Madagascar Country Environmental Analysis May 2013 May 2013 Public Disclosure Authorized Madagascar Country Environmental Analysis (CEA) Taking Stock and Moving Public Disclosure Authorized Forward Public Disclosure Authorized Public Disclosure Authorized i Madagascar Country Environmental Analysis May 2013 Acknowledgements The World Bank Country Environmental Assessment (CEA) for Madagascar was task-managed by Jean- Christophe Carret (Sector Leader, AFTSN). The lead consultancy was undertaken by Alison Clausen (Climate Change Adaptation and Environmental Consultant, AFTN1) with contributions from (in alphabetical order): • Chapter 2: Juerg Brand, Adele Faure, Pierre-Noel Giraud, Jean-Baptiste Marre, and Timothée Olivier • Chapter 3: Iharimamy Andriamarozaka, Mohammed Bekhechi, Amelie Voninirina and the study team from DELC/World Resources Institute • Chapter 4: Lalalison Razafintsalama and the study teams from Agreco, Industrial Economics Consulting and Practical Action Consulting Peer reviewers were Tuukka Castren (Senior Forestry Specialist, AES), Paul Jonathon Martin (Sector Leader, AFTSN) and Helena Naber (Environmental Specialist, MNSEN). Other World Bank staff that provided valuable comments on the report included (in alphabetical order): André de Aquino (Carbon Finance Specialist, CPFCF), Benoit Bosquet (Sector Manager, AFTN1), Haleh Bridi (Country Director, AFCS4), Paul-Jean Feno (Senior Environmental Specialist, AFTN1), Stig Johansson (Senior Forestry Specialist, AES), Glenn-Marie Lange (Program Manager WAVES, AES), Anne-Lucie Lefebvre (Senior Public Sector Specialist, AFTP1), Jacques Morriset (Lead Economist, AFTP5), Remi Pelon (Senior Mining Specialist, SEGM2), Idah Pswarayi-Riddihough (Director, SARSQ), Bienvenu Rajaonson (Senior Environmental Specialist, AFTN1), Olivia Rakotomalala (Operations Analyst, AFTN1), and Giovanni Ruta (Senior Environmental Economist, AFTN1). Erick Rabemananoro provided communications support for the CEA, and Rondro Rajaobelison provided invaluable administrative support for the team. In addition to the World Bank’s own resources, the financial support from the Multi Donor Trust Fund for Country Environmental Analysis is gratefully acknowledged. ii Madagascar Country Environmental Analysis May 2013 Table of Contents Acknowledgements ................................................................................................. ii Abbreviations and Acronyms .................................................................................. vii Executive Summary ................................................................................................. x Chapter 1: Introduction ............................................................................................ 1 I. Background and Context .................................................................................................. 1 II. CEA Objectives, Outcomes and Methodology.................................................................... 2 III. Structure of the CEA ..................................................................................................... 3 Chapter 2: Identification of Environment – Development Priorities ............................. 4 I. Evolution and Status of Environmental Challenges ............................................................ 4 1. Madagascar’s Natural Capital ................................................................................................ 4 2. Terrestrial Ecosystem Degradation ....................................................................................... 5 3. Agricultural Land, Soil Fertility and Erosion ......................................................................... 10 4. Degradation of Coastal and Marine Ecosystems ................................................................. 11 5. Environmental Pollution ...................................................................................................... 15 6. Natural Disasters and Climate Change ................................................................................ 17 II. Evaluation of the Costs of Environmental Degradation .................................................... 18 III. Sustainability of Madagascar’s Development Pathway ................................................ 19 IV. Poverty-Environment Linkages in Madagascar ............................................................ 21 V. Identification of Environment-Development Priorities .................................................... 23 Chapter 3: Environmental and Natural Resources Governance in Madagascar ............ 25 I. Evaluation of Environment Sector Governance ............................................................... 25 1. Policy Framework and Policy Making Processes ................................................................. 25 2. Institutional Structure, Capacity and Resources ................................................................. 27 3. Legislative and Regulatory Framework ............................................................................... 31 4. Rights of Access and the Role of Civil Society ..................................................................... 33 II. Examples of Applied Environmental Governance in Madagascar ..................................... 39 1. Governance challenges related to Madagascar’s involvement in a future REDD+ performance payment mechanism .............................................................................................. 39 2. Governance challenges associated with the management of products of illegal exploitation of precious timber .................................................................................................... 44 III. Public Environmental Expenditure Review .................................................................. 51 1. Environment Sector Revenues ............................................................................................ 51 2. Environment Sector Expenditure ........................................................................................ 52 IV. Suggestions for Improved Governance in the Environment Sector ............................... 56 Chapter 4: Analysis of Selected Environment Sector Public Policies ........................... 59 I. Sustainable Financing of the Protected Area Network ..................................................... 59 1. Description of Madagascar’s Protected Area Network ....................................................... 59 2. Current Costs and Financing Sources of the Protected Area Network ............................... 62 3. Future Costs and Financing Sources for the Protected Area Network ................................ 65 4. Mechanisms for Offsetting Opportunity Costs of Protected Area Network Creation ........ 67 II. Planning for Climate Resilient Institutions and Development in Madagascar ................... 69 1. Overview of Madagascar’s Climate Characteristics and Historic Climate Trends ............... 69 2. Projected Changes in Average Climate and Extreme Events in Madagascar ...................... 70 3. Future Economic and Social Impacts of Climate Change in Madagascar ............................ 76 iii Madagascar Country Environmental Analysis May 2013 4. Institutional, Policy and Legislative Challenges and Possible Responses ............................ 78 III. Environmental Regulation of Madagascar’s Mining Industry ....................................... 82 1. Overview of Madagascar’s Mining Sector ........................................................................... 82 2. Overview of Existing Environmental Regulation Framework .............................................. 87 3. Challenges in the Application of the Existing Environmental Regulation Framework ........ 89 4. Priority Issues for Strengthening of the Environmental Regulation Framework ................ 92 IV. Combating Household Air Pollution and Deforestation through Improved Cookstoves . 95 1. Feasibility and Benefits of a Large-Scale Ethanol Cookstove Program in Madagascar ....... 96 2. Institutional and Technical Requirements for Ethanol Cookstove Program Development 98 Chapter 5: Moving Forward ................................................................................... 101 I. Where to from here for Madagascar’s Environment Sector? ......................................... 101 1. Introduction ....................................................................................................................... 101 2. Past and Current Engagement in the Environment Sector by the World Bank ................ 101 3. Future Priorities for the World Bank in the Environment Sector ...................................... 104 References .......................................................................................................... 107 List of Tables Table 2.1: Breakdown of Value of Madagascar’s Natural Capital ....................................................... 5 Table 2.2: Estimated Costs of Environmental Degradation ............................................................. 19 Table 2.3: Poverty – Environment Linkages of Key Environmental Challenges ............................... 22 Table 3.1: Madagascar’s Environment Policy – Priority Challenges and Proposed Responses ......... 26 Table 3.2: Key Directorates within MEF .......................................................................................... 28 Table 3.3: Madagascar’s International Environmental Agreements ................................................