CHAPTER 2 Design and Implementation of the Red de Protección Social o permit an assessment of how RPS altered behavior, it is first necessary to describe Thow the program operates and how it has evolved.4 Program Targeting In the design phase of RPS, rural areas in all 17 departments of Nicaragua were eligible for the program. The focus on rural areas reflects the distribution of poverty in Nicaragua—of the 48 percent of Nicaraguans designated as poor in 1998, 75 percent resided in rural areas (World Bank 2001). For Phase I of RPS, the Government of Nicaragua selected the departments of Madriz and Matagalpa from the northern part of the Central Region, on the basis of poverty level as well as on their capacity to implement the program. This region was the only one that showed worsening poverty between 1998 and 2001, a period during which both urban and rural poverty rates were declining nationally (World Bank 2003). In 1998, approximately 80 percent of the rural population of Madriz and Matagalpa was poor, and half of these people were extremely poor (IFPRI 2002). In addition, these departments had easy physical access and communication (including being less than a one-day drive from the capital, Managua, where RPS is headquartered), relatively strong institutional capacity and local coordination, and reasonably good coverage of health posts and schools (Arcia 1999). By targeting purpo- sively, RPS avoided devoting a disproportionate share of its resources in Phase I to increasing the supply of educational and health-care services. In the next stage of geographic targeting, all six (out of 20) municipalities that had the small-scale participatory development program Microplanificación Participativa (Participa- tory Micro-planning [MP]) run by the national Emergency Social Investment Fund (FISE) were chosen.5 The goal of that program was to develop the capacity of municipal governments to select, implement, and monitor social infrastructure projects such as school and health-post construction, with an emphasis on local participation. It is possible, then, that the selected municipalities had atypical capacity to carry out RPS, although this may not have been wide- spread, as MP did not completely cover the participant municipalities and it is unclear how 4Appendix A provides a descriptive chronology of activities undertaken during Phase I. 5The six were Totogalpa and Yalagüina municipalities in the department of Madriz, and Ciudad Darío, El Tuma- La Dalia, Esquipulas, and Terrabona municipalities in the department of Matagalpa. 4.