Documenet of The World Bank Report No: 22604-HO PROJECT APPRAISAL DOCUMENT ON A PROPOSED CREDIT IN THE AMOUNT OF SDR 4.0 MILLION (US$5.0 MILLION EQUIVALENT) TO THE REPUBLIC OF HONDURAS FOR A SUSTAINABLE COASTAL TOURISM PROJECT JULY 19, 2001 Environmentally and Socially Sustainable Development Sector Management Unit Central America Country Management Unit Latin America and the Caribbean Region CURRENCY EQUIVALENTS (Exchauge Rate Effective May 18, 2001) Currency Unit = Lempira I Lempira = US$0.065 US$I = 15.35 Lempira FISCAL YEAR January I -- December 31 ABBREVIATIONS AND ACRONYMS AECI Agencia Espanola de Cooperaci6n Internacional AMHON Asociaci6n de Municipios de Honduras CAS Countiy Assistance Strategy CBO Commnunity Based Organization CI Intersectoral Comm-iittee CLADES Centro Latinamericano para la Competitivedad y el Desarrollo COHDEFOR Coporacion Hondureana de dessarrollo Forestal COLAP Comite Local de Areas Protegidas CORAP Comite Rural de Areas Protegidas CQ Selection Based on Consultants' Qualification EAR Environment Assessmlent Report EIA Environmental lmpact Assessment EMP Environmiental Management Plan EMS Environmuental Management Systems EOP End of Project FHIS Fondo Hondurefio de ]nversi6n Social FMS Financial Management System GDP Gross Domestic Product GEF Global Envirormnent Facility GoH Govenmuent of Honduras GTZ Genman Agency for Teclnical Cooperation HIV/AIDS Human Imunodeficiency Virus/Acquired Immunodeficiency Syndrome IBRD International Bank for Reconstruction and Developmnent IDA International Development Agency 1DB Inter-American Development Bank IFC International Finance Corporation IHAH Institute of Anthropology and Histoiy lHT/HIT Instituto Hondulreio de TLirismo/Hoonduras Institute of Tourism ILO International Labor Organization 1NA Instituto Nacional Agraria INCAE Instituo Centroamiiericano para la Administraci6n de Empresas INFOP National Institute for Professional Training IPDP Indigenous People's Development Plan LACI Loan Administration Change Initiative LCS Least Cost Selection LCSES Latin America and the Caribbean Enviromnent and Socially Sustainable Development Unit LIL Leamning and Innovation Loan M&E Monitoring and Evaluatioin ABBREVIATIONS AND ACRONYMS (continued..) MBRS Mesoamerican Barrier Reef System NABILPA Associacion de Trabajadores y Profesionales Islefios NBF Not Bank Financed NCB National Competitive Bidding NGO Nongovernmental Organizations ODECO Organizacion de Desarrollo Comuntario Etnico OFRANEH Organizaci6n Fraternal Negra de Honduras OP/BP Operational Policy/Banlc Procedures PAAR Proyecto Agricola en Areas Rurales PACTA Proyecto para Acceso a lia Tierra PAD Project Appraisal Document PAHO Pan American Health Organization PAS Procuremnent Accredited Staff PCU Project Coordination Unit PIU Project lmplementation Unit PMR Project Managemenit Report PPI Private Participation InfrastuLctLre PROBAP Biodiversity in Priority Areas Project PS Procurement Specialist QCBS Quality and Cost Based Selection RUTA Regional Unit for Techniical Assistance SA Social Assessment SCT Sustainable Coastal Tourism SCTP Sustainable Coastal Tourism Project SERNA Secretariat of NatuLral Resources and Environinent SFB Selection under a Fixed Btudget SIDA Sindromue de Iimunodeficiencia Adquirida SINAPH Sistema Nacional de Areas Protegidas de Honiduras SME Small and Meditm Enterprise SOE Statemient of Expenditures TA Technical Assistance TEU Tourism Envirominent Unit UNDP United Nations Development Prograimme UNESCO UN Education, Scientific and Cultural Organization UNFPA UN Family Planning Agency UNICEF UN Children's Fund USAID United States Agency for International Development UTAS Unidad Tecnica de Ambiente WHO World Health Organization WTO World Tourism Organization Vice Presidenlt: David de Ferranti Country Director: Donna Dowsett-Coirolo Sector Director: John Redwood Task Team Leader: Marea Hatziolos HONDURAS SUSTAINABLE COASTAL TOURISM PROJECT CONTENTS A. Project Development Objective Page 1. Project development objective 2 2. Key perfonrance indicators 3 B. Strategic Context 1. Sector-related Country Assistance Strategy (CAS) goal supported by the project 3 2. Main sector issues and Government strategy 3 3. Learning and development issues to be addressed by the project 5 4. Learning and innovation expectations 6 C. Project Description Summary 1. Project components 7 2. lnstitutional and implementation aiTangements 9 3. Monitoring and evaluation arranoements l l D. Project Rationale (This section is not to be completed in a LIL PAD) E. Summary Project Analysis 1. Economic 12 2. Financial 14 3. Technical 14 4. lnstitutional 14 5. Environmental 17 6. Social 18 7. Safeguard Policies 2 1 F. Sustainability and Risks 1. Sustainability 22 2. Critical risks 22 3. Possible controversial aspects 24 G. Main Credit Conditions I. Effectiveness Conditioni 24 2. Other 25 H. Readiness for lImplementation 25 1. Compliance with Bank Policies 26 Annexes Annex 1: Project Design Summaiy 27 Annex 2: Detailed Project Description 33 Annex 3: Estimated Project Costs 42 Annex 4: Cost-Effectiveness Analysis Summary 43 Annex 5: Financial Summary for Revenue-Earniilng Project Entities, or Financial Summary 49 Annex 6: Procurement and DisbuLrsemenit Arrangements 50 Annex 7: Project Processing Schedule 61 Annex 8: Documents in the Project File 62 Annex 9: Statement of Loans and Credits 67 Annex 10: Countiy at a Glance 68 Alnex 11: Environmental Assessment (Executive Summary) 70 Annex 12: Social Assessment (Execultive Summaty) 75 Ainex 13: Indigenous Peoples' Developmnent Plan 86 MAP(S) I HONDURAS SUSTAINABLE COASTAL TOURISM PROJECT Project Appraisal Document Latin America and Caribbean Region ENV Date: July 19, 2001 Team Leader: Marea Eleni Hatziolos Country Manager/Director: D-M Dowsett-Coirolo Sector Director: John Redwood Project ID: P057859 Sector(s): VM - Natural Resources Management Lending Instrument: Learning and Lnnovation Loan (LIL) Theme(s): Envirotnment Poverty Targeted Intervention: N 1'Program Financing Data [I Loan [XI Credit [ ] Grant [1 Guarantee [1 Other: For Loans/CreditslOthers: Amount (US$m): SDR4.0 million equivalent (US$5.0 million equivalent) Proposed Terms (IDA): Standard Credit Grace period (years): 10 Years to maturity: 40 Commitment fee: 0.75% Financing Plan (US$m): Source Local Foreign Total BORROWER 0.56 0.00 0.56 IDA 3.69 1.31 5.00 BORROWING AGENCY 0.00 0.00 0.00 LOCAL COMMUNITIES 0.48 0.00 0.48 Total: 4.73 1.31 6.04 Borrower: REPUBLIC OF HONDURAS Responsible agency: MINISTRY OF TOURISM Honduras Institute of Tourism Address: Apartado Postal No. 3261 Contact Person: Ana Abarca Tel: 504-222-4002 Fax: 504-238-2102 Email: ihturism@hondutel.hn Estimated disbursements ( Bank FYlUS$m): - -FY - -2002 :-2003 :20- 005.....-..... Annual 0.78 1.66 1.72 0.84 Cumulative 0.78 2.44 4.16 5.00 Project implementation period: January 1, 2002 - December 31, 2004 Expected effectiveness date: 12/15/2001 Expected closing date: 06/30/2005 XCS PAD FC-m RMI. Mxat 2r.D A. Project Development Objective 1. Project development objective: (see Annex 1) The North Coast of Honduras, extending along the mainland from Omoa to Trujillo and offshore to the Bay Islands, includes the southemmost part of the Mesoameiican Banier Reef System (MBRS), the world's second longest coral barrier reef. The MBRS comprises coastal and marine ecosystems of outstanding natural beauty and global biodiversity value. Associated with these natural assets are cultural resources which reflect a rich history of indigenous and colonial heritage. Together these resources endow Honduras' Caribbean Coast with a tourism potential that is unique in the region. Tourism is widely perceived by the Government of Honduras (GoH) to offer the greatest opportunity for near-term economic growth based on sustainable use of Hoonduras' outstanding natural and cultural resources along the North Coast and Bay Islands. Tourism is a key part of the Government's strategy for National Reconstruction and Transformation in the wake of Hurricane Mitch. In line with this priority, 2001 has been declared the National Year of Toulism by the Office of the Presidency. However, without a policy framewofk for the strategic development and sustainable management of these assets, the economic development potential of North coast tourism may remain unrealized, or its trajectory follow a course of environmentally unsustainable and socially inequitable growth. Tapping into this source of economic growth and avoiding the pitfalls that have characterized tourism development in other parts of the region, will require integration of sustainable development values, e.g., economic, environmental and social, into a tourism development strategy for the North Coast, and new models for participation and active benefit sharing by a broad array of stakeholders. The LIL is designed to identify the elements of such a strategy and innovative ways to engage local communities in the capture of tourism benefits to ensure ownership and sustainability. The Project Development Objective for this Leaming and Innovation Loan (LIL), therefore, is to create an enabling environment for the development and management of sustainable coastal tourism along the North Coast mainland and offshore Bay Islands of Honduras, through a learning and participatory process that: (a) promotes dialogue on the objectives and elements of sustainable coastal touiism (SCT); (b) identifies best practice ways to promotes its adoption; (c) strengtlhens capacity at municipal and local levels to manage and benefit fiom SCT; and (d) rewards innovation in pursuit of these objectives. The Project will support interventions at three levels by: * National level: Initiating a dialogue on prevalent sectoral policies and practices that should lay the foundation for a strategy for sustainable tourism on the North Coast and Bay Islands of Honduras; * Municipal level: Strengthening capacity of public institutions and civil society to plan for and manage the development of coastal tourism that is environmentally and culturally sustainable and allows for the capture of benefits locally by communities; and * Local level: Introducing best practice and environmental certification of selected market segments, and enhancing entrepreneurship through public-private pattnerships in tourism at the small and medium scale, through skills training and financial support for innovative pilot activities. A regional Project, Conservation and Sustainable Use of the Mesoamerican Barrier Reef System, developed in parallel with this Project, has recently been approved by the Global Environment Facility (GEF) and the Bank's Board, for financing of $11.0 million. This regional Project, involving Mexico, Belize, Guatemala and Hlonduras as riparian stakeholders, aims to preserve the integrity and ecological values of the barrier reef system while promoting opportunities and approaches for sustainable use. This includes marine tourism and introduction of user fees for ecosystem goods and services associated with - 2 - improved Marine Protected Area management. 2. Key performance indicators: (see Annex 1) Output indicators have been developed during consultations with Project stakeholders. These include: * A 5 to 10 percent increase in revenues from municipal taxes, user fees or resource rents realized from economically, environmentally and socially sustainable tourism at the local community level in at least 5 destinations by EOP; * Perceived economic, environmental and social benefits to local communities derived from tourism (in the pilot destinations) increased by 35 percent from baseline measure of attitudes of key stakeholders from Project initiation to EOP; and * Improved policy environment for the resolution of land security/land tenure issues in communities on the North Coast that may be affected by tourism development. B. Strategic Context 1. Sector-related Country Assistance Strategy (CAS) goal supported by the project: (see Annex 1) Document number: 20072 Date of latest CAS discussion: 12/14/1999 The CAS for Honduras identifies sustainable tourism development as a national development priority in the post-Hurricane Mitch recoveiy strategy presented to the donor community. The anticipated outcome from this Project consistent with the CAS is economic growth that benefits coastal communities. The Project design emphasizes: (a) strengthening local capacity to manage outstanding natural resources and cultural heritage amenities of the coastal zone; (b) fostering innovation in public-private partlerships involving a wide range of stakeholders; atnd (c) promoting ptivate sector led growth and greater participation of civil society. 2. Main sector issues and Government strategy: Tourism has the potential to generate significant near- to medium-term economic benefits for Honduras. However, it is in the long-term interest of the country to expand toutism in an environmentally and socially sustainable manner. Ensuring repeat visits should be the key to tourism development and ultimately will depend on the long-term environmental quality of the North Coast and Bay Islands. This, in turn, depends largely on the goals and objectives that the GoH and people of Hoonduras want to establish for their resource base. In spite of high quality natural and cultural assets that represent potential competitive advantages for Honduras and its coastal areas, a variety of institutional problems limit the development of these assets. These include: * Weak natural resources management capacity in general, including coastal and marine resources management. There is limited experience in the establishment and effective management of marine protected areas. Although Hlonduras has quite a bit of experience in the establishment of terrestrial protected areas, it has not had much success in their effective management from government and NGOs; * Inadequate public sector budgets and financing schemes to suppolt improvements in the sector; * Insufficient infrastructure to support physical demands and investment in the tourism sector (particularly nature and culture-based tourism); - 3 - * Fragmented management of those sectors which directly affect or impact tourism (such as water and sanitation, transport, communications, energy, agriculture, and fisheries); * Limited application of planning tools (for example, strategic EA, land use planning and mapping, integrated coastal zone management) due to inadequate capacity at municipal and local levels; * Insecure land tenure and conflicts over land use rights, particularly among indigenous groups, in and adjacent to coastal protected areas; and * Inadequate enforcement of existing legislation to protect the natural and cultural assets and amenities that underlie Honduras' potential competitive advantage in this growing segment of the tourism industry. Govemmental institutions and mechanisms are not currently capable of realizing the greatest value from development decisions and investments in sustainable tourism. Development decision-making could be improved by more systematic application of land use plans and environmental impact assessment tools (e.g., regional EA, sectoral EA), more transparent use of permitting, zoning, user fees and application of the polluter-pays principle, and more stable institutional arrangements for protected area management. With the decentralization of development planning and public works to municipalities, where capacity (financial and technical) are still weak, environmental planning and management has not kept pace with demand. Also, overlapping jurisdiction in land administration at the municipal level has led to inappropriate titling of lands and conflicts in ownership or use rights. In Honduras, the problem is further exacerbated by weak enforcement of existing land use plans, environmental laws and regulations, and an inefficient land administration. The Project will seek to address these weaknesses through: * Strengthening the environmental planning unit in the Honduran Institute of Tourism and their outreach capacity to municipal govemtiment; * Establishing tourism technical assistance units in six coastal municipalities; * Training in tourism destination management, enterprise development and related tourism services; * Introduction of exemplary practices in coastal tourism and related development planning; * Introduction of economic instruments as incentives to private sector investment in sustainable tourism and the capture of resource rents locally; * Testing of innovative partnerships to encourage greater participation by the private sector and civil society in the management and benefits of sustainable nature- and culture-based tourism; and - Identification of needed policy reforms and regulatoty frameworks in tourism and related sectors, based on outcome of national dialogue on sustainable tourism, results of land titling studies, experience in the introduction of environmental certification schemes, codes of conduct and local revenue generation and benefit sharing from tourism. The Project will seek to build on existing programs, including: USAID-supported programs for municipal strengthening in environmental management, INCAE's Central American Center for Competitiveness and Sustainable Development (CLADES), and projects such as the IDB-financed Bay Islands Natural Resources Management Project, the World Bank/UNDP/GEF Parks and Protected Areas Project, the Bank-financed PAAR and PACTA Projects, and other related activities. -4 - 3. Learning and Development issues to be addressed by the project: It is increasingly important, in Honduras and worldwide to encourage the private sector to work in collaboration with governments, nongovernmental organizations (NGOs) and other stakeholders involved in sustainable approaches to tourism development and management. The essential learning issue for this LIL is to determine whether tourism is a viable sector for significant future investments on Honduras' North Coast, and which conditions (e.g, sectoral policies, multi-stakeholder participation, training, and public-private partnerships) can catalyze sustainable development and management of Honduras' unique coastal resources with benefits to local communities. Successful sustainable tourism initiatives require the active and concerted involvement of the public and private sectors. This involvement can and must occur at a variety of levels. The core resources that attract tourists to Honduras' North Coast are national patrimony -- the cultural and natural resources that make a country, region or people distinctive or even unique. As national patrimony, these resources tend to be owned and managed (or at least directed) by the governtment. Tourism also requires the active participation of private sector entrepreneurs to develop services that make enjoyment of those assets possible (e.g., hotels, restaurants, tour companies, interpretation, and transportation providers). However, these services are largely meaningless if there is no physical or social infrastructure to permit tourists to enter an area. Airports, roads, potable water and other basic services are generally provided or promoted by the public sector. Often, provision of these services can be accelerated if there is the prospect of significant private investment to stimulate economic growtlh in an area. At a more operational level, public-private partnerships can take many forms: concessions or outsourcing contracts to manage public assets; joint ventures to develop tourism attractions; agreements to develop and operate paid infrastructure such as roads, ports and water systems; user fee systems to support common objectives such as resource protection; and simple forms of cooperation such as agreements between governments and the private sector to support shared objectives with human and financial resources. The principal objective of these mechanisms is to leverage investment capital from the private sector. The governments provide the private sector witlh the core assets, necessary investment conditions and the "license" to invest in activities that have a much greater impact than the government alone is capable of achieving; in turn, the private sector provides employment opportunities, training and generates tax revenues. All of these mechanisms, and many others, are used to help advance tourism development in developing countries. The most visible form of public-private partnership in Honduras is the outsourcing of national park management to private NGOs. Declining public sector budgets and other financial difficulties have led to weak governmental mechanisms to manage national parks. The GoH has called upon the private sector and NGOs to assume management responsibility for most of these parks. This form of public-private partnership allows for greater management agility, lowers government budget obligations and provides the parks with more flexibility to enter directly into agreements with donors, tour operators and the local hospitality sectors. However, it assumes that NGOs and private entrepreneurs have the necessary resources to effectively manage protected areas in agreed co-management arrangements. In many Latin American countries, Honduras including, government rules greatly restrict the options for generating park revenue and retaining resource rents locally. These need to be revised to create appropriate incentives for private sector participation and the accrual of benefits to local communities and the environment. Additional public-private cooperation is needed to protect the natural and cultural assets that attract visitors to Honduras' North Coast. Municipal and national governments need to work with the private - 5 - sector and local communities to identify common objectives and opportunities for producing revenue to protect the parks, archeological sites and protected areas of the region, ensuring the sustainability of these core attractions into the future. User fees, room taxes, environmental perfonnance bonds for new tourism development, enforcement of the polluter-pays principle, and a variety of other mechanisms, including trust funds, need to be considered. In addition to producing revenue, these types of mechanisms provide assurances to tourists that the destinatiotn is serious about maintaining the quality of its attractions. Effective public-private partnerships can accomplish other desirable development goals, such as providing greater opportunities for smaller enterprises to participate in tourism development, and ensuring that a higher percentage of tourism revenues are generated by locally-owned enterprises. Well-managed public assets, such as a high quality national park, allow many small businesses to operate successfully in its buffer zone or surrounding area. In the absence of such a high quality asset, only firms large enough to develop their own natural or cultural attraction would consider entering the local tourism business. Small businesses can use the park as their attraction and focus their investmenit on services to tourists (e.g., hotels, restaurants, tours, transportation and other related activities). Positive examples of small-scale tourism based on high quality assets are found in Costa Rica, Thailand, Bhutan and other successful cultural and nature-based tourism destinationis. Thanks largely to its extensive and fairly well developed national park system, the Costa Rican tourism sector is comprised primarily of small- and medium-sized hotels (usually locally-owned), locally-owned restaurants and extensive networks of other local people involved in jobs or entrepreneurial activities that provide services to visitors. In addition to creating greater opportunities for the local community, smaller scale tourism helps ensure that tourism revenues. are spent and invested withinl the community, or at least withlin the country. With large-scale, usually foreigni-owned, development Projects, most (if not all) profit is repatriated to the investors' country and is not reinvested, or even spent, in the community, hostinig the tourism. A special report by the World Tourism Organization (Towards New Fonns of Public-Private Sector Partnership: The Changing Role, Structure and Activities of National Tourism Administrations, WTO: Madrid, January 1997) emphasized the importance of the changing govemment role in tourism and the need to reexamine traditional activities undertaken by the public sector. These changes have been particularly evident in Europe and North America where govemnment-owned assets have been divested and privatized. Governments have also created public-private paLtnerslhips to market their countries as international travel destinations. The trend toward public-private partnerships in tourism management and marketing is not only at the national level, but is increasingly spreading to regional and municipal levels, which is the specific focus of this LIL. 4. Learning and innovation expectations: 1 Economic D Technical 1 Social [X1 Participation Z Financial El Institutional 1 Environmental O Other A key objective of the LIL will be to assess the potential for tourism on Honduras's North Coast to trigger sustained and broad-based economic growth and to determine the feasibility and desirability of future investments in this sector by the GOH and the World Bank Group in a follow-on operation. The LIL is intended to shed light on the following factors which will provide a basis for future investment decisions: (a) Economic: The Project will provide Honduras withi assistance to develop a tourism sector more in line with evolving market expectations and higher value product niches. Nature- and culture-based tourism is the fastest growing tourism market segment worldwide. While representing only about 5 to 10 percent of current tourism demtand, this segment is growing at rates of over 25 percent per year (compared to 4 percent for traditional sun-and-sand tourism). Thzis trend is expected to continue. In addition, recent - 6 - research has shown that in Central America, visitors with environmental and cultural expectations spend on average 25 percent more than their sun-and-sand counterparts. Honduras must build a competitive position consistent with commercial opportunities. Failure to do so will relegate the countly to low-cost tourism that places little value on its unique assets and greatly limits the development potential for its coastal communities. With a sustainable development oriented position, it is reasonable to expect growth rates that are slightly higher than with a sun-and-sand strategy, higher per-visitor expenditures, and greater potential for involving local communities and protected areas in value-creation for tourists and the communities themselves. This will result in a higher retum on economic investments with lower environmental and social costs. (b) Financial: Financial analysis for follow-on activities at this time would be highly speculative. The Project will seek to create a climate for follow-on investment that will lead to greater financial returns for tourism businesses and the local communities, while reducing the negative impacts of these business opportunities. lnvestments in infrastructure related to improving access and maintaining or improving the environmental quality or cultural value of target destinationis to ensure their inicome generating potential may be among the follow-on Project considered. (c) Environment: The objective of the Project is to identify ways to integrate sustainable development values into a tourism development strategy. As such, environmental impacts would be reduced when compared to other development scenarios. The LIL will pilot innovative approaches to enhance capacity for environmental assessment of tourism related impacts through establishment of Technical and Environmental Units in 6 Municipal Govenmments, and promote identification and adoption of best practice through a system of enviromental certification of tourism related enterprise. (d) Social: A key element of a sustainable coastal tourism strategy for the North Coast will be the identification of means to enhanice participation in the benefits of tourism by as broad a group of stakeholders as possible, but particularly by economically and socially disadvantaged groups whose traditions and lifestyles are intimately linked with the cultural and natural assets being developed for tourism. This will be encouraged through opportunities to participate in public-private partnerships, micro- and small-scale toulism enterprise development and employment in the labor market generated by a growing tourism industry. Social and cultural values will be defined and efforts made to mainstream these into local tourism development plans. Policy failures and other threats to land security will be identified and incorporated into the national dialogue. These will form part of the innovation and leaming aspects of the Project, and will be evaluated for possible scale up in a follow-on investment Project. C. Project Description Summary 1. Project components (see Atnex 2 for a detailed description and Annex 3 for a detailed cost breakdown): Project Componienit 1: National Strateg and Inistituttioital Support for Sustaintable Coastal Tourism - US$1.32 million This component will focus on the development of a national strategy for coastal tourism, comprised of tourism plans and development scenarios for priority areas along the North (Caribbean) Coast. A national dialogue will be supported through a series of workshops to be held in various locations. Among the topics to be discussed will be: regional tourism and environmental planning; tourism development and financing; environmental management; economic impact analysis; criteria for sustainable tourism development; coastal zone management; land administration and land use planning; and community participation, including involvement of indigenous peoples. The component includes the following major activities: - 7 - * Formulate and promote a participatory approach to policy dialogue with public and private sector stakeholders at the national, regional and local levels. This will include support for the work of the lntersectoral Committee for Indigenous Land Rights in consulting with key stakeholder groups regarding the interpretation/implementation of policies related to land regularization and land use rights, and mechanisms for the resolution of conflicts in land administration; * Develop and implement a national tourism strategy for the North Coast which includes integrated, sustainable tourism action plans over the short, medium and long term. This will include the identification of strategic actions needed to address HIV/AlDS and security issues on the North Coast; and * Provide technical assistance to support implementation of the national strategy and sustainable coastal tourism action plans along the North Coast. This will include promotion of the necessary legal and policy reforms to address successfully issues identified above in the national dialogue and tourism action plans, along with the institutional arTangements required to lay the foundation for sustainable coastal tourism on the North Coast. Among the activities to be promoted will be baseline surveys/tourism audits to facilitate assessment of changes in economic, environmental and social conditions associated with sustainable tourism, legal and technical preparation of communal titles to land in nine Garifuna communities in the Project area whose claims are still pending before the Government, and infonnation campaigns for HlV/AIDS prevention and treatment. Project Component 2: Institutional Strentgtlhening Trainintg and Teclhnical Assistance at the Municipal Level US$2.01 million The objective of this component is to develop the capacity of coastal municipalities (including local government, the private sector and community based organizations) to engage in sustainable tourism development planning, through skills training in such areas as environmental management, tourism destination management, and environmental certification for tourism related enterprise. A complementary subcomponent will support the creation of a cultural tourism destination demonstration site through the restoration of the historic center of one of Central America's oldest coastal town, Trujillo, gateway to the Mosquitia and Honduras' adventure tourism. The major activities under this component include: 3 Creation of tourism and environment teclhical assistance units at the municipal level to provide resources for local tourism development and environmental management; * Provide training for municipalities in identified areas of need; and v Conduct heritage site restoration activities for Trujillo's historic city center. Project Component 3: Pilot Entrepreneurship Programs for Sustainiable Coastal Tourism - US$2.14 million This component will foster entrepreneurship in different parts of civil society and support the development of innovative public/private partnerships for tourism enterprise development. An entrepreneurslhip center will be created to provide technical assistance and serve as an incubator for development of small and medium enterprise through public private partnerships. This will include assistance in business plan development, identification of finanlcing and markets for tourism related enterplises. The Center will provide support for proposal development and matching grants awarded to individuals, communities and indigenous groups on a competitive basis, for grants of up to $30K. This component will contribute significatldy to the learning and innovation aspects of the LIL in tenns of stimulating ideas and investments in the sector at the local level. The LIL will support the following major activities under this component: -8 - * Design and delivery of an Enterprise Center for the development of tourism-related enterprise, including training in the preparation of market studies, business plans and development of skills necessary to stimulate productive capacity and opportunlities for public private partnership in sustainable tourism enterprise; and * Pilot innovative public/private partnerships among entrepreneurs, NGOs and community-based organizations which demonstrate the viability and replicability of small- and medium-scale sustainable tourism enterprises (e.g. ecolodges, handicrafts, tour guide operations, protected area management, adventure travel outfitters, cultural heritage, etc.) Matching grant subprojects, including technical assistance, will be administered for the benefit of both ladino/mestizo communities and indigenous communities in the Project area to support pilot activities. National Strategy and Institutional 1.32 21.9 1.27 .. 25.4 Support for SCT Institutional Strengthe ning for 2.01 33.3 1.52 30.4 Municipalities Pilot Entrepreneurship Programs for 2.15 35.6 1.67 33.4 SCT Project Management 0.56 9.3 0.54 . 10.8 Total Project Costs 6.04 100.0 5.00 100.0 Interest during construction 0.00 0.0 0.00 0.0 Front-end fee 0.0 0.0 Total Financing Required 6.04 100.0 5.00 100.0 2. Institutional and implementation arrangements: This Project will be implemented over a 3-year period, from January 1, 2002 to December 31, 2004. Overall Project implementation will be the responsibility of the Ministry of Tourism, through the Honduras Institute of Tourism (IHT). The IHT is a decentralized, autonomous agency reporting to the Ministry of Tourism, that is developing the technical capacity and administrative flexibility to manage international Projects. IHT is currently overseeing implementatioin of a $25 million Natural Resources Management Project for the Bay Islands. To strengtlhen IHT's capacity to manage this LIL in more direct, hands on way, it will receive Project assistance for the establishment of a Project Implementation Unit (PIU), and strengthening of a newly designed environmental unit to oversee EIA requiremrents of proposed tourism investment Projects. The PIU staff will be headed by a Project Coordinator reporting directly to the Executive President of the lIHT, who also functions as the Minister of Tourism (see Figure 1). In-kind office support and operating budget assistance will be provided to the PIU by the IHT. The PIU will be responsible for maintaining close links with Project stakeholders. A tourism planning and environmental management specialist will form part of the PIU. His/her principal responsibility will be to oversee technical aspects of Project implementation. Related to this will be an assessment of training needs and capacity building of IHT and municipal based Project staff. Each beneficiary entity will designate a liaison official to monitor and coordinate Project implementation. These individuals will form part of the Project Advisory Coommittee, that will meet regularly with the PIU to ensure communication between the -9- Project and beneficiaries on Project related issues. The Project is committed to establishing and maintaining this advisory group as a means of promoting ownership among the many different stakeholders involved. It will provide autonomy, decentralized decision making, and experience in the process of Project design and implementation within the following institutions: Secretariat of Natural Resources and Environment (SERNA); Ministry of Finance; the Instituto Nacional Agraria (INA), the National Institute for Professional Training (INFOP); municipal governments; as well as NGOs and private sector groups. The PIU will be responsible for overall Project management, monitoring and evaluation of Project activities as well as drafting amnual work plans to ensure consistency with the Projects overall objectives. The PIU will also be responsible for maintaining a financial management system in accordance with World Bank guidelines under the Loan Administration Change Initiative (LACI). A financial management plan for the Project including Project implementation benchmarks, was developed during Project preparation to respond to these guidelines. The PIU will prepare requests for disbursements following procedures and provisions outlined in the financial management plan. The organizational chart for the Project follows: SECRETARY OF STATE FOR TOURISM HONDURAN INSTITUTE OF TOURISM (IHT) INTERNATIONAL PROJECT IMPLEMENTATION dVIs COOPERATION UNIT (PlU) . .. UNIT J )4e) Donor Coordination Admin Team Technical Team m:Ur~X~At...... ,... A Project financial management system will be established prior to effectiveness of the credit to serve as the principle Project monitoring tool. - 10- The PIU will present to the World Bank, on a quarterly basis, beginning with the first quarter of Project effectiveness, a Project Implementation Repott covering activities during the previous quarter. This Report will include an assessment of: (a) the Project Implemnentation Plan for the year under review; progress achieved against: (b) the Project Monitoring and Impact Evaluation lIdicators for the year under review. The Project Implementation Report will be discussed during Bank supervision missions. At the end of the LIL, an independent evaluation of the Project will be undertaken to assess Project impact and evaluate lessons learned. Innovation and risk will be assessed in terms of outcomes generated, and a decision whether or not to scale-up in follow-on activities in Honduras and elsewhere in the region will be made. The appropriateness of a follow-on investment Project to apply lessons learned from Sustainable Coastal Tourism throughout Honduras will be assessed. Background studies conducted during Project preparation will serve as baseline indicators to be monitored over the course of the Project. Increased economic activity generated by tourism enterprises will be monitored, including the following perfonrance measures: * Increased employment, individual wages and family income; * Increased and diversified funditng for protected areas; * Expanded municipal and coimnunity participation in sustainable toulism development; and * Implementation of legislation or regulations providing direct revenue flows to municipalities affected by tourism development operations. 3. Monitoring and evaluation arrangements: Project Monitoring and Evaluation: In light of the development objective of the LIL, an anticipated outcome is a series of lessons learned regarding participatory and innovative approaches to enhance the sustainability of coastal tourism, including broad benefit sharing at the local level. Signiificant social issues related to land administration and the threat of HI V/AIDS, lack of business and organization skills, and the absence of technical capacity in environmental planning and tourism destination management, are being addressed in the LIL as preconditions for successful tourism development. These are reflected in the monitoring indicators in Annex 1. An IPDP has been developed to ensure participation and benefit sharing by Indigenous Groups whose livelihoods are likely to be directly affected by the nature and course of tourism development on the North Coast. A sociologist will be hired as part of tle Project Team to belp oversee the implementation of the IPDP and to monitor the social indicators in Annex 1. An environmental/tourism specialist will take the lead in monitoring output and perfonnance indicators related to capacity building in tourism enterprise and environmental management. The PIU will also be guided by input from the Advisory Committee and regular stakeholder consultations. A land titling diagnostic study and tourism audits to be conducted during the first year of Project lmplemenation, will provide an impoltant baseline of information against which progress in the resolution of land security issues and the promotion of tourism-related enterprise can be assessed in the course of the LIL. A mid-tenn review is scheduled late in year two of the LIL. Based on the outcome of this evaluation, and the degree to which GOH commitments under the IPDP have been carried out, recommendations regarding a follow-on strategy in the sector and the scope of any follow-on investment Project would be made. D. Project Rationale [This section is not to be completed in a LIL PAD. Rationale should be implicit in paragraph B: 3.] - 11 - E. Summary Project Analysis (Detailed assessments are in the project file, see Annex 8) 1. Economic (see Annex 4): [For LIL, to the extent applicable] (D Cost benefit NPV=US$ million; ERR = % (see Annex 4) * Cost effectiveness o Other (specify) The economic analysis canied out during Project preparation establishes an estimate of likely benefits from sustainable tourism in Honduras' North Coast and Bay Islands during the Project implementation period and an assumed five-year follow-on Project (see Annex 4). Because of the nature of the Learning and innovation Loan, this analysis focuses on the overall benefits of the approach the Project is seeking to promote, rather than on a cost-benefit analysis seeking to derive net benefits. The principal benefits from the Project will be derived from creating conditions in the target area that lead to a "healthy" tourism industry capable of attracting additional tourists and appropriate levels of investment, and significant community participation. These benefits are expressed in terms of the difference between "without Project" and "with Project" scenarios. The former is based upon tourism visitation and revenue growth consistent with historic averages (i.e., roughly four-percenit growth for the country with variability at different locations and in different years). The latter is based on expert assessments of likely growth scenarios given a comprehensive program designed to establish the Norit Coast as an attractive natural and cultural resource destination, which is conservatively estimated at 8 percent. This higher growth scenario is made possible by a number of parallel and mutually supporting activities conducted at the municipal and national levels by public sector, private sector, and nongovernmental actors. While many of these activities are beyond the scope of the Project itself, the LIL-financed activities are seen as a necessary condition for this higlher growth scenario. Three categories of benefits addressed quantitatively in the suppolting analysis include: * increased revenue capture for marine and coastal terresttial parks. This will be derived from increased visitation, implementation of user and entrance fees, and likely natural resource protection fees charged at the municipal level; * Revenue captures to improve municipal tourisin-related services and national-level promotional programs. This revenue is expected to come from additional national tourism tax revenues (from the existing lHT tax) and new municipal fees charged of visitors (presumably from a small municipal fee collected through hotels); and * Increased tourism revenues from increased visitation and spending. Thlis analysis will quantify differences in likely tourism expenditures between the two growth scenarios. There are significant differences between tourism conditions in the Bay Islands, and the rest of the North Coast. Problems associated with promoting sustainable tourism in the Bay Islands relate more to the Islands' "success" as a tourism destination. The Islands' natural resource base is threatened from increased construction of roads, hotels and building sites, and from the direct and indirect effects of increasing population and tourism visitation. The challenge in the Islands will be to protect the quality of the natural resources that attract tourists -- principally reefs, mangroves, and beaches, as well as the forests and intact coastline that protect dtem. The mainland North Coast bas ample natural and cultural assets with great tourism potential. In contrast to the Islands, however, the tourism infrastructure of hotels, guides, tour packages restaurants and a natural and cultural destination is quite underdeveloped. At the same time, the natural resources that make up the fundamental attraction of the area are under threat from expansion of agriculture, cattle ranching, poorly planned and occasionally unauthorized logging operations, and - 12 - contamination from municipal and industtial waste. The goal in both areas will be to find a more mutually self-supporting relationship between touiism development and protection of the natural resource base. The Islands and remainder of the Coast do share common weaknesses in municipal capacity to promote and regulate sustainable tourism. All of the municipalities lack financial resources and personnel with the appropriate skills and training to develop strategies, promote tourism development and ensure development is consistent with the economic, environmental and social goals of sustainable tourism. LIL activities are expected to promote noticeable and measurable improvements in tourism-related variables such as: * Tourism-related job creation in the municipalities and park buffer areas; * Skill levels of tourism-related workers with potential impact on wages; * The rate of start-ups of new tourism-related businesses; and * Diminished environmental impacts of toulism operations. In formal cost benefit analysis, tax revenue is corTect]y categorized as a transfer rather than a benefit. However, th-is Project aims to generate a flow of revenues for activities that are considered essential to providing the base for successful sustainable tourism. The North Coast will require substantial investments in parks and in municipal and national capacity to support and promote sustainable tourism development. Absent these investments, the higher tourism growtll scenario is unlikely. Improved protected area maniagement will provide additional market and non-market economic benefits. Marine park and reserve benefits will include: * Reputation effects that increase the attractiveness and raise the international image of the North Coast and the Bay Islands region; o Higher willingness-to-pay for a scarce resource. High quality coral reefs are becoming increasingly scarce. Successful protection and management of the reefs will lead to increasing financial returns to the tourism sector and the municipalities; and - Improved healtlh of fisheries -- this will help increase the value of future commercial fish catches, and add stability to subsistence and traditional fishermeni. Improving the terrestrial parks will provide additional benefits, such as: * Higher willingness-to-pay for scarce resources. Wildlife viewing, scenic beauty, living culture and historic sites are "premium products" for foreign and local tourism markets. As competing locations become rarer and less accessible, the future value of well-protected resources should increase; * Improved quality of coastal resources. The terTestrial parks directly and indirectly protect mangroves, wetlands, reefs, freshwater resources and a host of other valuable resources. Without well-functioning parks, these coastal resources would be even more seriously threatened, reducing the economic viability of traditional communities, and futther depleting coastal fisheries; * Quality of driniking water supplies. The coastal terrestrial parks provide drinking water capture for La Ceiba, Trujillo, Tela, Omnoa and other coastal conmnunities. The economic value of this natural service is likely in the millions of dollars, based on relevant studies of drinking water supply value in Honduras and other developing countries; and * Reduction of vulnerability. Intact upland watersheds reduce downstream damage from excessive rain and flooding. The value of this vulnerability reduclion could be in the millions of dollars considering the valuable coastal resources located downstream and around thie parks. - 13 - 2. Financial (see Annex 4 and Annex 5): NPV=US$ million; FRR = % (see Anunex 4) [For LIL, to the extent applicable] Not Applicable. Fiscal Impact: The fiscal impact of the Project on the Government of Hoonduras is expected to be minimal. The counterpart contribution is at approximately 10% of Project costs, including taxes, for a total of US$0.56 million. The first year's trench has been reserved by the Ministry of Finance for inclusion in IHT's FYOI budget. 3. Technical: [For LIL, enter data if applicable or 'Not Applicable'] Best practice within the sustainable touiism sector - as indicated by the Certification for Sustainable Tourism program in Costa Rica and the Green Globe International Program - have demonstrated the importance of public-private partner-ships in promoting improved envirolnmental perfonnance together with economic efficiency and cost savings. Waste minimization and energy and water conservation measures save money for hotel and resort owners and operators, and often pay for themselves in a relatively short period of time. Furthernore, hotel operators have found that the ability to market their properties as "green" hotels provides a competitive advantage in the marketplace. However, access to innovative environmental technologies and management practices that can be applied in new and existing tourism developments in Honduras is limited. This is due in large part to a lack of awareness of available technologies and management practices; import restrictions; insufficiency of financing; lack of appropriate skills; and unavailability of pailts for effective operation and maintenance. Current, state-of-the-art technologies include equipment for efficient power generation, water conservation; desalinization; wastewater treatmnent, solid waste minimizationi/recycling; etc. Best practices in tourism management include enviroimnental audits, periodic preventive maintenance, and training programs, among other needs. For satisfactory development of the tourism industry, steps must be taken simultaneously to preserve and protect the natural environmenit and expand efforts to market Honduras as a "green" destination. Recent reviews of environmental labeling and certification prograns indicated that the Green Globe lnternational Program is evolving into an effective enviroomental maniagement strategy with upside marketing and positioning benefits for tourism destinations anid business operations. Green Globe is a worldwide environmental management and marketing program for the tourism industry. The program has more than 500 members in 90 countries, and has established environmental improvement initiatives for destinations in Asia, Europe, Middle East, Latin America and the Caribbean. Its global certification process is in partnership with SGS, a leading intemnational verification bureau. Green Globe's principal mandate is to provide low-cost, practical ways for all tourism businesses to undertake improvements in environmental responsibility. 4. Institujtional: 4.1 Executing agencies: The Institute for Honduras Tourism is a decentralized agency reporting to the Ministry of Tourism. The Director of the IHT also functions as the Minister of Tourism. The IHT has the legal power and independence to manage the Project. The duration of the Project implementation period is 3 years. - 14 - 4.2 Project management: Project management: Project management will be carried out by a team of consultanits to the IHT, financed by the Project. Project Management responsibilities will be divided between an administrative team, based in IHT headquarters in Tegucigalpa, and a technical team based in La Ceiba, on the North Coast. The former will consist of a Project Director, an Accountant in charge of financial management and disbursement, a Procurement Specialist to oversee acquisition of goods, provision of services, civil works and training, and an administrative assistant to support the financial management and procurement functions. The administrative team will be in place prior to Project Effectiveness. The technical team, consisting of a tourism and environmetntal planning specialist, a sociologist and a program assistant, will be based in La Ceiba to create an IHT presence on the North Coast, in conjunction with the Enterprise Center, to be established under the Project. The Tourism and Enivironmental Planning Specialist will also oversee functioning of the Tourism and Environmental Units to be established within local govermnent in the six target municipalities The sociologist will facilitate linkages between the Project and local communities and indigenous groups on the North Coast, and will be in responsible for overseeing the implementation of the lPDP. The Program assistant will provide overall support and liaison with the PCU in Tegucigalpa for Project Implementation. The Technical team will be hired no later thani 6 montlhs following Project Effectiveness. 4.3 Procurement issues: See Annex 6 for a discussion of these issues. Procuremenit capacity withini the IHT is limited, due to lack of extensive experience with implementation of intemational Projects. The Project will finance the establishment of a PIU within IHT, to build capacity in IHT for Project management. A procurement specialist will be hired, who will be trained in Bank procurement procedures and will, in tumn, work with lIlT staff during Project implementation to introduce international best practice and institutionalize procurement capacity within the IHT. 4.4 Financial management issues: A. Financial Management System: As result of the financial management assessment conducted during Project preparation, it was identified that the IHT has an adequate financial management structure, keeps adequate, automated accounting financial and budget records and controls on fixed assets, and has internial controls in place. However, the financial management staff does not have the capacity to manage the additional workload that the Project activities will require and the accounting system does not lhave thie Project Management Report PMR capabilities, nor is it s ufficiently flexible to introdtuce changes to meet Project needs. As a result of the assessment and given that the Project design contemplates the establishmenit of a PIU within the lHT, an action plan was agreed upon which includes key actions to: (a) design and implement a financial management system that meets PMR requirements; (b) hire the staff needed to establish the PIU; (c) draft a Project operations manual and develop administrative procedures; and (d) hire external auditors. It was agreed that a Financial Management System (FMS), which would be PMR-compatible, would be installed and substantially operational prior to Project effectiveness. The action plan is included in Annex 6, Table D. - 15 - The financial management system will include internal control systems, reliable records and report of Project assets, accounting, financial reporting, physical and financial monitoring of Project indicators, procurement management, reconciliation of the PIU's Project records with the Special Account statements, and auditing systems to ensure the provision of accurate and timely information to the World Bank regarding Project resources and expenditures, in accordance with: (i) the Financial Accounting, Reporting, and Auditing Handbook (World Bank, 1995); (ii) the Bank's Operational Policy (OP) and Bank Procedure (BP) 10.02 dated July 1996; and (iii) the revised Bank finanicial management standards to comply with OP and BP 10.02, dated August 1997. The PlU within the IHT would maintain separate Project accounts, retain strict financial controls, exercise contractual authority over all Project components, conducting annual Project reviews, including contracting of a firm for the audit of Project financial statements, as well as preparing periodic reports on performance against agreed performance monitoring indicators. The PIU will consolidate and transmit to the Bank quarterly PMRs which summarize Project progress in tenns of financial activity, key performance indicators, and procurement. The PIU will also be responsible for continuous Project work plan updates to ensure consistency with the Project's overall objectives. Finally, the PIU will be responsible for Project management according to best administration practices and the Bank's financial management and reporting requirements. B. Project Management Reports: Under the Loan Administration Cbang,e Initiative (LACI) introduced by the Bank in July 1998, the PIU should maintain a financial management system that integrates financial, physical and procurement activities of the Project, to be reported through the PMR. The PMRs will also serve as an application for disbursement from the credit account, if so requested by the Borrower. The first PMR would present a forecast for disbursements during the first six (6) months of the Project; subsequent disbursements to the Special Account would be based upon receipt and approval of quarterly PMRs. The PIU will produce PMRs on a quatterly basis. These reports will be prepared 45 days after the end of each quarter. In addition, annual financial statements (to be included in the audit report) will be required. The fiscal year of the Project will match IHT's fiscal year. The PIU will be responsible for conducting annual Project reviews, including audited financial statements of the Project, as well as preparing periodic reports on physical and financial, agreed Project indicators. The PIU will consolidate and transmit to the Bank quarterly PMRs which summarize Project progress in tetms of financial activity, key perfonnance indicators, and procurement. C. Annual Audits: In addition to submission of quarterly PMRs, IHT will contract an independent public accounting firm, prior to the beginning of the fiscal year to be audited. The auditors should be hired, preferably under a multi-year contract (two years), according to terms of reference acceptable to the Bank, for the performance of annual Project audits. The auditors will conduct interim audits through each year of Project implementation. Cost of the External audit will be provided with credit funds. The Project audited financial statements will be submitted to the Association within 120 days after the close of the Project's financial year. The Guidelines and Terms of Reference for Audit of Projects with Bank Financing by the World Bank in Latin America and the Caribbean Region should be followed when preparing the terms of reference for the extemal audit. The terms of reference and proposed short list of public accounting firms for the audit of the first Project implementation year should be submitted to the Bank for its no-objection and a review of the short listed proposals completed, prior to Project effectiveness. The selected firm should be hired within 30 days following Project effectiveness. D. Special Account: - 16 - IDA credit funds will be disbursed into separate a Special Account, in US Dollars, at the Central Bank of Honduras. Disbursement of Project transactions will be channeled directly dhough tle Special Account. 5. Environmental: Enviroinmental Category: B (Partial Assessment) 5.1 Summarize the steps undertaken for environmental assessment and EMP preparation (including consultation and disclosure) and the significant issues and their treatment emerging from this analysis. Stakeholders within the GoH (the lHT Project counterpart officials, including the Environmental Unit within lIlT) were consulted and their comments incorporated into the preparation of the Environmental Assessment Report (EAR) as well as the Environmental Management Plan (EMP). One of the main findings of the EAR was the nearly nonexistent capacity of municipalities to carry out environmental planning in general, but particularly in relation to tourism development. To address tlhis, significant Project resources will be directed toward capacity building of national and local government entities to improve their environmental review and management capabilities. (See Annex 11 for a discussion of this). 5.2 What are the main features of the EMP and are they adequate? The main features of the EMP include: * streamlining and upgrading environmental review and management procedures in relation to tourism development at both national and municipal government levels througlh legal consultation, training and infonnation dissemination; * provision of guidelines for environimental review of pilot activities to be financed under the innovation matching grants component; and * environmental hot spot analysis/profile of six priority municipalities prepared as part of a regional strategy for sustainable touiism on the North Coast. 5.3 For Category A and B projects, timeline and status of EA: Date of receipt of final draft: Final EA in Spanish received August 20, 2000 and presented to borrower and IHTr on August 3 1. English draft versioni received September 21, 2000. 5.4 Hlow have stakeholders been consulted at the stage of (a) enviroiunmenital screening and (b) draft EA report onl the environmental impacts and proposed environment management plan? Describe mechanisms of consultation that were used and wlhich groups were conisulted? Stakeholders within the GoHl (the IHT and Environmental Unit within SERNA) were consulted and their comments incorporated into the preparation of the Envir-onmental Management Plan. The EMP has been vetted publicly through distribution to the municipal govemments in each of the six municipalities where the Project will be supporting the establishment of Environment and Tourism Technical Units, and will be disseminated to other stakeholder groups, includinig NGOs representing indigenous groups, along the North Coast. 5.5 What mechanisms have been established to monitor and evaluate the impact of the project on the environmienit? Do the indicalors reflect the objectives anid resltlls of the EMP? Environmental Management System audit reports will be prepared and disseminated for those enterprises that will participate in the environmental certification pilot process. These will measure any change in environmental performance of these enterprises. Criteria for matching grant awards will include neutral or positive environmental outcomes, and final reports will be submitted documenting pilot activities. A final evaluation of the LIL will include analysis of environmental indicators measured against baseline - 17 - information collected at Project outset under Componenit 1. 6. Social: 6.1 Summarize key social issues relevant to the project objectives, and specify the project's social development outcomes. A social assessment (SA) was carried out in various phases over the course of Project preparation. The SA included extensive consultation with stakeholders at various levels and in different fora, from regional workshops involving a large cross section of interest groups in North Coast Tourism, to small focus groups at the community level in the four coastal Departments in wlhich the Project is worling (Cortes, Colon, Atlantida and Islas de Bahia). The SA and additional detailed background studies are available in the Project Files. An executive summaiy of the SA is appended as Ainex 12. The main objectives of the SA were to: * identify and characterize beneficiary groups within the Project area, and evaluate their attitudes and socio/economic activities in relation to the development and management of sustainable coastal tourism on the North Coast; * assess their reaction to the proposed Project and interest in participating; * identify possible negative impacts from the Project or a follow on investment (e.g., in relation to land security and access to benefits from tourism, foreign investment, increased pressure on natural resources, cultural erosion) and ways to mitigate these impacts; * identify needs and means to ensure substantive participation by beneficiary groups, and in particular the needs of indigenous and economically disenfranchised groups, with regard to capacity building, access to Project resources and infonnation, and decision-makers during Project design and implementation; - identify institutional barriers to broad benefit sharing by local communities in tourism development; and * identify the major links between natural and cultural patrimony in the region, in terms of subsistence, traditional and religious use, and opportunities for integrating these into sustainable development options, including cultural tourism, with greater income generating potential. The metlhodology included: * fielding a multi-disciplinary team including tourism, rural development and indigenous peoples' specialists, and local community leaders; * consultations in advance with stakeholder groups regarding the composition of the team, methodology and instruments to be used for data collection (e.g., survey instruments, focus groups, semi-structured interviews, and geographic area covered); and * stakeholder consultations at various intervals to apprise groups on progress and outcomes of the SA and Participation Plan, and to ensure a continuing dialogue during the course of Project implementation to further refine the Indigenous People's Participation Action Plan and specific activities to be supported under the Project components. The main social issues identified were: * lack of basic infrastructure (sanitation/public toilets, access to clean water, and beach facilities) to support coastal tourism; * lack of investment financing to capitalize start up of small businesses or expand existing - 18 - micro-enterpn'se; * urgent need for training and Humani Resources Development in the area of tourism (e.g., in diversification of services, enterprise development and financing, information access, marketing, etc.); * land tenure: need to regularize titles held informally, including to communal and ancestral lands of indigenous groups, resolve conflicting claims on these and other lands, rationalize jurisdiction over land titling by INA and the municipalities, speed up the land titling and adjudication process and make it more transparent; and * the spread of HIV/AIDS (this was identified as among the top three health issues by respondents; it ranked in importance from number I to number 3, depending on ethnic group and gender, but was acknowledged as being an issue of critical importance to sustainable tourism development). Basic infrastructure will not be financed under the LIL. However, the need for suclh infrastructure to attract future investment in tourism will be considered in the design of a possible follow-on Project. The need for investment financing for SME and training and human resources development in support of tourism are being addressed under the LIL. Otlher issues, such as land tenure and the proliferation of HlV/AIDS on the North Coast, were viewed as critical issues which lay beyond the scope of the LIL, but which would have to be addressed in parallel, to lay the foundation for sustainable coastal tourism on the North Coast. The land tenure situation along the North Atlantic Coast is very dynamic, and has been the focus of conflicts particularly between Indigenous Communities and the Govemment, in areas of overlap between Ancestral Lands and Protected Areas and in pedi-urban settlements of indigenous communities located adjacent to expanding municipalities of primarily ladino populations. In the process of expansion, these municipalities have laid claim to lands within the "functional habitat" or ancestral territories of adjacent Indigenous communities, thereby interfering with traditional livelihoods which are natural resource-based, and the regularization of communal claims to these lands by Indigenous groups, as provided for under the Indigenous and Tribal Peoples' Convention, Convention No. 169 of the International Labor Organization, ratified by Honduras in 1995. HitV/AIDS: The results of the SA indicated that among indigenous groups, Garifuina men and women consider HI V/AIDS to be the number one health problem in their communities, with infection rates as high as 25% of the population, recorded in some communities. The high rate of infection is attributed to the migration patterns and sexual practices of this group. Further analysis of these issues was carried out by the Project Team and specialists in LCSES, to identify the scope of the problem, the Government of Honduras' commitment to address these issues, and an appropriate suite of interventions that could be supported by the LIL and other IDA-financed Projects in parallel with the LIL. These became the basis for the Indigenous Peoples' Development Plan, which is appended as Annex 13, and which the Borrower and lIlT are committed to implementing, through, inter alia, institutional arrangements with INA and the Ministry of Health, under the tenns of the Credit Agreement. 6.2 Participatory Approach: How are key stakeholders participating in the project'? Key stakeholders are participating in the Project in every component. The LIL will support a national dialogue to define the elements of a Strategy for Sustainable Coastal Tourism for the North Coast that will engage public sector institutions, like the Instituto de Turismo Hondureno, the Instituto Nacional Agraria, the Ministry of Health, the Association of Mayors of Honduras, the Private Sector and civil society through a broad representation of interest groups in a series of stakeholder workshops at different locations on the Nortl Coast. At the Municipal level, the Project will work with local governiments to strengthen their capacity to plan for and promote tourism in an environmentally and socially sustainable way through technical assistance units in each of six municipalities. Restoration of tle colonial/historic section of Trujillo, as an example of public-private partnerships with local govemment and entrepreneurs will be supported under the Project. Training in the preparation of business plans for small scale entrepreneurs and - 19 - the promotion of small and medium ecotounism enterprises for provision of tourism related goods and services will be supported through the establishmenit of an Enterprise Center and Business Incubator, and matching grants programs for pilot Project development and implementation. These will be available to individuals, community-based organizations and NGOs in the Project Area, with special programs designed to facilitate access to those with little or no prior experience. To comply with the Bank's safeguard policies on Indigenous Peoples, an IPDP was developed to provide benefits specifically to indigenous communities in the Project Area and to mitigate any impacts which might arise in the future from the development of tourism, i.e., through increased investments in infrastructure, migration, land markets and increased externial influence. 6.3 How does the project involve consultations or collaboration with NGOs or other civil society organizations? The Project Team canied out extensive social and legal analyses related to the SA, the IPDP, and the Environmental Assessment, in consultation with various segments of civil society. Indigenous and Garifui.na leaders from the main ethlnic groups in the Project area were consulted, along with NGOs representing these groups to identify key concems and expectations regarding tourism in the region. Public institutions e.g., IHT Secretaria de Gobemaci6n y Justicia, Secretaria de Salud, AMHON, Instituto Nacional Agraria, etc. were also consulted regarding their role in and commitment to addressing land regularization and land security issues, HIV/AIDS, capacity building for tourism development, and environmental management issues. Their participation was ensured by hiring local leaders and NGOs to conduct the workshops. During Project implementation, there will be ample opportunity for consultation and collaboration with NGOs and civil society througlh the following: - support for the work of the Intersectoral Committee to Address Indigenous Land Rights, through consultations, conflict resolution and regularizationi of communal land claims in the case of nine Garifuna communities whose titles are still outstanding; * contracting of an NGO or community-based organization to administer the Innovation Matching Grants sub-components; * eligibility of civil society, including NGOs and CBOs to take part in the Matching Grants sub-Project (Component 3 of the Project); and * participation of relevant representatives of these groups in the Steering Committee for the Project, which will be convened on an ad hoc basis in the context of specific issues (e.g., coordination with local government, training and outreach for development of small scale tourism operations, .lIV/AIDS awareness and prevention campaigns). 6.4 What institutional anrangements have been provided to ensure the project achieves its social development outcomes? Establishment of technical assistance units to promote sustainable tourism and coastal land use planning will be established in six municipalities, a tourism enteiprise center and business incubator serving the north coast will be established in La Ceiba, and financing of feasibility studies and innovative public/private partnerships for small and medium scale enterprise tailored to meet the expressed needs of target beneficiary groups in tourism development will be supported by the Project. This will help ensure the kind of capacity building and resource allocationi required to launch micro-and small-scale pilots in sustainable tourism, and improve potential for longer term social and economic development in the Project area. These pilots, if successful, can be replicated oni a larger scale, thus contributing to Project impact and sustainability. A sociologist will be part of the Project management team assigned to La Ceiba. S/he will be overseeing social aspects of the Project, and helping to monitor performnance against social indicators as outlined in the IPDP, with assistance from INA and the MOH. - 20 - 6.5 How will the project monitor perfonrance in terms of social development outcomes? The Logframe and the IPDP provide monitorable indicators for desired social development outcomes. 7. Safeguard Policies: 7.1 Do any of the following safeguard policies apply to the project? .-.... . --.-. . ........... ........ . .-.-. ........................... . . . - : -Policy :--:AppHlcablity- Environmental Assessment (OP 4.01, BP 4.01, GP 4.01) 0 Yes (C) No Natural habitats (OP 4.04, BP 4.04, GP 4.04) () Yes 0 No Forcstry (OP 4.36, GP 4.36) ( ) Yes* No Pest Management (OP 4.09) ( ) Yes 0 No Cultural Property (OPN 11.03) 0 Yes ( ) No Indigenous Peoples (OD 4.20) * Yes (:) No Involuntary Resettleinent (OD 4.30) ( ) Yes 0 No Safety of Dams (OP 4.37, BP 4.37) C ) Yes * No Projects in International Waters (OP 7.50, BP 7.50, GP 7.50) ( ) Yes 0 No Projects in Disputed Areas (OP 7.60, BP 7.60, GP 7.60) (C) Yes * No 7.2 Describe provisions made by the project to ensure compliance with applicable safeguard policies. The Project is designied to lay the groundwork for the development of environmentally and socially sustainable coastal tourism along the Noi-tlihern Caribbean mainland and offshore Bay Islands of Honduras. It complements a regional GEF Project for the Conservation and Sustainable Use of the Mesoamerican Barrier Reef System (MBRS), involving Honiduras and its three neighbors to the north, by promoting opportunities for significant benefit flows fri-om coastal and marine touiism to municipalities and local communities along the southenimost reaches of the MBRS. Preparation has involved significant consultation with all stakeholder groups and includes an Indigenous Peoples' Development Plan (Annex 13 of the PAD). The IPDP is consistent with the results of these workshops and will not only ensure substantial benefits to the most marginalized groups in the target area, but includes measures to mitigate the potential future impacts of tourism development on the North Coast related to land security and HIV/AIDS. With regard to cultural property, the Project includes funds to help rehabilitate the historic ceniter of Trujillo, the oldest city on the North Coast of Hoonduras, as a cultural tourism destination. Extensive consultations with the Ministly of Anthiropology and Culture were carried out in the design of this component. - 21 - F. Sustainability and Risks 1. Sustainability: This section is not to be completed in LIL PAD. 2. Critical Risks (reflecting the failure of critical assulmptions foun(d in. the fourtlh column of Ainex 1): il}00iQE;S0itilQ:l RiskXa X iRisk Rating Risk'Mitigation Measurei From Outputs to Objective Government provides weak leadership on S The Project calls for establishment of joint environmental and social sustainability teclmical assistance units for environment and issues related to tourism development on tourism within each municipal govemment the North Coast. targeted under the Project (6). SERNA has a Memo of Understanding with IHT to help strengthen the environmental review capacity within IlT; the LIL will provide training and T.A. to this unit as well as field an expert on environmental planning in tourism destination development in La Ceiba, and a sociologist, to extenld support to all 6 municipalities. An Intersectoral Committee has been formed, headed by INA, to coordinate and accelerate land titling efforts on the Nolth Coast. The Committee will also serve as a forum for policy dialogue on issues related to land security and conflict resolution. Communities reject tourism as a viable N In many of the coastal municipalities (e.g., economic development altemnative. Trujillo, Roatan, Utila and Tela), tourism is the only alternative. All 6 mayors enthusiastically endorsed Project plans for establishing the Technical Assistance Units and providing T.A. on tourism destination development and marketing. Results of social assessment indicated overwhelming support among beneficiaiy groups for development of sustainable tourism opportunities in their coimmunities. Government fails to invest in necessary H The LIL can pave the way to follow-on physical infrastructure to support investment Projects, but government development of tourism destinations and commitment to providing basic infrastructure maintain natural and cultural assets, will be key to attracting private sector essential to tourism taking off in the investment. Public-private partnerships will be region. essential to successfully launching the sector. lnitial links with IFC in Project design and review will be strengthened during Project implementation and supervision. - 22 - From Components to Outputs Indigenous communities are not willing to M Indigenous communities are wary of govetnment participate in sustainable tourism initiatives in the tourism sector, in light of initiatives. unresolved land tenure issues and earlier efforts to promote direct foreign investment widely perceived as jeopardizing traditional land holdings and use rights. However, the Project has consulted widely with indigenous communities in the preparation of the Social Assessment and development of an Indigenous People's Development Plan, resulting in a very positive dialogue. There now appears to be clear and sustained interest in pursuing ecotourism and cultural tourism options among Indigenous groups as alternative fonns of income generation. The Project Team has been approached with several intetim requests for assistance in this regard, prior to initiation of the Project. Municipal government fails to provide N All the mayors expressed strong support for this necessary counterpart support to component, and the GoH is co-financing the initiatives under Municipal Strengthening staffing of the tourism/environmental T.A. units for Tourism and Environmental within municipal government. Management component of the Project. GoH fails to provide counterpart funds in N Government counterpart is small and GoH has a timely manner, thus delaying earmarked funds in FYOI budget to IHT for implementation and undenniing Project Project start up. These are to be deposited completion within three year time frame. quarterly, in a separate account, to cover anticipated expenses for the quarter, with an initial minimum deposit of $50,000 as a condition of Project Effectiveness. The Ministry of Finance has confirmed the high priority accorded this Project in the context of their National Plan for Reconstruction and Transfonnation, following Hurricane Mitch. The Project is also seen as directly relevant to the poverty reduction focus and assistance to Indigenous peoples, which are also part of this Plan. The Project's geographic focus is in line with new initiatives to invest in economically depressed communities like Trujillo on the Noithi Coast. Innovation grants fail to stimulate S Project will set up an entrepreneurship center to sufficient level of interest or volume of provide training in tourism management, Project bankable pilot Projects. development, feasibility studies and access to co-financing (to meet match requirements.) - 23 - Three years is not enough time to achieve H Project will recruit qualified consultant staff to Project objectives given limited absorptive assist IlHT in Project management (PIU capacity and Project management established withlin IHT), and in the field (in La experience of implementing agency. Ceiba) and will invest in training and T.A. for IHT staff and local level stakeholders to facilitate their achievement of Project implementation benchmarks, Security situation in the North Coast due H The GoH has declared 2001 as National to increasing crime, and the high rate of Tourism Year in recognition of the growing AIDS infection will discourage tourism importance of Tourism to the economy. This is from taking off. likely to increase investments in police training, deployment and enforcement, designed to heighten security in tourist destinations. More investments in AIDS prevention from donors such as IDB, UNDP and USAID are planned to help stem the rise in AIDS. Overall Risk Rating H This risk is high but manageable, given that this is a LIL and that the Bank's safeguard policies are being rigorously enforced. Risk Rating - H (High Risk), S (Substantial Risk), M (Modest Risk), N(Negligible or Low Risk) 3. Possible Controversial Aspects: The most controversial aspects of the Project are the perceived relation between tourism development and unresolved land tenure issues affecting indigenous and other ethlnic communities along the north coast, particularly where these related to communally held lands. Although the prospect of a constitutional amendment that would allow foreign ownership of coastal lands for tourism development has been tabled indefinitely in light of political opposition from both parts of the political spectrum, there is still the perception that a push toward tourism development will catalyze land speculation on the coast and that insecure land titles will be vulnerable to purchase by the highest bidders. Agrarian reform and resolution of land tenure issues is a huge challenge in Honduras, and far beyond the scope of this Leaming and Innovation Loan. However, the Project will link up with a new land titling study to identify the legal and technical obstacles to more efficient land administration on the North Coast coupled with a pilot activity to accelerate titling and "ampliacion" (or expansion of titles to include functional habitat) of communal lands among Indigenous groups on the Nortl Coast. This will be a participatory effort involving communities in boundary demarcation and mapping, in close collaboration with a new Iintersectoral Committee, headed by the Instituto National Agraria, to coordinate land titling and adjudication of claims on the North Coast. This buy in from local communities and their active participation in the Project as outlined in the IPDP should go a long way to defusing the controversy surrotunding tourism development on the North Coast, at least in the context of this Project. G. Main Loan Conditions 1. Effectiveness Condition * The Implementation Agreement has been executed oni behalf of the Borrower and 1HT; * IHT has adopted the Implementation Manual; -24 - * IHT has established the PCU and contracted for the PCU the services of: (i) a Project coordinator; (ii) a finance director; and (iii) a procurement specialist/accountant, all with qualifications and experience satisfactory to the Association; * IHT has strengthened the financial management system referTed to in Section 4.01 (a) of the Development Credit Agreement in a manner satisfactoiy to the Association, including the selection of auditors from a short list of firms satisfactoiy to the Association, as described in Annex 6 of the PAD, Table D, the Financial Management System Action Plan; and * IHT shall have opened the account referred to in Section 3.01 (e) (iii) of the Development Credit Agreement and the Boirower shall have made a deposit of $50,000 equivalent therein. 2. Other [classify according to covenanlt types used in the Legal Agreements.] Condition of disbursement for the Matching Grants subprojects: * That an agreement be entered into by IHT with the agent(s) for administration of the Innovation Matching Grants Subproject activities; and * That a Grant Agreement be signed with the beneficiary. Dated covenants: * That the IPDP be carried out, and the Land Titling Diagnostic Study refetTed to in the IPDP be submitted to the Bank for review by September 30, 2002; * That a Sociologist and an Environmental/Tourism Coordinator be hired within 6 months after Project effectiveness to staff the Technical Team of the PIU based in La Ceiba; and * That the revolving fund for counterpart contributions be maintained by the Bon-ower, witlh a three month advance of funds required for the following quarter, deposited each quarter. H. Readiness for Implementation D: 1. a) Thne engineering designi documents for the first year's activities are complete and ready for the start of project implementation. 1 1. b) Not applicable. LIi 2. The procurement documents for the first six months' activities are complete and ready for the start of project implementation; and a framework has been established for agreement on standard bidding documents that will be used for ongoing procurement throughout the life of LIL Z 3. The LIL's lmplementation Plan has been appraised and found to be realistic and of satisfactory quality. D 4. The following items are lacking and are discussed under loan conditions (Section G): L.a The engineering design documents will be prepared during the period prior to effectiveness. 3. The LIL's Financial Management Action Plan has been appraised and found to be realistic and of satisfactory quality. The LIL's Project Implementation Plan is available in Draft and will be appraised during Project appraisal. - 25 - 1. Compliance with Bank Policies Z 1. This project complies with all applicable Bank policies. C 2. The following exceptions to Bank policies are recomnmended for approval. The project complies with all other applicable Bank policies. Marea Eleni Hatziolos John Redwood D-M Dowsett-Coirolo Team Leader Sector Director Country Manager/Director - 26 - Annex 1: Project Design Summary HONDURAS: SUSTAINABLE COASTAL TOURISM PROJECT ....... .. - b-e..iv. ......o.. .. .. t. ....... .. .it. .. . i . .. .. Sector-related CAS Goal: Sector Indicators: Sectorl country reports: (from Goal to Bank Mission) Environmentally sustainable More rational use of coastal Annual CAS m~onitoring and Other externalities do not development of Honduras' and marine resources to review, undermine social and rich tourism potential in balance economic economic benefits from coastal areas. development and conservation integrated management of needs along the North Coast. the coastal zone. Natural phenomena like Hurricanes generate unanticipated social response. Follow-on Development Objective: 1. To take successful IM. Numerous tourism Other destinations and local public-private partnership enterprises involving private municipalities are willing to approaches promoting sector and govereunent (local replicate the programs. sustainable tourism or national) established in destinations to scale different locations along the throughout the Caribbean coast. corridor of Honduras. 2. Social and economic 2.(a) Policy, legal and The Intersectoral Committee benefits to local communities institutional framework to on Indigenous Land Rights increased or sustained, title and protect indigenous implements its mandate. land rights and those of marginalized groups in the North Atlantic Coast established through a participatoly process 2.(b) median income, health Surveys based on human and welfare of such groups development indicators, at increased over base line levels beginning and end of Project. by end of Project. -27- . .. ... ~Ky Prfrmance i- ar bhy ofO'bjectivs Indicators MoitE I t ft. Conitoringr&E Eauat' Ct Assumption Project Development Outcome I Impact Project reports: (from Objective to Goal) Objective: Indicators: 1. To create an enabling 1.1 A strategy for Sustainable Supervision mission and GoH continues to politically environment for the Coastal Tourism on the North Project reports; IHT Reports. support the importance of development and management Coast, developed and under sustainable tourism and of sustainable coastal tourism implementation with encourages private sector along the North Coast of stakeholder participation and involvement. Honduras, while generating support of national and local increased economic and social government by beginning of benefits for local 2003. communities. 1.2. Perceived economic, Pilot area prelimninary and GoH supports necessary ecological and social benefits subsequent impact analysis policies and infrastructure for of tourism by key stakeholders report (PIU). tourism development. in the pilot destinations increases 35% from baseline measure of attitLdes, between Project initiation and EOP. 1.3. Tourism revenue Amnual reports on municipal Policies governing income capturing mechanisms finance. generation and local retention identified and adopted at of user fees for protected municipal level by EOP in at areas. least 4 municipalities. 1.4. Institutionalized Reports from group mechanisms for the equitable admninistering matching distribution of tourism x grants and Project supervision benefits from the Project, reports. including eligibility criteria for iniovation grants to private sector and communities, established and functioning by middle of 2003. 1.5. Strengthening and Reports of Intersectoral Land Tenure Diagnostic regularization of a legal, C ommittee on Indigenous Study has been carried out institutional and procedural Land Rights. successfully and, based on its fiamework for the titling of results, actions of communal lands, the regularization and titling have expansion of titles to inclcle been taken. ancestral lands, and conflict resolution mechanisms, in the Project area by end of 2004. - 28 - 1.6 A participatory strategy Reports of Intersectoral for resolving conflicts and Committee, INA Policy securing land tenure in statemeents, Bank Supervision indigenous communities in Repolts. the Project area established by begimning of 2003, and incorporated into strategy for Sustainable Tourism on the North Coast. 1.7 H1V/AlDS issues NGO reports, Banlk identified and resources Supervision Reports, National mobilized to support Commission on AIDS reports. awareness and prevention in most vulnerable communities of North Coast by early 2002. - 29 - y Ob- t'Ke PCfranceoiior Output from each Output Indicators: Project reports: (from Outputs to ObJectlve) Component: 1. Sustainable coastal tourism 1. A Sustainable Tourism Review of national strategy Government commitment to development strategy Action Plan for the Nolth and action plan audit, through sustainable development designed and implemented at Coast drafted in year 1; plan ongoing Project monitoring principles and practices the national and local levels. under implementation at the activities. remains strong. local level in years 2 and 3. Bank supervision repolts. 2.1. Municipal officials have 2.1 (a). Six municipalities Municipalities Training Inter-institutional agreements the knowledge, skill and tools provided with incremental Impact Report. Bank between Municipalities and needed to develop and technical staff and equipment supervision reports. IHT exist. coordinate sustainable in tourism and environmental Annual Operating Plans tourism. management by EOP. within municipalities. 2.1 b). At least one revenue capture mechanism introduced by each municipality participating in training and tecluhical assistance activities by EOP. 2.2. A voluntary 2.2.(a). Environmenital EMS audit reports and PIU environrnental rating and Management Systems (EMS) report. certification program is audits are conducted at 5 pilot successfully piloted. sites by EOP. 2.2.( b). Criteria for environm1ental and social sustainability of coastal tourism operationis established and agreed with IHT and local communities. 2.3. Honduran North Coast is 2.3. At least 5 new tourism l1 IT annual report and Willingness of local emerging as a sustainable destination packages based on commercial ads in travel community to accept tourism tourism destination with a sustainable tourism model magazines/literature. as an economic alternative for distinctive natural and and incorporating sustainable development. cultural attractions. sustainability criteria, promoted by Honduran Institute of Tourism by EOP. 2.4. Heritage restoration 2.4. At least 5 heritage sites SME Training Impact Report, activities established for or buildinig facades restored M&E reports from matching Trujillo as a basis for and supported witlh signaled, grants subproject. attracting tourists. interpretation and walkways. 2.5. Micro and SME 2.5. Small Business IHT annual reports; entrepreneurs are trained. Enterprise Center M&E reports from nmatching established and operational grants subprojects by end of year 2. Bank supervision reports. - 30 - 3.1. Pilot small and medium 3. .(a). At least 10 additional Project supervision repoits enterprises are developed. public-private sector and reports of entity ilnovation Projects (in administering matching addition to Trujillo) are grants. initiated by EOP. 3.1 .(b). At least 7 innovation Project supervision reports Projects targeting indigenous and reports of entity populationis are initiated by administering matching EOP. grants. - 31 - Key Performhan.ce: C.ie I ¢hy of Mborw Indicator : Monitoring :W&Evaluation. Critical A Project Components I Inputs: (budget for each Project reports: (from Components to Sub-components: component) Outputs) 1. National Strategy US$1.32 million (a) Anuual and quarterly GoH counterpart funds are Formulation and Institutional reports; available in a timely manner Support for Sustainable (b) Procurement records; to support plan development Coastal Tourism. (c) Evaluation reports; and implementation. (d) Copies of contracts; - Fora for policy dialogue, 1. I Policy dialogue with 1.1 US$0.33 million (e) Bank supervision reports; such as the Intersectoral public and private sector (f) Field management reports. Committee to coordinate land stakeholders. titling on the North Coast, 1.2 National Sustainable 1.2 US$0.47 million continue to function Coastal Tourism Plan. effectively. 1.3 Tourism Plan 1.3 US$0.52 million - Meaningful participation by implementation. all stakeholder groups is achieved. 2. Municipal Strengthening, USS2.01 million Municipal government staff Training, and Technical internalizes training and Assistance change process to promote 2.1 Establishment of Tourism adoption of good practice. and Environment Units. 2.1 US$0.97 million 2.2 Municipal Training Program. 2.3 Trujillo: Heritage Site 2.2 US$0.34 million Restoration. 2.3 US$0.70 million 3. Pilot Entrepreneurship US$2.15 million Governnent agencies Programs for Sustainable effectively support Coastal Tourism. decentralized municipal 3.1 Small & Medium 3.1 US$0.25 million capacity and decision-making. Business Enterprise Development. 3.2 Sustainable Tourism 3.2 US$ 1.14 million Innovative Projects. 3.3 Sustainable Tourism with 3.3 US$0.76 million Indigenous Communities. 4. Project Implementation US$0.56 million SMEs apply introduced 4.1 Project Implementation 4.1 US$0.56 million business skills in managing Unit. private enterprises. lndigenous communities are willing to participate in sustainable tourism initiatives. IHT provides policy and technlical leadership. -32 - Annex 2: Detailed Project Description HONDURAS: SUSTAINABLE COASTAL TOURISM PROJECT This LIL includes finance for three operational components and a Project Implementation Unit, which covers monitoring arid evaluation activities. As a result of the public-private partnership approaches to be tested and refined through the LIL, it is anticipated that follow-on replication actions will help coastal municipalities throughout Honduras to develop and manage more effectively sustainable tourism while benefiting local communities. The Project may also serve as a model for sustainable tourism development in other coastal communities participating in the Mesoametican Banier Reef System (MBRS) Project. By Component: Project Component I - US$1.32 million This component will focus on the development of a regional strategy for sustainable coastal tourism on the North Coast of Honduras. The strategy will include tourism development plans for priority coastal areas in four Coastal Departments of Honduras. A dialogue will be supported througlh a series of workishops in key locations on the coast. Expertise will be required in the following areas: regional planning; tourism development and financing; environmental management; economic impact analysis; sustainable development; coastal zone management; land administration and land use plannling; and community participation, including involvement of indigenous peoples. Sub-component 1.1: Formutulate and promote a participatory approach to policy dialogue with public and private sector stakeholders at the national, regional anld local levels - US$0.33 million. Tourism is a classic example of thle need for public-private pattnership development, which requires extensive consultation and dialogue. The public sector's primary role is to create the proper environment for private investment by creating stable economic conditions; facilitating and attracting foreign and domestic investment, including regulation; supporting destinationi marketing and promotion; dealing with security and health concemns of toulists; and ensuring a just and transparent process of land administration, zoning and land use planning to minimize negative environmenital and social impacts from tourism. The priyate sector's primary role is to provide investment funding, development coordination, maticeting direction, and operational management. Workshops in six destinations will involve key stakeholders in formulating a sustainable tourism strategy for the North Coast over short, medium and long-term horizons, including mission, action priorities, community development and institutional arrangemenets for the North Coast as a region and for priority destinations within it. Ptior to the workshops, ongoing efforts directed toward developmnent of national tourism strategy and background studies will be synthesized into a working paper for the workshop participants to review and augment. Strategy fomnulationl will include the work of the recently established Intersectoral Committee on Indigenous Rights in relation to land tenure for the North Coast. This will include a major Land Titling Diagnostic in Indigenous communities of the North Coast and recommended actions onl ways and means to fonnalize the Governiment of Honduras' recognition of indigenous land rights, including mechanisms for satisfactomy resolution of conflicts where adjudication of existing or pending land titles may be required, as provided for in thle Constitution of Honduras, in the Agrarian Reform Law, the Agricultural Modemization and Development Law, and in ILO Convention 169, ratified by the Honduran Congress in 1995. A report incorporating these finding and other major workshop outcomes will be drafted and widely disseminated tlhrough print and Inteniet distribution chainels. - 33 - Following the workshop, baseline studies will also be conducted in priority areas identified through Project appraisal or through the workshop process. For example, studies will be undertaken to assess: (a) attitudes and perceptions of key government, business and citizen stakeholders on issues related to environment and tourism in target municipalities, and (b) economic, environmental and social assessment of tourism impacts. Background studies prepared during Project preparation may .be used to validate some of the baseline measures and to assist in establishing a policy dialogue with key stakeholders in coastal tourism These include the following analyses: (a) Hionduras' sustainable coastal tourism potential; (b) municipal environmental and tourism management capacity assessment, (c) legal anid regulatory issues, including those related to land tenure and regularization of land titles and land use rights in areas of high priority for tourism development and regulatory issues related to use of economic instruments to increase revenues from tourism; (d) revenue resource needs of coastal park and protected areas, (e) environmental and tourism education needs; and (f) social assessment and indigenous peoples participation plan. Sub-component 1.2: Develop an1d implement a nationial tourism strategy for thle Norlh Coast which includes integrated, sustainable tourism action plans over the short, mediunt anid long term - US$0.47 million. With the prospect of new foreign investment along Hionduras' North Coast and the Bay Islands expected in the near future (e.g. Tela Bay), and increased economic activity, there is a risk of incurring significant environmental and social costs associated with unplanned development and the aggravation of ongoing social and environmental issues. Illustrative examples of these costs resulting from recent coastal tourist development activities in neighboring countries include: large-scale conversion and loss of critical habitat for wildlife which forms the basis for Honduras' nature-based tourism; increased incidence of illegal fishing and over-harvesting of high quality fishing and shellfish; and dumping of untreated wastes in coastal waters. Added to this is the ongoing problem of insecure land tenure due to outdated and inefficient land administration in the region, and failure to resolve conflicts related to indigenous land rights, particularly in areas overlapping with protected areas and forestry reserves. A new threat is the increasing incidence of HIV/AIDS on the North Coast, which poses a risk not only to vulnerable local communities, but to tourists as well. In light of experience from elsewhere in the region, it is clear that an essential step in the development of sustainable tourism will be the preparation of an integrated planning framework which regulates the development of tourism in a fonn that is not only compatible with the underlying natural and cultural environment, but sensitive to the complex social, economic and public health related environment in which tourism will be promoted at the local level. A Sustainable Nortb Coast Tourism Strategy Working Group, representing key stakeholders, would guide planning activities, focusing on criteria such as canying capacity of coastal ecosystems, basic infrastructure and transportation access, destination trip circuits, revenue generation and management, and land security and public health. The strategy will include involvement of indigenous peoples as described in the LIL's Indigenous Peoples Development Strategy. The Working Group will review the results of consultations with stakeholders through workshop and focus groups over the course of Project preparation and early on during implementation. The latter will include community consultations on HIV/AIDS awareness, prevention and treatment; institutional antangements related to co-management of coastal and marine resources in adjacent or overlapping protected areas and forest reserve areas. Based on these results, the Working Group will formulate a participatory planning framework. This framework will include (a) an analysis of existing national and regional tourism and environmental management plans and technical studies carried out during Project preparation; (b) the results of the Land Titling Diagnostic to be carried out under the guidance of tlhe Intersectoral Committee on Indigenous Land Rights; (c) an - 34 - environmental scan (including externial factors, benchimarks and market opportuniities or threats, including HIV/AIDS, internal assets, funding resources, environmenital conditions, institutional arrangements and product strengths or weaknesses); (d) the evaluation of strategic options, comparative and competitive options, desired market position, and development approach; and (e) a shared vision for North Coast sustainable tourism development over the near term (3 to 8 years). A North Coast Sustainable Tourism Strategy and Plan of Action will be drafted by the Working Group and presented at a national conference of stakeholders designed to encourage public-private partnerships and collaborative activities. At the conference, specific action plans will be prepared in areas such as competitive network development, environmental management systems, enterprise development, public awareness, and municipal capacity building. A "Conference Outcomes and Recommendations Report" will be produced and disseminated. These outcomes and recommenidations shall be incorporated into a final North Coast Sustainable Tourism Strategy and Plan of Action document, which in turn will be submitted for review and endorsement by the Ministry of Tourism, and key Honduran govenmment agencies, private sector, and Nortlh Coast departnents and municipalities, and commtnity groups, including indigenous groups. This document will also be shared with oth-er countries participating in regional planning and cooperation activities conducted under the MBRS Project. Sub-contponent 1.3 Provide techinical assistance to prontote reformr of policy, legal and regulatory instruments and intprove instituJtional arrangements in support of planz implementation - US$0.52 million. This component will focus on the technical assistance required to implement of the national strategy for sustainable coastal tourisn along the North Coast. This will include promotion of the necessary legal and policy reforms to address successfully issues identified above in the national dialogue and tourism action plans, along witlh the institutional arrangemenits required to lay the foundation for sustainable coastal tourism on the North Coast. Among the activities to be promoted will be: tourism audits; conflict resolution and legal and technical work related to the futLure titlling of communal land claims in 9 Garifuna communities, whose tertitories overlap witlh protected areas on the North Coast; and information campaigns for HIV/AIDS prevention and treatment. The PIU will be responsible for hiring tourism planning specialists with regional and technical expertise to facilitate participatory actions planning and public-private sector collaboration for the environment and toutism sectors. Conisultants engaged will be responsible for development and adoption of planning, monitoring, and evaluation methodologies to assist the PIU and IHT staff responsible for Project implementation. These specialists will also provide appropriate training to upgrade the skills of IHT staff involved in the new environment/EIA unit within IHT headquarters and PIU staff coordinating the new tourism/environment technical units to be established in municipal governments on the North Coast (see Project Component 2 below). A North Coast Sustainable Tourism Audit will be carried out in the second and third years of the Project in order to monitor plan implementation and economic, environmental, and social impacts of tourism development to the extent measurable over the Project period. Using the audit as a scorecard, teclhical assistance activities will be directed toward reducing barriers to sustainable tourism development and facilitating positive environmental and social actions at the regional and local levels. This will also be used to evaluate performance against key policy objectives whiclh will form palt of the conditionality for a possible follow on investment Project. - 35 - Project Component 2 - US$2.01 million The objective of this component is to develop the capacity of coastal municipalities (including local government, the private sector and community based organizationis) to engage in sustainable tourism development plaining, through skills trainiing in such areas as environmental management, tourism destination management, entreprenieurship, environmenltal certification for tourism related enterprise. A complementary subcomponent will support the creation of a cultural tourism destination demonstration site through the restoration of the historic center of one of Central America's oldest coastal town, Trujillo, gateway to the Mosquitia and Honduras' adventure tourism. Sub-component 2.1: Create a techinical assistance uniit to provide resources for municipal tourism developnment and environmentfal mianagemenit - US$0.9 7 million. Honduras can benefit from relevant expeiiences in comparable countries in planning its relatively undeveloped coastline. However, one major constraint that needs to be addressed is the weak planning and management capacity in the countly's coastal municipalities. The time to address this constraint is particularly opportune because the recently enacted Municipal Law has given siginificantly greater autonomy to local govemments to manage their own affairs. Moreover, there are a number of ongoing institution building Projects and activities that are providing local govemments the means to take full advantage of the opportunities provided by the new law. For example, USAID's Proyecto de Desarrollo Municipal is promoting the development of increased institutional capacity in municipal governments needed to manage existing resources and develop new sources of revenue. Most Hoonduran municipal govemrments participate in a variety of inter-institutional commissions and committees. However, none of these adequately address the unique multi-sectoral planning requirements to oversee coastal tourism areas. The Project will assist in the development of technical assistance units at key coastal municipalities, referTed to as a Tourism-Einvironment Unit (TEU). A municipal TEU will provide a highly visible and needed resource, whiclh canl be used by public officials and the private sector. The TEU will support increased efficiency in municipal operations througb provision of a computer, monitor, software, Internet connectioni and resource materials (particularly available through distance learning) and technical assistance focused on tourism development and environmental management in coastal areas. Needs analysis conducted during the Project preparation identified a particular need for TEUs where environmental units do not exist or are weak (Utila in the Bay Islands). A TEU could strengthen the environmental units of Omoa, Tela, Trujillo, La Ceiba, and Roatan. During Project preparation, it was determined that all six municipalities studied lacked capability in sustainable tourism plaining, development, finance, and marketing. An advisory committee will be foimed to assist eachi TEU in (a) establishing a work plan and performance outcomes, (b) encouraging public-private sector collaboration and, as necessaly, conflict resolution assistance, and (c) maintaining active relationislhips with EIA units in SERNA and IHT. The TEU will also liase actively with indigenous groups and other coastal communities to help them articulate plans for community-based management of cultural and natural resources within their sphere of influence. A sociologist will be hired as part of tlhe Project Implementation Team to assist TEUs witlh community outreach and encourage stakeholder participation. S/hle will be based in La Ceiba along with the Coordinator of tlle Tourism/Environmental Units onl the North Coast (see 4. Management Component, below) to provide technical assistance atId oversight of field activities. Tbe TEU will provide the following - 36- services: (a) organization of a unit in La Ceiba to coordinate TEU activities; (b) technical assistance to (i) establish criteria and procedures for improving the environmental impact assessment and inspection system (as described in the Environmental Management Plan), (ii) formulate a municipal tourism development and marketing strategy; (iii) conduct cost/benefit analyses of tourism development altemnatives, using economic, environmental and social assessments, (iv) identify revenue capture and financing mechaniisms; (v) assist in the mediation of land titling and resources access tights issues, (vi) establish liaison with NGOs managing park and protected areas in the destination area and (vii) stimulate small business development and job creation, particularly benefiting poor population segments including indigenious ethnic groups. The TEUs will also pilot test environlmenital certification programs, including (a) agreement on a strategy and road map for certification, including performance-based standards for environmental certification/eco-labeling using tested programs such as Green Globe, Certification for Sustainable Tourism and Blue Flag, (b) formulation and adoption of an independent certification system, (c) provision of resources for establishment of the program on a pilot basis, and (d) development and introduction of a plan for expanding and financing the certification system (e.g., fee for service, cooperative marketing to the green market). This sub-component will also entail the establislhment of a regional information network linking TEUs in participating municipalities. This network will provide an interactive Intemet capability in order to facilitate exchange of relevant information and experiences that will serve as valuable guides in planning and managing future development activities. The network could also coordinate the delivery of training programs, which will be provided through the Project. Sub-compontentt 2.2: Provide training for municipalities in identified areas of need - US$0.34 million. Emphasis will be placed on using existing training programs which can be adapted, and translated if necessary, to meet the needs of local municipalities. Programs will include on site training supported, if available, with resources accessed through distance education and mediated leatting. Local regional and national training resources will be used wherever possible, including government, university and private sector training capabilities. The review of municipal training and technical assistance needs related to coastal tourism and environmental management resulted in the identification of the following priority areas: (a) Environmental Management: land use planning, zoning and pennitting; coastal zone management, environmental protection, pollution abatement systems, control and monitoring mechanisms (including EIA responsibilities of municipalities and SERNA EIA compliance,); (b) Municipal Tourism Planning: tourism and environmental legislation and regulations (including nonns that allow municipalities to take environmental control actions); planning and control systems; (c) Tourism Destination Management: assessment of toulism potential and product developmeot; (d) Revenue Capture and Investment Mechanisms: collection/retentioni of fees (e.g. paticing, fishinlg licenses, dive fees, airport fees, and sailing/mooring charges); private participation in infrastructure (PPI) options. With the exception of (b), which will only be offered in year 2, each of these priority-training programs will be offered annually at four training locations over the Project period. Sub-conmponent 2.3: Conduct heritage site restoration activitiesfor Trujillo 's historic city center - US$ 0. 70 million. IHT and municipal leaders have recogniized the vital need to establish Trujillo as a gateway destination to access Honduras "last frontier" of wilderntess areas. It is essential to take steps now to restore and preserve sites and building that have historical interest and which can attract tourists to stay in Trujillo. With - 37 - funding from the Agencia Espanola de Cooperation Inteniational (AECI), IHT has contracted with a Barcelona firn, THR, to develop a heritage restoration and tourism concept plan. Aid from the Fondo de Inversiones de Venezuela is in place to develop a Master Plan whicb could guide site and building restoration, the development of walkways and promenades, public use areas, and signage. This Project would provide funds to support public works needed for site and building restoration. The Fondo Hondureno de Inversion Social (FHIS) provide fundinig for labor and some materials. The Ministry of Culture and the Institute of Anthropology and Histoiy (11 IAH) will also provide on-site technical assistance and oversight of civil works related to restoration. Project Component 3 - US$ 2.15 million Sub-component 3.1: Designs and deliver micro and small business enterprise trainintg to stimulate productive capacity and create business opportunities - US$0.25 nlillion. There is a need to identify existing and future SME requirements for training, teclnical assistance, financial facilities, and capacity building. Toulism offers the potential for creating micro/SMEs, including transport, food service, handicrafts and light manufacturing as well as the industries that supply hotels and offer maintenance services. Focusing on the businesses themselves reveals the challenges faced by the private sector in maintaining quality standards and remaininig competitive for tourism investment. A Sustainable Coastal Tourism Enterprise Center will be established, possibly as a collaborative venture witlh existing training institutions, colleges and universities now offering education and training services. This Center will focus on technical skills and entrepreneurship tiaining in small- and medium-sized business operations in water sports, dive operations, inbound tour operations, hotel and eco-lodge operations, tour guide services and other promisinig opportunities. Where feasible, fees for services rendered will be charged to help offset operating costs. There are many opportunities to develop SMEs. Most small enterprises need assistance in bringing ideas to market in a fonn that is understandable to potential financiers and to govemnment authorities providing approvals (e.g., permits, tax incentives, etc.) For example, the cost of most ecotourism facility-oriented Projects ranges from US$400,000 to US$5 million. They operate on a small scale (from 15 to 120 rooms) and the number of tourists is strictly regulated to avoid over-exploitation of resources and harmful effects on wildlife. More modest investments are needed for concession operations in park and protected areas, Bed and Breakfast inns, tour operators and outfitters. Strategic planning, economic/financial analyses, and business plan development is needed to create a Project pipeline necessaty to create entrepreneurial-driven sustainable development designed to improve the quality and viability of tourism on the North Coast. The Entrepreneurship Center would provide on going technical assistance to assist SMEs in (a) business development and incubation (from concept to capital finanicinig) witlh a particular emphasis on assisting small business in bringing ideas to market; (b) use of existing business development tools, including those available on Internet and by otlher electroniic means; (c) developing, "cultivating" and maintaining direct contacts with potential Project investors, including: venture capital fimns, foundations, multilateral financial institutions (e.g., IFC, IDB's Multilateral Investment Fund), bilateral aid agencies and commercial banks; and (d) developing viable business Projects that can be submitted to pre-qualified investors. The Center will establish a business-mentoling program enlisting volunteers recruited through Chambers, retired businessmen and women, and tlhrough intemational assistance programs, such as USAID Senior Executive Corps. - 38 - Sub-component 3.2: Test and prepare for replicationi pilot innovation Projects in local communities focused on sustainable tourisnm (e.g. ecolodges, hanidicrafts, tour guides and operators, and adventure travel outfitters) involvinig entrepreneurs in partnership witht NGOs or governiment - US$1.14 million. Developing countries, as in the case of Honduras, are increasingly targeting tourism as an international development strategy. Tourism holds potential for producing substantial economic benefits, which can be eroded by negative social, cultural and environmental impacts. This Project provides an opportunity to foster public-private sector partnerships as a means of facilitating investnent in tourism and encouraging sustainability from a social, environmental and financial perspective. The private sector has been actively engaged in tourism development and investment; however, the tourism industry is performing below its potential in Honduras and suffers from a lack of a coordinated and strategic approach. Critical to its future growtb is public sector involvement in developing sustainability strategies for the industry. The main challenge today is to engage the public and private sectors in fostering tourism investment that provides economic gain while preserving the social, cultural, and environmental assets, which constitute a country's comparative advantage. The component will take into account the urgent need in Honduras to: (a) create new tourism products and support the development of established and emerging destinations; (b) encourage community control instead of development control, with the participation of communities, including indigenous people, in the process of approval and benefit allocation; (c) encourage tourism development as a way of conserving and protecting the environment; (d) target specialty markets versus mass markets, involving environmentally sensitive consumers in a process of learning and interaction with communities; and (e) embrace new information technologies to improve marketing communications. Innovative pilot Projects will be encouraged througlhout the Project period, taking into account the need to involve the public and private sector in collaborative activities. Procedures for a two-phase tourism innovation marketplace could be adapted for use in Honduras. A similar program -- The Canadian Product Club, developed by the Canadian Tourism Commission and Barcelona Province in Spain -- could be used as a potential model. This sub-component will require expertise and experience in tourism product development and the initiation of innovative public and private sector collaborative approaches. Grants will be awarded to stimulate innovative proposals for public/private partnerships in some fomn of tourism enterprise. Under the innovation marketplace program, (i) private sector businesses and (ii) individuals (including historic property owners wishing to rehabilitate their facades for tourism) will be eligible to compete for funds. The first step will entail the solicitation and evaluation of Project concepts, presented in one-page summaries with a display poster. An expert panel will assess these concepts and approximately 20 Projects will be selected for a small award (US$1,000), which will be used to prepare a full proposal seeking matching funds. The second phase will focus on the evaluation and funding of the most promising proposals. Up to 29 grants totaling up to $30,000 each will be awarded on a 2:1 matching basis (whereby the credit will finance up to 66% of the award and the beneficiary $33%). The administration of these innovation matching grants will be contracted out to an eligible fitl/NGO, who will be responsible for developing eligibility criteria in line with the principles of financial, environmental and social sustainability in consultation with the PIU and Project Steering Committee, and for ensuring compliance with Bank procurement guidelines in the disbursement of grant. In this regard, the PIU will supervise the development of: (a) a manual describing the tourism innovation pilot program with guidance on the tourism product development process, (b) a pilot Project application process in two stages - (i) selection of promising Project ideas and (ii) selection of matching grants for Project implementation. This could be developed through an "Innovation Marketplace" event in which (i) Project concepts are presented in a poster format - 39 - for public review and (ii) an independent pilot Project review panel is constituted with representatives of the public and private sector, to select Project concept awards and pilot Project grants. The organization or individuals responsible for this sub-component will need to provide support to the review panel, assist potential grantees through the application review process, arrange for publicity coverage, disperse grants and audit matching grant requirements, monitor and evaluate the program and develop a strategy for continuation program through support by IHT and other funding partners (such as technical assistance cooperation Projects with Mexico, Spain and other donors). Sub-Component 3.3: Build capacity in indigenous com1nmuniities for preparation, financing and implententation of pilot innovation Projects focused on sustainable tourism (eg. ecolodges, handicrafts, tour guides and operators, and adveniture travel outfitters) involving entrepreneurs in partnership witht NGOs or governmentt) - US$0.76 million. Prior experience of indigenous cotmmunities around the world with ecotourism has been less than positive. The lack of understanding of community needs and market realities has contributed to the failure of many such attempts to promote tourism in the past. These initiatives lacked several key components for success: (a) adequate social and cultural assessment of community needs; (b) market surveys to determine demand for the product and willingness to pay; (c) realistic assessments of how the ecotourism product will be delivered with quality over the long-term and (c) targeted efforts to connect the Project to the international and local marketplace. Given the rapidly changing nature of the market for small-scale, community-based ecotourism, a small business program will be designed and tailored to meet the needs of indigenous communities in developing proposals for an iinovation matcling grants program, described below. Capacity building activities developed under this sub-component will be guided by the Indigenous Peoples Development Plan and will include the: (a) design and delivery of a training program for indigenous community groups or individuals focused on small scale ecotourism business development; and (b) provision of on-going teclnical assistance from the Entrepreneurship Center to develop promising business ideas into business planis and to design a cooperative marketing strategy for indigenous communities involved in developing ecotourism businesses. Parallel with the activities described in 3.2, above, a matching grants facility designed to meet the needs of indigenous communities seeking to become involved in sustainable tourism activities will be developed. Administration of these grants will be carried out under contract by an appropriate intermediary, according to agreed eligibility criteria. Up to 14 Matching grants totaling $28,000 each will be awarded under th-is sub-Project to eligible communities or to NGOs/representatives on their behalf Grants will be awarded on the basis of a 3:1 match (i.e., the credit will finance 75% of the award and recipients will finance 25%). Basic criteria for this and the matching grants program in Sub-component 3.2 will be developed in consultation with stakeholder groups early during Project implementation, and finalized as part of the bidding process in the contracting of an NGO/firm to administer these matching grants. Project Component 4 - US$0.56 million Project Management. A Project Implementation Unit will be established within the Honduran Institute for Tourism (IHT) to: * Work with IHT staff to build capacity for Project implementation; * Develop financial managemenit (accounting, disbursement and repolting systems); * Introduce international standards in procurement systems and Project oversight; * Keep track of implementation schedules witlh appropriate software (e.g., Microsoft Project) based on the Project Implementation Plan; - 40 - * Hire staff, initiate activities, provide liaison witll the private sector and administer grant funds for pilot activities; * Liaise with national and regional staff of the GEF Mesoamerican Barrier Reef Systems Project, and other relevant Projects, to ensure complementarity of activities and dissemination of lessons learned; and * Establish a protocol for monitoring and evaluation to assess Project outcomes, distill lessons learned and evaluate appropriateness for follow-on investments and scale-up. The PIU will coordinate the implementation process. The PIU will be responsible for coordinating, monitoring and evaluating implementation of the Project Work Plan; preparing terms of reference for procurement of services anid goods according to guidelines provided by the association; and providing quality control. The Operational Manual will include financial management methodology and instruments (accounting, disbursement and reporting systems), the P'roject Implementation Plan and software, among others. The PIU will include the following consultants, based in Tegucigalpa, to work alongside lHT staff in administering the Project: 3 a Project Coordinator * a Financial Management Officer/Accountant * a Procurement Officer * ani Administrative Assistant A sub-team of technical specialists will be based at thie Enterprise Center in La Ceiba to oversee field activities and undertake community outreach along the Nortlh Coast: * Enterprise Center Director * Sociologist * Program Assistant Project-financed staff will be hired according to IDA and IHT procurement guidelines under terms of reference detailing teclnical profiles and the professional experience required. PIU staff will consist of at least two specialists withi ample experience in the aspects to be covered under the LIL as well as a Project administrator. The PIU will maintain constant communication, including developing and maintaining a web site, with public and private stakeholders providing technical assistance during Project implementation. -41 - Annex 3: Estimated Project Costs HONDURAS: SUSTAINABLE COASTAL TOURISM PROJECT ,,',,..-..,,,,'' -'-.1'j<''gSV;;0XEfS'000i'. -|... .......... ......... i';...; . . ........... ~ ~ ~ ~ ~ ~ o~aIflIrei9nTha National Strategy and Institutional Support for SCT 0.70 0.56 1.26 Institutional Strengtheninig for Municipalities 1.49 0.36 1.85 Pilot Entrepreneurshiip Programs for SCT 1.68 0.28 1.96 Project Management 0.49 0.04 0.53 Total Baseline Cost 4.36 1.24 5.60 Physical Contingencies 0.14 0.01 0.15 Price Contingencies 0.23 0.06 0.29 Total Project Costs 4.73 1.31 6.04 Interest during construction 0.00 0.00 Front-end fee 0.00 0.00 Total Financing Required 4.73 1.31 6.04 Local orig Tta , - E ........ .ESiREi D-Ei E..diSEiCEEg Ly : ISSiiE:T Eidgf Project C-st By C-teoy -US minifibn S miflir o n US- $mIli6n Technical Assistance 1.84 1.07 2.91 Training 0.36 0.00 0.36 Goods 0.04 0.17 0.21 Subprojects 1.50 0.00 1.50 Civil Works 0.69 0.07 0.76 Recurrent Costs 0.30 0.00 0.30 Total Project Costs 4.73 1.31 6.04 Interest during construction 0.00 0.00 Front-end fee 0.00 0.00 Total Financing Required 4.73 1.31 6.04 Identifiable taxes and duties are 0.14 (USSnID and the total project cost, aict oftaxes, is 5.9 (I SSri). Therefore, the project cost sh.aing ratio is 84.770/6 of total project cost net of taxes. - 42 - Annex 4: Cost Effectiveness Analysis Summary HONDURAS: SUSTAINABLE COASTAL TOURiSM PROJECT Economic Analysis Summary The economic analysis carried out during Project preparation establishes an estimate of likely benefits from sustainable tourism in Honduras' Nortlh Coast and Bay Islands during the Project implementation period and an assumed five-year follow-on Project. Because of the nature of the Learning and Innovation Loan, this analysis focuses on the overall benefits of the approach the Project is seeking to promote, rather than on a cost-benefit analysis seeking to detive net benefits. The principal benefits from the Project will be derived from creating conditions in the target area that lead to a "healthy" tourism industry capable of attracting additional tourists and appropriate levels of investment. This benefit is expressed as the difference between -without Project- and -with Project- scenarios. The former is based upon tourism visitation and revenue growth consistent with historic averages (i.e., roughly four percent growth for the country with variability at different locations and in different years). The latter is based on expert assessments of likely growth scenarios given a comprehensive program designed to establish the North Coast as an attractive natural and cultural resource destination, which is conservatively estimated at eight percent. This higher growth scenario is made possible by a number of parallel and mutually supporting activities conducted at the municipal and national levels by public sector, private sector, and non-governmental actors. While many of these activities are beyond the scope of the Project itself, the LIL-financed activities are seen as a necessary condition for this higher growth scenario. Additional information and analysis would be needed to accurately assess the financial and economic benefits of sustainable tourism on the Honduran Nortl Coast. A complete analysis would reflect both market benefits (i.e., those benefits that can be observed and quantified in the marketplace, such as tourism related revenues and financial "multiplier" impacts in the communities) and non-market benefits (i.e., benefits that have economic value but are not reflected in the market, such as watershed protection, biodiversity conservation, existence values of natural resources). Sustainable tourism in Honduras' North Coast region is expected to bring substantial benefits in both market and non-market forms. At this time, however, the analysis provides general estimates regarding likely market benefits, and qualitative indications regarding non-market benefits. The three categories of benefits addressed quantitatively in this discussion include: * Revenue capture for marine and coastal terTestrial parks. This will be derived from increased visitation, implementation of user and entrance fees, and natural resource protection fees charged at the municipal level. * Revenue capture to improve municipal tourism-related services and national-level promotional programs. This revenue is expected to come from additional national tourism tax revenues (from the existing IHT tax) and new municipal fees charged of visitors (presumably from a small municipal fee collected through hotels). * Increased tourism revenues from increased visitation and spending. This analysis will quantify differences in likely toulism expenditures between the two growth scenarios. Only the first two are considered in the specific economic evaluation of the LIL Project and five-year follow-on period. However, the overall goal of the Project is to put the Nortlh Coast on a higher growth -43- scenario, and the goal of the LIL is to create necessary conditions for this growth. Therefore, the third category of this analysis provides an estimate of likely benefits from a comprehensive effort that will place the region on an eight percent growth scenario rather than the current four percent. In formal cost-benefit analysis, the revenue capture items would be identified as transfer payments rather than as Project benefit. However, this Project aims to generate a flow of revenues to municipalities for activities that are considered essential to providing the base for successful sustainable tourism. The North Coast region will require substantial investments in parks and in municipal and national capacity to support and promote sustainable tourism development. Absent these revenues and the subsequent investments, the higher tourism growth scenario is unlikely. Finally, the analysis assumes that increased prices faced by consumers (from the modest user fees to be introduced) will not significantly decrease demand, particularly from intemational visitors. Intra-regional differenjces There are significant differences between tourism conditions in the Bay Islands, and the rest of the North Coast. Problems associated with promoting sustainable tourism in the Bay lslands relate more to the Islands' "success" as a tourism destination. The Islands' natural resource base is threatened from increased construction of roads, hotels and building sites, and from the direct and indirect effects of increasing population and tourism visitation. The challenge in the Islands will be to protect the quality of the natural resources that attract tourists-principally reefs, mangroves, and beaches, as well as the forests and intact coastline that protect them. The North Coast has ample natural and cultural assets with great tourism potential. In contrast to the Islands, however, the tourism infrastructure of hotels, guides, tour packages restaurants and natural and cultural destinations is quile underdeveloped. At the same time, the natural resources that make up the fundamental attraction of the area are under threat from expansion of agriculture, cattle ranching, poorly planned and occasionally unauthorized logging operations, and contamination from municipal and industrial waste. The goal in botl areas will be to find a more mutually self-supporting relationship between tourism development and protection of the natural resource base. The Bay Islands and remainder of the North Coast do share common weaknesses in municipal capacity to promote and regulate sustainable tourism. All of the municipalities lack financial resources and personnel with the appropriate skills and training to develop strategies, promote toulism development and ensure development is consistent with the economic, environmental and social goals of sustainable tourism. The analysis breaks down each of the three elements to make more explicit the differences between the two areas. Annex 4a provides specific details regarding economic benefits; nonetheless additional economic benefits are expected although not easily quantified with existing data. These include noticeable and measurable improvements in tourism-related variables such as: * Tourism-related job creation in the municipalities and park buffer areas. * Wage rates of tourism-related workers. * The rate of start-ups of new tourism-related businesses. * lnvestment levels in parks, buffer areas and local commnunities. * Diminished environmental impacts of tourism operations. Detailed information on these variables will be collected in the first months of Project implementation and monitored throughout the Project life given that they are indicative of the type of development the LIL and sustainable coastal tourism seek to promote. - 44 - Park protection will provide additional mnarket and non-mnarket econotnic benefits. Expected benefits from marine protected areas include: * Reputation effects that increase the attractiveness and raise the intemational image of the North Coast and the Bay Islands region. * Higher willingness-to-pay for a scarce resouLrce. High-quality coral reefs are becoming increasingly scarce. Successful protection and management of the reefs will lead to increasing financial retums to the tourism sector and the municipalities. * Improved health of fisheries this will help increase the value of future comnmercial fish catches, and add stability to subsistence and traditional fishetmen. Improving the terrestrial parks will likewise provide a variety of market and non-market benefits, including: * Higher willingness-to-pay for scarce resources. Wildlife viewing, scenic beauty, living culture and historic sites are -premium products-,for foreign and local tourism markets. As competing locations become rarer and less accessible, the future value of well-protected resources should increase. * Improved quality of coastal resources. The terrestrial parks directly and indirectly protect mangroves, wetlands, reefs, freshwater resources and a host of other valuable resources. Without well-functioning parks, these coastal resources would be even more seriously threatened, reducing the economic viability of traditional communities, and further depleting coastal fisheries. - Quality of drinking water supply. The coastal terrestrial parks provide drinking water capture for La Ceiba, Trujillo, Tela, Omoa and othier coastal communities. The economic value of this natural service is likely in the millions of dollars, based on relevant studies of drinking water supply value in Honduras and other developing countlies. • Reduction of vulnerability. Intact upland watersheds reduce downstream damage from excessive rain and flooding. The value of this vulnerability reduction could be in the millions of dollars considering the valuable coastal resources located downstream and around the parks. - 45 - Inputs and Assumptions Observations Historic Tourism Growth Rate (% increase in # of 3.6% WTO Data 1987-1996 tourists) Estimated Annual Revenue Increase 5.0% Average of total tourism expenditures per visitor for 1994-1996 Islands US$1,700 Estimate based on average hotel rate, food and dive fees (avg. sta 7 days) North Coast US$600 Based on comparable data for Guatemala (avg. stay of 3 days) Cruise ship day visitors 15 Based upon interviews with Roatan tourist operators Cruise ship day divers (SCUBA and snorkel) 100 Based upon interviews with Roatan tourist operators Assumed Touhrism Growt Rate without Project 4% Expert estiBates based on historic data in Honduras Assumed Tourism Growth Rate with Project 8% Expert estimates based on historic data in other CA countries Assumed Revenue Growth Scenario (annual revenue 8% increase) IHT Tourism Tax (% of hotel, restaurant, tours, transport 3% CurTent tax and diving) Proposed Municipal Assessment (US$/room night) US$1 Commnon revenue mechanism in discussion in region Proposed Natural Resource Protection Fee (US$/room US$1 Common revenue mechanism in discussion in region night) Proposed Bay Island Reef Protection Fee (US$/visitor) Potential revenue mechanism under consideration Fee for all multiple divers, valid for one year US$10 Assumes relative inelasticity of demand elasticity (i.e., will not reduce visitations, particularly by intemational visitors) Fee for single day divers from cruise ships US$5 Assumes relative inelasticity of demand elasticity (i.e., will not reduce visitations, particularly by international visitors) Proposed Bay Island Municipal Fee US$1 Proposed under LIL (charged to day visitors to manage tourism and environment) Proposed North Coast Municipal Docking Fee US$1 Proposed under LIL (same as above, charged to day visitors of non-Islands destinations) Number of Visitors Bay Islands . 1998 estimates for overnight visitors 41,000 Estimates from official statistics, adjusted by hotelier data % of overnight visitors who dive or snorkel 90% 1999 estimate for day visitors from cruLise ships 72,000 Estimates from Munlicipalidad de Roatan Annual number of cruise ship divers (estimated at 5% of 3,600 Estiniates from J. Galindo and two dive shops, Roatan cruise ship) Average nights per visitor on Islands 7 1997 IHT survey Rest of North Coast 36,000 Rough estimate based on INCAE-CLADS research Average nights per visitor 3 Estimated based on 1997 IHT survey Future cruise ship visitors- phase-in year 3 (10% of 7,200 lslands') Park Inputs (Rest of North Coast) ___ _ Park visitation (visitors per year) 22,000 Estimate of total visitation of 6 largest North Coast _ _ _ _ _ _ __ ~parks - 46 - internationial 8,000 Estiinate of total visitation of 6 largest North Coast parkcs national 14,000 Estimate of total visitation of 6 largest North Coast parks International park entrance fee average LJS$5.00 Approximate average of 6 largest parks National park entrance fee average l)S$0.50 Approximate average of 6 largest parks Assumed ainual park revenue increase 20% Estimiiate of effect of increased visitation, better fee collection and souvenirs 1999 PYI PY2 PY3 2004 2005 2006 2007 2008 (reference) (1) Increased Revenue for Marine and Coastal Parks A. Bay Islands Yearlydivefee(forovemightvisitors) 430,402 464,834 502,020 542,182 585,557 632,401 682,993 Daily Dive fee for cruise ship visitors 19,469 20,248 21,057 21,900 22,776 23,687 24,634 Total tourism revenue 449,870 485,0(1g 523,078 564,082 608,332 656,088 707,627 Hlow to Bay Islands marine and coastal parks _ B. Rest of North Coast . Natural Resource protection fee 150,379 162,410 175,402 189,434 204,589 220,956 238,633 (charged by hotels, transferred to parks) Increased park revenue Intemational visitors 40,000 50,000 62,500 7S,125 97,656 122,070 152,588 190,735 238,419 National visitors 7,000 8,750 10,938 13,672 17,090 21,362 26,703 33,379 41,723 Total tourism revenue flow to rest or 47,000 58,750 223,g17 254,206 290,148 332,867 383,880 445,070 518,775 North Coast parks Total Additional Revenue to Parks Ss,750 673,687 739,288 813,226 896,949 992,212 1,101,158 1,226,402 Net Present Value of Revenue Stream 4,372,790 (200 1-20081 (2) Municipal and National Tourisl__ Management & Promotion Revenules - Additional Tourism Revenue (Bay 2,959,424 6,273,979 9,976,810 14,103,905 18,694,324 23,790,462 29,438,315 Islands) Additional Tourisn Revenue (rest of 898,560 1,904,947 3,033,545 4,291,480 5,690,659 7,244,006 8,965,546 North Coast) Total Additional Tour-ismn Reveniue - 3,857,984 8,178,926 13,010,356 18,395,384 24,384,983 31,034,469 38,403,860 AdditionalRevenuefromlHTtax 115,740 245,368 390,311 551,862 731,549 931,034 1,152,116 (3% of Total Additional Tourism Revenue) *Bay Island Municipal Docking Fee 77,760 83,981 90,699 97,955 105,792 114,255 123,395 (with High Growth scenario) OtherNorth Coast Municipal Docking 8,398 9,070 9,796 10,579 11,425 12,340 Fee (with High Cirowth scenasio) North Coast Municipal Room Fee (US$ I per room night) v 30% ofroom nights in pilot phase 43,124 46,574 50,300 54,324 58,670 63,364 68,433 v 70% of room nights in follow-on period - 121,755 131,495 142,015 153,376 165,646 Additional MunicipalRevenuefron - 120,884 138,953 271,824 293,570 317,056 342,420 369,814 User Fees Total AdditionalRevenue to Support 236,624 384,321 662,135 845,431 1,048,605 1,273,454 1,521,929 Tourism Manageiment and Pronimoion Net Present Value of Revenue Stream -l 3758,570 (2001-2008) - 47 - (3) Revenue Growth Projections A. Bay Islands Overnightguestrevenue " 69,700,000 72,488,000 75,387,520 78,403.021 81,539,142 84,800,707 88,192,736 91,720,445 95,389,263 Slow Growth" scenario Overnightguestrevenue" 69,700,000 72,488,000 78,287,040 84,550,003 91,314,003 98,619,124 106,508,654 115,029,346 124,23t,694 High Growth" scenario . __ _ __ __ _ Difference in annual revenue 2,899,520 6,146.9S2 9,774,S62 13,818,416 18,315,918 23,308,901 28,842,431 strearms Cruise ship day visitor 1,440,000 1,497,600 1,557,504 1,619,804 1,684,596 1,75 1,980 1,822,059 1,894,942 1,970,739 revenue "Slow Growth" scenario (includes shorc visitors and day divers) (Cruise ship day visitor 1,440,000 1,497,600 1,617,408 1,746,801 1,886,545 2,037,468 2,200,466 2,376,503 2,566,623 revenue "High Growth" scenario (includes shore visitors and day divers) Difference in annual revenue 59,904 126,996 201,948 285,488 378,406 481,561 595,884 streams B. Rest of North Coast . Overnight guest revenue " 21,600,000 22,464,000 23,362,560 24,297,062 25,268,945 26,279,703 27,330,891 28,424,126 29,561,091 Slow Growth" scenario Ovemight guest revenue " 21,600,000 22,464,000 24,261,120 26,202,010 28,29, 170 30,562,024 33,006,986 35,647,545 38,499,348 High Growth" scenario _ __ _ DiYerence in annual revenue 898,560 1,904,947 3,029,225 4,282,321 5,676,095 7,223,418 8,938,257 streanms Cruise ship day visitor 108,000 112,320 116,813 121,485 126,345 131,399 revenue "Slow Growth" scenurio Cruise ship day visitor - - - 10S,000 116,640 125,971 136,049 146,933 158,687 revenue "High Growth" scenario D3ifference in annual revenue - -- 4,320 9,15 8 14,564 20,588 27,289 streams1 Total IncremLental Revenue I _ 3,S57,984 8,17S.926 13,010,356 1 8,395,384 24,384,983 31,034,469 38,403,860 Stream (High Growth Scenario mninus LoK Growth Scenario) Net Present Value of Revenue 84,972,426 Stream (2001-2008) . NPV Calculations Project Costs 2,018,532 1,961,904 2,221,176 Revenuestreanis(1) 58,750 910,311 1,123,609 1,475,361 1,742,380 2,040,817 2,374,612 2,748,332 and (2) . _. NPV of Project | 2,493,S92 _ Summary of benefits and costs: Main Assumptions: Cost-effectiveness indicators:! - 48 - Annex 5: Financial Summary HONDURAS: SUSTAINABLE COASTAL TOURISM PROJECT Years Ending December 31 | eYear I a Year 3 Year 4 Year 5 Year 6 lYear 7 Total Financing Required Project Costs Investment Costs l1.6 2.1l 2.0 0.0 0.0 0.0 0.0 Recurrent Costs 0. I 0. l 0. l 0.0 0.0 0.0 0.0 Total Project Costs 1.7 2.2 2.1 0.0 0.0 0.0 0.0 Interest during 0.0 0.0 0.0 0.0 0.0 0.0 0.0 construction Front-end fee 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Total Financing 1.7 2.2 2.1 0.0 0.0 0.0 0.0 Financing IBRD/IDA 1.5 1.8 1.7 0.0 0.0 0.0 0.0 Government 0.2 0.2 0.1 0.0 0.0 0.0 0.0 Central 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Provincial 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Co-financiers 0.0 0.0 0.0 0.0 0.0 0.0 0.0 User Fees/Beneficiaries 0.0 0.2 0.3 0.0 0.0 0.0 0.0 Others 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Total Project Financing 1.7 2.2 2.1 0.0 0.0 0.0 0.0 Main assumptions: - 49 - Annex 6: Procurement and Disbursement Arrangements HONDURAS: SUSTAINABLE COASTAL TOURISM PROJECT Procurement A) GENERAL All procurement of goods under the Project would be car-ied out in accordance with the "Guidelines, Procurement under IBRD Loans and IDA Credits" dated January 1995 and revised in January and August 1996, September 1997, and January 1999. Consultants would be employed in accordance with the Guidelines, Selection and Emnployment of Consuiltants by World Bank Borrowers, dated January 1997 and revised in September 1997 and Januaiy 1999, and the provisions stipulated in the Credit Agreement. Procurement methods: The methods to be used for procurement are described below and the estimated amounts for each method are summatized in Table A. The tlhresholds contract values for the use of each method are establislhed in Table B. B) PROCUREMENT RESPONSIBILITIES AND CAPACITY Thle Adminiistrative and Financial Uniit of thie Hlondurani Institute of Tourism (IHT) would carry out procurement for thle Project. lIHT is a decentralized agency witlin the Ministry of Tourism. The procurement capacity of the implementinig agency was assessed by Enzo de Laurentiis, Procurement Specialist, LCSES, and was approved by the Regional Procurement Advisor's Office on September 1 8, 2000. The "Overall Procurement Risk" was assessed as "higlh". This unit has adequate capacity to handle the present level and type of procurement, generally enjoys a good reputation with suppliers, and bas appropriate intemnal controls. However, the present capacity is not yet satisfactory to plan, implement, and monitor procurement under the proposed Project. As currently staffed the procurement group would not be able to manage the additional volume of work generated by the Project. In addition, tlle unit hias no knowledge of IDA procurement policies and procedures and no experience witlh procurement of works and selection of consulting firms. To strengthen its capacity, the PIU would recruit a procurement consultant with substantial experience in IDA-financed procurement, particularly procurement of consulting services, and contract administration by no later thian effectiveness. A qualified assistant should support the procurement group with experience in file management and contract moniitoring. This assistant may be shared between the procurement group and the Financial Management Specialist which will be retained by IHT, as recommended in the Financial Management Assessment A procurement manual or a chapter of the Project Implementation Manual focusing on procurement should be prepared and adopted prior to effectiveness. The manual should desciibe, as a minimum: 1. Staffing and facilities of the procurement unit. 2. Organization of the procurement function includinig a detailed description of individual responsibilities and appropriate intemal control procedures. 3. Thresholds for different types of procuremenit of goods and works and for selection of consultants 4. Thresholds for prior review. 5. Procedural details of the vatious procurement metlhods wlhich are going to be used for the Project. - 50 - 6. Procedures for planning and monitoring/supervising procurement actions. 7. Reporting requirements (internally and to IDA). 8. The Project's filing system and procedures to ensure its control, security and confidentiality. In addition, IHT would prepare standard fonnats for shopping and contracting with individual consultants. C) PROCUREMENT ARRANGEMENTS Procurement of Works The Project would finance small works for heritage site restoration in Trujillo for an approximate total amount of US$0.76 million. Contracts estimated to cost less than US$150,000 would be procured under lump-sum, fixed price contracts awarded on the basis of quotations obtained from a minimum of three qualified domestic contractors in response to a written invitation. The invitation shall include a detailed description of the works, including basic specifications, the required completion date, a basic form of agreement acceptable to IDA, and relevant drawings, where applicable. The award shall be made to the contractor who offers the lowest price quotation for the required work, and who has the experience and resources to complete the contract successfully. No NCB is anticipated. Standard documents and procedures for piice comparison would be agreed with IDA before the first invitation to submit quotations is issued. Procurement of Goods The Project would finance several small contract packages for the purchase of computers and software, audio-visual and miscellaneous office equipment estimated to cost a total amount of US$228,000 equivalent. One contract for miscellaneous office equipment estimated to cost approximately US$44,000 should be procured on the basis of National Competitive Bidding (NCB) procedures acceptable to IDA. Bids for this equipment shall be invited and contracts awarded on a lot-by-lot basis. All other contracts are estimated to cost less than US$25,000 equivalent and may be procured following shopping procedures in accordance with paragraphs 3.5 and 3.6 of the Guidelinies up to an aggregate amount of US$60,000 equivalent. Printing services estimated to cost approximately US$72,000 would also be procured on the basis of NCB procedures and documents appropriate for the procurement of these services. Consulting Services The Project would finance consulting services to prepare studies, conduct public consultations, design infornation campaigns, design and provide training programs, design and supervise civil works, and strengthen IHTs capacity to impletnent the Project. The film selected to provide technical assistance on small business enterprise development (under Component C. of the Project) will also be responsible for administering the subProjects (i.e. call for and evaluate proposals and award grants, and monitor subProjects' implementation), as described in the TOR for this assignment. - 51 - Firms Conitracts for firms would be awarded following a Quality and Cost Based Selection (QCBS) process, in accordance with Section 1 of the Consultant Guidelines. The total anount of these contracts is estimated to be approximately US$2.632 million. Individuals Individual consultants would be retained for specialized advisory services and services for Project administration and monitoring whichi meet the requir-einemets of Chapter V of the Consultant Guidelines up to an aggregate amount US$ 408,000 equivalent. The competitive process followed to select individual consultants would be described in further detail in the Operational Manual. Pilot Activities The Project would finance competitive granits awarded to eligible beneficiaries, as defined in the Lmplementation Manual following agreed procedures outlined thereby. Beneficiaries would be individual entrepreneurs, small businesses, and indigenous communities. Communities will have to be legally constituted entities or organizations or be represented by appropriate organizations, which are empowered to represent the community. Community members' shared accountability would be demonstrated in the grant proposal in accordance with the criteria set forth by the Implementation Manual. . Individual grants would not exceed US$30,000 in the case of entrepreneur, and US$28,000 in the case of communities/NGOs. All grants would require a minimum contribution of one third of the total subProject's cost in the case of entrepreneur and one fourth in the case of indigenous communities or NGOs. Beneficiaries' contributioni would be in cash in the case of entrepreneurs, and cash or kind in the case of the communities. In addition, grants would be awarded to eligible individuals for restoration of privately owned historical building in Trujillo, in accordance with the procedures specified in the manual. The maximum amount of these grants would also be US$30,000 with a minimum 33% beneficiary contribution. As part of their grant proposal, eligible beneficiaries will have to demonstrate, to the satisfaction of the grant administrator, that they have adequate capacity to manage procurement in accordance with the grant conditions, and maintain accurate procuremeint and financial records for purposes of audit. IHT or the entity contracted to administer the matching grants, would be responsible for carrying out directly procuremnent on behalf of the beneficiaries who do not demonstrate such capacity as well as all procurement of goods and works exceeding the thleshold for shopping. A standard grant agreement acceptable to IDA and included in the operational manual would be used to transfer grant funids to the beneficiaries under conditions that would ensure adequate implementation. Procurement of goods under the grants would follow commercial practices which would include price comparison from three qualified suppliers, whenever- possible. Services of individual consultants may also be procured under the grants, provided that consultanit have appropriate qualifications for the assignment. All goods and services shiould be procured at a reasonable price, taking into account also other relevant factors such as time of delivemy and efficiency and reliability of the goods and availability of maintenance facilities and spare parts. All such goods and services sbould be used exclusively for the purpose of implementing the pilot activities. - 52 - Small civil works for restoration of historic buildings will be procured following comparison of three quotations from qualified local contractors, and using lump sum, fixed-pliced contracts. Granits would be administered by a firmn or NGO selected competitively. This firm will be responsible for evaluating proposals, awarding the grants, monitoring their implementation, evaluating performance, and ensuring that grantees comply witlh the grant's tenns and conditions. However, IHT will be responsible for providing teclmical assistance to the grantors on procurement matters and exercising quality controls over all procurement actions. Overatin2 Costs Sundry items, office rental and utilities would be financed on a declining basis and would be procured using IHT's administrative procedures, which were reviewed and found acceptable to IDA. IDA would finance 80 percent of operating costs during the first year, 60 percent duiing the second year, and 40 percent during the third year. Prior Review The proposed thresholds for prior review are based on the procurement capacity assessment and are summarized in Table B. In addition, the plan and budget for IHT Operating Costs under the Project will be reviewed and approved by IDA annually. Procurement Sunervision Procurement supervision missions should be carried ouLt every six montlhs by a Procurement Specialist (PS) or Procurement Accredited Staff (PAS) and include a review of: (i) IHTs capacity; (ii) the procurement plan for the Project, including a timetable for procurement actions anticipated during the next 12 months; (iii) IHT's monitoring system for the purposes of the Project; and (iv) complete records for one in eveiy five contracts (for goods, works, and consulting services, respectively). The PS or PAS should perform selected physical inspectionis of the goods received and meet witl selected suppliers/contractors, whenever possible. - 53 - Procurement methods (Table A) Table A: Project Costs by Procurement Arrangements (US$ million equivalent) Procuremen_ Vethod... . ... ..... i:... f E : i: - -: i I : I - ith N :: ::: ... .. : :- i : , : -.-..t-.Expeflditur --Categior g 0-0;0.404400:000ICB N.XB Other. N.a.F Thta Ca 1. Works 0.00 0.00 0.76 0.00 0.76 (0.00) (0.00) (0.66) (0.00) (0.66) 2. Goods 0.00 0.14 0.07 0.00 0.21 (0.00) (0.12) (0.06) (0.00) (0.18) 3. Services 0.00 0.00 2.63 0.28 2.91 (0.00) (0.00) (2.60) (0.00) (2.60) 4. Training 0.00 0.00 0.36 0.00 0.36 (0.00) (0.00) (0.34) (0.00) (0.34) 5. Interest during 0.00 0.00 0.00 0.00 0.00 construction (0.00) (0.00) (0.00) (0.00) (0.00) Front-end fee 0.00 0.00 0.05 0.00 0.05 (0.00) (0.00) (0.00) (0.00) (0.00) SubProjects 0.00 0.00 1.50 0.00 1.50 (0.00) (0.00) (1.04) (0.00) (1.04) Operating Costs 0.00 0.00 0.30 0.00 0.30 (0.00) (0.00) (0. 1 8) (0.00) (0. 1 8) Total 0.00 0.14 5.67 0.28 6.09 (0.00) (0.12) (4.88) (0.00) (5.00) Figures in parenthesis are the amounits to be financed by the IDA Credit. All costs include contingenicies. 2' Includes civil works and goods to be procured through national shopping, consulting services, services of contracted staff of the Project management office, training, technical assistance services, and incremental operating costs related to (i) managing the Project, and (ii) re-len(ling Project fun(ds to local government units. Note: N.B.F. = Not Bank-financed (includes elements procured under parallel co-finanicinig procedures, consultancies under trust funds, any reselved procurement, and any other miscellaneous items). The procurement arrangement for the items listed under "Other" and details of the items listed, as "N.B.F." need to be explained in footnotes to the table or in the text. Figures in parenthesis are the amounits to be financed by the Bank loan/IDA credlit. - 54 - Table Al: Consultant Selection Arrangements (optional) (US$ million equivalent) ..... ... ... S ection Method: - -Coneultaig Ser ..ces . - - Expedtur Cate°ory . S a s -BS F LS C.-Q. O-::ther N. . ..... ..tl... A. Firms 1.60 0.00 0.00 0.00 0.00 0.00 0.00 1.60 (1.60) (0.00) (0.00) (0.00) (0.00) (0.00) (0.00) (1.60) B. Individuals 0.00 0.00 0.00 0.00 0.00 1.00 0.00 1.00 (0.00) (0.00) (0.00) (0.00) (0.00) (1.00) (0.00) (1.00) Total 1.60 0.00 0.00 0.00 0.00 1.00 0.00 2.60 (1.60) (0.00) (0.00) (0.00) (0.00) (1.00) (0.00) (2.60) 1\ Including contingencies Note: QCBS = Quality- and Cost-Based Selection QBS = Quality-based Selection SFB = Selection under a Fixed Budget LCS = Least-Cost Selection CQ = Selection Based on Consultants' Qualifications Other = Selection of individual consultants (per Section V of Consultants Guidelines), Commercial Practices, etc. N.B.F. = Not Bank-financed Figures in parenthesis are the amounts to be financed by the Bank Credit. - 55 - Prior review thresholds (Table B) Table B: Thresholds for Procurement Methods and Prior Review ~~~~~~~~~~. . . . .. . .. . .. . . . ,, ,-'t'.. .thr .axneritUre Categoryg :u(yUSt'ihousands) E E-i:Method:. E :i ; (US$ mifions).---- 1. Works < 1,500 NCB Price comuparisonl First 2 contracts <0.15 First contract 2. Goods <0.15 NCB First contract (0.044) <0.025 Shopping First contract (0.02 2) 3. Services liTespective of amount QCBS All contract estimated to (a) Consulting Firms cost more than Us$100,000 (b) Individuals Irrespective of amount Section V of the Consultant(16 Guidelines All contracts estimated to cost more than US$50,000 (0.37) r~~~~~~~~~~~~~~~~~~~~~~~~~~~~C. toL . . = 4. Miscellaneous 5. M iscellaneous | _ _ _ _ _ __ _ _ _ _ __ _ _ _ _ _ _ _ _ _ _ Total value of contracts subject to prior review: )verall Procurement Risk Assessment High Frequency of procurement supervision missions proposed: OneC every 6 months (includes special procuremnent supervision for post-reviewiaudits) 2Threshods generally differ by country and project. Consult OD 11.04 'Review of Procurement Documentation< and contact the Regional Procurement Adviser for guidance. - 56 - Disbursement Allocation of credit proceeds (Table C) Table C: Allocation of Credit Proceeds -:ExSpenditure Category Amount in US$million Financing-Percentage6-. . Works 0.59 88 Goods 0.16 100 foreign/85 domestic Consulting Services 2.34 100 Training 0.31 100 Pilot Activities: Pilot Activity: Entrepretneur sub- 0.62 66 in the case of entrepreneurs and in the Project matching grant case of restoration of privately owned historical buildings in Trujillo; Pilot Activity: Indigenous communities 0.32 75 in the case of indigenous communities sub-Project matching grant Operating Costs 0.16 80 the first year; 60 the second and 40 (including audits) the third Unallocated 0.50 Total Project Costs 5.00 Interest during construction 0.00 Front-end fee, .Total 5.00 _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ Accounting, Financial Repor-ting, Auditing, and Disbursement Arrangements As result of the financial management assessment conducted duLing Project preparation, it was identified that the IHT has an adequate financial managemnent structure, keeps adequate automated accounting financial and budget records and controls on fixed assets, and has intenial controls in place. However, the financial managetnent staff does not have the capacity to manage the additional workload that the Project activities will require and the accounting system does not have the PMR capabilities, nor is flexible to introduce changes to meet Project needs. As a result of the assessment and the Project design that contemplate the establishment of a PIU within the IHT, an action plan was agreed upon which includes key actions to: (a) desigqn and implement a financial management system that meets PMR requirements; (b) hire the staff needed to establish the PIU; (c) draft a Project operations manual and develop administrative procedures; and (d) hire external auditors. It was agreed that a Financial Management System (FMS), that is PMR-compatible, would be operational prior to the Project effectiveness. The action plan is included in Table D below. The IHT will implement an adequate integrated financial management system for the Project, including intenial control systems that: (i) are in accordance with international accounting standards; (ii) reliably record and report all assets, liabilities and financial transactions of the Project; (iii) provide sufficient financial infolmation for managing and monitorinig Project activities; and (iv) integrates financial infonnation, disbursements, purchasing, procurement, and control of contracts, to allow the generation of quarterly programmatic financial reports on the finanicial and physical advance of each component, as well as financial informationi by disbursement category. The detail of these procedures will be contained in the Operational Manual. - 57 - Auditing Arrangements: An external auditor, acceptable to the Bank, will be contracted by the IHT to carry out an ainual financial audit of the Project, as required by OP/BP 10.02. The auditor will be selected according to the Bank's "Guidelines for the Selection and Employment of consultants by the World Bank Borrowers" dated Januaty 1997, revised in September 1997. The auditors should be hired at Project inception, and ptior of the commencement of each Project fiscal year thereafter, so that the interim audits can be perfonned tlhroughout each year oi Project implementation. The Project financial statements, the Special Accounts, SOEs (if applicable), and the PMRs will be audited at the end of eacb fiscal year during Project implementation. An audited of the Project financial statements will be submitted to the Bank within 120 days of the close of the Project's financial year. The "Guidelines and Terms of Reference for Audits of Projects with Finanicing by the World Bank in the Latin American and the Caribbean Region" should be followed by tile IHT when preparing the terns of reference for the audit and these guidelines should be provided to (he selected auditors Disbursement Procedures: Traditional disbursement procedures will be used for the first two quarters of Project implementation, in accordance with the guidelines set in the Disbursement Procedures Handbook. SOEs documentation will be maintained by IHT for post-review and audit purposes. The authorized allocation(s) to the Special Account, for Non-PMR disbursements will be set at a level sufficient to cover approximately four months of estimated expenditures eligible for financing by the Bank, up to a maximum authorized allocation of US$550,000. Replenishments of funds will be made on evidence of satisfactory utilization of the previous advance(s) as evidenced by the documentation submitted in support of disbursement applications. Deposits into the Special Accounts and its replenishments, up to the Authorized Allocations will be made initially on the basis of Applications for Withdrawals (Form 1903) accompanied witb the supporting and other documentationi specified in the Disbursement Handbook. Withdrawal applications will be fully documented, except for expenditures under contracts costing less than US$25,000 equivalent for goods, less than $150,000 equivalent for works and US$100,000 and US$50,000 equivalent for consulting firms and individual consultants, respectively, for which no prior review is required. All expenditures for traininig and operating costs will be made on the basis of SOEs. Use of Project Management Report (PMRs): By the end of the second quarter of Project implemenitationi, or earlier if the IHT is compliant and requests transition to a full Project Management Report (PMR) system, the PMRs would serve as disbursement requests. Transition to PMR will be subject to the satisfactory results of new financial management and procurement assessments. Once the borTower becomes PMR compliant, and if requested by the Borrower, disbursemenits would be in accordance with guidelines set in the Loan Administration Change lnitiative (LACI) Implementation Handbook. Each application for withdrawal should separately identify the funds requested from the credit Account, and would be supported by a Project Management Report (PMR) or such other documents and evidence as the Bank may request. PMRs should be submitted within 45 days from the preceling quarter. Upon receipt of each application for withdrawal, the Bank, on behalf of the Borrower, shall withdraw from the credit account and deposit into the Special Accounts an amount equal to the lesser: (a) the amount requested; and (b) the amount the Bank has determined, based on the PMR accompanying the application, is required to be deposited in order to finance eligible expenditures during the six month period following the date of the report, but in no case should exceed 20% of the total credit and grant funds, without - 58 - prior authorization fromn the Loan department. The tHT would be responsible for preparing withdrawal applications anid the related PMRs. All supporting documeintationi authenticating the expenditures reported in the PMRs would be maintained by the IHT and made available for review by independent auditors and by the Bank supervision missions. Retroactive Financing. Retroactive financing may be made on account of payments made for eligible expenditures from Project appraisal held May 13-25, 2001 in an aggregate amount not exceeding SDR 0.4 million, starting May 13, 2001, up to the signing of the Credit Agreement. Use of statements of expenditures (SOEs): If, by Project effectiveness, the IllT has not implemented a finanicial management system with PMR capabilities, but which meets minimum Bank requiremenits, the traditional disbursement mechanisms (Statement of Expenditures, SOEs) will be used for the first two quarters of the Project implementation. SOEs may be submitted for (i) goods, works, and services of individual consultants and consulting firms under contracts for expenditures for whichi prior review is not required, and for (ii) training and operating costs. Special account: A Project Separate Special Accounts in US Dollars will be established at the Central Bank of Honduras. The li-IT will be responsible for submitting appropriate disbursement applications to request the transfer of funds to the Special Account. Replenislnmenits of funds under SOEs will be made on evidence of satisfactory utilization of the previous advance(s) as evidenced by the documentation submitted in suppolt of disbursement applications. Deposits into the Special Account and its replenishments, up to the Authorized Allocations will be made initially oni the basis of Applications for Withdrawals (Fonn 1903) accompanied with ithe supporting and other documentation specified in the Disbursement Handbook. Once the lHT is PMR compliant, and is certified as such by the Bank, and at the Borrower's request disbursements become PMR based, any subsequent disbursement from the credit account would be to cover estimated eligible expenditures for the next six-months of cash forecast reported in the PMR, as described hereafter. Table D: Financial Management Action Plan (* indicates actions reqtired for effectiveness) Action Estimated Completion Date 1. Establishment of the Project lImplementation Ulnit: (a) Preparation of tenns of reference for PIU staff: completed Project Coordinator Financial Specialist/Accountatit Procuremnent Specialist Administrative Assistant (b) Advertising for contracting of Project Coordinator 07/15/01 (c) Short list for Project Coordinator candidates 08/01/01 (d) Contracting of Project Coordinator* 08/20/01 (e) Contracting of additional PIU's staff: Financial Specialist/ Accountant, Procurement Specialist, and Administrative Assistant* 08/31/01 2. Design and implementation of financial management system (FMS): - 59 - (a) Preparation of terms of reference and shiort list for consultants completed (b) Bank's No-Objection of shott list and terms of reference completed (c) Evaluation of proposals completed (d) Contracting of conssultant 07/15/01 (e) Design of FMS 08/15/01 System itnplemented and substantially operational* 12/15/01 (g) System fully operationial 03/30/02 3. Contracting of extemnal auditors: (a) Preparation of tenns of reference (TORs) 07/07/01 (b) Short list and TORs 07/15/01 (c) Bank's No-Objection to slhort list and TORs 07/30/01 (d) Evaluation of proposals and appointmnent of auditors* 12/15/01 (e) Contracting of external auditors 30 days after Project _ _________________________________________________________________________ effectiveness 4. Document flow of funds from the Special Account ongoing 5. Funds for payment of retroactive expenses are made available by the 08/15/01 Ministry of Finance (Subsequently to be reimbursed from credit funds) 6. Identification of Project indicators for physical and financial monitoning completed 7. Determination of counterpart funds to be provided by the lHT and the Project beneficialies completed 8. Preparation and adoption of operations manual, including administrative and 12/15/01 procurement procedures, and Project repotting requirements* 9. Evidence of counterpart funds available for the first year of Project 12/15/01 _implementation; deposit of $50,000 equivale_t for first quarter* - 60 - Annex 7: Project Processing Schedule HONDURAS: SUSTAINABLE COASTAL TOURISM PROJECT :Proje¢t-Schedule : :.-.-:: f- P:lanned: : - |1 Time taken to prepare the project (months) 5 24 First Bank mission (identification) 02/01/99 02/01/99 Appraisal mission departure 10/04/99 05/14/2001 Negotiations 10/23/99 06/25/2001 Planned Date of Effectiveness 01/03/2000 12/15/2001 Prepared by: Honduras Institute of Tourism Preparation assistance: PHRlD Funds Bank staff who worked on the project included: ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~... .. . . .... .. .. . ...... ...... .. Name- Speciality: .... ..... Marea Hatziolos Marine Resources Specialist / Task Team Leader Steven Maber Rural Development Specialist / Co-Task Team Leader Marta Molares-Halberg Legal Counsel Enzo De Laurentiis Procuremenit Specialist Luz Zeron Financial Management Specialist John Kellenberg NatLUral Resources Economist (World Bank / RUTA) Juan Martinez Social Scientist (World Bank / RUTA) Livio Pino Financial Management Specialist Isabel Lavadenz Land Specialist Lourdes Guzzone Project Team Assistant Augusta Molnar Peer Reviewer Mark Eckstein Peer Reviewer Donald Hawkins Tourism Specialist / Independent Consultant Lawrence Pratt Competitiveness Expert / INCAE Rebecca Santos Project Preparation Logistics & Coordination / Independent Consultant Mario Vallejo Larios Legal Analysis / lndependent Consultant Carlos Domingo Posas Social Assessment / Independent Consultant Martin Ochoa Environmental Assessment / Independent consultant Gloria Lara Social Assessment / Independent Consultant - 61 - Annex 8: Documents in the Project File* HONDURAS: SUSTAINABLE COASTAL TOURISM PROJECT A. Project Implementation Plan Manual de Implementacion del Proyecto - (Primer Borrador) B. Bank Staff Assessments Country Assistance Strategy Letter from Min. Gabriella Nuiiez (Secretaria de Finanzas) requesting the Project BTO: Identification Mission, October 1998 PHRRD Award Letter with Acceptance by Min. (abriella Nuldez (Secretaria de Finanzas) Borrower and Consultant Reports: Report 1: Assessment of Tourism Potential of H-londuras: Observatiolns and Recommendations for Sustainable Coastal Tourism (1H[awkins and Lamoureux) lnforme 1: Evaluacion del Potencial del Turismo de Honduras: Observaciones y Recomendaciones Para Sostenible Turismo en la Region Costera (Hawkins y Lamoureux) Original Language: English Report 2: Environmental Education and Tourism Awareness on the North Coast and Bay Islands of Honduras (Dominiguez) Informe 2: Educacion Y Conocimiento Ambientale del Turismo en la Costa Norte y en las Islas de la Bahia de Honduras Dominguez) Original Language: English Report 3: An Environmental Economics Strategy for Hlonduras Coastal Tourism and Protected Areas (Pratt) Informe # 3 -- Estrategia Econ6mica Ambiental para las Areas Protegidas y el Turismo Costero de Honduras (Pratt) Original Language: English Report 4: Legal and Regulatory Aspects of Coastal Tourism Developmeint in Honduras (Mauri, Mumford Pratt, and Bogran) Informe 4: Aspectos Legales Y Reguladores Del Desarrollo Costero Del Turismo En Honduras (Mauri, Mumford Pratt, and Bogran) Original Language: English Report 5: Coastal Municipalities and Sustainable Tourism in Honduras (Posas and Montoya) Informe 5: Proyecto Planificacion y Manejo Del Turismo Sostenible en la Costa Norte De Honduras (Posas y Montoya) Original Language: Spanislh - 62 - Social Assessment Report: * EVALUACION SOC:IOETNOGRAFICA DELA COSTA NORTEDEHONDURAS * PLAN DE PARTICIPACION Enviromental Assessment and Management Plan (in Spanislh and English) Draft Project Implementation Plan C. Other Amigos de Sian Ka'an, "Guidelines for Low-Impact Coastal Tourism Development" Coastal Resources Center/URI & The US Agency for lnternational Development, Quintana Roo, 1998. Arizona Council for Enhlancing Recreation and Tourism, "Tours for Tourism: Positioning for Positive Impact" Ashton R. & P. Aslton, "Local Commuinities and Ecologies: Preparation and Planning, The Keys to Long- Term Success", Florida, September 1994. Bailly, H., "Environmental Audits for Suistain1able Toutrismt. Final Report", Assessment of Voluntary Environmental Rating and Certification Programs, January 1999. Banco Interamei-icano de DesalTollo, Situacion lTuristica de Honduras y Lineamientos Esrategicos para su Desairollo, Consultoria para el Apoyo a las Autoridades Turistica de Centroamerica, March 1999. Bar-on, R., "The Americas", Databank, Tourism Economics, 5 (3), pp. 293 - 307, 1999. Brylske, A., Doctoral Dissettation Preliminary Research Proposal, Florida Institute of Technology, January 1999. Callilian D. & R: Goodldnd, '"Using Tourism as a Means to Sustain Community-Based Conservation: Experience from Namibia ", U SAID Workshop on Growth-Environment "Win-Win" Opportunities Through Natural Resource-Based Industries, Washington, D.C., November 4, 1999. Canadian Tourism Commission, "On the Path to Success" Results of the CTC Best Practices Tour, 1999 Certification for Sustainable Tourism, "What CST is all about", Website: htcp:{//ww.turismo-sostenible.co.cr/EN/sobreCST/about-cst.shtml, September 15, 1999. Comisioo Centroamericana de Ambiente y DesarTollo (CCAD), Plan de Accion del Sistema Arrecifal del Caribe Mesoame-ricano, BotTador final, June 1998. Conlin, M., "Human Resoturce Development: The Foundation for Quality Service", Centre for Tourism Research anid Innovation, Bermuda College. Conservation International, "Conservation International's Ecotourism Program Initiatives 1999", Washingtoni, D.C., 1999. Conservation International, "Fact Sheet: Ecotourism Development Program ", Washington, DC, September 1999. DeShazo, J., "The Economic Bene/its from Natural and Cultural destinations in Central America"", - 63 - Harvard Institute for International Development, 1999, INCAE The Environment and Central America's Competitiveness. Ecotourism Society, "A Ecotoutrism Statistical Fact Sheet", www.ecotourism.org/textfiles/stats.txt, August 1997. Egyptian Red Sea Coastal And Marine Resoturce Management Project, Baseline Report, Arab Republic of Egypt, Tourism Development Authority, August 1997. Forest, N., "Assessment of Coastal Regulations and Implementation: Case Study ofRoatan, Bay Islands, Honduras" Coastal Management, No. 26, pp. 125 - 155, 1998. Furlan, L., "How You Can Improve Your Ecotouirisin Operations", CAPAS, August 1995. Garcia, N., "Postura Oficial del Instituto Hondureno de Turismno", Faces, pp. 13 15, March 1999. Gartner, W., Tourisn Development. Piinciples, Processes and Policies, Van Nostrand Reinhold, USA, 1996. Hawkins, D., "The Relationship of Tourism-Retated Revenule Generation to Coral Reef Conservation ", Coral Reefs: Challenges and Oppootunities for Sustainable Management, Proceedings of an Associated Event of the Fifth Annual World Batik Conference on Environmentally and Socially Sustainable Development, Washington, D.C., October 1997. Hawkins, D. & C. Holtz, "Global Environmental Policies and Management Systems in the Tourist Industry" Washington, DC, 1999. Holtz, C., Sustainable Tourism Best Practices. Washington, DC: The George Washington University, 1998. Honduras Institute of Tourism, "Hondtiras Tourism After Mitch: Assessment and Status of Resources" Honduras, December 1998. Honduras Institute of Tourism & FONATUR Interniacionial, Project: Ecoturistico Bahia de Tela, Honduras, C.A. Honduras Today Advertisement, p. 12 Hope, C. & A. Muehlemann, "Total Quality, Human Resource Management and Tourism", Tourism Economics, 4 (4), pp. 367 - 386, 1998. INCAE, "Diagnostic: Training Needs Assessment of the Tourism Sector in Central America", CLACDS, December 1998. INCAE, "Turismo en Honduras: El Reto de la Competitividad", CLACDS, July 1998. INCAE & CLACDS, "Tourism in Honduras: The Competitive Challenge", Tranislation, 1998. INCAE, "The Environment and Central America's Competitiveness ", Working Paper, May 1999. Island Resources Foundation, "Tourismii and Coastal Resources Degradation in the Wider Caribbean", St. Thomas, December 1996. Jones, C., "The New Touirism and Leisiure Environment: A Disculssion Paper" Economics Research Associates, San Francisco. Juhasz, F., "An International Comparison of Sustainiable Coastal Zone Management Policies", Marine Pollution Bulletin, Vol. 23, pp. 595 - 602, Great Britain, 1991. Kohl J. & F. Garcia, "Antecedentes y Eventos Actuales Sobre El Turismo En La Costa Norte De Honduras", RARE Center for Tropical Coniservation. - 64 - Lonely Planet Website www.lonelvplanet.coni, "Honduras: Getting Around". Lundberg, Donald E., The Tourist Business, CBI Publishing Co., Iic., 1990:315. Madrid, P., Lo Que Habia De Este Lado: A proposito de los 500 anos 1492-1992, 1994. Management Systems Inteniational, "Joint-Venitures in Ecotourisin ", RAISE Website htt.p:,7/www.raise.ors/lestplractices,'#nonag, January 6, 2000. Manning, Edward W., Goveniance for Tourism. Coping with Tourism in Impacted Destinations, Centre for Sustainable Future, June 1998. Manual del Maestro, Prograrna de limpieza y liderazgo ambiental, "Adopte una Calle o un Tramo de Camnino", Programa EDUCAR, Hoonduras, May 1997. Medio, D., R.F.G. Oi-mond & M. Pearson, "Effect of Briefings on Rates of Damage to Corals by Scuba Divers", Biological Conservation, 79, pp.91-95, Great Britain, 1997. Murray, J., Strategies for Small. Coastal Communities: Manual, Community Economic Development. Naisbitt, J., Global Paradox, William MoIrow & Co., Inc. New York, 1994. Organization of Americao States, "Suistaininig Tourism By Managing Its Natuiral and Heritage Resources ", XVII Inter-American Travel Congress, Costa Rica, April 1997. Organization of American States, "Formfor the Presentation of Projects", Inter-American Council for Integral Development, July 1997. Pagiola, S., "Economic Analysis of Investments in Cultural Heritage: Insightsfrom Environmental Economics", Environmental Department, World Bank, June 1996. Parker, S., "Collaboration on Tourismit Policv Making: Envirownental and Commercial Sustainability on Bonaire, NA ", The Joumnal of Sustainable Tourism, pp. 240 - 259, Vol.7, Nos. 3 &4, 1999. Pendleton, L., "Environmental Qualil'v and Recr-eation Denmanid in a Carribean Coral Reef', Coastal Manaemernt, Vol. 22, pp. 399 - 404, UK, 1994. Posas, M., Breve Historia de la Ciudad de Lai Ceiba, Alcaldia Municipal de La Ceiba, Honduras, 1993. Potter, B., "Tour ism and Coastal Resources Degradation in the Wider Carribbean", Island Resources Foundation, St. Thomas, Virgin Islands, December 1996. Proyecto PAAR, "Anteproyecto de Ley Forestal", Tegucigalpa, Enero, 2000. Proyecto DesaiTollo Turistico Sostenible de la Costa Notte de Honduras, Componente del proyecto: Rescate y Revitalizacion Integral del Centro Historico de Trujillo, August 2000. Red Ecologista olIondurena de DesaITollo Sosteniible (REHDES) & Centro RARE, Promoviendo la Conservacion y Desarrollo Comunitario en H-londuras Mediante el Ecoturismo, Programa de Tres Anos en la Costa Norte de Honduras, componente del Programa de RARE Center por el Corredor Biologico Mesoamericano (Mexico, Belice, Guatemala y Honduras), October 1999. Research Alert: the Bi-Weekly source for Research on Americans, June 19,1992. Salvat, B., "Tourism and Coral Reeft", Tourism Focus, No. II, 1998. Scriabine, R., "Putting People into Policy: The Role of Environmental Education and communication?", A GreenCOM Discussion Paper, June 1996. - 65 - Snelson D. & An. Lanjouw, "Final Report on Protected Areas Conservation Strategy (PAR CS) Project ", lnstitutionalizing In-Service Training in Protected Area Authorities in Africa, July 1997. Stoll, A., "Master Plan. North East Sector of Jeannette Kawas National Park and The Town of Miami, Honduras", Graduate Research Project Proposal, University of Florida, January 1999. Sustainable Development, "Touirismn - Towards Sustainability", A Consultation paper on sustainable tourism in the UK. The Bay Islands, Destinatioon Honduras 1999. The Best of Central America Guide 1999, Sol y Lunia, San Salvador, C.A. 1998. USAID, "'Best Practices' Guidelines for Tourism Facility Site: Planning, Design, Construction and Operation ", Volume 8, Environmentally Sustainiable Tourism (EST) Project, Environmental and Natural Resources Policy and Training Project, April 1997. Welcome to Honduras 1997-1998, Editorial frainsainerica S.A., Hlonduras 1997. Winrock International Environmental Alliance, "Comiiparactive Advantage Review of the Egyptian and Red Sea Coast Touirism Industries , USAID. World Bank, "HOND URAS COUNTR Y ASSIS7 A;NC'E STRA TEG Y EXC Upstream Review Document". World Tourism Organization, Tourism 2020 Vision, Madrid 1998. World Tourism Organization, Tourism Highlights 1999, Madrid 1999. World Tourism Organization, Tourism Market Trends Americas 1998 Edition, Madrid, 1998. World Tourism Organization, Tourism to the Year 2000: Qualitative Aspects, 1993:17. World Tourism Organization, Tourism Market Trends: Americas, 1999 Edition, Madrid 1999. World Travel and Tourism Council, World Tourism Organization and Earth Council, "Agenda 21 for the Travel and Tourisnm Industry: Towards Environmentally Suistainable Development World Travel and Tourism Council, "Best PracJice Suistainable Touirism Approach: GREEN GLOBE Destination Strategy and Action Planning", London, United Kingdom, 1998. *Including electronic files - 66 - Annex 9: Statement of Loans and Credts HONDURAS: SUSTAINABLE COASTAL TOURIM PROJECT May-2001 D lOM nce blween expected and acual Orignal Amount in US$ Milhlons disbu.rs.ments Projed ID FY Purpose IBRD IDA GEF Cancel. Undisb. Ong Frm Rev'd P057538 2001 ROAD RECONSTRUCTION AND IMPROVEMENT 0.00 es.50 0.00 0.00 64.03 0.00 0.00 PO6078s 2001 HN ECONOMIC & FIN.MANAGEMENT PROJECT 0.00 19.00 0.00 0.00 1825 3.87 0.00 P007397 200t HN-COMlMUNITY-BASED EDUCATION PROJECT 0.00 41.50 0.00 0.00 40.s7 0.00 0.0 P064096 2001 HN- FIFTH SOCIAL IWVESTMENT FUND PROJECT 0.00 e0.00 0o. 0.00 50.92 0.00 0.00 P054913 2000 EMERG DISASTER MGMT 0.00 10.82 noe 0.00 9.55 4.63 0.00 P048651 1999 HNIFHIS IV 0.00 45.00 0.00 5.LI .2524 0.00 P057350 1999 PROFUTURO 0.0e 8.30 o. o.00 4.52 1.59 O.W P044343 1998 BOIVEnRSITY PROJ 0.00 0.00 7.00 0.00 4.49 4.90 0.00 P007398 1997 RURAL LAND MGMT 0.00 34.00 0.00 0.00 9.66 7.96 7.96 P007387 1996 HN PUS SEC MOD SAC 0.00 55.00 000 0o. 33.10 1.13 36.83 P007399 1995 HN- BASIC EDUCATION 0.00 30.00 0.00 0.00 342 601 5.43 Poo73e8 1993 TRNSPRT SCTR RHB o.0 .00 0.00 0 .00 325 -14.93 321 P007392 1993 HNMNUTRTIONALTH 0.00 2.00 0.00 0.00 040 A0.41 0.16 Total: 0.00 460.12 7.00 0.00 256.70 417.73 53.58 HONDURAS STATEMENT OF IFCs Held and Disbursed Portfolio May-2001 In Millions US Dollars Committed Disbursed IFC IFC FY Approval Company Loan Equity Quasi Panic Loan Equity Quasi Partic 1998 Camino Real Plaz 10.00 0.00 0.00 0.00 8.00 0.00 0.00 0.00 1995/98 Elcosa 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1986/99 Granjas Marinas 6.00 0.00 0.00 0.00 6.00 0.00 0.00 0.00 Total Portfolio: 16.00 0.00 0.00 0.00 14.00 0.00 0.00 0,00 Aptwvais Paiding Commtment FY Approval Company Loan EqUity Quasi Partic 2000 Agropatma 7.00 0.00 0.00 0.00 1999 Celtel Honduras 5.00 5.00 0.00 15.00 Total Pending Commitment: 12.00 5.00 0.00 15.00 - 67 - Annex 10: Country at a Glance HONDURAS: SUSTAINABLE COASTAL TOURISM PROJECT Latin Lower-~ POVERT.Y and SO6CIAL~ Amnerla mliddle Honduras & Cairib. Aiancome Dovelopment diamtond' P60.tiation,::mid-year (millib s) ~6.3: .509 ~2.,094: .Life expectancy GNP per capita (Atlas method. iJS$) ~~~~~ ~~760. 340 :1,200. :GN1P iAtLssrrmelhod.: S$ bIllrinsj 4.8. 1,955: 2,513:: Aeage annul girowth. 1993-99 Ropatone 6h(5) 2.8 ~ 1.8 1. Lao .. oc ...... ..... 3.8 I 2.5 1.2 GNP . v rs Moe~~~~~~~ recent ~~~~~~~~~~~~per primary eMitreinlstimiate (laitest year available, 1993-99)caiayu, erlmn : :PoVertvi'%:ot popUlation below. national poverty line) 53 Urb6rl nOpUIatIon:(% Of total poPulation) 52 75 ~ 43~ :Llf* expectancy: ot birth (years) .69. 0 .69 lnfsnttorlaitvlpri,PO livebirths) 36 31 ~ 33 01,116~~~M m~nilin( fildre une 125 8 1 5 Access to safe water :Access to:improved watersource (% of t,opulationl 65 75 86. Ilfteracv~56f!Nopbtnlaiio aqe..15+).26 12 16, Grosso~arv~nrolirn~nt1% af schooj-aqevoooulationl 1 11 113 114.: Male1 11 to. 1.1 4 Lower-middte-lncome group Female 1~~ ~ ~~~~~~~~~~~~~~~~12 .. 1:16 KEY: ECO NOM I C RATIO0S: a nd LO N G-TE RM T RE ND S 1979 1989 1998 *1999 G~~P (OS$tiillJdnsl . . . . 2.3 5.2 ~~~~~~~~~~~~~~Economic ratios' GfossdortiestlcinvestmentlGD3P 26.8 19.1 30.8 32.9 Eftertsiofgdcidsand services/GDtP 36.6 28.0 47.2 42.9Trd :G85b,:doniesotic:savinns.IGDP 22.0 13.7 24.6 18.1 :GfosasrnatI0nA1.savllhgslGDP 158.0 9.9 25.3 ~22.9 .Cllrf.aht Acount:balancelGbP -8.8i -7.9 -5.5 -10.0 ,) :Itt0roWt paVrttensIGQP 2.7 .0.9 3.5 3.2 DoeIc'nvestment Total :debtl$DP: . 52.6 655 95.3 ~~~~~~~ Savings .Totatiebt:s.ervicel.expor'p ~~~~20.5 1.2.6 18.2 134A i'resentvalueofdebtlGDp .. .. 61.4 PirasientValueof debtlexports . . 116.2 Indebtedness i 1979-89 1989-99 1998 1999 .1999-03. ( .vrsg anwprow,th) G~~~~P . : ~~~~~~~~2.4 3.2: 2.9 ~ -1.9 5~3 . ~ ~ onu "'.NP.O or caoitv . 0:7 0.8 . 0.A -3.9 ...8 . ..Lower-middle-income group i sorti of g6ods' and services 0.5 1.5 0.3. -9.4 g 98 STRUCTURE of the ECONOMY 1979 1999 1999 1999 Growth of investment end GOPl% (% ofGDP) Agriculture 25.6 21.1 19.2 16.2 30 Industry 24.4 24.7 30.4 31.9 20.b Manufacturing 15.1 15.0 18.6 19.6 ro Services 50.0 54.2 50.4 51.9 0 Private consumption 67.0 72.0 65.3 69.4 iv 4 97 so am General government consumption 10.9 14.3 10.1 11.4 _GD Q-,GDP Imports of goods and services 41.4 34.4 53.3 56.7 -___________________ (average annuat growth) 1979-89 1989-99 1999 1999 Growth of exports and imports(% Agriculture 2.4 2.4 -2.9 -8.7 15 Industry 2.9 3.5 4.2 4.0 iv Manufacturing 3.0 3.8 3.4 2.61, Services ~~~~ ~~~~ ~~~~ ~~~~2.3 3.5 5.6 -.2~ P'rivate consumption 2.8 3.0 3.4 0.8 5%af 50 56 i7a Generat government consumption 3.9 -0.6 21.7 10.9 . Gross domestic investment 0.0 8.0 2.8 4.7 .10 Imports of goods and services 0.1 3.6 5.9 6.7 --E".'Eports --*-Imports Gross national product 2.5 3.7 3.3 -1.3 Note: 1999 data are preliminaty estimates. The diamonds show four key indicators in tihn country (in bold) compared with its income-group average, If data are missing, the diamond wilt be Incomplete. - 68 - Honduras PRICES and GOVERNMENT FINANCE 1979 1989 1998 1999 Inflation (%) Domesitic prices 40 (% change) T Consumer prices 9.9 13.7 11.6 30 Implicit GDP deflator 11.5 7.1 11.0 11.1 20 . Govemment finance 10 (% of GDP, incdudes current grants) 0 Current revenue 18 8 19.4 94 ss 90 97 9g 59 Current budget balance 4.1 2.8 -GODP defto Overall surplusldeficit -1.7 -4.4 TRADE (US$ millions) 1979 1989 1998 1999 Export and impcrt levels (USS mill.) Total exports (fob) 903 1,657 1,304 3 ooo Bananas 352 176 38 Coffee 191 430 256 2000 Manufactures 11 Total Imports (cif). 1,045 2,445 2,718 Food .. 172 364 397 1,0 Fuel and energy 146 214 256 Capital goods .. 220 615 724 93 94 95 9S 97 sa 99 Export price index (1995=100) .. 98 94 90 Import price index (1995=100) .. 76 93 91 Q Exports * Imports Terms of trade (1995=100) 129 102 99 BALANCE of PAYMENTS (UJS$ millions) 1979 1989 1998 1999 Current account balance to GDP (%) Exports of goods and services 838 1,061 2,476 2,312 0 * / f Imports of goods and services 930 1,273 2,797 3,055 i RVesource balance -92 -213 -322 -743 .4 Net income -120 -240 -209 -160 '" Net current transfers 14 43 241 365 -80 | i Current account balance -198 -410 -290 -538 . D Financing items (net) 218 364 458 880 Changes in net reserves -20 45 -168 -342 -16 Yrmo: Reserves including gold (US$ millions) 28 770 1,209 Conversion rate (DEC, boallUS$) 2.0 2.0 13,4 14.2 EXTERNAL DEBT and RESOURCE FLOWS 1979 1989 1998 1999 - (USS millions) Composition of 1999 debt (US$ mill.) Total debl outstanding and disbursed 1,184 3,386 5,002 5,356 IBRD 132 528 235 185 G:482 A:1S5 IDA 47 79 579 841 Total debt service 179 142 505 367 F: 415 IBRD 14 1 68 65 IDA 1 0 6 7 C 1 Composition of net resource flows Official grants 21 71 163 210 Official creditors 86 86 19 158 E. 1,486 Pnvate creditors 63 43 109 -35 Foreign direct investment 28 51 84 222 Porifolio equity 0 0 37 World Bank program Commitments 35 0 59 61 i A - IBRD E - Bilateral Disbursements 32 2 64 273 B - IDA D - Oher mullilateral F - Pnvate Principal repayments 4 0 50 49 C- IMF G ShorermI Netflows 29 2 14 224 Interest payments 11 1 24 22 Net transfers 17 1 -10 202 Development Economics 9/9/2000 - 69 - Additional Annex I I HONDURAN INSTITUTE OF TOURISM HONDURAS SUSTAINABLE COASTAL TOURISM PROJECT ENVIRONMENTAL ASSESSMENT Executive Summary* September 2000 *Full document available in Spanish and English in Project File - 70 - Table of Contents 1. Executive Report 3 1. Introduction 5 11. Overview of the Project 5 2.1. Description of the Project 6 2.1.1 Objectives of the Project 6 2.1.2 Description of the activities of the Project 6 2.2. Socioeconomnic Context of the Project's Area of Influence 9 2.3.1. Overall Characteristic 10 2.3.2. Particular Characteristics of each Municipality 13 2.4. Environmental Problems of the Area of Influence 15 2.5 Environmnental Institutional Aspects 17 2.5.1 Overall Description 17 2.5.2 Specific Description 20 2.6 The Legal Envirornental and Tourist Context of Honduras 22 2.6.1 Overall Aspects 22 2.6.2. laws Related with Tourism 27 111 Environmental Implications of the Project 29 3.1. Overall Considerations 29 3.2. Potential Socio-environinental Implications 29 IV. ENVIRONMENTAL ACTION PLAN AND STKATEGIES FOR COMPLIANCE 32 4.1. Objectives and Characteristics of the Environmental Management Plan 32 4.1.1. Objectives of the Environmental Management Program 32 4.1.2. Characterivtics of the Proposed Environmental Management Plan 32 4.1.3. Expected Results 33 4.2. Description of the Environmental Managemzent Plan 33 - 71 - 4.2.1 Technical Assistance Requirements 33 4.2.2. InvestmentandFund-raising Requirerncts 34 4.3. Monitoring and Control of the Environimental Management Platn 37 4.4. Instruments to be Utilized 37 4.5. Overall Costs of the Environmental Management Plan 37 Bibliography Annex 1. The Decrees, Laws, and Regulations applicable to the tourist-environmental sector Annex 2. International Guidelines for restoration of historical sites for preservation of the Cultural Patrimony of the City of Trujillo Annex 3. Environmental Guidelines for approval of financing granted to small and micro entrepreneurs. TABLES Table 1. Project Component Description. Table 2. Main Socioeconomic Indicators of the Project's Area of lnfluence. Table 3. Growth of the Bay Island's Participation in the Diving Market. Table 4. High Quality Beaches in the Bay Islands. Table 5. Main Problems faced by the Coral Reefs. Table 6. Problems of Mangrove Swamps. Table 7. Problems faced by the Beaches. Table 8. Problems faced by Lagoons and Estuaries. Table 9. Potential Socio-environmental Implications of Comlponent 1: National Strategy and Institutional Strengthening for Development of Sustainable Coastal Tourism. Table 10. Potential Socio-environmzental Implications of Comnponent 2: Institutional Strengthening and Technical Assistance for Municipalities. Table 11. Potential Socio-enviromnental Implications of Component 3: Pilot Progranm for Entrepreneurial Development of Sustainable Coastal Tourism. Table 12. Proposed Environmen-tal Management Plan for the Project. FIGURES Figure 1. Area of the Project. Figure 2. Honduran Institute of Tour ism's Organizational Table - 72 - 1. Executive Summary The scenic value of the coastal resources in the Atlantic zone of Hooduras has turned this region into an important tourism destination for foreigners as well as for locals. Its littoral region amounts to a 670 kilometer coast dominated by tropical rainforest vegetation ending in a line of fine sandy beaches. Additionally, this region portrays interesting archaeological sites and it is inhabited by different ethnic groups. Such variety of attractions in this and other regions of the couintty have turned tourism into one of the most important economic items of the country. However, efforts to maintain the growing rhythm of this sector have been curtailed by the impact and aftennath of Hurricane Mitch. Damage to basic infrastructure is -among others- one of the limitations that the country faces in order to strive for greater development. In an effort to recover and if possible to surpass gains attained before Hurricane Mitch, the Government of Honduras seeks to consolidate a Sustainable Coastal Development Strategy in the Atlantic area of the country. In this context, thie Govemmment of Honduras has begun a negotiation process with the World Bank for financing the strategy. The Project in mind seeks to integrate a process for the development of sustainable tourism in the Honduran northern coast -aiming for institutional strengtheniing of governmental entities, at central and local levels, as well as for private development agencies and small investors of the sector. The environmental analysis of the Project for Coastal Sustainable Touristn -based on the socio-economic and biophysical diagniosis for the area of influence and in the proposed objectives and activities for the Project- determines that tle potential negative environlmental impacts to be generated with its operation shall be foreseeable and mitigated. In most cases the impacts shall be positive since the Projects objective is to contribute to planning for the usage of municipal resources that have tourist potctiial -- bearing in mind a strong institutional base. However -for purposes of guaranteeing the permanenice of these positive aspects and facing the needs for evaluating the impacts of the proposed strategies for the Project- the actions to be incorporated in order to mitigate the expected negative impacts emphasize the importance of having an efficient environmental management within the municipality and within -lIlT. The environmental assessment undertaken highlights the need: (i) to strengthen the institutional profile for HIT's Environmental Unit; (ii) to enforce the effective legal environmental framework, specially in regards to environmenital health, quality of waters, quality of municipal effluents, and principles for restoration of historical sites, (iii) to incorporate modules for environmental municipal management in the municipal training program, including the effective legal environmental fi-amework applicable to municipal management; and (iv) to incorporate additional studies that identify unloading sites/municipal contamination (urban) and specially related with the absorption capacity of Trujillo Bay and Tela Bay for tourist attraction; additionally, the identification of existing tropical diseases in Trujillo Bay and its impact/mitigation measures in regards to expected tourist. From the previous, given thie type of activities that they propose to be undertaken in the short-term and its effects in the long-tenn, the Project has been ranked as B, according to ranking criteria for World Bank Projects. In order to maximize the positive environmental impacts of the Project and to mitigate any negative environmental impacts, an Environimental Management Program of the Project will be implemented, the objective being: (i) To contribute to consolidate initial efforts by HIT in the search for municipal tourist resource maximization; and (ii) Institutionial strengthening of HIT's Environmental Unit and Environment/Tourism Technical Units for the Municipalities of Omoa, La Ceiba, Tela, Trujillo, Roatan and Utila providing them with adequate resources to reach an adequate environmental management in the - 73 - execution of tourist Projects. The proposed Environtnenital Management Program has four strategic elements: (i) Restructuring and Repositioning of HIT's Environmental Unit; (ii) Definition of Management Processes and lnstruments; (iii) Training, Coordination and Participation; and (iv) Investment and Resource Management. The Environmental Management Plan is viewed as a transversal element in regards to the different components of the Project; thus, it is an integral part of each one of them. The environmental variable is incorporated by means of two fundamental guidelines: Technical Assistance and Investment for institutional strengthening. The multisectoral nature of the Program shall require the participation of all municipal branches and other local offices for its successful execution; however, the proposed Environmental Management Program is a direct responsibility of HIT's Environmental Unit and of the municipalities' environmenltal /tourism uniits (UTA's). As such it shall coordinate with all municipal branches and entities outside the municipality. Thie Project is congruent with the Bank's Operational Policies on Environmental Assessment, Social Assessment, Cultural Heritage, Involuntary Resettlement, and Rights of Indigenous People. - 74 - Additional Annex 12 Sustainable Coastal Tourism Project on the North Coast of Honduras Socio-Ethnographic Evaluation Executive Summary' Ministry of Tourism Tegucigalpa M.D.C. Septiembre, 2000 ANED - Consultores Introduction 1. The purpose of the Social Assessment of the Notth Coast is to evaluate the different activities related to the development and management of sustainable tourism at municipal and community level, land use, land management and land ownership, from a gender perspective; to identify the main direct beneficiaries of the Project that participate in the preparation and execution of the Project, as well as other stakeholders; to identify the possible negative impact of the proposed activities and to propose methods for their mitigation; to identify the most proper opportunities for teclhical and institutional strengthening to initiate activities of sustainable management of tourism at municipal and communiity level, including the improvement of the balance between the participalion of men and women in the community organizations and local authorities in the municipal sphere to achieve a better planning and execution of the Project; to identify mechanisms preferred by the beneficiaries to patticipate in each of the Project's components; to identify the main links between the natural and cultural heritage, including the following aspects: (i) traditional religious rituals, Garifuna dances, etc. (ii) strong ties between the cultural survival, local control of natural resources, specifically its link witlh the protected areas; and to explore the possibilities of co-financing and synergy with other programs in the inifluenice area. I Tk F".N em d ,k S ,I *nbb an ...I bc HIaF Descripdon of the Area 2. The study is carried out in the area defined as the North Coast of Honduras, from Omoa to the municipal boundary of the Iriona Municipality with the Gracias a Dios department and the island group the Bay Islands. This area includes 4 departments: the municipalities Omoa and Puerto Cort6s in the Cort6s Department; the Atlantida Department, with emphasis on the municipalities of Tela and La Ceiba and the Garifuna villages around them, and secondly the municipalities El Porvenir, La Masica and Jutiapa. The Department Col6n, with emphasis on the municipalities Trujillo and Santa Fe and including the Garifuna villages around them, and secondly dte municipalities Irionia, Limon Balfate, Saba, Tocoa and Sonaguera. - 75 - The Bay Islands, with emphasis on the context of the municipalities Utila and Roatain and secondly the municipalities Santos Guardiola and Guanaja and their communities. Results 3. The four teams of surveyors (one per department, consisting of three techlnical staff per team), carried out 427 surveys under community leaders, small entrepreneurs, local authorities and non-govermnental organizations, as well as 12 focal group exercises with the same actors. In the sample there is a clear predominance of men, almost 2/3 of the sample. The age range best represented in the sample of botlh men and women is between 31-50 years of age. In all age categories mestizo men and women form the majority, with the exception of the people of 61 and older. In that age group tlhere are twice as much Garifuna men as mestizo men, while the difference among women is not significant. Schooling level 4. The prevailing categories of the sample that are also similar in absolute terms are those with more than 12 years of schooling and those between 4-6 years of education. This means those with complete secondary education (a third of the sample) and those with at least 4 years of primary school (another third of the sample). The odter schooling ranges (1-3, 7-9 and I-I I years of schooling make up the last third of the sample). * The data reveal the trend that men and women have an equal clhance to access first cycle of primary education (1-3 years). This trend not only continiues for women, but their opportunities to finish the second cycle, or primary school increase (3-6 years). This trend remains stable and favors women even more in the third cycle (7-9 years) of basic education, traditionally known as the basic education plan. However, when entering the diversified cycle that concludes secondaty school (11-12 years), the curve abruptly drops for women and a propottional inverse growtlh is observed for men, in such a way that only a very small percentage of women finish secondary school. This mneans that for a large percentage of women primary school is the end station. However, once womeni have managed to pass the threshold of 11 years of schooling, finishing secondary school, the likelihood for them to continue their education improves remarkably, although the gap with men is not closed * The mestizo men and women have a preferential access to primary and secondary school compared to the Garifuna and island population. The differences between mestizos and Garifunas are significant towards the end of secondary school and after finislhing secondary school. The differences between Garifunas and islanders are important in tile first cycle of primaly school, and they increase again after the third cycle until after secondamy school. For the majority of the male islanders the access to the first cycle of primary school is limited, and once surpassed that level the third cycle is the end station for the majority. * The differences between mestizo and Garifuna women gain importance after the third educational level or basic education plan. However, the Garifuna women recover and are at the same level as mestizo women when finishing secondaiy school. However, after having finished the secondary school, the gap is extremely big and only a minority continues. The differences between Gaiifuna women and island women are significant from the first cycle and throughout the second cycle of primary school, but in the third cycle the participation increases considerably to disappear completely from the registration towards the end of secondary sclhool. This meanis that as for island men, the third cycle is the end - 76 - station. After finishing secondary school, a veiy smnall propottion continues. Summarized, the trend among mestizo men and women is to finish secondar-y school and they will likely continue their studies, above all the women that finish secondary school. Among the Garifuna men and wotmen the trend is weaker, with a critical moment for men at the end of the third cycle, and for women at the end of primary school. For the island populationi the critical point is during the first cycle, and once this threshold is passed it is repeated at the end of the (lird cycle, whicb for women is definitely the end station. Ethnic representation 5. Half of the sample (51.76 %) conisists of mestizo men and women; the Garifuna men and women form around one third of the sample (35.13 %), while the island men and women make up 11 % of the sample. The foreign residents represent 1.64 % of thie sample. Amnong the women, the mestizo group is better represented while on the contrary among men the Gaiifuna population is better represented. Apart from the Garifuna and island population no other indigenous group is represented in the sample. The Misldto speakers mentioned in the sample are mestizo, (iarifuna, and island people. The sample in general can be considered representative in terms of the proportion between the majority etlnic group (inestizo) in the country and the North Coast, especially regardiog the culturally different population (Garifuna and island populations), the etlnic groups of this region. Prevailing Languages 6. As was to be expected, the prevailing maternal language of the people surveyed is Spanish, followed by Garifuna and Island English. The incidence of foreign languages (standard English, Italian, French and Germnan) as mother tongue is completely irrelevant in the suivey. Spanish is not only the first language of the mestizo population, but also of around 10 % of those who declared to be not mestizo, meaning that Spanisb is the first language of a certain number of GarifuLnlas, among which more men than women. * Gaiifuna has a significant percentage as the second language in importance, apparently adopted as such by mestizo people and in a lesser degree by the island population as a second language in areas of convergence. lsland English as a second language is slightly used as second or third language by mestizo and Garifuna people. There is rather a trend to use standard English as a bridge by the mestizo population (9.37 %) and even by the Garifunas in the convergence areas. The significant percentage and third place of standard English entails that it is the language the mestizo population learns after Garifuna and the one the Garifunas learn after Spanish. However, it is obvious that at community level English is not general among thie mestizo, gatifuna or island population. * Summarized, the typical mestizo person on thie Notrth Coast of Honduras is more likely to speak Garifuna as second language, standard English as tlhird language and if he/she is between 21-30 years of age this person has a schooling level of ninle years or more, and will speak Miskito as fourth language. The typical Garifunla person on the North Coast of Honduras is more likely to speak Spanish as a second language, standard Englisb as a tlird language and if he/she is between 21-30 years of age and has a schooling level of 9 years or more he/she will most likely speak Miskito as fourth language. The typical island person on the North Coast of Honduras, is more likely to speak Spanish as a second language, standard English as a third language, Garifuna as a fourth language and if he/she is between 21-30 years of age and has nine years or more of schooling, it is possible that he/she speaks Miskito as the fifth language. - 77 - Level of Organization 7. A large majority of the people surveyed (67.51%) belong to some organization, mostly local community or regional organizations; in second place religious organizations (33.45%); in third place ethnic organizations and in fourth place environmenital organizations. * The community organizations are neighborhiood organizations, parent's associations, fishermen's associations, associations of retired teachers, savings and loan cooperatives, community banks, rural banks, or the association of tourist guides. The regional community organizations are the associations or transporters, the associations of sport divers, the association of agricultural producers, the association of traditional and non-traditionial exporters and teacher's or professional associations. * In second place are the religious organizationis (33.45 %): the catholic and evangelical churclies. It is noted that there is still a trend for the catholic church to be the biggest one, but the evangelical church is only slightly below the catholic church regarding participation. Third place is taken by the ethnic organizations, OFRANEH and NABILPA. However, they are not equally importanit in the whole region. OFRANEH£ has its main centers in Tela, Santa Fe, Trujillo, La Ceiba, Lim6n and lriona; of minior importance are El Porvenir, La Masica, Jutiapa, Balfate and Bonito Oriental, Saba, Sonaguera, Tocoa, Puerto Cortes and very marginally Omoa. NABILPA has its center in Roatat, no presence is registered in Guanaja and Utila. * The fourth place (10.21 %) is taken by envirotnmental organizations (close season, production of fire wood trees, control of pesticides and herbicides, traditionial fishing methods, protection of the reef, counting turtles, training materials). These environmental organizations consist of all or at least part of the non-governmenital organizations. Finally, a small percentage (3.5%) are members of the chambers of commerce of Tela, Tocoa and La Masica) and the chambers of tourism Tela and Omoa. * The relatively high percentage of organized participation of the people surveyed in different types of initiatives reflects a great potential for concerted effotts, and some kind of experience in management and execution for the common good; bowever, a dtird part of the sample said not to belong to any organization. Generally, the active organized people are members of two to three different organizations, and sometimes even thiree or four. Tlhe vast majority (71.83%) of those that belong to some organization have bad some official post, whicih indicates a strong involvement of many people at one time or anotler regarding the planning and execution of the organization's activities. Health Situation 8. The main healtlh problems are in order of importance: respiratory infections, parasitic infections and HIV/AIDS. Less common are mental disorders, occupational accidents, malaria and dengue. Malnutrition is considered to be a minor problem and even less so alcoholism (0.94 %) or drug addiction (0.94%). Venereal diseases are practically absent according to thie people surveyed. The main source of infornation is the Ministry of Health, followed at some distance by the television, the radio and newspapers. It is obsetved that the people surveyed seem to have a good access to the mass media by television and radio. • The knowledge resulting from personal experiences and from person to person, are less important (together 14.76 %). In the campaigns on HI V/AIDS only half participated. As a consequence the other half lhas remained at the margin of one of the most critical health problems on the North Coast. The massive campaigns consist of talks in primary and secondary schools and the health centers. The talks with the parents and infonnative leaflets are second, third the churches and fourth the NGO's. * The influence of radio, television and newspaper campaign (4.31%) is completely secondary. Separately or jointly, they do they not have the impact that is attributed to them as main sources of -78 - information on HIV/AIDS in the perception of the people. The majority of the funds to finance the HLVIAIDS prevention campaigns, come from the Central Government, more specifically the Ministry of Healdt with a small participation from the Ministry of Education. The muniicipalities' input is minimal, but even lower are the contributions from the NGOs. * The contributions from the church are also marginal, but it should be mentioned that the evangelical churches contribute more than the catlholic church. The ethnic organizations contribute in the same degree as the churches. The occupational accidenis are not well represented in the sample, but the wounds from work instruments are the most common, possibly cutting instruments such as machetes. Paralysis as a consequence of diving without the proper equipment is becoming more important. While the loss of limbs, or intoxication because of herbicides and bunis are less frequent. * In the Department of Cort6s (Puerto Cort6s and Omoa), the sample is almost entirely among the mestizo population and HIV/AIDS as health problem comes first according to the men, while the women think it has increased in absolute tenns, but still comes in third place. The average person who recognizes VlHIAIDS as the main health problem has more than 12 years of schooling. In the Department of Col6n (Lim6n, lIiona, TrLujillo, Balfate, Bonito Oriental, Saba, Sonaguera and Tocoa) the sample has a fair Garifuna representation. In the sample, the mestizo population tlinks HI V/AIDS comes second as health problem, on the other hand (he women think it comes third and that its relative importance also has not increased. However, for Garifuna men and women equally, it is problem number 1. The average schooling of all the people surveyed is 4-6 years. * In the Depaltment of Atlantida (La Ceiba, Tela, El lPorvenir, La Masica and Jutiapa) the sample has a fair Garifuna representation. In the sample the mestizo men are the ones who put HI V/AIDS first as health problem, while according to the women it not only comes third, but also has decreased in relative importance. On the other hand, the Garifuna men consider the problem to be third, opposite to the Garifuna women who not only consider it to be health problem no. 1, but also attribute a higher absolute importance than any of the other groups mentioned. Also in this departmnent the average schooling level of the people surveyed is a minimum of 10- 11 and more likely more than 12 years. * In the Department of the Bay Islands (Roatan, Jose Santos Guardiola, Guanaja and Utila), mestizo men and women as well as Garifuna men and women put I-IlV/AIDS in first place as health problem. On the other hand, for the island men and women it doesn't only come third, but also its absolute importance is much less. In this department the schooling level of the people surveyed is a minimum of 7-9 years and more likely more than 12 years of schoolinig. Apparcntly, more schooling helps to recognize the rate of the disease, at least among the mestizo men and women but it is not the key point, as Garifuna men and women in Colon have the highest schooling level of the sample. It rather seems that there are other mechaniisms involved. Land ownership and related matters 9. Around half of the sample thought that the neighbors have land, but also a third part without land was registered. The majority of the landowners have full land titles and around a third own has the usufruct of the land. Regarding the location of the lands, the large majority of the owners have land on the beach (or mountain) in combination with any of the following locations: valley, hillside or urban plots. * Small landowners are the nonn, so there are few mcdium owners, and the presence of large owners is minimum (2.43 %). However, this could be misleading given that the few big landowners together could have more than the others. Therefore it is necessary to have an approximation of the size of each of these categories. The vast majolity of the land on1 beaches, forest, riverbanks and urban plots are private, in the forest for example, the muniicipalities have not more than 2.25 %. The buffer zones are the only category of which half is still owned by the municipalities. - 79 - * A minimal part of the lands is found in the core of the protected areas, above all in Atlantida and Colon; this figure practically doesn't exist in Cortes and the Bay Islands. The male owners are the majority both regarding full ownerslhip as usufruct of the land. Amrong women full ownership is a little better represented. Among the mestizo owners, as well as among the Garifunas, usufruct is slightly higher. The Garifunas have more usufiuct than the mestizo population. Among the island population full ownership is more common. Land use 10. The vast majority of the land is used for agriculture, combined with some other activity that could be a small business, rent, houses, fishing and cattle farming. A minority declared to have land in protected areas or natural reserves, also a smaller percentage registered to have land invaded by illegal residents. More than half of the land is cultivated by the owner and their families; around a third hires salaried workers and a minority involves family members. More than half of the producers cultivate year-round and less than a third cultivate in certain seasons. * Tow thirds of the agricultural producers cultivate mainly yam, followed in importance by basic grains (corn, beans and rice). All producers combine the cultivation of yam and basic grains with some paprika/pepper and tomatoes and even less with cawrots, cucumber and squash. The majority of the producers cultivate bananas, plantain, mangos, citius fruits and pineapple, combined with lichees, coconut, cacao and watermnelon. Additional]y they plant avocados, nances, papaya, sugarcane, apples, guanabanas, cashew, zapote, pashiotn fruit and rambutan. At a small scale are cultivated cacao, African palm and coffee. The variety of crops is large and covers almost every spectrum of agricultural products mostly consumed in the countly. i More than half of the producers plant for own consumption and sale, while the rest says to only plant for ownl consumption. Those who do market their products supply the local markets (80,51%), and less the regional market (22.88 %). Only a few export a portion of their production, and a very small percentage (0.85%) exports their wbole production. Among those who sell to regional and local markets, a minority (3.39 %) supplies to hotels and restaurants. This means that the large part of the agricultural products the hotels and restaurants use do not come directly from the producers, but possibly through intermediaries in tlie local and regional markets. The agricultural producers of the North coast mainly satisfy their owni needs of agricultural products, but produce sufficient suiplus to supply local and regional markets. Labor II. More than the majority of the landowners cultivates with family members; a third hires salaried workers, while a very small part cultivates with extended family. In the region the payment is generally higher than or equal to the minimum wage. However, it is still significant that a fifth of the informants said the pay is less than minimum wage. The most common payment is weekly payment, the rest receives two-weekly payments or montlhly paymenits (25.33). Daily wage is used very little. Regarding the equity of the salary the opinions differ; while more thani half of the sample thinks payment is equal for men and women, the other half thinks men are paid better. Also ihe opinions regarding the duration of contracts are divided, around half thinks they are the same for men anid women, while the other half thinks the contracts for men are longer. The last two observations reflect that regarding payment and contracts thie traditional gender differences still prevail in the region. Existence and use of forest - 80 - 12. Less than half of the sample said to have forest in the community or on their land and the opinion prevails that there is 'little' forest. This subjective category could not be translated in absolute terms (km or ha) by the surveyors. The majority of the group that answered positively regarding the existence of forest, used the forest and although this exploitation involves more than one activity, the most important activity is related to the exploitation of wood. * The extraction of firewood is high (45.25%) but most important is the production of wood for local consumption (54.74%). External sale is not important, not more than 12.00 % of the wood, in other words the other 88 % is used locally. This means that the cutting and processing is most likely traditional and is used for building houses, small boats and fumiture. The group that said to use the forest, uses the forest as a place for recreation and small-scale hunting, which was independent from recreational activities. This could indicate that in the influence area, 'hunting' at best is not considered a, sport but a contribution to the family diet. However, a light tendency is noticed in using 'hunting' and 'recreation' as synonyms. * The characterization of the forest as the generator of water seems to be little understood and was only mentioned by the mestizo population. The forest is used to extract wood above all by Garifunas, and only very little by mestizo population. Both use the forest equally for recreation and for wood for local consumption. Only the Garifunas use it for small-scale hunting. Only the mestizo population uses the forest for export wood, also on a small scale. Available Tourist Infrastructure 13. The main services in the regions are eateries and hostels, as well as hotels and restaurants. There is a clear differentiation between an eatery and a restaurant and between a hostel and hotel, which without any doubt has to do with the kind of facilities and prices. The little availability of boats and bus tenninals make clear that there are not enough. * The position of the airports in the sample reveal that the air transportation does not have impact regarding tourism. However, there are three interniational aiiports in the region, as well as three regional or local airports. This also indicates that they are not considered to be decisive for the influx of tourists, maybe because of the kind of tourists, generally using land transportation. The tourist infonmation centers also seem to be concentrated in very few places and probably without coverage outside of the more urbanized areas. The other services that make up the quality of the tourist product are scarcely represented or are not mentioned. This all reflects the prevalence of a low impact tourist development on the North Coast and little investment in this sector. * The green areas, the parking areas and tourist information centers seem to be packages according to the people for which as a whole they do have some impoltance. The sanitary services and public showers on the beach are preferred above those of the central square or park, but its usefulness for tourists is still not acknowledged sufficiently. * Camping facilities are associated with the visitor's center in protected areas, but this tourist service is very little developed. Stables for horse-riding are rare and the service that is offered by the decompression room is not considered to be instrumental for tourism. Shortly, the tourist offer comes down to basic services (eateries and hostels and restaurants and hotels). On the beaches, the main resource of the region, there are generally no basic installations for the tourist to use them. The tourist information centers are scarce and the prevailing means of transportation is over land. The visitor's centers in the protected areas are or non-existent or are not considered to be instrumental to attract tourists. In other words, the tourist development of the region is of vety low impact and doesn't offer alternatives, nor is it prepared to satisfy a visitor with certain demands. - 81 - Tourist Activities or r elated activities 14. The majority of the region's inhlabitants work directly in a tourist activity or tourist related activity. The vast majority of these people work in this sector year-round and the rest only part of the year. The main activity is hotels and restaurants followed by maritime transportation and urban and interurban transportation. A third of those that work in the industry provide guide services. * Around a third of the activities are related to sport diving. Non-traditional services as renting bikes and renting horses seem to be expanding. The participation of entrepreneurs as service providers of repairs, food and materials in hotels and restaurants is of little impact. Apparently the hotels and restaurants are provided by other resources, not necessarily local. * The social centers or discotheques practically have no impact in the sector. This indicates that the potential offered by nighttime entettainment is being little exploited for tourist purposes, or that the tourists that visit the area have other interests. The guides mainly divide their activities between visits to the city followed by visits to archaeological sites and museums. However, there is not one archaeological site in the region prepared for visits, for which these activities should have devastating effects on the sites. There are three museums: San Pedro, Omoa and Roatan, which apparently receive quite some visitors. * The tours that we would call ecological or adventure tours (bird watching, marine flora and fauna and rafting) absorb together a third part of these activities. Summaiized the guide activities reflect three already traditional directions in tourism: the city as tourist business center; archaeological sites and museums as center of cultural tourism and activities related with nature or ecological tourism. - It is important to analyze more in detail the potential cultural tourism proves to have, at this moment even more than ecological tourism in the region. Interesfing is one element completely absent in the demand for guide services and that is cultural tourism of living cultures (artistic shows, culinary art, musical instruments and traditional uses) in the region. The norm regarding the production of crafts is to combine two or more different kinds of raw material. The most common materials are wood and bamboo, palm, corral, and turtle-shell followed by materials derived from other shells and conch. The processing of clay is much less important, as well as the products made of rattan. It should be pointed out that a representative percentage (26.83%) of the crafts production uses raw materials that mean a deterioration of marine life (corral and turtle-shells), as turtles are in danger of extinction. Nature of Tourist Enterprises and Souirce of Financing 15. Almost two thirds of the enterprises are small, for which it is believed they are family businesses with a reduced employment capacity. The expansion of these businesses is gradual and there is not much variation observed over the last decade. In other words, there are no significant changes, revealing the limited growth of the sector. The origin of the investment for these enterprises is basically completely local individual capital with a third coming from foreign individual capital. Only a fifth of the enterprises use bank loans. This indicates that the banks do not form a feasible altemative as an investment source. * The contribution of seed capital for these enterprises by the local or central government or NGOs is not significant. This reflects the lack of funds for investmenit of the local governments, given that they recognize the potential of tourism. The NGOs on the other hiand have a certain fear to become part of the sector. * Summarized, it is very interesting to see the prevalenice of small enterprises together with an almost absolute local private participation in financing, whicb could be one of the reasons for the slow growth of the sector. That despite these conditions one fourth of the enterprises are more than 10 years in business and that another fourth is in business for 5-10 years indicates the sector is profitable, but the - 82 - conservative growth also reflects that there is little space for taking risks. Also, these small entrepreneurs seem to have altemnative income sources, probably agticulture is one of the most important ones. Needs of Investment in Sustainable Tourism 16. The urgent need for a basic infrastructure is shown here overwhelmingly. In the perception of the people it is a prerequisite to get into business. Despite the emphasis on basic services, there is also a rather precise notion that training of staff and promotion are key to the success of tourism. At the same time there is more and more recognitioni of the importance ol the production of crafts, however no relation has been made between the raw material and the sustainability and protection of the environmeint. * It is significant that there is little notion of the importance of cultural tourism, despite the fact that museum are instrumental for toulist guides. Only vely marginally there is a recognition of the importance of museums for the tourist potential. Indeed, the preparation of archaeological sites for visitors is not mentioned. Training as such is in absolute tenns the most felt need. This underlines the little professionalism regarding tourism in large areas of the North Coast and reveals the still existent need in regions where there is already an advanced tourist development such as the Bay Islands. Training with Environmental Approach 17. There is a big vacuum of traininlg with an environmental approach which means that to find a balance between the use of the natural resources for tourism and its conservation, a lot of work is to be done. The majority of the training activities are related to the conservation of the natural resources and sustainable small-scale production, but it is clear that the management and conservation of water sources comes first. The training activities directed at tourisn are few (tourist guide, sport diver, management national monuments, archaeological site/area, museums) and has low coverage. Thus it is to be expected that there is a widespread lack of knowledge regarding conservation and the management of the cultural patrimony for tourist use. The management of a protected area does not necessarily have to be for tourist purposes, which also applies to the first aid training for divers. Therefore these two categories are intermediate categories, with a certain relevance for tourism. Clean water (not pollution) is important for the general health of the population, but also for wild life in general withl subsequent purposes of exploitation. However, the not pollution of water is a contribution to a better quality of life, and is tlherefore important for tourism. Training needed for sustainable Tourism 18. When asked about training the majority of people surveyed responded - touiism in general - which is very ambiguous. It reveals a general lack of knowledge about the sector that makes it hard to exactly define the need. Thle most felt need regarding training is related to the relation with the tourist (client service, human relations, leaming a foreigni language, guide services and awareness). The management of hotels and restaurants seem to be more important in this context, and without any doubt it is the area where most experience is concentrated as these services prevail in the sector. Little thought is given to the diversification of the tourist supply related to nature (ecotourism, adventure, diving). In the case of diving, the question rises if the little importance given to diving means that the need is more or less covered or that on the main land no importance is given to this activity. Likewise, little thought is given to the diversification of the tourist supply regarding cultural tourism. This means that although there is an assumption that cultural, material and other expressions have tourist potential, it is not clear how to - 83 - prepare it and market it. Infrastructure necessary for a Tourist business 19. The comparison between the priority that small entreprenleurs give to the tourist infrastructure and the availability of services reveals a gap in certain categories. Despite the fact that there is a certain offer of hotels available, the small entrepreneurs still consider the existence of hotels to be a first necessity. This could indicate that they assume that with more hotels they could attract more tourists. On the other hand, the second priority (public bathrooms and showers on the beaches) of the entrepreneurs means their discontent with the reality. In a lesser degree, the same could be said of the third priority (tourist information centers). * Regarding hostels (fourth priority), there is quite somiie offer, as also is the case witlh the restaurants. There is a large offer of eateries, although mentioned as the sixth priority by the entrepreneurs. The priorities and availability of parking areas, bus terminals and green areas is pretty much balanced. The availability of visitor's centers in protected areas is not equivalent to the priority given, but is not very much below it. The availability of boats is practically twice as much as the priority given. Thus, according to the entrepreneurs, there are more than enough boats available. * It is remarkable that the priority given to camp sites equals the priority given to this activity which seem to indicate that the entrepreneurs still do not consider camp sites to have a lot of potential. The availability of public bathrooms in the central park is only a little bit less than the demand the entrepreneurs indicate, for which it can be concluded that there are not more of these facilities because there has been no request for them. On the contrany, the availability of facilities for maintenance of diving equipment seems higlher than the demand, but maybe it is because these services are in certain areas. O Regarding stables for horse riding there is a balanced relation between the demand and the offer; another resource that is not considered to have big potential. Another balanced relation between the availability and the demand is those of decompression chambers. Here one would think that the majority of the small entrepreneurs on the North Coast are not offering diving services and given that this activity is focussed on the Bay Islands it seems that the availability of decompression chambers ate the moment is sufficient. * Further priorities include basic infrastructure services (electricity, diuiking water, sewerage, roads and streets and latrines). Although the availability of these services provides a comparative advantage for these communities in developing tourism, these cannot be considered tourist infrastructure, but rather constitute basic public setvices and infrastructure. The mentioninig of basic infrastructure in the opinion of a few communities sampled is an indicationi that in certain communities of the sample the main difficulty is the lack of more basic services for the local inhabitants. Finally, priorities 17 and 18 on the list of those recorded, were the availability of ailports and public plazas, respectively. None of these was mentioned by the small entrepreneurs. It is interesting to see that airports are not considered to be instrumental for tourism, maybe due to that the majority of the destinations on the North Coast can be reached by land, and in the case of the Bay Islands, transportation by boat is an altermative. This would indicate, in tum, that tourism on the North Coast is above all national, or,if international, then with little economic impact. Conclusions * The majority of inhabitants of the region work directly in activities related in one way or another to tourism. * The great majority of these people work in this capacity all year long, while the rest of the population is - 84 - works in the sector only part of the year. * The principal activities are concenitrated in hotels and restaurants, followed by services in the marine transport sector and in urban and interurban transport. * The services of tour guide constitute one third of t[le employment in tourism related activities. * About one fourth of the activities revolved around recreational diving. * Non-traditional services like bicycle rental and horse back riding are on the increase. * Participation of service enterptises, in the provision of repairs and maintenance, food and materials to hotels and restaurants is not significant. Hotels and restaurants in the region appear to be provided by services that are not local. * There are hardly any community social centers or discoteques in the region. This suggests that there is either a significant, unexploited potential for development of nightlife/discos, eveniing entertainment, or that the tourism that is prevalent in the region has other interests. * Tour guides divide their activities along two principle routes: city tours and visits to archaeological sites and museums. Nevertheless, these is not one single archaeological site in the region that is adequately prepared for such visits, so that the potential for significant degradation of the sites exists. There are three museums in the region, in: (i) San Iledro Sula, (ii) Omoa, and (iii) Roatan, which are sought out by visitors. * Ecological or adventures tours (e.g., bird watching, rafting, underwater viewing) together absorb one fourth of tour guide activities. i In summary, tour guide activities reflect tlhree vety traditional avenues of development in this subsector: (i) the city as a businiess center, (i) archaeological sites and museums as foci for cultural tourism revolving around thie built enviroonmnent or patrimony, and (iii) activities related to nature and adventure tourism. i It is important to note the attractioni of the built environiment for culture-based tourism, whose potential is thought to be higher at present than even that of nature-based tourism. * Notable for its complete absence, is the demand for cultural tour guide services focusing on living cultural resources (e.g., altistic presentationis, cuisines, traditional musical instruments, etc.) in the region. Tfhe nonn for production of arts and crafts in the region is the combined use of two or more distinct raw materials. * The most common raw materials are wood and bamboo, palm, coral, tortoise shell, followed by conch and smaller snail shells. Clay based arts and crafts (pottery) are much less important, as are those made from fiber or rattan. * It is important to note that a significant portion of the arts and crafts (26.83%) involve processing of raw materials which have a negative impact on marine life (e.g, coral and tortoise shell). In The latter case, this has a direct impact on1 an endangered species, the loggerhead marine tuLtle. - 85 - Additional Annex 13 Sustainable Coastal Tourism Project Indigenous Peoples Development Plan (IPDP) Total US$ 1.163 million (with US$2.5 million in complementary activities) Introduction and Background Linguistic Profile of the Honduran North Coast 1. The Central-American geographic region, in anthropological and linguistic tetms, is recognized as the point of convergence between the Mesoamerican and the Intermediate cultural regions. It is precisely in Honduran territory where the division between the indigenous people formerly belonging to the Mesoamerican cultures and the Lower Central American cultures occurred. Geographically, the Mesoamerican descendants are settled in the nortlhwest of Honduras while the cultures fonnerly belonging to the Lower Central-America, where the Chibchas traditions dominated, are located in the eastern region (Hasemann 1991 contains vast infonnation on dichotomy of the region). 2. The proposed division that separates the above mentionied cultural areas is located along the so-called Honduran Depression, following the course of the Ullua and Comayagua iivers and extends beyond the Gulf of Fonseca to the coastal plains of Nicaragua and ending in the Nicoya peninsula of Costa Rica. The eastern region of Nicaragua and Honduras is extensively dominated by lower mountains that gradually and abruptly give way to the Atlantic coast. The prevailinig ethniic languages on1 the Northern Coast of Honduras are Misidto and Pech. The Miskito language is mainly spoken in the Gracias a Dios department and Garifuna (which includes the cities of Colon, Atlantida, Cortes and Bay Islands). In addition, some areas of the Gracias a Dios department and Colon also speak the Pech. Both of the languages, to some extent, are considered written languages. Undoubtedly, Pech is the most endangered language in the Northern Region which is the result of the division of the original territoiy into isolated settlements separated by relatively large distances. 3. The traditional region kInown as the Garifunas extends along the Northern Coast over the departments of Colon, Atlantida, Cortes, the Bay Islands and in a small part of Gracias a Dios. The ethnic population is however concentrated in Colon and Atlantida, with smaller communities in three otlher departments, as well as in the two main urban centers of the country, Tegucigalpa and San Pedro Sula. The departments of Atlantida and Cottes are well-developed centers with growing urbanization. The Bay Islands counts with some of the best socio-economic indicators and a strong tourist industry. However, this progress can be deceiving since most of the Garifuna and afro-descendent communities are not benefiting from this development and are still living in poverty. Demography 4. The Project Area, which extends from Omoa in the westerni-most part of tle North Coast to the community of Iriona in the east, on the border with Gracias a Dios, includes the three Departments of Cortes, Atlantida and Colon. Attempts to quantify the indigenous and etlhic population of Honduras have been only partially successful. The national census of 1988 significantly undercounted the indigenous population of Honduras. Statisticians currently agree, lhowever, that the Miskito and Garifuna populations - 86 - constitute the majority of ethniic peoples. 5. Within the LIL Project area, the main ethlnic/inidigenious group is the Garifuna, with a population estimated at around 100,000 members. In Gracias a Dios, just to the east of the Project area, the Miskito population is estimated at around 30,000-35,000. The Bay Islanids Creole population is estimated at 25,000 inhabitants. Both the Garifunas and the Miskitos have expanided their settletments to urban centers outside of their traditional tenitory. Also, botl have moved across national borders, the Garifunas towards Guatemala and Belize and the Miskitos to Nicaragua. There is no precise data on the numbers who have migrated to the U.S. More than a decade ago, it was estimated that there were between 75,000 to 100,000 diaspora Garifunas (from Honiduras, Belize and Guatemala) in the U.S.A. (Gonzalez, 1988: pages 177 and 180). It is clear, however, that the indigenous population of Honduras is a minority compared to the country's ladino/mestizo population on the North Coast, estimated at nearly 1.5 million (Social Assessment, Aned Consultores, 2000). Land Tenure Situiation on the Northern, Atlantic Coast 6. The tenure situation along the Northern, Atlantic Coast is very dynamic. Land regularization in general is moving forward, however not fast enough to keep pace with demographic movements and demand by indigenous groups for formal title to lands in areas increasingly subject to encroachmenit by third parties and with overlapping claims to public lands. Indigenous communities, their organizations and federations, are extremely concenied that counter claims are being made on their traditional territories, especially in relation to expansion by urban municipalities on the coast, and the encouragement of individual members of a community to sell lainds which they occupy but whiclh are traditionally ownled by the community, for development. Because of the uncertain state of land owniership in areas of high tourism potential on the North Coast, and the need to address these particularly in the case of indigenous communities whose titles and land claims are, in many cases still pending, it is essential that the tourism Project include support for the resolution of land tenure issues, includinig communal titling of lands and allocation of land/resource use rights. 7. There are a number of protected areas alonig the Northenl Coast which overlap with the Garifuna communities and other traditional indigenous territories. Some 28 Garifuna communities distributed along the Atlantic coast between Cortes, Gracias a Dios, (hle Bay Islands and Cayos Cochinos, overlap with protected areas in the Protected Areas (SINAPH) system of Honduras. There are 9 communities whose claims are still pending with INA, due to issues of overlap with the protected areas system. The current draft of the niew Forestry Law (which includes provisions related to protected areas and wildlife) introduces the concept of the "Catalogue of Forest Patrimnoniy". This concept prohibits the registration and titling of national forest lands with forest-quality soils to third parties, including indigenous communities, unless the lands are utilized for agricultural purposes. T'herefore, it is extremely important to resolve indigenous land claims in the affected areas prior to registerinig thiem as protected areas or national forests under the Forestry Catalogue. 8. The current government in IHlonduras has had an active program to recognize indigenous (including Garifuna) communal lanid rights as enshrined in the Constitution, the Law on Agricultural Modernization and Development, the Agrarian Reformn Law and, most recently, in the context of the ILO Convention 169 on Indigenous Rights. In addition to the Garifuna land titling initiative witlh INA, the GOH is implementing a land administration modernization program within the framework of the Rural Land Management Project (PAAR). Since 1997, this program has been installing and establishing a property registry system based on a folio real (physical and legal information database). The govern-ment has also been placing national forest areas under management through a participatory process of land-use planning, complemented by a program - 87 - of technical assistance to upland producers in the forest areas. A related Project to strengthen the SINAPH under the supervision of COHDEFOR (the GEF-financed Biodiversity in Priority Areas Project or PROBAP), is establishing the protected areas system in the Mosquitia with the support of local stakeholders organized in Regional and Local Protected Area Councils (CORAP y COLAP). 9. PAAR is supporting INA's titling of 11 Tolupatn communities in the Department of Yoro, just South of the Project area, as part of the natural resource management component. CulTently, the use of a multi-institutional and participatory methodology has shown positive results. This experience provides a basis for analyzing and adjudicating indigenous communal lands in other parts of the country, such as the North Coast, where land administratiol will have to proceed more quickly to keep pace with demographic trends and indigenous rights issues, particularly in the context of tourism development. Because of the importance of indigenous land issues to the success of PROBAP in establishing a viable system of Protected Areas, COHDEFOR has agreed to collaborate with the IHT in the implementation of the Sustainable Tourism Project, to provide TA and financing to address the issue of indigenous land rights in the Project area. 10. In order to prepare an Indigenous People's Development Plan directed at the needs of indigenous and Garifuna people, and to ensure overall compatibility with other ongoing/fortlhcominig Bank operations, the Sustainable Coastal Tourism Project (SCTP) carried out extensive social and legal analyses during Project preparation. Field work and secondary data analysis as well as consultations with civil society and indigenous organizations were part of these operations. Indigenous and Garifuna leaders from three etlnic groups were consulted, as well as relevant public institutionis (Secretaria de Gobernaci6n y Justicia, Secretaria de Salud, Secretaria de Turismo, Secreta via de Agricutltura y Ganaderia, Secretaria de Recursos Naturales, among others. The participation of civil society and key stakeholders was ensured through the involvement of local leaders and NGOs to conduct workshops, lead discussions and focus group sessions. The IPDP is consistent with the results of these consultations and with the World Bank's policy on Indigenous Peoples, as mandated in Operational Directive 4.20. In addition to the Plan, detailed background studies, including tle Social Assessment, are available in the Project Files. 11. The Social Assessment and related consultations revealed an emerging interest among Garifuna communities, as well as Miskito, in developing tourism enterprises. OFRANEH, a federation that represents the largest number of Garifuna communities along the Coast, has developed a proposal to develop a system of nature/culture trails that would be complemented with lodging facilities, restaurants, tour guides, music, dance, arts and crafts, and otler cultural/recreational activities. In addition, individual communities are developing smaller proposals that would be eligible for support under the SCTP. Given the comparative advantage that tle rich cultural beritage of the Garifuna bestows on Honduras to develop a unique tourism niche, these proposals have the potential to both ensure employment increase and income redistribution in the region and a value-added for thie development of more traditional enterprises. Support for these activities and the necessaiy business skills development to ensure access of local communities to opportunities in the tourism sector form part of the Indigenous People's Development Plan HI V/AIDS 12. Honduras canies a disproportionate burden of the HIlV/AIDS epidemic in Latin America, with almost 60% of all cases in the Central American region reported among Hondurans. Model projections based on official data estimate that at least 40,000 people are infected with HIV in Honduras. UNAIDS precis on HIV/AIDS situation in Honduras, June 2001 Until recently, the epidemic has been concentrated in the Sula valley and the central development corridor. I lowever, there are indications that rates are also increasing in other urban centers on the North Coast (Puerto Cortes, Tela and La Ceiba) as well as more - 88 - rural areas. ibid According to the social assessment, the general population sampled in the Project area, including mestizo and island populations, identified the main respiratory infections and parasitic infections as the main health problems, followed immediately by HIV/AIDS. Among both Garifuna men and women, however, HIV/AIDS was considered to be the main healtlh problem, regardless of educational level. In fact, Ministry of Health data indicate that the Garifuna have one of the highest rates of iinfection in the country, due largely to migration pattems, sexual practices and low perceived risk. Some information is extremely alarming. In the village of Corozal, close to La Ceiba, an estimated 25 % of the population was reported affected with HIV (Sancbez 1995:20). 13. The lead agency in the national response to HI V/AIDS in Hoonduras is the Ministry of Health. The Honduran Department of STI/HIV/AIDS/TB is one of the largest in Latin America (currently 35 staff members), with a long history of active involvement in epidemiological surveillance, research, and prevention activities. Currently approximately 60% of the Department's annual budget is provided through grants from USAID, witlh other bilateral and multilateral donors providing both financial and technical assistance. ibid These include Swedish SIDA, GTZ, the European Union, PAHO/WHO, UNFPA, UNICEF, UNDP and UNAIDS. The Bank has not becn a player in this arena in Honduras, however a number of initiatives are planned, including the provision of seed funds under the Sustainable Coastal Tourism Project, to focus the public's attention on the AIDS problem in general, and to address at risk populations, such as those on the North Coast. The Bank is an active member of a recently formed Thematic Group on HIV/AIDS, convened by the Ministry of Health, and is working closely with UNAIDS to help mobilize support from the donor community through an AIDS Trust Fund. The Fund will help coordinate assistance to at-tisk communities, such as the Garifuna, through HIV/AIDS awareness campaigns, social marketing of condoms and otlher prophylaxis, counseling to AIDS victims and their families, and ultimately, treatment. In light of the growinig AIDS epidemic in Honduras, the Bank is now actively exploring the development of a separate LIL dedicated to AIDS prevention and treatment in Honduras, in coordination with UNAIDS and the MinistLy of Hlealth. Principal Components and Areas of Action. 14. The goal of this IPDP is to ensure benefits to indigenous communities within the Project area, and to mitigate any potential negative impacts which may result from the future growth of tourism, by addressing issues of equity and sustainability of tourism benefits and their associated costs. The activities outlined in this IPDP are consistent with three main principles of development: (i) land/livelihood security; (ii) sustainability; and (iii) equity and development in a healtlhy environment. These principles are supported by activities in four main categories: (i) Recognition and protection of indigenous land rights (ii) Participation and strengthening of indigenous communities through capacity building activities; (iii) Promotion of sustainable tourism activities through small matching grants; and (iv) HIV/AIDS Awareness and Prevention Campaign in the Project area. 15. Given the proposed areas of intervention and tle cross-cutting issues involving indigenous issues, it is expected that this IPDP would be implemented th1rough more than one operation. Therefore the activities described below would be supported not onily by the SCTP but through a series of related Bank-financed Projects (e.g., PROBAP, PAAR I and the proposed PAAR ll), and complementary activities by the Government of Honduras. The objectives under each component of the IPDP are stated; these are followed by a description of the activities to be carried out, and the costs associated. A table summarizing thie activities, the agencies responsible, monitorable indicators and time frame for carrying out these activities are included in the IPDP matrix at the end of this narrative. - 89 - Components of the IPDP 1. Land Tenure Security (US$ 2.72 million) The specific objectives of this component are to support land tenure security through the recognition and protection of commnunities and ethnic groups lands. 16. The following activities will support this objective: (i) Land Titling Diagnostic Study ($500,000) on the North Coast, to be financed by PROBAP and GOH (the GEF Biodiversity in Protected Areas Project implemented by AFE/COHDEFOR); (ii) support to the newly established Intersectoral Committee on Indigenous Land Rights to, facilitate conflict resolution involving land tenure and land security, and to integrate this experience into the development of a Sustainable Coastal Tourism Strategy for the Northern Coast ($124,000 from the SCTP), (iii) regularization and titling of Indigenous communities in the SCT Project area (support to title 9 Garifuna communities whose claims are presently before the Instituto Nacional Agraria will be financed by the SCTP ($103,000). All of these activities will be based on the rights recognized under ILO Convention 169, ratified by the Honduran Congress in 1995, the Honduran constitution, and on claims made by indigenous and Garifluna communities based on ancestral lands and use rights. Through the Land Titling Diagnostic and the follow-up action to title outstanding communal land claims by Garifuna communities in the Project area, significant, but not all, issues of land security may be addressed in parallel with the development of tourism opportunities for communities and small scale entrepreneurs. A consensused plan of action among key stakeholders with respect to the most contentious issues will be identified and advanced by the Comite Intersectorial. In addition, best practice in the preparation and documentation of titles through participatoly mapping and demarcation of lands by the communities/stakeholders involved, and precedents in the resolution of disputes in areas where adjudication is required to resolve conflicting claims to lands will be documented through case studies involving a representative sample of land tenure situations on the North Coast. (iv) Under the proposed PAAR 11 Project, $2 million would be allocated for the regulaiization and titling of land claims throughout the Depaltment of Colon, in the beati of thle Project Area. This will include claims by non-indigenous and ladino/mestizo populations in the region. I. Capacity Buildino and Small Scale Tourism Enterprise Development (US$ 0.836 million) The specific objectives of this component are to build capacity fbr participatory planning and community- based sustainahle tourism enterprise development through training in social, administrative, technical, andfinancial aspects. 17. Tlle following actions are included: (i) technical training in eco-tourism feasibility and business plan development, marketing and destinationl managemenit, natural and cultural coastal resources management, and certification of sustainability of tour operationis to preserve cultural and enviromnental values in the region; (ii) matching-grants to foster innovationi and entrepreneurshfip among indigenous and etlhic communities in the development of sustainiable tourism enterprise, based on natural and cultural resources management in the region. Ill. HlV/AlDS Awareness and Prevention (US$ 76,000 and additional in-kind support) The objective of this component is to focus attention on t.he growing threat of HI V/AIDS among Garifuna communities in the Project area and to mobilize support/Jbr awareness, prevention and treatment among - 90 - at-risk populations. 18. The following actions are included: (i) Suppoit to NGOs and local governance institutions working to promote HIV/AIDS awareness and prevention campaigns among at risk populations ($76,000 under the LIL); (ii) research on1 the epidemiology of HIV/AIDS among at risk indigenous communities on the Nortl Coast involving studies of migration patterns and sexual behavior, in a format consistent witlh local cultural parameters and modes, and desigined jointly with the Ministhy of Health, etlnic organizations, NGOs and municipalities in target locations (with in-kind support from key stakeholders); (iii) mobilization and coordination of investment funds for HIV/AIDS awareness, prevention, counseling and treatment in target populations, including those at risk communities on the Northl Coast. Among the potential sources of financing are a commitment from USAID (up to $1,000,000 over three years targeted at Garifuna and other high risk populations), UNAIDS, UNDP and Bank-finanicing under a LIL. Development of this national program will require coordination between the Ministry of Health, the Donors Tliematic Group on HIV/AIDS, the National AIDS Commission and relevant national and local organizations. - 91 - INDIGENOUS PEOPLES' DEVELOPMENT PLAN HONDURAS SUSTAINABLE COASTAL TOURISM PROJECT COMPONENT ACTIVITY INSTITUTION COST COMPLETION INDICATORS (PROJECT) DATE 1. Land Tenure 1. Maintain INA, None ongoing Regular meetings Security lntersectoral COI lDEFOR, of Cl Conmmittee Ministry of (Cl) to promote and gain Interior, Public consensus on a strategic Prosecutor, policy framework and Ministry of action plan for land Justice, SERNA, security, IHT, OFRANEH, titling and adjudication ODECO, of indigenous lands, Municipalities) including communal holdings in the Project area. 2. Passing of an INA None August 2001 Executive Decree executive decree published formalizing Cl, its constituency, mandate and govemance arrangements 3. Carrying out a land COI-IDEFOR $500K August 2001 - Contract let and tenure diagnostic and (PROBAP) September 2002 funds disbursed preparation of titles INA across a representative sample of indigenous land holdings (Garifuna and Miskito) on the North Coast 4. Present final INA None September 2002 Report submitted; diagnostic report to Cl minutes of Comnite and IDA Intersectorial 5. Develop a INA/Cl $124 K Throughout LT Strategy available participatomy strategy (SCT LIL) diagnostic and for resolving conflicts Year I of LIL and securing land implementation tenure in indigenous comimunities in the Project area; incorporate into Sustainable Tourism Strategy for Nolth Coast 6. Title 9 Garifuna INA (SCT LIL) $104 K By end of SCT Titles prepared for coBmnunities in Project COHDEFOR LIL issuance Area - 92 - 7. Carry out a legal INA (PAAR 1) $1 million By end of 2003 Cadastres cadastre and establish a Municipalities, available in folio real for Colon Communuities municipal records; titles documented in Land Registry 8. Adjudicate and title INA ( PAAR 2) $1 million By end of 2004 Cadastres indigenous holdings in available in Atlantida either municipal record; individually or titles documented comumunally, as agreed in Land Registry by the indigenous comnuruities concemed; expanding existing commnunal titles if this is warranted 11. Capacity 1. Design and deliver lIlT (SCT LIL) $76.8 K Throughout LIL 25 % of clients Building for micro and small trained are from cultural and business enterprise indigenous natural resources training in select communities in management and tourism market Project area Small Scale segments focusing on Tourism opportunities in culture Enterprise and coastal resource Development based tourism on the North Coast 2. Creation of lilT (SCT LIL) $198.4 K Years 2 and 3 of Proposals prepared Indigenous Peoples LIL for financing Small Business and/or submission Program, and provision to Innovation of TA for Eco-tourismn Matching Grants development and Subproject business plan preparation; assistance in securing funding and business incubation 3. Inlovation lIlT (LIL) $561 K Years 2 and 3 of At least 30 concept Matching Grants LIL development facility established in a grants and 7 3:1 Match for eligible Innovation indigenous Matching Grants commiiunities, NGOs awarded and small scale entrepreneurs - 93 - 111. 11W/AIDS 1. Maintain Min. of 11ealth None ongoing Regular reports of Awareness, institutional Themnatic Group meetings Prevention, arrangements for on HIV/AIDS Treatment donor coordination in support of national HIV/AIDS strategy implementation 2. Mobilization of NGO lIlT $76.8 K January 2002 Awareness/prevent and other local support Min. of Healtlh, ion campaigns for campaigns in AMI-ON, NGOs carried out in at HIV/Al DS awareness, (SCT LIL) least 5 Garifuna social marketing and communities prevention in targeted Garifuna communities 3. AlDS policy lIlT $23.6 K Year 1 of LIL National Tourism dialogue in Min. of Health, Strategy for North developmenit of AMHON, NGOs Coast includes Sustainable Coastal (SCT LIL) HIV/AIDS Tourism Strategy and awareness and Action Plan prevention; municipalities incorporate HIV prevention campaigns in social services 4. Interventions under Min. of Health (potential ongoing Publislhed reports the National AIDS (with funding of Strategy (2001-2005) miulti-stakeholde $ million targeting high risk r support from _ populations, including donors, e.g., $ on the North Coast, in USAID, World 5million) HIV/AIDS awareness, Banlk, UNAIDS, prevention, counseling IDB, etc.), and treatment private sector, NGOs and other govermment agencies Total SCTP $1.16 m Total Associated $2.50 ni Projects TOTAL $3.66 m - 94 - MAP SECTION IBRD 311 10 HONDURAS r' SUSTAINABLE COASTAL TOURISM PROJECT TECHNICAL ASSISTANCE UNITS IN MUNICIPALITIES' MAIN ROADS ETHNICITY: (GUATEMALA Li-nan . SECONDARY ROADS GARIFUNAS pop 175,000) . HONDURS r SECONDARY SUPPORT TO MUNICIPALITIES + RAILROADS * PECH / PAYAS (pop. 2,700) t - S: TRAININGAND MATCHING GRANTS' AIRFILDS Nwe: F.GCi-ns nd Pnhl%yoso y InWp-nts --ity. N SELECTED COASTAL AND MARINE PROTECTED AREAS, - RIVERS CITIE . 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