 1995, and revisedJanuary and August 1996(for worksand goods), and the "Guidelinesfor Selectionand Employment of Consultants by WorldBank Borrowers' datedJanuary 1997 (for services). The World Bank'sstandard biddingdocuments and contracts will be used. All procurementwill be handledcentrally by the ProjectManagement Office (PMO). The ProjectDirector will approveall contractsprior to signatureby the ProjectManager (Pimpro). The project'sprocurement plan is detailedin the ProjectImplementation Plan (PIP).

Goods

Goods(US$2.2 million) procured under the projectwill includesurveillance equipment funded underthe Bankloan and GEF grant (US$2.1 million), and office and other equipment for project management,funded by GOI (US$0.1 million). Surveillanceequipment comprising computers,radios, faxes, maps, cameras, surveillance vessels, GPS, safetyequipment (e.g. life jackets,flash lights,and identificationvests) and other minorfield equipmentwill be procuredunder Intemational Competitive Bidding (ICB) procedures, in reasonablysized lots of US$50,000or more. A marginof preferencefor domesticallymanufactured goods can be applied.The surveillance equipment will be distributedto the DirectorateGeneral of Fisheries (in Jakarta)and to the ProvincialFisheries Offices in SouthSulawesi and Maluku.The patrol vesselswill be of civilianspecifications, and will be appropriatelymarked as being under GovemmentService as requiredby the UnitedNations Convention of the Lawof the Sea. services Services (US$7.8million) procuredunder the projectwill includeawareness campaigns, technicalassistance, community support services, and spiecialstudies. The project's awarenesscampaigns (US$3.4 million), includingspecialized services, TV and radio production,awareness materials, training, and miscellaneous campaigns, will becontracted to a professionalpublic relations firm, using qualityand cost based selection (QCBS) and an output basedcontract. Thefirm could,at its prerogative,sub-contract specific parts of the campaign to qualifiedlocal groups or NGOs. The contractwill be processedin two phases(i) campaign design;and, subjectto a satisfactorydesign, (ii) campaignimplementation. Provincial awarenessactivities will be fundedseparately by the Governmentat an estimatedcost of US$0.2million.

The project's technicalassistance contract (US$2.5million) for strategy and policy development,legal advice, monitoring,control and surveillance,reef management,and technicalsupport, will be procuredthrough a competitive,quality-based selection (QBS). Since it is vitalthat the technicalassistance be of the highestprofessironal quality for the development of the long-termprogram framework, price will notbe a factorin the selection.

Community support services (US$0.3million for the Lease Island site and US$0.4 millionfor Taka BoneRate) will includefield managers stationed at the clistrictsand project sites, village motivators,field equipment,and expensesassociated witth communitysupport such as -53 - workshops,training, awareness, and participatorymapping. These serviceswill be procured under two contracts (one for each pilot site) to highly qualifiedlocal non-govemmentalgroups (LSM), or a consortiumbetween an LSM and a local University,according to the selection criteria specified in Annex 2. The communitysupport groups will be sub-contractedby the winningTA firm. The short-listedTA firms will specify how the communitysupport serviceswill be managed,but will not namethe sub-contractorsin their bid. The winningTA will then select, either through a direct contracting procedure or through a competitive process, the most qualified LSM/Universitygroup for each site. The sub-contractsfor the communitysupport groupwill be subject to prior review by the Bank. Direct sub-contractswith communitysupport groupscould be justifiedbased on their uniqueexpertise and continuityneeds at the site level.

Specialstudies (US$1.0million) will consistof park managementand zonationfor Taka Bone Rate, a sanctuaryzoning studyin Lease Islands,two to three legal and enforcementstudies, an independentevaluation for COREMAPI, and a feasibilitystudy for COREMAPII. The legal and enforcementstudies, averaging US$55,000each, will be procured through selection basedon consultant'squalifications, but without price considerations.

Funds for park managementand zonation of Taka Bone Rate (US$180,000),consisting of expert advice, mapping,site surveys, demarcation, and workshops, will be contractedout to the Coral Reef Informationand Training Unit (CRITC) at HasanuddinUniversity in South Sulawesi. The Universityhas been actively involvedin assistingPHPA with park zonation,and the CRITCsfuture role in site monitoringmake it uniquelyqualified to providethis assistance.A parallel reef sanctuarystudy (US$55,000)will be carried out at the Lease Islands site under contractto the CRITCin Ambon.

The independent evaluation of COREMAP I (US$220,000)will be carried out by an independentevaluation panel, selected according to the criteria specified in Annex 2, sub- component 1.4. The World ConservationUnion (IUCN),would be selected to managethe panel undera sole sourcecontract, and would consolidatethe evaluationresults. IUCN would be able to commenton the compositionof the panel, and would be expected to ensure the quality (but not the results)of the independentevaluation.

The detailed design of COREMAP11 (US$370,000) will be included in the TA contract, with release of the funds subject to satisfactory performance of the firm during project implementation.

Miscellaneous

Miscellaneousprocurement items (US$2.7million) will include operationand maintenancefor surveillance operations (US$0.7 million), surveillance training (US$0.2 million), workshops (US$0.3 million), village grants (US$0.2million), public relations(US$0.3 million), and project management(US$1.0 million). These items will be procured according to Govemment proceduresacceptable to the Bank.

The Bank and GEF will finance the incrementalcosts of surveillance maintenanceand operation (US$0.3 million) in accordancewith the incrementalcost analysis of Annex 4.2. This will include vessel fuel, equipmentmaintenance, and minor equipmentreplacement; and allowancesand local patrol costs for communityreef watchers. Aerial surveillancewill be providedby GOI at an estimatedcost of US$0.2 million.Fuel, spare parts,and minor equipment replacement,valued at less than US$50,000per lot, which may be required 'on the spot' to ensure the safety of operationsat sea, will be purchasedunder local shopping procedures. Surveillance training (US$0.2 million) is expected to be contracted out to specialized institutions. Specific law enforcement training, which may need to be conducted by enforcementagencies such as the Police and the Navy,will be fundedby counterpartfunds.

The Project Management Office will organize all major workshops and seminars, in collaborationwith the technicalassistance team. Villagegrants (up to a maximumof Rp. 150 -54- millionper village in Taka Bone Rate and up to Rp. 100 millionper villagein Lease Islands)will be providedas a cash transfer to village LKMDs,against the productionof reef management plans meetingproject criteria. The grants will be used to fund eligibleexpenditures related to reef management,strengthening of savings' groups, alternative incomegeneration, and reef- caring infrastructure,as detailedin Annex2 and usingcommunity participation procedures. The LKMDswill have overall responsibilityfor overseeingthe procurementof goods,works and services under the village grants: goods procuredby village groups will be based on prudent local shoppingprocedures in accordancewith the approvedvillage grant plans. Materialsand equipmentrequired for reef-caringinfrastructure will be collected from local sources or, if not available,purchased from outside sources based on local shoppingprocedures. Paymentfor collectionwill be calculatedon equivalentperson-days and taken into accountin infrastructure expenditures. The Senior Field Manager and the Coral Fteef ManagementSpecialist will monitorthe progressof villagegrant activities.

Public relations expenditureswill include the production,printing and distributionof program guidelines,press briefs, public awards, and organizationof special events, such as a Reef Watchers' day. Local shopping procedureswill be used whenever appropriate. Project managementexpenditures (US$1.0million) wili be funded by GOI.

Prior Review Thresholds (Table B)

Prior review will be requiredfor (i) all ICB goods'contracts above US$50,000per contract;(ii) consultingfirms above US$100,000equivalent per contract (includingawareness services and studies); (iii) individual consultants above US$50,000equivalent (includingstudies); (iv) all communitysupport service sub-contracts;and (v) sole source contracts. This will ensure prior review of approximately86 percent of the IBRD/GEF financxd items. Other items will be subject to an ex-postevaluation during supervision,amounting to approximately10 percent of the transactions.

B. Disbursement

Allocation of loan and GEF grant proceeds

The allocationof loan and GEF grant proceedsis shownon Table C.

Use of statements of expenses (SOEs):

Disbursementbased on Statementof Expenditures(SOEs) will be used for (i) goods below US$50,000 equivalent; (ii) awareness and public relations activities below US$100,000 equivalent;(iii) consultingfirms below US$100,000(including studies); (iv) individualconsultants below US$50,000equivalent (including studies); (v) surveillance training; (vi) surveillance operationand maintenance;(vii) conferences,workshops and seminars;and (viii)village grants. All supportingdocumentation, including contracts, procurementinformation, and evidence of payment,will be kept at the ProjectManagement Office and ProvincialProject Offices for review by the Bankand independentauditors.

Special account:

GOI will establishtwo separatespecial accountsat Bank Indonesiafor the IBRD loan and the GEF grant. The initialdeposits will be US$1 millionfor the IBRD loan and US$500,000for the GEF grant account, equivalent to 4-5 months disbursements.The special account will be openedin US dollarsand maintainedby the DirectorateGeneral of Budget. -55 -

C. FinancialManagement

hntemalControl Structure

The project's InternalControl (IC) structure,consisting of projectmanagement policies and procedures, will follow GOI's internalcontrol system. This system is consideredsatisfactory to the Bank based on its: (i) accountingsystem; (ii) organizationstructures; (iii) delegation of authority and responsibility practices, such as job descriptions;(iv) managementcontrol methods, including an internal audit lunction, budgeting,variance analysis and forecasting; (v) enforcementpolicies establishedby the Government;(vi) authorizedexecution of transaction;(vii) limited accessto assets; (viii) comparisonof recordedamounts with existingassets; (ix) trained staff, and (x) segregationof functionsin ways which prevent staff from perpetratingand concealing errors and irregularities. Transparencywill be emphasizedunder the project,and the conceptwill be introducedto the LKMD and village groups as part of the internalcontrol.

Organization

The PMO will have a Project Manager (Pimpro) to manage project funds and a Treasurer (Bendaharawan).They will be providedwith assistance,as necessary,on procurement,technical and financialmatters. The ProjectManager and Treasurerwill meetthe followingqualifications:

1ProjectManager (Pimpro) Treasurer (Bendaharawan)

* Staffof implementingunit (LIPI) * Staff of implementingunit (LIPI) , Competence * Competence , MasterDegree or equivalent * Sarjana/DIlIl Degree Minimumstaff level Ill/c * Minimumstaff level III/a * Havinga ProjectManagement Certificate or * Havingtreasury (bendaharawan) certificate or equivalent equivalent Three years workingexperience in government * Two years working experiencein government projects. projects. L ~~ Accounting System and Procedures

The generalaccounting system and procedureswill followthe Governmentaccounting system which is in line with GenerallyAccepted Accounting Principles (GAAP), and is acceptableto the Bank.The specific projectaccounting system will be specifiedin ProjectGuidelines. The project'sfinancial statements will be preparedin accordancewith GAAP, and will show the financialposition of COREMAPat the end of fiscal year and the funds receivedand expendedfor the accountingperiod ending on March 31 of each year. The financialstatement will include the Project Account, preparedby the PMO, and the Special Account/Statement of Expenditures (SOE)prepared by DG Budget.

The Project Account reportwill use the formatspecified in the PIP, and include:

* Summaryof funds receivedfrom the Bank,GEF, and counterpartfinancing; * Summaryexpenditures shown underthe projectand by projectcomponent and category expenditures,both for currentfiscal year and accumulatedto date. -56 -

TheSpecial AccounUStatement of Expendituresreport will include:

* Depositand replenishments received from the Bank; * Withdrawalfrom special account and other sources, such as bricigingfinancing accounts, including all SOEsused as thebasis for the submissionof withdrawal applications; * The remainingbalances at the endof eachfiscal year; * Reconciliationbetween special account and amount being disbursed. The SpecialAccount/Statement of Expenditures report will usethe sitandard format which was developed andconveyed to DGBudget on June8, 1992. FinancialManagement Reporting Requirements The PMO,Provincial and Districtoffices, and LKMDor POKMAS,will establishand maintainadequate and separateaccounts, including those for the SpecialAccount, from the beginningof project implementation.The LKMD,with the assistanceof the field manager,will preparea progressreport, includingfinancial report, and submitit to the districtproject unit quarterly. The districtunits at the Bupatioffice, with assistancefrom the SeniorField Managers, will preparequarterly progress report consolidatingthe reportprepared by LKMDand othercost components(e.g. recurrentcosts). The provincialunits at BappedaTk. I office,with assistancefrom the SeniorField Managers, will similarly preparequarterly progress reports of activitiesand expenditures incurred at the provinciallevel (including enforcement).The provincialand district offices will submitthe financialreport to the Pimproon the third weekof the fourthmonth. This reportwill be consolidatedwith other components by the Pimproin LIPI. The Pimprowill submitthe consolidatedreport to the Bankon the last weekof the fourthmonth. The consolidatedfinancial reports will be submittedannually to the NationalSupervision and Development Board(BPKP) or otherqualified auditors acceptable to the Bank. AuditRequirements The implementingagencies will be requiredto: - Maintainrecords and accountsto reflect,in accordancewitlh sound accountingpractices, the operations,resources and expenditures in respectof the projectlor whichthey are responsible; * Havethese recordsand accountsaudited for each fiscalyear duringwhich disbursementshave beenmade under the project; * Fumishaudit reports to the Bankas soonas available,but in anycase no laterthan six monthsafter the endof eachfiscal year. Thespecific audit requirement are as follows: * DG Budgetwill be responsibleto preparefinancial statements for the SpecialAccount, and submit to the Banka SpecialAccountVSOE audit report not laterthan 6 monthsafter the end of eachfiscal year(September 30 each year); * The Pimproin LIPIwould be responsibleto producethe consolidated project account, as well as the progressreports. The Pimproshould submit to the Banka consolidatedProject Account audit report not laterthan 6 monthsafter the endof eachfiscal year (September 30 eachyear).

The financialstatement, including project accounts and the SpecialAccountVSOE, will be audited annuallyby BPKPin accordancewith procedures satisfactory to the Bank. In additionto the BPKPaudit, the Bankwill conduct ex-post review of all documentson a samplingbasis during supervision. Theexpenditure categories are as describedin the ProjectImplementation Plan. -57 - Annex 6, TableA: Project Costs by ProcurementArrangementse (in USSmillionequivalent)

Expenditure Category ProcurementMethod Total Cost (with contingencies) ______ICB NCB Other N.B.F

1. Goods

Surveillanceequipment 2.1 2.1 (1.6) [0-5] (1.6) [0.5] Officeand other equipment 0.1 0.1

2. Servksc

Awarenesscampaigns 3.41 0.25 3.6 (2.4) [1.0] (2.4) [1.0] Technicalassistance 2.51 2.5 (1.3) [1.2] (1.3) [1.2] Communitysupport services 0.71 0.7 (0.3) [0.4] (0.3) [0.4] Specialstudies 1.01 1.0 (0.4) [0.61 (0.4) [0.6] I. Msce/laneous

SurveillanceO&M 0.5 0.26 0.7 (0.2) [0.1]2 (0.2) [0-1] Surveillancetraining 0.23 0.2 (0.12 (0.1) Workshops 0.3 0.3 (0.2) [0.1] (0.2) [0.1] Village grants 0.24 0.2 (0.232 (0.2) Publicrelations 0.3 0.3 (0.31)[0.1] (0.1) [0-1 ProjectManagement 1.0 7 1.0

Total 2.1 9.1 1.5 12.8 (1.6) [0.5] (5.2) [3.6] (6.9)[4.1]

Note: N.B.F.= NotBank-financed (includes elements procured under parallel cofinancing procedures, consultancies under trustfunds, any reserved procurement, and any other miscellaneous items). The procurement arrangement for theitems listedunder "Other' and details of the itemslisted as "N.B.F."are explained below. Figuresin () arethe amountsto be financedby the Bank loan. Figuresin [] arethe amountsto be financedby the GEF grant. Numbersmay not roundup dueto rounding. 2- Procuredaccording to WorldBank Guidelines for Selectionand Employment of Consultants,January 1997. 2 - Incrementalcosts only. Procured according to GOIprocedures acceptable tothe Bank.See text for details. _.Procured according to GOIprocedures acceptable to the Bank.See text for details. 4- Procuredunder community participation procedures. s Includesprovincial awareness activities funded by GOIunder own procedures. 7- Includesaerial surveillanoe in TakaBone Rate funded by GOIunder own procedures. -All projectmanagement costs funded by GOIunder own procedures.

9For details on presentationof ProcurementMethods refer to OD11.02, "ProcurementArrangements for Investment Operations." Detailson ConsultantServices are shownon TableAl. - 58- Annex 6, TableAl: ServiceSelection Arrangements (in US$million equivalent)

~~~htI2n.IleIhed TotalCom QCSSQBS 88~~S CQ Other cnIgnIs

AwarenessCampaigns 3.434 - (2.4)[1.0] (2.4)[1.0] TechnicalAssistance 2.5 2.5 (1.3)[1.21 (1.3)[1.2] CommunitySupport Services: - TakaBone Rate 0.4 0.4 [0.4]' 10.4] - LeaseIslands 0.3 0.3 (0-3)1 (0.3) SpecialStudies: Legaland Enforcement Studies: - LegalStudies (2) 0.1 0.1 (0.07)[0.04] (0.07)[0.04] - PoisonTesting Study 0.1 0.1 (0.04)[0.02] (0.04)[0.02] ParkZonation/Sanctuary Studies (2) 0.22 0.2 (0.1)[0.2] (0.1)[0.2] COREMAPI Evaluation 0.23 0.2 [0.2] [0.2] DetailedDesign for COREMAP II 0.44 0.4 (0.2)[0.1] (0.2)[0.1] Total 3.4 2.5 0.4 0.2 1.1 7.6 (2.4) [1.0] (1.3)[1.2](0.1) [0.4] (0°1)[0.11 (0.5)[0.51 (4.4)[3.2]

Numbersmay not addup due to rounding.

Note: QCBS= Quality-and Cost-Based Selection OBS= Quality-basedSelection SS = Single-SourceSelecion CQ = SelectionBased on Consultants'Qualifications Other= Slebconof individualconsultants (per Section V of ConsultantsGuidelines), or others FiguresIn () parenthesisare the amountsto befinanced by the Bankloan. Figuresin [ ] arethe amountsto befinanced by the GEFgrant.

1 - Sub-contractedbythe winning TA firm undereither sole source or competitiveprocedures. The sub-contract would be subject to priorreview by theBank. 2 Contrcted,rspectvely, to the CoralReef Information and Training Center at HasanuddinUniversity, South Sulawesi, and to theLIPI center in Ambon. 3- Independentpanel nominated jointly by GOI/Bank,and managed by IUCN. 4- Indudedin TA contract,but subjectto satisfactoryperformance by theTA firm. SeeAnnex 6 for furtherdetails. -59 -

Annex 6, Table B: Thresholds for Procurement Methods and Prior Review10

Cateo_ Threshold for Procurement Review Documents Loan Grant Amount Total Prior Review Method Method required for Category Category Subject to Amount Disbursement Prior Review US$ million US$ million

Surveillarce Equip. > us$50,000 ICB P-or Full Doc. 1(a) (b) 1 2.1 2.1 (1.8)[0.5] (1.6) [0.5]

Office/otherEquip. none NBF NBF NBF - - 0.0 0.1

2. Servlcas

AwarenessCampgs. >US$100,000 QCBS Prior Full Doc. 2* 2(a)(b) 3.4 3.6 (2.4)[1.0] (2.4)[1.0]

TechnicalAssistan. >US$100,000 QBS Prior Full Doc. 7 7 2.5 2.5 for firms (1.3)[1.2] (1.3)[1.2]

>US$50,000 for individ.

Comm.SIupp. Serv. all Sub-contractby Prior Full Doc. 3 3 0.7 0.7 winningTA (0.3)[0.4] (0.3)[0.4] SpecialSitudies: Legaland Enforc. >US$100,000 CQ AnnualReview SOE 4 4(a) - 0.2 (0.1)[0.1] Designof COREMAPI all OBS Prior Full Doc. 4 4(a) 0.4 0.4 (includedin TA (includedin TA (includedin TA (0.2)[0.1] (0.2)[0.1] contract) contract) contract) COREMAP I all SS Prior Full - 4(b) 0.2 0.2 Evaluation [0.2] [0.2]

Zonation/Sanctuary all SS Prior Full Doc. 4 4(a) 0.2 0.2 Studies (0.1)[0.2] (0.1)[0.2]

3. Miscellaneous

SurveillanceO&M: Others RandomPost SOE 5 5 0.7 (0.2)[0.1]

Survei.Training Others RandomPost SOE 8 - - 0.2 (0.1)

Workshops Others RandomPost SOE 6 6 - 0.3 (0.2)[0.1]

VillageGrants Others RandomPost SOE 9 - - 0.2 (0.2)

PublicRelafions Others RandomPost SOE 2 2(a) - 0.3 (0.1)[0.1]

ProjectManagement none NBF NBF NBF _- 1.0

Total Value of ContractsSubject to Prior Review 9.5 12.8 (5-9)[3.6] (6.9)[4.1]

As percentageof Total BanktGEFfinancing 86%

^ - Excludes awards.

10Thresholds generally differ by countryand project. ConsultOD 11.04"Review of ProcurementDocumentation" and contact the RegionalProcurement Adviser for guidance. -60-

Annex 6, Table C: Allocation of Loan and Grant Proceeds

RIBR C4EF -IBRID GEF:

I. SurveillanceEquipment (a) National,Lease, Irian Jaya Sites 100/oI 00%l65%t _ 1.24 _

(b)Taka Bone Rate Site 40%/40%/25' 60%16O%o40%1 0.31 0.35 (0.47) II. AwarenessActivities: (a) Awarenessactivfties, except 70% 30% 2.37 0.76(1.02)

(b) Awards - 100% - 0.06(0.09) Ill. CommunitySupport Services: LeaseIsland Site 100% - 0.26 _

Taka BoneRate Site - 100% - 0.24(0.32) IV. Studies: (a) Studies,except: 50% 50% 0.39 0.27(0.36)

(b) Independentevaluation - 100% - 0.16(0.22)

V. SurveillanceO&M: (a) National,Lease, Iran JayaSites 60% - 0.16

(b) Taka BoneRate Site - 60% - 0.09(0.11) VI. Conferences/Workshops/Seminars 55% 45% 0.18 0.11(0.15) VIl. ConsultingServices 50% 50% 1.28 0.84(1.14)

Vil. SurveillanceTraining 60% - 0.12 IX. VillageGrants 100% _ 0.22 X. Unallocated 0.37 0.22(0.22)

Total 6.9 3.1(A1)

Notes: TA/Studies:GEFABRD financing shares reflects weighted average of incrementalcosts. AwarenessActivities/Conferences and Workshops: GEF/IBRD financing reflects incremental costs. All financingis netof taxes. GEFgrant is allocatedin SDRs.Amounts in parenthesisrepresent US dollar equivalents, at anexchange rateof I SDR=US$1.3517. Foreignexpenditures I Local expenditure (ex-factory costs) I Otheritems procured locally. -61 - Annex 7 Indonesia: Coral Reef Rehabilitationand ManagementProject ProjectProcessing Budget and Schedule A. ProjectBudget (US$000) Planned Actual (At final PCDstage) Identificationto DecisionMeetina Bank Budget US$167,700 US$314,000 GEF US$147,200 US$123,500 Total US$314,900 US$437,500 Decision Meeting to Board Presentation Bank Budget US$41,300 US$77,400 GEF US$36,800 US$49,400 Total US$78,100 US$126,800 B. ProjectSchedule Planned Actual (At final PCDstage) Time taken to preparethe project(months) 17 33 GEF ProjectDevelopment Facility (Block B) - 9/18/1995 First Bank mission(identification) 4/1511995 4/15/1995 GEF Council 05/01/1996 05/01/1997 Appraisalmission departure 6(29/1996 12/01/1997 Negotiations 09/18/1996 02/11/1998 GEF Chief ExecutiveOfficer Endorsement 10/03/1996 03/03/1998 PlannedDate of Effectiveness - 05/31/1998 Preparedby: GOI's inter-agencypreparation team, coordinated by BAPPENASand LIPI. Preparationassistance: PHRDGrant: Yen 67 million (GOI executed)* GEF PDF: US$280,000 (GOI executed)* Bankstaff whoworked on the projectincluded: Name Specialty Sofia Bettencourt NaturalResources Econ./Task Team Leader ThomasWalton Senior Coordinatorfor Environment HermanCesar EnvironmentalEconomist Carl Lundin CoastalZone ManagementSpecialist Karin Nordlander Legal Specialist AsmeenKhan ParticipationSpecialist Ben Fisher CountryProgram Coordinator ThamrinNurdin InstitutionalSpecialist Yogana Prasta DisbursementSpecialist UnggulSuprayitno Audit and DisbursementOfficer ChristineKimes GEF Coordinator/EastAsia and Pacific John Dixon EnvironmentalEconomist KathyMackinnon GEF BiodiversitySpecialist EsmeAbedin OperationsAnalyst ElizabethGeorge Task Assistant(HQ) Lieke Sastrosatomo/DellyNurzaman Task Assistants(RSI) Ellen Schaengold Senior Sociologist You Hua Yu/BridieChampion DisbursementOfficers (HQ) John Fringer/PrebenJensen/Chitta Battacharya ProcurementAdvisors Tony Whitten BiodiversitySpecialist Adi Wiyana Consultant,RSI Key ConsultantsContributing to Design: Peter Burbridge Key Coordinator/CoastalManagement Specialist Peter Flewwelling EnforcementSpecialist LindaChristanty Coastal ManagementSpecialist MargaretMockler AwarenessSpecialist Cliff Marlessy NGO Coordinator EttyAgoes Legal Specialist SimonWoodley MonitoringSpecialist Rily Djohani Coastal ResourcesManagement Specialist GrahamUsher ConflictResolution Specialist RobertJohannes TraditionalManagement/User Rights Specialist * Includespreparation of COREMAP11 sites. -62 - Annex 8 Indonesia: Coral Reef Rehabilitationand ManagementProject Documentsin the Project File'

Preparatfon Reports

Agoes,Etty R. 1997.COREMAP 'Legal Framework (Final Report)." Bandung, 1997. AMSATLtd., PT Ecolink Utama. 1996. 'COREMAP Project Preparation Document, and 'Annexes A-N", Jakarta,November 18,1996. Cesar,Herman. 1996. 'The EconomicValue of IndonesianCoral Reefs." World Bank. July 1996. Cesar,Herman. 1996. 'Economic Analysis of IndonesianCoral Reefs." IEnvironment Dept., Dec. 1996 Cesar,Herman. 'Economic Analysis for LeaseIslands." and 'Economic Analysis for TakaBone Rate"

Cesar,Herman. 1997. "Nilai EkonomiTerumbu Karang Indonesia." World Bank. April 1997.

Flewwelling,Peter H. 1997. 'The Govemmentof IndonesiaCoral ReefFtehabilitation and ManagementProject (COREMAP)for Riau (Senayang),Maluku (Nusa LautUSaparua),NITT (Kupang), and SouthSulawesi (Taka BoneRate) - Legal Framework,Surveillance and Enforcement."

Global Vision,Inc. 'Community EnvironmentalAwareness and Participation,Volume I, Field Assessment Report.",Volume II 'Inception Report"and Volume IlIl PreparationDocument, September1996.

Govemmentof Indonesia.'Terms of Referencefor TechnicalAssistance and AwarenessServices".

ResourceAnalysis. 1997. *COREMAPMonitoring Tool and BaselineDat3base Prototype Report." 1997.

YayasanKehati. "PengembanganDan PengelolaanTerumbu Karang Oleh Masyarakat di IndonesiaTimur (CommunityBased Coral Reef Managementat EastIndonesia). LaporanProyek COREMAP Tahap Persiapan,Juli 1996-Januari1997." Jakarta,Indonesia.

SiteReports - Maluku

Pusat Penelitiandan PengembanganKependudukan dan KetenagakerjagnLembaga llmu Pengetahuan Indonesia. 1996/1997.'COREMAP, Propinsi Maluku, Buku I: Data Dasar."

Yayasan Hualopu. 1996. "LaporanPerkembangan. Pengelolaan Sumber Daya Laut BerkelangjutanBerbasis MasyarakatDesa Ameth, Kec.Saparua, Kab. Malteng. Buku 1: ProsesKegiatan.", and "Buku2: KumpulanHasil Peta". Ambon.

Yayasan LearisakayemHaruku. 1996. "LaporanPerkembangan. Pengellolaan Kawasan Laut Pesisir KerakyatanUntuk Konservasi Terumbu Karang, Di DesaHaruku, Kab. MalukuTengah. Buku 1: Proses Kegiatan."

Site Reports - South Sulawesi

Badan PerencanaanPembangunan Daerah (BAPPEDA). 1997. "COREIVIAPI - Sulsel." PropinsiDaerah Tingkat I SulawesiSelatan.

KerjasamaAntara. 1995. 'Laporan EkspedisiKelautan Taka BonerateSulawesi Selatan, 25 September-2 Nopember1995." ProyekInventarsari Dan EvaluasiSumberdaya Nasional Matra Laut Bakosurtanal DenganPusat PenelitianDan PengembanganOseanologi (LIPI). Jakarta.

BAPPEDATK. 1. 1996/1997."KONSEP: COREMAPPropinsi Sulawesi ',elatan."

Ministryof Forestry. "DraftTaka Bone Rate NationalPark ManagementPlan, 1994-2019,Volume 1-11" DirectorateGeneral of Forest Protectionand NatureConservation. -63 -

BasicProject Documents and Mission Aide Memoires

Bettencourt,Sofia "Draft ConceptPaperlGEF Project Brief" July 11,1995, and commentsfrom peer reviewers.

Bettencourt,Sofia. "COREMAP:Minutes of ConceptPapertGEF Project Brief Meeting,July 21, 1995." World Bank Memo. July 28,1995.

Bettencourt,Sofia. 'Proposal for Review." Submissionto GEF Council. March24, 1997.

Bettencourt,Sofia 'Project AppraisalDocument", decision meetingpackage, November 12, 1997,and commentsfrom peerreviewers.

Bettencourt,Sofia 'Minutes of DecisionMeeting", December 2, 1997,and 'Appraisal CompletionNote", January 22,1998.

Bettencourt,Sofia "ProjectAppraisal Document", GEF/CEO Submission, January 28, 1998.

Bettencourt,Sofia. "COREMAP:Identification Mission (April 7-26, 1995)- Back-to-OfficeReport." World Bank Memo. May 15,1995.

Bettencourt,Sofia. 'COREMAP: PreparationMission Aide Memoire."World Bank Memo. November7, 1995.

Bettencourt,Sofia and Carl Lundin. 'COREMAP: PreparationMission Back-to-Office Report, August 19- September6, 1996." WorldBank Memo. October15, 1996,and 'Technical Recommendationson COREMAPComponents", August 1996.

Joint Donors'Coordination Mission. 'Aide Memoireof Joint DonorCoordination Mission (April 9-21, 1997)for COREMAP."

Joint Donors'Pre-Appraisal Mission. "AideMemoire of Joint DonorPre-Appraisal Mission for Grantand Loan Financingto the Republicof Indonesiafor the COREMAPI." July 24,1997.

Bettencourt,Sofia and ThomasWalton. "COREMAP:'Appraisal MissionAide Memoire,December 3-19, 1997". December19, 1997.

K`eyDocuments Provided by GOI

GCovemmentof Indonesia. 1995. 'Proposal for the Coral Reef Rehabilitationand ManagementProject."

GCovernment of Indonesia. 1997. 'Project ImplementationPlan."

Afegotiation Documents

Letterfrom Dr. BudhySoegijoko. Letterof DevelopmentProgram from Govemmentof Indonesia.Oct. 9, 1997.

Letterfrom Dr. Agus Pakpahan. Supplementto letterof DevelopmentProgram from Govemment of Indonesia. (Descriptionof COREMAPProgram). January 21, 1997.

Letterdated January 21, 1998,from Dr. H. HidayatSyarief on fulfillmentof NegotiationsConditions.

Noticeof Invitationto Negotiate

NegotiationsInvitation Telex (from Bank); Confirmationof Negotiations(from GOI)

(lobal EnvironmentFacility Trust Fund GrantAgreement and LoanAgreement between GOI and IBRD

MAinutesof Negotiations,February 13, 1998

Bettencourt,Sofia "NegotiationsCompletion Memo", February 18, 1998

Memorandumof the President,March 4, 1998

Final ProjectAppraisal Document, March 4, 1998. -64 - Annex 9 INDONESIA: Statement of Loans and Credits (as of January 31, 1998) (in Millions of US Dollars)

Amount in US$ million (less cancellations) LoanlCredit Fiscal Year Purpose Bank IDA Undisbursed Closing Date Credits 48 Credit(s) closed 901.6 Total Numberof Credits = 0 Loans 414 Loans(s)closed 17,478.63 56.07

3209A 1990 GASUTILIZATION 24.15 18.95 12/31/98 3246A 1991 THIRDJABOTABEK URB 13.41 12.62 12/31/98 3302A 1991 PROVIRRAGRIC DEVT 10.77 10.29 3/31/98 3402A 1992 AGRICULTURALFINANCI 39.06 38.96 12131/98 3454A 1992 BAPEDALDEV PROJ 0.3 0.3 6130/98 3431A 1992 NON-FORMALEDUC IlIl 5.94 5.26 3131/98 3448A 1992 PRIMARYEDUC QUALITY IMPROVE 13.4 12.49 3131/99 3496A 1992 PRIMARYSCHOOL TEACH 8.47 7.89 6/30/99 3464A 1992 TREECROPSSMALLHOLDE 27.12 25.96 9130198 3482A 1992 TELECOMIV 148.13 136.33 12/31/98 3501A 1992 SURALAYATHERMAL POWER 88.117 77.25 9/30/99 3550A 1993 THIRDCOMM HEALTH & 30.74 30.14 9/30/99 3586A 1993 INTEGRATEDPEST MGMT 13.28 12.37 9130/98 3629A 1993 WTR & SANIFOR LOWI 43.23 42.24 9/30/99 3579A 1993 E.INDONESIAKABUPATE 21.2 17.65 6/30/98 3588A 1993 GROUNDWATERDEVT. 11.91 11.05 12/31/99 3602A 1993 POWER(CIRATA II) 61.44 60.99 6/30199 3658A 1994 WTRSHEDCONSERVATION & MGMT 44.22 43.7 9/30/00 3712A 1994 HIGHWAYSECTOR II 196.44 185.62 12/31/99 3726A 1994 SURABAYAURBAN 113.14 109.66 9/30199 3732A 1994 KABUPATENROADS V 25.59 23.18 6/30199 3754A 1994 UNIV.RESEARCHFOR GR 33.12 32.03 2/29/00 3755A 1994 INTEGRATEDSWAMPS 38.42 35.85 9/30/00 3762A 1994 JAVAIRRIMP&WRM 108.27 101.02 12/31/00 3749A 1994 SEMARANG-SURAKARTAU 110.67 102.47 9/30/99 3742A 1994 DAM SAFETY 38.25 37.46 9/30100 3721A 1994 SKILLSDEVELOPMENT 10.24 8.83 12/31/98 3761A 1994 SUMATERA& KALIMANP 216.28 207 12131/00 3792A 1995 LANDADMINISTRATION 56.45 53.13 9/30/00 3801A 1995 ACCOUNTANCYDEV II 18.64 17.82 7/31/00 3825A 1995 PHRDII 40.57 39.22 9/30/00 3854A 1995 KALIMANTANUDP 77.43 77A3 6/30/01 38866 1995 AG. RESEARCHII 61 54.25 4/30/02 38876 1995 BOOK& READINGDEV 130.4 115.31 1011/00 3905S 1995 HEALTHIV:IMPR HEALT 1 0 3/31/01 39056 1995 HEALTHIV:IMPR HEALT 87 77.25 3/31/01 38886 1995 VILLAGEINFRASTRUCTU 47.1 3.9 9/30/98 3887S 1995 BOOK& READINGDEV 2.1 0.1 10/1100 39046 1995 TELECOMSECTOR MODER 325 305.64 6/30/01 3845A 1995 RURALELECT II 252.09 228.74 12/31/98 39136 1995 TA FOR INFRA.II 28 25.69 3/31/00 3978A 1996 POW.TRANS & DIST II 362.74 361.2 9/30/00 3979A 1996 SECONDARYSCHOOL TEA 54.4 53.43 10/1/01 39810 1996 STD/AIDS 24.8 23.14 9/30/99 4008A 1996 KERINCISEBLAT ICDP 18.47 18.47 9/30102 4017A 1996 SECONDE. JAVA UDP 129.64 129.46 3131100 4043A 1996 HIGHEREDUC SUP.(Ill 56.8 55.26 9/30/02 4042A 1996 E.JAVASEC.EDUC. 96.5 96.36 6/30/02 3984A 1996 NUSATENGGARA DEV. 24.8 24.8 9/30/02 -65-

Amount in US$ million (less cancellations) Loan/Credit Fiscal Year Purpose dank IDA Undisbursed Closing Date Credits 48 Credit(s) closed 901.6 Total Number of Credits = 0 Loans 414 Loans(s) closed 17,478.63 56.07

4030A 1996 HR CAPACITYBUILDING 19.31 19.26 12/31/00 4007A 1996 SULAWESIAGRI AREA 23.97 23.27 6/30/03 3972A 1996 IND'LTECHNOLOGY DEV 40.08 39.42 12/31/01 40540 1996 STRATEGICURB. RDS I 86.9 77.85 9/30/01 4095A 1997 SUMATRASEC EDUC 94.65 94.18 9/30/02 41000 1997 VILLAGEINFRA II 140.1 117.08 12/31/99 4062A 1997 C.INDONESIASEC.EDU. 101.14 100.87 6/30/02 41940 1997 BEPEKAAUDiT MODERP 16.4 15.4 12/31/02 4105A 1997 SULAWESIUDP II 149.58 147.81 12/31/01 41980 1997 RENW.ENER SMAL PW P 66.4 66.4 10/31/01 41060 1997 RLWYEFFICIENCY 105 105 9/30/02 41250 1997 IODINEDEF. CONTROL 28.5 27.2 6/30/02 41320 1997 SOLARHOME SYSTEMS 20 20 4/30/02 41550 1997 BALI URBANINFRAST. 110 110 12/31/02 419130 1997 QUALOF UNDERGRADED 71.2 71.2 3/31/04 42070 1998 SAFEMOTHERHOOD 42.5 41.15 5/31/03 42550 1998 BANKINGREFORM ASST. 20 20 9/30/00 42440 1998 IIDP 34.5 34.5 6/30/03

Toial Number of Loans = 67 4,560.54 4,298.77

22,039.17 901.6 of which repaid 7,406.44 186.6 Total held by Bank & IDA 14,632.73 715 Amount sold 88.08 of which 88.08 repaid Total Undisbursed 4,354.84 -66 - Annex 10 Country at a Glance Lower POVERTYand SOCIAL East Mliddle- Indonesia Asia hicome Populatonmid-1996 (millions) 197.1 1,726 1,125 pm diamond GNPper capita1998 (USS) 1090 890 1,750 Lifeexpectancy GNP1996 bilions US$) 213.7 1,542 1,967 Averageannual growth, 1990-96

Population(/) 1.7 1.3 1.4 GNP Gr Laborfome (%) 2.5 1.3 1.8 perp pnimaryGross Mostrecent estimate (latest avalabh since 1989) capita enrollment

Poverty:headcount index (*% of 11 populaton) 36 31 56 Urbanpopulation (% of totalpopulation) 64 68 67 Lifeexpectancy at birth(years) 51 40 41 Accessto safewater Infantmortality (per 1,000 live births) 11 Childmalnutriton (% of childrenunder 5) 62 49 711 Accessto safewater (% of populbon) 16 17 - -Indonesia Illiteracy(% of populationage 15+) 115 117 1(4 Lower-middle4icomegroup Grossprimary enrollment (% of schoolagepopulaDion) 117 120 1(-5L Male 113 116 101 ______Female KEYECONOMIC RATIOS AND LONG-TERMTRENDS 1975 1985 1995 1'196

GDP(biliions USS) 32.1 87.2 201.2 225.8 Economic ratios' Grossdomestic investmentGDP 23.7 26.1 31.1 31.8 Exportsof goodsand services/GDP 24.0 23.0 26.4 26.2 Grossdomestic savingslGDP 26.6 28.6 32.3 33.2 Opennessof economy Grossnational savingslGDP .. .. 24.7 25.6 Currentaccount balance/GDP .. .. -3.5 -3.6 Interestpayments/GDP 1.0 2.3 2.5 2.3 Totaldebt/GDP 35.8 42.1 61.7 56.5 Totaldebt service/exports .. .. 29.8 35.5 Savings Investment Presentvalue of debt/GDP .. Presentvalue of debtexports .. 1976-85 1986-96 1995 1996 1997-05 (averageannual growth) GDP 7.0 7.9 8.2 7.6 6.ti Indebtedness GNPpercapita 4.3 6.1 5.8 6.0 5.1 Exportsof goodsand services -1.0 8.9 8.6 6.3 7.6 h-idonesia Lower-middle-ncomegroup

STRUCTUREof the ECONOMY 1975 1985 1995 1996 Grwth ratesof outputand investment 1%) (% of GDP) 201 Agriculture 30.2 23.2 17.2 16.3 1s Industry 33.5 35.9 41.5 42.7 1 Manufacturing 9.8 16.0 24.2 25.2 5__ ServIces 36.3 40.9 41.4 41.0 Privateconsumption 64.3 59.6 59.9 59.2 91 92 93 94 95 96 Generalgovernment consumption 9.0 11.8 7.9 7.7 Importsofgoodsandservices 21.0 20.5 25.2 24.3 G01 - GDP (averageannual growth) 1975-85 1986-96 1995 19961

Agriculture 4.2 3.4 4.2 1.9 Growth ratesof exportsand ImportsI%) Industry 7.0 9.9 10.4 10.5 Manufacturng 14.5 11.2 10.8 11.0 25 Services 9.0 8.0 7.7 6.9 20 Privateconsumption 10.0 7.2 9.6 7.4 15 Generalgovemnment consumption 10.5 4.4 1.3 3.8 /0 Grossdomesticinvestment 12.1 10.8 13.5 11.1i 6 Importsof goodsand services 8.8 9A 15.8 9.6 o Grossnational product 6.5 7.9 7.5 7.5 91 92 93 94 95 96

Exports -'-mports

Note: 1996 data are preliminaryesfimats. * Tbe diamonds show four key indicators in tbe country (in bold) compared with its income-group average. If data are missing, the diamond will be incomplete. -67 -

PRICESand GOVERNMENTFINANCE 1975 1985 1995 1996 Inflation (%) Dorrestic prices 1 (% change) T _ Consumer prices 19.1 4.7 5.1 6.6 a Implicit GDP deflator 11.2 4.3 9.4 8.7 6

Government finance 2- (% of GDP) o0 Current revenue 19.2 15.5 15.3 91 92 93 94 95 9e Current budget balance 6.0 6.4 6.2 Overall surplusideficit -3.2 -0.2 0.9 -GDPdef 0-CP

TRADE (millions US$) 1975 1985 1995 1996

Total exports (fob) 18,823 47,454 50,188 Export and Import levels (mill. US$) Fuel 12,804 10,465 11,722 Rubber 714 1,986 1894 60,000T Mainufactures 2,287 30,853 32,653 50s000 Total imports (cif) 14,056 40,286 44,240 40,000 FoDd 812 3,397 3,852 30-000 Fuel and energy 2,870 3,841 4,693 2 oMI0 Enh Aiu_ Capital goods 5,394 18,957 20,783 20,000 Export price index (1987=1 00) 121 137 131 10,0o0 Import price index (1987=100) 85 127 127 0 Tenns of trade (1987=100) 143 108 103 90 91 92 93 94 95 96

BALANCEofPAYMENTS 19T5 1965 1995 1996 xports *Nlnofls (millions US$) Exports of goods and services 52,683 58,060 Imports of goods and services 51,589 56,961 Current account balance to GDPratio (%) Resource balance 1,349 1,099 Net income .. -7,832 -8,548 o_ - _ Net current transfers .. -284 -400 0 - - - Current account balance, before official * * * capital transfers -- 6,987 -7,849 -1 Financing itemsr(net) 9418 11,747 Changes in net reserves .. -2,651 -3,898 -2

Meimo: -* Reserves including gold (mil. US$) 592 13,184 26,139 27,519 -3 Conversion rate (local/US$) 415.0 1,110.6 2,248.6 2,342.3 -4 - EXTERNAL DEBT and RESOURCE FLOWS 1975 1985 1995 1996 (millions US$) Total debt outstanding and disbursed 11,498 36,715 124,398 129,033 IBRD 57 3,590 12,503 11,139 IDA 318 844 756 736

Total debt service 1,060 5,823 16,416 21,462 Compositionoftotaldebt 1996 ESRD 2 384 1,875 2,249 Cmpsto fttldb,19 IDA 2 12 26 26 (mill. LS$) 11139 B Composition of net resource flows G 736 Official grants 249 190 32230 5375 Official creditors 515 980 1,115 -805 Privatecreditors 1,749 154 2,314 6,971 Foreign direct investment 4,348 7,986 Portfolio equity 4,873 3,099 - E 28911 World Bank program Commitments 311 1,068 1,312 1,194 Disbursements 184 777 1,045 905 Principal repayments 1 133 975 1-429

INterest payments 3 262 926 846 50642 Net transfers 160 382 -857 -1,370 A-IBRD E-Bilateral B-IDA F-Private C-IMF G-Short-term D-OtherM ultilateral Development Economics Note: Govemment finance and trade fiscal year (April to March) -688-

Annex11 Indonesia:Coral Reef Rehabilitation and IManagementProject SocialAnalysis and ParticipatoryApproach

Considerableresources have been invested in socialassessment and consultationactivities during project preparation.These activities include participatory consultative workshops with key stakeholdergroups, site surveysand participatoryrural appraisals(PRAs), and developmentof pilotsite-based activities with local NGOgroups. These activities were implementedby the Governmmntof Indonesiathrough the Indonesian Instituteof Sciences(LIPI) and local Universities, preparatory technical assistance (AMSATJEcolink), and the IndonesianBiodiversity Foundation (KEHATI) in collaborationvwith a networkof local NGOs. Site assessmentswere carried out in all COREMAPprogram provinces, including sites whichwill be the target of the AccelerationPhase (COREMAP II). The site informationhas been assembledin a CD-Romdatabase and monitoringtool.

Summary Social Analysis Activities Include:

Preparation Technical Assistance: + literaturereview * provinciallevel consultationswith task forces * district-leveltask force consultation + consultationwith LKMDand villagechiefs at locations + communitymeetings facilitated by villageleaders (involving 40-50 participants) * focusgroups with keystakeholders

LIPI * questionnairesurvey for 150 householdsper location + in-depthinterviews with 150 informants PRAsin selectedsites (PadaidoIslands, Irian Jaya, and SpermondeIslands, South Sulawesi) + Socialassessment activities conducted by local universibeswith local NGOsin selectedsites (LP3M,in SouthSulawesi, Rumsram, in Irian Jaya)

KEHATI + key NGOsidentified for each province + localworkshops for proposaldevelopment * review and selectionof 21 small grant proposalsfor fundingin fivesCOREMAP program provinces (South Sulawesi,Maluku, Irian Jaya, Westand East NusaTenggara).

These participatoryapproaches will continueduring projectimplementation through the followingactivities:

* Public awareness component - support to informationdissemiination and awarenessabout the project targeted at key stakeholdersat the national,regional and local level. NGOs and local communitiesare expectedto participatedirectly in these activities.

* Establishment of local commiffees-to allow for feedback and informationfrom stakeholderson project implementation.

* Continued support for Social Assessment in new sites.

* Support for community based managementactivies involvingllocal NGOs,including the development of participatoryzoning and managementplans, PRAs and participatorybeneficiary monitoring of reef activibes. -69 - Summary Social Assessment Activities PRDVINCES SITESI PREPARATIONTA LIPI/REGIONAL KEHATI-fundedNGOs LOCATIONS UNIVERSITIES

S.SULAWESI Taka BoneRate a. districtmeeting LP3M,Rajuni, Pemda (a) RajuniKecil interviews Selayar(social preparation) ForumKonservasi Laut ______(aw______areness) Sinjai secondary Lakpesdam(social (a) PulauSembilan information preparation) MALUKU LeaseIslands a. comm.meeting c. householdsurvey, a. YayasanLearisa Kayeli (a) Haruku (b+c) community in-depthinterviews, (management) (b) Saparua meetings PRA b. Hualupu(management) (c) Nusalaut b. YayasanArman ______(aw______areness) KotaniaBay communitymeetings a. householdsurvey, YayasanSiwa Lima (a) Osi at 3 locations in-depthinterviews, (networking) (b) Kotania PRA AssosiasiKriminolgi (c) PelitaJaya (customaryrights documentation)

Consultation Activities and Outputs

Consultation Activities StakeholdersInvolved Duration Output NationalWorkshop NationalCOREMAP Team 3 daysin April 1996 Agreedsites and locations, Representativesfrom ProvincialSteering time schedulefor field visits Committee Prc,vincialWorkshop Provincialsteering committee & working 1 day each province field programs,identification group exceptIrian Jaya of specificissues, social and (betweenApril 17-June legalproblems,; NGO to 15, 1996) facilitatefield work District/Sub-District KecamatanStaff 1/2 day workshopper planfor community WCirkshop location meetings/consultations Communityparticipatory Villagegovernments, village 1 day workshopper identificationof potentialcoral Workshop organizations,traditional/adat leaders, location relatedresources in each religiousleaders, community groups location,management (fisheries,small traders,boat operators, problemsrelated to social, etc.), localNGO, women group & leaders, economicand culturalissues, schoolteachers, village cooperatives, etc. conflicts,illegal fishing activities,community expectationand willingness to participatein future COREMAPactivities NationalWorkshop II NationalCOREMAP technical team, 2 days in July 1996 feedbackon TA team'sfield representativesfrom provincialsteering findings,identification of committee,NGOs, donor representatives. approachto implementation, identificationof approachto implementation,identification of possiblefunding mechanismfor implementation Variousmeetings with NationalCOREMAP team severaltimes between feedbackon progress nationalCOREMAP team April 1996and August reports; ______1996 ______199 Consultationmeeting with NationalCOREMAP team October5th and 11th, AMSATapproach to nationalCOREMAP team 1996 preparationreport. NationalWorkshop IlIl NationalCOREMAP technical team, 2 daysin September agreementon approachto representativesfrom prov.steering 1996 locallybased management committee,NGOs, donor representatives. andstrategy for finalizing ______report NaitionalWorkshop IV NationalCOREMAP technical team, January1997 discussionof draft PIP representativesfrom provincialteams, projectconsultants NaitionalWorkshop V NationalCOREMAP technical team, 2 days in July 1997 discussionof site PIPs representativesfrom provincialsteering ______committees,international donors, NGOs 70 - Annex 12 Indonesia: Coral Reef Rehabilitation and ManagementProgram Summary Site Assessments and Implementation Strategy Annex 12. 1 Lease Islands Site

Geographical: Coral Reef Condition: Location: ca. 3°35'Sto 3°45'S;128u30VE and 128u45'E Range Theproject site is confinedto the islandsof % Life Coral Cover (Saparua,3 m): 25-50% Saparuaand Nusa Laut in the LeaseIsland % Life Coral Cover (N. Laut, 3 m): 25-75% group,grou, easteas oof Ambon,Am o , BandaB n a S oea...... Recovety Pirospects:...... Good potentialfor CBM. If damage Size: 24,300ha (land area); 5,000 ha (coralarea) eliminated,reef recoverycould be expectedin 15-20years. PopulatIon: 43,200. Status: Thesite is notcurrently protected. Key Threats: District: MalukuTengah, Maluku Threat Degree Trend Sub-District: PulauSaparua Bombing . . . Declining Traps ea.. Increasing Ecological: Coralextraction . . Declining Coral: 135species, 52 genera. Wading(reef flat only) . . . Increasing Reef habitats: primarilyfrnging. Anchordamage . . Increasing Dominant coral: Pontesspp. Overfishing .&. . Increasing Other species: Unknown(21 targetfish identified); Crown-of-Thorns(Acanthaster) . Seasonal highdiversity of mollusks. Poison(live) fishery . Declining Sedimentation(locally-based) . Increasing Social: Saparuaand NusaLaut were originallypopulated by peoplefrom Seram. Somevillages in Saparuaand the neighboringisland of Harukuare inhabited by ButoneseMoslem migrants. The islandsdepend primarily on agriculture. Fishing,primarily for skipjack,small pelagics,shellfish, sea cucumberand reeffish, is practicedfor both subsistenceand trade. The sitehas goodpotential for community- based managementdue to the prevalenceof customarymarine rights(petuanan laut), with accessto some fishinggrounds and seasonsregulated by customarypractices (sasi). For commercialresources, however, traditional sasi (sasiadat and sasigereja), has increasinglybeen replaced by govemment-ledseasons and auctioningsystems (sasi ,elang). Increasingcommercial pressures have resultedin sub-optimalclosures and decliningproductivity. User conflictssometimes arise betweenlocal residentsand seasonal extemalfishers. In addition,there have been recentconflicts in Harukuover a miningexploration concession claimed to affectthe productivityof coastalgrounds. In Ameth,Nusa Laut,the villagegovemment has institutionalizeda user pay systemwith diving operators,where Rp. 25,000 per boat is collectedin exchangefor reefprotection. Marinetourism is expectedto increasein NusaLaut, andmay require arrangements to ensurethat a largerproportion of the benefitsare retainedby islandcommunities. Yayasan Hualopu, a local NGO,has beenworking with islandcommunities in developingparticipatory resource mapping and strengthencommunity organizations.The main threats to localreefs include bombing, traps, overfishing, mining, and wading on reef flats.

Project Strategy: COREMAPI will starton two locationsin Saparuaand Nusa Laut, where community-based management efforts are on-going. Theselocations would constitute loci for expansioninto island-wide managernent during COREMAP II. Key issues COREMAPI Stratogy Level 1.§ Low ...... awareness !!...... !...... Publicawarenesscampaigns !aw rn s c mp i s; crossvisitsro sv it National,Provincial, District, site. 2Limitedeconomic opportunities Developmentof AIGslinked to reefmanagemenit District,site. ,...... 13.2.Lmte1cno Destructiveillega ...... i fishinoppruitethvlpent practices Implement...... andsurvelGslanc legally recognize e/ wathoreeflocal mng nagysemplans .n District,Disroincetsite. site. I4. Weaklaw enforcement Strenothen1------~~~...... surveillance/reef watchers' system. Province,r...... XfX...... site. 5 Weakeningof customarymarine Revitalizecustomary rights at villagelevel; Issu E Province,District l userrights PerDaTk. I and11 recognizing user rights over reef areas l~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ ...... 7 1 ...... 6. Coralmining Publicawareness and AIGs Site

Villages I Year1 . Year2 I Year3 Village Area(Km2) Population Density

Ameth NusaLaut: Titawai.~ Ameth 6 1,140 190 Nolloth ______Titawai 6 1,905 318 Nolloth ._Nalathia 6 660 110 Nalathia .______.Leinitu 3.5 514 147 Leinitu E______ii-' Sila 3.5 340 97 Sila ___ j____ Itawaka __X_ , , Nolloth 15 2,693 180 Itawaka 10 2,025 202 - 71 - Annex 12.2 Taka Bone RateNational Park Site Geographical: Coral Reef Condition: Location: 7°10'Sto 7020'S;120'55'E and 121720'E Avnall stations Range 21islands in FloresSea. % Life Hard Coral (3 m): 21% 4-72% Size: 530,800ha (nationalpark area) % Soft Coral (3 m): 11% 0-33% Pcipulation: 4,200in 7 inhabitedislands. % Dead Coral (3 m): 8% 0-34% Status: NationalPark since 1992. % Abiotic material (3 m): 22% 2-82% Dis ri t:Selya ,c out S la esi...... h...... w...... SLib-Districts: Pasimasungguand Pasimarannu Recovery Prospects: If damageeliminated, reef recovery Sub-Districts: Pasimasungguand Pasimarannu could be evidentin 5 years, due to fast-growingAcropora. ConservathonImportance: Indonesia's largest atoll and world's third largest. Identified Key Threats: as first order conservationpriority under Indonesia'sMarine Threat Degree Trend Conservation Atlas, and as a priority under the Global RepresentativeSystem of MarineProtected Areas. Bombing: ExtemalFishers a . . Stable IntemalFishers . . . Stable Ecological: Cyanide: ExternalFishers . . . Increasing Coral: 200 species,52 genera. InternalFishers . . . Increasing Reef habitats: atoll, patch,barrier, fringing. vIh E alFishers .. Dcasi Dominant coral: Acroporaspp Ovadsing StaInceasn Fish genera: 325 WadnchrDmgg Stcrableg Gastropod spp: 121 GAnhrbDamlage *. Stable Bivalve sps: 78

Social: The atoll is inhabitedby a mixtureof Bajauand later-arrivingBuginese, many of whomare involvedin patron-client(paonggawa-sawi) systems.Up to 70-80percent of the fishingeffort comes from extemalfishers, originating from Sinjai,Flores, Buton, Ujung Pandang and Baeli.Fishing activities, including squid, live food (cyanide), bombing, shellfish collection, and traps, are the maineconomic activities in the islands.Women play importantroles in reefgleaning and processing. There is no freshwater and transportation and communications with other areas is limited.This, associatedwith a high dependenceon ponggawasfor credit, contributesto low socdo-economic standardsand limited income opportunities. The areahas been hard hit by the cyanidefish tradeand extemal pressures. Enforcement efl'ortshave been launched in recentyears, but institutional coordination remains a problem,and individual abuses of authorityhave been reported.Recent efforts by NGOsactive in the park (LP3M,vWvF), the districtgovemment, and HasanuddinUniversity, have helped strengthencommunity groups, and raise local awareness,leading to declinesin fish bombingand coral mining; however, much remains to be done to controlextemal fishing, improveinstitutional coordination, optimize park zonation,and developsustainable income opportunitiesfor atollresidents. ProjectStrategy K-Y issues COREMAPStrategy Responsibility COREMAPI COREMAP I+ I 1. Lackof . OperationalizeCoordination Team for TBR Presidential Decree establishing PMO,Provincial coordinated * Developpark management framework ConservationInstitution w/ authorityfor and District .actionsand policies parkmanagement and regulation Teams 2. Destructive/illegal . Strengthenjoint surveillancepatrols and reef Stopall illegalfishing in the park. Provincial and fishing watchsystem in parkentry gates. District . Designvessel licensing system 3. Overfishing * Establishreef sanctuaries; Strengthened management for (a) Districtand site. ~~~~~~...... * Optimize park zonation. conservation;and (b) ...... fisheriesmanag...... ! 4. LimitedIncome . Strengthen village groups, introduce post- Ensure linksbetween AIGs and reef mng; Site Opportunities~~~~~~...... harvest and facilitate private ...... sector links ...... retain revenues withinthe park ...... 5. Lowawareness * Publicawareness campaigns CRITCto providefull mng information Prov. and site.

CIOREMAPI Villages and ProjectPhasing Village Island Population Village Year 1 Year 2 Year 3

Radjuni RadjuniKecil 701 Radjuni(2 islands) RadjuniBesar 239 Tarupa(I island) - Taupa Tarupa 643 Latondu Latondu 829 Latondu(1 island) Jinato Jinato 783 Jinato (1 island) Pasitallu/Lambena Pasitallu Tengah 556 Pasitallu (2 islands) Pasitallu Timur 449 Total 4,200 Includesall majorinhabited islands in thepark. _- -72-

Annex 12.3: Conflict ResolutionFramework for Taka Bone Rate SummaryDescription of Agents, Issues,and Conflict ResolutionMechanism

Agents Issues/Causes Conflict Avoidance Through Conflict Resolution Key Authorites GeneralAssumpUon Through

Efficient monitoring and Local Fishers Existing and future use Participatoryplanning of park zonesand * Enforcement; Park management informationflow pattems conflict with park restrictions,including: authorities restrfictions. * Meetingsat Park and Effective representationof * Gooddissemination of park rules; distfict level. District user groups * Wide understandingand acceptance of managementrules; Park rules and regulations * AltemativeIncome opportunities. clearlyunderstood

OutsideFishers Existing and future use * Goodplanning anticipating expected * Solid enforcement Park management Effectivelicensing system pattems conflict with park conflicts; and licensing at four authorities restrictions; * Identifyingleaders; entrygates into park; Senior agency staff are in * Defining'traditional' outside fishers; Enforcementunit touch with field situation * Weaklicensing system * Widedissemination of park rules; * Inter-provincial and individual behavior of * Effective enforcementof exclusion meetingsand actions District theirstaff and licensing ______P rovPro inc

Enforcement * Improper enforcement * Good training in procedures,park Disciplinaryaction Enforcementagencies Agents of restrictions; rues ani pubiicreiations; * Levy of unauthorized * Careerincentives; Districtand Province payments; * Goodleadership; * Changesof personnel * Publicdisclosure.

OutsideAgencies * Unauthorizedlicenses * Wide disseminationof park rules Effectiveenforcement ProvincialGovemment * Changesin personnel and managementsystem; (exclusionof vessels with * Inter-agencycollaboration. unauthorizedlicenses).

PrivateSector * Existing and future * Wide disseminationof park rules Enforcement Park management commercial pressure and managementsystems; authorities encouraging Dialogue unsustainable * Inter-agencycollaboration. District practices * Lobbying for Province inappropriate concessions - 73 -

Ideal Scenario: Park User Patterns and Park Restrictions Do Not Overlap

PARKRESTRICTIONS

NO CONFLICT

Diagram A: Process for Development of Community-Based Resource Management Plans to Minimize Conflicts in Implementation

IDETERMINE:USE A VLLAGEAL*PATTERNWnlAS..0 DAF VILLAGEHISOES CBRA ARK MANAGEMENT ATTUDES AUTHORITY KEYINDMDUALS \\ B VLLAGEB ASABOVE _ DRAFT NS I CBRMPAN_ INTER-VILLAGE ONREVISED COIt ARE MEETNG PLFSSA8., VILLAGECASABOVE _ DRAFT CBRMP/NO

RANRATIFICAON BYPPBY BUPAA K

K CONFLICTr | PROVINCE |Y ISKDEAB AAEMENT IC I |RATIFICATION|IITTRP1 IBYPHPA I |MAN4AGEMENIKDS I I I PLAN CSRMP-COMMUNITY-BASEDRESOURCE MANAGEMENT PLAN TBRNP-TAKA BONE RATE NATIONAL PARK -74 -

Diagram B: Resolution of Conflict Between Different Groups of Local Fishers

CONFLICTFIHRA REPORTSFROM RESOLVED FISHERSA Z~~O >L /CFLICT ENFO*ENFORCEMENl

/%m.IE REPORTSFROM FISERSA FISHERSB EPRESENTATIONS

RECOMMENAINS CONFLICT \FARK NEGOTIAlING

TOCHANGE USE::t RESOLVED B TEAMA LSMs

i tFISHERS ijAE i j ~~~~~~REPRESENTATIONS/ ~~~FISHB 0~~~~~~FIHE

MEETINGTD # ~~-~~~ RESOLVE CONFLICT

Diagram C: Resolution of Conflict Between LcicalUsers With Park Management

CONFLICT RESOLVED FISHERS

/ :; 0 fArlWrEiS;i2 :CONFIACT;; §ENFORCEMENT CO - Zz_w -REPORTS

FISHESlRlUIONS0; \FSHERS CONFLICT REPRESENTATIVES | / * ~~~CONFLICTI ______RESOLVED ~~PARKCNEGOTIATING ,CHANGEiLOCAL. g RESOLVED TEAM+ LSMs

ACTIVMTES0; j \ FVIUFELBD MANAG E 0

MANAGEMENTREGULATION MEETNGTO (EDS RATIFICATIONfBY -mo CONSENSU

\ l ~~~~~~~MEETINWff NSENSUS CBOUPATIASTO \ ~~~~~~CONESS. t:ORDINATOR...... _ -75-

ewon°tieadLclF5e fCnle : slfO iaram D rDia9~ fISHERS ~~~~CONFLICT LOCAL j REPORTS x 25~~~~~IORESOLVED V 0 | RFISHEO - } | _417RCA. /- ~~~~ACTIVITIES ENFORCEMENT (NEEoD ONFLIC ~~~~~~~REPORTS I }-_t EISHERY FISHERS) E REPRESENTA / OUTSIDE/ | REPRESENTAIMOF OUTSDE NEGOTATING CONFiARKLICTM' F PARK LSM | I NFLlcT F + ST MANAGEMENTcEslGE FISHERLVET REG RLOC IN ITEA BYAOI EES CHANGE I 7ON I I 1E InoAir8YPANI ACMTIESOF| EOMEETiRCTO F ONRFCTE 1 aI UDO VEN I UA1t9! s OUTSIDEFISHERSI EXC i v

ECLUDE IN W < IN

and Parr Otide Fishers aet4De of conflict Resolution ~Dagrr9 E: ff

FISHiERS

PARKv o|~R l NOCMN _-RE~~~~P-STRICTION I 5 CONFLICT RESOLVED RENORTS INPARKI CHNGE I ANIN (AED R4GtlC ByPARK I I oN I LLGLENTRYOR |-~~~~44"MLEGITIMATEPE4TIESONRIGNI / vR CLIMSR I ~~~~~~ Io NGO5 ~~~~CONSIDERED I ~ ~~~INAPPROPUITEREATDIFNGG BYa I EXCLUDE BgY EXcLUDE ENFORCEMIENT -76-

Annex 12.4: Sites Proposedfor GEFFinancing during COREMAPPhase II

.Characteristics Wakatobik (Tu g Best) i Padaldo Isla1s = Spennondelslands*..

Province SoutheastSulawesi IranJaya SouthSulawesi Region WallaceeRegion NorthernIian Jaya MakassarStraits Small-islandecosystem, between Flores 41 islands,southeast of Biak 121islands, west of South Suawesi andBanda Seas Island. ProjectFocus Selctedvillages inthe four moor islands. PadaidoBawah and Padaido Atas Underdiscussion torationalize siteboundaries to indude:(a) a representativeportion ofouter reef, or (b)key locations and conservation areas in inner,middle and outer reef. Size Reefarea: 60,000 ha; ca.57,000 ha tobe discussed NationalPark area: 1,390,000 ha Population 50,000 11,700 6,000(in target locations) GEFJustflcation Siteis COREMAPs dosest to the perceived Extensive coral reefs and high Hihest coral reef diversityrecorded in centerof world's coral reef diversity; coraldiversity; may contribute to Indonesia,one of the highestin the world. Identifiedasthird order conservation priority WestemPapua New Guinea Identifiedas secondorder conservation prority underIndonesia Maaine Conservafion Alas. reefs'maintenance. underMafine Conservaton Alas. BiologicalDivesity Site-specifticcoral diversitydata not Coralspecies: 192 Coralspecies: 262; coral genera 78 available,but nearbysites indicate one of Reefhabitats: atoll, fringing Reefhabitats: fringing thehighest marine biodiversity inthe world; Fishspecies: 71-107 Fishspecies: 210 Reefhabitats: fringing and atoll Seagrass sps: 6 Seagrass sps: II Reefcondition: 70 percentof reefswith Abgaesps: 5-20 Algaesps: 200 >75%live coral cover. Dominantcorals: Aoupora, Dominantcorals: Acropora/PociHopora inouter Butterflyfish sps: 38 atematingwith Porte6s reef,Podes, soft corals in inner reef

CurrentStatus NationalMarine Park since 1996. ProposedasMarine Threereserves proposed: RecreationPark P.Kapoposang (Marine Recreation Park) P.Panambungan (Stict Nature Reserve) l ______Togo-Togo(Wildlife Reserve) MainThrats Commercialbombing, cyanide, coral mining, Bombingand poisonlishing; Bombing,cyanide fishing, overfishing overexploitationfromexternal fishers. earthquakedamage; potential for Sedimentationininner reefs future tourism impacts if intemationalflights resume KeyInterventions - Privatesector-community partnership - Community-basedmanagement -Strengthen Navy/provincial collaboration with (proposed) model,building upon Operation Wallacea buildingon customarytenure; localcommunities tostop illegal fishing. andvolunteer diver program. - Strengthenedawareness - Strengthenself-help groups for atemative - Encourageseffinancdng through entrance campaignstostop bombing, by incomegeneration (micro-enterprise fees,sponsorships andvolunteer diver involvinginformal leaders, development). contributionsintoa parkmanagement - ContinueBiodiversity - Awarenessprogram onimpacts ofdestructive fund. ConservationNetwork's fishing; - Strengthenenforcement ofdestructive programtoinvolve local -UnkCOREMAP with urban environmental threatsby communities, Navy, and private communifiesinecotourisni projectto controlurban pollution inUjung sector. development Pandang.

CulturalFeatures Inhabitedby indigenousand Bajau Inhabited by indigenousBuginese, Makassarese communities communities,primarily subsistencecommunities, Kinship groups Patron-dientrelationships, and traditional user fishersfarmiersandtraders. (karat. ExistingcustDmary rights systems around fish aggregation devices marinetenure and management (Ongko) systems(sasisen) _ Existing or -OperationWallacea, a partnership between - LocalNGO program (Vayamn -LocalNGO program focuses on awareness and Prosed Programs WallaceaDevelpment Institute, PHPA, Rumsram)focuses on biological communitydevelopment intwo villages. LIPI,LH, and Hong Kong Bank Care for monitoring and income -HasanuddinUniversity conducts mariculture Nature TrustFund, focuses on reef generation. Assistedby a researchinthe area. monitoringand management,with US$300,0003-year grant from - LocalNavy and province have collaborative US$600,000secured in sponsorshipfunds BiodiversityConservation Network programtostop illegal practices and provide todate. (1996-98). altemativeincome. -ConservationIntemational andYayasan - Localcollaboration program - Localdiving company has proposed Samahave a smallcollaboration program betweenArmy, police and managementpartnership agreement for to assistBaiau communifies. districtto stopbombing. Kapoposang. * GEFfinancing condiioned onsite rationalzation - 77 - Annex 13 Indonesia: Coral Reef Rehabilitationand ManagementProgram Letterof DevelopmentProgram from the Governmentof Indonesia

REPUBLIKINDONESIA BADANPERENCANAAN PEMBANGUNAN NASIONAL JALAN TAMAN SUROPATI 2. JAKARTA 1U10 TELEPON! 33620 - 39"550

OurRef ;q /D.Vh/1 1/1997 Jakarta,|/ November, 1997 Subject COREMAP

Mr. Dennis de Tray CountryDirector World Bank Resident Mission n1.Rasuna Said, Kav. B-10, Suite 301, Kuningan Jakarta 12940

Dear Mr. Dennis de Tray,

In our discussion with the World Bank mission, the Government of Indonesia expressed interest in applyingfor Adaptable Program Loan (APL) to support our initiative in the implementation of Coral Reef Rehabilitation and Management Program (COREMAP), especially for the conservation of areas with high biodiversity richness. Following the discussion, we have prepared the attached proposal for COREMAP Implementation which we are now seeking your assistance to obtain APL support

Coral reef T-ehabilationand management issues are stated in both our Marine Biodiversity Action Plan and the Sixth Five-Year Development Plan (REPELTA-VI) as our priority. The ultimategoal of the COREMAP program is the protection, rehabilitation and sustainable utilization of coral reefs and associated ecosystems in Indonesia, which will, in turn, enhance the welfare of coastal communities.

COREMAP has three phases and is proposed as a 15 year program Initiation Phase (CORENMAPI/Years 1-3), Acceleration Phase (COREMAP EIVYears4-9), and InstitutionalizationPhase (COREMAP IUIYears 10-15). The objective of COREMAP I is to establish a viable framework for implementation of a national coral reef management system. The objective of COREMAP II is to establish viable reef management systemsin priority sites in ten provinces (South Sulawesi, Southeast Sulawesi, North Sulawesi, Maluku, Irian Jaya, North Sumatra, West Sumatra, Riau, West Nusa Tenggara. and East - 78 -

Nusa Tenggara). The objective of COREhMAPIn: is to establishviable management systems in priority sites, which are operationaJl,fully decentralized to regional goveTnments, and institutionalized (through specific block grants to regional governments).

COREMvAPis an inter-sectoraland inter-agencyproject. In initiationstage, Bappenas has been proposed as the coordinatingagency, the IndonesianInstitute of Sciences(LIPI) will be doingas executingagency, and involvingDirectorate General for RegionalDevelopment (BANGDA). the Ofticeof the State Ministryof Environmentand other relevance agencies, both at the national and local levels. Imnplementation responsibilitiesfor the program area expectedto be devolved progressivelyto district governments during phase I} and phase m. During the preparation stage, high commitment for community participation and inter-agency collaboration has been achieved.

Your agreementto the inclusionof this projectin the APL fundingis now sought in order that following activities can be implemented. Enclosed, please find the indicative financing plan (attachment I), policy framework, benchmark indicators and institutional arrangementproposed for COREMAPT, II and m (attachmentII, m and IV), and summaryof projectdesain for COREMAPI (attachmentV).

Thank you for your continued cooperation.

irs sincerely,

, +~jahyatiS oo PD Ojauty Chairmanj~~~S~vJokO.PhD. for ForeignCooperation Cooperation

Attachment1: Annex 14 of PAD AttachmentII, lil,and IV: Annex 14 of PAD AttachmentV: Annex 1 of PAD

Note: This letter is complementedby a SupplementaryProgram Letter No. 4241B.161111998,dated January21, 1998,and signedby Dr. Agus Pakpahan,Chief, Bureaufor Marine,Aerospace, Environment, Scienceand Technology,Bappenas. The letter providesadditional details on theCOREMAP program implementationarrangements, and is availableupon request. -79 -

Annex 14 Indonesia: Coral Reef Rehabilitation and Management Program Summary of Proposed Adaptable Program Loans and GEF Grants

Indiicative Program Financing Data (US$ million equivalent)

IBRDIGEF Financed Projects Other Donor Financed Total Projects* COREMAP Program Program Phases IBRD APL GEF GOI Total Other GOI Total ______I_ Donors US$M % US$M % US$M % US$M % US$M US$M US$M US$M

COREMAP I 6.9 54 4.1 32 1.8 14 12.8 100 13.3 7.0 20.3 33.1 COREMAP II 25.0 59 7.5 18 10.0 23 42.5 100 57.5 10.0 67.5 110.0 COREMAP III 35.0 70 .... 0 15.0 30 50.0 100 55.0 15.0 70.0 120.0

Total 66.9 64 11.6 11 26.8 25 105.3 100 125.8 32.0 157.8 263.1

Type Loan Grant Loan/ .______|_ G rant *Other donor financing is indicative and subject to confirmation.

Estimated Implementation Period

Estimated Implementation Period Commitment Date Closing Date

COREMAPI May 1998 October2001 COREMAPII 2001 2007 COREMAPIII 2007 2013 - 80 - Indonesia:Coral Reef Rehabilitation and IManagementProgram

Annex14.1: CoralReef Rehabilitation and ManagementProject InitiationPhase (COREMAP I) A. COREMAPI

COREMAPI DevelopmentObjective: To establisha viableframework for a nationalcoral reef system in Indonesia.

The IBRD/GEF-FundedProject (US$12.8million) will finance: two pilot sites and the (i) policy, strategy and legal, (ii) surveillanceand enforcement,and (iv) awarenesscomponents of the national COREMAP programframework.

Otherdonors will finance,under parallelprojects (US$20.3 million): two pilot sites, and the (i) monitoring and research;and (ii) capacitybuilding components of the nationalCOREMAP program framework.

GOI will finance, under separate interventions: initial program activities in the remainingsix program provinces.

PhaseI ParallelPrcijects (Indicative) Financier IBRD/GEF ADB AusAID' TotalPhase I

NationalComponents Policy, Legal Researchand Training Enforcement Monitoring Awareness Pilot Sites T. BoneRate Senayang KupangBay (S. Sulawesi) (Riau) (NTT) Lease Is. (Maluku) stimated Cosits US$12.8million US12.0million iS$8.3 million US$33.1million

1 - ADB financingwas negotiatedwith GOI on February16, 1998.AusAID financing is subject to confirmation.

B. The IBRD/GEFFunded Project

IBRD/GEFProject Description: The projectwill (I) strengthenthe nationalpolicy, strategicplanning and legal framework for coral reef management,by helping produce a national COREMAPprogram policy, strategyand action plan, and helping revise key legislationsupporting coral reef management; (ii) launch a nationalawareness campaign to increasepublic supportfor coral reef management;(iii) improvethe national enforcementframework, and pilot surveillanceand enforcementactivities in Malukuand South Sulawesi(Irian Jaya may be consideredif found justified); (iv) implementpilot community-basedmanagement plans in two sites (Taka Bone Rate NationalPark in South Sulawesi,and Lease Islands in Maluku);and (v) completethe designof COREMAPII.

ProjectFinancing Data: ProcessingTime Takble: GEF Council: May 1,1997 IBRD Loan: US$6.9million Appraisal: December 1, 1997 GEF Grant: US$4.1million Negotiations: February11, 1998 GOI: US$1.8million GEF CEO: March3, 1998 Board: March31, 1998 Total: US$12.8million Effectiveness: May 31, 1998 - 81-

B. The IBRD/GEF Funded Project (Cont'd)

Estimated Disbursements (US$ million) FY1999 FY2000 FY2001 IBRD Loan: Annual 1.0 4.0 1.9 Cumulative 1.0 5.0 6.9

GiEF Grant: Annual 0.6 2.0 1.5 Cumulative 0.6 2.6 4.1

Conditions to Proceed to APL II:

* Complete national COREMAP program policy and strategy discussed with key stakeholders. Ministerial letter from BAPPENAS issued, recommending the implementation of the strategy to the involved agencies. COREMAP II sites and design in accordance with the strategy.

* Institutional capacity evaluated as sufficiently improved to enable expansion of COREMAP program;

* Compliance rates (no. of patrol days without violations/total patrol days) increasing by 10 percent in pilot sites, following introduction of surveillance and enforcement system;

* Community-based management pilots evaluated as workable models, and lessons of experience incorporated into design of Phase il.

. 75 percent of outputs and disbursements reached. COREMAP I implemented satisfactorily. -82 -

Annex 14.1. a. Checklistfor Evaluationof Fiulfillment of Conditions to Proceedto COREMAF'1111

A. Completenational COREMAP program policy and strategy discussed with key stakeholders. Ministerialletter from BAPPENAS issued, recommending the implementationof thestrategy to the involvedagencies. COREMAP 11 sites and design in accordancewith the strategy.

1. DraftCOREMAP policy and strategy presented and discussed at a seriesof nationaland regional workshops,with separatesessions for at least threegroups: governrnentofficials, private sector (especially fishingand tourism),and NGO's.

NationalWorkshop (Jakarta); dates Eastern Indonesia Workshop (Maluku): dates Western IndonesiaWorkshop (Sumatra): dates 2. Ministerial letter issued from BAPPENAS. dates

B. Institutional capacity evaluated as sufficiently improved to enable expansion of COREMAP program.

The capacityof the agenciesthat would play key roles will be rated.Except as noted, ratingswill be on a scale of I to 5, with 5=fullyadequate, 4=exceeds minimum level, furtherimp,rovement possible, 3=at minimum acceptablelevel, 2=inadequate but improving,1=completely inadequate. Three sets of ratingswill be comparedfor each agency: GOI (BAPPENASand LIPI),joint donors' supervisionmission, and independent evaluationteam.

3. Ratethe capacityof the PMOto handlean expandedprogram, baised on the aspects listedbelow: numberof staff (GOI and consultants) skills and experienceof staff staff understandingof COREMAPobjectives and procedures equipment(e.g., communications, computers, vehicles) communicationwith and cooperationfrom other involvedagencies clarity/effectivenessof communicationwith provinces(rated by provinces) qualityand timelinessof progressreports and annualplans averagetime to processkey contracts(TA, Awareness,ICB) (# monthscompared to plan) (# monthscompared to averagefor Indonesia)

4. Rate the followingaspects of each ProvincialSteering Committee to handlean expandedprogram in its province: number of staff skills and experienceof staff staff understandingof COREMAPobjectives and procedures communicationwith and cooperationfrom otherinvolved agencies averagetime to processdisbursement requests (# monthscompared to averagefor Indonesia)

Theseindicators could be reviewed and modified if appropriateat mid-term. -83 -

5. Ratethe followingaspects of each provincialSurveillance and EnforcementAgency to handlean expandedprogram: number of staff skills and experience of staff staff understandingof COREMAPobjectives and procedures equipment(e.g., communications, computers, vehicles, boats) communicationwith and cooperationfrom otherinvolved agencies

CC.Compliance rates improving in pilot sites, following introduction of surveillance and enforcement system, as measured by a range of standard indicators, such as:_

6. R.atioof violation-freedays to total patroldays increasingby Ž 10% (%) 7. Frequencyof infractionsdecreasing by Ž 20% (%) 8. Dispositionmade and documentedfor 2 65% of observedinfractions (%)

D. Cmmunty-bsedmanagementpilots evaluated as workable models, and lessons of experience i17corporatedinto design of Phase 11.

The iindividualCBM's will be ratedseparately by villagestakeholder groups (villageauthorities, fishing groups and women'sgroups), ProvincialSteering Committee, and the independentevaluation team, and ratingswill be compared. Three aspects of the CBM will be rated: village guidelines,altemative income generation activities(AIG's), and overall impactson fishing activities. Exceptas noted,a 1-to-5 scale will be used, with 5=completelyadequate, effective or appropriate/useful,4=mostly adequate, effective or appropriate/useful, 3=minimumacceptable level, 2=somewhatadequate, effective, or appropriate/useful,but not up to minimum acceptablelevel, and 1=completelyinadequate, ineffective, inappropriate or useless.

9. Is knowledgeof the villageguidelines adequate?

10. Are the village guidelinesappropriate and useful?

11. How well are the reef managementplans following the guidelines?

12. How strongis the level of supportfrom local officials

13. What percentageof the AIG's implementedare still operating? (%) 14. Are there indicationsthat AIG's will contributeto improvedreef management?

15. Has there been a changein the amountof illegalor destructivefishing practices? (5=mruchbeKter, 4=somewhat better, 3=no change,2=somewhat worse, 1=much worse)

E 75 percent of output indicators listed in Annex 1 completed and 75 percent of disbursements reached. (,OREMAP I implemented satisfactorily.

16. Percentageof outputindicators completed (%) 17. Percentageof disbursements (%) 18. Projectimplementation rating -84-

Indonesia:Coral ReefRehabilitation and ManagementProgram Annex 14.2: SecondCoral ReefRehabilitation aind Management Project AccelerationPhase (COREMAP II)

A. COREMAPII

COREMAPII Development Objective: To establishviable reef management systems in prioritysites in ten provinces(South Sulawesi, Southeast Sulawesi, Maluku, Irian Jaya,West Sumatra, North Sumatra, Riau, EastNusa Tenggara and West Nusa Tenggara)

The IBRDIGEF-FundedProject (US$42.5 million) would likely finance: managementof priority sites in SouthSulawesi, Southeast Sulawesi, Maluku and Irian Jaya, and program support at the national level.

Otherdonors would likelyfinance, under parallelprojects (US$67'.5 million): managementof priority sitesin Riau,North Sumatra, West Sumatra, North Sulawesi, and Wesi: and East Nusa Tenggara; expansion of researchand monitoring to all tenprogram provinces; and a researchstation in Lombok.

PhaseAI Parallel Initiatives (Indica tive) jFinacier .- -0. 0 0 IBRDIGEF ADSB EHaiaF TotalPhase II ...... NationalComponents: Guidelines Research Researchstation Support and in Lombok(JICA) Monitoring Priority...... Sites ...... in: S..S. SulawesiSulawesi...... RiauR..i..a...... NTTN... T...... T"U US$110.0$ .0mmillion lion...... SESulawesi N. Sumatra NTB Maluku W. Sumatra 7______IrianJaya - Subjectto confirmation.

B. The IBRD/GEFFunded Project

ProjectDevelopment Objective: To establishviable reef managemientsystems in prioritysites in four provinces(South Sulawesi, Southeast Sulawesi, Maluku, and IrianJaya)l

ProjectDescription (Indicative): The projectwould (i) strengthenproject management capacity at the districtand provinciallevels; (ii) strengthensite-based enforcement and containmentof nationalmobile threats; (iii) raise local awarenessand participation;(iv) implementcoral reef managementplans in priority sites;and (v) prepareCOREMAP Ill. Site interventionsare expectedto include,among others, the SpermondeIslands, Wakatobi Islands and PadaidoIslands, which have globalbiodiversity importance.

ProjectFinancing Data (Ind 0icatv:Procsng00TimeTab (etati*e):

IBRDLoan: US$25.0million Appraisal: December2000 GEFGrant: US$7.5million Negotiations: February 2001 GOI: US$10.0million RVPApproval: March 2001 Total: US$42.5million Effectiveness: May 2001 -85 - B. The IBRD/GEFFunded Project (Cont'd)

Estimated Disbursements FY2002 FY2003 FY2004 FY2005 FY2006 FY2007 (US$ million) IBRDELoan: Annual 1.25 3.75 6.25 6.25 5.0 2.5 Cumulative 1.25 5.0 11.25 17.5 22.5 25.0

GEF Grant: 0.38 1.13 1.87 1.87 1.5 0.75 Annual 0.38 1.50 3.37 5.25 6.75 7.5 Cumulative

LikelyConditions to Proceedfor APL Ill:

* Satisfactoryinstitutional capacity at the provincialand district levels

* Compliancerates increasing,with incidenceof destructivepractices declining in programsites.

* Decliningtrends in mobilethreats to coral reefs.

* Coral reef managementplans implementedsatisfactory according to COREMAPprogram indicatorsin at least60 % of the sites.

* 75 % of outputsand disbursementsreached. COREMAP II implementedsatisfactorily. -86- Indonesia;Coral Reef Rehabilitationand ManagementProgram Annex 14.3: Third Coral Reef Rehabilitationand ManagementProject InstitutionalizationPhase (COREMAP Ill) A. COREMAPIlIl

COREMAPIlIl Development Objective: To establishviable reef managementsystems in prioritysites which1 are operational,fully decentralizedto regionalgovemments and institutionalized

The IBRD-Funded Project (US$50.0 million) would likely finance: expansion of site managementto priorityareas in EasternIndonesia, and strengthenedcapacity for programmanagement at the district level. Other donors would likely finance, under parallel projects (lJS$70.0 million): expansionof site managementand supportin other priority areas in Indonesia.

Phase Ill Initialtives (Indicative) Financier IBRD ADB Bilateral Total Phase IlIl ...... Priority Sites in: tbd tbd tbd US$120.0million

B. The IBRD Funded Project

Project Description (Indicative): The projectwould (i) institutionalizeand ensure the sustainabilityof the programthrough user pay schemesand/or a system of block grantsto provincialand district governments;(ii) strengthenCOREMAP integrated planning and implementationsupport capacityat the district levels; and (iii) expandCOREMAP implementation to other prioritysites in EasternIndonesia.

Project Financing Data (Indicative): Processing Time Talble(Tentative):

IBRD Loan: US$35.0million Appraisal: December2006 GOI: US$15.0million Negotiations: February2007 RVP Approval: March 2007 Total: US$50.0million Effectiveness: May 2007

Estimated Disbursements FY2008 FY2009 FY2010 FrY2011 FY2012 FY2013 (US$million) _ IBRD Loan: Annual 1.75 5.25 8.75 8.75 7.0 3.5 Cumulative 1.75 7.0 15.75 24.5 31.5 35.0

End-of-Program Indicators (Indicative): * Programstrategy incorporated into nationalpolicy * Site planningand implementationfollowing the program'sstrategic priorities, and fully decentralizedto the regions. * Programsustainability ensured through user-pay schemes,local governmentfinancing, and/or a system of block grants (inpres Pengend. Damp. Lingkungan) linkedto programpriorities and local performance. * At 75 % of COREMAPsites, coral reef managementplans endorsed by local authorities,and implemented satisfactorilyby localcommunities according to programindicators. _ . _~~~~~~~~~~~~~~~~~~~- MAP SECTION IBED29352 120'54 1210 0 121-06' 12112' 12V11e IBRa9d INDONESIA LEASEISLANDS SITE TAKA BONE RATE CORALREEF REHABILITATION Maluku Province NATIONAL PARK AND MANAGEMENTPROJECT Sulawesi Selatan Province Maroc.1tare ol Zone ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~K.1olho O35)6 36 6-24 624' ~~~~~~~~~~~~~~~~~~~~~~~~ Ihomoho 0 2 A4 I0168 8~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~0 e ; > ( > 6 2 4 ~ P' Kan. hu KILOMETERS

"e", ~~~~~~~~~~~~~~~~~~~~~~Saporva - Haruku Island Hand isla0 3ri4' 4 HruluIstn < *=t; A ; ! ow ,7 ! \ g X~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~id.i!a

600~~~~~~~~~~~~~~~~t 6238'8

G>361hd rd LL. , 'f Core Corsr ation Zone1I C ,; noenBeef/ I CORALREEFSO Y E A M bu MoodMolon ~~~~~\ (Fish Di-ersityl oln 66 -* PROJECTVILLAGES Island Akooot nNlj R,, : 1,j 2 ElTmr'. rmr\ KrdE46fj-ttl r 'Ti <5 ~ir TumEml~~R' s,nn-,," % KrJEEsP ¢51|183'18°4 ' 0 OTHERVILLAGESIsndldAko RI Ree.W D IL 2'8 N SV18 2°4'1 NL at '185 6'42'~ ~~ ~ ~ ~ ~ ~ ~~~ln E'1otaoll\64'Bailn i , re CRLEF ille CORALR EEF5Gm^5eSmt/;oXmy 121o00 , o Fn 2 ...... = n x i t y. oCO RA L REEFS a et 3203238>>nl2as 40 Btef5 T4 n,bo,B 0 12810 128G4 128'38' 128 A 128-50

Reef lOeke,e~~~~I.r.R.eI PDAfE a IL NDS* I 'B' 642 ' Lo6eio,~~~~~~ 06 I TobojoReef 642' Rook slrdcloud Irmon Poefef F/s' CORALORALREEFREEFS~iak

1x iCoral ay orekCa ConcovU'on, Zone ~~ leon~~p.f EMo ~~~~~~~~RIId11 Codore lelenf An< -d T

6 Solo, ~~~~~~~~~~~~'~~~~~~~~~~~netij ~ ~~~~~~~~~~~C r V1Mo

jj~~~~~~~~~~~~~ ;>FoFoEDENT4UfYBSDs - a z.tv r-z CU 9 \ X \-ELMNit Sf( or t0 6-48' ITrIBrd 6~~~~~~~~~~~~~~~~~~~~Tb66B1 2 T f~~~~~~~~~~~~~~~~Re

TO~~~~le 0 ISO 128~~~ZweII ReefKonoi I~~~~~~~~~~~~~~~~~~~~~~~tII

6054' Re en4 604,' TN LAND

BoleBeco ' ~~~~~~~~~~~~~~~~~~~ 7' 7 ~~~~~~~~PACIFIC K-ee ~¶~A4 OCEAN J, h6,d ~~ ~ ~ ~ ~ ~ ~ n ,M A L ACYS A /

0 PROPOSEDPROJECT VILLAGES GeI~~~ SAO

C~MANAGEMENT KObO 745-2 odoee 0/

PROPOSEDSURVEILLANCE AND PMei'tollTieeur- o 0 / Q,6ZP > ENFORCEMENTPATROLS L-Be. Ie.~ -~'lTRANJAYA EXISTING PARKZONATION , sou- T-- JAVA 064A ____ 6 A PenO8~~~~~ ) 6ld~~~401'0 0,0, 0e', ENTRYPOINTS FOR EXTERNAL btt I j '' '60 FISHRES Pu

NATIONALPARK BOUNDARY ooJl0o1T0o- pdob e0,n~oUIlooAoL 4fAO

CORALBEEFS 121 oen00-oeo M0eoOC1ooc,oO13000

MARCH 1996