Document of
The World Bank For Official Use Only Public Disclosure Authorized
Report No: 46667-PH
PROJECT APPRAISAL DOCUMENT
ONA
Public Disclosure Authorized PROPOSED GRANT FROM THE GLOBAL ENVIRONMENT FACILITY TRUST FUND
IN THE AMOUNT OF US$6.351 MILLION
TO THE
REPUBLIC OF THE PHILIPPINES
FOR A
Public Disclosure Authorized SECOND PHASE OF THE MINDANAO RURAL DEVELOPMENT PROGRAM (APL) - NATURAL RESOURCE MANAGEMENT PROJECT
August 14,2009
Philippines Sustainable Development Unit Sustainable Development Department East Asia and Pacific Region
This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Public Disclosure Authorized Bank authorization. CURRENCY EQUIVALENTS
Exchange Rate Effective April 2009
Currency Unit = Philippine Peso PhP 48 = US$1
FISCAL YEAR January 1 - December31
ABBREVIATIONS AND ACRONYMS
ADB Asian Development Bank AFMA Agriculture and Fisheries Modernization Act of 1997 AOs Administrative Orders APL Adaptable Program Loan ARMM Autonomous Region in Muslim Mindanao ASG Abu Sayyaf Group BLGUs Barangay Local Government Units CAAM Conflict Affected Areas in Mindanao CADC Certificate ofAncestral Domain Claim CAS Country Assistance Strategy CBD Convention on Biological Diversity CBFM Community Based Forest Management CBNRM Community Based Natural Resources Management CENRO Community Environment and Natural Resources Officer CFAD Community Fund for Agricultural Development CIS Communal Irrigation System CITES Convention on the International Trade of Endangered Species CLEAR Coastal Law Enforcement Action in the Region CLUP Comprehensive Land Use Plan CMBC Coastal and Marine Biodiversity Conservation CPB Cartagena Protocol on Bio-safety CPPAP Conservation ofPriority Protected Areas Programme CRFC Coastal Resources and Fisheries Conservation CRM Coastal Resource Management DA Department ofAgriculture DA-BFAR Department ofAgriculture - Bureau ofFisheries and Aquatic Resources DA-BSWM Department ofAgriculture - Bureau of Soil and Water Management DAO Departmental Administrative Order DAR Department ofAgrarian Reform DBM Department ofBudget and Management DND Department ofNational Defense DENR Department ofEnvironment and Natural Resources DILG Department ofInteriors and Local Government FOR OFFICIAL USE ONLY DOF Department ofFinance DOST Department of Science and Technology DOT Department of Tourism DOTC Department of Transportation and Communication DPWH Department of Public Works and Highways DSWD Department of Social Welfare and Development DTI Department of Trade and Industry EA Environmental Assessment EcoGov Environmental Governance Project ofUS AID ECP Environmentally Critical Project EJP Environmental Justice Project ELAC Environment Legal Assistance Center EMB Environment Management Bureau ENR Environmental and Natural Resources ENRU Environmental and Natural Resources Unit FARMC Fisheries and Aquatic Resource Management Council FASPO Foreign Assisted and Special Projects' Office (of the DENR) FBI Field-Based Investigation FGD Focus Group Discussions FISH Fisheries Improved for Sustainable Harvest (Project funded by US AID) FMB Forest Management Bureau FPIC Free and Prior Informed Consent FS Feasibility Study GEF Global Environment Facility GEM Growth with Equity in Mindanao (Programme funded by USAID) GIS Geographic Information System GOP Government ofthe Philippines IBRD International Bank for Reconstruction and Development ICR Implementation Completion Report IDP Internally Displaced Persons IEC Information, Education and Communication IKM Information and Knowledge Management IPAF Integrated Protected Area Fund IPRA Indigenous Peoples' Rights Act of 1997 IPs Indigenous Peoples IUCN International Union for the Conservation ofNature JI Jemaah Islamiyah JICA Japan International Cooperation Agency JMC Joint Memorandum Circular LGC Local Government Code of 199 1 LGUs Local Government Units LSP Local Service Providers MandE Monitoring and Evaluation MACCO Municipal Accounting Office MAFC Municipal Agriculture and Fisheries Council MDC Municipal Development Council MEDCo Mindanao Economic Development Council MENRO Municipal Environment and Natural Resource Office
This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not be otherwise disclosed without World Bank authorization.
PHILIPPINES Second Phase of the Mindanao Rural Development Program (APL) Natural Resource Management Project
CONTENTS Page
I. STRATEGIC CONTEXT AND RATIONALE ...... 1 A . Country and sector issues...... 1 B. Rationale for Bank involvement ...... 4 C . Higher level objectives to which the project contributes ...... 5 I1. PROJECT DESCRIPTION...... 6 A . Lending instrument ...... 6 B. Project development objective and key indicators., ...... 6 C . Project global environment objective and key indicators ...... 7 D. Project components ...... 7 E. Lessons learned and reflected in the project design...... 10 F. Alternatives considered and reasons for rejection ...... 12 I11. IMPLEMENTATION ...... 12 A . Partnership arrangements ...... 12 B. Institutional and implementation arrangements ...... 13 C . Monitoring and evaluation ofoutcomes/results ...... 14 D. Sustainability and Replicability ...... 15 E. Critical risks and possible controversial aspects ...... 15 F. Loan Covenants ...... 16
IV. APPRAISAL SUMMARY ...... 17 A . Economic and financial analyses ...... 17 B. Technical ...... 18 C . Fiduciary ...... 18 D. Social (Stakeholder Involvement) ...... 20 E. Environment ...... 21 F. Safeguard policies ...... 21 G. Policy Exceptions and Readiness...... 22 Annex 1: Country and Sector or Program Background...... 23 Attachment 1to Annex 1: Globally Significant Features ofthe 11 Sites ...... 30 Annex 2: Major Related Projects Financed by the Bank and/or other Agencies ...... 36 Annex 3: Results Framework and Monitoring ...... 37 Annex 4: Detailed Project Description...... 42
Attachment 1to Annex 4: Menu of On-the-Ground Investments and Corresponding Technical Justification ...... 53 Attachment 2 to Annex 4: Assessment of CMBC-2 in Addressing Climate Change ...... 57 Annex 5: Project Costs ...... 64 Annex 6: Implementation Arrangements ...... 67 Attachment 1to Annex 6. Duties and Functions of Stakeholders ...... 74 Attachment 2 to Annex 6. Memorandum of Agreement Between DA and DENR ...... 84 Attachment 3 to Annex 6. Memorandum of Agreement Between DA and NCIP...... 90 Attachment 4 to Annex 6. Implementation Arrangement ...... 95 Attachment 5 to Annex 6. Inter-Component Coordination and Implementation Arrangement ...... 98 Annex 7: Financial Management and Disbursement Arrangements ...... 103 Annex 8: Procurement Arrangements ...... 113 Annex 9: Economic and Financial Analysis ...... 117 Annex 10: Safeguard Policy Issues ...... 126 Annex 11: Project Preparation and Supervision ...... 134 Annex 12: Documents in the Project File ...... 135 Annex 13: Statement of Loans and Credits ...... 136 Annex 14: Incremental Cost Analysis ...... 140 Annex 15: Country at a Glance ...... 147 Annex 16: CMBC 2 Sites Selected ...... 150 Map No. 36490 ...... 151 PHILIPPINES
SECOND PHASE OF THE MINDANAO RURAL DEVELOPMENT PROGRAM (APL) NATURAL RESOURCE MANAGEMENT PROJECT
PROJECT APPRAISAL DOCUMENT
EAST ASIA AND PACIFIC
EASPS
Date: May 27,2009 Team Leader: Carolina V. Figueroa-Geron Country Director: Bert Hohan, EACPF Sectors: Roads and highways (55%);0ther Sector Director: John Roome, EASSD social services (19%);Irrigation and drainage Project ID: PO84967 (1 S%);Sub-national government administration Environmental Assessment: Partial (8 YO);Water supply (3 YO) Assessment Themes: Rural services and infrastructure Lending Instrument: Adaptable Program Loan (P);Decentralization (P);Participation and civic engagement (P);Municipal governance and institution building (S);Other rural development (S)
Global Supplemental ID: PO96836 Team Leader: Carolina V. Figueroa-Geron Lending Instrument: Adaptable Program Loan Sectors: General agriculture, fishing and Focal Area: M-Multi-focal area forestry sector (100%) Environmental Assessment: Partial Themes: Biodiversity (P);Decentralization Assessment (S);Land administration and management Supplement Fully Blended?: No (S);Other environment and natural resources management (S)
Project Financing Data [ ] Loan [ ] Credit [XI Grant [ ] Guarantee [ ] Other:
Source Local Foreign Total BORROWEWRECIPIENT 0.666 0.00 0.666 Global Environment Facilitv (GEF) Grant 4.183 2.169 6.351 I -MRDP2 Loan (Associated IBRD I 7.780 I 1.801 I 9.581 1 Funding) Total: 12.628 3.969 16.598
i Recipient: Republic of the Philippines
Responsible Agency: Department ofAgriculture Office ofthe Secretary, Elliptical Rd., Diliman, Quezon City, Philippines Tel: (63-2) 920-4079 Fax: (63-2) 920-4079
FY 2010 2011 2012 2013 2014 2015 Annual 1.000 1.300 1.500 1.500 0.751 0.300 Cumulative 1,000 2.300 3.800 5.300 6.051 6.351
Project implementation period: Start September 1,2009 End: June 30,2014 Expected effectiveness date: September 30,2009 Expected closing date: December 3 1,201 4
Does the project depart from the CAS in content or other significant respects? No Re$ PAD LA. [ Does the project require any exceptions from Bank policies? Re$ PAD IKG. Have these been approved by Bank management? Is approval for any policy exception sought from the Board? [ ]Yes [XINO Does the project include any critical risks rated “substantial” or “high”? [ ]Yes [XINO Re$ PAD IILE. Does the project meet the Regional criteria for readiness for implementation? [XIYes [ ]No Re$ PAD IKG.
Project development objective Re$ PAD ZLB., Technical Annex 3 MRDP 2 aims to (i)improve livelihood opportunities oftargeted communities and (ii) institutionalize a decentralized system for agriculture and fisheries service delivery that promotes participation, transparency and accountability.
Global Environment objective Re$ PAD IL C., Technical Annex 3 Critical coastal and marine biodiversity conserved in targeted sites and supported by sustainable land management in linked upland areas.
Project description [one-sentence summary of each component] Re$ PAD ILD., Technical Annex 4 (a) Participatory NRM Planning and Policy Development: Aims to foster NRM planning and mainstream this with the local development processes. (b) Selective On-the-ground Investments on Coastal/Marine and Sustainable Land Management Practices: This would support community efforts in coastal and marine biodiversity conservation as well as sustainable land management through an integrated .. 11 ecosystems approach. (c) Assistance to the Development of Sustainable Income Generating Activities (SIGAs): Aims to provide alternative livelihoods that relieve pressure on the natural resource base while also reducing poverty. (d) Strengthening Community Partnerships in Monitoring: Intends to build and strengthen . community-based resources monitoring through stakeholders partnerships and application ofappropriate tools and technologies. (e) Development and Conduct ofNRM Knowledge Management Program: Aims to enhance the knowledge of all sectors of society on biodiversity conservation, SLM and the integrated management of linked coastal and upland ecosystems.
Which safeguard policies are triggered, if any? Re$ PAD IKF., Technical Annex 10 Indigenous Peoples Policy (OP BP 4.10) Involuntary Resettlement Policy (OP BP 4.12) Environmental Assessment Policy (OP BP 4.01) Pest Management (OP 4.09)
Significant, non-standard conditions, for: Re$ PAD IILF. Covenants applicable to project implementation:
(a) The Recipient shall, through the PSO: (i)furnish to the Bank, not later than October 3 1 in each year, starting October 3 1,2009 for review and comments, an annual work plan for the implementation ofthe Project in the following year prepared in accordance with the provisions ofthe NRM Operations Manual; and (ii)afford the Bank a reasonable opportunity to exchange views with the Borrower on said plan and, thereafter, promptly take all actions necessary to implement said plan, taking into account the views ofthe Bank on the matter.
(b) The Recipient shall monitor and evaluate the progress of the Project and prepare Project Reports in accordance with the provisions of Section 2.06 of the Standard Conditions and on the basis ofthe indicators set forth in Annex 3 ofthis document. Each Project Report shall cover the period of one calendar semester, and shall be furnished to the World Bank not later than one month after the end ofthe period covered by such report.
(c) The Recipient shall prepare the Completion Report in accordance with the provisions of Section 2.06 ofthe Standard Conditions. The Completion Report shall be furnished to the World Bank not later than June 30, 2015.
(d) The Recipient shall ensure that interim unaudited financial reports for the Project are prepared and furnished to the World Bank as part ofthe Project Report not later than forty five days after the end of each calendar semester covering the semester, in form and substance satisfactory to the World Bank.
(e) The Recipient shall have its Financial Statements for the Project audited by external auditors in accordance with the provisions of Section 2.07 (b) ofthe Standard Conditions. ... 111 Each such audit ofthe Financial Statements shall cover the period ofone fiscal year of the Recipient. The audited Financial Statements for each such period shall be furnished to the World Bank not later than six months after the end ofsuch period.
(f) The Internal Audit Service within DA shall undertake periodic internal audits for the Project. Each such audit shall cover the period ofone fiscal semester ofthe Recipient. The internal audit review report for each such period shall be furnished to the World Bank not later than sixty days after the end ofsuch period.
(g) Each Participating LGU shall, by November of each year:
(i)issue a Local Finance Commitment Certificate (LFCC) confirming that it will make adequate budgetary provisions for the following year to cover its counterpart contributions for Components 2 and 3 ofthe Project; and (ii)confirm, through a signed resolution, that will make adequate budgetary provisions for the following year to cover the operating costs ofthe marine protected areas and the fish sanctuaries established or to be established under Component 2 ofthe Project within its jurisdiction.
iv I. STRATEGIC CONTEXT AND RATIONALE
A. Country and sector issues
1, Philippine economic growth during 2000-08 averaged around 5.1 percent. Economic growth picked up gradually from 2002 to 2007 when it peaked at 7.2 percent-the highest growth in three decades-but slowed down to 4.6 percent in 2008 as the twin shocks ofthe food and fuel crisis and global slowdown took their toll on the economy. Notwithstanding the improved growth performance, the Philippines growth has been noticeably below other developing East Asian countries, which grew at an average of 8.7 percent during 2000-08. With population growth at more than 2 percent per annum in the Philippines, growth in per capita income has been even lower relative to most ofits neighbors. Weak economic performance, coupled with high population growth and the recent food crisis and effects ofclimate change, constrained the country’s ability to reduce poverty and meet other development objectives.
2. The new Country Assistance Strategy or CAS (FY 2010 to FY 2012) was discussed by the World Bank Group’s Board ofExecutive Directors on April 30,2009. With a central goal of achieving growth that works for the poor, the World Bank Group (WBG) will support the Philippines in pursuing macroeconomic stability, an improved investment climate, better public service delivery for the poor, reduced vulnerabilities to income shocks and natural disasters, and better governance. Addressing the country’s fundamental development challenges, the new CAS focuses on poverty alleviation measures and on operationalizing governance in all Bank- supported activities. It also addresses emerging global challenges such as climate change, disaster risk management, and the financial crisis and emphasizes a knowledge agenda that supports the Philippines in addressing its own development challenges. This strategic focus mean Bank support for reforms, programs, and projects that improve opportunities, especially of the poor, to participate in markets through strengthened human capital (good health and better education), reduced vulnerability to shocks, and more economic prospects.
3. Under the new CAS period, the Bank Group will contribute to more inclusive growth by supporting the Philippines in (i)maintaining macroeconomic stability and coping with increased macroeconomic uncertainty through a stronger revenue base, improved expenditure efficiency and targeting, and responsive financing, (ii)improving the investment climate through an enabling business environment that promotes competitiveness, productivity and employment, notably for sectors ofparticular importance to the poor, including agriculture and fisheries, and developing better models ofinfrastructure finance and management in order to reduce transaction costs for the poor, (iii)increasing access to better public services for the poor by enhancing the reform agendas in key public services, while providing financial incentives to poor people to use social services, and (iv) reducing vulnerabilities by expanding and rationalizing the country’s social safety net, improving disaster risk management, piloting climate change adaptation measures and expanding climate change mitigation programs.
4. Promoting poverty reduction and rural growth specifically in the island ofMindanao remains particularly high on the GOP’s and the Bank’s CAS agenda given: (i)the island’s distinct climatic and geographic advantages which favor agriculture and fisheries sector growth; (ii)the large proportion ofthe country’s poor (almost one-third) is in Mindanao; (iii)rich terrestrial and coastal biodiversity; and (iv) advancing the peace initiative in Mindanao through the provision ofgreater economic opportunities and integration, particularly to indigenous communities and other disadvantaged groups.
5. The fisheries industry is a major part ofthe agriculture sector and is the source of livelihoods for a large proportion ofthe population nationally and particularly in Mindanao. During the past fourteen years, fishing contributed an average of4% to the total GDP ofthe country, and accounted for about 20% ofgross value added in the agriculture, fishery and forestry sectors. Forestry is also significant in providing protection to the main watersheds of rivers that provide water for various uses. In Mindanao these sectors are even more important as they accounted for one-third ofthe province’s GDP. The NRM sector and the Philippines in general are heavily dependent on the numerous economic and biodiversity values and services that coastal and marine ecosystems provide. For example, direct benefits from mangroves in terms offish production and potential sustainable wood harvest have been estimated to be more than US$ 600 per hectare per year (PEM1,2005). Thus, the annual direct benefits from mangroves amount to at least US$ 83 million per year. Significantly, the coral reefs have been estimated to contribute at least US$1.064 billion annually to the economy. The country has one ofthe longest coastlines in the world estimated at 36,289 kilometers. About one-third ofthese coastlines can be found in Mindanao, as well as a total of680,000 square kilometers of territorial waters that contain some ofthe world’s richest ecosystems.
6. The Philippines was identified as a biodiversity ‘hotspot ’ area because ofits distinctly rich biological wealth2 as well as the abundance ofthreats that increase the risks ofloss of endangered species. The marine and coastal zones in the Philippines consist ofvarious tropical ecosystems that include coral reefs, sea grass beds, mangroves, and, sandy beaches, rocky headlands, sand dunes, wetlands, estuaries and lagoons, each of which can be found in Mindanao. The areas where there are extensive and globally-significant biodiversity will be covered by this project. The proposed areas avow the presence ofwhale sharks; sperm, humpback, killer and melon-headed whales; marine turtles; manta rays; giant clams; and dolphins, among others. A detailed list is presented in Attachment 1 to Annex 1.
7. However, the coastal and marine environment ofMindanao is under severe threat, resulting in loss ofcritical habitat that threatens fisheries productivity, ecosystem integrity and biodiversity, which are the economic foundation for millions who depend on fisheries and tourism for livelihood. A range ofsocio-economic factors, together with institutional and policy failures, are causing serious environmental degradation. The major environmental problems affecting coastal resources and habitats include: pollution and siltation ofcoastal waters and estuaries; depletion oflive corals, sea grasses and mangroves; improper use offoreshore lands, wetlands and estuarine areas; and depletion offish stocks. In the upland areas ofMindanao, land degradation is driven by legal and illegal logging, swidden agriculture (in turn driven by limited access to resources by a growing population), poor soil management and improper use of agrochemicals.
8. The underlying causes ofterrestrial and marine ecosystem degradation include population growth, urbanization and industrialization amidst widespread poverty, which leads to
’ Philippine Environmental Monitor, a publication of the World Bank and the DENR. Ibid
2 unsustainable use of resources. But the linkages between upland and coastal systems and the need for sustainable management ofboth are not well understood and integrated ecosystem management is not practiced. This situation, combined with related policy failures, is degrading the natural ecosystems on which many local communities depend and seriously threatening much of Mindanao’s significant coastal and marine biodiversity. There has been inadequate attention given to sound environment and natural resource management (ENRM), and this could offset short-term, economic gains, by significant longer-term costs. Moreover, as the Philippines is particularly prone to natural hazards and is vulnerable to the impact ofclimate change, there are additional risks to its natural resource base. A detailed description ofthe threats to the country’s natural resources and root causes is presented in Annex 1.
Government Strategy
9. The Government enacted several legislation to enhance agricultural and rural development including: (a) RA 8550 or the Philippine Fisheries Code of 1998, an act providing for the development, management and conservation of the fisheries and aquatic resources, integrating all pertinent laws; (b) RA 8435 or the Agriculture and Fisheries Modernization Act of 1997 (AFMA), which aimed at enhancing the competitiveness ofPhilippine agriculture, and ensuring the development, conservation offisheries and aquatic resource, respectively; (c) the Local Government Code of 1991 (LGC) which devolves greater responsibility for frontline service delivery to Local Government Units (LGUs). In terms ofnatural resources management and biodiversity conservation, there are: (a) the National Integrated Protected Areas System (NIPAS or Republic Act No. 7586) that is aimed at protecting the critical biodiversity-rich ecosystems through multi-stakeholder protected area management bodies; and (b) Wildlife Resources Conservation and Protection Act (RA 9 147) which intends to strengthen government’s responsibility to sustainably manage and conserve the country’s rich ecosystems.
10. Despite these strategic initiatives, progress in achieving policy goals has been constrained by various factors, including, (i)the low level ofpublic expenditures for infrastructure, transport and market development, (ii)inefficient input supply channels, (iii)slow pace ofeffective devolution to LGUs, many ofwhich are still to mature as effective providers ofdevolved agricultural support services and (iv) poor linkages between rural development planning and implementation.
11. As part ofthe overall Adaptable Program Loan (APL) for the Mindanao Rural Development Program (MRDP), which began in 2000, a Coastal and Marine Biodiversity Conservation Project (CMBC) was implemented in two municipalities (in Paril-Sangay seascape in Kalamansig and Bongo Island in Cotabato) to conserve and restore globally important coastal habitats and related marine biodiversity. A second APL (MRDP2) was approved in 2007 and is presently under implementation. It aims to strengthen and operationalize the process of devolution through effective partnerships between the National Government and the Local Government Units (LGU). As part ofMRDP2 second phase, the proposed Natural Resource Management Project builds on the lessons learned in the first CMBC and addresses the sustainable integrated management of upland and coastal ecosystems in 11 municipalities to help conserve marine and coastal biodiversity threatened by upland degradation. It is fully integrated into the main MRDP2 project, with resources provided from the GEF supplementing those
3 alreadyprovided under the main project. The project was originally intended to be approved simultaneous with MRDP2 as a filly blended-project but changes in the GEF policy in 2006 and 2007 prevented its timely submission as such.
GEF Eligibility 12. The Philippines is eligible for GEF funding as a signatory to, and has ratified the key global treaties on the environment: Convention on Biological Diversity (1993), United Nations Framework Convention on Climate Change (1994) and the United Nations Convention to Combat Desertification (UNCCD, 2000) as well as Ramsar (1994), and is an active participant in the United Nations Forum on Forests. In addition, the planned support is in line with the National Biodiversity Strategy and Action Plan (NBSAP), including its operational strategies to ensure: (i)collaboration among key stakeholders in the country; (ii)formulation and enforcement ofcomprehensive policies and procedures for biodiversity conservation, sustainable use and equitable sharing ofits components; (iii)proper integration ofbiodiversity conservation strategies in development planning and management at all levels and by all sectors; (iv) putting into practice a conservation culture or environmental ethics for biodiversity and bio-resources; (v) active participation ofall sectors and stakeholder in biodiversity conservation; and (vi) fulfillment ofthe country’s commitments and obligations to the Convention on Biological Diversity (CBD), as well as other regional and international agreements.
13. A second iteration ofthe NBSAP, which was called the Philippine Biodiversity Conservation Priority-setting Program (PBCPP) was completed in 2002. This helped to redefine priorities for protected areas. The NPS-ENRM Program is also consistent with the priorities identified in the National Action Plan to address the objectives ofthe UNCCD, which advocates integrated watershed management as a key strategy for sustainable ENRM, and the introduction ofarea -specific technologies to reverse declining land productivity and the supply offreshwater.
B. Rationale for Bank involvement
14. The Bank has been a pro-active partner ofGovernment in addressing the sector and country objectives related to agricultural development, poverty reduction, biodiversity conservation, devolution and focus on Mindanao since 1999 when the first phase ofthe long term MRDP was prepared and subsequently implemented in 2000. The objectives and rationale for continued Bank involvement for the overall APL program remain highly relevant in the transition to Phase 23.
15. The justification for continued Bank involvement is made stronger given positive impacts and assimilation ofvaluable experiences and lessons learned from the MRDP1 currently being used in scaling up and expanding the program in MRDP2 to cover other provinces in Mindanao, which will significantly improve biodiversity conservation and sustainable land management experiences gained through CMBCl. LGUs under CMBCl manifested strong support for these conservation-related activities through the provision ofsignificant counterpart input including budget allocation and the legislation ofmunicipal ordinances for the establishment ofmarine sanctuaries in barangays (villages) within their jurisdiction. The practice ofintegrating
Report No. 19639-PH, MRDP-CMBC 1 Project Appraisal Document
4 community plans into higher tiers oflocal governments and sectoral agency planning and budget processes remains a major weakness in the Philippines. As such, the successes ofand lessons learned on CMBCl as well as those from the bigger program under MRDP1 would be replicated and scaled-up.
16. Additionally, GEF through the World Bank, UNDP, UNEP and the ADB, has also been a major contributor in providing resources to address global environmental issue, and has invested some US $118.7 million since 1992 for environmental management. Investment has been more directed to climate change mitigation (58%) and biodiversity conservation (3 7%).
C. Higher level objectives to which the project contributes
17. Within the strategic thrusts ofthe MTPDP, AFMA, Fisheries Code, LGC and the CAS, the Project will further scale-up successful practices piloted under CMBCl, The overall MRDP objective at initial design ofthe APL program is aimed at: (a) reducing poverty; (b) promoting growth with social inclusion; and (c) further strengthening decentralization, devolution and NG/LGU collaboration. These program objectives still remain highly relevant. In addition, given continued conflict in Mindanao, the realization of sustained rural growth and visible benefits to conflict-affected populations, will directly contribute to reinforcing donor and Government efforts at consolidating the peace initiatives, a key policy goal (see section A.2 MRDPl PAD). Although the higher-level objectives ofthe MRDP2 remain consistent with those at the onset of the overall APL, the proposed Natural Resource Management Project will further strengthen the likelihood ofachieving the objectives ofthe program and at the same time achieve global environmental benefits. The areas identified for protection host and/or support several globally significant marine species (see Annex 1) whose distribution range has been shrinking due to habitat destruction. The project’s global benefits are anchored on the precept that integrated upland and marine management can simultaneously conserve and protect biodiversity ofglobal significance through increased upland and fisheries productivity that would reduce poverty and ease population pressure on biodiversity resources as a whole.
GEF Operational Strategy
18. The project is consistent with the GEF 4 Focal Area Strategies for Biodiversity and Land Degradation respectively. More specifically, it addresses the objectives ofBiodiversity Strategic Priority (SP) 2 and SP-4 as well as SP-1 and SP-2 ofthe Land Degradation Strategy. Under Biodiversity SP2 the project aims to increase the area of effectively managed marine protected areas by establishing mostly fish sanctuaries as well as other categories ofprotected areas and by improving the management ofexisting ones. Their organization would include no-take zones, and they would be managed to conserve biodiversity, enhance long-term fisheries management, contribute to local livelihoods and help protect the coast against natural disasters. Annex 1provides detailed description ofthe globally significant biodiversity found in the sites which are proposed for inclusion in the project as well as the steps toward establishment ofsystems of management. Under SP-4, the project would strengthen the mainstreaming ofbiodiversity into policy, planning and regulatory frameworks at local and provincial levels. To achieve this, it would remove constraining factors such as knowledge and institutional barriers that currently prevent biodiversity from being mainstreamed. The project would increase knowledge about
5 biodiversity conservation, including the infusion ofscientific knowledge and strengthen capacity among decision-makers and community members. Following the example ofCMBC1, it would help to incorporate biodiversity conservation considerations into community (Barangay) and local government land use plans.
19. Under OP 15, the project responds to SP1 and the problem ofprotecting hillsides and upland areas that are significant in providing livelihoods as well as watershed functions. An integrated ecosystem management approach to the protection ofwatershed would be implemented to improve protection ofwater sources through measures such as stream bank stabilization, prevent soil erosion and stabilize forestry and cropping systems. Under SP2, the project would replicate successful sustainable forest management practices from elsewhere in the Philippines to restore and protect the integrity offorest ecosystems in the wider landscape. This would also help to mitigate climate change by increasing the amount ofabove ground carbon stored.
11. PROJECT DESCRIPTION
A. Lending instrument
20. The Second Mindanao Rural Development Project constitutes the second (five-year) phase ofa long term APL spanning 12 to 15 years. Long-term Bank experience in rural development in the Philippines, and particularly from the first phase ofMRDP, shows that an effective program ofpoverty alleviation involving successful partnerships between multiple stakeholders and governments at different levels requires sustained long-term commitment and involvement, particularly given the intricacies offorging and strengthening delicate processes such as NG/LGU partnerships and community empowerment are extremely difficult to attain through a single investment operation. The continuation ofa phased long-term program involving four APLs, each covering between 4 to 5 years still remains as the most effective modality for achieving sector and national objectives related to poverty and development. The proposed Project builds on the first CMBC project and would scale-up and replicate several of the successful NRM approaches. Support from the GEF would be provided through a grant.
B. Project development objective and key indicators
21. The proposed Natural Resource Management Project (NRMP) shares the same project development objectives with the larger program (MRDP2). The project development objective reflects the overall program’s purpose ofimproving incomes and food security. It will specifically aim to: (a) improve livelihood opportunities oftargeted communities; and (b) institutionalize a decentralized system for agriculture and fisheries service delivery that promotes participation, transparency and accountability.
22. The key outcome indicators to be measured would include: (a) an increase of20% in average household incomes ofbeneficiaries over the baseline and 10% over the control group; (b) 15% and 35% oftarget beneficiaries report significant improvement in LGU service delivery at mid-term and at the end ofMRDP2, respectively.
6 C. Project global environment objective and key indicators
23. The project would have the following global environment objective: critical coastal and marine biodiversity conserved in targeted sites and supported by sustainable land management in linked upland areas. This would be achieved by removing the barriers to mainstreaming marine and coastal biodiversity conservation; through co-management ofcritical marine habitats; and by the introduction ofimproved, upstream land management practices that would simultaneously arrest land degradation and benefit landholders who are mostly poor farmers, fisher folk, and/or indigenous people. By strengthening the conservation ofimportant coastal and marine ecosystems, several globally significant species would be better protected and the livelihoods of fisherfolk would be more secured. In the upland areas, land degradation would be reduced, the forest cover restored and terrestrial biodiversity better conserved while also strengthening the livelihoods that are natural resource-based.
24. The global environment objective would be measured by the following indicators: (a) increase in fish population as indicated by 30% increase in fish biomass and density; (b) decrease by 10% in siltation and sedimentation in coastal areas; and (c) increase by 10% in live coral cover and sea grass cover. Indicators to measure intermediate outcomes would include the increase in protected mangrove areas in the 11 municipalities covered by the Project, and the increase by 20% in public awareness and community participation in protection and monitoring ofglobally significant species (See Annex 3 on results monitoring).
D. Project components
25. This proposed Natural Resource Management Project (NRMP) is considered operationally linked to the NRM component ofthe main MRDP2 project and is specifically designed to incorporate the lessons learned from CMBCl . It will be implemented in 11 municipalities (See Annex 16) in Mindanao, which were selected based on a set ofcriteria including the presence ofglobally significant biodiversity, the extent ofland degradation and other threats to critical ecosystem functions, and the value added ofthe intervention in terms of the overall environmental, socio-institutional and economic impact. As NRMP is fully integrated into MRDP2, project management, monitoring and evaluation would be coordinated under the main project, though additional funds are provided for biodiversity monitoring and measurement of specific indicators such as increased carbon storage. The project would include the following components: ComDonent 1: Participatory NRM Planning and Policy Development (total estimated cost US$0.684 million) 26. The objective ofthis component is to promote and institutionalize NRM planning (particularly biodiversity conservation and sustainable land management) and mainstream it in the local governments’ regular policy and program planning and implementation through the strengthening ofparticipatory mechanisms, capacity building, revision and enhancement of existing plans and formal approval ofthe appropriate ordinances to achieve the integration of NRM concerns. Most ofthe NRM capacity building is included under Component 1 ofthe main project which is the Investments for Governance Reforms (IGR). Under MRDP2-NRMP, this component would focus on planning related to ecosystem management and further strengthen the institutional basis for implementing the other four components. It is envisioned that at the end of
7 the project, community-based NRM plans, programs, projects, and policies linking marine ecosystems and SLMin upland areas are mainstreamed across various levels ofdevelopment initiatives and land use plans in all target sites.
27. The component would strengthen the capacity ofLGUs and communities/POs (representing IPS, Muslims, Fisherfolk, Farmers, Women, and Church) to plan and manage their natural resources. Key activities would include (i)Conduct ofparticipatory resource and social assessment and PO diagnosis, (ii)Formulation and conduct of comprehensive NRM capability building plan for POs and LGUs, (iii)Conduct ofpre-identified training, (iv) Technical review of existing municipal and barangay development plans, (vi) Conduct ofparticipatory NRM planning, (vii) Forrnulatiodenhancement ofbarangay land use plans and integration ofsaid plans to municipal development plans or land use plans through participatory approaches, and (viii) Formulation and/or review and enhancement oflocal policies and instruments for conservation ofupland/coastal/marine resources including development ofenvironmental code.
28. Outcomes would include (i)Improved LGU and PO capacity for sound NRM planning, using sustainable development principles, methodologies and tools espoused by PCSD in assessing local policies, strategies, programs and projects, and (ii)Institutionalized community planning and operational mechanisms for effective participation of LGUs and communities for enhanced NRM, especially on coastal marine and terrestrial biodiversity conservation. Component 2: Selective on-the-Ground Investments on Coastal/Marine and Sustainable Land Management Practices (total estimated cost US$6.57 million) 29. The objective ofthis component is to support community efforts in coastal and marine biodiversity conservation as well as sustainable land management through an integrated ecosystems approach. This would address the problem ofcoastal degradation caused by poor upland management practices which is being driven by limited access to NRM technologies among other issues, as well as provide communities with more sustainable natural resource management option. Specifically, the component would support the implementation ofstrategic on-the-ground investments based on the priorities identified by the communities as contained in their local development plans. Investments would include: (a) Establishment and/or enhancement of Fish sanctuaries and Marine Protected Areas (MPA) and mangrove reforestatiodrehabilitation for coastal areas, and (b) in the upland area, agro-forestry to support sustainable farming on sloping land, reforestation to rehabilitate degraded lands, and stream bank stabilization/ rehabilitation using structural, vegetative, bio-engineering designs, or combination ofall three types to reduce soil erosion and excessive run-off. Through this component, appropriate technologies will be promoted to realize effective conservation of coastal zones/ecosystems that are rich in biodiversity. It will support the rehabilitation ofdegraded ecosystems to restore their ecological bnctions and at the same time improve agricultural and fisheries productivity, which is being co-managed by local POs and LGUs. Soil and water conservation would be improved, biodiversity preserved and vegetative cover increased.
30. To ensure that there will be strong linkage with key government technical agencies and timely provision oftechnical inputs to LGUs and communities, the component will also support activities related to institutional coordination among the national institutions working at local level particularly the coordination and monitoring ofactivities ofnational agencies having oversight functions. The component will also support access to technical services and linkage
8 with academic institutions particularly in the conduct ofspecialized research activities in the areas ofcoastal and marine biodiversity conservation. Component 3: Assistance to the Development of Sustainable Income Generating Activities (SIGA) (total estimated cost US$8.321 million) 3 1. The purpose ofthis component is to provide alternative livelihoods that relieve pressure on the natural resource-base while also reducing poverty, thereby helping to sustain integrated upland and coastal management that conserve and protect critical ecosystem functions and biodiversity ofglobal significance. The component intends to improve community efforts to increase their income by providing them with options for more sustainable land and natural resource use through the provision ofdirect capital funding support and technical assistance in the development and implementation ofSIGA, which are financially viable, socially acceptable and environmentally sound. The component will make use ofthe processes already established by the Community Fund for Agricultural Development (CFAD), which is Component 3 ofthe main project. CFAD processes were also described in the NRM Operations Manual and will be applied to all SIGA development and implementation. The options provided by SIGA would encourage communities to stop from engaging in environmentally disruptive agricultural and coastal resource practices and adopt sustainable economic activities. The identification ofSIGAs in selected sites was carried out in a participatory manner and the menu ofproposed activities was based on technical, financial, social and environmental analysis that are compatible with the objectives ofGEF OP 2 and OP 15. Component 4: Strengthening Community Partnerships in Monitoring (total estimated cost US$0.545 million) 32. The component intends to build and strengthen community-based resources monitoring through stakeholders partnerships and application ofappropriate tools and technologies. Activities to be supported include improvement oflocal rules and ordinances regarding resources use and management, strengthening activities oflocal monitoring groups and building collaborations with the academe, local enforcement bodies and civil society groups, among others. The key activities would include the following: (i)Provide support for the active participation ofthe Fisheries and Aquatic Resource Management Councils (FARMCs,) Bantay DagaUGubat (local monitoring groups), community volunteers in surveillance and enforcement activities; (ii)Forging partnership agreements with academe, community, church and religious groups and enforcement agencies in monitoring, and; (iii)Provide technical assistance to capacitate local stakeholders to conduct regular monitoring ofon-site improvements. These inputs are envisioned to result in the following: (i)Functioning FARMCs, Bantay Dagat/Gubat, community volunteers engaged in surveillance and enforcement activities; (ii)MOAS forged between LGU, academe, PO/ community and enforcement agencies; (iii)MENRO institutionalized, and; (iv) On-site Monitoring Reports as prepared by local stakeholders, consolidated by MLGU submitted to PLGU, RPCO and PSO. By the end ofthe project, it is expected that there would be improved LGU and PO capacities to enforce NRM policies leading to decrease in incidence ofillegal logging and fishing, and inappropriate farming practices in project covered areas.
33. Resources would also be provided under this component for more specific and more focused research and monitoring to measure changes in the presence ofindicator species, and changes in ecosystem functioning such as carbon storage.
9 Component 5: Development and Conduct of NRM Knowledge Management Program (total estimated cost US$0.477) 34. The main objective ofthis component is to enhance the knowledge ofall sectors of society at the local as well as regional levels on biodiversity conservation, SLM and the integrated management oflinked coastal and upland ecosystems. The latter is particularly important for Mindanao given the dependence on coastal and marine resources. Through this component, information materials on biodiversity conservation and sustainable land management will be developed and distributed, school programs and projects significant to biodiversity conservation will be supported, and local advocacy frameworks will be developed, applied and institutionalized. As a result, it is expected that local governments and communities would become pro-active and capable managers oftheir natural resources.The component firther intends to capture lessons and information into forms that are easily disseminated and understood by other stakeholders for expanding public environmental awareness and facilitating behavioural changes supportive ofsustainable resource management and utilization. As a result there would be improved awareness of LGUs and communities on the effects ofdestructive upland and coastal resources exploitation and the need for collective management and protection ofthese resources.
35. The component would develop and implement an IEC program that would include a communication and advocacy framework. It will institutionalize Information and Knowledge Management (IKM) units at the LGU level through strengthening LGU information management systems, promote and strengthen environmental stewardship by church and/or religious groups, and document and disseminate NRM success stories. Addressing Climate Change 36. The Project is responsive to GEF OP 2 and OP 15 where concerns have been clearly articulated about the possible impact ofclimate change on biodiversity and ecosystems. The project components and activities will address both climate change mitigation and adaptation. In component 2, the introduction ofmore sustainable land management practices that shift producers from unsustainable activities such as slash and burn, will help retain above ground carbon. Similarly, reforestation will increase carbon stored in plant biomass. In terms of increasing climate resilience, protected area plans would incorporate climate risk, while in the upland the project would introduce measures to mitigate the risks from changes in precipitation such as improved agricultural practices to better manage soil moisture (in case of drought) and soil conservation measures (structural and vegetative) to limit flooding and excessive run-off as a result ofanticipated higher intensity rainfall. A more detailed discussion is provided in Attachment 2 of Annex 4.
E. Lessons learned and reflected in the project design
37. The experience ofCMBC14 provided valuable lessons and insights that were incorporated into the design ofthis project. One of the major observations from the previous project was the need to ensure greater consistency and integration ofproject activities with the
CMBC-1 Implementation Completion Report
10 broader program for greater potential to optimize inputs and ensure more sustainable outcomes. Other specific lessons learned and enhancement in the design ofthis project are: (a) Involving local communities directly into the management, protection and conservation ofidentified marine sanctuaries linked to other relevant agencies at the municipal, provincial, regional and central government levels, including the DMBFAR, DENR, Coast Guard, Philippine Maritime Police, etc.; (b) The Fisheries Code was more efficient compared to the NIPAS Act in terms of fostering greater local ownership and simpler procedures with fewer steps done mainly by the municipalities with endorsement ofthe provincial LGU (which makes establishment ofFish Sanctuari,es for co-management easier than establishing MPAs); (c) Implementation support to LGUs can be made more effective if there is a regular office ofone single lead agency that can coordinate/facilitate the necessary technical assistance for LGUs from other relevant national and local agencies. Such support necessitates strengthening MPDOs or MENROs since budget can be assured by the LGU and activities are linked with local development planning; (d) Capacity building efforts can be better leveraged and institutionalized at the LGU and community levels; (e) Livelihood activities should be resource-based and designed to provide alternative livelihood to reduce pressure on the overall fishery resource, rather than as a reward for participation in resource protection; (f) Enhance PO participation in the context ofengendering ownership of conservation initiatives; (g) Commitments given to communities for goods, services and projects should be honored to prevent loss ofconfidence; (h) Siltation and sedimentation brought about by destructive agricultural land utilization in the upland and forest areas pose major constraints to the recovery of coral reefs, mangroves and sea grass beds; and, (i)Harmonize and reconcile pertinent sections ofvarious laws (LGC, Fisheries Code, NIPAS, and Wildlife Act) on PA establishment where various government agencies have overlapping concerns.
38. Lessons were also adopted from other Bank-supported projects in the Philippines in rural development such as: (i)natural resources management should be understood in the context of overall local development if local governments and communities are to buy-in into it; (ii) government agencies are more effective if the delivery ofservices ,are more oriented towards facilitating local implementation rather than restricting innovations through enforcement of regulations; (iii)conservation and land use management require strong partnerships between LGUs, POs and government technical agencies; and (iv) social preparation, organization development and capacity building, especially in fiduciary matters are critical for setting the right socio-institutional foundation for locally-driven and implemented natural resources management activities.
11 F. Alternatives considered and reasons for rejection
39. MRDP2 is part of a long-term rolling program with strong and active participation of Government and stakeholders. The model adopted under Phase-1 was robust and largely successful in meeting its desired outcomes, especially those related to decentralization ofpublic services and empowerment of poor communities. In light ofthese positive experiences, the reasons for rejecting alternative approaches to the design ofMRDPl (social fund and area-based approaches) still hold for MRDP2. Nonetheless, key lessons learned from the first phase have been incorporated in the design of MRDP2.
40. Likewise, lessons learned from the CMBCl experience show that conservation and natural resources management can be sustainably undertaken by local governments and communities especially ifit responds to their priorities and interests. The project thus rejected the approach ofexpanding the project to all parts ofMindanao and instead focused on those areas which fulfilled the criteria and where communities also expressed strong interest.
41. The project also opted to promote the Fisheries Code over NIPAS as the policy framework in the establishment ofmarine protected areas (MPAs) as the former empowers LGUs to establish fishery refuge and sanctuaries in municipal waters within itsjurisdiction through local legislation employing the best available scientific data in consultation with concerned agencies and communities. Establishing protected areas following the NIPAS process is time consuming and challenging to LGUs in terms ofprocedural and time requirements. The process entails high cost and the amount oftime needed to complete the process is beyond the 3- year regular term of a local chief executive.
42. Establishment oflarge MPAs through NIPAS even if beneficial to conservation was not prioritized because ofthe potential opposition from local fishers who will be displaced from the very same area where they source their livelihood. Instead the project proposed the establishment ofa series ofadjoining relatively manageable marine/fish sanctuaries that can be effectively protected by villagers. A specific targeted approach will be employed at the start to ensure that the core/no-take zone covers the more critical habitats. If a larger area is deemed necessary later on, the smaller ones could be expanded, especially if the local communities appreciate the value and benefits that would be accrued as a result ofimplementing with the smaller areas.
111. IMPLEMENTATION
A. Partnership arrangements
43. The project is an integral part ofMRDP2 which is being financed through the IBRD loan in the amount ofUS$83.752 million and counterpart contributions ofUS$39.92 million. Key partner agencies’ are the DENR and the National Commission ofIndigenous People (NCIP). DENR is the focal agency for OP 2 and by mandate tasked to oversee the management ofnatural resources. A number ofGEF-supported projects are also being executed or prepared by the DENR, including the Environment and Natural Resources Management Project (ENRMP) for
BFAR and BSWM are recognized partners, institutionally within the DA structure.
12 which the Bank is the GEF Agency. Close collaboration would be maintained with this project particularly in sharing experiences in implementing the integrated ecosystem management approach. Likewise, the DA itself is the national executing agency for the GEF-supported Coastal Resources Management Project for which the Asian Development Bank is the GEF Agency. During preparation, it was clarified that there would be no overlap in the coastal areas being covered by these projects and during implementation, information sharing would be carried out on a regular basis. The NCIP is the national agency mandated to safeguard the rights and interest of indigenous people. Memoranda ofAgreement between these agencies and the DA have been prepared and signed accordingly by the respective heads of agencies.
44. Collaboration, in terms of information sharing, are currently being done with various development partners in Mindanao, such as the International Finance Corporation (IFC), who are supporting some agribusiness ventures in Mindanao and the AUSAID who is currently preparing a grant project which would focus on supporting local infrastructure for sustainable economic growth in Mindanao. Coordination with the Coral Reef Targetted Research Project, a key GEF effort to establish a Center for Excellence (COE) on coastal resources management in the Indo- Pacific region, was done during preparation. It is envisioned that working relations with the project will strengthen the provision oftechnical advice to local governments and communities on establishing and protecting marine and fish sanctuaries and identifylng livelihood support activities, Potential linkage with the Bank’s Program on Sustainable Fisheries (PROFISH) during implementation will also contribute to the sustainability of local coastal resources management efforts.
B. Institutional and implementation arrangements
45. The DA is the executing agency tasked to provide the overall management and supervision of the Program. LGUs are the implementing arm. Partner institutions include the DENR and NCIP. Within the DA, institutions include the Bureau ofFisheries and Aquatic Resources (BFAR), Bureau of Soil and Water Management (BSWM, the focal agency for OP 19, and the DA Regional Field Units (DA-RFUs) through the Regional Project Coordination Offices (RPCOs) under the MRDP2.
46. Overall program support to coordination by RPCOs and LGU implementation under MRDP2 will be handled by the DA’s Program Support Office (PSO). It is acknowledged that the PSO is a temporary and program-specific structure and the need to mainstream the program coordinating functions to regular units of the DA is critical. To sustain the efforts done under the Program, the PSO, in the transition during MRDP2, will build capacities ofthe RPCOs on program coordination, management and oversight ofproject activities being implemented at the local levels by the LGUs and the communities.
47. Institutional strengthening and capacity building efforts are focused on LGUs to access efficient and timely delivery of devolved agriculture- and fisheries-related services. Six months before the actual implementation, preparatory activities will be done and focused engagement of both the LGUs and RPCOs is ensured to be on-the-ground so that by the time the Program is implemented, the implementers are ready to assume the various responsibilities required from them.
13 48. The implementation ofsubprojects under all ofthe five components will be done by the Municipal LGUs (MLGUs) through their Municipal Program Management and Implementing Units (MPMIUs) as supported by the Provincial LGUs (PLGUs) through their Provincial Program Management and Implementing Units (PPMIUs).
49. Technical support from national agencies (Le., DENR, NCIP/OSCC, BFAR and BSWM) through co-management arrangements and institutionalized comprehensive natural resources planning is envisaged to strengthen the capacity ofLGUs and local communities to design, implement, manage, monitor, evaluate and sustain their NRM initiatives. Necessary tenure security instruments will be provided to ensure sustained ownership and accountability of communities and LGUs over their NRM efforts. Consultants may be individually hired should the expertise not be available from participating institutions.
50. Considering the unique government structure ofthe Autonomous Region in Muslim Mindanao (ARMM), the MRDP2 adopted a unique and distinct implementation structure. As executing agency of MRDP-APL2, the DA will still provide overall management and supervision to the Program. A Memorandum ofAgreementNnderstanding and/or Cooperation between the DAF-ARMM and the partner agencies will be executed to legitimize the partnership cooperation. The MOA/MOU/MOC shall define the specific function ofeach partner/cooperating agency and the manner ofcollaboration and complementation between and among partner institutions down to the Barangay Level. The functions shall be agreed upon by the partner/cooperating agencies. Overall, the DAF-ARMM will sustain and maintain close working relations and coordination with the partner agencies in the ARMM for the implementation ofthe Natural Resource Management (NRM) Component and GEF activities. Particular to ARMM, the Office for Southern Cultural Communities (OSCC) will be closely involved in project implementation to ensure that appropriate safeguards are in place and strictly followed to protect the interest ofthe indigenous peoples (IP) groups, one ofthe project’s targeted vulnerable groups. (detailed discussion in Annex 10)
C. Monitoring and evaluation of outcomeshesults
51. M&E will be undertaken through the system already established for MRDP2. In collaboration with the DA RPCOs and the DAF-ARMM RPCO, the PSO will have overall responsibility for collecting data and monitoring results. Baseline data have already been collected for the main indicators in the Results Framework. To assess achievement ofthe global environment objectives, the data will be derived from periodic resource and socio-economic surveys as well as sample surveys ofbeneficiaries to capture bio-geographic as well as behavioral data which would measure changes over time. For the intermediate results, the data will be obtained from periodic surveys ofRFUs, LGUs and communities.
52. The results monitoring system will be incorporated as part ofthe DA’s overall system for management and financial information systems, which has already been established under CMBCl. Communities, organizations and beneficiaries will be brought into the M&E system through community-based monitoring and evaluation groups (CBMEG), which would coordinate all M&E activities at the Barangay level. Ecological zone partnerships will be organized and will
14 be responsible for data collection on the progress ofsubprojects. While M&E functions at the regional level will be the responsibility ofthe RPCOs, for LGUs they will be under the respective planning and development units ofthe PLGUs and MLGUs. The RPCOs will coordinate and validate all M&E activities ofthe PLGUs and MLGUs and submit these to PSO and DA-SPCMAD. The Project has made provisions to strengthen the capacity ofthe RPCOs, LGUs, POs and other partners to undertake M&E.
D. Sustainability and replicability
53. The main factors likely to influence the sustainability ofthe project and projected benefits are embedded in the design ofthe components. The components aim to maintain the integrity and productivity ofthe natural resources to ensure both ecological and economic benefits, and therefore continuing productivity and profitability in sustainable use ofnatural resources across generations. For example, under Component 1, mainstreaming NRM concerns into community and regional natural resource management plans and development initiatives is a major first step towards achieving institutional sustainability. This was demonstrated under CMBCl where communities reacted positively to the fact that their priorities for NRM could be mainstreamed into local planning processes. The choice ofon the ground investments as well as livelihood activities were expressed priorities by the communities. Co-management offish sanctuaries has been shown to be an effective strategy to promote sustainability. Livelihood projects would only be supported if they are financially profitable and environment-friendly type ofactivities. Moreover, the necessary institutional support would be provided to strengthen local management capacity. Sustainability will also be a product ofstronger partnerships between communities and LGUs and national agencies on natural resource monitoring and enforcement, which is being promoted under Component 4.
E. Critical risks and possible controversial aspects
54. Overall, Project risks will be moderate, as illustrated below.
Risk Risk Mitigation Measures To project development o bjective/GEO Poverty Issues Monitor poverty indicators and strive towards M 1. Increased inequality ofincome & inter-agency dialogue. Revisit project living standards lead to increased components’ activities for possible adjustments abuse ofresources in approach, as needed. Results of periodic 2. Further marginalization of project assessments will input into annual vulnerable groups; unable to access operational plans. benefits ofgrowth & development Deterioration ofthe peace and order Provision for making changes to participating M situation in Mindanao 1 LGUs will enable moving- to areas where implementation is possible Frequent changes in elected LGU Strong capacity building targeted at the LGU M officials and community levels to enhance institutional sustainability and ownership
15 Risk Risk Risk Mitigation Measures Rating To component results Institutional Considerations: Interhtra Institutional Dynamics Delay in release of funds and in Provision of LGU counterpart would be a M implementation schedules due to lack prerequisite before grant proceeds are of follow through by LGUs on their downloaded. commitment Inadequate capacity to implement key Fast track the development and M features of the project. implementation of the capacity development activities in component 1 and obtain additional support from the main project under the IGR Component of MRDP2. Unwillingness on the part of Intensive capacity building and mentoring. M implementers to assume new roles Clear delineation ofroles & responsibilities and lack ofinstitutional leadership to among participating stakeholder institutions. enforce new roles Ensure that Program Agreements clearly specify deliverables as well as responsibilities of implementing units. Overall risk rating M
F. Loan covenants
55. Implementation Covenants: (a) The Recipient shall, through the PSO: (i)furnish to the Bank, not later than October 3 1 in each year, starting October 3 1, 2009 for review and comments, an annual work plan for the implementation ofthe Project in the following year prepared in accordance with the provisions of the NRM Operations Manual; and (ii)afford the Bank a reasonable opportunity to exchange views with the Borrower on said plan and, thereafter, promptly take all actions necessary to implement said plan, taking into account the views ofthe Bank on the matter. (b) The Recipient shall monitor and evaluate the progress of the Project and prepare Project Reports in accordance with the provisions of Section 2.06 ofthe Standard Conditions and on the basis ofthe indicators set forth in Annex 2 to this Schedule. Each Project Report shall cover the period of one calendar semester, and shall be furnished to the World Bank not later than one month after the end ofthe period covered by such report. (c) The Recipient shall prepare the Completion Report in accordance with the provisions of Section 2.06 ofthe Standard Conditions. The Completion Report shall be furnished to the World Bank not later than June 30,2015. (d) Each Participating LGU shall, by November of each year: (a) issue a Local Finance Commitment Certificate (LFCC) confirming that it will make adequate budgetary provisions for the following year to cover its counterpart contributions for Parts B and C ofthe Project; and (b) confirm, through a signed resolution, that will make adequate budgetary provisions for the following year to cover the
16 operating costs ofthe marine protected areas and the fish sanctuaries established or to be established under Component 2 ofthe Project within its jurisdiction. (e) The Internal Audit Service within DA shall undertake periodic internal audits for the Project. Each such audit shall cover the period of one fiscal semester ofthe Recipient. The internal audit review report for each such period shall be furnished to the World Bank not later than sixty days after the end of such period.
56. Financial Covenants: (a) The Recipient shall ensure that interim unaudited financial reports for the Project are prepared and furnished to the World Bank as part ofthe Project Report not later than forty five days after the end ofeach calendar semester covering the semester, in form and substance satisfactory to the World Bank (b) The Recipient shall have its Financial Statements for the Project audited by external auditors in accordance with the provisions of Section 2.07 (b) ofthe Standard Conditions. Each such audit of the Financial Statements shall cover the period ofone fiscal year ofthe Recipient. The audited Financial Statements for each such period shall be furnished to the World Bank not later than six months after the end ofsuch period.
IV. APPRAISAL SUMMARY
A. Economic and financial analyses
57. Economic and FinancialAnalysis: The project design is not amenable to a full economic analysis, but an Incremental Cost Analysis to provide the rationale for GEF financing in presented in Annex 15 and financial and economic analyses are presented below for two components.
58. The Selective Income-Generating Activities (SIGAs) and the On-Ground Investments (OGIs) for CoastallMarine and Sustainable Land Management Practices are the particular components which are sources of quantifiable benefits. The mix oflivelihood projects in the 11 sites are financially and economically viable, with financial internal rates ofreturn (FIRR) ranging from an average of 21 to 61 percent for the SIGAs with economic rates ofreturn ranging from 21 to 82 percent (details are presented in Annex 9). The OGIs yielded FIRRs ranging from 16 to 36 percent while economic rates ofreturn (EIRR) ranged from 22 to 40 percent. The period ofanalysis used for SIGA is 5 years while a 20-year period ofanalysis is used for OGIs because ofthe long-gestating nature ofthe agro-forest crops.
59. Fiscal Analysis: Co-financing by the participating local government units (LGUs) and the main Project (MRDP-APL2) and to some extent, the active participation ofthe communities/peoples’ organizations, will be critical to the smooth implementation ofthe Project’s activities. Under the Project, the LGUs will contribute around US$0.576M or roughly 9 percent ofthe total grant ofUS$6.4M. LGU cost sharing for the SIGAs is 80:20 while a 90:10 cost sharing will be used for the OGIs. Similarly, the LGU contribution to subprojects financed under the IBRD loan in the main project is 50 percent for the rural infrastructure, 20 percent for
17 the CFAD subprojects and 10 percent to the NRM subprojects. Total LGU contribution to the loan component ofMRDP2 is 26 percent (US$31.76M) ofthe total cost of US$123.93M. With fiscal decentralization, LGUs should be able to support project activities and to continue doing so when necessary after implementation is completed. Also, based on MRDPl/CMBCl experience, LGUs were able to support and sustain the activities ofthe project.
B. Technical
60. The overall design of the project has benefited from the experiences gained from CMBCl. The main technical considerations would be the ability to design and implement on- the-ground investments to achieve the project’s objectives as well as livelihood activities that satisfy the agreed criteria. By scaling up and replicating successful practices from Phase 1 and elsewhere in the Philippines and with planned training in NRM planning, land use and watershed management as well as coastal resource management, there should not be any major technical constraints for project implementation. Moreover, partnerships would be established with the relevant technical agencies, including DENR, BS WM, DA-BFAR as well as the academic institutions, which would provide strategic and technical perspectives for the project.
C. Fiduciary
61. Assessments were conducted during project preparation ofthe financial management (FM) and procurement capacity of the PSO and RPCOs, and the sampled LGUs in relation to MRDP’s implementation arrangement and structure. These implementation arrangement and structure also apply to the Project.
62. Financial Management: During the project preparation for MRDP2 in February 2007, a FM assessment was conducted on the capacity of Department ofAgriculture’s Program Support Office (DA-PSO), Regional Field Units (RFUs) and sampled Local Government Units (LGUs) in relation to the project implementation and structure. Based on the previous FM assessment done, the DA’s FM system need to be improved in a number of areas like fund management, reconciliation ofthe General and Subsidiary ledgers, reconciliation of asset physical existence against recorded accountabilities timely submission of financial reports; adequacy ofFM staffing; and internal audit function. The FM arrangements for MRDP2 have addressed the aforementioned deficiencies and met the Bank’s minimum requirements.
63. The FM implementation review for MRDP2 in February 2009 rated the financial management performance ofthe project as moderately satisfactory. DA has no outstanding financial reports due under the MRDP2 project.
64. In July 2008, an update ofthe financial management assessment was carried out at the DA, DA-PSO, selected LGU’s and Peoples’ Organization (PO) in accordance with the Financial Management Practices in World-Bank-Financed Investment Operations issued by the Financial Management Sector Board on November 3,2005. The Bank’s assessment points to the need for mitigation measures to be undertaken to address weaknesses noted in DA’s FM system. The Bank’s assessment indicates that the financial management systems ofDA will meet the financial management requirement stipulated in the Bank’s OP/BP 10.0 subject to
18 implementation ofagreed actions and mitigating measures Deficiencies in the FM system reported by the external auditors based'on the 2007 audited financial statements ofDA involve non-compliance with prescribed internal control policies and procedures, inadequate staff at the Central Office to handle FM requirements, and delays in consolidation ofaccounts. At DA-PSO, recent implementation review ofMRDP2 disclosed certain areas requiring improvement such as prompt submission by POs to LGUs ofthe report on utilization offunds and monitoring by POs oftheir counterpart contribution. The LGUs and the POs, who will implement the Sustainable Income Generating Activities (SIGA) and On-Ground Investments under the Project, generally have low FM capacity.
65. The assessed financial management risk ofthe Project before the mitigating measures is considered substantial due to the factors discussed in the preceding paragraphs. An additional factor that puts the project at substantial risk is the security issue due to the peace and order situation in Mindanao where the eleven sites are all located including two areas in Autonomous Region ofMuslim Mindanao (ARMM). There is the likelihood that Bank staff or consultants could not conduct implementation review visits on regular basis in some ofthese areas due to security issues and thus, the Bank staff and consultants may not be able to physically verify that funds were used for the intended purpose. The residual risk would be moderate after the following proposed mitigating measures are implemented and have shown effective impact: (i) The financial management and disbursement arrangements for the Project shall follow the established procedures in the implementation ofthe MRDP2, wherein project management is lodged under DA PSO; (ii)DA PSO and the LGUs shall maintain separate books ofaccounts for the project and sub-projects, respectively, in accordance with the generally accepted accounting principles; (iii)DA regional offices, LGUs and POs shall maintain a project peso account in a commercial bank acceptable to the Bank, where the funds released from the Designated Account, the MRDP 2 and LGU counterpart fund shall be credited and payments to suppliers shall be disbursed. Subsidiary ledgers shall be maintained to account the receipts and disbursements of each fund source; (iv) Unaudited interim financial report (IFR) shall be submitted quarterly no later than 45 days after the end ofeach calendar quarter; (v) DA PSO shall conduct training and orientation to the LGUs and POs on FM including internal controls and on the FM arrangements ofthe Grant to increase the FM capacity ofthe beneficiaries, before funds are released to the LGUs/POs and supervise and monitor during project implementation; and (vi) The project shall be included in the scope ofwork ofthe DA internal audit services unit with a report submitted to the Bank 60 days after the end ofeach calendar semester. Additional factor that makes the residual risk moderate is the experience ofthe DA PSO staff gained from MRDP 1, where no significant FM issues were reported.
66. Procurement. The procurement system for the Project will be carried out following the procurement guidelines specified in the MRDP2 NRM Operations Manual. The overall project risk for procurement has been rated as average for MRDP2. Corrective measures including the: (i)designation ofprocurement specialists in the RPCOs and PSO; (ii)capacity building in the areas ofprocurement planning and monitoring and bid evaluation, and; (iii)finalization ofthe consolidated procurement manual were undertaken. Moreover, a training oftrainers, for all regions involved in MRDP2 was conducted in June 2006 to ensure appropriate capacities are present in the regions to oversee the LGUs' procurement operations. Hence, procurement operations for the Project will build on these enhancements in the procurement system ofthe
19 MRDP2. Since MRDP2 implementation is well underway, arrangements and processes for procurement within the overall project have been in place since the overall project became effective in 2007.
D. Social (stakeholder involvement)
67. A participatory social impact assessment conducted for the project in 2006 guided the design of the project. This consisted ofthe review ofsocio-economic reports taken from the selected 11 municipalities, 3 regional consultations (Regions 9, 13 and ARMM) in May 2006, rapid site validation appraisal ofthe selected sites and a multi-stakeholder analysis. The participants in the multi-stakeholder consultations included regional representatives ofboth central and local government agencies, non government organizations including church oriented ones, and peoples’ organizations including local tribal chieftains. The project expects to provide both direct and indirect benefits ofimproved NRM to some 420,000 people residing in these 11 municipalities plus 2 more sites carried over from the CMBCl. The project generated much enthusiasm for implementation across the multi-stakeholders. The top reason for wanting the project, especially among the local partners, is the benefit ofincreased productivity in the participating areas. Although aware ofthe relationship between productivity and improved NRM, there is a need to more consistently align the local stakeholders’ attitude and practice between proper NRM versus the urgent need for alternative income generation, M&E, community mobilization, and resource assessment.
68. The women and the indigenous peoples are the identified vulnerable groups in these areas. Other NCIP reports show the following indigenous tribes to be potentially present in the project sites either as full time residents or seasonal resource gatherers: the Subanen in Region IX, the Manobo, Mandaya and Kamayo in Region XI11 and the Yakan and the Maguindanao in the ARMM.
69. Social Safeguards: For the specific formulation of subproject designs, particularly for the Component 2 - On the Ground Investments on CoastaVMarine and Sustainable land Management and Component 3 - Assistance to the Development ofthe of Sustainable Income generating Activities (SIGA), unavoidable social safeguards impacts will be responded to using the MRDP2 Land Acquisition, Relocation and Resettlement Framework and the Indigenous Peoples Policy Framework.
70. Special Concern for Indigenous People. The Implementing Agency has demonstrated capabilities for training LGUs to comply with the Policy Guidelines and has exercised due diligence in monitoring and evaluating the compliance by implementing units with the safeguard policy. From the MRDPl lessons, the roles ofthe RFUs through the RPCOs are now more consistently harnessed as the lead unit for ensuring proper safeguards operations by the MLGUs with oversight assistance from the PLGUs. Aside from coordination with other central agencies concerned with safeguards, the PSO is responsible to provide technical assistance to the RPCOs and shall relinquish the function ofissuing the safeguards clearance after one year of implementation when the RPCOs would have gained the necessary skills and knowledge for strict observance ofthe project’s social safeguards policies. In areas where there are IPS,the project at preparation stage enjoined the participation ofthe NCIP. The IP Participation
20 Framework prepared for MRDP2 will similarly be observed and implemented under this Project. The project shall respect distinct protocols set by both the national and international peace- keeping bodies for areas covered by the BDA and the ARMM. Please see Annex 10 for details.
E. Environment
7 1, A Mindanao-wide environmental assessment (EA) covering all the 27 provinces of Mindanao was satisfactorily undertaken as part ofthe overall project preparation. The EA assessed the impacts ofthe types and scale ofsubprojects to be supported under MRDP2, and also evaluated the implementation experiences and lessons learned under MRDPl. Results ofthe EA indicated that the Project’s environmental impacts are minor and localized, which can be easily managed through strict observance ofenvironmental guidelines developed as part ofthe EA and which are mainstreamed into each component. The environmental guidelines provide the basic environmental considerations in site selection, subproject planning, technical design, as well as implementation ofsimple mitigating measures. In addition, the EA also formulated environmental policies to enhance the positive impacts ofMRDP2 and identified a negative list ofsubprojects and activities, including purchase and/or massive use ofchemical pesticides, to further safeguard the environment from any potential negative impacts. The Project has also formulated training programs to build the safeguard capacity ofthe PSO, the RPCOs and the LGUs and community subproject proponents.
F. Safeguard policies
72. The project is assigned a “By’ environmental classification because environmental impacts are assessed to be minor, localized and manageable. Overall, the project would lead to improvements in the coastal environment by discouraging destructive fishing techniques and improving fisheries management, which would eventually result in conservation ofbiodiversity and sustainable resource use.
Safeguard Policies Triggered by the Project Yes No Environmental Assessment (OP/BP 4.01) [ XI [I Natural Habitats (OP/BP 4.04) [I [I Pest Management (OP 4.09) [XI [I Physical Cultural Resources (OP/BP 4.1 1) [I [I Involuntary Resettlement (OP/BP 4.12) [XI [I Indigenous Peoples (OP/BP 4.10) [XI [I Forests (OP/BP 4.36) [I [I Safety ofDams (OP/BP 4.37) [I [I Projects in Disputed Areas (OP/BP 7.60)* [I [I Projects on International Waterways (OP/BP 7.50) [I [I
By supporting theproposedproject, the Bank does not intend to prejudice thefinal determination of theparties’ claims on the disputed areas
21 G. Policy exceptions and readiness
73. The Project complies with all applicable Bank policies. In terms ofreadiness for project implementation, the PSO and the RPCOs are already in place and LGU staff from the participating municipalities has been actively engaged in the preparation ofYear 1 activities. The revised NRM Operations Manual has also been submitted to the Bank by the DA prior to negotiations ofthe main loan in February 2007. The effectiveness ofthe MRDP2 loan was in July 2007, hence, all implementation arrangements for the Grant activities are all in place, especially for the NRM component under the loan, which this Grant aims to further strengthen and enhance.
22 Annex 1: Country and Sector or Program Background PHILIPPINES: Second Phase of the Mindanao Rural Development Program (APL) Natural Resource Management Project
1. A significant percentage ofthe Philippine population is agricultural and rural. The sector accounts for around 20 percent of the country’s GDP and provides the largest share in employment. Although the agricultural sector will continue playing a strategic role in the economy and growth, its relative share of GDP is declining due to slow rate of output growth. This contrasts with other emerging sectors, industry and services, which employ far less people than agriculture, but continue registering stronger productivity and growth rates.
2. Mindanao accounts for one third of the rural poor in the Philippines, with its rural sector remaining in a state of stagnation. Yet, with its distinct ago-climatic and geographic advantages, Mindanao holds tremendous potential and has distinct comparative advantage for agriculture and fisheries sector growth. The poor situation in the rural areas has been brought about by low levels ofpublic expenditures for critical infrastructure, poorly functioning transport systems and rural markets, inadequate post-harvest facilities, limited reach of agricultural support services, difficulty in accessing necessary production inputs, poor natural resource management and ill-prepared and non-integrated rural development planning and implementation. The pace of decentralization has remained slow and many LGUs are yet to mature as effective providers ofdevolved agricultural support services, as stipulated in the LGC. Also, the Department of Agriculture (DA) has not been quite effective in supporting LGUs to enable them to integrate communities into the LGU and the DA decision-making processes for rural development priorities and investments.
3. A major part ofthe country’s agriculture sector, fisheries sub-sector, is greatly dependent upon the condition of coastal and marine ecosystems. During the past fourteen years, fishing has contributed an average of 4% to the total GDP of the country, and has accounted for about 20% of gross value added in the agriculture, fishery and forestry sectors. As such, the Philippines heavily depend on its rich coastal and marine resources for the many economic and biodiversity values and services they provide. For example, direct benefits from mangroves in terms of fish production and potential sustainable wood harvest have been estimated to be more than US$600 per hectare per year (PEM6, 2005). Thus, the annual direct benefits from mangroves amount to at least US$83 million per year. Significantly, the coral reefs have been estimated to contribute at least US$1.064 billion annually to the economy.
4. A little more than 50% ofthe rural population live along the coastlines ofthe country and are thus highly dependent on the coastal and marine resources for their domestic and economic needs. The country’s coastlines extend to about 36,000 kilometers of which over one-third occurs in Mindanao and a total of 680,000 sq km of territorial waters and around 26,000 square kilometers of coral reefs. The Philippines’ territorial waters support 80% of all commercial species of fish and shellfish in the country. Coral reefs produce about 10- 15% of the country’s marine fishery production.
Philippine Environmental Monitor, a publication of the World Bank and the DENR.
23 5. The Philippine biodiversity is among the world’s richest (PA 21, 1995). It has approximately 15,000 plant species of which 13,500 are found in its forests and 2,500 could be classified as trees. There are 36 endemic genera and about 3,500 species of flowering plants. Sixteen of the 50 species of sea grasses in the world are found in Philippine waters. The country’s faunal diversity is estimated to consist of 186 species ofreptiles, 556 species ofbirds, 230-240 species of mammals, and 16,704 species of insects. Of the 1,496 bird and other animal species, 25 species are already considered threatened and 18 are listed as endangered.
6. The marine and coastal zones in the Philippines consist of a variety of tropical ecosystems that include: coral reefs; sea grass beds; mangroves; and, sandy beaches, rocky headlands, sand dunes, wetlands, estuaries and lagoons. These various ecosystems are interconnected, making it impossible to alter one without affecting another, either directly or indirectly.
7. The rich marine life includes 1,400 species of fish associated with the reefs and near coastal environment, 240 ofwhich are endemic. The country has the greatest variety of seashells in the Indo-Pacific region. Of the 13 most valuable seashells, 3 are found in the Philippines. There are about 1,500 species ofbivalves, 27 mussel species, 125 species ofzooplankton, 15,000 species of crustacean, and 225 inland fish fauna. The globally significant biodiversity found in Mindanao is extensive. Specifically in the areas to be covered by this project there are coral reefs, sea grass beds, mangroves, whale sharks, sperm, humpback, killer and melon headed whales, marine turtles, manta rays, giant clam and dolphins among others. A detailed list of globally significant biodiversity is presented in Attachment 1.
Value of Natural Resources and the Need for Sustained Management
8. Coral reefs are widespread and can be found throughout almost the entire archipelago. The reefs provide food, livelihood, recreation, protection from erosion, and extremely high levels ofbiodiversity. Sea grass beds are important habitats for underwater life such as juvenile fishes, adult rabbitfish, and commercially important species of shrimps, prawns, crabs, sea urchins and sea cucumbers. They provide the intermediate buffer necessary for coral reefs to protect coasts from strong waves and surges. Sea grass habitats also serve as the feeding ground for the highly endangered dugong and marine turtles. The mangrove forests occur along the tidal flats at the mouths of streams and along the shores of protected bays. It is dominated by the Bakauans of family Rhizophoraceae. Mangroves protect the coasts from storms, erosion and floods and likewise screen out debris from inland areas. They are important spawning grounds and feeding sites for many commercially important fish species. Bangus fries that gather in mangrove areas are very important for aquaculture. The delectable and highly-priced mudcrabs thrive only in mangrove areas. The beaches, foreshore and shoreline areas also form part of coastal ecosystems, which are used extensively for recreation, fishing activities, boat landings, and construction activities. The beaches are important nesting grounds for many species of marine turtles, Beaches also provide habitat for burrowing species, such as clams, crabs, and many other small crustaceans that comprise the complex inter-tidal community that attract fish and shore birds. They also serve as buffers between the land and sea where they provide protection against waves and erosion.
24 9. In terms of economic contributions, Mindanao contributed 648.3 billion pesos or around 16.12 % in the country’s gross domestic products in 2002 (Table 4). However, within Mindanao, the agriculture, fishery and forestry sector (a subsector of the whole NRM) contributed around 196.3 billion pesos to the GDP or 33.15 percent for the same period. Considering mining as another NRM sub-sector, the contributions of Mindanao NRM sector is definitely higher than 33.15 percent to Mindanao economy. These statistics show that the economic impacts ofNRM activities are more profound in Mindanao than the rest ofthe country.
10. The importance of the forestry sector is accentuated by the fact that forest lands are the main watersheds ofrivers that provide water for various uses. Deterioration ofwatersheds would have negative impacts on the productivity of the agriculture and fisheries sectors together with the infrastructures dependent on the sustained supply of water from the watersheds. Thus, the adoption of the watershed and ecosystems management (WEM) approach that considers interrelationships among the major ecological zones within the landscape continuum from uplands to costal and marine zones. This means that intervention in the upland areas should always be evaluated as to the impacts along the drainage system down to the coastal zones and must also be co-related to the interventions elsewhere in the continuum.
Dynamics of Threats and Condition of the Resource Base
1 1. The following threats, though not limited to those cited below, have been documented7 in the proposed sites of Mindanao: (i)illegal, unregulated, and unreported fishing activities, (ii) mangrove cutting, (iii)conversion ofmangroves to other land uses, e.g. fishponds, beach resorts, housing, (iv) increased populatiodhuman settlements, (v) harvesting ofendangered or threatened species, (vi) deforestation, (vii) encroachment of forestlands, (viii) unsustainable agricultural practices, (ix) irresponsible mining, and (x) municipal and industrial waste. These threats gave rise to the current state of the resource base, to wit: (i)degradation of coral reefs, (ii) disappearing sea grass beds, (iii)degradation of mangroves, (iv) increased rates of erosion, siltation, and sedimentation, (v) poor soil condition, (vi) increasing loss of biodiversity, (vii) increasing incidence of unsustainable extraction of biodiversity resources, and (viii) increasing manifestations of climate change. Attachment 2 provides details on biodiversity and threats at each site while Working Paper 1: Threats, Globally Significant Species/Ecosystems, and CMBC- 2 Investments: Site Description is available in the project files and describes the biological and socio-economic characteristics ofeach site in great detail.
12. The country has many sites where coastal resource development and upland activities threaten critical ecosystems, which are habitats for biodiversity of global significance. At present, it has been estimated that only about 5% of coral reefs in the Philippines are considered to be in excellent condition, about 25% are classified as being in good condition while about 70% are in fair to poor condition. The trend is generally moving toward a path ofdegradation for the whole country including the Mindanao regions. Sea grass beds that are critical habitats are also disappearing partly due to coastal developments, though primarily, as a result ofsoil and silt deposition and increased turbidity of the water from soil erosion originating from agricultural and upland areas. Furthermore, a large proportion of the human population depends on the natural resource base for livelihood which, consequently, leads to the exploitation and depletion
’Rapid resource Assessment conducted in 2006 for CMBC-2 project preparation.
25 ofthe natural resources and to a variety of socio-economic problems aggravated by institutional and policy failures.
13. The country has been identified as a biodiversity ‘hotspot’ area because of its distinctly rich biological wealth (PEM8, 2005) as well as the abundance ofthreats that increase the risks of loss of these species. According to PEM 2005, there are 488 species of hard stony corals (Scleractinians) found in Philippine coral reefs that far exceeds the 70 species of the Caribbean while the 16 species of seagrasses that are found here, is second most diverse in the world following Western Australia with 17 species.
14. The stark interplay of threats and conditions of the resource base generally are attributable to (i)increased poverty incidence, (ii)decreased in fish stocks, (iii)decreased in agricultural productivity, and (iv) increased population pressure on biodiversity resources.
Root Cause Analysis
15. Through multi-sectoral consultations in Mindanao, key policy and institutional root causes were identified.
16. Disjointed capacity building initiatives. Stakeholders acknowledge the lack ofknowledge and skills to prepare viable plans for LGU-based NRM development that result in weak law enforcement and political will, as well as coordination and integration, and community participation.
17. Limited access to NRM technologies. While there is lack of investments funds for sustainable agriculture and NRM development, this is closely linked with rational and acceptable land use planning ofwhere to locate such investments.
18. Limited livelihood development options. Low farm production and income and household income are manifestations oflimited alternative sources oflivelihood and lack ofknowledge and skills in livelihood/enterprise development. Current practices result to forestland conversions and destructive farming practices in the uplands that aggravate productivity.
19. Weak interagency networking/linkaging and harmonization initiatives. There exist limited linkagingl networking initiatives pertinent to agriculture and NRM with regard to sustainable use and conservatiodprotection among national government agencies, LGUs, civil society organizations, academe, and the military. The lack ofa potent LGU institutional frame to support NRM is a reflection of insufficient community ownership and participation to conservation initiatives that could serve as the platform to harmonize the existing laws and institutional efforts.
20. Unsustained IEC programs. While IEC has been recognized as a powerful tool for advocacies on NRM protectionkonservation in relation to sustainable development, the limited and unsustained public access to information and technology on NRM leads to lack of awareness/appreciation on the significance and dynamics of ecosystems, biodiversity conservation, and sustainable land management. There is an urgency to balance advocacy on conservation viz-a-viz food security.
* A publication of the World Bank and the DENR.
26 Government’s Strategy in Promoting Growth and Addressing Environmental Degradation
21. The policy thrusts to promote general and rural economic growth are at the heart of the Medium-Term Philippine Development Plan (MTPDP 2004-2010), which underpins the strategic framework for poverty reduction and economic growth with social inclusion and equity. On the other hand, the Bank’s Country Assistance Strategy (CAS) for 2006-2008 Philippines aims to stimulate a virtuous cycle of more effective public institutions, fiscal improvements, economic growth, poverty reduction, and greater social inclusion. More specifically, within the MTPDP and CAS, the strategic development goals include enhancing agricultural productivity and agribusiness, asset (land) reform, responsible management of natural resources and the environment and public expenditure rationalization to improve public service delivery.
22. The Government has enacted legislation to specifically enhance agricultural and rural development including: (i)the Agriculture and Fisheries Modernization Act (AFMA), which aims to enhance the competitiveness of Philippine agriculture; and (ii)the Local Government Code (LGC) which devolves greater responsibility for fiontline service delivery to Local Government Units (LGUs). Aside from these, the government has undertaken widespread reforms to enhance the policy and institutional framework for ENR management. Major initiatives include the National Integrated Protected Area System (NIPAS) Act, the Comprehensive Agrarian Reform Law, the Mining Act, the Indigenous People’s Rights Act (IPRA) Act, RA 8550 or the Fisheries Code, the Wildlife Resources Conservation Act, the Clean Air Act, the Ecological Solid Waste Management Act, the Toxic and Hazardous Waste Management Act and the Clean Water Act. Some of these policies are beginning to have a positive impact by encouraging the integration of environmental concerns and improved sustainable resource use and ecosystem protection into local development planning, though on a limited scale.
23. The Philippines is also a signatory to international treaties, conventions and protocols aimed at protecting the environment and conserving the natural resources. It is one ofthe parties that ratified the Convention on the International Trade of Endangered Species (CITES) and is watchful ofits own Red List ofendangered and threatened species. The country ratified the CBD in September 1993. Numerous laws and regulations are in place to support both international and national thrusts on natural resources and biodiversity conservation. The LGUs are now in a position to undertake many of these natural resources management and conservation endeavors through the passage ofthe LGC in 1991.
24. Coastal Resource Management in the Philippines is guided by the principles embodied in the Constitution, MTDP, National Marine Policy and Agenda 21 prepared by the Philippine Council for Sustainable Development. Likewise, CRM projects must be consistent with the Government commitments to international treaties and agreements such as UNCED, Base1 Convention, Montreal Protocol, UNCLOS, Convention on Biological Diversity (CBD) and CITES. The country also has the National Biodiversity Strategy and Action Plan (NBSAP) and the Philippine Biodiversity Conservation Priorities (PBCP).
25. Despite these commendable initiatives, many barriers still remain to overcoming the threats to the natural resource base. For example, weaknesses in local resource planning still remain with biodiversity concerns not sufficiently integrated into sector and local development plans.
27 26. Promoting poverty reduction and rural growth specifically on the island of Mindanao remains particularly high on the Government’s policy agenda given (i)the island’s distinct climatic and geographic advantages which favor agriculture, (ii)the large proportion of the country’s poor [almost one third] located there and (iii)advancing the peace initiative in Mindanao through the provision ofgreater economic opportunities and integration. Despite these strategic initiatives progress in achieving policy goals has been constrained by various factors, including, (i)the low level of public expenditures for infrastructure, transport and market development, (ii)inefficient input supply channels, (iii)slow pace of effective devolution to LGUs many of which are still to mature as effective providers of devolved agricultural support services and (iv) poor linkages between rural development planning and implementation.
Mindanao Rural Development Program
27. In 1999, the Government and the Bank started the discussions for the design for a long- term program for promoting rural development in Mindanao. The long-term program aimed to improve incomes and food security in targeted rural communities within all of the provinces of Mindanao, through implementation of better targeted and sustainable agriculture and fisheries- related rural development and marine biodiversity conservation programs, and improved LGU institutional, management and financial systems. The World Bank in June 1999 recognized that poverty alleviation and rural development are long-drawn processes that would require sustained support and that while most of the responsibilities for agricultural and rural development have been devolved to LGUs, institutional weaknesses continue to be the principal bottlenecks for effective and sustainable rural development. Building institutional capacity at the local levels and ensuring sustainability and support for such efforts at the national level requires nurturing over a long period. Through the Bank’s loan instrument of an Adaptable Program Loan (APL), an opportunity was presented to meet the specific, unique and long-term requirements for rural development. Outlined below are the agreed broad strokes of the long-term program agreed between the Government and the Bank:
(a) APL 1: Jump start the program in a relatively small group of about 5 provinces, for testing out and initiating a process ofengaging LGUs and rural communities in designing and implementing a rural development program, in close association with concerned national government agencies, developing an implementation strategy, and establishing a mechanism for scaling up the program in the succeeding APLs. (b) APL 2: Provide for expanding the geographic coverage ofthe program across Mindanao, to provinces and municipalities that meet eligibility criteria; the program would be deepened in the APLl provinces by enlarging the scale, and also ensuring that all eligible municipalities are included. (c) APL 3: Continue support for all provinces covered under APL2, and complete the coverage across Mindanao, to the extent that some LGUs remain outside the program due to inability in satisfying the eligibility criteria. It would focus on deepening the program by ensuring that all eligible municipalities are fully engaged. (d) APL 4: Reinforce the key thrusts underpinning the overall program and in securing both program and more importantly, institutional sustainability ofthe
28 developments undertaken in support of increasing agricultural production and alleviating rural poverty.
28. MRDP2-NRMP would contribute to the overall program goals by addressing natural resource degradation in selected sites of global environmental significance within the expanded geographic coverage of MRDP2. It would draw on the lessons learned fiom CMBCl and scale up the successful models of community management of marine areas and fishing sanctuaries.
29 Attachment 1 to Annex 1: Globally Significant Features of the 11 Sites PHILIPPINES: Second Phase of the Mindanao Rural Development Program (APL) Natural Resource Management Project
Olutanga Dumanquilas Bay Island Selection Murcielagos Bay (Margosatubig (Mabuhay, Lamitan Criteria (Rizal and Sibutad) and V. Sagun) Olutanga, Talusan) Global EHc EH VH VH significance VH VH Threatened and Corals and seagrass Mangroves (good) Coral reefs 226 ha ofcoral unique (fair), Mangroves Coral reefs (fair) (fair), reefs (fair), sea ecosystems (good) Seagrass (good) mangroves grasses, 158ha of Abalone sanctuary (both tree and diverse mangroves; palm types) and marine turtle seagrasses nesting site (good) Endemic or Sea turtles Marine turtle Marine turtles 75 species ofreef threatened species (Chelonia myda, (Chelonia myda, (Chelonia fishes, sea turtles, Eretmochelys Eretmochelys my& giant clams, manta imbricate) imbricate), Eretmochelys rays, whales, Whale sharks killedpygmy sperm/ imbricate) sharks, sea urchins, Sperm whale humpback/ fin whales, Whale sharks sea cucumber, Manta rays melon-headed/p ygm y Manta rays Sea snakes killer whale (19 spp), Sea snakes Giant clam true/smooth giant clam octopus (Tridacna gigas) ((Tridacna gigas), Giant clam Abalone fluttedhcally giant (Tridacna clam), dogfaced water gigas) Endemic snake, Thersite stromb, Wyville's/Smooth Some 29 species of bonnet , sea urchin, waterfowl and nine and starfishes species ofreptiles Abalone population have been recorded Rare spp., Gastropods along with giant (26 spp.), Bivalves (2 toads and swamp SPPJ frogs. Threatened spp., Gastropods (3 spp), Crustaceans (1 spp), Endangered spp., Clams (7 spp), Sea snakes (1 spp), Terr es tria1 Fauna: Flying fox (1 spp),.
30 Olutanga Dumanquilas Bay Island Selection Murcielagos Bay (Margosatubig (Mabuhay, Lamitan Criteria (Rizal and Sibutad) and V. Sagun) Olutanga, Talusan) Threats to 1, Illegal Fishing - Firewood gathering, 1. Illegal Depletion of forest biodiversity use ofDynamite, illegal fishing, use of Fishing - use of and forestland Cyanide, & unsustainable fishing dynamite, resources, Destructive fishing methods. cyanide, siltation due to gears Resource over destructive massive 2. Piracy & exploitation and fishing gears uncontrolled timber extortion minimal management. 2. Piracy & poaching in the 3, Inadequacy of extortion headwaters of support system & 3. Inadequacy Lamitan Weak Law of support Dynamite fishing, hnforcement system and use of compressor, 4. Silted/degraded weak law and fine mesh nets. mangroves, enforcement mangrove cutting 4. Siltation of 6. Intrusion of mangroves, sea commercial fishing grass beds and vessels in the coral reef municipal waters 5. Intrusion of 7. Overfishing commercial 8. Low peoples fishing vessels awareness on the in the protection and municipal conservation of waters coastal resources 6. Low 9. Low fish catch awareness on due to increasing the protection number of and households that conservation of indulge in fishing coastal resources 7. Over fishing & low fish catch due to increasing number of households that indulge in fishing 8. Chemical and fertilizer run-off to
31 Olutanga Dumanquilas Bay Island Selection Murcielagos Bay (Margosatubig (Mabuhay, Lamitan Criteria (Rizal and Sibutad) and V. Sagun) Olutanga, T alusan) coastal areas Land degradation Siltation coming Sibutad (CLUP2001): Siltation 3700ha of forest, 2 and opportunities from the upland 1) Degradation of coming from subwatersheds; for improved land due to traditional logged-over areas of the upland due forestlands management agricultural about 1,260 ha. & to traditional converted to practice. Residues/ siltation of 740 ha. of agricultural agricultural uses, Wastes offarm marshes/swamps practice. lack ofProper Inputs coming (1 1.99% ofthe total Residues/ management of from the land area) Wastes of farm tenured land and lowland/riceland. 2) Mining 800 ha. Inputs coming open access areas. Intensive from the Lack of appropriate agricultural Rizal : lowland/ water and soil practice in upland 1) Soil erosion riceland. conservation areas, deterioration potential: 2926 ha. Malpractice in measures. of shorelines, (CLUP) farming leads Siltation ofriver coastal erosion and to soil erosion and dams, reduced sedimentation. Traditional farming which causes irrigation and practices in sloping low soil domestic water areas, small scale fertility. supply mining. Low farm Abandoned mining production areas Landslide, siltation Pollution from mining and farming Biogeographic Margosatubig Mun. ofRizal and Ulotanga, Basilan and ecosystem V. Sagun in Sibutad in ZDN, Bohol Mabuhay Sulu Archipelago representation Zamboanga Del Marine Triangle, Reg Talusan, ARMM Sur, Mor0 Gulf, 9 Zambo Sibugay Reg 9 Mor0 Gulf, Reg 9 Potential impact The 2 Improved CRM and The island Good NRM municipalities lie at upland management in straddles practices in the mouth of the 2 municipalities Dumanquilas Lamitan can serve Dumanquilas Bay can greatly alleviate and as model for other where threats to biodiversity Zamboanga municipalities in interventions have and coastal Sibugay Bays the province and a radiating effect degradation in the bay. and Sulu Archipelago. on other coastal interventions areas in the bay. will impact on both bays.
32 Olutanga Dumanquilas Bay Island Selection Murcielagos Bay (Margosatubig (Mabuhay, Lamitan Criteria (Rizal and Sibutad) and V. Sagun) Olutanga, Talusan) Local enabling CRM plan Creation of Local fishery 100 ha MPA environment incorporated in Murcielagos Bay ordinance Existing municipal municipal dev’t Dev’t and mgt. Committee on NRM plans and plan; LGU initiated council; local fishery environment in programs are marine sanctuary ordinances the municipal already establishment MPAs & fish council incorporated in the sanctuaries established FLUP and CRM.
__ in Sibutad LGU commitment LGU supportive of LGU interested in Initial fishery LGU supportive of NRM interventions implementing CRM, law NRM Reforestation, enforcement, interventions. watershed creation of Around 64 ha of rehabilitation MFARMC/ coastal area has BFARMC been identified as an MPA site but has not been established. ~ Community Multi-sectoral Multi-sectoral Multi-sectoral Multi-sectoral interest attendance during attendance during attendance attendance during consultations on consultations on during consultations on project preparation. project preparation. consultations project preparation. on project preparation. ~ Complementarity No external ADB assisted Recipient ofLGSP with other funding for NRM mangrove before; natural initiatives projects. reforestation; KR2- fragmented forest JICA, Phil.-Canada declared as Basilan Dev’t Fund supported Natural Biotic Area fish sanctuary while plantation establishment. forests are covered mostly by the CBFMA (1,781.91 ha) Other Recurrent red tide Small scale mining in Small island considerations in the bay. Sibutad. straddling Zamboanga Sibugay Bay & Dumanqilas Bay.
33 *Based on the PBCP rating wherein marine sites were identified and divided based on 11 sub- thematic groups: mangrove, seaweeds, seagrasses, corals, molluscs, whale sharks, reef fishes, turtles, elasmobranches, cetaceans and dugong. Areas identified as a priority by six or more sub- themes and the top 3 priority areas identified by all the sub-thematic groups were included in the area priority listing.
Selection Criteria Lianga Bay (Marihatag & San Agustin) Datu Blah Sinsuat
H VH Global significance ~ Threatened and Coral reefs, Mangrove forests Fair coral cover (1.6km with a width of 10 to unique ecosystems 20 m), bangus fry zone, (Brgy Nalkan) Endemic or reef fishes, Whale Sharks, Manta rays, Green sea turtle (Chelonia mydas), threatened species Dolphins, Sea Turtles(CheZonia myda, Hawksbill turtle (Eretmochelys imbricate), Eretmochelys imbricate), , Sea Snakes, sperm whale (Physeter catodon), giant clam Tridacna sp, Octopus, etc.. . (Tridacna gigas), dolphins belonging to family Delphinidae, and seacow (Dugon dugon), manta rays, whales, sharks, sea urchins, sea cucumber, star fishes & reef fishes. Threats to Poaching ofMangrove Trees for firewood Illegal and destructive fishing activities. biodiversity and construction ofhouses; Illegal and Low public awareness on coastal destructive fishing activities. biodiversity conservation interlinked with Low public awareness on coastal sustainable land management. biodiversity conservation interlinked with Conversion offorest into agricultural uses sustainable land management. and timber poaching. Land degradation High land degradation due to upland Siltation coming from the upland due to and opportunities farming and mining traditional agricultural practice and timber for improved land Siltation coming from the upland due to poaching; Residues/ Wastes offarm inputs management traditional agricultural practice and (Chemical Based) coming from the lowland/ continuous cutting oftrees (illegal riceland farm areas. logging); Residues/ Wastes offarm inputs (Chemical Based) coming from the lowland/ riceland farm areas. Biogeographic and Marihatag & San Agustin Datu Blah Sinsuat, Maguindanao, ARMM; ecosystem CARAGA Mor0 Gulf reuresentation Potential impact SLM interventions would complement SLM interventions can lessen the siltation in CRM activities already being initiated. Bongo Island, a CMBCl site Local enabling LGUs are using RA 8550 in establishing Declaration ofthe local government to stop environment marine sanctuaries. carabao logging or timber poaching which Formulated unified management plan for causes soil erosion and siltation/ Lianga Bay with support from DOST sedimentation ofcoastal and marine eco s ys tem.
34 Selection Criteria Lianga Bay (Marihatag & San Agustin) Datu Blah Sinsuat
Active LGU participation in project LGU is supportive oforganizing the Bantay preparation, anti-mining resolution of Dagat and strengthening partnerships with LGU commitment Marihatag LGU. NGOs in CRM. Active participation during project Active participation during project Community interest preparation. preparation. Complementarity CBRMP supported the establishment of Recipient ofLGSP before. with other marine sanctuaries, mangrove initiatives rehabilitation and agroforestry projects in the upland. Other Provincial LGU support for mining Newly formed municipality and province considerations
35 Annex 2: Major Related Projects Financed by the Bank and/or other Agencies PHILIPPINES: Second Phase of the Mindanao Rural Development Program (APL) Natural Resource Management Project
Sector issue Project Latest ISR Ratings (As of March 2008) (Bank-financed wojects only) Implementation Development Progress (P) Objective (DO) Bank-Assisted Area-based, targeted poverty Mindanao Rural Completed S alleviation; Strengthening Institutions Development Program for Promoting Decentralization APL 1 Local Infrastructure Provision to Second Agrarian Reform S S Targeted Groups; Microenterprise Communities Development Development Project Financing ofLocal Government Community-Based Completed MU Investments on NRM. Resource Management Financing of Local Government Laguna Lake Institutional S S Investments on NRM., Watershed Strengthening and Management community ParticipatiodLISCOP (LISCOP) Environment and Natural S S Resource Management Project Water resources planning and Water Resources Completed S management; watershed management Development Project Emergency Post-Conflict Recovery ARMM Social Fund S S Project Targeted Poverty Alleviation; KALAHI S S Strengthening Community Empowerment Enhancement of Delivery ofMarket- Diversified Farm Income U MU Oriented Services for enhancing and Market Development Agricultural Competitiveness Proi ect Other Development Agencies Targeted Area Development; poverty European Union: Upland n.a. n.a. focus, micro-proj ect financing Develonment Proiect LGU Institutional Strengthening on USAID: Environmental n.a. n.a. NRM Governance Project Local Infrastructure Development 4DB: INFRES Project n.a. n.a. Farmer linkage with Agri-business; USAID: Growth with n.a. n.a. enterprise development Equity in Mindanao ;GEM) Project Note: IPDO Ratings: HS (Highly Satisf :tory), S (Satisfactory), MS Aarginally Satisf :tory), MU (Marginally Unsatisfactory), U (Unsatisfactory), HU (Highly Unsatisfactory)
36 Annex 3: Results Framework and Monitoring PHILIPPINES: Second Phase of the Mindanao Rural Development Program (APL) Natural Resource Management Project
Results Framework and Monitoring
Development Objective (from Project Outcome Indicator Use of Results Information main project) It will specifically Average household incomes ofbeneficiary The increase in income with the project is aim to: (i)improve communities 20% higher than baseline and significantly higher than the baseline and access to livelihood 10% higher than control group the control to show that the project is opportunities of having a positive impact. Conversely, if not targeted significant, may suggest that scaling-up of communities and the program is towards vertical expansion (ii)institutionalize a than horizontal or the target was decentralized overambitious. system for agriculture and fisheries service delivery that promotes participation, transparency and accountability. Global Environment Project Outcome Indicator Use of Results Information Obiective Critical coastal and Increase in fish population as indicated by No or small change in fish population mean marine biodiversity 30% increase in fish biomass and density in that protection efforts are not being conserved in targeted protected areas. effectively implemented. targeted sites and 10% decrease in siltation and sedimentation No improvement in siltation and supported by in coastal areas. sedimentation levels suggests problems in sustainable land sustainable land management interventions. ~ management in 10% increase in live coral cover and sea Status quo in the condition ofthe coastal linked upland areas. grass cover. and marine habitat would indicate weaknesses in project implementation.
Intermediate Intermediate Outcome Indicators Use of Intermediate Outcome Monitoring Outcomes Component 1 At least 75% of participating LGUs have Weak mainstreaming ofNRM plans into Participatory NRM NRM plans mainstreamed into their local development plans threaten the Planning and Policy development plans and implemented based sustainability ofinterventions undertaken Development on DarticiDatorv resource assessment survevs. by the project. Implemented At least 75% of participating barangays and Non-passage ofNRM ordinances show municipal LGUs pass enabling resolutions limited LGU support and does not augur and allocate funds in support of SLM and well for the project's sustainability. coastal biodiversity conservation.
37 Intermediate Intermediate Outcome Indicators Use of Intermediate Outcome Monitoring Outcomes
Component 2 At least 700 hectares ofmarine and fish Threats to globally significant marine Selective on-the- sanctuaries are established and effectively species are not mitigated when marine Ground Investments co-managed as confmed by SP2 METT. sanctuaries are not properly established and on Coastal/ Marine managed in a uarticiuatorv manner. and SLM Practices At least 500 hectares of mangrove forests are Siltation in coastal areas would not be rehabilitated and protected. addressed if rehabilitation of degraded hilly land and forestland restoration is not demonstrated among upland communities. At least 1,000 hectares of degraded hilly land rehabilitated with sustainable farming practices, multiple-use of indigenous species or assisted natural forest regeneration. Component 3 Average household income of beneficiaries Low increases in income suggest that menu Assistance to the increase by 20% over baseline as measured of subprojects are either inappropriate or Development of by sample surveys. poorly implemented and do not relieve SIGA Funded At least 30% of SIGA allocations are pressure on the natural resource base. Under CFAD accessed by IPSand/or women in participating municipalities. Component 4 At least 60% ofparticipating municipalities Without local enabling policies and fund Strengthening have active FA€&&, Bantay Dagacand allocation for NRM activities initiated by community Bantay Gubat and volunteer monitoring the project, environmental conservation and Partnerships in groups and linked with existing enforcement management could also end with project Monitoring bodies. termination. At least 60% of participating municipalities Community participation in surveillance have formed partnerships with academe, and enforcement enhances and ensures its scientific institutions, national agencies or effectiveness. other communities for monitoring activities. Component 5 At least 75% of participants to trainings on Knowledge infusion and behavioral Development and PRA and resource assessment, environmental changes supportive of NRM are measured Conduct of NRM monitoring and IEE are applying the in the actual application ofparticipants of Knowledge knowledge gained in actual work. information they have gained and absorbed Management during trainings. Program. At least 20% increase in public No change in public awareness on the awareness ofthe importance of link between SLM and CMBC suggests biodiversity conservation and SLM problems in the design and uractices as measured by samde surveys. imulementation of IEC activities.
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7 g m 3 d g s hl vl t-- g I; 3 Annex 4: Detailed Project Description PHILIPPINES: Second Phase of the Mindanao Rural Development Program (APL) Natural Resource Management Project
1. The project builds on the lessons learned from CMBC1, in particular, that sustainable integrated management of upland and coastal ecosystems can simultaneously help to conserve marine and coastal biodiversity while supporting sustainable livelihoods. It is fully integrated into the main MRDP2 project under the NRM component. Thus, each component, described below is co-financed by the GEF as well as with the resources from MRDP2. Implementation mechanisms already functional under MRDP2 would also be utilized for most activities under this project.
Project Sites
2. The Project will be implemented in 11 out of about 206 coastal municipalities in Mindanao, most of which have been identified as requiring immediate coastal and marine resource management intervention (municipalities are listed in Annex 16). Of these 206municipalities, 180 are located in zones identified as key conservation priority areas by the Philippine Biodiversity and Conservation Priority-Setting Program (Year 2000), all of which have global significance. For the selection of the Project sites, the first stage selection criteria used was the same as that for the main MRDP2 namely: (i)poverty level; (ii) significance of agriculture andor fisheries to total local economy; (iii)existence of a BDP; (iv) existence of LGU NRM initiatives; (v) geography (must showcase interdependence of upland and coastal areas and influence on agriculture and fisheries productivity, including presence of environmentally critical or sensitive areas & activities), and ;(vi) presence of similar projects. Preference was also given to those that are not recipients of similar government or non-government programs.
3. A second set of criteria was applied to make the final selection of the 11 municipalities, namely: (i)interdependence or connectivity of upland and coastal areas; and (ii)the ranking based on the Priority-Setting Program mentioned above. A detailed description ofthe ecological, social and economic characteristics ofthese sites, as well as the threats and potential remedial practices together with the detailed site selection process is given in Working Paper No. 2: Site Selection Process, which is available in the project file.
Components
4. The project has five components which are fully consistent with the design of MRDP2’s NRM Component.
Component 1: NRM Participatory Community Planning and Development (GEF- US$O. 635 million: MRDP2 - US$O.049 million) 5. The main objective ofthis component is to foster NRM planning and mainstream this with the local development processes. It addresses the problem of lack of knowledge and skills to manage resources which leads to limited capacity to develop viable plans for NRM- based LGU development, weak law enforcement and political will, coordination and integration, and limited community participation. Most of the NRM-related capability building is included under the Component on Investments for Governance Reforms (IGR) of MRDP2 which covers the LGUs under the Project. This Project will only provide training
42 and highly-specialized technical assistance which are unique to its focus on ecosystem management. These activities will aid in improving and strengthening the NRM focus in local development plans such as the Municipal’s Comprehensive Land use Plans (MCLUPS) and the Barangay Development Plans (BDPs). Local communities will be engaged through participatory resource and social assessment surveys with the assistance from a capacitated PSO and technical specialists assigned by the Project, as well as cooperating institutions such as DA (RFUs, BFAR, and BSWM), DENR, academe, NGOs, etc. The component would support the activities described below:
6. Conduct of participatory resource appraisal and social assessment. The social assessment study aims to validate information on demographics, organizational features in the area that would impact on people’s participation, social and political makeup of the area, as well as the community’s needs and values. The resource appraisal survey would include the collection and compilation of all relevant information on the biophysical features of the area, that would serve as basis for the initial resource management plan, NRM policy development and subsequent annual resource monitoring.
7. Conduct of PO diagnosis. A study will be conducted to determine the capability of POs, if present, to sustain the operation and vitality of their organizations and their operations.
8. Formulation and conduct of comprehensive NRM capability building plan for POs and LGUs. From the results of the PO diagnosis and subsequent or parallel training needs assessment among LGU staff in relation to NRM knowledge and skills, a comprehensive capability-building plan shall be formulated and implemented.
9. Conduct of pre-identijied training. Some commonly needed training shall be implemented even prior to the formulation of a comprehensive training plan. These are the training onparticiuatow resource assessment and monitoring (PRAM); NRM planning; and NRM project development and management.
10. Multi-stakeholders Consultations. Results of resource assessment would be disseminated to various stakeholders to equip them for subsequent review and revision of local plans as well as form the basis for a NRM policy agenda in the locality.
11. Technical review of existing municipal and barangay development plans. NRM specialists at the RPCO, assisted by the specialists at the PSO, the DENR and BFAR would examine existing municipal and barangay development plans to determine the presence of, andor adequacy or quality ofits, NRM contents.
12. Conduct of participatory NW planning. If there is no barangay andor municipal development plan in the NRM municipality, or if the verdict of the review of existing municipal and barangay development plans shows the need to enhance the plans, NRM planning shall be conducted.
13. Enhancement of barangay land use plans, the municipal Comprehensive Land use Plans and Barangay Development Plans thru participatory approaches. This involves an assessment of the social, economic and biophysical condition and attributes of the entire territory of the barangay, as recorded in the resource profile that resulted from the PRA, and based on these attributes, assigning allowable social and economic activities across the space.
43 14. Integration of barangay development plans into municipal development plans or comprehensive land use plans. Because the barangay is a component of the municipality, not only administratively, but physically, it is important that there is harmony in the land use and development plans of the two. Moreover, the integration would ensure that activities in one barangay do not contradict or threaten the zoning (e.g. protection, settlement) in a neighboring, contiguous barangay.
15. Formulation and/or review and enhancement of local policies and instruments for conservation of upland and coastaharine resources, including development of environmental code and water use code and fisheryflorestry regulations. This will involve review of existing local policies pertaining to NRM and their enhancement either through amendment or formulation of new ones. It will also involve multi-stakeholder consultations and discussions on prevailing local and national issues. A policy agenda shall be formulated based on the outputs of the resource assessments as well as the consensus of the community. This will also involve the formulation of a municipal environmental and water use code and local fishery/forestry regulations.
Component 2: Selective on-the-Ground Investments on CoastaVMarine and SLM Management (GEF- US$2.846 million: LGUs - US$O.25Omillion: MRDP2 - US$3.475 million)
16. The objective ofthis component is to support community efforts in coastal and marine biodiversity conservation as well as sustainable land management through an integrated ecosystems approach. This would address the problem of coastal degradation caused by poor upland management practices which is being driven by limited access to NRM technologies among other issues, as well as provide land users with more sustainable natural resource management option. Activities in the coastal areas would include the enhanced management or establishment of co-managed marine protected areas and sanctuaries, and in the upland areas: sustainable land management practices such as: riverbank stabilization, agro-forestry, upland rehabilitation and assisted natural regeneration, among others. Technical support to communities and local government units will be provided by partner technical agencies, academe and local service providers. The overall outcome of this component will be the sustained conservation of critical coastal resources and the improved management of the watershed ecosystem through joint management of critical biodiversity areas. Technical justification for the proposed investments is presented in Attachment I.
Marine and Coastal Interventions: Establishmept/Enhanced Management of fish sanctuaries and mangrove rehabilitation projects (coastal investments)
17. The activities towards establishment of fish sanctuaries would include: (i)community consultations, PO diagnosis, community organization and strengthening; (ii)boundary delineation survey and demarcation; (iii)planning/delineation of roles and responsibilities; and (iv) monitoring and surveillance. A detailed step by step approach for establishment of sanctuaries is presented in the Project Operations Manual. The marine/fish sanctuaries plans would include 'no-take-zones' and buffer zones as relevant based on maps indicating land use, vegetation, coral status, sea grass status, mangrove status and areas critical to sea turtles, marine mammals and other endangered marine organisms. The size and location of fish sanctuaries will be determined on the ground by delineating and demarcating them. Fish sanctuaries will be located in areas that satisfy BFAR's criteria.
44 18. Assistance would also be provided for mangrove plantation boundary delineation surveys and demarcation as well as establishment and maintenance.So that POs and their members are provided security in their right to use and benefit from the use of coastal resources, and therefore ensure sustainability in the management ofmangrove plantations, the program will assist them in formulating community resource management framework (CRMF) and documentation to gain the appropriate tenurial instruments, particularly, the community-based forest management agreement (CBFMA). Specific activities will include:
Sustainable Land Management: Sustainable upland land-use practices
19. To address the problem of deteriorating conditions of coastal resources caused by siltation and soil erosion from poor upland practices, three main areas for investment in sustainable land management technologies were identified: i) establishment of sustainable hilly land farming practices through agroforestry; (ii)rehabilitation of degraded lands through reforestation, with native species specifically the establishment of forest plantations; and (iii) establishment of soil erosion measures directly affecting river systems that may include structural measures, vegetative, bio-engineering designs, and/or combination of all three types. These activities would contribute to soil and water conservation, preservation of biodiversity and improve vegetative cover. Communities would be mobilized to establish agroforestry farms, implement watershed improvement activities and streambank stabilization efforts in the areas delineated and demarcated for such purposes. Some of the best practices on which these initiatives would be based are experiences of communities in the buffer zones of forested conservation areas and watersheds elsewhere in the country. Within conservation areas the component would support biodiversity conservation through reforestation using local Philippine species and outside of critical Conservation areas, the establishment of high value agro-forestry plots with non-invasive species in production and multiple-use zones would be supported.
20. Specific activities to be carried out to identify, implement and maintain the above practices include the following: (i) Community consultations, organization, and strengthening; (ii)Actual site identification, detailed site survey, mapping; (iii)training of farmers on appropriate agroforestry modules and forest rehabilitation and development planning; (iv) Assistance on appropriate tenurial instruments, (v) Agroforestry, Forest Plantations and Streambank Projects Establishment; and (vi) Agroforestry, Forest Plantations and Streambank Projects Maintenance and Protection.
21. As described above for marine/fish sanctuaries, communities would receive assistance in acquiring the appropriate tenurial instruments, particularly the community-based forest management agreement (CBFMA) from DENR.
Component 3: Assistance to the Development of Sustainable Income Generating Activities (SIGA) (GEF- US$1.947 million; LGUs - US$0.416 million; MmP2 - US$5.958 million)
22. Implementation of this component is aimed at providing alternative livelihoods that relieve pressure on the natural resource base while also reducing poverty thereby helping to sustain integrated upland and marine management that conserve and protect biodiversity of global significance. The component intends to improve community efforts to increase their income by providing them with options for more sustainable land and natural resource use through the provision of direct capital funding support and technical assistance in the development and implementation of SIGA, which are financially viable, socially acceptable
45 and environmentally sound. The component will make use of the processes of CFAD which will be applied to all SIGA development and implementation. Community-identified SIGA subprojects will be matched with the results of resource assessment and will be implemented and managed by the POs in the community. Related capability building will also be provided to enhance capacity of the POs to fully implement and manage the subprojects. Overall, the activities and processes under this component follow those under the MRDP2’s CFAD component,
23, During preparation a preliminary list ofprojects was identified based on the following approaches: (i)enhancing the productivity of the land (or increasing production per unit); (ii) broadening of income-base through alternative livelihood; (iii)establishment of secondary and tertiary product processing enterprises for higher value added to commodities; (iv) expanding non-cash income; (v) provision of support infrastructure such as roads, market linkage; (vi) provision of funds; (vii) skill enhancement and training; and (viii) formulation of enabling policies (tenurial instruments). Additional criteria were also applied including the following: market demand, availability ofraw materials, availability of labor and technology, overall financial viability and environmental impact. During the project communities would be assisted in prioritizing and final selection of the activities, where necessary, assisted by capable NGO partners, fund mobilization, implementation strategies and sustainability plan, repayment, capital build-up and reinvestment, and the formulation of responsible benefit sharing systems. Community capacity for implementing these activities would be improved through training in savings/resource mobilization, product markethubsector analysis, enterprise feasibility analysis, business planning, basic accounting, and financial management. The component will be mainly supervised by the CFAD component under the main project.
24. Consistent with MRDP2-CFAD guidelines, livelihood projects are to be implemented by the POs. Key activities related to this component are as follows: (i)Training Needs Analysis; (ii)Personal Development Services (Value Formation and Personal Leadership Training); (iii)Organizational Development Services (Formation of acceptable and legitimate PO partnerships, Organizational Strategic Development Planning, Setting up of Organizational and Management System, and Project Development and Implementation Training); (iv) Entrepreneurship Development (CEFE, Business Planning, and Project Implementation Training); (v) Direct Capital Funding Support for SIGA; (vi) Business Audit: Improve Your Business Module (On the job mentoring and assistance in problem solving through TA or through “Big-Brother-Small-Brother” approach and Provision of needed technical support for enterprise development); and (vii) Market Development Support (Trade Fair Participation, Promo Collateral, and Local Market Consolidator).
25. Projected outputs are (i)Existence of trained, viable and legitimate PO/ community partners, (ii)PO/Community engagement in appropriate SIGA sub-projects, and (iii) Established market linkages. The expected outcome of the project is that participating POs and communities develop, implement, and manage community subprojects using sustainable, profitable and non-destructive modes ofalternative income generating activities.
26. A detailed list of potential activities, including financial analysis is presented in Working Paper 3: Technically Assessed SIGAs and Enterprise Development and include: seaweed farming, fish drying, banana cultivation, cassava cultivation on marginal land, banana chips production.
46 Component 4: Strengthening Community Partnerships in Monitoring (GEF- US$0.496 million: MmP2 - US$0.049 million) 27. The fourth component intends to build and strengthen local partnerships among stakeholders as regards to monitoring and enforcing of NRM regulations. This may require either the institutionalization of the Municipal Environment and Natural Resource Offices (MENROs) or enhancing the capabilities of existing and appropriate local organic offices and staff within Project areas will. It is envisioned that at the end ofthe project, community-based NRM plans, programs, projects, and policies linking marine ecosystems and SLM schemas are mainstreamed across various levels of development initiatives and land use plans of all target sites. Activities under this sub-component may comprise the following: (i)establish venues for national and local policy consultations within the LGUs; (ii)create local partnerships or advocacy groups for NRM regulations enforcement; and (iii)advocate for integration and adoption of NRM plans in LGU policy planning process. As such, this component will entail the conduct of policy assessmenthtudies and consultations, as well as discussions on national and local NRM policy issues.
28. It will likewise advocate for the incorporation of coastal and marine conservation and SLM into local development plans as well as the identification and enactment of key municipayprovincial ordinances/regulations related to law enforcement. Partnerships may be established by way of forging alliances with relevant nationayregional agencies as regards law enforcement initiatives that provide support for the active participation of existing institutions such as FARMCs, Bantay Dagat/Gubat, community volunteers in surveillance and enforcement activities. Through this sub-component, the project seeks to support LGUs in either establishing their respective MENRO positions or improving the capacities of their organic offices to perform NRM. This will enable the LGUs to better facilitate municipal NRM and environmental planning and implementation, policy formulation and regulation, actualizing institutional linkages/partnerships coordinating environmental activities between line agencies, and resource generation efforts. Through alliance building and networking, it also aims to facilitate exchange of assistance and ideas on coastal biodiversity issues, raise the scientific value ofcommunity-based conservation efforts, and develop local leadership in NRM advocacy. Additional details on some ofthe specific activities are presented below:
29. Provide support for the active participation of FARMCS, Bantay DagadGubat, community volunteers in surveillance and enforcement activities. This activity starts in convening relevant stakeholders and provides venues for critical collaboration and cooperative endeavours. This also involves networking activities that would improve linkages among individuals and groups committed to NRM in the municipalities and at the regional level. Such partnerships have the potential to discourage unsustainable practices that degrade resources and the environment. It involves the activities below as follows:
Forging of partnership agreements with academe, communi@, church and religious groups, and enforcement agencies
30. Further complementing and strengthening the component activities, specific agreements on the enforcement of environmental and other NRM relevant laws would be forged with the academe, community, church and religious groups, and enforcement agencies delineating roles and responsibilities and coordinative modalities to ensure that resources are maximized.
47 Assistance to the institutionalization of the MENRO
31. This will involve the conduct of advocacy activities among LGU officials for the establishment, which involves commitment to fund, of a Municipal Environment and Natural Resources Officer (MENRO) in the LGU structure.
Building the Science of Community-based Coastal and Marine Biodiversity Conservation
32. The project will ensure that there is a strong link and working relations with key academic and scientific institutions such that there is a clear effort to highlight the scientific features of community-based coastal and marine biodiversity conservation. A key lesson from CME3Cl was the value of engaging the academe and science-based groups in supporting resource monitoring activities.
Regular monitoring of on-site improvements
33. This involves the conduct of regular monitoring activities of the various subprojects and activities supported by the project. Stakeholders would conduct an annual resource monitoring covering marine indicator species, condition of seagrass, mangrove and corals; rates of soil erosion and seedling survival rates. Because these activities are covered under the regular monitoring and evaluation framework of the MRDP2, the monitoring activities shall validate the reports of on-site status, including improvements, through the conduct of validation meetings. Regular coordination meetings ofvarious groups involved in monitoring shall also be held.
34. The organization of the daily monitoring operation will have the fisherfolk and other community residents at the first layer. They will act as spotter and reporter of destructive practices. Such role is the reason for orienting them on laws on fisheries protection and coastal protection. In the second layer are the deputized community residents who will patrol and deter illegal activities. The third layer will be law enforcement agencies such as the PNP, PCG and the Municipal Government. The various groups involved in surveillance and enforcement should agree on: roles and tasks in the surveillance operation based on their mandates, interface in patrolling, reporting, pursuit, arrest and prosecution; sharing of transportation, equipment and other resources, linkages with agencies and NGO who can assist in case ofprosecution; installation ofradio system to interconnect barangays with these agencies, granting of honorarium to deputized residents in exchange for spending a minimum number ofhours in patrolling; and design and schedule ofpatrolling activities.
' Component 5: Development and Conduct of NRM-Oriented Knowledge Management Program (GEF- US$0.428 million: MmP2- US0.049 million)
35. The major objective of this component is to enhance the knowledge of all sectors of society at the local as well as regional and national levels with respect to overall environmental awareness but particularly on biodiversity conservation and the integrated management of coastal and upland ecosystems. More specifically this Component aims to instill in the public's mind the understanding on the significance of linking CMBC and SLM by way of (i)developing training modules on environmental awareness, (ii)training DENRBFAR officers, LGU/NGO/PO staff, and schoolteachers as eventual trainers in sustainable marine, fisheries and improved land management, and (iii)formulation, implementation, and dissemination of IEC programs and materials for continuous environmental public awareness. As per specific objectives, training modules on CMBC, SLM and an integrated module linking both CMBC and SLM will be formulated and
48 packaged, trainings will be conducted for DENR, DA-BFAR, DA-BSWM, and DA-RFU staff, LGUs, NGOs-POs staff, and schoolteachers as possible trainers in sustainable marine, fisheries and improved land management, and a detailed IEC plan be made, operationalized and sustained by trained participants in the previous sub-component. Increase in public awareness and community participation in protection and monitoring of globally significant species of dugong, marine turtles, manta rays, whale sharks, giant clams, etc. and linked upland ecosystem management is expected after 5 years of project implementation. The specific component activities are described below.
36. Training of Government oficers, LGU/NGO/PO stag and schoolteachers as trainers in environmental awareness; coastal and marine biodiversity conservation, sustainable marine, Jisheries management; and improved land management. This activity involves convening of the above groups and help form a critical mass of environment advocates and trainers. They would be trained on participatory coastal and upland resource assessment, SCUBA diving, NRM plan preparation, etc. These shall be reinforced by in-country cross visitshtudy tours to best practice sites by selected representatives among them.
37. Promotion and strengthening of church and religious leaders' capacity to convey the need for human stewardship of all creation. The project will work with mosques and churches to obtain support for the project objectives through those congregations. From CMBC1 experience, it is useful to work with religious leaders and for them to convey the conservation messages to their flock.
38. Creation of IKM unit in LGWStrengthening of LGU information management systems. This involves the provision of technical assistance to enable the LGUs to set up and operate their IKM pertaining to coastal and marine biodiversity conservation. With an MIS, the LGUs and the community will have a way by which to detect opportunities and threats to the environment and natural resources and promptly act on it. The MIS will thus stand as an important monitoring tool.
39. Formulation of a communication and advocacy framework plan. This involves the conduct of a trainers-training workshop for the preparation of a communication and advocacy framework plan for the NRM Component that would be embedded in the general MRDPAPL2 IEC Plan. The participants in these workshops would be the representatives of the PSO, RPCOs, DENR, BFAR, BSWM, NCIP and participating members of the academe. Intended as a toolkit for managing the communication functions of the program, the communication and advocacy framework will contain a comprehensive list of NRM Component stakeholders, including the program funders and managers; basic program messages for them; and recommended strategies for imparting these messages. Such strategies will include use of media (print, radio-TV broadcast, and ICT) and non-mediated face-to-face dialogues (courtesy calls, interviews, and public forums).
40. Development and Implementation of IEC program and environmental advocacy plans. IEC programs would be developed and formulated to include development, production, reproduction and dissemination of appropriate IEC materials. The communication and advocacy framework plan shall include as one its basic strategies the use of the internet. Toward this end, an NRM-GEF Component link will be part of the MRDP APL2 website design. Some of the applicable materials determined and designed during the Mindanao-wide and regional training-workshops should be uploaded immediately into the NRM-GEF Component link ofthe MRDP APL2 website.
49 4 1. Documentation of NRM success stories. Breakthroughs, like the successful adoption of SLM and CMM strategies, and innovations, or unique ways of doing things developed in the course of the NRM Component implementation, especially in subproject developments, shall be documented and promoted for possible replication in other areas. The stories will then be translated and published in popular comic book form and in video-documentaries, using video and CD formats.
Provision of Continuing Technical Assistance to CMBC-1 Sites
42. The Project will sustain GEF initiatives in CMBCl areas of Bongo Island, Parang, Maguindanao and Paril-Sangay, Kalamansig, Sultan Kudarat in terms of continuity and commitment to the overarching goal of MRDP2. CMBCl sites will continue to be recipients oftechnical assistance in the form of capacity building, monitoring, and facilitation of access to other h4RDP2 components. SIGA can be accessed through CFAD regular procedures. Funds for this key undertaking are lodged at the PSO-IGR and NRM units and will be transferred to the RPCOs andor partner institutions.
Addressing Climate Risks
43. The Project is responsive to GEF OP 2 and OP 15 where concerns have been clearly articulated about the possible impact of climate change on biodiversity and on ecosystems. The project components and corresponding activities will seek to address both climate change mitigation and adaptation. In component 2, the introduction of more sustainable land management practices that shift producers from unsustainable activities such as slash and burn, should help retain above ground carbon. Similarly, reforestation should increase carbon stored in plant biomass. In terms of increasing climate resilience, protected area plans would incorporate climate risk, while in the upland, the project would introduce measures to mitigate the risks from changes in precipitation such as improved agricultural practices to better manage soil moisture (in case of drought) and soil conservation measures (structural and vegetative) to limit flooding and excessive run-off as a result of anticipated higher intensity rainfall. A more detailed discussion is provided in Attachment 2.
The table below summarizes the project’s components and major activities:
Project Components and corresponding major activities
I COMPONENTS I ACTIVITY I Component 1: Conduct ofparticipatory resource appraisal and social assessment. Participatory NRM Conduct ofPO diagnosis. Planning and Policy Formulation and conduct ofcomprehensive NRM capability Development building plan for POs and LGUs. Conduct ofpre-identified training Multi-stakeholders consultations Technical review ofexisting municipal and barangay development DlanS Conduct ofparticipatory NRM planning Enhancement of barangay land use plans, the municipal Comprehensive Land-use Plans and Barangay Development Plans thru participatory approaches Integration ofbarangay development plans into municipal development plans or comprehensive land use plans
50 COMPONENTS ACTIVITY Formulation and/or review and enhancement oflocal policies and instruments for conservation ofupland and coastallmarine resources, including development of environmental code and water use code and fisherdforestrv rermlations Training-workshop on policy review and development Component 2: Establishment of fish sanctuaries and mangrove rehabilitation Selective on-the- projects (coastal investments) Ground Investments . Community consultations, PO diagnosis Community on CoastaVMarine and organization and strengthening Sustainable Land . MarineRish Sanctuary Management- PlanningDelineation- of Management Practices roles and responsibilities . MarineRS boundary delineation survey and demarcation usinn buovs . Mangrove Plantations Planning/Assistance in CRMP formulation and securing a CBFMA for mangrove . Mangrove plantation boundary delineation survey and demarcation . Mangrove Plantations Establishment and Maintenance Sustainable upland land-use practices . Community consultations, organization, and strengthening Actual site identification, detailed site survey, mapping Trainings of farmers on appropriate agroforestry modules and forest rehabilitation (also in support of Component C) and development planning . Assistance on acquiring appropriate tenurial instruments Agroforestry, Watershed Improvement, and Streambank Stabilization Maintenance and Protection ofAgroforestry, Watershed Improvement and Streambank Stabilization Component 3: Emphasis on SIGA as Contributing to Coastal and Marine Assistance to the Biodiversity Conservation Development of Preparing the Communities for SIGA Sub-projects Sustainable Income Improving Community Capacity for SIGA Generating Activities Building the Support System (SIGA) I Component 4: Provide support for the active participation ofFARMCs, Bantay Strengthening community DagatIGubat, community volunteers in surveillance and Partnerships in Monitoring enforcement activities
. Formation ofmunicipal ecological zone partnerships . Formation ofregional (to include representation at provincial and municinal levels) ecolonical zone nartnershin forums. I . Formulation and execution ofDartnershiD forums. Forging of partnership agreements with academe, community, church and religious groups, and enforcement agencies Assistance to the institutionalization ofthe MENRO
51 COMPONENTS ACTIVITY Building the Science ofCommunity-based Coastal and Marine Biodiversitv Conservation Regular monitoring ofon-site improvements ComDonent 5: Training-- ofgovernment officers, LGU/NGO/PO staff, and Development and schoolteachers as trainers in environmental awareness; sustainable Conduct ofNRM marine, fisheries management; and improved land management Knowledge Promotion and strengthening ofchurch and religious leaders' Management Program capacity to convey the needfor human stewardship of all creation Creation ofIKM unit in LGUBtrengthening ofLGU information management svstems Formulation of a communication and advocacv framework Dlan Development and Implementation ofIEC program and environmental advocacv ~lans Documentation ofNRM success stories
52 Attachment 1 to Annex 4: Menu of On-the-Ground Investments and Corresponding Technical Justification PHILIPPINES: Second Phase of the Mindanao Rural Development Program (APL) Natural Resource Management Project
1. Below, in tabular form are the technically assessed OGIs in terms of strengths to address the threats to NRM. Financial justification is in Attachment 1, Annex 9. Technical Justification of Identified OGIs
I OGI I Areah I Justification
1. Fish Olutanga, Mabuhay, (i)All destructive practices such as use of fine nets, Sanctuary / Talusan, dynamitekyanide fishing, etc are prohibitedcontrolled Margosatubig, V. especially in strict protection zones and allows control Sagun, Sibutad, ofother human activities, including access, in order to Rizal, Marihatag, San protect the ecosystem within the specific site thereby Agustin, Datu Blah increasing fish production. Sinsuat, (ii)Coral reefs provide food, livelihood, recreation, protection from erosion, and extremely high levels of biodiversity. Damaged coral reef areas when rehabilitated increases fish species and fish catch, improves turtle breeding grounds and diving spots for ecotourism. (iii)Sea grass beds likewise rehabilitated and these are important habitats for underwater life such as juvenile fishes, adult rabbitfish, and commercially important species of shrimps, prawns, crabs, sea urchins and sea cucumbers. These provide the intermediate buffer necessary for coral reefs to protect coasts from strong waves and surges. Sea grass habitats also serve as the feeding ground for the highly endangered dugong and marine turtles.
2. Mangrove Olutanga, Mabuhay, (i)Carbon density values are comparably high in Rehabilitation / Talusan, upland carbon sinks than in mangrove carbon sinks. Reforestation Margosatubig, V. Nevertheless, both carbon sinks, assuming their fully Sagun, Rizal, restored condition, can sequester relatively vast Lamitan amounts ofcarbon. (ii)Mangrove forests, as a distinct ecosystem in'itself, provides the transition between terrestrial and coastaYmarine ecosystems. Mangroves protect the coasts from storms, erosion and floods and likewise screen out debris from inland areas. They are important spawning grounds and feeding sites for many commercially important fish species. (SEE MORE UNDER REFORESTATION IN GENERAL)
53 OGI Areals Justification
1. Reforestation Talusan, (i)Climate change is considered as one ofthe most Margosatubig, V. pressing environmental issues ofour day because Sagun, Marihatag, experts believe that it carries along harmful effects both on the environment and the human population. To mitigate climate change, degraded areas need to be rehabilitated since forest ecosystems can assimilate carbon dioxide via photosynthesis and store carbon in biomass and in soil. (ii)Carbon density values are comparably’ high in upland carbon sinks than in mangrove carbon sinks. Nevertheless, both carbon sinks, assuming their fully restored condition, can sequester relatively vast amounts ofcarbon. (iii)Reforestation is an approach to mitigating climate change” by capturing carbon dioxide (C02) from large point sources such as power plants and subsequently storing it away safely instead ofreleasing it into the atmosphere. The concept of carbon sink thus works as a “giant filter”. Carbon dioxide may be incorporated into forests and forest soils by trees and other plants. Plants absorb and store carbon dioxide from the atmosphere and release oxygen into the atmosphere. A young forest, composed ofgrowing trees, absorbs carbon dioxide and acts as a sink. Forests are carbon stores, and become carbon dioxide sinks when their density or area increases. Tropical reforestation can mitigate global warming until all available land has been reforested with mature forests (iv) Carbon sinks also aid in natural water filtering, which basically protects and preserves the water quality in the area. The carbon sink absorbs excess nitrates and phosphates, and reduces the level of organic pollution. (v) The forest vegetation plays an important role in the capture, storage and transport ofprecipitation that falls in a watershed. Any alteration in these processes, by way ofchanges in land uses within the forestlands, will alter water quality wherein a reduction ofthe filtering process and increased runoff ofwater and sediment can occur (Waterlines 2001). (vi) Based on h4RDP safeguards, design should take note ofthe following: - Provision ofprotection measures against forest fires (fire lines, fire breaks, look-out towers) and attack
2006. College ofForestry and Natural Resources, UPLB as headed by Dr. Rodel Lasco and Dr. John Pulhin. BBC: Trees only cool the planet if they are planted in the tropics. News Release: Models show growing more forests in temperate regions could contribute to global warming. DecCMBC-2er 5,2005 NR-05-12-04, Website ofLawrence Livermore National Laboratory 54 OGI Areds Justification ofpest and diseases - Planting along contour lines specially on erodible and sloping areas - Strategic location ofbunk houses, permanent nurseries and satellite nurseries. Should consider accessibility and adequate water supply. - Availability ofwater supply - Multiple tree species to minimize infestation - Planting of species by blocks for easy identification - Roads and trail system for accessibility especially during transport of seedlings from nursery to the planting site
(i)Deviation from mono-cropping farming system. (ii)Contour lining is very appropriate in the area since it is rolling, it was recommended to control soil and Lamitan erosion thereby addressing the fertility ofthe soil. (iii)Increases land utilization ofareas under coconuts that are usually unproductive despite its huge potential. (iv) Rubber may take five to seven years before it can Farming Talusan, be tapped ofits latex but in the long term, it could be a Margosatubig, V. good source ofincome especially that the buying price Saw, for rubber is noticeably high at present. Coconut- Lamitan (iv) Multiple perennial and cash crops planted in based between the rows of old coconuts increases land SALT Mabuhay, Sibutad, utilization of areas under coconuts that are usually San Agustin,
55 OGI Areah Justification Combination Olutanga, Mabuhay, unproductive despite its huge potential. It also Talusan, showcases proper agricultural practices. Margosatubig, (v) Intercropping that leaves crop residues in the field Sibutad, Marihatag, to decompose results to a beneficial effect on the soil through effects ofrun-off and soil erosion. More plants result to more oxygen in the surroundings and more fresh air. (vi) Based on MRDP safeguards, design should: - Conform to the Indigenous Knowledge Systems particularly of IPS in cases where there are IPS - Sequential planting oftree crops and short-rotation crops - Provide soil and water conservation through establishment ofvegetative strips along contour lines and/ or hedgerows - Alley cropping in sloping or erodible areas - Avail of Agroforestry system that are either agro- silvi-pastoral or aqua-ago-silvi-pastoral - Select species for hedgerows (multi-purpose plant species), shrubs and fast-growing tree species, and agricultural crops
3. Streambank Stabilization I (i)Deterioration ofwatersheds would have negative Rehabilitation impacts on the productivity ofthe agriculture and Structural I V. Sagun, Rizal, Datu fisheries sectors together with the infrastructures Engineering: Blah Sinsuat, dependent on the sustained supply of water from the Rip-rap or watersheds. gabion (ii)Arrests soil erosion that end up as sediments that Vegetative V. Sagun, Rizal, fill up important water reservoirs and water bodies, Marihatag, San thereby causing water pollution. Agustin, Datu Blah (iii)The ecological linkage between the upstream land Sinsuat uses and downstream water conditions. In particular, Bio- land use transformations in upstream areas have engineering impacts on downstream communities, directly or Currently Sibutad, indirectly, through the effects on productivity and undetermined other conditions oflowland ecosystems. (iv) Bio-engineering can utilize local biodegradable materials to arrest soil erosion (v) Watercourses and water quality shall be protected by these erosion-control structures.
56 Attachment 2 to Annex 4: Assessment of CMBC-2 in Addressing Climate Change PHILIPPINES: Second Phase of the Mindanao Rural Development Program (APL) Natural Resource Management Project
GLOBAL WARMING & CLIMATE CHANGE
1. The effect of global warming is being felt worldwide specifically as regards changes in climate patterns. According to the IPCC Report”, “Countries in temperate and tropical Asia are likely to have increased exposure to extreme events, including forest die back and increased fire risk, typhoons and tropical storms, floods and landslides, and severe vector- borne diseases. The stresses of climate change are likely to disrupt the ecology of mountain and highland systems in Asia. Glacial melt is also expected to increase under changed climate conditions. Sea-level rise would cause large-scale inundation along the vast Asian coastline and recession of jlat sandy beaches. The ecological stabiliv of mangroves and coral reefs around Asia would be put at risk.” Vulnerability ofsuch regions increases.
2. Disastrous impacts of climate change will negatively affect development initiatives, which similarly will limit developing countries in attaining poverty reduction and sustainable development objectives under the UN Millennium Development Goals (MDGs)’~.
Climate Change Impacts
3. The Global Environmental Facility (GEF) identifies possible impacts of climate change on two ofits key program priorities; biodiversity conservation and land degradation.
4. Biodiversity. The expected impacts on biodiversity due to climate change will vary across regions. The vulnerability of ecosystems will be exposed through the frequency, intensity, extent and locations of climate-induced disturbances. Specifically, impacts on biodiversity due to climate change, extreme climatic events and climate variability include (but are not limited to) changes in13:
Wetlands, mangroves, and coral reefs; Timing ofreproduction in animals and plants; Length ofgrowing season; Species distribution and population sizes, including possibility of extinction - especially species with limited climatic ranges and restricted habitat requirements; Frequency ofpest and disease outbreaks; and, Species migration
5. Land degradation (OP 15) is broadly defined as “... any form of deterioration of the natural potential of land that afsects ecosystem integrity either in terms of reducing its sustainable ecological productivity or in terms of its native biological richness and maintenance of resilience.” The direct causes of land degradation are (i)unsustainable
____~
‘I Cruz, R.V., H. Harasawa, M. Lal, S. Wu, Y. Anokhin, B. Punsalmaa, Y. Honda, M. Jafari, C. Li and N. Huu Ninh, 2007: Asia. Climate Change 2007: Impacts, Adaptation and Vulnerability. Contribution of Working Group I1 to the Fourth Assessment Report of the Intergovernmental Panel on Climate Change, M.L. Parry, O.F. Canziani, J.P. Palutikof, P.J. van der Linden and C.E. Hanson, Eds., Cambridge University Press, Cambridge, UK, 469-506. GEF website. l3Eswaran et al, 2004 57 agricultural practices, (ii)overgrazing, and (iii)deforestation and forest degradation. Climate change is expected to be an additional stress on rates of land degradation specifically through:
(a) Changes in length ofdays'andor seasons; (b) Recurrence of droughts, floods and other extreme climatic events; (c) Changes in temperature and precipitation that reduces vegetation cover, water resource availability and soil quality; and (d) Changes in land use practices.
Climate Resilient Development l4
6. In response to the development challenges of climate risk faced by least developed countries, financing institutions like the World Bank and the Asian Development Bank are preparing strategies to support climate resilient growth specifically in the areas of agriculture, water resources, disaster and health risk reduction, and coastal zones.
7. Agriculture/food security. The vulnerability of the agriculture sector to both climate change and variability will result in:
(a) Changes in land and water regimes that affect agricultural productivity; (b) Changes in crop yields especially vulnerable tropical regions; (c) Rural poverty increased as livelihoods are threatened.
8. Least developing countries are likely to be most affected by the above. The GEF deems that adaptation initiatives focus on reducing vulnerability and/or increasing adaptive capacities ofcommunities and/or ecosystems.
9. Water resources. Climate change is expected to increase the pressures on dwindlin freshwater supplies in many regions of the world that are already under severe water stress 18. Expected impacts of climate change on water resources include:
(a) Higher precipitation in some regions and reduction in others; (b) Increased evaporation; (c) Changes in runoff and available surface flow, causing changes in the infiltration rates of water in soils; (d) Drier regions will be more sensitive to changes in hydrological regimes; (e) Rising sea level, which can adversely affect freshwater supplies; (f) Additional stress on scarce water supplies.
10. Adaptation-related projects on water resources could focus on regulations and technologies for directly controlling land and water use, the implementation of hard and soft measures, and improvements in water-management operations and institutions. Other adaptation measures could include measures to maintain flood plains, protect waterside vegetation, restore river channels, and reduce water pollution.
11. Disasterhealth risk reduction. Climate change has implications for disaster and health risk management as magnitude and frequency ofclimatological extremes increases and
l4Dilley et al, 2005; Kasperson et al., 2000 New Scientist, 2004. 58 environmental and socioeconomic conditions are weakened“. Adopting risk management approaches that address current vulnerabilities to natural and health hazards is imperative. Recommended adaptation measures include, among others, improved warning and preparedness systems, climate-sensitive land-use planning, and more resilient water supply systems. Public-private partnerships are encouraged in addressing health and risk hazard reduction.
12. Coastal zones. Coastal erosion, already a problem due to maladaptive practices in many regions, is likely to be exacerbated by climate change specifically by increase in sea level and frequency of storm surges. Expected impacts include:
(a) Inundation ofcoastal regions and other lowlands; (b) Shoreline erosion and impacts on coastal infrastructure; (c) Threatened livelihoods in agriculture, tourism, infrastructure and other key sectors.
13. Some regions will be more vulnerable than others but adaptation undertakings should focus on reducing vulnerability and/or increasing adaptive capacity of communities and/or ecosystems to climate change and variability in coastal zones. Development projects have to include piloting measures, institutional strengthening and/or capacity building.
KEY ENVIRONMENTAL PROBLEMS ADDRESSED BY THE PROJECT
14. Coastal, marine, and freshwater ecosystems suffer the impact, directly or indirectly, of land degradation. The Project intends to showcase the interconnectivity of upland and coastaVmarine ecosystems by addressing land degradation effects on such ecosystems.
Coastal and Marine Biodiversity
15. The objective of the GEF Operational Program (OP) 2 is the conservation and sustainable use of biological resources in coastal, marine, and freshwater ecosystems. Conservation is ensured by ecosystem functioning through the establishment and strengthening of systems of conservation areas. The scope will be tropical and temperate coastal, marine, and freshwater ecosystems areas at risk. Sustainable use on the other hand is ensured by systems, which combine biodiversity conservation, production, and socio- economic goals. The scope, as set out in the Operational Strategy, includes strict protection on reserves, various forms ofmultiple-use with conservation easements, and full-scale use.
Land Degradation
16. As per OP 15, land degradation is broadly defined as any form of deterioration of the natural potential of land that afects ecosystem integrity either in terms of reducing its sustainable ecological productivity or in terms of its native biological richness and maintenance of resilience.” The negative impacts of land degradation are both ecological and socioeconomic. Land degradation undermines the structure and functions of ecological systems that are critical for the survival of human beings. This impact puts at risk the livelihoods and economic well-being, and the nutritional status of people in developing countries. Causes of Land Degradation are: (i)unsustainable agricultural practices, (ii) overgrazing, and (iii)deforestation and forest degradation.
l6Dilley et al, 2005. 59 17. The objective of the GEF OP 15 therefore is to mitigate the causes and negative impacts of land degradation on the structure and functional integrity of ecosystems through sustainable land management practices as a contribution to improving people’s livelihoods and economic well-being.
RESPONSE TO CLIMATE CHANGE: MITIGATION / ADAPTATION
18. Evans (2007) simplistically defines mitigation as a means of avoiding the unmanageable and adaptation to be the management of the unavoidable. The mitigation of global warming involves taking actions to reduce greenhouse gas emissions and to enhance sinks aimed at reducing the extent of global warming. This is in distinction to adaptation to global warming which involves taking action to minimize the effects of global warming.
19. With respect to the design of the Project, there are two initiatives being addressed by the project: (i)geo-engineering through rationalized land use planning, and (ii)carbon sequestration. Geo-engineering is defined as “options that would involve large-scale engineering of our environment in order to combat or counteract the effects of changes in atmospheric chemistry.” The following types of option are still under study: reforestation, increasing ocean absorption of carbon dioxide (carbon sequestration) and screening out some sunlight. Carbon sequestration is a term that describes processes that remove carbon from the atmosphere. The main natural process is photosynthesis by plants and single-celled organisms. Although they require land, natural sinks can be enhanced by reforestation and afforestation carbon offsets.
20. Table 1 shows how the Project responds to issues on climate change by component.
21. Based on the IPCC Report17, “adaptation and mitigation can be complementary, substitutable or independent of each other. If complementary, adaptation reduces the costs of climate change impacts and thus reduces the benefits of mitigation. Although adaptation and mitigation may be substitutable up to a certain point, they are never perfect substitutes for each other since mitigation will always be required to avoid ‘dangerous’ and irreversible changes to the climate system. Both adaptation and mitigation depend on capital assets, including social capital, and both afect capital vulnerability and GHG emissions. Through this mutual dependence, both are tied to sustainable development.”
l7Cruz, R.V., H. Harasawa, M. Lal, S. Wu, Y. Anokhin, B. Punsalmaa, Y. Honda, M. Jafari, C. Li and N. Huu Ninh, 2007: Asia. Climate Change 2007: Impacts, Adaptation and Vulnerability. Contribution of Working Group I1 to the Fourth Assessment Report of the Intergovernmental Panel on Climate Change, M.L. Parry, O.F. Canziani, J.P. Palutikof, P.J. van der Linden and C.E. Hanson, Eds., Cambridge University Press, Cambridge, UK, 469-506. 60 Table 1. Response to Climate Change
CMBC-2 KEY CONCERNS ON RESPONSE TO ENVIRONMENTAL CLIMATE CLIMATE COMPONENT / CLIMATE PROBLEM CHANGE RESILIENT DEVT INTERVENTION CHANGE: ADDRESSED BY IMPACTS MITIGATION / THE PROJECT ADAPTATION 4. Coastal and Marine :i) Wetlands, (i)Agriculture/Food Component 1. (i) Capacity building 3iodiversity mangroves, Security Participatory NRM (ii)Landuse planning & coral - Changes in Planning & Policy (iii)Land tenure B. Land Degradation reefs land and water Development reform threatened regimes that (iv) Rezoning of Timing of affect agriculture reproductio agricultural (v) Encourage n in productivity; systematic use of animals & - Changes in soil and water plants; crop yields conservation ii) Length of especially measures growing vulnerable (vi) Reduce season; tropical anthropogenic iii) Species regions; drivers of coastal distribution - Rural poverty erosion & increased as (vii) Introduction population livelihoods are ofpolicies sizes, threatened. designed to slow, including (ii)Water Resources halt or reverse possibility - Higher ecosystem of precipitation in fragmentation extinction - some regions Component 2: (i)Changing tillage especially & reduction in Selective on-the- practices species others; Ground (ii)Soil and water with -Increased Investments on conservation limited evaporation; Coastal/Marine & (iii)Changing climatic -Changes in SLM Management crop/livestock mix ranges & runoff & Practices (iv) Adoption of new restricted available crops and habitat surface flow, livestock more requirement causing suited to s; changes in the anticipated iv) Frequency infiltration climatic conditions ofpest & rates of water (v) Carbon disease in soils; sequestration outbreaks; -Rising sea (vi) Capacity building
61 CMBC-2 KEY CONCERNS ON RESPONSE TO ENVIRONMENTAL CLIMATE CLIMATE COMPONENT / CLIMATE PROBLEM CHANGE RESILIENT DEVT INTERVENTION CHANGE: ADDRESSED BY IMPACTS MITIGATION / THE PROJECT ADAPTATION v) Species level, which Component 3. (i)Livelihood migration can adversely Assistance to the portfolio vi) Changesin affect Development of diversification length of freshwater Sustainable (ii)Expand days &/or supplies; Income Generating exploitation of seasons; - Additional Activities other food sources vii) Recurrence stress on scarce (iii)Pursuing of droughts, water supplies; alternative floods & (iii)DisasterIHealth livelihoods to other Risk Reduction reduce dependence extreme - Increased on threatened climatic frequency of natural resources events; forest fires (iv) Capacity building viii)Changes in - Increased Component 4. (i) Prohibit new temperature endemic Strengthening development in & morbidity & Community high-risk areas precipitatio mortality from Partnerships in (ii)Limits on n that diarrheal & Monitoring exploitation of reduces vector-borne existing resources vegetation diseases in order to slow cover, (iv) Coastal Zones resource decline water - Inundation of (iii)Development of resource coastal regions monitoring availability & other systems to provide & soil lowlands; early warning of quality; - Shoreline ecosystem ix) Changes in erosion & collapse landuse impacts on (iv) Promoting practices; coastal partnerships infrastructure; Component 5. (i)Increased - Threatened Development & knowledge and livelihoods in Conduct ofNRM awareness agriculture, Knowledge (ii)Capacity building tourism, Management (iii)Mainstreaming infiastructure Program risks & adaptation: & other key local to regional to sectors. national
CLIMATE RISK MANAGEMENT
22. The primordial concern for climate change adaptation is the reduction of local risks, which similarly addresses global environmental objectives such as biodiversity conservation and carbon sequestration. Climate change effects on coastal development, water supply, energy, agriculture, and health require partnerships of all sectors for a better appreciation of anticipated impacts, help strengthen adaptive capacity, and promote adaptation measures. Lessons fi-om previous WB-GEF experiences with adaptation recognize the need for a practical approach aimed at mainstreaming adaptation not only with local, regional, and 62 national entities, but for Bank operations as well. These institutions acknowledge the imperatives for building capacities for climate risk management among stakeholders and key institutional partners.
Climate Risk Screening or Climate Proofing in the Project Cycle
23. Funding institutions are now one in attempting to identify climate-sensitive investments early in the project cycle and to support the integration of climate risk management into project design”. It is to this end that a climate risk-screening tool is being prepared by the World Bank Global Climate Change Team designed to be a simple means for quickly assessing whether a development project, investment, or activity might be subject to climate risks”.
24. The ADB coins such a climate change risk screening initiative as Project-level Climate Proofing2’ defined to be a “shorthand term for identfiing risks to a development project, or any other specified natural or human asset, as a consequence of climate variability and change, and ensuring that those risks are reduced to acceptable levels through long-lasting and environmentally sound, economically viable, and socially acceptable changes implemented at one or more of the following stages in the project cycle: planning, design, construction, operation, and decommissioning.”
Millennium Development Goal # 7: Ensuring environmental sustainability
25. The challenge for all countries changing existing policies and practices and adopting new policies and practices in the attainment ofMillennium Development Goals (MDG) in the face of climate change and its associated impacts*’. Climate change threatens environmental sustainability as it results to fundamental alterations in ecosystem relationships, change the quality and quantity of available natural resources, and reduce ecosystem productivity. This greatly links with poverty (MDG #1) in a way that the poor depend on these very resources for survival and livelihood.
26. Inasmuch as the Project is linked to MRDP2 and both address the overarching objective of poverty reduction, it is prescribed that, at project onset, screen for risks associated with climate change across the project cycle keeping in focus all project components. As the project commences with resource and social assessment activities utilizing tools and methods of ecological profiling, risk screening, similar to the procedures of environmental assessment can be prepared. The -Project does not start from scratch as environmental and social safeguard policies have been put in place through MRDP2. All that is required is to have the risk screening/proofing zero in on effects of climate change to ensure management as well as the funding institutions that the precautionary principle prevails.
Burton and van Aalst 2004. l9 Managing Climate Risk Integrating Adaptation into World Bank Group Operations. 2006. 2o Climate Proofing: A Risk-based Approach to Adaptation. Asian Development Bank, 2005. 21 UNDP unpublished, 2006. 63 Annex 5: Project Costs PHILIPPINES: Second Phase of the Mindanao Rural Development Program (APL) Natural Resource Management Project
Source Components GEF I LGUShare MRDP2 I TOTAL (In M US$) to GEF ( In M US$) (In M US$) (In M US$) Component 1. Participatory NRM 0.635 0.049 0.684 Planning and Policy Development Component 2: Selective on-the- 2.846 0.250 3.475 6.570 Ground Investments on CoastaVMarine and SLM Management Practices Component 3. Assistance to the 1.947 0.416 5.958 8.321 Development of Sustainable Income Generating Activities Component 4. Strengthening 0.496 0.049 0.545 Community Partnerships in Monitoring Component 5. Development and 0.428 0.049 0.477 Conduct ofNRM Knowledge
TOTAL 6.351 0.666 9.581 16.598 ~ Note: MRDP2 refers to resources already committed under the MRDP2 Loan for co- financing activities at the Project sites.
64 Table 2. Project Cost by Component, Local and Foreign
Components Local Foreign T OTAL USD Million Component 1. 0.684 Participatory NRM Planning and Policy Development Component 2: Selective 5.558 on-the-Ground Investments on CoastaVMarine and SLM Management Practices Component 3. Assistance 5.701 2.619 8.321 to the Development of Sustainable Income Generating Activities Component 4. 0.257 0.288 0.545 Strengthening Community Partnerships in Monitoring Component 5. 0.428 0.049 0.477 Development and Conduct of NRM Knowledge Management Program. TOTAL Project Costs 12.628 3.969 16.598
I I I Exchange Rate of 1USD=Php48
65 Table 3. Financing Plan
(In Million US$ )
Foreign Local Total Percent
Local Government Units and POs 0.666 0.666 4.0
Global Environmental Facility 2.169 4.183 6.351 38.3
MRDP Baseline 1.801 7.780 9.581 57.7 Total 3.970 12.628 16.598 100.0
Table 4. Components Project Cost Summary
I I Local
Develonment 32.84 I 2. Selective On Ground I
Community Partnerships in Monitoring 12.34 5. Development and I Conduct ofNRM I I Knowledge Mgt Program I 20.53 2.38 22.92 0.43 0.05 0.48 190.55 796.71 12.63 3.97 16.60
Income Generating I Activities
66 Annex 6: Implementation Arrangements PHILIPPINES: Second Phase of the Mindanao Rural Development Program (APL) Natural Resource Management Project
1. The project fundamentally follows the implementation arrangements set out for the broader Mindanao Rural Development Program. The basis for this is to ensure that the project is mainstreamed into the overall implementation of the program thus strengthening the program-level outcome and sustainability of the project activities. This was also one of the learnings from CMBCl where there were two implementing agencies under the program and having two different processes and procedures. Although the outputs were achieved and there were significant outcomes on the site level, sustainability and replicability were weak. Having a single implementing agency following one set of rules, procedures, and arrangements optimizes the human, financial and logistical resources and strengthens the overall desired impact.
Key Institutional Issues
2. Based on the learning from CMBC1 and the series of consultations with all of the six Mindanao DA-Regional Field Units (RFUs), representative group of Mindanao Local Government Units (LGUs) and other national and local stakeholders, the following were identified as the main challenges in the successful implementation ofthe project.
3. Putting coastal biodiversity conservation and sustainable land-use management in the LGU’s development radar screen: Sustaining conservation and sustainable resources management will need to be put into local development planning. An approach that has shown to demonstrate this has been through a landscape approach. Other similar conservation and NRM projects show that a landscape approach can potentially place these thrusts are integrated into the regular functions of LGUs and as such, it is focused on enhancing local mechanisms and appropriate technologies for conserving, rehabilitating and utilizing natural resources in the coastal, marine and terrestrial habitats.
4. Inter-component integration: The CMBC 1 experience clearly showed that conservation activities require a multi-dimension and multi-sector approach for it to be sustainable and relevant to the communities. Doing this will require stronger and clear collaborative arrangements between NRM and Conservation activities with the other major components of the program. This key consideration is expected to optimize limited project resources but will also ensure that communities regard conservation as integrative to overall development.
5. Inter-agency coordination: The LGUs will be the direct implementers of the GEF- supported sub-projects as well as the other interventions supported by the program through the various components. This multi-sectoral and multi-dimensional aspect will require sustained and strong working arrangements with partner agencies, civil society groups and academe. Past and current community-based conservation projects show how important it is to establish constructive and strategic working relations with various support groups.
6. Strengthening LGU and community capabilities for sustainability: Ultimately, LGUs can only implement an effective extension service if they have sufficient funds. Most LGUs in Mindanao have extremely limited funds and are almost dependent on the Internal Revenue Allocation (IRA) and only small amount is available for development purposes. However, there were a number of LGUs that have been able to strengthen their local tax base and
67 identified other sources of income, for example from service charges and fees, resulting in significant increases to the resources available. Innovative fimd generation mechanisms, strong community participation through incentives, and effective planning need to be provided focused attention.
Design Considerations
7. The CMBC1 experience demonstrated the effectiveness of engaging the communities and government agencies in a synergistic relationship for managing, protecting and conserving marine sanctuaries. Such engagement should cover and inform the entire project development cycle, from conceptualization to identification, planning, implementation, management and monitoring. Furthermore, this sectoral engagement should also inform the engagements between and among government agencies. This was demonstrated very vividly in the functional relationship and complementarity forged between and among BFAR, BSWM, DENR, and the LGUs, with the national agencies assuming enabling roles for the LGUs through the provision of technical assistance consistent with their mandates. Under current institutional arrangements, LGUs hold and assume the frontline role in local development.
8. CMBC also showed the need to provide, in a strategic and integrative manner, livelihood opportunities that would directly complement and strengthen natural resource protection and conservation activities.
9. Finally, the CMBC1 project showed that an integrated landscape approach to natural resource management provides the optimal and sustainable benefits to the community. The project clearly demonstrated that for any development intervention to protect, preserve and conserve resources in the coastal and marine areas to succeed sustainably, corresponding actions have to be done at the terrestrial areas, both the uplands and the lowlands.
10. Taking into consideration the valuable lessons from the CMBCl experience, and also recognizing the need for more effective transition arrangements towards full decentralization within a fixed timeframe and within sustainable institutional framework, the GEF-supported activities of MRDP-APL 2 will strengthen community-based coastal biodiversity conservation and sustainable land-use management by enhancing the partnership established between LGUs, as capable resource managers, and the DAYas support agency to the LGUs. These learnings have been incorporated into the project through the following key design features:
(a) Implement and refine institutional, financial and community-based planning and management systems for supporting rural development and biodiversity conservation (b) Strengthen and operationalize community-based and co-management arrangements through the improvement ofcapacities of communities, LGUs and DA (c) Complementing and strengthening conservation activities with focused livelihood interventions (d) Addressing community priorities for sustainable rural development, agricultural productivity and biodiversity conservation (e) Institutionalizing community-based mechanismshystems to conserve or restore coastal and terrestrial ecosystems
68 Institutional and ImplementationMechanisms, Strategies and Approaches
11. At the program level, MRDP-APL 2 will be implemented over 5 years across 26 provinces and 225 municipalities. The selection of municipalities will be carried out using the agreed pre-condition which is the commitment of LGUs to participate by providing the equity for RI sub-projects and other counterpart funds for other components. To further trim down the number of municipalities, selection criteria was also established and this includes poverty incidence, agricultural potential, absence of foreign-assisted projects (FAPs) and availability of development plans. APLl LGUs that did not .perform according to standards set under the Program are automatically disqualified.
12. Institutional arrangements emphasize the use of permanent and existing structures within the government and MRDP-APL 2 completely abides by this principle. DA will be the executing agency and will provide the overall management and supervision of the Program. The MRDP2 Program Advisory Board (PAB) will provide the overall direction and oversight in the implementation ofMRDP2. With the geographic expansion of the program under this second phase, the reconstituted PAB will have an expanded membership, and a new Executive Order, superseding the existing one (EO 474 signed b the President of the Philippines in April 1998) has been issued prior to loan effectiveness 2Y.
13. The DA’s Special Project Coordination and Management Assistance Division (SPCMAD), owing to its inherent function of coordinating and providing assistance to DA’s foreign-assisted projects, will act as secretariat to the PAB. The re ional counterpart of the PAB will be the Regional Program Advisory Boards (RPABs) ‘3, already existing and operational in all ofthe Mindanao regions and presently functioning as the regional oversight of the DFIMDP24. The RPABs’ functions will be expanded to cover MRDP2. It shall provide regional perspective for the prioritization and approval of sub-projects for funding under the Program.
14. Overall program support to coordination by the DA’s RFUs and the LGU’s implementation under MRDP2 is being handled by the Program Support Office or the PSO (this was the Program Coordination Office or the PCO during MRDP1). The PCO’s main function has been re-focused from overall coordination to supporting overall program implementation. It is acknowledged that the PSO is a temporary and program-specific structure and the need to mainstream the program coordinating functions to regular units of the DA is critical25. To sustain the efforts done under the Program, the PSO, in the transition during MRDP2, will build capacities ofthe DA RFUs on program coordination, management
22 The Program Management Board (PMB) under MRDPl has been reconstituted into a Program Advisory Board or PAB. It is chaired by the DA Undersecretary for Operations, co-chaired by the Chairperson ofthe Mindanao Economic Development Council, and composed ofthe President ofthe Leagues ofProvinces, Municipalities, and Cities Mindanao Chapter; Vice President ofthe Regional Agricultural and Fisheries Councils (RAFCs) in Mindanao; Executive Director ofthe Bureau of Fisheries and Aquatic Resources; Regional Executive Director ofthe Department ofEnvironment and Natural Resources in Mindanao; and Commissioner for Southern Philippines ofthe National Commission on the Indigenous People. 23 The RPAB is chaired by the DA Regional Executive Director. Members include representative ofthe participating provinces in the region, the RAFC Chair, BFAR Regional Director, andRegional Directors ofDENR and NCIP. In the case ofthe Autonomous Region ofMuslim Mindanao (ARMM), the RPAB shall be chaired by the Secretary ofthe ARMM Department ofAgriculture and Fisheries. 24 The Diversified Farm Income and Market Development Project is a Bank-assisted project ofthe DA (Loan No. 7236-PH) which aims to assist the GOP to strengthen the capacity ofits DA to provide market-oriented services to increase agricultural competitiveness and rural incomes. 25 This, again, is a critical lesson learned under MRDP1, when focused institutional strengthening to DA RFUs was deemed inadequate; hence, under MRDP2 the important role ofDA RFUs in strengthening the DA-LGU linkages would be given primary focus, especially through MRDP2’s institutional implementation arrangements. 69 and oversight ofproject activities being implemented at the local levels by the LGUs and the communities.
15. For the DA RFUs to fulfill its coordination roles and responsibilities, Regional Program Coordination Offices (RPCOs) have been created using its existing regular and permanent staff. The six (6) RPCOs (of the 5 DA RFUs in Mindanao and the ARMM’s Department of Agriculture and Fisheries) are fully involved in project coordination and management for the various components of MRDP2. Related to this, the DA Secretary has issued a Special Order (NO. 590, Series of 2006, dated September 20, 2006) on the constitution and roles and responsibilities ofthe PSO and the RPCOs.
16. In general, MRDP2 adheres to the valuable approaches applied in MRDP1. The learning-by-doing approach is most appropriate when implementing a multi-faceted project like MRDP as the processes can easily be acquired and internalized. To ensure efficient implementation, integrated and coordinated plan of activities across components will be put in place so as to prevent overlapping and duplication. One very apparent flaw of APL 1 was the lack of clear operational linkage between components particularly RDPAP and CFAD. Both units are involved in developing the barangay development plans which instead of becoming facilitative, it created more confusion to the beneficiaries at the communities. The implementing units under MRDP2 are now pursuing activities with strategic focus and working collectively and with competence towards a common goal.
17. Another useful strategy of MRDP1 was the development of operation manuals for each and every component which details out the implementation procedures and processes. These same documents will also be used in MRDP2 but have been reviewed and updated to include field experiences as well as the new innovations that will be applied in the project. The operations manuals serve as guide to the implementing units for standardized and sequential procedures of carrying out the various components. The NRM Manual contains the detailed operational and procedural features for both the regular and GEF-supported activities under the NRM Component.
18. In executing the Program, a Program Contract will be forged with the implementing units, incorporating the roles, functions and responsibilities of agreeing parties and various implementation and financial arrangements including compliance to the World Bank’s environmental and social safeguards specifically for sub-projects under NRM component, which is similar to the program’s rural infkastructure (RI) and community fund for agricultural development (CFAD) components.
Implementation Arrangements
19. The executing agency is the Department of Agriculture and is responsible for the overall management and supervision of the Program. It will work in close coordination with the Department of Environment and Natural Resources (DENR), the Bureau of Fisheries and Aquatic Resources (BFAR), the Bureau of Soils and Water Management (BSWM) and the National Commission on Indigenous People (NCIP). The responsibility for overall Program supervision at the DA rests with the Undersecretary for Operations, who is also the designated Project Implementation Officer (PIO) for the DA’s Official Development Assistance (ODA) projects. MRDP-APL2 organizational structure and its linkages are illustrated in Figure 2.
20. A Program Advisory Board (PAB) provides Program policy directions, and the Regional Program Advisory Board (RPAB) serves as the regional counterpart of the PAB. 70 The Special Projects Coordination, Management and Assistance Division (SPCMAD) under the Office of the Undersecretary for Operations of DA is responsible for the overall coordination during Program implementation and as such acts as Secretariat to the PAB. The members of the PAB are the following: DA Undersecretary for Operations, Chairperson of the Mindanao Economic Development Council, President of the Leagues of Provinces, Municipalities, and Cities Mindanao Chapter; Vice President of the Regional Agricultural and Fisheries Council (RAFC) in Mindanao; Executive Director of the Bureau of Fisheries and Aquatic Resources; Regional Executive Director of the Department of Environment and Natural Resources in Mindanao; and Commissioner for Southern Philippines of the National Commission on the Indigenous People.
21. At the regional level, the Regional Program Advisory Committee (RPAB) in each region provides policy guidance for the prioritization and screening of sub-projects and approve meritorious sub-projects for allocation of funds by the DA-RFUs. The RPAB is chaired by the DA Regional Executive Director. Members include representative of the participating provinces in the region, the RAFC Chair, BFAR Regional Director, and Regional Directors of DENR and NCIP. In the case of the Autonomous Region of Muslim Mindanao (ARMM), the RPAB shall be chaired by the Secretary of the ARMM Department ofAgriculture and Fisheries.
22. The Regional Program Coordination Office (RPCO) has been organized using the regular and existing organic staff within each of the DA-RFUs in Mindanao. The RPCOs coordinate Program implementation in their respective covered provinces. A Program Support OfJice (PSO) is tasked for all project support activities and functions for efficient implementation.
23. The RPCO will assist the Provincial LGUs (PLGUs) establish the Provincial Program Management and Implementing Units (PPMIUs) which shall be in-charge with coordinating the implementation of the Program activities implemented by their respective municipalities. The PPMIU may recommend to the provincial govenunent through the Sangguniang Panlalawigan (SP) the allocation of funds to help meet the cost-sharing requirements of municipal LGUs (MLGUs) that are willing to take part and join the MRDP2 but are unable to raise the required equity. The PPWwill be composed of staff from the following offices: Provincial Planning and Development Office (PPDO), Provincial Engineering Office (PEO), Office of the Provincial Agricultural Officer (OPAg), and Provincial Accounting Office (PACCO). The Provincial Governor has the option to designate the head ofthe PPMIU and to assign additional staff as the need arises.
24. Correspondingly, the MLGUs have created the Municipal Program Management and Implementing Units (MPMIUs) to implement the subprojects and provide extension services/technical assistance to the participating barangaysPOs. The municipal governments are expected to provide most of the LGU share of the costs of subprojects, and to carry out governance reforms designed to, among other objectives, increase their local revenue generation capacity. The MPMIU is composed of staff from the Municipal Planning and Development Office (MPDO), Municipal Engineering Office (MEO), Office of the Municipal Agriculturist (OMA), and Municipal Accounting Office (MACCO). The Municipal Mayor has the option to designate the head ofthe MPMIU and to assign additional staff as the need arises.
25. At the barangay level, the Barangay LGUs (BLGUs) will prepare their own development plans based on their local development needs, taking into consideration MRDP-
71 APL2 poverty reduction, social participation and environmental conservation frameworks. They will oversee the activities of the POs within their respective jurisdiction in implementing sub-projects. Based on the basic principles of the Program, the POs, will plan, manage and maintain sub-projects at the community level.
26. By virtue of the IPRA Law, NCIP representatives will be actively and directly involved with IP communities down to the barangay level. At the barangay level, the Tribal chieftain of the participating IP community will likewise be participating in any planning and decision-making .
27. The duties and functions of the agencies26 and institutions directly involved in the NRM component are in Attachment 1. Implementation arrangements for ARMM follows that of the broader program and is presented in detail in Attachment 4.
28. The diagram below shows the working relations among the different partner agencies and the project. LJPSO-NRM
I I I I I I I I I I I PPMlUs I I I I ------7------1------PENROs I I PPMlUs I I Offices I I I I I I I e I I MLGUs ---- T MPMlUs CENROs BLGUs ----- Baranaav
r Communities, Peoples’ Organizations and Households
26 See inter-agency MOA attached as Attachments 2 and 3 72 Mainstreaming and Inter-Component Coordination
29. The critical feature of this project, as well as the broader NRM component of MRDP2, is mainstreaming biodiversity conservation and sustainable land management activities with the other components of the program. The need to build the project’s integrative feature necessitated clear linkage with the program’s other components thus ensuring an integrative strategy for local development. This was observed to be a key factor during CMBCl when NRM and conservation activities were conducted exclusively from the other components of the bigger program hence resulting in limited capacities for sustainability. Therefore, under this project, key activities with communities are implemented jointly and in collaboration with the program’s other components. This arrangement not only ensures consistent and coordinated working relations with communities, but also contributes to improving effectiveness and efficiency of the program’s limited manpower and financial resources.
30. The implementation arrangement with the program’s other components in the context ofthe project’s various implementation phases are presented in Attachment 5.
73 Attachment 1 to Annex 6. Duties and Functions of Stakeholders PHILIPPINES: Second Phase of the Mindanao Rural Development Program (APL) Natural Resource Management Project
PSO (a) Assist in setting up the RPCOs within the DA-RFUs and provide technical assistance to enable them to fulfill their functions under MRDP-APL2; (b) Ensure that all activities are properly coordinated with the RPCO; (c) Promote cohesion and synergy in the planning and implementation of the program; (d) Facilitate a quarterly conference ofRPCOs to promote integration; (e) Recommend to the Undersecretary for Operations through the SPCMAD, policies and institutional reforms; (0 Consolidate regional reports on physical and financial progress of implementation and submit these to the Usec for OperatiosPIOs, through the SPCMAD; (8) Undertake periodic review and evaluation ofthe program; (h) Prepare and consolidate Implementation Financial Reports (IFR); (i)Advocate and support social and environmental safeguard compliance; (j) Review and consolidate annual work and financial plans; and (k) Ensure ICC/IP participation in the program;
PSO-NRM Unit (a) Oversee, coordinate and direct the planning, implementation and monitoring of the various NRM component activities in consultation with institutional partners, specially DENR, DA-BFAR, DA-BSWM, NCIP, DA-RFUs and LGUs, other project implementers and project beneficiaries Mindanao-wide and at the local administrative levels; (b) Coordinate with the IGR Unit all social preparation activities for the NRM Component project areas; (c) Coordinate with CFAD Unit implementation of the SIGA in NRM project areas; (d) Provide assistance in the annual work and financial planning of the RPCOs for the NRM; (e) Integrate and harmonize the RPCO’s annual work and financial plans for NRM Component into the MRDP-NRM Component’s annual work and financial plan; (0 Develop strategies and approaches and prepare implementing guidelines for the effective and efficient implementation ofthe NRM Component; (g) Assist in the monitoring and progress of NRM activities and document relevant procedures for dissemination purposes; (h) Develop and maintain NRM Component information or knowledge management system; (i)Provide direct technical assistance in selected NRM project areas where special intervention is needed; (j) Prepare periodic reports consistent with MRPD and DA monitoring and reporting fi-amework; (k) Recommend measures for a more effective and improved NRM Component implementation based on field observations and lessons learned.
74 RPCO (a) Lead in the preparation of a regional multi-year and annual work and financial plan and submit the same to the PSO; (b) Provide technical assistance to enable LGUs meet program policies, standards and processes; (c) Institutionalize use of participatory approaches in the preparation of local development plans; (d) Ensure the integration oflocal plans into regional plans; (e) Process and validate subproject proposals fiom the LGUs and provide feedback to the proponents on the status of such proposals (table until manual review); (f) Monitor the physical and financial progress of PPMIU plan implementation in accordance with agreed reporting arrangements as prescribed in the project’s MIS and M&E system; and (g) Coordinate with partner agencies or other relevant institutions in the region with respect to required services of implementing units.
RPCO-NRM Unit (a) Oversee, direct and coordinate the planning, implementation and monitoring ofthe NRM component within the region; (b) Spearhead the formulation, implementation and monitoring of regional annual work and financial planning for the NRM Component and ensure that the requirements of government and partner institutions and their activities are properly considered; (c) Coordinate with the IGR and the CFAD within the RPCO for activities related to the NRM component plans; (d) Establish and maintain a mechanism for developing and sustaining partnerships in planning, implementing and monitoring NRM component activities with institutional partners from the government, notably the DENR, BFAR, BSWM and NCIP; from the academe, or the private and state, colleges and universities with programs pertaining or related to NRM; and fiom the private sector, consisting of NGOs and other civil society organizations with advocacies in or related to NRM; (e) Ensure the timely provision of financial, logistic and technical support to the plans and activities of partner-institutions, specially the provincial, municipal and barangay LGUs, that promote the attainment of NRM Component and MRDP objectives; (0 Develop and maintain NRM component information or knowledge management system; (g) Provide direct technical assistance, specially in NRM planning and BDP enhancements through NRM plans, in selected NRM project areas where special intervention is needed; and (h) Recommend measures for more effective and improved NRM component implementation based on field observations and lessons learned.
PPMIU
The PPMIU shall assist the MPMIUin the implementation of subprojects within its jurisdiction.
75 PPMIU-NRMUnit
(a) Provide overall coordination, assistance and supervision of NRM Component activities in the province; (b) Prepare, in coordination with MLGUs and partner agencies, the NRM Component plan for the province (annual and five-year plan); (c) Recommend to RPCO guidelines and standards in the conduct of NRM Component; (d) Coordinate with focal persons of other components and partner-agencies, specially the DENR, BFAR, and NCIP, at the provincial level, in the implementation and monitoring ofNRM Component activities; (e) In coordination with the MPMIUs, identify possible local service providers capable ofconducting NRM component activities; (f) Identify possible institutional partners for collaborative agreements to deliver NRM component activities; (g) Conduct NRM Component activities that will improve the capacity of the P/MLGUs to sustainably perform the full range of agricultural and agricultural-related functions mandated by the LGC and AFMA; (h) Provide technical assistance to MLGUs in conducting NRM Component activities; (i)Ensure compliance with social and environmental safeguards ofthe program; (j) Conduct NRM needs assessment to update NRM Component; (k) Conduct advocacy activities that will promote the component; (1) Develop a system of awards and incentives for LGUs with exemplary performance; (m)Coordinate integration of component plans and financial management at all levels.
MPMIU
The MPMIUwill spearhead implementation ofall subprojects within its jurisdiction.
MPMIU-NRM Unit
(a) Provide overall coordination, control and supervision of NRM Component activities in the municipality; (b) Prepare an NRM Component plan for the municipality (annual and five-year Plan); (c) Coordinate with focal persons of other components and partner-agencies, specially the CENRO, FARMC, MAFC, and BLGU at the municipal level, in the implementation and monitoring ofNRM Component activities; (d) Conduct NRM Component activities that will improve the capacity of the MBLGUs to sustainably perform the full range of agricultural and agricultural-related functions mandated by the LGC and AFMA; (e) Provide technical assistance to MBLGUs in conducting NRM Component activities; (9 Ensure compliance with the social and environmental safeguards of the program; (g) Conduct NRM needs assessment;
76 (h) Disseminate information, manuals and CDs and other materials that will promote the NRM Component; (i)Implement a system ofawards and incentives for exemplary performance; (i) Assist BLGU in organization of CBMEGs; (k) Coordinate with relevant agencies in providing assistance to WBLGUs in undertaking governance reform.
BLGU
Barangay LGUs (BLGUs) are the lead mobilizer.for PRA-BDP and monitoring and evaluation ofsubprojects at the barangay level. LGUs will perform the following functions:
(a) Designate local NRM facilitators; (b) Mobilize residents to participate in the barangay development planning, and ensure inclusion ofIPS, women and youth concerns in the development plans; (c) Follow-up the status ofplans submitted to the MLGUs to ensure that these are included in the municipal development plan; (d) Allocate funds to support barangay facilitators operation (e) Facilitate negotiation for the right-of-way (0 Audit the books of accounts ofPOs; and (g) Maintain the sub-project billboards.
PO/Communities
Based on the basic principles of the Program, the Peoples’ Organizations (POs) are the subproject managers:
(a) Identify and prioritize sub-projects; (b) Prepare subproject proposals; (c) Produce the counterpart equity for community sub-projects under MRDP APL-2 and manage the implementation of these projects in such a way that the projects become sustainable; (d) Encourage savings and thrift among the members and increase its working capital; (e) Monitor & record the project benefits on the lives ofits members; (0 Comply with the Environmental Management Plans; (g) Prepare sustainability plan ofsub-projects; and (h) Report to the BLGU the status of subproject implementation.
DA- BFAR
(a) Provide technical assistance andor training to LGUs and POs in: 0 formulating criteria and guidelines for the evaluation and approval of coastal and marine NRM subprojects and activity outputs/results submitted by LGUs and POs; 0 mariculture/aquaculture and fisheries conservation and management; 0 the development, implementation and management ofmarine protected areadfish sanctuaries; 0 coordinate with DENR on mangrove protection and rehabilitation activities;
77 formulation ofmunicipal fisheries ordinances/appropriate policies; formulation of Community Resource Management Plans (NRMP) in the formatiodstrengthening and networking of FARMCs; in the conduct of coastal inventory/resource assessment of suitable sites for the demarcation offishlmarine sanctuaries, the establishment ofbaseline data and resource assessments; 0 zoning of coastal areas/municipal waters according to specific uses; 0 the development of a mechanism for the conduct of local monitoring and enforcement of environmental laws and regulations, policies and ordinances; the development ofsustainable income generating activities (SIGA) 0 collaboration in planning and execution of IEAC in NRM the conduct of training for deputation of Fish Wardens and or Forest Guards. (b) Provide and enforce standards in the development of coastal and marine subprojects; and (c) Assist the DA and LGUs in monitoring coastal and marine subprojects.
DENR
The DENR shall assume role of NRM technical adviser to the MRDP2 program. Accordingly, through its central, regional, provincial and municipal offices, it shall assume the following:
(a) Provide technical assistance to the target NRM site on the application of a participatory planning and management process for the identification and development of protected areas and related coastal marine and upland agro- forestry areas identified for improved land management; (b) Designate permanent staff as MRDP Focal Persons for MRDP APL 2 activities at the central and regional levels and at the LGU levels when applicable; (c) Assist in the review community- based development plans in both upland agro-forestry, coastal and marine, and protected areas; (d) Provide technical assistance to the LGU in the implementation of policies/guidelines on the establishment of upland agro-forestry, watershed management, mangrove management, coastal resource management and protected areas; (e) Assist the LGU in collaboration with BFAR in the conduct of participatory coastal resource assessment for marine Protected Areas (MPAs); (0 Assist the LGUs in the land use planning; (g) Share or provide available information on upland agro-forestry, watershed, coastal and marine resources, protected areas and biodiversity, including consolidation ofproject maps to the regional base map; (h) Provide technical assistance in the formulation and enactment of environment related local ordinances/policies; (i)Assist in the monitoring and evaluation activities; 6) Facilitate the processing and issuance of tenurial instruments required for the implementation of MRDP2 subprojects;
78 (k) Assist in the formulation and execution of information, education, communication and advocacy plan; (1) Assist in the NRM capability building intervention of stakeholders; (m)Provide technical assistance to LGUs in the implementation of environmental- friendly SIGAs and other NRM activities; (n) Assist in community-based resource assessment in upland agro-forestry, coastal marine and protected areas; (0) Assist in the organization of Bantay Gubamantay Dagat; @) Assist in site identification, survey, mapping and delineation of the proposed project sites; and (d Assist in coastal management.
DA-BSWM
The BSWM is the focal agency for sustainable land management. It shall fulfill the following duties and functions: (a) Provide technical assistance in: Generating detailed soil and land evaluation for CLUP and BDP; Assessing productivity of land; Identification ofproduction strategies and appropriate land use; and Integration of SAFDZs in land use plans. (b) Provide training in: Incorporation of SAFDZs in LUPs; Comparative analysis of alternative and competing crops in coverage areas; Soil and water management technologies; and Establishment of farms to demonstrate soil and water management technologies. (c) Provide land management units/soil map; slope map; elevation map; erosion map; land usehegetation map; land limitations map; soiVland suitability; and ’ convergence area maps to the LGUs if available.
NCIP
The NCIP shall be the promoter and chief safeguard ofIP rights in the program. Through its concerned Regional and Provincial Fields, It shall have the following responsibilities: (a) Provide the RPCOs/PPMIUs/MPMIUs information on ICCs/IPs and technical assistance for project planning in the target areas; (b) Designate regional, provincial and if possible municipal focal persons for MRDP concerns and provide them with necessary logistic support; (c) Provide information on MRDP target areas where ICCs/IPs are known to exist; (d) Facilitate the issuance of the FPIC and Certification of Precondition in cases hwere identified sub-projects affect ICCs/IPs within the ancestral domains; (e) Participate in IP development planning and consider the formulated ‘IP Development Plans as supplement to the CDP and ADSDPP; (f) In collaboration with the DA, coordinate activities involving the participation of ICCs/IPs organizations in the planning and implementation of sub-project; and
79 (g) Participate in consultations, meeting, briefing, workshops and similar activities as indicated in the Project Implementation Plan.
Implementation Arrangements in ARMM
0 Project Operation in AWM. Because of its unique structure of governance, the MRDP2 and the NRM Component shall adhere to the following institutional arrangements at the ARMM. Figure 4 shows MRDP’s operational structure and implementation arrangements in ARMM.
The Department of Agriculture @A)
As executing agency of MRDP-APL2, the DA will provide overall management and supervision to the Program. It will work in close coordination with the Department of Environment and Natural Resources (DENR) and the Bureau of Fisheries & Aquatic Resources (BFAR), the Bureau of Soils and Water Management (BSWM) for the implementation of the Natural Resource Management (NRM.) Component and GEF activities
The Office for Southern Cultural Communities (OSCC) on the other hand will be closely involved in the project implementation to ensure that appropriate safeguards are in place and strictly followed to protect the interest of the IP groups- one of the project’s targeted vulnerable groups. Other agencies would also be involved as members at the Advisory Board and Sub-project Appraisal Committee (SAC) as a mechanism for collaboration and complementation.
A of Memorandum of AgreemenWnderstanding and/or Cooperation between the DAF- ARMM and the partner agencies will be executed to legitimize the partnership cooperation.
The MOA/MOU/MOC shall defme the specific function of each partner/cooperating agency and the manner ofcollaboration and complementation between and among partner institutions down to the Barangay Level. The functions shall be agreed upon by the partner/cooperating agencies.
The Department of Agriculture and Fisheries-Autonomous Region in Muslim Mindanao OAF-ARMM)
0 Considering the unique government structure of the Autonomous Region in Muslim Mindanao (ARMM), the Program adopted a unique and distinct implementation structure. The overall implementation structure for ARMM is presented in Figure 3.
0 Implementation at the region will be coordinated by the DAF-ARMM through its Regional Program Coordination Office (RPCO) with the guidance of the Regional Advisory Board (RAB)
80 The Regional Advisory Board
0 The Regional Advisory Board shall be chaired by the Regional Governor and co-chaired by the Secretary of the Department of Agriculture and Fisheries-Autonomous Region in Muslim Mindanao (DAF-ARMM). The board members include: the Regional Planning and Development Office Director, DENR Secretary, BFAR Director, OSCC Director, NIA Director, Regional Agriculture and Fisheries Council (RAFC), and others. The RAB shall serve as the Regional Policy-making Body ofthe Program.
The Regional Project Coordination Office
0 The Regional Project Coordination Office (RCPO) will be organized and shall obtain legal mandate through a Special Order to be issued by the DA Secretary in Manila based on the recommendation of the DAF-ARMM Secretary. The RPCO will report directly to the Undersecretary for Field Operations ofDAF-ARMM.
The Subproject Appraisal Committee
0 There shall be a Regional Sub-project Appraisal Committee (SAC) to be created to review and approve Rural Infrastructure Sub-projects. The SAC shall be chaired by DAF- ARMM Secretary and co-chaired by the Director of the Regional Planning and Development Office (RPDO). Other members include the Regional Agricultural Engineering Division (RAED) of the DAF-ARMM, Regional Agriculture and Fisheries Council (RAFC), Department of Environment and Natural Resources (DENR), OSCC, and a private sector representative (from PICE and/or PSAE). The Regional Program Coordination Office shall serve as the secretariat.
PPMIU
0 The composition and hnctions of the PPMIUs in the Autonomous Region in Muslim Mindanao will be similar to the PPMIUs in the regular RFUs. An added benefit however is expected because of the presence of DAF-ARMM Provincial Agricultural Office (PAO) with complete staff that will be tapped in providing technical assistance to the PPMIUs.
MPMIU
The composition ofthe MPMIUs in the Autonomous Region in Muslim Mindanao will be slightly different with the MPMIUs in the regular RFUs due to the lack of devolved Municipal Agriculturist. The CFAD component head in the ARMM participating municipalities will be the DAF-ARMM paid Municipal Agricultural Officers (MAOs). The Office of the Municipal Agriculturist (OMAO) shall assume an active fimction on both technical assistance provision and in the implementation of specific interventions under the CFAD component. Relative to MRDP operations, although serving as the CFAD component head, OMAO still maintain a straight line from the DAF-ARMM structure.
81 The Project Component and Support Unit
0 The four major components namely: Investment for Governance Reforms (IFR), Community Funds for Agricultural Development (CFAD), Rural Infiastructure (RI), and Natural Resource Management (NRM); and the Support Units namely: Administration and Finance, Monitoring and Evaluation (M&E), Information, Advocacy, Communication and Education (InfoAce), Procurement, and Social and Environmental Safeguards (S&E) will be organized at three levels-RPCO, PPMIU, and MPMIU.
CFAD
0 Unlike the regular DA-RFUs, DAF-ARMM has its own structure down to the Municipal LGUs that were not devolved. The RPCO will utilize this structure to Merits coordinative and technicaVagricultura1 assistance provision functions to LGUs.
0 At the Provincial level, the devolved Provincial Agriculturists shall head the CFAD Component. The Provincial Agricultural Officers (PAO) would serve as the extension office of RPCO at the Provincial level whose task is to coordinate and assist the Provincial Project Management and Implementing Units (PPMIUs) in complying MRDP implementation requirements and interventions. At the Municipal level, since there were no devolved Municipal Agriculturists, the Municipal Mayor shall designate the Municipal Agricultural Officer (MAO) to handle the CFAD Component of the Municipal Project Management and Implementing Units (MPMIUs).
MSC
0 The existing MSC organized by another World Bank-assisted project (ARMM Social Fund) in the covered ARMM municipalities will be retained for MRDP with the Municipal Agriculture Office serving as the secretariat in lieu of the Social Welfare Office which is serving the ARMM Social Fund. The MSC shall be responsible in conducting review and approval of CFAD and NRM sub-projects.
Support Units
0 Operationally, the support units will cut across the four major components and provide the necessary assistance to ensure effective and efficient implementation of the various interventions.
The Support and Cooperating Agencies
0 The support and other cooperating agencies such as the DENR, BFAR, BSWM, OSCC, NIA, DAF-ARMMIARC, DA-ATI, Regional Agriculture and Fisheries Council (RAFC) & Others shall provide technical assistance to the program through the DAF-ARMM.
82 Figure 1. Implementation arrangement in ARMM
Office of Secretary Advisory Board
Office of Undersecretary
SPCMAD
support
I I
1 Communities, Peoples' Organizations and Households Legend: - Supervision ....."../.~ Coordination 83 Attachment 2 to Annex 6. Memorandum of Agreement Between DA and DENR PHILIPPINES: Second Phase of the Mindanao Rural Development Program (APL) Natural Resource Management Project
of Agriculture. w
84 WHEREAS, partnership and coordination be built with the Department of Environmmt and Natura1 Rcsaurcw (DENR) and the DA's Bureau of Fisheries and Aquatrc Resautccs (3FAR). Bureau of Soils and Water Management I BSWM). and RK. to ensure bmad provision of technical srrvicc to iocil government and cornmumtics in unplementing the NWvl subcomponents. as follows: {a) NRM participatory communip planning and devetopment: (bl selrxtivc on the ground invcsmcnrs on coastsl,manne and sustainable land use practices; (c) assistance to the development of' sustainable income , generating activities; (d) local policy developnieat and slrenythened partnershrps tn ~~~ni~~enforcement; and (e) dcvelctpment and conduct af NRM kmwt&ge management program;
WHEW. m line with the national government and World Bank's Safepard Poky. the lclRDP APC 2 pmjeject design, panicuhrly for CFhD and Ri subprojects. incorpantes social and cnvimnmeni cmccrns as well as measures to ensure susitarnahlr managcmenr of remurcw;
WHEREAS as executing agency, the DA wifi msure the proper ccIordim$ionwd adequate pmviaon of technical supporr of other partner yencics ta participating LGUs and communities in implementingthe four (4) components of MRDP 2.
NOH' THEREFORE, far and in consideration of the foregoing mutua1 covenants hminafm contained, the parties do hedy hind themslues and agree on thc fillawing obligation and mpnsibili(rcs:
SNon 1. RespoesibUJtks of the DA, As cxcruting agency of chz MRDP API 2. rhe PA will provide oserafl rnanagcrnent and supervision IO the Program Spccifrcally, the DA tbmttgb its Program Support OMce aad DA-RFU Regional Program Cmrthatjan Office shall:
1.1 Oversee, coordinate and direct the planning, implmcntation and monitoring of the various IrXM component activities In c~n~ulla~i~nwilh institutional partnm, specially DENR, NCW, and J.GC:s, ather pmj~rt rmplemcntm and project beneficiaries Mindanao - widc and at the local administrative levels: I .2 Provide the DENR with PKI~~informalian imd documents such as manuals, repotrs, plans and such olhn documents to factlitarc tht implementation of the ?WMsub-projects and related activities; 1 *3 Ucvclop strategies itnd appmachss and prepare implementing guideiincs and measures for effective and efficient itnplcrncntiition af the NR-W Component brmxl on field observations and lessons teamed; 14 Spearhead the formulation. implementation and munitonng af il hannontzed and integrated Inter-agcncy regioital annual work and firmcia1 plan for MRDP - NJtM Component; I.5 Establish and maintain a mechmisrn for developing and sustaining pdmcrship i 11 p Ilinning, rnipletnenting and rn onitorinp h ILM Component activities with hrtutional partners fbm the government. partreularl) Ihc DENR. I.6 Ensure the tirncly provision of financial, logistic md technical sypon in the implementation ofthe MRDP - NRxiI plans and arhvitica ofthe DEYR ;md other partner-institutions bascd an v Work and Financial Plan for MRDP and in accord 1's appraicd systems iinri P~OG~US~Sfor the release o
85 86 1.13 Provide training in
u Incopranon of SAFDZ in CLLFs; ~1 Pnrnparaiive analysis of alternative and competing crops in covcnng arw: u Soil and wser management technologies; and J Establishment of demonstnition farms fur soil and water management techmhgies ,
1.14 Provide lami management unim'soil map, slope map, etewutctn map, c~sionmap, land uscivcgetation map, tmd imitations map, soillland suitability map. and convergence areas maps to the LGUs if available
Section 2. Rcrpnsibitlticr of thc DENR. The DENR shall assumr I he rote as NRM policy antt tcchcal advim to the MRDP. Aofordingly, hugh its central, regional, provincial and community offices, it shall assume the following duties:
2.1 Provide polity guidance ad directions for thc implmimbtion uf MRDPZ-NfCM rompanent as a member of the Program Advisory Bod'Regional Progrant Advisory Boards; 22 Designate permanent staff Y MRDP Focal Pcrscrns for MRDP API. 2 activities a1 the central and regional levels and at the LCiL levels-when iipplicablc; 2.3 Assis? in site identification und facilitate thc conduct of sun.cy, mapping and dctimation of the pmpclcled sub-project sites. 2.4 Assist the LGlJ in collaboration with E FAR in Ihc conducl of MAfor Manne htostcd Areas (MP.48); 2.5 Assist the LGUs in the land usc phllRg; 2.6 Prowde technical wistance to the targe? NRM site on thc applcebon of d participatory plming and managanent process for the identification and development of protected areas and related coastal M~Cand uplid tipforwtry mtts rdentified for improved land rn~a~e~~~t; 2.7 hvide technical amstance to the LGU in the implementation of pdicies'guidelines on the establishment of uptaitd ago-fnrcsrry, watershed management, maqpw mana~mcnt, coastal m~urcc nuuraycmcnt and protected areas; 2.8 Assist in the review of communrty-based development plans in both upland ap-forestry, coastal and marinc, and protected areas; 29 Providc, share and establiqh information on riplarid agci-forestry, watershed, coastal and marine wsourccs, protected ivea and Mcldiremity. including comlidatrori of prujcc1 maps to the regional base map: 2.111 Pruvide technical assistance in rhe formulation and enactment of environment related 1~31ordirrsnccstpolicieses; 2.1 I Facilitate the processing and issuance of tenuhal instruments requrd fur rhe itnplemalalionof MRDP Subprojects; fp 2.12 Assist in the formulation and execution of infomatron, ducaiirrn, / 1 conrrnunmitioniind advocacy pian: 2.13 Assist En the XRhl capability building interventionof st;rkehotdes; 2.14 Providc tcchnical assistance to LCUs in the in~pl~~~!i~att~rioi environmental-friendly SIC3As and other NRM activities; 2 15 Assist iR c ommunity-hami r source assessment i n \I pland a go-forestry. coastal rnanne and protected arcas; 2.16 Assist in the organization of Bantay GubatjBantay Dagat;
87 WTIVESSES:
88 Republic of the Phihppincs ) Q@W(SU'Ciry )S.S
BEFORE ME, a %o~aryPublic, personally appeared the following penom:
Name CTC No. Place md Datc of liisuc
89 Attachment 3 to Annex 6. Memorandum of Agreement Between DA and NCIP PHILIPPINES: Second Phase of the Mindanao Rural Development Program (APL) Natural Resource Management Project
90 r'eltgiom and cuku7ts, becam lrtrtaiuUy diffmttsted from the mapr8Q of Filipinos.
ICWIPr shrlt &kwhein&& peoples who BFC regadd as rndtgmous on roSrr dCt doffsrr %Ipr tk populatMas which inhgbitcd khe coun~y, rn&~dalmgmtaraOid&a& 01 rt rtuC time of inmads of MN- dil)w w drmr, er th WWrnrnr of' present state [email protected] 01 r10 of titoh own social. rconom1c. culttrnl and political institutions. but who may have been displaced from their rraditional domains, or who may haw rebenled outside of their ancestral domains.
1.2 Ancwtral Doman Sustamahlc Development and I'mtcctton Pian IADSDPP) is a long-lctm plait that erntd~cs goals md uhiectiues. policies md straicgm, pmgrandprojccts of IC 11' for rhr *nstarnble development and mamgement of their ancesrral damems and GI) rcsoiin'cs: therein including hurnm and cultwal rcsutmxs such as their IKSP
I.3 IP Rcvrlopment f'ilm (IPDP) IS a community plan conipurablr to communily deve!oprnmt plm or ADSDPP of ICC.fP in non-anccslrd damatn areas,
1.4 Indigenous Kmwllodge S@cmo arid Practices (IKSF') are sets of" knowledge, innovations, practices, instttutrans, mh-hdnihtirs and tmhnolagics of the [CCllP that evolvedtdcvelopcd ova tmc as they rdacc tu their natural and human erivironrncnt, wiihin or outside thcir ancestral domains. It PISU includes dim1 responses and adnpWc:'coping mcchanims for wi*Lrval.
IS kree, Pnor end hilormed Consent fFPIC) BS the ;I~CCF~,W,C 01 klre IC C li' to paircia. dcx clvpmeni pmgrms and projects to he implcrrrcq:teJ ill :heir carnmumty. whrch IS detemiined in a prwess inrohng the panicipation of the cammuncty and the use of their trdtional Z~~~~L?IICULt?liitding mechanisms wiih duc regard to the protection of their anc~trsldomams, traJitionel kinship of support systmr and IKSP.
Section 2. Objectives
To initiate the process of instittitionatiring thc pmershr;t bct.rwcn tkc D \ and the NCIY in rhc implcnientation of dc\duptiiciit prolccrs In rke cauntrpide,
To spell out the mlcs md responsibilities of rhc DA arid thc NClP ~cll as the systems and procedures to ensurt: that the Indrgcnum Penplca Devclopmrnt Fnmewnrk under MRDP - API, 1 1s propcrlj I. lo set the minimum requirements for carrying nut act;\:t:cs :u prutnntc anti enhance culturally approprtate and cnvirwnmeirtnlt~snimd h~clrltoad and other cnlcrprises in 1P comrnlmitres as descnbcul in 15e If' Ucwiopmcnt Frmework Serdoa 3. Principles of Psrtlretrhip The DA and the NClP agree to dhere to the following princrplcs. ir" 91 Seetion 5. Respoesibitiilcs of the NCIP 92 5.1 52 53 SJ 5.5 5.6 5.7 93 SIGNED 13 THE PWSEPJCL: OF: I ACKNOWLEDGEMENT Republic of the Philippines ) wanCity )S.S BEFORE ME, it Notary Public, personally itppcarcd the following pns: Name crc No. Pla~r:and Date of issue Known to me to be the same persons wlto executed the forrgoing Mcmordtadum of Agmcmcnt arid they have acknowiedged that tke same is their own free will, act and deed as principals that they represent, MY 2 9 2808 WITNESS MY HAND AND SEAL, this day of . 3 WE4 ilt WJ# Mt Philippines. PWW f# PW-' 94 Attachment 4 to Annex 6. Implementation Arrangement PHILIPPINES: Second Phase of the Mindanao Rural Development Program (APL) Natural Resource Management Project Project Operation at the ARMM 1, Because of its unique structure of governance, the MRDP2 and the NRM Component shall adhere to the following institutional arrangements at the ARMM. Figure 3 shows MRDP’s operational structure and implementation arrangements. The Department of Agriculture @A) 2. As executing agency of MRDP-APL2, the DA will provide overall management and supervision to the Program. It will work in close coordination with the Department of Environment and Natural Resources (DENR) and the Bureau of Fisheries & Aquatic Resources (BFAR), the Bureau of Soils and Water Management (BSWM) for the implementation ofthe Natural Resource Management (NRM) Component and GEF activities 3. The Office for Southern Cultural Communities (OSCC) on the other hand will be closely involved in the project implementation to ensure that appropriate safeguards are in place and strictly followed to protect the interest of the IP groups- one of the project’s targeted vulnerable groups. Other agencies would also be involved as members at the Advisory Board and Subproject Appraisal Committee (SAC) as a mechanism for collaboration and complementation. 4. A Memorandum of Agreemenwnderstanding and/or Cooperation between the DAF- ARMM and the partner agencies will be executed to legitimize the partnership cooperation. 5. The MOA/MOU/MOC shall define the specific function of each partner/cooperating agency and the manner of collaboration and complementation between and among partner institutions down to the Barangay Level. The functions shall be agreed upon by the partner/cooperating agencies. The Department of Agriculture and Fisheries-Autonomous Region of Muslim Mindanao OAF-ARMM) 6. Considering the unique government structure of the Autonomous Region of Muslim Mindanao (ARMM), the Program adopted a unique and distinct implementation structure. The overall implementation structure for ARMM is presented below. 7. Implementation at the region will be coordinated by the DAF-ARMM through its Regional. Program Coordination Office (RPCO) with the guidance of the Regional Program Advisory Board (RPAB). The Regional Program Advisory Board (RPAB) 8. The RPAB shall be chaired by the Regional Governor and co-chaired by the Secretary of the Department of Agriculture and Fisheries-Autonomous Region of Muslim Mindanao (DAF-ARMM). The board members include: the Regional Planning and Development 95 Office Director, DENR Secretary, BFAR Director, OSCC Director, NIA Director, Regional Agriculture and Fisheries Council (RAFC), and others. The RPAB shall serve as the Regional Policy-making Body ofthe Program. The Regional Project Coordination Office (RPCO) 9. The RCPO will be organized and shall obtain legal mandate through a Special Order to be issued by the DA Secretary in Manila based on the recommendation of the DAF- ARMM Secretary. The RPCO will report directly to the Undersecretary for Field Operations ofDAF-ARMM The Subproject Appraisal Committee (SAC) 10. There shall be a Regional SAC to be created to review and approve Rural Infiastructure subprojects. The SAC shall be chaired by DAF-ARMM Secretary and co- chaired by the Director of the Regional Planning and Development Office (RPDO). Other members include the Regional Agricultural Engineering Division (RAED) of the DAF- ARMM, Regional Agriculture and Fisheries Council (RAFC), Department of Environment and Natural Resources (DENR), OSCC, and a private sector representative (fiom PICE andor PSAE). The Regional Program Coordination Office shall serve as the secretariat. PPMIU 11. The composition and functions of the PPMIUs in the ARMM will be similar to the PPMIUs in the regular RFUs. An added benefit however is expected because of the presence ofDAF-ARMM Provincial Agricultural Office (PAO) with complete staff that will be tapped in providing technical assistance to the PPMIUs. MPMIU 12. The composition of the MPMIUs in the ARMM will be slightly different with the MPMIUs in the regular RFUs due to the lack of devolved Municipal Agriculturist. The CFAD component head in the ARMM participating municipalities will be the DAF-ARMM paid Municipal Agricultural Officers (MAOs). The Office of the Municipal Agriculturist (OMAO) shall assume an active function on both technical assistance provision and in the implementation of specific interventions under the CFAD component. Relative to MRDP operations, although serving as the CFAD component head, OMAO still maintain a straight line fiom the DAF-ARMM structure. The Project Component and Support Unit 13. The four major components namely: Investment for Governance Reforms (IGR), Community Funds for Agricultural Development (CFAD), Rural Infrastructure (RI), and Natural Resource Management (NRM); and the Support Units namely: Administration and Finance, Monitoring and Evaluation (M&E), Information, Advocacy, Communication and Education (InfoAce), Procurement, and Social and Environmental Safeguards (SES) will be organized at three levels namely RPCO, PPMIU, and MPMIU. 96 MRDP 2 Implementation Arrangements in ARMM Secretary Advisory Board Undersecretary Office ofthe for operation . Secretary I Officeof I DAF ElSPCMAD I SUUUO~ I ...... I I Admin & Finance I I I I I I I I Office of the tPA0 DAF Admrn & Frnance 9- Communities, Peoples' Organizations and Households I Legend: - Supervision ....."._.- Coordination 97 13 I I I 0 m I I! PI m 3 0a a .c-lE 0 W '7 D m5 o 3 a E 4 I II I I II 1 I I I Annex 7: Financial Management and Disbursement Arrangements PHILIPPINES: Second Phase of the Mindanao Rural Development Program (APL) Natural Resource Management Project Executive Summary 1. The Project - The proposed Project shares the same project development objectives with the larger program ofMindanao Rural Development Project 2 (MRDP2). The first CMBC project closed in December 2005, which also supported the Coastal and Marine Biodiversity Conservation component ofMRDP 1. One ofthe components under MRDP 2 is the Natural Resources Management (NRM) which is focused on activities in upland watershed areas as well as land use management, which would impact on agricultural and fisheries productivity in the MRDP 2 sites. The program is supporting sound and sustainable management of natural resources and the conservation ofcoastal resources in priority areas. During the preparation of MRDP 2, there was already a plan to prepare for a GEF grant proposal. The GEF grant resources are expected to complement and scale up the MRDP 2 activities and investments on sustainable land use management in coastal areas of global biodiversity significance. The project development objective reflects the overall program’s purpose of improving incomes and food security. It will specifically aim to: (a) improve livelihood opportunities oftargeted communities; and (b) institutionalize a decentralized system for agriculture and fisheries service delivery that promotes participation, transparency and accountability. The project would have the following global environment objective: critical coastal and marine biodiversity conserved and supported by sustainable land management in linked upland areas. This would be achieved by removing the barriers to mainstreaming marine and coastal biodiversity conservation; through co-management of critical marine habitats; and by the introduction ofimproved, upstream land management practices that would simultaneously arrest land degradation and benefit landholders who are mostly poor farmers, fisher folk, and/or indigenous people. By strengthening the conservation ofimportant coastal and marine ecosystems, several globally significant species would be better protected and the livelihoods of fisher folks would be more secured. In the upland areas, land degradation would be reduced, the forest cover restored and terrestrial biodiversity better conserved while also strengthening the livelihoods that are natural resource-based. 2. Overall Conclusion - During the project preparation for MRDP2 in February 2007, an FM assessment was conducted on the capacity of Department ofAgriculture’s Program Support Office (DA-PSO), Regional Field Units (RFUs) and sampled Local Government Units (LGUs) in relation to the project implementation and structure. Based on the previous FM assessment done, the DA’s FM system need to be improved in the following areas: (i) fund management; (ii)reconciliation ofthe General and Subsidiary ledgers; (iii) reconciliation ofasset physical existence against recorded accountabilities; (iv) timely submission offinancial reports; (v) adequacy ofFM staffing; and (vi) internal audit function. The FM arrangements for MRDP2 have addressed the aforementioned deficiencies and met the Bank’s minimum requirements. 3. The FM implementation review for MRDP2 in February 2009 rated the financial management performance ofthe project as moderately satisfactory. DA has no outstanding financial reports due under the MRDP2 project. 103 4. In July 2008, an update ofthe financial management assessment was carried out at the DA, DA-PSO, selected LGU’s and Peoples’ Organization (PO) in accordance with the Financial Management Practices in World-Bank-Financed Investment Operations issued by the Financial Management Sector Board on November 3,2005. The purpose ofthe review is to ensure that there are in place adequate financial management arrangements for the proposed Natural Resource Management Project (NRMP or the Project) at DA and DA- PSO that satisfies the Bank’s OP/BP10.02. Under OP/BP 10.02, the Bank requires the recipient and all its implementing units to maintain financial management arrangements (budgeting, accounting, internal control, funds flow, financial reporting, and auditing arrangements) that are acceptable to the Bank and that will provide reasonable assurance that the proceeds ofthe grant are used for the purposes intended. 5. On the overall, the financial management system ofDA will meet the financial management requirements as stipulated in OP/BP 10.02 subject to implementation ofagreed actions and mitigating measures. Weaknesses were noted at DA based on the 2007 audited financial statements of DA such as the following among others: (a) non-compliance with prescribed internal control policies and procedures; (b) inadequate staff at the Central Office to handle FM requirements; and (c) delays in consolidation of accounts. At DA-PSO, recent implementation review ofMRDP2 disclosed certain areas requiring improvement such as the following among others: (a) prompt submission by POs to LGUs ofthe report on utilization of funds; and (b) monitoring by POs oftheir counterpart contribution. The LGUs and the POs, who will implement the Sustainable Income Generating Activities (SIGA) and On- Ground Investments under the Project, generally have low FM capacity. 6. The assessed financial management risk ofthe Project before the mitigating measures is considered substantial due to the factors discussed in the preceding paragraphs. An additional factor that puts the project at substantial risk is the security issue due to the peace and order situation in Mindanao where the eleven sites are all located including two areas in Autonomous Region of Muslim Mindanao (ARMM). There is the likelihood that Bank staff or consultants could not conduct implementation review visits on regular basis in some of these areas due to security issues and thus, the Bank staff and consultants may not be able to physically verify that funds were used for the intended purpose. The residual risk would be moderate after the proposed mitigating measures discussed herein are implemented and have shown effective impact. In addition, the DA-PSO staff are already experienced in implementing Bank-assisted project gained from MRDP 1, which did not have any major FM issues. 7. Mitigating Measures - The mitigating measures that DA has committed to undertake or has undertaken to reduce the financial management risks described above are as follows: (a) The financial management and disbursement arrangements shall follow the established procedures in the implementation of the MRDP2, wherein project management is lodged under DA PSO. (b) DA PSO shall conduct training and orientation to the LGUs and POs on FM including internal controls and on the FM arrangements of the Grant to increase the FM capacity of the beneficiaries, before funds are released to the LGUsPOs and supervise and monitor during project implementation. (c) DA PSO and the LGUs shall maintain separate books of accounts for the project and sub-projects, respectively, in accordance with the generally accepted accounting principles. 104 (d) DA regional offices, LGUs and POs shall maintain a project peso account in a commercial bank acceptable to the Bank, where the funds released from the Designated Account, the MRDP 2 and LGU counterpart fund shall be credited and payments to suppliers shall be disbursed. Subsidiary ledgers shall be maintained to account the receipts and disbursements of each fund source. (e) The project shall be included in the scope of work of the DA internal audit services unit with a report submitted to the Bank 60 days after the end of each calendar semester. (0 Annual audited project financial statements shall be submitted to the Bank no later than 6 months after the end of each calendar semester. (g) Unaudited interim financial report (IFR) shall be submitted quarterly no later than 45 days after the end of each calendar quarter. (h) LGUs shall submit to the DA PSO annual audited sub-project financial statements together with the auditors’ management letter. Risk Analysis 8. A summary ofthe financial management assessment risk ratings is provided in the table below. The overall FM risk of the project is substantial while residual risk is moderate. The detailed discussion of each subject immediately follows hereunder. Condition of Negotiations, :ategory of Risk Risk tisks Mitigating Measures In Place or to be lesidual Board of (Issues/Factors) tating Adopted Risk Effectiveness WIN?) Inherent risk H Countrv level H 1. Strengthening of the internal audit N 1. Perceived high functions in government agencies is currently corruption in the in progress. country N 2. The procurement law and its implementing 2. Weak internal rules and regulations have been passed and controls/weak or already implemented by all units of lack ofinternal government. An empowered Government audit function in Procurement Policy Board (GPPB) has been government units established and is now overseeing implementation to make sure that the transparency, efficiency, economy and N accountability principles of the law are carried out. 3. The Bank has initiated addressing this through its Grant on Strengthening the Internal Audit (IA) with the Philippine Anti Graft Commission as its implementing entity. A Generic Internal Audit Manual aligned with international standards has been 105 Condition of Negotiations, zategory of Risk Risk Lisks Mitigating Measures In Place or to be .esidual Board of (Issues/Factors) lating Adopted Risk Effectiveness NIN?) leveloped through the IDF Grant. Please see [A arrangement for the Project. Imdementing Entity S M 1. Weak 1. Greater emphasis on capacity building for N institutional LGUs and POs. N capacity at the 2. The project including the LGUs and POs level ofLGUs shall be covered by the Internal Audit and POs Service Group at the DA Central Office. including Scope ofthe review of Internal Audit Service N ARMM. should be extensive incARMM areas. 3. DA PSO FM shall monitor and coordinate the FM compliance by the LGUs under the project . Proi ect H S 1. Implementing 1. RFU and LGU project staff will be N entities involved working with DA PSO office to ensure that located in proper communication, consolidation of Mindanao accounts and reporting of expenditures and where there is progress is in place. DA PSO project staff always issue on (including FM) will be supervising the peace and order LGU’sPOs concerned including periodic N posing security visits. risk. 2. The project including the sub-grantees rhall be covered by the Internal Audit Service Grow ofthe DA Central Office. Control risks a. Budget To reduce delays in release of funds, close M N :oordination with the Central Bank, Bureau Delayed release ifTreasury and Department ofBudget and of grant. Management should be done by DA PSO. b. Accounting Inadequate FM The FM shall be handled by DA PSO FM M N staffing at DA staff based in Davao who also handles the Central Office FM for MRDP2. Subprojects will be handled )y the respective FM staff at the RFU, LGUs ind POs. d. Internal M Contro1 s I. Replicate the FM arrangements of N Weak internal vIRDP2 including its internal control 106 Condition of Negotiations, 3ategory of Risk Risk Ysks Mitigating Measures In Place or to be Lesidual Board of (Issues/Factors) tating Adopted Risk Effectiveness (Y/N?) controls at LGUs policies and procedures as documented in the N and POs and Natural Resource Management (NRM) report on non- Operations Manual. compliance with 2. DA PSO to provide trainings to LGUs and internal controls POs with emphasis on internal controls to N in the DA’s 2007 increase their financial management audited fmancial capacity. statements. 3. DA PSO FM staff to conduct periodic field visits to LGUs and POs to review and monitor sub-project FM implementation, including review of disbursement documents. Document results ofvisits with N back to office report submitted to LGUs visited and DA PSO manager, DA IAS and make them to the Bank during implementation review missions. 4. The DA internal audit services shall include the project in its scope ofwork, which shall be conducted semi-annually with report submitted to the Bank 60 days after the end of each calendar semester together with the report on MRDP 2. e. Financial S 1. RFUs/LGUs/POs shall submit quarterly M N reporting [FRs 30 days after the end ofeach calendar quarter to give ample time for DA PSO FM to consolidate and submit to the Bank 45 Delayed days after the end of each calendar quarter. N reporting and The IFR format shall follow the IFR format consolidation of 3fMRDP 2. reports. 2. LGUs shall submit annual audited Financial statements (Statement of Sources md Uses of Funds) within four months after :he end of each fiscal year to allow ample :ime for DA PSO to consolidate. g. Funds Flow S M Delays in release 1. Close monitoring by DA PSO FM of N offunds due to -eport submission by RFUsl delayed LGUdPOs. submission of reports S I.Orientatiodtraining of DA PSO to the M N 107 Condition of Negotiations, :ategory of Risk Risk tisks Mitigating Measures In Place or to be esidual Board of (Issues/Factors) Lating Adopted Risk Effectiveness (Y/N?) h. External Audit LGUsPOs auditorshepresentatives should Auditors from include the COA auditors to ensure that they Commission on become familiar with the FM arrangements Audit (COA) and other provisions ofthe grant agreement assigned may not and the project appraisal document. be familiar with the Bank policies and procedures and the provisions ofthe grant agreement. ~ Overallcontrol 1 S M M Rating Risk Rating: H (High Risk), S (Substantial Risk), M (Modest Risk), N (Negligible or Low Risk) 9. Strengths and Weaknesses - The significant strength of the DA PSO is the knowledge and experience ofthe MRDP2 staff from the MRDP 1. The FM system from MRDP1 operation that has been found to be adequate shall be used for the Project. 10. The significant weaknesses and the corresponding corrective actions and mitigating measures are discussed under the risk analysis table above. Financial Management Arrangements 11. FM organization and staffing - The Financial Management arrangements for the Project shall mainly be implemented through the Financial Management function at the DA PSO ofMRDP2 based in Davao City. The DA PSO is the main implementation support for the project. The DA PSO is under the Special Projects Coordination Management and Assistance Division (SPCMAD) ofDA which in turn reports to the Undersecretary for Operations. The DA PSO FM staffs have gained their experience from MRDP1 under the Program Coordination Office (PCO). The FM functions ofthe sub-projects at the RFU and LGU shall be handled by their respective FM staffs. 12. Planning and Budget - Annual work and financial plan shall be prepared promptly so that request for the release ofthe automatic Special Allotment Release Order (SARO) from the Department ofBudget and Management can be made. 13. Accounting - The books ofaccounts ofthe project at DA PSO shall be maintained using NGAS chart of accounts. RFUs, LGU, and POs will maintain separate books of 108 accounts for the sub-projects and submit unaudited IFR to DA PSO 30 days after the end of each quarter. 14. Internal Controls/Internal Audit - The project shall follow the internal controls policies and procedures found in the NGAS, Government Audit and Accounting Manual (GAAM), COA and DBM memoranda and circulars, other laws and regulations. In addition, the following requirements shall be implemented for the project: (a) Approval of financial transactions shall be under the Project Director or his designee together with the FM Head and thereafter follow the DA’s cash disbursement procedures. (b) Separate books of accounts and subsidiary ledgers shall be used with periodic reconciliations. (c) Designated Account shall be maintained for the project where all grant proceeds released from the Bank are credited. Regional offices and LGUsPOs shall maintain project bank account for the grant funds and counterpart funds and maintain subsidiary records to account the receipts and disbursements for each funding source. (d) Copy of bank reconciliation statements as of quarter end shall be included in the submission ofthe IFR to the DA PSO by the LGUs. (e) Annual physical inventory count of project fixed assets and inventories shall be conducted and results reconciled against the accounting and property management records. Copy of the results of the count and the reconciliation shall form part of the 4‘h quarter IFR to be submitted to the Bank. (f) The project shall be included in the scope of work of the DA IAS with copy ofreport submitted to the Bank within 60 days after the end of each calendar semester. First report to cover the calendar semester ending December 3 1,2009. 15. Funds FlowDisbursernent Arrangements - The funds ofthe Project come from the grant proceeds, MRDP2 and LGU counterpart. The general funds flow for the Project will follow the arrangement under the NRM Component of MRDP2. In general, the funds flow of the GEF Grant shall follow the procedure where fund releases from the World Bank are transferred to the Bureau ofTreasury’s account at the Bangko Sentral ng Pilipinas (Central Bank ofthe Philippines). After approval by the Department ofBudget and Management (DBM), through the issuance ofa Notice ofCash Allotment (NCA), funds flow to the DA PSO’s CMBC Designated Account maintained in a commercial bank acceptable to the Bank. A project Peso account shall also be opened at the DA PSO to pay for Peso based expenditures. Funds flow for each component shall be as follows: (a) Components I, 4, 5 and continuing soft investments for CMBC-I sites - Transfer of funds to Regional Project Control Office (RPCOs) shall be based on the agreed annual program contracts with MRDP 2 for this Project. (b) Component 2, funds for On-Ground Investments (OGI) - Funds will be released to LGUs while the capacity building interventions to RPCOs based on a signed and notarized program contract. (c) Component 3 (SIGA) - Funds shall be released to the LGUs based on approved program contract (by tranches). 16. For funds in these components, the RPCO shall submit report of fund utilization on a monthly basis to DA PSO using the Statement of Expenditures (SOE) while the LGUs will submit monthly Statement ofReceipts and Disbursements covering all sources of funds. 109 17. Below is the graphical flow of funds for the GEF grant: c------I I I I I I Central Bank I I ~ I I I DA - Program I Support Office + ------1 + ------I 110 18. The Project shall be disbursed over a period offour years as a GEF Grant in the amount ofUS$6.351 million. The disbursements ofthe grant shall be in accordance with the Financial Plan for the project for the following categories (in US$ million): Amount of Grant % of Expenditures Cateeorv (Expressed in Dollars) to be Financed 1. Goods 423,000 100 2. Consultants’ services 292,000 100 3. Trainings and 1,309,000 100 Workshops 4. OGI Sub-Grants 2,246,000 100% ofthe amount disbursed 5. SIGA Sub-grants 1,663,000 100% ofthe amount disbursed 6. Incremental Operating 418,000 100 costs TOTAL 6,351,000 19. PSO shall open and maintain a Designated Account (DA) in US Dollars in a commercial bank acceptable to the Bank with a maximum allocation of US$ 600,000. Should the DA become insufficient for the operations of the Project, a request with justification for an increase may be done. 20. Disbursement for the project shall be through the use ofa summary report in the form of Statement ofExpenditures. 21. Financial Reporting - The project financial reports to be submitted to the Bank are as follows: (a) Unaudited Interim Financial Reports (IFRs) within 45 days after the end of each calendar quarter, which shall consist ofthe following: (i)financial reports consisting ofstatement of financial position, statement of sources and uses of funds covering all sources of funds and copy (for the quarter and cumulative fkom project start and showing actual against planned), bank reconciliation statements and copy ofthe results ofthe annual physical count of fixed assets and inventories. The 4* quarter IFR to include the reconciliation ofphysical count against the accounting and property asset records; (ii)physical progress reports; and (iii)procurement status report. The format ofthe IFR shall follow that of the MRDP 2. (b) Annual audited project financial statements, which shall consist of the statement of financial position, a statement offinancial performance, a statement ofchanges in net equity, and a cash flow statement together with copy ofmanagement letter reflecting the auditor’s findings and recommendations, shall be submitted to the Bank no later than 6 months after the end of each fiscal year. The auditor for this project is COA. (c) Internal audit review report of the project 60 days after the end of each calendar semester. 111 22. External Audit - The external audit arrangements shall be in accordance with the Bank’s policies on audits ofProjects, and based on terms ofreference acceptable to the Bank. COA is the external auditor ofDA’s financial reports. This supreme audit institution is an independent office which was given the mandate under the Philippine Constitution to audit all accounts pertaining to all government revenues and expenditures and uses of government resources. Financial Covenants 23. Implementation Arrangements (a) The project shall be subject to a semi annual review by the IAS of DA and a copy of its report submitted to the Bank within 60 days after the end ofeach calendar semester starting from the semester ending December 3 1,2009. (b) Separate books ofaccounts shall be maintained for the project in accordance with generally accepted accounting principles. (c) The unaudited IFRs shall be submitted to the Bank on a quarterly basis no later than 45 days after the end of each calendar quarter. (d) Annual audited project financial statements, which shall consist of the statement of financial position, a statement of financial performance, a statement of changes in net equity, and a cash flow statement together with copy ofmanagement letter reflecting the auditor’s findings and recommendations, shall be submitted to the Bank no later than 6 months after the end of each fiscal year. The auditor for this project is COA. 24. Supervision Plan - The frequency ofthe FM supervision will be in line with the FM Manual and EAP FM regional guidelines and is dependent on the FM risk rating ofthis project in any given year during project implementation. The scope of the supervision is left to the professional judgment ofthe FM specialist. It may cover any ofthe following, among others: (1) review of the continuous maintenance of adequate FM system by DA PSO; (2) review ofselected transactions, where deemed necessary and visits to selected LGUs and POs; (3) review and discussion ofthe internal audit reports, and POs and LGUs interim financial reports; (4) follow up oftimeliness ofFM reporting and actions taken on issues raised by external auditors; (5) review of financials reports ofthe project; (6) follow up of the status ofthe agreed actions; and (7) review ofcompliance with the financial covenants. In addition, the FM implementation review should include desk review ofthe quarterly IFRs, internal audit reports, and audited financial statements and management letter submitted to the Bank. 112 Annex 8: Procurement Arrangements PHILIPPINES: Second Phase of the Mindanao Rural Development Program (APL) Natural Resource Management Project A. General 1. Procurement for the proposed project would be carried out in accordance with the World Bank’s “Guidelines: Procurement under IBRD Loans and IDA Credits” dated May 2004 revised October 2006, and “Guidelines: Selection and Employment of Consultants by World Bank Borrowers” dated May 2004 revised October 2006, and the provisions stipulated in the Legal Agreement. While the new Philippine Procurement Law (RA 9 184) is sufficiently in harmony with the Guidelines at the NCB level, the Procurement Schedule of the Grant Agreement will include an annex detailing the procedures under the national law that are not acceptable to the Bank. Other than that, NCB procurement will be carried out in accordance with the country’s law. The general description ofvarious items under different expenditure categories for the first 18 months are described below and summarized in the attached Procurement Plan. For each contract to be financed by the Trust Fund, the different procurement methods, estimated costs, prior review requirements, and time frame are agreed between the Borrower and the Bank task team in the Procurement Plan. The Procurement Plan will be a rolling plan that will be updated at least annually or as required to reflect the actual project implementation needs and improvements in the institutional capacity ofthe implementing units. 2. Procurement of Goods. Goods procured under this project would include transportation (pick-up trucks, boats, motorcycles, etc.), monitoring (GIS/GPS, radios, telescopes, diving gears, cameras, etc.) and ICT (computers and peripherals, LCD, TV/DVD sets, etc.) and office equipment. The procurement for contracts costing US$500,000 or more will be done through international competitive bidding (ICB) using the Bank’s Standard Bidding Document (SBD). is Contracts estimated to cost US$50,000 and up to less than US$500,000 will be procured following national competitive bidding (NCB) procedures using the Philippine Bidding Document (PBD) as harmonized with the Bank. Procurement for off-the-shelf goods and small value contracts costing below US$50,000 will be awarded based on shopping procedures, by comparing price quotations obtained from several suppliers, usually at least three, as defined in Para. 3.5 ofthe Guidelines. Note the arrangements described in paragraph 4 below for community based contracting. 3. Selection of Consultants. Consultancy services to support technical assistance in the areas ofnatural resource management, social and institutional development, and sustainable income generation activities to build capacity ofkey personnel in the regional offices to implement and manage these activities will be financed under the program. Quality and cost based selection (QCBS) procedures will be followed in the hiring ofconsulting fmswith contracts estimated to cost the equivalent ofUS$lOO,OOO or more. Contracts estimated to cost less than US$lOO,OOO equivalent may be procured through selection based on consultants’ qualifications (CQ), fixed budget selection (FBS), quality based selection (QBS) or least cost selection (LCS). Consultancy Services valued at less than US$20,000 per contract to be provided by accredited NGOs (maximum ofUS$50,000 per NGO) for small assignments or assignments in remote areas would be procured through single source selection. It includes assignments in connection with community organizing and preparation of sub-project proposals. Government research and training institutions with exceptional expertise for assignments related to social assessment and monitoring and evaluation may also be tapped 113 under the program. Individual Consultants necessary to support the program, meeting the requirements set forth in Section 5 ofthe Consultant Guidelines, will be selected under contracts awarded on the basis of competition in accordance with the provisions ofthe Consultant Guidelines. 4. Natural Resource Management (NRM) Sub-Grants. A broad spectrum of activities to be undertaken with the direct participation and involvement ofthe LGUs and community- beneficiaries will be financed by the project through sub-grants. Procurement would include rehabilitation ofmangrove plantation, establishment offish sanctuaries, agro-forestry and forest plantation, and stabilization of stream banks, etc. An Operations Manual for NRM has been prepared to incorporate lessons learned under CMBC 1 and innovations to make the NRM Component more operationally functional to the intended beneficiaries. A dedicated section in the Operations Manual provides the procedures and processes involved in the procurement operations for the sub-grants. Procurement methodologies would involve shopping, community force account and direct contracting of small value contracts amounting to less than US$20,000 per contract up to a maximum ofUS$50,000 per NGO/PO. 5. Trainings and Workshops. Training and workshops, including related expenditures for travel and accommodation, fees and materials, related to the project operations based on annual training procurement plan will be procured in accordance with existing government prescribed procedures and limits which are acceptable to the Bank. 6. Incremental Operating Cost (IOC). Activities relating to managing the project, including staff travel and office utilities and supporting the project operations based on annual IOC procurement plan will be provided in accordance with existing government prescribed limits and procedures acceptable to the Bank. B. Assessment of the agency’s capacity to implement procurement 7. Procurement activities will be carried out by the Department ofAgriculture’s Regional Field Units (RFU’s) and Project Support Office (PSO), and the participating local government units (LGU’s). Each ofthe project’s components including the NRM has an operations manual in which procurement aspects are covered to mainstream procurement process in the project operations. The procurement chapterdsections in the different components’ manuals formed part ofthe consolidated procurement manual. 8. The assessment is based on the findings ofthe recently approved MRDP2 loan (in May 2007) and actual experiences from the World Bank-assisted MRDP1 and CMBC1. A number ofthe implementing units are already familiar with the relevant procurement guidelines for the project. The Procurement Specialist made an assessment with the participation ofDA and LGU staff ofthe capacity ofthe implementing agencies to undertake procurement activities for the project. The assessment reviewed the organizational structure for implementing the project and the interaction among the project’s staff responsible for procurement. The assessment took into consideration various studies, including the Country Procurement Assessment Report (CPAR) and the baseline indicator system (BIS) assessment in which an independent consultant determined that the country, in general, was substantially achieving the desirable standards for reliance on its public procurement system. Based on the sampled LGU’s and RFU’s procurement performance indicators, adopted and customized from the DAC/OECD developed indicators, the implementing agencies have been diagnosed 114 as generally acceptable in adopting the country system for its procurement undertakings. The implementing agencies have greatly benefited fi-om the procurement and implementation reforms initiated under previous Bank- financed activities in MRDP1 and CMBC1 , and the on-going government procurement reform programs. Appropriate trainings have been provided to the LGU’s in relation to the new procurement law (RA 9184), and its implementing rules and regulations, and the use ofPhilippine Bidding Documents. 9. Issues/risks concerning the procurement aspects for implementation ofthe project have been identified, and these include lack ofcapacity ofRFUs to undertake the oversight and supporting roles to LGUs, inadequate capacity ofPSO to provide technical assistance to RFUs, procurement planning of LGUs is weak, and unclear project procurement process. The corrective measures which have been agreed upon and initiated include: designation of procurement coordinatorshpecialists in the RFUs and in the PSO; capacity building in the areas ofprocurement planning and monitoring, and bid evaluation; finalization ofthe consolidated procurement manual. While PSO staff have experienced procurement operations for this type ofproject under MRDP1 and CMBC1, there is still a need to augment its procurement capacity due to the number of LGUs now involved in the second phase ofthe main loan program and the technical assistance it will extend to the RFUs who will be the main oversight and support unit in the regions, and who will review the LGU procurement actions. A training oftrainors has been conducted in June 2006 to ensure appropriate capacities are present in the regions. This training and knowledge have been cascaded to the participating LGUs by the regional trainors. Follow up procurement training courses are planned during May to June 2009 prior to actual start ofgrant. The overall project risk for procurement is moderate. C. Procurement plan 10. The DA developed a Procurement Plan for the first 18 months ofproject ‘implementation, which provides the basis for the procurement methods. The Borrower and the Project Team both agreed upon this plan in September 2008, however an updated procurement plan will be submitted by April 2009; it will be available at PSO and DA website. It will also be available on the Bank’s external website. The Procurement Plan will be updated in agreement with the Project Team annually or as required to reflect the actual project implementation needs and improvements in institutional capacity. D. Frequency of procurement supervision 11. Based on the’overall risk assessment, twice a year field supervision missions including post review ofprocurement action is to be implemented in addition to the prior review to be carried out from the Bank’s Manila office. With respect to each contract not subject to prior review, the procedures set forth in paragraph 4 ofAppendix 1 to the Procurement and Consultant Guidelines will apply at an initial ratio ofnot less than one (1) in five (5) contracts. This ratio may be adjusted based on the performance ofthe implementing units. 12. Prior Review Thresholds: (4 The first contract for goods per region per year, and subsequent contracts estimated to cost US$300,000 and above per contract will be subject to prior review by the Bank. 115 (b) The first consultancy contract to be awarded following a particular selection method, and subsequent contracts estimated to cost US$100,000 and above for fm will be subject to prior review by the Bank. (c) All contracts for consultants’ services procured on the basis of Single Source Selection, regardless of contract value. (d) Shortlists ofconsultants for services estimated to cost less than US$200,000 equivalent per contract may be composed entirely ofnational consultants in accordance with the provisions of paragraph 2.7 ofthe Consultant Guidelines. All other contracts shall be subject to Post Review by the World Bank 116 Annex 9: Economic and Financial Analysis PHILIPPINES: Second Phase of the Mindanao Rural Development Program (APL) Natural Resource Management Project Overview 1. The financial benefits of the individual subprojects are generally derived from the revenues of the Sustainable Income Generating Activities (SIGA) and On-Ground Investments for coastal and upland sites with globally significant biodiversity. The GEF- funded economic activities, particularly the SIGA will be implemented using the processes being applied to the Community Fund for Agricultural Development Fund (CFAD) a component of MRDP2 (financed under the loan proceeds component) but the only difference is that the target beneficiaries are those inhabiting areas of global environmental significance. The on-ground investments for coastaVmarine and sustainable land management practices, on the other hand, are also aimed at reducing poverty condition ofthe target communities but the return of the investment takes longer compared to that of the SIGA because of the nature of the commodities (i.e. long gestating agriculture and forest crops and coastal marine resources) involved. 2. Both the SIGA and on-ground investments are strategic mechanisms to divert current environmental malpractices to protect and conserve the ecosystem’s global environmental significance, i.e. to provide stakeholders with options for more sustainable land and natural resource use that will effectively deliver them with sustained income. Moreover, these economic activities possess financial viability, social acceptability, and environmental soundness. By providing these to key stakeholders, environmental hazards shall be avoided and environmental losses are minimized. Essentially, agricultural productivity is enhanced. Sustainable Income Generating Activities (SIGA) 3. The SIGA is aimed at addressing the need for sustaining the integrity of the environment and natural resources within the MRDP2 key GEF sites both for the upland and the coastal ecosystems with global significance. Implementation of the SIGA in the selected sites shall be carefully planned in such a way that the mix of individual subprojects in the area will not only ensure positive cash flows but also ensure the health (e.g. prevention of possible epidemics) of the communities implementing these subprojects. The enterprise development plan (EDP) that will be crafted by the different stakeholders involved for each selected site shall ensure that all aspects (Le. human and physical environment) of development be addressed. 4. The table in the succeeding page show the sites identified to avail of the GEF grant and the SIGA selected (by the communities) for each site. Various SIGA subprojects have been identified and for the purpose of calculating the financial costs and returns, three subprojects per site were subjected to analysis and results are provided in Table 1 which follows. 117 Table 1. Financial Cost and Returns Per Site-Selected SIGAs Average Annual Net Benefits (PhP) 25,500 93,619 62.505 93,619 33,320 168,000 93,619 148,220 93,619 62,505 47,229 168.000 167,001 25,500 93,619 168,000 93,619 33,320 168.000 93,619 168,000 23,742 50,304 118 Total Average I Average Average SiteISIGA Capital Annual Annual Cost Annual Net Investment Benefits (PhP) Marihatag,- Surigao del Sur I Fish Culture in Cages Coastal 157,600 50,304 ~ I Seaweeds Farming Coastal I 168.882 93,619 Nina Shingles Coastal I 408.000 168.000 San Agustin, Surigao del Sur Crab Fattening Coastal 132,8 19 168,000 Salted Fish Drying Coastal 33,509 148,220 Fish Culture in Cages 4Coastal 157,600 50,304 Production Scale Per Number of SiteISIGA Tme Year Households Unit Value Datu Blah Sinsuat, Shariff Kabunsuan Goat Raising Heads 5 80 119 6. Shown below are the economic and financial indicators showing viability of each SIGA to be implemented in 11 GEF sites. It is important to note that the analysis shown in Table 3 are very site specific and has taken into consideration the variables presented in Table 2. These individual SIGAs are found financially viable, as well as socio-economically and environmentally sound. Table 3. Financial and Economic Indicators of Site-Selected SIGAs 120 Financial Economic Site/SIGA NPV I Y Salted Fish Drying 149,761 35% 1.12 423,869 82% 1.66 Fish Culture in Cages 34,353 25% 1.12 73,058 37% 1.28 Summary of Financial and Economic Analysis of SIGA Activities and Respective Enterprise Development Plans 7. Financial feasibility analysis is undertaken to determine if the cash flow gains from a particular development project are greater than the cash outflows associated with it. It is used to assess, on a net benefit basis, whether the project will provide positive return to investors and/or peoples’ organizations. 8. The financial feasibility is undertaken from the perspective of the barangay. Only the revenues and cost streams attributable to the proposed SIGAs are included in the financial feasibility analysis. The discount rate used to account for the time value of money, is assumed to be 15%. 9. Financial viability indicators will provide evidences of each of the SIGA’s financial attractiveness from the stand-point of the barangay and/or the people’s organization. The following financial viability indicators were used in this analysis: Net Present Value (NPV), Internal Rate of Return (IRR), and Benefit-Cost Ratio (BCR). 121 10. The net present value (NPV) is the annualized summation of net benefits less costs for the whole project duration. A positive value would mean that a proposed sub-project is financially viable while a negative value would mean otherwise. 11. Another indicator that can be used to determine financial viability of a project is the benefit-cost ratio (BCR). BCR is the value of a project’s present value benefits over its present value of costs. A BCR greater than one (1.0) would indicate financial viability of a project while a value less than one (1 .O) would mean otherwise. 12. The Internal Rate of Return (IRR) can also be used to determine a project’s financial viability. If an IRR of a particular intervention is greater than the hurdle rate (assumed to equal 15%), it would mean that the project is financially viable. The IRR value also provides insight on the project’s relative efficiency in utilizing resources. Modular Financial and Economic analysis of SIGAs 13. Reflected in Table 4 is the summary of financial and economic indicators for each type of enterprise module. Apparently, tilapia production is potentially the most financially viable enterprise with 61% IRR resulting to an NPV estimate of PhpO.O63M, followed by cassava production (59%), seaweeds farming and crab fattening, both with IRR of 53%. The rest of the SIGA modules are still financially viable which ranges from 21 to 42 percent FIRR. Table 4. Financial and Economic Indicators of Modular SIGA 14. In terms of resource-use productivity, salted fish drying ranked first with an estimated ERR of 82%. It is followed by cassava production (ERR of 72%), tilapia production (EIRR of 65%) and crab fattening (EIRR of 61%), respectively. The remaining SIGA modules are likewise economically viable, given that the hurdle rate equals 15% per year. 122 15. Overall computed financial internal rate of return for the SIGA investments is 33 percent while the economic IRR is 45 percent. Benefits from SIGAs will be accrued to the households even during the investment year as SIGAs only require shorter investment period. Selected On-Ground Investments for CoastaVMarine and Sustainable Land Management Practices and their Financial and Economic Viability 16. Similar to the NRM subprojects financed under the loan component of MRDP2, the returns of investments (revenues) are only realized after the life of the Project. The subprojects will continue to address needs for environmentally sustainable revenue- generating activities in targeted poor communities inhabiting the uplandlowland and coastal/marine areas ofrural Mindanao. The On-Ground Investments for 11 NRM-GEF sites will not only augment the income of the communities and household savings but they will also have investments for other environment-liiendly economic enterprises. 17. The table in the succeeding page shows the type of investmentshbprojects for the upland and coastal ecosystems covered by GEF for MRDP2. Also indicated in the table are the physical targets, number ofparticipating barangays and unit cost involved per subproject. Table 5. OGI Development Cost per Unit, Physical Targets and Participating Barangays ~ Development Physical No. of Cost in Php Target Participating Intervention/Subprojects Million Barangays Fish Sanctuary Establishment 27,272 779.2 37 ha Mangrove Rehabilitation 15,450 515 ha 31 Reforestation 4,680 180 ha 8 Riverbank Protection 3,087 123.50 17 km Agroforestry 32,400 1,080 ha 41 Intervention/Subprojects Financial Economic Internal Internal Rate of Rates of Return Return (%) (%) Mangrove Rehabilitation 16.91 22.21 Riverbank Protection - Bamboo 16.59 ' 20.64 Based Agroforestry - Mango Based 33.54 36.37 Agroforestry - Durian Based 36.01 40.98 Agroforestry - Rubber Based 29.47 34.48 TOTAL 35.07 39.45 19. On the average, the return of investment for the OGIs is in the 4th year from the investment year. Per result of the financial analysis computation, agroforestry yielded the 123 highest financial internal rates of return, followed by the riverbank protectiodstabilization and mangrove rehabilitation, respectively. The same ranking is observed in the economic viability computations for the said OGIs. 20. Overall financial IRR for OGI investments is 35.07 percent while the overall economic IRR is 39 percent. This indicates that these investments will not only improve the environmental condition of the GEF sites but these investments will also improve the poverty situation of the households. Overall Financial and Economic Viability 21. Period of Analysis. Since (NRMP includes the OGI investments of which the benefits (economic revenues) only starts coming in the 5'h year onwards, the longest economic lifespan used in the analysis was 20 years while SIGA economic lifespan used was 5 years. 22. Prices. Financial prices were converted to economic prices using appropriate methodologies and conversion factors. Shadow exchange rate (SER) factor of 1.2 for traded components and a shadow wage rate (SWR) of 0.6 for unskilled labor were applied, consistent with the National Economic and Development Authority - Investment Coordination Committee (NEDA-ICC) standards. Moreover, prices were expressed in current year level. A simulation of the effect ofprice changes and change in benefits was imputed in the sensitivity (or value switch) analysis. 23. Ouantified Benefits. As earlier discussed in this section, revenues from the OGI and SIGA investment were the sole sources of benefits for the Proejct. Generally, the high rates of return (IRRs) of the individual subprojects both for the SIGA and OGI reveal that the Project is financially and economically viable and will, therefore, increase incomes of the target communities. The stream of benefits starts on the second year and fourth year for SIGAs and OGIs, respectively. 24. Non-Ouantified Benefits. The success ofthe Project does not only lie on the capacity of the LGUs andor communities in providing for the required share in capital investment and operating/maintenance fund but also for the extension and market linkage support from the government line agencies and non-government organizations operating in the selected GEF areas. Replicability and sustainability of these economic activities will depend on the sense of ownership ofthe communities and their desire to improve andpresewe the biodiversity. 25. Institutional development and capability building inputs that will be provided by the Project are the non-quantified direct benefits. These inputs will empower the communities so that they can be economically self-reliant in the long run and at the same time consciously aware of their responsibility of keeping their land and water resources healthy and sustainable. 26. Overall Proiect Viabilitv, Similar to the main Project (MRDP2), the NRMP Project is not an income-generating so only the economic cost-benefit analysis was applied to the overall CMBC viability computation. The result of said analysis indicates that the Project is viable with an overall internal rate ofreturn (EIRR) of 17.55 percent, with a net present value (NPV) of Php89.77M (or US$2,24M) and benefit-cost ratio (BCR) of 1.3. 124 Type of Subproject NPV at 15% Economic Benefit-Cost Discount Rate Internal rate of Ratio Return (%) S IGA Php1.66 M 45.45 7.3: 1.oo US$O .42M OGI Php326M US$S.lS M 33.45 1.27: 1.OO Overall Rate) Php89.77M US$2.24M 17.55 1.30: 1.00 27. Sensitivitv Analvsis. Using the switching values method, the analysis indicated that the Project grant assistance is viable and not sensitive to increases in costs and decreases in benefits even up to a combined level of30 percent increase in cost and 30 percent decrease in benefits. Fiscal Analysis 28. Co-financing by the participating local government units (LGUs) and the main Project (MRDP-APL2) will be critical to the smooth implementation of the component activities. For GEF specifically, the implementation of the SIGAs and OGIs which amounts to an LGU counterpart of roughly Php25M (USS0.634M) will be realized if the participating LGUs, as well as the communities, will make the required financial resource available. Moreover,, the beneficiary LGU andor community will likewise ensure that they have the fund to sustain the activities in the selected 11 sites. 29. Corollary to the GEF is the IBRD-financed activities, ofwhich LGU cost-share is also required for the implementation of rural infrastructure subprojects (30-50 percent), NRM subprojects (10 percent) and CFAD or community subprojects (20 percent). It is expected then that the LGU shall carefully pladidentify their subprojects so that there will be no problems in the financing of the required investments and operating/maintenance costs of said subprojects. 30. Disbursement offunds throughout the whole duration ofMRDP2 will be vital element in Project implementation. DA, as the executing agency, shall see to it that its counterpart funding of for the loan component will be efficiently allocated and likewise the annual allocation of the IBRD (specifically on co-financing around US$ll.497 or Php456M solely for the GEF sites) and GEF grant (US$6.351M or Php254M) fund will be religiously monitored and well-coordinated with the WB by the DA. 31. The fundamental fiscal impact that can be achieved from MRDP2 (regardless of the funding source) is the effective and enhanced (i)fiscal management and administration system, (ii)rural development planning and (iii)organized community participation. There will be better socio-economic condition in the affected communities. The community subprojects, which are the CFAD and SIGA (with Php78.45M or US$1.96 M under GEF and with Php1.553B or US$29.87 M under the IBRD of WB), will strengthen the agricultural productivity and biodiversity conservation and other related development activities of the participating LGUs. All these will ultimately lead to greater efficiency in the utilization of both national and local government resources. 125 Annex 10: Safeguard Policy Issues PHILIPPINES: Second Phase of the Mindanao Rural Development Program (APL) Natural Resource Management Project 1. For the preparation of the Project social and environmental safeguards, the approach was anchored on the overall MRDP-APL2 preparation. Background 2. The Project is an associated project of the MRDP2. Being so, it aims to help improve the income and food security of the residents of selected barangays from the participating 11+227 municipalities through conservation of critical coastal and marine biodiversity priority areas. Although not all of the 420,735 total population (as of 2005) of the 11 municipalities will directly benefit from the project as direct benefits may be limited to the residents of selected barangays, the rest of the municipalities’ population stands to gain by way of improved management of vital natural resources that very often are the main sources of livelihood in the localities. Social Impact Assessment 3. A participatory social impact assessment was conducted for the project in 2006. This consisted of the review of socio economic reports taken from the selected municipalities, a series ofregional consultations for each ofthe three Regions of Mindanao (Regions 9, 13 and ARMM) in May 2006, rapid site validation appraisal of the selected sites and a stakeholder analysis. The participants in the multi stakeholder consultations included regional representatives ofboth central and local government agencies, non government organizations including church oriented ones, peoples’ organizations including local tribal chieftains. 4. Consistently, the project received high acceptance from all stakeholders seeing the importance of its objectives and an opportunity to push their own complementary agenda. The top reason for wanting the project especially among the local partners is the promise of increased productivity of the area. Attached below is table showing the output of the Stakeholders’ Analysis : Table 1. Stakeholder Identification, Interests and Project Effect on Interest Effect of Stakeholder Interest on NWCMBC-2 YWCMBC- Group 2 on Interest LGU perceived interest to NMCMBC-2revolve around revenue/job generation; barangay infrastructure projects; crafting ofbarangay development plans and implementation Local Government ofsuch plans; preparation and issuance of Positive units resolutions/ordinances especially in support ofthe project. All these with the intent to balance conservation efforts with and development specifically improved productivity. Non-Government Interested in the project as a venue to promote their respective Organizations and development agenda via social preparation and capacity Positive Peoples building ofcommunities. In turn, they get to be involved 27 I1LGUs are eligible to full complement ofthe project while 2 other sites fiom CMBC 1 are eligible to participate in technical assistance activities funded under this project. Both these 2 LGUs are CMBCl and are also MRDP2 sites. 126 Effect of Stakeholder Interest on NWCMBC-2 VWCMBC Group 2 on Interest Organizations through M&E; at the same time generating income. Overall productivity is improved within their respective communities. Coupled with spirituality, the perceived interest ofthis stakeholder group on NWCMBC-2 is to uphold the respect for the dignity ofstakeholders regardless ofreligious belief Religious groups and culture as they advocate for peace, value formation and Positive human rights. They are seen to be highly supportive to project IEC initiatives with due focus on environmental ethics. Preservation ofcultural heritage, protection of ancestral domain and promotion ofdevelopments that are sensitive to Indigenous People Positive their culture if any are affected by program intervention; job and livelihood Security oftenure; increasedimproved agricultural production/ productivity; market access; farm inputs; pre/post Farmer harvest facilities; access to technology and credit; agricultural Positive infrastructure facilities; IEC; land degradation; Watershed management; Address poverty alleviation; Coastal Resource Management to arrest illegal fishing, purse seiners, muro ami, use of fine Fisher folks Positive mesh nets, hulbot hulbot, encroachment of commercial fishing vessels, and piracy. Improve and sustain production. Increase profitability by way ofcontinuing business transactions, continuous trade and commerce, generate employment and income. Invest on eco-tourism projects. Both positive Investors However, for other investors like miners and loggers, there is and negative anxiety for corresponding increase in the financial allocation for environmental restoration. National Collaborates in mainstreaming NRM though sound policy Government formulation and implementation that is able to harmonize Positive Agencies overlapping policies and ordinances. Increases opportunities for information sharing/instruction AcademeResearch and technology generation through R&D. May also access Positive Institutes bding support for research and capability building. Uphold and practice tenets ofgender and development that Women empowers women through job/livelihood opportunities and Positive improved productivity. Upland settlers hcrease productivity and participation to livelihood activities Positive Through consultations and dialogues, to avail ofjobs and Armed groups - Positive livelihood opportunities Participate in alternative livelihood programs and Displaced workers Positive :mployment opportunities. Political leaders Use NWCMBC-2 in order to sustain political interest. Positive 5. The women and the indigenous peoples are the vulnerable groups in these areas. Other NCIP reports have identified the following indigenous tribes to be potentially present 127 in the project sites either as full time residents or seasonal resource gatherers: the Subanen in Region IX, the Manobo, Mandaya and Kamayo in Region XI11 and the Yakan and the Maguindanao in the ARMM. Three mechanisms are now in place to ensure that the IPSare given opportunities for informed consultation and culturally appropriate program intervention. 6. The social assessment report also discusses the procedure taken for the final selection of the sites using continuing support to the project of the major stakeholders together with social inclusion, global significance, interdependence or connectivity of the threats to resources in the upland and coastal area among the criterion for selection. A site visit of some selected sites done by the Appraisal Task Team showed the presence of the above cited indicators. The project sites are inhabited mostly by very poor people heavily dependent on the use of the natural resources for livelihood. Some LGUs have existing NRM policy frameworks and programs which could benefit from the project support for enhancement of systems and critical on the ground investments. The mission also validated the appropriateness of the project objectives and responsiveness of the strategies. Still, due to extreme poverty and limitations of project intervention that will not be able to sufficiently cover everyone engaged in activities that are classified environmentally degrading (such as small scale mining) it will take more than this project to draw people away from them. For such purposes, appropriate and simple environment management plans towards responsible NRM practice shall be introduced. Among others, this will include an IEC program that will consistently align key activities with the global environmental objective and harmonize policies and procedures from local LGUs and POs among GOP institutions, NGOs and funding agencies. Social safeguards 7. The project benefits from the Social Safeguards systems that were established in MRDP1 and are enhanced in MRDP2. i. LARRRAP Framework. The Policy Frameworks ofthe Land Acquisition and Resettlement and Rehabilitation for MRDP1 is applicable. Given the nature ofthe local community and sub projects, land acquisition and resettlement ofhouses are not anticipated. Ifunavoidable in the establishment of on-the-ground investments; like plantation forests, agro forestry, and stream bank stabilization, the same are expected to be small in scale. ii. IP Development Framework. Indigenous Peoples Development Framework of MRDP-APL 1 shall apply to this project. The program will ensure that Indigenous Peoples (IP) benefits from the Project, avoids or mitigates potentially adverse effects on IP caused by sub-projects and other activities supported by the Program. In addition, the following mechanism to further strengthen the IPS right to informed consultation and culturally appropriate project interventions have also been in put in place: (a) A Memorandum ofAgreement between the NCIP and the DA was signed in May 2007 indicating the commitment ofboth agencies to informed participation ofthe IPSand clearly identifying their respective roles in executing this. NCIP shall facilitate the processing ofthe required Free and Prior Informed Consent (FPIC) using funds that will be made available by the DA for this purpose. 128 (b) The project shall apply a direct targeting mechanism to insure that 30% of Ips and women are included among the SIGA participants, and (c) A technical assistance project shall also be incorporated to the project to document Indigenous knowledge on NRM conservation; on the possible effects ofrestrictions that may be imposed on the gathering of specific resources that are important to their customary way oflife; information on the potential health related use ofcertain species for appropriate scientific study to determine if any could be a contribution to the national and /or global scientific body of knowledge. Social Safeguards Institutional Implementation Arrangement and Assessment 8. The Implementing Agency has demonstrated capabilities for training LGUs to comply with the Policy Guidelines and has exercised due diligence in monitoring and evaluating compliance by implementing units to the safeguard policy. From the lessons learned for the MRDP1, the roles of the RFUs are now more consistently harnessed. The DA Regional Field units (RFUs) shall be responsible the training, monitoring and evaluating the MLGUs’ strict observation of the safeguards policy. After, the RFUs have gained the necessary knowledge and skills for safeguards, they shall spearhead safeguards operations and the PSO shall then perform TA roles when needed. For the first year of operations, the task of monitoring social safeguards compliance by way of issuing the social safeguards clearance as a requirement for subproject approval is with the PSO. 9. The PPMIU shall act as an oversight body within its jurisdiction to complement the efforts and resources ofthe MPMIU when needed 10. For post-conflict areas: The Bangsamoro Development Authority (BDA), an agency created through peace agreements between GRP-MILF outside of the present ARMM management and assisted by WB, has appointed seven (7) Regional Program Management Officers (RPMOs) responsible for area development coordination and implementation. The project shall respect distinct protocols set not just by local Muslim stakeholders, but also by both the national and international peace-keeping bodies. Environmental Safeguards 11. The project is assigned a “B” environmental classification because environmental impacts are assessed to be minor, localized and manageable. An environmental assessment of MRDP APL 2 was conducted from October to December, 2005 to determine the potential environmental impacts of the program in Mindanao. The assessment was carried out simultaneously with the preparation of the Feasibility Study of the program. Since APL 2 subprojects have not yet been designed and specific location not identified, the method of assessment used is the Regional Environmental Assessment (REA), a method developed by the World Bank for the environmental assessment of policies, programs, and plans. REA allows for a comprehensive assessment ofenvironmental issues and impacts and how impacts may cumulatively affect the ecology and human living conditions within given area or region. 12. It is, with confidence, concluded that the implementation of APL 2 types of subprojects will not cause significant environmental impacts. The scale of planned subprojects on rural infrastructures and community livelihood, including those under the category of alternative income generating activities, are relatively small, and largely are rehabilitatiodenhancement ofexisting ones. 129 Environmental Policy Statements 13. Environmental safeguard policies for institutional mainstreaming have been crafted for MRDP-APL 2 and those pertinent to the Project are as follows: (a) Gently to moderately sloping grasslands (518% slope) may be put to intensive agricultural production that requires seasonal and periodic cultivation using sloping agricultural land technologies (SALT). (b) Grassland areas with slope gradients of 18-30% shall be utilized for establishment of orchards and industrial tree plantation. (c) Grasslandlopen lands with slope gradients of 30-50% or more shall be developed immediately into intensive agro-forestry farm or full-blown forestry lands to avoid landslide. (d) All stream banks starting from 100 mas1 up to the highest tributary shall maintain a 50-meter and 20-m vegetative riparian buffer for riverbanks and creeWstreambank protection, respectively. (e) Areas utilized for aquaculture/fishpond shall maintain a 50-meter mangrove buffer between the fishpond and open sea for coastal protection. (f) Existing mangrove forests shall no longer be subjected to alternative land use conversion but shall be maintained in support of fishery production and coastal protection programs. (g) Erosion prone open areas or grasslands shall be developed into industrial tree plantations. (h) Flood prone areas shall be rehabilitated through dredging ofnatural floodways (creekdrivers) and construction ofrevetments and dikes. (i)Mudflats on coastal areas shall be planted to mangrove species. (j) Open areas with slopes of50% and over shall be reforested with watershed tree species (e.g. mahogany, ipil-ipil, narra, mangium and other deciduous trees). (k) Remaining forests shall be protected at all times from all kinds of forest destruction and hunting ofwildlife therein shall be prohibited. (1) Close environmental monitoring ofcompliance to guidelines and impacts of subprojects will also be implemented. Capacity building and institutional strengthening are recommended for those staff and institutions that will be responsible for the implementation of environmental safeguards, project screening, and environmental monitoring and assessment. Negative Sub-project List 14. A negative sub-project list was likewise prepared. Specifically the following sub- projects are recommended to comply with the prescribed modifications and qualifications to be eligible for funding. (a) Tree plantations: 1 ha block indigenous species planted alternately with fast- growing exotic species or fast growing indigenous species within buffer zones ofprotected areas (b) Limited fuelwood production and charcoal making will be acceptable if extracted from established tree plantations (c) Contour farming recommended for sloping lands rather than plowing perpendicular to contour 130 (d) Agroforestry farms: multi-storey designs to increase habitat niches ofwildlife and increase biodiversity. Rainforestation strategy encouraged (e) Establish biological corridors between patches offorested areas to ensure movement ofwildlife and exchange ofgenetic materials: Critical habitats of indicator species preserved and protected (0 Mangroves conserved and not subject to unsustainable utilization; serve as nursery to marine organisms (g) Subprojects that entail draining of waste products/materials into river systems or increase siltation should have the necessary mitigating measures (h) Subproject that will drain the Ligawasan Marsh will not to be financed 15. Environmental guidelines for each type of subprojects, which are set forth (See Safeguards under MRDP/APL2), provide mitigating measures that are meant to strengthen environmental safeguards. They should be considered in the design, site selection and implementation of subprojects. It shall be made a part of the approval process to require the subproject proponents to agree and comply with these guidelines. Institutional Arrangement for Environmental Assessment and Management 16. Environmental functions from the national level will simply be as oversight as regards to compliance with World Bank and NEDA requirements on environmental safeguards. The role of MRDP2 is to facilitate the establishment and strengthening of linkages/ network and mechanism of RFUs, DENR-Reg and the LGUs and to ensure the smooth flow of environmental information, materials, and funds through that linkage. 17. The implementation of environmental safeguards and guidelines will cover the activities/ functions in agriculture and forestry, which at the national level belong to two separate agencies, DA and DENR. At the local level, however, these two major functiondsectors do converge. Convergence of agricultural and forestry activities is already taking place in the municipalities which were visited. At the MLGU level, in many instances, only the MA0 or the MENRO gets appointed. Either of them performs both functions. In the implementation ofMRDP this practice shall be strengthened and institutionalized. Therefore, the most appropriate institution that should implement and monitor these guidelines and safeguards are the LGUs to be assisted by DA and DENR. A unit, tentatively called environmental management unit (EMU) with a staff to be headed by MAO/MENRO shall be put up in MRDP-covered areas. 18. Responsibilities for regional implementation down to the site level, the arena where complexities ofregional structures and processes are most evident, are shown in Table 3. Special Concern for ARMM 19. The roles and functions for agricultural development had not been devolved to the Autonomous Region of Muslim Mindanao (ARMM). It is thus the ARMM-DA tasked with providing such services through its PAOs in the provinces and MAOs in the municipalities. This ARMM-DA is unique in that it retains direct authority and supervision over the PAOs and MAOs. The ARMM-DA through the RPCO ARMM will be the coordinating body for APL2. This means that it will be involved in both planning and implementing agricultural development programs. Its service delivery will therefore be strengthened. At the same time, it will have the responsibility of strengthening the capabilities ofLGUs in the region. 13 1 20. DENR-ARMM though is devolved but participation of ARMM-DENR as regards to environmental safeguards and assessment will have to be harnessed. This is also in consideration of the fact that they already have a Framework Plan for Environmental Safeguards through the SZOPAD as introduced and trained by World Bank staff and Consultants. Environmental Monitoring 21. Close environmental monitoring of compliance to guidelines and impacts of subprojects will also be implemented. Capacity building and institutional strengthening will be undertaken for those staff and institutions that will be responsible for the implementation of environmental safeguards, project screening, and environmental monitoring and assessment. Environmental monitoring during program implementation provides information about key environmental aspects of the project, particularly compliance to environmental safeguard measures by the project proponent, the environmental impacts of the subproject, and the effectiveness of mitigation measures. Such information enables the RFUs, LGUs and the DENR to evaluate the success of mitigation as part of project supervision, and allows corrective action to be taken when needed. 22. Environmental monitoring involves repeated or periodic measurement of environmental variables during the implementation ofthe project to determine environmental changes, which may occur as a result of the project. The parameters to be measured at the project level are those safeguard measures, including the guidelines. The MENRO is the one responsible for spearheading the environmental monitoring program. Environmental monitoring will be carried out following the Forms developed under MRDP-APL2, to be filled up by the MENRO and conducted periodically and reported to the MPMIUs, PPMIU, and PSO. Capacity Building for Environmental Management 23. The environmental and social sustainability of MRDP APL 2 supporting multiple, small-scale subprojects is highly dependent on the capacity of WUs, LGUs and local communities (POs) to carry out the associated design, planning, approval, implementation work, and monitoring. To ensure that capacity, it is important that MRDP APL 2 allocates sufficient resources to training and capacity building. 24. There is a need to further upgrade the level of awareness, sensitization to environmental issues and problems, and technical capability among the DA-RFUs. There must be an appreciation of the fact that, with the concern on sustainability, agricultural development goes beyond production and productivity concerns and explore the realm of harmonizing the twin objectives of food production and environmental conservation. Environmental management provides a mechanism in which the sustainability of MRDP depends. 25. Based on the assessment, there is a need to provide training to those who will be responsible for the implementation of environmental safeguards and monitoring under this component as well as strengthened monitoring and enforcement of environmental laws and drafting of IEC that show interconnectivity of upland and coastal resources. Table 4 indicates the training requirements for various stakeholders. 132 T i d 4 X d c X X X 4 Annex 11: Project Preparation and Supervision PHILIPPINES: Second Phase of the Mindanao Rural Development Program (APL) Natural Resource Management Project Planned Actual PCN review 06/19/2006 06/16/2005 Initial PID to PIC 07/11/2006 08/08/2005 Initial ISDS to PIC 07/11/2006 09/02/2 00 5 Appraisal 09/15/2008 07/28/2008 Negotiations Board/RVP approval 06/16/2009 Planned date ofeffectiveness 07/3 1/2009 Planned date ofmid-term review 0 1/3 0/20 12 Key institutions responsible for preparation ofthe project: Philippine Department of Agriculture, in collaboration with the Department ofEnvironment and Natural Resources Bank staff and consultants who worked on the project included: Name Title Unit Carolina V. Figueroa-Geron Task Team Leader EASPS Samuel Wedderburn Senior NRM Specialist EASER Agnes Albert-Loth Senior FM Specialist EAPCO Dominic Aumentado Procurement Specialist EAPCO Preselyn Abella FM Specialist EAPCO Victoria Florian Lazar0 Operations Officer EASPS Josefo Tuyor Senior Operations Officer EASPS Ronald Zweig Senior Agricultural Ecologist EASER Minneh Kane Lead Counsel LEGES Robert O’Leary Senior Finance Officer LOAFC Tomas Sta. Maria Consultant, Financial Mgt. EAPCO Gilbert Braganza Consultant, NRM Specialist EASPS Luningning Bondoc Consultant, Project EASPS Development R. Cynthia Dharmajaya Program Assistant EASER Andrew Mendoza Program Assistant EACPF Teri Nachazel Program Assistant EASER Mary Michelle Dee STT EASER Bank funds expended to date on project preparation: 1, Bank resources: USD108,469 2. Trust finds: USD135,OOO (PPG executed by Government) 3. Total: USD243,469 Estimated Approval and Supervision costs: 1. Remaining costs to approval: US 40,000 2. Estimated annual supervision cost: US$50,000 134 Annex 12: Documents in the Project File PHILIPPINES: Second Phase of the Mindanao Rural Development Program (APL) Natural Resource Management Project 1. Project Preparation Reports prepared by DA 2. Working Paper 1: Threats, Globally Significant Species/Ecosytems, and CMBC-2 Investments Site Descriptions 3. Working Paper 2: Site Selection Process 4. Working Paper 3 : Technically Assessed SIGAs and Enterprise Development 5. MRDPII - Project Appraisal Document 6. NRM Operations Manual endorsed by DA 7. Detailed Project Costs 8. Root Cause Analysis and Project Response 9. Commitment Letters from Mayors 10. 2008 Process Documentation 11. 2006 Process Documentation 12. Terms ofReference for Technical Assistance 135 Annex 13: Statement of Loans and Credits PHILIPPINES: Second Phase of the Mindanao Rural Development Program (APL) Natural Resource Management Project Difference between expected and Original Amount in US$ actual Millions disbursements Project N Purpose IBRD IDA SF GEF Cancel. Undisb. Orig. Frm. ID Rev'd PO75464 2006 PH-NP Support for HNP 110.00 0.00 0.00 0.00 0.00 110.00 0.62 0.00 PO64925 2006 PH-SUPPORT FOR 100.00 0.00 0.00 0.00 0.00 98.65 0.00 0.00 STRATEGIC LOCAL DEV & INV PO94063 2006 PH-NP Support for Basic 200.00 0.00 0.00 0.00 0.00 200.00 14.38 0.00 Ed PO79661 2005 PH-MANILA 64.00 0.00 0.00 0.00 0.00 52.46 2.69 0.00 SEWERAGE 3 PO79628 2005 PH-2ND WOMEN'S 16.00 0.00 0.00 0.00 0.00 15.58 0.63 0.00 HEALTH & SAFE MOTHERHOOD PO73206 2005 PHLAND 19.00 0.00 0.00 0.00 0.00 17.78 1.05 0.00 ADMINISTRATION AND MANAGEMENT I1 PO75184 2004 PH: Diversified Farm 60.00 0.00 0.00 0.00 0.00 55.45 16.70 0.00 Income & Mkt. Devt PO72096 2004 PH-GEF-Rural Power 0.00 0.00 0.00 9.00 0.00 7.41 0.91 0.00 Project PO70899 2004 PH LAGUNA DE BAY 5 .OO 0.00 0.00 0.00 0.00 4.57 2.70 0.00 INSTITUTIONAL STRENGTHE PO66076 2004 JUDICIAL REFORM 21.90 0.00 0.00 0.00 0.00 17.20 10.70 0.00 SUPPORT PROJECT PO66397 2004 PH-Rural Power Project 10.00 0.00 0.00 0.00 0.00 6.17 -1.73 0.00 PO66532 2004 PH-GEF-Electric 0.00 0.00 0.00 12.00 0.00 6.68 6.07 0.00 Cooprtv System Loss Redu PO77012 2003 PHKALAHI-CIDSS 100.00, 0.00 0.00 0.00 0.00 56.18 39.02 0.00 PROJECT PO73488 2003 PH - ARMM Social Fund 33.60 0.00 0.00 0.00 0.00 17.78 13.37 0.00 PO71007 2003 PHSecond Agrarian 50.00 0.00 0.00 0.00 0.00 30.16 28.37 0.00 136 Difference between expected and Original Amount in US$ actual Millions disbursements Project FY Purpose IBRD IDA SF GEF Cancel. Undisb. Orig. Frm. ID Rev'd Reform Communities Dev PO69491 2002 PH-LGU URBAN 30.00 0.00 0.00 0.00 17.28 12.01 25.05 4.76 WATER APL2 PO69916 2002 PH-2nd Social 100.00 0.00 0.00 0.00 0.00 6.30 6.30 0.00 Expenditure Management PO66509 2001 PH-GEF-MMURTRIP- 0.00 0.00 0.00 1.30 0.00 0.15 1.16 0.00 Bicycle Nwk PO57731 2001 PH-MMURTRIP 60.00 0.00 0.00 0.00 0.00 35.90 35.90 0.00 PO39019 2000 PH-NAT'L ROADS 150.00 0.00 0.00 0.00 0.00 20.72 20.72 6.91 IMPROVMT APLl PO57598 1999 PH-RURAL FINANCE 150.00 0.00 0.00 0.00 0.00 12.97 12.97 0.00 I11 PO48588 1999 PH-LGU FINANCE & 100.00 0.00 0.00 0.00 40.00 32.55 72.55 -1.41 DEV. PO04595 1998 PH - COMMUNITY 50.00 0.00 0.00 0.00 12.00 4.85 16.85 4.85 BASED RES0 PO04576 1998 PH-WATER 56.80 0.00 0.00 0.00 18.88 1.97 20.85 3.87 DISTRICTS DEV. Total: 1,486.30 0.00 0.00 88.16 823.49 18.98 22.30 347.83 137 PHILIPPINES STATEMENT OF IFC’s Held and Disbursed Portfolio In Millions of US Dollars Committed Disbursed IFC IFC FY Company Loan Equity Quasi Partic. Loan Equity Quasi Partic. Approval 200 1 AEI 0.86 0.00 0.00 0.00 0.86 0.00 0.00 0.00 2002 APW Trade 0.00 0.00 0.65 0.00 0.00 0.00 0.65 0.00 Alaska Milk 0.00 0.62 0.00 0.00 0.00 0.62 0.00 0.00 2000 Asian Hospital 3.30 0.00 1.00 0.00 3.30 0.00 1.00 0.00 Bahay Financial 0.00 0.16 0.00 0.00 0.00 0.16 0.00 0.00 2005 Balikatan HF 0.00 1.89 34.31 0.00 0.00 1.89 32.13 0.00 2002 Banco de Oro 0.00 6.03 10.00 0.00 0.00 6.03 10.00 0.00 2005 Cepalco 15.78 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1998 Drysdale Food 4.31 0.00 0.00 1.87 4.3 1 0.00 0.00 1.87 2002 Eastwood 13.53 0.00 0.00 0.00 13.53 0.00 0.00 0.00 2005 Eastwood 12.50 0.00 0.00 0.00 0.00 0.00 0.00 0.00 200 1 Filinvest 17.73 0.00 0.00 0.00 17.73 0.00 0.00 0.00 2005 Filinvest Lan... 43.69 0.00 0.00 0.00 21.84 0.00 0.00 0.00 2004 Globe Telecom 20.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1998 H&Q PV I11 0.00 0.94 0.00 0.00 0.00 0.94 0.00 0.00 1989 H&QPV-I 0.00 0.15 0.00 0.00 0.00 0.15 0.00 0.00 1993 H&QPV-I1 0.00 0.08 0.00 0.00 0.00 0.08 0.00 0.00 1992 Holcim Phil 0.00 1.97 0.00 0.00 0.00 1.97 0.00 0.00 2004 LARES 22.00 2.70 0.00 0.00 0.00 0.00 0.00 0.00 2000 MFI MEP 0.00 0.11 0.00 0.00 0.00 0.1 1 0.00 0.00 2001 MNTC 36.33 0.00 0.00 0.00 36.33 0.00 0.00 0.00 2003 MWC 29.84 0.00 0.00 0.00 29.84 0.00 0.00 0.00 2004 MWC 30.00 14.96 0.00 0.00 0.00 14.96 0.00 0.00 2000 Mariwasa 10.89 0.00 3.52 0.00 10.89 0.00 3.52 0.00 1993 Mindanao Power 0.00 2.22 0.00 0.00 0.00 2.22 0.00 0.00 1993 Mirant Pagbilao 3 .OO 0.00 0.00 0.00 3.00 0.00 0.00 0.00 200 1 PEDF 1.50 0.00 0.00 0.00 0.75 0.00 0.00 0.00 2005 PLGIC 0.00 0.00 1.50 0.00 0.00 0.00 1.50 0.00 1992 Pilipinas Shell 0.00 1.56 0.00 0.00 0.00 1.56 0.00 0.00 2000 PlantersBank 0.00 0.00 2.32 0.00 0.00 0.00 2.32 0.00 138 Committed Disbursed IFC IFC FY Company Loan Equity Quasi Partic. Loan Equity Quasi Partic. Approval 1998 Pryce Gases 13.34 0.00 1.70 5.82 13.34 0.00 1.70 5.82 2000 STRADCOM 6.85 0.00 0.00 0.00 6.85 0.00 0.00 0.00 2003 SVI 0.00 2.00 0.00 0.00 0.00 0.00 0.00 0.00 1995 Sua1 Power 18.29 0.00 0.00 23.88 18.29 0.00 0.00 23.88 1994 Walden Mgmt 0.00 0.03 0.00 0.00 0.00 0.03 0.00 0.00 1994 Walden Ventures 0.00 0.02 0.00 0.00 0.00 0.02 0.00 0.00 Total portfolio: 35.44 31.57 30.74 31.57 303.74 55.00 180.86 52.82 Approvals Pending Commitment FY Company Loan Equity Quasi Partic. Approval 2001 PEDF 0.00 0.00 0.00 0.00 2002 Eastwood 0.00 0.00 0.00 0.00 Total pending 0.00 0.00 0.00 0.00 commitment: 139 Annex 14: Incremental Cost Analysis PHILIPPINES: Second Phase of the Mindanao Rural Development Program (APL) Natural Resource Management Project Introduction 1. With more than 7,100 islands and a coastline that extends for about 17,400 km, the Philippines is considered rich in both terrestrial and marine biodiversity. The country’s coastal waters support the greatest marine and coastal biodiversity in the world including about 430 species of corals, 2,300 species of fishes, 13 species of sea grasses and hundreds of seaweed species. 2. The coastal ecosystems and habitats are significant ecologically and contribute greatly to the country’s economy. Coral reefs produce about 10-15% of the country’s marine fishery production. Marine and coastal areas provide some 50% of the country’s animal protein intake. Mindanao, the third largest of the Philippine islands, abounds with coral reefs, sea grasses and mangroves which support 80% ofall commercial species offish and shellfish. 3. However, about 60% of the country’s population lives within coastal areas, 54% of the country’s 1500 municipalities are also found in these areas, and some one million people are engaged in fishing. Many of these resources have been seriously degraded as well as the threat posed on marine biodiversity particularly in near-shore areas. Context and Broad Development Goals 4. The 11 sites (excluding the 2 CMBCl sites) selected under the Project were taken from the Philippine Biodiversity Conservation Priority-Setting or PBCP list with ratings of high, very high and extremely high in terms ofthe need for immediate interventions on marine biodiversity conservation. 5. Only about 5% ofthe 26,000 square km ofcoral reefs in the country are considered to be in excellent condition, about 25% are classified as in good state and about 70% are in fair to poor condition. The trend is generally moving toward a worsening state for all as indicated by the: (i) disappearance of critical habitats such as sea grass beds due to coastal development activities which resulted to sedimentation and increased turbidity of the water; (ii)continuous degradation of downstream coastal areas due to poor upland land management; and, (iii)reduction of agricultural and fishery productivity which threatens natural resource dependent livelihoods. Mindanao basically shares the same picture with the rest of the country’s coastal areas. 6. Few interventions in the country address the upland-coastal approach to conservation of biodiversity. At least, in Mindanao, linkages between upland and coastal systems are adequately understood and measures have been started to correct the unsustainable natural resources practices. Baseline Scenario 7. The Philippine Government has acknowledged the ecological and economic importance ofpreserving its coastal/marine and upland resources. Within this premise, the Protected Areas 140 and Wildlife Bureau (PAWB) of the DENR coordinated with the academe, NGOs and other institutions and have identified and prioritized marine biodiversity areas in the country that need urgent interventions. The DA’s Bureau ofFisheries and Aquatic Resources (BFAR) implements related activities on coastal and fishery resource management. In the baseline condition stakeholders and fishing communities in the coastal areas have minimal or no external support to manage these resources. They would continue to overexploit coastal resources with destructive methods just to survive from their poor economic state. Hence, threatening and degrading further the marine biodiversity and fishery productivity as indicated by the dramatic decline of catch per unit effort and consequently has decreased the catches ofthe small, subsistence fishers. Moreover, the use of high volume, non-discriminatory commercial fishing methods and destructive fishing methods (e.g. cyanide for live fish trade, bottom trawling and dynamite, fine mesh nets) has degraded the coastal and marine habitats and resources. Said situation is also attributed to absence ofrational national and local fisheries management policies and plans. 8. Baseline interventions in Mindanao would mainly come from MRDP2 where the focus would be on agricultural and fisheries support service delivery, poverty alleviation and development of supportive natural resources management practices. These interventions will further contribute to the overall long-term program objectives of the program by: (i) institutionalizing and decentralizing services delivery to enhance productivity, transparency, accountability and community participation, (ii)improving access to viable livelihood opportunities for targeted communities and (iii)developing sound natural resources management practices. 9. MRDP2 has four major components whose strategies complement the development goals ofthe Philippine Government. These project components are: (a) Investments for Governance Reforms (IGR). This component will provide assistance to the permanent organs ofregional and local governments that will make up and support the decentralized agricultural extension system that the Department envisages for the long-term future ofMindanao. (b) Rural Infrastructure @I).This component will make investment funds available for local communities to build or rehabilitate local roads, irrigation systems and water systems. (c) Community Fund for Agricultural Development (CFAD). The sub-projects under this component will be identified, planned and implemented by the local communities, and will provide the means for them to improve their production, processing and marketing opportunities. (d) Natural Resource Management (NRM). This component will support a range of activities that will build LGU and community capacities to protect the environment while introducing sustainable alternative income generating activities for communities in environmentally critical areas. Baseline Benefits 10. Generally, the baseline activities from MRDP2 are expected to generate significant development benefits from the institutionalization and decentralization ofagricultural and fishery services delivery consequently (i)enhancing productivity, transparency, accountability and 141 community participation, (ii)improving access to viable livelihood opportunities for targeted communities and (iii)developing sound natural resources management practices. The NRM component of MRDP2 would be implemented directly in 30 targeted municipalities. As a result, there would be some improvement in the management of Mindanao’s natural resources. However, the selected sites are not necessarily representative of those where biodiversity of global significance is under threat. Rather, the focus is on strengthening the natural resource basis in its role as a provider of livelihoods. The focus would also be on upland areas with little regard to better management of coastal and marine resources or of the connectivity between upland and coastal systems 11. Moreover, the promotion of local level resource management would still continue to be restricted by the low level of priority given to the establishment of environment and natural resource offices at the LGU level and the corresponding allocation of funds. As a result, the mainstreaming of SLM and biodiversity conservation into the local resource plans would be difficult. Hence, the adoption of comprehensive ecosystem management interventions (integrating the ecological, economic and social dimensions) would be unlikely to occur. The GEF Alternative 12. In the GEF Alternative, resources would be provided to expand the activities ofthe NRM component of MRDP-2 to 11 additional sites of global environmental significance (plus 2 from the first phase). The project would conserve coastal and marine biodiversity of global significance through co-management by communities and LGUs of critical marine habitats and through the introduction ofimproved, upland sustainable land management practices that would arrest land degradation and enhance the integrity of important ecosystems as well as benefit landholders who are mostly poor farmers, fisher folk, and/or indigenous people in the 13 selected sites in Mindanao. These activities would also contribute to increasing the resilience of natural ecosystems to the effects ofclimate change. Consequently, there would be significant benefits to the global community as well as to local communities. 13. The Project will further remove the barriers to mainstreaming marine and coastal biodiversity conservation by: (i)establishing local community-based natural resource management mechanisms; (ii)strengthening local capacity to address marine ecosystem and land use management issues; (iii)enhancing the knowledge base for sound ecosystem management and decision- making, including monitoring and evaluation for sustainable long-term marine ecosystem management; (iv) identifying key upstream land management malpractices and introducing and adopting better land use methods through the participatory involvement of communities and households; and (v) developing and implementing institutional and community action plans and local policies for marine biodiversity conservation and sustainable land management and mainstreaming them into coastal development and land use plans, respectively. 14. The project will have five components namely: a) Participatory NRM Planning and Policy Development; b) Selective on-the-Ground Investments on Coastal/ Marine and SLM Practices; c) Assistance to the Development of Sustainable Income Generating Activities; d) Strengthening Community Partnerships in Monitoring; and e) Development and Conduct of NRM Knowledge Management Program. 142 15. Project results would include the following: (i)779 hectares ofmarine sanctuaries will be established,, (ii)5 15 hectares of mangrove areas will be reforested, (iii)1080 hectares of hilly land will be utilized for agroforestry activities, (iv) 180 hectares of watershed areas will be reforested and (v) 123.5 kilometers of river banks will be stabilized using bamboo plantation or thru construction ofgabion or riprap. 16. Expected long term benefits include: (a) the improvement of marine biodiversity conservation; (b) strengthening the integrity of critical terrestrial ecosystems, (c) provision of services of global significance, (d) enhancing water flows, (e) reduced sedimentation and loss of aquatic biodiversity downstream and (f) potential increase ofabove ground storage ofcarbon. 17. The envisaged result would be to strengthen the capacity of LGUs and local communities with support from national agencies (e.g. DENR, DA, BFAR) through co-management, by institutionalizing integrated natural resources planning and coordinated development approach that can promote sustainable development practices. This would be directly focused on the improvement of governance through additional GEF funding as an increment to MRDP-2’s NRM component. Without GEF support, the MRDP-2 would lack critical, incremental inputs that would form the basis for mainstreaming and institutionalizing local biodiversity conservation planning and integrated sustainable development strategies that would help LGUs and communities identify linkages among ecosystems and provide examples of innovative and indigenous approaches leading to sustainable land management and downstream marine biodiversity conservation. Incremental Costs Analysis 18. The difference between the cost of the baseline scenario (US$123.652 million) and the GEF Alternative (US$130.003 million) is US$6.351. This represents the incremental costs of achieving global environmental benefits related to biodiversity conservation through establishment of new marine protected areas and better management of existing ones, as well as sustainable land management in upland areas that would reduce the damage to coastal biodiversity as well as strengthen the functioning of threatened ecosystems. Incremental Costs Matrix cost Component Domestic Benefit Global Benefit Category Million*us$ I Improvements in the Baseline 4.400 government’s capacity to manage rural development 1. Participatory reduce poverty and NRM Planning conserve natural resources and marine biodiversity. With GEF cost cost US$ Component Domestic Benefit Global Benefit Category Million* Alternative SLM concerns are mainstreamed into community, municipal and provincial development planning Key decisions concerning biodiversity conservation are made with inputs from communities Incrementa 0.622 Reduced 2.On-the-ground Baseline investments in 30.000 environmental coastaYmarine degradation due to biodiversity improved watershed conservation and management in sustainable land upland areas management Strengthened and improved coastal habitats for threatened GEF marine species of global Alternative 32.896 importance through well managed MPAS. The integrity ofcritical terrestrial ecosystems strengthened through the adoption ofSLM practices Increment 2.896 Increased agricultural Sustainable production and 3. Baseline income profitability and generation activities xeation of (SIGA) additional, diversified 83.852 zmployment in 3arangays ?articipating in the ?reject. [mproved rural .nf?astructure, in 144 cost Component Domestic Benefit Global Benefit Category Million* particular rural farm to market roads Sustainable livelihoods contribute to relieving the pressure on the natural base, GEF 85.761 in particular, reduction in the Alternative over-exploitation ofmarine resources, and reduction in deforestation. Increment 1.909 Some improvement 4. Strengthening Baseline in surveillance community partnerships in impact on illegal NRM monitoring Presence ofstrengthened local monitoring teams leads to better protection of biodiversity resources and significant reduction in illegal GEF extraction ofthreatened Alternative species 3.219 Increased datdinformation on species of global importance through partner ships with research institutes that promote research and monitorinn Increment 0.519 Improved awareness 5. Development and among the general conduct of NRM population and knowledge Baseline 2.70 decision makers on management the importance of program natural resources management Improved knowledge and awareness among the general population and decision GEF 3.106 makers about the significance Alternative sfbiodiversity conservation and management ofcritical Ecosystems. 145 Global Benefit Good practices on biodiversity conservation and SLM are documented and disseminated to promote scale-uD and redicaton I I Increment 0.406 I Baseline GEF I I Alternative 6*351 I I ll"Crementa I . Baseline cost was not computedfor other donor assistedprojects in Mindanao. 146 Annex 15: Country at a Glance PHILIPPINES: Second Phase of the Mindanao Rural Development Program (APL) Natural Resource Management Project East Lower- POVERTY and SOCIAL Asia & mlddle- Development dlamond" P hilippines Paclflc Income 2005 Population, mid-year (millions) 83.1 1,885 2,475 Life expectancy GNIpercapita (Atlasmethod, US$) 1,300 1,627 1,918 GNI (Atlasmethod, US$ billions) t38.0 3,067 4,747 T Average annual growth, 1999-05 Population (%) 1.9 0.9 1.0 Gross Laborforce (%) 32 1.3 1.4 primary Most recent estimate (latest year available, 1999-05) capita enrollment Povert y (%of po pulatio n below national po verty line) Urban population (%of totalpopulation) 63 41 50 Life eqectancyat birth (pars) 71 70 70 1 Infant mortality (per 7,OOOlive births) 26 29 33 Child malnutrition (%of children under5) 28 15 12 Access to improvedwater source Access to an improvedwatersource (%ofpopulation) 85 79 a2 Literacy(7hofpopulationage 69 93 91 89 Gross primaryenrollment (%ofschool-agepopulation) I12 115 114 -Philippines Male IT3 116 18 -Lo wer-middle-incomegroup Female Ill 114 1x3 KEY ECONOMIC RATIOS and LONG-TERM TRENDS 1985 1995 2004 2005 Economic rat io s* GDP (US$ billions) 30.7 74.1 90.1 98.3 Gross capital formation1GDP 14.3 22.5 17.1 15.7 Trade Eqorts of goods and sewices1GDP 24.0 36.4 50.6 46.4 Gross domestic savings1GDP 16.5 M.6 7.7 15.0 Gross national savings1GDP 14.1 35.9 32.9 Current account balance1GDP -0.1 4.4 1.8 2 A Domestic Capital interest paymentsiGDP 3.1 2.5 3.9 savings formation Total debt1GDP 86.7 53.1 67.2 Total debt serviceleqorts 31.6 16.9 21.0 I Present value of debtlGDP 69.1 Present valueof debtieqorts 10.0 Indebtedness 1985-95 1995-05 2004 2005 2005-09 (average annualgrowth) GDP 3.2 3.9 6.0 5.1 5.3 -Philippines GDP percapita 0.8 1.9 4.1 3.3 3.5 ~ Lower-middle-income group Eqorts of goods and services 8.4 3.6 14.1 2.3 7.1 147 STRUCTURE of the ECONOMY 1985 1995 2004 2005 Growth of capital and GDP (%) (%of GDP) Agriculture 24.6 216 152 14.4 Industry 35.1 32.1 31.9 32.6 Manufacturing 25.2 23.0 23.1 23.4 10 Services 40.4 46.3 52.9 53.0 r 0 Household final consumption expenditure 75.9 74.0 72.1 75.2 .10 General gov't final consumption ewenditure 7.6 114 TI2 9.7 Imports of goods andservices 229 44.2 50.0 47.1 -GCF =-4--GDP 1985-95 1995-05 2004 2005 IGrowth of exports and imports (%) (average annual gro wth) Agriculture 19 2.9 4.9 2.0 Industry 3.1 3.0 52 5.3 Manufacturing 3.1 3.4 5.1 5.6 Services 3.9 4.9 7.1 6.3 Household final consumption expendlture 3.7 4.3 1.5 7.1 General gov't finai consumption expenditure 4.2 12 0.0 2.7 Gross capital formation 8.1 23 9.5 -4.3 Imports of goods and services Q.1 2.9 5.9 18 ~~ Note: 2005data are preliminaryestimates. This tablewas producedfrom the Development Economics LDB database. 'Thediamonds showfourkeyindicators in thecountry(in bo1d)comparedwith its income-group average. If data aremissing,thediamond will be incomolete. Philiuuines PRICES and GOVERNM ENT FINANCE 1985 1995 2004 2005 Inflation (Oh) Domestic prices (%change) 10 T Consumer prices 23.1 6.7 6.0 7.6 Implicit GDP deflator 77.6 7.6 6.0 6.0 Government finance (%of GDP, includes current grants) Current revenue V.1 19.0 14.5 14.8 ~ 00 01 02 a3 04 1 Current budget balance 2.4 4.4 -14 -0.8 I -GDPdefldor -=e--CPI Overall surplusideficit -2.0 0.6 -3.9 -2.7 TRADE 1985 1995 2004 2005 Export and import levels (US$ mill.) (US$ rni//ionsj Total exports (fob) 4,629 38,794 40,231 ElectronicslTeleco m 7,4u 27,787 23,263 60 Oo0 T Garments 2,570 2,m 3,m Manufactures 2,539 U.868 35,444 37,968 Total imports (cif) 5,111 26,391 44,476 47,777 Food 256 1,276 1,603 1750 Fuel and energy 1,452 2,461 4,714 4.543 Capital goods 769 8,029 8,742 8,004 99 00 01 02 03 04 05 Export price index (20OO-fJO) Import price index (2000-WO) Terms of trade (200O=x)O) I 148 BALANCE of PAYMENTS 1985 1995 2004 2005 Current account balance to GDP (%) (US$ millions) Worts of goods and services 6,864 26,795 42,837 44,693 Imports of goods andservices 5,961 35,991 50,298 53,635 ‘T Resource balance 903 -9.196 -7,461 -8,942 Net income -1,317 2,345 -73 47 Net current transfers 379 9,596 9,849 03 04 05 Current account balance -35 -3,297 1,626 2,354 Financing items (net) 867 3,928 -1,346 -4,761 ! Changes in net reserves -832 -631 -280 2,407 6i M erno: Reserves including gold (US$ millions) 7,633 16,228 18,495 Conversion rate (DEC,locaI/US$) 18.6 25.7 53.6 54.7 EXTERNAL DEBT and RESOURCE FLOWS 1985 1995 2004 2005 :omposition of 2004 debt (US$ mill.] (US$ millions) Total debt outstanding and disbursed 26,637 39,379 60,550 .. IBRD 2,421 5,002 3,37 2,885 B 214 IDA 84 183 2% 87 G 5046 Totaldebt service 2,534 5,364 11,570 IBRD 285 789 494 499 IDA 1 3 9 8 Composition of net resourceflow Official grants 09 277 155 Official creditors 359 -791 -672 Private creditors 797 894 1,571 Foreign direct investment (net inflows) a 1,478 469 F Portfolio equity(net inflow) 0 0 418 33 929 World Bank program Commitments 1)4 168 65 L - IBRD E- Bilaterd Disbursements 276 402 145 a9 I - IDA D - Otbrmltilaterd F - Private Pnncipal repayments 11) 415 379 383 :-IMF G - Short-ten Net flow 166 -0 -233 -253 Interest payments 76 377 I23 P5 Net transfers -1) -390 -357 -379 Note:This tablewas producedfrom the Development Economics LDB database. 8it3106 149 Annex 16: CMBC 2 Sites Selected PHILIPPINES: Second Phase of the Mindanao Rural Development Program (APL) Natural Resource Management Project 150 IBRD 36490 120° 122° 124° Leyte 126° Cebu Regions andProvinces Dinagat Dinagat Islands IX Zamboanga Peninsula 10° PHILIPPINES 10° 1 Zamboanga del Norte Siargao 2 Zamboanga del Sur 3 Zamboanga Sibugay MINDANAO RURAL DEVELOPMENT Negros Bohol PROJECT PHASE 2 Surigao X Northern Mindanao 4 Bukidnon Coastal and Marine Ecosystem Del Norte 5 Camiguin XIII 6 Lanao del Norte Conservation Component Mindanao 7 Misamis Occidental 8 Misamis Oriental Agusan Siquijor Sea Del Norte XI Davao Reg. 9 Compostela Valley Marihatag 10 Davao del Norte Butuan 11 PROJECT SITES Surigao Davao del Sur X Camiguin Agusan 12 Davao Oriental PAN-PHILIPPINE HIGHWAY Sibutad Del Sur Sulu Sea Rizal Cagayan San Agustin XII SOCCSKSARGEN OTHER MAIN ROADS 13 North Cotabato R. de Oro 14 Sarangani MAJOR PORTS Misamis 15 South Cotabato Oriental RIVERS IX Misamis 16 Sultan Kudarat Occidental Agusan REGION CAPITALS Del Sur XIII Caraga Zamboanga 17 Agusan del Norte PROVINCE BOUNDARIES Bukidnon 18 Agusan del Sur Del Norte 8° 19 Dinagat Islands 8° REGION BOUNDARIES Lanao 20 Surigao del Norte Pagadian Del Norte 21 Surigao del Sur Margosatubig Lanao Del Sur Mindanao ARMM Autonomous Reg. in Muslim Mindanao Zamboanga Compostela 22 Basilan Zamboanga Del Sur Davao Valley Sibugay 23 Lanao del Sur Del Norte 24 Maguindanao Davao V.A. Sagun North 25 Sulu Talusan Oriental 26 Tawi-Tawi Mabuhay Cotabato Cotabato Davao (Jerusalim) Olutanga Maguindanao XII Lamitan Datu Blah XI Sinsuat 100° 110° 120° Sultan NORTH PACIFIC Basilan Kudarat Davao CHINA OCEAN Koronadal Davao Basilan Gulf 20° LAO 20° Moro Del Sur P.D.R. ARMM South Cotabato Philippine THAILAND Manila Sea 6° Sulu 6° VIETNAM Sulu CAMBODIA Gulf Sarangani PHILIPPINES 10° Project Area. 10° See main map. PALAU BRUNEI Tawi-Tawi Celebes Sea Sarangani MALAYSIA SINGAPORE Tawi-tawi 0° 0° Java Sea P.N.G. 0 50 100 150 This map was produced by the Map Design Unit of The World Bank. INDONESIA The boundaries, colors, denominations and any other information shown on this map do not imply, on the part of The World Bank KILOMETERS Group, any judgment on the legal status of any territory, or any Arafura Sea endorsement or acceptance of such boundaries. 10° TIMOR-LESTE 10° INDIAN OCEAN Timor 120° 122° 124° 126° 100° 110° 120° Sea AUSTRALIA 140° APRIL 2009