Document of The World Bank
FOR OFFICIAL USE ONLY
PAD243 Public Disclosure Authorized Report No:
PROJECT APPRAISAL DOCUMENT
ON A
PROPOSED CREDIT IN THE AMOUNT OF SDR 8.20 MILLION (US$12.50 MILLION EQUIVALENT)
ON A
PROPOSED GRANT IN THE AMOUNT OF SDR 3.00 MILLION Public Disclosure Authorized (US$4.50 MILLION EQUIVALENT)
AND ON A
PROPOSED GRANT FROM THE GLOBAL ENVIRONMENT FACILITY TRUST FUND IN THE AMOUNT OF US$6.83 MILLION
TO THE
LAO PEOPLE'S DEMOCRATIC REPUBLIC
Public Disclosure Authorized IN SUPPORT OF A PROTECTED AREA AND WILDLIFE PROJECT (PAWP)
AS FOURTH PHASE OF
A SERIES OF PROJECTS ON STRENGTHENING REGIONAL COOPERATION FOR WILDLIFE PROTECTION IN ASIA
February 24, 2014
Southeast Asia Sustainable Development Unit Sustainable Development Department East Asia and Pacific Region Public Disclosure Authorized
This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCY EQUIVALENTS
(Exchange Rate Effective as of December 31, 2013)
Currency Unit = Lao LAK 8,030 Lao LAK = US$ I US$ 1.54 = SDR I
FISCAL YEAR October I - September 30
ABBREVIATIONS AND ACRONYMS
ADB Asian Development Bank APL Adaptable Program Loan ASEAN-WEN Association of South East Asian Nations - Wildlife Enforcement Network AWPB Annual Work Plan and Budget BCC Biodiversity Conservation Corridors BP Bank Procedure CA Conservation Agreement CAP Community Action Plan CC Climate Change CCM Climate Change Mitigation CEF Community Engagement Framework CPS Country Partnership Strategy CBD Convention on Biological Diversity CBI Community and Biodiversity Investment Window (EPF) CITES Convention on International Trade in Endangered Species of Wild Fauna and Flora CliPAD Climate Protection through Avoided Deforestation CQS Consultant Qualification Selection DA Designated Account DAFO District Office of Agriculture and Forestry (MAF) DFRM Department of Forest Resources Management (MONRE) DOF Department of Forestry (MAF) DOFI Department of Forest Inspection (MAF) DONRE District Office for Natural Resources and Environment (MONRE) DPC Department of Planning and Cooperation (MONRE) EA Environmental Assessment EPF Environment Protection Fund ERR Economic Rate of Return ESMF Environmental and Social Management Framework ESMP Environmental and Social Management Plan FCPF Forest Carbon Partnership Facility FIP Forest Investment Program FM Financial Management FRDF Forest Resources Development Fund GDP Gross Domestic Product GEF Global Environment Facility GIZ Deutsche Gesellschaft fir Internationale Zusammenarbeit GmbH (German Society for International Cooperation) GoL Government of Lao PDR GMS Greater Mekong Subregion GTI Global Tiger Initiative GTRP Global Tiger Recovery Program
ii IBRD International Bank for Reconstruction and Development IC Individual Consultant ICB International Competitive Bidding ICBF Integrated Conservation of Biodiversity and Forestry IDA International Development Association IFC International Finance Corporation IFR Interim Financial Report IMS Internal Monitoring System INTERPOL International Criminal Police Organization ISP Implementation Support Plan IUCN International Union for the Conservation of Nature KfW Kreditanstalt fUr Wiederaufbau (German Reconstruction Credit Institute) Lao PDR Lao People's Democratic Republic LD Land Degradation LENS Lao Environment and Social Project LENS2 Second Lao Environment and Social Project LULUCF Land Use and Land Use Change in Forestry M&E Monitoring and Evaluation MAF Ministry of Agriculture and Forestry MDGs Millennium Development Goals MEM Ministry of Energy and Mines METT Management Effectiveness Tracking Tool MOF Ministry of Finance MONRE Ministry of Natural Resources and Environment MoU Memorandum of Understanding MU Management Unit NCB National Competitive Bidding NEPL Nam Et - Phou Louey National Protected Area NEPL MU NEPL Management Unit NGO Non-Governmental Organization NNT Nakai Nam Theun National Protected Area NPA National Protected Area NT2 Nam Theun 2 hydropower plant NTFPs Non-Timber Forest Products NTPC Nam Theun Power Company NUOL National University of Laos ODA Overseas Development Assistance OP Operational Policy ORAF Operational Risk Assessment Framework PA Protected Area PAD Project Appraisal Document PAWP Protected Area and Wildlife Project PDO Project Development Objective PFRM Provincial Office of Forest Resources Management (MONRE) PICE Policy, Institutional, and Capacity Enhancement Window (EPF) PIF Project Identification Form PIM Project Implementation Manual PLUP Participatory Land Use Planning POFI Provincial Office of Forest Inspection (MAF) PONRE Provincial Office of Natural Resources and Environment (MONRE) ProCEED Project for Climate Awareness and Education QBS Quality Based Selection QCBS Quality and Cost Based Selection QER Quality Enhancement Review REDD Reduced Emissions from Deforestation and Forest Degradation RPF Resettlement Policy Framework
111 SA Social Assessment SA-WEN South Asia Wildlife Enforcement Network SDA Sub-project Delivery Agency SESO Social and Environmental Standard for Operation SFM Sustainable Forest Management SIA Social Impact Assessment SMART Specific, Measurable, Attributable, Realistic, Time-bound SOE Statement of Expenditure SSS Single Source Selection SUFORD Sustainable Forestry for Rural Development SUPSFM Scaling Up Participatory Sustainable Forest Management TA Technical Assistance ToR Terms of Reference TRAFFIC The Wildlife Trade Monitoring Network VDC Village Development Committee VDF Village Development Fund WCS Wildlife Conservation Society WEN Wildlife Enforcement Network WMPA Watershed Management Protection Authority WWF World Wildlife Fund
Vice President: Axel Van Trotsenburg Country Director: Ulrich Zachau Sector Manager: Julia Fraser Sector Director: John Roome Task Team Leader: Jean-Michel Pavy
iv LAO PDR: Protected Area and Wildlife Project (PAWP) Fourth Phase of a Series of Projects on Strengthening Regional Cooperation for Wildlife Protection in Asia
TABLE OF CONTENTS Page
I. STR A TEG IC C O N TEX T ...... 1 A . R egional and C ountr y C ontext ...... 1 B. Sectoral and Institutional C ontext ...... 2 C . H igher Level O bjectives to w hich the Project C ontributes...... 5
II. PROJECT DEVELOPMENT OBJECTIVES ...... 5 A . PD O ...... 5 B. Project Beneficiaries ...... 5 C . PD O Level R esults Indicators ...... 6
III. PR O JECT D ESCRIPTIO N ...... 7 A . Project Com ponents...... 7 B. Project Financing ...... 8 C . Lessons Learned and R eflected in the Project D esign ...... 9
IV . IM PLEM EN TA TIO N ...... 10 A . Institutional and Im plem entation Arrangem ents...... 10 B. R esults M onitoring and Evaluation ...... 10 C . Sustainability ...... 10
V. KEY RISKS AND MITIGATION MEASURES ...... 11 A . R isk R atings Sum m ar y Table ...... 11 B. O verall R isk R ating Explanation ...... 11
V I. APPR AISA L SU M M A R Y ...... 12 A . Econom ic and Financial Analyses ...... 12 B. Technical ...... 12 C . Financial M anagem ent ...... 12 D . Procurem ent ...... 13 E. Social (including Safeguards) ...... 13 F. Environm ent (including Safeguards) ...... 14 G . Issues Com m on to A ll Safeguards ...... 15
V ANNEX 1: RESULTS FRAMEWORK AND MONITORING ...... 16
ANNEX 2: DETAILED PROJECT DESCRIPTION...... 20
ANNEX 3: IMPLEMENTATION ARRANGEMENTS ...... 32
ANNEX 4: OPERATIONAL RISK ASSESSMENT FRAMEWORK (ORAF) ...... 55
ANNEX 5: IMPLEMENTATION SUPPORT PLAN ...... 64
ANNEX 6: FINANCIAL AND ECONOMIC ANALYSIS...... 67
ANNEX 7: LESSONS LEARNED ...... 71
ANNEX 8: CONSISTENCY WITH GEF IDENTIFICATION NOTE ...... 75
A N N EX 9: M A P...... 79
vi PAD DATA SHEET LAO PDR: Protected Area and Wildlife Project (PAWP) Fourth Phase of a Series of Projects on Strengthening Regional Cooperation for Wildlife Protection in Asia
PROJECT APPRAISAL DOCUMENT
East Asia and Pacific Region SustainableDevelopment Department
Basic Information Date: March 27, 2014 Sectors: Forestry (60%), Public Country Director: Ulrich Zachau Administration - Agriculture, Sector Manager: Julia Fraser Fishing, and Forestry (40%) Sector Director: John Roome Project ID: P128393 (IDA); P128392 (GEF) Themes: Biodiversity (60%); Environment Lending Instruments: Investment Project Financing Policies and Institutions (35%); Team Leader: Jean-Michel Pavy Climate Change (5%) Co Team Leader: Viengkeo Phetnavongxay EA Category: B
Joint IFC: No
Borrower: Lao People's Democratic Republic
Contact: Mme. Thipphakone Chanthavongsa, Director General, Department of External Finance, Ministry of Finance (MOF) 23 Singha Road, PO Box 46, Vientiane, Lao PDR Telephone No.: +856 21 911 611; Mobile +856 20 2222 2579 Email: thip61gyahoo.com Responsible Agency:
Environment Protection Fund (EPF) Mr. Soukata Vichit, Executive Director Telephone No. (856-21) 252739 Email. soukatavglaoepf.org.1a, Website: http://www.laoepf.org.la
Project Implementation Period: Start Date: June 1, 2014 End December 31, 2020 Date: Expected Effectiveness Date: August 1, 2014
Expected Closing Date: June 30, 2021
Project Financing Data (US$M) [ ] Loan [X] Grant [ ] Other [X] Credit [ ] Guarantee
vii For Loans/Credits/Others Total Project Cost: 25.23 Total Bank Financing: 23.83 Total Cofinancing: 1.40 Financing Gap: 0
Financing Source Amount (US$M) BORROWER/RECIPIENT 1.40 OTHER Cofinancing: 0.00 IDA: New 17.00 IDA: Recommitted 0.00 Others - GEF 6.83 Financing Gap 0.00 Total 25.23
IDA Expected Disbursements (in US$ Million) Fiscal Year 2015 2016 2017 2018 2019 2020 2021 Total Annual 0.80 1.20 2.0 3.0 5.0 3.0 2.0 17.0 Cumulative 0.80 2.00 4.0 7.0 12.0 15.0 17.0 17.0
GEF Expected Disbursements (in US$ Million) Fiscal Year 2015 2016 2017 2018 2019 2020 2021 Total Annual 0.10 0.50 0.80 1.00 1.50 2.00 0.93 6.83 Cumulative 0.10 0.60 1.40 2.40 3.90 5.90 6.83 6.83
Project Development Objective(s) To strengthen the management systems for national protected areas conservation and for enforcement of wildlife laws.
Components Component Name Cost (US$ Millions) Component 1: National institution development and capacity building 8.90 Component 2: Management of wildlife and protected areas 12.60 Component 3: Project administration and capacity building 3.73
Compliance Policy Does the Project depart from the CPS in content or in other significant respects? Yes [ ] No [X]
Does the Project require any waivers of Bank policies? Yes [ ] No IX] Have these been approved by Bank management? Yes [ ] No IX]
viii Is approval for any policy waiver sought from the Board? Yes [ ] No [X] Does the Project meet the Regional criteria for readiness for implementation? Yes [X] No I I
Safeguard Policies Triggered by the Project Yes No Environmental Assessment OP/BP 4.01 X Natural Habitats OP/BP 4.04 X Forests OP/BP 4.36 X Pest Management OP 4.09 X
Physical Cultural Resources OP/BP 4.11 X Indigenous Peoples OP/BP 4.10 X Involuntary Resettlement OP/BP 4.12 X Safety of Dams OP/BP 4.37 X Projects on International Waterways OP/BP 7.50 X
Projects in Disputed Areas OP/BP 7.60 X
Legal Covenants Name Recurrent Due Date Frequency Remedies of the Association x Continuous Description of Covenant IDA may suspend the Project if (a) EPF's Establishment Decree has been amended, suspended, abrogated, repealed or waived so as to affect materially and adversely the ability of EPF to implement the Project and to perform its obligations under the Subsidiary Grant Agreement, or (b) EPF has failed to perform any of its obligations under the Subsidiary Grant Agreement. Name Recurrent Due Date Frequency Institutional Arrangements X NA Continuous Description of Covenant For the purposes of carrying out the Project, the Recipient shall ensure that the EPF is maintained, at all times during the implementation of the Project, with a mandate, functions and resources satisfactory to the Association, and with staff in adequate numbers and with qualifications, experience and terms of reference satisfactory to the Association, including a steering committee, a technical committee, and a dedicated project management team. Name Recurrent Due Date Frequency Project Implementation Manual X NA Continuous Description of Covenant The Recipient shall ensure that the Project is carried out in accordance with the arrangements and procedures set out in the Project Implementation Manual (PIM). Name Recurrent Due Date Frequency Annual Work Plans and Budgets X NA Annual Description of Covenant The Recipient shall cause the EPF to prepare and furnish to the Association not later than March 31 of each year during the implementation of the Project (or such later date as the Association may agree) for the Association's no-objection, a consolidated Annual Work Plan and Budget containing all eligible Project activities and eligible expenditures. Name Recurrent Due Date Frequency Project Reports X NA Semi-annual
1x Description of Covenant The Recipient shall cause the EPF to monitor and evaluate the progress of the Project and prepare semi-annual Project Reports in accordance with the provisions of Section 4.08 of the General Conditions and on the basis of indicators acceptable to the Association and set forth in the Project Implementation Manual. Name Recurrent Due Date Frequency Name Recurrent Due Date Frequency Sub-grants X NA Continuous Description of Covenant The Recipient shall cause the EPF to provide Sub-grants for financing Sub-projects under Part 1 and Part 2 of the Project in accordance with the eligibility criteria (including negative checklist of excluded activities), approval and administration arrangements, and terms and conditions set out in the Financing Agreement and the Project Implementation Manual. Name Recurrent Due Date Frequency Midterm Review 12/31/2017 Description of Covenant The Recipient shall: (a) not later than December 31, 2017 (or such other date as the Association may agree), prepare and furnish to the Association a mid-term report, in such detail as the Association shall reasonably request.
Name Recurrent Due Date Frequency Environmental and Social Safeguards x Continuous Description of Covenant The Recipient shall ensure that the Project is carried out in accordance with the provisions of the Environmental and Social Management Framework (ESMF), the Community Engagement Framework (CEF) and the relevant Safeguard Assessments and Plans and other measures as defined in the Financing Agreement.
Conditions Name Recurrent Due Date Frequency Effectiveness Within 3 months after signing of the agreements. Description of Covenant As a condition for effectiveness of the Financing Agreement and of the GEF Grant Agreement: (a) both the IDA Financing Agreement and the GEF Grant Agreement have been executed and delivered and all conditions precedent to their effectiveness or to the right of the Recipient to make withdrawals under them (other than the effectiveness of these Agreements), have been fulfilled, and (b) The Subsidiary Grant Agreement has been executed on behalf of the Recipient and the EPF.
Team Composition Bank Staff Name Title Specialization Unit Jean-Michel Pavy Senior Environmental Specialist Biodiversity EASER (TTL) Viengkeo Phetnavonxay Environmental Specialist (co TTL) Environment, Environment EASTS safeguards Christophe Crepin Sector Leader Environment EASER Peter Leonard Regional Safeguard Coordinator Safeguards EASDE Ruxandra Floriou Senior Environmental Engineer Environmental Safeguard EASTS Focal Point
x Roch Leveque Senior Counsel Legal Counsel LEGAM Manush Hristov Senior Counsel Senior Counsel LEGES Viengsamay Srithirath Country Officer Communication EACLF StrategyPolitical Analysis Manoly Sisavanh Program Assistant Operational and Admin EACLF Support, Vientiane Ngozi Blessing Obi Malife Program Assistant Operational and Admin EASER Support, Headquarter Siriphone Vanitsaveth Financial Management Officer Financial Management EASFM Malarak Souksavat Financial Management Analyst Financial Management EASFM Khamphet Chanvongnaraz Procurement Specialist Procurement Management EASR2 Satoshi Ishihara Sr. Social Development Specialist Social Safeguards Focal EASTS Point Chanhsom Manythong Rural Development Specialist Rural EASTS Development/Agriculture Konesawang Nghardsaysone Trade Officer Wildlife Trade EASPT George Henry Stirrett Junior Professional Associate Environment EASER Stefanie Sieber Environmental Economist Economic Analysis EASER Claudia Sobrevila Senior Environmental Specialist Peer Reviewer AFTN3 Valerie Hickey Senior Biodiversity Specialist Peer Reviewer AES Sumith Pilapitiya Senior Environmental Specialist Peer Reviewer SASDI Simon Robertson Senior Forensic Data Officer Peer Reviewer INTOP Non Bank Staff Name Title Office Phone City Renae Stenhouse Consultant Biodiversity (1) 202 644 6863 Washington, USA Richard Grandalski Consultant Wildlife Law Enforcement Seattle, USA Mike Dyson Consultant Wildlife Law Enforcement (03) 6223 3055 Hobart, Australia Gabriele Rechbauer Consultant Operation (33) 9 5004 3790 Strasbourg, France Manida Unkulvasapaul Consultant Environment (856) 20 5665 9748 Bangkok, Thailand
Locations Country First Administrative Location Planned Actual Comments Division Laos Vientiane Capital Vientiane X Capacity building Laos Houaphan Province Xam Neua X Capacity building Laos Houaphan Province Nam Et Phou Louey X Capacity building; NPA Investment; Community sub-projects Laos Luang Prabang Province Nam Et Phou Louey X Capacity building; NPA Investment; Community sub-projects
x1 Laos Xiengkhouang Province Nam Et Phou Louey X Capacity building; NPA Investment; Community sub-projects Laos Khammouane Province Thakhek X Capacity building Laos Khammouane Province Nakai Nam Theun X Capacity building; NPA Investment; Community sub-projects Laos Bolikhamxay Province Paksane X Capacity building Laos Bolikhamxay Province Nakai Nam Theun X Capacity building; NPA Investment; Community sub-projects
xi I. STRATEGIC CONTEXT
A. REGIONAL AND COUNTRY CONTEXT 1. This is the fourth phase of a horizontal Adaptable Program Lending (APL)1 on 'Strengthening Regional Cooperation for Wildlife Protection in Asia' (the Program). Phase 1 (Nepal and Bangladesh) and Phase 2 (Bhutan) are ongoing. Phase 3 (India) was dropped.
2. Regional Overview. Together, Southeast Asia (11 countries; 4.4 million kM2 ; 0.62 billion people) and South Asia (8 countries; 4.4 million km2; 1.60 billion people) represent 310% of the global population and only 5% of the gross world product. They are two of the fastest growing regions in the world, averaging annual growth rates of 5.5% and 7.6% respectively over the past decade. Both regions have benefited from expanding regional production networks, integration with the global economy and a commodity boom. Though these two regions have traded with one another for millennia, economic integration has been modest. The near future could be very different. The ASEAN-India Free Trade Agreement has already started to enhance economic connections. Although a net benefit is assumed, closer integration may entail environmental and social costs by accelerating the spread of pollution, environmental degradation, and crime.
3. National Overview. Located within Southeast Asia, Lao People's Democratic Republic 2 (PDR), 236,800 kM2, 6.64 million people, is landlocked and shares borders with China, Myanmar, Vietnam, Thailand and Cambodia. Since 2003, the Government of Lao PDR (GoL) capitalized on East Asia's rising demand for electricity and natural resources (hydropower and mining) through trade liberalization and infrastructure. As a result, growth accelerated to an average Gross Domestic Product (GDP) growth rate of 6.7% and the natural resource sector expanded 21 % annually, tripling its contribution to the GDP from 6 % (1998) to 16% (2011). The subsequent reduction in poverty is impressive, with the percentage of citizens below the poverty line decreasing from 39.1% (1998) to 27.6% (2008)2. The GoL has set the target of graduating to Middle Income Country status by 2020. To achieve this goal, the 7th National Socio-Economic Development Plan proposes to continue developing the natural resource sector.
4. Sustainability of Economic Growth. A challenge to long-term prosperity in Lao PDR is the lack of investment in the natural resource base that fuels the current economic growth, especially natural habitats. Lao natural habitats provide a plethora of services that enrich and sustain human life with both tangible and intangible economic and social values, including clean air, exploitable water, watershed protection, biological control of pests, and crop pollination. Continued, unsustainable degradation of natural ecosystems jeopardizes infrastructure and public health through the enhanced probability of flooding, declining water availability and quality, soil fertility loss, spread of diseases such as malaria and alienation of economic opportunities such as nature tourism all of which disproportionally affect the poorest segment of the population.
5. Poverty Environment Nexus. Despite progress in poverty reduction, many Lao citizens remain poor and dependent on natural resources. This is especially relevant for the ethnic and rural communities where the overwhelming majority of the population is reliant on natural
'An Adaptable Program Lending or APL is now referred to as a Series of Projects 2 World Bank Lao PDR Poverty Assessments
1 resources for food security and income opportunities. For example, villagers within Nam Et- Phou Louey National Protected Area (NEPL NPA) acquired 67% of their animal protein from wild sources 3 . In rural areas, non-timber forest products (NTFPs) contribute between 30-70% of income for forest-dependent households. Nationwide, domestic consumption of wood and NTFPs is valued at around US$31.4 million annually. With population predictions increasing from 6.6 million (2012) to 7.6 million (2020) consequences for wildlife and forest are dire.
B. SECTORAL AND INSTITUTIONAL CONTEXT 1. Brief overview of the Sector in the Region and Country
6. South Asia and Southeast Asia each contains approximately 13 and 15% of global biodiversity. Southeast Asia has the highest mean proportion of country-endemic birds (9%), mammal species (11%), and the second highest proportion of vascular plant species (25 %)4. As a result, virtually all of Southeast Asia is included in one of the world's twenty-five biodiversity hotspots, with the Indo-Burma Biodiversity Hotspot shared between Lao PDR, Nepal, Bhutan, Bangladesh, India, and others . Together, South Asia (65%) and Southeast Asia (25%) contain approximately 90% of the remaining wild tigers, as well as virtually every wild population of Asian Elephants and a myriad of other unique and charismatic fauna.
7. Within Southeast Asia, Lao PDR is distinguished by habitat integrity and species uniqueness6 . It has the highest percentage of natural forest in the region with approximately 40% (9.8 million hectares). It possesses 24 protected areas (PA or conservation forests) nominally protecting approximately 15% of the total land area (3.8 million hectares). Around 50% of the PAs line an international border, making transboundary management a necessity. Two of Lao PDR's most distinctive ecological regions are included in the Project: the Northern Indochina Sub-Tropical Moist Forests (represented by NEPL NPA) and the Annamite Range Moist Forests (represented by Nakai Nam Theun National Protected Area (NNT NPA). NEPL NPA (5,959 km2) is globally distinguished by containing the last confirmed breeding population of Indochinese Tigers in Lao PDR. The Annamite Range (shared between Vietnam and Lao PDR) contains the most species endemism of any non-island ecosystem in the world and new species are regularly discovered. Adjacent to the Nam Theun 2 Hydropower Station, the NNT NPA (3,450 kM2 ) is located in the heart of this region, containing populations of the critically endangered Saola (identified in 1993), and endangered Giant Muntjac (identified in 1994).
8. National Policy, Legislation and Institutions. The PA management policy is based on integrated conservation and development with a focus on collaboration and benefits for local people. All PAs are multiple-use areas corresponding with the International Union for the Conservation of Nature (IUCN) PA Category VI. The Forestry Law (2008) categorizes PAs as either (a) conservation forest or (b) protection forest. PAs can be national (NPAs), provincial or district. Wildlife management is governed by the Forestry Law, Wildlife Law (2007) and the Ministry of Agriculture and Forestry (MAF) Regulation No. 0360 (2003). The Wildlife Law
3 Johnson, A. et al. 2010. Finding the Linkages Between Wildlife Management and Household Food Consumption in the Uplands of Lao People's Democratic Republic: A Case Study from the Nam Et-Phou Louey NPA. USAID-WCS Study 4 Sodhi et al. 2010. The State and Conservation of Southeast Asian Biodiversity. Biodiversity Conservation 19:317-328 s Sodhi et al. 2004. Southeast Asian Biodiversity: an Impending Disaster. TRENDS in Ecology and Evolution 19:12. 6 There are over 700 species of birds, 90 species of bats, 100 species of large mammals and 500 indigenous species of fish in Laos (WREA, 2008). In 1999 Duckworth et al. reviewed 1,140 species of Laos, and found that 319 are of national or global biodiversity significance.
2 divides species into three categories: (a) prohibited species, (b) management species, and (c) common or general species. In 2011, the Ministry of Natural Resources and Environment (MONRE) was created. The MONRE Department of Forest Resource Management (DFRM) oversees PAs. Only a few PAs have a management entity. Instead, the majority of PAs are loosely managed by staff from the District Offices for Natural Resources and Environment (DONRE). MAF, through its Department of Forest Inspection (DOFI), created in 20087, has retained responsibility for law enforcement on wildlife and forestry. In 2012, the Sam Sang (devolution) Directive delegated responsibilities to provinces, districts, and villages.
9. International Commitments. The GoL signed the Convention on Biological Diversity (CBD) in 1992 and the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES) in 2003. Lao PDR is a member of the ASEAN Wildlife Enforcement Network (ASEAN-WEN) launched in 2005, and established its own Lao-WEN network in May 2011. In 2012, DOFI adopted its national strategy, which includes wildlife law and international trade control in partnership with Lao-WEN institutions.
2. Key Challenges Facing the Sector in the Region and Country
10. Ecosystem Erosion. Southeast Asia's annual deforestation rate (1.4% during the past decade) is the highest among all tropical regions and increasing. Broad regional projections (2003) predict that 13 to 42% of all Southeast Asian species could be extinct by 2100 due to a 72 to 90% loss of natural habitat. Lao PDR also is rapidly losing its remaining 9.5 million ha of forest: during the 1990s the annual loss of forest cover was around 1.4% or 134,000 ha per year. Wildlife populations are declining as well, though only anecdotal data is available.
11. Drivers ofEcosystem Erosion. The causes of deforestation and forest degradation in Lao PDR are: fire, unsustainable wood extraction, pioneering shifting cultivation, agricultural expansion, industrial tree plantation, mining, hydropower, infrastructure development, and urban expansion. In recent years, roads construction, mining and hydropower development increasingly threaten natural habitat in PAs. In addition to habitat destruction, a threat to South and Southeast Asian biodiversity is illegal hunting. Hunting contributes to food security, but increasingly illegal wildlife products enter the national and international markets for food, skins, medicinal ingredients and ornaments. The increasing demand for wildlife is linked to urbanization and economic growth, especially in China and Vietnam. Lao PDR is an important country in the illegal wildlife international trade, as both a transit and source country.
3. Key Sector Issues
12. First, a challenge to addressing the depletion of wild resources is the perception still shared by many that environmental considerations are a hindrance to the country's economic aspirations. Second, Lao PDR is possibly the lowest performing Asian country for wildlife trade control8. Wildlife traders adapt to changing enforcement to operate in countries with limited control capacity. Third, the organization of PA management is complex, especially NPAs. The management of each PA is entrusted to environment district officers with diffuse accountability
MAF Agreement 0340/MAF 8 WWF, 2012. Wildlife Crime Scorecard: Assessing Compliance with and Enforcement of CITES Commitments for Tigers, Rhinos and Elephants. WWF International, Gland.
3 as well as little staff, equipment and training. Fourth, collaboration between the Vietnam and Lao PDR conservation agencies is ineffective despite attempts since the 1990s. Fifth, the public departments tasked with NPA oversight and wildlife law enforcement are critically underfunded and understaffed. Sixth, there is domestic shortage of technically skilled workers and university graduates. Finally, even though a suitable strategy to involve communities in PA management exists, it is not implemented to its full extent in any of the country PAs.
4. Strategy of the Country to Address National and Regional Sector Issues
13. National Biodiversity and Forestry Strategies. The 2004 National Biodiversity Strategy to 2020 and Action Plan to 2010 seek to "maintain the diverse biodiversity ... to protect the current asset base of the poor". The Forestry Strategy 2020 aims to restore forested areas to about 70% of the total land area, "to generate a sustainable stream of forest products, to preserve unique and threatened habitats, and promote environmental conservation and protection."
14. Environment Financing. To mitigate the low budget allocated to DFRM and DOFI, the GoL established two funds. The Forest Resources Development Fund (FRDF) under MAF receives a portion of the timber sales. The FRDF finances the management of production, protection, and conservation forests. The Environment Protection Fund (EPF) is an autonomous institution under the Government Office. It manages an endowment provided by the Asian Development Bank (ADB) and voluntary contributions from hydropower and mining companies.
5. Current International Assistance to the Sector
15. The past 10 years saw an increased support from non-government organizations (NGOs) and overseas development assistance (ODA) to environment management in Lao PDR. There is an abundance of donor financial support for the forestry sector in Laos, approximately US$150 million (ongoing and pipeline). See Annex 2 for more details.
6. Rationale for Bank involvement
16. Phase 4 of a Regional Series of Projects. The Project will be the fourth phase of a series of projects designed to strengthen regional cooperation for wildlife protection in Asia (see also par. 1). It satisfies the regional IDA criteria: (a) it involves three or more countries (Bangladesh, Nepal, Bhutan and Lao PDR); (b) its environmental benefits spill over country boundaries (see section II.B on beneficiaries; (c) there is evidence of country ownership through ASEAN-WEN and South Asia WEN (SA-WEN) which demonstrates commitment of the majority of participating countries; and (d) it provides a platform for policy harmonization between the countries participating in the WEN which will gradually improve transfrontier and regional coordination and strategies. The Project meets the three regional Program triggers: (a) a formal expression of interest was received from the GoL expressing interest and willingness to tap into IDA resources for the Project, (b) a program of activities was designed to meet the regional project's objective which is 'to assist the participating governments to build and enhance shared capacity, institutions, knowledge and incentives to collaborate in tackling illegal wildlife trade and other selected regional conservation threats to habitats in border areas', and (c)an appraisal of the Project by the World Bank.
4 17. Greater Mekong Subregion (GMS) Forests and Biodiversity Regional Support Project. The Project is a building block of the above-referenced GEF5 Project for which the higher objective is to facilitate enhanced regional cooperation and coordinated national actions for the sustainable management of a network of priority conservation landscapes in the GMS. It will contribute to Output #2: Management of transboundary biodiversity conservation landscapes and local livelihoods improved (see Annex 2 for more details).
C. HIGHER LEVEL OBJECTIVES TO WHICH THE PROJECT CONTRIBUTES 18. The conservation of natural ecosystems in Laos is at the nexus of the World Bank's two corporate goals: shared growth and poverty alleviation. First, the sustainability of future economic growth is dependent on well-managed natural resources. Second, the livelihoods of many rural poor are heavily dependent on natural resources. The proposed Project is included in the Country Partnership Strategy (CPS) and will contribute to the CPS 2012-2016 Strategic Objective 2 Sustainable Natural Resource Management in general and to Outcome 2.3: 'sustainable management and protection of forests and biodiversity in particular'. The Project is one of a set of complementary operations supporting this objective of the CPS: (a) the Nam Theun 2 (NT2) project which initiated the development of the NNT NPA that the Project will help restructure, (b) the second Lao Environment and Social Project (LENS2) project which will also use EPF sub-projects but with a broader focus on decentralized environment and water resources management capacity building, (c) the ongoing Integrated Water Resources Management project which focuses on river basin management, and (d) the Forest Support operation which support MAF efforts in Production Forests including a similar strategy to proposed project to support community livelihoods.
19. In addition, the Project will contribute to millennium development goal 7 "ensure environmental sustainability" the World Bank Road Map for Environment Law Enforcement 9 and the Global Tiger Initiative (GTI).
II. PROJECT DEVELOPMENT OBJECTIVES A. PDO 20. The Project Development Objective (PDO) is to strengthen the management systems for national protected areas conservation and for enforcement of wildlife laws.
B. PROJECT BENEFICIARIES 21. The proposed Project contributes to global, regional, national, and local public goods and provides direct benefits to Government agencies and village communities (see table below).
22. Rural Beneficiaries. There will be an emphasis on rural community involvement in conservation, with about 100 villages (between 50,000 and 100,000 people) receiving training and direct livelihood support. Ethnic minorities (Hmong, Khmu, Mien, Makong, Bru and others) living in and around the NPAs are the main project beneficiaries. These are considered to be vulnerable ethnic groups in Lao PDR as their livelihood is heavily based on subsistence agriculture and forest. The Project enhances the assets of the poor by expanding sustainable livelihood opportunities and by reducing the poor's vulnerability to natural-resource related
'Approved by the Board in 2013.
5 shortages (i.e. NTFPs, wildlife, fish, and timber), with a special emphasis on women. All of the villages are located within the 46 GoL priority districts for poverty reduction. In some communities, the Project will contribute to land use planning and land allocation activities, which have been correlated strongly in Lao PDR with a 10% lower incidence of povertylo
23. Government Beneficiaries and National Benefits. Direct beneficiaries include a number of Government agencies and their staff such as the EPF, DFRM, DOFI, Watershed Management and Protection Authority (WMPA), Province and district staff, National University of Laos (NUOL), Department of Justice, Customs Department, and the Environmental Police. The Project will improve the capacity of these institutions to preserve the integrity of a most important environmental asset of Lao PDR.
24. Regional and Global Benefits. The Project would create a number of positive regional and global externalities. In particular, enhanced management of wildlife species in NNT and NEPL may provide Vietnam with more viable wildlife populations of key species such as tigers, elephants, and saola. The Project is also expected to have some global climate change mitigation benefits by reducing deforestation and land degradation in the two PAs.
National Benefits (Outcomes) Regional Benefits (Outcomes) Global Benefits (Outcomes) IDA Nat. allocation (US$9.00 M) IDA Regional (US$8.00 M) GEF (US$6.83 M) Capacity of national institutions in Knowledge transfer from global and Limit the degradation trend of PA management and wildlife trade regional institutions and universities globally important biodiversity law enforcement enhanced and endangered wildlife Transfrontier management of Watershed protection and transfrontier ecosystem (Annamite) Reduced pressure on forest consequence on availability of water including corridors between protected through integrated land use for downstream users areas across borders planning and management with communities within and around Livelihood development linked to Preservation of tiger habitat & improved NPAs multiple environmental benefits steps toward tiger preservation along the (biodiversity and forest protection) Laos/Vietnam border. Reduced carbon emissions through avoided emissions from Strengthened livelihoods for people Improved scientific knowledge about deforestation and degradation who depend on the use of forest transfrontier ecosystem and especially on (although this is not specifically resources, within and around NPAs critically endangered species such as targeted and will not be saola and tiger that span the borderland. measured) Preserved economic opportunities from ecosystem services provided Diminution of the illegal cross border by better protected NPAs including trade in wildlife and wildlife parts and tourism development and sustainable improvement of the reputation of both use of natural resources. countries.
C. PDO LEVEL RESULTS INDICATORS 25. The Project's outcomes will be measured by key performance indicators, including one core indicator". For details on outcome and intermediary outcome indicators see Annex 1.
* Area brought under enhanced biodiversity protection (hectare, METT1 2 ) - core indicator;
o World Bank (2006), Poverty Environment Nexus: Sustainable Approaches to Poverty Reduction in Cambodia, Lao PDR, and Vietnam A second core indicator, number of beneficiaries, is an intermediary outcome indicator.
6 * International illegal trade information reports submitted by DOFI to international law enforcement or monitoring agencies (number); * Functional capacity of DFRM, Lao-WEN, WMPA and NEPL Mgt Unit (aggregate index).
III. PROJECT DESCRIPTION 26. The Project will create wildlife/PA enforcement standards, develop good practice applications, and learn successful schemes for PA management and reduction of illegal wildlife trade. The Project will build on bilateral initiatives between Lao PDR and Vietnaml3 to control illegal wildlife trade, as well as strengthen Lao PDR's capacity to collaborate with regional centers of knowledge and with international organizations addressing wildlife trafficking.
A. PROJECT COMPONENTS 27. Component 1 and 2 will be implemented through a sub-project mechanism administered by EPF. EPF would provide grants to sub-project delivery agencies (SDA). Component 3 will help the EPF administer the Project and expand/strengthen its own capacity. The design of most sub-projects will be completed during year 1 of implementation. Five provinces are eligible: Bolikhamxay, Khammouane, Houaphan, Luang Prabang and Xiengkhouang. All sub-projects must (a) support a GoL policy and an official plan, (b) contribute to at least one outcome indicator and at least one intermediary outcome indicator, and (c) contribute to a regional outcome such as cross border cooperation, knowledge transfer or prevention of illegal wildlife trade. About US$13.9 million from the IDA credit/grant and the GEF grant has been allocated to an initial portfolio of 16 sub-projects. A reserved budget of about US$6.4 million will either support the scale up of successful initial sub-projects or new sub-projects identified during implementation that meet the selection criteria (see Annex 2 for more details).
Component 1: National institution development and capacity building (US$6.50 million of which World Bank US$6.10 million1 4)
28. This component seeks this Intermediary Result: improved capacity of DFRM, DOFI and other institutions' partnership to implement and monitor national conservation laws, regional/international commitments, and operate according to a clear national plan. These sub- projects are implemented through the EPF's window Policy Implementation and Capacity Enhancement (PICE). The initially proposed sub-projects and estimated initial budget are outlined below. Additional sub-projects may be identified during project implementation.
Sub-project IDA/GEF Allocation SDA (US$ '000) 1.1 Capacity building for national biodiversity planning and monitoring 0.20 DPC 1.2 Capacity/institution building for PA management/wildlife cons. 1.50 DFRM 1.3 Capacity building for addressing regional wildlife trafficking 1.50 DOFI 1.4 Human resources development for wildlife and PA management 2.30 NUOL 1.5. Constituency building of high level officials 0.30 Kaysone Acad.
12 METT: The Management Effectiveness Tracking Tool was developed by WWF and the World Bank as a standard benchmark to the effectiveness of PA management worldwide. It is a World Bank core indicator on biodiversity and is mandatory for GEF projects supporting PAs. An MOU on "cooperation in controlling, preventing illegal trading and transporting of timber, forest products and wildlife" was signed for 2009-2012 and an extension was signed in June 2012. 14 This amount does not include the reserved budget (unallocated) which explains why it is different from the component amount in the datasheet which prorate the unallocated amount between Component 1, 2 and 3.
7 1.6. Constituency building of public administration 0.30 GO PR" Total initial World Bank funding allocation 6.10
Component 2: Management of wildlife and protected areas (US$8.60 million of which World Bank US$7.80 million)
29. This component seeks this Intermediary Result: improved Provincial Offices of Forest Inspection (POFI), Provincial offices of Forest Resources Management (PFRM), WMPA, communities and other stakeholders' capacity to conserve NPAs and protect wildlife in five provinces against threats from infrastructure development and illegal use or trade of natural resources. These sub-projects are implemented through the EPF's window Community and Biodiversity Investment (CBI). The initially proposed sub-projects and estimated initial budget are outlined below. Additional sub-projects may be identified during project implementation.
Sub-project IDA/GEF Allocation SDA (US$ '000) 2.1 Management of the Nakai Nam Theun NPA 2.80 WMPA 2.2 Management of the Nam Et Phou Louey NPA 2.80 NPA MU 2.3 Coordination of NPA management in Bolikhamxay Province 0.20 PFRM B 2.4 Coordination of NPA management in Khammouane Province 0.20 PFRM K 2.5 Coordination of NPA management in Houaphan Province 0.20 PFRM H 2.6 Coordination of NPA management in Luang Prabang Province 0.20 PFRM L 2.7 Coordination of NPA management in Xiengkhouang Province 0.20 PFRM X 2.8 Wildlife law enforcement in Bolikhamxay Province 0.40 POFI B 2.9 Wildlife law enforcement in Khammouane Province 0.40 POFI K 2.10 Wildlife law enforcement in Houaphan Province 0.40 POFI H Total initial World Bank funding allocation 7.80
Component 3: Project administration and capacity building (US$3.2 million of which World Bank US$3.00 million)
30. This component seeks this Intermediary Result: Project's outputs are delivered within the allocated time frame and with satisfactory planning, procurement, financial management, monitoring, and communication. Component 3 will support the administration of the sub-project mechanism by EPF. It will include capacity building of EPF staff and systems including fund raising, compliance with the World Bank's fiduciary requirements, especially procurement, and environment and social safeguards, monitoring and evaluation, communicating with stakeholders, and facilitating effective coordination and cooperation among SDAs. B. PROJECT FINANCING 31. Lending instruments. The lending instrument for the Project includes Investment Project Financing with (a) an IDA credit in the amount of US$12.5 million equivalent (of which US$8 million equivalent is from the IDA regional allocation); (b) an IDA grant in the amount of US$4.5 million equivalent; and (c) a grant from the Global Environment Facility of US$6.83 million. The IDA credit will be on standard IDA terms. GoL will provide US$1.4 million in in- kind contribution.
'5 Government Office Public Relation
8 32. IDA regional allocation. As a regional series of projects, Lao PDR is accessing IDA regional funds. (Annex 2 provides additional information on activities potentially financed by sub-projects that are regional in nature).
33. GEF. Lao PDR is accessing its GEF5 allocation to contribute to alleviating identified threats in the two selected PAs as well as by improving local capacity and awareness and reviewing management systems nationally. The GEF support will be incremental to the GoL and IDA co-financing and the parallel financing from Nam Theun Power Company (NTPC), World Wildlife Fund (WWF) and Wildlife Conservation Society (WCS).
34. Project costs and financing. The Project cost is US$25.23 million. The IDA credit and grant, and the GEF grant will finance all expenditures on a joint co-financing basis, i.e. in disbursement percentages corresponding to the relative shares of the credit and grants. Parallel financing for additional activities related to the Project will include US$8.40 million from the NTPC (to WMPA), US$0.35 million from WCS, US$0.30 million from WWF and in kind contribution from GoL is estimated at US$0.2 million per year or US$1.4 million.
Project Components Project IDA Credit IDA Grant GEF GoL ('000 US$) ('000 US$) ('000 US$) ('000 US$) ('000 US$) Component 1: National institution development and 6,500 3,260 1,040 1,800 400 capacity building Component 2: Management of wildlife and 8,600 4,200 1,300 2,300 800 protected areas Component 3: Project administration and capacity 3,200 1,575 545 880 200 building Refinancing of the Project Preparation Advance 530 530 Total Baseline Costs 18,830 9,035 3,415 4,980 1,400
Unallocated 6,400 3,465 1,085 1,850 0
Total Project Costs 25,230 12,500 4,500 6,830 1,400
C. LESSONS LEARNED AND REFLECTED IN THE PROJECT DESIGN 35. Since the 1980s, the World Bank and GEF have accounted for 60% of global biodiversity-related funding. Over the past ten years, the direct biodiversity commitments have been worth over US$1 billion spread across 74 countries in 245 projects. Integrated into the Project is a series of lessons learned based on this long and substantial previous experience globally and specifically in the Lao PDR context and regional projects (see Annex 7). World Bank experiences around the world emphasize that biodiversity conservation and management can yield income and growth opportunities if natural capital is not relegated to a readily disposable commodity. Furthermore, clarifying access, tenure, and benefits from biodiversity establish incentives and build the poor's assets. The importance of well-structured PAs and PA institutions with relative autonomy and strong leadership are vital for long-term sustainability, and the role of law enforcement is crucial for a well balanced approach to wildlife management.
36. As well, key lessons learned from other Lao biodiversity and sustainable development projects confirm: (a) that EPF has proven itself as a cost-effective mechanism for delivering finances to provincial and district administrations; (b) the need for strong due diligence on safeguard risks and strong safeguard frameworks to avoid infractions as such attention would absorb a large proportion of the supervision budget and staff time; (c) the importance of
9 community-based conservation initiatives within a decentralization policy environment and the need for these community schemes to have targeted, narrowly-defined, and measurable results; (d) the importance to strike a balance between incentive-based conservation and effective law enforcement without which experience has shown no sustainable results are obtained; (e) the need for not only national level dialogue on protected areas and wildlife trade but also the necessity of acquiring commitments from provincial and district governments; (f) the importance of an aggressive communication strategy to reverse the prevailing attitudes of environmental conservation being contrary to development; and (g) the importance to restructure WMPA into a PA management institution with PA management tools.
IV. IMPLEMENTATION
A. INSTITUTIONAL AND IMPLEMENTATION ARRANGEMENTS 37. Regional. Regional coordination, especially with South Asia countries in the Program, will be mobilized through thematic meetings on transboundary conservation issues. India and Vietnam are expected to join in the discussions. The long-term regional coordination mechanism would be through the SA-WEN and ASEAN-WEN (see Annex 3).
38. National. The EPF will be the implementing agency. The EPF Board, chaired by the Deputy Prime Minister will serve as Project Steering Committee. To strengthen EPF, a TA package will be provided (see also IV.B). The EPF secretariat will be responsible for project administration including financial management, procurement, monitoring and reporting. EPF will assist SDAs in developing sub-project proposals, provide training and support during implementation (see Annex 3).
B. RESULTS MONITORING AND EVALUATION 39. Monitoring and Evaluation (M&E). The EPF will recruit an M&E adviser. Monitoring indicators (see Annex 1) are aligned with the GoL Forestry Strategy 2020, the World Bank's core indicator for biodiversity, land degradation, sustainable forest management, biodiversity and GTI indicators. Project and sub-project monitoring is governed by the Project Implementation Manual (PIM). Each SDA will submit an Annual Work Plan and Budget (AWPB) with indicators feeding into the Project's Result Framework. The EPF will consolidate sub-projects AWPBs in a Project AWPB. It will combine all sub-project reports in semester reports. Line ministries will verify that sub-projects are aligned with sectoral policies. Mid-term and end-of- project evaluations will be carried out by consultants.
C. SUSTAINABILITY 40. The main sustainability aspects are: human resource and institutional and financial sustainability. Investments in human resource development is a key element to achieve sustainable results in the country as the governmental agencies have a high demand for trained officers and national experts. The financial sustainability of the national PA system based on GoL budgets is unrealistic. The environmental sector has largely been funded by donors and there is no sign of this diminishing. So, if GoL is able to clarify the institutional structure for PA management and increase capacity, the Project results should be sustainable with donor funding. The Project will support a feasibility assessment of other mechanisms of non-governmental funding including biodiversity offset, endowment funds or earmarked funding windows to cover
10 recurrent costs of the NPAs. The expected capacity gains should facilitate GoL negotiations with the private investors on sustainable developments in and around the target sites.
V. KEY RISKS AND MITIGATION MEASURES
A. RISK RATINGS SUMMARY TABLE
Stakeholder Risk High Implementing Agency Risk - Capacity Substantial - Governance Moderate Project Risk - Design Substantial - Social and Environmental High - Program and Donor Moderate - Delivery Monitoring and Sustainability High Overall Implementation Risk High
B. OVERALL RISK RATING EXPLANATION 41. The Project is expected to face high risks during implementation as described in the Operational Risk Assessment Framework in Annex 4 and summarized below.
42. Stakeholder Risks. The Project supports a transformational agenda to regulate wildlife trade and enhance PA management. However, not all branches of society (GoL, industry, local communities) are ready for these policies. In NEPL NPA, there are dams and roads planned. In NNT NPA, there is a history of illegal mining, logging, and poaching. Villagers around PAs who rely on the natural resources could view the Project as conflicting with their priorities and needs. The Community Engagement Framework (CEF) - an approach to partnering with communities - has been developed to mitigate this risk while complying with safeguards.
43. Implementing Agency Risks. EPF is stably anchored in the Government Office. EPF's capacity is reasonable, as proven by the implementation of the Lao Environment and Social Project (LENS 6). However, with PAWP and LENS2 scaling-up, there is a risk of insufficient planning and management capacity to implement the Project with increased funds and geographic scope. This risk will be mitigated by financing a dedicated team lead by an international TA as well as financial management, procurement, and M&E staff which will improve EPF's operational capacity. The Project would also finance international-level short term TA in two of the main SDAs: DRFM and DOFI.
44. Project Design Risks. The Project involves two ministries, the five provincial governments, more than ten district governments, about 100 villages, WMPA and NEPL Management Unit (MU), and local and international NGOs. International and intra-government cooperation has not been very strong in Lao PDR, and yet this Project requires both. This risk is exacerbated by the current uncertainty caused by the Sam Sang (decentralization) unrolling.
45. Delivery Monitoring. There is insufficient experienced staff in MONRE, WMPA, NEPL MU, and MAF to ensure effective monitoring and evaluation. Difficult access to selected PA
16 In the LENS ICR, EPF performance was rated MS.
11 sites makes monitoring of environmental and social outcomes challenging. One EPF staff will be dedicated to M&E, and M&E training will be made available for EPF and SDA staff.
VI. APPRAISAL SUMMARY
A. ECONOMIC AND FINANCIAL ANALYSES 46. Benefits from improving PA management. Conservation of biodiversity provides long- term benefits. Under the status quo scenario, the degradation and depletion of forest resources, biodiversity, and wildlife will continue. Under the Project investment scenario, pressures on these resources will decrease. The potential economic benefits of improved NPA management are expected to be large. Preliminary estimates suggest that the net present value of the Project intervention in NEPL NPA could be as high as US$8.3 billion over 10 years (see Annex 6).
47. Benefits from improved enforcement of wildlife laws. The economic analysis draws on the literature on the economics of combating global crime through cooperative actions. In a seminal 2009 paper, Sandler et al17 argue that joint and cooperative actions are a public good, comparing the decision-making by countries to that of a "prisoner's dilemma". Annex 6 presents a review of the economic aspects of cooperation in developing and implementing transnational policies for international rivers, forests, and habitat management. The quantitative analysis builds on Sandler's methodology of cooperative actions against a "public bad". National data of poaching and illegal wildlife trade are not available and estimates of the incidence of these crimes are elusive. The Project's regional approach entails the use of available estimates for Southeast Asia's share of the world's biodiversity (i.e. at least 15%) and for the global value of illegal wildlife trade (i.e. US$20 billion) as the starting point of the analysis. Thus, the value of the illegal wildlife trade in the region is assumed to be at around US$3 billion.
B. TECHNICAL 48. PAs and wildlife operations are not using advanced technology or technical design. There is no sophisticated information technology per se except the purchase of communication equipment for NPAs and satellite images for forest cover analysis.
C. FINANCIAL MANAGEMENT 49. Assessment. The fiduciary risk in the country is considered "High" as the operations aimed at mitigating this risk are still under implementation e.g. the Public Financial Management Strengthening Program. The high-risk rating arises from the weak control environment and limited financial management capacity at all levels. Although the proposed implementing agency, EPF, has more than eight years of experience implementing a World Bank project, the limited existing financial management capacity may be stretched, as EPF will be implementing both the PAWP and the proposed LENS2 project. Overall financial management risk is assessed to be substantial, given the nature of the Project activities and weak control environment particularly at the provincial level and the scale involved. The financial management arrangements will meet the minimum requirements of OP/BP 10.00 when the proposed action plan has been implemented (see Annex 3).
17Sandler, T., Arce, D., Enders, W. (2009). An Evaluation of INTERPOL's Cooperative-based Counterterrorism Linkages. JournalofLaw and Economics, 54(1), 79-110.
12 50. Mitigation. The mitigating measures include the recruitment of a senior financial management consultant and two accountants at EPF. The existing LENS financial management manual and sub-grants manual, which are part of the PIM, have been upgraded during preparation and training in Bank procedures was upgraded Each sub-project will be screened for financial management capacity. Depending on the complexity of the proposed activities and the total value of the sub-grants a separate accountant may be needed to record and report of the funds used under sub-grants. The accountants would receive training and support during sub- project implementation with supervision by the EPF finance team. Supervision by Bank missions will be necessary at least during the initial start-up period of project implementation.
51. Financial Reporting and audits. The Project will be required to prepare and submit Unaudited Interim Financial Report (IFR) on a six monthly basis and submit to the World Bank no later than 45 days after each six month period. The IFR format was agreed at negotiation. The Project will be subject to annual audit by an independent qualified auditor with Terms of Reference (ToR) acceptable to the World Bank. The audit report and the management letter are due to the World Bank within six months after the end of each fiscal year (see Annex 3).
D. PROCUREMENT 52. The EPF is responsible for procurement and contract execution. Since EPF is fairly familiar with IDA financed procurement through experience with LENS, the same institutional arrangement is kept for the Project. The EPF Procurement Manual had been cleared by the World Bank, was translated into Lao language and distributed to all staff working at the national, provincial, and district levels. It was used for the LENS project. An improved version of this manual has been incorporated as a chapter into the PIM. To strengthen the capacity of EPF, an action plan has been agreed (see Annex 3). EPF will (a) recruit a senior procurement specialist dedicated to the Project and assign a number of staff to work with the consultant for on-the-job training; and (b) organize procurement training workshop for the EPF staff and the SDA staff. A Procurement Plan has been prepared and will be updated at least annually or as required.
E. SOCIAL (INCLUDING SAFEGUARDS) 53. A Social Impact Assessment (SIA) was conducted during preparation, which reviewed potential negative impacts, including losses of livelihood due to increased PA enforcement. The impact, however, is expected to be minor because the areas currently or traditionally used for livelihood activities by local people will be delineated under the Participatory Land Use Planning (PLUP) and preserved for community use. Community grants and technical advice will be provided to affected communities to address the residual impacts and improve livelihoods beyond the baseline. The SIA also found that ethnic groups are present in Project areas and will constitute the majority of Project beneficiaries. Very limited land acquisition or asset loss may result from livelihood activities and/or construction of checkpoints and other small structures. OP 4.12 Involuntary Resettlement and OP 4.10 Indigenous Peoples are triggered. Free, prior and informed consultations were conducted during preparation with villagers in two NPAs where the Project would be implemented. It confirmed the broad support of the consulted local population.
54. Community Engagement Framework. The CEF includes a Process Framework for the purposes of OP 4.12 and an Indigenous Peoples (Ethnic Groups) Planning Framework for the purpose of 4.10 on Indigenous Peoples. It will guide the final selection of villages supported by the NPA sub-project. Building on the existing national approach to community participation in
13 conservation, this CEF is predicated upon four core principles: (a) all communities will be made aware of the sub-project purpose and potential benefits; (b) all community-level, regardless of their ethnic group or social status, will be engaged in a culturally relevant way; (c) the process will take account of minorities and ethnic differentiation; and (d) all project-affected people will have the opportunity to participate in the development of Community Action Plans (CAPs).
55. Resettlement Policy Framework. The Resettlement Policy Framework (RPF) is attached to the CEF, which sets out policies and procedures that should be followed if minor land acquisition is necessary for the livelihood activities and/or construction of small structures.
56. Gender Mainstreaming. Women in remote rural areas and in smaller ethnic groups are the groups most at risk of being left behind during Lao PDR's current period of rapid economic growth 8 . The SIA identified that women and men play different roles and have different interests in relation to conservation agenda. While hunting of wildlife and clearance/ preparation of land for planting is done almost always by men, women are actively engaged in the collection of NTFP and farming. Community resource diagnostics will assess socioeconomic and cultural aspects of communities including gender aspects, and gender issues will be paid particular attention under the participatory social assessment.
F. ENVIRONMENT (INCLUDING SAFEGUARDS) 57. Category. The Project is classified as "Category B". Considering the sensitive nature of natural habitat and forest, the potential existence of ancient ruins and tombs in the NPAs, and potential support of agriculture in community grants, the following environmental safeguard polices are triggered: OP/BP 4.01 Environmental Assessment; OP/BP 4.04 Natural Habitats; OP/BP 4.36 Forests, OP 4.09 Pest Management, Physical Cultural Resources OP/BP 4.11, OP/BP 4.10 Indigenous Peoples and OP/BP4.12 Involuntary Resettlement. No long-term or large-scale negative environmental impacts are anticipated, and medium and longer term positive impacts are expected from sustainable land management, biodiversity protection and avoided deforestation. Small civil works in and near the NPAs could create minor and short-term negative impacts during project implementation. The area of influence--beyond the department's offices in the province selected--is the selected NPAs legal areas plus the land area of villages near the NPA that are proposed for CEF implementation.
58. Environment and Social Management Framework. Given that sub-projects have not been designed before appraisal, an Environment and Social Management Framework (ESMF) was prepared. The ESMF guides the environmental and social analysis for all sub-projects that could create negative environmental or social impacts. It includes: (a) an assessment of issues typically associated with the NPA support; (b) a screening process, (c) measures for environmental and/or social risk mitigation; (d) protocols/guidelines to conduct sub-project- specific ESAs and prepare sub-project-specific Environmental and Social Management Plan (ESMP) with measures to address social risks not covered under CEF, (e) protocols/guidelines for implementation and monitoring of sub-project-specific ESMPs, and (f) an environmental code of practice to be incorporated into the construction contract for all civil works.
1 ADB and The World Bank. 2012. Country Gender Assessment for Lao PDR, Reducing Vulnerability and Increasing Opportunity
14 G. ISSUES COMMON TO ALL SAFEGUARDS 59. Grievance Redress Mechanism. Grievances that result from project activities will be resolved through a grievance mechanism provided in the CEF. The grievance mechanism will be based on key principles: (a) protect the rights and interests of project participants; (b) ensure that their concerns and grievances are addressed in a prompt and timely manner; and (c) that entitlements or livelihood support is provided in accordance with existing GoL regulations and World Bank safeguard policies. The Project grievance redress mechanism will consist of four steps with guidelines and procedures outlined for each step (see Annex 3).
60. Excluded Activities. The Project will exclude the financing of activities and expenditures posing significant potential negative environmental and/or social impacts and risks, as defined in a negative list included in the PIM, ESMF and CEF. While the Project will build capacity for improved wildlife protection and law enforcement, it will not finance the purchase or training in the use of weapons and any other expenditure intended for military or paramilitary purpose. All subproject proposals will be subject to screening and approval by the Bank to ensure that they meet the eligibility criteria (including negative list of excluded activities and expenditures) defined in the PIM and the safeguard documents and referred to in the legal agreements.
61. Measures to Address External Risks. The Project will not work in villages scheduled or proposed to be consolidated within the Project lifetime. In villages that have been consolidated in the past, Project funds can be used if, and only if, land and resource tenure issues associated with the consolidation have been resolved to the satisfaction of villagers. Specifically, in villages consolidated in the past, the Project will identify such villages and (a) determine through participatory social assessment if land and tenure issues associated with the consolidation have been resolved to the satisfaction of communities; (b) ascertain if adequate land for agriculture or other means of livelihood to improve, or at least maintain their livelihoods, has been made available; (c) exclude such villages if outstanding issues related to land for agriculture and natural resource are identified, and convey findings to provincial authorities for appropriate action; and (d) excluded villages can subsequently become project beneficiaries if: (a) provincial authorities demonstrate that issues have been resolved, (b) communities confirm such resolution met standards of free, prior and informed consultation, and (c) communities provide their broad community support for participating in the Project.
62. There is a risk that concessions for road construction, mines and hydropower, especially with the end of the moratorium on new concessions, overlap with PAs supported by the Project. The ESMF includes an inventory of known planned concession and infrastructure. DFRM will prepare a database to track these projects and to assess their severity. On this basis, DFRM will discuss with provincial governments to avoid overlap between concession areas and the Project areas, offer advice and support and ensure that they are not an obstacle to the PDO.
63. Public Disclosure. All the safeguard documents are available in the Project files. Drafts of the ESMF, the CEF (and the SIA as background document) were publicly disclosed in the country before appraisal on December 9, 2013 and at InfoShop on December 12, 2013. Final approved versions of the ESMF and CEF were re-disclosed on January 27, 2014.
15 ANNEX 1: RESULTS FRAMEWORK AND MONITORING LAO PDR: PROTECTED AREA AND WILDLIFE PROJECT FOURTH PHASE OF A SERIES OF PROJECTS ON STRENGTHENING REGIONAL COOPERATION FOR WILDLIFE PROTECTION IN ASIA
Results Framework
Project Development Objective (PDO) and Global Environment Objective (GEO): To strengthen the management sstems for nationalprotected areas conservation andfor enforcement of wildlife laws for Description Unit of Reporting Data Source/ Resp. PDO Level Results Indicators Measu Baseline Target Values (Annual or Cumulative) Frequency Methodology Data (indicator re R1Collection definition etc.) YR 1 YR 2 YR3 YR 4 YR 5 YR6 YR7 Indicator1. % NEPL: 38 40 44 46 48 51 53 Annually Score of DFRM A change in 38 for 420,000 management METT Category is Area brought under enhanced ha effectiveness highly biodiversity protection measured E NNT 35 36 37 40 43 49 50 (METT) and satisfactory. A by score of management watershed: area it applies 15% improvement effectiveness (annual) 35for 438,000 to. is satisfactory. ha Indicator2. 0 0 2 3 5 5 5 5 Annually DOF DOF to agencies such as information The Wildlife International illegal trade report Trade Monitoring information reportsagencies submitted (a5nual)n by alleeD,(information NetworkCriminoalgencieuha DOFI to international law report refers to (TRAFFIC), enforcement or monitoring suseed, nrinal pdetected, Organization observed, (INTERPOL), reported ASEAN-WEN, illegal CITES activities) Indicator3. % DFRM 12 13 16 20 22 22 22 Annually Index score DPC 12 sheet filled out validates index of functional Lao WEN 6 7 16 21 29 36 36 by each (Workshop Aggregate ine ffntoa 6 institution with all capacity of selected protected E WMPA 28 30 35 38 40 40 40 based on a concerned area and wildlife management 28 9 _____19 max score of institutions) institutions (annual)' NEPL MU 24 25 29 33 34 36 36 100 24
19 The aggregate index of functional capacity is a score provided through 10 capacity criteria each scored from 1 to 10 such as (a) existence of a functional board, (b) staffing, (c) fiduciary system, (d) budget, etc.
16 INTERMEDIATE RESULTS
Data Source/ Responsibility Description Methodology for Data (indicator PDO Level Results Indicators Unit of Annual or Cumulative Target Values** Frequency P Measure Baseline Methodology Collection definition etc.) YR 1 YR2 YR3 YR 4 YR 5 YR6 YR7 Component 1 : Institution development and capacity building Intermediate Result: To improve the DFRM and DOFI partnership and capacity to implement and monitor national conservation laws and international commitments and operate according to a clear national plan Intermediate Result indicator LI Cum # National 0 40 100 180 220 300 300 Annually Reports from NUOL, DOFI, Measured by training training DFRM additional PA wildlife or institutions. and wildlife which women) (cumulative) management Regional 0 0 5 8 20 30 40 staff having training completed the wildlife or basic training in PA: 0 management of wildlife Female 20 20 20 20 20 20 20 trafficking or of beneficiary PAs %PA Intermediate Result Indicator1.2: # Houaphan 7/0 7/0 10/1 12/1 14/1 14/1 14/1 Annually Information DOFI 7/0 Management Wildlife trafficking cases Khammouan 5/0 6/0 8/1 10/1 11/1 12/1 12/1 System (IMS) recorded in the IMS by POFI in 5/0 Khammouane, Bolikhamxay, Bolikhamxay 14/5 15/5 17/6 18/6 20/7 21/7 22/7 Houaphan and DOFI central (of 14/5 which are international DOFI central 3/0 5/0 7/1 9/1 11/2 11/2 11/3 cases)(annual). 3/0 Intermediate Result indicator 1.3 Progress 0 0 2 4 6 10 12 12 Annually Project DFRM Point system: 2pts score monitoring NPA planning and Indicator of gradual development reports guideline of a national system plan for scorec vlu conservation and protection engagement forests development and guidelines, 2 pts management (cumulative) of NPAs E0 published, 2pts National NPA status report, 2pts Report of optimization of policy, institutions and laws for NPA Mgt, 2pts L adoption of road
17 map to restructure NPA mgt. Intermediate Result indicator 1.4 %0 0 0 20 40 60 70 80 Annually Data collected DRM Project is by DONRE, financing the Planned projects affecting NPAs PFRM and development of (e.g. roads, power lines, mines, consolidated a database. dams, plantations, logging & verified by concessions, etc.) for which DFRM development status is updated annually and accurately in the D0RM Tracking Report (annual)02406708AnulyDtcolceDFMPoeti Component 2: Wildlife andbprotected area management Intermediate Result: To build POFI, PFRMV, communities and other stakeholders capacity to conserve two national protected areas and protect wildlife in five provinces against threats from infrastructure development and illegal use or trade of natural resources. Intermediate Result Indicator 2.1 #'000 NEPL: 0 0.5 3 8 t1 Annually c4Projecto6 NUOL, NEPL about 0 implementatio DFRM, DOFI, 20,000 people Direct project beneficiary NNT 0 0.5 2 6 9 12 13 n regular NEPL MU and NNT about recipient of livelihood or watershed: monitoring and WMPA 6,900 people in conservation grants (of which reciientof0waershd: lveliood r records,mnitoing ndnWA9,00 enclave villagesol inh women or women organizations) and 9,400 in the female 40 40 40 40 40 40 40 PIZ. Given that (cumulative) (cmltv)% 4CAP are for all the community, all are considered beneficiary of small grants. Intermediate Result Indicator2.2 % NEPL baseline - > 0 >0 > 0 > 0 Annually Household NEPL MU This indicator after year 3 survey in and WMPA measures the Trend of proportion of household tbd target villages sustainability of income from non-timber forest E_ NTFP income. product (wild fish, wildlife, NNT baseline - > 0 >0 > 0 > 0 Baseline bamboo shoots, etc.) (annual) Watershed establish after villages are tbd selected. Intermediate Result Indicator2.3 # NEPL: 0 5 10 20 30 40 40 Annually Project NEPL MU implementatio and WMPA Villages that (a) have an 0 n reports community approved PLUP, (b) have signed extension staff a NPA Conservation Agreement, # NNT 0 5 15 35 45 61 65 (c) where the terms of the watershed: Conservation Agreements are met 0 Intermediate Result Indicator2.4 Ha '000 NEPL - 336 - 336 - 336 - Every two Scientific NEPL MU 80% of years survey and WMPA managed area. Area where the status of the E 0 Occupancy Must be population of selected mammals method. accurate
18 and hunting intensity is NNT 0 350 - 350 - 350 -statistically as measured (annual) Watershed determined by an independent 0 reviewer of the data and analysis. Intermediate Result indicator2.5 Ha '000 NNT - - 438 - - 438 - Year 3 and Monitoring NEPL MU It is expected Watershed: 6 Reports of and WMPA. that this will Area where gross forest loss rate each NPA Assisted by confirm minor in NPAs is measured (twice in E 353 based on specialist at deforestation in project period) NEPL: - - 420 - - 420 - satellite partner both NPA images organization 420 ___ Intermediate Result indicator2.6 E # Khammoua 24/0 24/0 36/1 36/2 40/4 40/4 40/4 Annually IMS POFIs from Patrols and ne: each province inspections POFI patrols and inspections that 24/0 as recorded in include market include wildlife crimes (of which Bolikhamx 0/0 24/0 36/1 36/2 40/4 40/4 40/4 the Internal controls, road in border areas or to control ay Monitoring blocks, international trade) (annual) 0/0 System response Houaphan 24/0 24/0 36/1 36/2 40/4 40/4 40/4 controls. 24/0 International/ border refers to patrols along borders, and intemational enme. Component 3: Project administration and capacity building Intermediate Result: To deliver the Project's outcomes within the allocated time frame through excellence in planning, procurement, financial management and monitoring. Intermediate Result indicator3.1 # NA 0 1 2 3 3 3 3 Bi- Monitoring EPF M&E 1 for S in annually Reports, Officer, M&E, 1 for S Financial management, Financial Procurement in Procurement, Monitoring & Evaluation and Report, IFR Officer, FMS I for S in Procurement ratings at or above Financial S (annual) management Intermediate Result indicator3.2 % Cl: NA 50 70 90 100 100 100 100 Annually IFR and EPF M&E Officer and all C2: NA 50 70 90 100 100 100 100 Annual "Deliverables" proposed in the E Reports SDAs AWPB completed each year C3: NA 50 70 90 100 100 100 100 (annual)
19 ANNEX 2: DETAILED PROJECT DESCRIPTION LAO PDR: PROTECTED AREA AND WILDLIFE PROJECT FOURTH PHASE OF A SERIE SOF PROJECTS ON STRENGTHENING REGIONAL COOPERATION FOR WILDLIFE PROTECTION IN ASIA
1. Key Challenges Facing the Sector in the Region and Country
1. South and East Asia immense biological resources are under pressure at all geographic scales and the current regional and country responses to mitigate the threats are insufficient.
2. Ecosystem Erosion. Southeast Asia's annual deforestation rate (1.4% during the past decade) is the highest among all tropical regions and increasing. Furthermore, many of the region's protected forests are being degraded by illegal logging activities. Broad regional projections (2003) predict that 13 to 42% of all Southeast Asian species could be extinct by 2100 due to a 72 to 90% loss of natural habitat. With the recent clearance of 59% of the region's forest cover, many species are considered "living dead" with unviable populations - creating an acute need for immediate action2 0
3. Lao PDR is rapidly losing its remaining 9.5 million ha of forest cover. Data suggest that during the 1990s the annual loss of forest cover was around 1.4% or 134,000 ha per year. Wildlife populations are declining as well, though only anecdotal data is available. For example, wild tigers have already been reduced to only one known breeding population in Lao PDR, and even this last remaining population may not have enough individuals to be viable in the long- term.
4. Drivers of Ecosystem Erosion. The causative sources of deforestation and forest degradation in Lao PDR are: fire, unsustainable wood extraction, pioneering shifting cultivation, agricultural expansion, industrial tree plantation, mining, hydropower, infrastructure development, and urban expansion. Of these nine causes of habitat degradation, unsustainable wood extraction and shifting cultivation have been the two most detrimental to PAs. However, in recent years, roads construction, mining and hydropower development increasingly threaten natural habitat in PAs.
5. In addition to habitat destruction, a threat to South and Southeast Asian biodiversity is illegal hunting. Hunting does contribute to food security, but increasingly illegal wildlife products enter the burgeoning national and international markets for food, skins, medicinal ingredients and ornaments. The increasing demand for wildlife is linked to increasing urbanization, economic growth, especially China and Vietnam, and further exacerbated by population growth and globalization. The consumption of wild meat or utilization of wild- sourced pharmacopeia appears to be strongly anchored in the East Asian culture. With an emerging East Asian middle class and the improvement of trade infrastructure, the demand is now reaching alarming proportion. INTERPOL suggests that the global value of the illegal wildlife-related trade exceeds US$20 billion per year, only surpassed by the narcotics and possibly the illegal arms trades. The trade is controlled by international criminal organizations.
20 Sodhi et al. 2010. The State and Conservation of Southeast Asian Biodiversity. Biodiversity Conservation 19:317-328
20 The problem, therefore, transcends national boundaries and call for compatible policies along the national, regional and even global wildlife "supply" chain.
6. Lao PDR is considered an important country in the illegal wildlife international trade, as both a transit and source country. In March 2013, a New York Times cover story portrayed a Lao businessman as the "single largest known illegal wildlife trafficker in Asia" 21. At the Lak Sao Lao-Vietnam border post, observers estimate that one ton of pangolin 22 crosses the border every day . Hunters from neighboring countries do not hesitate to illegally cross Lao borders to reach hunting grounds and extract animals or timber. For example, in the proposed project site, NNT NPA, wildlife and tree destruction is attributed to poachers entering directly from Vietnam.
7. Rural communities have hunted for thousands of years for food. As forest and hunting experts they are contracted by intermediary traders or recruiters from criminal organizations to carry out the hunt 4. For these people, wildlife represents a new cash generating opportunities. Still, locals profit the least and take the most risk. When asked, villagers almost unanimously agree that wildlife populations have declined or disappeared in recent years. Hence, this new source of cash may disappear shortly after manifesting itself, leaving local villages without a traditional food source. As a result, villagers show a strong desire for controlling, and even halting, hunting on their territory - when provided alternative income opportunities 25
2. Key Sector Issues
8. Lack of Understanding of Sustainability. A key challenge to addressing the continued depletion of wildlife and environmental resources in Lao PDR is the perception still shared by many that environmental considerations are a hindrance to fulfilling the country's economic aspirations. Exploiting the environment, even to extirpation, is considered justified if it brings human benefits. A consequence is that hydropower, mining, and agriculture concessions are increasingly overlapping with PAs. Despite endangered wildlife hunting bans since the 1980s, consuming wildlife is much appreciated, sometimes considered a status symbol and there is little willingness to curtail consumption.
9. Low Performance in Wildlife Law Enforcement. Laos is possibly the lowest performing Asian country (along with Myanmar) for elephant trade control and (along with Vietnam) for tiger trade control26. Implementation of wildlife trade controls across international boundaries has been problematic. Wildlife traders quickly adapt to changing enforcement environments and operate in countries with the weakest controls. The country would seem to be one such weak point at the present, undermining to some degree, the enforcement investments made in neighboring countries. Lao PDR's attempts to control the illegal wildlife trade have largely been unsuccessful. On international borders where procedures are clear, enforcement has not been a
2 Fuller, Thomas. Trading on the Endangered. March 4, 2013. International Herald Tribune Pangolin, a CITES Appendix 2: Zero Annual Export Quota Species 23 Singh, Sarinda. 2008. Contesting Moralities: The Politics of Wildlife Trade in Laos. JournalofPolitical Ecology 15:1-20 24 This market structure is complex. The market resembles an inverted wine glass. A large number of potential poachers (forest dwellers) operate under quasi open access conditions. The poached commodity is then sold to organized traders who are few in number and control the market. The product is sold via retailers to a large number of consumers. Where controls are optimally applied to cause the greatest disruption is not obvious - given the imperfectly competitive "middle". See Bulte E. H. and R. Damania, 2006, "The Wildlife Trade", Ecological Economics. 25 Knowledge, Attitudes, and Practices (MONRE PROCEED, 2012) 26 WWF, 2012. Wildlife Crime Scorecard: Assessing Compliance with and Enforcement of CITES Commitments for Tigers, Rhinos and Elephants. WWF International, Gland.
21 priority for custom officers. Mechanisms for international cooperation (such as CITES, ASEAN-WEN, Lao-WEN) are fairly nascent and not yet functional.
10. Low Performance in NPA Management. The institutional organization of PA management in Laos is unusual, especially in NPAs. The PA system working model requires a strong central institution that coordinates and demands results from PAs operated by dedicated teams (e.g. Kenya, Thailand, India, Jordan, France, Canada, Costa Rica, etc.). Instead, in Lao PDR the management of each PA is entrusted to environment district officers in all of the districts that overlap with a PA. With diffuse accountability as well as little staff, no equipment, little communication and training, PAs that do not receive external assistance are simply not managed. In some cases, usually at the initiative of a NGO or a donor, a dedicated team is created as a PA Management Unit (PA MU). This is the case in NEPL NPA where the NGO Wildlife Conservation Society (WCS) has helped curtail some of the pressures from hunting, agriculture and infrastructure development. NNT NPA is a unique case in Lao PDR. The management of NNT NPA is institutionally comparable to the "single park" institutions model (e.g. Ngorongoro in Tanzania, Moheli in Comoros). As part of a biodiversity offset arrangement, the NNT NPA, is managed by an autonomous public institution: the Watershed Management Protection Authority (WMPA). Created in 2001, WMPA receives approximately US$1.4 million annually from the NTPC. Despite its financial support, because of an inadequate organizational set up, poor governance and absence of an adequate management plan, it has not met expectations so far.
11. Lack of Cross Border Cooperation for NPA Management. This project targets two NPAs that border Vietnam, both with poaching and encroachment across international borders. Under current conditions, effective protection of natural resources will require trans-border cooperation. However, collaboration between the Vietnam and Lao PDR conservation agencies has remained minor and irregular despite attempts since the 1990s (especially in NNT, which included the signing of a national MoU on cross border cooperation and a provincial MoU on transboundary management). An increase in Lao PDR's capacity to fulfill these international MoUs would enhance the management of NNT and other transboundary PAs.
12. Lack of Funds and Staff One reason for limited performance is that both the Department of Forest Resource Management (DFRM) in MONRE and the Department of Forest Inspection (DOFI) in the MAF, which are respectively tasked with NPA oversight and wildlife law enforcement, are critically underfunded and understaffed. The lack of funding also causes a significant constraint in the Lao PDR fulfilling its international and regional treaties and agreements (i.e. CITES, ASEAN-WEN). A review of 108 countries covering 1993-199527 found that the global mean expenditure on protected areas was US$898/kM2, and the mean for developing countries was US$157/km 2. Lao PDR's budget is well below the developing country mean, at US$8.86/ km2 (US$300,000 across approximately 33,800 km2 in FY 2009/10). Similarly staffing is an issue. The22 IUCN recommends one staff for 50 km2 in forest ecosystem. For the 5,950 km2 NEPL NPA, this would equate to 120 staff. As of now, there is less than 10 government staff in this PA - to which WCS added 20 - which altogether remains critically
27 James, A.N., Green, M.J.B. and Paine, J.R. 1999. A Global Review of Protected Area Budgets and Staffing. WCMC - World Conservation Press, Cambridge, UK.
22 insufficient for this PA. This pattern repeats itself in all PAs of Laos. In comparison, Myanmar exceeds in most of its PAs the recommended one staff per 5,000 ha ratio.
13. Lack of Skilled Human Resources. A challenge to Laos' economic growth is the domestic shortage of technically skilled workers and university graduates, and a large segment of the labor force is under-skilled. The performance of Lao PDR's higher education system has been a concern and there is evidence of a considerable mismatch between current skills training and those required by the labor market. This pattern is also true for staff in the PA and wildlife sector and justifies investment in university programs and regional knowledge exchanges, with the long-term expectations that the PA and wildlife workforce will need to be multiplied by more than ten over the next decade.
14. Lack of Incentive to Communities. Even though a suitable strategy to involve communities in PA management exists (see Section VI.B and VI.E.) at this time, it is not implemented to its full extent in any of the country PAs. A consequence is that communities have no short-term reasons to become better stewards of the land and land resources, especially wildlife, which contribute to their livelihood and can increasingly be traded.
3. Strategy of the Country to Address National and Regional Sector Issues
15. Regional Agreements. A number of regional initiatives have emerged, such as the South Asia Cooperative Environment Program, South Asia Wildlife Trade Initiative, and the Association of South East Asian Nations Wildlife Enforcement Network (ASEAN-WEN). However, these organizations are not funded adequately and are moderately effective.
16. National Biodiversity Strategy. The GoL recognizes its international obligations to conserve biodiversity and natural ecosystems. Laos signed the Convention on Biological Diversity in 1996. In June 2004, the National Biodiversity Strategy to 2020 and Action Plan to 2010 were completed. The National Biodiversity Strategy aims to 'maintain the diverse biodiversity ... to protect the current asset base of the poor'.
17. National Forestry Strategy. The Lao PDR Forestry Strategy 2020 aims to restore forested areas to about 70% of the total land area, "to generate a sustainable stream of forest products, to preserve unique and threatened habitats, and promote environmental conservation and protection." It is supplemented by a Forest Inspection Strategy to 2020 and a 5-year action plan. The strategy concerns both timber and wildlife law enforcement.
18. Environment Financing. To mitigate the low budget allocated to DFRM and DOFI, the GoL has established two funds. The FRDF established under MAF receives a portion of the timber sales. The FRDF finances the management of production, protection, and conservation forests through a sub-project mechanism. Recipients are DFRM and Department of Forest (DOF) and their decentralized offices. The Environment Protection Fund (EPF) is an autonomous institution established under the Prime Minister's Office. It manages an endowment provided by the ADB and voluntary contributions from a number of hydropower and mining companies. The EPF funds environment and social protection through a sub-project mechanism dispatched through five thematic windows. Eligible recipients are government departments, NGOs and private sector.
23 4. Current International Assistance to the Sector
19. In the past 10 years, there has been increasing support from the international community, both from NGOs and ODA, to support the various dimensions of environment management in Lao PDR.
20. Coordination. Starting in 2013, external assistance coordination to the sector in Lao PDR is done through the Natural Resource and Environment Sector Working Group that is chaired by the Minister of MONRE and co-chaired by the German Ambassador and the World Bank Country Manager. There is an abundance of donor financial support for the forestry sector in Laos, approximately US$150 million (ongoing and pipeline). However, the majority of this financing is for production forests.
21. Donor Support to PA and Wildlife. Donors with large investments in conservation are led by the German Government. The German Technical Cooperation (GIZ) is implementing the Him Nam No NPA (E6.1 million) as well as the Project for Climate Awareness and Education (ProCEED) (E2.5 million), which helps MONRE launch an environment awareness program, and the Project Climate Protection through Avoided Deforestation (CliPAD) (E18 million). The latter is implemented in Houaphan Province adjacent to the NEPL NPA. The German Development Bank (KFW) is preparing an Integrated Conservation of Biodiversity and Forestry (ICBF) program (E15.5 million). The Bank is actively cooperating with Germany. Germany and the European Union are both supporting the Forest Law Enforcement, Governance and Trade Initiative (FLEGT), which involves substantial support (about US$20 million) to DOFI in forest crime control. ADB has been financing the Biodiversity Conservation Corridors (BCC) Project (US$20 million) in southern Lao PDR under the GEF-funded GMS Forests and Biodiversity Regional Support Project, as does the proposed Project. Finland is funding technical assistance (TA) to the DOF and DOFI as cofinancing to the IDA project: Scaling up Participatory Sustainable Forest Management (SUPSFM).
22. NGO Support to NPAs and Wildlife. NGOs such as IUCN, WWF, and WCS have had programs in the country in support of biodiversity conservation, which are complementary to the Project's objectives. WCS has supported the management of NEPL NPA (currently the implementing agency for NEPL Tiger Landscape Conservation Project) and has, in collaboration with the NGO Freeland been active in awareness building on the wildlife trade. WWF currently assists in the management of southern Lao protected areas (Xe Xap and Xe Pian) and has, in collaboration with IUCN and WCS, developed training courses for PA staff. All these NGOs have been valued contributors in the Project's preparation and are expected to remain involved during implementation.
5. Higher Level Objectives to which the Project Contributes
23. Millennium Development Goals. The Project would contribute to the Millennium Development Goals (MDG) Goal 7, "Ensure Environmental Sustainability": (a) Integrate the Principles of Sustainable Development into Country Policies and Programs and Reverse the Loss of Environmental Resources; and (b) Reduce the Loss of Biodiversity.
24. Strengthening Regional Cooperation for Wildlife Protection in Asia series of projects (the Program). The Project would contribute to the higher level objective of the Program which
24 is to improve the effectiveness of wildlife and habitat conservation in the countries participating in this project by addressing key regional threats, such as wildlife trade and habitat management in critical boundary areas. Since wildlife and habitats cross administrative boundaries and because knowledge and capacity vary widely across and within countries, a regional approach will help address cross-border issues, build synergies, share skills, knowledge and experiences, and build regional collaboration. Given that Lao PDR is both a source and transit country in the regional illegal wildlife trade, a regional approach is appropriate for addressing illegal wildlife trade. Also, given the inter-connectedness of habitats and ecosystems and that poaching is particularly high in border-land NPAs, strengthening actions between Lao PDR and Vietnam, who share a particularly diverse ecosystem (the Annamite Range), will contribute to the objective of the Program.
25. Global Tiger Initiative. The Bank and the Smithsonian established the GTI in 2009. Given their apex predator role, tiger's conservation is vital to the conservation of many other species and ecosystem services. In 2010, under the leadership of the Russian President and the World Bank President, the heads of governments of the tiger range countries (including all countries in the Program) adopted the St. Petersburg Declaration on Tiger Conservation and the Global Tiger Recovery Program (GTRP). The Project supports the priorities of the GTRP and implements some of the priority actions of the 2010 Lao PDR Tiger Action Plan.
26. Greater Mekong Subregion Forests and Biodiversity Program. The Project is a building block of the GEF5 GMS Forests and Biodiversity Regional Support Project for which the higher objective is 'to facilitate enhanced regional cooperation and coordinated national actions for the sustainable management of a network of priority conservation landscapes in the GMS'. It will contribute to Output #2: Management of transboundary biodiversity conservation landscapes and local livelihoods improved. The Project contributes to the GEF5 focal area strategies of Biodiversity, Land Degradation (LD) and Sustainable Forest Management (SFM). Strengthening protected area management and enforcement of wildlife laws contributes to the GEF biodiversity goal of conservation and sustainable use of biodiversity and the maintenance of ecosystem goods and services, and in particular to objective 1: Improve Sustainability of PA Systems. Site level activities in two NPAs will contribute to the GEF biodiversity outcome 1.1: Improved management effectiveness of existing protected areas. The Project supports the third objective under GEF LD; to reduce pressures on natural resources from competing land uses in the wider landscape, through activities with villages and GoL authorities on integrated land management linked to improved livelihoods, forest and wildlife conservation. Accessing both the biodiversity and LD focal areas allows for an integrated approach, which supports biodiversity conservation, forest and forest carbon conservation, and sustained livelihoods of villagers dependent on forest use. This is augmented by funding from the GEF SFM multi-focal area, and the Project contributes to SFM Objective 2: Reduce pressures on forest resources and generate sustainable flows of forest ecosystem services.
27. Regional activities. Lao PDR is accessing IDA regional funds in the form of an IDA credit. Given that the core issue is the mitigation of illegal wildlife trade across borders and that the supply of wildlife originates from South and Southeast Asia, applying a regional approach will help build synergies, provide tools for more effective enforcement, support agencies in participating countries to address wildlife trafficking, and build collaboration with existing global organizations and enhance wildlife conservation through a landscape approach. Although
25 sub-projects are not yet fully designed, it is expected that these funds will help Lao PDR (a) engage discussion with Vietnam authority to reenergize existing MoUs, prepare action plans and cooperate on the ground in two PAs, (b) establish relation with India Wildlife Institute to help NUOL develop a curriculum for wildlife and PA management, receive Lao students and facilitate twinning arrangements between PAs in Laos and other PAs in the region (e.g. India, Nepal), (c) participate in various knowledge exchange forum (e.g. World Park Congress) or initiatives (e.g. annual meetings), and (d) actively help Lao-WEN institutions engage with ASEAN-WEN institutions and CITES not only for capacity building and knowledge exchange but also on the ground collaboration and intelligence sharing.
6. Detailed description of project activities
28. The Project will focus on in-situ conservation of wildlife and habitat at select highly bio- diverse and at threat NPAs and at the national and regional level will create harmonized enforcement standards, develop good practice applications, and share successful schemes towards PA management and reduction of illegal wildlife trade. The Project would build on the ongoing bilateral initiatives between Lao PDR and Vietnam to promote cooperation on controlling illegal forest products and wildlife trade as well as strengthen Lao PDR's capacity to enhance its collaboration with global efforts with international organizations involved in the fight against illegal wildlife trade.
29. Component 1 and Component 2 will be implemented through a sub-project mechanism from EPF to Sub-project Delivery Agencies (SDAs). Component 3 will help the EPF Office administer and monitor the Project and enhance its own capacity.
30. The completion of the design of the first set of sub-projects, the approval by the EPF Board and the World Bank, will occur during year 1 of implementation. The EPF Office will sign Sub-grant Agreements with each SDA for the proposed duration of the approved sub- project. In year 1, funds will be released to the SDA, based on an approved Annual Work Plan and Budget (AWPB). From the second year and afterward, funds released will be based on previous years' performance based on agreed triggers and approved AWPB. Non-performing SDAs will first receive additional support and training. If the situation does not improve, EPF in consultation with the World Bank may reduce the value of their sub-project or possibly cancel the balance of the funding allocation returning into the Project unallocated amount.
31. About US$13.9 million has been allocated from IDA and GEF to an initial portfolio of 16 sub-projects. A reserved budget from IDA and GEF of about US$6.40 million will either support the scale up of successful initial sub-projects or new sub-projects that meet the selection criteria. The selection of additional sub-projects will be initiated after completion of year 1 of implementation and when (a) it is determined that the EPF Office has acquired the capacity to increase the number of sub-projects it administers under this Project, and (b) lessons are learned early implementation.
32. The figures in the component description below do not include the unallocated budget.
Component 1: National institution development and capacity building (US$6.50 million of which World Bank US$6.10 (IDA Credit US$3.26 million, IDA Grant US$1.04 million, GEF US$1.80 million) and GoL US$0.4 million)
26 33. This component seeks the following Intermediary Outcome: To improve the DFRM, DOFI and other institutions' partnership and capacity to implement and monitor national conservation laws and regional/international commitments and operate according to a clear national master plan.
34. Component 1 is implemented through the EPF window PICE. These sub-projects will strengthen the capacity of eligible SDAs to execute and coordinate national biodiversity planning, manage the Recipient's national protected areas system and cooperate with neighboring countries, monitor and control the illegal wildlife trade, develop and implement educational and training programs in protected area and wildlife sciences, raise the awareness of decision makers on biodiversity and wildlife trade issues, and other activities related to national biodiversity conservation. Six sub-projects have been pre-identified and are in the process of being designed, and additional sub-projects in the areas outlined above may be identified for financing during project implementation. The respective budget of the below sub-projects represents an initial allocation which may change as the design is completed.
35. Each sub-project would have a set of eligible expenditures. While the detail of these expenditure is unknown until the proposals are received, eligible expenditures include (a) civil works for office building rehabilitation, (b) equipment including vehicles, motorcycles, computer and office equipment, furniture, field equipment, etc., (c) training expenditures including workshops, study tours, scholarships, short courses, research grants, etc., (d) consultant services including international and national technical assistance (TA) to SDAs, short term consultants for advisory services (individual, firm or NGOs), legal advice, etc., (e) operating expenditures such as external auditors, non-consultant and non-civil service staff and labor, utilities, equipment operation insurance and maintenance, rental, office supplies, travel and subsistence, etc. The initially proposed Component I sub-projects and estimated initial budget is proposed below.
36. Sub-project 1.1 - Capacity building for national biodiversity planning. US$0.2 million. The Department of Planning and Cooperation (DPC) of MONRE proposes to implement this sub-project. It would aims to strengthen the capacity of the DPC. The sub-project proposes to finance TA, workshops and equipment for DPC. Under this sub-project, DPC would (a) coordinate the Forest Subsector Working Group, (b) monitor DFRM's implementation of national policies and strategies including progress toward the biodiversity of MDG indicators, and (c) develop arguments in favor of greater mobilization of GoL budget for PAs, etc.
37. Sub-project 1.2 - Capacity and institution building for PA management and wildlife conservation. US$1.5 million. This sub-project is proposed by DFRM of MONRE. It aims to strengthen the policy and institutional framework as well as DFRM capacity to protect and manage the country national PAs system as well as implement its MoU with Vietnam on the joint management of borderland PAs. The sub-project proposes to finance TA, workshops and equipment for DFRM. Under this sub-project, DFRM would (a) establish a database of "investment projects" that impact PA and a system to monitor them, (b) investigate alternative institutional options to improve PA management nation-wide, (c) prepare a country PA master plan, (d) facilitate the twinning arrangement of NPAs in India or Nepal, (e) activate the MoUs with Vietnam on transfrontier NPAs and possibly prepare guidelines for Laos cooperation with
27 Vietnam PAs authorities, and (f) prepare PA Guidelines for community engagement in and around PAs, infrastructures in PAs, bio-monitoring and mapping protocols and standards, (f) support some elements of the Laos tiger plan such as carrying investigation to map the last tiger locations in Laos, preparing action plan if tigers are detected and need protection, fund raising, preparing and implementing and information campaign, promoting knowledge exchange with other experience in the region, etc.
38. Sub-project 1.3 - Capacity building for addressing the regional illegal wildlife trade. US$1.5 million. DOFI of MAF proposes this sub-project. It aims to strengthen DOFI capacity as well as the capacity of partner institutions members of Lao WEN, to monitor and enforce national rules and regulations that assist regional cooperation on addressing the illegal wildlife trade. The sub-project proposes to finance TA, workshop, and equipment for DOFI. Under this component DOFI would (a) develop and implement protocols for responding to illegal wildlife trade, (b) train and equip the Lao WEN for operation, (c) activate the relation between ASEAN- WEN and Lao-WEN as well as other international agencies active in the control of wildlife trafficking, and (d) in collaboration with NUOL, train DOFI, POFI staff, and partners in investigations, prosecutions, animal handling, media relations, airport-based monitoring and enforcement, CITES, and customs procedures.
39. Sub-project 1.4. Human resources development for protected area management. US$2.3 million. This sub-project is proposed by the Forest Faculty of NUOL. A set of training modules for existing PA staff has been developed and tested. The sub-project would finance TA, scholarships, workshops and equipment to help NUOL (a) scale up the implementation of these modules so they are administered to PA staff in the country, (b) fund master scholarships in PA or wildlife sciences, (c) establish a relation with the India Wildlife Institute, (d) develop a bachelor curriculum in PA and wildlife science, (e) administer a scholarship program for "conservation leaders" in universities in South or Southeast Asia, and (f) mobilize visiting professors from Vietnam and other countries in the region.
40. Sub-project 1.5. Constituency building of high level officials. US$0.3 million. This sub- project is proposed by the Government Office. The Government Office would (a) lead seminars and workshops at the national and local levels to build the awareness of participants on Lao PDR decrees, international treaty commitments, strategies and action plans relevant to conservation forests and wildlife trade, (b) publish and promote information related to conservation forests and wildlife management in a magazine entitled "Administrators" which is distributed to Party members (i.e. ministers, governors, district governors) and posted in English and Lao on the Lao PDR Government Office website, and (c) national and international study tours for government decision-makers, promotional writing and singing competitions, educational radio and television programs, and provisions for supplies and equipment.
41. Sub-project 1.6. Constituency building of public administration. US$0.3 million. This sub-project is proposed by the Kaysone Academy. Kaysone Academy trains all high level GoL officials in the dealing of leadership, politics and administration. Kaysone Academy would (a) review and improve its curriculum to include coverage of biodiversity, protected areas and wildlife, (b) organize and lead study tours for high government official to PA in Laos and elsewhere, and (c) implement and monitor the improved curriculum including identifying future champions for the conservation sector in Lao PDR.
28 Component 2: Management of wildlife and protected areas (US$8.60 million of which World Bank US$7.80 million (IDA Credit US$4.20 million, IDA Grant US$1.30 million, GEF US$2.30 million) and GoL US$0.8 million)
42. Component 2 seeks the following Intermediary Result: To build POFI, PFRM, WMPA, communities and other stakeholders capacity to conserve national protected areas and protect wildlife in five provinces against threats from infrastructure development and illegal use or trade of natural resources.
43. These sub-projects are implemented through the EPF window (Community and Biodiversity Investment) CBI. The sub-projects will strengthen: (a) the management of selected NPAs and wildlife in the participating provinces including, inter alia, design of protected area management plans, development and implementation of improved patrolling mechanisms, biodiversity monitoring, macro zoning, awareness raising, carrying out of community engagement, livelihood development and other activities related to the implementation of the CEF and ESMF, and implementation of cross border cooperation and twinning arrangements; and (b) the capacity of provincial and district authorities and other stakeholders to coordinate and support the management of protected areas and to control the illegal wildlife and timber trade in the participating provinces. Ten sub-projects have been pre-identified and are in the process of being designed, and additional sub-projects in the areas outlined above may be identified for financing during project implementation. The respective budget of the below sub-projects represents an initial allocation which may change as their designs are completed. It is expected that some of these sub-projects may need up to a year before they are ready to be implemented.
44. Each sub-project would have a set of eligible expenditures. While the detail of these expenditure is unknown until the proposals are received, eligible expenditures include (a) civil works including mostly office building rehabilitation for provincial and district government offices, and in NPAs, construction of rehabilitation of guards houses, fence and sign posts, small wooden bridges, forest management road maintenance, etc., (b) equipment such vehicles, motorcycles, boats, computer and office equipment, furniture, field equipment, etc., (c) training expenditures including workshops, study tours or short courses, etc., (d) consultant services including international and national TA to SDAs, short term consultants for advisory services (individual, firm or NGOs), legal advice, etc., (e) community grants to implement the CAP, and (f) operating expenditures such as non-consultant and non-civil service staff and labor, utilities, equipment operation insurance and maintenance, rental, office supplies, patrol ration, travel and subsistence, etc. The initially proposed Component I sub-projects and estimated initial budget is proposed below.
45. Sub-project 2.1. Management of the Nakai Nam Theun NPA. US$2.80 million. This sub-project is proposed by the WMPA. The sub-project would finance TA, workshops, training, civil works, community grants and equipment in order to support (a) PA management such as design of management plan, patrolling, biodiversity monitoring, macro zoning, awareness raising, (b) implementation of the CEF in villages and livelihood development linked to land use planning and compliance to conservation agreements, (c) implementation of the NNT ESMP and (d) implementation of the MoU with Vietnam Vu Quang National Park authority for cross-
29 border patrolling and establishment of a twinning arrangement with another park in the region with more experience and capacity.
46. Sub-project 2.2. Management of the Nam Et Phou Louey NPA. US$2.80 million. This sub-project is proposed by the NEPL MU. The sub-project would finance TA, workshops, training, civil works, community grants and equipment in order to support (a) PA management such as design of management plan, patrolling, biodiversity monitoring, macro zoning, awareness raising, (b) implementation of the CEF in village and livelihood development linked to land use planning and compliance to conservation agreements, and (c) establishment of an MoU with Vietnam forest authorities for cross-border patrolling and establishment of a twinning arrangement with another park in the region with more experience and capacity.
47. Sub-project 2.3. Coordination of NPA management in Bolikhamxay Province. US$0.20 million. This sub-project is proposed by PFRM Bolikhamxay. It would help PFRM, and DONRE in Khamkeut District receive training, acquire equipment and logistic support to provide assistance to WMPA for management of the Nakai Nam Theun NPA.
48. Sub-project 2.4. Coordination of NPA management in Khammouane Provinces. US$ 0.20 million. This sub-project is proposed by PFRM Khammouane. It would help PFRM, and DONRE in Nakai, Nhommalath and Boulapha Districts receive training, acquire equipment and logistic support to provide assistance to WMPA for management of the Nakai Nam Theun NPA.
49. Sub-project 2.5. Support to NPA management in Houaphan Province. US$0.20 million. This sub-project is proposed by PFRM Houaphan. It would help PFRM, and DONRE in the Huameuang, Viengthong and Xamneua Districts receive training, acquire equipment and logistic support to provide assistance to the NPA Management Unit for management of the NEPL NPA.
50. Sub-project 2.6. Support to NPA management in Luang Prabang Province. US$0.20 million. This sub-project is proposed by PFRM Houaphan. It would help PFRM, and DONRE in the Phonethong, Viengkham and Phonexay Districts receive training, acquire equipment and logistic support to provide assistance to the NPA MU for management of the NEPL NPA.
51. Sub-project 2.7. Support to NPA management in Xiengkhouang Province. US$0.20 million. This sub-project is proposed by PFRM Xiengkhouang. It would help PFRM, and DONRE in the Phoukoud District receive training, acquire equipment and logistic support to provide assistance to the NPA MU for management of the NEPL NPA.
52. Sub-project 2.8. Support to wildlife law enforcement in Bolikhamxay Province. US$0.4 million. This sub-project is proposed by POFI Bolikhamxay. This sub-project would help POFI, and some of its partner institutions such as the provincial environment police, the judiciary and the customs department receive training, acquire equipment and logistic support to scale up wildlife trade law enforcement in their province and support the Khanikeut DAFO team in its effort to protect wildlife and prevent timber extraction in Nakai Nam Theun NPA. Under this component POFI would develop a provincial law enforcement strategy, equip and upgrade the POFI office, increase operations for response patrols, routine patrols and road blocks.
53. Sub-project 2.9. Support to wildlife law enforcement in Khammouane Provinces. US$0.4 million. This sub-project is proposed by POFI Khammouane. It would help POFI, and
30 some of its partner institutions such as the provincial environment police, the judiciary and the customs department receive training, acquire equipment and logistic support to scale up wildlife trade law enforcement in their province and support the Nakai and Boulapha Districts DAFO teams in their effort to protect wildlife and prevent timber extraction in Nakai Nam Theun NPA. Under this component POFI would develop a provincial law enforcement strategy, equip and upgrade the POFI office, increase operations for response patrols, routine patrols, and road blocks.
54. Sub-project 2.10. Support to wildlife law enforcement in Houaphan Province. US$0.4 million. This sub-project is proposed by POFI Houaphan. It would help POFI, and some of its partner institutions such as the provincial environment police, the judiciary and the customs department receive training, acquire equipment and logistic support to scale up wildlife trade law enforcement in their province and support the Huameuang, Viengthong and Xamneua Districts DAFO teams in their effort to protect wildlife and prevent illegal mining expansion in NEPL NPA. Under this component POFI would equip and upgrade the POFI office, increase operations for response patrols, routine patrols, and road blocks.
Component 3: Project administration and capacity building (US$3.2 million of which World Bank US$3.00 million (IDA Credit US$1.57 million, IDA Grant US$0.55 million, GEF US$0.88 million) and GoL US$ 0.20 million)
55. Component 3 seeks the following Intermediary Result: To deliver the Project's outcomes within the allocated time frame through excellence in planning, procurement, financial management and monitoring.
56. Component 3 will support the administration of the sub-project mechanism by EPF. Eligible expenditures include (a) small civil works to rehabilitate an office building for EPF, (b) equipment such as two vehicles and two motorcycles as well as office furniture and equipment, (c) training (e.g. procurement, financial management, safeguard, sub-project development and monitoring, team building, etc.) and workshops (e.g. annual planning or stakeholder consultation), (d) consultant services (e.g. an international technical advisor, national long and short term consultants in financial management, procurement, M&E, communication, etc.) and advisory services (e.g. database development, guideline for biodiversity offsets, etc.) as well as (e) operating expenditures such as translation services, stationary, utilities, advertising, labor, travel, equipment operation and maintenance, etc.
57. Under this component, EPF Office will be supported to carry out the day-to-day coordination, administration, procurement, financial management, environmental and social safeguards, sub-project management for review and approval, communication, monitoring, evaluation, reporting and audit of the Project; and (b) raise funds for protected area and wildlife protection activities. This component includes capacity building of EPF staff and systems including fund raising, compliance with the World Bank's fiduciary requirements, especially procurement, and environment and social safeguards, monitoring and evaluation, communicating with stakeholders, and facilitating effective coordination and cooperation among SDAs.
31 ANNEX 3: IMPLEMENTATION ARRANGEMENTS LAO PDR: PROTECTED AREA AND WILDLIFE PROJECT FOURTH PHASE OF A SERIES OF PROJECTS ON STRENGTHENING REGIONAL COOPERATION FOR WILDLIFE PROTECTION IN ASIA
1. Project Institutional and Implementation Arrangements a) Regional
1. Regional coordination, especially with South Asia countries that have benefited from the Program, will be mobilized through thematic meetings on transboundary conservation issues. India, Thailand and Vietnam are expected to join in the discussions. The long-term regional coordination mechanism would be through the SA-WEN and ASEAN-WEN. This will be formalized during the mid-term review of phase 1 and 2 and at the start of this Project both intended to be completed by mid-2014.
b) Agreements
2. The Lao PDR and IDA (acting in its own capacity and as implementing agency of the GEF) will sign the financing agreement making available to the Lao PDR the credit and the grants. In addition, a subsidiary agreement will be concluded between MOF and EPF, which would determine the terms by which the MOF makes available the credit and the grants to EPF for its administration. EPF will in turn conclude sub-project grant agreements with the relevant SDAs for each sub-project, defining the terms and conditions under which the SDAs will implement the sub-projects and account for the use of the sub-grants. Lastly, those SDAs (WMPA and NEPL MU) whose sub-projects include the provision of community grants will sign Conservation Agreements (CAs) and other agreements as needed with the relevant Village Development Committee (VDCs) defining the terms and conditions for the use of the community grants.
c) Project Steering and Advising
3. The EPF Board of Director will serve as Project Steering Committee. The Board is chaired by the Deputy Prime Minister, vice-chaired by Minister of Finance, and membered by the Minister of MONRE, Minister of Ministry of Energy and Mines (MEM), Vice President of Science and Technology Council, President of Lao Women Union, Vice Governor of Bolikhamxay province, Vice President of Chamber of Commerce and Industry, and President of the Association for Agricultural Production and Processing. The Board will (a) provide strategic and policy guidance on the implementation of Project activities; (b) support inter-ministerial coordination of Project activities; (c) appoint the Technical Committee; and (d) approve the Annual Work Plans and Budgets and all Sub-projects. The EPF Board meets regularly twice a year (every six months) to review and approve Annual Reports and AWPB of EPF Office as well as attend to other EPF Office matters. The sub-projects above US$50,000 to US$100,000 will be approved by the Vice-chair, and the Chair will approve the sub-projects above US$100,000 on a rolling basis.
32 4. The TC will be chaired by the Executive Director of EPF Office and comprised of DPC and DFRM of MONRE, DPC and DOFI of MAF, MOF, Ministry of Planning and Investment and NUOL. The EPF Office will review sub-project proposals, reports and plans as well as prepare the agenda of the EPF Board and Technical Committee meetings.
d) Project administration and management mechanisms
5. The EPF Office will be the implementing agency and therefore administer and monitor the implementation and management of the sub-project mechanism. The Executive Director and staff of the EPF Office will be responsible for the day-to-day operations of the PAW Project, including facilitating effective operation of the EPF Board and the TC. The EPF has managed an US$5 million endowment since 2005 as well as funds received from some hydropower and mining investment from the private sector. Between 2005 and June 2013, the EPF implemented the LENS. The Project closed in June 2013 and the ICR rated its outcome as Moderately Satisfactory. EPF Office's performance was rated Moderately Satisfactory as well though it was recognized that its capacity improved throughout LENS implementation. The main EPF shortcoming was on M&E and technical aspects. In April 2013, a new LENS, or LENS2, was identified with larger financing. One of the main lessons of the ICR was that the EPF sub- project mechanism worked best for medium sub-projects (i.e. over US$100,000) and that its procedures were ideal to support the country decentralization agenda by supporting provincial and district offices which otherwise have little access to development budget.
6. The EPF operates a sub-project mechanisms dispatched through thematic windows. Of the 5 EPF windows two qualify for PAWP financing: (a) Policy Implementation and Capacity Enhancement (PICE) and (b) Community Biodiversity Investment (CBI). EPF general operations are guided by an Operation Manual approved by its Board and a set of Manuals such as the sub-grant manual. EPF has initiated a comprehensive review of these instruments, which will not be ready by Project start. The initial administration of the Project will be guided by a project-specific PIM (including financial management, procurement, M&E, sub-projects administration as well as the implementation plan) that would be approved by the EPF Board.
7. To strengthen EPF, TA will be provided through short-term inputs of international and national advisors as needed. The EPF Office will be responsible for overall project coordination and management, at the national and provincial level including financial management, procurement, safeguard, monitoring and reporting. They will assist SDA in developing sub- project proposal, assist them with initial training for implementation, and provide them support during implementation in the form of technical advice, procurement and M&E services as well as reporting. They will supervise the quality of implementation, the compliance with fiduciary requirements including safeguards and whether sub-projects are delivering outcomes. However, they will not supervise the alignment with national plans, policy and laws, which will be carried out by MONRE DPC or MAF DPC as the case may be.
e) Sub-project cycle and administration
8. All PAWP sub-projects will meet the following criteria (a) support a GoL policy and an officially approved plan, (b) contribute to at least one outcome indicator and at least one
33 intermediary outcome indicator, (c) contribute to a regional outcome such as cross-border cooperation, knowledge transfer or prevention of cross-border wildlife trade. They would exclude any activities or expenditures in the negative list contained in the PIM and the safeguard documents.
9. Under PAWP, the sub-project cycle will be as follows: (a) SDA will submit a short concept to be reviewed by the EPF Secretariat for eligibility, (b) if the concept is deemed eligible, the SDA will be invited to prepare a full proposal using the PIM sub-project application template (the EPF Office will provide assistance to the SDAs to ensure quality of the proposal and build SDA's capacity), (c) when the SDA submits its proposal, the EPF will appraise it using a check list from the PIM and, if necessary help the SDA improve its proposal, (d) when EPF Office and Technical Committee are satisfied that the sub-project meets all relevant criteria, it will be submitted to the World Bank for review, comments and no objection, (e) at that stage, SDA of sub-projects less than US$50,000 can sign a sub-grant agreement with the EPF Executive Director and begin implementation; sub-projects above US$50,000 to US$100,000 are submitted to the Vice-Chair of the EPF Board for approval, and sub-projects above US$100,000 are approved by the EPF Board Chairperson before a sub-grant agreement can be signed with the EPF Executive Director and begin implementation.
10. The Project initial portfolio of sub-projects has already completed steps (a) and (b). It is expected that they will progress through the steps from (c) to (e) during the first year of the Project implementation with some sub-projects starting early after Project effectiveness.
11. Sub-project performance will be measured along the continuum input, output, intermediary outcome and outcome. However, the trigger for approving AWPB will be based on performance related to (a) input (use of fund and governance), (b) and output. Each proposal will suggest these triggers.
12. According to the EPF Decree a variety of institutions are eligible, as SDA, for sub-project financing such as (a) public agencies, departments, offices, etc. (b) public education institutions, (c) NGO and Non-Profit Associations. The main SDAs at Project start, would be:
* Department of Planning and Cooperation (DPC), MONRE * Department of Forest Resources Management (DFRM), MONRE * Provincial Office for Forest Resources Management (PFRM), Provincial Office of Natural Resources and Environment (PONRE) in selected Provinces * The NEPL NPA Management Unit * Department of Forest Inspection (DOFI), MAF * Provincial Office for Forest Inspection (POFI) in selected Provinces * The NNT Watershed Management and Protection Authority (WMPA) * Faculty of Forestry at the National University of Laos (NUOL)
13. Each of the SDAs will need to demonstrate capacity to implement their sub-project. Transactions above US$10,000 will be carried out through direct payment by EPF Office. Procurement above $10,000 will be carried out by EPF Office. Each SDA will have the option of using a percentage of the sub-project to recruit implementation support TA.
34 f) Community-level Implementation Arrangements
14. The community engagement process is described in details in the Community Engagement Framework (CEF). The sub-projects supporting NPA management and livelihood development will verify whether existing VDCs and Village Development Fund (VDF) are adequate to support the implementation of the CEF. If this is not the case, VDCs (or equivalent) and VDFs (or equivalent) would be established in participating villages. The VDCs will become the key institutional mechanism for all sub-project activities at the community level starting with the Participatory Land Use Plan (PLUP), the Community Action Plan (CAP) and the Conservation Agreement (CA) in line with the CEF prepared for PAW project. VDC members would be representative of the village community and include a Chairperson, a Deputy Chairperson, Secretary, Treasurer, and representatives of women, elders, youth, and other village sub-sectors as members.
15. In order to implement CAPs, and help villagers comply with the CA, the SDA would provide the VDC with community grants to finance agreed activities. Immediately after adoption of the PLUP, CAP and signature of the CA, the SDA will make available to the VDC grants to finance eligible expenditures under two grant budget lines: (1) livelihood development activities, and (2) a conservation activities. The development and livelihood budget lines will fund the implementation of the main priorities identified in the CAP (a negative list of activities and a "preference" list are available in the CEF). The conservation budget line will help strengthen the villager's capacity to manage and support the conservation of biodiversity in their land and in the NPAs. Focus will be on activities that enable the communities to meet the terms of the CA. This may include surveillance of villager's adherence to the PLUP, contribution to law enforcement in the NPA, resource monitoring, etc. Based on the monitoring of the CAP implementation, and compliance to the CA, in subsequent years, the two budget lines will be replenished according to the terms of the CAs.
g) Planning and reporting
16. The EPF Office will prepare by August 30 of each year an AWPB which would include a narrative section as well as a Result Framework with indicators measured, an activity plan with completed activities, a detailed budget implementation and a monitored procurement plan. The AWPB will also include, as annex, a copy of the AWPB of each of the approved sub-project. The AWPB will be submitted to the World Bank for approval and to the EPF Board following the Technical Committee's recommendation.
17. By November 30, of each year, the EPF Office will produce an Annual Report, which would include a narrative section as well as an updated result framework, and monitored activity plan, a financial report and an updated procurement plan. The AWPB will also include, as annex, a copy of the annual report of each of the sub-project under implementation.
18. The SDAs will, like EPF the Office, prepare AWPBs (by July 31 or January 31 in which case it would be 6-month AWPB) and an annual report according to a format approved in their proposal.
35 2. Financial Management and Disbursements a) Summary of the Financial Management Assessment
19. The financial management capacity assessment determined the adequacy of Financial Management (FM) arrangements for the Project28. Under the policy, the EPF, as the implementation agency, and the SDAs as sub-project implementation entities, are supposed to have and maintain adequate financial management systems, which include budgeting, accounting, internal controls, funds flow, financial reporting, and auditing arrangements, to ensure that they can readily provide accurate and timely information on the use of project resources and expenditures. These arrangements are deemed acceptable if they: (a) are capable of correctly and completely recording all financial transactions and balances relating to the Project resources; (b) can facilitate the preparation of regular, timely, and reliable financial statements; (c) safeguard the Project's assets; and (d) are subject to auditing arrangements acceptable to the World Bank. The assessment was substantially based on previous FM assessment, findings of existing internal and external reviews, the earlier supervision reports of the LENS Additional Financing and LENS2 capacity and performance and discussions with the deputy director of EPF and the finance team.
20. EPF will administer the subproject mechanism. The EPF Office will be responsible for overall Project coordination and management, at the national and provincial level including financial management, procurement, monitoring and reporting. EPF will ensure that fiduciary requirements are met and comply with whether subprojects are delivering outcomes.
21. The financial management arrangements put in place for this project will be deemed acceptable and meet the minimum requirements of OP/BP 10.00 when the proposed mitigation measures (1) and (2) of the Financial Management Action Plan (see section m. below) have been implemented.
b) Country Issues
22. The overall fiduciary risk in Lao PDR is considered to be high, despite the fact that there are elaborate built-in controls within the government FM system. There is insufficient transparency in public finances and access to Government financial information is limited. These weaknesses have been compounded by insufficient awareness of modem practices of internal control in the public sector and by the government's ongoing decentralization initiative, which needs to be supported with a sufficiently robust institutional framework that clearly defines the new responsibilities at lower levels. Technical capacity of staff at these levels needs to be strengthened and the oversight functions and the State Audit Organization need improvement. A Public Expenditure Review, combined with a Public Expenditure and Financial Assessment, has been completed and disseminated whose findings demonstrate the weak accounting environment.
23. The recent Joint Portfolio Effectiveness Review also identified similar issues and weaknesses and it was agreed that a series of remedial measures in a time bound action plan
2 The assessment was carried out during November 21, 2013 with the aim to ensure that there will be acceptable financial management capacity and system to take on the Project financial management as required by the World Bank's Operational Policy/Bank Procedure 10.00 with respect to financial management.
36 would be implemented, including: (i) delegation of authority over the management of project designed accounts to executing agencies that have in place adequate quality and control system; (ii) streamlining of approval processes; (iii) harmonization of a FM chapter in the PIM; (iv) utilization of uniform FM software; (v) consolidation of project FM functions; and (vi) implementation of a consolidated training program. While these actions have started to improve specific fiduciary issues, the country FM environment for externally-funded projects remains weak as the effects of some of the measures being implemented have not yet taken effect.
24. The Overall FM risk associated to the Project is assessed to be substantial, given the nature of the Project activities and overall weak control environment particularly at the provincial level and the scale involved.
c) Staffing
25. Although the proposed implementing agency, EPF, has many years of experience implementing World Bank projects, it is foreseen that the limited existing financial management capacity may be stretched, as they will be implementing both this project and the LENSII. Based on discussions with the management and finance staff of EPF, it is proposed a full time senior financial management consultant, acting as Project financial manager, and at least two senior accountants be recruited to oversee and provide advice on all financial management matters of this project, including capacity building of EPF Office's own staff and those in the provinces. The consultants will be based at EPF Office and the two accountants will also support the sub- projects. They will report to the EPF Executive Director or a deputy on all financial management aspects of the Project. The consultants shall be recruited within three months of project effectiveness with ToR acceptable to the World Bank.
26. Depending on the complexity of the proposed activities and the total value of a sub- project, an accountant will be recruited to be responsible for the overall recording and reporting of the funds used.
d) Accounting Policies, Systems and Procedures
27. Accounting shall be cash basis and follow a double entry system. The Project will continue to use the existing accounting system to record and report on receipts and expenditures. However, an upgrade of hardware and additional software licenses will need to be purchased and installed. The upgrade of the accounting software shall be procured/updated and in place within three months of project effectiveness.
28. The existing LENS Additional Financing FM Manual describes the financial policies and procedures for budgeting, flow of funds, monthly and end of year closing and financial reporting procedures, responsibilities and delegation of authorities, disbursement procedures, payment authorization for all accounts and cash, internal controls over petty cash, advances, fixed assets, financial accounting system, and all routine financial management and related administrative activities. It was last updated in August 2013. That FM Manual has been adapted for use under the PAWP to become the FM chapter of the PIM.
37 e) Internal Controls
29. The systems of internal controls are described in the Financial Management chapter of the PIM to provide guidance to the Project management and financial staff. The additional controls that will be introduced for this Project will be part of the revision and should ensure that all expenditures are properly monitored for eligibility, the financial information is accurate and complete and the Project assets are properly safeguarded. Appropriate segregation of duties shall be in place. The job descriptions and responsibilities for all the FM staff will be reviewed by the World Bank to make sure that the segregation of duties is adequate.
30. An advance control book should be prepared and maintained to monitor outstanding advances. Reporting of advances should be done in a timely manner. New advances will be made available only if the previous advances have been properly accounted for. Month end procedures, such as bank reconciliations, cash counts should be noted. The eligible rates of DSA and related travel expenses shall be clearly determined and be consistent with the Minister of Finance Ministerial Decision on Public Administrative Budget Expenditure Norms currently in force and any related notifications on the use of ODA issued by the World Bank and by MOF are to be followed.
31. Controls over soft expenditure are set out in the Financial Management chapter of the PIM as most of the activities involved travel, training/workshops.
32. The FM chapter of the PIM may be revised from time to time and is subject to the EPF Board and Bank's approval. The effectiveness of internal controls is to be reviewed annually by the Project and will be evaluated as part of the external audit process.
f) Budgeting
33. The AWPB shall be prepared by the relevant SDA for their sub-projects and consolidated by the EPF Office.
34. The consolidated annual work plan and budget will be discussed and approved/endorsed by EPF's Board and the World Bank. The AWPB will also be submitted to the World Bank on an annual basis and shall be updated from time to time as needed. Procedures are elaborated in the Sub-project Administration chapter and in the FM chapter of the PIM.
35. In budgeting for in and out country travel, MOF Ministerial Decision 0008/MoF and any related notifications by the World Bank or by MOF on the use of Overseas Development Assistance are to be followed.
g) Fund Flows
36. A Designated Account (DA) denominated in US dollars will be opened at the Bank of Lao PDR or any other financial institution acceptable to the World Bank. The DA will be a pooled account to hold both IDA and GEF funds with an individual fixed disbursement percentage for each source of funds. The DA will have an authorized allocation of US$ 1 million which is an equivalent to approximately 3 months of project expenditures less expected
38 direct payments. The level of allocation is considered to be adequate however as the Project progresses, the ceiling may be adjusted from time to time upon reasonable request.
37. The Designated Account will be administered by the National Treasury of the Ministry of Finance; however day-to-day management and replenishment to the DA will be handled by EPF.
38. Accounting opening procedures and authorization for withdrawals from the Designated Account shall follow the current practices of the Ministry of Finance as elaborated in the Ministry of Finance regulation 2695/MOF dated November 1, 2010. All replenishment applications will be accompanied by reconciled bank statements from the depository bank showing all transactions through the DA. The DA will be audited annually an independent external auditor acceptable to the World Bank.
h) Subproject
39. The SDA of each sub-project will be screened for financial management capacity. Depending of the total value of the subproject, an accountant will be recruited to help SDA management on the recording and reporting of the funds. The account will be trained and will be in close supervision by the EPF Finance Team.
40. The SDA of each subproject will open a bank account in the name of the sub-project at the nearest town/district to receive the sub-project proceeds. Sub-project grants will be paid directly from the Designated Account. Funds will be disbursed to sub-projects on a quarterly basis or based on the schedule of payment as indicated in the sub-project agreement. However, EPF's finance team will closely review and ensure that sub-project timely reports on the actual expenditures incurred together with the activities accomplished. No additional advance will be made if the actual expenses of the previous advance had not been reported. EPF finance team will review all supporting document to ensure that funds are used for the intended purpose before clearing the amount advanced and book the subproject expenditures. Payments from the designated account will only be in respect of expenditures actually incurred and must be supported by approved vouchers for payment. These procedures including additional measures are documented in the FM chapter of the PIM including sub-projects.
41. The authorization and procedures for withdrawals from all bank accounts are elaborated in the FM chapter of the PIM.
FUNDS FLOWS
39 World Bank Payment
, Transfer Designated Account at the Bank of Lao PDR (US$ 1 million) Payment
IDA US$ GEF US$
I Transfer Sub-project Suppliers of civil accounts at works, good, commercial Banks services and community US$ grants
i) Disbursement Arrangements
42. The Project will be implemented over a seven-year period co-funded from an IDA Credit in the amount of SDR 8.20 million, an IDA Grant in the amount of SDR 3.00 million, and a Grant from the Global Environment Facility Trust Fund in the amount of US$ 6.83 million.
43. The allocation of the proceeds will be disbursed against the following disbursement categories:
Disbursement Category IDA Credit IDA Grant GEF Grant Financing Percentage SDR SDR US$ (inclusive of taxes) 1 Goods, works, non-consulting 8,200,000 2,650,000 6,830,000 IDA (71.00%) with the service, consultants' services, Sub- grant portion disbursed grants, Training, and Operating first; Costs for the Project GEF Grant (29%) 2 Refund of Preparation Advance 350,000 1 Total 8,200,000 3,000,000 6,830,000
44. Disbursement from the grant/credit account shall be based on traditional procedures, i.e. made against Statement of Expenditures (SOE). Frequency of reporting of expenditures and replenishment will be on a monthly basis (irrespective of the amount involved). Ceiling for direct payments and reimbursements shall be at least 20% of the DA balance.
45. Disbursement methods shall include: advance, direct payment, reimbursement and special commitment.
40 46. Supporting documentation required for documenting eligible expenditures paid from the DA are Summary Sheets and SOE.
47. The documentation supporting the SOE disbursements will be retained by the EPF Office and by the SDAs during the life of the Project.
48. The Project will have a disbursement deadline date of four months after the closing date of the Project. This date is the final date on which the World Bank will accept applications for withdrawal from the government for documentation of the use of the proceeds already advanced by the World Bank.
49. Government's counterpart funding of US$1.4 million will cover staff salaries, offices, and logistical support at national and subnational level in participating project provinces. These expenditures will be 100% financed by the counterpart funds.
50. There is no outstanding audit report under Bank projects currently being implemented by the EPF Office.
51. Operating Costs will include the reasonable costs of goods and non-consulting services required for the day-to-day coordination, administration and supervision of Project activities as set forth in the respective Annual Work Plan and Budget, including leasing and/or routine repair and maintenance of vehicles, equipment, facilities and office premises, fuel, office supplies, utilities, consumables, communication expenses (including postage, telephone and internet costs), translation, printing and photocopying expenses, bank charges, publications and advertising expenses, insurance, Project-related meeting expenses, Project-related travel, subsistence and lodging expenses, and other administrative costs directly related to the Project, but excluding salaries, bonuses, fees and honoraria or equivalent payments of members of the Recipient's civil service.
j) Financial Reporting
52. The Project shall prepare and submit the Unaudited IFR on a six monthly basis and submit to the World Bank no later than 45 days after the end of each six-month period. The IFR format was agreed at negotiation. The IFR shall include: (i). discussion of the Project progress; (ii) a balance sheet; (iii) statement of sources and uses of funds statement; (iv) Statement of uses of funds by component and activities; (v) advance monitoring; (vi) procurement monitoring report; and (vii) fixed asset register. The above reports shall emphasize linkages between expenditures and physical progress as an important aspect of overall project monitoring. The charts of accounts and the reporting module of the computerized accounting system should be customized to facilitate reporting needs.
53. The period for the purpose of financial reporting shall follow the government's fiscal year i.e. from October 1 to September 30.
54. Any other financial reporting requirements by project management and/or the MOF are included in the FM chapter of the PIM.
41 k) Audit Arrangements
55. Only EPF operations are audited by the Supreme Audit Office however at the moment this office can only do compliance audits due to the limited capacity. As such the Project expenditures and accounts, including the Project Preparation Advance, will be subject to annual audit by an independent qualified auditor in accordance with International Standards on Auditing under ToR acceptable to the World Bank. The audit report together with the management letter are due to the World Bank within six months after the end of each fiscal year. The appointment of the external auditor shall be within three months of the Project effectiveness. The Project will be subject to the new Bank policy on Access to Information. The auditor's opinions and audited financial statements including the audit report shall be made available to the public in accordance with the World Bank's Policy on Access to Information. The principle of public disclosure was agreed at negotiation. Disclosure requirements are detailed in the Financial Management chapter of the PIM.
56. The cost of audit is provided in the Project budget and will be paid out of project funds as an eligible expenditure.
57. Due to the large scale of the sub-projects, it is proposed that the annual audit will also cover the review 100% of the sub-projects to ensure that processes have been followed and that funds have been used for the intended purpose as well as a sample of 30% of the community grants.
1) Implementation Support and Supervision Plan
58. As the financial management overall risk is assessed as "substantial", implementation support and supervision of project financial management will be done at least twice a year. The supervision will review the Project's financial management systems including but not limited to operation of designated accounts, evaluating quality of budgets, project financial management reports, financial reports submitted by SDAs, assessing relevance of PIM including sub-project administration, statement of expenditures, internal controls, reporting and follow up of audit and mission findings. The review will also include random reviews of financial transactions concentrating on soft expenditures i.e. per diems, training and workshop expenses, fuel and accommodation as well as compliance with covenants. It will also involve visits to various sites and physical verification of assets bought by the Project. During each the Project's financial management risks and the frequency of supervisions will be reassessed.
59. To ensure that the Financial Management action plan proposed below is implemented, the World Bank financial management team will follow up closely with the EPF Office. Implementation support will be integrated with the task team and where possible an integrated fiduciary review of goods and services contracts will also be carried out jointly with procurement team.
m) Financial Management Action Plan
FT __ Actions I Responsibility Completion Date 1 Recruitment by the EPF Office of one senior FM EPF Office Within three months of
42 consultant and at least two senior accountants to project effectiveness support the EPF Office and SDAs with terms of reference acceptable to the World Bank 2 Revision of the Financial Management chapter of EPF Office By negotiation the PIM including sub-project/community grant (completed) administration acceptable to the World Bank 3 Upgrade of the accounting system and training EPF Office Within three months of delivered to all finance staff project effectiveness 4 Agree on the format of IFR EPF Office / World By negotiation Bank (completed) 5 Agree on mechanism for disclosure of project EPF Office / World By negotiation audit report to the public Bank (completed) 6 All finance staff to be trained in the revised FMM EPF Office Latest at project launch and WB FM and Disbursement policies and procedures 7 Appointment of external auditors with Terms of EPF Office Within three months of Reference acceptable to the World Bank project effectiveness 8 Training in World Bank financial management World Bank By project launch and disbursement procedures
The above action items are included in the PIM, which, in turn, has been referred to in the Financing Agreement.
3. Procurement a) Assessment of the Agency's Capacity to Implement Procurement
60. A World Bank procurement specialist carried out the procurement capacity and risk assessment of EPF Office. The assessment reviewed the EPF organizational structure and capacity of staff to implement procurement for the Project. EPF Office has experience with procurement financed by the World Bank through the previous projects (the LENS and the LENS Additional Financing). A Procurement Officer has been appointed, who has experience on the World Bank procurement procedures, such as shopping of goods and works and selection of individual consultant. To strengthen the capacity, EPF Office will recruit a senior procurement consultant to be a Procurement Officer advisor for this project and a Procurement Advisor may be recruited as needed. At the same time, EPF Office will assign enough staff to work with the consultant for on-the-job training. The overall procurement risk is rated as "moderate".
b) Applicable Guidelines
61. Procurement will be carried out in accordance with the World Bank Guidelines: Procurement of Goods, Works and Non-consulting Services under International Bank for Reconstruction and Development (IBRD) Loans and IDA Credits and Grants by World Bank Borrowers, dated January 2011; and Guidelines: Selection and Employment of Consultants under IBRD Loans and IDA Credits and Grants by World Bank Borrowers, dated January 2011, and the provisions stipulated in the Legal Agreements for the Project.
c) Procurement Plan
62. For project implementation, a detailed Procurement Plan for the first 18 months of project implementation has been prepared and agreed with the World Bank. The Procurement Plan will
43 be updated in agreement with the Task Team at least annually or as required to reflect the actual project implementation needs and improvements.
Bank's approval Date of the procurement Plan: January 31, 2014 Date of General Procurement Notice: Not yet done Period covered by this procurement plan: The procurement period of project covered from year June 2014 to September 2016
Goods and Works and non-consulting services.
Prior Review Threshold: Procurement Decisions subject to Prior Review by the World Bank as stated in Appendix 1 to the Guidelines for Procurement:
Ref. Procurement Method Procurement Method Threshold Comments (Prior No. (US$'000) Review Requirement) 1. International Competitive Bidding >= 600 All (ICB) (Goods) 2. National Competitive Bidding <600 First contract (NCB)(Goods) 3. ICB (Works) >= 2,000 All 4. NCB (Works) <2,000 First contract 5. Shopping (Goods) <100 First contract 6. Shopping (Works) <200 First contract 7. Community procurement (Good and <10 First contract in each Works) sub-project
Proposed Procedures for Community Driven Development Components (as per paragraph. 3.19 of the Guidelines: Community grants to about 100 communities altogether estimated at U$4.0 million (amount will depend on sub-project proposals) will use community procurement procedures as defined in the PIM.
Reference to (if any) Project Operational/Procurement Manual: January 24 2014 PIM.
Summary of the prior review Procurement Packages planned during the first 18 months after project effectiveness. This is for Component 3. Sub-projects under component 1 and 2 will be approved during implementation and will include a Procurement Plan.
Ref. Description Estimated Packages Domestic Review Comments No. Cost Preference by Bank US$ million (yes/no) (Prior / Post) EPF vehicles US$90 1 lot No Prior 1s contract for Prior Review (Shopping)
Selection of Consultants
Prior Review Threshold: Selection decisions subject to Prior Review by Bank as stated in Appendix 1 to the Guidelines Selection and Employment of Consultants:
Ref. Selection Method Prior Review Threshold Comment No. (US$000) 1. Quality and Cost based Selection All (QCBS), Quality Based Selection (QBS) (Firms) Consultant Qualification >= 100 First contract for prior review when
44 Selection (CQS)(Firms) the value is less than US$100,000. 2. Single Source Selection All (SSS)((Firms) 3. Individual >10 for SSS and contracts First contract for prior review for fiduciary or legal assignments
Short list comprising entirely of national consultants: Short list of consultants for services, estimated to cost less than US$200,000 equivalents per contract, may comprise entirely of national consultants in accordance with the provisions of paragraph 2.7 of the Consultant Guidelines.
Consultancy Assignments with Selection Methods and Time Schedule
Ref. Description of Assignment Estimated Packages Review Comments No. Cost by Bank US$ '000 (Prior / Post) 1 Selection of consultants to support 400 14 Prior and Post All 3-year contacts. EPF Office with (a) project Individual Consultant management, (b) financial (IC) management, (c) procurement, (d) M&E, (e) safeguard, (d) accounting, (e) procurement and data entry. 2 Selection of international short-term 240 6 Prior and Post All IC contracts with consultants to advise EPF Office on variable number of days (a) technical management, (b) M&E, (c) gender and (d) communication. 3 Auditors 60 1 Prior CQS for 3-year contract
d) Implementation Support
63. Field procurement supervision will be conducted as a part of the regular implementation support missions, which will be fielded twice a year. The World Bank team will periodically undertake the post review at least annually. The scope of ex-post reviews will be expanded to include checks for collusion and verification of end-use delivery. The World Bank will periodically undertake integrated fiduciary supervision jointly by the Procurement and FM specialists.
e) Procurement Action Plan
Actions Responsibility Completion Date 1 Recruitment by EPF of one senior Procurement EPF Within 3-month of project consultant to support EPF and SDAs with terms of effectiveness reference acceptable to the World Bank 2 Revision of the Procurement chapter of the PIM EPF By negotiation (completed) including community-based procurement. 3 The main procurement staff to be trained in the EPF At the latest at project launch procurement procedures
64. The above action items will be included in the PIM, which, in turn, has been referred to in the Financing Agreement.
45 4. Environmental and Social (including safeguards)
65. The Project has been classified as "Category B". No long-term or large-scale negative environmental impacts are anticipated, and medium and longer term positive impacts are expected from sustainable land management, biodiversity protection and avoided deforestation.
66. No large scale or irreversible adverse environmental or social impacts (at the level of Category A projects) are anticipated, given the Project objective to strengthen participatory management of NPAs which, in the context of Lao PDR, require a development of sustainable livelihood of local people who depend on natural resources in and around NPAs for livelihood. Most of the subprojects are to develop legislative and regulatory frameworks, provide training to and develop the capacity of government agencies at national and provincial levels to increase their ability to effectively, (a) implement and monitor the NPA management system, and conservation of wildlife, and (b) conserve and protect forest resources and wildlife in NEPL and NNT NPAs. The legislative and regulatory frameworks to be developed are anticipated overall to have positive impacts although they may have some low environmental and/ or social adverse impacts. An ESMF has been prepared by the recipient to address potential environmental and social issues that may result from such institutional development activities as well as relevant mitigation measures.
67. The sub-projects under the component 2 will support enforcement of national and international good practice conservation laws and the development of sustainable protected areas management, which may result in a short-term loss in livelihood of local people who will not continue carrying out some of the livelihood activities they traditionally engaged in before the Project. The initial assessment conducted during project preparation did not find significant potential negative impacts that may be caused by project activities. This is partially because the PLUP will be carried out which will help preserve the current patterns of land and natural resource use.
68. OP4.11 on Physical Cultural Resources is triggered given the potential impacts on PCR and the unknown location of the subprojects. Chance find provisions are presented in the ESMF and inserted in contractors' contracts.
69. OP 4.04 on Natural Habitats is triggered given the high biodiversity value and protected area status of project area and the positive benefits provided by the Project interventions in the targeted natural protected areas.
70. OP 4.09 on Pest Management is triggered as sub-project activities in NPA may include interventions that could further lead to increased use of pesticides or of current pest management practices. Screening procedures (and negative list) are in place to prevent any use of pesticides that would impact the Project area of intervention. A Pest Management Plan has been developed and included in the ESMF.
71. The CEF through its Process Framework will address potential impacts of access restrictions under the Project, by providing detailed steps to ensure a full and informed participation of local people in PLUP process and in the development of alternative, sustainable income streams. Free, prior and informed consultations will be carried out with affected people,
46 and their broad community support to project activities will be ascertained. CAP will be developed based on a participatory process, and the Project will provide grant funding to implement part of the CAP, in order to at least maintain pre-project level of livelihood after the Project. Potential presence of the Physical Cultural Resources will also be identified through PLUP and verified through field visits. Management plans will place emphasis on conservation and management of endangered wildlife. Villagers will continue to be consulted on and participate in the Project throughout implementation through participatory social assessment, PLUP, CAP and CA processes at the village level, and through participatory M&E.
72. Indigenous peoples (who are called Ethnic Groups in Lao PDR) will constitute the majority of affected people and project beneficiaries under the sub-projects of component 2. The overall project impacts on Ethnic Groups are expected to be positive, however, care will be exercised so their precarious land/ natural resource tenure will not be adversely affected by the Project. CEF provides detailed steps to ensure that free, prior and informed consultations will be conducted with ethnic groups leading to their broad community support, and that they meaningfully participate in a culturally appropriate manner in land and natural resource use planning and zoning, and the development of alternative, more sustainable income streams.
73. Baseline livelihood data especially of vulnerable households, including women headed households, will be collected based on participatory social assessment to be carried out during implementation, and their livelihood status will be regularly monitored throughout the Project implementation under the participatory M&E. Where villages consist of hamlets that previously constituted independent villages but are now consolidated into larger villages, participatory planning process will start at the hamlet level.
74. In order to address minor land acquisition that may be required for community livelihood development and the construction of office buildings and facilities, a RPF was developed in line with OP 4.12 as part of his CEF. An abbreviated RAP will be developed during implementation should involuntary land acquisition become necessary.
75. In order to address project risks with regard to village consolidations, the Project will make an upfront agreement with provincial governors that the following criteria will be applied for the implementation of the Project: In villages consolidated in the past the Project will identify such villages and: (a) determine through participatory social assessment if land and tenure issues associated with the consolidation have been resolved to the satisfaction of communities; (b) ascertain if adequate land for agriculture or other means of livelihood to improve, or at least maintain their livelihoods, has been made available; (c) exclude such villages if outstanding issues related to land for agriculture and natural resource are identified, and convey findings to provincial authorities for appropriate action; and (d) excluded villages can subsequently become project beneficiaries if: (i) provincial authorities demonstrate that issues have been resolved, (ii) communities confirm such resolution met standards of free, prior and informed consultation, and (iii) communities provide their broad community support for participating in PAW project. Villages scheduled or proposed for consolidation during the life of the Project are excluded from participation in the Project.
76. An initial screening of eligible villages will be conducted under the support of qualified consultants, and their eligibility will subsequently be confirmed during the initial meeting with
47 communities. All relevant data, including minutes of meetings with community representatives, will be documented and filed for review by the Bank. Details on the Project approach to village consolidations are provided in CEF.
77. Environmental and Social Management Plans (ESMPs) will be developed to address site- specific environmental impacts that may occur in targeted NPAs as a result of minor civil works and other activities implemented under subcomponents under Component 2.
78. The Project will use indigenous leadership and conflict resolution mechanisms as the first tier grievance mechanism but will significantly strengthen their capacity including on safeguards requirements, gender equity, existing legal and administrative frameworks and land management.
79. The findings of safeguard assessment carried out for the Sustainable Forestry for Rural Development (SUFORD) project (closed in 2012) were used for the safeguard preparation of the Project, because of the similarity in issues such as the presence of large number of ethnic minorities in project areas, project impact on livelihood primarily resulting from access restriction, remoteness of project areas, similarities in consultative process, etc. Several weaknesses were identified with regard to the consultation process and the participation of ethnic minorities in key project activities. These included limited consultations and participation of target SDAs, inadequate capacity of project staff, weak linkages between safeguard processes and technical processes, and weak monitoring and evaluation mechanisms. These lessons learnt were incorporated in the safeguard measures developed under the new IDA/Finland SUPSFM project, which are also incorporated in this Project. a) Potential indirect or long term impact
80. All PAs in the country are subjected to a form or another of infrastructure/concession overlap. But all must comply with the Environment impact legislation, some of which, such as Social and Environment Standard for Operation (SESO), are supported by the Bank and International Finance Corporation (IFC) under the Hydro-Mining Technical Assistance project. Still, the improving/upgrading funded by GoL of existing roads passing through NE-PL (roads No. IC, No. 3204, and Phathi road) and NNT (8B or lE) are likely to degrade some natural habitat and increase the threats to both NPAs by facilitating access to remote area. There is a plan for hydropower development outside of the NEPL NPA, which could flood a portion of the NPA as well as increase boat access and threat to the NEPL NPA. The development of hydropower projects in NEPL NPA is at feasibility stage. Construction is unlikely for several years. The upgrading of other roads in NEPL NPA is also at the stage of plan. There is a gold mine concession adjacent to the NNT NPA, which, if not monitored, may impact the NPA in the future. The World Bank is not involved in any of these projects or concessions. However, the World Bank will raise the issue of large infrastructure development in highly valued biodiversity PA and provide advice to the Government as well as support if requested.
81. The linkage to these activities and any associated impacts will be assessed as part of subprojects preparation and approval. The Project will help MONRE contribute to the discussion on environment law compliance, build the capacity of PA team to monitor such projects, help DFRM develop a database of large projects so they can better anticipate their environmental and
48 social impacts and feasibility, and prepare guidelines for biodiversity offsets. These potential developments will be taken into account, in the NPA management plan, which will be developed and implemented during the Project implementation. Also, other Bank projects such as NT2, Hydro-mining TA, LENS2 are helping the GoL capacity with national laws on safeguard compliance. b) Environment and Social Management Framework
82. To comply with these safeguard policies and key concerns a SIA was conducted as background document to review the potential social impacts given due focus to the priority PAs selected for sub-project support (i.e. NNT NPA and NEPL NPA). The SIA concluded that the overall impacts of the proposed project would be positive and the potential negative impacts would be localized and could be mitigated.
83. Given that sub-projects have not been designed at the time of appraisal and therefore specific impacts are not yet known, an ESMF has been prepared. The ESMF will serve as a template to guide the environmental analysis required for all sub-projects that could create negative environmental impacts. The ESMF primarily includes: (a) an assessment of generic issues typically associated with the proposed interventions; (b) a screening process of sub- projects which must include measures for environmental risk mitigation; (c) protocols/guidelines to conduct sub-project-specific EAs and prepare sub-project-specific ESMPs and (d) protocols/guidelines for implementation and monitoring of sub-project-specific ESMPs. The ESMF also include the ECOP to be incorporated into the construction contract for all type of civil works as well as the site selection criteria that has been developed based on the technical criteria adopted for the regional series of projects29 as well as measures to reduce the implementation risk. The ESMF recommends approaches to minimize pesticide use, and alternatives, including integrated pest management. A simplified pest management plan that applied in other similar Bank projects is provided in the ESMF and will be used for sub-projects as applicable. In compliance with the Physical Cultural Resources OP/BP 4.11; the environmental screening process will assess and confirm whether selected sub-project areas are located in or near to known areas with physical cultural resources. A "chance find" procedure for confirming and protecting physical cultural resources identified during project implementation is included in the ESMF.
c) Community Engagement Framework
84. The sub-projects that implement NPA management activities will work with communities that are reliant to varying degrees on forest resources for their livelihoods. In order to address potential negative impacts described above, and also to ensure target populations are sufficiently informed of and meaningfully participate in project implementation processes, a CEF has been prepared in accordance with Bank policies, OP 4.10 on Indigenous People and OP 4.12, on
2 Areas with high levels of poaching and illegal wildlife trade; Area of high biodiversity significance; Threatened ecosystems; Locations with observed high presence of endemic species and/or flagship species; Locations with potential for non-consumptive ecosystem services; The protected area at risk of succumbing to surrounding development pressures; and The protected areas with high nature based tourism activity and potential thus requiring intensive management.
49 Involuntary Resettlement30. All affected communities, be they ethnic groups or Lao, will be engaged in a culturally appropriate way to ensure broad-based community support.
85. The CEF includes, or rather itself represents, a Process Framework for the purposes of OP 4.12 and an Indigenous Peoples (Ethnic Groups) Planning Framework for the purpose of 4.10 on Indigenous People. It will guide the final selection of villages supported by the NPA sub- projects. The CEF constitutes the main strategy for community engagement under the Project. It applies to all sub-projects that implement NPA management activities. It is an improved version of an approach already in use on some PAs in Laos called "Participatory Integrated Conservation and Development". The CEF is based on four core principles: (a) all communities will be approached in the spirit of constructive collaboration, made aware of the sub-project purpose and potential benefits. It will be explained that communities have the option to refuse to participate; (b) all community-level beneficiaries, regardless of their ethnic group or social status, will be engaged in a culturally relevant way on the basis of a free, prior, and informed consultations; (c) the community engagement process will take account of minorities and ethnic differentiation to ensure that dialogue is inclusive and carried out in the appropriate language(s). Communication throughout the Project cycle will use appropriate information, education, and communication (IEC) materials to respond to issues of language and ethnicity, literacy / illiteracy, gender, and social vulnerability; and (d) all project-affected people will have the opportunity to participate in and benefit from the Project by providing input to the preparation of, and through participation in, the implementation of CAPs.
86. The CEF will be implemented through four stages that will include (a) selection of participating villages and team formation, (b) community awareness and resource diagnostics, participatory planning including PLUP, CAP and signature of CAs, and (c) implementation of CAPs which are likely to include community-based resource protection, revolving fund for community livelihoods and provide incentive-based grants to the VDC for social infrastructure and other community priorities. After an initial disbursement, subsequent disbursement into the VDF will be based on compliance with CAs. CA will be signed between the relevant SDA (i.e. WMPA or NEPL MU) with the relevant VDC.
d) Resettlement Policy Framework
87. The Project will not involve physical relocation. However, minor land acquisition may be required under community livelihood activities and/or small repair or upgrading of infrastructure including rehabilitation/upgrading buildings. The RPF sets out policies and procedures that will apply to such impacts.
3o OP4.12 is cited to provide guidance and ensure that resource access restrictions that may occur under the Project do not disproportionately affect any group within the community. CAPs will be developed in all villages without regard to ethnicity, and are intended by design to offset resource restrictions with viable alternative options to ensure that the livelihood of all households in project participating villages will at least be maintained as before the Project level. A resettlement policy framework is also provided in the CEF for use in the unlikely, but possible, localized need for involuntary land acquisition for project-related facilities. The approved CEF has been disclosed both locally and through the World Bank Infoshop on January 27, 2104.
50 e) Gender Mainstreaming
88. Gender has been mainstreamed in Project design and steps taken to ensure gender issues and the special needs of women receive adequate attention. All sub-project proposals will need to demonstrate their approach to considering gender mainstreaming. The community-based development TA will be responsible for gender issues. At mid-term, a gender assessment will be conducted and results reflected in project design and implementation. The Project monitoring framework includes gender specific data. Progress reports at sub-project and consolidated level will systematically report on gender aspects.
89. In sub-projects related to NPA management, it is expected that SDAs will recruit women facilitators with local language skills to be part of the sub-project extension and livelihood teams, especially in minority ethnic group communities. CEF consultations, endorsement of CAPs, and CAs will ensure women are active in participation, and receive due representation in all decisions. Data collected on livelihoods and forest resources utilization will be disaggregated by gender.
f) Grievance Redress Mechanism
90. Grievances that result from project activities will be resolved through a grievance mechanism provided in the CEF. The grievance mechanism will be based on key principles that will protect the rights and interests of project participants, ensure that their concerns and grievances are addressed in a prompt and timely manner, and that entitlements or livelihood support is provided in accordance with GoL and Bank safeguard policies.
91. The grievance mechanism will be in line with existing policies, strategies, and regulations on redressing village grievances as defined by GoL and will be institutionalized in each village by a selected group of people, involving ethnic minorities, women, and representatives of other vulnerable groups in the village. In Bolikhamxay and Khammouane Province communities can also take advantage of the existing grievance mechanism developed under the LENS project.
92. The Project grievance redress mechanism will consist of four steps with guidelines outlined for each step. Grievances will be addressed at the village, district, province, and national level. A complainant also retains the right to bypass this procedure and can address a grievance directly to the EPF Office or the National Assembly, as provided for by law in Lao PDR. At each level grievance details, discussions, and outcomes will be recorded in a grievance logbook.
g) Excluded activities. The project will exclude the financing of activities and expenditures posing significant potential negative environmental and/or social impacts and risks, as defined in a detailed negative list included in the PIM, ESMF and CEF. While the Project will build capacity for improved wildlife protection and law enforcement, it will not finance the purchase or training in the use of weapons and any other expenditure intended for military or paramilitary purpose. All sub-project proposals will be subject to screening and approval by the Bank to ensure that they meet the eligibility criteria (including negative list of excluded activities and expenditures) defined in the PIM and the safeguard documents and referred to in the legal agreements.
51 h) Measures to address external risks
93. In order to address the risks associated with the government's ongoing program of village consolidation, the Project will not work in villages that will be consolidated or proposed for consolidation within the life of the Project. In villages that have been consolidated in the past, project finance can be used if, and only if, land and resource tenure issues associated with the consolidation have been resolved to the satisfaction of villagers. Details on the Project approach to village consolidations are provided in CEF.
94. Regarding concession risks especially for road construction, mines and hydropower that overlap with the NPA supported by the Project, the sub-project ESMPs will include an inventory of such concession and infrastructure projects and an assessment of their severity. The current PDO outcome has been designed to seek outcomes that are still relevant should these concessions and projects proceed without environment mitigation. DFRM will prepare a database to track these projects and detect new ones as they emerge as well as to assess their severity. On this basis, discussions will be held with provincial governments to avoid overlap between concession areas and the Project areas, offer advice and support and ensure that they are not an obstacle to the Project PDO. In case it is determined that an overlapping concession (or project) is either non-compliant with national safeguard laws or in opposition with the PDO, and that the promoters are proceeding with implementation, all further expenses under the sub- project supporting that NPA will be deemed eligible, the sub-project will be cancelled and no additional fund would be made available for that NPA.
5. Monitoring & Evaluation
95. Monitoring and Evaluation arrangements are based on the Project's results framework (see Annex 2) and lessons learned from LENS. It includes indicators, baselines, target values, data collection schemes, and responsible entities. The M&E system developed for the Project in EPF Office will address input-output, process and outcome monitoring and use an improved version of EPF Office's existing instruments (i.e. sub-project database, webpage). The M&E system is described in EPF's M&E chapter of the PIM. The sub-project application and reporting forms represent the key data collection tools. Data will be entered and processed in EPF Office's sub-project database. The EPF Office will ensure that the following crosscutting issues are embedded in the Project activities and are regularly monitored and reported: (a) beneficiary's participation with particular focus on women and gender equity, (b) compliance with the environmental and social safeguards, and (c) good governance. a) Indicator quality and reliability
96. The indicators were selected to ensure an accurate attribution of the Project's results through its achievement of the PDO. A special effort was made to ensure that the indicators selected are SMART (specific, measurable, attributable, realistic and time-bound) and have low- cost data requirements. All sub-projects will have their individual results framework with clearly defined contribution to indicators defined in the Project results framework.
52 b) M&E capacity and capacity-building
97. M&E capacity in EPF Office and at SDA level is low and will require training during the first years of implementation. A full-time monitoring and evaluation adviser as part of the EPF Office's TA team will be recruited for the duration of the Project and ensure that M&E capacity is built to the required standard and EPF Office's and sub-project's M&E systems are functional and of adequate quality.
c) M&E implementation at EPF level
98. The M&E tasks will be led by the M&E expert recruited for the Project. Data collection starts at the SDA level and will be consolidated at EPF's office (sub-project application and reporting forms). The analysis of the data collected will be carried out by EPF Office's M&E team. The Project may finance targeted annual and periodic studies to assess project performance. The EPF Office will consolidate all sub-project AWPB in its own Project AWPB. It will also combine all sub-project annual reports in its own annual report. Dissemination of the consolidated report will be done in English and in Lao through regular stakeholder meetings at central and provincial level and use of EPF Office's webpage. Mid-term/ End of project evaluation: Mid-term and end-of-project evaluations will be carried out by independent consultants subcontracted by the EPF Office and include up-date of GEF tracking tools for biodiversity, land degradation, and sustainable forest management.
d) M&E implementation at SDA level
99. Data collection: The sub-project application and reporting forms specify information to be provided. Each sub-project will have its own AWPB, which would include a results framework with clearly defined indicators feeding into the Project's Result Framework and annual benchmarks (output indicators) to determine renewed release of funds. Each SDA is expected to provide a baseline and demonstrate how it will monitor and report on its indicators. The EPF Office will assist the SDAs at central and provincial level in the design of the sub- project results framework and related implementation and reporting and ensure compatibility with its own sub-project database.
100. WCS has been recruited during preparation to design a "scientific monitoring tool" to measure evolutions of forest cover, carbon emission and wildlife. WCS will remain available to beneficiary should they elect to contract its services. Field staff and rangers are already testing a "smart" patrolling monitoring protocol. Communities will also play a direct role in monitoring and evaluating village-level activities performance under the CA as part of the NPA sub-projects.
e) National policy monitoring
101. The MONRE and MAF DPCs, will monitor the implementation of sub-projects from a policy and national plan compliance view points as many of these activities are feeding directly into the MONRE and MAF 5-year Programs.
53 f) Performance assessment by the World Bank
102. Implementation support missions will evaluate performance against the approved AWPB and the submitted consolidated and sub-project specific progress reports.
6. Role of Partners
103. Parallel financing is secure from NTPC for additional activities related to the NNT NPA sub-project, in an amount of about US$1.40 million per year. Funds from NTPC are released once a year to WMPA to implement their overall AWPB. The NNT sub-projects would also support the implementation of selected aspects of the WMPA AWPB. However, purchases would be segregated as identified in the detailed budget and procurement plan. The Bank would coordinate its input, support advisory services with other WMPA partners such as the NTPC, the Independent Monitoring Agency and Panel of Expert as they also must clear the AWPB before it is presented to the WMPA Board of Directors.
104. There is also parallel financing from WCS and from WWF for DFMR capacity building and human resources development. Both will be mobilized on a year by year basis and taken into account in the relevant sub-projects AWPB.
105. Parallel financing has also been identified (1) from GIZ, through the CLIPAD Project. CLIPAD is supporting the current stage of NEPL NPA development (which is also financed by GEF4) and (2) from the ICBF project funded by the German Reconstruction Credit Institute (KfW). Other parallel financing may be mobilized as the Project is implemented and new sub- projects are approved and implemented.
Parallel Financiers
Institution/Country Role Amount WCS Investments & TA in NEPL and possibly US$350,000 other NPAs NTPC Investments in NNT NPA US$7.50 million WWF Capacity building DFRM and human US$300,000 resources
54 ANNEX 4: OPERATIONAL RISK ASSESSMENT FRAMEWORK (ORAF) LAO PDR: PROTECTED AREA AND WILDLIFE PROJECT FOURTH PHASE OF A SERIES OF PROJECTS ON STRENGTHENING REGIONAL COOPERATION FOR WILDLIFE PROTECTION IN ASIA
Stage: Board
1. jcptkhle ik 1.1. Stakeholder Risk Rating High Description: Risk Management: The Project supports a transformational agenda the presence of a negative attitude towards environmental conservation, there is a for improved wildlife trade regulation andDept enhanced pAenhaced management.mnageent A HowverHever,in notallwildlife all growing trade.concern This for isenvironmental strongly reflected quality inand recent adheng Government to international actions, agreementssuch as theon branches of government or society (industry, establishment of MONRE and LAO-WEN and proposed legal and regulatory reforms (revised local communities) are ready for these policies forestry law, proposed new NPA policy and NPA decree). And, due to a large volume of and resistance is expected. Environmental crimes complaints on environmental destruction, in 2012, the National Assembly enacted a thee-year are committed by national (and regional) ban on all new mining and rubber plantation concessions. stakeholders at all levels of society and, thus, are problematic for the borrower to resolve. The Project will include a strong communication and behavioral change dimension in order to Furthermore, PA investments are often viewed as convey the importance of the environment to sustainable, green growth and the positive "anti-evepment" aondc crartioreaci economic benefits of environment management focusing on high-level governmental decision- omakers at all levels including members of the National Assembly, the military and the
All Protected Areas in the country are subjected Politburo. to a form or another of infrastructure/concession All of the planned hydro and mining concessions are considered strategic by the Laos PDR overlap, which may increase when the The Bank has raised the issue in several aide memoire and met with relevant authority in the moratorium on new concession ends. In NEPL Ministry of Transport and Ministry of Energy and Mines. All infrastructure or concession NPA, there are currently multiple hydropower must comply with the Lao PDR environm ent impact legislation. The Bank is active with concessions overlapping the NPA (which would building GoL capacity in ESIA. For example, the design of Social and Environment Standard also involve salvage logging), overlapping for Operation (SESO), are supported by the World Bank and IFC under the Hydro-Mining mining concessions will likely by granted in Technical Assistance project. At both PA locations (NNT and NEPL), the World Bank already 2016, and road construction is already in has current investments (Nam Theun 2 Project and NEPL Tiger Landscape) and carried out a progress. dialog with GoL on the subject. Hence, with the proposed Project, the World Bank would be firther investing in these sites and would have some leverage to discuss, advice and perhaps
55 In NNT NPA, there are currently no major oppose conflicting uses and to support reaching sustainable land use consensus with planned infrastructure investments, but there is a developers (e.g. biodiversity offsets). There is a history of working and communicating with history of illegal mining, logging, and poaching. the national, provincial, watershed authorities, district governments including support from international NGOs on these two PAs that will be enhanced during implementation. The All of these issues require high-level support and Project allocates more than half of its resources to institutional and human resources Government coordination to address properly. developments to gradually enable the country to make tradeoffs that are more conducive to greener growth. The Project will assist MONRE strengthening environment law compliance, building the monitoring capacity of the PA team and supporting DFRM to develop a database of large projects at central and provincial level so they can anticipate their feasibility, and prepare guidelines for biodiversity offsets. It is hoped that such potential developments will be taken into accounting the NPA and broader landscape management plans, which will be developed and implemented during the Project implementation.
The borrower has prepared an ESMF, which includes a scoping of planned infrastructure developments as part of the SIA process. The NPA sub-project ESMPs will provide detailed information ion planned infrastructures that may affect the NPAs. These will be reviewed by the World Bank who will offer advice and support to GoL on how to address these issues.
Resp: Stage: Recurrent: Due Date: Frequency: Status: Both Implementatior X NA Continuous In Progress Direct village beneficiaries in PAs could view the Risk Management:
56 Project as conflicting with their priorities and The preparation process included an extensive review of past and current approaches of needs. These peoples rely strongly on the natural community engagement in PAs by the World Bank (LENS), KFW (Him Na No NPA), and resources PAs provide and could view negatively WWF (Xe Xap NPA). The diagnostic assessment conducted during project preparation did not any resource restrictions. Furthermore, there is fmd any significant potential negative impact that may be caused by project activities. This is often unclear tenure, access, and rights partially because the Participatory Land Use Planning (PLUP) will be carried out which will constraining their participation in management. help preserve the current patterns of land and natural resource use to the extent that is A very high level of ethnic, linguistic and technically viable and legally allowed. religious diversity within PAs that have sometimes been difficult to engage in some past As part of the preparation, the borrower has prepared a Community Engagement Framework WB investments (i.e. SUFORD). (CEF) to develop a standardized approach to partnering with communities. It includes an Ethnic Group Framework (indigenous peoples are called Ethnic Groups in Lao PDR) and the Gender concerns are critical to achieving PDO Resettlement Process Framework (RPF) to fully engage these ethnic minorities group to indicators and stakeholder's experiences participate/benefit in project activities. The CEF through its Process Framework will address incorporating gender concerns into operations are potential impacts of access restrictions under the Project, by providing detailed steps to ensure limited. a full and informed participation of local people in PLUP process and in the development of alternative, sustainable income streams. Free, prior and informed consultations will be carried The enforcement of PA and wildlife laws present out with affected people, without regard to their ethnic background, and their broad risks to the lives of those tasked with patrols and community support to project activities will be ascertained. Community Action Plan (CAP) arrest. Past records show that poachers in Laos will be developed based on a participatory process and the Project will provide grant funding do not carry automatic weapons and demonstrate to implement part of the CAP, in order to at least maintain pre-project level of livelihood after aggressive behavior. So far in the history of PA the Project. Potential presence of the Physical Cultural Resources (PCRs) will also be and wildlife management ion Laos, there appears identified through PLUP and verified through field visits. to have been few casualties. Villagers also carry out patrol to protect their own resources. They The Project team has been coordinating with the Country Gender Coordinator to ensure gender do not carry out weapons and do not get involved concerns are adequately integrated in the Project design. Baseline livelihood data especially of in arrests. vulnerable households, including women headed households, will be collected based on participatory social assessment to be carried out during implementation, and their livelihood status will be regularly monitored throughout the Project implementation under the participatory monitoring and evaluation (M&E).
The patrol teams are Government employees, DFRM, DOFI or sometimes military staff detached to PA management. They carry the regular Government provisions for life loss compensation and health. To minimize risk, training is provided in risk avoidance, arrest procedures and first aid. Resp: Stage: Recurrent: Due Date: Frequency: Status:
57 Both Implementation X NA Yearly In Progress Resp: Stage: Recurrent: Due Date: Frequency: Status: Both Both X NA Yearly In Progress Resp: Stage: Recurrent: Due Date: Frequency: Status: Bank Yearly In Progress
2.1. Capacity Rating Substantial Description: Risk Management:
EPF capacity is reasonable, as proven during the Based on a review of the EPF's current staffing capacity and lessons learned from LENS 1, the of the EPF's Executive Office with 5 satisfactorypreparation assessment concluded to increase the staffing However, imPleenan of L 1. additional positions during project implementation including financial management, thoeer ith PAW andk LEN 2nufiincalaing-up, procurement and M&E and a full-time international TA responsible for overall project there is a risk of insufficient capacity to implementf management. Further, the existing PIM including subprojects, monitoring and evaluation and lessons from LENS 1 including an revenues and geographic scope. DFRM fiduciary aspects was updated to take into account and endorsement process and (MONRE) is a gograpc oe. d FRm improved standard subproject proposal form, sectoral screening The Project will finance training and Sang iaong detme an he m strengthening of EPF's subproject monitoring database. implementation. The Bank will (de etiat ) re cte i se en more TA to EPF to evaluate subproject proposals and support their recent.rcent.xt TheProecithereorebilefrmnedinga provide regular implementation support through quarterly short support missions. Integrated context, where te rensiiltermnagin procurement and financial management supervision will provide regular feedback of PAs is currently still being determined between different levels of Government (district and performance and identify areas for improvement. LENS 2 will provide additional support for devising EPF's Business Plan including staff performance, salary and incentive structure as aditawellas improving EPF's overall organizational set-up and instruments.
Resp: Stage: Recurrent: Due Date: Frequency: Status: Client Both X NA Yearly In Progress 2.2. Governance Rating Moderatep Description: Risk Management:
58 There have not been any governance issues The Bank will monitor the situation through regular support mission. Prior and post reviews during LENS I. The Board of EPF has been and continuous dialog with GoL on the EPF governance and financing. stable, met regularly, and provided adequate guidance to EPF Office.
Resp: Stage: Recurrent: Due Date: Frequency: Status: Bank Implementation X NA Yearly In Progress DFRM (MONRE) is a young department and the Risk Management: Sam Sang (decentralization) directive is even With TA provided by Finland and Germany, MONRE is currently producing guidelines to implemrent in ae Potext wherefhe further elucidate the implementation roles and responsibilities created by recent statues and imlmntd i a cnex,.er h decrees and the decentralization directive. responsibilities for managing PAs are currently still being determined between different levels of The Project would support the reform agenda by helping develop legislation, regulation, or Government (district and provincial). guideline as needed.
Resp: Stage: Recurrent: Due Date: Frequency: Status: Both Implementation X NA Yearly In Progress
3.1. Design Rating Substantial Description: Risk Management:
59 The proposed Project is very wide in scope, both The implementation arrangements build on experiences gained under LENS I project. A strong geographically and institutional. At the national technical team will assist EPF during the full implementation period. The PIM was up-dated to level it involves two ministries (MONRE and assist EPF and the delivery agencies with sub-project processing and implementation. Training MAF) plus the Lao-WEN government entity. At to EPF and the delivery agencies will be carried out regularly to build necessary capacity at all the sub-national level, it includes the five levels. provincial governments (+ six line ministries of DFRM and DOFI), approximately ten district The Bank will carry out frequent implementation support missions including field visits to governments, at least 100 villages, the Nakai guide implementation and address challenges. Partnerships with other development partners Nam Theun WMPA and the NEPL MU. Local are expected to leverage knowledge and resources for stronger results. and international NGOs may also be included in project components. The Project design includes provision for regular central high-level sector meetings involving key stakeholders to ensure that information is shared and coordination strengthened and for International and intra-government cooperation similar meetings at provincial level covering stakeholders relevant for each of the NPAs. has not traditionally been very strong in Lao PDR, and yet this Project requires large quantities The implementation of the high-level decision-maker awareness raising and communication of both. This risk is exacerbated by the current strategy is expected to increase overall interest, awareness and ultimately commitment to the uncertainty caused by the Sam Sang environmental issues addressed by the Project. implementation. Resp: Stage: Recurrent: Due Date: Frequency: Status: Client Implementatior X NA Yearly In Progress 3.2. Social and Environmental Rating High Description: Risk Management: This is a Category B project with modest An Environment and Social Management Framework (ESMF) was prepared for the Project. In potential for negative environmental and social its annex three additional frameworks will guide the design of the Project: A Community impact. Regarding the implementation of Engagement Framework (CEF, essentially a Process Framework), a Resettlement Policy activities that may restrict community access to Framework (RPF). An Ethnic Group Management Framework (EGMF) is nested in the CEF. natural resources, there is a risk that insufficient As well, implementing agency staff will receive safeguard training as needed. consultation of, or participation by, local communities in park management, fisheries and As indicated in the CEF, in order to address the risks associated with the government's river basin management lead to further ongoing program of village consolidation, the Project will not work in villages scheduled or marginalization and antagonism. proposed to be consolidated within the lifetime of the Project. In villages that have already been consolidated, project funds can be used if and only if land and resource tenure issues There is a social risk that the Project become is associated with the consolidation have been resolved to the satisfaction of villagers. Details on implemented in consolidated villages with the Project approach to village consolidations are provided in CEF. residual issues or in villages scheduled for
60 consolidation. The ESMP includes an inventory of known concession and infrastructure projects and an assessment of their severity. The borrower has prepared an ESMF, which includes a scoping There is also a risk that concessions for road of planned infrastructure developments as part of the SIA process. The NPA sub-project construction, mines and hydropower overlap with ESMPs will provide detailed information ion planned infrastructures that may affect the NPAs. the PAs supported by the Project. These are These will be reviewed by the World Bank who will offer advice and support to GoL on how likely to induce additional degradation to the to address these issues. Under its sub-project, DFRM will prepare a database to track these NPAs that the Project is building capacity to projects and detect new ones as they emerge as well as to assess their severity. On this basis, protect. discussions will be held with provincial governments to avoid overlap between concession areas and the Project areas, offer advice and support, and to ensure that they are not an obstacle to the achievement of the Project PDO. In case it is determined that an overlapping concession (or project) opposes the PDO, and that the promoters is are authorized to proceed with its implementation, all further expenses under the sub-project supporting that NPA would become ineligible. Resp: Stage: Recurrent: Due Date: Frequency: Status: Client Implementation X NA Yearly In Progress 3.3. Program and Donor Rating Moderate Description: Risk Management: The Project will be fully harmonized with KFW's The Natural Resource and Environment Sector Working Groupthat is chaired by the Minister Integrated Conservation of Biodiversity and of MONRE and co-chaired by the Ambassador of Germany and the Country Manager of the Forestry Project (ICBF) and to a lesser extent will World Bank will continue to be used as a mechanism to improve cooperation. coordinate with ADB's Biodiversity Conservation Corridors (BCC) Project. However, completion of Project activities will have limited interdependence with the ICBF and both projects are at roughly the same stage of development. Other potential partners (WCS, WWF, and IUCN) have been integral parts of the preparation process and will continue to be involved in project preparation. Resp: Stage: Recurrent: Due Date: Frequency: Status: Bank Both X NA Yearly In Progress 3.4. Delivery Monitoring and Sustainability Rating High Description: Risk Management:
61 EPF was the implementing agency of LENS EPF's capacity will be strengthened by a full-time M&E expert to ensure effective monitoring whose main shortcoming was M&E. Project and evaluation based on the, M&E Framework developed during preparation. The latter delivery and contract monitoring will be a risk includes the measurement of all indicators, data collection modalities and reporting tools. due to EPF, MONRE and MAF staff at all levels M&E and procurement training will be made available for staff in delivery agencies. of Government having inadequate skills, and experience for monitoring contract Sustainability is embedded in sub-project selection and will be reflected in monitoring reports. implementation and procurement.
There is also insufficient staff in MONRE, WMPA, and MAF to ensure precise and accurately monitor and evaluate project Resp: Stage: Recurrent: Due Date: Frequency: Status: implementation. Furthermore, difficult access to PA sites makes monitoring environmental and Client Both X NA Yearly In Progress social outcomes challenging. Financial sustainability based exclusively on Risk Management: Government budgets is unlikely by the Project's Completion. Donor funding as long dominated EPF's capacity will be strengthened by a full-time M&E expert to ensure effective monitoring the environmental sector in Lao PDR. However, and evaluation based on the M&E Framework developed during preparation. The latter if SDAs are able to clarify the institutional includes the measurement of all indicators, data collection modalities and reporting tools. structure and increase capacity, the Project results M&E and procurement training will be made available for staff in delivery agencies. should be sustainable with donor funding likely available. Sustainability is embedded in sub-project selection and will be reflected in monitoring reports. The Project will support EPF fund raising capacity and effort in order to either capitalize further its endowment or secure a sustainable source from hydro or mining.
The Project, with KFW partners, initiates strategic discussions on institutional arrangements and provide funding where an opportunity to improve the PA institutional structure exist.
Resp: Stage: Recurrent: Due Date: Frequency: Status: Client Both X NA Yearly In Progress
Implementation Risk Rating: High Comments:
62 The implementation risk is high since (a) EPF remains a young organization with much improvement required to be more efficient and effective, (b) most sub-grant recipients have low capacity and will require much technical assistance both in sub-project development and implementation.
63 ANNEX 5: IMPLEMENTATION SUPPORT PLAN LAO PDR: PROTECTED AREA AND WILDLIFE PROJECT FOURTH PHASE OF A SERIES OF PROJECTS ON STRENGTHENING REGIONAL COOPERATION FOR WILDLIFE PROTECTION IN ASIA
1. The implementation support plan (ISP) recognizes the importance of effective and timely support to the client especially during the start-up phase of the Project. The ISP will give priority to the following aspects: (1) technical support to the recruitment, orientation, training of field staff responsible for implementation of the CEF and NPA Management Plans, and to ensure inclusion of vulnerable communities and gender equity, (2) technical support to reviewing and developing methodologies and instruments for sub-project development and implementation, (3) enhanced linkages with sector strategies and forest law and governance developments, (4) placement of TA staff for monitoring and evaluation, and the setting up of a sound monitoring and evaluation framework, (5) appropriate procurement and financial management procedures, (6) safeguards and fiduciary issues, and (7) risk mitigation measures as outlined in the ORAF.
2. Formal supervision including field visits will be undertaken four times in year-one of the Project and be reduced to two times per year during the Project. In addition the task team will participate in key project events, and sector and policy dialogue meetings. The task team will also undertake at least one integrated fiduciary and technical supervision mission during each year of the Project. Implementation support will be required for the following key areas:
3. Technical. Technical inputs will be provided to ensure methods and processes used for implementation of sub-projects, CEF and development of NPA Management Plans are in keeping with the objectives related to free, prior and informed consultation process, broad community support, vulnerable communities and women, safeguards, and are of acceptable technical standard. Technical inputs will also be required to review the quality of Sub-project preparation (including capacity assessment). The task team will share responsibility for enhancing engagement with sector strategy issues, with policy dialogue and developments in related sectors that may have a bearing on the wildlife sector, and with conservation laws. Bank staff will also play an important role in coordination of the Project with other projects implementation
4. Capacity Building. The task team will provide inputs to the design of the capacity assessment for the Project, and participate in key milestones of the assessment, especially the adoption of recommendations and integration into project design and implementation. Inputs will also be provided to selection of high quality and relevant regional and/or international individual service providers or institutions for diverse needs of the Project.
5. Safeguards and gender. The CEF has been designed as the key framework to address social safeguards issues in the Project. Implementation support will be provided to ensure integration of safeguards aspects in the orientation and training of field staff, and in the setting up of a functional and effective grievance mechanism. The task team will also maintain continued linkages with consolidation and resettlement plans of the GoL and take steps as outlined in the ORAF for mitigation. Environmental safeguards are incorporated into the forest
64 management planning guidelines. Technical expertise will be made available to ensure compliance with gender aspects of the Project.
6. Monitoring and Evaluation. The Project will finance an international monitoring and evaluation professional that will have overall responsibility for establishing a monitoring and evaluation mechanism for the Project. Technical inputs will be provided to support this professional, ensure compliance with the results framework, review of terms of reference for key studies and surveys, review of monitoring mechanisms for enhanced benefits to communities, and supervision for quality and effectiveness.
7. Procurement. Implementation support will aim to provide training to procurement staff, review of procurement plans and documents, ensure compliance with the World Bank's procurement guidelines, and supervision of the annual procurement plans.
8. FinancialManagement. Bank TA will support a financial adviser at the central level and staff at provincial level. Implementation support will be provided for training, upgrading of accounting software, review of IFRs and external audits, monitoring disbursement progress, and monitoring effectiveness of financial management of the Project.
9. Grievance and Complaints Management Implementation support will consist of supervision and review of the effectiveness of the grievance and complaints management mechanism, and coordination with national capacity building efforts related to conflict resolution.
10. Communication Strategy. Bank inputs will include review of implementation progress of the national communication strategy, and coordination with other programs.
11. Other. Sector specific risks will receive ongoing monitoring as specified in the ORAF and the ORAF will be reviewed periodically and updated to respond to changing circumstances.
12. Required task team skills mix and international implementation partners and their anticipated roles are described in the following tables.
Partners
Name Institution / Country Role
NTPC Private company / France & Co-finance the development of the NNT watershed area. Thailand WCS NGO / World wide Co-finance NEPL NPA, training and capacity building against illegal wildlife trafficking WWF NGO / World wide Co-finance training and capacity building against illegal wildlife trafficking Cooperating partners Various Policy dialog with GoL on NPA management and wildlife and NGOs law enforcement
65 Main Focus in terms of Support to implementation
Time Focus Skills Needed Resource Partner Role Estimate 1st 12 months Sub-project development, Leadership, sub-project US$160,000 Information sharing activity planning and planning, M&E, Procurement, and technical input. capacity building on FM fiduciary skills 12-48 months Sub-project Leadership, M&E, NPA and US$140,000 Information sharing implementation and wildlife management, rural per year and technical input, monitoring, EPF capacity development, social safeguard, joint supervision building procurement and FM. Afterward Sub-project Leadership, M&E, US$140,000 Information sharing implementation and communication, NPA and per year and technical input, monitoring, EPF capacity wildlife management, rural joint supervision building, lessons learning, development, social safeguard, communication procurement and FM.
Task Team Skills Mix
Skills Needed Number of Staff Number of Trips Weeks per year per year* Environment Specialist /Biodiversity/Protected area management 12 4 in year 1 2 afterward Natural Resources Management Specialist /Forestry Specialist. 6 2
Operation Officer 6 2
Rural Development Specialist 8 4 in year 1 2 afterward Operation Officer (M&E Specialist.) 8 4 inyear 1 2 afterward Social Safeguards Specialist 6 2
Environmental Safeguards Specialist 6 2
Financial Management Specialist 2 2 in year 1 1 afterward Procurement Specialist 2 2 in year 1 1 afterward Communications Specialist 4 2 in year 1 1 afterward * It is noted that several of the key team members are located in the country or based regionally, and as such, the Project will benefit from continuous support. The number of trips listed refers to formal missions. It is also noted that additional formal missions will likely be required during the startup period.
66 ANNEX 6: FINANCIAL AND ECONOMIC ANALYSIS LAO PDR: PROTECTED AREA AND WILDLIFE PROJECT FOURTH PHASE OF A SERIES OF PROJECTS ON STRENGTHENING REGIONAL COOPERATION FOR WILDLIFE PROTECTION IN ASIA
1. The overall project objective is to strengthen the management systems for national protected areas conservation and for enforcement of wildlife laws. The economic and financial analysis aims to estimate the Project impact for both improved protected area management and enforcement of wildlife law. However, this is challenging due to data constraints and the indirect use values of many benefits associated with the conservation of protected areas (PAs) and biodiversity.
Benefits from improving protected area (PA) management
2. The NPA system in Lao PDR is confronting some significant management issues. The first is habitat degradation due to infrastructure development (e.g. hydropower and roads), community growth, aspirations for economic improvement, and land conversion for agriculture. The second issue is the overexploitation of resources, including the unsustainable collection of NTFPs, hunting and fishing, and timber extraction (ICEM, 2003). Third is the limited development of participatory management and unclear benefit-sharing arrangements to encourage a wide range of stakeholders to participate in the management and funding support for NPAs. Fourth is the declining and fluctuating level of funding available to effectively manage the NPA system (Kyophilavong and Tsechalicha, 2011).
3. Through the Project, the management of the NPA system will be improved. To illustrate the costs and benefits associated with this investment, the SDA will calculate an Economic Rate of Return (ERR) during implementation. To compute the ERR, two scenarios - with and without the Project investment - will be compared. Under the status quo scenario, the degradation and depletion of forest resources, biodiversity, and wildlife will continue. Under the Project investment scenario, on the other hand, monitoring of wildlife trade and forest protection will improve, thus reducing pressures on existing resources. To quantify these impacts, the analysis will draw on expert interviews as well as existing literature. A market price-based approach supplemented by a benefit transfer method will be used capture direct and indirect use values.
4. The potential economic benefits of improved NPA management are expected to be large. For example, ICEM (2003) investigated economic benefits from NEPL NPA. Using a market price-based approach, the annual economic value of NEPL was estimated at US$294 per household for the early 2000s. Put differently, the NEPL NPA contributed US$750,000 a year to the economy of the Houaphan province. The economic activities covered in the analysis included forests, small and medium hydropower and irrigated agriculture. This is a lower bound estimate, as many regulating and cultural ecosystem services of NEPL NPA were not captured, such as ecotourism, the downstream use of water resources or carbon sequestration.
5. In contrast, the costs of running a NPA effectively are fairly small. Most PAs in developing countries are suffering from a shortage of funding, many of them with no budget (James et al., 1999 and Wilkie et al., 2001). Funding shortages are a fundamental limitation resulting in the degradation of natural resources in PAs. This degradation not only threatens
67 biodiversity but also the numerous market and non-market benefits that PAs provide to local, national and global communities (Balmford and Whitten, 2002). The two most important costs associated with PAs are establishment and operation costs (Bruner et al., 2003). According to Bruner et al. (2003), the cost of PAs is mainly determined by size, vegetation types, in-country cost levels, pressure and active ecosystem management. Kyophilavong and Tsechalicha (2011) estimated the cost for NPAs which follow the approach developed by ART (1998), the result of the cost estimation show that Lao PDR needs US$62/sq. km/year or about US$2 million to effectively manage and protect its NPAs per year.
6. Preliminary estimates suggest that the net present value of the Project intervention at the NEL NPA could be as high as US$8.3 billion over 10 years. The benefits captured in this analysis, include biodiversity conservation, consumptives uses, including NTFPs and ecotourism, watershed protection and carbon sequestration. The value estimates are based on a study of the economic value of natural forest in Xekong, Laos (Rosales, et al, 2003). The cost estimates are based on Kyophilavong and Tsechalicha (2011) and the Project investment costs..
7. The economic and financial analysis will also analyze the financial and economic viability of the small grants for alternative livelihoods provided under the Project. During implementation, a series of interviews will be conducted in several villages in Nam Kading and Nakai Nam Theun to collect some basic data on villager's general incomes and livelihood activities as well as use of forest products and wildlife. ERRs will then be computed to analyze the financial and economic viability of the village revolving funds. This will be critical to ensure that the livelihood activities financed under the Project will be sustained after the Project closes.
Benefits from improved enforcement of wildlife laws
8. Illegal wildlife trade has led to the massive destruction of habitats and species, threatening irrevocable damage to ecosystems. Wildlife traffickers operate within and between countries through well-organized, cross-border networks. Unfortunately, data on illegal trade are sparse and anecdotal due to the clandestine nature of the industry. Hence, conducting a conventional cost-benefit analysis of the Project payoffs from improved enforcement of wildlife laws is not possible. Instead, the economic analysis draws on the literature regarding the economics of combating global crime and, in particular terrorism, through cooperative actions.
9. In a seminal 2009 paper, Sandler et al argue that joint and cooperative actions are a public good, comparing the decision-making by countries to that of a "prisoner's dilemma". The prisoner's dilemma demonstrates that cooperative and offensive measures to weaken a transnational terrorist group would generate positive externalities to all countries at risk. However, the decision by any given country on how much to invest in anti-terrorist measures is based quite often solely on the benefits that accrue to that country. Such decision-making can lead to under-investment in cooperative measures.
10. However, the under-investment can be corrected through organizations like INTERPOL that facilitate cooperation among countries. Sandler estimated that a dollar spent on INTERPOL counterterrorism generates a payback of US$40-200. High benefit-cost ratios of INTERPOL operations reflect the benefits to all of INTERPOL members at risk to terrorism because INTERPOL makes it possible for its members to cooperate in carrying out proactive
68 counterterrorism measures in a cost-effective manner. Sandler's analysis on defensive and pro- active cooperative measures is relevant to the proposed project's goal of combating illegal wildlife trade. Unlike terrorism, successful enforcement that leads to the decline in the supply of illegal wildlife commodities raises the prices of such products and, in turn, increases the incentive to engage in illegal activities. Measures to tackle the demand for wildlife commodities - the root cause of the problem - are also imperative.
11. The quantitative analysis builds on Sandler's methodology of cooperative actions against a "public bad". National data of poaching and illegal wildlife trade are not available and estimates of the incidence of these crimes are elusive. The Project's regional approach entails the use of available estimates for Southeast Asia's share of the world's biodiversity (i.e., at least 15%) and for the global value of illegal wildlife trade (i.e., US$20 billion) as the starting point of the analysis. Thus, the value of the illegal wildlife trade in the region is assumed to range from US$2.6 to US$3 billion. These figures represent quite conservative estimates because Southeast Asia is disproportionately affected by illegal wildlife trade due to the high demand for species like wild tigers, turtles, and pangolins. The economic analysis entailed two sets (each with over 100 simulations) under varying assumptions. Most of the simulations resulted in benefit-cost ratios of above 1, demonstrating that the benefits of the proposed project exceed the costs. Indeed, many of the benefit-cost results are 2 and higher, reaching values of above 40 in some cases. Still, the simulation results provide conservative, lower-bound estimates of the economic benefits of the Project. If the analysis had included other benefits (such as those arising from nature-based tourism), the break-even point for the Project would be reached much earlier and the benefit-cost ratios would be even higher. The analysis concludes that the benefits from addressing illegal wildlife trade under the Project would far outweigh the investment costs.
12. An illustrative benefit associated with a stronger DOFI is the impact of the department on illegal logging. A review of DOFI performance revealed that in 2008 roughly 3500 cum of illegal logs were confiscated. Once a more structured program for enforcement and capacity building was undertaken, the volume of illegal logs confiscated rose to 180,000 cum. The number of illegal logging cases handled in 2008 was roughly 400. In 2011, the number of cases was closer to 2,000 and the Government received US$6 million in fines. In the first five months of 2012, the number of cases handled range between 100 and 200 cases. While the numbers from 2012 suggest a decline in cases, they point to improved enforcement 31. Other intangible benefits from improved law enforcement include the reduction of the rate of increase of carbon emissions from deforestation and degradation of forest resources.
References
[ART] Africa Resources Trust (1998). Costs of Conserving State Protected Areas in Southern Africa. Harare (Zimbabwe): ART.
Balmford, A., and Whitten, T. (2003). Who should pay for tropical conversation, and how could the costs be met?, Oryx, 37(2), 238-250.
Bruner, A., Gullison, R. E., and Balmford, A. (2003). Financial Costs and Shortfalls of Managing and Expanding Protected-Area Systems in Developing Countries, BioScience, 54(12), 1119-1126.
31 However, given the complex nature of illicit forestry activities, it is possible that other factors beyond enforcement influenced the decline in illegal cases documented.
69 ICEM (2003), Field studies: Economic benefits of protected areas: Lower Mekong Protected Areas and Development Review, Indooroopilly, Queensland, Australia.
James, A.N., Green, M.J.B., Paine, J.R. (1999), A Global Review of Protected Area Budget and Staff WCMC Biodiversity Series No. 10, Cambridge, WCMC-World Conservation Press.
Kyophilavong, P, and Tsechalicha, X (2011). Sustainable Financing Mechanisms for National Protected Area Management in Lao PDR: Issues and Options, Department of Forestry, Ministry of Agriculture and Forestry and IUCN Lao PDR
Rosales, R.M.P., Kallesoe, M.F., Gerrard, P., Muangchanh, P., Phomtavong, S., Khamsomphou, S. (2003), The economic returnsfrom conserving naturalforestryin Sekong, Lao PDR, Vientiane: IUCN and WWF.
Sandler, T., Arce, D., Enders, W.(2009). An Evaluation of INTERPOL's Cooperative-based Counterterrorism Linkages. JournalofLaw and Economics, 54(1), 79-110.
Wilkie, D.S., Carpenter, J.F., and Zhang, Q. (2001). The under-financing of protected areas in the Congo Basin: So many parks and so little willingness to pay. Biodiversity and Conservation 10: 691-709.
70 ANNEX 7: LESSONS LEARNED LAO PDR: PROTECTED AREA AND WILDLIFE PROJECT FOURTH PHASE OF A SERIES OF PROJECTS ON STRENGTHENING REGIONAL COOPERATION FOR WILDLIFE PROTECTION IN ASIA
Global Lessons
1. The public sector has the responsibility for the administration of biodiversity to maximize its contribution to driving strong economies and spurring healthy communities. There is a growing understanding of the linkages between biodiversity, ecosystem services, and natural capital and human well-being. Conservation, once viewed by some as a luxury concern, technical and remote, is increasingly understood as underpinning sustainable economic development and human well-being and has recently ignited growing public sector interest in developed and developing countries alike. Nonetheless, the conservation sector has been dominated for years by three key actors: public sector natural resource management or environment agencies mandated to manage nature, but rarely have the capacity to do so. In response to this, NGOs have developed a science of conservation and provide direct policy assistance and implementation support. In developing countries, the past several years have also brought other actors into the sector, particularly the private sector. The lack of integration of natural capital values in economic planning and the growing role of private actors has often served to stifle investment in public sector agencies, resulting in weak institutions unable to cope with environmental challenges that often require public policies, such as in the case of resource rights, tenure, governance, and law enforcement. The clarification of roles and responsibilities in society, especially within public agencies responsible for conservation and protected areas, and for conservation aspects within other sectors, such as forestry, fisheries and agriculture, as well as planning agencies, is key to coordinating and maximizing the impact of public sector actors in conservations.
2. Biodiversity conservation and management can yield income and growth opportunities. There is no one-size-fits-all approach to maximizing the livelihood contributions and poverty reduction returns of conservation. In seeking to make the conservation and sustainable use of biodiversity financially sustainable and rewarding for communities, the World Bank has variously looked to nature tourism and associated employment generation, the harvesting of timber and non-timber forest products. In Zambia's Kafue National Park, World Bank support to park authorities led to private investors tripling available accommodations, such that tourism visits rose markedly and park revenues grew ten-fold within six years. Similarly, in South Africa's Greater Addo Elephant National Park, a US$5.5 million investment spurred US$14.5 million in private sector investment and creation of 614 jobs. The Albania Natural Resource Development Project led to an 8% increase in incomes in communities that the Project assisted to rehabilitate and sustainably manage their forest and pasture resources. The Honduras Forests and Rural Productivity Project launched sub-projects in a subset of communities that increased incomes by over 300%, and more broadly, it created 3,000 direct jobs and an additional 5,400 indirectly. In the Indian state of Andhra Pradesh, a 23% decline in seasonal outmigration was associated with an average annual forest- based incomes rising from US$44 to US$104 as a result of the AP Community Forest Management Project. The projects provide positive examples of how conservation can yield poverty reduction results.
71 3. Clarifying access to, tenure of and benefits from biodiversity establish incentives and build people's assets. Weak governance and open-access resource regimes have frequently resulted in degradation of common property resources, and greater focus on rights-based management can provide an avenue for managing the development-conservation tradeoff, and help build assets for the poor as a way out of poverty. In Mexico, the Second Community Forestry Project placed 1.78 million hectares under community zoning plans. Given the success of these plans, the government prepared an additional 451 zoning plans covering 2.64 million hectares. A follow-up project initiated community forestry programs in 700 further communities, 80% of which are indigenous. In Brazil, the Amazon Region Protected Areas Program created 24 million hectares of protected areas - equivalent to 46% of all protected areas created in the world from 2003 to 2008 - while improving the lives of the Amazonian population by generating sustainable livelihood opportunities, strengthening value chains of forest-based products, and allowing for better co-existence between small family farms and large -scale agriculture. In Namibia, community conservancies have been shown to have positive impacts on household welfare, raising revenues generated through the conservancies, in turn spurring the establishment of numerous new conservancies.
4. The need for functional protected area management systems. There is not a long history of PA management or wildlife trade control in Lao PDR. As a consequence the institutional set up has not yet progressed to a system that can deliver sustainable results. The usually working model is of a NPA system managed by a central institution with each NPA managed by a dedicated team (e.g. Kenya, Thailand, India, Jordan, France, Canada, Costa Rica, etc.). Lessons from these countries show that successful models (a) strike a good balance between law enforcement and community involvement, (b) possess a strong and politically supported central institution to which each PA report directly, (c) establish nearly autonomous management team in each PA, and (d) are able to establish formal partnerships with NGO or private entities for co-management of PAs. Instead, in Laos the management of each PA is entrusted to environment district officers of the districts that overlap with PAs. With no equipment, little coordination or communication and training, PAs that do not receive external assistance are simply not managed. The Project will fund a process to help DFRM diagnose the national management system and, if convinced that alternative form of management are more suitable, initiate a reform process.
5. Without effective law enforcement, wildlife protection policy and legislation is impotent. The conservation and sustainable use of wildlife in PAs depend on the proper control, management, supervision, monitoring and utilization of wildlife, which includes enforcement of laws governing such use. Experience from Cameroon has proven that enforcing wildlife laws and providing measurable standards for the effectiveness of enforcement, is possible. The criminals involved in the illegal wildlife trade are well organized and financed, therefore; agencies and communities working together and pooling skills, knowledge and resources across PAs is the most effective and efficient means to combat wildlife trafficking. Most law enforcement personnel never get any training in areas related to wildlife crime. This project intends to impart the necessary skills to the right people.
Lao PDR-Specific Lessons
72 6. EPF is a proven mechanism for delivering resources to provincial and district administrations. During LENS, EPF demonstrated it could channel much needed financing and technical resources in a cost-effective manner to lower levels of government. Currently donor financing and technical support is concentrated at the central level, whereas the national government is currently devolving administrative responsibilities to provincial and district governments under the Sam Sang Directive. EPF provides future potential to assist in realizing the Government's ambitions under PAWP as well.
7. The need for an increased focus on EPF capacity development: As a nascent institution, EPF capacity development needs to be prioritized (this will be financed in LENS2 as well as PAWP). The EPF has lacked visibility and regular communication with higher-level Government staff, potential foreign donors, and the media; partly resulting in its inability to legally secure a sustainable source of financing from government revenues. Furthermore, EPF has relied unsustainably on Bank technical support. For EPF's institutional maturation to occur, it requires an enhanced emphasis on technical capacity development, strategic communication planning, and improved fundraising ability. This is factored in Component 3 of the PAWP.
8. Wide array of stakeholders need to be included in project consultation - In past projects, the focus on a national government implementing agency and PA managers has not been enough to achieve project objectives. Unlike in other countries, national PA management is not the sole responsibility of a national government agency. Rather national, provincial, and district governments will all manage different activities within a PA, including infrastructure development and enforcement. As well, different line agencies will not often coordinate effectively, highlighting the need to also engage ministries such as MEM, Ministry of Public Work and Transport, and Ministry of Defence as done during project preparation.
9. In absence of a strong government presence, community based conservation has elevated significance - In almost all PAs in Lao PDR, there are substantial human populations living within the PA and/or utilizing its natural resources. In the short and medium term, village natural resource management and enforcement will remain one the most important factors of successful PA management and need to be incorporated by management. The CEF has been designed as an integrated tool to take into account this lesson.
10. Community based conservation schemes need to be targeted, narrow, and measurable - Empirical evidence suggests that achieving dual goals of development and sustainability have been elusive. Village development funds and broad development investments do not necessarily lead to community engagement in conservation, and can indirectly contribute to counter- productive consequences. Direct and narrowly targeted incentive schemes that are based on rewards for measurable conservation outcomes are likely to be more successful. The CEF includes a conservation compliance agreement which will enable monitoring of local outcomes.
11. Environment projects need to reverse perception of restriction-Throughout the Government and Lao society, environmental conservation projects are often perceived as exclusively constrictive or contrary to the nation's development goals. Better communication and awareness is needed of the direct community benefits that result from the sustainable use of natural resources. Two sub-projects seek to build conservation awareness of decision makers.
73 12. Strong due diligence and safeguard frameworks are required - In past Bank natural resource operations in Laos, there has often been a staff focus on potential or realized safeguard infractions to the extent of subtracting needed attention on achieving core operation objectives. Future operations need to have strong due diligence to prevent safeguard issues from arising and strong safeguard frameworks for issues that do materialize, in order to efficiently manage safeguards. DFRM will develop and monitor a "concession-in-NPA" database.
13. The Nam Theun 2 Hydropower project included provision of long term measures for the conservation of the watershed above the dam reservoir as both watershed protection and biodiversity offset. These measures included the establishment of WMPA, and autonomous GoL entity, and the obligation for the dam operator, NTPC, to fund the conservation of the watershed through WMPA. Unfortunately, insufficient controls were organized to guarantee the conservation of the watershed. So, while WMPA operates and the funds are spent, they are not transformed into conservation or livelihood benefits. There are several lessons to be extracted and factored in the design of the Project support to WMPA: (a) WMPA was not given clear targets in terms of outcomes and output and did not report on achievements, (b) WMPA does not operate according to a Management Plan or even to an Annual Work Plan and Budget or suitable standard, (c) WMPA is not structured with all the elements and staff of a functional PA institution, (d) while the WMPA budget is substantial, it may be sufficient to manage the conservation dimension of the NPA but in fact, it appears to be tasked by all development dimension such as agriculture, transport, health, education, etc., and (e) finally, it operates in partnership with Government institutions to which it transfer funds but who are not accountable to WMPA for results. Some of these dimensions will be improved under the PAWP such as (a) design and adoption of management plan, (b) use of the EPF mandatory AWPB format and report, (c) reorganization of the staffing and fiduciary dimension to improve governance an deficiency, and (d) restructuring of WMPA organization for community support (using CEF) as well as resource protection and monitoring.
74 ANNEX 8: CONSISTENCY WITH GEF IDENTIFICATION NOTE LAO PDR: PROTECTED AREA AND WILDLIFE PROJECT FOURTH PHASE OF A SERIES OF PROJECTS ON STRENGTHENING REGIONAL COOPERATION FOR WILDLIFE PROTECTION IN ASIA
1. The Project design has evolved since the GEF endorsement of the Project Identification Form (PIF). The total GEF finance to the Project remains the same, and co-finance remains in the same range as per the PIF. The Project retains the same overall goals; to protect the wildlife and forests of Laos through strengthening management systems for PAs and wildlife. As with the PIF, the Project has activities to integrate Laos into regional biodiversity conservation efforts, national level activities to build government capacity for PA management and enforcement of wildlife laws, and activities at key, high biodiversity sites, including a strong community component. The Project differs now from the PIF with a change in implementing agency, a focus on two protected area sites rather than four, and removal of the Climate Change Mitigation (CCM) funding and associated carbon finance activities. These and other key changes are identified in detail in the table below.
PIF Project Appraisal Justification for changes Document (PAD) Title Strengthening protection Protected areas and The title has been simplified for ease and management wildlife project (PAWP) of reference while still reflecting the effectiveness for wildlife Project content. and protected areas Project 60 months 84 months Due to increased financing, a change Duration to a flexible, sub-project approach and concerns regarding potential delays in sub-project implementation, a longer time frame is warranted. PDO To increase capacity for To strengthen the Following recommendations during effective protected area management systems for two Quality Enhancement Reviews management, wildlife national protected areas (QERs) the PDO was adjusted to conservation and control of conservation and for remove redundancy and to be more illegal wildlife trade enforcement of wildlife simple and targeted. through an SFM/ Reducing laws Emission from Deforestation and forest Degradation (REDD) + and multiple benefits approach Executing Executing Partner: GoL Executing Partner: GoL While the executing body remains as Agencies Government of Laos as noted in PIF, Executing Agencies: Executing Agency: it was originally envisioned that Department of Forest Environmental DFRM under MONRE would be the Resource Management Protection Fund (EPF) lead executing agency, with DOF as (DFRM) - lead co-lead. At appraisal EPF has been Department of Forest selected as the executing agency, and Inspection (DOFI) - DFRM and DOF as sub-grant partner/co-lead beneficiaries. EPF is a public autonomous agency under the Prime Minister Office. EPF was brought in as an executing agency, given its capacity and experience in executing
75 WB projects (LENS project). While still modest, EPF has more capacity in FM, procurement and M&E than DFRM. This change in the executing agency has led to a change from a classic component and subcomponent approach to a more flexible, sub- project approach. Focal Areas Total: 7,440,000 Total: 7,440,000 Previous versions of the PAD lacked (US$) Biodiversity: 5,030,000 Biodiversity: 5,030,000 strong arguments for the use of the Climate Change: 460,000 Climate Change: 0 US$0.4m Climate Change allocation, Land Degradation: 90,000 Land Degradation:: but provided good rationale for Sustainable Forest 550,000 increasing the Land Degradation Management: 1,860,000 Sustainable Forest allocation. It was agreed amongst the Management: 1,860,000 World Bank team, the GEF Secretariat staff, and the Laos GEF Focal Point to remove the Climate Change funding and increase Land Degradation funding to meet the same overall total GEF grant value (of 7.44 million including agency fee). Co-financing Total: 17,600,000 Total: 26,200,000 Joint co-financing and other parallel and parallel WB IDA: 12,000,000 WB IDA: 17,000,000 financing has increased since PIF financing WB FCPF: 3,400,000 GoL: 550,000* approval. The IDA national and sources (US$) WB FIP: 1,000,000 WCS: 350,000* regional financing to the Project GoL: 550,000 WWF: 300,000* increased. The parallel financing from WCS :350,000 NTPC: 8,400,000** Forest Carbon Partnership Fund WWF: 300,000 (FCPF) and Forest Investment Program (FIP) was removed due to reduced focus on carbon finance in the Project. Additional parallel financing is anticipated in the order of US$1.14 millionyear provided by NTPC to WMPA for management of NNT
______NPA. Geographic National and regional level National and regional The national and regional activities scope of activities plus activities at level activities plus remain part of the Project; however intervention four sites: subnational activities: there has been a change in subnational 1 . Xe Pian NPA in 1. Nam Et Phou Louey sites. southern Laos NPA and Houaphan Guidance was given the first QER to 2. Nam Kading NPA in Province reduce the Project scope from four to central Laos 2. Nakai Nam Theun two NPA sites and their surrounding 3. Nam Et Phou Louey NPA and provinces, to ensure that interventions NPA in northern Laos Khammouane and can be comprehensive and lead to 4. To be determined in Bolikhamxay solid results. preparation, and Provinces A number of risk factors were selected based on associated with Xe Pian (military biodiversity value, involvement at the border, new roads, existing management mining) and with Nam Kading (a large capacity, and hydropower development) and so transboundary links, these sites were dropped from the Proj ect. NNT was added as the second site, given its status as the most biodiverse site in Laos, its existing funding and
______management base, and the high
76 potential for transboundary management with protected areas bordering in Vietnam. NEPL, the site with tiger population and other key species, was retained as a project site. Components C1. Supporting protected CL National institution The overall content of the three and GEF area management, wildlife development and components identified in the PIF (Cofunding) conservation, REDD and capacity building remains consistent in the current PAD, resource sustainable forest with the exception of removal of the distribution management C2. Management of REDD activity. GEF: 5,100,655 Wildlife and Protected In the PIF, component 1 focused on Co-finance: 12,200,000 Areas protected area management, to be implemented by DFRM; and C2. Addressing the illegal C3. Project component 2 focused on wildlife trade national and regional Administration and control, to be implemented by DOFI; wildlife trade capacity building and each component included regional GEF: 1,000,000 to subnational activities. Feedback in Co-finance: 4,000,000 the first QER suggested that this presented as if it was two projects, one C3. Awareness raising, and on PAs and one on wildlife trade. As communication such, the components have been re- GEF: 400,000 ordered to create a logic of national Co-finance: 600,000 level activities in C and subnational activities in C2, and this encourages connection between PA management and wildlife trade related law enforcement, and the regional and national level (CI) and at each site (C2). Awareness raising has been merged into C and C2, and C3 now focuses on project management and TA. Focal Area Objective 1: Improve Objective 1, Outcome No change to Objective, or to outcome Objectives and Sustainability of Protected 1.21 retained 1.1 Outcomes - Area Systems Indicator defined for 1.1 Biodiversity Expected: at least 1000 Outcome 1.1 Improved increase in MEtT score Outcome 1.2 removed and focus management effectiveness for 941,000 ha adjusted to improving the of existing and new management effectiveness at the two protected areas Outcome 1.2 removed sites and to national gains in improved systems for PA management. Outcome 1.2: Increased revenue for protected area systems to meet total expenditures required for onpoetmngmn nAmanagement Focal Area Objective 5: Promote CCM focal area removed The Project activities under CCM Objectives and conservation and were not strongly defined, whereas, Outcomes - enhancement of carbon there is strong rationale for land CCM stocks through sustainable degradation funded activities (such as management of land use, integrated land use planning with land-use change, and communities). As such, CCM was forestry removed and the LD funding Outcome 5.1: Good correspondingly increased. management practices in Land Use and Land Use
77 Change in Forestry (LULUCF) adopted both within the forest land and in the wider landscape Focal Area Objective 3: Integrated Retained The scope and the number of Objectives and Landscapes: Reduce communities included under Outcomes - pressures on natural "Integrated landscape management LD resources from competing practices adopted by local land uses in the wider communities" increased greatly since landscape the PIF, and as such, LD funding has Outcome 3.1: Enhanced been increased to accommodate this cross-sector enabling work, including participative land use environment for integrated planning and conservation agreements landscape management with communities that will result in Outcome 3.2: Integrated forest and wildlife conservation. landscape management practices adopted by local communities Focal Area Objective 2: Strengthen the Objective 2 removed, With removal of CCM funding and Objectives and enabling environment to due to removal of REDD the REDD component there is not
Outcomes - reduce Greenhouse Gas component and the CCM strong logic for SFM Objective 2. SFM/REDD Emissions (GHG) funding. However, with increased LD funding emissions from and focus on integrated and deforestation and forest Change to: participative land use planning to degradation and enhance Objective 1: Reduce reduce pressures on forests, the carbon sinks from pressures on forest Project now has a strong fit to SFM LULUCF activities. resources and generate Objective 1 on reducing pressures on Outcome 2.1: Enhanced sustainable flows of forest resources. institutional capacity to forest ecosystem account for GHG emission services and Outcome reduction and increase in 1.2: Good management carbon stocks. practices developed and Outcome 2.2: New revenue applied in existing for SFM created through forests engaging in the carbon market
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