Document of The World Bank For Official Use Only Public Disclosure Authorized Report No: 46667-PH PROJECT APPRAISAL DOCUMENT ONA Public Disclosure Authorized PROPOSED GRANT FROM THE GLOBAL ENVIRONMENT FACILITY TRUST FUND IN THE AMOUNT OF US$6.351 MILLION TO THE REPUBLIC OF THE PHILIPPINES FOR A Public Disclosure Authorized SECOND PHASE OF THE MINDANAO RURAL DEVELOPMENT PROGRAM (APL) - NATURAL RESOURCE MANAGEMENT PROJECT August 14,2009 Philippines Sustainable Development Unit Sustainable Development Department East Asia and Pacific Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Public Disclosure Authorized Bank authorization. CURRENCY EQUIVALENTS Exchange Rate Effective April 2009 Currency Unit = Philippine Peso PhP 48 = US$1 FISCAL YEAR January 1 - December31 ABBREVIATIONS AND ACRONYMS ADB Asian Development Bank AFMA Agriculture and Fisheries Modernization Act of 1997 AOs Administrative Orders APL Adaptable Program Loan ARMM Autonomous Region in Muslim Mindanao ASG Abu Sayyaf Group BLGUs Barangay Local Government Units CAAM Conflict Affected Areas in Mindanao CADC Certificate ofAncestral Domain Claim CAS Country Assistance Strategy CBD Convention on Biological Diversity CBFM Community Based Forest Management CBNRM Community Based Natural Resources Management CENRO Community Environment and Natural Resources Officer CFAD Community Fund for Agricultural Development CIS Communal Irrigation System CITES Convention on the International Trade of Endangered Species CLEAR Coastal Law Enforcement Action in the Region CLUP Comprehensive Land Use Plan CMBC Coastal and Marine Biodiversity Conservation CPB Cartagena Protocol on Bio-safety CPPAP Conservation ofPriority Protected Areas Programme CRFC Coastal Resources and Fisheries Conservation CRM Coastal Resource Management DA Department ofAgriculture DA-BFAR Department ofAgriculture - Bureau ofFisheries and Aquatic Resources DA-BSWM Department ofAgriculture - Bureau of Soil and Water Management DAO Departmental Administrative Order DAR Department ofAgrarian Reform DBM Department ofBudget and Management DND Department ofNational Defense DENR Department ofEnvironment and Natural Resources DILG Department ofInteriors and Local Government FOR OFFICIAL USE ONLY DOF Department ofFinance DOST Department of Science and Technology DOT Department of Tourism DOTC Department of Transportation and Communication DPWH Department of Public Works and Highways DSWD Department of Social Welfare and Development DTI Department of Trade and Industry EA Environmental Assessment EcoGov Environmental Governance Project ofUS AID ECP Environmentally Critical Project EJP Environmental Justice Project ELAC Environment Legal Assistance Center EMB Environment Management Bureau ENR Environmental and Natural Resources ENRU Environmental and Natural Resources Unit FARMC Fisheries and Aquatic Resource Management Council FASPO Foreign Assisted and Special Projects' Office (of the DENR) FBI Field-Based Investigation FGD Focus Group Discussions FISH Fisheries Improved for Sustainable Harvest (Project funded by US AID) FMB Forest Management Bureau FPIC Free and Prior Informed Consent FS Feasibility Study GEF Global Environment Facility GEM Growth with Equity in Mindanao (Programme funded by USAID) GIS Geographic Information System GOP Government ofthe Philippines IBRD International Bank for Reconstruction and Development ICR Implementation Completion Report IDP Internally Displaced Persons IEC Information, Education and Communication IKM Information and Knowledge Management IPAF Integrated Protected Area Fund IPRA Indigenous Peoples' Rights Act of 1997 IPs Indigenous Peoples IUCN International Union for the Conservation ofNature JI Jemaah Islamiyah JICA Japan International Cooperation Agency JMC Joint Memorandum Circular LGC Local Government Code of 199 1 LGUs Local Government Units LSP Local Service Providers MandE Monitoring and Evaluation MACCO Municipal Accounting Office MAFC Municipal Agriculture and Fisheries Council MDC Municipal Development Council MEDCo Mindanao Economic Development Council MENRO Municipal Environment and Natural Resource Office This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not be otherwise disclosed without World Bank authorization. PHILIPPINES Second Phase of the Mindanao Rural Development Program (APL) Natural Resource Management Project CONTENTS Page I. STRATEGIC CONTEXT AND RATIONALE ................................................................. 1 A . Country and sector issues.................................................................................................... 1 B. Rationale for Bank involvement ......................................................................................... 4 C . Higher level objectives to which the project contributes .................................................... 5 I1. PROJECT DESCRIPTION................................................................................................. 6 A . Lending instrument ............................................................................................................. 6 B. Project development objective and key indicators., ............................................................ 6 C . Project global environment objective and key indicators ................................................... 7 D. Project components ............................................................................................................. 7 E. Lessons learned and reflected in the project design.......................................................... 10 F. Alternatives considered and reasons for rejection ............................................................ 12 I11. IMPLEMENTATION .................................................................................................... 12 A . Partnership arrangements .................................................................................................. 12 B. Institutional and implementation arrangements ................................................................ 13 C . Monitoring and evaluation ofoutcomes/results ................................................................ 14 D. Sustainability and Replicability ........................................................................................ 15 E. Critical risks and possible controversial aspects ............................................................... 15 F. Loan Covenants ................................................................................................................ 16 IV. APPRAISAL SUMMARY ............................................................................................. 17 A . Economic and financial analyses ...................................................................................... 17 B. Technical ........................................................................................................................... 18 C . Fiduciary ........................................................................................................................... 18 D. Social (Stakeholder Involvement) ..................................................................................... 20 E. Environment ...................................................................................................................... 21 F. Safeguard policies ............................................................................................................. 21 G. Policy Exceptions and Readiness...................................................................................... 22 Annex 1: Country and Sector or Program Background......................................................... 23 Attachment 1to Annex 1: Globally Significant Features ofthe 11 Sites ............................... 30 Annex 2: Major Related Projects Financed by the Bank and/or other Agencies ................. 36 Annex 3: Results Framework and Monitoring ........................................................................ 37 Annex 4: Detailed Project Description...................................................................................... 42 Attachment 1to Annex 4: Menu of On-the-Ground Investments and Corresponding Technical Justification ................................................................................................................ 53 Attachment 2 to Annex 4: Assessment of CMBC-2 in Addressing Climate Change ............ 57 Annex 5: Project Costs ............................................................................................................... 64 Annex 6: Implementation Arrangements ................................................................................. 67 Attachment 1to Annex 6. Duties and Functions of Stakeholders .......................................... 74 Attachment 2 to Annex 6. Memorandum of Agreement Between DA and DENR ............... 84 Attachment 3 to Annex 6. Memorandum of Agreement Between DA and NCIP................. 90 Attachment 4 to Annex 6. Implementation Arrangement ...................................................... 95 Attachment 5 to Annex 6. Inter-Component Coordination and Implementation Arrangement ............................................................................................................................... 98 Annex 7: Financial