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Report No. 24484-BR Report No. 24484-BR Brazil Piauí State Economic Memorandum Managing a Natural Inheritance Public Disclosure Authorized Public Disclosure Authorized July 31, 2003 Brazil Country Management Unit Poverty Reduction and Economic Management Sector Management Unit Latin America and the Caribbean Region Brazil Piauí State Economic Memor Public Disclosure Authorized Public Disclosure Authorized andum Public Disclosure Authorized Public Disclosure Authorized Document of the World Bank Public Disclosure Authorized Public Disclosure Authorized CURRENCY EQUIVALENTS (R$/US$) Currency Unit - Real (R$) December 2000: R$1.96/US$ December 2001: R$2.65/US$ December 2002: R$3.53/US$ July 2003: R$2.90/US$ WEIGHTS AND MEASURES The Metric System is used throughout this report. FISCAL YEAR January 1 to December 31 Vice President LCR: David de Ferranti Director LCCSC: Vinod Thomas Director LCSPR: Ernest0 May Lead Economist: Joachim von Amsberg Sector Manager: Mauricio Carrizosa Task Manager: Mark Roland Thomas ABBREVIATIONS AND ACRONYMS BNB Northeast Development Bank -Banco do Nordeste do Brasil BNDES National Development Bank - Banco Nacional de Desenvolvimento EconSmico e Social CEASA-PI Centrais de Abastecimento do Piaui CENTEC Rural Technical College - Cole'gio Profssionalizante em Te'cnicas Rurais CODEVASFP Corpora@io de Desenvolvimento dos Vales do Rio S6o Francisco e do Parnaiba CPAC EMBRAPA Cerrados CPSFGV Centro de Pesquisas Sociais/Funda@o Getlilio Vargas CVT Technical Vocational College - Cole'gio Vocacional Te'cnico DFID Department for International Development (UK) DNER State Roads Department - Departamento Nacional de Estradas de Rodagem DNOCS Departamento Nacional para Obras Contra a Seca EMATER-PI State Rural Extension Agency - Empresa de Asist2ncia Te'cnica e Extens60 Rural do Piaui EMBRAPA Empresa Brasileira de Pesquisa Agropecudria FA0 UN Food and Agriculture Organization FPE Fundo de Participagio dos Estados FUNDEF Fund for the Maintenance and Development of Basic Education - Fundo de Manuten pio e Desenvolvimento do Ensino Fundamental HDI Human Development Index IBGE Brazilian Institute for Geography and Statistics - Funda@io Instituto Brasileiro de Geografa e Estatistica ICMS Impost0 de Circulagio de Mercadorias e SewiCos IDB Inter-American Development Bank IFPRI International Food Policy Research Institute INEP National Institute for Education Research - Instituto Nacional de Estudos e Pesquisas Educacionais PEA Applied Economic Research Institute - Instituto de Pesquisa EconSmica Aplicada ITERPI State Land Reform Agency - Instituto de Terras do Piaui LDB Lei de Diretrizes Bdsicas (Basic Education Law) LMA Legislagio sobre Meio Ambiente (Environment Law) LRF Fiscal Responsibility Law - Lei de Responsibilidade Fiscal MEC Education Ministry NE Northeast Region osc Organized Civil Society PCPR Rural Poverty Reduction Project - Projeto para a Combate B Pobreza Rural PIEMTUR Piaui Tourist Board - Empresa Piauiense de Turismo PLANAP Parnafba Basin Action Plan - Plano de A@o para a Bacia do Parnaiba PLANFOR National Worker Training Program - Programa Nacional de Qualifica@io do Trabalhador PNAD National Household Survey - Pesquisa Nacional por Amostra de Domicilios PRODECER Projeto de Desenvolvimento dos Cerrados PRODETUR Programa de Desenvolvimento do Turismo PROURB Projeto de Desenvolvimento Urbano do Estado do Ceard 4 PZEE Programa de Zoneamento EconSmico e Ecoldgico SAEB Basic Education Evaluation System - Sistema de Avaliapio da Educa$o Bdsica SE Southeas t (of Piaui) SEBRAE Small Business Support Service - SewiGo Brasileiro de Apoio ds Micro e Pequenas Empresas SEMAR-PI State Environment and Water Resources Secretariat - Secretaria do Meio Ambiente e dos Recursos Hidricos do Piaui SENAI Industrial Training Service - SewiCo Nacional de Aprendizagem Industrial SENAC Comercial Training Service - SewiCo Nacional de Aprendizagem Comercial SENAR Rural Training Service - SewiCo Nacional de Aprendizagem Rural STN National Treasury - Secretaria do Tesouro Nacional sw Southwest (of Piaui) SUDENE Northeast Development Agency - Superintend2ncia para o Desenvolvimento do Nordeste UFPI State Federal University - Universidade Federal do Piaui UN United Nations UNDP UN Development Program UNESCO United Nations Educational, Scientific and Cultural Organization ZAA Zoneamento Agricola e Ambiental ZEE Zoneamento EconSmico e Ecoldgico c July 3 1. 2003 Table of Contents 1. Context and Framework .............................................................................................. 1 Preface ............................................................................................................................. 1 The State of Piaui............................................................................................................. 3 Why Is Piaui So Poor?..................................................................................................... 9 The Framework for this Report ..................................................................................... 14 Roadmap ........................................................................................................................ 17 2 . Socially and Environmentally Sustainable Development in the Cerrados ................19 Definition and Motivation ............................................................................................. 19 Physical Characteristics, Climate, and Agricultural Potential. ...................................... 21 Existing Social and Economic Patterns ......................................................................... 23 The Main Issues ............................................................................................................. 24 The Role of the State ..................................................................................................... 26 Some Lessons Learned .................................................................................................. 28 Options ........................................................................................................................... 31 3 . Reducing Vulnerability through Rural Productivity in the Semi-Arid Southeast .....35 An Introduction to Semi-Arid Southeastern Piaui......................................................... 35 Physical Characteristics, Climate, and Agricultural Potential ....................................... 38 Existing Social and Economic Patterns ......................................................................... 39 The Main Issues ............................................................................................................. 42 A Change of Emphasis .................................................................................................. 43 Options ........................................................................................................................... 45 4 . Urbanization and Resource Use in the North and the Littoral................................... 47 Distinguishing Features of Northern Piaui .................................................................... 47 The Main Issues ............................................................................................................. 50 Managed Urban Growth ................................................................................................ 51 Managed Protection of the Coastal Environment .......................................................... 55 Small-Scale Agriculture ................................................................................................. 59 Tourism .......................................................................................................................... 61 Shrimp Farming ............................................................................................................. 66 Options ........................................................................................................................... 69 5 . Cross-Cutting Institutional Themes for the Whole State ........................................... 73 Piaui’s Overriding Challenges ....................................................................................... 73 Focusing on Productivity ............................................................................................... 73 The Participation of the Poor in Public Decisions ......................................................... 74 Education ....................................................................................................................... 78 Fiscal Management and Investment by the State .......................................................... 85 6 . A Development Strategy for Piaui............................................................................. 91 A . Raising the Profile of Natural Resource Management .......................................... 91 B. Strengthening Piauiense Government Institutions ................................................. 92 C . Focusing Infrastructure around Strategic Goals .................................................... 92 D. Recognizing Human Capital as a Key Constraint ................................................. 93 E. Reengineering Public Spending ............................................................................. 93 F. Building Public Participation ................................................................................. 94 Priorities. Costs. Timing ...............................................................................................