Document of The World Bank Public Disclosure Authorized

Report No. 16485-JO

Public Disclosure Authorized PROJECT APPRAISAL DOCUMENT

ON A

PROPOSED LOAN OF US$32 MILLION

TO

THE HASHEMITE KINGDOM OF JORDAN

FOR A

Public Disclosure Authorized SECOND TOURISM DEVELOPMENT PROJECT

July 11, 1997 Public Disclosure Authorized

Infrastructure Sector Group Mashreq Department Middle East and North Africa Region CURRENCY Currency Unit: Jordanian Dinar (JD) (As of December 1996) JD 1.0= 100 fils JD 1.0 = US$1.40 US$1.0 = JD 0.71 WEIGHTS AND MEASURES Metric System ABBREVIATIONS AND ACRONYMS ARA = Aqaba Region Authority CAS = Country Assistance Strategy CBA = Cost-Benefit Analysis CERM = Cultural and Environmental Resources Management Project CVDB = Cities and Villages Development Bank DOA = Department of Antiquil ies ERR = Economic Rate of Return

GCEP - General Corporation for Environmental Protection GEF = Global Environment Facility GNP Gross National Produci GDP Gross Domestic Product GTZ Gesellschaft fur TechnmscheZusammenarbeit ICB International Competitive Bidding IFC International Finance Corporation JICA = Japan International Cooperation Agency JSTD = Jordan Sustainable Tourism Development/Sites Project JTB = Jordan Tourism Board MIGA = Multilateral Investment Guarantee Association MOF = Ministry of Finance MOP = Ministry of Planning MOTA = Ministry of Tourism and Antiquities MPWH = Ministry of Public Works and Housing NCB = National Competitive Bidding NGO Non-Governmental Organization OECF = Overseas Economic Cooperation Fund (Japan) PAD = Project Appraisal Document PHRD = Policy and Human Resources Development PMU = Project Management Unit PNT = Petra National Trust PRC = Petra Region Planning Council RSCN = Royal Society for Conservation of Nature RTC = Rum Tourism Cooperative SOE = Statement of Expenditures UNDP United Nations Development Programme UNESCO = United Nations Educational, Scientific and Cultural Organization USAID = United States Agency for International Development FISCAL YEAR January I - December 31 Vice President: Kemal Dervi, Country Director: Inder K. Sud Sector Director: Amir Al-Khafaji (acting) Task Manager: Mohammed Feghoul THE HASHEMITE KINGDOM OF JORDAN

SECOND TOURISM DEVELOPMENT PROJECT

PROJECT APPRAISAL DOCUMENT

Table of Contents

Page No. Project Financing Data ...... 1 Block 1. Project Description ...... 2 I Project development objectives ...... 2 2 Project components ...... 2 3 Benefits and target population ...... 3...... 3 4 Institutional and implementation arrangements ...... 3 Block 2. Project Rationale ...... 4 5 Country Assistance Strategy objectives supported by the project .4 6 Main sector issues and Government strategy: .4 7 Sector issues to be addressed by the project and strategic choices .4 8 Project alternatives considered and reasons for rejection .6 9 Major related projects financed by the Bank and/or other development agencies. 6 10 Lessons learned and reflected in the project design ...... 7 11 Indications of Borrower commitment and ownership ...... 8 12 Value added of Bank support ...... 8 Block 3. Summary Project Assessments...... 9 13 Economic assessment ...... 9 14 Financial assessment ...... 9 15 Technical assessment ...... 9 16 Institutional assessment ...... 9 17 Social assessment ...... 10 18 Environmental assessment ...... 10 19 Participatory approach...... 11 20 Sustainability ...... 12 21 Critical risks ...... 12 22 Possible controversial aspects ...... 13 Block 4. Main Loan Conditions ...... 14 Block 5. Compliance with Bank Policies ...... 15

Annexes Annex 1: Project Design Summary Annex 2: Detailed Project Description Annex 3: Estimated Project Costs Annex 4: Economic Analysis Annex 5: Financial Summary Annex 6: Procurement and Disbursement Annex 7: Project Processing Budget and Schedule Annex 8: Documents in Project File Annex 9: Status of Bank Group Operations in Jordan Annex 10: Jordan at a Glance

Map: IBRD 28630

INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL DEVELOPMENT ASSOCIATION

Middle East and North Africa Regional Ofrice Mashreq Department

Project Appraisal Document

The Hashemite Kingdom of Jordan Second Tourism Development Project

Date: July11, 1997 EZ Draft 3 Final Task Manager: Mohammed Feghoul Country Manager: Inder K. Sud Project ID: JOR-PA-35997 Sector: Tourism Lending Instrument: SIL PTI: Yes 3 No

Project Financing Data g Loan 5 Credit D Guarantee 5 Other ISpecifyl

For Loans: Amount (US$m): 32.0 Proposed Terms: 5 Multicurrency 0 Single currency Grace period (years): 4 C Standard Variable 5 Fixed 0 LIBOR-based Years to maturity: 17 Commitment fee: 0.75% Service charge: ...... Financing plan (US$m): Source Local Foreign Total Government 12.0 - 12.0 Cofinancers - - - IBRD 1 LL 32.0 Total 23.7 20.3 44.0 Borrower: Govem-mentof Jordan Guarantor: Responsible agencies: Ministry of Tourism and Antiquities (MOTA), Ministry of Public Works and Housing (MPWH), and Aqaba Region Authority (ARA)

Estimated disbursements (Bank FY/US$M): 1998 1999 2000 2001 2002 2003 Annual 1.6 5.6 8.0 7.8 5.3 3.7 Cumulative 1.6 7.2 15.2 23.0 28.3 32.0 For Guarantees: Not Applicable Partial Credit Partial risk Proposed coverage: Project sponsor: Nature of underlying financing: ...... Terms of financing: Principal amount (US$) Final maturity Amortization profile Financing available without guarantee?: 0 Yes C No If yes, estimated cost or maturity: Estimated financing cost or maturity with guarantee: Expected effectiveness date: October 1, 1997 Closing date: December 31, 2002 2 Jordan- SecondTourism Development Project Block 1: Project Description

1. Project development objectives (see Annex I for key performance indicators): Tourism is Jordan's second largest generator of foreign exchange after remittances. With the advent of the peace process, tourism has increased significantly. In 1996, 1.1 million tourists visited Jordan (as measured by accommodation arrivals), resulting in foreign exchange revenues of over US$750 million equivalent, or approximately 10 percent of GNP. In addition, tourism has been an important employment generator, currently employing more than 8,000 persons directly, and far more in view of links to other sectors. The actual tourism potential of the Kingdom is even greater; capturing this potential, however, will require Jordan to develop the sector in a coherent manner to ensure its economic, social and environmental sustainability. To this end, the Government, with Bank assistance, is formulating a medium- to long-term Tourism Development Program; the proposed Second Tourism Development Project would finance Phase I investments of the Program. The project's development objectives are to: (a) create the conditions for an increase in sustainable and environmentally sound tourism in Petra, Wadi Rum, Jerash and Karak; and (b) realize tourism-related employment and income-generation potential at project sites. Criteria for evaluating the achievement of the first objective are: (a) approval of a long-term tourism sector strategy and accompanying investment, institutional restructuring and regulatory reform programs by September 1999; (b) improved infrastructure, environmental protection and site management at the two primary project sites of Wadi Rum and Petra; and (c) growth of tourism by 75 percent at Wadi Rum. Achievement of the second development objective would be indicated by a 100 percent increase in tourism-related employment at Wadi Rum. 2. Project components (see Annex 2 for a detailed description and Annex 3 for a detailed cost breakdown): Component Category CostIndQuhng %oaft Contineendu Total (USSM) 1. Petra Region infrastructuredevelopment and environmentalmanagement physical, 27.4 62.1 * Road rehabilitation/improvementworks (about 60 km); project management, * Urban infrastructure development(urban spine roads, traffic management and and parking, enhancement of Wadi Musa town center, development of street institution-building layout of the tourist arrival area, and street lightingand landscaping); * Site enhancementand visitor managementat the Petra sanctuary; * Environmentalprotection and management(reforestation, Wadi valley terrace regeneration,flood control measures, and solid waste management);and * Petra Region Planning Council capacity building to enforce local land-use plans and environmental protection, implement urban development projects, and promote tourism. 2. Wadi Rum developmentand environmentalconservation physical, 9.2 20.9 * Infrastructuredevelopment (upgrading of Rum village, infrastructurefor a new project management, village, visitor center, and tourist access road); and * Protected area conservationand managementand visitor managementservices; institution-building and * Development of income-generating activities for the local community, particularlyBedouin women. 3. Karak and Jerash Tourism DevelopmentPilot Program physicaland 5.2 11.9 * Feasibility studies to identify urban regeneration and tourism-relatedprojects project management and cultural heritage conservationactivities; and * Implementation of a pilot program of priority tourism-related projects and cultural heritage conservationactivities. 4. Sector DevelopmentSupport policy, 2.2 5.1 * Technical Assistance to MOTA to (a) develop a longer-term tourism project management, development strategy, with an associated prioritized investment program; (b) and prepare measures for deregulation and streamlining of procedures that impede institution-building private sector participation and tourism growth; and (c) prepare a restructuring plan for tourism-sectorpublic institutions;and * Project managementservices. Total 44.0 100 Jordan - Second Tourism DevelopmentProject 3

3. Benefits and target population The project would prevent further degradation of historical and ecological sites, thus ensuring their sustainability for future generations. Urban regeneration, including the delivery of better infrastructure, coupled with enforcement of land use plans, would improve not only the experience for tourists but also the quality of life for the local population at Petra (about 20,000), Wadi Rum (about 2,000), Karak (28,000) and Jerash (21,000). The Jordanian economy in general would benefit from increasedtourism earnings as well as increasedemployment. The project would support income-generation opportunities for women through the establishment of the Bedouin Women's Handicraft Center at Wadi Rum. And finally, the project would help lay the foundation for coherent development of tourism in the Kingdom through the formulation of (a) an improved legislative and regulatory framework to facilitate tourism flows and an increased role for the private sector; (b) a longer-term sector strategy and priority investmentprogram that can send the proper signals to the private sector, as well as channel donor funds to priority investments; and (c) a more effective and efficient institutionalstructure that can support implementation of the strategy...... Z n ;...... I...... 4. Institutionaland implementationarrangements Implementationperiod. The project would be implementedover a period of 63 months. Executingagencies (seeChart I below) * The Ministry of Tourism and Antiquities (MOTA) would have overall project implementationcoordination responsibility and direct executive responsibility for the Sector Development Support and the Karak and Jerash Tourism DevelopmentPilot Program components. * The Petra Region Planning Council (PRC), under the guidance of MOTA, would be the implementing agency for the Petra component, with the exception of the Petra Region access road rehabilitationprojects. * The Ministry of Public Works and Housing (MPWH) would be the implementingagency for the Petra Region access road rehabilitationprojects. * The Aqaba Region Authority (ARA) would implementthe Wadi Rum component. Project coordination. A Project ManagementUnit (PMU) has been established at MOTA with the mandate for overall project managementand monitoring and to serve as focal point for all communicationwith the Bank. Project oversight. The Higher Council for Tourism, headed by the Prime Minister and enlarged to include additional representativesof concerned Governmentagencies (Chart 1), would facilitate coordination,provide policy guidance, and oversee implementation.The PMU would regularly submit progress reports to the Council based on monitoring indicators. Accounting, financial reporting and auditing arrangements. Project accounts: MOTA, ARA and MPWH would establish and maintain project accounts in formats acceptable to the Bank and have them audited each fiscal year in accordance with Bank guidelines by independent auditors acceptable to the Bank. MOTA would ensure that all the audited project accounts are prepared in English and furnished to the Bank within six months of the end of each fiscal year, in such scope and detail as the Bank may reasonably request. Special Accounts: To facilitate disbursements against eligible expenditures, the Government would open two Special Accounts in the Central Bank, to be operated, respectively, by MOTA and ARA, under terms and conditions satisfactory to the Bank. Administrative details of the Special Accounts are included in Annex 6. The Special Accounts would be audited annually by independent auditors acceptable to the Bank. The audit report, in English, would be submitted to the Bank for review and approval within six months of the end of each fiscal year. During negotiations, it was agreed that documented administrative proceduresand financial regulations denoting staffing, responsibilities,organization chart and accountingmanual for the Project accounts and Special Accounts will be implementedat project outset by the executingagencies. Monitoring and evaluation arrangements. The Project Management Unit would be responsible for monitoring progress against agreed-upon performance monitoring indicators specified in Annex 1. MOTA, PRC, ARA and MPWH would furnish the PMU with detailed quarterly reports for bank review summarizing project operations and the utilization of project funds. The standardized format for the reports would be finalized during the Project Launch Workshop. They would cover implementationstatus; deviations, if any, from the Implementation Plan; problems and constraints and corrective actions being taken; and updated disbursement and commitment tables. The PMU would prepare a detailed mid-term report to serve as the basis for a mid-term project review, scheduled for the last quarter of 1999. The PMU will also prepare and submit an Implementation Completion Report to the Bank within six months of the closing date of the Bank loan. 4 Jordan - Second Tourism DevelopmentProject

Chart 1 - Implementation Arrangements Prjec Oversight:Higher Council for Tourism with additional representativesof the Ministryof Water and Irrigation; the Ministry of Public Works and Housing, and the Ministryof Municipalities,Rural Affairs and the Environment

Overall Project Responsibility:MOTA - Project Management Unit - PMU Overall project managementand monitoringand focal point for all communicationswith the Bank I. MOTA-PMU

PRC MOTA-PMU MPWH ARA a implementation . implementationof Karak and . implementation . implementation of the Petra Jerash Tourism Development of the Petra of Wadi Rum component with Pilot Program component;and access roads component the support of . implementationof the Tourism rehabilitation MOTA-PMU Sector DevelopmentSupport (in coordination component with PRC)

Block 2: Project Rationale

5. CAS objective(s) supported by the project Document number and date of * Improve infrastructure extent and efficiency to relieve the constraints to latest CAS discussion: sustained growth. Strategy to emphasize lending in, inter alia, tourism, Report No. 14999-JO, environmentally sustainable infrastructure, and natural resources management, October 24, 1995 catalyzing private investment wherever possible. * Create enabling environment for private sector-led, outward-oriented growth...... 6. Main sector issues and Government 7. Sector issues to be addressed by the project and strategy strategic choices Infrastructure at tourism sites needs to be The project addresses infrastructure deficiencies at project developed or rehabilitated. The infrastructure at sites. At Petra, roads and urban infrastructure improvements, tourism sites is already overtaxed, particularly in including enhancement of areas around the Petra sanctuary, Petra. With increased tourist bus traffic, roads and solid waste management would be carried out. Under a around tourist areas require widening and USAID-financed project, additional water would be provided upgrading. With increased water demanded by and wastewater treatment put in place. At Wadi Rum, onsite hotels, houses in Wadi Musa, the main town by infrastructure for a new settlement, improvement of existing the Petra sanctuary, receive intermittent water water and wastewater infrastructure, and solid waste supply. Also, there is need to put in wastewater collection and disposal would be put in place in and around and solid waste disposal systems. Given the the Rum Village. At Karak and Jerash, priority infrastructure country's water constraints, it is essential that investments would be implemented and feasibility plans for water availability be assured as a first step in additional improvements prepared. planning for tourism site development.

Environmental protection and management of In Petra, a land-use plan designed during project preparation tourism sites and surrounding areas need to be would be enforced to prevent further uncontrolled growth. given priority. Regulations to protect the sites Environmental management and landscape improvements are not yet in place, nor is the institutional would ensure environmentally sustainable development of the mechanism to manage environmental protection area. Within the Petra sanctuary, strengthened site at the archaeological sites. management will reduce environmental damage to the site. Wadi Rum would be declared a "protected area with special regulations" and an environmental conservation plan implemented. Jordan - Second Tourism DevelopmentProject 5

Capacity to manage archeological and natural A site management plan for Petra to address archaeological parks is inadequate and responsibilities are resources management, visitor services and protection, diffuse; rapid capacity development and education and information, and commercial services would be coordination mechanisms are needed. There designed and implemented. The plan would cover managerial are at least eight different organizations responsibility for the site, including contracting for services, operating at the Petra Sanctuary, often with site planning, and coordination with NGOs, universities, and overlappingresponsibilities. At Wadi Rum, there other governmentaldepartments and agencies. is no real administrative or management In Wadi Rum, the project would establish a management structure, and management of the site is largely structure, and a site manager would be nominated to left to the local community,which does not have implement the project and manage the site. A conservation adequate capacity. manager and his team of ecologists and rangers recruited from the local community would enforce conservation rules and regulations.

Tourism development suffers from To address institutionalcapacity at the local level, the project fragmentation of authority among several would support activities to strengthen the PRC, which is a new public entities and inadequate coordination and entity. The PRC was established by Cabinet decree as a capacity. A coherent strategy and institutional Higher Planning Council. The Government has submitted a framework are needed The Ministry of legal opinion to the Bank stating that the PRC has absolute Tourism is charged with formulating tourism power pertaining to building permits, usage of land, policies and overseeing tourism development; implementation of regulatory plans, and infrastructure, and however, the major tourism sites are run by that it would have an independent budget ratified by the regional authorities - Aqaba and Wadi Rum by Cabinet. Under the project, the PRC would be established the Aqaba Region Authority, and the Dead Sea with full staff, budget and operating procedures. by the Jordan Valley Authority. Overlapping or Lack of institutional capacity at the national level is a more unclear authority is exacerbated by complex issue that requires a coherent tourism development uncoordinated planning and a lack of capacity strategy, an increased role for the private sector, and a pro- and funding within municipalitiesto identify and active tourism ministry supporting and coordinating with the address constraints to tourism development. private sector and public agencies. These issues would be addressed by the Sector Development Support component of the proposed project. A Jordanian team, comprising public and private sector representatives, supported by international expert(s), would carry out a comprehensive restructuring study. The recommendations of the study would be implementedunder a subsequent phase of the project.

Absence of attractions to encourage visitors to The first approach to address this issue would be to improve stay longer reduce potential tourism revenues. the attractiveness of the environment as well as design evening Developing evening attractions at sites is attractions, such as sound and light shows, local folklore essential to increase overnight stays. exhibitions, etc. These attractions would be developed by the private sector, with the PRC serving as a mobilizing element. The second approach would be to enhance the urban infrastructure and tourism focus at Wadi Rum, Jerash and Karak, by which the pressure on Petra would be redistributed and tourists provided additional attractions to lengthen their stays in the country.

Private sector participation needs to be The Government has taken numerous actions to foster enhanced through an improved enabling outward-oriented,private sector-led growth. There are several environment. additional policy actions required in the tourism sector, i.e., consolidation,modernization and strengthening of regulations and legislation. The Policy and Regulatory Study to be carried out under the project would address these issues. 6 Jordan - Second Tourism DevelopmentProject

8. Strategicchoices and project alternatives consideredand reasons for rejection The objective of the project is to establish a basis for environmentally sustainable tourism development that also benefits the local population. To reach this objective the following alternatives were considered: Multiple site v. single. In order to broaden the tourism base of the country (i.e., the number of sites that are adequately developed for positive tourism experience), it was decided to adopt a multiple site strategy. This approach would have the benefit of (a) spreading tourism benefits to a larger population, (b) increasing the number of attractions in the country to encourage tourists to stay longer (and spend more), and (c) reducing the current overload on Petra and Amman. MOTA v. municipalities as implementing agencies. The project opted against the use of municipalities as implementing agencies because of the very weak capacity of Jordanian municipalities, which arises primarily from budgetary constraints (i.e., lack of revenue-generating authority). Involvement of municipalities as implementing agencies at this stage would therefore be premature. However, the project recognizes the important role of local entities in tourism development. To develop the capacity to play this role, initial support would be given to the municipalities of Jerash and Karak by MOTA to carry out feasibility studies. Furthermore, the project would initiate the process of retention by concerned local entities of all or a portion of admission fees to Wadi Rum and Petra tourism sites. In a follow-up project, the issue of revenue base in Karak and Jerash would be addressed in order to ensure the sustainability of tourism-related municipal investments at those sites. 9. Major related projects financed by the Bank and/orother developmentagencies Bank-financedProjects ProjectDescription

-Tourism Development Project (1976-1981) Flood control measures; renovation and expansion of the Petra Forum The project was largely successfulin implementation Hotel; construction of a restaurant/visitor center in the Petra basin; of physical works; however, it was less successful in conservation of key monuments; construction of administrative ensuring efficient managementand upkeep of sites. facilities;upgrading of trails and interpretivefacilities...... -Gulf of Aqaba Environmental Action Plan (Bank- Investmentsand technicalassistance in: legal and regulatoryframework implementedGEF project) (1996-1999); $2.7 million development; institutional strengthening; infrastructure investments; (GEF), $14 million (other donors) marine park management; monitoring and applied research; and public HighestUJNDP rating awarenessand environmentaleducation. - Dana Wildlands Project (Bank-implemented GEFi Institutional strengthening, protected area management, income UNDP project) Phase 1 (1994-1996); $3.3 million; generation, and poverty alleviation. Phase 11(1997-1999); $2.0 million IP =S; DO = S -Urban DevelopmentProject (1980-1987); Provision of serviced plots; upgrading of low-income settlements; Loan. 1893; $21.0 million provision of training, service equipment, and consultancyservices. Highly satisfactoryrating -Second Urban Development Project (1985-1993); Shelter improvements for low-income families; encouragement of Loan. 2587; $28.0 million sound spatial development;institutional capacity strengthening. Satisfactoryrating -Third Urban Development Project (1987-1995); Infrastructure provision in previously unserved areas; construction of Loan. 2841; $26.4 million schools, health and communitycenters; municipal strengthening. Satisfactoryrating ...... I...... I...... - Cities and Villages Development Bank Project Establishmentof Cities and Villages Development Bank (CVDB) as a (1980-1986);Loan. 1286; $10.0 million developmentbank; advisory and training assistance. Satisfactoryrating

- Second Cities and Villages Development Bank Municipal and village development; CVDB capacity strengthening; Project (1985-1991);Loan. 2614; $15.0 million training of local council officials Unsatisfactoryrating -Amman Transport and Municipal Development Amman transport infrastructure strengthening; solid waste collection Project;(1985-1993); Loan. 2334; $30.0 million and disposal, municipality engineering and planning capacity Marginally satisfactoryrating upgrading. Jordan - Second Tourism DevelopmentProject 7

Other DevelopmentAgency-financed Projects ProjectDescription ...... UNESCO - Petra Sanctuary ManagementPlan Study and recommendationsregarding managementdeficiencies at the (1994-1995) Petra Sanctuary...... USAID - Petra Water and WastewaterProject Feasibility and engineering studies for water and wastewater in the (1995-1996) Petra Region; construction of water supply and wastewater treatment facilities. - Jordan SustainableTourism Tourism development and enhancement at selected sites, including Development/SitesProject (1995- monument restoration, development of visitor facilities, and public 1996) awareness. Sites includedthe Amman Citadel, Madaba, and Petra...... JICA -Tourism DevelopmentPlan (1995- Formulation of a five-year tourism development plan for priority areas; 1996) formulationof a 15-yeartourism developmentpolicy and strategy. OECF - Tourism DevelopmentProject Investmentin priority public-sectortourism projects identified in the (ongoing) above Tourism DevelopmentPlan, particularlyin Amman. France - Nabatean Waterworks Study (ongoing) Archaeological investments at Petra. Germany - Monument Restoration(ongoing) Archaeologicalinvestments at Petra. EIB - Tourism infrastructureinvestment Tourism infrastructureinvestment at the Dead Sea. (ongoing) ...... -...... 10. Lessons learned and reflected in the project design The Petra component addresses many of the issues highlighted in the Petra Sanctuary Management Plan study prepared by UNESCO (1994-1995), primarily the urban and environmental management deficiencies in the area surrounding the archeological sanctuary and lack of visitor management within the sanctuary. By strengthening the project implementation and enforcement authority of the PRC, many of the other concerns are also addressed: uncontrolled hotel construction and urban development, degradation of the sanctuary exit zone, and the lack of additional tourism attractions to extend tourists' stay and encourage greater spending. To date, most multilateral and donor investments have focused primarily on Petra. Investments in Petra and a few other sites have not necessarily resulted in better management of sites, sustained maintenance, or the development of the sector in accordance with a coherent plan that aims at developing other tourism sites. The proposed project addresses these issues, in addition to restructuring the tourism institutional, policy and financing framework. The Government has identified a broad framework for a longer-term tourism development strategy and associated investment program, which would be further developed and fine-tuned under the project in consultation with the relevant public agencies and the private sector. This would be accompanied by preparation of an appropriate policy framework as well as a sector restructuring plan to strengthen the capacity of concerned public sector institutions and to foster a more collaborative interface with the private sector. The strategy would be implemented in a phased manner. The proposed project would represent the first phase and would set the foundation for subsequent projects. A critical factor causing delays in implementation of previous projects has been weak institutional arrangements. To ensure timely implementation of this project, the tendering of consultancy contracts with firms to carry out design and engineering works and preparation of procurement documentation has been completed, as have been the hiring of key personnel and the establishment of budget and operating procedures for the implementing agencies. Other lessons learned from past work in the sector that are incorporated into the project include: building strong awareness and understanding of key sector issues and sector operation; planning successive operations that build on one another; integrating tourism development with urban regeneration to help local populations benefit from the "tourism dividend"; instituting mechanisms for effective coordination among the various agencies involved; keeping the project flexible; ensuring that the project has realistic objectives, the achievement of which can be measured against clear, monitorable targets; and ensuring the presence of clear budgetary mechanisms, including allocation of local tourism revenues to implementing agencies. 8 Jordan - Second Tourism Development Project

11. Indications of Borrower commitmentand ownership The Government recognizes that tourism is one of the country's primary engines of growth, and tourism development is one of its highest priorities. Government economic programs and plans emphasize the importanceof investment in the sector and Governmentcommitment to infrastructureimprovements and environmental protectionin the context of tourism. Although in the past the Government invested directly in the sector, it has been gradually retreating from this role, leaving investment in tourism-related projects to the private sector. For example, the Government already has sold much of its interest in hotels and guest houses and lifted the monopoly of a tour bus company. The following steps have also been taken: * Recognizingthe lack of capacity of the Petra Region municipalities,the Government has created the PRC as an area authority with a mandate to enforce land-use plans, protect and manage the environment,and coordinate with other Governmentand private sector entities. * The Government has declared Wadi Rum a protected area with special regulations. * MOTA has begun reviewing, modernizing,and consolidatingthe regulations governing tourism. * For the sector as a whole, the Government has assigned the Higher Council for Tourism, comprised of members of the Cabinet, to oversee project implementation,supervise implementationof tourism policy, propose laws and regulations, approve the establishment of training centers and set up programs and institutions for their operation,and establish licensing. * As a major step toward ensuring proper coordination among MOTA, ARA, NGOs, the private sector and the local population in the development of Wadi Rum, the Government has established a Steering Committee with a clear oversight mandate...... 12. Value added of Bank support Value added of the Bank's participation in the Project comes through at least five contributionsto its design and implementation: (a) The Bank is working with the Government through several related projects to promote opportunitiesfor the private sector (e.g., the Economic Reform and Development,Export Development,and Private Sector Assessment projects). Therefore, the design of this project was done is such a way as to ensure overall coordination with the policies and initiatives adopted in the ongoing projects and also to achieve synergies wherever possible. (b) The Bank's 15-year experience with Jordanian housing and urban development agencies under six urban and municipal projects will help to ensure smooth implementationof the urban componentsof this Project (particularlyfor the Petra, Karak and Jerash components). (c) The Bank has extensive worldwideexperience implementingprojects in environmentallysensitive areas, and this comparative advantage is reflected in the selection of project investments and safeguards for the Petra and Wadi Rum areas. The Dana Wildlands Project in Jordan has provided a particularly useful model. (d) The project involves entities at the local, regional, and national level. The Bank is accustomedto working across geographical, legislative, and regulatory boundariesunder a single project framework,and thus can design componentsand implementationstrategies to help ensure the achievementof project objectives. (e) The Bank has led the coordination among the Government and donors (USAID, JICA, and others) working in the tourism sector, helping to ensure that resources used are consistent with a well-defined strategy and related national policies. Jordan- SecondTourism Development Project 9

Block 3: Summary Project Assessments (Detailed assessmentsare in the project file. See Annex 8)

13. EconomicAssessment (seeAnnex 4) 0 Cost-BenefitAnalysis 0 CostEffectiveness Analysis D Other As the second largest source of foreign exchange, tourism is vitally important to Jordan's economy. This Project's primary objective is to provide the framework for a sustainable and environmentallysound expansion of tourism in four of Jordan's most important tourist destinations. Benefits of the project include an unquantifiable increase in tourism-based income and employment, enhanced environmental conditions, cultural and historical preservation, and increased safety and attractiveness of public facilities related to major tourist destinations in the Kingdom. The project cannot be directly linked to a specific increase in tourism over the medium term, and therefore a cost-effectivenessmethodology is used to justify project investments. Each project investment is examined in terms of its appropriateness in the overall tourism strategy for the country, the effect of the investment on the individual sites, and criteria for public sector investment. The two road rehabilitation subcomponentswere evaluated using cost benefit analysis and found to have economic rates of return between 16 and 17 percent. There are no major project risks; moderate risks fall into three categories: (a) political stability in the region; (b) those concerning the implementationcapacity of Government authorities placed in charge of project components;and (c) lack of sustained financing to maintain rehabilitated or new infrastructure. A detailed economic analysis is provided as Annex 4. Fiscal impact. The Government will provide about US$12 million in counterpart funds under the project, which is less than one percent of the country's total annual investment budget expendituresand should not pose any fiscal constraint. There will be a slight increase in recurrent Government expenditures from the staffing and operation of the PRC, but this entity is relatively small and will rely on short-term consultants to the extent possible. Increased operations and maintenance costs resulting from new or rehabilitated infrastructureunder the project are estimated at about US$1.3 million per year including PRC, Wadi Rum AdministrationUnit, and site management operating costs (see Annex 5 for additional details). 14. Financialassessment IBRD and the Government would fully finance project investments. The Government's share of total costs would not exceed US$3.6 million in any one year, easily accommodatedwithin its annual capital investmentbudget of about US$300 million. Financial sustainability was assured during negotiations,when the Government confirmedthat revenue from entrance fees at the individual sites will be allocated for operation and maintenance expendituresof the sites. Funding for operations and maintenance has been secured through a Cabinet decision to retain 25 percent of the admission fees for Petra (Cabinet Decision of May 31, 1997) and 100 percent of the admission fees for Wadi ...... Rum, in accordance with ARAI...... Law No. 7 of 1987...... I...... 15. Technical assessment The project is technically sound. Extensive feasibility studies (engineering, environmental, and social analysis) were performed during project preparation, from which project subcomponents were chosen. For each project subcomponent, the recommendationswere reviewed against appropriate standards, and costs were estimated based on costs for similar infrastructureprojects in the region. Preparation of the Petra Sanctuary subcomponentwill be completed during project implementation due to its late inclusion in the project. Initial preparation had been performed under the USAID-funded JSTD/Sites project, and after that project was canceled, the component was included under the proposed project. Additional review of the recommendedtasks under the subcomponentwill take place prior to its implementation...... 16. Institutionalassessment a. Executingagencies Ministry of Tourism and Antiquities (MOTA). MOTA is the main governmental entity involved in the tourism industry. Its mandate is to develop tourism by preserving and developing tourist sites; licensing and classification of tourist professions; setting prices for services in the sector; marketing and promotion, encouraging tourism investment; providing human resources and technical capabilities to raise standards of performance; and preparing studies and specialized research for the development and growth of tourism. Because of the nature of the sector, coordinationwith other ministries and local municipalities is vital to enable MOTA to influence the actions of concerned line ministries,municipalities, and area authorities in areas related to tourism. 10 Jordan - Second Tourism DevelopmentProject

Petra Region Planning Council. The PRC is a new entity. The PRC was established by the Council of Ministers on March 28, 1995 in response to the increasing need for control of urban growth in the Petra Region. Created pursuant to the Law of Town Village and Building Planning (Law No. 79, 1966, as amended by Law No. 16, 1975), the PRC is empoweredto prepare, approve, and enforce land-use plans within the area under its authority. Its authority replaces that previously vested in the municipalities. The PRC will be organized into four main units: (a) a Project Implementation Unit, responsible for executing governmentand donor-financedprojects; (b) a Tourism DevelopmentUnit, which would focus on developing tourism products to create additional attractions, support initiatives in training services for tourism personnel, help market Petra, and work closely with staff of the Department of Antiquities and tourism police; (c) a DevelopmentControl and Planning Unit, responsible for all land-use planning, its enforcement, zoning, licensing, and the issuance of building permits; and (d) an EnvironmentalManagement Unit, responsible for watershed management, including reforestation and flood control, solid waste management,and urban landscaping. Until the PRC has an independent budget ratified by the Cabinet, its budgets for recurrent expenditures and capital investments for municipal and environmentalprojects will be given as separate line items in the MOTA budget, and approval of all capital investment-relatedtransactions will rest with MOTA. Ministry of Public Works and Housing (MPWH). The MPWH has established project implementation capacity and procedures. It is responsible for the construction and maintenance of the main, secondary, and rural/village road networks. Aqaba Region Authority (ARA). ARA has established urban development control and project implementation capacity and procedures. It is assigned general governing responsibility for the Aqaba Region, comprising approximately one-tenth of Jordan's land area including Jordan's Gulf of Aqaba. Through its Town Planning and Regional Planning departments,the ARA takes the lead in commissioningor drafting the plans for new neighborhood development and urban renewal projects as well as for industrial zones, road siting, and hotel and residential development. b. Project management MOTA has limited experience in project management. Therefore, in addition to the Project Manager already on board, the PMU will be staffed with an engineer, a systems analyst, a statistics analyst, a procurement specialist, and an accountant, all of whom will be recruited on performance-based contracts. Given the number of implementingagencies involved in the project and the fact that PRC is a new entity with limited capacity, start-up delays are a risk. To guard against it, the Government agreed that consulting firms would be contracted to prepare the design and engineering and later carry out supervision for all projects of the Petra and Wadi Rum components. To ensure clear definition of tasks, timetables, responsibilities,and expectedoutputs and outcomes, terms of reference for key staff and detailed implementationplans, together with performancemonitoring indicators,have been prepared ...... I...... 17. Social Assessment In designing the project, a key focus was integrating tourism development with urban regeneration to ensure that local population benefits from increased tourism and tourism-related investments. Moreover, the project has strongly emphasized retaining and supportingthe local lifestyle at project sites to ensure social sustainabilityas well as to use the local culture as a tourism attraction. To this end, the project incorporates several aspects to retain and support the local lifestyle at project sites. For example, in Wadi Rum, the local population requested and participated directly in the design of the new village to allow use of the old village for tourism-relatedcommercial activities, such as a women's handicraft production,bed-and-breakfast facilities, etc. In Petra, the project would support construction of a new "souq" to strengthen the businesses of local vendors. Also in the Petra Region, there has been extensive consultation on land-use plans to ensure orderly urban developmentwhile protecting the environment...... -...... 18. Environmentalassessment Environmentalcategory B Environmental threats to the Petra Sanctuary have increased with the number of visitors to the site and are exacerbated by lack of visitor management, interpretive materials, signage, and marked trails. Vendor activities degrade both the visual impact of the sanctuary and the red stone of the monuments. The Petra Sanctuary sub- component will directly address these deficiencies. In addition, uncontrolled development in the region poses significant a threat to the surrounding of the Petra archeological site. Moreover, the surrounding environment is threatened by extensive hotel development, which often disregardsneeded infrastructureand environmentservices. Jordan - Second Tourism DevelopmentProject 11

Sewage and solid waste are already problematic and utility and municipal budgets are inadequate to address the problems. All these problems are compounded by the lack of an adequate framework for environmental protection and management. The project would address these concerns and have a positive impact on the region's environment through the development of environmental management and land-use plans, landscape improvements, strengthened site management, and capacity building of the PRC. Environmental analyses have been prepared for each of the infrastructure-related tasks. The increasing popularity of Wadi Rum and the growth of Wadi Rum Village have resulted in adverse impacts to the environment. Major environmentally related concerns include the prevalence of off-road driving, lack of protection of ecological and archaeological sites, graffiti, heavy littering, uncontrolled growth of Rum Village beyond legal boundaries, uncontrolled and indiscriminate hunting, damage from quarrying operations, and destruction of natural vegetation from overgrazing. The proposed project addresses these issues through its tourism and protected area management plan subcomponents. Other subcomponents that may have an impact on the local environment are the development of a new settlement and construction of a new tourist access road and visitor center. Environmental analyses were performed in the preparation of these subcomponents, possible environmental impacts identified, and mitigation measures built into the design of the components. A mitigation action plan was also prepared for the implementation of these components. The proposed project is expected to have an overall positive environmental impact. Project components include category C and B components. The category B components would support enhancement of current infrastructure in Petra, Wadi Rum, Jerash and Karak. The project's proposed plans for these components have been subject to an environmental analysis, including mitigation measures where necessary, consistent with OD 4.01. During the project, development of the infrastructure components (detailed engineering) would include all the findings of the environmental analysis...... 19. Participatory approach Beneficiaries/comm unity groups Identification/Preparation Implementation Operation Relevant ministries and Government agencies IS, CON, COL IS, CON, COL IS, CON, COL Members of Rum Village IS, CON IS, CON, COL IS, CON, COL Rum Tourism Cooperative IS, CON IS, CON, COL IS, CON, COL Tour operators(Wadi Rum) IS, CON, COL IS, CON IS, CON Local vendors (Petra) IS IS, CON, COL IS, CON, COL Um Seyhun Residents (Petra) IS IS, CON, COL IS, CON, COL IntermediaryNGOs Royal Society for the Conservationof Nature IS, CON IS, CON, COL IS, CON, COL Queen Alia Fund IS, CON IS, CON, COL IS, CON, COL Petra National Trust IS, CON, COL IS, CON, COL IS, CON, COL Academicinstitutions (University of Jordan) IS, CON Local governments IS, CON, COL IS, CON, COL IS, CON, COL Other (UNESCO) IS, CON, COL IS, CON, COL IS, CON, COL Note: IS = informationsharing; CON = consultation;COL = collaboration Preparation of the project has involved extensive and broad-based participation by representatives of national and local governments, local populations, the private sector, and NGOs. With respect to improvements to the Petra Visitor Center, the task team has and will continue to consult with UNESCO to ensure that the final design is commensurate with the importance of the site. A working group to advise on the design of the visitor center has been established with representatives from UNESCO, the Petra National Trust, and other concerned NGOs. Consultations have been carried out with stakeholders with respect to the Petra Sanctuary component, and during project implementation ongoing consultations are planned. For the Wadi Rum component, Government officials and stakeholders agree that local involvement and collaboration is key to successful implementation. Hence the institutional framework and the project implementation mechanisms have been specifically devised to ensure local participation not only in the design but also the implementation of the project. 12 Jordan - Second Tourism DevelopmentProject

20. Sustainability Six aspects of the project would help promote sustainability: (a) The multiple-site approach(described in paragraph 8) would increase beneficiaryownership by involving local municipalitiesand populations. (b) There would be a rigorous screening and appraisal of subprojects to be financed under the Karak and Jerash Tourism Development Pilot Program to ensure that they are viable, will deliver the expected benefits to the sector at least cost, and can be maintained at reasonable expense. (c) During negotiations, it was confirmed that adequate funding for operations and maintenance has been secured through a Cabinet decision to retain 25 percent of the admission fees for Petra and 100 percent of the admission fees for Wadi Rum, in accordance with ARA Law No. 7 of 1987. (d) During negotiations, it was agreed that the sector's long-term strategy, institutional restructuring and regulatoryreform programs will receive Cabinet approval by September 1999. (e) The project's monitoring and supervision program (including baseline and follow-up surveys and the mid-term review provisions) will help to identify and respond to problems of sustainability at an early stage when corrective action can still be taken. (f) Finally, the project would build institutionalcapacity for sustainabilitythrough: (i) its support of targeted training and technical assistance to the PRC; (ii) the provision of funds for recruiting experienced individuals on performance-based contracts to staff the MOTA-PMU and train MOTA staff how to identify and implement appropriate projects for the sector; and (iii) its support of targeted training and technical assistance to build technical and environmental protection capacity in the Wadi Rum AdministrativeUnit of the ARA. 21. Critical risks (see fourthcolumn of Annex1): Risk Risk rating Risk minimization measure Project * Political stability in the region Modest (MR) outputsto * InsufficientGovernment commitment and Lowor Cabinetapproval of the sectorrestructuring and development support to the sector restructuringand negligiblerisk regulatoryreforms by September1999 objectives regulatoryreforms (NR) * InsufficientARA commitment and support Lowor Wadi Rum has been declared a protectedarea to the Wadi Rum Conservation negligiblerisk withspecial regulations ManagementPlan (NR) . Lack of Government commitmentand Modest(MR) PrimeMinistry legal opinionon PRC's authority supportto PRC'sauthority to controlurban to enforceland-use plans and buildingregulations developmentin the Petra Region and has been obtained. Land-useplans acceptableto protect its environment (including the Bank, includingagreed protected areas, to be appropriate operating budget and completedby October31 and December31, 1997 procedures)

. Lack of sustainedfinancing for operating Modest(MR) During negotiations, it was confirmed that and maintaining new infrastructure adequatefunding for operationsand maintenance facilitiesincluded in the urbanregeneration has been secured to retain 25 percent of the program (new infrastructureinvestments, admissionfees for Petraand 100percent for Wadi particularlysolid waste management) Rum

Project * Weak project management and Modest(MR) Project Managerand key staffingof PMU and components implementation capabilities in the PRC are in place. Steps toward implementation to outputs implementingagencies have been taken beforenegotiations (finalization of tendering for detailed engineering and supervision)

* Lack of Government commitment of Modest(MR) The Bankwill assistthe Governmentin its efforts resourcesto technicalassistance mobilizinggrant financing for TA services Overall Modest(MR) projectrisk rating Jordan - Second Tourism DevelopmentProject 13

22. Possible controversialaspects Possible controversialaspects of the proposed project are as follows: Social Petra: Wadi Musa land-use rezoning. A land-use plan study to ensure well-conceivedand environmentally sound developmentof the Petra Region was launched in February 1996, and the resulting land-use plans for the three main urban areas of the Petra Region are expected to be approved by the PRC by October 31 and December 31, 1997 after completion of the required public consultation. They include the rezoning of selected environmentallysensitive urban areas as protected areas, thereby constraining the development plans of the owners. Given local sensitivity regarding land-use rights in Wadi Musa, particularly on the hill opposite the Movenpick hotel (Dara area), it was agreed during negotiations that the Government will pursue the protection of the Dara area through changes in zoning and special building regulations. The special regulations will preclude any residential construction and will provide incentives to landowners to develop the area exclusively for light tourism activities and recreation in the form of a traditional vernacular village, single story, flat-roofed, constructed in local stones with an overall ceiling of 25 percent for built-up areas. Petra: vendor operations within the sanctuary. The sanctuary management component of the project may result in the clustering of vending activities within the Petra Sanctuary in order to better serve the needs of tourists while improving the marketing of handicrafts. Additionaland ongoing social surveys and stakeholder discussionswill be held during the course of the project before any scheme to cluster the vendors is implemented. Wadi Rum: new settlement. The largest part of the Wadi Rum component is to refurbish structures and improve basic infrastructurewithin the existing village, and to provide alternative nearby (about three km) housing and other facilities to accommodate fiiture growth and the needs of residents who want to undertake commerciallyrelated activities within the existing village. Households taking advantage of the Government's offer for an additional house would still retain ownership of their home in the traditional village. The risk of residents' not respecting agreed building and growth controls has been mitigated through discussions with village inhabitants and agreement that current residents of Rum village, should they desire it, will be given serviced plots at no charge within the new village site. Ecological Wadi Rum: provision of a new settlement. The site for the developmentof a new settlement at Wadi Rum was chosen on environmental and sociological grounds. In terms of the environmental impact of the site, it is an area unaffected by flash floods, and design for surface water drainage and sewerage will take into considerationthe risks of erosion and the need to recharge the aquifer. In addition, no unique species or habitats for flora and fauna were identified at the site, and the loss of grazing area is insignificant. Visual impact will be taken into considerationby strict design guidelines for the village. Wadi Rum: construction of a new tourist access road. The new access road will allow entrance of a larger number of tourists without damaging the site and would enable tourists to experience pristine and dramatic desert scenery on first enteringthe site. The environmentalimpact of the visitor access road will be minimal. The road will be designed to be as narrow as possible (within safety standards)and follow existing ground contours, with the surface at the existing ground level throughout. There will be no lighting or other infrastructureservices along the road, and the surface and edging will be designed to provide a natural appearance through the use of local red-colored surface chippings and local stone edges. Routing avoids flash flood areas, and design will allow for surface water drainage to avoid erosion and recharge of the aquifer. Ongoing consultationswith NGOs active in Wadi Rum may result in new points of discussion. Governance Competing levels of government (ARA/MOTA). As discussed elsewhere, MOTA is charged with formulating tourism policies and overseeing tourism development, but major tourism sites are run by regional authorities and municipalities. In terms of project implementation,there may be conflicts between the various executing agencies. For implementationof the Wadi Rum component, the risk of conflicts of authority has been mitigated through the Steering Committee for Wadi Rum, which was established by the Prime Minister, and through clear implementation arrangementsand responsibilities. 14 Jordan - Second Tourism Development Project

Competing levels of government (municipalities/PRC).The PRC, created pursuant to the Law of Town Village and Building Planning, is empowered to prepare, approve, and enforce land-use plans within the area under its authority. Its authority replaces that previously vested in the municipalities. There is a risk that municipalities will resent the authority transferred to the PRC (which reports to MOTA); however, it is expected that the recent inclusion (December 1996) of representativesfrom the municipal governments on the Board of the PRC will encourage the full considerationof municipal concerns in PRC decision-making. The PRC is an evolving entity, and lessons learned during the course of this project will be taken into consideration in any actions to further strengthen the PRC during future projects. Tourism sector: institutional restructuring and regulatory reform programs. The Sector Development Componentwill focus on improvingthe sector's strategic, legislative/regulatory,and institutional frameworksthrough the carrying out of three studies. In order for this component to be effective, however, the Government has to be committedto developing and adopting the recommendedreforms. The risk of this not being the case is relatively low, and will be mitigated by agreement on the part of the Government to approve the reform proposalsby September 1999 and to implementthem by the end of the project. Management Capacity Implementation capacity of the implementing agencies. This risk of inadequate implementationcapacity is considered modest, and has been mitigated through the requirement to finalize certain steps toward implementation prior to negotiations (i.e., finalization of tendering for detailed engineering and supervision contracts and completion of detailed studies for first-year projects) and by hiring key staff members of the PMU and PRC. Overall Degree of Potential Controversy The overall degree of potential controversy as described above is moderate. This rating is based on the rating assigned to individual factor headings, which are summarized in the table below. The degree of potential controversy is rated on a five-point scale -ranging from high (5) to low (1).

Possiblenegative factors or Magnitude of potential Chancesof unsuccessful Degree of stakeholder Degreeof potential controversies damage mitigation concern internal debate Social 2 2 2 Ecological 2 1 2 1 Governance 2 1 2 Managementcapacity 2 I 1

Block 4: Main Loan Conditions

23. Conditionsof effectiveness None. 24. Other [classifyaccording to covenant types used in the Legal Agreementsdatabase.] The following were agreed at loan negotiations: Accounts/audit (a) Documented administrative procedures and financial regulations denoting staffing, responsibilities, organization chart and accounting manual for the project accounts and Special Accounts will be established at the project outset by the executing agencies. (b) Annual audit reports of project accounts and SOEs will be prepared and submitted in English by auditors acceptableto the Bank within six months of the end of each fiscal year. (c) Documentation to support expenditures financed under SOEs or otherwise will be maintained in English by MOTA and made available for review by Bank supervision missions. Financial performance/revenuegeneration from beneficiaries (d) It was confirmed that adequate funding for operations and maintenance has been secured through a Cabinet decision, dated May 31, 1997, to retain 25 percent of the admission fees for Petra and 100 percent of the admission fees for Wadi Rum in accordance with ARA Law No. 7 of 1987. Jordan - SecondTourism DevelopmentProject 15

Managementaspects of the project or executing agencies (e) The Government will maintain the Project Management Unit, established within MOTA, with staffing, terms of reference, and qualifications satisfactory to the Bank. (f) MOTA will submit to the Bank, not later than October 31, 1997, PRC's detailed operating procedures, including PRC's coordination arrangements with other relevant ministries and agencies, and municipalities in the Petra Region. Proiect implementation (g) PRC will adopt: (i) not later than October 31, 1997 the land-use plans and building regulations for the Petra Region urban and protected areas, except those for the Dara area; (ii) not later than December 31, 1997, the special zoning and building regulations for the Dara area; and (iii) thereafter PRC will issue building permits in these areas only in compliance with the aforementioned regulations. (h) ARA will carry out the environmentaland conservationcomponents of Wadi Rum componentthrough RSCN on the basis of contractual arrangementsacceptable to the Bank. (i) ARA will adopt, not later than June 30, 1998, detailed special regulations, satisfactory to the Bank, required pursuant to the Council of Ministers' decision designating Wadi Rum a protected area, and will not modify such regulations without the consent of the Bank. (j) MOTA, MPWH, PRC and ARA will prepare, under terms of reference satisfactory to the Bank, not later than September 30, 1999, a mid term review report integrating the results of the monitoring and evaluation of all performed activities and setting out the measures recommendedto ensure the efficient carrying out of the project. They will review the report with the Bank by October 31,1999 in order to take all measures required to ensure the efficient completion of the project and the achievement of its objectives before project closing. Sectoral policy/regulatory/institutionalaction (k) MOTA will (i) complete the sector development studies by March 31, 1999 (see Annex 2 - Sector Developmentcomponent); (ii) thereafter exchange views with the Bank on the outcomes and findings of the studies; and (iii) ensure that its Council of Ministers approves by September 30, 1999, a long- term tourism sector strategy, including institutional restructuring and regulatory reform programs satisfactoryto the Bank.

Block 5: Compliancewith Bank Policies This project complies with all applicable Bank policies.

Task Manager: Mohai-A ed Feghoul Acti ntry Director: Tufan Kolan

Annex 1 Jordan: Second Tourism Development Project

Table 1 - Project Design Summary

Summary of Objectives and Key Performance Indicators N-rrative Sumnnary KeyPerformance Monitoringand Critical Assumptionsand

Indicators Supervision Riskx

* create an enabling * sustainedincrease in foreign * region's politicalstability environmentfor outward- tourists orientedprivate sector growth improve infrastructureextent and efficiencyto relieve * sustainedincrease in constraintsto sustained revenuesfrom foreign growth tourists

obiectiv ~~~~~~~~~~~~~~~~CAS(JWectiv

1. create the conditionsfor 1.1 approvalby September1999 1.1.1 project monitoringreports, * the Govemmentwill: sustainableand and implementationby the and project mid-term environmentallysound end of the projectof a long- review (i) create an enabling tourism inPetra, Wadi Rum, term tourismsector strategy, environmentwhich Jerashand Karak institutionalrestructuring promotestourism and and regulatoryreform support privatesector programs developmentin the tourism sectorwhile protectingthe 1.2 improvedinfrastructure, 1.2.1 project monitoringreports, environment environmentalprotection and project mid-term and site managementat the review (ii) preservecommunity support two primaryproject sites the Wadi Rum and Petra by the for projectsi the two end of the project ajo prjc sem a and WadiRum) 1.3 growthof tourismby 75 1.3.1 project monitoringreports, percentat Wadi Rumby the and project mid-term end of the project review

1.3.2 regularsurveys; and MOTAstatistics

2. increasetourism-related 2.1 100percent increase in 2.1.1 project monitoringreports, employmentand income tourism-relatedemployment and project mid-term generationopportunities at at WadiRum by the end of review project sites the project 2.1.2 regularsurveys; and MOTAstatistics Annex 1 Page 2 of 5

Table 1 - Project Design Summary (continued)

Nsarriae Summa y ierformancee Monitoriugand Ci A pion I iatrsSpeisoRik

1. Petra Region

1.1 increasedinstitutional 1.1.1 PRC operatingprocedures 1I.1 .1 project monitoring * Governmentcommitment and capacity of the Petra completedby October31, reports supportto PRC'sauthority to RegionalPlanning Council 1997and staffing control urban developmentat (PRC) completedby June 30, the Petra regionand protect its 1998 1.1.2.1 projectmonitoring environment 1.1.2 all Petra component reports * effectivecooperation between projectsincluding PRCand the Petraregion environmental municipalities managementand tourism * effectivecooperation between promotionactivities PRCand GCEP launchedby December31, (environmentalprotection 1998 1.1.3.1 projectmonitoring agency) on Enviromnental reports Assessment(EA), in particular .1.3 PetraTourism Promotion on the delegationof the EA program (includingnew reviewin the PetraRegion to tourismattractions) PRC preparedby December 31, 1998 1.1.4.1 projectmonitoring reports 1.1.4 PRC preparationof annual reports on Petra Region TourismDevelopment, involvingall local stakeholders,beginning in 1999

1.2. improved environmental 1.2.1 protectedareas defined 1.2.1.1 protectedareas Protectionin the Petra and protection designatedby Region mechanismsestablished negotiations by December31, 1997 1.2.1.2 projectmonitoring reports

1.2.2 PetraRegion detailed 1.2.2.1 project monitoring land-useplans, including reports environmentalprotection requirements,completed by December31, 1997

1.2.3 solid wastemanagement 1.2.3.1 project monitoring plan implemented reports (including monitoring systemof private sector operators) by June 30, 1998

1.2.4 flood protection measures 1.2.4.1 project monitoring implementedby the end of reports the project

1.2.5 reforestationand Wadi 1.2.5.1 project monitoring terracesregeneration reports componentscompleted by the end of the project Annex 1 Page3 of 5

Table 1 - Project Design Summary (continued)

N1ErratveSummary Key Performance Monitoringand Critical Atsumptionsmkd :::______-___ Indicators Supervision Risks OUTPUJT(continued)

1.3 Petra region: improved 1.3.1 Main access roadsare 1.3.1.1 traffic countsand * sustainedfinancing for infrastructureto support rehabilitatedand accidentreports operatingand maintaining environmentallysustainable maintained,including (numberof fatalities, (O&M)new infrastructure tourismdevelopment safety improvements,by numberof injured) facilities includedin the urban the end of the project regenerationprogram (Unaizah- Shobak -Wadi 1.3.1.2 projectmonitoring Musa Road;and Wadi reports * Ministryof Publi Worksand Musa - Um Seyhun- little Housing(MPWH) ability to Petrascenic road ensure properand timely maintenance 1.3.2 urbaninfrastructure 1.3.2.1 projectmonitoring developedand improved reports * new infrastructure in Wadi Musa,Taybeh investments,particularly for and Um Seyhunby the water and wastewater,will be end of the project implementedas scheduled

1.4 improvedvisitor 1.4.1 redevelopmentof the 1.4.1.1 projectmonitoring * communitysupport for the infrastructureand servicesat visitorcenter and site reports project the Petra Sanctuary entrancearea completed by the end of the project

1.4.2 Sanctuaryenhancement projects implementedby the end of the project

1.4.3 Visitormanagement plan developedand implementedby December31, 1998

2. Wadi Rum 2.1 Increasedinstitutional 2.1.1 WadiRum 2.1.1.1 project monitoring * Aqaba RegionAuthority capacityof the Wadi Rum Administrationoperating reports (ARA) maintainsits Administration(WRA) by March31, 1998 commitmentand supportto (organizationalstructure the establishmentof an and staffingcompleted) efficientWadi Rum Administrationto implement 2.1.2 all Wadi Rumcomponent 2.1.2.1 projectmonitoring the proposedWadi Rum projects,including reports EnvironmentalConservation environmental and TourismManagement conservationand income Plans generationactivities, launchedby December31, 1998

2.1.3 WadiRum Administration 2.1.3.1 projectmonitoring preparationof annual reports reporton Wadi Rum tourismdevelopment and environmental conservation,involving all local stakeholders, beginning in 1999 Annex 1 Page 4 of 5

Table 1 - Project Design Summary (continued)

4;4Narrative 0 0 SumnmaryX 0 0 00 Key Performance: Monitoring and Critical sumptions Indicators Superision nd Risks OUTPUTS (continued)

Wadi Rum (continued)

2.2 improvedenvironmental 2.2.1 detailedregulations and 2.2.1.1 projectmonitoring conservationand tourism land-use plans for reports management environmentalprotection and conservation includingdetailed land- use plans for Rum village, approvedby ARA Board and enforceable by June 30, 1998

2.2.2 Wadi Rumenvironmental 2.2.2.1 project monitoring conservationmanagement reports and tourismmanagement plans implementedby June 30, 1999 2.3 improvedinfrastructure to 2.3.1 infrastructure 2.3.1.1 project monitoring * sustainedfinancing for support environmentally developmentprojects reports operatingand maintaining sustainabletourism implementedbe the end of (O&M)new infrastructure development the project facilitieswill be secured

2.4 increasedefficiency of Rum 2.4.1 regularissuance of RTC 2.4.1.1 projectmonitoring TourismCooperative accountsbased on reports restructuredaccounting beginning fiscalyear 1999

2.5 increased tourism-related 2.5.1 recruitmentof target 2.5.1.1 projectmonitoring * effectivewomen's incomegeneration populationfor Women's reports participation opportunitiesfor women in HandicraftCenter WadiRum area 2.5.2 developmentof product 2.5.1.1 projectmonitoring line by June 1999 reports 3. Karak and Jerash Tourism DevelopmentPilot Program

3.1 actionplan for tourism 3.1.1 Tourismdevelopment 3.1.1.1 projectmonitoring . active involvementof the developmentin Karak and plans including projects reports municipalities Jerash preliminarydesign completedby March31, 1999

3.2 Karak and Jerashpriority 3.2.1 priority projects 3.2.1.1 project monitoring . activeinvolvement of the projects (pilot program) implementedby the end of reports municipalities the project 4. Tourism Sector Development

4.1 Long-termtourism strategy 4.1.2 tourismsector 4.1.1.1 project monitoring . sustainedGovemment amdaccompanying developmentstrategy reports commitment institutionalrestructuring includinginstitutional and regulatoryreform restructuringand * involvementof all programs regulatoryreform stakeholdersin the tourism programs,completed by strategyformulation process March31,1999, approved * Higher TourismCouncil will by September30, 1999, closelyoversee preparationof and implementedby the the tourismdevelopment end of the project strategy Annex 1 Page 5 of 5

Table 1 - Project Design Summary (continued)

NarrativeSummary Key Performance Monitoringand Critical Assumptionsand Indicators Supervision Risks

Project Components fSee Annex 2

1. Petra . technical assistance and . project monitoring reports * counterpart funding secured 1.1 road project management services in MOTA's budget and rehabilitation/improvement (US$5.00 million) MPWH budget for all (about 60 kmn) project fiscal years * detailed engineering and 1.2 urban infrastructure construction supervision * adequate coordination with 1.3 site enhancement and services (US$2.70 million) the implementation of the visitor managementat the * vehicles,computers and plannednew water and Petra Sanctuary office equipment wastewaternetworks 1.4 Petra Region environmental (USSI.50 million) * efficient coordination management * equipment for Women's Government ancier 1.5 Petra Regional Planning Handicraft (US$0.20 agencies Council (PRC) capacity million) . Wadi Rum infrastructure building * civil Works and development projects EnvironmentalProtection ~~~~~~approvedand counterpart Environmental Protection funding secured in ARA's 2. Wadi Rum Environmental and management Works budget for all project fiscal Conservation and Tourism (US$34.60 million) years Development 2.1 infrastructuredevelopment 2.2 protectedarea management and tourismmanagement 2.3 incomegeneration activities support

3. Karakand Jerash Tourism DevelopmentPilot Program 3.1 feasibilitystudies and priority projectspreparation 3.2 implementationof eligible priority projects

4. Tourism Sector DevelopmentSupport 4.1 technicalassistance and training servicesfor tourism sector developmentand restructuring 4.2 equipmentfor MOTA 4.3 technicalassistance services for project management

Annex 2 Jordan: Second Tourism Development Project Detailed Project Description

Project Component 1 - Total cost: US$27.4million Petra Region Infrastructure Development and Environmental Management

Introduction

1. Petra is the most spectacularof Jordan's national treasures and one of its two UNESCOWorld Heritage Sites,the other being Qasr Amra, recognizedfor its 7th centurymosaics. Petra was the home of the Nabateans, an industriouspeople who settled in the area over 2,000 years ago and carved out their capital from the soft red sandstoneof the area. The only entrance to the city was a narrow gorge (the Siq) which afforded its residents a high degree of security. From this hidden city, the Nabateans dominatedthe trade routes, levying tolls and sheltering caravans. The city, reflecting the architectural styles of the Egyptians, Greeks and Romans, during its heyday was known for its refined culture, massivearchitecture, and ingeniouscomplex of dams and water channels.At its peak, Petra is thought to have housed some 20,000 to 30,000 people. The city declined followingan earthquakein 363 AD and a shift in trade routes and was all but forgottento the outside world for almost300 years, from the 16thto the 19th centuries. The Bedouintribes of the area guarded it as their treasure from outsiders. Petra was rediscoveredby the outside world when a Swiss explorer, hearing of the city, was able to persuade a Bedouin to guide him there in 1812. The residents of the area today belong to two major tribal groups: the Layatne,who live in Wadi Musa and Taybeh;and the Amarine,who reside in Um Seyhun.

2. Petra today faces a host of problems that, if not immediately addressed, will significantly diminishthe tourism experienceand further exacerbatethe adverse results of the uncontrolledgrowth of Wadi Musa, the town at the entranceto Petra. The major problemsin the Petra Region are: (a) pressure on the monumentscaused by lack of a visitor managementplan; (b) uncontrolledurban growth; and (c) lack of urban infrastructure.

3. For most tourists visiting Jordan, Petra is the premier attraction. Due to its status as a World Heritage Site and facilitated by the peace process, continued growth in visitor numbersto Petra can be expected. It is thereforeof crucial importancethat (a) the site is preserved; (b) the experienceof tourists visiting the site is enhanced; and (c) the national and local economic benefits from tourism are maximized.

4. Pressure on the monuments and lack of a visitor managementplan. The number of tourists visiting Petra increasedalmost 70 percent in 1995 over the 1994 level, with a substantialnumber being day visitors arriving in coaches from Israel. The rapid influx of tourists is severelytaxing the capacityof the site. All visitors enter Petra at the Siq, the narrow gorge leading to the sanctuary. Uncontrolled visitor movementcontinues through the Siq to the Treasury,the first major monumentof the sanctuary and where severe visitor "bunching" occurs. After the Treasury, visitors tend to wander undirected throughoutthe sanctuary- there is little access control and no signageto direct the visitor. The ultimate result is monumentsdamaged by litter, graffiti,and erosion causedby inappropriatewear and tear.

5. There are at least eight different organizationsoperating at the Petra Sanctuary,sometimes with overlappingresponsibilities: The DOA, the Tourism Office, Tourist Police, Desert Police, Civic Police, Ministryof Health, a maintenancecontractor, and the Governor's Office. Each has its own direct line of authority from Amman. In addition, there is no uniform set of rules for the site, no regulations or managementpolicies or principles derived from a statement of the site's significance, and no guiding mission for site managers. Approximately100 people are employed in site protection and management through the various organizationspresent at Petra, yet there is little coordinationamong the organizations Annex 2 Page 2 of 21 and little authority accorded to managers. These deficiencies have resulted in inadequate archaeological site protection and a visitor satisfaction rate that is much lower than might be reasonably expected of a site with Petra's beauty and significance.

6. Uncontrolled urban growth. Several new hotels are under construction. Total bed capacity had quadrupled by end-1996, from 500 beds in 1994. Urban development is following suit. In the absence of an updated land-use plan, the areas surrounding the sanctuary have grown in an unsightly and uncontrolled manner, with significant adverse environmental impacts. As a quick reaction to the unplanned construction boom, the local government has placed a ban on issuing building permits. Although this has resulted in significant opposition from landowners and speculators, the Government is taking a firm stand. It has asked the Bank to help prepare a land-use plan that would ensure well- conceived and environmentally sound development of the Petra area and priority investments. The work was launched in February 1996 under a Japan PHIRDgrant and was completed in December 1996. The land-use plans for the three main urban areas of the Petra Region are expected to be approved by the Petra Region Planning Council (PRC) by October 31, 1997 after completion of the required consultation with the public.

7. Inadequate infrastructure. Hotel expansion and accompanying urban development in the towns of Wadi Musa and Taybeh are putting pressure on existing infrastructure, which is already limited in capacity and of low quality. The major infrastructure issues are water and wastewater services, environmental degradation, traffic flows and road conditions, and the clear absence of any integration between the town and the tourism activities at the Sanctuary. At present, there is no wastewater system in the town, and a number of cesspits discharge directly into the wadis. Drinking water supply is intermittent, and even then, hotels get priority over households. Unaccounted-for water is estimated at around 50 percent. Environmental neglect and degradation have significantly affected the natural landscape - there are periodic floods, loss of vegetation, and visual intrusion. Road conditions throughout the town are poor, especially the spine road, which is congested through the town center as a result of indiscriminate parking, absence of sidewalks, general clutter, and conflicting activities. The access roads to Wadi Musa are generally not of an acceptable safety standard.

Subcomponents

8. To address the above problems, the proposed project would concentrate on five areas: (a) rehabilitating and improving two main access roads to the Petra Region; (b) developing and improving urban infrastructure in the main urban areas; (c) improving visitor support infrastructure and services at the Petra sanctuary (improving visitor flow patterns, developing proper signage and interpretation, formalizing adhoc trails and parks through the sanctuary), and developing site management capacity; (d) improving environmental management (reforestation, wadi terraces regeneration, flood protection, solid waste management); and (e) building the capacity of the PRC to enforce controlled development and environmental protection, implement urban development projects, and promote tourism. The following is a description of the components to be funded under the project.

A. Road rehabilitation and improvement

9. The proposed investments for roads under the project would focus on improving the level of service in the area, including traffic safety on two existing key access roads to the Petra Region, specifically (a) the access road to Wadi Musa from the desert highway through Uzainah and Shobak (53 km); and (b) the scenic road from Wadi Musa to Little Petra (Baida) through Um Seyhun (7.5 km). For these proposed road improvement projects, works would be related to increased road safety and the construction of scenic viewpoints. The road improvements would be implemented within the existing Annex 2 Page 3 of 21

right of ways and would not include significant widening which could have a negative impact on the environment. In addition to initial design financed by the Government, the project would finance additional detailed engineering studies and construction supervision services for these road projects.

B. Urban iaifdastucture deveomet

10. This subcomponent would support the implementation of urban infrastructure development and improvement in the three main Petra Region urban areas: Wadi Musa, Taybeh and Um Seyhun.

11. Wadi Musa urban infrastructure development. The proposed urban infrastructure investments in Wadi Musa would focus on rehabilitating the existing key urban roads, including lighting, along with enhancement works in Wadi Musa town center and the Tourist Park zone. Specifically, under this subcomponent the following works would be implemented: (a) improvement of the Wadi Musa spine road from the urban boundaries through the town center to the Tourist Park zone; (b) enhancement of the Wadi Musa town center, where traffic would be diverted and streets upgraded and landscaped, and where the adjacent abandoned traditional village houses (Elge old village) would be rehabilitated to attract tourists for sightseeing and shopping; (c) development of the street layout of the Wadi Musa tourist arrival area (Tourist Park zone, including the Promenade); (d) improvements to selected lengths of minor urban collector roads in Wadi Musa to provide enhanced circulation patterns, thereby providing bypasses around tourist and environmentally sensitive locations and reducing congestion; (e) improvement of street lighting and street landscaping (including civic works, urban furniture and signing) with the potential to benefit both tourists and the local economy; and (f) improvement of traffic management and parking at points of visitor arrival and departure, including the Wadi Musa tourist area and town center.

12. Tavbeh urban infrastructure development. The proposed urban infrastructure investments in Taybeh would focus on rehabilitating the Taybeh town spine road (4 km) and improving street lighting and street landscaping.

13. Um Sevhun urban infrastructure development. The proposed urban infrastructure investments in Um Seyhun would focus on rehabilitating the main spine road in Um Seyhun; improvement of traffic management and parking at points of visitor arrival and departure, including the Sanctuary exit zone, and development of a new coach parking/interchange area, and improving street lighting and landscaping, civic works, urban furniture and signage.

14. The project would finance detailed design engineering and construction supervision services for the infrastructure development and improvement projects outlined above.

15. The Second Tourism Development project does not address water and wastewater deficiencies in the region. These infrastructure requirements are being addressed through an ongoing water supply, wastewater collection and treatment project financed by USAID, France and Germany. Work on this project would occur concurrently with the infrastructure development subcomponents of the Petra component. Because the water and wastewater pipes would be laid within the right of way of the urban road network, there would have to be a high degree of coordination between the two projects.

C Visitor facilities and management at the Petra Sanctuar

16. The objective of this subproject is to improve visitor support services at the Petra Sanctuary by: (a) addressing the needs of tourists through the improvement of visitor flow patterns, the existing visitor center, and rest and shopping areas; (b) enhancing the Sanctuary through the creation of paths and/or trails and appropriate landscaping, including indigenous vegetation; and (c) improving tourism Annex 2 Page 4 of 21 management through improvements in the presentation of the site through proper signage, explanatory panels identifying monuments, and training for site management and guides.

17. Visitor center and site entrance area. The project would support the design and implementation of the redevelopment of the visitor center and the site entrance area. USAID, as part of the recently canceled (for reasons unrelated to the project) Jordan Sustainable Tourism Development/Sites (JSTD/Sites) project, has completed initial work in the form of drawings, reports and contract documents for the visitor center, shopping and rest areas. The JSTD/Sites project proposed to remodel, but not expand, the visitor center. The proposed project would support the establishment of a committee, with membership from MOTA, UNESCO, and the Bank, to review the current design with respect to the expected increase in visitors and determine whether to proceed with the proposed design or to expand the center. In the event the latter is recommended, the project would support a competition for which the terms of reference and evaluation criteria would be prepared by Jordanian officials and advisors from UNESCO. The design of the shopping arcade and rest area would be linked to the decision regarding the design of the visitor center.

18. Sanctuarv enhancement. The proposed project would improve visitor support services by improving visitor flow patterns, designing appropriate signage, formalizing the adhoc trails that lace the Sanctuary and creating new paths and/or trails where appropriate, and providing soft landscaping with plants and shrubs indigenous to the Sanctuary. Lack of information about the site is a major cause of tourist dissatisfaction with the site - it is a major cause of visitor "bunching" at the Treasury and of lack of visitor awareness of most of the other monuments within the Sanctuary. Undirected wandering results in monuments being damaged by litter, graffiti, and erosion caused by inappropriate wear and tear. The proposed project would fund the development of (a) a basic tour of the sanctuary, (b) trails through and to the more remote monuments, and (c) interpretive material at the visitor center and along the established routes to highlight the monuments.

19. Site and visitor management. The proposed project would develop a visitor management plan that would, within the limits of the site's carrying capacity, improve presentation of the site through development of a visitor management plan and provision of training for site management staff and guides. The visitor management plan would coordinate the development and presentation of information about the site, visitor circulation plans, and site control and management. Technical assistance for the above would be funded, as would the development of training materials for site management staff and guides.

20. The project would also fund site preparation and implementation services (detailed engineering and supervision).

D. Evironmealmanwgment

21. In tandem with infrastructure development, investments would be made for environmental protection and management in the Petra Region. These would include:

22. Watershed management: Reforestation and wadi terraces regeneration. The proposed project would include the creation of a vegetation belt area at Um Seyhun village, the reforestation of the upper watershed along the scenic road, the development of a management plan for the Hisha Forest and the implementation of a forest conservation pilot project the Wadi Musa area. In addition, the project would support the regeneration of the wadi terraces and the design and implementation of landscape improvements within dedicated areas of Wadi Musa and Wadi Sadr. This would include planting, walkways, existing pathway and pedestrian access improvements; irrigation system upgrading; graphical, Annex 2 Page 5 of 21 informational, and directional signage; and terrace wall and embankment repair. The investments would respect local cultural values and complement traditional agricultural practices. The design would be based on the recommendations, facilities, improvements, and configurations as contained in the Wadi Valleys Master Plan (previously approved). The Ministry of Agriculture (Department of Reforestation) would be associated with the design and implementation of these projects.

23. Watershed management: Flood control and protection. Under this component, (a) embankments would be protected; (b) obstructions in the Wadi beds removed; (c) soil erosion control measures taken; and (d) bottlenecks, especially in the area approximately I km upstream of the Siq entrance, removed. In addition, the project would fund technical assistance for a comprehensive study of flooding in the area and the design of an appropriate flood protection system.

24. Solid waste management. The project would support monitoring of solid waste services contracted out to a private operator. The PRC would supervise the management contract on behalf of the municipalities of the project area. The private operator would be required to undertake: (a) the collection of all solid wastes from the towns and rural settlements of the Petra Region; (b) street and market cleaning for the principal towns of the Petra Region; (c) emergency cleaning and the removal of unauthorized waste; (d) emptying of cesspools and septic tanks; (e) transportation of all refuse and waste to the Ma'an regional landfill or other designated point of disposal. The concessionaire would be asked to provide and manage the labor to operate the system and to maintain records on the volume of waste collection and disposal. The project would also support supplementary solid waste management activities such as the design and installation of additional garbage bins in tourist areas and the Wadi Musa town center and a public awareness campaign.

E. Develonig capacity of the Petra Region Planning Council (PRC)

25. The PRC was established by the Council of Ministers in April 1995 in response to the increasing need for control of urban growth in the Petra Region. Created pursuant to the Law of Town Village and Building Planning (Law No. 79, 1966, as amended by Law No. 16, 1975), the PRC is empowered to prepare, approve, and enforce land-use plans within the area under its authority. Its authority replaces that previously vested in the municipalities. It is also empowered to implement development projects. It is essential that the PRC be rapidly strengthened so that it can fulfill its mandate effectively. The area is booming - recent hotel investments amount to US$70-80 million, tourism flows have more than doubled, and, as proposed under the project, an investment program of several tens of millions of US dollars is to be implemented - and the presence of a strong entity is vital. However, the PRC is not fully functional and is currently unable to perform these tasks.

26. A Board of Directors has been established to oversee the operations of the PRC. It is chaired by the Minister of Tourism and Antiquities and includes the Secretaries General of the Ministry of Municipal and Rural Affairs and Tourism and Antiquities, the Director of the Environmental Department of the General Corporation for Environmental Protection, the Director of the Department of Antiquities, the Secretary General for Roads, the Governor of Wadi Musa District, representatives of the Ministry of Planning and the Petra National Trust, the Mayor of Wadi Musa, and two specialists appointed by the Minister of Tourism.

27. Technical assistance will be provided to the PRC to build the technical, management, and implementation capacity necessary to carry out its mandate, including the effective implementation of the proposed project. The PRC would be headed by a General Manager, assisted by directors of four units: (a) a Development Control and Planning Unit, which would be responsible for all land-use planning, its enforcement, zoning, licensing, and the issuance of building permits; (b) a Project Annex 2 Page 6 of 21

Implementation Unit, which would be responsible for executing government and donor-financed projects; (c) an Environmental Management Unit, which would be responsible for watershed management,including reforestation and flood control, solid waste management,and urban landscaping; and (d) a Tourism Promotion Unit, which would focus on developing tourism products to create additional attractions to enhance visitors' experience and motivate them to stay longer at Petra, support initiatives in training services for tourism personnel, help promote Petra, and work closely with staff of the Department of Antiquities and tourism police.

28. The land-use plans for the Wadi Musa, Taybeh, Um Seyhun, and the Scenic Road to Taybeh provide the basis for the work of the Development Control and Planning Unit. During the early project implementation period, technical assistance would be provided to the planning unit to set up an appropriate operating system, ensure that the implementation skills are effective, help further develop the recently developed urban growth management tools, and help ensure satisfactory enforcement of the land-use plans. The PRC unit would ensure proper protection of the following declared protected areas: (a) new zoning regulations for the hill facing the Movenpick Hotel (Wadi Musa Dara area) would preclude any residential construction and restrict development in this area exclusively to light tourism activities and recreation in the form of a traditional vernacular village, single story, flat-roofed, constructed in local stones with an overall ceiling of 25 percent regarding built-up areas; (b) all existing wadis terraces in agricultural or garden use would be retained as open space and regenerated with an appropriate watering system and replanted trees with the support of the project; (c) the Wadi Musa-Taybeh scenic road, along which development would be allowed only in authorized zones within the limits of the special building regulations approved by the PRC; and (d) the Wadi Musa-Um Seyhun scenic road, along which development would not be allowed. With respect to Um Seyhun, which is within the boundaries of the Petra National Park, any further growth would be proscribed.

29. The Development Control and Planning Unit of the PRC would be responsible for the following activities: (a) monitoring and managing the implementation of development in accordance with the land- use plans and development controls and guidelines for Wadi Musa, Taybeh, Um Seyhun and other existing villages; (b) assisting all applicants and assessing all applications for development within the Petra Region and making recommendations to the PRC Board; (c) monitoring all new construction in the Petra Region to ensure that planning permission has been granted and that actual development corresponds with permissions; and (d) reviewing any necessary adjustments to the land-use plans when exceptional circumstances occur and making recommendations to the PRC Board.

30. To ensure implementation effectiveness, project supervision would be contracted out to consultants, and specific training would be provided to the staff at the PRC Project Implementation Unit in project management and monitoring. The project would also provide cars, computers, office equipment and specialized software.

31. The proposed project would support the creation and institutional strengthening of the PRC Environmental Unit. The Unit's mandate would be to manage environment-related programs in the Petra Region, including the main urban areas of Wadi Musa, Um Seyhun, Taybeh, Rajef, Baida, Al Hay and Dalagha. The primary activities of the Unit would include: (a) participation in the development of zoning and land-use plans for the Petra Region; (b) full implementation of environmental impact assessment procedures for major development proposals; (c) solid waste management measures, including development of inspection/enforcement procedures, and participation in the performance review of private sector contracts for solid waste collection and disposal; (d) industrial pollution prevention measures; (e) sewage management measures; (f) contract oversight for the removal of construction debris, domestic garbage and discarded appliances and car parts from wadis and open spaces; (i) participation in the planning and review of erosion and flood control measures to ensure that Annex 2 Page 7 of 21 valued agriculturallands and vulnerable natural habitats are not damagedby new constructionprojects; () developmentand implementationof guidelinesfor landscaping,agriculture, and soil erosion control (in cooperation with the Ministry of Agriculture);(ix) regulation of livestock grazing in ecologically sensitive areas; and (x) public education and awareness-buildingthrough classroom education, contact with the local media, and coordinationwith NGOs efforts to promote environmentalawareness. Initial support for the unit would be recruitedfrom the Royal Societyfor Conservationof Nature (RSCN).

32. The Tourism PromotionUnit of the PRC would be responsiblefor the promotionof investment in the tourism sector in the Petra Region and would act as a catalyst for private-sectorinvestment. This would involve (a) identificationof tourism investmentopportunities; (b) preparation of marketing and feasibility studies; (c) coordinationwith Petra National Park managementwith respect to Park activities and special events; (d) coordination with tourism professionals in the region to develop additional attractions;(e) support for initiativesin training servicesfor tourism personnel;and (f) provisiona forum for public/privatesector interactionin the sector. Local and foreign expertswith demonstratedcreativity and energy would be employedto direct this highly innovativeundertaking. Annex 2 Page 8 of 21

Project Component 2 - Total cost: US$9.2 million Wadi Rum Development and Environmental Conservation

Itroducon

I. Wadi Rum is one of Jordan's premier nature reserves and a site that will become a major attraction for eco-tourism and a source of significant tourism revenue. Its unspoiled beauty and tranquillity rank it among the world's best desert parks, and it is also an important preserve for the region's desert biodiversity. It is a spectacular desert tourist destination of ecological (there are many large desert mammals, as there are in the Dana Reserve), archaeological (prehistoric and Nabatean sites), and historical importance. The massive sandstone crags and gorges, interspersed with rolling sand dunes are the home of the Howeitat Bedouin, with whom T.E. Lawrence lived, and from where he attacked Aqaba. Although only an hour by road from the town of Aqaba, the site was relatively unknown by tourists until the late 1980s, when publication of a rock climber's guide was enough to attract the attention of masses of tourists visiting Aqaba beaches. Uncontrolled mass tourism (500-1,000 people each day during peak season), and associated unplanned urban developments, now constitute the major threats to the site's ecological and aesthetic integrity. Increasing visitor use of Wadi Rum, if unmanaged, will exacerbate the damage to the ecology and archaeology of the site.

2. To date, there has been little focus on developing tourism at Wadi Rum while preserving it environmentally. The result is an increasing problem with litter, archaeological sites damaged by graffiti, unplanned vehicle tracks, and an unsightly village. The Rum Village (Bedouin community), which only a few years ago contained just a few homes, now has more than 300 houses and is experiencing an alarming rate of growth. Current tourism activities are poorly organized and underfunded, there is little effort to promote regulations to preserve the site, and there is no proposal to maximize the returns from tourism (the current admission fee is I JD). Wadi Rum is at an important juncture, and steps must be taken to avoid further endangering the very fragile environmental balance that makes it so attractive.

Subcomponen

3. The Wadi Rum Development and Environmental Conservation component would support and encourage tourism development that maximizes economic returns to local communities while protecting and conserving the natural and cultural resources. Main component activities, developed and implemented in close collaboration with the local community, would include the following subcomponents: (a) infrastructure development; (b) protected area and tourism management; and (c) support for income-generating activities. The following is a description of the subcomponents to be funded under the component.

A. h&astructuredevelpment

4. The majority of investments in Wadi Rum would be related to infrastructure development and improvement. Infrastructure investment would concentrate on four primary areas: (a) off-site infrastructure, mainly a new access road of about 4.4 km from the Disi Road to the visitor reception area and a new entrance gate; (b) development of new visitor facilities and administrative buildings; (c) planning and development of a new village to accommodate increases in the local population; and (d) improvements to the existing Rum village. In addition, the project would fund detailed engineering of the proposed subcomponents and supervision of implementation. Annex 2 Page 9 of 21

5. Off site infrastructure: Construction Qf a new entrance road. a new entrance gate. and solid waste management. A new one-way visitors' entrance road into Wadi Rum, beginning to the east of Jebel al Quwaysa and curving back toward the existing road to Rum just before it passes over the hill, would be built as part of the project. The route includes some of the most dramatic entrance views and the panorama of the main Rum Valley and the Seven Pillars from the higher ground. It would start at a new junction on the existing Disi Road located between the two wadis at a point approximately 1.7 km east of the existing junction to Wadi Rum. The road would head southwards toward the foothills and then along the eastern and southern edges of Jebel al Quwaysa to the proposed visitor parking and reception area. The total length of the road is about 4.4 km.

6. A new entrance gate to Wadi Rum would be located on the entrance road about 100m from the junction. The access road would be designed for 2-way operation over this length only. From the entrance gate to the visitor parking and reception area the road would be designed for one-way operation with stopping/overtaking areas at regular intervals.

7. The environmental impact of the visitor access road would be as small as possible. The road would be designed as narrow as possible (within safety standards) and follow existing ground contours, with the surface at the existing ground level throughout. There would be no lighting or other infrastructure services along the road, and the surface and edging would be designed to provide as natural an appearance as possible through the use of local red-colored surface chippings and local stone edges.

8. The proposed project would fund solid waste management improvements. Current solid waste disposal arrangements are inadequate. It is proposed that a collection system be instituted for Wadi Rum. Funding for the purchase of hand-carts, brooms, and storage bins and/or areas would be provided, as well as improvements to the current dump site at Disi.

9. Visitor and administrative facilities. The objectives of the construction of the new visitor facilities are to create a dramatic arrival that maximizes the experience of entering Wadi Rum and to create a space for full interpretative facilities where the views of the landscape can be appreciated and the impact of parking and interchange facilities minimized.

10. The centerpiece of the project investments is the design and construction of a new visitor center for Wadi Rum. The visitor center would include a comprehensive interpretation of the natural and cultural history of the reserve, tourist shops, kiosks, and a cafe/restaurant for refreshments and information on transportation and accommodation within Wadi Rum. The visitor center would serve as a control on further access to Rum, and would house the offices of the area's administrative and management staff.

11. The visitor center would be located on the existing access road to Rum Village, situated on the steeply sloping southern end of a low range of hills looking south. Visitors would approach the center as they drive south along the new access road, leaving their car or coach in a parking area set in a landscape of desert flora and boulders, and walking up a rising pedestrian route that climaxes at the summit of the saddle with a dramatic elevated view. This view would be framed by stone towers forming the control over movement along the road and the visitor center.

12. The center would lead visitors through a series of display spaces interpreting the resources of Wadi Rum. To one side the rocks of the hillside would emerge into the interior and could be used to portray rock carvings and geological history. On the other side narrow openings would provide glimpses of the great valley. Visitors would rise through the building to a final shaded terrace cafe where they would be confronted with a dramatic view of the Seven Pillars of Wisdom. From this terrace a track Annex 2 Page 10 of 21 would rise to the summit of the hill giving panoramic views of the desert. A return track, would lead to a desert roof garden on the center and finally back to the entrance vestibule.

13. Ranger and tourism police outposts and sanitary facilities for tourists within the park would be also be provided.

14. New Rum settlement. Because Rum Village has reached its full capacity for growth, consultation with the local population led to the selection of a site within Wadi Rum for a new settlement that would accommodate the population growth in the area resulting from greater opportunities in tourism. The site is located in a bowl of land drained by three main wadis. The wadis are essential as stormwater channels and are of visual and ecological interest, and are therefore used to divide the residential areas into four small neighborhoods of varying size. These neighborhoods would be served and linked by two spine roads running along the contours and joining the main Rum village road at the northern and southern ends of the new village.

15. All housing would be served off the two spine roads and would be based on a series of housing cells, or clusters, each of 12-20 plots and served by a communal, central courtyard. The structure of neighborhoods, spine roads and housing clusters would allow for the social development of the village by extended families. The overall structure of the new village would allow for variation in plot density; the lower, easterly band next to a corridor of nonresidential uses would be the highest density, averaging 2 plots per dunum. The central band, between the two spine roads, could be mixed densities of one and two plots per dunum. The westerly band on the upper slope could be mixed densities with plots of one to two dunums and may be favored by families keeping large numbers of livestock.

16. The "public face" of the village along the Rum village road would be a stone wall set back from the road. Its purpose would be to screen the village, particularly in the early years when buildings are unfinished and plantings immature. The wall would not be continuous, but instead would have several breaks along its length as well as several towers up to five meters high at some locations. The wall would weave back and forth, with different widths at different locations. Specific possibilities for non- residential uses of the wall include an open tower for crafts such as weaving; cafes and shops built into the wall or using shade awnings suspended from it; the village mosque and minaret in a wall tower; and other community buildings such as a post office, police station, clinic, village council and schools sited along the corridor abutting the wall.

17. Imrnovements to Rum Village. The main considerations built into the design of this subcomponent were (a) the restriction of the growth of the village across the wadi and encouragement of a distinctive village form; (b) enhancement of the appearance of the village by improvements to existing buildings, walls, open spaces, etc.; (c) encouragement of redevelopment and changes in use to tourist accommodations and facilities, craft manufacture and commercial activities; and (d) promotion of a more attractive urban area that will encourage visitor contact and improve economic benefit for villagers.

18. The project would establish boundaries to the present village, control growth within the village, and enhance current buildings and land. The project would encourage rebuilding of plot walls in suitable materials and/or rendering and painting; rendering unfinished houses and painting; tidying streets and removing waste material; and landscaping - planting trees and desert bushes both on- and off-plot. The project would also invest in utility improvements: water distribution, sanitation, and solid waste disposal.

19. A detailed land use plan for Wadi Rum would be prepared. The plan would focus on location, layout and design of infrastructure and tourism facilities (accommodation, service facilities, parking, Annex 2 Page 11 of 21 reserve headquartersand ranger posts), including possible uses of buildings within Rum village. Any additional construction, such as accommodation,restaurants or shops, would be strictly based on the land-use plan. The location of publicly funded community facilities, i.e., a health center, and infrastructureimprovements would follow the land-useplan as well.

B. Protected area managementplan and to I anaement plan

20. Technical assistance. training. and consultancv services. There would be a wide range of protected-areaand tourism-managementactivities implementedas part of the project. They are intended to encourageboth the communityand visitors to maintain Wadi Rum in the best state possible through monetary incentives,enforcement, and education. The elementsof the sub-componentwould include(a) revising the entrance fee structure and overall reserve revenue allocation in order to maximize cost recovery and reinvestment in tourism services and infrastructure;(b) designing and implementinga community-basedenforcement scheme focusing on hunting, littering, graffiti, fuelwoodcollection and off-road driving; and (c) preparing and delivering public awarenessand education programs for local tour guides, the local community,non-local tour operatorsand resident militarypersonnel. In addition,a protected area management plan, based on a detailed baseline assessment of natural and cultural resources,would identify managementpriorities and action plans for the protectedarea and buffer zone. It would incorporate a visitor management plan that defines visitor flow and circulation patterns according to the site carrying capacity, a conservationand recreation zoning plan, and grazing scheme. Preparationof the managementplan for the protectedarea would be the responsibilityof ARA under the oversight of the Wadi Rum Steering Committee and in close consultation with local residents, the Jordanian scientificcommunity, relevant national and internationalresearch institutions,and NGOs.

21. The baseline assessmentof natural and cultural resourceswould be carried out early in project implementation. Under contractualarrangements with ARA, RSCN, in collaborationwith associations and universities,would compile all ecological,physical and demographicinformation of relevanceto the conservationof Wadi Rum in a geographical informationsystem and ensure the timely preparation of maps. This informationwould be used in the preparationof the subsequentplans described below.

22. A study of Wadi Rum's carrying capacity would also be carried out early in project implementationin order for its findingsto be incorporatedinto the project's protected area management plan. As defined, carrying capacity is the type and level of visitor use that can be accommodatedwhile sustaining the resource and social conditions that complement the purposes of the park and its management objectives. The study would provide both maximum numbers of visitors and identify potential management concerns. This would provide useful information to determine the most appropriatemanagement strategy. Managementreforms that take place over the life of the project would allow changes in the carrying capacity, as greater managementabilities would facilitate better visitor movementand management.

23. The componentsof the protected area managementplan would be as follows:

24. A preliminary zoning plan would include detailed maps and would identify the management objectivesand uses of each zone. For example,certain zones would be accessibleonly by foot or camel. Baseline field surveys would also be designed and implementedto fill the information gaps, focusing particularlyon the presence and distributionof rare and endangeredspecies.

25. A visitor management plan would be prepared,determining visitor flow and circulationpatterns based on the site's ecologicaland archaeologicalcarrying capacity. Annex 2 Page 12 of 21

26. A wildlife conservation program would be developed, including detailed habitat mapping, species conservation and monitoring programs, and identification of priorities for further applied research. It would identify the most ecologically sensitive areas and indicate the priorities for biodiversityconservation. The feasibility of species reintroductionprograms would also be addressedin the plan.

27. A cultural resources conservation program would also be developed. The program would indicate priorities for the conservationof the reserve's cultural and archaeologicalresources, including the history and culture of the contemporary Bedouin tribes, and the conservation of prehistoric and historic remains.

28. A livestock and rangeland management scheme would be prepared that will include a survey of the numbers,movement patterns, and socio-economicdependencies of all groups of Bedouinpastoralists using the wider Disi-Wadi Rum area. The scheme would provide the basis for a community-based participatoryrangeland management scheme aimedat promotingthe sustainableuse of natural resources.

29. Finally, a community-based system of surveillance and enforcement of regulations would be developed. The system would incorporate the concept of limited legalized rights to hunt within acceptableguidelines and rightsto royaltiesand fines in order to curb excessiveillegal hunting.

30. The project would also include the revision of the entrance fee structure and overall reserve revenue allocationto maximize cost-recoveryand reinvestmentin the provisionof tourism services and infrastructureand in the preservationof the site's culturaland ecologicalvalue. A visitor reservationand fee collectionsystem would be devised.The proposed review would also includea systemto re-allocate reserve revenues(entrance fees, services and fines)to ensure adequatesite managementat all levels.

31. The project would prepare and implement on-site professional training programs specifically designed for Bedouintour guides, local four-wheel-drivevehicle drivers and TouristPolice. The training program would focus on the fragility of desert ecosystemsand archaeological sites (i.e. the long-term effect of off-roaddriving on vegetation, litter disposal, etc.); basic measures to minimize visitor impact on the natural ecosystem and first-aid treatment. The program would also include English language training.

32. Ofjce equipment and computers. The project would fund the purchase of office equipment and furniture for the administrationof the protectedarea.

33. Vehicles for tourism and protected area management. The project would fund the purchaseof a vehicle for tourism and protected-areamanagement staff and tourism police.

C. Income geeratig actividesfor the localgppulation

34. The project would fund consultancyservices focusingon two activities: strengtheningthe Rum TourismCooperative and developinga Women's HandicraftCenter.

35. Strengthening the Rum Tourism Cooperative. Assistancewould be directedto the Rum Tourism Cooperative so that it is better able to (a) manage tourism services, (b) represent local community interests with regard to site management and associated tourism developments to the Government agencies involved, and (c) ensure that local communities derive maximum benefits from the development of the site. Specifically, technical assistance would be directed toward improving the efficiency and quality of services offered by the tourism cooperative,devising a transparentand reliable Annex 2 Page 13 of 21 accountingsystem with separateaccounts for each service, and devising equitable mechanismsto enable all households to benefit from tourism in Wadi Rum. The organization and management of the cooperative would be assessed, and measures towards their consolidation would be devised and implementedincluding a more transparentaccounting system.

36. Developing a Women's Handicraft Center. A Women's Handicraft Center would be established by the project in order to promote alternative income-generatingmechanisms for women and to link income generationwith tourism. The project would first finance a market survey to determine existing products, skills among the women at the site and potential market niches. The focus would be on the developmentof productiontechniques that are compatiblewith the nomadicBedouin way of life. Based on the results of the market survey, a line of unique Wadi Rum natural products would be designed. Handicrafts would be developed from locally available materials and be related to local traditions. Finally, Bedouin women would be trained on site to produce, package and market the handicrafts. Dependingon the type of handicrafts,production would be home-basedor based at the handicraftcenter in Rum. Regardless of the production site, the handicraft center would serve as a base for the distribution of inputs, gathering of final products, quality control, packaging and marketing. It is anticipated that most product sales would be local, and in case production exceeds demand, could be expandedto includeAqaba and other tourist destinations.

37. Women's Handicraft Center equipment. The implementationof the handicraft center project would entail recruitmentand training of a local site managerand the provision of financial assistancefor the period during which women from the local community would be trained. In addition, the project would fund the constructionof the handicraftcenter and the purchaseof office equipmentand handicraft center supplies. Annex 2 Page 14 of 21

Project Component 3 - Total cost: US$5.2 million Karak and Jerash Tourism Development Pilot Program

Introduction

1. To support the Government's efforts to spread the heavy tourist concentration in Amman and Petra to other historic sites, this component would: consist of a tourism development pilot program to (a) carry out feasibility studies and land-use plans for implementation under a follow-up phase of the Government's Tourism Development Project; and (b) enable the Ministry of Tourism and Antiquities (MOTA) to implement priority urban regeneration tourism-related projects and cultural heritage conservation activities in Karak and Jerash.

Subcomponents

A. Technicalassistance-far-feaibilt studies

Technical assistance forfeasibility studies in Jerash

2. Jerash, known as Gerasa in ancient times, is one of the most extensive and best preserved provincial Roman cities in the Near East. Founded during the second century BC, it was a member of the Decapolis, a commercial league of ten Greco-Roman cities. The site had been previously settled, but Jerash was built on top of its predecessors and little evidence of them remains. Strategically located on overland trading routes, the city flourished during the first century BC through the second century AD. With the development of maritime trade routes and the decline in overland trade, Jerash declined. Following a major earthquake in 747 AD, the city was left uninhabited, and a modem town was built by Circassians on the eastern slope of the stream valley in what was once the residential area of the ancient town. The site is relatively small but the entrance, dominated by the Triumphal Arch built to commemorate Hadrian's visit in AD 129, is spectacular. Today, it is well known for the Jerash Festival, an annual cultural event celebrating Jordanian handicrafts and performing arts, which draws performers and visitors from throughout the region. The Jerash Festival was founded by Queen Noor in 1981. Under the 1976 First Tourism Development Project, IDA financed the construction of a restaurant and visitors' center, upgrading of a small site museum, preservation and restoration of major monuments, and improvement of trails, interpretative materials and administrative facilities.

3. The project would fund an integrated tourism and urban development study for Jerash, including plans, programs, and priority action projects with necessary institutional and implementation guidance. Key urban issues that would be addressed by the studies are:

* Traffic circulation and parking: Existing pressures resulting from visitor arrival and parking, city center congestion, and circulation at the bus station and the possibility of closing part of the Irbid through-road to provide pedestrian access to the center, require the presentation of alternative traffic circulation plans, including a southern cross-town route, to be reviewed as part of coordinated traffic management and circulation proposals for the city. * Water supply and sewerage: At present there are severe local water supply shortages and low pressures throughout the city. Only 22 percent of the houses are connected to the sewerage system. Urgent investments are required to benefit the residents and are also essential for the development of tourism facilities and accommodation. Annex 2 Page 1S of 21

* Solidwaste collectionand disposal: Improvedcollection of solid waste throughoutthe city is required,as well as a reviewof current disposalmethods; the existingsurface landfillsite is far from the city and contaminatesthe undergroundwater. * Municipalfacilities: Sites at the edge of the city have been identifiedfor future relocationof the bus station,a wholesalemarket, a slaughterhouseand an industrialpark. The suitabilityof these locationsand their impactneeds to be reviewedas part of a coordinatedplan for the city. * Municipal finance and management: An overall review of the institutionalframework and public finance system should be conducted,including the definitionof responsibilities,skill levels and training requirements, with particular attention given to project coordination, operation,and cost recovery.

4. The feasibilitystudy would identifypotential projects directly linked to tourism and that would benefitthe local population.These are likelyto include: - restorationof the city walls and monuments,the East Baths,and lightingof the attractions; - rehabilitationof historic housesin the centralarea as a traditionalsouq; - selectionof appropriatelocations for tourist accommodations; - enhancementof the central area, the greening and reuse of the Wadi, and the creation of a pedestrianlink into the Decapolis;and - trainingin tourism-relatedskills and entrepreneurialadvice.

5. The identificationof tourism-relatedand urban developmentprojects would take into accountthe followingcriteria: - tourismdevelopment opportunities:to increasevisitor contactwith the city; to lengthenvisitor stay and season;to improvepresentation of attractions;and to enablethe city's use as a regional base for visitors. - economicdevelopment and employment: to support the economicregeneration of the city and to ensure that tourism benefits local businesses;to improveurban services;and to encourage private-sectorinvestment. - urban conservationand planning: to protect and enhancethe walled city - the monuments, historic buildings, and areas worthy of conservation;and to ensure new developmentis of appropriateform and materials. - traffic managementand parking: to resolve congestionand inadequateparking and improve circulationand pedestrianmovement. - urban infrastructureand services: to ensure suitable coverageis achievedat reasonablecost using appropriatetechnologies, and suitablequality of services,operations and maintenance, financialarrangements and environmentalimpact. - institutionaland financial management improvements: to ensure appropriate institutional capacityfor effectiveplanning, finance and implementation. - private-sector participation: to encourage and increase opportunities for private sector investmentand joint venturepartnerships.

6. The studieswould be carriedout in two stages: First, preparationof a preferredurban development strategy, and second, a detailed urban developmentplan with a five-yearproject program and social and environmentalimpact assessments. The first-phaseurban developmentstrategy would includean initiallist of capital-investmentand institution-buildingprojects that would be considered in detail in the second phase. Annex 2 Page 16 of 21

echi assistanceforfeasibilit studies inLarak

7. Karak The historic hilltop city of Karak, with its ancient walls and crusader castle, has the characteristics necessary to become a tourist destination and benefit the local population and economy. In addition to the castle, the tourist attractions of Karak include the numerous historical buildings of the city itself, authentic artisanal workshops, a dramatic landscape and views across steep valleys, and ease of access to nearby archaeological and natural sites such as the Dead Sea. Despite these attractions, Karak is not a significant destination for international tourists, and only a relatively small number visit the castle.

8. The project would fund an integrated tourism and urban development study for Karak, including plans, programs, and priority action projects with the necessary institutional and implementation guidance. Key urban issues that would be addressed by the studies are: * Traffic circulation, public transport and parking: current levels of congestion has made visiting Old Karak by vehicle increasingly difficult and pedestrian movement unpleasant. * Urban enhancement: conservation of selected areas, pavement widening, the removal of signs and the restoration of buildings of historic significance. * Economic regeneration: opportunities to support local enterprises benefiting from increased tourism and the retention of government services in the old city. * Upgrading utilities and public services: ensuring necessary infrastructure is in place and maintained to support the increasing requirements of the urban population. * Technical assistance and training for the municipality and Government departments and agencies to manage and promote investment and urban regeneration: particular concerns in Karak are the lack of tourism experience, effective planning and building controls and private- sector investment in tourism facilities. * Development or upgrading of tourism facilities and attractions.

9. The feasibility study would identify potential projects directly linked to tourism and that would benefit the local population. These are likely to include: - restoration of part of the castle and city wall; - creation of a plaza area in front of the castle; - development of visitor accommodations, including the possibility of using historic houses as bed-and-breakfast facilities; and - improvements to any nearby potential tourism or recreational sites outside Old Karak.

10. The study would concentrate on investments and improvements to Old Karak with the understanding of the impact of its setting in the region. Selected projects outside the old city may be identified and included as essential actions to benefit tourism and urban regeneration, e.g., improvements to the road link to the desert highway, development control and landscaping of the steep valleys around the castle, or regional tourist attractions.

11. The identification of tourism-related and urban development projects should take into account the following criteria: - tourism development opportunities to increase visitor contact with the city; to lengthen visitor stay and season; to improve presentation of attractions; and to enable the city's use as a regional base for visitors. Annex 2 Page 17 of 21

- economic development and employment: to support the economic regeneration of the city and to ensure tourism benefits local businesses; to improve urban services; and to encourage private-sector investment. - urban conservation and planning: to protect and enhance the walled city - the monuments, historic buildings, and areas worthy of conservation; and to ensure new development is of appropriate form and materials. - traffic management and parking: to resolve congestion and inadequate parking and improve circulation and pedestrian movement. - urban infrastructure and services: to ensure suitable coverage is achieved at reasonable cost using appropriate technologies, suitable quality of services, operations and maintenance, financial arrangements and environmental impact. - institutional and financial management improvements: to ensure appropriate institutional capacity for effective planning, finance and implementation. - private-sector participation: to encourage and increase opportunities for private sector investment and joint venture partnerships.

12. The study would be carried out in two stages: First, preparation of a preferred urban development strategy, and second, a detailed urban development plan with a five-year project program and social and environmental impact assessments. The first-phase urban development strategy would include an initial list of capital-investment and institution-building projects that would be considered in detail in the second phase.

B. Priori& tourism devlomenfRoEQcts

13. The proposed project would fund the detailed engineering studies and implementation of priority projects identified in the feasibility studies described above. The chosen projects would have a high probability of (a) increasing the attractiveness of the respective city to international and domestic tourists; (b) increasing tourism-related activities, facilities, and services in the respective city; (c) improving urban infrastructure and/or services that benefit both tourists and the local community; and (d) encouraging private-sector investment and participation in the tourism sector. The chosen projects would be an integral part of the urban development strategy prepared as part of the above feasibility studies, and would constitute a high-visibility and economically viable investment in the respective city.

14. In anticipation of implementation of the priority projects to be identified by the feasibility studies, the proposed project would fund the following two already-identified priority projects:

15. raka: Upgrading and pedestrianization Qf the castle plazas and rehabilitation Qf the vernacularbuildings. This project includes the upgrading and pedestrianization of two plazas and the regeneration of their surrounding area and rehabilitation of selected buildings for tourism-related activities. A new route from the main shopping street to the castle entrance would be created through a parking square behind government offices down to the lower level plaza in front of the castle entrance. This would require: (a) the removal of the parking facility; (b) landscaping; (c) the clearance of small outbuildings; (d) the construction of a wide stair down to the lower plaza; (e) the renovation and reuse for tourism activities of abandoned municipal buildings; and (f) the construction of stairs down into the moat and clearance of rubble at the end of the moat. The goal of the project is to create an attractive setting for the castle and new facilities for tourists, encouraging more visitors to walk into the town center. The proposed project would fund surveys, detailed designs and necessary drawings, the preparation of all contract documents, and implementation of the project. Annex 2 Page 18 of 21

16. Jerash: Upgrading and pedestrianization of the urban space surrounding the Roman Baths and rehabilitation of the traditional soug and the vernacular quarter. This project involves the creation of a functional plan to revitalize and enhance the space as a visitor destination. This would require: (a) the removal of the existing bus terminal; (b) provision of landscapingand urban furniture, including new pavement, fountains, kiosks, and public restrooms. The proposed project would fund surveys, detailed designs and necessary drawings, the preparation of all contract documents, and implementationof the project. Annex 2 Page l9 of 21

Project Component 4 - Total cost: US$2.2 million

Sector Development Support

Itroduction

1. Under the current legal framework of the tourism sector, the Tourism Law (Law No. 20 of 1988) grants MOTA the responsibility for four tasks: the preservation and development of tourism sites, licensing and classification of tourist occupations, marketing, and the development of human resources. However, except for licensing, the Tourism Law fails to grant MOTA the necessary specific powers to carry out its responsibilities. Rather, it is expected to accomplish these critical tasks "in cooperation and coordination with the concerned parties" (Preamble). Regarding the development of tourism sites, the concerned parties are numerous and diverse, depending on the particular site. At the same time, these concerned parties have divergent interests not always compatible with tourism sector policies.

2. To date, except in the case of Petra (where the Petra Region Planning Council reports to MOTA), MOTA has at best secondary authority in critical issues of land use, planning and site development, the environment and safety matters at major tourist sites. In the current law MOTA's authority is not spatially specific or primary in any one place. Rather, authoritative allocation of real resources (land, water, and infrastructure) and regulation of such matters rest with the Jordan River Valley Authority, the Aqaba Region Authority, or various municipal councils and prefectures ("muhafazat").

3. Where MOTA is clearly empowered, as in the case of licensing, the exact scope of its responsibilities and powers are poorly defined and dependent on outdated regulations and unnecessarily complex, time-consuming procedures. This system is incoherent from a policy perspective and raises transaction costs for the private sector. Still, the chief practical function of MOTA remains licensing. The classification of establishments and, generally, the establishment and maintenance of quality according to internationally accepted and known standards, does not yet exist. The price system for hotels has not been shown to be essential in attracting tourists or in providing incentives for hotel improvement. In this area complete reform is merited.

4. In the case of marketing and promotion, the Jordan Tourism Board (JTB) efforts are considered by the private sector and past studies (USAID, 1993, and WTO, 1995) to be ineffective, due in large part to the difficulties of accomplishing marketing tasks with bureaucratic structures tied to Government incentives.

5. The development of human resources has been hampered largely by a lack of funds and the lack of a nexus between the educational system and MOTA. The issues here are less legal than institutional and financial. However, the Tourism Law and the institutional arrangements it creates are insufficient to support efforts needed to achieve the policy goals.

6. With recently changed circumstances, including the increased importance of tourism to the economy as well as the clear need to preserve and protect Jordan's natural and cultural heritage, it is an opportune time to rationalize, harmonize and strengthen the legal and institutional basis for achieving the goals of tourism policies and removing unnecessary bureaucratic obstacles to private-sector participation. Annex 2 Page20of 21

Siubcomponents

7. Techical assistanceand trainizZg.The Sector DevelopmentSupport Component would focus on improvingthe basis for strategic, policy, and institutionalframework for the sector. Toward this end, three studies would be conducted:(i) a longer-termtourism developmentstrategy, with an associatedand prioritized investment program; (ii) a policy and regulatory study that identifies impediments to increasedprivate-sector participationand proposes measures for deregulation and for streamliningthe numerous regulations; and (iii) a restructuringplan for tourism sector public institutions,with a view toward improvingtheir effectivenessand coordinationwith related line ministriesand the private sector as well as toward rationalizingtheir role in tourism.

8. The longer-termstrategy would be the lead study, as both the policy and regulatorystudy and the institutionalrestructuring plan would be formulatedaround the objectives set forth in the strategy. The key objectivesof the strategywould includethe following:

(a) expand internationaltourism and, in particular, rather than aim at mass tourism, develop tourism attractions in a manner to spread tourism flows around the country and encourage longer visitor stays and higher spending; (b) increase participation in regional tourism by entering into cooperative agreements with neighborcountries; (c) expand business,conference, incentive, and eco tourism; (d) encourageand facilitate domestictourism; (e) establish the requisite mechanisms for coordination between tourism development and conservation; (f) develop and managetourism in a manner to bring socio-economicbenefits directly to local communities,with community-basedtourism projectsas an importantvehicle; (g) develop and manage tourism in an environmentally,socially, and financially sustainable basis to ensure that historical,cultural, and ecologicalassets are maintainedindefinitely; (h) optimize the economic benefits of tourism, including strengthening linkages between tourism and other economicsectors; (i) establish the requisite organizational mechanisms and policy framework to ensure close coordinationand cooperationamong Governmentagencies involvedin tourism and between the public and private sectors; (j) upgrade all existing tourism facilities, and for those to be developed,ensure that services meet acceptablesafety, comfort, sanitationand service standards; (k) develop an effective education and training system, in close cooperation with the private sector, for tourism sector personnel;and (1) ensure the presence of appropriateinstitutional mechanisms to monitor the developmentof the tourism sector and implementationof the strategy.

9. MOTA would be responsiblefor the sector developmentsupport component. It would establish a Tourism Task Force to prepare the three studies. The Task Force would be assistedby one long-term and four short-termexperts who would be financedby the proposed project. Annex 2 Page 21 of 21

10. The Task Force membership would include representation from MOTA, MPWH, the Ministries of Water and Irrigation, Rural Affairs, Finance, Planning, and Industry and Trade, in addition to bankers, legal experts, local representatives from concerned communities; the Jordanian Hotel Association, and tour operators and tour guide associations. The Task Force would divide into sub-groups depending on the subject under study. The draft study would be discussed with a wider group of concerned public and private entities. The revised version would then be submitted to the Higher Council for Tourism for endorsement and then to the Cabinet. The Phase II project to follow the proposed operation would help the Government implement the proposed strategy, policy framework, and institutional structure.

11. Terms of reference for the three studies are in the project files.

12. The outputs of the studies would be incorporated into sector recommendations and policy for Government approval by September 30, 1999.

13. In addition, the project would fund technical assistance to MOTA for upgrading their system of collecting and analyzing tourism-related statistics.

14. Eg;ent purchase. The proposed project would fund the purchase of computers and vehicles for MOTA.

15. Technical assistance to the Project Management Unit. The proposed project would fund the operating costs of the PMU for five years. PMU Staff would be hired on performance-based contracts. Annex 3 Jordan: Second Tourism Development Project

Estimated Project Costs (US$million)

% of Project Component total % US$ million base as Local Foreign Total cost foreign

1. Petra Region Infrastructure Development and Environmental Management 1.1 Road rehabilitation/improvement works 5.4 5.1 10.5 28.9 48.3 1.2 Urban infrastructure development 3.9 3.4 7.3 20.1 46.6 1.3 Site enhancement and visitor management at the Petra sanctuary 1.2 0.8 2.0 5.5 41.8 1.4 Environmental management 0.9 0.4 1.3 3.6 28.1 1.5 Petra Region Planning Council (PRC) capacity development ad5 0 LQ 2.1 55.0 Subtotal Component 1 11.8 10.2 22.0 60.8 46.3 2 Wadi Rum Development and Environmental Conservation 2.1 Wadi Rum infrastructure development 3.4 2.3 5.7 15.7 40.5 2.2 Wadi Rum protected area management and tourism management 0.9 0.6 1.5 4.0 38.6 2.3 Wadi Rum income generating activities support Q02 0Q1 03 0Q 40.0 Subtotal Component 2 4.4 3.0 7.4 20.4 40.1 3 Karak and Jerash Tourism Development Pilot Program 3.1 Feasibility studies 0.2 0.8 1.0 2.8 80.0 3.2 Karak and Jerash priority tourism development projects 2.Q 2AQ 4.Q 11Q 50.0 Subtotal Component 3 2.2 2.8 5.0 13.8 56.0 4 Sector Development Support 4.1 Technical assistance including training to MOTA 0.5 0.5 1.0 2.8 50.0 4.2 Equipment for MOTA (computers and vehicles) 0.0 0.2 0.2 0.6 90.0 4.3 Technical assistance to the Project Management Unit (PMU) QJ QA1 Q6 lA 20.0 Subtotal Component 4 1.0 0.8 1.8 4.9 44.7 Total Baseline Cost (October 1996) 19.4 16.8 36.2 100 46.3 Physical Contingencies 2.6 2.2 4.8 13.3 45.8 Price Contingencies 1.6 1.4 3.0 8.3 45.6 Total Project Cost 23.7 20.3 44.0 121.7 46.2 Note: Amountsrounded. Annex 4 Jordan: Second Tourism Development Project Economic Analysis

Abstract. Tourism is Jordan's second largest earner of foreign exchange and one of its most important exports. Given the importance of this sector to Jordan's GDP, the Project's primary objective is to provide the framework for a sustainable and environmentally sound expansion of tourism in four of Jordan's most important tourist destinations. Overall, the Project cannot be directly linked to a specific increase in tourism over the medium term and, therefore, a cost effectiveness methodology is used for most of the economic analysis. One component, road rehabilitation, is examined using cost benefit analysis, and results show an ERR of between 16 and 17 percent. Tourism: Jordan's Second Largest Export 1. Tourism is Jordan's second largest generator of foreign exchange after remittances, surpassing both potash and phosphates. Although a small country, Jordan is fortunate to have several world-class tourist destinations that offer the potential for producing sustainable economic benefits. It has two historic areas - Petra and Qasr Amra - designated as World Heritage sites, plus numerous other historically important attractions that represent the long span of history from ancient Greek influence to the modern Hashemite dynasty.

2. As a result of the peace process, Jordan has enjoyed a rapid growth in tourism and the earnings accruing from this sector. Between 1989 and 1995, annual tourist arrivals increased by 50 percent, from about 650,000 to over one million. According to the central bank and Ministry of Tourism and Antiquities (MOTA), estimated 1996 foreign exchange revenues associated with tourism account for ten percent of the county's GNP (US$750 million equivalent). The sector directly provides approximately 8,000 jobs. Economic gains from tourism are still not fully exploited, and the Government is increasingly aware that it must make selected strategic investments and policy changes in order to preserve the sector's potential over the long term.

Project Objectives

3. Given the importance of the sector as described above, the primary objective of the Second Tourism Development Project is to provide the framework for a sustainable and environmentally sound expansion of tourism in four of Jordan's world-class tourism destinations. These sites include the area immediately surrounding Petra (a World Heritage Site), Wadi Rum (a premier desert wilderness), Karak (an ancient hilltop crusader city) and Jerash (one of the Middle East's best preserved examples of a Roman provincial town). Framework, in this context, would includes the setting of policies, institutional development, and a program of investments.

4. The project's secondary objective is to provide employment through tourism-related activities and through income-generation schemes located at the tourist destinations. These activities are generally not infrastructure related and involve the organization and training of indigenous people living at, or in proximity to, the project sites.

Link to Country Assistance Strategy and Sector Work

5. The project is fully consistent with the latest country assistance strategy (CAS), dated October 24, 1995 (Report No. 14999-JO). The CAS discusses the importance of tourism to the national economy, the need for providing essential infrastructure and encouraging the private sector in the tourism industry. It also states that an essential part of the tourism strategy will be to protect historical and natural attractions from environmental threats. The provision of essential infrastructure and appropriate Annex 4 Page 2 of 15

regulatory frameworks (such as those provided under the project) are stated in the CAS to be strategic objectives of the Bank's overall assistance program. In addition, lending in the tourism sector is specifically identified as a priority instrument to address these strategic objectives.

6. The Bank's last sector work for tourism in Jordan, completed in 1991 (Tourism Sector Note), was done to assess the sector's potential at the end of the Gulf War. In this report, Jerash, Karak and Wadi Rum were all highlighted for their tourism potential, as were environmental concerns for the country's fragile tourist destinations. Promising regions recommended for more analysis in this study were the south Aqaba coast and the Dead Sea. Six years later in 1997, both of these areas are being developed by the private sector, with the public sector role limited to the provision of basic infrastructure and regulation.

7. A main recommendation in the Tourism Sector Note was to develop a comprehensive sector strategy. Following up on this suggestion, in 1995 and 1996, JICA assisted MOTA in undertaking a comprehensive sector analysis and formulating the overall tourism strategy. The Bank has been informnallyconsulted on this work during its preparation and has reviewed interim reports. The Bank has also reviewed the final report, dated February 1996. For this reason, the Bank has not undertaken any recent sector work on tourism, preferring instead to conserve its Economic and Sector Work resources to examine other parts of the economy.

Benefits of the project

8. First, the project will have positive environmental effects in the sensitive areas immediately adjacent to Petra in Wadi Musa and in Wadi Rum. In Wadi Musa, these benefits include flood prevention through reforestation, embankment protection, soil stabilization measures, wadi restoration, motor vehicle traffic organization, and solid waste management. In Wadi Rum, positive environmental effects will be realized through the designation of the zone as a protected area with special regulations, the definition and subsequent enforcement of a tourist carrying capacity for the protected area, preparation of a wildlife conservation program, preparation of a livestock and range land management scheme, and development of a solid waste management system.

9. Next, the Project will prevent further degradation of historical and cultural sites, thus ensuring their preservation for future generations. In Wadi Musa, the project will bring order to currently un- controlled urban growth through the establishment of a Petra Region Planning Council (PRC). This body would be vested with the powers necessary to enforce urban land use planning, the implementation of development projects, and supervision of regional solid waste services. The project will also improve visitor support services and circulation patterns at the Petra sanctuary, redesign and upgrade the Petra Visitor Center and improve infrastructure immediately adjacent to the Visitor Center and Sanctuary entrance. In Wadi Rum, a cultural resources conservation program would be developed, as would complimentary regulations and police capacity. An existing village inside the Reserve will be upgraded using local materials and traditional designs to recover its past harmony with the surrounding landscape.

10. Not undertaking the project would result in: (a) environmental degradation; (b) destruction of sensitive cultural sites and landscapes; and (c) the irretrievable loss of tourist revenues. Because the project would be working in environmentally sensitive areas that are susceptible to permanent damage solely from overuse (in addition to occasional destructive behavior), one of the major consequences not undertaking the project would be the slow destruction of the very attributes that made the sites attractive in the first place. This is particularly the case for the pristine Wadi Rum area, which is very environmentally sensitive, has a low carrying capacity, and is urgently in need of protective measures. Annex 4 Page 3 of 15

11. Similarly, many of the cultural sites that tourists find attractive in these areas are very old and either made of, or carved or painted on, natural structures. These natural "canvases" (if one may define them as such) are subject to rapid deterioration from human contact, automobile pollution and erosion caused by heavy traffic. Leaving these cultural attractions and sites unprotected would doom them to rapid extinction.

12. Finally, if there were nothing left to see, or if the sites were in such poor condition that they were no longer special, then tourist would have no interest in visiting and tourism revenues would fall. If this happened to Petra, Wadi Rum, Jerash or Karak it would be a devastating loss to Jordan, threatening not only estimated annual foreign exchange earnings of over US$750 million, but also some 8,000 jobs associated with the tourism industry. This project is not sufficient, in itself, to ensure that this scenario does not materialize - many other actions and policies would also have to be implemented (e.g., the planned water and wastewater infrastructure in Wadi Musa, restoration and preservation of archeological sites at Jerash and Karak, or development of a long-range tourism strategy). However, the project is a necessary component in the country's comprehensive strategy to prevent such a decline and preserve these assets for prosperity. In addition, the project should provide the basis for a rational expansion of the tourism industry in an environmentally responsible and sustainable fashion.

Economic Analysis Methodology

13. With the exception of the road rehabilitation component, cost-benefit analysis (CBA) is not appropriate for this project. This is because there is no realistic way to predict the increase in the number of tourists visiting Jordan as a result of the project, and hence the benefit of tourism to the economy. At the same time, it is just as difficult to estimate the decrease in tourism (over the medium term) if the project is not implemented. For those reasons, the benefits cannot be quantified monetarily and a cost effectiveness methodology has been used for the economic analysis.

14. In this context, the following section, Choice of Investments, presents the case that the selected investments are the most cost-effective alternative to meeting the project's objectives. Following that discussion, the Public vs. Private Issues section demonstrates that all components are also appropriate for the public sector to undertake.

Choice of Investments

15. The project's planned investments are shown in Annex 3. The biggest component, approximately 29 percent (about US$10.5 million of total base cost) concerns improvements to existing access roads to Petra. As the project's main objective is to permit a sustainable expansion of tourism activities, and as the only way (beside using a helicopter) to arrive at Petra is by motor vehicle, safe roads with a reasonable carrying capacity are needed. Expenditures under this component seek to address three concerns: safety, longevity and a reduction in vehicle operating costs. By widening the paved portion of the main access roads from 6 to 7 meters, the roads will be made safer for the large number of high-capacity tourist buses that use them. Similarly, selected road sections will be realigned to better accommodate navigation by these large buses. Both of these measures should reduce accidents. While the widening is undertaken, certain technical steps will also be accomplished that will strengthen the roads, thereby lengthening their useful life. This rehabilitation will also decrease vehicle operating costs through smoother surfaces and faster traveling times. The road rehabilitation design, and the sections to be realigned, were extensively discussed with the Government. As a result, the standards and work plan adopted are considered to be the minimum possible while still remaining consistent with safety and longevity concerns as well as cost. The construction standards are, therefore, considered to be the technically optimal choice for the project. Annex 4 Page 4 of15

16. The economic analysis of the access road rehabilitation components is subject to CBA, described beginning at paragraph 49. In sum, the overall base case ERR is about 17 percent for the Wadi Musa - Um Seyhun - Little Petra road (7.5 kilometers), and about 16 percent for the Unaizah - Shobak - Wadi Musa road (53.3 kilometers). A sensitivity analysis for this component was also performed, and switching values calculated (see description starting at paragraph 51). In sum, the base case ERR for this component is quite robust and there is a fairly high degree of certainty that the NPV would remain above zero at a 12 percent discount rate.

17. About 20 percent of total base costs ($7.3 million) would be used to upgrade urban infrastructure in Wadi Musa, Taybeh and Um Seyhun. The majority of this cost ($4.6 million) will go for the upgrading of the principal spine roads in the three communities (about 3.0, 4.0 and 0.5 kms, respectively), plus some collector roads in Wadi Musa. For these urban roads, use of the HDM model is not appropriate because of the low vehicle speeds, congestion caused by non-road condition factors and the short distances involved. Justification for their rehabilitation, as well as the rest of the urban infrastructure upgrading, is based on pedestrian safety, minimum appearance standards for city centers, and externalities involving the promotion and growth of urban businesses and services. Most of these externalities are a direct result of tourism activities that the project seeks to sustain and help grow. Given the already established nature of the infrastructure to be upgraded, no other investments were considered to be as cost effective.

18. Six percent (about US$2.0 million of total base cost) of the project's investments would be made with the objective of improving visitor support services at the Petra sanctuary. This component directly addresses the issue of the preservation of Jordan's principal cultural heritage site. This site is irreplaceable, and therefore investments are needed to prevent further damage from inappropriate use or overuse. Additional investment in the visitor center at the entrance of the site are necessary to improve the "tourist friendliness" of the site, i.e., to introduce visitors to the wealth of Petra and provide information about its history. Currently, there is inadequate archaeological site protection within the Sanctuary (resulting in unnecessary damage to the site caused by inappropriate pedestrian traffic), and lack of information about Petra is a major cause of tourist dissatisfaction, as is visitor "bunching" at the major monuments. To address these concerns, the project would fund the design and implementation of the redevelopment of the visitor center and the entrance area, improve visitor support services through better visitor flow patterns, more appropriate signage, formalizing the adhoc trails that lace the Sanctuary and creation of new paths and/or trails where appropriate, providing landscaping with indigenous plants and shrubs, and developing a visitor management plan and training for site management staff and guides.

19. Another 16 percent (about US$5.7 million of total base cost) concerns reorganizing, or providing new, infrastructure for Wadi Rum. Here, the objective is to better manage tourist flows, better control access to the park, and modify infrastructure to be consistent with the natural setting and tourism activities. The largest part of this component (about US$2 million) is to make the existing village less visually intrusive, refurbish structures, and improve basic infrastructure. Alternatives considered were to raze the village and relocate the people, redraw the park boundary to put the village outside the park, leave it the way it is now, or revamp the village and provide alternative space for villagers who wanted to pursue activities not consistent with the park's use (e.g., small industry or vehicle repair). Leaving the village as it is now is not desirable because of negative externalities that come from its present condition. Redrawing the park boundary was rejected because the village sits in a magnificent site surrounded by the tall cliffs that, better than any other aspect, define Wadi Rum. Razing the village and relocating the people had two drawbacks: first, it would seem to be rather draconian considering that for many people this is their ancestral home; and second, for a small marginal cost the existing structures could be modified to add value to the park. Thus, in consultation with the community and with its support, it was decided that the best course of action was to upgrade the village and provide alternative housing and Annex4 Page 5 of 15

other facilities nearby (three kilometers away) for those people who wanted to undertake commercial and related activities from their home. Households taking advantage of the Government's offer for an additional house at the new village site would still retain ownership of their home in the traditional village.

20. Fourteen percent (US$5.0 million of total base cost) of the project has to do with the development of Karak and Jerash as tourism destinations. These two cities have substantial undeveloped potential for tourism and, therefore, this component is fully consistent with developing a sustainable increase in tourism and expanding tourism-related employment. Under this component, investments that would enhance tourism potential would be identified (through feasibility studies) and implemented. This strategy is considered by the Bank and Government as the best alternative for developing tourism potential in the two cities. The cost of this component was discussed with the Government and the amount decided based on the likely potential of these two cities to attract tourists over the near term. To reduce the risk brought about by the lack of information while at the same time permitting promising investments to proceed quickly once they are identified, pilot projects to be funded under the component would be chosen on the basis of: (a) increasing the attractiveness of the city to international and domestic tourists; (b) increasing tourism-related activities, facilities, and services in the city; (c) improving urban infrastructure and/or services that benefit both tourists and the local community; and (d) encouraging private-sector investments and participation in the tourism sector.

21. The remaining 15 percent of the project's costs (about US$5.7 million of base costs) mainly has to do with the following three investments: (a) environmental management and improvements to small structures; (b) developing income opportunities for women in Wadi Rum; and (c) technical assistance to MOTA and the PRC to improve their capacity and efficiency.

22. Examples of the first of these are measures for flood control in the Wadi Musa wadis, reforestation, regeneration of wadi terraces, and the refurbishing of trails and existing traditional small buildings. Because of topography or the small scale of the structures involved, alternative courses of action are limited for technical reasons.

23. Developing a cottage handicraft industry for the women of Wadi Rum appears to be the best possible income generation activity for the area. First, most women in Wadi Rum Village have a low education level and, therefore, pursuing higher valued added activities would not be appropriate under this Project. Second, producing traditional and indigenous goods for sale to tourists is entirely consistent with the nature of the Wadi Rum Park, which emphasizes the natural environment and a unique experience.

24. Finally, MOTA and the PRC are both in need of equipment and technical assistance to help carry out their mandates. Under the project, MOTA will conduct three studies considered to be priorities for the development of the sector. These studies (fully described in Annex 2 of the PAD) would cover the development of a long-term strategy and investment plan for the sector, policy and regulatory matters (with an emphasis on increasing private sector opportunities in the sector), and rationalizing the Government's activities in the sector. Concerning the PRC, the project would address the priority areas of staff strengthening and implementation capacity through the provision of relevant technical experts on short-term assignments, office technology and vehicles. There may be alternative uses of these funds at the margins, but overall the priorities appear logical and appropriate. Annex 4 Page 6 of 15

Alternative Investments Examined

25. In addition to the investments described above, the Bank and MOTA also examined several additional investment choices to accomplish the project's main objectives. All investment alternatives were under the multi-site approach described in the PAD (Section 8) and, therefore, deal mainly with specific locations for project components. One of these alternative sites was Aqaba, where the project team examined possible investments to assist in: (a) relocating port facilities to accomplish a more homogeneous use of the coast for tourism activities; and (b) upgrading specific urban areas lying close to existing tourist infrastructure. After discussion with the relevant port authorities and the Ministry of Planning, it was determined that changing the layout of the port was too big a task for a tourism project. In addition, this proposal would have necessitated a lengthy discussion with several ministries, and the time required for this process was considered too long to meet MOTA's desire for quick action on other project components. The urban upgrading investment was also rejected because it did not well address the project's objectives.

26. Several other villages and towns were also examined as potential sites for investmnent. These included Qasr El-Hallabat, Azraq, Qasr Amra, Qasr Kharanah, Hemmeh, Um Qais, Pella, villages at the Dead Sea, Madaba, and Mount Nebo (see June/July 1994 aide memoire for this project for a full description of these alternative sites). All of these sites were considered to be too small and not important enough tourist destinations to justify giving them investment priority over those sites ultimately selected.

27. The project originally considered funding part of the potable water and wastewater system upgrading and expansion project in Wadi Musa. The investment fit well with the project's objectives, but was subsequently financed by USAID (on a grant basis), France and Germany, and MOTA requested that it be removed from the Bank's project (see PAD Section 9). Another environmentally important investment originally considered was a comprehensive solid waste collection service in Wadi Musa. It was originally conceived that the project would support the initial investments and recurrent costs of a private sector operator and then withdraw its involvement over two or three years. However, the private sector subsequently assumed full responsibility for this service. Thus, this investment was also not included in the project.

28. There are three major donors in the tourism sector in Jordan: the Bank, USAID and JICA. Therefore, any investments already identified for JICA or USAID financing were not considered for the Project.

29. Finally, the weak implementation capacity of MOTA and the relevant municipalities influenced the decision to steer a large part of the project's investments to roads, urban management, housing facilities and other buildings. Such infrastructure will meet the project's objectives and will be implemented by the Ministry of Public Works and Housing. As described in the PAD (Section 9), the MPWH has an established implementation capacity and procedures, and project implementation capacity will likely be enhanced where it is involved. Thus, the project team and Government could have directed more resources to Karak or Jerash or even another smaller town, but with the doubts about implementation capacity in the municipalities (or MOTA's ability to effectively intervene at this level), this emphasis was rejected in favor of components that stood a better chance of being implemented in a timely manner and making an immediate contribution to the sector. Annex 4 Page 7 of 15

Public v. Private Issues

30. Tourism, by it very nature, should be mostly a private sector activity, with the role of the public sector confined to the design and implementation of an appropriate legal and regulatory framework. This is because, at the microeconomic level, there is usually no market failure and the public sector has little or no justification for intervention. The other common grounds for public sector participation, equity and efficiency, also usually do not generally apply to tourism projects. Thus, the public sector should not be involved in running hotels or tour companies, or providing employment at tourist destinations.

31. Given the role of the public sector in the project, the list of investments was examined during the design phase to ensure that they are appropriate. The results of this review are illustrated in Table 4. As shown there, none of the components presents a strong case for private sector participation. For example, about 64 percent of the project represents an investment in public goods where there is a market failure. Included here are road and town center investments and the undefined investments to be made in Karak and Jerash. These latter investments are, however, likely to be basic infrastructure (e.g., roads, sidewalks, street lighting, public transport areas, etc.), and therefore will also have public good characteristics.

32. Another 25 percent of the Project results in externalities for which, without Government intervention, too little of the good would be provided. For example, most of these costs are for infrastructure inside the parks of Petra and Wadi Rum, or for costs associated with the protection of these two areas. Because the private sector would have few, if any, opportunities to charge for these goods, they would not be interested in providing them.

33. On the other hand, these investments do preserve the natural environment in Petra and Wadi Rum and produce significant environmental benefits, thus making them appropriate for public sector support. For example, the Rum Village enhancement effort is designed to bring an existing village, located just inside Wadi Rum Park, into harmony with the surrounding landscape. The village houses and associated compound walls will be resurfaced with indigenous materials and the color schemes modified to reflect traditional patterns. The buildings will be upgraded and minimum services provided where they do not now exist. The size of village will be limited to the existing number of buildings, with no new structures permitted. The eventual use of these houses would be decided by the current residents and ARA to decide, but many of them will likely become tourist overnight accommodations (following the precedent of a similar scheme in Taybeh - the Taybeh Zamman Hotel'). The overall effect will be to make what is now an inconsistency in the landscape appear to be natural and pleasing and an opportunity for appropriate revenue generation.

34. The remaining 15 percent of the project is split between public goods where exclusion is undesirable (e.g., street lighting), areas where the Government is intervening because of a lack of information (feasibility studies), where there are equity (redistribution) concerns (developing income opportunities for indigent women), or investments in an area reserved for the public sector (e.g., MOTA's regulatory function). Details can be seen in Table 4.

Taybet Zammanwas an abandonedvillage near Taybeh that was transformedinto a hotel. Extraordinarycare was taken to preserve the original architectureand layout of the village and the original houses. The resulting hotel truly exhibits the one-of-a-kindresults that come from the use of traditionalbuildings to meet modem needs. Annex 4 Page 8 of 15

Beneficiaries of the project

35. Beneficiaries from this project include: MOTA, PRC, the Aqaba Region Authority (ARA), the towns of Wadi Musa, Taybeh and Um Seyhun, and the parks of Petra and Wadi Rum. It is also likely that the cities of Karak and Jerash will be gainers under the project, but this cannot be confirmed until the feasibility studies financed under the project are completed.

36. The Project will have a positive impact on poverty. Women and their families living in Wadi Rum would benefit through the project's income generating activities. Some residents of Wadi Rum (typically without a regular source of income) will also have increased income opportunities through the conversion of their existing homes into accommodations for tourists. To the extent that the poor are involved in selling souvenirs to tourists, they are also likely to benefit from the expansion in tourism that the project helps to support. All of these groups are likely to support the project and its implementation.

37. Strong support for project implementation should also come from MOTA, the PRC, ARA and the Rum Tourism Cooperative, because each of these will receive technical assistance and equipment. In addition, their authority for their respective areas will be increased, which should also provide an incentive for implementation.

38. However, there are some parties that will likely lose influence and power under the Project. The most important of these are those private sector interests that wish to increase their activities inside or adjacent to Petra and Wadi Rum without regulatory restriction. Pressure is especially likely to be brought on the PRC by these groups, because the private sector is in the midst of a major development effort in this location. Limiting uncontrolled growth will be a challenge for the PRC and may effect the project's sustainability over time. The influence of these groups is discussed in the Project Risks section below (starting at paragraph 44).

39. The existing residents of Wadi Rum village will have an incentive for project implementation because each household will have the option to receive a serviced lot at Government expense outside the park boundary. However, some villagers will resist the project because they will have to curtail certain activities at their traditional home. For example, car repair and servicing is not consistent with an environmentally sensitive area and this sort of activity will likely be prohibited by the Wadi Rum Administration, which will be established to administer the park. The degree of resistance will probably depend on the residents' perception of: (a) the value of the serviced lot outside the park; (b) increased tourism-related revenue and employment opportunities that will result from enhancements to the park under the project; and (c) the benefit to women from the planned income-generating activities.

Fiscal Impact

40. Over the six-year implementation period, the Government will have to provide about US$12.0 million in counterpart funds under the project, varying from about US$1.1 million in FY98 to a maximum of US$3.6 million in FYOO. This level of investment is less than one percent of the country's total annual investment and should not pose any overall fiscal constraint. For example, counterpart funds would be included in the budgets of MOTA (for the Karak, Jerash, Petra and PRC investments), MPWH (for the road investments), and ARA (for the Wadi Rum component). For each of these entities, annual counterpart contributions are expected to be less than US$1.0 million. For MOTA, counterpart requirements would average under 10 percent of its total investment budget. The timely provision of counterpart funds is expected, however, the Government also confirmed the provision of adequate counterpart budgets prior to negotiations. Annex 4 Page 9 of 15

41. There will be a slight increase in recurrent expenditures from the staffing and operation of PRC (see PAD, Section 16). But this entity is meant to be a small and efficient organization, relying on short- term consultants to the extent possible versus permanent staff. Until it receives its own budget ratified by the Cabinet, PRC's investment and recurrent costs will be shown as separate line items in MOTA's budget. (MOTA's 1997 budget already contains shows separate entries for PRC totaling just over US$2.6 million.) Increased operating and maintenance costs resulting from all new or rehabilitated infrastructure under the project are estimated at about US$1.3 million per year.

42. Repayment of the loan from IBRD (US$32 million) is the sole responsibility of the Ministry of Finance and there will be no pass-through of this obligation to another entity. The single currency LIBOR-based loan would be repaid over 17 years at an estimated 6.7 percent annual interest rate, with a likely annual commitment fee of 0.75 percent calculated on the undisbursed balance. There would be a grace period of four years, after which annual principal plus interest payments would vary from US$4.8 million (FY04) to US$2.8 million (FY15). This project represents an incremental increase of 0.62 percent to Jordan's overall debt (US$7.05 1 billion, 1994 figure, latest estimate available).

Financial Sustainability

43. IBRD and the Government are the sole financial sources for the Project, and there appears to be adequate funds available. For example, during the project's implementation period, the maximum counterpart funds required in any one year is US$3.6 million. This is a very modest sum for a country with an average annual Government capital investment budget of about US$300 million. However, the Bank also asked the Government to enact a provision that would set aside 25 percent of Petra's tourist admission fees (or commit to allocating the required amounts in the general budget) for park operations and maintenance. This was done with a Cabinet Decision dated May 31, 1997. Admission fees will not, however, be used for road maintenance because it is Government policy to include all the country's roads under a national program set up for this purpose.

Project and Institutional Risks

44. There are no major project or institutional risks identified in the PAD. Moderate risks discussed there fall into three categories: (a) those concerning the implementation capacity of Government authorities placed in charge of project components; (b) political stability in the region; and (c) lack of sustained financing to maintain rehabilitated or new infrastructure.

45. Although the project design cannot mitigate the risk of change in the political security of the region, the design has taken into consideration the risks inherent in the project - institutional implementation capacity and the availability of funds for O&M costs. Project design has attempted to mitigate the first risk through establishment of a project management unit within MOTA, the primary implementing agency. Key staffing of the unit and of the PRC was accomplished as a condition of negotiations, and steps toward implementation (including the tendering for detailed engineering and supervision) took place before negotiations. In order to ensure efficient operation of the PMU and PRC from the beginning of the Project, technical experts were also selected before negotiations took place. In addition, the Sector Development Support component of the project will address key organizational issues of the sector as a whole.

46. A main goal of the assistance given to the PMU and the PRC will be to strengthen institutional capacity over the long term and to accomplish the transfer of technical and managerial expertise. Accomplishments achieved under these headings will be reviewed at the mid-term review and adjustments made in the technical assistance component if so indicated. Annex 4 Page 10 of 15

Mid-Term Review

47. The project's mid-term review is scheduled for the third year of the implementation period. The mid-term review will be used as a means to adjust project components and reallocate effort and resources as appropriate. In the context of the economic analysis, the following items are scheduled to be addressed and assessed at the mid-term review:

(a) subproject economic analyses under the Karak and Jerash Tourism Development Pilot Program; (b) accomplishments for the strengthening and improving of managerial and technical expertise in MOTA's PMU and the PRC; (c) surveys and statistics to confirm the growth of tourism at Wadi Rum; (d) traffic and track counts to document the increased safety and reduced vehicle operating costs of the Unaizah-Shobak-Wadi Musa road; and (e) assessment of natural and cultural resources in Wadi Rum by comparing the baseline survey with surveys of the same areas just prior to the mid-term review. 48. To ensure that the required information will be available, planning for the mid-term review will be discussed in the project launch workshop and then followed up during supervision. Well in advance of the actual date of the review, the concerned implementing agencies will be asked to provide relevant documentation for prior review and to formulate action plans as required. The Bank will also ensure that staff with the appropriate skill mix will participate in the mission.

Road Component Cost Benefit Analysis

49. For the road rehabilitation components described beginning at paragraph 15, benefits are estimated for improved road conditions that lower vehicle operating costs, decreased maintenance costs and benefits resulting from improved road safety. While reduced vehicle operating costs, time savings for passengers and savings in road maintenance following rehabilitation are important benefits, what is more important from a tourism viewpoint are the safety issues involved with the proposed road rehabilitation. The benefits from improved road safety were estimated at US$15,000 per million vehicle kilometers2. Tables 2 and 3 present the "with" and "without" project scenarios for the two roads based on the World Bank's Highway Design and Maintenance Model (HDM-III).

50. A 0.8 conversion factor was used in the model to estimate the economic costs for patching, re- sealing, 4 cm overlay, reconstruction and routine maintenance. This conversion factor is estimated taking into account a 10 percent import duty for bitumen (HS Code No. 2714.9) and a gross corporate marginal tax rate of 25 percent, expected to yield an average net tax rate of 10 percent.

51. Nine sensitivity analyses were performed to test the robustness of base case ERRs for this component. The scenarios were designed to model the normal project risks for construction cost overruns (Nos. 1, 2), and an overestimation of benefits (Nos. 3, 4, 5, 9), plus the risk mentioned in the PAD that there may be a lack of sustained financing to maintain rehabilitated infrastructure, in this instance the roads (No. 8). Results are summarized in Table I below. As shown there, and using a 12 percent discount rate, a negative NPV would result only from a combination of two scenarios: (a) costs

2 Based on a total cost of accidents in Jordan of about 2 percent of GNP for about 4.5 billion vehicle kilometers traveledper year. Annex 4 Page 11of 15 increasing by 25 percent and benefits decreasing by 25 percent; or (b) benefits both decreased by 25 percent and delayed by two years.3

52. Switching values were also calculated for this component using project cost increases plus changes in traffic counts. Regarding the former, costs would have to increase by 45 and 32 percent for the Um Seyhun - Little Petra and Unaizah - Shobak- Wadi Musa roads, respectively, in order to have a zero NPV. As for traffic counts, they would have to decrease by 31 and 41 percent, respectively, to yield a zero NPV.

Table 1. Sensitivity Analysis Results for Road Rehabilitation Component

Um Seyhun - Little Petra Unaizah - Shobak - Wadi Musa IRR NPV IRR NPV Scenario Description (%) ($ Millions) (%) ($ Millions) 0 Base Case 17.0 0.46 15.8 1.39 1 Costs T 10% 15.5 0.34 14.4 0.94 2 Costs T 25% 13.6 0.18 12.6 0.27 3 Benefits 410% 15.5 0.31 14.5 0.89 4 Benefits 425% 13.1 0.09 12.4 0.13 5 Benefits Delayed 2 years 13 0.1 12.4 0.14 6 Scenarios 2 + 4 10.1 -0.19 9.0 -1.00 7 Scenarios 4 +5 10.0 -0.18 9.7 -0.81

8 Rehabilitation in Year 10 = 14.8 0.24 13.2 0.43 50% of Base Costs

9 Accident Benefits ' 50% 15.6 0.33 13.2 0.42

53. The sensitivity analysis shows that the ERR for the project's road rehabilitation component is very robust and that the increase in costs, or decrease in benefits, needed to result in a zero NPV are unlikely to occur. This is particularly the case considering: (a) the short road lengths involved (7.5 and 53.3 km), and (b) the anticipated brief construction period of only two years.

3 Other combinationsof scenarioswere also examined with similar or better outcomes. Scenarios6 and 7 are thought to be "worst case" outcomesand were chosenfor this reason to be illustratedin Table 1. go ^

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_ S -'4 Annex 4 Page 14 of 15

Table 4 - Project Components and Rationale for Public Sector Involvement by Project Component

< ---- Market Failure ------> ------Public Good---- Project Component USS Exclusion Exclusion Information Redistribution Reserved million Externalities Difficult Undesirable Incomplete Function I Petra Region infrastructure development and environmental management .1.1:...... ! :Randx...... 1.1.1. .PetraRoads: (detailed engineering and supervision) 0.7 070 iI ...... 4...... 1.1.2. .Improvement of Unaizah - Shobak - Wadi Musa Road (53 km) 8.0 8.0 ...... I...... 1.1.3. .Improvement of Wadi Musa - Um Seyhun - Baida Scenic Rd. 7.5 km LB 1 8 ...... 10.5 ...... ----i...... -..-...... ---.-.... ; 1.2 :Urbaninfrastructure 2development 'Urban ir frastructureent developm ...... 1.2.1. .Petra Urban (detailed engineering and supervision) 0.4 0.4 . I ...... , ...... 1.2.2. 'Wadi Muss urban infrastructure~~~~~~~~~~~~~~~~~~...... development...... ,,,,4------v ,I 1.2.2.1 WadiMusa town spine road and minorcollector roads 3.5 3 5 1.2.2Wadi2 Musa Town Centerloop 0---''''-'''''''''''-''-'''''------3 t 0 3----.-.--...... t ...... 1.2.2.3:Wadi Musa Tourist Park zone (including the Promenade) 0...... u.0 8 1.2.24 Wadi Musa street lighting 0.5 05 1.2.2.5 Restoration of the traditional Elge village (Town Center) 041 0.4 5.5 ...... 1.2.3 Tavbeh urban infrastructure development 1.2.3.1mTyb b t wn spi e ro d (4 kmj) 0 .8 8...... 4...... 4..-S~~~~~~~~~~~~~~~~~~~~...... t .. . " 'l "*...... " I ll ,...... I ,, -, .. .. . 1...... 3...... i °.:.0 ...... 0.9 ...... 1.2.4 UUmSeyhun urban infrastructure development 1.2.4.1 UrmSeyhun town spine road and secondary streets 0.3 0 3 i22umefi1.2.4.2s et ltIUm j Seyhun .....street ...... lighting ...... 0.1 ...... 4...... 0.1 ...- - -..... - -...... 1.2.4i3 Urn Seyhunnew coachpark/interchange D 0 i ...... 3 ...... , ...... ,4......

1.3...... RenhanelomentSIte...... teVisitor.ad...... *. . mantraneement...... at. . .the . . . Petra...... ' ''...... I...... 1archcological...... sanctuary ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~4 ...... , ...... :

1.3.3 Site landscaping, new trail system and site signage 0.5 0.5 ...... 1.3.4 .Visitor management plan and training services D3 0.3 ...... 4 '''''i:o 2.0 14Evironmental Maaeement v...... ; ...... 1.4.1 .Watershed management - reforestation - wadis terraces regeneration 0.7 0.7 ...... I...... ,...... 4 ...... -...... 1.4.2 ',Watershed management -- flood control and protection measures 0.5 0.5 ...... 1.4.3 .Penra...... Equipmentfor solidwaste management ...... O2 ...... 010 ...... -...... 1.3 ...... 4...... 1.5 Developingcanacity of the Petra Reeional Coun i 1.5.2 Technical Assistance to PRC for capacity building including training 0.7 i . 0.7 ...... 1.5.3 .Equipment...... for PRC ...... 0 3...... 1 0.3......

...... *...... I...... _ SubtotalComponent I 22.0 2.1 18.3 0.7 0.0 0.0 1.0 Annex 4 Page 15 of 15

Table 4 - Project Components and Rationale for Public Sector Involvement by Project Component (Continued)

------Market Failure------> -----Public Good----- Project Component USS Exclusion Exclusion Information Redistribution Reserved million Externalities Difficult Undesirable Incomplete Function 2 :Wadi Rum

2. ! Wadi Rum infrastructure develonment .4,, .> 2I1.1 'Wadi Rum Infrastructure: (detailed engineering and supervision) 0.3 0.3 2.1.2 .Off-site infrastructure 1.2 1.2 l , ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~...... i...... 2.1.3 Visitor and Administra ive facilities !..!.°...... 0... . . 2.1.4 New Rum settlement 1.8 1.8 2.1.5 :Rum Village: enhancement, utility services, key area improvement 1.4 1.4 . 5.7 2.2 Wadi Rum protected area management and tourism management 2.2.1 ,Wadi Rum: Technical assistance training and consultancy services 1.0 1.0

, & ......

l : ...... ::~~~~~~~~~~~~~~~~~~~~~~~~~~~......

2 .3 IWadi Rum ineome neneratine aetivities suipport 3.1 RumTouism Cooperative(RTC) st engthening .1 :0...... 0.4 2 .3.2I~ ~.Women's~ ~ ~~~~. Handicraft ...... Center consultancy and training services ...... 0.1 -.. . '''''''''''"'''''''''''''''4'''' .0.1

.. .3.. 3 .... Women's...... Handicraft...... Center...... equipment . ;...... e ...... Q ...... a. . .;...... 0.2......

l ~~~~~SubtotalComponent 2 7.5 7.1 0 0 0 0 0. 0.40. 2...... :Karak...... and Jeash. I . . . . .Tourism...... Development...... Pilot. . . . . Program...... | S 3.1 studies (Tourism Development Pro ranvl...... Feaibilit...... 1.0 ...... I3.1.1...... ,. '.Technical...... assistance for . feasibility...... studies...... for. . .Karak...... ser05...... 0.5. . . . . : ...... 3 .1.2 .Technical assistance for feasibility studies for Jerash 05I,. 0.5

3 .2 .Karak and Jerash prioritv tourism development projects '(Tourism Development Fund for Karak and Jerash) 4.0 .4 0 *,SubtotalComponent 3 5.0 0.0 . 4.0 0.0 1.0 0.0 0.0 DevearSector loment Su p' r ...... : ...... I...... 4.1 .Technical assistance including training to MOTA 1.0 10 4.2 .Equipmentfor .I.~~~~~~~~~~~~~~~~~~~~~~~. MOTA (computers and vehicles) 0.2 .. 0.2 .3 .Technical assistance to the Project Management Unit (PMU) 0.6 0.6 l '''''''''. ''''Subtotal Component 4 1.8 0.0 0.0 0.0 .0.0 t o0.0 1.8.. Total Baseline Cost (Octobera1996) 36.2 9.1 22.2 0.7 1.0 0.4 2.8 . ~~~PercentofTotal _ 25% ',61% i 2% . 3% 1% S . ~~~~~~~~~~PhysicalContingencies 4.8 * ~~~~~~~~~~PriceContingencies 3.0 ism DevclopmentFundforKarahTotal Project Cost 44.0

Note: Amounts Rounded.

Annex 5 Jordan: Second Tourism Development Project Financial Summary

Year Ending June 30 (US$ million, 1996 base year)

Implementation Period Operational Period FY98 FY99 FY00 FYOI FY02 FY03 FY04 FY05 FY06 Prject Costs Investmentcosts 2.20 7.70 11.00 10.70 7.30 5.10 Recurrent costs QQ5 00 Q.60. 070 1.30 L1.3 13D30 130 Total 2.70 8.20 11.60 11.40 8.60 6.40 1.30 1.30 1.30

FinancingSources (% of total project costs) IBRD 59.3% 68.3% 69.0% 68.4% 61.6% 57.8% - - - Cofinanciers - - - - - Government Central 40.7% 31.7% 31.0% 31.6% 31.4% 31.3% Local User feeslbeneficiaries* - - - - 7.0% 10.9% 100% 100% 100% Total 100% 100% 100% 100% 100% 100% 100% 100% 100%

* A share of the admission fees for Petra (about 25 percent and all of the admission fees for Wadi Rum would be allocated for operation and maintenance expenditures at project sites (including site management and operating costs). - - Annex 6 Jordan: Second Tourism Development Project

Procurement and Disbursement Arrangements

Procurement

A. ProcurementMethod (Tables Al and A2)

1. The project elements, their estimated costs, and the procurement arrangements and schedule for the components to be financed by the Bank are summarized in Table Al and Table A2.

2. All Bank-financed civil works, equipment and materials would be procured in accordance with the Bank Procurement Guidelines for Procurement under IBRD Loans and IDA Credits of January 1995 and revised January and August 1996. Procurement of consultant services and technical assistance would follow Bank's Guidelines for the Selection and Employment of Consultants by World Bank Borrowers of January 1997.

3. Contracts for civil works valued at US$2,000,000 or more would be awarded according to intemational competitive bidding (ICB) following Bank Guidelines. Prequalification of contractors for all civil works contracts bid under ICB would be required. Civil works contracts under US$2,000,000 would be awarded according to national competitive bidding (NCB) procurement procedures.

4. Goods and equipment required for the project would consist of vehicles for sites and project management, computers, telecommunication and office equipment, handicraft equipment, and small equipment for solid waste management. Contracts for equipment and materials estimated to cost more than US$250,000 equivalent each would be procured through ICB, using World Bank Standard Bidding Documents. Contracts valued at less than US$100,000 would be procured according to National Shopping with an aggregate amount of US$700,000. Contracts valued above US$100,000 and below US$250,000 would be procured according to International Shopping with aggregate amount of US$1,000,000. National and Intemational Shopping should be based on at least three price quotations and, where relevant, from two eligible countries.

5. Consultant and training services for the project's technical assistance components and detailed engineering and construction supervision services would be contracted in accordance with the Bank's Guidelinesfor the Selection and Employment of Consultants by World Bank Borrowers of January 1997. These services include studies, technical assistance for capacity building, training, engineering designs, and construction supervision services for which proposals would be requested from three to six short-listed firms.

B. Prior Review Thresholds (Table B)

6. All contracts for works exceeding US$1,000,000 and contracts for goods and equipment exceeding US$250,000 would be subject to prior review and approval by the Bank. For consultancy assignments financed by the Bank, there would be prior review for contracts worth US$100,000 and above for contracts with consulting firms and US$50,000 and above for contracts with individual consultants. This would result in prior review of about 80 percent of Bank-financed procurement. The contract review arrangements are summarized in Table B. Annex 6 Page 2 of 5

Disbursemen

C. Allocation of Loan Proceeds (Table C)

7. The proposed Bank loan would be disbursed against the project components as shown in Table C. Withdrawal applications for contracts valued at more than US$1,000,000 for works, US$250,000 for goods, US$100,000 for consulting firms, and US$50,000 for individual consultants would be presented in English for disbursements. During negotiations, it was agreed that annual audit reports of project accounts and SOEs would be prepared and submitted in English by auditors acceptable to the Bank within six months of the end of each fiscal year.

D. Use of Statements QfExpenditures (SOEs)

8. Disbursements for contracts valued at less than US$1,000,000 for works, US$250,000 for goods, US$100,000 with consulting firms, and US$50,000 with individual consultants would be made on the basis of Statements of Expenditures (SOEs). Disbursement for training services valued at less than US$50,000 would be made on the basis of SOEs. During negotiations, it was agreed that documentation to support expenditures financed under SOEs or otherwise would be maintained in English by the MOTA and made available for review by Bank supervision missions.

E. SpecialAccount

9. To facilitate disbursements against eligible expenditures, the Government would establish in the central bank two Special Accounts to be operated respectively by MOTA and ARA under terms and conditions satisfactory to the Bank. The Bank would, upon request, make an authorized allocation of US$1.5 million to the Special Account of MOTA and an authorized allocation of US$0.5 million to the Special Account of ARA. Initially, the allocation would be limited to US$0.75 million in the Special Account of MOTA and US$0.25 million in the Special Account of ARA. The full authorized allocations could be claimed when disbursements reach US$5.0 million for MOTA and US$2.0 million for ARA. MOTA and ARA would submit replenishment applications for their respective Special Accounts on a monthly basis, or when about 20 percent of the initial deposit has been utilized, whichever occurs first. The replenishment applications would be supported by the necessary documentation: a bank statement of the Special Account and a reconciliation bank statement of the Special Account against the Bank's records. The minimum amount for applications for direct payment and for special commitment would be 20 percent of the authorized allocation to the Special Account. Replenishment of the Special Accounts would follow Bank procedures. The Special Accounts would be audited annually by independent auditors acceptable to the Bank. The audit report, in English, would be submitted to the Bank for review and approval within six months of the end of each fiscal year. During negotiations, agreement was reached on the above provisions for the operation and auditing of the Special Accounts. Annex 6 Page 3 of 5

Table Al: Project Costs by Procurement Arrangements

(in US$ million equivalent)

Expenditure category Procurement Method ICB NCB Other N.B.F Total

1. Civil Works Petra Region InfrastructureDevelopment and Environmental Management Road works 12.1 12.1 Urban infrastructureworks 8.5 8.5 Sanctuaryand VisitorCenter area enhancementworks 2.0 2.0 Environmentalprotection and managementworks L1 5 12.1 12.0 24.1 Wadi Rum InfrastructureDevelopment and Environmental Conservation 6.5 6.5 Jerash and Karak TourismDevelopment Pilot Program _ 4 Q 4LQ 12.1 22.5 34.6 (7.9) (14.7) (22.6)

2. Goods Office equipment,computers, vehicles and equipment for solid waste for MOTAand PRC 0.8 0.8 for Wadi Rum Q] DI 1.5 1.5 Equipmentfor Handicraft(Wadi Rum WomenHandicraft Center) QD Q1 1.7* 1.7 (1.7) (1.7) 3. Services Consultancyand trainingservices (MOTA) 3.2 3.2 Consultancyand trainingservices ( PRC) 1.9 1.9 Consultancyand trainingservices (MPWH) 0.9 0.9 Consultancyand trainingservices for Wadi Rum 1.7 1.2 7.7 t 7.7 (7.7) (7.7)

12.1 22.5 9.4 44.0 ______(7.9)_ _ _ _ _ (14.7)_ ___ (9.4) (32.0) Note: Amountsrounded. Figuresin parenthesisare the amountsto be financedby the Bank loan. N.B.F = Not Bank-financed. * Nationaland InternationalShopping procurement procedures. t Servicesto be procuredin accordancewith Bank's Guidelinesfor Selectionand Employment of Consultantsby WorldBank Borrowers(Washington, DC, January 1997). Annex 6 Page 4 of 5

Table A2: Procurement Arrangements and Schedule Schedule Pkg Deacripeion Type onentMethod Estimated Complete Invitation Bid Award Completion No. Amounat Bidding to Bid Opening Contact S million Documenu Pregualification of Contractors for ICB works 10/97 11/97 12/97 Wo I Uzainah - Shobak - Wadi Musa Road (53 Iam) W ICB 9.9 11/97 12/97 02/98 04/98 12/00 2 Wadi Musa - Um Sayhun - Little Petra (7.5 km) W ICB 2.2 03/98 04/98 06/98 08/98 12/00 3 Wadi Musa urban spine road & collector (secondary) roads W NCB 4.3 03/98 04/98 06/98 08/98 12/00 4 Wadi Musa Town Center Loop W NCB 0.4 11/97 12/97 02/98 04/98 06/99 5 Wadi Musa Tourist Park Zone W NCB 1.0 11/97 12/97 02/98 04/98 06/99 6 Restoration of the traditional Elge Village W NCB 0.5 02/98 04/98 06/98 08/98 12/99 7 Taybeh Spine Road W NCB 1.0 03/98 04/98 06/98 08/98 12/00 8 Um Sayhun Spine Road and new coach park/interchange W NCB 0.5 03/98 04/98 06/98 08/98 12/00 9 Street Lighting for Wadi Musa, Taybeh and Um Sayhun T NCB 0.8 08/98 10/98 11/98 12/98 06/99 10 Petra - Redevelopmentof the Visitor center W NCB 1.0 03/98 05/98 07/98 09/98 06/00 11 Petra - Redevelopmentof the Souq area W NCB 0.4 12/97 01/98 03/98 04/98 04/99 12 Petra - Site landscaping,trail system and site signage W NCB 0.6 03/98 05/98 07/9S 09/98 06/00 13 Reforestationand wadi valley/terracesregeneration W NCB /Direct 0.9 06/98 07/98 09/98 10/9S 12/01 Contracting 14 Floodprotectionmeasures W NCB _li 11/97 12/97 01/98 02/98 12/98 Total Works (Petra) 24.1 1 Tourist accessroad and off-site infrastructure W NCB 1.3 03/98 04/98 06/98 08/98 08/99 16 Rum Village infrastructureimprovements W NCB 1.7 05/9S 07/98 09/98 11/98 11/00 17 New settlement on-site infrastructure W NCB 2.0 03/98 04/98 06J98 08/98 12/00 18 Visitor and administrative facilities W NCB Li 06/9S 08/9S 10/98 12/9S 12/00 Total Works (Wadi Ruim) 6.5 19 Jerash(PackageNo.1) W NCB 0.8 11/97 12/97 02/98 04/98 12/99 20 Jerash(Package No.2) W NCB 1.2 03/99 04/99 06/99 07/99 06/01 21 Ka-ak(Package No. 1) W NCB 0.5 11/97 12/97 02/98 04/98 12/98 22 Karak (PackageNo.2) W NCB LU 03/99 04/99 06/99 07/99 06/01 Total Works (Jerash and Karak) 410 Total Works 34.6 Goods and Equipment 23 Computers for MOTA and PRC P IS / LS 0.2 12/97 01/98 02/98 03/98 06/98 24 Vehicles for MOTA and PRC P IS / LS 0.3 12/97 01/98 02/98 03/98 06/98 25 Solid waste management equipment for Petra P LS 0.1 02/98 03/98 04/98 05/98 07/98 26 Computersfor Wadi Rum P IS /LS 0.1 12/97 01/98 02/98 03/98 06/98 27 Vehicles for Wadi Rum P ICB/ IS/ LS 0.5 12/97 01/98 02/98 03/98 06/98 28 Solid waste management equipment for wadi Rum p LS 0.2 02/98 03/98 04/98 05/98 07/98 29 Women's HandicraftCenter Equipment P IS / LS Q2 06/98 07/98 08/98 09/98 03/99 Total Goods and Equipment 1.7 Services 30 MOTA Project Management Unit S Individuals 0.7 09/97 12/02 31 Technical Assistance for Sector Development Support S Individuals/QCBS 1.3 12/97 01/98 02/98 03/98 03/99 32 Feasibility studies for Karak S QCBS 0.6 12/98 02/98 04/98 05/98 12/99 33 Feasibility Studies for Jerash S QCBS 0.6 12/98 02/98 04/98 05/98 06/99 34 Petra Roads: design and supervision S QCBS 0.9 11/97 12/97 02/98 04/98 12/00 35 Petra Sanctuary & Urban Infrastruure: design & supervision S QCBS 0.6 11/97 12/97 02/98 04/98 12/00 36 Pctra Visitor Management Plan and training seTvices S Individuals/ QCBS 0.4 02/98 03/98 05/98 06/98 06/01 37 TA to PRC for capacity building including training S Individuals / QCBS 0.9 11/97 12/97 02/98 04/98 06/02 38 Wadi Rum infrastructure:design & supervision S QCBS 0.4 11/97 12/97 02/98 04/98 12/00 39 Wadi Rum: TA for environmental and visitor management S Individuals / QCSB 1.2 09/97 06/02 Direct Contracing 40 Wadi Rum: TA for RTC and Women's Handicraft Center S Direct Contracting u 02/9S 12/99 Total Services 21 TOTAL 44.0

* Works would be divided into three contracts in order to coordinate with the implementationof the new water supply and waste water networks W Civil Works Contract IS Loca Shopping; ICB Intemational Competitive Bidding T Supply and Erection Contract IS Intemational Shopping NCB National Competitive Bidding P Supply Contract S Consultancy and Training Services Contract QCBS Quality and Cost Based Selection (Consultants) Annex 6 Page 5 of 5

Table B: Prior Review Thresholds (US$) Expenditure Type of Procurement PriorReview ContractValue Category 1. Works InternationalCompetitive Bidding (ICB) all 12,100,000 National CompetitiveBidding (NCB) 1,000,000 16.500.000 28,600,000 2. Goods InternationalCompetitive Bidding (ICB) 250,000

3. Services ConsultantGuidelines (Firm) 100,000 6,200,000 ConsultantGuidelines (Individual) 50,000 200.000 6,400,000

Total ~~~~~~~~~~~~~~~~~~35,000.000

Table C: Allocation of Loan Proceeds (US$) Expenditurecategory US $ % of Expendituresto be Financed 1 Civil works Petra component:road works 6,400,000 Petra component:infrastructure development works 4,500,000 Petra Sanctuary:site enhancementand infrastructuredevelopment works 1,100,000 Petra Component:environmental protection works 800,000 Wadi Rum Component:infrastructure development works 3,400,000 Jerashand Karak infrastructuredevelopment works 2,600.000 18,800,000 65% of all expenditures 2 Goods and Equipment Equipmentand goods for MOTAand PRC 600,000 Equipmentand goods for Wadi Rum 800.000 1,400,000 100%of foreignexpenditures, 100% of local expenditures(ex-factory cost) and 90% of other items procuredlocally 3 Services(Technical Assistance and Training) Detailedengineering and constructionservices Petra roads rehabilitation/improvement 700,000 Petra urban infrastructure,environmental protection & Sanctuary 500,000 enhancement Wadi Rum infrastructuredevelopment and environmentalconservation 300Q000 1,500,000 Technicalassistance services including training MOTA:project managementand sectordevelopment support 1,600,000 PRC capacitybuilding and ArcheologicalSanctuary management 1,000,000 Wadi Rum: incomegeneration, environmental conservation and site 1,100,000 management 3,700,000 Tourismdevelopment feasibility studies Karak and Jerash feasibilitystudies 1.000,000 Total services 6,200,000 100%of all expenditures

4 Unallocated 5,600,000 Total 32,000,000

Annex 7 Jordan: Second Tourism Development Project Project Processing Budget and Schedule

A. Project Budget(US$000) Planned Actual

643 624

B. Project Schedule Planned Actual

Time taken to prepare the project (months) 21 First Bank mission (identification) 01/31/1995 01/31/1995 Appraisal mission departure 11/05/1996 11/05/1996 Post-Appraisal 03/27/1997 03/27/1997 Negotiations 06/21/1997 06/21/1997 Planned Date of Effectiveness 10/01/1997 10/01/1997

Prepared by: Ministry of Tourism and Antiquities (MOTA) Ministry of Public Works and Housing (MPWH) Aqaba Region Authority (ARA)

Preparation assistance: - PHRD Grant TF25287 and TF25182 (JPY 6.5M and JPY47 M): Petra Priority Action Plan Study - METAP PHRD Grant TF 29404 (JPY 10.21 M): Support to Project Preparation Unit and Wadi Rum Study - British Trust Fund TF34014 (US$18,000): Wadi Rum Study

Bank staff who worked on the project included: Tufan Kolan Principal Operations Officer, Task Manager through appraisal Mohammed Feghoul Municipal Engineer, Task Manager since appraisal Nicole Glineur Senior Environmental Specialist John Dixon Unit Chief, Environmental Economist Alexander McPhail Economist Faye Lumsden Operations Officer, Urban Planner Elizabeth Monosowski Environmental Specialist Ashraf Ghani Senior Anthropologist Elisabeth Sherwood Consultant Eugenia Dennis Production of the report

Annex 8 Jordan: Second Tourism Development Project Documents in the Project File'

A. Project Implementation Volume 1. Karak and Jerash Tourism Development Program: Terms of Reference for Feasibility Studies, and Priority Projects 2. Sector Development Support: Terms of Reference for Studies and Technical Assistance Services 3. Petra Regional Council: Terms of Reference for Technical Assistance and Key Staff Positions 4. Wadi Rum Component: Terms of Reference for Technical Assistance and Key Staff Positions 5. Petra Environmental Management Subcomponent 6. Petra Infrastructure Development: Terms of Reference for Detailed Designs and Construction Supervision 7. Wadi Rum Component: Terms of Reference for Detailed Designs and Construction Supervision 8. Wadi Rum Component Implementation Volume

B. Bank Staff Assessments 1. World Bank comments on the Wadi Musa Water and Wastewater Project 2. World Bank comments on Petra Priority Action Plan Study, Phases I, II and III interim reports 3. Economic analysis of the Petra access road rehabilitation projects

C. Other 1. Japan International Cooperation Agency: Jordan National Tourism Development Strategy and Policy

2. United Nations Educational, Scientific and Cultural Organization (UNESCO): Petra National Park Management Plan

3. Wadi Musa Water and Wastewater Project (Camp Dresser and McKee: Wadi Musa Water and Wastewater Services Study, 1996)

4. Petra Priority Action Plan Study, Phases I, II and III Reports (Dar Al-Handasah, 1996)

5. USAID Jordan Sustainable Tourism Development/Sites reports (1996): a. Petra Sanctuary Carrying Capacity Analysis b. Management Analysis and Recommendations for the Petra World Heritage Site

Includingelectronic files

Annex 9 Jordan: Second Tourism Development Project Statement of Loans and Credits and IFC Investments Status of Bank Group Operations in Jordan

A. IBRD Loans and IDA Credits in the Operations Portfolio As of June 30, 1997 Difference OriginalAmount in Between US$ Millions Actual Project Loan Fiscal & ID No. Year Borrower Purpose IBRD Cancel. Undisb. Expected Disburs.' Numberof Closed Loans/credits:52 5319 L35740 1993 Governmentof Jordan Healthll 20.00 0.00 17.79 5.99 5284 L35680 1993 Governmentof Jordan TransportIII 35.00 0.00 18.32 16.62 5322 L37380 1994 Telecomm.Corporation JordanTelecom. 20.00 0.00 9.11 7.41 5318 L36510 1994 Governmentof Jordan EnergySector Loan 80.00 0.00 20.00 20.02 5307 L38640 1995 Governmentof Jordan HumanRes. Devt. SIL 60.00 0.00 53.99 15.59 5321 L38180 1995 Govemmentof Jordan TA for Agriculture 6.60 0.00 5.02 4.22 35995 L39930 1996 Governmentof Jordan ExportDevelopment 40.00 0.00 24.22 -3.78 5323 L40710 1997 Governmentof Jordan HousingFinance & Urban 20.00 0.00 20.00 2.92

Total 281.60 0.00 168.44 68.98

Active Loans ClosedLoans Tota Total Disbursed(IBRD and IDA): 113.16 1,242.10 1,355.26 of whichhas been repaid: 0.00 515.88 515.88 Total nowheld by IBRD and IDA: 281.60 726.22 1,007.82 Amountsold 0.00 11.53 11.53 Of whichrepaid 0.00 11.53 11.53 Total Undisbursed 168.44 0.00 168.44 a. Intendeddisbursements to date minusactual disbursementsto date as projectedat appraisal. Note: Disbursementdata are updatedat the end of the first weekof the month. B. Statement of IFC Investments Committed and Disbursed Portfolio As of May 31, 1997 (In US Dollar Millions) ------Committed------Disbursed------IFC------IFC------FY Approval Company Loan Equity Quasi Partic Loan Equity Quasi Partic 1987/90/93/95 Al-Hikma 4.12 0.00 2.70 0.00 4.12 0.00 2.36 0.00 1994 Al-KeenaPaper 8.00 0.00 0.00 0.00 8.00 0.00 0.00 0.00 1995 Indo-Jordan 30.00 0.00 0.00 0.00 18,66 0.00 0.00 0.00 1995 Jordan Telephone 15.00 3.00 0.00 0.00 15.00 3.00 0.00 0.00 1996 MODAL 5.50 0.00 0.00 0.00 4.50 0.00 0.00 0.00 1996 Zara 15.00 3.00 0.00 0.00 0.00 3.00 0.00 0.00 Total Portfolio: 77.62 6.00 2.70 0.00 50,28 6.00 2.36 0.00

ApprovalsPending Commitment Loan Equity Quasi Partic 1997 DEADSEA MARRIOTT 4.00 1.00 0.00 0.00 TotalPending Commitment: 4.00 1.00 0.00 0.00

Annex 10 Jordan: Second Toursim Development Project Jordan at a Glance

M. East Lower- POVERTYand SOCIAL & North middle- Jordan Africa Income Developmentdiamond Populationmid-1995 (mifl/ons) 4.2 273 1,154 GNP percapita 1995(USS) 1,500 1,7B0 1 700 Life expectancy GNP 1995 (bilrionsUSS) 6.4 486 1,962 Average annual growth, 1990-95 Population(X) 5.7 2.7 1.4 GNP Gross Labor force (%) 5.2 3.3 1.8 per primary Most recent estimate (latestyear availablesince 1989) capita enrollment Poverty: headcountindex (X of populafion) 15 Urban population(% of totalpopulation) 72 56 56 Life expectancyat birth (years) 70 66 67 Infant mortality (per 1,000live births) 31 49 36 Access to safewater Child malnutrition(X of children under 5) 17 Access to safe water (% of population) 97 82 78 Illiteracy (% of populationage 15+) 13 39 Gross primary enrollment(% of school-agepopulation) 94 97 104 Jordan Male 94 104 105 Lower-middle-incomegroup Female 95 90 101

KEY ECONOMICRATIOS and LONG-TERMTRENDS 1976 1986 1994 1995 Economic ratios' GDP (billions USS) 5.0 6.0 6.6 Gross domesticinvestmentVGDP 21.7 36.2 35. Exports of goods and non-factor services/GDP 37T2 49.8 53.0 Opennessof economy Gross domesticsavings/GDP -17.4 12.7 14 3 Gross nationalsavings/GDP -2.4 27.0 26.7 Currentaccount balance/GDP -19.9 -9.2 -9.1 Interestpayments/GDP 3.8 3.3 4.2 Savings - 2 Investment Total debtlGDP 80.6 117 6 109 3 Total debt service/exports 3.7 17.2 12.2 Presentvalue of debtlGDP 838 Presentvalue of debtlexports 121.1 Indebtedness

19764-4 1985-95 1994 1995 1996-04 (averageannual growth) Jordan GDP -0.1 5.8 6.4 71 GNP per capita -5.6 5.5 0.5 3 5 Lower-middle-incomegroup Exports of goodsand nfs 8.7 1 2 11.0 8.8

STRUCTUREof the ECONOMY 1975 1986 1994 1995 (X of GDP) Growth rates of output and investment(%) Agriculture 7 9 4 9 5.8 5 7 60 Industry 23 7 26.9 28.1 28 2 Manufacturing 869 119 14 0 13 6 30 Services 684 68.2 66 2 661 90 91 92 9395 Private consumption 90 6 64 6 62 5 .30 General governmentconsumption 26 8 22 7 23 1 GDI -- D-GDP Importsof goods and non-factorservices 76 3 73.3 74 4

1975-84 1986-95 1994 1995 (averageannual growth) Growth rates of exports and imports (I% Agriculture 11 9 1 0 40 30 Industry 2.0 6.5 58 Manufacturing 5.3 9.3 3.0 20. Services -3.3 6.0 5.0 0

Private consumption -3.0 5.2 2 2 0 . . General govemmentconsumption -0e9 8 5 7 7 90 92 93 95 Gross domestk investment 9 9 -9 9 4.9 -13 Importsof goods and non-factorservices 5 8 -5 5 5.6 Exports -6--Imports Gross national product -0.8 9.4 4.0

Note: 1995data are preliminaryestimates. The diamondsshow four key indicators in the country (in bold) comparedwith its income-groupaverage. If data are missing, the diamondwill be incomplete. Annex 10 Page 2 of 2

PRICESand GOVERNMENT FINANCE 1975 1985 1994 1995 Inflation1%) Domestic prices (% change) 40 Consumerpnces 11.9 3.0 3.5 2.4 ImplicitGDP deflator -0.3 3.9 3.6 20 Govemmentfinance (% of GDP) 0. 9 , Currentrevenue 18.9 22.4 29.7 314 9C 91 9Z 93 9 95 Currentbudget balance -9.9 -11.6 -0.1 1 7 - GDPder -0--CPI Overallsurplus/deficit -28.1 -21.6 -6.2 -5.1

TRADE (11975 1985 1994 1995 Exportand Import levels(mill. US$) (millions US$) Total exports(fob) 125 789 1,425 1,771 4,000 - Phosphorus 168 117 151 Othermetals 79 166 174 3.000 Manufactures .. 282 607 704 Total imports(cif)I 732 2,720 3,374 3,696 2 iLrI_

Food .. 386 582 591111 Fueland energy .. 490 427 480 1.0 Capitalgoods .. 661 858 906 __0 Exportprice index (1990=100) 107 114 B9 90 91 92 93 94 95 Import price index (1990=100) 102 109 aExports E Imports Termsof trade(1990=100) 104 105

BALANCEof PAYMENTS 1975 1985 1994 1995 (millionsUS$) Currentaccount balance to GDPratio (%) Exportsof goodsand non-factorservices 379 1,976 2,986 3,490 0 _-- -. ] Importsof goodsand non-factorservices 942 3,723 4,395 4,905 89 90 91 92 93 04 95 Resourcebalance -562 -1,747 -1,409 -1,415 Net factorincome 26 -89 -144 -304 -10 Netcurrenttransfers 172 845 1,002 1,118

Currentaccount balance, .20 beforeofficial transfers -365 -991 -551 -601 Financingitems (net) 538 1,145 850 963 Changes in netreserves -173 -154 -298 -362 -30

Memo: | Reservesincluding gold (mill.US$) 571 770 1,977 2,257 Conversion rate (locat/US$) 0.3 0.4 0.7 0.7

EXTERNALDEBT and RESOURCE FLOWS 1975 1985 1994 1995 (millionsUSS) Compositionof totaldebt, 1995 (mill. US$) Totaldebt outstanding and disbursed 345 4,022 7,051 7,200 G A IBRD 0 168 635 736 55 736 B IDA 33 82 71 69 69 C 141 Totaldebt service 21 531 505 641 D IBRD 0 21 102 125 291 IDA 0 2 2 3 F .91 3090 / J Compositionof netresource flows 3090 Officialgrants 357 453 306 320 Officialcreditors 71 210 109 205 E Privatecreditors 19 190 -162 -106 2818 Foreigndirect investment 26 25 3 43 Portfolioequity 0 0 0 0 World Bankprogram Commitments 12 97 107 190 A - IBRO E - Bilateral Disbursements 10 64 58 158 B - IDA D- Othermultilateral F -Private Prncipal repayments 0 10 59 79 C - IMF G- Short-term Net flows 10 54 -1 79 Interestpayments 0 12 47 49 Net transfers 10 42 -48 30

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Report No.: 16485 jg Type: PAD