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World Bank Document Document of The World Bank Public Disclosure Authorized Report No. 15917- HO STAFF APPRAISAL REPORT Public Disclosure Authorized HONDURAS RURAL LAND MANAGEMENT PROJECT Public Disclosure Authorized February 28, 1997 Central America Department Latin America and the Caribbean Region Public Disclosure Authorized CURRENCY EQUIVALENTS Currency Unit= Lempira US$1.00 = Lp. 12.94 Lp. 1.00 = US$0.0773 GOVERNMENT FISCAL YEAR January 1- December 31 WEIGHTS AND MEASURES Metric System ACRONYMS, ABBREVIATIONS AND GLOSSARY AFE-COHDEFOR State ForestryAdministration--Honduran Forest Development Corporation(Administraci6n Forestal del Estado- Corporacion Hondurena de Desarrollo Forestal) AGSAC AgriculturalSector Adjustment Credit (Cr. 2540-HO) AML AgriculturalModemization Law (Ley de Modernizaci6n Agricola) BANADESA GovenmmentAgricultural Credit Bank (Banco de Credito Agricola) CEMAPIF Centerfor Managementand Utilizationand SmallForestry Industry (Centro de Manejo, Aprovechamiento y Pequena Industria Forestal) CIDA CanadianIntemational Development Agency (Agencia Internacional de Desarrollo Canadiense) CIDICCO HonduranNGO workingon uplandTechnologies COCONA NationalAdvisory Council on the Environment(Consejo Nacional del Ambiente) CODA Commissionon AgriculturalDevelopment (Comisi6n de Desarrollo de Agricultura) CONACTA NationalAdvisory Council on AgriculturalTechnology (Consejo Nacional de Tecnologia Agricola) CONAPH National AdvisoryCouncil for ProtectedAreas (Consejo Nacional de Areas Protegidas) COSECHA HonduranNGO specializedin uplandtechnology Vice President: Shahid Javed Burki, LACVP Director, Country Department: Donna Dowsett-Coirolo, LADCN Manager, Sector Leadership Group: Michael Baxter, LASLG Sector Leader: Mark Cackler, LADCN Task Manager: Augusta Molnar, LASLG - 11- CSJ Supreme Court (Corte Suprema de Justicia) DAPVS Protected Areas and Wildlife Department (Departamento de Areas Protegidas y Vida Silvestre) DDR Directorate of Rural Development (Direccion de Desarrollo Rural) DEC Department of Cadastre (Departamento Nacional de Catastro) DICTA Directorate for Agricultural Science and Technology Transfer (Direcci 6n de Ciencia y Transferencia de Tecnoloia Agricola) EJIDO Municipal lands allocated during the pre-independenceperiod for communal use and urban expansion FAMA Honduran NGO working with poor farmers FHIS Honduras Social Investment Fund (Fundaci6n Hondurella de Inversiones Sociales) FINNIDA Finnish Development Authority FMU Forest Management Unit FOLIO REAL A system of parcel based land information and registration GDP Gross Domestic Product GEF Global Environmental Facility GOH Government of Honduras GPS Global Positioning System GTZ German Technical Assistance IBRD International Bank for Reconstruction and Development ICB International Competitive Bidding IDA International DevelopmentAssociation IDB Inter-American Development Bank IFC International Finance Corporation IGN National Geographic Institute (Instituto Geogr6fico Nacional) IMF International Monetary Fund - iii - INA National Agrarian Institute (Instituto Nacional Agrario) LUPE USAID-Financed Upland Development Project M & E Monitoring and Evaluation MIS Management Information System NCB National Competitive Bidding NGO Non-Government Organization NRM Natural Resource Management PACO/CARE Upland project financed by the Christian Relief Agency (CARE) PBDL Broadleaf Forestry DevelopmentProject (Proyecto de Desarrollo del Bosque Latifoliado) PDF Project Development Facility PPF Project Preparation Facility PR Property Registry (Registro de la Propiedad) PRODEPAH Honduran Project for Support to Agriculture Development SAG Secretariat of Agriculture and Livestock (Secretaria de Agricultura y Ganaderia) SERNA Secretariat of Natural Resources and Environment (Secretaria de Recursos Naturales y del Ambiente) SINAPH National System of Protected Areas of Honduras (Sistema Nacional Hondurefo de Areas Protegidas) SNIITA National System of Agricultural Technology SNITTA National Research and Technology Transfer System TVF Land of Forest Vocation (Tierra de Vocacion Forestal) UNDP United Nations DevelopmentProgramme UPEG New name of UPSA (Unidad de Planeaci6n y Evaluacion) UPSA Planning Unit of SAG USAID United States Agency for International Development HONDURAS RURAL LAND MANAGEMENT PROJECT TABLE OF CONTENTS Page No. Credit and Project Summary.................................................... i 1. BACKGROUND .................................................... 1 A. CountryOverview and MacroeconomicBackground ......................................................... 1 B. GovernmentPolicy, Institutional and LegalFramework .......................................................... 2 C. LessonsLearned ......................................................... 4 D. Country Assistance Strategy......................................................... 6 2. THE PROJECT .................................................... 6 A. ProjectOrigin ........................................................... 6 B. Rationale for IDA Involvement.............. ............ 7 C. Project Objectives........................... 8 D. Project Description............................ 8 E. Program Objective Categories........................... 13 F. ProjectCosts And FinancingPlan ........................... 14 G. Financial Analysis............................ 14 3. PROJECT IMPLEMENTATION, PROCUREMENT, DISBURSEMENT AND REPORTING ......... 15 A. Project Implementation, Coordination and Management............................................ 15 B. Technicaland FinancialAudits .................................... 22 C. Procurement.................................... 22 DDisbursement . .................................... 25 E. ProjectReporting, Monitoring and Evaluation.................................... 26 F. Supervisionby IDA..................................... 26 This report is basedon the findingsof pre-appraisaland appraisal missionswhich visitedHonduras in March and May of 1996respectively, comprising Messrs./Mmes. Augusta Molnar (TaskManager), WilliamBeattie (LA2NR), John Joyce,James Smyle,Luis Zelaya,Maria Luisa Pardo, NelsonEspinoza, and Ana LuciaMoreno (RUTA);Richard Owen (FAO);and Tom Korczowski,Daan Vreughdenhil,Maria Correia,Juan Martinez,and Robinle Breton (Consultants).Ms. DonnaDowsett-Coirolo is the Country Director, Mark Cackleris the SectorLeader, and MichaelBaxter is the SectorLeadership Group Manager. ii Page No. 4. ECONOMIC ANALYSIS, BENEFITS AND RISKS ........................................... 27 A. Benefits........................................................... 27 B. EconomicAnalysis ................................................... 27 C. Environmental Impact ................................................... 30 D. Participation and Social Impacts................................................... 31 E. Risks................................................... 33 F. Sustainability................................................... 35 5. SUMMARY OF AGREEMENTS, ASSURANCES AND RECOM4MENDATION ............................................. 35 A. Agreements and Assurances................................................... 35 B. Recommendation.............. 37 TABLES: Table 1: Project Costs Table 2: Project FinancingPlan Table 3: ProcurementArrangements Table 4: Summaryof PotentialEconomic Benefits CHARTS: Chart 1: Use of Funds by ProjectAgencies Chart 2: OrganizationChart NaturalResources Management Component Chart 3: OrganizationChart for the LandAdministration Modemization Component ANNEXES: Annex A: InstitutionalArrangements and ImplementationSchedule Annex B: LandAdministration Modemization Component Annex C: NaturalResources Management Component InstitutionalStrengthening ForestManagement Annex D: Fundfor Upland ProducersSub-component Annex E: ProtectedAreas Sub-component Annex F: Cost Tables,Financing Plan and DisbursementSchedule AnnexG: ProjectMonitoring, Reporting, and Evaluation Annex H: ProjectAnalysis EconomicAnalysis EnvironmentalAnalysis SocialAssessment and Participation Annex I: ProjectImplementation Detailed Plan (PIP) Contents ProjectBrief IDB AgriculturalTechnology Annex J: Documentsin ProjectFile MAP: IBRD No. 28168 HONDURAS RURAL LAND MANAGEMENT PROJECT CREDIT AND PROJECT SUMMARY Borrower: The Republic of Honduras Implementing Agencies: Secretariat of Agriculture and Livestock (SAG) State Forestry Administration - Honduran Forestry Development Corporation (AFE-COHDEFOR) Poverty: Program of Targeted Interventions Amount: SDR 23.5 million (US$34.0 million equivalent) Terms: Standard IDA terms, with 40-year maturity Commitment Fee: Standard Financing Plan: See page 7 in Annex F Net Present Value: See Chapter 4, Section B Map: IBRD No. 28168 Project Identification No.: HO-PA-7398 HONDURAS RURAL LAND MANAGEMENT PROJECT STAFF APPRAISAL REPORT 1. BACKGROUND A. COUNTRYOVERVIEW AND MACROECONOMIC BACKGROUND 1.1 After a decadeof slow economicgrowth, averaging 2.5 percent per annum,and mounting fiscaland trade disequilibria,external debt, and marketdistortions, the Governmentof Honduras (GOH)undertook a structuraladjustment program in 1990,supported by the SecondStructural AdjustmentCredit (3257-HO). Key elementsof this market-orientedprogram were fiscalreform, trade liberalization,removal of price controls,and liberalizationof the foreign exchangesystem. While someimportant progress was made duringthe 1990-94administration and GDP improved substantially,the administrationleft seriousmacro-economic imbalances unsolved. 1.2 The present Government,which took officein January
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