Mexico - Mesoamerican Biological Corridor Project

Document of The World Bank Report No: 21136-ME PROJECT APPRAISAL DOCUMENT ONA PROPOSED GRANT FROM THE GLOBAL ENVIRONMENT FACILITY TRUST FUND IN THE AMOUNT OF SDR 11.5 MILLION TO NACIONAL FINANCIERA, S.N.C. FOR A MEXICO MESOAMERICAN BIOLOGICAL CORRIDOR PROJECT November 6, 2000 Colombia, Mexico and Venezuela Country Management Unit Environmentally and Socially Sustainable Development Unit Latin America and the Caribbean Regional Office  CURRENCY EQUIVALENTS (Exchange Rate Effective October 24, 2000) Currency Unit = Mexican Pesos 1 Mexican Peso = US$0. 1048 US$1 = $9.534 FISCAL YEAR January I - December 31 ABBREVIATIONS AND ACRONYMS CAS Country Assistance Strategy CCAD Central American Commission for Environment and Development (Comisi6n Centro Americana para el Desarrollo) CHM Clearing House Mechanism CICY Scientific Research Center of Yucatan (Centro de Investigaci6n Cientifica de Yucatan) CIFOR Center for International Forestry Research CINVESTAV Research and Advanced Studies Center (Centro de Investigacion y Estudios Avanzados) CONABIO National Commission for the Knowledge and Use of Biodiversity (Comisi6n Nacional para el Conocimiento y Uso de la Biodiversidad) CONANP National Council for Natural Protected Areas (Consejo Nacional de Areas Naturales Protegidas) COPLADE State Planning and Development Committee (Comite de Planeaci6n y Desarrollo Estatal) COPLADEMUN Municipal Planning and Development Committee (Comite de Planeaci6n y Desarrollo Municipal) CSC Corridor State Council EA Executing Agency Ejido Territorial unit managed and owned by villagers GEF Global Environment Facility GIS Geographic Information System GOM Government of Mexico GTZ Gernan Technical Assistance Agency (Deutsche Gesellschaft fur Technische Zusammenarbeit) Vice President: David de Ferranti Country Manager/Director: Olivier Lafourcade Sector Manager/Director: John Redwood Sector Leader: Adolfo Brizzi Task Team Leader/Task Manager: Raffaello Cervigni  IBRD International Bank for Reconstruction and Development ICRAF International Center for Research in Agroforestry INE National Ecology Institute (Instituto Nacional de Ecologia) INI National Institute of Indigenous Peoples (Instituto Nacional Indigenista) MBC Mesoamerican Biological Corridor MBS Mexican Biodiversity Stratelgy MIS Management Information System MMBC Mexico Mesoamerican Biological Corridor MSP Medium-Sized Project NAFIN National Financier (Nacional Financiera) NCC National Corridor Council NEA National Executing Agency NGO Non-Government Organization NPA Natural Protected Area NTU National Technical Unit OEPFZM Union of Forestry Ejidos in the Maya Zone (Organizaci6n de Ejidos Forestales en la Zona Maya) PMR Project Management Report PMU Project Management Unit PRODER Regional Sustainable Deve'lopment Program, implemented by SEMARNAP (Programa de Desarrollo R,egional Sustentable) PROFEPA Federal Office of Environmental Protection (Procuraduria Federal de Protecci6n al Ambiente) PROMAD Program of Environmental Management and Decentralization (Programa de Manejo Ambiental y Descentralizaci6n) RTU Regional Technical Unit SAGAR Ministry of Agriculture, Livestock and Rural Development (Secretaria de Agricultura, Ganaderia y Desarrollo Rural) SCT Ministry of Communications and Transport (Secretaria de Comunicaciones y Transporte) SEA State Executing Agency SECOFI Ministry of Commerce and Industrial Development (Secretaria de Comercio y Fomento Industrial) SEDESOL Ministry of Social Develoipment (Secretaria de Desarrollo Social) SEMARNAP Ministry of Environment, Natural Resources and Fishery (Secretaria de Medio Ambiente, Recursos Naturales y Pesca) SEP Ministry of Public Education (Secretaria de Educaci6n Publica) SHCP Ministry of Finance (Secretaria de Hacienda y Credito Publico) SINAP National System of Protected Areas (Sistema Nacional de Areas Protegidas) SOE Statement of Expenditures SRA Ministry of Agrarian Reform (Secretaria de Reforma Agraria) SSA Ministry of Health (Secretaria de Salud) TC Technical Committee UACH University of Chiapas (Universidad Aut6noma de Chiapas) UADY University of Yucatan (Universidad Aut6noma de Yucatan) UNDP United Nations Development Program UTNEP United Nations Environment Program UNORCA National Union of Regional Farming Organizations (Uni6n Nacional de Organizaciones Regionales Campesinas Aut6nomas) UYCC Unprotected Yucatan Coastal Corridor WRI World Research Institute   Mexico Mesoamerican Biological Corridor CONTENTS A. Project Development and Global Objective Page 1. Project development objective and key performance indicators 2 B. Strategic Context 1. Sector-related CAS goal and GEF Operational Program supported by the project 2 2. Main sector issues and Government strategy 4 3. Sector issues to be addressed by the project and strategic choices 5 C. Project Description Summary 1. Project components 6 2. Key policy and institutional reforms supported by the project 12 3. Benefits and target population 12 4. Institutional and implementation arrangements 13 D. Project Rationale 1. Project alternatives considered and reasons for rejection 18 2. Major related projects financed by the Bank, GEF and/or other development agencies 18 3. Lessons learned and reflected in proposed project design 21 4. Indications of recipient commitment and ownership 22 5. Value added of Bank support in this project 23 E. Summary Project Analyses 1. Economic 23 2. Financial 24 3. Technical 24 4. Institutional 26 5. Social 26 6. Environmental assessment 27 7. Participatory approach 29 8. Checklist of Bank Policies 29 F. Sustainability and Risks 1. Sustainability 30 2. Critical risks 30 3. Possible controversial aspects 32  G. Main Grant Conditions 1. Effectiveness conditions 33 2. Other 33 H. Readiness for implementation 34 I. Compliance with Bank Policies 34 Annexes Annex 1. Project Design Summary Annex 2. Detailed Project Description Annex 3. Financial and budget information Annex 4. Incremental Cost Analysis and Global Environmental Benefits Annex 5. Financial Summary Annex 6. Procurement and Disbursement Arrangements Annex 7. Project Processing Schedule Annex 8. Documents in Project File Annex 9. Statement of Loans and Credits Annex 10. Country. at a Glance Annex 11. Social Analysis and Participatory Approach Annex 12. Indigenous Peoples Development Plan Annex 13. Corridors and Focal Areas Annex 14. Northern Yucatan Corridor Annex 15. Communication Strategy Map IBRD 30873  Mexico Mesoamerican Biological Corridor Project Appraisal Document Latin America and the Caribbean Region Colombia, Mexico and Venezuela Country Department Date: November 6, 2000 Task Team Leader/Task Manager: Raffaello Cervigni Country Manager/Director: Olivier Lafourcade Sector Director: John Redwood; Sector Leader: Adolfo Brizzi Project ID: MX-GE-60908 Sector: VM Program Objective Category: EN GEF Supplement ID: Focal Area: Biodiversity Lending Instrument: Program of Targeted Intervention: [ ] Yes [X] No Project Financing Data [ Loan [ ] Credit [] Guarantee [] Grant [XI Other: GEF Grant For Loans/Credits/Others: Amount of the requested GEF Grant: SDR 11.5 (equal to US $14.84M) Financing plan US$: $ 90.05 M Source Local Foreign Total Go-vernment [a] 66.99 0.00 66.99 Co-financiers (GTZ - Estimate to be finalized) 0.00 2.44 2.44 IBRD [b] 4.25 0.00 4.25 GEF ~9.02 5.82 14.84 CONABIO 1.24 0.00 12-4 Beneficiaries 0.28 0.01 0.29 Total 81.78 8.27 90.05 [a] Includes US$ 57.72 million of baseline development programs [b] Estimated amount from IBRD APL loan "Rural development in Marginal Areas" Project, phase 11 to be applied to project area Estimated disbursements (Bank 2001 2002 2003 2004 2005 2006 2007 2008 FY/US$M): Annual 1.34 2.08 1.91 2.12 2.09 1.83 2.08 1.39 Cumulative 1.34 3.42 5.33 7.45 9.54 11.37 13.45 14.84 Borrower: Not Applicable Recipient: Nacional Financiera, S.N.C. Responsible agency: National Commission for the Knowledge and Use of Biodiversity (CONABIO) through its private Trust Fund "Fideicomiso Fondo para la Biodiversidad" Project implementation period: 2001 - 2008 (seven years, in two phases of four and three years respectively) Estimated effectivenes date: January 31, 2001 Estimated closing date: June 30, 2008 1  A. PROJECT DEVELOPMENT OBJECTIVE Project global objective and key performance indicators (see Annex 1) The global objective of the project is the conservation and sustainable use of globally significant biodiversity in five biological corridors in southeast Mexico, through mainstreaming of biodiversity criteria in public expenditure, and in selected local planning and development practices. Key performance indicators are (see Box 1 on page 6 below for clarifications on terminology): 1. After 7 years, in focal areas (15% of corridors total surface): a) rate of native habitat loss is decreased, and/or area under native vegetation cover is increased (with specific targets varying across individual focal areas); b) degree of perturbation of populations of corridor-specific indicators species (e.g. selected birds, mammals, insects, plants) is decreased. 2. Communities (and/or producers groups) in focal areas are engaged in different forms (depending on levels of organization) of local planning oriented towards conservation and sustainable use: a) Awareness raising (at least 80% of focal areas' surface and/or 80% of communities) b) Problem assessment (at least 50%) c) Priority setting (at least 30%) d) Development of action plans (at least 10%) 3. In focal areas, no more than 30% to 50% (depending on each focal area) of production (in area or producers) is associated with selected, high-impact resource use practices detrimental to biodiversity (e.g. uncontrolled agriculture fire use, inadequate waste disposal, overfishing, over-hunting) in native ecosystems. 4. In focal areas, at least 30% to 50% (depending on individual focal areas) of production (in percentage of area, or of producers, or value) is generated by financially sustainable, biodiversity-friendly selected practices of use of natural resources (forest products, honey, maize, vegetables, ecotourism activities, etc.) in the productive landscape. 5. In the various corridors, at least 40% of (existing and new) public programs and at least 20% of public spending with impacts on natural resource base take into account biodiversity considerations, including: a) programs re-oriented from potentially harmful to biodiversity friendly or neutral activities; b) programs actively promoting activities of sustainable use of biodiversity. B. STRATEGIC CONTEXT la. Sector-related Country Assistance Strategy (CAS) goal supported by the project (see Annex 1): Document number: R99-92, IFC/R99-82 Date of latest CAS discussion: 06/08/99 The Country Assistance Strategy for Mexico identifies three core themes for World Bank Group assistance to Mexico: social sustainability, removing obstacles to sustainable growth, and effective public 2  governance. Within this broad framework, the CAS identifies a few priority areas for Bank involvement in the environment sector, including institutional development and decentralization of environmental management, better management of natural resources (e.g. forests, water and biodiversity), and assistance in the design of sector policies. The proposed project supports all the above sector goals. In particular, it is expected that the project will contribute to better management of natural resources (including biodiversity and agrobiodiversity) by promoting planning and monitoring tools based on the biological corridor concept. Under the biological corridor criteria, conservation and use of biodiversity and agrobiodiversity can be better balanced within a sustainable development framework. Ecological cohesion of protected areas, the maintenance of ecological processes at the landscape level, and the cultural landscape are considered central elements for the planning and implementation of actions by regional stakeholders. Additionally, regional specificity (both ecological and social) in the design and implementation of actions and the active, informed participation of stakeholders are considered crucial elements for sustained development and project success. The corridor concept allows stakeholders to promote development and poverty alleviation. within a framework that goes beyond "do no harm" environmental management: it helps align productive activities within the natural capacity of ecosystems to support these activities in the long term. Project design and implementation centered around these 3 axes of ecological cohesion, regional specificity and informed participation will help strengthen current efforts towards decentralization in environmental and natural resources management, as well as enhanced institutional coordination. At the institutional level, the Federal Government will play a catalytic role in the promotion and design of the project; in order to ensure adequate project ownership, however, a key role in the execution and monitoring of the initiative will be played by local actors (State and Municipal governments, communities and NGOs). This approach will assist the country in further developing and refining its decentralization strategy in the environment and natural resource sector. lb. GEF Operational Strategy/program objective addressed by the project: The project is fully consistent with guidance from the Conference of the Parties of the Biodiversity Convention regarding conservation and sustainable use of biological diversity in vulnerable areas. It will also promote and support the increased conservation and sustainable use of agrobiodiversity by increasing economic viability for the diversified and ecologically sustainable Mayan rural economy. This strategy responds to a dual need to (i) consolidate the conservation of pristine biodiversity within and around protected areas; and (ii) conserve and sustainably use human-influenced biodiversity in cultural landscapes, including agrobiodiversity. The project addresses these needs from a multi-scale perspective and at all three levels of biodiversity (ecosystem, species and genetic or within-species variation). The four states of the project area comprise a variety of high-priority ecoregions and biomes, including Tehuantepec and Yucatan moist forests, Yucatan dry forests, and Quintana Roo wetlands. In Chiapas there are temperate cloud forests, an ecosystem which covers 1% of the national territory but contains 10% of the country's floral diversity. The Yucatan peninsula boasts an impressive diversity of flora and fauna: over 900 plant species and 200 animal species have been found in an hectare of tropical evergreen forest, some 70 species of herpetofauna (amphibians and reptiles), 320 species of birds and 120 species of mammals are known to inhabit the Peninsula. According to CONABIO, the high diversity present in the area results from the confluence of Neartic and Neotropical biota and spatial climatic variation accentuated by geomorphological conditions, reaching its maximum expression in Oaxaca, Chiapas and Guerrero. Both flora and fauna in these states show a significant proportion of endemic species and a variety of ecosystems of high priority for conservation: 3  lowland rainforests, cloud forests, dry forests, wetlands and savannas. Among these, the ecosystems bordering the Guatemalan and Belizean territory constitute the largest mass of continuous forest ecosystems in all Mexico and Mesoamerica. The mosaics of different ecosystems and different age patches within each of these ecosystems, constitute a still unique laboratory of ecological relations and are of strategic importance for continuing speciation and sheltering of species in the face of the continuing reduction of forest cover and global change. Genetic variation within species is of particular interest in southeast Mexico: many species occur at the edge of their southern or northern geographical distributional ranges. Therefore, a high degree of genetic variability is observed, as well as distinct morphological and fenotypical characteristics. In the Yucatan Peninsula, an additional consideration contributing to communities' composition is related to their adaptation to frequent hurricanes. These events provide selection stimuli with strong effects upon successional forest stages, age-composition, and evolutionary adaptations to ecotones. With respect to agrobiodiversity, Mexico's many indigenous groups have domesticated a great array of plants and still maintain a very high degree of genetic variation within these plants, including semi- domestic forms and the knowledge for how to use their wild relatives. Todav, farmers continue to contribute this knowledge to the selection and domestication of species. In this process, which is strongly linked to traditional patterns of land-use, genetic exchange with wild relatives plays an important role in maintaining genetic variability in agrobiodiversity. With rapid deforestation, loss of biodiversity, and economic incentives that favor non-traditional land-use practices, potentially useful practices will continue to be lost unless a systematic effort is undertaken to redesign local sustainability. Agrodiversity is of particular importance in the Yucatan Pensinsula and Chiapas, where species' selection and domestication have been going on for millennia. In addition to the biological importance of the project's area in its own right, these ecosystems form part of a critical link in the Mesoamerican Biological Corridor (MBC). The MBC is a comprehensive effort by participating countries to connect natural habitats from Mexico through Central America to Colombia. This initiative received top-level political endorsement at the Second Tuxtla Summit Meeting in 1996, in San Jose, Costa Rica, where Presidents of the Central American countries and Mexico committed themselves to establish regional cooperation to develop the "Regional Mesoamerican System on Natural Protected Areas, Buffer Zones and Biological Corridors" (MBC). In Central America, the effort is led by the Central American Commission for Environment and Development (CCAD) and supported by the GEF, the World Bank, UNDP, and numerous other national and intemational organizations. The project directly addresses operational program No. 2 (Coastal, marine and freshwater ecosystems) in corridors linking protected areas of global significance; operational program No. 3 (Forest ecosystems) in virtually all of the proposed corridors; and operational program No. 4 (Mountain ecosystems) in the State of Chiapas (see Annex 13 for details). Specifically, and by establishing corridors under different levels of sustainable use (from protected areas to managed landscapes to diversified organic agriculture), the project addresses outputs under OPs 2, 3 and 4 regarding increased protection through in-situ conservation, agrobiodiversity, alleviation of demographic and economic pressures and other root causes, sustainable use, poverty alleviation and institutional strengthening for conservation and sustainable development. 2. Main sector issues and Government strategy: Priority natural resources management and conservation challenges in Mexico include: (i) high deforestation rates (one of the highest in Latin America); (ii) unsustainable land use practices, including inadequate slash-and-bum agriculture and extensive cattle ranching; 4  (iii) unsustainable levels of exploitation and loss of habitat for aquatic resources; (iv) unsustainable tourism development and increased urbanization; (v) limited participation of rural populations in conservation and natural resources management efforts; and (vi) loss of biodiversity and agrobiodiversity. The response of the Government is based on several key lines of action, including the consolidation of the newly created Ministry of Environment, Natural Resources and Fisheries (SEMARNAP, 1994), a strategic shift towards increased decentralization of environmental management to states and municipalities; the development of an integrated model of sustainable development with a regional focus (PRODERs); increased public participation; and a stronger commitment to international environmental issues and the global commons. With respect to biodiversity, the Mexican Government, Academia, Private Sector and relevant stakeholders have prepared, as part of Mexico's obligations under the Convention on Biodiversity, a Country study and a Biodiversity Strategy has been presented. The four broad themes of the strategy are conservation, diversified sustainable use, valorization of biodiversity, and knowledge and information management. SEMARNAP has been developing policy instruments consistent with the implementation of the strategy. These include: (a) improving conservation through the national system of protected areas (SINAP); (b) promoting sustainable use of plant and animal species with improved management and market access; and (c) mainstreaming both conservation and sustainable use into territorial development by means of an integrated approach to regionally based land-use planning. Implementation of the government's innovative approach, however, remains constrained by key limitations, including continued underfunding of environmental protection and sustainable natural resource management, and the challenge of establishing effective mechanisms of institutional coordination among public agencies at the various levels of government for better environmental management. A step of key importance towards institutional coordination has been the signing in 1998 of a framework agreement for institutional coordination ("Bases de Colaboraci6n Inter-institucional") by the Ministries of Environment (SEMARNAP), Agriculture (SAGAR), Social Development (SEDESOL), Transport (SCT) and Agrarian Reform (SRA). These have been subsequently joined by the Education (SEP), Health (SSA) and Trade (SECOFI) Ministries. By signing the agreement, these Ministries have committed to join efforts in promoting sustainable development in priority regions of the country. These regions are defined as those with high levels of poverty and social exclusion, limited availability of physical and social infrastructure, and typically high reliance on natural resources for subsistence purposes. In early 1999, in an effort to mitigate damages from recent natural disasters (forest fires and floods) and to prevent future ones, the President of Mexico launched a country-wide initiative to promote the adoption of more environmentally conscious agricultural practices. For southeastern Mexico (one of the most vulnerable areas to natural and man-induced environmental degradation), this initiative may be a crucial opportunity for moving towards to a path of sustainable development. 3. Sector issues to be addressed by the project and strategic choices: The project will assist the government in tackling the challenge of mainstreaming biodiversity into development planning by developing an innovative initiative in the southeast region of Mexico, which comprises the States of Campeche, Yucatan, Quintana Roo, and Chiapas. Internationally, the region is an essential building block for the Mesoamerican Biological Corridor. 5  Natural resources and biodiversity in this region are subjected to a number of pressures from human activities. These include very large conversion of forests and other pristine ecosystems to agriculture as a stepping stone to extensive cattle ranching; this process has been particularly intense in the tropical lowlands during the past decades. Other pressures are related to uncontrolled tourism development and over-fishing along the coasts of Quintana Roo, Yucatan and Campeche. The project's main hypothesis is that these practices result from the interplay of two major forces: on the one hand, the demand for development opportunities and activities expressed by communities residing in the project area; and, on the other hand, the supply of development programs provided by government agencies. If biodiversity considerations are poorly integrated in either of these sets of forces, most of the activities actually undertaken will result in threats to biodiversity. The strategic choice made in project design is therefore to use GEF resources for the re-orientation of both demand and supply of development initiatives. Such a two- pronged approach would induce in the medium to long term a much larger adoption of practices compatible with biodiversity conservation and sustainable use than in the present situation. A more detailed illustration of how the various components would contribute to such a goal is contained in the following section. C. PROJECT DESCRIPTION SUMMARY 1. Project components (see Annex 1 for performance indicators): The project will promote, in two consecutive phases of four and three years, conservation and sustainable use of biodiversity in five' broad biological corridors. These corridors will link ecologically and biologically existing protected areas across the productive landscape. Protected areas and connectors together would form an integrated system for the conservation and sustainable management of natural resources, including biodiversity, across the natural and productive landscapes in southern Mexico and as part of the Mesoamerican Biological Corridor (MBC). Given the considerable area spanned by the corridors, the project is designed to generate measurable impacts in 16 smaller "focal areas"; however, it is expected that the project will generate benefits spilling over to "transition areas" comprised within the corridors, as well as benefits more broadly distributed (Box I provides clarifications on the terminology used). Detailed information on the corridors and focal areas, including maps and an analysis in matrix form of root causes of biodiversity loss, is presented in Annex 13. Annex 14 provides an example of detailed project design and activities proposed under each component for a specific corridor, the Northern Yucatan Coastal Corridor. Box 1 - Terminology used Corridor: a mosaic of land patches under various land-ue situated in between protected areas. Corridors generate global biodiversity benefits through three mnain mechanisms: (i) by serving as habitats with various degrees of importance for specific types of biodiversity; (ii) by allowing the flow of genes, individuals, and species atong protected areas; and (iii) by maintaining ecological processes over large landscape scales. Corridors are rnainly identified on the basis of type, quality and quantity of vegetation cover or other ecological criteria. Corridors are the project's broad planning tool; however, in recognition of their large territorial extension, and of the variable degree of ecological and biological integrity within them, priority or focal areas have been identified for the purposes of project design and implementation. Focal Area: is the area in which actual project activities are targeted, and where progress and impact indicators will be monitored. The basic building blocks of a focal area are land tenure units (ejidos, communities, private properties); therefore, the boundaries of a focal area results from the boundaries of the land tenure units constituting it. ' The number of five is mentioned throughout the text. Though geographically and biologically a unity, the Sian Ka'an - Calakmul corridor involves two states with separate institutional and organizational arrangements and stakeholders. It is therefore considered as two corridors. 6  Transition Area: areas situated inside a Corridor, which are adjacent to Focal Areas, or encompass them, Even though transition areas will not be the target of specific investments, it is expected that some of the project activities, such as planning at the corridor level or investment for sustainable use at the focal area level, will generate ecological benefits spilling over to transition areas. The project will furthernore support mainstrcaming of biodiversity concerns into rural development programs undertaken in the biological corridors. through improved program design and execution. By rcplication and extension to other locations in Mexico and elsewhere, the project can generate benefits well beyond the focal areas targeted by the project. The diagram below illustrates visually the concept of corridor, focal area and transition area. ~~~. -- , PI, P2: Protected Areas A + B + C: Biological CorTidor A, B: Focal Areas C: Transition area Phasing The project involves both activities tied to specific geographic locations (especially community planning and sub-projects of sustainable use of biodiversity), and activities of a more "diffuse" nature. Correspondingly, there will be different mechanisms for sequencing those different activities over the project's duration time. The first type of activities will be financed in 9 focal areas in a first, four-year, phase. Triggers indicators have been established (at the bio-ecological, social and institutional level, see Annex 1) to evaluate project's performance in phase I focal areas. The second-phase set of 7 focal areas will only be eligible for sub-project support, if/when trigger indicators for the expansion to the second phase focal areas have been met. For project activities not tied to specific geographic locations, there will be, instead of formal phasing -- a "standard" project mid-term review to allow for possible execution adjustments. An independent evaluation would be undertaken by international experts after four years of project execution to formulate recommendations to the Bank's management for transition to the second phase. The project consists of four components: corridor design, integration into development programs, sustainable use, and project management and coordination. Table I provides the estimated project budget, and the following sections summarize activities under each component. A more detailed description of the project components is given in Annex 2. Annex 3 provides a detailed breakdown of estimated project costs. 7  Table 1 - Estimated Project Budget Component | Category | Indicative % of Total GEF GEF GEF GEF (US$ M) Costs financing (% of total) financing financing (US$M) (phase 1) (phase 2) Participatory design and Monitoring Technical assistance, 5.91 6.6 4.26 72.1 2.23 2.03 of Corridors Institutions Building Corridor Integration into Policy, Institutions 71.72 79.6 3.98 5.5 2.12 1.86 development programs Building Sustainable Use of biodiversity Technical assistance, 9.31 10.3 4.01 43.1 2.62 1.39 credit Project Management and Project Management 3.10 3.5 2.59 83.3 1.42 1.16 Coordination Total 90.05 100.0% 14.84 16.5 8.4 6.44 Note: On account of the project's objective to mainstream biodiversity criteria in public spending, baseline government programs are considered as an integral part of the project's financing package: if the project is successful in its mainstreaming efforts, funds for regular development programs that would have had a negative impact on biodiversity conservation in the corridors, would be re-oriented in a biodiversity-friendly direction, including: a) programs re-oriented from potentially harmful to biodiversity-friendly or neutral activities; b) programs actively promoting activities of sustainable use of biodiversity. See below the description of component B and Annex 4 for details. A) Design and Monitoring of Biological Corridors (US$ 5.91 m, GEF $4.26 m) This component will finance the detailed definition of priorities in the focal areas for conservation and sustainable use of biodiversity, through processes of participatory community planning, and on the basis of expert scrutiny of biological/ ecological field and cartographic information (See Annex 2 for details). The component will finance the establishment and operation of an integrated monitoring and evaluation system, which will track project performance through monitoring bio-ecological, socio-economic and institutional indicators at the corridor and focal area levels. Availability of sound scientific data on species, population and ecosystems is key to assess the biodiversity benefits of activities promoted under components B and C of the project. Specific activities to be financed under this component include: I ) Analyze relevant existing information to design and implement biological connectors, focusing on the biological data, current land use patterns, user rights and the role of agrobiodiversity. 2) Involve stakeholders in local planning for management of biodiversity in focal areas. Engagement of stakeholders will take into account differences in their degree of organization, building on the results of the social assessment (see Annex 11). Moving from communities and organizations with weak (type la), to strong organization (type 2b), the following activities would be undertaken: (a) Raise awareness among stakeholders on the economic and environmental benefits of the corridors (type I a); (b) Promote assessment of natural resource management problems and issues; (type Ib); (c) Assist in the definition of priorities for natural resource and biodiversity management (type 2a); 8  (d) Develop community and organization (local, regional) natural resource management strategies (type 2b). Completion of natural resource management strategies compatible with the projects' objectives and the corridor strategies (item (d) above) will be a condition to access to the larger pilot projects under the sustainable use component (see component description on page 11). 3) Implement a monitoring and evaluation protocol. Monitoring will be implemented at different scales. A geographic information system (GIS) will integrate biological, ecological, socio-economic and institutional information. It will involve both formal scientific aspects and evaluation of change by project beneficiaries. Implementation of the M&E protocol will entail the establishment of baselines for the project's indicators. This will be done by gathering, organizing, analyzing and validating existing data (biological, ecological, socio-economic and institutional) on corridors and focal areas. Only when required data is not available, the project will finance the ad-hoc generation of baseline information. B) Corridor Integration into Development Programs (US$ 71.72m, GEF US$3.98 million) This component will promote removal of institutional, technical and informational barriers that prevent the adoption, in regular rural development programs, of win-win natural resources and biodiversity management options. About 50 programs for social, agricultural and infrastructure development are currently applied with federal funding (some with state/municipal counterpart) in the project area. Analysis undertaken during preparation shows that at least half of them have direct relationships with the conservation and sustainable use of natural resources and biodiversity. These relationships may be positive if programs are properly designed and executed. As the biodiversity relevance of the individual programs and the institutional, technical and political opportunities for their re-orientation vary across corridors, the implementation modalities of this component will be made specific to the characteristics of each corridor and its focal areas. In particular, this component will finance the following activities: 1) Analysis of biodiversity impacts (positive and negative) of development programs through studies and consultations. 2) Corridor Strategies. Development and periodic update of strategies in individual corridors to promote conservation and sustainable use of biodiversity, taking into account the results of studies on biodiversity impacts, and current patterns of government programs for rural development in the corridors. Strategies would be agreed upon at the level of Corridor State Council (see implementation arrangements below) and would typically contain the following elements: (a) Assessment of threats and opportunities for the conservation and sustainable use of biodiversity; (b) Definition of short, medium and longer term targets for mitigating threats and seizing opportunities; (c) Prioritization of public programs to be re-designed/ modified for meeting the targets; (d) Determination of public programs that would co-finance sustainable use sub-projects on a matching fund basis with the GEF (see component on sustainable use below); (e) Outline of a strategy to ensure long-term financial sustainability of biodiversity conservation and sustainable use in the corridors, including long-term re-orientation of 9  public spending local mechanisms for capturing financial benefits of biodiversity (e.g., user fees, payment for environmental services), etc. Elements (c)and (d) of the strategies would be reflected in state-specific agreements (Convenios) between State governments and federal ministries, on the basis of consultations undertaken within the State Corridor Councils and brokered at the political and instituional level within the National Corridor Council (see section on institutional arrangements below). The project's operational manual includes standard formats for these agreements. Corridor Strategies would form the basis for determining each corridor's annual spending plan, in the sense that each annual budget would be designed to attain sequentially the various targets determined by the strategy. Corridor strategies would be the key tool for modifying the uppjy of development assistance, thus mirroring the community and organization level strategies financed under the design component above, which would promote the integration of biodiversity into the demand for development interventions. 3) Development Planning. Through institutional strengthening, capacity building and awareness raising, the project will promote the inclusion of provision for the conservation and sustainable use of biodiversity into selected state and municipal development plans. The selection of the state and municipal plans will be made during the first year of each phase based on consideration of institutional and political timing. 4) Program Design. The project would provide technical assistance for redesigning development programs that had been shown to have actual or potential negative biodiversity impacts. Re-design may include both positive filters (priority assigned to areas or activities with both development and biodiversity benefits) and negative filters (ineligibility for activities/ practices detrimental to biodiversity). Studies under this sub-component may include field-testing to assess the viability of the modified programs. The project would support the inclusion of biodiversity indicators in the M&E systems of development programs. Furthermore, in order to help better design future biodiversity management programs (in Mexico and elsewhere), the project would support preparation and dissemination of reports on lessons learned. 5) Program Execution. Through appropriate training of public officials at different levels and in different sectorial agencies, the project would strengthen the capacity to design and implement development plans and programs in ways that integrate biodiversity considerations. It is expected that activities under this component would result, whenever appropriate, in strengthening Environmental Impact Assessment (EIA) guidelines and procedures to better take into account biodiversity impacts of development programs. Activities under this component would be financed at no more than 80% by the GEF (with the exception of corridor strategies that could be financed 100% considering their importance to kick-off the mainstreaming process). GEF finances, however, would be incremental to baseline government funding of much larger amounts (with estimated ratios of 1 to 20), which would be re-oriented in biodiversity-compatible directions as a result of project's interventions. 10  C) Sustainable Use of Biological Resources (US$9.31 million, GEF US$ 4.01) Under this component an integral approach will be developed to promote sustainable use of biodiversity, in focal areas within the 5 selected corridors. This approach will include activities aiming at: 1) Maintaining native ecosystems (forests, coastal ecosystems, marshes, etc.), after wildlife viewing, rule establishment for ecotourism, forest enrichment with desirable species, extraction schemes for non NTFP, etc.; 2) Restoring degraded ecosystems, such as restoration of water flow to original ecosystems (wetlands, "cienegas"), planting of native trees in "petenes," reforestation with native species compatible with biodiversity conservation objectives (corridors, etc.), pilots for rebuilding dunes through replanting with native species, etc.; 3) Developing Sustainable Use of Biological Resources in productive landscapes, such as capacity building for alternative use of wood products (non timber species), establishment of rules for extraction of ornamental plants, sustainable use of plant biodiversity in homegardens ("traspatios, solares"), test of native species as covercrops, pilot projects of improved use of local species and varieties (fauna and flora), studies on market access for organic products and/or "sustainably managed" biological resources, certification, etc. Specific activities in this component include: 1) Capacity building and training programs on Sustainable Use of Biological Resources for producers and their organizations front line agents. This would include workshops, field visits, short study tours, producers networking, specific training on development of organizational capacity and managerial skills, particularly for vulnerable groups, such as women and indigenous groups, for a total amount of about US$ 1.Om supported by GEF grant. 2) Studies at rural community level to identify practical steps in the implementation of community/ producers groups-based sub-projects, including constraints and opportunities for developing biodiversity-friendly markets, and fine-tuning of selected practices to the specific biophysical, social and cultural conditions. Both studies and capacity building are considered barrier-removal activities and would therefore be financed 100% by the GEF. 3) Development and implementation of pilot projects of sustainable use of biodiversity. Pilot projects would be demand-driven, on the basis of broad categories of eligible expenditure, and would be financed by GEF resources either at 80% or at 33%, depending on a) the level of organization of the requesting community or other legal entity; and b) the presence of vulnerable groups. For details see Annex 2. Eligibility criteria for financing include: long-term financial and social sustainability, as well as replication potential, matching with corridor strategy, market assessment, provisions for follow-up, and replicability, all specified in the Project's Implementation Plan. Screening and approval procedures included in the PIP (and summarized in section E6, on page 27) ensure that financed activities are beneficial to biodiversity and comply with relevant Bank's safeguard policies (indigenous peoples and environmental impacts). D) Project Management and Coordination (US$3.10 million, GEF US$ 2.59m) This component will finance the establishment and operation of a technical unit at the central level, and of two Technical Units at the regional level (one for Chiapas; one for the Yucatan Peninsula: Campeche, YucatAn and Quintana Roo), as well as operational costs of the National Corridor Council and State Corridor Councils. The technical units will undertake day-to-day management of project activities, will 11  ensure compliance of project activities with project objectives and procedures, will be responsible for procurement of goods, works, services and financial audits; and will be responsible for keeping the National Corridor Council and State Corridor Councils informed of the projects and advances and operation, and taking into account their recommendations. The National Technical Unit (NTU), in coordination with the Regional Technical Units (RTUs), will prepare and execute, subject to the no-objection of the National Corridor Council, the Consolidated Annual Plan of Operation and budget (AOP), based on annual corridor operational plans proposed by the Regional Units. The NTU will ensure the liaison between the project and related activities in the broader Mesoamerican corridor initiative. The Regional Technical Units will develop Annual Operational Plans at the corridor level, which will follow the recommendations of the respective Corridor State Council (CSC), and which will be submitted in block to the CSC for its no-objection . The regional units will report to the National Technical Unit (see section on implementation arrangements below for further details on the State and National Councils and their relationships with National and Regional Technical Units). 2. Key policy and institutional reforms to be sought: The Bank has been assisting the current administration in the conceptual analysis of institutional coordination and regional development through Economic and Sector Work and in piloting, under the Marginal Areas APL, institutional mechanisms (such as regional councils) to promote participatory, decentralized management of rural development programs. As part of its policy dialogue with the new federal administration, the Bank will seek renewed political and institutional support to the Inter-ministerial agreement for sustainable development in priority regions. This will ensure the necessary political backing and operational effectiveness to the proposed project's National Corridor Council. 3. Benefits and target population: Mexico as a country will benefit from project activities through the stabilization of agricultural frontiers in the mostly tropical forest areas of the Yucatan Peninsula and Chiapas and the maintenance of different ecosystems where natural resources are managed in a sustainable way. This should contribute to long-term continued growth. The project areas will benefit in terms not only of strengthened grass roots community organizations and NGOs, but also of more diversified sources of income. The global environment benefits of the project consists of enhanced biodiversity conservation through improved ecological, biological and genetic connectivity of currently fragmented habitats. Furthermore, the project will generate global benefits by experimenting and demonstrating the bioregional approach to biodiversity management. The lessons leamed in this project will serve for national, regional and global replications and adaptation of the model. The primary beneficiaries of this project are rural communities and rural producer groups. More specifically, people who live in the corridors are the main target group of activities that promote conservation and sustainable development. In terms of social organization, most of the target populations are organized in ejidos and indigenous communities. Some ejidos are predominantly oriented to forestry activities; others combine subsistence production of principally maize with activities such as honey production and the collection of non-timber forest products. Indigenous peoples are particularly targeted because they live in areas which still maintain extensive forest cover and because they are considered the strongest allies in the conservation process due to their broad knowledge of the natural resource base and its uses. In order to adequately consider the social, cultural and economic diversity of the population groups within the corridors, including that of indigenous peoples in Chiapas, Yucatan and Campeche, the social 12  assessment formulated a typology of communities and producer groups (peasants). The level of organization, which to a large degree would guarantee the effective participation of these groups in the project, was considered as the main criteria of classification. The typology establishes two main types (and two sub-types, see Annex 11 for details). Within level I (sub-types I a and lb) are those communities and producer groups with lower levels of organization (about 70 percent of the total). These communities would receive support in the area of awareness raising on natural resource management issues and problem assessment. Communities with better organization level (type 2, with sub-types 2a and 2b, accounting for the remaining 30% of the total) would be able to access resources for priority setting and community level planning. The cultural diversity of Southern Mexico is very high: Maya, Tzeltal, Tzoltzil, Lacandon, Tojolobal, Chol and Zoque represent the largest number of indigenous peoples in the four states included in the MMBC. In addition, there are also significant numbers of indigenous people who have migrated from other states, among them the Zapotec of Oaxaca, Totonac of Veracuz, Purepecha of Michoacan. Finally, other Maya- speaking indigenous people in the project area are Guatemalan refugees (Mam, Quiche and Kanjobal). An important characteristic of these groups is that most of their lands are adjacent to natural protected areas. A rough estimate of the total number of indigenous beneficiaries in the corridors is around 330,000 inhabitants. Of this total number 60,000 live in the selected focal areas and will have direct access to project funds. Other important beneficiaries are mestizo people, who in many cases manage forestry and agroforestry systems that are recognized to play an important role for biodiversity conservation. Additional direct beneficiaries are individuals and groups who derive their livelihood from ecotourism and ethno-tourism since in the long run the biodiversity and cultural diversity of the area will be protected. The summary of the project's social assessment and the Indigenous Peoples Development Plan (Annexes 11 and 12) provide further information on the population in the project's area. 4. Institutional and implementation arrangements: Grant Recipient: The recipient will be NAFIN, Nacional Financiera, designated by the Government of Mexico, after consultation with the Treasury Ministry (SHCP), as financial agent for the project. Executing agency: The executing agency for this project is the United Mexican States' National Biodiversity Use and Knowledge Commission (Cornisi6n Nacional para el Conocimiento y Uso de la Biodiversidad; CONABIO), a federal level, public sector intersecretarial commission. Because CONABIO has no legal personality of its own, it will act in this project through a biodiversity trust fund mechanism (Fondo para la Biodiversidad; the Trust) which has supported CONABIO's activities since 1993. Nacional Financiera, S.N.C., serves as the Trust's Trustee, hiring consultants, entering into contracts, maintaining accounts and disbursing Trust funds in support of CONABIO initiatives, as instructed by the Trust's governing body known as the Technical Committee (Comite Tecnico). The Technical Committee is controlled by representatives from the United Mexican States' environmental agencies INE (Instituto Nacional de Ecologia) and PROFEPA (Procuraduria Federal de Protecci6n al Ambiente), and the Trustee acts through the Trustee's delegate the Technical Secretary of the Trust, who by intemal Trust rules must be the Executive Secretary of CONABIO. CONABIO, through its Executive Secretary and under the direction of the United Mexican States-controlled Technical Committee, carries out the project, and this is what is meant in this PAD when short-hand reference is made to CONABIO implementation of the project. The executing agency has been chosen in consultation with SEMARNAP and NAFIN. CONABIO, which is the institution in charge of developing the National Biodiversity Strategy and Action Plan, has been 13  selected because of its internationally recognized expertise in biodiversity matters, the match of the project's objectives with CONABIO's mandate, and the guarantee that monitoring and evaluation results will be integrated in the national information system on biodiversity established by CONABIO. Furthermore, CONABIO is in a unique position to promote mainstreaming of biodiversity criteria in sectoral agencies, since the main participants in the "Bases de Colaboraci6n" plus Finance, participate at a ministerial level in the steering committee of the CONABIO. Within CONABIO, the project unit (National Technical Unit) will be established as a directorate. At the local level, Regional Technical Units will be formed, and their personnel will be contracted directly by CONABIO. Financial Management: In order to be in full compliance with Bank requirements per OP/BP 10.02, a certified specialist carried out the financial management assessment of the project's executing agency. This review concluded that project's financial management system is adequate for final project processing and submission to the Board, since it satisfies the Bank's minimum financial management requirements (including accounting system, internal control, planning, budget and financial reporting system), as spelled out in the Bank's guidelines for review of FM Systems. The project executing agency is taking actions to have a Management Information System (MIS), which will produce quarterly Project Management Reports (PMRs) and eventually allow for PMRs-based disbursements. Traditional disbursement methods (SOEs, special commitments, petty cash where applicable, and direct payments) will be used until (i) PMR-based disbursement has been officially approved by the SHCP (Secretaria de Hacienda y Credito Publico) and (ii) both National and regional units are ready to adopt this methodology. A certificate 4-B was issued jointly with an action plan, which describes the steps that the executing agency will take to establish an MIS that can provide, with reasonable assurance, accurate and timely information on the status of the project (PMR) as required by the Bank for PMR-based disbursements. Full implementation and operation of satisfactory project management information system and reporting is one of the grant conditions of effectiveness. Institutional framework: National level. A National Corridor Council (NCC) for the project will build on and enhance the project steering committee established during preparation. The latter comprises Directors General in charge of regional programs in the Ministries participating in the Institutional Coordination Framework (SAGAR, SEMARNAP, SEDESOL, SCT, SRA, SSA, SECOFI, SEP), as well as senior officials from the National Ecology Institute (INE). The unit for international affairs of SEMARNAP acts as Secretariat of the committee. This structure will evolve into a National Corridor Council (NCC) after being enhanced to ensure representation of other sectors. The plenum of the enhanced NCC will include a total of 19 members; in addition to the federal government (4 members), there will be representation from CONABIO (2), National Commission for Protected Areas (1),. the States' governments (4), the academic (2), NGO (2), social (2) and private (2) sectors. As specified in detail in the project's PIP and operational manuals, the NCC will meet twice a year to discuss the project's overall strategic and operational framework (including linkages with the broader Mesoamerican Corridor, fit of the project within development policies and programs in southeast Mexico), to review progress in project implementation and achievement of project objectives, to review and approve in general terms the consolidated annual operational plan and budget, and to provide recommendations to the National and Regional Units on project implementation matters. . An Executive Committee of three members within the NCC will act on its behalf when the NCC is adjourned. Its main function is to oversee the functioning of the executing agency and the compliance with the 14  Executing Agreement covenants. It will be composed by SEMARNAP, CONABIO, and one representative of civil society. Local level. In each state, a Corridor State Council (CSC) representing federal (3 members) and state government (3 members), local municipal governments (2 members), NGO (2 members), academic (2 members), social (2 members) and private sectors (2 members) would discuss and oversee strategic aspects of project implementation at the corridor and focal area levels. Based on specialized work coordinated by the Regional Technical Unit, the State Corridor Council would adopt a strategy for the Corridor at large, including criteria of geographic priority, short- and mid-term targets, area of concentration of the mainstreaming efforts, and an action plan for resource mobilization to ensure long-term sustainability of Corridor activities. Project management: CONABIO's "Fondo para la Biodiversidad" will be responsible for the overall technical, administrative and procurement implementation. A specialized unit (National Technical Unit, NTU) within CONABIO will be formed for that purpose. The unit will be headed by a project general director, who will be reporting to the executive secretary of CONABIO. The project general director will coordinate a small team of two staff: an administrator, in charge of planning, financial management, accounting, and procurement; and a secretary. The NTU will also be responsible for risk management and communication. For information technology, the project will rely on existing capacity in CONABIO. This core team will be complemented as needed by experts (e.g. in Monitoring and Evaluation) hired through short-term consulting contracts. At the local level, two Regional Technical Units will be established, one for the Yucatan Peninsula corridors (Yucatan, Campeche and Quintana Roo); and one for the two corridors in Chiapas. The Yucatan Peninsula Unit will be formed by five staff: a regional director (responsible for the Yucatan Corridor), two corridor coordinators (one for the Campeche corridor and the other for the Quintana Roo corridor), a specialist in projects of sustainable development during the project's first phase, and an administrator/secretary. The Chiapas Regional Technical Unit will be formed by five staff: a regional director, two corridor coordinators (one for the northern, the other for the southern Chiapas corridor), a specialist in sustainable development projects, and an administrator/secretary. In both cases the regional director will have overall responsibility of the Unit's functioning and a specific responsibility for the corridor integration component. The Regional Technical Units (RTUs) will be responsible for the overall technical and administrative implementation of the project within their states. RTUs will cover the functions of planning, monitoring and evaluation, financial management, accounting, risk management, procurement, information technology and communication. The RTUs will report to the project's general director. Program Cycle. Every year, the Regional Technical Unit will prepare, in coordination with the NTU (National Technical Unit), an Annual Corridor Plan for each State, which will reflect recommendations from the Corridor State Council (CSC), and which will be cleared by the CSC on a no-objection basis. The State Corridor plans would include reports on past performance and output, reports on progress towards achievements of corridor and focal areas objectives, priority programs that would co-finance pilot projects on a matching fund basis, and a budget for activities to be financed during the following year. The budget would indicate source of financing (GEF, Federal and local governments, other sources). The NTU will prepare a consolidated AOP, and present it for review to the National Corridor Council (NCC). The NCC would approve (or recommend changes to) the work program as a whole (i.e. the aggregate of the individual corridor plans) on the basis of consistency with the project's objectives, conformity with the procedures established in the Project Implementation Plans (PIP) and related operational manual, and equilibrium between components. The World Bank would provide technical comments to Corridor Operational Plans prior to submission to the National Corridor Council; and it would provide its no- 15  objection to the work program as a whole, subject to conformity with project documents and compliance of the annual budgets with the pre-determined co-financing ratios for use of GEF resources (as specified in the description of the individual components above). The full description of all administrative procedures, including how to plan, prepare, select, contract, finance, and supervise project activities will be spelled out, as a condition of project effectiveness, in the final draft, acceptable to the Bank, of the Project Implementation Plan (PIP) and related operational manuals. These manuals will guide the implementation process by setting the requirements and rules of project operations for the NCC, executing agency, National Technical Unit, CSC and Regional Technical Units. Accounting, financial reporting and auditing arrangements: Each of the RTUs will maintain separate project records and will report on a monthly basis to CONABIO via the National Technical Unit. Such records will be maintained in order to reflect, in accordance with sound accounting practices (compatible with International Accounting Standards and acceptable to the Bank), the operations, resources and expenditures of each project activity. The administrators in the National and Regional Units will be qualified financial and accounting professionals. Adequate financial management arrangements for the project are included in the PIP and Operations Manual. The National Technical Unit will prepare combined financial statements for the project as a whole. The project accounts maintained by the National and Regional Units will be audited periodically; consequently, an annual audit report of project accounts, and a separate opinion with respect to the Statements of Expenditures and the Special Account will be prepared by independent auditors acceptable to the Bank, in accordance with International Standards on Auditing and the guidance provided in the "Guidelines and Terms of Reference for Audits of Projects with Financing by the World Bank in the Latin America and Caribbean Region" (the Guidelines). The auditors will be selected before the beginning of each year to be audited. All Regional Units will submit information required for the audits in a timely manner, so that CONABIO via the National Unit will be able to submit to IBRD a certified copy of the agreed audit reports no later than six months after the end of each year. TORs for all audits should obtain the Bank's no-objection. Procurement arrangements: The executing agency will be responsible and would follow standard Bank procedures for all Project procurement, and ensure their enforcement in procurement by beneficiaries. A four-year Procurement Plan is included in the Project Implementation Plan, and will be updated as part of the project's mid-term review for application to the rest of project implementation. Procedures for procurement would be incorporated into a specific Operational Manual for the National and Regional Units. Procurement would include consultant services, goods and equipment, training, minor civil works, and grants. Disbursement and flow of funds; A Special Account in US dollars with an initial deposit of US$ 650,000 would be established. This special account will be replenished and will be used for all transactions with a value of less than 20% of the amount advanced to the Special Account. Traditional documentation requirements apply for direct payments, special commitments and statements of expenditures (SOEs). If project is converted to PMR-based disbursement methodology, disbursement procedures should be in line with the Financial Management Initiative (FMI). The executing agency, with technical support from the financial agency NAFIN, would prepare the necessary documentation for prompt disbursements. An operating account in Mexican pesos would be established and should be used for all project transactions. This local-currency operating account should be replenished on monthly basis. The amount to be transferred from the Special Account to this account must be only the estimation to cover one month of eligible expenditures. 16  GEF funds will be channeled from Nafin to CONABIO, which will be responsible to transfer funds on the basis of approved operational plans to the Regional Technical Units. The project's special account will be handled outside of the regular fiscal budget process, and therefore will not be vulnerable to cuts in the budget of any of the government agencies in the National Corridor Council. Management Information System: Satisfactory management information systems will be established in the National and Regional Units. The system will cover procurement, financial management, monitoring and evaluation, communication, scheduling and planning components. The procurement activities will include establishing software for preparing and processing procurement contracts and procurement reports for PMRs. The financial management system includes COI accounting software to track the flow of project funds and will also produce the Statement of Expenditures (SOEs) and PMRs. The communication module will utilize web-based software to function as a the central hub for information exchange internally within the project and for informing external audiences on the advancement of the project. The scheduling and planning module will use Microsoft Project to develop the annual operating plans and monitor and control them. Monitoring and Evaluation: A Monitoring & Evaluation protocol has been developed during project preparation, based on indicators listed in the project's logical framework. The system will track development objective (impact) and component (process) indicators from the project's logical framework and will be based on information at the project, corridor, focal area and community levels. The protocol allows for flexibility in adapting the general framework to the conditions of specific corridors; and describes processes to be followed for data collection, analysis, consolidation and interpretation. Corridor- specific indicators will be included in the final complete version of the M&E protocol, to be submitted to the Bank for no-objection as part of the Operational Manual as a condition of effectiveness (see section G below). The NTU will be responsible for integrating and harmonizing the various aspects of monitoring (biological, ecological, socio-economic, institutional). In recognition of its comparative advantage and existing installed capacity, CONABIO will be responsible for all biological, ecological activities of the M&E sub-component, including its design, subprojects, consultant contracts, Certain specialized technical tasks will be contracted out to qualified academic or research organizations, equally under terms of reference prepared by the National Technical Unit in consultation with CONABIO's regular technical staff. Supervision: The Bank will conduct supervision activities in partnership with CONABIO and NAFIN throughout project implementation. Efforts will be made to link supervision missions to the project's programming cycle, with details to be specified in the operational manual. It is expected that supervision activities will pay special attention to the effectiveness of the project implementation arrangements (including financial management aspects), to enable their timely adjustment and fine tuning. An independent evaluation of project performance will be undertaken, under terms of reference satisfactory to the Bank, no earlier than the third full year of implementation of the project. The purpose of the independent evaluation will be a) to assess overall project performance (including progress in delivering outputs and achieving objectives); b) assess compliance with cost-sharing arrangements; c) evaluate progress in implementing the IPDP; d) evaluate whether the triggers indicators (described in Annex I of this PAD) for application of planning and investment activities to phase 2 focal areas have been met. The Independent Evaluation will provide recommendations on a) the readiness of the project to start planning and investment activities in phase 2 focal areas; b) the need for carrying out fine-tuning and adjustments to project design. Based on the outcome of the independent evaluation, CONABIO, NAFIN and the Bank will conduct a mid- term review of the project, which will have the objective of a) defining arrangements for transition to phase 2 focal areas (including an action plan for compliance with the triggers indicators, should some of them not 17  have been met); b) updating the IPDP; c) defining any other adjustment to project design and implementation arrangements that may be necessary. CONABIO, NAFIN and the Bank will conduct a final review of the project during the last year of implementation; this review will provide the basis for the project's implementation completion report. D. PROJECT RATIONALE 1. Project alternatives considered and reasons for rejection: Main choices made during preparation concerned the prioritization and design of, and the sequencing of activities in, biological corridors. Concerning the number, over 30 biological corridors were proposed in the project's inception workshop (held in October 1998 in Cancun), linking protected areas in the southeast of Mexico. The existence of a wealth of technical and scientific knowledge and of many experiences with natural resource management suggested promising opportunities for integrated biodiversity conservation in many (if not all) of the proposed connectors. Based on considerations of biodiversity relevance, costs, availability of technical capacity, and opportunities in political and institutional terms, the Bank and Mexican teams have engaged in a process of priority setting within the corridors universe initially identified. After a first round of corridors screening, six corridors with 19 focal areas were selected in 5 southern states of Mexico (Campeche, Yucatan, Quintana Roo, Chiapas and Tabasco). However, subsequent preparation work led to further reduce and concentrate the scope of the work. The Mexican and Bank design team reached the decision not to include the state of Tabasco in the project area, since the preparation process has proven that there are very few committed institutions and individuals in the state. The apparently low institutional capacity in the state of Tabasco has not allowed the preparation team to make the level of progress attained in the other 4 states. While the exclusion of Tabasco caused the number of focal areas to drop from 19 to 16, the project budget was not reduced, since advances in preparation (including more detailed definition of the project areas in the remaining states) induced an upward revision of the estimates of per-focal area implementation costs. In terms of the design of corridors, the option of distributing efforts throughout the entire extension of the corridors was discarded in favor of an approach prioritizing activities within focal areas ( Box 1, on page 6). Finally, on sequencing of implementation, the project team discarded the possibility of implementing the project in just one phase. A phased approach was preferred to reduce risks associated with the limited international experience with biological corridors and in order to be able to better incorporate lessons learned as they become available. Therefore, implementation will start in 9 focal areas during the first 4 years of the project. In the second phase the scope of actions will be widened to 7 additional focal areas. 2. Major related projects financed by the Bank and/or other development agencies (completed ongoing or planned): The project will take advantage of strategic, operational and institutional linkages with a number of closely related initiatives in the southeast of Mexico, implemented by the Bank, UNDP and other multilateral and bilateral agencies. Table 2 - Related Projects - summarizes some of the most important activities planned or ongoing in areas including institutional development and decentralization, social development, natural resource management and biodiversity conservation. 18  Related Bank Projects The project fits well within the current portfolio of World Bank projects in relevant sectors. The GEF- financed Protected Areas project supports basic conservation in 10 Protected Areas throughout the country; five of these (Sian Ka'an, Calakmul, Montes Azules, Ria Lagartos, El Triunfo) are adjacent to, or surrounded by, the proposed corridors, and will therefore benefit from the enhanced biodiversity protection provided by the corridors. The Bank finances two related projects: the Mexico Rural Development in Marginal Areas Project, which aims at improving the well-being of the rural population and expand the opportunities for integrating smallholder marginal producers into the growth process; and the Agricultural Productivity project, which operates in all 4 corridor states to promote sustainable increase in productivity and food security. The World Bank contributes baseline funding for an estimated US$ 4.2 million in support of productivity increases in maize based "milpa" systems and in fruit, coffee and livestock, 'traspatio' production to complement food and income in the selected corridor areas. Other on going natural resource management Bank projects (Community Forestry and In Farm and Water Management) contribute to strengthen the institutional and regulatory framework for sustainable natural resources management. The Bank further provides analytical assistance and financial support to indigenous people development, through its indigenous profiles 1 and 2, and the GEF initiative for biodiversity conservation in indigenous communities, respectively. Coordination with other GEF Implementing Agencies (a) Country Programmatic Frameworkfor Biodiversity The Government of Mexico is working with the GEF Secretariat and the Implementing Agencies to develop a Programmatic Framework for GEF support of biodiversity conservation initiatives in Mexico over the next 5-10 years. The Framework consists of a comprehensive approach that commits to measurable progress in conservation and sustainable use, while incorporating biodiveristy objectives into the country's national strategies and plans. It is intended to be a cost-effective means to help the country conserve and sustain its vast biodiversity. A key consideration for Mexico in the development of the programmatic framework is the viability of the current, robust pipeline in conservation and sustainable use that has been identified by the country with the assistance of the Implementing Agencies. This pipeline - containing the first full-scale projects in biodiversity in the past eight years - supports many of the areas and national priorities identified in the Mexican biodiversity strategy (MBS) as well as the instruments developed by the Government of Mexico for conservation and sustainable use. In its four principal areas (conservation, sustainable use, biodiversity knowledge and natural resource valuation) the MBS identifies areas of opportunity for increased knowledge and research as well as for engaging other sectors and actors in cross-cutting efforts needed to deepen and strengthen the country's capacity to respond to threats. The combination of the MBS and diverse policy instruments and commitments enable Mexico to focus on measurable outcomes and address the gaps identified in the development of its Action Plan. The pipeline responds to national priorities in the four "pillars" of the MBS providing for in situ conservation, sustainable use initiatives and economic and social valuation of natural resources. Each of the projects in the pipeline supports different aspects of the national strategy. The Consolidation of SINAP proposal is the centerpiece of the conservation component, and focuses on the govemment and civil society sectors. The Indigenous and Community Biodiversity Conservation project (COlNBIO) provides an 19  important complement to the SINAP approach by focusing on conservation through the indigenous and community sectors, and protecting biodiversity through non-federal conservation regimes. The conservation projects are complemented by sustainable use projects such as the current proposal and the Biodiversity Conservation and Sustainable Use in Three Priority Regions (see below). These initiatives will contribute to identifying innovative and decentralized conservation and sustainable use mechanisms that can serve as models for long-term, replicable conservation, as well as promoting the integration of civil society in biodiversity and buffer zone management, consistent with long-term government strategies. (b) Project - specific Coordination In addition to coordination at the programmatic level, linkages with specific GEF/UNDP activities will be very important. In particular, coordination arrangements with the Small Grants Program (SGP) in the Yucatan Peninsula have already been established during preparation, and a protocol has been agreed on how to ensure effective cooperation, through sharing of informnation and knowledge, joint funding of projects of sustainable development and integration of project selection, monitoring and evaluation mechanisms. The proposed Corridor project will benefit from the successful projects of sustainable developoment carried out by the SGP and will take advantage of these experiences. The teams of SGP and the Corridor projects have developed procedures to co-finance projects of sustainable use of biodversity in geographical areas of common priority, including mechanisms to reach an agreement with local stakeholders, and considering policies of both programs. With respect to the UNDP/GEF project "Conservation of Biodiversity in Three Priority Regions" - currently under preparation - the proposed Corridor project is adopting the same regional development approach in the design of the sustainable use component. Information on lessons learned will be shared as the two projects move forward during implementation. Close relations would also be maintained with the UNDP/GEF project proposing strengthening of a protected Pantanos de Centla wetland in Tabasco, which would be fully complementary with the establishment of biological connectors under the Corridor project in the neighboring states. 20  Table 2 - Related Projects Sector issue Project Latest Supervision (Form 590) Ratings (Bank-financed pr ects only) Implementation Development Progress (IP) Objective (DO) Bank-financed 1. Decentralization - Institutional 1.1 Environmental Management and Under preparation Under preparation Development Decentralization Project (PROMAD) 1.2 Institutional Coordination For Regional Not applicable Not applicable Sustainable Development Economic And (non-lending (non-lending Sector Work (Grey Cover) service) service) 2. Natural Resource Management, 2.1 Rural Development in Marginal Areas S S Biodiversity Conservation 2.2 Community Forestry S S 2.3 Protected Areas Program (GEF) HS S 2.4 Protected Areas Program 2 (GEF) Under preparation Under preparation 2.5 Mesoamerican Barrier Reef (GEF, Under preparation Under preparation multi-country) 2.6 Instruments for Private Lands Under preparation Under preparation Conservation (GEF MSP) 2.7 El Triunfo Productive Landscape (GEF S S MSP) 2.8 Oaxaca Sustainable Hillside S S Management (GEF MSP) 2.9 Regional Action Plan for the Gulf of Identification Identification California (GEF) 2. 10. Agricultural Productivity 3. Social Development 3.1 Indigenous Country Profiles 1 and 2 Not applicable Not applicable (non-lending (non-lending service) service) 3.2 Conservation in Indigenous Under preparation Under preparation Communities (GEF) Other development agencies UNDP/GEF Small Grants Program - Yucatan Peninsula Conservation of Biodiversity and Sustainable Development in Three Priority Regions Conservation of Centla Wetlands, Tabasco, and Terminos Lagoon, Campeche GTZ/DFID Sustainable Forestry in Quintana Roo and Campeche (Plan Piloto Forestal) Cloud Forest in Chiapas (DFID) HS: Highly Satisfactory; S: Satisfactory 3. Lessons learned and reflected in proposed project design: The design and preparation of the project has drawn on lessons derived from World Bank experience in implementing biodiversity projects. According to a recent World Bank report, Mainstreaming Biodiversity in Development: A World Bank Strategy for Implementing the Convention on Biological 21  Diversity, the key factors contributing to successful project implementation include: institutional strengthening, participation of local stakeholders, flexibility and decentralized management of protected areas. Similar lessons come from the Bank's experience with Biodiversity projects in Mexico (especially the first phase of the GEF Protected Areas project) and are being taken into account into the design of the Corridor project. From the Protected Areas Project it was learnt that institutional development and the broader policy environment must be addressed. In the present project important resources are therefore assigned to training of officials at different levels, while the policy environment is systematically addressed by building on an Intersecretarial Agreement (Bases de Colaboraci6n Interinstitucional). Also a different financial mechanism is proposed whereby resources will not be channeled via the federal budgetary institutions (as in the pre-restructuring Protected Areas Project), but via an extra-budgetary account. This will insure simplicity in the management of the funds and expeditiousness in project implementation. Second, a top-down approach to project design and implementation does not work or at least has serious limitations when dealing with activities affecting local peoples and organizations of civil society. Therefore, the project has adopted a participatory approach involving stakeholders in design and implementation of the project. In all states multistakeholder workshops have been organized, to discuss the project's goals and components. Local people have been consulted directly and through experts (farmers' organizations, NGOs, research institutions, government agencies). Additionally, anticipating project implementation, state corridor consultative groups have been formed in three states (Campeche, Quintana Roo and Yucatan), while steps are being taken in one (Chiapas). As a result of the process, a consensed menu of projects of sustainable development is available at present. Adequate public participation in biodiversity project areas requires activities oriented to strengthen social organizations and build capacities on sustainable development. The project builds on the experience of the Technical Advisory Committees of the Protected Areas and adopts State Corridor Councils as participatory and transparent fora at the corridor to promote decisions on strategic aspects of the projects. To assure a continuous participation of stakeholders in the project during implementation, a communication strategy has been developed as an integral part of the project implementation structure (Annex 15). Similarly, the main lesson of working with small producer, rural organizations is that one must start learning about the existing patterns of natural resource management and build on them, combining local traditional knowledge with modern technology and working together in the search of technological alternatives which are appropriate to their socioeconomic conditions. In addition, it is important to promote producers organizations around economic incentives like improving crop marketing. Finally, a major effort is required to educate trainers to provide effective support to rural communities and indigenous people, to acquire the right communication skills, to get the technical know-how needed for the adaptation of technical recommendations to specific landscape and/or agroecological conditions and to contribute to the development of economic and market-oriented sustainable use of biological local resources. 4. Indications of recipient commitment and ownership: Following a large number of studies in the past few years, undertaken by the conservation and academic communities, and promoted by the National Institute of Ecology, there have been recent 22  expressions of high level political commitment to objectives of sustainable natural resource management in the southeast of Mexico in the context of the Mesoamerican Corridor. In particular, during a recent meeting of the Executive Director of the United Nations Environment Program (UNEP) with Mexico's President and with the Environment Ministers of Central America, the Mexican Environment Minister expressed unequivocal support to the MBC, in accordance with the priorities presented on behalf of the region. The existence of a Presidential initiative (described above, section B2) to move towards a more sustainable agriculture nationwide attests to the emergence of a long-term view that is not only responding to particular pressures or groups, but is strongly committed to the national interest of sustainable environmental management and the international objectives of biodiversity conservation. Important technical and policy fora that have endorsed the Corridor idea include the National Council for Natural Protected Areas ('CONANP) (which is formed by researchers, NGOs, industry, producers organizations), and the eight ministries participating in the Institutional Coordination Framework referred to above. The latter, in particular, are committed to re-orient development programs to better integrate biodiversity concerns into them. The national GEF focal point has endorsed the project as a national priority and has requested GEF support. 5. Value added of Bank and global support in this project: The World Bank through a GEF project Pilot Phase has been collaborating with the Government of Mexico in protecting 10 protected areas, including 6 areas in the Southeast. With the Corridor project presented here, the Bank will assist the govemment in addressing the next challenge, that is, sustainable biodiversity management beyond protected areas. GEF funds under this proposal will complement and provide synergy to those already invested, by focusing on biological corridors as a complementary strategy for biodiversity conservation. GEF involvement is justified on the grounds of the project's innovative approach to biodiversity mainstreaming into development programs and biodiversity management into the productive landscape. The potential replication benefits of such an approach to other GEF-financed initiatives are remarkable. By virtue of its technical expertise, its knowledge of the project area acquired through past and current lending operations (e.g., the DRD 1, DRD2 and marginal areas projects), its dynamic network of contacts with the international development community, and its active policy dialogue with the government, the Bank is well placed to mobilize and catalyze the human and financial resources required to consolidate sustainable natural resource management in southeast Mexico, and to promote -through appropriate use of the proposed GEF grant- a long-term strategy of biodiversity mainstreaming. E. ISSUES REQUIRING SPECIAL ATTENTION 1. Economic A key issue to be addressed during implementation concerns adequate mobilization of resources for full funding of baseline activities. Estimates based on project team's consultations with the government indicate a strong commitment of the Federal Government to earmark funds from its 23  regional development programs to the project's focal areas. During appraisal, the SEMARNAP Secretary indicated that, as part of the 2001 budget process, the Ministries participating into the Priority Regions program would prioritize federal programs, and define budgetary amounts to be concentrated in the project area and to serve as a basis for the project's re-orientation effort. During negotiations, a Counterpart Resource Obligation Schedule was discussed and agreed upon, which includes projections, throughout the project duration, of federal resources to be earmarked to corridor areas for full funding of baseline activities. Economic evaluation methodology: [ ] Cost benefit [ ] Cost effectiveness [X] Incremental Cost []Other [specify] An analysis of Incremental Costs and Global Environmental Benefits is presented in Annex 4. 2. Financial The financial viability of selected alternative options of biodiversity-friendly natural resource management has been analyzed in several studies undertaken during preparation. Financial feasibility is one of the criteria included in the Project Implementation Plan (and related operational manuals) for the selection of sub-projects under the sustainable use component. 3. Technical Corridor Design Component: As has been mentioned earlier, international experience with the design of biological corridors is limited. Therefore, a substantial effort took place to identify best practice and lessons learned. An international scientific team, consisting of scientists from Oxford University, Bank staff and Mexican scientists, summarized the scientific basis for biological corridor design, international experience in corridor implementation, and developed a set of explicit recommendations to develop design features applicable to the local realities of southern Mexico. The Bank also commissioned a literature review on biological corridors (Fernandez 1999). The results of these studies were discussed at a workshop held in CONABIO in September 1999 with top Mexican scientists. As a result, design is based on a state of the art understanding of issues and limitations related to corridor experience. Through this process, the following issues have been identified as key to be closely watched during project implementation: (i) A primary goal of biological corridors is to maintain biodiversity and ecological processes over large scales. Therefore, complete and solid biological and ecological information is indispensable to evaluate the advance towards that goal, and biodiversity goals and monitoring efforts need to be taken into account and made compatible at site, local, and regional levels. CONABIO's participation in the project, and its responsibility in biological and ecological aspects, is particularly important for this component due to its knowledge and experience in biodiversity information management. (ii) Scientific uncertainty. According to Simberloff, "there is no unified scientific agreement regarding the role of corridors to combine genetic, demographic, and other forces threatening small populations nor is there accord on the relative importance of these threats." Therefore, it is imperative to maintain, as much as possible, a non-intrusive, flexible principle and avoid the implementation of major and irreversible management actions (precautionary principle). (iii) The long-term sustainability of corridors is strongly linked to their ability to provide multiple services to societies; these services go beyond biodiversity conservation and include the 24  generation of economic opportunities to local people that live and depend on natural resources. The multiplicity of goals and stakeholder interests needs to be recognized as an integral part of corridor design and were identified as part of the incremental cost analysis. (iv) In addition to the precautionary principle, experience in the Wadden Sea regional program suggests the need to also consider the following principles: principle of careful decision (making decisions on the basis of best available information); principle of avoidance (avoiding potentially damaging activities); principle of translocation (translocate damaging activities to those areas where their impact will be minimal); principle of compensation (harmful effects which cannot be avoided must be balanced by compensatory measures); principle of restoration (where possible, key habitats must be restored); principle of best available techniques (to apply latest technological tools that may enhance effectiveness); and principle of best environmental practice (to apply optimal combination of measures to limit environmental impacts). Wherever applicable, these principles have been used in the design of this project. (v) The ecological considerations developed for corridor design (Oxford, 1999) include three major axes: biodiversity, connectivity, and generation of ecological benefits. A matrix of land- use options allows for values to be assigned to each axis for each land-use category. In this way, it is possible to determine relative biodiversity values for each land-use option. This matrix constitutes an important tool to define optimal land-use configurations. (vi) Monitoring and evaluation. An M&E protocol has been developed, that considers the systematic and periodic gathering of information at different scales by combining participative methods of monitoring by local people with formal scientific methods. During implementation, monitoring will permit the detailed understanding of patterns of land-use change and status of biodiversity as a basic input for adaptation of corridor strategies. The implementation of the protocol can draw on existing information and on monitoring funded through other sources than the project. Sustainable use component: The Project Implementation Plan specifies criteria that would ensure quality of technical activities developed by sub-projects, being technological, or economic in nature, such as improved milpa or pasture management, marketing of organic productions, ecotourism, aquaculture, artisanal production, etc. Specialized technical assistance and farmers' research will be favored at farm and rural communitv levels to achieve fine-tuning of recommended activities to specific agroecological, social and cultural context and consequently to ensure economic, social and cultural sustainability of the technical changes recommended. Capacity building activities will be provided to farmers, producers and their organizations, as well as to front line agents and local authorities to facilitate the internalization of biodiversity conservation objectives into current practices and programs of natural resources management. Emphasis will be on farmer to farmer visit and networking. Mainstreaming component: Retrofitting biodiversity compatibility criteria to existing development programs may be challenging in some cases, due to the dearth of relevant technical experience, as well as to the complexity of current practices of design and implementation of the programs' operational manuals. Implementation of this component will target programs with large biodiversity impacts while striving to keep administrative and management costs within reasonable norms. It is expected that while encountering some difficulty in applying it to existing (and long consolidated) programs, the proposed mainstreaming approach may generate significant methodological benefits (e.g. lessons learned), thereby influencing at an upstream stage the design and implementation of future development programs in Mexico and possibly also in other countries. 25  4. Institutional [ ] Summarize issues below (e.g., project management, M&E capacity, administrative regulations) [X] To be defined (indicate how issues will be identified) [ ] None Current political timing (with little time remaining to the present federal administration) may pose both opportunities and challenges for the project. On the one hand, the current administration, which has distinguished itself for a strong commitment to environmental matters, welcomes opportunities to leave a legacy of initiatives with a long-term vision. On the other hand, its ability to accompany those initiatives all the way from design to fruition is limited by the very short time it will remain in office. The success of the project will, therefore, greatly depend on the existence of an incentive framework that encourages the new federal administration to reiterate the commitment. Three factors are likely to generate those incentives: a) the momentum that the Mesoamerican Corridor Initiative is gaining at the international level will make Mexico's participation in the effort more necessary (and more politically palatable); b) the awareness-raising and social engagement activities that will be undertaken at the local level during project preparation and the initial stages of implementation will generate a "local demand" for the Corridor Initiative that will likely translate in renewed political commitment; c) the proposed phased approach to project financing will generate incentives for the new administration to comply with the conservation and sustainable use targets developed during preparation. 5. Social A social assessment (SA) and participatory rural appraisal, with special attention for indigenous peoples, has been completed. The assessment effort started by analyzing existing information, specially that provided by the Indigenous Peoples Profiles of Mexico (Web page www.unam.mx/ciesas), prepared by several govemment agencies and NGOs with World Bank support. It has been further developed by studies and fieldwork carried out at the corridor and focal area levels by local NGOs and social consultants, whose expertise is highly recognized. Implementation of this process essentially has entailed the following activities: 1) Identification of key stakeholders in the corridors MMBC and particularly in the focal areas; particular attention is paid to lands belonging to indigenous communities, which are covered by World Bank OD 4.20. 2) Identification of key social issues in biodiversity conservation and sustainable development of the MMBC. Five key issues have been identified: the need to consider the region as a living space; the relationship between local culture and the environment; land tenure and distribution; economic activities; social organization. 3) Determination of the potential social impacts of the MMBC, with special focus on indigenous peoples and gender, and including quantitative and qualitative methods and tools. 4) Formulation of an action plan, including a framework of social participation with a specific strategy to insure that indigenous peoples participate in the project cycle, receive benefits compatible with their culture and are not affected adversely by project activities. 26  The project includes an Indigenous Peoples Development Plan (IPDP) (see Annex 12 ), oriented to find practical ways to involve indigenous peoples in the design and implementation of the project, particularly via technical assistance and capacity building activities. It essentially entails the creation of a special window to finance pilot projects presented by vulnerable groups (such as indigenous communities and women groups). This represents about 10% of total project resources over an eight- year period. But, in addition, the above groups can also access the project resources for activities such as workshops, pilot projects, studies, and capacity building and planning, which amount to some 40% of the project's budget. Considering the special conditions of the focal area La Cojolita (high level of social conflicts and land tenure problems), the IPDP specifies that during the first year of project implementation there will be additional consultation activities carried out in this focal area. The activities will involve participatory planning to adapt the global strategic lines of the IPDP to the particular conditions of the area. The conclusion of these activities will be a condition for the application of investment resources in La Cojolita. The overall Social Assessment and Indigenous Peoples Development Plan has been implemented in a progressive way. The corridor of Sian Ka'an-Calakmul in Quintana Roo has served as a model for the studies undertaken in the other corridors (see details in Annex 12). The studies analyzed opportunities to improve indigenous peoples' access to improved natural resource use technologies by: a) strengthening their social organization; b) training in legal aspects (e.g. land tenure); c) promoting a gender approach in the generation and distribution of income as well as in communal decision making and the distribution of labor; and d) increasing their technical capacity for self- managed development in different fields. 6. Environmental This Category B project is designed to be entirely positive from an environmental standpoint, particularly by promoting the conservation and sustainable use of globally significant biodiversity on selected community, ejido and private lands. A number of activities were undertaken during preparation to assess current trends and threats to biodoversity in the project area, and to define interventions to revert the accelerated loss of biodiversity. These activities included a study by the Department of Plant Sciences, University of Oxford, UK, which developed a set of criteria to be used for identifying activities in terrestrial corridors. For the Northern Yucatan corridor, an international consulting firm, Euroconsult, analyzed the specific problems related to the coast that play a significant role in this corridor. In addition to technical reports, direct consultation were undertaken with farmers, fishermen and other stakeholders, to develop a menu of projects of sustainable development (see Annex 2). This information was analyzed in conjunction with data generated through the social assessment. In order to assess the potential environmental impacts of activities proposed for project financing on the basis of the above process of analysis and consultation, an environmental assessment was undertaken by a team of a Mexican and an international consultant. The consultants consolidated the results of studies and consultations undertaken during preparation, and conducted additional field work in Chiapas and Quintana Roo to discuss with local stakeholder their findings. Project activities that may have significant environmental impacts are pilot sub-projects in the sustainable use and corridor integration components. As described in detail in Annex 2, these sub- projects are geared towards promoting community and indigenous development. In terms of their nature, they are of three main types: a) maintenance of ecosystem quality, b) restoration and c) sustainable use of biodiversity. Differential procedures for screening and assessing the impacts of 27  sub-projects are established in the PIP for sub-projects of types a) and b), on the one hand; and of type c), on the other hand. Sub-projects promoting maintenance and/or restoration of ecosystem quality (types a and b) are expected to have very low environmental impacts. They would be screened and assessed by the Regional Technical Units (RTUs). Each RTU will have in their staff a specialist in sustainable use projects, with skills and qualifications (satisfactory to the Bank) in environmental impact assessment. Environmental impacts of sub-projects of sustainable use (see Annex 2 for a detailed list of examples) will be subject to more in-depth scrutiny. They will receive a preliminary screening by the RTUs to verify eligibility and a first environmental assessment. In addition, the RTU (under the supervision of the National Technical Unit) will prepare a report on environmental impacts ("informe preventivo"), to be submitted to the National Ecology Institute (INE) for technical review. Written approval by INE of the ("informe preventivo") will be a condition for sub-project financing. In order to monitor smooth operation of the proposed arrangements, a total of 8 of sub-projects will be subject to Bank's prior review. These will be the first 2 sub-projects approved by each RTU with a cost below $7,500, and the first 2 sub-projects approved by each RTU with a cost above $7,500. For subsequent sub-projects, the National Unit will inform the Bank on the pipeline of sub-projects under consideration (in the different types a, b and c) through bi-annual reports. The full list of sub-projects approved every year will be submitted to the National Corridor Council as an annex of the Annual work program. All assessments undertaken by the RTUs will be conducted on the basis of a typology and checklist, contained in the operational manual, of possible environmental impacts. No sub-project will be financed, which proposes activities inconsistent with Bank policies. In particular, in compliance with OP 4.36, no funds will be provided to finance investments in timber harvesting operations or in timber processing equipment (except with respect to plantations in non-forested areas, in heavily degraded forested areas, or in areas already planted; or except with respect to controlled sustained- yield forest management; but in no case in areas of primary tropical moist forest). f. Local groups and NGOs consulted: (List names): Amigos de Sian Ka'an CICY CINVESTAV Consejo Regional Agrosilvopecuario y de Servicios de Xpujil, S.C. Consejo Regional Indigena y Popular de Xpujil, S.C. Conservation International, Chiapas Ecosur El Eden ICRAF IDESMAC Marea Azul Mero Lec, A.C. Noh Bek (forestry producers) OEPFZM (forestry producers) Programa Peninsular de Desarrollo Participativo Pronatura Chiapas A.C. Pronatura Peninsula de Yucatan Proselva 28  Rio Lagartos Sociedad de Productores Ejidales Forestales de Quintana Roo Sociedad de Pueblos Indigenas Forestales "Tumben Cuxtal", S.C. TNC Tropica Rural Latinoamericana UACh UADY Uni6n de Productores de Chicle Natural-Plan Piloto Chiclero Universidad de Quintana Roo Universidad Juarez Aut6noma de Tabasco UNORCA Quintana Roo Yax che Yum Balam g. Resettlement [] Summarize issues below (e.g., resettlement planning, compensation) []To be defined (indicate how issues will be identified) [X] None h. Borrower permission to release EA: [] Yes [ No [] N/A i. Other remarks: None 7. Participatory Approach: a. Primary beneficiaries and other affected groups: During project preparation and in particular during the preparation of the SA and IPDP (see Annexes 11 and 12), several forms of consultations have been organized in communities and ejidos and with representatives of farmers' organizations, to inform about the objectives of the project and to establish a dialogue between stakeholders and the team that prepares the project. In this way the conditions have been created to ensure local ownership of the project. In order to strengthen this approach, a communication strategy has been developed for project implementation (see Annex 15 for details). Radio programs and videos are being developed and translated to indigenous languages. Informed participation is further ensured through the work of the local corridor councils, whose members actively inform their constituencies (farmers, NGOs, academy, local government). b. Other key stakeholders: The project has been designed with a very strong participatory framework, and several workshops have been held with local and national stakeholders. An internet page has been developed with information and key documents: http://freecenter.digiweb.com/pages/cbm/index.htnl. The project's monitoring and evaluation protocol considers active participation of all stakeholders and their access to results. 8. Checklist of Bank Policies The project addresses issues contained in the Bank policies checked below. All the provisions made therein are being complied with. 29  a. Do any of the following safeguard policies apply to the project?: [x] Indigenous peoples (OD 4.20) [ ] Riparian water rights (OP 7.50) (BP 7.50) (GP 7.50) [x] Cultural property (OPN 11.03) [ ] Financial management (OP 10.02) (BP 10.02) [x] Environmental impacts [] Financing of recurrent costs (OMS 1.21) (OP 4.01) (BP 4.01) (GP 4.01) [xl Natural habitats [ ] Local cost sharing (OP 4.01) (BP 4.01) (GP 4.01) (OP 6.30) (BP 6.30) ((P 6.30) [x] Gender issues (OP 4.20) [ ] Cost-sharing above country three-year average (GP 6.30) (OP 6.30) (BP 6.30) [ ] Involuntary resettlement (OD 4.30) [ ] Retroactive financing above normal limit (OP 12.10) (GP 12.10) [xl NGO involvement (GP 14.70) [ ] Disputed territory (OP 7.60) (BP 7.60) (GP 7.60) [x] Forestry (OP 4.36) [ ] Other (provide necessary details) b. Describe issue(s) involved, not already discussed above: None F. SUSTAINABILITY AND RISKS 1. Sustainability: Stakeholders' interest and participation, demonstrated during the project's preparation phase, reflect the demand that exists for locally adapted programs for sustainable use of natural resources. This, together with institutional and political commitment, technical soundness and financial viability, is likely to ensure long-termn sustainability of the project. The specific combinations of community participation, political will, civil society engagement, and financial arrangements required to promote sustainability of biodiversity conservation after the project is likely to vary across the various corridors. For this reason, it is proposed that each corridor strategy develops a specific approach and set of provisions to that end (satisfactory to the Bank) as a condition for transition to the second phase of project financial support. 2. Critical Risks (reflecting assumptions in the fourth column of Annex 1): Identified risks fall in two main categories: a) technical (design of corridors and sub-projects to take place therein); and b) institutional (mobilization of political will and institutional cooperation in support of the corridor concept). Ratings show that risks are in general manageable. The most significant risks relate to possible institutional, policy and political obstacles to the project's objective of mainstreaming biodiversity in public programs and local development practices. Measures proposed to minimize these and the other risks identified are listed below. Risk Risk Risk Minimization Measure Rating Annex 1, cell "from Outputs to Objective" 1. Technical data is not available and scientific N 1. Seek opportunities for data exchange with other consensus and local capacity is not present to organizations 30  Risk Risk Risk Minimization Measure Rating define limits and characteristics of corridors 2. Policy decision making processes at various M 2. 1 Project's communication strategy at community and levels take into account outcome of corridor institutions level mapping 2.2 Generate incentives for use of infommation in the corridor integration component 3. Communities do not accept corridor approach M 3. 1 Project's communication strategy at community and and are not willing to commit themselves to institutions level conservation and sustainable use priorities 3.2 Generate incentives for use of information in the sustainable use component 4. Social unrest increases in project area M 4. 1 Project's participatory and inclusive approach helps improve living conditions thereby reducing risk in focal areas 4.2 Risk rating applies only to a few focal areas 5. Local institutional and technical capacity is N 5. 2 Seek opportunities for collaboration and exchanges with insufficient to operate the M&E system local organization with required capacity 5.2 Targeted use of project resources in design component 6. Lack of support of senior policy makers to M 6. 1 Project's communication strategy at community and mainstreaming efforts institutions level 6.2 Generate incentives for use of information in the sustainable use component 7. National sectoral policies (e.g. pricing of S 7. Policy dialogue of the Bank with the Federal govemment agricultural inputs and outputs, land tenure) are in conflict wilh conservation and sustainable use of biodiversity 8. "Bio-friendly" modifications cannot be S 8. Identification of practical administrative options to modify implemented effectively in State and Federal programs programs 9. Cost of bio-friendly modifications exceeds N 9. Concentration of efforts in areas where different benefits benefits (in economic terms, taking into account combined exceed cost (taking into account extemalities) externalities) 10. Lack of technical consensus on criteria to re- M 10. Promote consensus through information exchange and orient govermnent plans and programs in a sharing best practices biodiversity - friendly manner 11. Lack of trainees' commitment to translate N 11. Project's communication strategy at community and knowledge acquired into modified behavior institutions level 12. Time opportunity cost of training is too high for N 12. Make training demand driven, efficient and useful trainees 13. Inappropriate socioeconomic conditions for the M 13. Careful selection of focal areas and target communities adoption of altematives of sustainable use (land based on social assessment tenure, community organization, level of conflict and access to resources) 14. Insufficient altematives of sustainable use N 14. Careful selection of options based on agroecological studies 15. Low demand from producers for sustainable use N 15. Awareness raising of market opportunities options 31  Risk Risk Risk Minimization Measure 16. Viable sustainable use alternatives are not N 16. Improve selection and screening of altemative options compatible with corridor objectives 17. Findings of studies are not implemented in the M 17. Dissemination of best practices including farmer to field farmer extension 18. Options proposed by studies are not financially S 18. Improve market access through: eco-marketing, labeling viable and certification 19. Lack of consensus within steering committees at M 19. Facilitate consensus building the central and state level 20. Workload of the Project Management Units S 20. Outsource selected activities to qualified NGOs or (national and state level) is unmanageable academic institutions Annex 1, cell "from Components to Outputs" 1. Required counterpart funding is not available S/M 1. GEF disbursement made conditional on adequate counterpart funding 2. Proper project coordination mechanisms are not in S 2. Seek renewed commitment to institutional coordination as place part of the Bank's policy dialogue with the new federal administration; if needed, identify options for adjustment of coordination arrangements during supervision Overall Risk Rating S Risk Rating - H (High Risk), S (Substantial Risk), M (Modest Risk), N (Negligible or Low Risk) 3. Possible Controversial Aspects (Project Alert System): Risk Type of Risk Rating Risk Minimization Measure Risk A small NGO claiming to represent S M Bank and Mexican teams are indigenous communities in Chiapas has engaged in dialogue with expressed dissatisfaction with the NGO and community consultation process followed in one of the representatives to address Chiapas focal areas, and has indicated that it concerns and resolve may consider filing a complaint before the controversial issues. Project Bank's Inspection Panel. design (including IPDP) allows for continued consultation and participatory planning in the detailed definition of activities to be financed under the corridor design and sustainable use components Type of Risk - S (Social), E (Ecological), P (Pollution), G (Governance), M (Management capacity), 0 (Other) Risk Rating - H (High Risk), S (Substantial Risk), M (Modest Risk), N (Negligible or Low Risk) 32  G. GRANT CONDITIONS The main grant conditions are summarized in the table below. Table 3 - Grant conditions Conditions of Negotiation Conditions of Effectiveness Technical Units * TORs, list of qualifications and National Technical Unit fully staffed and criterias for evaluation and selection operational (in accordance with the for the following staff: provisions of the operational manual) no later - Project General Director than 30 calendar days after the effective date - Regional Directors National Corridor All membership positions filled Council Corridor State All membership positions in all 4 CSCs filled Councils (CSCs) in M&E Protocol Advanced draft design Completed (included in Operational Manual) Procurement * Satisfactory Procurement Plan (General Procurement Plan for the first phase and detailed Plan for first year) Financial Project Management Information Financial management system satisfactory to Management, Audits System design approved the Bank (including reports) Independent auditors appointed Project Completed Completed Implementation Plan Operational Issued and put into effect Manuals Legal Opinion UMS furnished to the Bank a legal opinion satisfactory to the Bank, of SEMARNAP counsel acceptable to the Bank, showing that on behalf of UMS, Grant Agreement has been duly authorized or ratified by, and executed and delivered on behalf of, UMS and is legally binding upon UMS in accordance with its terms 33  H. READINESS FOR IMPLEMENTATION 1. a) The engineing design documenu for the first year's aivitics are completc and iwady for the stan of project implem entaion. I b) Nol applicable. -_X 2 The procurement documents for the firm yees activities are complete and ready fbr the sta of prjoct implementation. See Grzn conditions 3. The Project lnplcinenution Plan has becn appraised nd found to be realistic and of satisfcsory quali. Ycs 4. The following iterns ac lacking and arc discussed under grt conditions (Section 0): * Final venions of Uie Proc4temewL Plan * Final version of the Opeuational Manuals * Final version of the MIS * Final venion of the MIE Protocol 1. COMPLIANCE WITH BANK POLICEES 1- This projea complics with all applicable Bank policies. Yes 2. The following exceptiong to Bank policies are rccomnmended for approval. The projct comnplies with all other applicable Bank policies. Raffae f0 Crvgni Jon Rwood Olivier Lu Tam Leader Sector Manager/Director County Managedirector 34  Annex 1 Page 1 of 10 Annex 1: Project Design Summary - Mexico: Mesoamerican Biological Corridor A. Logical framework [ Narrative Summary Key Performance Indicators Monitoring and Evaluation Critical Assumptions a. Sector-reloed CAS Goda Institutional development and decentralization of Increased institutional capacity for Sector work in the natural resource sector (Goal to Bank Mission) environmental management, better management environmental management, decentralized (periodic) Improved, decentralized management of of natural resources, assistance in the design of environmental management, effective natural resources helps alleviate poverty in a sector policies management plans in corridor areas sustainable way b, GEF Operado#a Program: Protection of biodiversity through in-situ Maintenance of ecosystem diversity and Ecological, biological, and geographic surveys conservation and sustainable use in coastal, biodiversity conservation forest and mountain ecosystem (OP. 2, 3 an.d4. . . . .......__ Project Global Objective_- Conservation and sustainable use of globally 1. After 7 years, in focal areas (15% of 1. Land cover, land use surveys, ecological (From Objective to CAS Goal) significant biodiversity in six biological corridors total surface): surveys, biological surveys (GIS) Commitment of the public sector and civil corridors in southeast Mexico through a) rate of native habitat loss is decreased, society to incorporate project lessons into mainstreaming of biodiversity criteria in public and/or area under native vegetation cover is broader (sector-wide or nation-widn) expenditure, and in selected local planning and increased (with specific targets varying initiatives for natural resource management development practices. across individual focal areas); b) degree of perturbation of populations of corridor-specific indicators species (e.g. selected birds, mammals, insects, plants) is decreased 2. Communities (and/or producers groups) 2. Social surveys in focal areas are engaged in different forms (depending on levels of organization) of local planning oriented towards conservation and sustainable use: * Awareness raising (at least 80% of focal areas' surface and/or 80% of communities) * Problem assessment (at least 50%/o) * Priority setting (at least 30%/o) * Development of action plans (at least 10%) I  Annex 1 Page 2 of 10 Narrative Summary Key Performance Indicators Monitoring and Evaluation Critical Assumptions 3. In focal areas, no more than 30% to 50% 3. GIS and Agroecological field surveys (From Objective to GEF Operational (depending on each focal area) of Program) production (in area, or producers) is 1. Landscape approach benefits biodiversity associated with selected, high-impact conservation. Corridors are effective resource use practices detrimental to mechanism for genetic dispersion and biodiversity (e.g. uncontrolled agriculture migratory species well being fire use, inadequate waste disposal, overfishing, over-hunting) in native ecosystems 4. In focal areas, at least 30% to 50% 4. Social surveys 2. Occurrence of Natural Disaster does not (depending on individual focal areas) of exceed historical trends and does not production (in percentage of area, or of generate unanticipated social response producers, or value) is generated by financially sustainable, biodiversity- friendly, selected practices of use of natural resources (forest products, honey, maize, vegetables, ecotourism activities, etc.) in the productive landscape 5. In the various corridors, at least 40% of 5. Budgets of government programs (existing and new) public programs and at least 20% of public spending with impacts on natural resource base take into account biodiversity considerations, including: a) programs re-oriented from potentially harmful to biodiversity friendly or neutral activities b) programs actively promoting activities of sustainable use of biodiversity 2  Annex 1 Page 3 flO l Narrative Summary Key Performance Indicators Monitoring and Evaluation Critical Assumptions Outputs A. PARTICIPATORY DESIGN AND MONITORING 1. Detailed Information is available on 1. Maps on vegetation land use and Technical reports (CD-Rom and Web formats) (Outputs to Objective) delimitation of corridors, focal areas and geomorphology: 1. Technical data is available and scientific transitions zones 1.1. At the corridor level (5 maps per theme Maps produced consensus and local capacity is present to at scale 1:250,000) define limits and characteristics of corridors. 1.2. Focal area level (9 maps per theme for . P d the first phase; 7 for the second phase at 2. Policy decision making processes at thae fistphs; frth scodphsea various levels take into account outcome of scale 1:100,000) ~~~~~~~~~~~~~~corrdor mapping 2. Communities in focal areas get involved in 2.1 Raised awareness in 120 communities Workshop reports 3. Communities accept corridor approach and local planning for corridors in different ways 2.2 Problem assessment in 72 communities Reports of meetings are willing to commit themselves to (awareness raising, problem assessment, priority 2.3 Priority setting in 36 communities Reports of technical studies conservation and sustainable use priorities setting, strategies) 2.4 12 Community level maps and strategies (1:10,000, designed in a Maps produced 4. Social unrest does not increase in project participatory manner) area 3. A Monitoring and Evaluation system 3. GIS and Database System: Technical Report 5. Local institutional and technical capacity (comprising biological, ecological, socio- 3.2 Data collected initially (baseline) and Annual M&E Reports exist to operate the M&E system economic and institutional indicators) is periodically to feed M&E System: established and functions regularly 3.2.1 Ecological information (baseline, Maps produced mid-term, end of project) 3.2.2 Biological informnation (baseline, mid- term, end of project) 3.2.3 Socio-economic information (baseline, and then every other year) 3.2.4 Institutional data (baseline, and then every year) 3  Annex 1 Page 4 of 10 Narrative Summary Key Performance Indicators Monitoring and Evaluation Critical Assumptions Outputs (continues) B. CORRIDOR INTEGRATION l. Based on the analysis of biodiversity impacts 1.1. 35 Studies on biodiversity impacts of Technical reports 1. Continuing support of senior policy of existing programs (federal, state and 1 2 14 Studies to promote integration of Minutes of Corridor Councils meetings makers to mainstreaming efforts municipal), 5 corridor strategies are defined with biodiversity into state/municipal Reports of workshops stakeholder consensus (first phase; reviewed in development plans second phase) with respect to coordination and 1.3. Five corridor strategies developed with integration of biodiversity concems in programs stakeholder consensus (first phase; (including production and restoration) reviewed in second phase) 2. Biodiversity considerations are integrated in 2.1 At least two state development plans State and Municipal development Plans 2. National sector policies (e.g. pricing of the design, execution and monitoring of selected include biodiversity priorities. Operational Manuals of development programs agriculatural inputs and outputs, land tenure) public programs and policy instruments 2.2 At least 15 municipal development Pre-feasibility studies, technical reports are not in conflict with conservation and plans address biodiversity priorities sustainable use of biodiversity. 2.3 At least 5 sectoral programs include negative filters (activities with negative 3. "Bio-fricndly" modifications can be impacts on corridor are ineligible for retrofit to state and federal programs funding). 2.4 At least 10 sectoral programs contain 4. Cost of bio-friendly modifications does not positive incentives (priority for activities exceed benefits (in economic terms, taking with both development and biodiversity into account externalities) benefits) 5. Technical consensus exists on criteria to 2.5. Biodiversity concerns consistently r-retgvrmn ln n rgasi integrated in M & E procedures of at least re-orient govefrment plans and programs m a 10 public programs (through an "observer" biodiversity - fnendly manner type approach) 3. Capacity of government officials at federal, 3.1. 60 officials trained at federal level Training reports 6. Trainees are committed to translate state and municipality level is strengthened to 3.2. 60 officials trained at state level knowledge acquired into modified behavior design and implement selected development 3.3. 140 officials trained at municipal level plans and programs in ways that integrate biodiversity considerations (through training and study tours) 4  Annex 1 Page 5 of lO F Narrative Summary Key Performance Indicators Monitoring and Evaluation Critical Assumptions Oulpuis (condnues) C. SUSTAINABLE USE I. Strengthened capacity building for diversified 1 l . 64 Training workshops Course reports I. Time opportunity cost of training is not too production, and improved managerial and 1.2 112 Learning courses Minutes of workshops high for trainees organizational skills 1.3 64 Dissemination activities (including Other field reports farmer to farmer extension) 2. Sustainable use of biodiversity promoted 2.1 305 Small pilots to promote awareness Field supervision reports 2. Appropriate socioeconomic conditions through pilot projects for maintenance of native in communities with limited levels of exist for the adoption of alternatives of ecosystems' functions, restoration of degraded organization Social surveys sustainable use (land tenure. community ecosystems, sustainable use in the productive 2.2 130 Pilots reserved for sulnerable organization, low level of conflict, access and landscape groups initiatives (indigenous, women) demand for appropriate alternatives) 2.3 130 Pilots for communities with higher 3. Adequate alternatives and demand for levels of organization (financed with sustainable use exist matching funds from government programs) 4. Viable sustainable use alternatives are compatible with corridor objectives 3. Knowledge of conditions required for local 3.1 32 Focused studies Reports 5. Findings of studies will be implemented in adoption of sustainable use options improved the field (including market access and certification, pre- Field surveys feasibility, local adaptation of alternative 6. Options proposed by studies are technology) financially viable 4. Effective communication outreach 4.1 Clear understanding of project Interviews with audiences and opinion polls 7. Institutional capacity in communication for objectives and components by primary development exists in the region audiences at regional and local levels averaging 40% for rural stakeholders, and 60% for institutional stakeholders Review of material effectiveness 4.2 Timely production and distribution of outreach materials based on communication strategy and social and cultural backgrounds 5  Annex 1 Page 6 of 10 Narrative Summary Key Performance Indicators Monitoring and Evaluation Critical Assumptions D. PROJECT MANAGEMENT 1. Effective performance of the National I. NCC meets twice a year to review Reports of meetings 1. Consensus within Corridor Councils at the Corridor Council operational plans and execution, to discuss National and State level exists lines of actions and strategies. 2. Effective management and coordination of Based on project cycle and schedule Independent reviews 2. Workload of the Project Technical Units project at the National level established in the Operational Manual: Bank supervision (National and Regional level) is manageable 2.1. Timely preparation and distribution of Procurement and audit reports infonration to the National Corridor Council 2.2. Timely preparation of the Annual Operational Plan 2.3. Timely disbursement of project funds in compliance with applicable procurement and audit procedures 3. Effective performance of the State Corridor 3. SCC meets four times a year to review Reports of meetings Councils operational plan preparation and execution and discuss lines of actions and strategies. 4. Effective management and coordination of Based on project cycle and schedule Reviews by the National Technical Unit project at the Regional level established in the Operational Manual: Reviews by the National Technical Unit 4.1Timely preparation and distribution of information to the State Corridor Councils Procurement and audit reports 4.2. 'I'imely preparation of the State Corridor Annual Operational Plan 4.3. Timely disbursement of project funds in compliance with applicable procurement and audit procedures 6  Annex I Page 7 of 10 Narrative Summary Key Performance Indicators Monitoring and Evaluation Critical Assumptions Project Com ponents/Sub-con.ponents: Inputs A. Participatory Corridor Design US $ 4.26 M Supervision reports (Components to Outputs) Disbursement reports 1. Required counterpart funding is available 1.1. Mapping at focal area and corridor level 1.2. Awareness raising workshops 1.3. Diagnostic workshops 1.4. Priority setting workshops 1.5. Strategy workshops 1.6. GIS establishment 1.7. GIS operation 1.8. Generation of ecological data (M&E System) (corridor area) 1.9. Generation of ecological data (focal area level) (M&E System) 1. 10. Generation of biological information vegetation (M&E System) 1I.11. Generation of biological information fauna (M&E System) 1.12 Generation of institutional information (M &E System) __ _ __ _ _ _ _ ___ __ _ _ _ _ _ _ _ _ __ _ _ _ _ _ 1.13. Generation of social information (M&E System) B. Corridor Intearation into development US $ 3.98 M Supervision reports 2.1 Required counterpart funding is available programs: Disbursement reports 2.2 Horizontal and vertical coordination State and Federal budgets mechanisms among government agencies are in place and working 2.1. Studies to determnine impact of programs and provide technical inputs for corridor strategies 2.2. Workshops to define and update corridor strategies 2.3. Studies on state and municipality development plans 2.4. Training to increase capacity at state and municipal level 2.5. Workshops to integrate biodiversity concerns in state and municipal plans 2.6. Studies to improve design of govemment programs (including field tests) 2.7. Training to improve execution of 7  Annex 1 Page 8 of 10 Narrative Summary Key Performance Indicators Monitoring and Evaluation Critical Assumptions government programs 2.8. Support for the incremental M & E cost of re-oriented programs C. Sustainable and equitable use of biological US $4.01 M Supervision reports 3.1 Required counterpart funding is available resources Disbursement reports 3.2 Institutional capacity in communication ______________________________ __ State and Federal budgets _ for development 3.1. Small Pilots to promote planning 3.2. Pilots (vulnerable groups: indigenous, women groups) 3.3. Pilots (Other groups) 3.4. Capacity building for diversified production, managerial and organizational skills 3.5. Capacity building for diversified production, managerial and organizational skills (Training courses/ workshops) 3.6. Capacity building for diversified production, managerial and organizational skills (Study tours/ farmer to farmer extension, including Technical Assistance) 3.7. Studies (market access and certification, pre-feasibility, local adaptation) 3.8. Development of communication strategy at regional and state levels 3.9. Design, production and distribution of printed and audiovisual communication materials (audiences according to communication strategy, in 5 languages) 3. 10. Establishment of a communication network in the region 3.11. Establishment of a monitoring system for evaluation of communication impact D. Coordination and Implementation US $ 2.59 M Supervision reports Disbursement reports State and Federal budgets 4.1. Establishment and operation of a National Corridor Council 4.2. Establishment and operation of a National Technical Unit 4.3.Establishment and operation of Corridor State Councils 4.4.Establishment and operation of Regional Technical Units 8  Annex I Page 9 of 10 B. Principles and indicators for phasing and mid-term review The project involves both activities tied to specific geographic locations (especially community planning and sub-projects of sustainable use of biodiversity), and activities of a more "diffuse" nature. Correspondingly, there will be different mechanisms for sequencing those different activities over the project's duration time. The first type of activities will be financed in 9 focal areas in a first, four-year, phase. The second-phase set of 7 focal areas will only be eligible for sub-project support, if/when trigger indicators for the expansion to the second phase focal areas have been met. For project activities not tied to specific geographic locations, there will be, instead of formal phasing -- a "standard" project mid-term review to allow for possible execution adjustments. An independent evaluation would be undertaken by international experts after four years of project execution to formnulate recommendations to the Bank's management for transition to the second phase. Table 4 below specifies triggers indicators to evaluate project's performance in phase I focal areas; and indicators to assess, at mid-term review time, implementation progress in "generic" activities. Table 4 - Triggers for transition to phase 2 Component and Indicators of progress for focal area- Indicators of progress for generic Principles specific activities activities (Attainment of indicators in phase 1 focal (To be evaluated at mid-term review) areas triggers transition to phase 2 focal areas) Design * Final definition of communities to be Detailed definition of included in focal areas has been teffitorial priorities completed territofidors * In communities of phase 1 focal areas, completed, and an depending on the level of community effective monitoring organization: moniton - Environmental awareness has and evaluation been raised and supports the - Natural resource assessment evaluation of project have been completed pevalumatio of rojctNatural Resources priorities have performance been agreed upon Natural Resource strategies have been agreed upon * The M&E protocol is functioning satisfactorily (focal area and community levels): - Baseline data has been collected and systematized on natural resource use - Capacity for monitoring has been generated Information on selected indicators has been collected annually or biannually and is evaluated against baselines 9  Annex I Page 10 of 10 Component and Indicators of progress for focal area- Indicators of progress for generic Principles specific activities activities (Attainment of indicators in phase I focal (To be evaluated at mid-term review) areas triggers transition to phase 2 focal areas) Mainstreaming * Corridor strategies have been Promoting the consolidated and agreed upon for all integration of corridors biodiversity concems * Strategies contain provisions for into regular ensuring longer term sustainability of development biodiversity conservation and sustainable programs use (e.g., after project's completion) * Priority programs for re-orientation/re- designed have been determined * Technical studies required for the re- design of development programs have been completed * Capacity building and training of selected government staff has been completed Promoting options of Capacity building and studies in phase sustaina use of I focal areas have been completed sustainable use of * Phase 1 sustainable use pilot projects biodiversity with have been completed or are close to wide replication completion potential * Evaluation of selected activities under the sustainable use component has taken place Project * The project's National Council meets Management twice a year and approves the annual work Effective project program for the project management and * The National Technical Unit takes into coordination at the account the opinions of the National National and Council Regional level is in * State Corridor Councils have been place established in each state and discuss strategic lines of the project * Regional Technical Units take into account opinions of the State Corridor Councils 10  Annex 2 Page 1 of 11 Annex 2: Detailed Description of Project's Components A. Design and Monitoring of Biological Corridors (US$ 5.91 m, GEF $4.26 m) A set of five biological corridors will be established in 4 southern states of Mexico to function as reservoirs of agrobiodiversity and biological connectors between established Natural Protected Areas (NPAs), which are currently being strengthened under Mexico's Program on Natural Protected Areas 1995-2000. These biological corridors have been proposed as a strategy to avoid the isolation and fragmentation of ecosystems in protected areas by allowing genetic and species exchange. An initial set of biological corridors were identified and recommended at the initiation workshop on the Mexican Mesoamerican Biological Corridor held among public, private and international conservation and development organizations in Cancun, Quintana Roo, in October 1998. In a first selection, 31 important connectors were identified. This number was narrowed down using principles of biodiversity significance (and therefore likelihood of generating global environmental benefits), social viability, technical feasibility, and political and institutional support. Through this process of methodological refinement, a final set of 5 corridors has been selected, i.e. wide geographical areas in which the application of biodiversity-friendly measures is of crucial interest for maintaining connections between areas with pristine biodiversity. Within these macro-areas of interest, a choice has been made to concentrate efforts in specific focal areas (see Box I on Page 7 for clarifications on terminology used). Focal areas have been selected on the basis of opportunities and immediate needs for within- and outside-corridor conservation, considering also aspects of social organization and available information (see Annex 13). The precise actions to take place within each of these focal areas will be defined through a consensus approach with local stakeholders. Broad priority sets of threats to, and opportunities for, biodiversity conservation in focal areas have already been developed (see Annex 13). The design at the level of focal areas explicitly involves the assessment of agrobiodiversity and the precise relations established by the rural habitants with their natural environment. Special attention is paid to the management as well as to the precise motivation of the management of village territories. These territories are considered a critical level of aggregation in the present project and planning of resource use on the community level will be strongly promoted. Specific activities to be financed under this component include: 1) Design and implementation of biological connectors, based on an analysis of existing information (and where necessary, on information obtained from ad-hoc surveys) with particular attention to the current land use patterns, user rights and the role of agrobiodiversity. 2) Involvement of stakeholders in local planning and biological surveys for management of biodiversity in focal areas. Engagement of stakeholders will take into account the different levels of community organization based on the results of the social assessment (see Annex I 1). Moving from communities with lower (communities type 1 a), to higher levels of organization (type 2b), the following activities would be undertaken: (a) Raise awareness among stakeholders on the economic and environmental benefits of the corridors (communities type 1 a); 1  Annex 2 Page 2 of 11 (b) Promote assessment of natural resource management problems and issues; (communities type Ib); (c) Assist in the definition of priorities for natural resource and biodiversity management (communities type 2a); (d) Develop community natural resource management strategies and village level maps (communities type 2b). Completion of community strategies (item (d) above) would be a condition to access to the larger pilot projects under the sustainable use component (see component description below). Implement a protocol for the monitoring and evaluation of the biological corridors in terms of sustainable use and conservation of biodiversity, institutional performance, socio-economic and productive change. Monitoring and evaluation will be implemented at different scales with the aid of a geographic information system (GIS) and build on recent scientific work developed by CIFOR (and adapted as appropriate to Mexican conditions). CIFOR proposes to assess the effects of management on biodiversity by examining processes that maintain biodiversity. Processes are assessed by means of verifiers, that are adapted to regional conditions. The monitoring system will complement ongoing inventory efforts (e.g., CONABIO, and local research institutions). Information will be shared at all levels, to assist the planning of conservation and production activities; and it will be incorporated to CONABIO's national biodiversity information system. Particular efforts will be made to strengthen community based monitoring, for better natural resources management. The overall multi-scale monitoring system will guarantee dissemination of lessons learned for future use in the design of other biodiversity projects in Mexico, in other countries involved in the Mesoamerican Biological Corridor and elsewhere. B. Corridor Integration into Development Programs (US$ 71.72 m, GEF US$3.98 million) This component will promote removal of institutional, technical and informational barriers that prevent adoption of win-win natural resources and biodiversity management options. In particular, it will promote the adoption of land-use and resource management practices that help achieve biodiversity conservation objectives by maintaining habitat integrity and forest cover, while at the same time enhancing local environmental values and economic opportunities through maintenance of the productivity of the natural resource base (e.g., better soil conservation practices). About 50 programs for social, agricultural and infrastructure development are currently applied with federal funding (some with state/municipal counterpart) in the project area. Analysis undertaken during preparation shows that at least half of them have direct relationships with the conservation and sustainable use of natural resources and biodiversity. The 8 ministries coordinated under the intersectoral coordination instrument "Bases de Colaboraci6n Interinstitucional" have expressed their support to recognize a status to the biological connectors equal to the one granted to 'priority regions' through a high level agreement and detailed agreements with each one of the participating State Govemments through which state and federal authorities identify current program budgets and commit resources to the corridor. Within each one of the states, the State Corridor Councils, where representatives from civil society join govemment officials in coordination of the implementation of the project, a consensus worked out at the local level would have the guarantee of the support of the different agencies to implement different options for "mainstreaming" (concentration of investments, planning based on corridor strategies, and adequate operational rules for existing programs in the area). 2  Annex 2 Page 3 of 11 These detailed agreements with each one of the participating States would incorporate the corridor strategy in the process of determining each corridor's annual spending plan. Corridor strategies would be the key tool for modifying the upply of development assistance, thus mirroring the community and organization level strategies financed under the design component above, which would promote the integration of biodiversity into the demand for development interventions. The two pillars for implementing such a strategy are: i) integrating the corridor concept and approach in the federal, state, and municipal governments' regular development programs; and ii) demonstrating the social, technical and economic viability of options for sustainable use of biodiversity in the connectors. The first line of action is described in the remainder of this section; the second one, in section C below. The basic idea behind the notion of corridor integration is to re-orient existing programs (as well as orienting new ones) in relevant areas (e.g. agriculture, forestry, road building, tourism, social development) in directions compatible with conservation and sustainable use of biodiversity. Re-orientation of government activities would be pursued throughout the cycle of programs and projects with demonstrated (or demonstrable) relevance for the conservation and sustainable use of biological resources. The table below offers a breakdown of expected outputs and activities at the various stages of the cycle. Table 5 - Breakdown of expected outputs and activities Expected Outputs Activities to achieve outputs Planning Federal, state, municipal and Technical and institutional strengthening of village development plans: state, municipal and village decision making Based on the analysis of (e.g. COPLADE, COPLADEMUN, etc.) biodiversity impacts of Take into account the connectors existing programs in the determination of programs' Training and capacity building for senior (federal, state and geographic and thematic priorities federal, state and municipal and village municipal), corridor government officials strategies are defined Include targets for sustainable use with respect to of biodiversity in connectors Awareness raising of win-win opportunities coordination and through technical studies, cost-benefit analysis integration of biodiversity concerns in programs (including production and restoration) Identification & Programs contain provisions Development of technical guidelines for Design encouraging corridor-compatible determining impacts of development activities initiatives: (forestry, agriculture, tourism) on biodiversity Biodiversity in connectors considerations are Filters: activities with negative integrated in the design, impacts on corridor are ineligible Inclusion of those guidelines in the programs' execution and for funding operational manuals monitoring of selected public programs and Priority given to funding of win- Training and capacity building of technical policy instruments win activities staff 3  Annex 2 Page 4 of 11 Expected Outputs Activities to achieve outputs Execution High level agreement Status of priority region granted to Presentation of project design, objectives and and detailed agreements biological corridors. strategies to sectoral agencies and Finance, with each one of the within CONABIO's steering committee, with participating States. the support of State Corridor Councils and stakeholders that participated in project design/preparation. Capacity of govermnent Programs' operational manuals Training and capacity building of technical and officials at federal, state ensure that execution avoids or field staff and municipality level is minimizes impacts on biodiversity strengthened, to design in connectors and implement selected development plans and programs in ways that integrate biodiversity considerations (through training and study tours) Monitoring Government M & E systems allow Modification or strengthening of M & E for measuremer.t of impact on systems, possibly based on the experience The impact of programs biological connectors developed under the project's own M & E on biodiversity and system sustainable use is Results fed back into planning and systematically project/program design Training and capacity building of technical monitored as apart of staff program cycles Lessons learned are made available to decision makers and Preparation of periodic summaries of lessons practitioners to help design future learned programs of biodiversity management in Mexico and elsewhere A key criterion for determining the actual scope for GEF-funded mainstreaming will be long-term institutional and social sustainability, that is, sustainability beyond the projects' intervention. C. Sustainable Use of Biological Resources (US$9.31 million, GEF US$ 4.01) Under this component an integral strategy will be developed for sustainable use of biodiversity, in focal areas within the 5 selected corridors. This strategy will include activities aiming at: 1) Maintaining native ecosystems (forests, coastal ecosystems, marshes, etc.), such as wildlife viewing, studies of population dynamics for target wild species (native only), rule establishment for ecotourism, forest enrichment with desirable species; 2) Restoring degraded ecosystems, such as restoration of water flow to original ecosystems (wetlands, "cienagas"), planting of native trees in "petenes," reforestation with native species and in way that is 4  Annex 2 Page 5 of 11 compatible with biodiversity conservation objectives (corridors, etc.), pilot for rebuilding, replanting dunes with native species, etc.; 3) Developing Sustainable Use of Biological Resources in productive landscapes, such as capacity building for alternative use of wood products (non timbered species), establishment of rules for extraction of ornamental plants, sustainable use of plant biodiversity in homegardens ("traspatios, solares"), test of native species as covercrops, pilot projects of improved use of native local agriculture varieties (including annual, perennial and aquaculture), studies on market access for organic products and/or "sustainably managed" biological resources, certification etc. A more detailed list of activities is presented in Table 7. Specific objectives of the component of sustainable development are to: 1) Support capacity building and training programs that will raise awareness and promote site-specific sustainable use of biological resources among farmers' communities and other stakeholders such as local authorities, social organizations, local NGOs, research institutions and extension organizations. 2) Develop and implement pilot projects, prioritized on the basis of the willingness and proven commitment of local communities and/or groups of farmers and producers, the availability of relevant local experiences (improving productivity, diversification of production, mitigating negative environmental impacts, agroforestry, apiculture and sustainable tourism) and an evaluation of their economic potential. 3) Undertake specific studies which will increase the performance and efficiency of the pilot projects, and will complement studies developed within the components Design and Mainstreaming to identify the main constraints, opportunities and strategies to implement community-based and/or farmer groups sub-projects of Sustainable Use of Biological Resources in productive landscapes, adapted to the specific biophysical, social and cultural conditions. Sub-projects will be customized to the demand and organizational capacity of the communities, ejidos, and farmer groups, in consistency with the results of the social assessment (Annex 11), and integrated within a framework of sustainable development at the local level. The menu of sub-projects will be enriched periodically with new, forthcoming alternatives and demand. The sub-projects would include the following: (i) studies and surveys related to local a) identification of root causes of biodiversity degradation; and b) evaluation of appropriate options for improvement of biological resources management, including constraints and opportunities for biodiversity-friendly market development; (ii) training and learning-sharing activities including workshops on field visits, short study tours, producers networking, specific training on development of organizational capacity and managerial skills, particularly for vulnerable groups, such as women and indigenous groups; (iii)specific inputs related to the efficient implementation of agroecological farming, agroforestry and/or aquaculture practices (pilot projects), such as specific inputs for alternative fishing production, such as net mesh bags, clam seeds, and small equipment useful for the implementation at farm and community levels of Integrated Pest Management or Integrated Plant Nutrient Management, such as biopesticides, light traps, vermicompost, seeds of covercrops, etc; (iv) technical assistance to a) contribute to the development of studies and training activities; b) support the preparation and the implementation of pilot projects of Sustainable Use of Biological Resources; and c) 5  Annex 2 Page 6 of 11 provide specialized technical and organizational back-up to rural communities, farmers groups and public and private front-line agents to ensure that sub-projects will be coherent with local demands and development objectives of the GEF Project. In the development of rural community frameworks for sustainable development, due attention will be paid to the opportunities enclosed in farmers' knowledge, land-use patterns based on such knowledge, and the gene pool available for diversified production. Mechanisms will be developed to strengthen rural communities and their organizations to deal with conflict resolution and to improve the local capacity to manage natural resources. The absence of continuity in technical assistance and training has been identified as a mayor constraint for sustained development, calling for the upgrading and use of local capacities and know-how in horizontal schemes of training, aided by outside experts. Financial resources will be allocated on demand. Small grants for sustainable use of biodiversity will be given on a competitive basis to rural communities, ejidos and/or producers groups, consortia of grass roots organizations, second tier organizations and NGOs. The project will provide financial resources under the following framework: 1) Capacity building and training activities and studies related to Sustainable Use of Biological R.esources will be fully funded by the Project, for a total amount of about US$ 0.97 million supported by GEF; 2) Eligible pilot projects would be demand-driven, and would be financed by GEF resources either at 80% or at 33%, depending on a) level of community organization; and b) the presence of vulnerable groups. In particular: (a) Small pilot projects (averaging $1,500 per project) to provide incentives for planning in communities poorly organized (type 1, see Annex 12 for details); for vulnerable groups (indigenous, women) pilot projects will average $4,000. These small projects would be supported at 80% of the total cost. It is estimated that at the end of the project there would be about 435 small projects for a total amount of about US$ 1.2 million (US$ 0.9 million from GEF); (b) Pilot projects in rural communities better organized (type 2) will be supported on a matching grant basis (every $1 from the GEF would be matched by $2 from the Government, so that the GEF share would be 33%). At the end of the project, it is estimated that about 130 sub-projects will be supported for a total cost of about US$ 2.88 million, including US$ 0.85 million from GEF. Vulnerable groups will also have access to these funds, besides those specifically oriented to them (above, a) and Annex 12). Table 6 summarizes funding arrangements for the component of sustainable use. 6  Annex 2 Page 7 of 11 Table 6 - GEF funding of studies, capacity building and sub-projects, component Sustainable Use of Biological Resources Community types Financing eligible Expenditure types: Studies All types GEF 100% (consulting services, travel expenses) Capacity building/ All types GEF 100% Organizational strengthening (Workshop, training, field visits and study tours) Pilots All types GEF 80%, Beneficiaries 20% (vulnerable groups: indigenous, women groups) Pilots to promote planning Types la and lb GEF 80%, Beneficiaries 20% Pilots Type 2a and 2b (after - GEF matches government on a 1 to 2 (33%) completion of - Beneficiaries contribute whatever required by (Other groups) community strategy) government program The project will not fund recurrent costs of win-win activities that will follow on the initial demonstration and/or barrier-removal effort. Eligibility criteria will ensure full compliance with the Bank's safeguard and other relevant policies (indigenous people, environmental impacts, etc.). During project preparation, after the selection of the corridors and focal areas, a first analysis has been made of opportunities and threats for the sustainable use of biodiversity. Sub-projects will be applied in 9 focal areas in the project's first phase (2000 - 2004) and in another 7 focal areas in the second phase (2004 - 2007). At the end of the first phase the project will assess the opportunity and practical feasibility to use project funds to develop revolving funds in the best-organized rural communities. Table 7 - List of eligible sustainable use activities Category Theme Activity Maintenance of ecosystems Ecotourism Define possibilities Maintenance of ecosystems Ecotourism Define tracts Maintenance of ecosystems Ecotourism Establish rules Maintenance of ecosystems Ecotourism Infrastructure establishment Maintenance of ecosystems Ecotourism Quality control Maintenance of ecosystems Forestry Ameliorate felling techniques Maintenance of ecosystems Forestry Control of pests and diseases Maintenance of ecosystems Forestry Definition of extractable volumes Maintenance of ecosystems Forestry Development of sustainable management plan Maintenance of ecosystems Forestry Forest enrichment with desirable species Maintenance of ecosystems Forestry Inventories Maintenance of ecosystems Forestry Inventory of pests and diseases Maintenance of ecosystems Forestry Plant production Maintenance of ecosystems Forestry Selection of seed trees 7  Annex 2 Page 8 of 11 Category Theme Activity Maintenance of ecosystems Forestry Small infrastructure for observation and control Maintenance of ecosystems Hunting Rustic Infrastructure (e.g. blind) Maintenance of ecosystems Hunting Studies (Inventories/ Population dynamics/ Quotas) Maintenance of ecosystems Hunting Wildlife management Maintenance of ecosystems Medicinal plants Define quantities for extraction Maintenance of ecosystems Medicinal plants Define species Maintenance of ecosystems Medicinal plants Establish rules for extraction Maintenance of ecosystems Medicinal plants Inventories Maintenance of ecosystems Medicinal plants Market access, certification Maintenance of ecosystems Medicinal plants Processing Maintenance of ecosystems Wildlife Ranching Breeding facilities Maintenance of ecosystems Wildlife Ranching Certification and marketing Maintenance of ecosystems Wildlife Ranching Studies of population dynamics for target species (native only) Maintenance of ecosystems Wildlife Viewing Rustic Infrastructure Maintenance of ecosystems Wildlife Viewing Zoning, trail design, regulation of access Restoration of ecosystems Beach/Dunes Pilot for rebuilding, replanting dunes with native species Restoration of ecosystems Degraded/eroded landscapes, Pilot projects of cover crops or live invasion by exotic weeds, barriers using native species Restoration of ecosystems Degraded/eroded landscapes, Planing to define areas invasion by exotic weeds, Restoration of ecosystems Improvement infrastructure Biodiversity friendly planning of extraction tracks (overlay) Restoration of ecosystems Reforestation (Only with native Define areas species and in way that is compatible with biodiversity conservation objectives (corridors, etc) Restoration of ecosystems Reforestation (Only with native Define species species and in way that is compatible with biodiversity conservation objectives (ccrridors, etc) Restoration of ecosystems Reforestation (Only with native Follow-up species and in way that is compatible with biodiversity conservation objectives (corridors, eto) Restoration of ecosystems Reforestation (Only with native Nursery maintenance species and in way that is compatible with biodiversity conservation objectives (ccrridors, etc) Restoration of ecosystems Reforestation (Only with native Planting species and in way that is compatible with biodiversity conservation objectives (corridors, etc) Restoration of ecosystems Restore water flow to original Culverts ecosystems (wetlands, etc). Restoration of ecosystems Restore water flow to original Studies (Define areas) ecosystems (wetlands, etc). Restoration of ecosystems Restore water flow to original Cleaning ecosystems (wetlands, "cienagas" etc). Restoration of ecosystems Wetlands Planting of native trees in "petenes" Sustainable use of biodiversity in productive Aquaculture Certification and marketing landscape Sustainable use of biodiversity in productive Aquaculture Development of managerial skills 8  Annex 2 Page 9 of 11 Category Theme Activity landscape Sustainable use of biodiversity in productive Aquaculture Hatcheries landscape Sustainable use of biodiversity in productive Aquaculture Management of fishing, recycling of landscape fish wastes, etc. Sustainable use of biodiversity in productive Aquaculture Pilot of small "model farm", landscape including waste recycling, and alternatives uses (clams, brine shrimp, etc.) Sustainable use of biodiversity in productive Aquaculture Studies of population dynamics for landscape target species (native only) Sustainable use of biodiversity in productive Beekeeping Certification and marketing landscape Sustainable use of biodiversity in productive Beekeeping Production planning (both landscape traditional and non traditional) Sustainable use of biodiversity in productive Beekeeping Support to biodiversity -friendly landscape (Melipona) beekeeping (initial investment and training) Sustainable use of biodiversity in productive Beekeeping Support to commercial beekeeping landscape (initial investment and training) Sustainable use of biodiversity in productive Chicle Ameliorate collection methods landscape (training) Sustainable use of biodiversity in productive Chicle Certification and marketing landscape (Including feasibility studies) Sustainable use of biodiversity in productive Chicle Efficient use of local cultivars landscape Sustainable use of biodiversity in productive Chicle Planting landscape Sustainable use of biodiversity in productive Fauna based artesanal production Certification and marketing landscape (Including feasibility studies) Sustainable use of biodiversity in productive Fauna based artesanal production Quality control landscape Sustainable use of biodiversity in productive Fibers Define quantities for extraction landscape Sustainable use of biodiversity in productive Fibers Define species landscape Sustainable use of biodiversity in productive Fibers Establish rules for extraction landscape Sustainable use of biodiversity in productive Fibers Inventories landscape Sustainable use of biodiversity in productive Integrated Nutrient Management Use of native herbs or trees as green landscape manure, composting Sustainable use of biodiversity in productive Integrated Pest Management Development of plant-based landscape biocides/ biological pest control Sustainable use of biodiversity in productive Integration crop and animal Pilot mixed farming, based upon landscape husbandry best use of existing biodiversity, recycling of nutrients, IPM Sustainable use of biodiversity in productive Maintenance of local Diversify through integration of landscape agrobiodiversity trees in pastures Sustainable use of biodiversity in productive Maintenance of local Enrichment of soil seedbank landscape agrobiodiversity Sustainable use of biodiversity in productive Maintenance of local Improve use of plant biodiversity in landscape agrobiodiversity homegardens ("traspatios, solares") Sustainable use of biodiversity in productive Maintenance of local Maintain fringes of trees around landscape agrobiodiversity fields (sources of seed) Sustainable use of biodiversity in productive Maintenance of local Pilot projects of improved use of landscape agrobiodiversity native local agriculture varieties (including annual, perennial and aquaculture) Sustainable use of biodiversity in productive Maintenance of local Test of native species as covercrops 9  Annex 2 Page lOofll Category Theme Activity landscape agrobiodiversity Sustainable use of biodiversity in productive New/non marketed timber species Capacity building for alternative use landscapc of wood products processing Sustainable use of biodiversity in productive New/non marketed timber species Define species landscape Sustainable use of biodiversity in productive New/non marketed timber species Market access landscape Sustainable use of biodiversity in productive New/non marketed timber species Processing landscape Sustainable use of biodiversity in productive Ornamental plants Define quantities for extraction landscape Sustainable use of biodiversity in productive Ornamental plants Define species landscape Sustainable use of biodiversity in productive Ornamental plants Establish rules for extraction landscape Sustainable use of biodiversity in productive Ornamental plants Inventories landscape Sustainable use of biodiversity in productive Ornamental plants Market access, certification landscape Sustainable use of biodiversity in productive Oromiental plants Processing landscape Sustainable use of biodiversity in productive Promotion of agroforestry Adaptation and dissemination landscape Sustainable use of biodiversity in productive Promotion of crop rotation Adaptation and dissemination landscape alternatives Sustainable use of biodiversity in productive Resins Ameliorate production of charcoal landscape Sustainable use of biodiversity in productive Resins Define species landscape Sustainable use of biodiversity in productive Resins Establish rules for extraction landscape Sustainable use of biodiversity in productive Resins Inventories landscape Sustainable use of biodiversity in productive Resins Market access, certification landscape Sustainable use of biodiversity in productive ReisProcessing landscape Sustainable use of biodiversity in productive Wood-based artesanal production Capacity building for alternative use landscape of wood products Sustainable use of biodiversity in productive Wood-based artesanal production Certification and marketing landscape (Including feasibility studies) Sustainable use of biodiversity in productive Wood-based artesanal production Development of managerial skills landscabe Sustainable use of biodiversity in productive Wood-based artesanal production Qarocessing landscape Sustainable use of biodiversity in productive Wood-based artesanal production lQuality control landscape I_I Sustainable use of biodiversity in productive Wood-based artesanal production Reference plots to adjust extraction landscape I__ rate D. Project Management and Coordination (US$3.10 million, GEF US$ 2.59 m) This component will finance the establishment and operation of a technical unit at the central level, and of two Technical Units at the regional level (one for Chiapas; one for the Yucatan Peninsula: Campeche, Yucatan and Quintana Roo) as well as operational costs of the National Corridor Council and State Corridor Councils. The technical units will undertake day-to-day management of project activities, will ensure compliance of project activities with project objectives and procedures, will be responsible for 10  Annex 2 Page 11 of 11 procurement of goods, works, services and financial audits; and will be responsible for keeping the National Corridor Council and State Corridor Councils informed of the projects and advances and operation, and taking into account their recommendations. The National Technical Unit (NTU), in coordination with the Regional Technical Units (RTUs), will prepare and execute, subject to the no-objection of the National Corridor Council, the Consolidated Annual Plan of Operation and budget (AOP), based on annual corridor operational plans proposed by the Regional Units. The NTU will ensure the liaison between the project and related activities in the broader Mesoamerican corridor initiative. The Regional Technical Units will develop Annual Operational Plans at the corridor level, which will follow the recommendations of the respective Corridor State Council (CSC), and which will be submitted in block to the CSC for its no-objection . The regional units will report to the National Technical Unit (see section on implementation arrangements below for further details on the State and National Councils and their relationships with National and Regional Technical Units). 11  Annex 3 Page 1 of 1 Annex 3: Estimated Project Costs (US$ million) Mexico Mesoamerican Biological Corridor Project Components by Year - Base Costs (US$ '000) Base Cost 2001 2002 2003 2004 2005 2006 2007 Total 1. Participatory Design and Monitoring of Corridors 1,189.5 314.9 879.1 589.5 877.3 228.6 1,167.4 5,246.3 2. Corridor Integration into Developnient Programs 9,134.3 8,985.8 9,134.3 8,985.8 9,134.3 8,985.8 9,134.3 63,494.6 3. SustainableUseof Biodiversity 1,117.7 1,267.8 1,353.7 1,269.7 941.9 854.8 922.2 7,727.8 4. Project Management and Coordination 409.6 360.4 360.4 369.6 360.4 360.4 360.4 2,581.1 Total BASELINE COSTS 11,851.1 10,928.8 11,727.5 11,214.5 11,314.0 10,429.6 11,584.3 79,049.8 Physical Contingencies 162.3 149.6 153.9 150.2 95.7 91.3 94.7 897.6 Price Contingencies 205.4 574.8 1,043.9 1,421.3 1,865.9 2,139.3 2,855.4 10,106.0 Total PROJECT COSTS 12,218.8 11,653,2 12,925.3 12,786.0 13,275.6 12,660.2 14,534.4 90,053.4 Mexico Mesoamerican Biological Corridor Components by Financiers (US$ '000) GOM GEF GTZ CONABIO IBRD Beneficiaries Total Amount % Amount % Amount % Amount % Amount % Amount % Amount % 1. Participatory Design and Monitoring of Corridors 378.6 6.4 4,262.3 72.1 - - 1,187.1 20.1 - - 81.3 1.4 5,909.3 6.6 2. Corridor Integration into Development Programs 63,494.2 88.5 3,976.3 5.5 - - - - 4,252.9 5.9 - - 71,723.4 79.6 3. Sustainable Useof Biodiversity 2,647.9 28.4 4,012.7 43.1 2,441.0 26.2 - - - - 210.4 2.3 9,312.0 10.3 4. Project Management and Coordination 466.3 15.0 2,589.2 83.3 - - 53.1 1.7 - - - - 3,108.7 3.5 Total Disbursement 66,987.0 74.4 14,840.5 16.5 2,441.0 2.7 1,240.3 1.4 4,252.9 4.7 291.7 0.3 90,053.4 100.0 I  Annex 4 Page 1 of 5 Annex 4: Incremental Costs and Global Environmental Benefits Mexico is among the first four "megadiversity" countries, containing an estimated 10% of the world's biodiversity. The Southeast region (including the states of Chiapas, Yucatan, Campeche and Quintana Roo) is one of the country's most important biodiversity havens, and at the same time, one of the areas with the most urgent development needs. In such a context, a viable strategy for biodiversity conservation must be based on a clear fit within the region's overarching development priorities. The present project proposes to use the Biological Corridor concept as an ordering principle for territorial planning and management, thereby making biodiversity an integral part of the region's development programs. BASELINE SCENARIO Biodiversity of Mexico's southeast region is subject to a number of pressures from human activities. These include very large conversion of forests and other pristine ecosystems to cattle ranching and agriculture (in the Yucatan peninsula 1 million has and 0.6 million has, respectively); oil extraction and transformation with related negative impacts on wetlands and other coastal ecosystems; tourism development along the coasts of Quintana Roo, Yucatan, and Campeche. It is expected that in a baseline scenario, pressure on terrestrial and coastal biodiversity -mainly through disruption of habitat- will continue. The proposed project area overlaps with ten of Mexico's 36 regions of high priority for alleviation of poverty and mitigation of social and economic marginalization. Priority regions are the target of an effort of eight ministries in the federal govemment (Environment, Agriculture, Land Tenure, Transports, Social Development, Health, Trade and Education) to coordinate their activities in support of regional (i.e. sub- state) development. In the absence of GEF assistance for addressing global biodiversity objectives through the proposed integrated landscape approach, it is expected that those ministries would concentrate their development resources on agriculture and natural resource management programs that would generate national benefits for the four states of the proposed project. Recent budget figures indicate that some US $100 m per year would be allocated to priority regions in the project's four states. A detailed exercise of assessment of relevant public investment in the project area has been undertaken as part of project preparation, with information for the individual programs broken down at the municipality or community level and tracked over the course of the current federal administration. Results from such exercise indicate that, based on recent pattems of expenditure, it is plausible to expect, during the 7-year life of the project, public funding to the corridor area in the order of US$61.97 million for rural and social development, and US$ 5.0 million for conservation and sustainable use of natural resources (of the former figure, it's estimated that some US$4.25 million would be financed by the World Bank loan "Rural Development in Marginal Areas," which includes in its list of target areas two regions in Chiapas comprised in the Corridor project area). In addition, based on the budget fo CONABIO, it is estimated that US$1.24 million would finance baseline activities related to those proposed by the project in the components of Corridor Design and project coordination and management. Explicit biodiversity conservation efforts would be concentrated in maintenance of existing protected areas (which include those supported by the earlier GEF protected area project, such as Sian Ka'an, Calakmul, Ria Lagartos, Montes Azules, Isla Contoy, El Triunfo), with limited or no attention to the important role 1  Annex 4 Page 2 of 5 played by ecosystems located outside protected areas in guaranteeing the continuity of habitats, the exchange of genetic flows and the mobility of migratory species. The combined cost of the baseline scenario (natural resource management, GOM- and Bank- financed agriculture and rural development, and CONABIO) is estimated at US$68.21 million equivalent. Under this baseline scenario, it is expected that biodiversity would be protected mainly within existing protected areas. However, the long-term integrity and sustainable use of natural resources within a broader biodiversity corridor would not be ensured because: I) There are no readily available monitoring tools for managing the various ecosystems linking protected areas in biological corridors (conceived as integrated units for territorial planning); 2) Knowledge about farming and natural resources management practices that are beneficial to conservation and sustainable use of biodiversity and agrobiodiversity outside protected areas is limited; 3) Current managers and beneficiaries of development programs have no incentives to integrate biodiversity concerns into federal and state programs, nor are there any systematic plans for doing so in the near future; 4) Current initiatives for conserving biodiversity in the productive landscape (such as UNDP's small grant program) require scaling up (both in spatial and organizational terms) to be able to make a long-lasting difference in southeastern Mexico; 5) Capacity for the design, implementation and monitoring of initiatives for biodiversity sustainable use in the productive landscape is inadequate, both in the government and the NGO sectors. GLOBAL ENVIRONMENTAL OBJECTIVE The Global Environment objective of the project is to promote conservation and sustainable use of globally significant biodiversity through the establishment of biological corridors linking Protected Areas in the southeast of Mexico. The corridors will foster the ecological equilibrium of land and coastal ecosystems, within a sustainable development approach. The four states of the project area comprise a variety of ecosystems, including lowland tropical rain forests, coastal wetlands, mangroves, savannas; in Chiapas there are temperate cloud forests, an ecosystem which covers 1% of the national territory and represents 10% of the country's flora. The coral reefs of the Yucatan and Quintana Roo coasts also contribute significantly to Mexico's great biological diversity. In addition to their own high global importance, these ecoregions and ecosystems forn part of a critical link in a larger Mesoamerican Biological Corridor (MBC) linking North America, Central America, and South America. 2  Annex 4 Page 3 of 5 GEF ALTERNATIVE With GEF assistance for addressing the global biodiversity objectives outlined above, the GOM would be able to undertake a more ambitious program that would generate both national and global benefits. The GEF Alternative would comprise the baseline scenario described earlier (protected area management plus development in priority regions), augmented with an expanded conservation and sustainable use program explicitly designed to address biodiversity conservation outside protected areas, as well as mainstreaming of biodiversity into regular government programs and projects. The GEF alternative would promote the establishment and maintenance of biological connectors linking protected areas via a sequential approach: in the inception phase, lasting four years, nine focal areas (see Box I in the main text for definitions) would be supported; in the second 3-year phase, seven additional focal areas would be financed. The phased approach would enable learning by doing in corridor design and implementation; and it would facilitate the establishment of a set of indicators that -once met- would trigger transition to the consolidation phase. It is anticipated that the GEF intervention would catalyze additional development resources from bilateral sources. Consultation undertaken during preparation indicates that GTZ is developing complementary initiatives worth some US$ 2.4 million. The European Union is in the early stages of development of program of assistance, and may join forces with the GEF at a later stage. This expanded Biological Corridor program would comprise four different activities (described in detail in the Project Document): * Corridor Design and Monitoring [Total US$ 5.91 m, GEF $4.26 ml, * Biodiversity Mainstreaming, [Total US$71.72 m, GEF US$ 3.98 m] * Sustainable use ofBiodiversity in the Productive Landscape [Total US$ 9.31 m, GEF US$4.01 m] * Project management and coordination arrangements, [Total US$3.1 m, GEF US$2.59 m] The GEF Alternative will make possible activities and programs that would not have been possible under the baseline scenario, thus covering important gaps that threaten the biological and ecological integrity of the Corridor area. The combined cost of the GEF Alternative (baseline scenario plus Biological Corridor program) is estimated at US$ 90.05 million. The project would put in place a continuous system of protected and non-protected areas with incentives for biodiversity conservation and sustainable use. Such a system would not only ensure preservation of globally significant biodiversity but also the connection between key areas as a corridor concept. Implementation of the GEF Alternative would result in the following outcomes: I) Minimizing threats to biodiversity by strengthening sustainable biodiversity use in 16 focal areas distributed in five broader biological corridors. The corridors would include an appropriate system for monitoring and evaluation of land uses and their impact on biodiversity. The connectors would be developed in a participatory manner and with the consensus of key GOM agencies and donors and the support of local and regional 3  Annex 4 Page 4 of 5 governments, NGOs and community representatives; they would serve as the framework within which public investment programs for the region would be designed 2) Ensuring conservation of biodiversity within the Corridor area by financing pilot and demonstration sub-projects of communities for the sustainable use and conservation of biodiversity outside of protected areas. 3) Promoting systematic integration of biodiversity concerns into processes of regular development planning of federal state agencies. This would be achieved through financing technical studies for the re-formulation of natural resources programs, revision of the programs' operational manuals, training of government field staff, support to demonstration projects. 4) Raising awareness about biodiversity resources through environmental education and training of indigenous and non-indigenous communities. 5) Strengthening capacity of community groups and NGOs in designing, implementing and monitoring activities of natural resource management compatible with the sustainable use of biodiversity. GEF funds would be critical to leveraging additional cofinancing for this initiative, from national, bilateral and multilateral sources. INCREMENTAL COSTS The difference in cost between the Baseline Scenario and the proposed Alternative is estimated at US$ 21.84 million. Of this amount, it is estimated that about US$2.44 million would be forthcoming from bilateral donors, US $4.27 million from the Government, and US$ 0.3 million from project beneficiaries. It is estimated that an incremental cost of US$14.84 million will be incurred to achieve global environmental benefits through the protection and sustainable use of biodiversity in the corridor area; this amount would therefore be eligible for GEF support. See the following table for a summary of the project components and the proposed financing plan of the incremental cost. 4  Annex 4 Page 5 of 5 Table 8: Incremental Cost Matrix Component Sector Cost Category US$ Million Domestic Benefits Global Benefits Corridor Design and BaI $1.19 M Basic tools for natural Monitoring aseline resource monitoring Planning tools for regional With GEF $5.91 M Integrated planning tools to planning of globally Alternative address local externalities significant biodiversity Increment $4.72 M . Integration of Limited or no consideration of Corridors into Baseline $57.72 M Rural and social development threats to and opportunity for development (Government) programs biodiversity management Programs outside protected areas Rural development (estimated Baseline (IBRD) $4.25 M financing in project area from IBRD marginal area loan) Internalization of natural With GEF 71 resource considerations into Integration of biodiversity into Alternative $7.72 M development programs and development planning projects Increment $9.75 M Sustainable use of Baseline $5.00 M Sustainable use benefits for a biodiversity few resource users Income and employment Demonstration of social, With GEF $9.31 M benefits for a larger number institutional and economic Alternative . of resource users and viability of biodiversity communities sustainable use activities Increment $4.31 M Project Coordination Baseline $.05 M Professional team assisting Professional team to assist With GEF Processionalitegraste Mexico in removing barriers Alternative $3.11 M processes of Integrated to sustainable use of natural resource management biodiversity Increment $3.06 M Totals Baseline $63.96 M (Government) Baseline (IBRD) $4.25 M With GEE 9-0 Alternative $90.05 M Increment $21.84 M Financing Plan: Government $4.27 M Bilaterals $2.44 M Beneficiaries $.29 M GEF $14.84 M 5  Annex 5 Page 1 of 1 Annex 5: Financial Summary Mexico: Mesoamerican Biological Corridor Project Years Ending (US$ million) IMPLEMENTATION PERIOD Year 1 l Year 2 Year 3 Year 4 Year 5 Year 6 l Year 7 Total Financing Required Project Costs Investment Costs 11.87 11.29 12.55 12.40 12.88 12.25 14.11 Recurrent Costs 0.35 0.36 0.37 0.39 0.40 0.41 0.42 Total Project Costs 12.22 11.65 12.92 12.79 13.28 12.66 14.53 Total Financing 12.22 11.65 12.92 12.79 13.28 12.66 14.53 Financing GEF 2.69 1.48 2.33 1.90 2.27 1.38 2.79 IBRD 0.55 0.57 0.58 0.60 0.63 0.65 0.67 Government 8.77 9.01 9.39 9.65 9.77 9.99 10.41 Co-financiers (GTZ) 0.0 0.37 0.39 0.40 0.41 0.43 0.44 Conabio 0.16 0.17 0.17 0.18 0.18 0.19 0.19 Beneficiaries 0.05 0.05 0.06 0.06 0.02 0.02 0.03 Total Financing 12.22 11.65 12.92 12.79 13.28 12.66 14.53 1  Annex 6 Page 1 of 7 Annex 6: Procurement and Disbursement Arrangements PROCUREMENT Procurement Responsibilities and Capacity The project will be executed by the Fondo para la Biodiversidad supporting the National Commission for Sustainable Use of Biodiversity (CONABIO). CONABIO will be in charge of managing the execution of the proposed project through a Management Unit that will be staffed by a General Director, a Director of Administration, and a support staff. Two regional offices reporting to the General Director will be established, one in Chiapas and the other in Yucatan (the latter will provide services to three states: Yucatan, Quintana Roo and Campeche). Both regional offices will be staffed with a Regional Director, an administrator, an expert in Sustainable Development projects, and two Corridor Coordinators. An overall assessment of CONABIO was carried out by the Mexico Resident Office in August 2000. The evaluation found that CONABIO's own procurement system is well designed, but it lacks experience with Bank's financed projects. The overall procurement risk is considered average. However, the risk is mitigated by the assistance that CONABIO will receive from NAFIN on Bank's procedures, and the training on procurement that the Bank has agreed to carry out for project staff by February 28, 2001. As part of the action plan agreed with CONABIO to improve their procurement capacity, by effectiveness of the grant, CONABIO will hire a staff with procurement expertise satisfactory to the Bank and will open a register of experts that could be hired as external consultants over the life of the project in different areas of expertise. CONABIO has started already to request expressions of interest from consultants to create this register. Procurement for subprojects to be financed by the grant will be done under community participation principles through direct contracting and comparison of at least three price quotations to the extent possible. CONABIO will be responsible for including the eligibility criteria and approval procedures in the Operational Manual and will ensure that the agreed procedures are being followed. Procurement Methods (Table A) Section I: Procurement of Goods Part A: Procurement of Goods and Civil Works 1. Procurement of goods and civil works financed by the GEF Grant --computers, software for Data Bases and GIS processing, maps, training materials, office furniture, and stationery and small civil works costing less than US$350,000 equivalent-- shall be carried out in accordance with Bank's Guidelines for Procurement under IBRD Loans and IDA Credits (January 1995, revised in January and August 1996, September 1997 and January 1999) and the following provisions of Section I of this Attachment. Because of the size of the project (about US$300,000 per year, per state) no foreign suppliers are expected to participate, no ICB procedures will apply to procure goods and civil works under this Grant. 2. Goods estimated to cost more than US$100,000 may be procured under contracts awarded in accordance with the provisions of paragraphs 3.3 and 3.4 of the Guidelines using Standard Bidding Documents satisfactory to the Bank. Goods estimated to cost less than US$100,000 per contract up to an I  Annex 6 Page 2 of 7 aggregated amount of US$250,000 may be procured through National Shopping in accordance with the provisions of paragraphs 3.5 and 3.6 of the Guidelines. 3. Sub-projects would comprise a broad spectrum of activities to be undertaken with direct participation and contribution of the beneficiaries. The total cost for an individual sub-project would not exceed US$20,000. Eligibility criteria and operational procedures would be included in the Operation Manual for the project. These procedures may include: direct contracting, national shopping procedures for goods, and procurement of small works under lump-sum, fixed priced contracts awarded on the basis of quotations of at least three qualified domestic contractors. Part B: Review by the Bank of Procurement Decisions 1. No prior review of contracts would be required under the Grant. Rather, ex-post reviews will be conducted by the Bank, based on provisions of the project's operational manual and in a proportion of one every ten contracts. Table A: Project Cost by Procurement Arrangements (US$ million Expenditures Category ICB NCB Others N.B.F. Total 1. Subprojects 4.12 4.12 (1.67) (1.67) 2. Goods 0.20 0.08 0.28 (0.17) (0.07) (0.24) 3. Consultants and Training Consulting Firms 10.20 10.20 (8.86) (8.86) Individual Consultants 3.33 3.33 (2.83) (2.83) 4. Operating Costs 2.72 2.72 (1.24) (1.24) 5. Baseline Development Program 66.97 66.97 6. Bilateral funding 2.44 2.44 TOTAL 0.20 20.45 69.41 90.06 (0.17) (14.67) (14.84) Note N.B.F.=Not Bank-financed (GEF) Figures in parenthesis are the arnount to be financed by the GEF Grant 2  Annex 6 Page 3 of 7 Section II: Employment of Consultants Part A: General 1. Consultant services shall be procured in accordance with Guidelines for the use of Consultants by the World Bank Borrowers and the Bank as Executing Agency (January 1997, revised in September 1997 and January 1999) and the following provisions of Section II of this Schedule. Part B: Quality-Cost Based Selection 2. Except as otherwise provided in Part C of this Section, consultants' services shall be procured under contracts awarded in accordance with the provisions of Section II of the Consultant Guidelines, paragraph 3 of Appendix 1 thereto, Appendix 2 thereto, and the provisions of paragraphs 3.13 through 3.18 thereof applicable to quality-and-cost-based selection of consultants. 3. The following provisions shall apply to consultants' services to be procured under contracts awarded in accordance with the provisions of the preceding paragraph. The short list of consultants, estimated to cost less than $200,000 equivalent per contract, may comprise entirely national consultants in accordance with the provisions of paragraph 2.7 of the Consultant Guidelines.) Part C: Other Procedures for the Selection of Consultants 1. Services for processing remote sensing data estimated to cost less than US$200,000 equivalent per contract may be procured under contracts awarded in accordance with the provisions of paragraph 3.6 of the Consultant Guidelines. 2. Services by individual consultants shall be procured under contracts awarded to individual consultants in accordance with the provisions of paragraphs 5.1 through 5.3 of the Guidelines. Part D: Review by the Bank of the Selection of Consultants 1 . Contracts for consultants firms estimated to cost US$100,000 equivalent and individual consultants estimated to cost US$50,000 equivalent or more shall be subject to prior review by the Bank following the provisions set forth in paragraphs 1 and 2 of the Appendix 1 of the Guidelines. Contracts below these threshold shall require Bank's prior approval of the Terms of Reference. 2. With respect to each contract not governed by paragraph 1 of this Part, the procedures set forth in paragraph 4 of the Appendix 1 shall apply. Section III: Operating Costs. 1. The grant will finance operational costs such as operation, maintenance, insurance for equipment procured under the project, office materials and utilities and communication expenditures required for the implementation of the project. 3  Annex 6 Page 4 of 7 Section IV: Procurement Monitoring. 1. The Project National Technical Unit (NTU) will prepare annually, in accordance with provisions of the operational manula, a Procurement Plan, satisfactory to the Bank. The NTU will establish procedures for monitoring project execution and impact, procurement implementation, including monitoring of contracts. The NTU will maintain detailed records of procurement activities financed under the Grant. Table Al: Consultant selection Arrangements (US$ million) Expenditures QCBS QBS SFB LCS CQ Other N.B.F. TOTAL Category A. Firms 8.14 2.06 10.2 (7.31) (1.55) (8.86) B. Individuals 3.33 3.33 (2.83) (2.83) TOTAL 8.14 2.06 3.33 13.53 (7.31) (1.55) (2.83) (11.69) 4  Annex 6 Page 5 of 7 Prior Review Thresholds (Table B) Table B: Thresholds for Procurement Methods and Prior Review Expenditures Category Contract Value Threshold Procurement Method Contracts Subject to Prior (US$ equivalent) Review 1. Subprojects National Shopping None Direct Contracting None Small Works None 2. Goods >100,000 NCB None <100,000 up to an aggregated National Shopping none Amount of 250,000 3. Consultants Firms >200,000 QCBS All (if > 100,000) International Short-List Expressions of Interest <200,000 QCBS Only TORs (if < 100,000) National Short List is accepted Individuals >50,000 Individual All <50,000 Individual TORs Straighforward <200,000 LCS TORs Nature 4. Operating Costs Review Annual Plans Only consultant service contract will be subject to prior review None of the contracts for works or goods will be subject to Prior Review because the amount of each contract is small Overall Procurement Risk Assessment=Average Frequency of Procurement Supervision Missions Proposed=3 Post Review Missions per year Before effectiveness of the grant, CONABIO should finalize a procurement plan for the first year of the project and will include it in the Operational Manual. Updated annual procurement plans will be submitted as part of the Annual Operating Plan. Frequency of Supervision In addition to the prior review, it is recommended that the Bank carry out one post review mission every four months. Such post-review should cover the review of one out of 10 contracts. 5  Annex 6 Page 6 of 7 DISBURSEMENT ARRANGEMENTS The financial management assessment was carried out by a certified specialist. This review was based on the Bank's guidelines for "Review of Financial Management System", and focused on the assessment of the project's accounting system, internal control, planning, budgeting and financial reporting system, selection of an auditor as well as the format and contents of the Project Management Report (PMR) to be quarterly submitted by the recipient. This assessment revealed that project does not have in place an adequate project financial management system that can provide, with reasonable assurance, accurate and timely information on the status of the project (PMR) as required by the Bank. Nevertheless, current system satisfies the Bank's minimum financial management requirements Consequently, traditional disbursement methods (SOEs, special commitments and direct payments) will be used until (i) PMR-base disbursement has been offically approved by the MOF (Secretaria de Hacienda y Crddito Publico) and (ii) both National and regional units are ready to adopt this methodology. CONABIO is taking actions, in close coordination with Nafin, for Bank requirement's compliance, including implementation of an MIS which will produce quarterly PMRs and eventually allow for PMRs-based disbursements. Expenditures that could be disbursed on the basis of SOE are the following: all contracts for works and goods, consultant firm contracts below $100,000, individual consultant contracts below $50,000, all expenditures for subprojects, training, and operating costs. A Special Account in US dollars with an initial deposit of US $650,000 would be established. This special account will be replenished and will be used for all transactions with a value of less than 20% of the amount advanced to the Special Account. Traditional documentation requirements apply for direct payments, special commitments and statements of expenditures (SOEs). If project is converted to PMR- based disbursement methodology, disbursement procedures should be in line with the Financial Management Initiative (FMI). The executing agency, with technical support from the financial agency NAFIN, would prepare the necessary documentation for prompt disbursements. An operating account in Mexican pesos would be established and should be used for all project transactions. This local-currency operating account should be replenished on monthly basis. The amount to be transferred from the Special Account to this account must be only the estimation to cover one month eligible expenditures Each Regional Technical Unit and the National Technical Unit will maintain separate project records and will, on a monthly basis, consolidate project records. Such records will be maintained in order to reflect, in accordance with sound accounting practices, the operations, resources and expenditures of each project activity. The unit will be audited on annual basis by independent auditors. The audit report will be submitted to the Bank within the six months after the end of each year. 6  Annex 6 Page 7 of 7 Annex 6: Table C: Allocation of Grant Proceeds Mexico Mesoamerican Biological Allocation of Grant Proceeds Suggested Allocation of GEF Grant Proceeds (Special Drawing Disbursemen Loan Amount % 1. Goods 183,315 86 2. Consultant Services and 8,954,817 100 3. 1,127,522 86 4. Operating 916,003 86 Unallocated 318.343 Total 11,500,000 Grant amounts financed by GEF 7  Annex 7 Page 1 of 1 Annex 7: Project Processing Schedule Project Schedule Planned Actual Time taken to prepare the project (months) First Bank mission (identification) 09/08/98 2/08/98 Appraisal mission departure 5/20/00 5/30/00 Negotiations 10/10/00 10/16/00 Planned Date of Effectiveness 12/15/00 01/31/01 Prepared by: National Coordinator: Dr. Hans van der Wal, under the supervision of: Secretaria de Medio Ambiente, Recursos Naturales y Pesca (SEMARNAP), Instituto Nacional de Ecologia (INE), Secretaria de Agricultura, Ganaderia y Desarrollo Rural (SAGAR), Secretaria de Desarrollo Social (SEDESOL), Secretaria de Comunicaciones y Transportes (SCT), Secretaria de Reforma Agraria (SRA), Comisi6n Nacional para el Conocimiento y Uso de la Biodiversidad. Preparation assistance: PHRD (TF025318) GEF PPG (TF022489) GEF Block A (TF028440) Bank staff who worked on the project included: Name Specialty Raffaello Cervigni Task Team Leader, Natural Resources Economist Adolfo Brizzi Sector Leader Christine Kimes GEF Regional Coordinator Arsenio Rodriguez Senior Advisor Tania Carrasco Consultant, Anthropologist Gonzalo Castro Biodiversity Specialist Lucia Grenna Communication Specialist Ricardo Hernandez Environmental Specialist Christian Pieri Agro-ecologist Carl Lundin Environmental Specialist Jorge Uguillas Sociologist Mark Austin Project Management Specialist Lea Braslavsky Procurement Specialist Victor Ordofiez Financial Management Specialist Rocio Sarmiento Program Assistant Teresa Roncal Procurement Analyst (Cost tables) 1  Annex 8 Page 1 of 1 Annex 8: Documents in the Project File A. Project Implementation Plan First draft of PIP B. Bank Staff Assessments Communication Strategy Environmental Analysis Financial Management Assessment Institutional Assessment Procurement Assessment Social Analysis C. Other Agroecological alternatives for the Quintana Roo and Campeche corridors Analysis of the forestry sector in Campeche and Quintana Roo A Review Of Criteria To Design Biological Corridors For Sustainable Development (Desk Study prepared by Miguel Fernandez) Memories of preparation meetings in Chiapas, Campeche, Yucatan and Quintana Roo Memories of workshops: Cancun, Akumal, Xpujil , Merida, Tuxtla Gutierrez Problem-opportunity analysis for focal areas in the corridors Project Information Document Social assessment Chiapas, Campeche, Quintana Roo, Tabasco and Yucatan Selection and Design of Biological Corridors (Oxford University) Memories of meetings of preliminar Corridor Councils Memories of work meetings Hurricane impacts on the Yucatan Peninsula landscape The Northern Yucatan Coastal Corridor Monitoring and Evaluation Protocol 1  Annex 9 Page 1 of 3 Annex 9: Statement of Loans and Credits As6IlSra O Dference Beavn Execed and Adk Oricinal Anmxt in LES Milis Disbaseu FY Pnqect ID R*edNarne IBM IA GE Cancel. Undsh C ig Fm Fsd 1999 P04850 AGFCLQJJUALF