Document of The World Bank FOR OFFICIAL USE ONLY Public Disclosure Authorized Report No: 41202 - BO PROJECT APPRAISAL DOCUMENT ON A Public Disclosure Authorized PROPOSED CREDIT IN THE AMOUNT OF SDR 12.80 MILLION (US$ 20 MILLION EQUIVALENT) TO THE REPUBLIC OF BOLIVIA FOR A Public Disclosure Authorized SECOND PARTICIPATORY RURAL INVESTMENT PROJECT NOVEMBER 19, 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 24, 2007 Currency Unit = = US$1 SDR 1 = US$ 1.56 FISCAL YEAR January 1 – December 31 ABBREVIATIONS AND ACRONYMS AMDES Departmental Municipal Associations APG Guarani Peoples Assembly (Asamblea del Pueblo Guaraní) POA Annual Operating Plan (Plan Operativo Anual) CDAP Departmental Project Approval Committee (Comité Departamental de Aprobación de Proyectos) CEPESC Federation of Indigenous Peoples of Santa Cruz (Central Pueblos Indigenas Santa Cruz) CIDOB Indigenous Confederation of Bolivia (Confederación Indígena de Bolivia) CIROBO Indigenous Coordination Office for the Bolivian Amazon Region (Coordinadora Indígena de la Región Amazónica de Bolivia) CODEL Local Economic Development Committee CONADES National Council for Decentralization CONAMAQ National Council of Markas and Ayllus of Qullasuyu CPIB Federation of Indigenous Peoples of Beni (Central Pueblos Indigenas del Beni) CUT Single Treasury Account CUT – ME Single Treasury Account in US Dollars DA Designated Account DANIDA Danish International Development Agency DILPE Local Economic Promotion Directorates DUF Consolidated Bureau of Funds (Directorio Unico de Fondos) EA Environmental Assessment EMF Environmental Management Framework FAM Federation of Municipal Associations (Federación de Asociaciones Municipales) GOB Government of Bolivia FDC Small-Farmer Development Fund (Fondo de Desarrollo Campesino) FPS Productive and Social Investment Fund (Fondo de Inversión Productiva y Social) HIPC-II Second debt-reduction program IADB Inter-American Development Bank ICR Implementation Completion Report IDH Human Development Index IFR Interim Financial Report IRR Internal Rate of Return ISN Interim Strategy Note LIL Learning and Innovation Loan FOR OFFICIAL USE ONLY MAS Movement Toward Socialism (Movimiento al Socialismo) MMs Group of municipalities - municipal associations (mancomunidades) MP Ministry of the Presidency M&E Monitoring and Evaluation PDM Municipal Development Plan MG Municipal Government NDP National Development Plan NDL National Dialogue Law NSRD National Secretariat of Rural Development (Secretaría Nacional de Desarrollo Rural) NPV Net Present Value NGOs Non-governmental Organizations NOU National Operating Unit OECA Small-farmer Economic Organizations O&M Operations and Maintenance OM Operations Manual PRI First Participatory Rural Investment Project (also, PDCR II) PRI II Second Participatory Rural Investment Project PPL Popular Participation Law PMIS Project management information system RCDP Rural Communities Development Project (PDCR) SAP Administrative Subprojects System (Sistema de Administración de Proyectos) SDC Swiss Development Corporation SERNAP National Protected Areas Service SME Small and Medium Enterprises SNDR National Secretariat of Rural Development SNPP Secretariat for Popular Participation SOE Statement of Expenditure TA Technical Assistance OTBs Territorially-based Organizations TOU Territorial Operating Unit UEAF Administrative Financial Liaison Unit VIPFE Viceministry for Public Investment and External Finance VMD Viceministry of Decentralization WHO World Health Organization Vice President: Pamela Cox Country Director: Felipe Jaramillo Country Manager (Acting): David Tuchschneider Sector Manager: Ethel Sennhauser Task Team Leader: Mark A. Austin 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 Second Participatory Rural Investment CONTENTS Page I. STRATEGIC CONTEXT AND RATIONALE ................................................................. 1 A. Country and sector issues....................................................................................................1 B. Rationale for Bank involvement ......................................................................................... 3 C. Higher level objectives to which the project contributes.................................................... 4 II. PROJECT DESCRIPTION ............................................................................................. 4 A. Lending instrument............................................................................................................. 4 B. Program objective and Phases (NA).................................................................................. 4 C. Project development objective and key indicators.............................................................. 4 D. Project components............................................................................................................. 5 E. Lessons learned and reflected in the project design............................................................ 7 F. Alternatives considered and reasons for rejection .............................................................. 8 III. IMPLEMENTATION ...................................................................................................... 9 A. Partnership arrangements.................................................................................................... 9 B. Institutional and implementation arrangements.................................................................. 9 C. Monitoring and evaluation of outcomes/results................................................................ 12 D. Sustainability..................................................................................................................... 13 E. Critical risks and possible controversial aspects............................................................... 14 F. Loan/credit conditions and covenants............................................................................... 16 IV. APPRAISAL SUMMARY ............................................................................................. 16 A. Economic and financial analyses...................................................................................... 16 B. Technical........................................................................................................................... 17 C. Fiduciary ........................................................................................................................... 17 D. Social................................................................................................................................. 19 E. Environment...................................................................................................................... 19 F. Safeguard policies............................................................................................................. 19 G. Policy Exceptions and Readiness...................................................................................... 20 Annex 1: Country and Sector or Program Background ......................................................... 21 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...................................................................................... 43 Annex 5: Project Costs ............................................................................................................... 57 Annex 6: Implementation Arrangements ................................................................................. 58 Annex 7: Financial Management and Disbursement Arrangements..................................... 68 Annex 8: Procurement Arrangements...................................................................................... 83 Annex 9: Economic and Financial Analysis ............................................................................. 93 Annex 10: Safeguard Policy Issues.......................................................................................... 102 Annex 11: Project Preparation and Supervision ................................................................... 117 Annex 12: Documents in the Project File ............................................................................... 119 Annex 13: Statement of Loans and Credits............................................................................ 120 Annex 14: Country at a Glance ............................................................................................... 121 Annex 15: Geographical Area and Beneficiaries ................................................................... 123 Annex 16: Detailed Lessons Learned ...................................................................................... 130 Annex 17: Results of Rural Development Programs (1995 to present) ..............................