Document of The World Bank FOR OFFICIAL USE ONLY Public Disclosure Authorized Report No: 35795-PA PROJECT APPRAISAL DOCUMENT ON A PROPOSED GRANT FROM THE Public Disclosure Authorized GLOBAL ENVIRONMENT FACILITY TRUST FUND IN THE AMOUNT OF US$6.0 MILLION TO THE REPUBLIC OF PANAMA FOR A RURAL PRODUCTIVITY AND CONSOLIDATION OF THE ATLANTIC Public Disclosure Authorized MESOAMERICAN BIOLOGICAL CORRIDOR PROJECT May 11,2006 Environmentally and Socially Sustainable Development Central America Country Management Unit Latin America and the Caribbean Region Public Disclosure Authorized This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCY EQUIVALENTS (Exchange Rate Effective January 3 1,2006) Currency Unit = Balboa 1 Balboa = US$1 FISCAL YEAR January 1 - December 31 ABBREVIATIONS AND ACRONYMS AIP Annual Implementation Plan ANAM National Environment Authority CCA Comisidn Consultativa Ambiental (Consultative Environmental Commission) DBC Department of Biological Corridors FM Financial Management GOP Government of Panama MBC Mesoamerican Biological Corridor MBC-P Panamanian Mesoamerican Biological Corridor MIDA Ministry of Agricultural Development. NGO Non-governmental Organization NRM Natural Resource Management PAMBC Atlantic Mesoamerican Biological Corridor Project PIP Project Implementation Plan POA Annual Operating Plan SINAP National Protected Areas System SMAP Sistema de Monitoreamiento de Areas Protegidas (Protected Areas Monitoring System) SNMDB Sistema Nacional de Monitoreamiento de Biodiversidad (National Biodiversity Monitoring System) TA Technical Assistance UAM Unidad Ambiental Municipal (Municipal Environmental Unit) Vice President: Pamela Cox Country Director: Jane Armitage Sector Director: Laura Tuck Sector Manager: Mark Cackler Task Team Leader: Matthew A. McMahon PANAMA Rural Productivity and Consolidation of the Mesoamerican Biological Corridor Project CONTENTS Page A . STRATEGIC CONTEXT AND RATIONALE ................................................................. 1 1. Country and sector issues.................................................................................................... 1 2 . Rationale for Bank involvement ......................................................................................... 4 3 . Higher level objectives to which the project contributes .................................................... 5 B. PROJECT DESCRIPTION................................................................................................. 8 1. Financing instrument .......................................................................................................... 8 2 . Project Development Objective .......................................................................................... 8 3 . Project Global Environmental Objective and Key Indicators ............................................. 8 4 . Project components ............................................................................................................. 9 5 . Lessons learned and reflected in the project design.......................................................... 10 6 . Alternatives considered and reasons for rejection ............................................................ 12 C. IMPLEMENTATION ........................................................................................................ 12 1. Institutional and implementation arrangements ................................................................ 12 2 . Monitoring and evaluation of outcomes/results ................................................................ 15 3 . Sustainability and Replicability ........................................................................................ 15 Critical risks and possible controversial aspects ....................................................................... 16 D. APPRAISAL SUMMARY ................................................................................................. 18 1. Economic and financial analyses ...................................................................................... 18 2 . Technical ........................................................................................................................... 18 3 . Fiduciary ........................................................................................................................... 19 4 . Social ................................................................................................................................. 19 5 . Environment ...................................................................................................................... 20 6 . Safeguard policies ............................................................................................................. 21 7 . Policy Exceptions and Readiness...................................................................................... 23 Annex 1: Country and Sector or Program Background ......................................................... 24 Annex 2: Major Related Projects Financed by the Bank and/or other Agencies ................. 31 Annex 3: Results Framework and Monitoring ........................................................................ 32 Annex 4: Detailed Project Description ...................................................................................... 40 Annex 5: Project Costs ............................................................................................................... 49 Annex 6: Implementation Arrapgements ................................................................................. 50 Annex 7: Financial Management and Disbursement Arrangements..................................... 54 Annex 8: Procurement Arrangements ...................................................................................... 60 Annex 9: Economic and Financial Analysis ............................................................................. 65 Annex 10: Safeguard Policy Issues............................................................................................ 68 Annex 11: Project Preparation and Supervision ..................................................................... 82 Annex 12: Documents in the Project File ................................................................................. 83 Annex 13: Statement of Loans and Credits .............................................................................. 84 Annex 14: Country at a Glance ................................................................................................. 85 Annex 15: Incremental Cost Analysis ....................................................................................... 87 Annex 16: STAP Roster Review ................................................................................................ 95 Annex 17: Selection of Project Area ........................................................................................ 109 Annex 18: Map .......................................................................................................................... 147 PANAMA RURAL PRODUCTIVITY AND CONSOLIDATION OF THE ATLANTIC MESOAMERICAN BIOLOGICAL CORRIDOR PROJECT PROJECT APPRAISAL DOCUMENT LATIN AMERICA AND CARIBBEAN LCSER Date: May 10, 2006 Team Leader: Matthew A. McMahon Country Director: Jane Armitage Sectors: General agriculture, fishing and Sector ManagerDirector: Laura Tuck forestry sector (75%);Agricultural marketing Project ID: PO64918 and trade (lS%);Agro-industry (10%) Lending Instrument: Specific Investment Loan Themes: Rural markets (P);Export development and competitiveness (P);Technology diffusion (P);Other rural development (S) Environmental screening category: Partial Assessment Global Supplemental ID: PO83045 Team Leader: Matthew A. McMahon Lending Instrument: Specific Investment Loan Sectors: General agriculture, fishing and Focal Area: B-Biodiversity forestry sector (75%);Sub-national government Supplement Fully Blended?: No administration (15%);Central government administration (10%) Themes: Biodiversity (P);Small and medium enterprise support (P);Participation and civic engagement (P);Rural non-farm income generation (S);Decentralization (S) Project Financing Data [ ] Loan [ ] Credit [XI Grant [ ] Guarantee [ ] Other: For Loans/Credits/Others: Total Bank financing (US$m.): 0.00 Borrower: Ministry of Economy and Finance Via Espana Calle 52 Panama PanamaFax: 507-269-5863 Responsible Agency: ANAM Albrook, Edificio No.804 Panama Panama Tel: 507-3 15-0855 Fax: 507-3 5-066 I FY 2007 2008 2009 2010 2011 2012 0 0 0 Annual 1.10 1.20 1.50 1.20 0.70 0.30 0.00 0.00 0.00 Cumulative 1.10 2.30 3.80 5.00 5.70 6.00 6.00 6.00 6.00 Project implementation period: Start April 2,2007 End: March 30,2012 Expected effectiveness date: March 2, 2007 Expected closing date: September 28, 2012 Does the project depart from the CAS in content or other significant respects? [ ]Yes [XINO Ref. PAD A.3 Does the project require any exceptions from Bank policies? Ref. PAD 0.7 [ ]Yes [XINO Have these been approved by Bank management? [ ]Yes [ IN0 [ ]Yes [XINO Does the project include any critical risks rated “substantial” or “high”? [ ]Yes [XINO Ref. PAD C.5 Does the project meet the Regional criteria for readiness for implementation? [XIYes [ ]No Ref. PAD 0.7 Project development objective Ref. PAD B.2, Technical Annex 3 Global Environment