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The World Bank Integrated Landscape Management in Dominican Republic Watersheds (P170848) Public Disclosure Authorized For Official Use Only Public Disclosure Authorized Appraisal Environmental and Social Review Summary Appraisal Stage (ESRS Appraisal Stage) Date Prepared/Updated: 12/10/2020 | Report No: ESRSA01204 Public Disclosure Public Disclosure Authorized Public Disclosure Authorized Dec 10, 2020 Page 1 of 16 The World Bank Integrated Landscape Management in Dominican Republic Watersheds (P170848) BASIC INFORMATION A. Basic Project Data Country Region Project ID Parent Project ID (if any) Dominican Republic LATIN AMERICA AND P170848 CARIBBEAN Project Name Integrated Landscape Management in Dominican Republic Watersheds Practice Area (Lead) Financing Instrument Estimated Appraisal Date Estimated Board Date Environment, Natural Investment Project 12/15/2020 1/29/2021 For Official Use Only Resources & the Blue Financing Economy Borrower(s) Implementing Agency(ies) Ministry of Economy, Ministry of Environment and Planning and Natural Resources Development Proposed Development Objective The objective of the proposed GEF project is to strengthen integrated landscape management in targeted watersheds in the Dominican Republic. Public Disclosure Financing (in USD Million) Amount Total Project Cost 4.06 B. Is the project being prepared in a Situation of Urgent Need of Assistance or Capacity Constraints, as per Bank IPF Policy, para. 12? No C. Summary Description of Proposed Project [including overview of Country, Sectoral & Institutional Contexts and Relationship to CPF] The project will address identified challenges for the successful maintenance of landscapes and biodiversity, namely inter-sectoral coordination, uptake of sustainable agricultural practices, and restoration of critical landscapes. The proposed operation is based on a participatory, multi-sector, and Integrated Landscape Management (ILM) approach that considers upstream and downstream impacts across priority sectors and regions within the Yuna and Yaque del Norte watersheds. Project activities will be specifically focused on ways to contribute to Land Degradation Neutrality Dec 10, 2020 Page 2 of 16 The World Bank Integrated Landscape Management in Dominican Republic Watersheds (P170848) (LDN) while ensuring the sustainability of productive systems, including through prioritization criteria for the locations where investments will be made. The PDO will be achieved through four components: Component 1 seeks to create an enabling environment for ILM across the contiguous jurisdiction of Yaque del Norte and Yuna watersheds, with a focus on governance, policies, and implementation arrangements. Components 2 and 3 will focus on critical hotspots for testing innovative approaches for reducing land degradation and biodiversity loss. Component 2 consists of testing and scaling up sustainable rice production systems to improve productivity, water use efficiency, and biodiversity conservation, while Component 3 targets the restoration of biodiversity and hydrological ecosystem services in critical ecosystems through activities like agroforestry systems for coffee and cacao, restoration of degraded areas, and sustainable livelihood alternatives. Component 4 covers project monitoring and management. Each component contributes strategically to the achievement of the PDO, by respectively (i) providing a platform for governance and land use zoning and planning based on science, social inclusion of vulnerable populations, and learning through participation that lead to agreements on a shared vision for the watershed and future monitoring of long-term trends; (ii) strengthening the technical capacity of the country to promote and monitor the adoption of sustainable For Official Use Only production in rice systems in the lower watershed to reduce environmental impacts to surrounding and downstream ecosystems; (iii) conserving and restoring key ecosystems in terms of water recharge and ecosystem structural diversity through biodiversity friendly productive activities and crops; and (iv) developing the capacity to monitor and evaluate the environmental trends and effects, such as changes in habitat connectivity, system-level water footprints, and biodiversity trends. D. Environmental and Social Overview D.1. Detailed project location(s) and salient physical characteristics relevant to the E&S assessment [geographic, environmental, social] The project will operate in the Dominican Republic and will focus on an Integrated Landscape Management (ILM) approach for sustainable management of natural resources, considering upstream/downstream impacts in the Yaque Public Disclosure del Norte and the Yuna watersheds. Component 1, which consists of technical assisstance activities will be implemented throughout both watersheds, whereas project activities under Component 2 (sustainable rice production) and 3 (restoration of biodiversity and hydrological services in critical ecosystems) will take place within a defined landscape unit for the project. This landscape unit encompasses the Yuna Watershed territory and some municipalities of the northern part of the Yaque del Norte Watershed that are part of the "Mother of Waters" area which is of great importance for water provision to local communities and its biodiversity. The Yaque del Norte and Yuna watersheds constitute the Cibao Valley, which is the major agricultural production region in the country. Both watersheds are of great importance to the country due to the biodiversity they host and the ecosystem services these areas provide. Given the wide altitudinal range (from 2800 to 0 meters), multiple ecosystems are present in the landscape hosting important biodiversity of the Caribbean region. The Yaque del Norte watershed (with an area of 689,113 ha) located on the northwest region of the country, is the largest and most important watershed, covering 14.6% of the country. This watershed hosts the largest river in the country – the Yaque del Norte River which their main tributaries (Jimenoa, Bao, Ámina, Mao, Guayubín y Maguaca) feed approximately 75 micro watersheds that are critical for water supply for urban populations, meeting the needs of agricultural and industrial sectors, and providing a source for hydroelectric power generation. Agriculture practices cover 20% of the watershed's area and require about 80% of the total water available. The remaining watershed area corresponds to forests, scrub and grasslands, mangroves, and urban areas. Urban areas use about 12% of the Dec 10, 2020 Page 3 of 16 The World Bank Integrated Landscape Management in Dominican Republic Watersheds (P170848) watershed's water. Water balance in the Yaque del Norte Watershed is projected to be in deficit by 2025. Over 34% of the watershed is part of the National System of Protected Areas, which includes 6 different categories of protected areas totaling to 25 protected areas: (i) 4 of Strict Protection; (ii) 3 National Parks; (iii) 4 Mangroves; (iv) 3 Natural Monuments; (v) 2 Habitat Management Areas; (vi) 5 Natural Reserves; and (vi) 4 Protected Landscapes. Some of these parks have been largely reforested, and serve an important function for controlling erosion and surface water runoff for the country, decreasing the spread of household and agricultural waste. The Yuna watershed (with an area of 290,549 ha) located on the northeast region of the country is considered a cornerstone piece that allows a continuous and biologically diverse landscape creating a pathway for environmental flows that goes from the upper and lower montane humid forests of the central highlands to the coastal lowland forests, wetlands, mangroves, and seagrasses that extend into the Samaná Bay and towards the Atlantic Ocean. The Samana Bay, is the largest semi-enclosed bay in the Caribbean, which contains the most extensive mangrove and shrimp fisheries in the country, and is considered as the most important sanctuary for humpback whales in the North For Official Use Only Atlantic. The Yuna watershed contains 12 protected areas, classified as follows: (i) 6 National Parks; (ii) 2 Scientific Reserves; (iii) 3 Scenic Routes; and, (iv) 1 Natural Monuments. Both watersheds face severe deforestation, forest and land degradation, soil erosion, and are vulnerable to extreme weather events (floods and droughts) whose severity is likely to increase due to climate change. Agricultural production is the primary driver of deforestation and forest degradation in the country, which results in overexploitation of water resources and overuse of agrochemicals and pesticides. The decline in water availability is driven by deforestation and soil degradation, from the expansion of unsustainable agricultural practices, cattle ranching, inadequate land management planning, and reduced precipitations. In the lower sections of both watersheds, inefficient rice production systems demand increasing water resources, generating GHG emissions (methane), and contributing to soil and water contamination through agrochemicals and pesticide runoff. Rice is the main contributor to agricultural production value-added in the country and represents 14% of agriculture GDP. It Public Disclosure constitutes an important source of jobs and is considered a strategic crop in terms of food security, as represents the main staple of the Dominican diet. Approximately 30,000 farmers are dedicated to rice production, of which about 50% are small producers with less than 3 hectares, and in total, about 300.000 people are directly