Document of The World Bank

Transcription

1 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Document of The World Bank FOR OFFICIAL USE ONLY IMPLEMENTATION COMPLETION REPORT (SCL-42930) ON A LOAN IN THE AMOUNT OF US$3.00 MILLION TO THE DOMINICAN REPUBLIC FOR A NATIONAL ENVIRONMENTAL POLICY REFORM PROJECT 04/30/2003 Report No: 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.

2 CURRENCY EQUIVALENTS (Exchange Rate Effective October 31, 2002) Currency Unit = Peso 1 Peso = US$ 0.05 US$ 1.00 = FISCAL YEAR January 1 December 31 ABBREVIATIONS AND ACRONYMS CAS GoDR ICB INPRA LIL NBF NCB NEAP NEMP NGO ONAPLAN PAD PNGA PCU QAG SMRN SOE TORs UN UNDP Country Assistance Strategy Government of the Dominican Republic International Competitive Bidding Instituto Nacional de Proteccion Ambiental (National Institute for Environmental Protection) Learning and Innovation Loan Not Bank Financed National Competitive Bidding National Environmental Action Plan National Environmental Management Program Non Governmental Organization Oficina Nacional de Planificacion (National Planning Office) Project Appraisal Document Programa Nacional de Gestion Ambiental Project Coordinating Unit Quality Assurance Group Secretaria de Medio Ambiente y Recursos Naturales (Environmental Secretariat) Statement of Expenditures Terms of Reference United Nations United Nations Development Program Vice President: Country Manager/Director: Sector Manager/Director: Task Team Leader/Task Manager: David de Ferranti Caroline D. Anstey John Redwood Renan A. Poveda

3 DOMINICAN REPUBLIC National Environmental Policy Reform Project CONTENTS Page No. 1. Project Data 1 2. Principal Performance Ratings 1 3. Assessment of Development Objective and Design, and of Quality at Entry 2 4. Achievement of Objective and Outputs 3 5. Major Factors Affecting Implementation and Outcome Sustainability Bank and Borrower Performance Lessons Learned Partner Comments Additional Information 17 Annex 1. Key Performance Indicators/Log Frame Matrix 18 Annex 2. Project Costs and Financing 21 Annex 3. Economic Costs and Benefits 23 Annex 4. Bank Inputs 24 Annex 5. Ratings for Achievement of Objectives/Outputs of Components 26 Annex 6. Ratings of Bank and Borrower Performance 27 Annex 7. List of Supporting Documents 28 Annex 8. Borrower's Contribution 29 Annex 9. Summary of Pilot Activities 34 Annex 10. List of Capacity Building Activities Financed by the Project 40

4 Project ID: P Project Name: National Environmental Policy Reform Project Team Leader: Renan Alberto Poveda TL Unit: LCSEN ICR Type: Core ICR Report Date: May 5, Project Data Name: National Environmental Policy Reform Project Country/Department: DOMINICAN REPUBLIC Sector/subsector: Central government administration (75%); Sub-national government administration (13%); Other social services (12%) L/C/TF Number: SCL Region: Latin America and Caribbean Region KEY DATES Original Revised/Actual PCD: 02/05/1998 Effective: 06/09/ /30/1998 Appraisal: 02/24/1998 MTR: 08/09/ /22/2000 Approval: 03/06/1998 Closing: 12/31/ /31/2002 Borrower/Implementing Agency: Other Partners: GOVERNMENT/Oficina Nacional de Planificacion (ONAPLAN) and Secretaria de Estado de Medio Ambiente y Recursos Naturales (SMRN) STAFF Current At Appraisal Vice President: David de Ferranti Shahid Javed Burki Country Manager: Caroline D. Anstey Orsalia Kalantzopoulos Sector Manager: John Redwood Maritta Kock-Weser Team Leader at ICR: Renan A. Poveda Maria Donoso Clark & Andy White ICR Primary Author: Renan A. Poveda; M. Rosa Puech & Jackson Morrill 2. Principal Performance Ratings (HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HL=Highly Likely, L=Likely, UN=Unlikely, HUN=Highly Unlikely, HU=Highly Unsatisfactory, H=High, SU=Substantial, M=Modest, N=Negligible) Outcome: S Sustainability: HL Institutional Development Impact: H Bank Performance: S Borrower Performance: S QAG (if available) Quality at Entry: S Project at Risk at Any Time: No ICR S

5 3. Assessment of Development Objective and Design, and of Quality at Entry 3.1 Original Objective: The development objective of the project was to establish the basis for improved environmental management, by defining environmental policy reforms and elaborating a National Environmental Management Program (NEMP) through a learning and participatory process, including developing a fiscal and regulatory framework and testing innovative approaches to addressing key environmental problems. The project was envisioned as the first phase of a longer-term effort to improve environmental management that could eventually be supported by an Adaptable Program Loan. 3.2 Revised Objective: No revisions were made to the project's objectives. 3.3 Original Components: Total project costs were estimated at US$3.6 million (US$3.0 million loan and a Government contribution of US$0.6 million). The project comprised three main components: Component 1: Supporting Policy and Institutional Reform (US$1.5 million or 41% of total cost). The component would finance: (i) key background studies; (ii) a process of national-level public debate on the proposed reforms; and (iii) the preparation and publication of the NEMP. Component 2: Developing Pilot Activities (US$1.25 million or 34% of total cost). This component would support the development and testing of innovative activities and new mechanisms for finding solutions to priority environmental policy problems, including innovative models for natural resource management, increased decentralization of environmental functions, public-private sector partnerships and creative financing mechanisms for sustainable environmental management. This component would finance: (i) on a cost-sharing basis, a program of grants to non-governmental organizations and municipalities to carry out the activities, and; (ii) a system for monitoring and evaluating the results of implementation and the integration of its main results into the NEMP. Component 3: Building Capacity for Project Management and Providing Technical Training (US$0.9 million or 25% of total cost). This component would strengthen capacity for environmental planning and management in the Environmental Planning Department of the National Planning Office (ONAPLAN) and other key environmental agencies as appropriate; ensure efficient and effective project implementation by the Project Coordinating Unit (PCU); and develop the needed human resources for the institutional arrangements resulting from the reforms. To achieve this, the component would finance the establishment of the PCU, including consulting services, office equipment, training and incremental operating costs. 3.4 Revised Components: While none of the components were formally revised, the Bank worked with technical staff of the new Ministry of the Environment and Natural Resources (Secretaría de Estado de Medio Ambiente y Recursos Naturales - SMRN) created by law on August 18, 2000, to shift the focus of Components 1 and 3 to better meet the needs of this institution. In particular: (i) the key technical studies (component 1) were adjusted to accommodate the new institutional and legal framework for environmental management; (ii) capacity building activities (component 3) shifted to meet the needs of SMRN's technical staff; and (iii) the project s technical advisory committee's composition was adjusted in response to SMRN's creation. In addition, shortcomings in the Environmental Diagnostic study and the National Environmental Management Plan (NEMP) led the Bank and the PCU to agree to finance the preparation of an Analytical Framework and Strategic Plan for Environmental Management (also known as the Toolkit ) not envisioned in the original - 2 -

6 Component 1. The Toolkit was designed to integrate and synthesize the data of the two studies into a more user-friendly policymaking tool for SMRN. 3.5 Quality at Entry: SATISFACTORY. The project responded to a request in 1997 from the Government for assistance in coordinating, consolidating and improving environmental management. Extensive discussions between the Bank and Government counterparts on the project's potential development objectives helped to streamline project preparation, and ultimately influenced the choice of the Learning and Innovation Loan (LIL) approach. The Government, Bank and UNDP, who provided support in project preparation, sought to align the project with international and regional priorities as established in the UN Conference on Human Development (Rio de Janeiro 1992), as well as with Government priorities for ongoing efforts to reform and modernize the public sector. The project supported the CAS objectives (April 1995) and benefited from the limited Bank sector work in existence at the time (Dominican Republic Environmental Issues Paper. July, Report N DO). The decision to use the LIL approach was appropriate, given the uncertain political context, limited national environmental management capacity and coordination, and the Bank's relative lack of awareness of the key players and institutions in the country at the time. The project s development objectives were clear and relevant to the country's sector priorities and development needs. Project design adequately supported ongoing Government efforts to build consensus on a consolidated and improved environmental management framework through a well-designed, transparent participatory process. However, considering the somewhat limited available resources and overall Borrower s capacity, project design was too ambitious in the scope of its objectives and the timeframe for the delivery of products. The project was assessed as satisfactory by the Bank's Quality Assurance Group (QAG) for its quality at entry, although the report highlighted the country's historically low disbursement rate and the political risks associated with the location of the PCU outside of ONAPLAN s physical space as potential risks or weaknesses of the project. While both of these issues materialized over the life of the project, the PCU and the Bank worked diligently, and fairly successfully, to mitigate the impact of these risks on the successful completion of project activities. 4. Achievement of Objective and Outputs 4.1 Outcome/achievement of objective: The performance indicators provided in the Project Appraisal Document (PAD) for the achievement of the project s objective do not adequately measure project outcomes, but rather measure the achievement of project outputs. Therefore, to better reflect the achievements of the objective of the project in this report, the original PAD indicators have been adjusted to facilitate an analysis from a development outcome perspective (See Annex I for the original list of outcome indicators). The achievement of the project objective is rated [Satisfactory] based on the following, refined outcomes: 1) Key environmental policy issues identified by stakeholders, and progress towards learning how to address them achieved through a participatory process (Highly Satisfactory). The lack of an appropriate legal and institutional framework was the key environmental policy constraint in the Dominican Republic, and the project was very successful in identifying and addressing it. Between , the project supported a series of broad-based consensus building activities to consolidate and reform the organizational structure in place for environmental management, which at the time included more than twenty different poorly coordinated public institutions with - 3 -

7 overlapping responsibilities as well as gaps in managing key environmental issues. Consultations and debate also focused on the country s outdated and inadequate environmental laws and regulations, identifying the need to build a consolidated and modern legal framework to improve environmental management. Through these consultations and discussions, the project played an important, supportive role in building the necessary consensus that ultimately facilitated the passage of the Environmental Framework Law and the creation of SMRN in August of The Framework Law reflects a broad consensus reached within the country on key policy issues and basic principles (e.g. polluter pays principle, payment for environmental services, etc.) and the methods and tools to be used to address them (e.g. effluent limits, environmental permits, etc.). Having thereby achieved this significant development outcome midway through the project, the Bank and the PCU continued to make further progress in addressing environmental priority issues laid out in the Framework Law through capacity building and technical assistance activities for the new Ministry, including such topics as: (i) environmental impact assessment; (ii) strategic environmental evaluations; (iii) forestry policy formulation; (iv) watershed conservation and management; (v) and environmental audits, among others. 2) Identification of Pilot Activities to address key issues and their successful completion (Satisfactory). The project was successful in selecting and completing eight pilot projects that tested innovative methods for addressing key issues for local environmental management, including solid waste management, partnerships for protected areas management, and environmental information dissemination and education. Pilot teams composed of members of local government, civil society and the private sector worked effectively together, demonstrating the possibility of leveraging these partnerships to address local environmental issues. The pilot projects: (i) demonstrated the willingness and capacity of local communities and civil society groups to manage local environmental problems; (ii) provided insights on the potential weaknesses of decentralized environmental management; and (iii) proved to be a powerful tool for prioritization of local environmental management actions, based on a demand-driven, participatory process that reflected the variable needs, capacities and diversity of environmental challenges. These three lessons drawn from the pilots provide potentially useful solutions to the challenges of environmental management in the Dominican Republic (which include a wide range of environmental problems that need to be addressed, the still limited capacity of the newly created SMRN, and the relative small size of the public sector). 3) The development of a framework for addressing key environmental problems, through the preparation of background studies, sector studies and a National Environmental Management Program (NEMP) (Satisfactory). The project-funded background studies, a NEMP, a Toolkit, as well as the public consultations that accompanied them, provided SMRN with a solid foundation to begin prioritizing and executing specific environmental interventions by: (i) building the knowledge base, consolidating widespread data and gathering new information and technical analysis; (ii) presenting an overview of the range of environmental issues; (iii) providing policy options and recommendations to address them; and (iv) tools and information for analyzing and prioritizing environmental management issues. SMRN has already used the NEMP and Toolkit to internally restructure the Ministry, determine new programs and budget priorities, demonstrating their utility and impact. The Legal and Institutional Study has helped guide the initial organizational structure and division of functional responsibilities of SMRN, and will continue to serve as a reference for further efforts in this area

8 The shortcomings of the NEMP (see Section 4.2) reflect an overly ambitious project design that failed to take into account the project s short timeframe and limited resources, as well as the weak existing knowledge base. The shortcomings, however, do not detract from the significant achievements of the project towards the development of a framework, grounded in sound technical principles and participatory processes, for addressing key environmental problems. 4.2 Outputs by components: Output indicators provided by the PAD do not fully capture the outputs by Component. This section will therefore analyze the attainment of project outputs by activities and components. Component 1: Supporting Policy and Institutional Reform. ICR Rating: Unsatisfactory As provided in the Project Appraisal Document, the objective of this component was to: (i) define, through a consultative process and sound technical principles developed in four background studies, the state of the environment and priority legal, institutional and economic reforms necessary to improve environmental management in the Dominican Republic, including a rationalized EA process; (ii) define sectoral action plans for reform (e.g. mining, tourism) and priorities for future investments in environmental management through sectoral studies; and (iii) prepare a National Environmental Management Program (NEMP) that integrates and articulates the proposed reforms and investments emerging from the background and sectoral studies, and the practical lessons learned from the Pilot Activities component into an action plan that identifies key policy reforms and sets priorities for short, medium, and long term activities and investments, by both the public and private sectors, for improving environmental management. This component has been rated unsatisfactory because the outputs did not match the expected objectives defined in the PAD. While the output objectives were over-ambitious, and in addition this component suffered a number of shortcomings, the impact of this component is considered satisfactory (See 4.1). 1. Key Background Studies. Given the close correlation between the thematic areas of the proposed four background studies, it was decided appropriately during implementation to condense them into two key studies: (i) the Environmental Diagnosis and the Economic and Fiscal Analysis Study; and (ii) the Institutional and Legal Framework Study. 1.a. The Legal and Institutional Framework Study. This activity was highly satisfactory. The study began preparation (March 2001) soon after the establishment of the new Environmental Framework Law and SMRN, and was tailored early on to better meet the needs of SMRN and address the changes called for under the new Law. As a result, this study, completed in August of 2001, examined and provided a thorough analysis of the country s environmental legal framework, including the Environmental Framework Law and drafts for sectoral laws, regulations and standards for protected areas, biodiversity, air quality emissions, noise, solid waste, water quality, and forestry, among others. The study included proposals for draft regulations for the National Council for the Environment (Consejo Nacional de Medio Ambiente) and the National Fund for the Environment (Fondo National de Medio Ambiente), both created by the new General Law of the Environment. In addition, the study analyzed the institutional framework for environmental administration, focusing in particular on: (i) the internal organization and functional responsibilities among the different units of SMRN; (ii) the assignment of specific tasks to strengthen SMRN s internal operations (i.e. monitoring & evaluation and financial administration); (iii) specific suggestions for the decentralization of environmental management responsibilities; and (iv) suggestions for improving overall human resources capacity. This highly satisfactory study was submitted on time, meeting the tight schedule of delivery in project - 5 -

9 design. All levels within SMRN have benefited from the analysis and recommendations provided in this Study. Leadership in SMRN has used it as a planning tool for organizational and operational purposes, while technical staff have relied on the study to define their individual roles and responsibilities within their relevant departments. As SMRN continues to evolve, this study will continue to play a key role in defining the legal and administrative framework for environmental management. 1.b. The Environmental Diagnosis and Economic and Fiscal Analysis Study. This activity has been rated unsatisfactory. This study, which had a time horizon of 6 months, began preparation in March of 2001 and was completed in June, This study sought to gather existing, and in some cases, provide new information pertaining to the state of the environment in the Dominican Republic. As per the terms of reference, this study would also provide an economic analysis to complement the diagnosis of environmental problems to assist in the identification of policy reforms and the prioritization of environmental challenges. To achieve these objectives, the Environmental Diagnosis divided its analysis into the following twelve chapters: (1) identification of pollution sources; (2) characterization of pollution sources; (3) water quality; (4) water resources, with a focus on management issues; (5) air quality; (6) forestry resources; (7) protected areas; (8) coastal and marine resources; (9) agricultural impact on the environment; (10) mining impacts on the environment; (11) the associated environmental impacts from the economic and commercial structure; and (12) a monitoring plan and specific recommendations. In some sections (i.e. water quality and supply) the study gathered data from representative geographic areas (i.e. three watersheds) to develop its analysis, while in others (i.e solid waste), it examined national data. The Diagnosis generated new data and gathered a significant amount of useful environmental information from many widespread sources. The study also provided a methodology for collecting and analyzing additional data, highlighting gaps of information and providing general conclusions and recommendations for future policy making. The Environmental Diagnosis, however, suffered several shortcomings during its implementation including: (i) weak or incomplete economic and fiscal analysis; (ii) weak technical analysis of some key sectors (i.e. tourism, energy); and (iii) ten month delay in implementation. As a result, the Environmental Diagnostic: (a) did not provide timely input to the NEMP; (b) did not adequately identify policy reforms; (c) did not provide for prioritization of environmental problems; and (d) hindered dissemination and consensus building. 2. Sectoral Studies. This activity has been rated unsatisfactory, as only one sectoral study on the "Effects of Hurricane Georges on Erosion in the Rio Nizao Watershed was completed (February 2001) under the project. Despite the study's high quality, its overall usefulness was questioned by SMRN, and it was unclear if additional sectoral studies would provide any significant additional value, given the comprehensive coverage envisioned under the Environmental Diagnostic. Furthermore, stakeholder meetings did not succeed in identifying in a timely fashion sectoral policy issues for consideration. Consequently, a strategic decision was made by the PCU, in conjunction with the Bank, to forgo additional sectoral studies. In hindsight, additional sectoral studies could have provided the necessary information to complement the Environmental Diagnostic Study

10 3. The National Environmental Management Program. This activity has been rated unsatisfactory, as it did not fully meet the objectives and process described in the PAD. The decision was made during project implementation to change the design of the NEMP in three significant ways. First, the NEMP was prepared in parallel with the Diagnostic, beginning in March 2001, with the expectation that the NEMP would incorporate the data and analysis of the Diagnostic midstream. Second, the NEMP was developed through the preparation of nine case studies designed to use public debate and consultation to uncover and define common environmental problems, institutional bottlenecks and potential solutions in a participatory manner. Third, once it was evident that the NEMP could not adequately incorporate the Diagnostic due to delays, the decision was made to prepare a Toolkit that integrated the data from the Diagnostic and NEMP into a more condensed user-friendly planning tool for SMRN. Ultimately, the NEMP and subsequent Toolkit were unable to achieve the output objectives for Component 1. More specifically, both studies collectively did not provide a prioritized, sequenced and detailed action plan, with specific key policy reforms and investments. The NEMP, completed in February of 2002, was unable to incorporate the Diagnostic (June 2002) in its final analysis. While the preparation of nine case studies was participatory, and the final NEMP benefited from consensus building activities, it was ultimately not adequately disseminated and promoted. The Toolkit, completed one month prior to project closure in September of 2002, could not, for lack of time, benefit from consultation and consensus building activities, and has not yet been fully internalized within SMRN. The failure of the NEMP however is relative to initial objectives set out in the PAD, which were ambitious in scope and depth. The scope of the issues to be covered, as evidenced by the 12 chapters of the Diagnostic, as well as the level of analysis and consultation processes required to develop key policy reforms and set priorities for the short medium and long-term was ambitious given the project s limited resources and time, as well as the limited level of capacity and available data at the time of project preparation. In addition, the decision to prepare the NEMP and Diagnostic in parallel rather than sequentially, and the use of different consulting firms for each study, created additional risks. Ultimately, these risks materialized, in that the Diagnostic was not completed on time and of inadequate quality, and therefore could not serve as a basis of data and analysis for a NEMP report that was already completed. Risks could also have been reduced by limiting the coverage of the Diagnostic to fewer, key environmental issues. Finally, more proactive Bank supervision could have managed the risks better as they arose during implementation (See Section 7.2). Despite the shortcomings enumerated above, the NEMP did succeed in identifying and analyzing: (i) critical environmental problems; (ii) causes of environmental degradation; and (iii) principal consequences of these identified environmental problems on Dominican society. The NEMP also provided a framework for prioritizing environmental challenges and developed a series of proposed interventions and policy reforms. The NEMP incorporated the findings of the Legal and Institutional Analysis, results from the consultations, workshops and case studies, and some of the lessons learned from the pilot projects. In addition, attempts were made to remedy the delays in the completion of the Diagnostic through the incorporation of some of the findings of the Environmental Diagnostic ex post facto by the consulting firm and through several PCU-led workshops to verify the data and facilitate its incorporation into the NEMP. An independent external evaluation of the NEMP rated the final draft as satisfactory, concluding that the NEMP, exhibits high coherence, quality and relevance, reflected in the integrity of the analysis of the environmental problems, thoroughness in the proposal of construction of policies, and in the vastness and deepness in the treatment of the different sectors which require an environmental policy. Despite the fact that the NEMP has had a positive impact on SMRN s operations, as evidenced by the: (i) reliance on the framework proposed in the NEMP to reorganize its thematic areas; and (ii) efforts to restructure its - 7 -

11 budget allocations according to the NEMP s recommendations, it may be too early to judge on its overall sustainability. 4. Public Consultation. This activity has been rated satisfactory. Project design originally envisioned that public consultation would form a separate activity to build consensus among the different agencies and actors involved in environmental management. Thus, between , the project supported a series of round tables to discuss institutional and legal reforms in environment. The round tables included political parties representatives, members of Congress, private companies, community leaders and representatives from public agencies. The creation of SMRN centralized the environmental management process into one institution, reducing the need for a consensus building process among widespread environmental public agencies (further broad based consultations). While the project shifted to actively foster consultation within SMRN on the quality and content of the background studies, and the NEMP, as well as in workshops and capacity building activities, the project was limited on actively involving the private sector and civil society in these consultations, particularly regarding the dissemination of the final version of the NEMP. Component 2: Developing Pilot Activities ICR Rating: Satisfactory The project financed the implementation of eight pilot sub-projects (see Annex 9 for further details) that tested innovative activities and new mechanisms for finding solutions to priority environmental policy problems, including: (i) innovative models for natural resource management; (ii) decentralized environmental management, (iii) public-private partnerships; and (iv) creative mechanisms for sustainable environmental management. This component met its objective in that it successfully tested these approaches and in that it followed the process proposed in project design. The transparent and detailed preparation and selection process for the pilot activities proved to be one of the project s most noteworthy achievements. The PCU developed a very detailed operation manual that included administrative procedures (including the formulation of an independent selection committee), clear eligibility criteria, and a monitoring system for project implementation. During the entire selection process, the PCU hosted an orientation workshop and provided valuable technical and administrative support to applicants in the preparation of the detailed pilot proposals, helping to build the capacity of participants to effectively plan and implement locally-based environmental projects. Over 140 organizations submitted proposals and participated in the workshop, including private-public sector partnerships, NGOs, and local government teams. Applicant teams, including even many that were not selected, praised the informative workshop and transparent selection process. From this group, an independent selection committee made up of NGO, private and public sector representatives selected the final eight pilot proposals. The pilot projects focused on key environmental issues faced at the local level, including solid waste management, partnerships for protected areas management and environmental information dissemination and education. Project teams, encouraged by the cooperative atmosphere fostered by the selection process, worked together to share experiences and improve performance. After completion of the pilots, project teams shared the lessons learned in a workshop sponsored by the PCU, and an independent a final evaluation of the component concluded that the pilots had: (i) successfully tested innovative approaches to managing environmental issues at the local level (in terms of the scope and proposed solutions to those local environmental problems); (ii) developed new approaches in shared management that promoted participation and strategic alliances in the environmental sector (zoning, waste management, co-management of protected areas); (iii) fostered decentralization and privatization of environmental management services; (iv) promoted the exchange of methodologies and successful practices among pilot teams; (v) created effective monitoring indicators; and (vi) developed strong ownership among project - 8 -

12 participants and beneficiaries. This evaluation concurs with these conclusions, but also notes that the three pilots that tested creative financing mechanisms for local environmental management (i.e. payment for environmental services) failed to achieve financial sustainability, highlighting weaknesses that would need to be addressed in the future development of a framework for decentralized environmental management, and underlying the importance of future analysis on this issue (See Annex 9 for greater detail). While this component has provided valuable lessons, future efforts will be required to guide SMRN s efforts in the decentralization process of environmental management. Component 3: Building Capacity for Project Management and Providing Technical Training ICR Rating: Highly Satisfactory The component achieved its objectives of strengthening technical and environmental management capacity and ensuring efficient and effective project implementation by the PCU. The project achieved these objectives by: (i) creating and supporting a PCU to implement and supervise the project; (ii) training key personnel, particularly in the newly created national environmental agency; (iii) creating a Technical Advisory Committee to provide consultative support to the PCU and enhance stakeholder participation; (iv) disseminating project activities and environmental information; and (v) monitoring and evaluating project activities. Creation of the Project Coordinating Unit (PCU). This activity is has been rated Satisfactory. This component supported the creation of a PCU, which performed in a satisfactory manner in the delivery of project outputs. The PCU benefited from UNDP s support on project administration, including account management and procurement. While high technical staff turn-over in the PCU hindered project supervision, often in critical times, the PCU performed competently when fully staffed. Creation of a Technical Committee and an Advisory Commission. This activity is has been rated Satisfactory. Initially the project envisioned the creation of two advisory entities: (i) the Advisory Commission (AC), responsible for providing overall guidance to the PCU on the project; and (ii) the Technical Committee (TC) to direct the selection, monitoring, and evaluation of the pilot sub-projects. Although the formal names and the composition of the members changed during project implementation, the original functions and responsibilities remained through the establishment of two advisory committees (the Technical Advisory Committee - TAC, and the Selection Committee for Pilot Subprojects - SC). In particular, the TAC: (i) established priorities for selecting key studies; (ii) provided a quality review of drafts studies and NEMP; (iii) ensured close inter-institutional collaboration; (iv) approved the plan for preparing the NEMP; (v) participated in identifying key recommendations for the program; (vi) oversaw the work of the SC and the PCU; and (vi) promoted the adoption of environmental policy reforms. The TAC met regularly as required. The TAC was composed of: (a) all Subsecretariats under SMRN; (b) the office of Planning and Programs; (c) UNDP; (d) private sector representative; and (e) an NGO. While the project envisioned greater representation of the private sector (i.e association of industries) and civil society in the TAC, ultimately there was only one corporate (Helados Bon) and one NGO representative (Plan Sierra). The SC, as described above, oversaw the entire selection process of the Pilot Sub-projects, ensuring transparency in the process. The SC was composed of: 12 professionals recognized for their experience in the environmental sector and with ample expertise in planning and evaluating projects. This Committee ensured a transparent and fair selection process, which was highly commended by all involved in the process. Public Information Campaign. This activity is has been rated Highly Satisfactory. During early stages of - 9 -

13 implementation, the project promoted dialogue among key stakeholders on the future of national environmental management, through round table discussions on political and institutional reforms ( Proyecto de Mesas de Discusión sobre Reformas Políticas e Institucionales Mesa Redonda). The PCU created and periodically updated a website to present and make available information on the main activities and products generated by the project. In addition, the project financed bulletins, with relevant information on the project s activities and related environmental issues, that were distributed to organizations and individuals, either directly or through project sponsored events. Responding to the request of SMRN, the project supported the dissemination of copies of the National Environmental Law, forestry regulations, as well as standards and norms for forestry, solid waste, air and water quality and noise pollution. Finally, all project reports, including the key studies and the sectoral study on soil erosion were disseminated to stakeholders and presented for discussion through a series of workshops. Strengthening of Institutional Capacity for Environmental Planning and Management. This activity is has been rated Highly Satisfactory. The objective of this activity was to build capacity through training for key personnel and provide technical assistance to support overall environmental management. The target beneficiary groups of this activity included government agencies, with a focus on SMRN after its creation, and other relevant stakeholders. In addition to technical capacity built through the implementation of the studies and the pilot process, the project sponsored specific capacity building activities targeting key needs for technical staff. Some of the topics covered by the technical assistance and training courses/workshops delivered under this component included: (i) Environmental Impact Assessment; (ii) Strategic Environmental Evaluations; (iii) Forest Policy Formulation; (iv) ISO 14000; (v) Protected Areas Management; (vi) Watershed Conservation and Management; and (vii) Environmental Audits. (see Annex 10 for a detailed list of activities and numbers of participants). Despite concerns that the change in administration would disrupt the capacity building process, most beneficiaries continued in technical positions within SMRN once it was created. However, these and other staff members of the newly created institution (SMRN) still required a significant amount of technical support and capacity building. Most notably, the project continued to build capacity within SMRN to execute a system of Environmental Impact Assessment and Strategic Environmental Evaluations procedures in accordance with the Environmental Framework Law. Monitoring and Evaluation (M&E). This activity is has been rated Satisfactory. The project established a monitoring and evaluation system for project activities that was incorporated into the project's operational manual. However, the M&E system, which was based on an agreed schedule for the implementation of activities and performance and progress indicators, had a weak supervision. While the PCU adequately supervised project activities, the methodology proposed in the M&E system, was not systematically followed. Ultimately, the PCU monitored and evaluated project components through: (i) workshops for Pilot coordinators; (ii) field visits to pilot sites; (iii) revisions of key studies and general oversight of their technical quality; (iv) two external evaluations (one for the pilot component, the second for the entire project); and (v) periodic progress reports that measured and evaluated project achievements and shortcomings. 4.3 Net Present Value/Economic rate of return: N/A 4.4 Financial rate of return: N/A

14 4.5 Institutional development impact: Substantial The institutional development impact generated by the project is substantial. The institutional basis for improved environmental management has been firmly established, providing the necessary stepping stone for future interventions and improved environmental outcomes. The choice and the timing of implementing a LIL as a lending instrument was appropriate, since it contributed to the consolidation of dispersed environmental management agencies, facilitated the creation of a modern environmental framework law, developed important technical knowledge and lessons, and created the tools and built momentum for a long term intervention to support environmental management in the Dominican Republic. Furthermore, most of the technical staff that once worked on the PCU are still working in the sector (within SMRN, in an environmental NGO, and as independent environmental consultants) contributing to the institutional development impact. 5. Major Factors Affecting Implementation and Outcome 5.1 Factors outside the control of government or implementing agency: The project suffered a number of unexpected factors which led to delays in project implementation. In order to accommodate these delays and setbacks in the delivery of key products, the project received a ten month extension to the closing date. Congressional delays in approving the project. The project, approved in February and signed in March of 1998, suffered a six month effectiveness delay because of a failure of the Congress to approve the project until August of that same year. Hurricane George. In September of 1998, Hurricane George touched down on the Dominican Republic, causing serious damage to the country's infrastructure and natural resources and delaying project implementation by two months. Death of the PCU Administrator. The sudden death of the Project Administrator and the subsequent inability of the PCU to find a qualified replacement resulted in a five month delay in the execution of several of the project's activities. 5.2 Factors generally subject to government control: Location of the PCU. In order to maintain a certain level of political neutrality and autonomy, the PCU offices were initially located outside of ONAPLAN. To some extent, the PCU benefited from its location and relative autonomy because it was able to serve as a bridge between the political parties' varying positions on the environment. However, the PCU's isolated location also created friction with some officials who felt that the Government should have greater access and control over the project. Ultimately, the PCU was relocated to ONAPLAN, and then finally to SMRN after its creation. Delays in the provision of counterpart funds. The Government failed to meet the schedule for allocation of counterpart resources to fulfill its project responsibilities. After reaching a point where the lack of counterpart funding might impede an extension to the closing of the project and halt the project's progress, the Secretary of the Environment directly requested the President s office to secure funds in 2001 from a special account to cover the deficit and provide for the remainder of the project's counterpart funding requirements. While ultimately all of the counterpart funds were secured for the project, the Government disbursed only 60% of its agreed to counterpart funding to project activities. This low disbursement of counterpart funds was mostly

15 due to the delay in receiving the funds, a recurrent problem in the Dominican Republic. By the time the first project extension was granted (December 2001), only 54% of counterpart funds had been received, leaving few opportunities to spend the remaining counterpart funds (as per the loan agreement, counterpart funds were required to cover only 20 percent of the operating costs category). Currently GoDR is considering using unused counterpart resources to finance the preparation work for the follow-up operation. 5.3 Factors generally subject to implementing agency control: Lack of continuity of the personnel within the PCU. The PCU struggled to maintain adequate technical staff over the life of the project. The main adjustments in staffing occurred when there was a change of administration. While project coordinators hired well-qualified people who provided excellent support to the project's activities, frequent changes to technical personnel had a negative effect on the level of monitoring and evaluation for project components, as well as delays while staff members were brought up to speed on the project and its activities. In addition, periods of staff turn-over led to several intervals where the PCU was understaffed, reducing the level of project supervision of the pilot projects. 5.4 Costs and financing: Initially, the PAD foresaw a total project cost of US$3.6 million with a contribution by the Bank of US$3.0 million and US$ 0.6 million by the Borrower. By project closing, the Bank contribution amounted to [US$2.76 million, or 91%] and the Borrower's to [US$0.37 million, or 60%]. The Borrower requested two extensions of the closing date from December 31, 2001 to June 2002 and then to October 31, 2002, to complete project activities. Initially, the extension was to allow some of the pilot projects to complete its activities. However, the extensions have provided necessary additional time for a number of activities, including: (i) the completion of the Environmental Diagnostic study; (ii) the integration of the Diagnostic into the NEMP; (iii) training and capacity building activities; (iv) closing workshops for the pilot projects; (vi) elaboration of the Toolkit; and (vii) the final evaluation of the project. In June 2002, there was a reallocation of loan resources among project categories, to increase the amount of resources to categories 2 (consultant services) and 3 (training), and reducing the amounts from categories 1 (Goods), 5 (Pilot Subprojects) and 6 (unallocated). This was mainly motivated by the higher prices for the delivery of the key studies and for additional training activities provided to the SMNR. 6. Sustainability 6.1 Rationale for sustainability rating: It is [highly likely] that the achievements of the project will be maintained for the following reasons: The approval of the Environmental Framework Law and the creation of SMRN have set in place an environmental management framework that is well-equipped to maintain the achievements of the project. Project outputs, despite noted shortcomings, will be well-positioned to provide continued support to SMRN and its execution of the Environmental Framework Law even after project closure. In particular, it is expected that the Legal and Institutional Framework Study will continue to guide future adjustments to the institutional structure within SMRN, inter-sectoral coordination between Ministries, and the decentralization of key functions to municipalities. The most complete and accurate sections of the Environmental Diagnostic Study are being used by the relevant Sub-secretaries as sources of key data for planning, and the NEMP is currently used in SMRN to determine new programs and budget priorities. The tool-kit that synthesizes data from the NEMP and Environmental Diagnostic may further increase these studies impact and

16 sustainability. Looking ahead, the sustainability of the NEMP would certainly benefit from consensus building within SMRN and wider dissemination to NGOs and the private sector to build consensus and coordination. While may be too early to judge, it is likely that the project has helped to generate greater environmental awareness through its participatory approach. The many workshops and training activities, as well as public outreach and dissemination of project materials and pilot activities have all helped to build knowledge and capacity for environmental management. 6.2 Transition arrangement to regular operations: After project closure, the PCU has been dissolved, but has kept a core group of administrative staff to conclude accounting and financial matters. The SMRN and the Bank are in the process of preparing a new operation, and it is foreseen that the core administrative staff would be integrated within the planning department of SMRN to support the follow-up project, since they have the knowledge and experience of working with Bank operations. The Secretary has designated key staff to work with the Bank team on project design and preparation. Building on the results of the NEMP, the Bank is working with SMRN on the identification of priority environmental management interventions and a corresponding action plan to develop a strategic framework for programmatic lending interventions. 7. Bank and Borrower Performance Bank 7.1 Lending: Satisfactory At the time of project preparation, responsibility for environmental management in the Dominican Republic was dispersed among a wide range of agencies, resulting in overlapping responsibilities and a general lack of coordination. Several different versions of an environmental framework law existed at the time, and were the subject of intense debate between political parties. The Bank team, in close collaboration with the Borrower, recognized an opportunity to build on the political momentum for environmental reform, and quickly prepared a project to support the reform movement. The Bank s decision to use the Environmental Learning and Innovation Loan tool for the first time in the Latin American Caribbean region was appropriate given the: (i) limited development of environmental management in the country; (ii) highly charged debate on environmental reform; and (iii) overall level of in country capacity. The LIL also provided an optimal approach for building a stronger foundation for environmental reform that is paving the way for a larger commitment in the future. Project design envisioned an organized and transparent platform for participatory discussion that would generate key outputs to help support concrete reforms. The project s final design successfully translated this vision into three components, founded in a participatory approach and flexible enough to support the eventual creation of the Environmental Secretariat and the implementation of the Environmental Framework Law. However, the design of component 1, was too ambitious in the expected comprehensiveness and depth of the proposed NEMP and background studies, given the limited funding and time dedicated to these outputs, as well as the initial level of local capacity and weak knowledge base. 7.2 Supervision: Satisfactory The Bank team provided proactive support to the PCU, with nearly 18 missions and almost daily phone or contact. Project documentation was more than adequate, with 15 PSRs and many informative aide memoires and back to office reports. The Bank team sought to incorporate the right composition of staff (by their field of expertise) to complement supervision missions. Furthermore, the Bank team delivered

17 sound technical assistance to the Borrower, most notably in environmental management, procurement, and financial management. For the most part, Bank project management proactively addressed problems that arose during implementation. The project team sought extensions early in the life of the project to adjust to the various delays caused by events outside of project management control. At mid-term review, the Bank team worked diligently with the Secretary and his technical staff to adjust the project to meet the needs of the new Environmental Secretariat. These interventions allowed to shift the focus of Components 1 and 3 to better meet the needs of the new institution (SMRN). In addition, the Bank team provided a satisfactory supervision to component 2, as evidenced by the close monitoring of pilot activities, which included a number of field visits to pilot sites, and in the active engagement in solving issues that emerged during the implementation of pilots. Likewise, the Bank team provided an adequate supervision to component 3, providing ongoing support and technical advice to capacity building and technical assistance activities, as well as to the development of public information campaigns. However, in some sections of Component 1, the Bank team was not as successful in designing a process for the development of the Environmental Diagnostic and NEMP that mitigated potential risk, and in reacting to the shortcomings during their implementation. Thus, supervision efforts were limited in addressing implementation issues arising from the overly-ambitious design of component 1. The team did provide: (i) two extensions to closing date to accommodate delays; (ii) technical, legal and procurement advice; (iii) information to the minister and other key high level staff within SMRN about the shortcomings of the products; and (iv) advice to GoDR on the elaboration of the Toolkit to integrate data from studies and the NEMP. However, in retrospect, the parallel implementation of the NEMP and Diagnostic studies, as well as the use of separate consulting firms, proved to be risky. These risks could have been mitigated through a variety of means: (i) sequencing implementation of the two studies as initially planned; (ii) implementation through a single procurement package; (iii) reducing the coverage of the Diagnostic and NEMP to fewer, key environmental issues; and (iv) using alternative methods of contracting the consultants (i.e. performance-based as opposed to input-based). Furthermore, as the risks materialized during implementation of the studies, the Bank could have been more proactive in re-focusing the Diagnostic study, and holding further implementation of the NEMP until satisfactory completion of the Diagnostic. 7.3 Overall Bank performance: Satisfactory Despite the limited success in mitigating the shortcomings of the Environmental Diagnostic Study and NEMP for component 1, the Bank team and the Borrower worked closely and efficiently during project preparation and implementation, achieving the project objective s and delivering project activities. Lastly, the project design embedded in the LIL provided the flexibility needed to respond to the country s needs and adapt the project to the emerging institutional and legal framework. Borrower 7.4 Preparation: Satisfactory The Borrower worked closely with the Bank to build consensus on the project s design. Both parties sought input from a wide range of stakeholders, which included representatives from political parties, civil society and the private sector. Preparation of the project was swift and efficient, due in large part to the shared vision between the Bank team and the Borrower, who had worked previously together on other projects. However, the Bank and the Borrower may have been overly ambitious in the design of the activities within component

18 7.5 Government implementation performance: Satisfactory Government's performance during implementation was partially satisfactory, due to the failure of the Government to meet the schedule for providing counterpart funding. Delays in submitting the pending counterpart funds threatened the possibility of obtaining extensions to the closing date for the completion of pending activities, but through the active intervention of the PCU, SMRN, ONAPLAN, UNDP and the Bank, the Government responded at a critical time to provide the necessary funds from a Presidential discretionary account. While this satisfied the Bank s condition for granting the extension of the closing date of the project, the Government ultimately disbursed only 53% of these funds. On the other hand, it is worth noting that government responded effectively when ONAPLAN yielded its responsibilities as the implementing agency to SMRN once this was created. 7.6 Implementing Agency: Satisfactory The PCU s performance during the life of the project was satisfactory. The PCU s efforts to prepare project implementation manuals, TORs, procurement plans, and administrative systems were noteworthy and according to Bank procurement and finance officials, represented best practices. Faced with significant delays due to Hurricane Georges, the death of a project administrator, a six month effectiveness delay and country-wide elections, the PCU worked admirably to keep the project on its critical path. However, the PCU was often understaffed, resulting in an inability to effectively monitor and evaluate ongoing work. Furthermore, high turnover of personnel within the PCU affected continuity, and created delays as new staff tried to familiarize themselves with the project. This affected the overall quality of implementation of several project activities. Furthermore, the PCU could have been more proactive in raising awareness of the unsatisfactory performance of the consultants in charge of the Environmental Diagnostic, and could have taken preventive measures to ensure compliance with the legal agreement. Nevertheless, despite the frequent personnel changes, the PCU made significant efforts to deliver the outputs and maintain the pace of project implementation. The PCU maintained good communication lines with the Bank and prepared lengthy, well-organized progress reports. While the PCU established a methodology for monitoring and evaluation, it was not systematically followed. Noteworthy, was the PCU s ability to remain somewhat apolitical during the early stages of operation, ensuring its neutrality and building consensus towards a unified, participatory approach. 7.7 Overall Borrower performance: Satisfactory Despite the fact that counterpart funds were not provided according to schedule, overall Borrower performance was satisfactory. Many of the Sub-Secretaries and their staff actively participated in the project, contributing to building the capacity to operate under the new General Environmental Law. The project benefited from talented technical PCU staff, who worked hard to complete project outputs despite often being understaffed and lacking institutional support. Faced with a number of delays and obstacles (as listed above), the PCU completed the foreseen activities and components within the life-span of the project

19 8. Lessons Learned 1. Project Design Simplicity and flexibility in project design are two essential characteristics for loans with short implementation periods. Avoiding complexity in project design (e.g. clear and concise components, concrete objectives in line with institutional capacity, realistic timing in output delivery, etc.), allows for smoother implementation. Similarly, projects that build in a flexible approach (e.g. confined, demand-driven capacity building activities) are better equipped to adapt to unforeseen shocks encountered during implementation, ensuring their completion. In this particular project, the tight sequencing of the background studies, sectoral studies and the final NEMP in Component 1 was a major cause for the shortcomings of the NEMP. The scope of the coverage of the NEMP and Diagnostic, given the relative paucity of existing local data, may have been too ambitious, and could have been scaled down during project implementation to address only priority environmental problems; The preparation of a dissemination strategy is essential for projects with a significant consensus building component. While this project did include dissemination activities (i.e. bulletins, web-site, workshops), the project did not have a communication strategy for targeting key stakeholders, facilitating their active engagement in project s activities, and a methodology for measuring the impacts of the dissemination process. 2. Implementation Adopting a participatory consultative process to develop project outputs and implement project activities enhances continuity and sustainability in project execution. Despite a reduced scope in the consultative process after SMRN s creation, a participatory approach integrated into each project component ensured the engagement of technical staff and stakeholders in the development of project outputs. This exposure and participation familiarized stakeholders with project s objectives and will likely influence the ownership of project s products and lessons beyond the closure of the project. 3. Pilot Subprojects While the degree of success and sustainability varied among the 8 pilots, the most successful pilot implementation teams were those that fully involved the local communities in all decision-making, building ownership and trust from the proposal stage until the closure of the project. One particularly successful project (located in La Mina and el Café neighborhoods in Santo Domingo) that exemplified this approach will be expanding to meet other community solid waste management needs in a sustainable fashion through community financial support. Further efforts should be made in the pilot selection process to choose carefully only those pilots that incorporate this approach; Pilot projects should contemplate financial sustainability as a major criteria for selection. Project teams should also be made clearly aware that additional funding will not be made available, so as not to build expectations for future support. Although it was conveyed (through the initial workshop and the operating manual) that this exercise would only serve to test different approaches to environmental management, many of the pilot projects (particularly those which did not include financial mechanisms) have been unable to sustain themselves after project closure. In addition, many project teams that worked hard to achieve impressive results in a limited amount of time voiced their frustration at being unable to continue their valuable work without continued financial support

20 9. Partner Comments (a) Borrower/implementing agency: (b) Cofinanciers: N/A (c) Other partners (NGOs/private sector): N/A 10. Additional Information None