PROPOSAL FOR REVIEW
PROJECT TITLE: NICARAGUA: ATLANTIC BIODIVERSITY CORRIDOR
GEF FOCAL AREA: Biodiversity
COUNTRY ELIGIBILITY: Convention ratified November 20, 1995
TOTAL PROJECT COSTS: US$ 50.7 million
GEF FINANCING: US$ 7.1 million
COUNTERPART FINANCING: US$ 10.6 million
IDA CREDIT: US$ 30.0 million
DONOR CO-FINANCING: US$ 3.0 million
ASSOCIATED IDA PROJECT: Rural Municipalities Project
GEF IMPLEMENTING AGENCY: World Bank
LOCAL COUNTERPART AGENCY: Ministry of Environment and Natural Resources (MARENA)
Nicaraguan Institute for Municipal Development (INIFOM)
ESTIMATED STARTING DATE: May 1997
PROJECT DURATION: Five years
GEF PREPARATION COSTS: US$ 330,000 (PDF Block B Grant)
NICARAGUA: ATLANTIC BIODIVERSITY CORRIDOR
COUNTRY AND SECTOR CONTEXT
Country Context
1. Although the Nicaraguan economy has begun to grow, as demonstrated by a 3.3% growth of Gross Domestic Product (GDP) in 1994 and 4.2% in 1995, Nicaragua remains the second poorest country in Latin America. Per capita income in Nicaragua was halved during the 1980s to less than US$ 400 (World Bank, Review of Social Sector Issues, 1993). The incidence of poverty is especially high in rural areas. A high proportion of the total population (41 percent) and of the poor (63 percent) and extremely poor (78%) lives in rural areas. Seventy six percent of the rural population are poor and 36 percent extremely poor, compared to 32 percent and 7 percent, respectively, for the urban population.
2. The deteriorating condition of Nicaragua's natural resources is both a cause and a consequence of extreme rural poverty. Insufficient investments in heavily populated rural areas of the Pacific region is a factor underlying increasing migration to the areas unsuitable for agriculture. High rates of population growth and an estimated 250,000 demobilized combatants add to these pressures. The country's total land area is approximately 12 million hectares, of which only 1.3 million hectares are considered arable. However, the land area actually used for agriculture is almost 2 million hectares, far in excess of the sustainable potential. A further 4.4 million hectares of extremely poor quality land has been cleared for pasture. Another 2.6 million hectares are classified as "production forests", but are mostly subject to unmanaged exploitation with few resource rents accruing to local communities.
Biodiversity in the Atlantic Zone of Nicaragua
3. From a conservation viewpoint, the natural resources of the Atlantic slope of Nicaragua are of tremendous importance because of their biodiversity value. The Atlantic slope of Nicaragua is biologically an extremely rich area of lowland tropical rain forests, coastal wetlands, pine savannas, and higher altitude pine-oak forests. These ecoregions and ecosystems have high global importance on their own merits, but in addition, they form part of a critical link in a larger Meso-American Biological Corridor (MBC) linking North America, Central America, and South America. Parts of the Atlantic slope of Nicaragua represent the most intact natural areas remaining in Central America with still healthy populations of species such as harpy eagles and jaguars.
4. Traditionally, the Atlantic has been a zone of forest exploitation, mining, fisheries, limited migratory agriculture and indigenous subsistence activities, but this situation is changing. Recent years have seen a sharp rise in its population, as poor families have migrated from the Northern and Western region and as Government has sought land on which to settle ex-combatants. This has resulted in a high rate of forest clearing for subsistence farming, followed by expansion of extensive livestock operations, as farming has proven to be unsustainable. Resettlement of indigenous and non-indigenous communities after the end of the war, the advance of the agricultural frontier, and the limited institutional capacity to monitor logging, mining and fishing concessionaires and licensees, pose risks for the biological richness of the Atlantic region.
5. There is widespread concern among national, regional, and local governments that the current patterns of frontier development on the Atlantic slope are unsustainable, non-economic and are the source of substantial social problems. Indigenous populations, who have traditionally inhabited many areas of the Atlantic slope, are particularly vulnerable given that most indigenous land claims remain unresolved. Moreover, there is insufficient control over logging and mining concessions in the region, in part because Nicaragua has not yet put in place the legal and institutional framework to minimize environmental risks from these activities, which could become potentially important in the Atlantic.
6. Large portions of the ecoregions in the Atlantic slope are officially designated as protected areas. However, in most of these protected areas, there are no management activities, protection is weak or non-existent, the legal status is unclear, and the actual boundaries on the ground are ill-defined and unmarked. Support for protected areas and their buffer zones in this part of Nicaragua is being provided by a variety of donors and aid agencies on an ad hoc basis, but programs are not taking place within a coordinated framework with identified investment priorities.
National Natural Resources Strategies
7. Over the past few years, the Government of Nicaragua (GON) has begun to consider these problems in a systematic way, in an effort to develop a national strategy for the environment and natural resources. A National Tropical Forestry Action Plan (TFAP) was approved by Presidential Decree 246-92 on September 7, 1992, which was followed by a National Environmental Action Plan (NEAP), approved by Presidential Decree 261-93 on December 3, 1993. A draft National Biodiversity Strategy has recently been prepared, and is now undergoing a process of public consultation. These plans taken as a whole identify the following priorities for investment and institutional development: (i) soil conservation, water resource management, and sustainable forestry; (ii) decentralization of natural resource management to the municipal level; (iii) reform of the policy and legal framework, including institutional strengthening (the environment ministry, the National Assembly, the judiciary); and (iv) enabling local communities to participate in and benefit from natural resource use and public investments. Promoting sustainable natural resource use in the Pacific Western Region and conserving a biological corridor in the Atlantic Region are identified as top national priorities.
8. Given these broad priorities, the GON has decided to implement a three-pronged strategy to promote sustainable natural resource use in the Pacific region and to conserve biodiversity in the Atlantic slopes. The first major element of this strategy consists of implementing programs in the Pacific and Atlantic regions which address the root causes of resource degradation and biodiversity loss (extreme poverty of poor and landless migrants, and expansion of the agricultural frontier onto fragile lands in the Atlantic slopes); this will be accomplished through community level investments and support for intensification of agricultural production techniques. The second major element of the Government's strategy is to reform the overall legal and policy framework, explicitly integrating and addressing environmental concerns related to forests, fisheries, biodiversity, protected areas, and other key resources. This broad institutional reform will include programs to strengthen institutional capacity, so that GON will be able to operate this improved legal and policy framework effectively (whether at the upstream investment planning stage or at the downstream enforcement stage). The third prong of the GON strategy is to define and implement a coherent land use framework for sustainable development in the Atlantic, which gives priority to the establishment and protection of an Atlantic Biodiversity Corridor (ABC) stretching from Indio-Maiz in the south to the Rio Coco in the north. This planning framework and associated institutional mechanism will ensure consistency of development and conservation activities (whether public or private) with the objectives of the ABC corridor.
REGIONAL BIODIVERSITY CONTEXT AND STRATEGY
9. Mesoamerica contains a mosaic of distinct and extremely diverse forested landscapes. Aquatic and marine biodiversity is also disproportionately high, including the largest coral reefs in the Western Hemisphere and vast coastal wetlands, mangrove forests, and seagrass flats. Species richness and endemism are characteristic of these diverse ecosystems. In recognition of the global importance of the region's biodiversity and the threats to its conservation, the Central American governments have established over the past decade institutional mechanisms designed to promote coherent and coordinated programs in the environmental domain. These have included the Central American Commission on Environment and Development (CCAD) in 1989, the Central American Convention on Conservation of Biodiversity and Protection of Priority Protected Areas (1992) and the Central American Alliance for Sustainable Development (1994). The agenda for the upcoming November 1996 Central American presidential summit includes the establishment of the Central American Fund for Environment and Development (FOCADES), which would provide financial support for the objectives of the Alliance.
10. The Central American Convention on Conservation of Biodiversity and the Alliance for Sustainable Development both acknowledge the inadequacy of isolated initiatives to maintain and restore ecological integrity in the region, and explicitly endorse the establishment of a regional biological corridor. To this end, CCAD (with the endorsement of its member governments) requested GEF/UNDP PDF assistance to prepare the regional framework for the Mesoamerican Biological Corridor. This was followed by requests from Nicaragua and Honduras to prepare their national component of the Mesoamerican Corridor, in support of the CCAD regional initiative; a similar request from Panama is expected shortly. The Implementing Agencies have been coordinating closely to ensure consistency among these initiatives and to avoid duplication of efforts. It is expected that, eventually, GEF support for the Mesoamerican Corridor will be channelled through complementary regional and national interventions. The CCAD Mesoamerican Corridor regional project is expected to focus on coordination, capacity-building, harmonization of legal/regulatory frameworks, and monitoring activities at the regional level, while individual national projects would focus on the investment/institution building activities at the local level required to establish the Corridor. The proposed Nicaragua Atlantic Biodiversity Corridor project is the first of these national interventions to be submitted to the GEF Council.
PROJECT OBJECTIVES AND DESCRIPTION
11. The integrated Rural Municipalities/Atlantic Biodiversity Corridor Project (IDA/GEF) has been conceived as the major tool to support the GON's strategy for promoting sustainable natural resource use in the heavily populated zones of the Pacific and for conserving biodiversity in the Atlantic. The main objectives of the project are to reduce rural poverty, improve natural resource management, and conserve key biodiversity. These objectives translate into the following specific operational goals:
(a) To establish a mechanism based on municipal governments and community organizations for reducing rural poverty through rural investment in economic infrastructure, improved natural resource management, and small-scale communal productive activities.
(b) To ensure that central government institutions acquire the capacity to provide a coherent overall framework for natural resource policy-making and enforcement, accounting for global, national, and regional environmental priorities.
(c) To promote the long-term integrity of a biological corridor along the Atlantic slope of Nicaragua, conserving key national and global biodiversity values.
12. To achieve these objectives, the IDA/GEF project would have three components:
(a) Rural Municipalities Development (US$31.7 million including contingencies) would include: (i) institutional development of municipalities in the Pacific; (ii) institutional development of the Nicaraguan Institute of Municipal Development (INIFOM), as the principal coordinating body; (iii) information, participation and training for communities and the local private sector; and (iv) grants for community and municipality subprojects in the Pacific.
(b) Natural Resources Policies and Institutions (US$4.5 million including contingencies) would include: (i) institutional development of MARENA including policy making, environment and land use planning and monitoring, and protected area management; and (ii) an inter-institutional technical assistance program for other public entities with natural resource responsibilities (National Assembly, judiciary, regional and municipal governments, enforcement agencies).
(c) Atlantic Biodiversity Corridor (US$14.5 million including contingencies) would include: (i) capacity building for biodiversity management, including institutional development of municipalities; (ii) biodiversity planning, information, monitoring and evaluation; (iii) a fund for biodiversity conservation and sustainable use activities to ensure the sustainability of the Corridor; and (iv) grants for community and municipality subprojects in the Atlantic.
GEF funds would be applied to the incremental costs of protecting globally significant biodiversity in the Atlantic Biodiversity Corridor. The ABC is the Nicaraguan component of the regional Mesoamerican Biological Corridor mentioned earlier.
13. The IDA/GEF project would be implemented in three phases. The first phase, to be supported by IDA/PDF funds, would last about one year and would focus on capacity building to create the necessary conditions for effective project implementation. It would include (i) technical assistance to implementing agencies; (ii) developing the legal and institutional framework for natural resources; (iii) capacity building activities in the municipalities of the Pacific; and (iv) developing environment and land use plans for the Pacific and the Atlantic regions, including the final delineation of the ABC in the Atlantic. The second phase would last about one year and would initiate the investment program for poverty alleviation and sustainable natural resource management in the Pacific region (IDA funds) and focus on capacity building activities and finalization of land use plans in the Atlantic region (IDA and GEF funds). The third phase is expected to last about four years and would continue the implementation of the investment program in the Pacific (IDA funds) and initiate implementation of the investment program in the Atlantic (GEF/IDA funds).
Detailed Description of the Atlantic Biodiversity Corridor Component
14. To provide a framework for implementation of activities in the Atlantic Biodiversity Corridor, a detailed environment and land use plan for the Atlantic region of Nicaragua is being prepared with input from, inter alia, local communities, regional governments, and biodiversity specialists. This plan would include an approximate delineation of the biodiversity corridor and a proposal for the strategic use of resources in the Atlantic including protected areas, buffer zones, forest reserves, indigenous traditional territories and areas for economic development activities. A particularly innovative aspect of this project is that the ABC is being defined taking into account both economic, social, and biological considerations. This environment and land use plan, referred to as "the ABC strategy", would be the basis for defining the kinds of subprojects to be promoted (or excluded) in the Corridor, and would apply not only to investments under the proposed IDA/GEF project but also to investment programs supported by other donor, GON agencies, and private entities. The ABC Strategy will be refined and reformulated during the project implementation period as lessons are learned and assimilated.
Capacity Building for Biodiversity Management (US$ 1.3 million)
15. This subcomponent would finance consultants and training for: (i) disseminating information on project activities among indigenous and non-indigenous communities in the Atlantic region and involving them in project implementation; (ii) training indigenous and non-indigenous communities in sustainable biodiversity use and protection; (iii) assisting indigenous communities in pursuing formal recognition for their land and natural resources rights; (iv) training and technical assistance to municipal and regional governments for the implementation of the ABC strategy; and (v) training of central government agencies on ABC strategies. GEF support of US$ 0.35 million is proposed to finance incremental costs of this subcomponent.
Biodiversity Planning, Information, Monitoring, and Evaluation (US$ 3.2 million)
16. This subcomponent would finance equipment, consultants, studies, workshops, training and dissemination materials, travel expenses and incremental salaries, and other recurrent costs for: (i) continued land use planning within the ABC; (ii) implementing a biodiversity monitoring system in coordination with communities and local and regional governments to warn of threats to biodiversity; and (iii) establishing a system for evaluating potential impacts on the ABC of development activities (such as roads, other infrastructure, and logging, mining and fishing concessions) and for proposing and enforcing mitigating measures. GEF funding of US$ 2.76 million is proposed to finance incremental costs of this subcomponent.
Fund for Biodiversity Conservation and Sustainable Use (US$ 7.7 million)
17. This subcomponent would finance: (i) the establishment and operating costs of a fund to promote the long-term sustainability of the ABC and ensure coordination of the programs supported by different agencies; and (ii) grants for biodiversity subprojects, including equipment, consultants, training, workshops, seminars, studies and study tours, covering the following themes:
(a) Management of protected areas, including protection investments, preparation and implementation of management plans and recurrent costs related to the maintenance of protected areas, such as Bosawas, Cayos Miskitos, Indio Maiz, Cerro Silva, and Wawashan. Priorities for investments will take into consideration priorities identified during the land use planning exercise and present and planned foci of other donors.
(b) Subprojects related to sustainable use of biodiversity submitted by indigenous and non-indigenous communities, municipalities, NGOs and the private sector for areas included in the ABC. Matching grants would only finance subprojects that have a clear positive impact on biodiversity and the integrity of the ABC, including training and technical assistance for communities in biodiversity protection and sustainable uses, demarcation of key areas, biodiversity monitoring and inventories, vigilance systems, environmental education, ecotourism, sustainable uses of biodiversity, targeted biodiversity research, etc. These subprojects could be financed as quid pro quo agreements, whereby the recipient commits to sustainable resource use and conservation practices.
(c) Subprojects, submitted by indigenous communities, for demarcation of indigenous lands and territories which include or abut biologically important habitats .
GEF funding of US$ 3.99 million is proposed to cover the incremental costs of this subcomponent.
Community and Municipality Subprojects in the Atlantic (US$ 2.3 million)
18. This subcomponent would fund traditional community development projects not specifically tied to biodiversity, and is the equivalent grant program to that being implemented in the Pacific under the Rural Municipalities Development Component. These grants would cover the development needs of indigenous and non-indigenous communities in the Atlantic. Subprojects for environment, communal productive activities, community and municipality infrastructure, and capacity-building would be identified, prepared and implemented by indigenous and non-indigenous communities and/or municipalities and would be approved by municipalities within investment plans consistent with the ABC strategy. Participatory structures would be put in place to ensure that communities could choose options appropriate to their needs and that municipal governments have the capacity to meet them. No GEF funding is proposed for this subcomponent.
PROJECT COSTS AND FINANCING
19. The total IDA/GEF project cost is estimated at US$ 50.7 million equivalent, of which the cost of the Atlantic Biodiversity Corridor component is estimated at US$ 14.5 million equivalent. The incremental cost of generating global environmental benefits in the ABC is estimated at US$ 10 million, based on a comparison of a Baseline Scenario and GEF Alternative. The proposed financing plan for the ABC component would comprise: a GEF grant of US$ 7.1 million to finance part of the incremental costs of activities that contribute to the achievement of global biodiversity objectives; donor co-financing of US$ 3 million (under discussion); IDA co-financing of US$ 2.7 million (negotiations completed July 1996); and US$ 1.7 million in counterpart funds or in-kind contributions provided by the GON, local and regional governments, and local communities. A detailed cost table and financing plan is attached at the end of this proposal. The incremental cost analysis and justification for the GEF grant are provided in Annex 1.
RATIONALE FOR GEF FINANCING
20. The project is eligible for GEF funding in line with two of the four operational programs under the Operational Strategy for Biodiversity: Mountain and Forest Ecosystems; the project will also strengthen protection of coastal wetlands and freshwater ecosystems. In accordance with Article 8 of the Convention on Biological Diversity (CBD), the project focuses on in situ conservation and sustainable use of biodiversity in the Atlantic Corridor across a range of ecosystems and altitudinal gradients from mountains and tropical forests to coastal wetlands. It would help to protect biodiversity in the regionally and globally distinctive Miskito Pine savannas and the most extensive areas of remaining natural forests in Central America.
21. The project is consistent with guidance from COP1 and COP2 of the CBD to support conservation and sustainable use of ecosystems and habitats; it would include capacity building and promote sustainability through demonstration projects and innovative measures to strengthen the involvement of local communities and indigenous people in biodiversity management; and would integrate conservation and sustainable use with regional development programs.
22. The project is identified as a national priority in the Tropical Forestry Action Plan (TFAP), the National Environmental Action Plan (NEAP), and the draft National Biodiversity Strategy which is now undergoing a process of public consultation. The project will conserve and maintain biodiversity in a crucial segment of the Meso-American Corridor running from Mexico to Colombia. It is consistent with the regional operational framework being developed for the Corridor by CCAD, and will complement national initiatives to protect the habitat corridor in neighboring Honduras and Costa Rica. The integrated IDA/GEF project will help to address some of the root causes of biodiversity loss in Nicaragua by providing support for agricultural intensification in the more fertile western Pacific regions, thereby slowing agricultural expansion into the Atlantic corridor, and by strengthening the legal and institutional framework for natural resource management. The GEF focal point endorsement letter is attached as Annex 2.
PARTICIPATION AND SUSTAINABILITY
Participation
23. The project is being designed through a participatory process involving communities, local and regional governments, NGOs, central government agencies, and donors active in the ABC. Many participatory and consultative activities have taken place over the last year during preparation of the project and considerable resources are allocated to continue such activities under the IDA/GEF project itself. Specific activities designed to consolidate and strengthen this process fall into three broad categories:
(a) Information Sharing: many workshops and meetings took place during preparation in various municipalities in the Atlantic region as well as in the North Atlantic and South Atlantic Autonomous Regions (RAAN and RAAS). During implementation information on the project would continue to be widely disseminated among eligible beneficiaries using appropriate technologies.
(b) Consultation: a process of consultations with beneficiaries has been going on since project identification, regarding project design, investment priorities, and local decision-making mechanisms. A social assessment, an Indigenous Peoples Development Plan and a Participation Plan (for both indigenous and non-indigenous communities) are presently being carried out as part of preparation of the proposed component.
(c) Participation: IDA funds will support the Intercommunity Assembly made up of representatives of comarcas and indigenous communities within a municipality; and the Community Supervision Committee to increase the local accountability of municipal governments. Furthermore, technical assistance to GON agencies will include strengthening the process of local participation and consultation.
(d) Ownership will be promoted because local investments will be chosen, implemented, and operated by the beneficiaries themselves.
Sustainability
24. Sustainability of global benefits from biodiversity projects is difficult to predict because it depends on behavior changes on the part of individuals, communities and governments, as well as on continued availability of resources for conservation programs. Elements in the proposed project design which will contribute to sustainability over the long term include: First, the proposed land use planning and monitoring mechanisms would ensure that development activities are compatible with the conservation objectives of the Atlantic Biodiversity Corridor and that resources are channeled effectively to priority biodiversity areas. The effective functioning of the ABC strategy and its monitoring mechanisms would reassure donors and encourage additional donor financing for biodiversity conservation programs in the Corridor, thereby ensuring financial sustainability. Second, the security of the Atlantic Biological Corridor would also be promoted through various win-win activities, including ecotourism, sustainable forest use by indigenous communities, and the promotion of sustainable agroforestry systems. Third, the planned modifications and clarifications to the legal and policy framework will give local communities greater control over natural resources, which is expected to result in more sustainable use of natural resources and biodiversity. Fourth, the capacity-building emphasis of the project and the integration of biodiversity values into key policies of government are expected to contribute over the long-term to increased public sector capacity to protect the Atlantic Biodiversity Corridor. And finally, the project will support an improved system of fiscal transfers for disadvantaged municipalities, including those in the Atlantic. In the future these fiscal transfers, as well as other public and private funding, would continue to be subject to the ABC strategy and natural resource framework, thus ensuring land use consistent with biodiversity conservation.
LESSONS LEARNED AND TECHNICAL REVIEW
Beneficiary Participation
25. There is considerable accumulated experience in the Latin America and Caribbean region on demand-driven development activities, which would be the basis for part of the proposed component. A recent Bank review on this type of project in Latin America reported that: (i) by encouraging the active involvement of community groups, such projects are much more likely to meet the community's needs than if they reflect the priorities of a government agency; (ii) once the communities develop a sense of ownership of a project, they are willing to share in its costs and to ensure its maintenance; and (iii) once a community group is given responsibility for implementing a project that it has helped to design, it shows great interest in ensuring that the private contractor executing the project does so well and honestly.
Biodiversity Protection
26. The design and preparation of the proposed project has drawn on lessons derived from World Bank experience in implementing biodiversity projects. A recent World Bank report, Mainstreaming Biodiversity in Development: A World Bank Assistance Strategy for Implementing the Convention on Biological Diversity, highlights some of the key factors contributing to successful project implementation. These include: institutional strengthening, participation of local stakeholders, financial sustainability, flexible and iterative processes, and decentralized management of protected areas.
27. To date there have been no GEF projects in Nicaragua, but experiences of bilaterally financed projects in the Atlantic region, by DANIDA and the Netherlands in the South Atlantic, and GTZ and The Nature Conservancy in Bosawas in the North Atlantic, are consistent with these findings. These bilateral projects have found that small farmer training for the adoption of appropriate technologies is the single most cost efficient intervention for environmental protection in the region. They also found that assistance to indigenous communities to obtain recognition of their lands and natural resources rights are an essential condition for project success where indigenous communities are present. Other highly successful activities include community development activities, such as schools, which help to stabilize migrant populations, support for land titling for small farmers, support on environmental matters to local governments and to regionally based representatives of the central government, and support to inter-institutional and NGO coordinating mechanisms. The proposed project includes activities that seek to incorporate these lessons from experience.
External Peer Review
28. The proposed project was reviewed by an expert from the STAP Roster in May 1995, prior to preparation of the ABC component with GEF PDF support. The expert concluded that the ABC component was a strong candidate for GEF funding and should be supported. The integration of IDA and GEF funding was considered to provide a positive framework for biodiversity conservation, and the GEF funding was seen to be leveraging IDA resources on behalf of the Corridor. The STAP reviewer also flagged some important risks to successful project implementation and underlined the need to address these constraints. These included: the highly fluid social situation characterized by the influx of new settlers with little organization; the potential for conflicts between the semi-autonomous regional governments and the central government; and the weak framework for community participation in the Atlantic region. All of these issues have been addressed during preparation of the IDA/GEF integrated project. The revised proposal was reviewed in August 1996 by the same STAP expert, prior to the proposal's submission to the GEF Council. The expert stated that modifications made since the earlier May 1995 review have made the project more attractive, and that it could become a model for countries beginning to pursue decentralized biodiversity management. The reviewer concluded that the proposal is feasible as designed and a cost-effective use of GEF resources. The STAP reviewer's comments are attached as Annex 3.
ISSUES, ACTIONS, AND RISKS
29. In promoting the design of a land use strategy for the Atlantic, including the definition of corridor areas of high priority for biodiversity conservation, the major issue facing the ABC component was the need to look beyond strictly sectoral concerns. Its long-term success depends on addressing root causes of poverty and migration on the Pacific slope of Nicaragua, understanding and addressing key issues related to the indigenous populations of the Atlantic, and mobilizing and coordinating support from government agencies and donors. By integrating the proposed ABC conservation program with investment activities targeted to the rural municipalities in the Pacific, and by stressing the need to work with indigenous peoples to realize common goals, significant progress has been made in addressing these project risks. However, significant risks remain, the most important of which include: financial sustainability; the capacity of MARENA, the capacity of beneficiaries to generate high quality sub-projects, and the possibility of non-participation of key stakeholders.
30. The capacity of MARENA to implement this complex project is of concern because of resource constraints the Ministry has always faced and lack of highly trained staff. In response, the IDA/GEF project includes resources for staff training and for staffing a high quality project implementation unit. In addition, other donor agencies, such as USAID, DANIDA and CIDA, are supporting complementary institutional strengthening programs; this project has sought out close coordination with other donors on these issues.
31. The capacity of municipalities and communities to generate high quality subprojects and implement them satisfactorily is also of concern. Consequently, considerable resources will be devoted to establishment and training of municipal units, training of various groups such as NGOs, and a variety of other mechanisms. Other donors and other World Bank projects (such as the Second Social Investment Fund project) are also investing in capacity training at the local level in the Atlantic.
32. The non-participation of key stakeholders in supporting the overall concept of an ABC, particularly indigenous populations and the foreign donor community, could have significant negative impacts. Participation of indigenous peoples is in many areas dependent on making progress toward settlement of land claims. The project will directly finance subprojects submitted by indigenous communities (such as demarcation), which is expected to enhance their security of land tenure and generate considerable support for conservation and sustainable use activities. In addition, through investments made during the preparatory phase (in part for the preparation of the Indigenous Peoples Development Plan for the Atlantic), the GON is making significant progress toward recognizing and dealing with major land settlement claims in the Atlantic. Coordination of donor activities is expected to be a consequence of the high quality of planning instruments and information that the ABC strategy will provide. The GON is committed to working with donors to ensure that individual projects or programs are consistent with national strategies and priorities.
33. A last risk involves the potential for conflict between the various levels of government (central, regional, and municipal) which share responsibility for natural resource management in the Atlantic. This risk has been addressed by involving all levels in the preparation and design phase of the project and by ensuring their full participation in decision-making mechanisms for project implementation.
INSTITUTIONAL FRAMEWORK AND PROJECT IMPLEMENTATION
34. The integrated IDA/GEF Rural Municipalities/ABC Project would be implemented by two agencies: INIFOM, the Nicaraguan Institute for Municipal Development, would implement the Rural Municipalities Development activities in the Pacific and Atlantic Regions; MARENA, the Ministry of Environment and Natural Resources, would implement the Natural Resources and Institutions Component and the Atlantic Biodiversity Corridor Component (other than the municipal development activities). The MARENA Project Unit, to be supported by IDA funds, would include: an Implementation Coordinator, the Director of Planning, the Director of Protected Areas, and a Technical Support Group formed by staff from the Directorates of Forestry, Environment and Finance and Administration. Disbursements, accounting, and procurement activities would be carried out by the relevant Divisions of MARENA under the supervision of the Implementation Coordinator.
35. Although INIFOM and MARENA would play the key role in overall project implementation, other institutions and levels of governments would also participate through agreements to be established. Regional Governments in RAAS and RAAN would play a key role in the definition of the ABC strategy and its monitoring and implementation, as would municipal governments in the Atlantic region. These governments would receive training and technical assistance to facilitate their role in project implementation. The fund for conservation and sustainable use currently being designed would be overseen by representatives of MARENA, several levels of government, and representatives of NGOs, indigenous, and non-indigenous communities and the private sector. Community structures would intervene directly in project implementation through participatory mechanisms to be supported by the project. These include the traditional indigenous organizations in the case of indigenous groups and representatives of the "comarcas", a type of community including an average of 500 families, in the case of non-indigenous communities. These structures would be the main instruments for generating ideas for biodiversity subprojects and for their implementation. NGOs would also play a key role in proposing biodiversity subprojects either directly or by assisting communities with formulation of their proposals.
Annex I - Incremental Costs and Global Environmental Benefits
{Remaining Annexes are not available in electronic format. Copies are available on request from the GEF Secretariat}.