Public Disclosure Copy The World Bank Implementation Status & Results Report Espirito Santo Biodiversity and Watershed Conservation and Restoration Project (P094233) Espirito Santo Biodiversity and Watershed Conservation and Restoration Project (P094233) LATIN AMERICA AND CARIBBEAN | Brazil | Environment Global Practice | Global Environment Project | Specific Investment Loan | FY 2009 | Seq No: 5 | ARCHIVED on 09-Jan-2015 | ISR17882 | Implementing Agencies: Secretaria de Estado de Meio Ambiente e Recursos Hidricos (SEAMA), Secretaria de Estado de Meio Ambiente e Recursos Hidricos (SEAMA) Key Dates Key Project Dates Board Approval date:18-Nov-2008 Effectiveness Date:10-Aug-2005 Planned Mid Term Review Date:14-Mar-2012 Actual Mid-Term Review Date:18-Apr-2012 Original Closing Date:30-Jun-2012 Revised Closing Date:31-Dec-2014 Global Environmental Objectives Global Environmental Objective (from Project Appraisal Document) The Project Development Objective i s to support the adoption o f environmentally friendly landuse practices on 3,400 hectares in two key Atlantic Forest watersheds in Espirito Santo, thereby contributing to biodiversity conservation. Key indicators include: Increase in area (3,400 has) under sustainable land use practices’ (SLMs). Which will be accomplished in part through the: (i) establishment and implementation o f institutional arrangements for payment mechanisms for watershed conservation; and (ii) supporting the adoption o f Sustainable Land Management (SLM) practices through the implementation o f Payment for Environmental Services mechanisms and the participation and capacity building o f local actors. The Global Environment Objective i s to reduce threats to globally important biodiversity (for example, the endangered Muriqui monkey) from agricultural production systems and increase habitat for species in two key rainforest watersheds o f the Atlantic Forest. Key indicators include: Area o f critical habitat restored and/or protected from encroachment; which will be accomplished in part through the: (i) implementation o f sustainable market-based mechanisms to finance Protected Areas (PA) management and conservation o f biodiversity in agricultural landscapes. Has the Global Environmental Objective been changed since Board Approval of the Project Objective? No Components Name Strengthening Watershed Management:(Cost $2.65 M) Targeted Biodiversity Protection and Protected Area (PA) Management:(Cost $4.46 M) Integrating Biodiversity in Production Landscapes:(Cost $2.97 M) Monitoring and Evaluation, and Project Management:(Cost $1.92 M) Overall Ratings 1/9/2015 Public Disclosure Copy Page 1 of 13 Public Disclosure Copy The World Bank Implementation Status & Results Report Espirito Santo Biodiversity and Watershed Conservation and Restoration Project (P094233) Name Previous Rating Current Rating Progress towards achievement of GEO  Satisfactory  Satisfactory Overall Implementation Progress (IP)  Moderately Satisfactory  Moderately Satisfactory Overall Risk Rating  --  Low Implementation Status and Key Decisions On December 26, 2013 this Grant project was restructured to extend the closing date from June 2012 to December 31, 2014, to enable the implementation of two delayed large contracts. The 2013 Restructuring Paper called for and the State has finalized arrangements to operationalize the transfer of funds to the FUNDÁAGUA "SEAMA-Florestas para Vida" sub-account for Payments for Environmental Services (PES). Despite slow disbursement of Global Environment Fund monies the Espirito Santo Biodiversity and Watershed Conservation and Restoration Project (Florestas para Vida - FpV) has had an impact on conservation beyond that expected at the outset of the project. The passing of the first State level Payment for Environmental Services law in Brazil was a direct result from project supported consultations and technical assistance. The restructuring of FUNDÁGUA, which directs 2.5% of royalties originating from oil and gas exploration to PES payments has also benefited from this support. Through the FpV project the State has committed to scaling up the effort initiated under the project and has committed to doubling the natural forest cover of the state through the launch of the Reflorestar Program which essentially scales up the current FpV project's objectives with the ambitious goal of reforesting 30,000 has with native species in water critical areas. Recently the State was invited to join the World Resources Institute (WRI) and the International Union for the Conservation of Nature (IUCN) in their drive to respond to the 2020 Bonn Challenge of restoring 150 million hectares of degraded forests and landscapes. Those two large contracts are coming to a close. The first is finalizing the Watershed Management Plans for the Basin Committees of the two target watersheds of the project: Jucu and Santa Maria. The state is extending their contract through January 2015. 75% of the contract has been finalized. The remainder of the contract will be paid through State Institute for Environment and Hydrological Resources (IEMA) funds. The second contract with the University of Washington (UW) has been concluded. This contract started the hydrodynamic modeling of these watersheds and of the broader areas of influence (including the Doce river basin) and has delivered preliminary results which are now an integral part of the Dynamic Information Framework and can be found in the Portal Capixaba da Gestão da Água e da Paisagem (PCGAP portal) at http://pangaea.ocean.washington.edu/. A student from the Federal University of Espirito Santo spent three months in training at UW and subsequently finalized his PhD focusing on one of the models used, data collection has continued throughout the year with state agencies (INCAPER, Espirito Santo Integrated System of Geospatial Databases - GeoBases, IEMA) and the water utility CESAN participating. Recently the University of Espirito Santo has taken on the leadership of the modeling in the state and is coordinating a group of interested parties. A final report is imminent. The state is extending the UW's contract with the intent of exploring future directions of this analytical work including how this relates to land use, land use change and disaster risk management. The FpV project has launched PES schemes and currently 120 land holders are participating. After the first payments were officially launched by Governor Renato Casagrande an increasing number of farmers are benefiting from the program. Another 280 farmers have signed on. Their properties are scheduled to be visited and prepared in January. Preliminary spatial land use analysis is ongoing. The identification of critical areas for biodiversity conservation and the establishment of private nature reserves (RPPN) inside and in neighboring municipalities are not only contributing to the achievement of the Global Environmental Objective (GEO) but demonstrating an important multiplier effect. The Espirito Santo PES Program has been noticed nationally and internationally. Just in this past year it has been invited to share its experience in pulling together a PES scheme internally in several states in Brazil and internationally in the US, Panama and China. The program has also been noticed by several key international NGOs and Think Tanks through invites to participate in events in international venues: WRI, IUCN and The Nature Conservancy (TNC). The GEF confirmed, through correspondence dated September 2, 2014 (attached) that they do not need to approve the transfer of funds to the endowment fund as there is no change in the objectives of the project and the monies are for the same purpose: namely PES payments. The Bank should follow its own procedures and later inform in the Project Implementation Review.(PIR) these changes. Given that half the grant will be deposited into a forest specific sub-account of the State’s FUNDÁGUA the task team reviewed the FpV project's Financial Management arrangements and verified that FUNDÁGUA had the capacity to manage and control the resources to be disbursed against payment for environmental services. The October 2014 FM mission (Aide Memoire attached) verified that SEAMA staff, who are now managing the follow-on Reflorestar Program, are experienced in working with World Bank projects, that the FpV project has appropriate systems of control to approve transfers/budgetary allocations and make the proper execution of the procurement plan. Moderate shortcomings in financial management exist but do not prevent the timely and reliable provision of information required to manage and monitor the implementation of the FpV project and its continuation through the Reflorestar Program. Information can be easily accessed as a result of good documentation/record keeping and the auditors issued a clean opinion. In light of the FpV project closing, special attention was placed on an analysis of FUNDÁGUA in order to assess its capacity to manage and control the GEF funds that will be disbursed for the payment of environmental services (PES). This is similar and consistent with previous World Bank projects where endowment funds were capitalized (e.g. Costa Rica's Sustainable Biodiversity Fund established through the Ecomarkets Project). Through close scrutiny it was possible to determine that FUNDÁGUA was created by a legal instrument (Law 9866/2012), has an organized institutional structure (it has a Fiscal Number, an advisory board and management board), rulings that define models, manuals and operational standards for eligibility of projects by the Fund (eg. Ruling 51-R / 2013 making the call for producers to present projects to the program Reflorestar) and has a team that, although reduced, is able to meet the demands of the program. It was agreed that a chapter in the Operational Manual that 1/9/2015 Public Disclosure Copy Page 2 of 13 Public Disclosure Copy The World Bank Implementation Status & Results Report Espirito Santo Biodiversity and Watershed Conservation and Restoration Project (P094233) aggregates all of this information, would be developed, and would include: laws; structure; institutional arrangements; chart of accounts; document workflow and staff responsibilities; computer systems (SIGEFES and PES Management System); Annual Reports; and, Audit / Review of Accounts. This information has been created and inserted in the Operational Manual to the satisfaction of FM, Legal and of a technical review. It was also agreed that the Annual Report of FUNDÁGUA will detail the use of funds from the bank account of the Project (the segregated account opened at the Bank of Brazil under the Nr. 72884-5) and that this note will be audited by SECONT (the internal audit entity of the State) which will validate the information and issue an opinion on the proper use of funds. This information has been added to the Operational Manual of the project and satisfies the requirements of good financial management and control stipulated by the operational policies of the Bank and of the GEF. It should be noted that reallocating the US$50,000 originally allocated to both category 2(b) and 2(c), to cover the operational costs of INCAPER and CESAN, to Category 1 does not mean that these institutions are not participating in the project. The funds were not used in the case of CESAN as it covered its own expenses and INCAPER's needs were for vehicles. Those were eligible expenditures and purchased under Category 1 in lieu of the operating costs. The two institutions are instrumental to the work in the field and will continue to collaborate. With this in place, the FMS concluded that the requirements of OP 10.20 will be met and the Bank may disburse the GEF funds to capitalize FUNDÁGUA. 1/9/2015 Public Disclosure Copy Page 3 of 13 Public Disclosure Copy The World Bank Implementation Status & Results Report Espirito Santo Biodiversity and Watershed Conservation and Restoration Project (P094233) Risks Systematic Operations Risk-rating Tool Risk Category Rating at Approval Previous Rating Current Rating Political and Governance  --  --  Low Macroeconomic  --  --  Low Sector Strategies and Policies  --  --  Low Technical Design of Project or Program  --  --  Low Institutional Capacity for Implementation and Sustainability  --  --  Moderate Fiduciary  --  --  Moderate Environment and Social  --  --  Low Stakeholders  --  --  Low Other  --  --  -- Overall  --  --  Low Results Global Environmental Objective Indicators 1/9/2015 Public Disclosure Copy Page 4 of 13 Public Disclosure Copy The World Bank Implementation Status & Results Report Espirito Santo Biodiversity and Watershed Conservation and Restoration Project (P094233) PHINDGEOTBL  New areas outside protected areas managed as biodiversity-friendly (ha)(Number, Core) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 1144.00 1144.00 1000.00 Date 10-Mar-2009 24-Nov-2014 31-Dec-2014 31-Dec-2014 PHINDGEOTBL  Area of critical habitat restored and/or protected from encroachment(Hectare(Ha), Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 3905.00 3305.00 1000.00 Date 10-Mar-2009 24-Nov-2014 31-Dec-2014 31-Dec-2014 Comments In the previous recording an error was made when stating 3,905 hectares. It is actually 3,305 ha. PHINDGEOTBL  Market-based mechanisms to finance Protected Areas (PA) management implemented(Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value No No No Yes Date 10-Mar-2009 24-Nov-2014 31-Dec-2014 31-Dec-2014 Comments Market-based mechanism to finance PAs refers to the sources of the funds. The effort is to identify those that demand the environmental services (water utilities, dam operators, bottelers, tourist operators) and thus create a market with those that can provide those services. 1/9/2015 Public Disclosure Copy Page 5 of 13 Public Disclosure Copy The World Bank Implementation Status & Results Report Espirito Santo Biodiversity and Watershed Conservation and Restoration Project (P094233) PHINDGEOTBL  Conservation of biodiversity in agricultural landscapes implemented(Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value No Yes Yes Yes Date 10-Mar-2009 24-Nov-2014 31-Dec-2014 31-Dec-2014 Overall Comments Intermediate Results Indicators PHINDIRITBL  2 watershed management committees strengthened (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 2.00 2.00 2.00 Date 10-Mar-2009 26-Nov-2014 31-Dec-2014 31-Dec-2014 PHINDIRITBL  Plenary established (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Plenary established Plenary established and Plenary Value No Plenary and meeting w/ meeting w/ regularity established regularity Date 10-Mar-2009 26-Nov-2014 31-Dec-2014 31-Dec-2014 PHINDIRITBL  Definitive directorate elected (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value No Yes Yes Yes Date -- 26-Nov-2013 31-Dec-2013 31-Dec-2013 1/9/2015 Public Disclosure Copy Page 6 of 13 Public Disclosure Copy The World Bank Implementation Status & Results Report Espirito Santo Biodiversity and Watershed Conservation and Restoration Project (P094233) PHINDIRITBL  Ecological and Economic Zoning (ZEE) for watersheds formulated and officially adopted by participating municipalities (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target ZEE delivered & ZEE delivered & ZEE delivered Value None implemented implemented & implemented Date 10-Mar-2009 26-Nov-2014 31-Dec-2014 31-Dec-2014 PHINDIRITBL  Critical biodiversity conservation areas and critical water supply areas identified and some selected for project intervention (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Modeling in full swing. Modeling contributing to Areas selected Value None Partial results being identifying critical areas. and intervened vetted. Date 10-Mar-2009 26-Nov-2014 31-Dec-2014 31-Dec-2014 PHINDIRITBL  Water resource monitoring system implemented and providing critical information to local, state, and national water resource manager s (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Water resource Water resource Water resource monitoring Value Incipient system in place monitoring system monitoring system system implemented implemented implemented Date -- 26-Nov-2014 31-Dec-2014 31-Dec-2014 Comments The water resource monitoring system has been instrumental in providing input to the modeling effort and the state Integrated Geospatial Databases. This in turn will provide decision makers with resource (water, land useo) and sector (water, forestry, agriculture) specific information. PHINDIRITBL  Vegetative cover monitoring system implemented and information available to the general public (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Vegetative Vegetative cover Vegetative cover cover Value None monitoring system monitoring system monitoring implemented implemented system implemented Date 10-Mar-2009 26-Nov-2014 31-Dec-2014 31-Dec-2014 1/9/2015 Public Disclosure Copy Page 7 of 13 Public Disclosure Copy The World Bank Implementation Status & Results Report Espirito Santo Biodiversity and Watershed Conservation and Restoration Project (P094233) Comments The vegetative cover monitoring system has also been instrumental in providing input to the modeling effort, the rural technical extension service, Water Resource Management institute and the state Integrated Geospatial Databases. This in turn will provide decision makers with resource (water, land useo) and sector (water, forestry, agriculture) specific information. PHINDIRITBL  Management Plan for Pedra Azul State Park under implementation with workplan established and monitored (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Updated Updated Management Updated Management Management Value Previous plan outdated Plan under Plan under Plan under implementation implementation implementation Date 10-Mar-2009 26-Nov-2014 31-Dec-2014 31-Dec-2014 PHINDIRITBL  Management Council for Pedra Azul State Park established and functioning with quarterly meetings (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Mgmt Council Mgmt Council Mgmt Council Value Inexistent established & established & established functioning functioning Date 10-Mar-2009 26-Nov-2014 31-Dec-2014 31-Dec-2014 PHINDIRITBL  Financial instrument for biodiversity conservation selected and implemented (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Funds for Biodiversity sub- Biodiversity sub-account Biodiversity Value None account established established Conservation established Date 10-Mar-2009 26-Nov-2014 31-Dec-2014 31-Dec-2014 1/9/2015 Public Disclosure Copy Page 8 of 13 Public Disclosure Copy The World Bank Implementation Status & Results Report Espirito Santo Biodiversity and Watershed Conservation and Restoration Project (P094233) PHINDIRITBL  8 Private Natural Heritage Reserves (RPPNs) established (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 6.00 6.00 8.00 Date 10-Mar-2009 26-Nov-2014 31-Dec-2014 31-Dec-2014 PHINDIRITBL  1,000 ha of severely degraded areas recovered (Hectare(Ha), Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 1144.00 1144.00 1000.00 Date 10-Mar-2009 26-Nov-2014 31-Dec-2014 31-Dec-2014 PHINDIRITBL  300 landholders receiving Technical Assistance on Sustainable Land Management (SLM) (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 360.00 360.00 300.00 Date 10-Mar-2009 26-Nov-2014 31-Dec-2014 31-Dec-2014 PHINDIRITBL  60 trainers (20 extension officials from municipalities and 40 members of technical associations and NGOs) trained on SLM (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 100.00 100.00 60.00 Date 10-Mar-2009 26-Nov-2014 31-Dec-2014 31-Dec-2014 1/9/2015 Public Disclosure Copy Page 9 of 13 Public Disclosure Copy The World Bank Implementation Status & Results Report Espirito Santo Biodiversity and Watershed Conservation and Restoration Project (P094233) PHINDIRITBL  4 experimental stations on SLM implemented (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 4.00 4.00 4.00 Date 10-Mar-2009 26-Nov-2014 31-Dec-2014 31-Dec-2014 PHINDIRITBL  Short-term PES payment plan established for sustainable land use practices (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value None Done Done Done Date 10-Mar-2009 26-Nov-2014 31-Dec-2014 31-Dec-2014 PHINDIRITBL  160 landholders receiving short-term PES (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 301.00 301.00 160.00 Date 10-Mar-2009 26-Nov-2014 31-Dec-2014 31-Dec-2014 PHINDIRITBL  Percent increase in the number of properties certified for organic production or in the process thereof (cumulative) (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 205.00 205.00 100.00 Date 10-Mar-2009 26-Nov-2014 31-Dec-2014 31-Dec-2014 1/9/2015 Public Disclosure Copy Page 10 of 13 Public Disclosure Copy The World Bank Implementation Status & Results Report Espirito Santo Biodiversity and Watershed Conservation and Restoration Project (P094233) PHINDIRITBL A functioning PES program targeted toward protection of critical areas for water service supplies in the Jucu and Santa Maria da Vit ória watersheds (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target PES Program PES Program Functioning Value None functioning functioning PES program Date 10-Mar-2009 26-Nov-2014 31-Dec-2014 31-Dec-2014 PHINDIRITBL  Main water users identified and engaged in the program (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Main water Main water users Main water users Value None users identified identified and engaged identified and engaged and engaged Date 10-Mar-2009 26-Nov-2014 31-Dec-2014 31-Dec-2014 PHINDIRITBL  160 landholders (40 in each of the 4 micro-basins) receiving payments for ecosystem services (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 301.00 301.00 160.00 Date 10-Mar-2009 26-Nov-2014 31-Dec-2014 31-Dec-2014 PHINDIRITBL A project-level M&E Framework established and providing timely and relevant information to the decision making bodies governing land use of the watersheds (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target A project-level Transfered to the new Transfered to the new M&E Value None project project Framework established Date 10-Mar-2009 26-Nov-2014 31-Dec-2014 31-Dec-2014 1/9/2015 Public Disclosure Copy Page 11 of 13 Public Disclosure Copy The World Bank Implementation Status & Results Report Espirito Santo Biodiversity and Watershed Conservation and Restoration Project (P094233) PHINDIRITBL  Regional-level Information System covering the Jucu and Santa Maria da Vitória basins established and providing timely & relevant in formation to the watershed decision making bodies governing land us (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Functioning Functioning Regional- Functioning Regional- Regional-level Value None level Information level Information System Information System System Date 10-Mar-2009 26-Nov-2014 31-Dec-2014 31-Dec-2014 PHINDIRITBL  Project Management Team set up and working effectively (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value None Team set up Team set up Team set up Date 10-Mar-2009 26-Nov-2014 31-Dec-2014 31-Dec-2014 PHINDIRITBL  Best practices and lessons learned disseminated in the municipalities of the State and to other states (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Reflorestar Program Reflorestar Program set Value None -- set up and functioning up and functioning Date 10-Mar-2009 26-Nov-2014 31-Dec-2014 31-Dec-2014 Overall Comments Data on Financial Performance Disbursements (by loan) Project Loan/Credit/TF Status Currency Original Revised Cancelled Disbursed Undisbursed Disbursed 100 P094233 TF-55569 Closed USD 0.20 0.20 0.00 0.20 0.00 % P094233 TF-93210 Closed USD 4.00 4.00 0.00 1.51 2.49 38% Key Dates (by loan) 1/9/2015 Public Disclosure Copy Page 12 of 13 Public Disclosure Copy The World Bank Implementation Status & Results Report Espirito Santo Biodiversity and Watershed Conservation and Restoration Project (P094233) Project Loan/Credit/TF Status Approval Date Signing Date Effectiveness Date Orig. Closing Date Rev. Closing Date P094233 TF-55569 Closed 10-Aug-2005 10-Aug-2005 10-Aug-2005 01-Jul-2006 31-Oct-2006 P094233 TF-93210 Closed 11-Dec-2008 11-Dec-2008 10-Mar-2009 30-Jun-2012 31-Dec-2014 Cumulative Disbursements Restructuring History Level 2 Approved on 26-Dec-2013 ,Level 2 Approved on 31-Dec-2014 Related Project(s) There are no related projects. 1/9/2015 Public Disclosure Copy Page 13 of 13