Document of The World Bank FOR OFFICIAL, USE ONLY Public Disclosure Authorized Report No: 41251-BO PROJECT APPRAISAL, DOCUMENT ONA PROPOSED CREDIT Public Disclosure Authorized IN THE AMOUNT OF SDR 12.8 MILLION (US$20 MILLION EQUIVALENT) TO THE REPUBLIC OF BOLIVIA FOR A LAKE TITICACA LOCAL, SUSTAINABLE DEVELOPMENT PROJECT Public Disclosure Authorized November 20,2007 Sustainable Development Department Country Management Unit for Bolivia, Ecuador, Peru and Venezuela 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 October 3 1,2007) Currency Unit = BOB Boliviano BOB7.8 = US$1 FISCAL YEAR January 1 - December 31 ABBREVIATIONS AND ACRONYMS ALT Binational Lake Titicaca Authority BSTC Basic Services Technical Committee CAS Country Assistance Strategy CBT Community-based Tourism CMU Country Management Unit cso Civil Society Organization DPL Development Policy Lending EIA Environmental Impact Assessment EMA Empresa Municipal de Aseo - Municipal Trash Collection Agency EMF Environmental Management Framework ENAPA Entidad de Agua Potable y Alcantarillado Sanitario - Drinking Water and Sanitary Sewer Agency EPSA Entidad Prestadora de Sewicios de Agua Potable y Alcantarillado Sanitario - Drinking Water and Sanitary Sewer Service Provision Agency FMR Financial Management Report FPS Fondo Nacional de Inversidn Productiva y Social - National Productive and Social Investment Fund GEF Global Environmental Fund GIS Geographic Information System IBRD International Bank for Reconstruction and Development ICB International Competitive Bidding ICSDLT Inter-institutional Committee for the Sustainable Development of Lake Titicaca IDA International Development Association IFC International Finance Corporation IJC International Joint Commission IPP Indigenous Peoples Plan IRR Internal Rate of Return LCR Latin America and the Caribbean Region MDG MillenniumDevelopment Goals M&E Monitoring and Evaluation MPME Ministry of Production and Micro Enterprise NCB National Competitive Bidding NDP National Development Plan NGO Non Governmental Organization NGS National Geographic Society NPV Net Present Value NTP National Tourism Plan OM Operational Manual OTB Organizaciones Territoriales de Base - Grassroots Organizations FOR OFFICIAL USE ONLY O&M Operation and Maintenance PAS Producer Associations PCN Project Concept Note PCU Project Coordination Unit PDCR Proyecto de Desarrollo de Comunidades Rurales - Rural Development Project PLP Prefecture of La Paz POA Plan Operativo Anual- Annual Operating Plan PPF Project Preparation Facility PPL Popular Participation Law - Ley de Participacidn Popular PRIP Participatory Rural Investment Project PRS Project Regional Council PSC Public Service Committee QBS Quality Based Selection RAP Resettlement Action Plan RPF Resettlement Policy Framework SA Social Assessment SBD Standard Bidding Document scs Social Communication Strategy SIGMA Government’s integrated financial management system sss Single Source Selection TDPS Titicaca-Desaguadero-Poop6-Salar de Coipasa Hydrologic Basin T&T Travel and Tourism TTCI Travel and Tourism Competitiveness Index VDC Vice Ministry for the Development of Cultures VIPFE Vice Ministry of Public Investment and External Financing VMT Vice Ministry of Tourism VSB Vice Ministry of Basic Services WEF World Economic Forum WTO World Tourism Organization Vice President: Pamela Cox Country Director: C. Felipe Jaramillo Country Manager David Tuchschneider Sector Director: Laura Tuck Task Team Leader: Daniel Hoornweg 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. BOLIVIA Lake Titicaca Local Sustainable Development Project CONTENTS Page I. STRATEGIC CONTEXT AND RATIONALE .................................................................. 1 A . Country and sector issues ................................................................................................................. 1 B. Rationale for Bank involvement ....................................................................................................... 6 C . Higher level objectives to which the Project contributes ................................................................. 7 I1. PROJECT DESCRIPTION .................................................................................................. 7 A . Lending instrument .......................................................................................................................... 7 B. Project development objective and key indicators ........................................................................... 8 C . Project components .......................................................................................................................... 9 D. Lessons learned and reflected in the Project design. ...................................................................... 13 E. Alternatives considered and reasons for rejection.......................................................................... 14 I11. IMPLEMENTATION ......................................................................................................... 15 A . Institutional and implementation arrangements ............................................................................ -15 B. Monitoring and Evaluation., ........................................................................................................... 16 C . Sustainability .................................................................................................................................. 17 D. Critical risks and possible controversial aspects ............................................................................ 17 E. Credit conditions and covenants .................................................................................................... 19 IV. APPRAISAL SUMMARY .................................................................................................. 20 A . Economic and financial analyses ................................................................................................... 20 B. Technical ........................................................................................................................................ 21 C . Fiduciary ........................................................................................................................................ 21 D. Social .............................................................................................................................................. 22 E. Physical Cultural Resources ........................................................................................................... 23 F. Environmental Category: B ............................................................................................................ 23 G. Safeguard policies .......................................................................................................................... 24 H. Policy Exceptions and Readiness ................................................................................................... 24 Annex 1: Country and Sector or Program Background .......................................................... 25 Annex 2: Major Related projects Financed by the Bank and/or other Agencies .................. 34 Annex 3: Results Framework and Monitoring ......................................................................... 42 Annex 4: Project Costs ................................................................................................................ 48 Annex 5: Detailed Project Description....................................................................................... 51 Annex 6: Implementation Arrangements .................................................................................. 56 Annex 7: Financial Management and Disbursement Arrangements ...................................... 61 Annex 8: Procurement Arrangements ....................................................................................... 75 Annex 9: Economic and Financial Analysis .............................................................................. 84 Annex 10: Social Safeguards ....................................................................................................... 89 Annex 11: Environment Safeguards ........................................................................................ 114 Annex 12: Geo-tourism Needs Assessment by National Geographic Society ....................... 121 Annex 13: Community Demand Driven Initiatives ................................................................ 133 Annex 14: State of the Lake-Executive Summary .................................................................. 136 Annex 15: Cultural Heritage Investments in Lake Titicaca .................................................. 153 Annex 16: FPS Action Plan....................................................................................................... 157 Annex 17: Project Preparation and Supervision .................................................................... 167 Annex 18: Documents in the Project File ...............................................................................