Arenales, San Isidro, Lima, Peru, Contact Person: Alberto Paniagua, Director; Tel: Fax:

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1 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Project Name Region Sector Project ID Grantee: Implementing agency Report No. PID10125 Peru-Participatory Management of... Protected Areas Latin America and Caribbean Region Environment P PROFONANPE Date this PID prepared August 24, 2002 Projected appraisal date November 11, 2002 Projected Board date March 15, 2003 Country and Sector background: PROFONANPE, 722, Prolongaci6n Arenales, San Isidro, Lima, Peru, Contact Person: Alberto Paniagua, Director; Tel: Fax: Despite the global importance of the country's vast biodiversity endowment, this richness is increasingly at risk. Peru has an estimated 222 species in the process of extinction, including 81 aquatic species. This accelerated loss of biodiversity is the result of unsustainable human activities, among them deforestation, soil erosion, water pollution and illegal trade in wildlife and plants. Mining and oil exploration are major economic activities which generally contribute to the loss of biodiversity when executed without proper environmental standards. Major identified constraints affecting the public sector's capacity to address biodiversity conservation issues include the following: (i) limited policy development and implementation capacity; (ii) market failure and forgone revenues for protected areas; (iii) limited financial resources and absence of a self-financing policy; (iv) weak public sector capacity to work with civil society and private sector institutional agents in biodiversity conservation activities; (v) lack of environmental awareness; and (vi) inadequate information management systems. Government Strategy Reflecting the importance Peru gives to its rich biodiversity endowment, the country's National Environmental Council (CONAM) chairs or participates in a number of commissions related to biodiversity conservation. CONAM is also the national focal point for the Global Environmental Facility (GEF). The institution responsible for coordinating activities required under the Convention on Biodiversity (CBD) is the National Commission for Biodiversity (CONADIB). The lead institution responsible for in situ conservation and management of the country's biodiversity is the General Directorate of Natural Protected Areas (DGANP) of the National Institute for Natural Resources (INRENA), under the Ministry of Agriculture (MAG) which has the

2 mandate of administering the country's national system of natural protected areas. The main government policy for in situ biodiversity conservation has been based on the establishment of Peru's Natural Protected Areas System (SINANPE) whose objective is to conserve representative samples of the country's biodiversity by creating and managing protected areas efficiently while guaranteeing that environmental, social and economic benefits accrue to society at large. During the past few years, Peru has taken a series of important steps towards expanding and consolidating its national system of protected areas. Some of the more significant milestones achieved during this process include: (i) approval of the necessary enabling legislation; (ii) strengthening of management capacities of DGANP and PA staff; (iii) preparation of a national strategic plan (Plan Director) for the national protected area system; and (iv) establishment of new protected areas. To assist with the financing of SINANPE, the National Trust Fund for Natural Protected Areas (PROFONANPE) was created with GEF support. Since its creation, PROFONANPE has catalyzed additional funding from the national treasury and bilateral and multilateral sources. These resources have been channeled directly to PAs to support increased staffing levels and operations. To date, PROFONANPE has raised about US$28 million for the country's protected areas and remains very active in identifying and seeking additional funds. Despite these strong achievements, much remains to be done. Many of the system's existing PAs are still not adequately managed and protected. Protected areas are increasingly at risk due to illegal squatters, nonsustainable economic activities in adjacent buffer areas, and poorly-managed tourism development. In conformity with other major public sector reforms, the GOP has provided an opportunity to increase the role for the private sector, NGOs and civil society institutions in the management and conservation of the country's biodiversity resources. The aforementioned strategic plan for SINANPE, the Natural Protected Areas law and its bylaws provide the conceptual and legal framework. The most relevant provisions include: (i) ensuring participation of both the public and private sectors in a system-wide SINANPE Coordination Council; (ii) involving all private, NGO, community-based and civil society organizations, and public sector stakeholders in drawing up PA-specific Master Plans; (iii) strengthening PA Management Committees (PAMCs) as a vehicle for stakeholder participation; (iv) delegating functions inherent to the management of PAs to private agencies; and (v) allowing the establishment of private conservation areas. Project objectives The project's development objective is to ensure biodiversity conservation by (i) increasing the involvement of civil society institutions and the private sector in the planning and sustainable management of 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 additional financial sustainability for the financing of recurrent costs in SINANPE. The six 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 Abanico de Morona Pastaza. - 2-

3 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. Despite a series of field inventories estimated to cover only two-thirds of the national territory, Peru has already been classified as one of earth's seventeen megadiverse countries Project description The project has three main components: (i) participatory protected area management, (ii) institutional development, and (iii) protected area financing, project administration, monitoring and evaluation and information dissemination. Project Component 1: Participatory Protected Area Management (US$17.55 million;57.1- of total project cost. GEF US$9.47 million; Netherlands cofinancing US$2.17 million, Germany parallel financing US$4.27 million). The objective of this component is to allow civil society and private sector organizations to actively participate in the decision-making processes leading to the management of protected areas, and to share the benefits resulting from them. Outputs.- The expected outputs of this component will be: (i) five PA master plans prepared and one updated (Huascaran), all of them substantially implemented; (ii) a series of supporting studies and PA-specific data baselines prepared, to support management, monitoring and evaluation activities; (iii) Protected Areas Management Committees (PAMC) fully functional in each participating PA; (iv) up to three PAs and a series of services and concessions in support of management objectives contracted out to civil society and/or private sector organizations/consortiums; (v) basic infrastructure established, and equipment and staff requirements provided to ensure conservation of biodiversity of international importance in six PAs; and (vi) an estimated 150 small-scale development initiatives designed to reduce threats to biodiversity while promoting sustainable economic activities in PA buffers areas. Activities.- To produce the above outputs, the component would support activities in four subcomponents: (i) preparation of participatory PA master plans, including: boundary demarcation, studies, natural resource inventories, targeted research, establishment of management rules and norms, sector plan preparation etc.; (ii) master plan implementation, including infrastructure, equipment and operating costs; (iii) concession and management contracts for PAs; and (iv) support for small-scale, environmentally sustainable economic activities in PA buffer zones and inside Natural Resource Reserves, compatible with management plan objectives. Project Component 2: Institutional Development (US$4.88 million; 15.9t of total project cost. GEF US$1.51 million; Netherlands co-financing US$1.86 million; Germany parallel financing US$1.51). The main objective of this component is to consolidate PA management through: (i) the strengthening of INRENA, PROFONANPE, PAMC and civil society and private sector organizations to work collaboratively in the management of -3 -

4 PAs; (ii) increased public awareness of the importance of Peru's biodiversity and the role of protected areas; and (iii) the development and implementation of a standardized management information system. Outputs.- The expected outputs of this component will be: (i) a strengthened INRENA, PROFONANPE and PAMCs, and increased organizational capacities to manage and administer small-scale projects; (ii) strengthened small, locallybased civil society organizations, provided with the tools and equipment to support project objectives; (iii) implementation of a national public awareness strategy; (iv) a series of media campaigns, Internet home pages, and school program materials developed and implemented in districts in proximity to the project's six PAs; and (v) an enhanced decision-making process through better and updated information, supplying feedback to the national administrators as well as to the stakeholders and civil society organizations. Activities.- To produce the above outputs, the component would support activities in four subcomponents: (i) staff training for INRENA/PROFONANPE and national and regional civil society institutions/organizations to enhance closer collaborative relationships in PA management; (ii) capacity building for environmental institutions/organizations located in the proximity of project-supported PAs; (iii) development and implementation of a biodiversity conservation-based public awareness program; and (iv) design and implementation of a SINANPE Management Information System (MIS). Component 3: PA Financing, Administration, Monitoring and Evaluation, and Information Dissemination (US$8.28 million; 27T of total project cost. GEF US$3.82 million; Netherlands co-financing US$0.42 million; Germany parallel financing US$1.04; Finland contribution to PROFONANPE endowment fund of US$2.5 million and other donor contribution to endowment fund: 0.5 million) The main objectives of this component would be to increase the PROFONANPE endowment fund, manage and monitor the project and disseminate information on the project's progress and achievements. Outputs.- The expected outputs of this component will be: (i) an increase in the endowment fund by US$6 million above the already existing US$5.7 million; (ii) increased private sector contributions in at least two PAs; (iii) an updated M&E system appropriate for PROFONANPE; (iv) timely M&E reports prepared according to GEF and World Bank monitoring and reporting standards; (v) improved institutional capacity to monitor projects; (vi) enhanced relations with national, regional and local civil society and private sector through dissemination of results and lessons learned using reports and workshops; and (vii) relevant experiences and "lessons learned" from PROFONANPE II disseminated to other PAs in Peru's SINANPE and other national systems of protected areas. Activities.- To produce the above outputs, the component would will support activities in three subcomponents: (i) an increase in the endowment fund; (ii) project implementation and a monitoring and evaluation system; and (iii) design and implementation of an information dissemination strategy. Project financing -4-

5 NOTE: This document contains tables that cannot be converted into text files. However, if you have MS Word or Word Viewer on your computer, you should be able to download the complete original version by going to: Project implementation The proposed project will be implemented over a period of six years. PROFONANPE will be the recipient of the GEF Grant, and will disburse resources upon request of various implementers, including INRENA that will be entitled to request technical assistance support and financial resources to implement project activities. Project implementation will require a framework agreement between INRENA and PROFONANPE. Such agreement will clearly define the roles and responsibilities of both institutions in PA management under the project, and will form part of a framework project agreement between the Bank and PROFONANPE. The framework agreement will also stipulate the responsibilities and approach to project implementation (e.g., which institution will be responsible for the design of terms of reference and bidding documents for the studies to be financed under the project, how contracts will be awarded, who will be responsible for quality control of studies and contract implementation, how the contractors will be paid, etc). An analysis of the best mechanisms for funding of project activities, taking into account the mandates of both institutions, their comparative advantages, their efficiency, and their effectiveness, has been done during preparation. PROFONANPE's existing Board of Directors will provide overall guidance and supervision to the project. A project-specific Administrative Board (Junta de Administraci6n) will be established, including some of the members of PROFONANPE's Board of Directors and representatives of stakeholders. A professional project manager will be hired to ensure supervision of day-today activities according to the rules contained in project manual and the framework agreement signed between the Bank and PROFONANPE. Financial management of endowments (one from GEF and the other from the Finish bilateral cooperation) will be provided by a part time financial advisor, and financial revenue from the endowments is expected to be used to cover recurrent costs of protected areas. Project sustainability Technical Project sustainability will be assured by: (i) increasing awareness and participation in biodiversity conservation and sustainable use of biodiversity by local populations, local organizations and institutions through training, the use of participatory approaches and tangible benefits; (ii) implementing the legal framework that encourages a participatory approach to conservation and management of protected areas; (iii) strengthening participation of local stakeholders in management decisions through PAMCs; (iv) funding demand-driven, small productive projects identified by local communities which are economically feasible and environmentally friendly; and (v) involving civil society and the private sector in the planning, management and implementation of the system as a whole. -5-

6 Financial sustainability will be ensured partly through the Endowment Fund mechanism, which will enable PROFONANPE to double its contribution to the financing of the recurrent costs of SINANPE. The concessions will also reduce the need for payment of recurrent costs as concessionaires will be responsible for supporting recurrent costs. Some of the areas, which could be managed by private sector institutions as a result of this project, could be self-sustainable. Sustainability of community initiatives will be ascertained prior to funding. Lessons learned from past operations in the country/sector Lessons learned from the Implementation Completion Report (ICR) of the GEF Grant creating PROFONANPE: 1. Trust Fund financial resources should be invested in large, developed markets, in order to minimize investment risks. Portfolio management and investment agreements need to include clear guidelines for investment risks, asset quality and portfolio diversity. Investment contracts must include performance clauses so that the owner of the assets can move the funds out of the portfolio in the event of portfolio mismanagement. The project appraisal team will evaluate how PROFONANPE's investment policy can be improved and the operational manual will clearly stipulate the rules for sound financial management. The proposed project fully supports the ICR's recommendations to PROFONANPE to finance the involvement of civil society and the private sector in SINANPE's management and programs. Recommendations were made in the mid-term review of 1998, the ICR and the Aide-Memoire of the final GEF supervision in December 1999 and the Independent Evaluation of January Lessons learned from other countries: 3. The importance of adequate legal instruments to delegate responsibility between the public sector and the civil society/private sector involved in the management of protected areas cannot be overemphasized. Many pilot operations involving the civil society/private sector in the management of PAs have run into problems because the legal arrangements between the public owner of the protected area and the private concessionaire/administrator were unclear or confusing. The project preparation team includes an experienced legal expert to design high-quality collaboration contract models and learning from other countries. 4. The importance of long-term sustainability of private sector involvement. Short-term administration and concession contracts normally do not provide sufficient incentives to civil society and the private sector to place high-level staff and resources in the management of PAs. Therefore, the project preparation team is examining with PROFONANPE how continuity and sustainability could be ensured. The endowment fund (with funds being available) will add credibility to the sustainability of the financial resources for protected areas management and in this sense be an incentive for the private sector to dedicate the required resources to this type of contract. -6-

7 5. The Mexican experience shows that participatory activities, such as those planned for this project, develop a positive reaction in civil society, the people living in and around PAs, and in the government. Consequently, local support to conservation of biodiversity and the strengthening of PA control is better achieved. Moreover, awareness programs and school participation improve the reduction of pressure on natural resources. 6. The critical requirement for the effective operation of PAMCs is to have well-informed stakeholders; PAMC members need clear definitions about the objective of PAMC operation rules, procedures and responsibilities. It must be clearly stated that decisions must only be related to conservation as the main axis of interchange. 7. PAMCs also require a good balance of members' weight in the decisionmaking process to avoid conflicts or loss of time. PAMCs require, at the very least, a set of clear and consensual rules for the decision-making approach. A review of rules regarding PAMC membership, operation and recommendations for assimilating lessons learned from other countries will be developed by the project. 8. Finally, there is need for transparency in the assignment of funds to support annual planned activities in each PA involved in similar projects. MIS and Awareness Programs will be used by the project as the main means to meet the transparency requirements. Poverty category: B Environmental aspects: Environmental category B Most project activities will have a very positive environmental impact. The project's very nature and objective are to conserve biodiversity. Nevertheless, some activities under component 1 of the project (Participative Management of Protected Areas) may trigger environmental issues. The Environmental Assessment (May 2002) has identified three sub components under component 1 that may trigger environmental issues: (i) implementation of participative management plans; (ii) concession contracts for the management of protected areas; and (iii) small scale environmentally sustainable economic activities. For this reason, an environmental framework (EF) has been prepared. Activities in buffer zones and in resource use reserves under such sub-components will need to undergo a specific environmental screening which will be part of the subproject evaluation. The EF has identified likely potential environmental impacts by the activities in the referred sub-components, and has grouped and presented them in the form of a data sheet that will be used as a screening system of activities on the resources within the PA and the buffer zones. The EF presents 6 categories of environmental impacts: (i) load capacity; (ii) visual impact; (iii) natural environment deterioration; (iv) solid and liquid waste; (v) fire and emissions; and (vi) hosts and visitors security. The EF also presents measures to mitigate adverse environmental impacts and provides practical steps to include such measure in the design of projects under the referred subcomponents. In this way, project design for all activities with possible adverse environmental impact will include a well defined Environmental Management Plan (EMP). The steps to prepare an EPM to mitigate the possible negative environmental impacts of some economic initiatives - 7 -

8 include: (i) screen every subproject under the referred subcomponents for environmental impact; (ii) include impact mitigation measures in the design and implementation of the subprojects whenever necessary, by providing specialized consultants to the design teams; (iii) consult with stakeholders on whether the impact mitigation measures can and will be implemented; and (iv) include in the monitoring and evaluation system the monitoring of compliance with the proposed mitigation. Social and Indigenous Peoples Issues: A comprehensive social assessment and consultation process were carried out in the five PAs in the project and their surrounding areas of influence to identify main social issues and possible impacts arising from the project. Restrictions in access to natural resources. Peru has adopted a policy principle based on coexistence of people within protected areas, therefore, resettlement is not envisioned to take place under the project. Instead, the project aims at preserving biodiversity without hindering legitimate aspirations of people living in those areas and it expects to have a positive impact in their livelihood by promoting a better management of natural resources. However, in exceptional cases, as in areas zoned for strict conservation, there might be the need for limiting access to resources. To address the possible impact from this restriction, the project's social strategy comprises a Process Framework to operate under the following principles: (i) any restrictions on access to resources will be jointly defined with the affected communities during the preparation of the PA's management plans; (ii) participation mechanisms will ensure these communities to be actively involved in decision-making of the process; and (iii) sustainable alternatives will be developed to provide affected people with revenue-generating activities with a positive impact on both biodiversity and people's income, to substitute damaging practices. Involvement of Indigenous Peoples. In four of the five protected areas in the project there are several ethnic groups that preserve some of their cultural traditions in spite of the pressures of migration, cultural deterioration, and urban growth. Most of them live in poverty or extreme poverty conditions, dedicated to agriculture activities and natural resources exploitation. In the Andean area, the Quechua, Ayamra and Collahua groups still preserve their language and some traditional practices in the use of natural resources. However, they are fully integrated to market practices and culture. In the Amazon area, the main indigenous groups are the Ese'eja and some Quechua- Collahua groups who have migrated towards tropical areas seeking land. Demographic growth of these groups and changes in their consumption patterns have intensified in the last years the pressure over natural resources. Under the project, a specific strategy has been designed to protect indigenous peoples rights and ensure that they benefit from the project by supporting sustainable activities rooted in their traditional natural resources management and strengthening community organizations. Land Tenure Issues. The five protected areas in the project have officially registered and defined boundaries. However, with the exception of Tambopata and Bahuaja Sonene, PAs face some kind of legal rights problems over land. In Huascaran, three private fishing firms claims rights in the PA; in the remaining PA there is a mix of unsolved conflicts among small land owners, - 8 -

9 private owners and indigenous communities; some have legal tittles while others are illegally occupying PA lands. Though there are several land claims, the actual number of families living within the PA is limited. Private Management Concessions. The project proposes to promote private involvement in protected area management through concessions. This proposal has been perceived by some communities as a "privatization" of protected areas that might affect their rights. This alternative might also have a negative impact on the relationships between INRENA and the communities, which have been usually complicated. To address this issue, concessionary selection will be an open and clear process. Selection criteria will include to have local roots, regional experience and to incorporate a participatory approach in operations. The establishment of local management committees, as PA regulations foresee, will ensure community participation in management operations and will allow for social monitoring and control. The project's social strategy incorporates in an integrated manner, different instruments to address above-described social issues. Specifically: (i) a Process Framework in regard to natural resources use restrictions; (ii) an Indigenous Peoples Development Framework to ensure indigenous peoples benefiting from the project; and (iii) a participation promotion to guarantee stakeholders involvement an adequate operation of the proposed PA Management Committees. The project has been prepared under a participatory approach comprising a beneficiary assessment involving population in and around the five protected areas in the project; this exercise helped to identify their expectations and fears towards the project. Additionally, the project team met with local NGOs and representatives of surrounding communities. Overall, more than 500 people were contacted through various consultation mechanisms such as: 261 participants in local consultation meetings; 189 persons in focal groups (for public, private and social sectors); 74 surveys on Environmental Management and Institutional Development Experiences; and 66 key informants in Depth Interviews. With the results of these processes, initial protected areas management plans were prepared and further consulted through regional workshops. Simultaneously, alternatives to address identified main social and environmental threats were discussed and agreed with main stakeholders. This participatory process will continue during preparation of PA Master Management Plans involving main stakeholders as the Peruvian legal framework establishes. Program Objective Categories: Environment and Natural resources Management GEF Focal Area is Biodiversity. GEF Operational Programs: OP2 (Coastal, Marine, and Freshwater Ecosystems OP3 (Forest Ecosystems) and OP4 (Mountain Ecosystems) This is information on an evolving project. necessarily included in the final project. Certain components may not be Contact Point: Pierre Werbrouck, The World Bank, Washington DC. Tel Fax pwerbrouck@worldbank.org 9

10 The InfoShop The World Bank 1818 H Street, NW Washington, D.C Telephone: (202) Fax: (202) This PID was processed by the InfoShop during the week ending August 30,