Document of The World Bank Public Disclosure Authorized Report No: 25074-PE PROJECT APPRAISAL DOCUMENT Public Disclosure Authorized ONA GLOBAL ENVIRONMENTAL FACILITY PROPOSED GRANT IN THE AMOUNT OF SDR1 1 MILLION (US$14.8 MILLION EQUIVALENT) TO THE PERUVIAN NATIONAL TRUST FUND FOR PROTECTED AREAS - PROFONANPE PERU Public Disclosure Authorized FOR THE IMPLEMENTATION OF A PARTICIPATORY MANAGEMENT OF PROTECTED AREAS PROJECT FEBRUARY 20, 2003 Public Disclosure Authorized Environmentally and Socially Sustainable Development Sector Management Unit Bolivia, Ecuador, Peru and Venezuela Country Management Unit Latin America and Caribbean Region CURRENCY EQUIVALENTS (Exchange Rate Effective November 18, 2002) Currency Unit = New Soles S/. 3.6 = US$1 US$1 = S/. 0.28 FISCAL YEAR 1 January - December 31 ABBREVIATIONS AND ACRONYMS CAS Country Assistance Strategy CBD Convention on Biological Diversity CEPF Critical Ecosystems Partnership Fund CHM Clearing House Mechanism CI Conservation Intemational (NGO) CONABID National Biodiversity Commission CONAM National Environmental Council COP Conference of the Parties to the Biological Diversity Convention DGANP General Directorate of Natural Protected Areas EF Environmental Framework EMP Environmental Management Plan EU European Union FANPE Proyecto Fortalecimiento del Sistema Nacional de Areas Naturales Protegidas PONANPE National Fund for the Natural Protected Areas GEF Global Environmental Facility GOP Government of Peru GTZ German Technical Cooperation ICR Implementation Completion Report INRENA National Natural Resources Institute KfW Kreditanstallt fur Wiederaufbau MAG Ministry of Agriculture MIS Management Information System NGO(s) Non-Govemment Organization(s) NPA Natural Protected Areas OP Operational Program PA(s) Protected Area(s) PAMC(s) Protected Area Management Committee(s) PCD Project Concept Document PIMA Indigenous Management of Protected Areas in the Peruvian Amazon Project PNH Huascaran National Park PRONAMACHCS National Program for River Basin Management and Soil Conservation PROFONANPE Peruvian National Trust Fund for Protected Areas RNSAB Salinas y Aguada Blanca National Reserve RNT/PNBS Tambopata National Reserve and Bahuaja Sonene National Park SBSTrA Subsidiary Body on Scientific, Technical, and Technological Affairs (of the CDB) SINANPE National Natural Protected Areas System of Peru SNLMT National Sanctuary Los Manglares de Tumbes UNDP United Nations Development Program WB World Bank Vice President: David de Ferranti Country Director: Marcelo Giugale Sector Director: John Redwood Task Team Leader: Pierre Werbrouck PERU PARTICIPATORY MANAGEMENT OF PROTECTED AREAS CONTENTS A. Project Development Objective Page 1. Project development objective 2 2. Key performance indicators 2 B. Strategic Context 1. Sector-related Country Assistance Strategy (CASi goal supported by the project 3 2. Main sector issues and Government strategy 4 3. Sector issues to be addressed by the project and sirategic choices 5 C. Project Description Summary 1. Project components 7 2. Key policy and institutional reforms supported by the project 9 3. Benefits and target population 9 4. Institutional and implementation arrangements 10 D. Project Rationale 1. Project alternatives considered and reasons for rejection 12 2. Major related projects financed by the Bank and/or other development agencies 12 3. Lessons learned and reflected in the project design 17 4. Indications of borrower and recipient commitment and ownership 20 5. Value added of Bank and Global support in this project 20 E. Summary Project Analysis 1. Economic 21 2. Financial 21 3. Technical 21 4. Institutional 22 5. Environmental 24 6. Social 25 7. Safeguard Policies 28 F. Sustainability and Risks 1. Sustainability 29 2. Critical risks 29 3. Possible controversial aspects 31 G. Main Grant Conditions 1. Effectiveness Condition 31 2. Other: 1. Effectiveness Conditions and 2. Disbursement Conditions 31 H. Readiness for Implementation 32 I. Compliance with Bank Policies 32 Annexes Annex 1: Project Design Summary 33 Annex 2: Detailed Project Description 37 Annex 3: Estimated Project Costs 44 Annex 4: Incremental Cost Analysis 46 Annex 5: Financial Summary 51 Annex 6: Procurement and Disbursement Arrangements 52 Annex 7: Project Processing Schedule 59 Annex 8: Documents in the Project File 60 Annex 9: Statement of Loans and Credits 61 Annex 10: Country at a Glance 63 Annex 11: Protected Areas Profiles 65 Annex 12: Environmental Assessment 71 Annex 13: Social Assessment and Strategy 75 Annex 14: Institutional Analysis and Implementation Arrangements 86 Annex 15: Implementation Plan 91 Annex 16: Endowment Fund Asset Management Strategy 93 Annex 17: Financial Gap Analysis and Follow-up Strategy 96 MAP(S) IBRD 30828 and IBRD 32190 PERU Participatory Management of Protected Areas Project Appraisal Document Latin America and Caribbean Region LCSEPR Date: February 20, 2003 Team Leader: Pierre Werbrouck Sector Director: John Redwood Sector(s): Other social services (45%), Forestry (40%), Country Director: Marcelo Giugale Central government administration (10%), Sub-national Project ID: P068250 government administration (5%) Focal Area: B - Biodiversity Theme(s): Civic engagement, participation and community driven development (P), Biodiversity (P), Environmental policies and institutions (P) Project Firiancing Data - , - - - : [ Loan [] Credit [X] Grant [ ] Guarantee [ ] Other: For Loans/Credits/Others: Amount (US$m): 14.8 Financing. Plan (US$m): Source - . - Local - Foreign, Total BORROWER/RECIPIENT 2.46 0.50 2.96 GLOBAL ENVIRONMENT FACILITY 10.30 4.50 14.80 FINLAND, GOV. OF (EXCEPT FOR MIN.FOR FOREIGN 0.00 2.50 2.50 AFFAIRS) GERMANY: KREDITANSTALT FUR WIEDERAUFBAU 4.38 2.20 6.58 (KFW) NETHERLANDS: MIN. OF FOREIGN AFFAIRS / MIN. OF 3.64 0.80 4.44 DEV. COOP. LOCAL FARMER ORGANIZATIONS 0.53 0.00 0.53 NON-GOVERNMENT ORGANIZATION (NGO) OF 1.00 0.00 1.00 BORROWING COUNTRY Total: 22.31 10.50 32.81 Borrower/Recipient: PROFONANPE PERUVIAN NATIONAL TRUST FUND FOR PROTECTED AREAS Responsible agency: PROFONANPE Address: Prolongaci6n Arenales No. 722, San Isidro, Lima, Peru Contact Person: Alberto Paniagua, Director Tel: 51-1-2121010 Fax: 51-1-212 1011 Email: [email protected] Estimated Disbursements ( Bank FY/US$m): A *> --'2003:.: 2dol*,04'4 --§2005 2006-; - s} -28 '200927200 Annual 3.61 1.56 2.31 2.89 2.35 1.88 0.20 Cumulative 3.61 5.17 7.48 10.37 12.72 14.60 14.80 Project implementation period: From April 15, 2003 to April 14, 2009 Expected effectiveness date: 04/15/2003 Expected closing date: 10/14/2009 Lo,Ab. dt*n A. Project Development Objective 1. Project development objective: (see Annex 1) The project's development objectives are: (i) to ensure biodiversity conservation by increasing the involvement of civil society institutions and the private sector in planning and sustainable management of at least five protected areas (PAs) of the Peruvian System of Natural Protected Areas (SINANPE), and one PA to be created during project implementation; and (ii) to obtain sustainability for the financing of recurrent costs in SINANPE. The PAs are: Tambopata-Candamo National Reserve, Bahuaja-Sonene National Park, Salinas and Aguada Blanca National Reserve, Huascaran National Park, Manglares de Tumbes National Sanctuary, and Morona Pastaza prospective PA. The first five PAs were selected using criteria explained in Annex 11. Morona Pastaza was selected by INRENA and cofinancier KfW. During project implementation additional PAs could be included. SINANPE's financial sustainability will be increased by an additional endowment of US$6 million to the Peruvian National Trust Fund for Protected Areas (PROFONANPE) endowment fund which will allow an additional US$250,000 per year for recurrent cost financing. A strategy for long-term financing of SINANPE will help to channel these resources. The project will build upon the experience gained during first GEF Grant to PROFONANPE, supporting the Trust Fund's establishment and development of its capacity to attract financial resources for conservation. Over the last years PROFONANPE has ensured the funding of the basic operational costs in twelve PAs. One important instrument for project implementation will be the equal participation of women in planning, management of PAs and monitoring and evaluating of PA management. The global objective of the project is to contribute to the conservation of biodiversity of global importance. Peru, in terms of its total number of species, levels of endemism, and range of habitats, is considered to be one of the world's great centers of biological diversity. Peru has been classified as one of earth's seventeen mega-diverse countries. In terms of species, Peru leads the world in numbers of butterflies, orchids, and endemic invertebrates. It also accounts for a total of 460 mammals and 1705 bird species, or 10 and 19 percent, respectively, of the world's total. As an indicator of its habitat diversity, Peru has been documented to have more life zones than any other country on earth with 84 of the world's 110 life zones identified in Holdridge's Life Zones System. In terms of its agro-biodiversity, the country is considered to be one of the five world centers of origin of cultivated plants and has an immense natural germplasm resource of useful wild species. In part, this rich endowment can be attributed to Peru's 675,000 km' of Amazon rainforest (including the Peruvian and Bolivian Yungas), the largest continuous forest on earth representing 40% of all remaining tropical forests