Brazil - Natural Resources Policy Project

Report No. 13620-BR PLOT PROGRAM TO CONSERVE THE BRZILIAN RAIN FOREST MEMORANDUM AND RECOMMENDATION OF THE DIRECTOR OF THE LATIN AMERICA AND THE CARIBBEAN DEPARTMENT I TO THE REGIONAL VICE PRESIDENT ON A PROPOSED GRANT FROM THE RAIN FOREST TRUST FUND IN AN AMOUNT EQUIVALENT TO US$ 20.0 MILLION TO THE FEDERATIVE REPUBLIC OF BRAZIL FOR A NATURAL RESOURCES POLICY PROJECT November 22, 1994 Pilot Program to Conserve the Brazilian Rain Forest Country Department I Latin America and the Caribbean Regional Office  i CURRENCY EQUIVALENTS (As of September 30, 1994) Currency Unit : Real US$1.00 : R$0.85 R$1.00 0 US$1.17 WEIGHTS AND MEASURES The metric system is used throughout the report. GOVERNMENT OF BRAZIL FISCAL YEAR January 1 to December 31  .i ACRONYMS CEC - Commission of European Communities CEZEE - Ecological and Economic State Zoning Commission COEMA - State Environmental Council CONDEMA - Municipal Environmental Council CP - Project Commission within MMA ECU - European Currency Unit EIA - Environmental Impact Assessment FUNAI - National Indian Foundation G-7 - Group of Seven Countries (Canada, France, Germany, Italy, Japan, United Kingdom, and the United States) GT - Executing Entities Working Group GTTP - Permanent Technical Working Group of Amazon OEMAs GTZ - Deutsche Gesellschaft fur Technische Zusammenarbeit IAG - International Advisory Group IBAMA - Brazilian Institute of the Environment and of Renewable Natural Resources INCRA - National Institute for Colonization and Agrarian Reform KfW - Kreditanstalt fur Wiederaufbau .'vMMA - Ministry of the Environment and the Legal Amazon NEP - National Environmental Project (Loan no. 3173-BR) NGO - Non-governmental organization ODA - Overseas Development Administration OEMA - State Environmental Entity PA - Action Plan PEA - State Environmental Plan PED - Decentralized Execution Program under NEP PGA - State Environmental Management Plan POA - Annual Operating Plan RFT - Rain Forest Trust Fund RIMA - Environmental Impact Report SAE - Secretariat of Strategic Affairs of the Presidency of the Republic SOE - Statement of Expenditures ST - Project Technical Secretariat STN - Secretariat of the National Treasury UA - Support Unit within the OEMA  a  iii BRAZIL PLOT PROGRAM TO CONSERVE THE BRAZILIAN RAIN FOREST NATURAL RESOURCES POLICY PROJECT TABLE OF CONTENTS GRANT AND PROJECT SUMMARY ...................... vi I. BACKGROUND .................................. 1 Environmental Issues in the Legal Amazon ............... 1 The Pilot Program to Conserve the Brazilian Rain Forest ... ... 2 Institutional Framework for Environmental Management in the Legal Amazon ............................ 6 Lessons Learned from Previous Bank Involvement .......... 11 II. THE PROJECT .................................. 12 Project Objectives .............................. 12 Rationale for RFT Funding ......................... 12 Project Description .............................. 13 Project Costs and Financing ........................ 16 Project Implementation, Organization and Management ... ..... 17 Executing Entities Project Coordination Responsibilities Procedures and Inter-institutional Coordination Qualification and Eligibility Criteria Operational Manual Reporting, Monitoring, Evaluation and Mid-term Review Implementation Schedule Supervision Legal Arrangements Procurement and Disbursements ...................... 26 Auditing .................................... 28 Project Sustainability ............................. 28 Project Benefits and Risks ......................... 29 Environmental Aspects ........................... 30 III. AGREEMENTS REACHED AND RECOMMENDATION ... ... 30 Assurances ..... ............................... 30 Conditions of Effectiveness ......................... 31 Conditions of Disbursement ........................ 31 Recommendation ............................... 32 SCHEDULE A-1 -- SUMMARY OF PROJECT COSTS BY COMPONENT ................................ 33 SCHEDULE A-2 -- FINANCING PLAN .................... 34  iv SCHEDULE A-3 -- SUMMARY OF PROJECT COSTS BY FINANCIER ................................. 35 SCHEDULE B-1 -- SUMMARY OF PROCUREMENT ARRANGEMENTS ............................. 37 SCHEDULE B-2 -- SUMMARY OF DISBURSEMENT ARRANGEMENTS ............................. 38 SCHEDULE C -- TIMETABLE OF KEY PROCESSING EVENTS .... 39 TECHNICAL ANNEXES .............................. 40 ANNEX 1: INSTITUTIONAL BASELINE DATA ON THE NINE AMAZON STATES .................... 41 ANNEX 2: PROJECT COSTS ...................... 53 ANNEX 3: IMPLEMENTATION SCHEDULE .... ........ 60 Physical Financial ANNEX 4: SUMMARY CONTENTS OF THE OPERATIONAL MANUAL ................... 68 ANNEX 5: PROJECT ORGANIZATION AND INSTITUTIONAL MECHANISMS AT FEDERAL AND STATE LEVELS .......................... 76 Project Coordination Structure at the State Level Project Coordination Structure at the Federal Level Project Procedures ANNEX 6: PERFORMANCE INDICATORS .... ......... 86 ANNEX 7: SUMMARY OF THREE EXAMPLES OF POSSIBLE INTEGRATED SUBPROJECTS ... ....... 95 ANNEX 8: SUMMARY TERMS OF REFERENCE FOR MAJOR STUDIES ........................ 100 ANNEX 9: REPORTS AND DOCUMENTS IN PROJECT FILES ................................ 108 Map: IBRD No. 26474 This report is based on the findings of an appraisal mission which visited Brazil in September 1994. Mission members were Carlos Bertao (LAlRF,  v mission leader), Chris Diewald (LAIBR), Dominique Babelon (LAIPS), Coralie Bryant (LAlNR), Charles Dahan and Peter Loach (Consultants), Gustavo Rodrigues (LEGLA) and Alberto Ninio (LEGEN). The mission was joined by Hans Schuetz and Otto von Grotthuss (KfW), Eberhard Goll and Udo Lange (GTZ), Jose Vasconcelos (CEC), and John Palmer and Gordon Armstrong (ODA), who represented co-financing agencies. The Managing Division Chief and the Country Department Director are Stephen J. Ettinger and Gobind T. Nankani, respectively.  vi BRAZIL PILOT PROGRAM TO CONSERVE THE BRAZILIAN RAIN FOREST NATURAL RESOURCES POLICY PROJECT GRANT AND PROJECT SUMMARY Grantor: Rain Forest Trust Fund (RFI) Recipient: Federative Republic of Brazil Beneficiaries: * Nine States in the Legal Amazon (Acre, Amapa, Amazonas, Maranhao, Mato Grosso, Para, Rond6nia, Roraima and Tocantins) * Ministry of the Environment and the Legal Amazon * Secretariat of Strategic Affairs of the Presidency of the Republic * Federal and State entities involved in environmental management in the nine states Amount: US$ 20.0 million equivalent (RFT) Terms: Grant Fimancing Plan: Source TOTAL (US$ million equiv) Rain Forest Trust Fund (grant) 20.0 CEC (grant) 12.0 KfW (grant) 24.8 GTZ (technical cooperation)' 5.8 ODA (technical cooperation)2 5.0 Local Counterpart 11.4 Total 79.0 Economic Rate of Return: N/A Map: IBRD No. 26474 GTZ technical cooperation will be provided as a bilaterally associated project. 2 ODA technical cooperation will be provided as bilateral technical cooperation.  MEMORANDUM AND RECOMMENDATION OF THE DIRECTOR OF THE LATIN AMERICA AND THE CARIBBEAN DEPARTMENT I TO THE REGIONAL VICE PRESIDENT ON A GRANT FROM THE PILOT PROGRAM TO CONSERVE THE BRAZILIAN RAIN FOREST TO THE FEDERATIVE REPUBLIC OF BRAZIL FOR A NATURAL RESOURCES POLICY PROJECT 1. I submit for your approval the following memorandum and recommendation on a proposed grant from the Rain Forest Trust Fund (RFI) to the Federative Republic of Brazil for US$ 20.0 million. The grant would help finance a Natural Resources Policy Project, aimed at strengthening the capabilities of the environmental entities of the nine states located in the Legal Amazon region3 and at enhancing the integration among such entities, for a more efficient management of the environment at the local level, including zoning, monitoring, and control and enforcement activities. This project is part of the Pilot Program to Conserve the Brazilian Rain Forest, which is funded by the Group of Seven countries (Canada, France, Germany, Italy, Japan, United Kingdom, and the United States - G-7), the European Union, and the Netherlands, and administered by the World Bank. 1. BACKGROUND Environmental Issues in the Legal Amazon 2. The Brazilian Amazon is a region of great cultural, biological, economic and ecological diversity. It contains the largest extent of tropical rain forest in the world (almost 40% of the remaining tropical forests on the planet) and contributes 20% of the global river discharge into the world's oceans. Brazilian Amazon rain forests, with an area of approximately 3.3 million square kilometers, are a major carbon store, and their destruction (it is estimated that some 8% of the native forest has already been removed) would occasion the release of greenhouse gases that could affect the global climate. The rich forest and aquatic ecosystems contain a large share of the world's biological diversity and, while not fully known, the potential uses of Amazonian natural products are significant and increasing. Conserving the Amazon rain forest while using its resources sustainably would provide significant benefits both to Brazilians and to the global community. 3. Recent economic and demographic changes in the Amazon region, guided by inadequate technologies, are leading to rapid changes in land use that imply loss of natural diversity, environmental degradation and the threat 3 The Legal Amazon Region was established by Law no. 5.173, of October 27, 1966. It includes the states of Acre, AmapA, Amazonas, Parg, Rond6nia and Roraima and part of the states of Maranhao, Mato Grosso and Tocantins.  2 of climatic changes. Ignorance of the likely consequences of non-sustainable production systems for the environment has contributed to decisions in the past which have led to accelerated deforestation. Policy-making and investment decisions are constrained in situations in which information is lacking on the economic value of the forest, its products and the environmental services it provides. 4. Table 1 (pages 3-5) identifies the main environmental problems related to the use of natural resources in the Legal Amazon, more specifically its forests and biodiversity. It details the main destructive processes that have degraded these forests and biodiversity, and describes the main causes, types of resulting degradation, and areas of the region in which such degradation has occurred. 5. Over the past several years, the Brazilian Govemment has recognized that previous policies have led to short-term benefits but greater long-term costs. There is a growing public sentiment inside the country in favor of protecting the resources contained in its rain forests. The 1988 Federal Constitution outlined the decentralization of environmental management, but allowed for overlapping jurisdictions among the levels of government. By strengthening the capability of institutions responsible for environmental management in the region and by increasing transparency of environmental decision making, it should also be possible to elevate the level of public debate on salient policy issues. The Pilot Program to Conserve the Brazilian Rain Forest 6. The Pilot Program to Conserve the Brazilian Rain Forest was initiated at the request of the G-7 at the Houston Summit in 1990. Individual projects are financed by the RFT, which was established by Resolution 92-2 of the Bank's Executive Directors in March 1992, and by associated bilateral co- financing (all on grant terms). The Program is intended to support an integrated set of projects that will contribute to a reduction of the rate of deforestation in the Amazon rain forests while protecting biodiversity, reducing carbon emissions, and using forest resources sustainably. These projects fall within three broad sub-programs which aim to: (i) strengthen the capacity of the public sector to set and enforce sound environmental policy; (ii) improve the management of special protected areas; and (iii) increase research and the use of environmentally benign technologies in the Amazon. 7. For the first sub-program, the Brazilian government has proposed a set of activities for the institutional strengthening of the state environmental entities (OEMAs) of the nine states located in the Legal Amazon region, and for control and enforcement, monitoring and zoning. These were originally conceived of as four separate projects, but are now combined in the proposed project in order to build on the linkages among them and provide a more integrated approach to environmental management in the Amazon region.  TABLE 1 Major Environmental Problems in the Legal Amazon: Types of Degradation, Their Main Causes, and Areas of Occurrence Problem Primary Types of Degradation Main Causes Areas of Occurrence 1) - Deforestation Loss of biodiversity Infrastructure construction, including Entire Legal Amazon region. through logging roads mostly near roads and urban a) clearing and burning Decapitalization of forest areas and along waterways both primarily for agricultural, Settlement, both official and private, of in flooded and dry land. livestock, and other Loss of soil fertility in the medium people on soils not appropriate for purposes, and and long term agriculture b) selective extraction for lumber. Soil erosion and sedimentation of Regulations requiring 'Improvements' for waterways validation of land titles Reduction of forest transpirational Land value appreciation through clearing capacity Financial and tax incentives for sawmills, Transfer of carbon into the agriculture and pasture lands atmosphere Political stimulation of squatting Air pollution. Weak state-level environmental management, control and enforcement Demand for charcoal, particularly for the steel industry.  TABLE 1 Major Environmental Problems In the Legal Amazon: Types of Degradation, Their Main Causes, and Areas of Occurrence Problem Primary Types of Degradation Main Causes Areas of Occurrence 2) - Problems related to Erosion and sedimentation of Lack of job opportunities in the formal Many Amazon river sub-basins, mining waterways economy including the Tapaj6s and Madeira, and In the states of Contamination of topsoils and Lack of regulation, licensing, control, and Amazonas, Para, Amapa, and chemical (mercury, crankcase oil, enforcement of mining processes Mato Grosso etc.) pollution of waterways and food chain Insufficient control of illegal, wildcat Industrial mining In Para, precious metals trade (Garimpos) Amazonas, Amapa, and Increase In transmissible diseases Rondonia Low technology of informal mining Destruction of habitats and loss of operations. Acre is the only state without biodiversity. serious mining problems.  TABLE 1 Major Environmental Problems In the Legal Amazon: Types of Degradation, Their Main Causes, and Areas of Occurrence Problem Primary Types of Degradation Main Causes Areas of Occurrence 3) Problems related to Endangering of species Attractive source of protein for rural and Fishing - entire Amazon basin fishing and hunting urban populations and coastal regions Loss of biodiversity and the knowledge of how ecosystem Lack of basic knowledge of exploited Hunting - entire Legal Amazon functions species, leading to a disregard for fishing region, including commercial seasons, little protection of reproduction hunting near urban areas. Stock reductions and loss of sites, and non-observance of minimum size protein available for the general regulations population. High rate of waste in commercial fishing due to inadequate fishing techniques Weak and inefficient enforcement infrastructure Conflicts of authority and regulations between state and federal jurisdictions.  6 Institutional Framework for Environmental Management in the Legal Amazon 8. Institutional Weaknesses. Effective environmental management in the nine Amazon states is seriously impeded by their weak environmental institutions and the lack of integration, within each state, between federal and state environmental institutions, as well as between environmental and development agencies. None of the states had an environmental law or an OEMA until the late 1980s. Only three of the nine states had federal forestry police in 1991. State zoning commissions did not exist until 1990-1991. In the past six years, serious efforts have been made to put these basic institutions in place. Yet much remains to be done to strengthen them so that they can assume more prominent roles in state policy determination. Their more powerful counterparts in productive sector secretariats are far more able to influence public investment choices and public policy. 9. The operational environmental agencies lack trained staff in the specializations required -- environmental economics, forestry, hydrology, biology, botany, and management, as well as core management systems -- financial management, personnel, and management information systems. Agency performance is constrained by managerial capacity gaps, little policy analysis capacity, limited equipment, and inadequate infrastructure for zoning, monitoring, and enforcement. Additionally, there are few members of the state judicial system with background in environmental law, and even fewer environmental prosecutors. 10. There are also serious gaps in communication and policy implementation, due mainly to the lack of integration of state and federal entities located within the states. While the 1988 Constitution envisioned greater decentralization, and outlined concurrent authority for the federal and state governments in several environmental subsectors, there were few institutional links to operationalize the Constitution. 11. Institutional Framework at the State-Level . The main principles and administrative mechanisms of a national environmental policy were first laid out in Law 6.938 of 1981, which created the National Environmental System and mechanisms at the federal level for integrated environmental management.. These principles were confirmed and substantially reinforced in the 1988 Constitution, which significantly increased the role of states and municipalities in environmental management. They were attributed, jointly with the Federal Government, responsibility for protecting the environment and renewable natural resources. Similarly, the Constitution established concurrent responsibility (competencia concorrente) between the states and the Federal Government to enact environmental legislation; the latter formulating general norms and minimum standards, and each state enacting supplemental legislation respecting federal minimum standards but suited to their particular situation. Table 2 (page 7) indicates the primary functions of the entities dealing with environmental management at the state level. 12. The nine states in the Legal Amazon have since structured themselves to varying degrees to fulfill their constitutional mandate. All of them have included environmental provisions in their Constitutions consistent with their obligations as spelled out in the Federal Constitution. However, only four states (Amazonas, Maranhao, Mato Grosso, and Tocantins) have enacted an environmental law and issued corresponding regulations or environmental codes. Two states (Acre and Rond6nia) have enacted an environmental law  7 TABLE 2 Environmental Management at the State Level: Entities and Their Primary Functions Erl P Pol Inter-tate M Control and Unersitieing IFormulation Coordination Enforcement OEMA _ COEMA _ .. _ jSecearimatofrPlanning l ||1s__..._ 1 |Forestry Police_ _ | IBAMA |FUNAI | | Federal Police  8 but not issued applicable regulations. In the remaining three states (Amapa, Para and Roraima) the environmental laws await State Congress approval. 13. Institutionally, all nine Amazon states have established State Environmental Councils (COEMAs). Most were recently created (generally since 1992), and, in five states (Amapa, Para, Rond6nia, Roraima and Tocantins), they are not functioning yet (their by-laws are still under discussion). Their composition and functions vary significantly from state to state, as specified in Table 5.0 of Annex 1. They are very important in establishing state environmental policies and norms, providing political support to OEMAs' actions, ensuring transparency and public access to information, and providing a forum for public debate. However, the frequency of meetings and relevance of their agendas had not been satisfactory (Table 5.0 of Annex 1). Their strengthening is an important objective of the project (para. 35). 14. State Zoning Commissions. State Zoning Commissions (CEZEEs) were established in all nine states in 1991 or early 1992 to plan, coordinate, supervise and evaluate zoning activities (only in Para and Tocantins did their creating decree specifically include among their functions that of suggesting how results from zoning activities should be used to orient state planning and government actions). Their membership usually consists of representatives of state sectoral secretariats. Only in Tocantins does its membership extend to the state university, and in Rond6nia to local offices of federal agencies and NGOs. Their secretariat and/or presidency is provided in six states by the state Secretariat of Planning, and in three states (MaranhAo, Amazonas and Roraima) by the state Secretariat of the Environment. CEZEEs were created under the leadership of the Secretariat of Strategic Affairs of the Presidency of the Republic (SAE), the federal agency in charge of planning, coordinating, supervising and evaluating zoning activities nationally, and of ensuring consistency in zoning methodologies. Many CEZEEs, however, have not met regularly since their creation (see Table 4.0 of Annex 1). Under the project, CEZEEs would plan, coordinate and supervise zoning activities carried out by their designated executing agency, with the support of SAE. 15. State Environmental Entities. All states have established OEMAs, which are charged with formulating (or proposing to COEMA) and executing the state environmental policies and monitoring, and controlling and enforcing environmental regulations. Their main activities thus include the elaboration of norms, issuance of licenses, review of environmental impact assessments and reports (EIAs/RIMAs), monitoring, control and enforcement, promotion of environmental awareness and education, and promotion and dissemination of environmentally friendly technologies. Although they have traditionally focussed on control of urban and industrial pollution, their responsibility also extends to protection of natural resources (including forests and fisheries), a task in which their activities are incipient but expanding, in light of a growing trend towards decentralization of such functions to the states. 16. OEMAs in the nine states exist in various legal forms (see Table 2.0 of Annex 1). In some states, they are an integral part of the state government apparatus as Environmental Secretariats (or Coordination), and as such have no legal personality and no administrative and financial autonomy (Amapa, Maranhao, Pard, Rond6nia, Roraima). In others (Acre, Amazonas), a small secretariat is in charge of formulating, approving, supervising and evaluating state environmental policy and formally issuing norms, but preparation and execution are entrusted to a decentralized agency with legal personality and administrative and financial autonomy (autarchy or foundation). In Mato Grosso, all functions are delegated to a foundation, accountable to a Secretary  9 of Environment; and in Tocantins, a foundation responds directly to the COEMA. While in principle foundations have advantages of being able to raise their own funds (proceeds from licensing fees, analysis of EIAs/RIMAs, fines, taxes, payments for services, etc..), in most cases these proceeds are either channelled to special restricted funds (e.g they cannot be used to pay for recurrent expenses), or allocated to other activities (such as science and technology). Sometimes they are so small that they only cover a minimal portion of the OEMAs' costs. All OEMAs, irrespective of their status, are thus overwhelmingly dependent on state budgets, which also considerably limits their ability to make their own decisions with respect to salary levels and hiring. 17. The OEMAs in the Amazon region suffer to varying degrees from a de-facto lack of administrative and financial autonomy, and a consequent lack of financial, physical and trained human resources. Many have high staff tumover because they are unable to offer permanent positions and reasonable salaries. They lack technical expertise, have weak internal systems, no strategic planning (essentially reacting to emergencies), and tend to work in isolation from other agencies (federal, municipal, NGOs, and other state government sectoral agencies). Their actions are also often impaired by a lack of enforceable state regulations. The project will support the strengthening of OEMAs in all these respects (para. 35). 18. There is a growing realization among OEMAs that they must also seek ways to strengthen themselves through alliances with other agencies. Among these other agencies, the most relevant traditionally are federal agencies such as the Brazilian Institute of the Environment and of Renewable Natural Resources (IBAMA), the National Indian Foundation (FUNAI) and the National Institute for Colonization and Agrarian Reform (INCRA), but also, increasingly, state special environmental prosecutors' offices (Curadorias de Meio Ambiente) and special forestry police (Batalhoes Florestais). Specialized Curadorias now exist in all states (except Roraima), though they are at various stages of development (Table 3.0 of Annex 1). By having an adequate capacity to initiate legal actions against offenders and impose criminal sanctions, they are potentially powerful allies of OEMAs as well as of the public. The forestry police (existent in five states, but only incipient in four of them, see Table 3.0 of Annex 1) are not capable of mobilizing considerable forces, which will be necessary as the enforcement of forestry regulations is decentralized to the states. The project includes their strengthening. 19. The Amazon is more urbanized than is generally realized. At municipal levels, OEMAs can leverage their actions by supporting the creation and strengthening of municipal environmental secretariats and councils (CONDEMAs) and by the establishment and strengthening of their offices outside the capital cities. In all institutions, there are significant needs for technical and other training, which will be supported under the project. The project will also promote integration among all environmental agents present in the states (including federal agencies) by financing integrated zoning, licensing, monitoring, control and enforcement subprojects (para. 36 (b)). 20. Although it is true that decentralization to the municipal level is essential for effective environmental management, the large size of the states in the Amazon region (the smallest state, Amapa, is almost five times the size of Belgium), with the consequent difficulties in communications and transportation, make it much more difficult to decentralize to the municipalities without first strengthening environmental institutions at the state level, specifically the OEMAs and the COEMAs. Because such strengthening is a  10 prerequisite for this decentralization as well as for increasing public participation in environmental protection, this project will give priority to the state level, while also encouraging a more effective presence of the OEMAs at the municipal level. 21. Zoning. Monitoring. and Control and Enforcement Issues. The objective of ecological-economic zoning is to provide the public sector with the information necessary to plan rational land occupation and more sustainable use of natural resources. It is accomplished through satellite and aerial imaging of the zoned area, and through biogeophysical (geological, hydrological, geomorphological, etc...) and socio-economic (sociological, economic, anthropological, etc...) studies of the area. Based on the recommendations of this research, land-use strategies are developed, public and private investments are planned, and conservation areas are identified, preserving the native populations and fragile ecosystems and rationalizing the use of natural resources. 22. Ecological-economic zoning, monitoring of the pattems and problems of environmental degradation, and enforcement of the norms embodied in legislation are three of the major functions to be performed in environmental management. In this regard, zoning is the most important tool which has become recently available due to the technological advances of the 1980s. The use of computerized geographic information systems to analyze satellite images can also extend monitoring and enforcement well beyond what was possible in the recent past. 23. The major technological breakthroughs of the mid-1980s in geographic information systems, satellite surveillance, and the use of the micro-computer for digitalized mapping are now being put in place in this part of Brazil. The contract to establish the Amazon Surveillance System (SIVAM) has just been awarded (not Bank-financed). During the implementation of the project, the Bank will be closely following the installation of SIVAM, in order to determine ways in which the information provided by the system can be used to enhance the environmental monitoring and enforcement capabilities of the Amazon states. 24. There are several intermediary steps, however, before real capacities can be built for using these advanced technologies. Primarily, agreements need to be reached on the processes, institutions, and people to be engaged in the processes. To date the concept of ecological-economic zoning in the Amazon remains essentially bio-physical, with only secondary attention to socio-economic data and its relationship to the incentives for the choices to be made. There is rarely a unique optimum land use, nor can technology alone identify one. Claiming that there is, and rushing to regulate (especially if it is without regard to incentives) without a review process to encourage ownership, only results in heightened conflict and enforcement stalemates. A regulation process based solely on restrictive legislation rarely works, even in industrialized countries with sophisticated capacity for enforcement. 25. Beyond ecological-economic zoning, however, there is other monitoring and enforcement work that needs strengthening: conformance with management plans submitted by sawmills and wood product manufacturers; licensing, fines, fee collections, and user charges; water and soil quality; and the impacts of illegal mining. The size and scale of the Amazonian states, and the dispersed nature of these problems, make the strengthening of these activities a considerable challenge. While IBAMA and the Forestry Police are on the front lines of enforcement, OEMAs also have their role to play in these  11 activities, as do the municipalities. Facilitating increased coordination among these different organizations is central to strengthening environmental management. Lessons Learned from Previous Bank Involvement 26. A number of lessons were learned from the implementation of the Bank-financed National Environmental Project (NEP) (Loan no. 3173-BR). First of all, project experience has shown that a thorough institutional analysis should be carried out early on in project implementation. Second, greater attention must be given to building capacity in the implementing agencies. In the NEP, IBAMA proved to be extremely weak in basic respects. Heavy reliance had to be placed on a project coordination unit and other technical experts (their presence reduced the capacity-building impact of the project). Another lesson learned is that this kind of project needs to be designed much more strategically and with greater simplicity. Future projects should build institutional capacity and carry out activities over a carefully designed sequence. 27. The recent restructuring of the NEP, with the allocation of sizable funds to the execution of decentralized projects (PED), represents an important experience for the Bank in lending to the environmental sector in Brazil since it incorporates lessons previously learned. It now includes sizable funds for which states compete with innovative projects involving new, decentralized approaches to environmental management, including the use of market-based incentives. The proposed project is following a similar approach in the integrated subprojects component. It is expected that, in the Amazon states, the program of PED and this project's activities will be complementary, with the proposed project focusing on the strengthening of state agencies and PED on municipalities and community associations. 28. Another germane Bank experience is with the Rond6nia and Mato Grosso Natural Resource Management Projects (Loan numbers 3444-BR and 3492-BR, respectively), currently under implementation. Both projects include separate institutional strengthening components targeted for, among other entities, their OEMAs. The Rond6nia activities concentrate on training and civil works, while the Mato Grosso activities are geared towards the purchase of essential equipment and civil works. Both projects also include programs for increasing decentralization of environmental policy to the municipal level and for zoning. Experience under these projects points to the need for strong environmental institutions at the state level in order to pursue sustainable development. It also highlights the critical importance of timely consultations with all segments of society (in particular conceming zoning activities). 29. Appraisal of these projects, discussions with Brazilian officials regarding the NEP, and sector work recently undertaken on decentralization have shown that institutional development must also include: (i) ending the historic isolation of OEMAs from other state agencies; and (ii) undertaking a broader approach to institutional development -- one which encompasses attention to the legal framework, the role of the OEMAs in decision making, the agencies' intemal managerial and organizational capacities, as well as the more traditional approach of providing equipment and training. 30. In addition, a 1992 paper entitled "Institutional Development in the Latin America and Caribbean Region: Lessons of Experience and  12 Recommendations for Improvement", emphasized: (i) basing project design on a thorough institutional needs assessment; (ii) establishing clear, monitorable performance indicators of project success; and (iii) carrying out an annual review as a setting for evaluating project performance and agreeing on necessary adjustments. II. THE PROJECT Project Objectives 31. The objectives of the project are to: (i) strengthen the policy analysis, regulatory and implementation capabilities of the entities dealing with environmental management at the state level, so they can develop and implement their key functions in an integrated manner; (ii) implement zoning, monitoring, and control and enforcement activities in key locations in the states, in order to mitigate the major environmental concerns in critical areas; and (iii) support the decentralization of environmental management from the federal to the state/municipal levels. 32. More specifically, the institutional and policy goals are to: (a) better integrate environmental entities at the state level with other sectoral entities, federal entities present in the states, NGOs, and the private sector, thus enhancing their capacity to set environmental policy and to intemalize environmental concems in investment decisions; (b) improve the intemal consistency of the legal framework for environmental policy, integrating it into other sectoral laws and policies; (c) raise public awareness of environmental problems through the participation of civil society in the major discussions affecting the sector and through the dissemination of information on environmental quality; (d) assure that the entities in charge of the protection of the environment have the basic capacity to implement and enforce instruments of environmental policy; (e) improve the financial and institutional sustainability of the 0EMAs; (f) enhance the capacity to respond quickly to specific demands that are considered a priority in terms of the protection of the environment; and (g) strengthen the zoning, monitoring, control and enforcement capabilities of the states in critical, priority locations. Rationale for RFi Funding 33. One of the objectives of the Bank's Country Assistance Strategy for Brazil, most recently discussed by the Board on June 29, 1993, is to identify ways to allow and encourage vigorous agricultural and industrial growth, while at the same time strengthening institutions and initiatives that will preserve the environment and reduce rural poverty. The Pilot Program's overall strategy is to demonstrate the feasibility of harmonizing economic and environmental objectives. Through support for integration of environmental management at the state level, and through strengthening the capacity of the main actors in such management, the proposed project would improve the essential institutional base needed for conservation of the Amazon rain forest along with the sustainable exploitation of its resources. As such, it is fully consistent both with the objectives of the Country Assistance Strategy as it applies to rural and rain forest areas, and with the objectives of the Pilot Program. Innovative aspects of the proposed project include its focus on joint management of the  13 environment (state and federal agencies working together), the strengthening of the OEMAs in a non-traditional fashion, their integration into policy and investment planning of the state governments, and the treatment of zoning, monitoring, and control and enforcement activities as an integrated set of actions involving several different entities at the local level. The proposed system of allocating a portion of project funds on a competitive basis, among both states and institutions, will create an incentive to the best performers, based on demonstrated capacity to effectively manage the environment. Project Description 34. The project would consist of two components: (i) institutional strengthening of the entities dealing with environmental management in the nine states in the Legal Amazon region; and (ii) zoning, monitoring, and control and enforcement activities in these states, through, inter alia, support for integrated subprojects which address a specific environmental problem within a limited geographic area of each state. The project would also finance MMA's administrative costs related specifically to the project, as well as technical assistance to the states for integrated subproject preparation (para. 41). 35. Part 1 of the project (39.4% of total project costs), would build the basic institutional foundation needed in every state for establishing a functional environmental protection system. This component will support the following activities common to the nine states: (a) improvement of the environmental policy framework, through: (i) the strengthening of strategic planning and policy analysis and implementation capacity for using existing instruments, such as review of EIAs-RIMAs, licensing and application of penalties, and for developing new policy instruments; and (ii) greater transparency of environmental decisions by promoting public access to environmental information and documents, such as RIMAs; (b) establishment of a process of needs assessment, priority setting, and strategic planning in each OEMA, through, inter alia: (i) the development of mechanisms to improve the financial sustainability of OEMAs, taking into account the potential application of natural resource taxes (royalties), pollution and user charges -- including recreational use of state conservation units; (ii) the identification of human resource needs and policies, including a system of personnel performance evaluation; (iii) the establishment of training programs for staff; and (iv) the improvement of the analytical capacity of laboratories and centers which process environmental data; (c) strengthening of state systems to address environmental issues, through, inter alia, (i) transforming the OEMAs into technical entities that would support improved state investment planning and design of state environmental legislation, through the holding of public workshops to discuss the design of environmental legislation compatible with existing legislation in other areas (consultants with knowledge of successful OEMAs outside the region would be hired to assist in this process); (ii) operationalizing an effective COEMA in each state, by revising, if necessary, its membership and scope of authority, by strengthening their ability to issue norms and standards, and by holding  14 workshops to discuss state environmental problems; (iii) supporting the establishment and functioning of Technical Commissions on State Environmental Legislation within COEMA (CTEL); (iv) strengthening forestry police; and (v) developing the state's capacity to adjudicate environmental disputes, through, for example, the training of judges and attorneys; and (d) enhancement of intrastate collaboration in solving environmental problems, through the broadening of the decision-making base of the COEMAs and CEZEEs, and the formation of GTs to coordinate the preparation of integrated subprojects, and of interstate collaboration, through the creation of a Permanent Technical Working Group of Amazon OEMAs (GTTP) for staff to exchange information on technical and regulatory issues related to the environment, and as a complement to the political working group of the region's environmental secretaries already in place. 36. Part 2 of the project (55.5% of total project costs) will consist of three components, as follows: (a) the strengthening of specialized staff of entities dealing with ecological-economic zoning, including the CEZEEs, the coordinating agencies of zoning works (Secretariats of Planning or of Environment), and other entities in charge of the execution of zoning activities in the states, through the provision of training, equipment and data for geo- processing and remote sensing; (b) the carrying out of a study on the territorial data of the Amazon region, which will consolidate the results of the "Environmental Diagnosis of the Legal Amazon", made by the Brazilian Institute of Geographics and Statistics (IBGE), and establish the system of territorial information of the region; (c) the carrying out of integrated sub-projects, in which: (i) the states will select critical areas with prospective environmental concerns; (ii) this area will be zoned (scale 1:250,000) so that the states can identify specific sub-areas ("hot spots") within the critical areas where an environmental concem is present4; (iii) a more detailed zoning of this sub-area will be done (scale depending on the size of the sub-area and the nature of the environmental concern); and (iv) monitoring, control and enforcement activities to mitigate the environmental concerns in the specific sub-area will be carried out. The project is expected to finance an average of three integrated subprojects per state, with an average subproject amount of US$1-2 million. Such integrated subprojects can include the selective strengthening of non-state entities for the execution of their activities under such subprojects, through the provision of specific training for their staff, equipment and vehicles, if needed. Annex 7 provides three examples of possible integrated subprojects dealing with sawmill, charcoal-based pig iron plant and mining activities; and 4 In the states of Acre, Mato Grosso and Rond6nia, all the territory of the states will be macro-zoned (scale 1:250,000) through, respectively, the KfW zoning project (as part of this project), and the Bank- financed Natural Resource Management Projects currently being carried out in the states of Mato Grosso and Rond6nia. Consequently, the zoning activities to be included in the subprojects for these states are only those in item (iii) of this paragraph.  15 (d) the carrying out of emergency enforcement activities in priority areas of the state (ad-hoc actions outside those programmed using the integrated subproject planning mechanisms) not to exceed US$250,000 per state over the life of the project. Such activities may include necessary related laboratory analysis and will have to be proposed by an executing entity and approved by the Project Commission (CP)5 within MMA and the Bank. 37. In order to become eligible to receive funds from sub-component (b) of Part 2, the states and the institutions will have to meet certain standards (paras. 56-59). Integrated subprojects will also be subject to technical analysis by CP, established within the Ministry of the Environment and of the Legal Amazon (MMA). Such analysis would be carried out in accordance with pre- determined criteria. All these criteria will be included in the Operational Manual (para. 62). 38. The objectives of an integrated subproject must be consistent with those of the Pilot Program, i.e., they should aim at reducing the rate of deforestation in the Legal Amazon by: furthering the sustainable use of natural resources (forest and water resources); protecting the forest and biodiversity; and reducing contributions to carbon emissions. Thus, activities which would qualify for financing could include control of: (a) deforestation and selective logging without adequate forest management; (b) fires in forest or contiguous areas; (c) placer mining (garimpo) activities (in particular, siltation and mercury pollution caused by these activities); (d) predatory fishing and hunting; and (e) industrial and urban pollution, but only when associated with: (i) the burning of wood or wood residues (charcoal manufacturing, wood burning in ceramics industry and burning of sawmill dust), which represents an indirect contribution of the forest to carbon emissions; (ii) threats to biodiversity in sensitive eco-systems in priority areas; or (iii) the need to secure the support and participation of local communities in priority areas. 39. The zoning activities under the integrated subprojects will provide the necessary tools to orient land occupation in the priority areas, taking into account the sustainable use and protection of its natural resources, thereby leading to an enhancement of the quality of life of the population in these areas. The methodology and process proposed for zoning activities under the integrated subprojects will be developed in workshops organized in the early stages of project implementation, and must include the required steps for consultation with affected groups and public hearings, the effective participation of local representatives of federal agencies, municipalities, organized civil society and affected populations in the various stages of zoning work (including socio-economic data collection and analysis of alternatives) and public hearings on zoning recommendations. 40. The significance of the effective enforcement of the zoning recommendations is such that, during negotiations, the representatives of the Recipient represented to the Bank that it is part of its policy in the Amazon region, and applicable to all entities controlled directly or indirectly by the Recipient, to take into account the ecological-economic zoning orientations of the Amazon states before making any productive investment in such states. 5 The CP comprises nine members: one representative from MMA (only with tie-breaking voting rights), one from SAE, one from IBAMA, three from the states (to rotate every. year) and three from NGOs.  16 Similar commitments will be required from the states, as specified in paragraph 70 (k) below. 41. Additionally, the project would finance project-specific administrative costs of MMA, which include support to the CP and to the MMA's Technical Secretariat (ST), as well as project monitoring and evaluation. This support represents the minimum external financing necessary for successful project implementation, since MMA is a recently established Ministry. This component will also finance technical assistance to the states, through MMA, for the preparation of integrated subprojects, when requested by the states. It represents 5.1 % of total project costs. Project Costs and Fimancing 42. Total project costs are estimated at US$79.0 million, including physical and price contingencies amounting to 10% of total project costs (except for the amount allocated to integrated subprojects under Part 2). Cost estimates are based on: (i) state proposals prepared using standard costs and a predefined project activities list; and (ii) budget limits agreed to for each component in the Pilot Program Progress Report of November 1991. These estimates are summarized in Schedule A-1 and detailed in Annex 2-A. Indicative cost estimates for each state and the regional level are in the project file. The financing plan, as a whole and by project component, is shown in Schedules A-2 and A-3. 43. The project would finance, inter alia, the provision of technical assistance and training, workshops and seminars, travel and per diem expenses (on a declining basis), the acquisition and use of equipment and vehicles, and some civil works on a modest scale, when required. All expenditures, except salaries of staff and taxes, would be eligible for financing. Only works of a value of less than US$200,000 in the aggregate per subproject would be eligible under the integrated subproject component (Part 2), so as to limit them to small-scale construction (such as construction of outposts and surveillance and monitoring installations). Eligible recurrent costs (such as supplies and materials) would be financed from external funds on a declining basis (para. 80). 44. The project would be financed with grants from the RFT (US$20.0 million), CEC (US$12.0 million equivalent), and the Kreditanstalt fur Wiederaufbau (KfW) (US$24.8 million equivalent), the technical assistance of the United Kingdom's Overseas Development Agency (ODA) (US$5.0 million equivalent), and the Germany's Deutsche Gesellschaft fur Technische Zusammenarbeit (GTZ) (US$5.8 million equivalent, in the form of a bilaterally associated project), and by counterpart funds (US$11.4 million equivalent). Technical assistance from ODA would be provided directly to the states for institutional strengthening, project implementation and integrated subprojects. Technical assistance from GTZ would be provided directly to three states (Acre, Para and Amazonas), and financial assistance from KfW would also be provided on a priority basis to these three states until the Mid- term Review, when this pre-allocation will be reviewed, taking into account the disbursements made. CEC funds would be disbursed through a Trust Fund expected to be established in the Bank in early 1995. If the amount of the CEC grant is more than US$12 million equivalent, the difference will be allocated to the carrying out of integrated subprojects under Part 2 of the project. To ensure sufficient funds to begin the proposed project, the  17 effectiveness of the RFT Grant Agreement will be dependent on the effectiveness of the CEC Grant Agreement (para. 93 (a)). The signing of the KfW Grant Agreement is expected by mid-1995, and its cross effectiveness with the RFT Grant Agreement is not proposed, because disbursements under the project in the first half of next year are expected to be very limited. Regarding the technical assistance of GTZ and ODA, in the case they are not formalized in due course, funds would be reallocated from the amounts allocated for integrated subprojects under Part 2 of the project (para. 36 (c)). Project Implementation, Organization and Management Executing Entities 45. The project would be executed by a number of participating entities designated by each state (see Annex 5). These would comprise: (a) for the institutional strengthening of state environmental agencies component (Part 1 of the project)), which, for the purposes of the component, include the State Environmental Secretariats, their executing entities (environmental foundations or other types of autonomous entities), the environmental sections of State Attorney General's Offices (Curadorias de Meio Ambiente), and the state Environmental Police forces; (b) for the strengthening of zoning institutions sub-component (under Part 2 of the Project), of entities dealing with ecological-economic zoning, including the CEZEEs, the coordinating agencies of zoning works (Secretariats of Planning or of Environment), and other entities in charge of the execution of zoning activities in the state (such as Universities), through the provision of training, equipment and data bases for geo-processing and remote sensing; and (c) for the integrated subprojects sub-component (under Part 2 of the Project), the executing entities designated to implement approved subprojects in the respective subproject proposals. These may include federal entities such as IBAMA, FUNAI, INCRA and the Federal Police, and state entities such as specialized forest police forces, or the regular state police. 46. Municipal entities and NGOs would not be direct recipients of grant funds. However, under specific subprojects, they may be indirect recipients if they are contracted as executing entities by a sponsoring entity as defined in items (a) through (c) above. Additionally, the project will promote the active involvement of NGOs in its implementation, through their participation in the CP (at the federal level) and the COEMAs and CEZEEs (at the state level). Subprojects under Part 2 which include the involvement of NGOs or municipalities in their preparation will be given greater weight when technically assessed, as specified in the Operational Manual.  18 Project Coordination Responsibilities 47. The following paragraphs describe the functions, membership and staffing of the various bodies involved in project coordination and management at the state, regional and federal levels. 48. At the state level, a Working Group (Grupo de Trabalho - GT) would be formed in each state to coordinate project implementation. The GT would be composed of one working-level representative of the OEMA (who chairs the Group) and one from each of the state entities and state-level offices of federal entities expected to carry out the project. The appointed representative of each entity to GT will be the person responsible for the coordination of the execution of the project in that entity. The composition of GT and the profile of its members will have to reflect the technical (not political) character of this group. GT would be in charge of: (i) coordinating the preparation of subprojects; (ii) reviewing executing entities' programs and budgets (Action Plans (PAs) and Annual Operating Programs (POAs)), and consolidating them; and (iii) preparing an annual evaluation report of the project. 49. A Support Unit (Unidade de Apoio - UA) will be established within the structure of each OEMA to serve as the executive secretariat to GT and to coordinate the OEMA's own activities under the project. This unit will be headed by a person designated by the OEMA from among its staff, and will comprise a full-time technical adviser (in the case of Acre, Amazonas and Para, the adviser will be provided under the technical assistance of GTZ) and two to three consultants (for financial, procurement and other aspects), all financed under the project. This unit would assist GT and executing agencies with: (a) the preparation of subproject proposals and other programming and budgeting documents; (b) the review and consolidation of these documents, and their verification for consistency with PEA/PGAs (see para. 54) and approved subprojects; and (c) the preparation of annual evaluation reports. The unit would also assist the executing agencies in the day-to-day operation of project-related systems (accounting, reporting, disbursements) and on procurement matters. This group would also be supported by specialist consultants provided (upon request) by ST, or hired directly by the states and financed under the project. 50. At the regional level, a Permanent Technical Working Group (Grupo de Trabalho Tecnico Perrnanente - GTTP) would be constituted, with representatives from each of the nine OEMAs, to: (a) identify and discuss common problems and approaches to resolving these problems; (b) discuss and propose uniform norms and procedures; and (c) review conflicts between environmental and other state-level or federal regulations and propose relevant changes. GTTP would be an important technical regional forum. It would meet initially every two months and would be supported by specialized ad hoc commissions and consultants financed under the project. 51. At the federal level, the responsibility for coordinating, managing, and supervising the project would be vested in CP and ST. Their responsibilities and composition are summarized below: (a) the CP would be responsible for: (i) approving consolidated state programs and annual budgetary allocations by states; (ii) approving integrated subproject proposals and "emergency activities"; (iii) recommending revisions to program norms, criteria and procedures; and (iv) commenting upon annual evaluation reports. It would consist  19 of: one representative of MMA (the Project Technical Secretary, who would preside over the CP but would have no voting rights); one representative of IBAMA; one representative of SAE; three representatives of the states, each appointed for one year on a rotating basis; and three representatives of NGOs (one from environmentalist groups, one from social groups and one from business groups). (b) ST would be established within MMA, under the Pilot Program Executive Secretariat (SEPP), to coordinate the project at the federal level. ST would be responsible for: (i) reviewing the five year PAs and POAs for consistency with Pilot Program rules (this function will become lighter as state GTs gain experience and knowledge of the project) and approving them; (ii) submitting changes to project norms and procedures to CP, then to the Bank and relevant donors for approval, and subsequently issuing them; (iii) preparing annual budgets and issuing budget rules to the states; (iv) assessing the technical, financial and institutional viability as well as the sustainability of integrated subprojects under Part 2 of the project, and submitting its recommendations and grading to CP for review and clearance, then to the Bank and relevant donors for approval; (v) consolidating POAs for submission to the Bank and relevant donors; (vi) preparing semi-annual progress reports on the project's physical and financial progress, the project's annual status report, organizing the project's Mid-term Review (see para. below), and preparing a project Implementation Completion Report at the end of the project; (vii) providing technical assistance to the states (upon demand) to help them prepare and review PAs, POAs and subprojects; (viii) ensuring that procurement, project accounting and reporting and disbursement are followed, and that standard systems have been installed and are functioning; and (ix) maintaining the Special Account and handling disbursements from the Trust Fund. ST would be staffed with ten professionals and three support staff, as shown in Annex 5, Graph 2, and would be supported by ad-hoc consultants (in particular for subproject appraisal) and technical personnel from other areas of MMA and SAE. 52. The establishment of CP and ST, the appointment of the project Technical Secretary and of the core staff of ST, as agreed, would be conditions of effectiveness for the Grant Agreement (para. 93 (b)). Assurances were obtained that MMA would subsequently maintain CP and ST adequately staffed at all times (para. 92 (a)). Procedures and Inter-institutional Coordination 53. Project management and coordination mechanisms are designed to promote decentralization at the state level in the design and adoption of priorities and programs, their coordination and integration, and their implementation, while maintaining adequate supervision and control mechanisms at the federal level and consistency with prevailing regulations governing transfers of federal funds. 54. The following procedures would apply to all project components: (a) during the first year of the project, each state OEMA would prepare an Environmental Plan (Plano Estadual Ambiental- PEA), a simplified document which would present a diagnostic of the main  20 environmental issues in the state, list priority themes and areas for attention, and propose critical areas within these themes and areas where the state should focus its efforts. The PEA will be approved by the respective COEMA, and the states which do not have functioning COEMAs would propose alternative review mechanisms for their PEA and subproject proposals. By the second half of the project, it is expected that each state would be able to prepare a more comprehensive document, an Environmental Management Plan (Plano de Gestao Ambiental-PGA), a strategic planning document which, in addition to articulating state environmental policies and priorities, would establish measurable objectives and define the means for achieving them (financial, institutional). A full PGA will be prepared and submitted to the respective COEMA in 1998. PEAs/PGAs will be prepared by the OEMA, in consultation with relevant sector secretariats and other state and federal agencies, and submitted to COEMA for review and approval. Proposed zoning priorities and programs would also be submitted to the respective CEZEE for review and approval; (b) integrated subproject proposals would be prepared by executing agencies under the leadership of GT, with the assistance of UA, approved by the COEMA and sent to ST. ST will carry out a technical assessment, in accordance with the criteria set forth in the Operational Manual. All subprojects would then be submitted for approval to the Bank and relevant donors; (c) each executing entity would prepare a five-year Action Plan (Plano de Acao - PA) reflecting its agreed participation in the project. This document would intemalize project planning, programming and budgeting into each entity's operations and programs. PAs would be revised annually. Each entity would also prepare a POA, which is an annual budget (including a breakdown of expenditures by type and a monthly physical and financial implementation schedule). PAs and POAs would be reviewed by GT for consistency with the priorities and programs established in the PEA/PGA and approved subprojects, and sent to ST for approval. During negotiations, assurances were obtained that MMA will send to the Bank, for its approval, by not later than September 30, 1995, the first PAs of the OEMAs for the activities under Part 1 of the project for calendar year 1996 (para. 92 (b)). Additionally, the Bank and relevant donors would review and approve the consolidated POA for each year, to be presented to the Bank by October 1 of each year. The approval by the Bank of the POA for calendar year 1995 would be a condition of effectiveness for the Grant Agreement, while the approval of subsequent POAs would be a condition of disbursement for each executing entity for each year (paras. 93 (c) and 94 (a)); and (d) semi-annual progress reports would be prepared by each executing entity and consolidated by ST before being sent to the Bank and relevant donors in the months of March and September of each year. Annual evaluation reports would be prepared by each GT/UA and sent to ST, the Bank, relevant donors and the COEMAs for information. 55. Activities to be financed during the first year of project implementation would not be subject to the above process. Rather, executing entities under the institutional strengthening component have been requested only to prepare POAs covering essential preliminary activities such as training, studies, and acquisition of basic data, as well as those required to support the creation of  21 coordinating bodies. These draft POAs were reviewed during negotiations and will be approved by ST and the Bank and later incorporated into the Sub-grant Agreements. 56. Thus, in this process, the states would have the exclusive responsibility for defining priorities in PEA/PGAs, and designing programs and integrated subprojects. The role of ST would be limited to a technical assessment of PAs of OEMAs and of integrated subprojects, ensuring that proposed activities and institutions meet the eligibility and qualification criteria established for the project, and that agreed monitoring, reporting, accounting, procurement and disbursement procedures are being followed. The role of ST in reviewing and approving PAs and POAs would be revisited during the Mid-term Review, based on the experience and capabilities developed at the state level. A decision will be taken at that point on whether approval authority for PAs and POAs could be further delegated. Proposed procedures and a timetable for major processing steps are detailed in Annex 5. Qualification and Eligibility Criteria 57. Eligibility of States. To access funds for integrated subprojects under Part 2 of the project, each state must: (a) have signed a Subsidiary Agreement with MIMA and that such Agreement has become effective; (b) have environmental legislation consistent with constitutional requirements, duly regulated; (c) demonstrate approved budget allocations to state environmental institutions (Secretarias de Meio Ambiente and their Executing Agency, Zoning institutions, and state environmental police) from domestic sources (i.e. excluding external funds) which show positive growth in real terms relative to the previous year; and (d) have complied with the applicable dated commitments listed in paragraph 70 below. 58. The funds for integrated subprojects, including the associated selective strengthening of non-state entities, will be disbursed on a first-come-first- served basis. Because of the different stages of development of environmental management in each of the nine states, and in order to allow sufficient time for the weaker states to develop acceptable subproject proposals, states will be exempt from conditions spelled out in items (b) and (c) of paragraph 57 above, for a period of two years (calendar years 1995 and 1996), but only up to US$1.5 million per state. Such limit will be included in the Operational Manual. On January 1, 1997 the uncommitted balance of state reserved funds will be available to all states, i.e., fully distributed among approved subprojects on a first-come, first-served basis. 59. Eligibility of Institutions. Each executing entity must have: (i) signed a Sub-grant Agreement with MMA (para. 70); (ii) demonstrated the technical capacity to implement its part of the integrated subproject; and (iii) demonstrated the availability of counterpart funds for the carrying out of such part in its budget.  22 60. Eligibility of Integrated Subprojects. In order to be eligible, Integrated Subprojects (Zoning, Monitoring, and Control and Enforcement activities) would need to: (i) be consistent with PEA/PGA and Pilot Program priorities, and have been recommended by COEMA; (ii) have been found by CP to be technically, financially and institutionally sound and sustainable; (iii) for zoning activities, be recommended by CFEZE, followed an agreed-upon methodology (including steps for consultation with affected groups and public hearings), and have the formal support of municipalities and local associations; and (iv) show satisfactory integration between licensing, zoning, monitoring, control and enforcement activities either already existing in the project areas or to be financed under the integrated subprojects. Eligible integrated subprojects would then be subject to a selection process similar to that designed under the PED under the NEP, i.e., subprojects will be assessed according to a series of criteria and assigned points on each one of these criteria. These criteria are listed in the Operational Manual (Annex 4). These points will then be added, and the project will be selected if the total number of points is equal or above 60% of the total of points. 61. In order to ensure a reasonable geographic dispersion of funds among the nine states, total disbursements for integrated subprojects under Part 2 will be limited to US$7.5 million per state. Such limit will be included in the Operational Manual. As indicated in para. 58 above, commitments for subprojects up to U$$1.5 million per state would not be subject to the proposed state eligibility criteria during the first two years of project execution, but will be subject to the institutional and subproject criteria. Operational Manual 62. Inter-institutional and project coordination mechanisms and procedures, qualification and eligibility criteria, subproject selection criteria as described in the above paragraphs, and reporting procedures described below would be incorporated in an Operational Manual for the project. The table of contents for this manual is presented in Annex 4. A draft of this manual was discussed at appraisal, and during negotiations agreement on its contents was reached. The issuance of the Operational Manual would be a condition of effectiveness for the Grant Agreement (para. 93 (d)). Assurances were obtained that the project would be carried out as specified in the Operational Manual (para. 92 (c)). Reporting, Monitoring, Evaluation and Mid-term Review 63. Each executing entity would be required to prepare semi-annual progress reports not later than March 31 and September 30 of each year, starting in September 1995, on the achievements of physical and financial targets as set out in their POAs, based on a standard format. These reports would be sent to the GTs and to ST for information, and consolidated twice a year by ST. This semi-annual progress report would be sent to the Bank and relevant donors. During negotiations, assurances were obtained that ST would hire a specialized consultant to: (i) by April 30, 1995, develop a project accounting and management information system, including financial and physical progress reporting and recording of procurement activities; and (ii) by September 30, 1995, install in MMA and in each OEMA such a system and train the relevant personnel (para. 92 (d)).  23 64. The first semi-annual progress report will include an evaluation of project progress during the preceding year, an analysis of successes, problems and proposed solutions, and an action plan detailing specific proposed actions to be taken in response to problems identified. These reports, and a summary prepared by ST, would be reviewed by CP before being circulated to the Bank, relevant donors and the International Advisory Group (IAG). A set of performance indicators for the institutional strengthening component is presented in Annex 6. During negotiations, assurances were obtained that the progress in project implementation would be measured, inter alia, by these indicators and by annual reviews to be conducted by the Bank, the relevant donors and MMA in the month of April of each year, beginning in 1996 (para. 92 (e)). For integrated subprojects, specific indicators will be developed and proposed as part of each subproject proposal, and progress would be measured against the agreed indicators. On the basis of these evaluation reports, ST will prepare an annual evaluation report, which will be submitted to the Bank, relevant donors and the Pilot Program Coordination Commission (CCPP). Also on these bases, proposals will be developed (at the initiative of ST and/or CP) to modify project procedures and criteria if necessary. These proposed amendments will be reviewed by, and agreed with, CP, the Bank, and relevant donors. 65. During negotiations, assurances were obtained that a Mid-term Review would be carried out not later than October 31, 1997 (para. 92 (f)) with the participation of the Bank, MMA, CP, the relevant donors and the states. Such a review will particularly focus on the: (i) review of revised five-year PAs of OEMAs; (ii) project coordination procedures and mechanisms and whether they can be further delegated to the states; (iii) subproject eligibility and selection criteria and financing limits; (iv) grant allocations by components; (v) allocations by states of funds from the various sources (RFT and co-financing sources); (vi) status of implementation of recommendations of institutional diagnostics undertaken during the first year; and (vii) functioning of the COEMAs and CEZEEs. By not later than August 31, 1997, ST will prepare a report, on the basis of which the Bank, ST and relevant donors will jointly carry out the Mid-term Review. Adjustments to the project scope, norms and criteria, procedures, institutional mechanisms, and allocation of funds will be introduced as necessary following this Mid-term Review. 66. Finally, within six months after project completion, an Implementation Completion Report will be prepared. This report will evaluate the success of the program in reaching its objectives, based on the agreed performance indicators. This report will be circulated for comments to CP, and then to the donors and the IAG. 67. During negotiations, assurances were obtained that project reporting and evaluation, and adjustments to project design, mechanisms and allocation of funds, would be done as set out in paras. 63-66 above (para. 92 (g)). Implementation Schedule 68. The Project would be implemented over a period of five years. The project is expected to be completed by December 31, 1999 and the closing date will be June 30, 2000. Estimated implementation and disbursement schedules for the total project period are presented in Annex 3-A and 3-B. These schedules are based on: (i) the timetable of process steps presented in Annex 5; (ii) the priority attached to each activity; (iii) the time necessary for  24 preparation of integrated subprojects; and (iv) the need for the executing agencies to progressively increase their financial participation and assure project financial sustainability. They also assume that the POA for 1995 will be presented and approved by the end of December 1994, and that the first subprojects under Part 2 will not be approved until 1996. Supervision 69. In view of the complexity of the proposed project, as well as the number of entities involved in its implementation in the Federal Government and in the nine states of the Amazon region, its supervision will be carried out through the Brasilia resident mission. About 75 staff-weeks per year have been allocated to the supervision of the proposed project, which represents three times the average allocation for similar projects. The supervision of this and other Pilot Program projects will be carried out by a unit located in the Brasffia resident mission. Additionally, KfW already has staff in Brasilia who will also be providing supervision support to the project. GTZ and CEC already expressed their intention to relocate one staff each for the same purposes in the near future. legal Arrangements '70. Subsidiary Agreements - MMA will sign with the nine states in the Amazon region Subsidiary Agreements (Convenios de Adesaol, through which the states would demonstrate their commitment to project objectives and principles and to follow established norms and procedures, provide required counterpart funds, establish the support unit (UA) within the OEMA, support the work of executing entities, and take recommendations of CEZEE into account in setting sectoral policies and planning public investments and activities. Specifically, any such agreement will incorporate covenants by which each state would undertake the following (para. 92 (h)): (a) designate their representatives to GTTP by June 30, 1995; (b) establish (or re-configure) their COEMAs with deliberative powers and adequate representation of civil society (at least one representative from NGOs of each environmental, business and social segments), and with the participation of representatives of the federal environmental entities at the state level -- by September 30, 1995 (before the second POAs are consolidated for submission to CP); (c) establish (or re-configure) their CEZEEs with deliberative powers, representation of the OEMA, and adequate representation of civil society (at least one representative from NGOs of each environmental, business and social segments), and with the participation of representatives of the federal environmental entities at the state level - by September 30, 1995 (before the second POAs are consolidated for submission to CP); (d) demonstrate the existence of a special prosecutor's office specialized in environmental matters (Curadorias de Meio Ambiente), by December 31, 1995;  25 (e) demonstrate that COEMA is functioning effectively, i.e. has met at least four times during the previous twelve months, with sufficient members to debate and decide on matters under its mandate, and that its decisions have been well publicized (publication in the Official Gazette and at least one newspaper of wide circulation), by September 30, 1996; (f) demonstrate that CEZEE is functioning effectively, i.e has met at least twice during the previous twelve months, with sufficient members to debate and decide on zoning matters, by September 30, 1996; (g) implement the agreed recommendations of the institutional diagnostic studies, in accordance with a timetable satisfactory to the Bank; (h) prepare a full PGA and have had it approved by COEMA by December 30, 1997; (i) demonstrate that all RIMAs and licenses granted are available for public reading in the OEMA and the relevant municipality (prefeitura); that all advertisements for public hearings are published in the Official Gazette as well as in at least one newspaper of wide circulation; and that a list of all fines and infractions has been made available to the public; and (j) ensure that all state productive investments (including those of the entities controlled directly or indirectly by the state) will take into account the recommendations of the respective CEZEE, regarding land use, ecological-economic zoning. 71. During negotiations, assurances were obtained that the signing of Subsidiary Agreements with at least five states would be a condition of effectiveness for the Grant Agreement (para. 93 (e)) and that, for the remaining states, signing of a Subsidiary Agreement would be a condition of disbursement under the project (para. 94 (b)). 72. Sub-grant Agreements - Each entity carrying out any part of the project will enter into a five-year Sub-grant Agreement (Convenio de Execuco) with MMA, which will include, in the case of entities carrying out integrated subprojects, inter alia, the establishment of coordination mechanisms among the entities in charge of implementing such integrated subprojects. Any such agreement will be amended with yearly supplements (Termos Aditivos) incorporating the respective approved POA. During negotiations, assurances were obtained that the signing of a Sub-grant Agreement would be a condition of disbursement for the respective executing entity, for expenditures under the project (para. 94 (c)). 73. Cooperation Agreement - MMA and SAE will enter into a cooperation agreement (Convenio de Cooperacao), establishing the coordination mechanisms between them relating to the carrying out of the activities described in paragraph 36 (a), (b) and (c). During negotiations, assurances were obtained that the signing of the Cooperation Agreement would be a condition of disbursement for expenditures under such activities (para. 94 (d)).  26 Procurement and Disbursements 74. The proposed procurement arrangements are summarized in Schedule B-1. During negotiations, assurances were obtained that all procurement for civil works and goods will be made in accordance with the Bank's Procurement Guidelines and using standard bidding documents issued by the Bank for International Competitive Bidding (ICB) and Limited International Bidding (LIB) and standard bidding documents agreed with the government of Brazil for Local Competitive Bidding (LCB) (para. 92 (i)). Civil works, laboratory equipment, computer equipment and software, transportation equipment and general office equipment, and technical assistance and other contracted services would be procured under the project. Procurement would be dispersed in time over the implementation period and would be carried out by a number of executing entities in different states. For these reasons, packaging of procurement across the states would be difficult, and, therefore, is not proposed. 75. Civil works under the project will be small and geographically dispersed. They include small-scale civil works necessary for the construction of laboratories and of OEMAs' offices in a few states, and for simple structures for monitoring and control facilities and outposts, under integrated subprojects. Since the largest single contract is not expected to exceed US$1.5 million, it is unlikely that foreign contractors would be interested. Procurement of works would therefore be carried out as follows: (i) contracts above US$300,000 would be procured on the basis of LCB procedures acceptable to the Bank for an estimated aggregated amount of US$1.0 million; (ii) contracts below US$300,000 would be procured using local shopping procedures (obtaining three quotations from any eligible contractor), up to an aggregate of US$1.0 million. Except for vehicles and computer equipment, contracts for goQds are not expected to exceed US$250,000 and therefore would probably not be large enough to attract foreign contractors. Contracts for goods, such as vehicles, computers and software, in excess of US$300,000 will be procured under LEB procedures, among manufacturers and importers who have established maintenance and technical assistance services in Brazil. Contracts for goods of US$300,000 or less, but above US$100,000, will be procured using LCB procedures acceptable to the Bank, up to an aggregate of US$4.0 million for equipment and US$1.5 million for supplies and materials. If contracts for supplies and materials were to be above US$300,000, they will be procured using ICB procedures. Contracts for goods costing US$100,000 or less, up to an aggregate amount of US$1.6 million, will be procured using local shopping procedures. Unless, otherwise agreed by the Bank, two steps bidding procedures will be used for the procurement of computers and the preparation of the materials necessary to carry out information, education and communication programs. 76. All ICB and LIB contracts for goods would be subject to prior Bank review of bidding documents, bid evaluation, award proposals and final contracts. The first LCB contract for goods and for works of each participating executing entity and all LCB for works contracts above US$500,000 would be subject also to prior Bank review of bidding documents, bid evaluation, award proposals and final contracts. Prior review is expected to cover about 50% of Bank-financed contracts for goods and works. 77. The selection and appointment of consultants for studies, workshops, training and technical assistance will follow the Bank Guidelines for the Use of Consultants by the World Bank Borrower and the World Bank Executing  27 Agency, dated August 1981 (para. 92 (j)). Contracts with consulting firms valued at US$100,000 or more would be subject to prior Bank review (Terms of Reference (TORs), letter of invitation, recommendation for award and proposed contract). For individual consultants, prior Bank review (TORs, qualifications and conditions of employment) would be required for contracts valued at US$50,000 or more. Below these limits, the Bank's prior review would apply only to TORs. These exceptions will not apply to critical assignments such as the definition of strategy and priorities for the harmonization of the legal framework. 78. Some discrepancies exist between the Bank's procurement guidelines for LCB and the Brazilian national procurement law. To avoid delays in procurement, special provisions will be included in the Grant Agreement to ensure that: (a) contracts are awarded to the bidder whose bid has been deternined to be the lowest evaluated bid, provided that the bid evaluation is based on factors that can be quantified objectively and the procedures for such quantification are disclosed clearly in the invitation to bid; (b) the invitation to bid is advertised for at least three consecutive days in a newspaper of wide circulation in Brazil; (c) the invitation to bid does not establish, for purpose of acceptance of bids, maximum and/or minimum amounts for the contract price; (d) the arrangements under the invitation to bid for joint ventures between Brazilian and foreign firms are approved in advance by the Bank in each case; and (e) the purchaser would not, without the Bank's prior approval, issue any change order under a contract which increases or decreases by more than 15 % the quantity of goods (and related services) without any change in the unit prices or terms and conditions of sale. 79. Since the experience in procurement of most executing agencies is limited, the UAs will include a procurement advisor to be trained under the project at the start of project implementation. In addition, the executing agencies will be assisted, as necessary by MMA and consultants. 80. Disbursements and Flow of Funds. The proposed grant, totalling US$20.0 million equivalent, would be disbursed over a period of five years. Five-year disbursement schedules for each project component are presented in Annex 3-C and summarized in Schedule B-2. First-year disbursement schedules for each state and for each project component can be found in the project files. This indicative disbursement schedule for the first year would be the basis for the preparation of 1995 POAs. The Bank will sign a Trust Fund Agreement with CEC to administer the CEC Trust Fund (US$12.0 million equivalent). RFT and CEC funds would be disbursed against 100% of eligible expenditures for works, goods and technical assistance (62.5 % RFT and 37.5 % CEC). Recurrent costs (except salaries) would also be financed under the project, but on a declining basis (90% in year 1, 75% in year 2, 50% in year 3, 30% in year 4 and 10% in year 5). The disbursement schedule for the RFT grant is shown in Schedule B-2. Funds or technical assistance services from KFW, ODA and GTZ would be disbursed under each agency's own procedures. 81. Grant funds would be disbursed against Statements of Expenditures (SOEs) for: (i) consultant services for firms whose contract value is below US$100,000 and consultant services for individuals whose contract value is below US$50,000; (ii) contracts for goods valued at less than US$100,000; (iii) works contracts below US$300,000; and (iv) all administrative expenses. Supporting documentation for such expenditures would not be submitted to the Bank but would be made available for inspection by Bank supervision  28 missions. All other disbursements will be made against fully documented withdrawal applications. 82. In order to ensure efficient and timely implementation of the project, Special Accounts for RFT and CEC funds, with initial deposits of US$2.0 million from each, would be established in US dollars at a commercial bank acceptable to the Bank. Any interest earned on the proceeds of the Special Accounts would be credited to the project, and would be kept in separate accounts. Replenishment of the Special Account would be supported by the required documentation or SOEs. 83. Because of the Bank-financed Natural Resource Management Projects currently being carried out in the states of Rond6nia and Mato Grosso (Loans Nos. 3444-BR - PLANAFLORO and 3492-BR - PRODEAGRO, respectively), which include institutional strengthening activities similar to those of this project, a condition of disbursement was incorporated into the Grant Agreement, to the effect that disbursements to these states under Part 1 of the project (except for regional activities) will be made only after the amounts allocated to similar activities under the two loans are fully committed (para. 94 (e)). Nevertheless, those states will be eligible to disburse for activities under Part 2 of the project, since such activities are complementary to those contemplated for zoning, monitoring, and control and enforcement under the two Bank loans. Auditing 84. Each executing entity would maintain separate accounts, identifying project expenditures by category of expenditure and financing source. In order to ensure uniformity in the presentation of project accounts and of SOEs, an accounting system and corresponding software will be developed and introduced in the accounting system of each entity, as part of the project management information system referred to in paragraph 63 above. ST staff (financial coordination) and Bank supervision missions would also perform periodic checks in each executing entity of the supporting documentation of SOEs, and, in addition to checking for eligibility, evidence of payment and delivery, would also verify that the goods, works and services purchased under the project are being used for the purposes of the project. 85. Each executing entity would keep adequate records to reflect its operations, resources and expenditures in respect to the project, in accordance with sound accounting principles applied consistently. The Special Account, and all other project accounts, would be audited annually by an independent auditor acceptable to the Bank, according to standards and procedures satisfactory to the Bank, and the auditor's report forwarded to the Bank within six months from the end of each fiscal year. SOEs would be verified periodically by the auditor on a sample basis in each executing agency several times a year. The terms of reference for the auditors will include inter-alia provision of a Management Letter, and a separate opinion on the use of the Special Account, the project accounts and SOEs. During negotiations, assurances were obtained in these respects (para. 92 (k)).  29 Project Sustainability 86. If the proposed project is successful, it will assure to a large degree its own sustainability. The OEMAs will be more fully integrated into policy and investment planning of the state government. They will have greater institutional capacity, and there will be more public support for environmental initiatives. Methods of improving the financial sustainability of state entities will also be developed, through fee assignment and cost recovery for services rendered. Additionally, the integration of all entities into the management of environmental problems at the state level will be an effective instrument to take the decentralization of environmental management in the Amazon region out of theory and into practice. Project Benefits and Risks 87. Benefits - The major benefit of the proposed project would be to provide the basic institutional capacity necessary for environmental and natural resource policy at the state level. The project would strengthen the capacity of OEMAs in the Legal Amazon region to a level comparable to the more developed states of Brazil, reducing the pressure on federal agencies to enforce policies in the region. Also, by providing for the integration of all entities responsible for environmental management at the state level, the project would provide the tools necessary to make effective the decentralization of environmental management included in the 1988 Federal Constitution. By increasing zoning activities, lands could be monitored and supervised for their use in resource-depleting activities. Zoning is expected to increasingly become not just a map-making exercise, but a practical guide to norms of zoning regulations. 88. Risks - There are several types of project risks, most of which can be reduced through effective project management. The main risks are: (i) the present institutional weakness of most of the nine participating OEMAs as well as the other federal and state institutions involved in environmental management at the state level; (ii) the very small budgetary allocations for environmental activities (Table 2.0 of Annex 1); (iii) the salary limitations imposed on public employees, causing a high staff turnover; (iv) the vested interest of part of the political elite and the business community at the state level in non-sustainable resource-depleting activities; (v) the novelty of the integration of state and federal entities jointly carrying out subprojects under Part 2 of the project; (vi) the tensions between state entities and federal entities at the state level created by the overlapping jurisdictions in environmental protection; and (vii) the change of government at both the federal and state levels which will coincide with the launching of the project. 89. To address these risks, the project will focus, especially in the critical years, on strengthening the state level environmental institutions. Increased budgetary provisions would be a condition for access to integrated subproject funding. Additionally, only those integrated subprojects of a size and complexity that are compatible with the capacity of each state will be financed. 90. There has been close cooperation between the federal and state agencies in the preparation of this project, and all nine of the outgoing state administrations have indicated their commitment to the project, such  30 commitment to be formalized through the signing of the Convenios de Adesao (para. 70). The "first-come-first-served" system for integrated subprojects will provide incentives for states to take the necessary steps (institutional, legislative, budgetary, etc...) to strengthen their environmental capabilities. Those states which fail to do so will not obtain access to this project funding. Envirommental Aspects 91. No significant negative environmental effects are expected. The project has a "C' classification for environmental assessment purposes. However, the environmental impact of the activities included in each subproject will be assessed before its approval, and remedial actions will be included if necessary. m. AGREEMENTS REACHED AND RECOMMENDATION Assurances 92. During negotiations, assurances were obtained that: a. MMA would maintain CP and ST adequately staffed at all times (para. 52); b. MMA would send to the Bank, for its approval, by not later than September 30, 1995, the PAs of the OEMAs for the activities under Part I of the project for calendar year 1996 (para. 54 (c)); c. the project would be carried out as specified in the Operational Manual (para. 62); d. ST would hire a specialized consultant to: (i) by April 30, 1995, develop a project accounting and management information system, including financial and physical progress reporting and recording of procurement activities; and (ii) by September 30, 1995, install in MMA and in each OEMA such a system and train the relevant personnel (para. 63); e. project progress will be monitored against the performance targets specified in Annex 6, and by annual reviews to be conducted in the month of April of each year, beginning in 1996 (para. 64); f. not later than October 31, 1997, a project Mid-term Review would be carried out, and not later than August 31, 1997, the Recipient would send to the Bank a project progress report, to serve as a basis for the review. Agreed adjustments would be made promptly afterwards (para. 65); g. project reporting, evaluation, and completion reports would be prepared and submitted to the Bank as specified (para 67); h. the Subsidiary Agreements would contain, inter alia, the covenants listed in paragraph 70;  31 i. the procurement of goods and works would be carried out in accordance with the Bank's guidelines (para. 74); j. consultants would be contracted in accordance with the Bank's guidelines for the hiring of consultants (para. 77); and k. (i) the project accounts will be audited annually by independent auditors acceptable to the Bank: (ii) the terms of reference for the auditors will include, inter alia, provision of a Management Letter, and a separate opinion on the use of the Special Account and SOEs for the project accounts and Special Accounts; and (iii) copies of the auditor's report will be sent to the Bank within six months of the end of each fiscal year (para. 85). Conditions of Effectiveness 93. The following were agreed as conditions of effectiveness: a. the CEC Grant Agreement would have been signed and become effective (para. 44); b. the CP and ST would have been established and the project Technical Secretary and the core staff of the ST would have been appointed (para. 52); c. the POA for calendar year 1995 would have been approved by the Bank (para. 54 (c)); d. the Operational Manual would have been issued (para. 62); and e. Subsidiary Agreements with at least five states would have been signed and become effective (para. 71). Conditions of Disbursement 94. The following were agreed as conditions of disbursement: a. for expenditures by any executing entity in any calendar year (except 1995), that the Bank would have approved the POA for the respective year (para. 54 (c)); b. for the remaining states not included in the condition of effectiveness mentioned in paragraph 93 (e), that the related Subsidiary Agreement would have been signed (para. 71); c. for expenditures to any executing entity under the project, that the related Sub-grant Agreement would have been signed (para. 72); d. for expenditures under the components described in paragraph 36 (a) and (b), that the Cooperation Agreement and the related Sub- grant Agreement would have been signed (para. 73); and e. for expenditures to the states of Rond6nia and Mato Grosso under Part 1 of the project (except for regional activities), until after the amounts allocated to similar activities under Loans nos. 3444-BR and 3492-BR, respectively, are fully committed (para. 83).  32 Recommendation 95. I am satisfied that the proposed RFT grant would comply with Resolution 92-2 of the Bank's Executive Directors, and recommend approval of the grant. Gobind T. Nankani Director, Country Department I Latin America and the Caribbean Region Attachments Washington, D.C. November 22, 1994  33 BRAZIL PILOT PROGRAM TO CONSERVE T}IE BRAZILIAN RAIN FOREST NATURAL RESOURCES POLICY PROJECT SCHEDULE A-1 Stunmary of Project Costs by Component (US$ million equivalent) % Foreign % of Component Local Foreign Total Exchange Base Cost Part 1 State Environmental Institutional Strewthenini 1. Organizational Capacity for Integrated Env. Management 13.4 1.7 15.1 11.1 20.0 2. Regularization of Legal Framework 0.6 - 0.6 - 0.8 3. Promotion of Environmental Awareness and Public Discussion 3.3 0.2 3.5 5.1 4.6 4. Organization of Env. Management Systems at Regional Level 0.6 - 0.6 - 0.9 5. Integrated State Planning, Project Implementation and Preparation of Integrated Subprojects' 3.4 4.0 7.4 53.8 9.8 6. Strengthening of COEMAs 1.1 - 1.1 - 1.4 Subtotal Part 1 22.4 5.9 28.3 20.7 37.5 Part 2 Zonin. Monitoring. Control and Enforcement (Z.M.C&E) i. Strengthening of Zoning Institutions 3.1 0.4 3.5 12.3 4.6 2. Z,M,C&E Integrated Subproject (including targeted strengthening of non-state institutions and tech. assist.) 30.2 7.6 37.8 20.0 50.1 3. Emergency Enforcement Activities 2.3 - 2.3 - 3.0 Subtotal Part 2 35.6 8.0 43.6 18.3 57.7 Part 3 Proiect Administration 1. Support to the Project Commission 0.6 - 0.6 - 0.8 2. Support to the Technical Secretariat 1.4 0.5 1.9 26.3 2.5 3. Technical Assistance to States 0.8 - 0.8 - 1.1 4. Project Evaluation 0.3 - 0.3 - 0.4 Subtotal Part 3 3.1 0.5 3.6 13.2 4.8 TOTAL BASE COSTS 61.1 14.4 75.5 18.9 100.0 Contingency (physical and price)2 3.5 TOTAL PROJECT COSTS 79.0 'Includes technical cooperation from ODA and GTZ 2 Total physical and price contingencies are estimated at 10% of Part 1, Part 2-2 and Part 3.  34 BRAZIL PILOT PROGRAM TO CONSERVE THE BRAZILIAN RAIN FOREST NATURAL RESOURCES POLICY PROJECT SCHEDULE A-2 Fnancing Plan (USS million equivalent) Million USS Observation Eguivalent Fmiancial CooDeration German Govemment financial cooperation 6.2 Up to DM10 million through separate bilateral for Zoning in Acre through KFW/GTZ agreement. KfW appraised this project in July 1994. German Govermment financial cooperation 18.6 DM30.0 million as parallel co-financing. through KfW for institutional strengthening (Part 1) and Z,M,C&E integrated subprojects (Part 2) with priority for the states of Acre, Para and Amazonas CEC 12.0 US$12 million equivalent as joint co-financing through a Trust Fund to be established in the Bank. Rain Forest Trust Fund 20.0 Local Counterpart 11.4 US$6 million equivalent (R$5.4 million) as counterpart of the Brazilian Government and about US$5.7 million as counterpart of the states' executing entities. Technical Cooneration German Government technical cooperation 5.8 Estimated at up to DM3.5 million for Acre, for institutional strengthening, Z,M,C&E DM3.0 million for Para and DM2.8 million for integrated subprojects, and for project Amazonas. implementation through GTZ in Acre, Pari and Amazonas. UK Government technical cooperation for 5.0 institutional strengthening, project implementation, and Z,M,C&E integrated subprojects through ODA in the states of Tocantins, Roraima, Amapa and Maranhao. Total 79.0  35 BRAZIL PILOT PROGRAM TO CONSERVE THE BRAZILIAN RAIN FOREST NATURAL RESOURCES POLICY PROJECT SCHEDULE A-3 Summary of Project Costs by Financier (USS million equivalent) UK German Local Component RFT CEC Gov. Goveriment Counterpart Total (5) ODA KfW GTZ (T.C) (F.Q tT. Part 1 State Environmental Institutional StrenztheninE (4) 1. Organizational Capacity for Integrated 4.18 2.51 2.23 6.14 1.51 16.57 Environmental Management (1) 2. Regularization of Legal Framework 0.17 0.10 0.34 0.06 0.67 3. Promotion of Environmental Awareness and 1.22 0.73 1.50 0.34 3.79 Public Discussion 4. Organization of Environmental Management 0.27 0.16 0.22 0.07 0.72 System at Regional Level 5. Integrated State Planning, Project 1.23 0.74 2.17 0.90 2.40 0.74 8.18 Coordination and Preparation of Subprojects (2) 6. Strengthening of COEMAs 0.33 0.20 0.53 0.11 1.17 TOTAL PART 1 7.40 4.44 4.40 9.63 2.40 2.83 31.10 Part 2 Zoning. Monitornir, Control and Enforcenment (Z.M.C&E) 1. Strengthening of Zoning Institutions (3) 1.39 0.83 1.28 0.35 3.85 2. Z,M,C&E Integrated Subprojects (including 8.92 5.35 0.57 13.13 3.20 6.63 37.80 targeted strengthening of non-state institutions and technical assistance) 3. Emergency Enforcement Activities 0.53 0.32 0.03 0.78 0.20 0.39 2.25 TOTAL PART 2 10.84 6.50 0.60 15.19 3.40 7.37 43.90 Part 3 Proiect Administration 1. Support to the Project Commission 0.25 0.24 0.21 0.70 2. Support to the Technical Secretariat 0.73 0.74 0.63 2.10 3. Technical Assistance to States 0.32 0.31 0.27 0.90 4. Project Evaluation 0.10 0.11 0.09 0.30 TOTAL PART 3 1.40 1.40 1.20 4.00 TOTAL 20.00 12.00 5.00 24.80 5.80 11.40 79.00  36 Notes: (1) The technical cooperation of ODA includes technical assistance for human resources training in the states of Maranhao, Tocantins, Amapa and Roraima and at the regional level. (2) The technical cooperation of GTZ includes technical assistance for integrated state planning, project implementation and preparation of subprojects in the states of Acre, Para* and Amazonas. The technical cooperation of ODA includes technical assistance, during four years, for integrated state planning, project implementation and preparation of integrated subprojects in the states of Maranhao, Tocantins, Amapa and RorAima. (3) The financial cooperation of KfW includes US$150,000 million for institutional strengthening for zoning activities in Acre. (4) The financial cooperation of KfW includes the equivalent of US$6.2 million (DM10 million) for zoning in Acre and US$18.6 million (DM30 million) for institutional strengthening and integrated subprojects which will be disbursed with priority given to the states of ParsS, Acre and Amazonas (at Mid-term Review, this priority will be revisited). (5) The local counterpart funds include US$6 million equivalent (R$5. I million) from the Brazilian Government and US$5.7 million equivalent (R$4.8 million) from the states' executing entities. T.C. Technical Cooperation F.C. Financial Cooperation  37 BRAZJL PILOT PROGRAM TO CONSERVE THE BRAZIUAN RAIN FOREST NATURAL RESOURCES POUCY PROJECT SCHEDULE B-1 Summary of Procurement Arrangements (USS million equivalent) Category of Expenditure Procurement Method Total LCB Other e/ NBF Cost Works 1.0 1.0 0.5 2.5 (0.6) (0.7) (1.3) Equipment 4.0 4.3 7.0 15.3 (2.5) (2.7) (5.2) Supplies and Materials a/ 1.5 0.6 4.1 6.2 (0.9) (0.4) (1.3) Technical Services (Consulting. Training) bl 11.5 23.1 34.6 (7.2) (7.2) Other Services c/ 2.0 1.4 4.8 8.2 (1.2) (0.9) (2.1) Travel and Per Diems d/ 4.7 7.5 12.2 (2.9) (2.9) Total 8.5 23.5 47.0 79.0 (5.2) (14.8) (20.0) LIB Umited Intemational Bidding LCB Local Competitive Bidding NBF includes procurement financed by GOB and KIW under own procedures and technical assistance through ODA and GTZ. a/ Supplies include operating costs such as fax and phone costs b/ Contracting of consultants and studies in accordance with Bank Guidelines c/ Other services include services such as rentals for training and workshops, maintenance of equipment, TV and radio programs. d/ Reimbursement of expenditures e/ Other include procurement of equipment through LIB for an estimated total amount of US$3.3 million and an RFT-financed of US$2.0 million Notes Numbers in parenthesis reflect RFT financing. Totals represent total estimated costs per category, including contingencies as per Annex 2B \ESCHEDBI  38 BRAZ3L PILOT PROGRAM TO CONSERVE THE BRADLIAN RAIN FOREST NATURAL RESOURCES POUCY PROJECT SCHEDULE B-2 Summary of Disbursenmnt Arrangements (US$ million equiiaent) ITEM and German Gov. U.K Gov. Local % of Total Cost Categorv of Expenditures RFT CEC KIW GTZ ODA Countwroirt Expenditure (1.A) (trA) CMI Works 1.25 0.75 0.50 RFT 50.0% 2.50 CEC 30.0% KIW 20.0% Equipment 5.19 3.11 7.00 RFT 33.9% 15.30 CEC 20.3% KWW 45.8% Supplies and Materkls 1.31 0.79 2.70 1.40 RFT 21.2% 6.20 CEC 12.7% KWW 43.5% Local 22.6% Techrncal Servies (Consulting, 7.19 4.31 8.60 5.80 5.00 3.70 RFT 20.7% 34.60 Training) CEC 12.5% KW & GTZ 41.6% ODA 14.5% Local 10.7% Other Services 2.12 1.28 3.00 1.80 RFT 25.9% 8.20 CEC 15.6% KIW 36.6% Local 21.9% Trave and Per Diems 2.94 1.76 3.00 4.50 RFT 24.1% 12.20 CEC 14.4% W(W 24.6% Local 36.9% Total 20.00 12.00 24.80 5.80 5.00 11.40 79.00 DISBURSEMENT SCHEDULES Bank Fiscal Year 1996 1997 1998 1999 2000 Toal Total Disbusemnert Schedule - ArnuaI * US$ million 6.9 22.2 24.2 16.8 8.9 79.00 *%ofTotal 8.7% 28.1% 30.6% 21.3% 11.3% 100.0% - Cumulative (US$ Million) 6.9 29.1 53.3 70.1 79.0 RFT Disbursement Schedule - Annual * USS million 1.7 5.6 6.1 4.3 2.3 20.0 *%ofTotal 8.7% 28.1% 30.6% 21.3% 11.3% 100.0% - Cumulative (US$ Million) 1.7 7.3 13.4 17.7 20.0 \MSCHEB2.WL  39 BRAZIL PILOT PROGRAM TO CONSERVE THE BRAZILIAN RAIN FOREST NATURAL RESOURCES POLICY PROJECT SCHEDULE C TIMETABLE OF KEY PROCESSING EVENTS Time taken to prepare: 10 months (November 1993 to August 1994) Prepared by: * Nine States in the Legal Amazon (Acre, Amapd, Amazonas, Maranhao, Mato Grosso, Para, Rond6nia, Roraima and Tocantins) * Ministry of the Environment and the Legal Amazon * Secretariat of Strategic Affairs of the Presidency of the Republic * Federal and State entities involved in environmental management in the nine states First Bank mission: November 1993 Appraisal Mission Departure: September 1994 Date of Negotiations: November 1994 Planned Date of Effectiveness: March 1995 Suummary Supervision Plan: Missions are planned for 2-3 month intervals to supervise progress closely. Technical expertise will include ecologist, economist, zoning specialist, financial analyst, and institutional development specialist. One mission each year will be designed as an annual review. The annual review for the third year will be the Project Mid-term Review. During such missions, project implementation and monitoring and evaluation procedures will be assessed and changes introduced, as necessary. Supervision staff will mainly be located in the Brasilia office.   40 BRAZIL PILOT PROGRAM TO CONSERVE THE BRAZILIAN RAIN FOREST NATURAL RESOURCES POLICY PROJECT TECHNICAL ANNEXES ANNEX 1: INSTITUTIONAL BASELINE DATA ON THE NINE AMAZON STATES ANNEX 2: PROJECT COSTS ANNEX 3: IMPLEMENTATION SCHEDULE: - Physical - Financial ANNEX 4: SUMMARY CONTENTS OF THE OPERATIONAL MANUAL ANNEX 5: PROJECT ORGANIZATION AND INSTITUTIONAL MECHANISMS AT FEDERAL AND STATE LEVELS: - Project Coordination Structure at the State Level - Project Coordination Structure at the Federal Level - Project Procedures ANNEX 6: PERFORMANCE INDICATORS ANNEX 7: SUMMARY OF THREE EXAMPLES OF POSSIBLE INTEGRATED SUBPROJECTS ANNEX 8: SUMMARY TERMS OF REFERENCE FOR MAJOR STUDIES ANNEX 9: REPORTS AND DOCUMENTS IN PROJECT FILES Map: IBRD No. 26474  I  41 BRAZIL PILOT PROGRAM TO CONSERVE THE BRAZILIAN RAIN FOREST NATURAL RESOURCES POLICY PROJECT ANNEX 1: INSTITUTIONAL BASELINE DATA ON THE NINE AMAZON STATES TABLES 1.0: General Informnation on the Legal Amazon States 2.0: Baseline Data on OEMAs: Institutional and Budgetary 2.1: Baseline Data on OEMAs: Personnel 2.2: Baseline Data on OEMAs: Personnel Salaries 2.3: Baseline Data on OEMAs: Professional Staff 2.4: Baseline Data on OEMAs: Infrastructure 2.5: Baseline Data on OEMAs: Monitoring Capacity 3.0: Baseline Data on Control and Enforcement Institutions and Activities 4.0: Baseline Data on Zoning Institutions and Activities 5.0: Baseline Data on State Environmental Councils (COEMAs) 6.0: Baseline Data on Municipal Environmental Councils (CONDEMAs)  42 TABLE 1.0: General Information on the Legal Amazon States (1993) Total Area No f SaeConservation State Conservation STATE (kr21 Population uNo. of State CAes (km2) Areas as a Portion of (km2) Municipalities Areas (km2J ~Total Area Acre 152,589 417,165 12 24,633 16.1% Amapa 140,276 288,690 9 21,748 15.5% Amazonas 1,565,785 2,102,901 62 29,092 1.9% Maranhao 328,663 4,929,029 136 70,112 21.3% Mato Grosso 881,001 2,022,524 95 43,001 4.9% Para 1,249,382 5,181,570 105 31,589 2.5% RondOnia 243,044 1,130,874 23 40,037 16.5% Roraima 230,104 215,950 8 44,235 19.2% Tocantins 286,944 920,116 79 7,783 2.7% Sources: 1) MMA, March 1994; 2) Associacio Brasiloira do Entidades do Meio Amnbiente (ABEMA), 'Diagn6stico Institucional dos Orgios Estaduais do Moio Ambionto no Brasil.' 1993.  TABLE 2.0: Baseline Data on OEMAs: Institutional and Budgetary INSTITUTIONAL BUDGET 1. Institutional Nature 2. Legal 3. Date 1. Allocationa 2. Allocations 3. OEMA Budget as 4. Propoeed 6. Portion of Total Nature Established 11992, 1993, lannual average, % of State Budget OEMA Budget for State Revenues STATE 19941 IUS}*) 1992-94) IUS$) lannual average. 1990 1995 (US$) coming from Federal 931 Gov. (19901 Environmental Institute of Acre Self- 420,000 Acre JIMAC) Governing 1986 449,423 654.808 0.26% 3,575,564 80.1% (IMAC) ~~~Body 1.095,000 State Coordination of the Executive 1,230,000 Amaph 1989 1,280,000 1,323,333 0.27% 2,103,071 91.1% Environment ICEMAI Law 1,480,000 Institute of Natural Resource and Self- 1,772.469 Amazonas Environmental Development Governing 1989 960,893 2,253,364 0.25% 5,434,598 27.6% (IMA) Body 4,026,730 1,881,754 J Meranhgo State Secretariat of the Executive 1987 496.705 1,096,348 0.16% 4,219,989 64.7% Environment ISEMA) Law 910,584 Mato Grosso State Environmental Foundation Foundation in 18 3.231,219 Mato Grosso (FEMA) Poubdlticn Law 1987 2,231,723 3,435,600 0.36% n/a 25.6% (FEMA) Public Law ~~~~4,843.858 State Secretariat of Science, Executive 893,862 Para Technology, end the Low 1988 445,604 670.742 0.07% 3,760,000 45.3% Environment (SECTAM) 672,760 State Secretariat of Executive 1,166,827 Rondonla Environmental Development 1991 2,567,678 2,268,168 0.33% nla 62.9% ISEDAM Law 3,070,000 State Secretariat of the Executive 63,562 Rorelma Environment, Interior and Justice Law 1992 127,098 191,053 0.06% n/a 92.9% (SEMAIJUS) Law 382,500 Tocantins Nature Foundation Foundation In 706,289 Tocantins INATURATINS) Privte In 1991 785,377 797.215 0.23% 1,511,628 70.9% SNoTurcesNS) Privet. Lrovided byOEAttcils99;1MA1900,000 Sources: 1) Information provided by CEMA officials, 1994; 2) MMA, 1994; 3) Rosenblatt, 1994; 4) ABEMA, 1993. US$1 -RII.85.  TABLE 2.1: Baseline Data on OEMAs: Personnel (1994) 1. Staff Size 2. Statutory 3. Seconded 4. Special Appointments and STATE Positions Personnel Temporary Personnel Acre 113 22 15 76 Amapi 33 0 33 0 Amazonas 342 142 16 177 Maranhgo 225 53 150 22 Mato Grosso 135 45 17 73 Pars 211 28 86 97 Rond8nia 244 22 30 192 Roraima 22 0 12 10 Tocantins 55 0 39 16 Source: MMA, 1994.  4, TABLE 2.2: Baseline Data on OEMAs: Personnel Salaries (US$, monthly, 1994) 1. Gross __ 2. Base STATE 1.1 Mean 1.2 Minimum 1.3 Maximum 2.1 Mean 2.2 Minimum 2.3 Maximum Acre 855 545 2,651 355' 131 1.569 Amapa 841 343 1,760 n/a n/a n/a Amazonas 332 115 716 108 67 145 Maranh5o 311 134 1,128 154 87 617 Mato Grosso 405 221 883 305 103 507 Para 483 299 1,433* 281 90 614* Rondonia 490 172 1,228 254 69 779 Roraima 476 285 611 411 285 586 Tocantins 365 218 583 264*0 84** 469** Sources: 1) Information provided by OEMA officials, 1994; 2) MMA. 1994. 'excluding top two salaries. `US$1 =R$.85.  TABLE 2.3: Baseline Data on OEMAs: Professional Staff (1994) 1. Adminietratore 2. Attorneye 3. Agronomists 4. Biologits 5. Civil 6. Forestry 7. Chemical B. Geographers 9. Economists 10. Other 11. Total STATE Engineer. Engineer Engineer. - Acre 1 1 7 8 2 1 0 4 2 17 43 Amapa 2 1 B 2 0 3 1 4 3 a 32 Amazonas 13 11 14 5 6 4 1 5 4 25 88 Maranhlo 1 6 7 3 6 2 16 13 3 15 72 Mato Grosso 4 4 6 2 8 5 3 2 5 14 53 Par 3 5 12 9 B 16 21 4 3 28 119 Rond6nla 2 3 12 3 3 16 1 6 0 17 63 Roraima n/a n/a 2 1 n/a 1 nla n/a n/a 1 n/a Tocantins 0 1 5 0 0 2 1 0 1 5 15 Sources: 11 Information provided by OEMA officials, 1994; 21 MMA, 1994.  TABLE 2.4: Baseline Data on OEMAs: Infrastructure 1. No. of Offices 2. Treneportation 3. Communication 4. Computer Outeide Vehicles (autos boatel Equipment (19911 Equipment Headquarters 119901 3.1. Telephone Lines 3.2. Telex 3.3. Fax 3.4. Radio units 4. 1. No. of PC. 4.2. No. of 4.3. (Headquarters : Reglonell (Headquarterm (Headquarters (Headquarter. UNIX Terminal. Networks STATE Reglonal) Reglonal) Regional) Acre 0 9 2 3; 0 1; 0 1;0 2; 0 8 0 0 Amep6 0 11 1 6;0 1 0 1:;o 0:0 14 0 Novell Amazonas 4 4 3 12;0 1 0 1 0 0;0 9 0 0 Maranh6o 5 5 5 13 :0 0: 0 3; 0 3 :9 10 32 0 MatoGroeso 0 4;0 4;0 1;0 1: 0 0:0 11 0 0 Pat6 0 7 0 6;0 0:0 1 0 0;0 23 0 Novell Rond6nia 0 2 0 8; 12 2 0 1 0 0:0 8 0 Amplus 14) Rorelma 0 8 0 8 1 0 0 1 0 1:0 7 0 Novell 121 Tocentins 1 10 0 2;0 0:0 1 0 0;0 0 0 0 Sources: 1) Information provided by OEMA officials, 1994: 2) MMA. 1994: 31 ABEMA, 1993.  46 TABLE 2.5: Baseline Data on OEMAs: Monitoring Capacity 1. Laboratory 2. Remote 3. Vehicles for STATE Facilities (water, air, Sensoring Monitoring son) Equipment in State water - yes Acre air - no yes 1 soil - no water - no Amapa air - no yes 1 soil - no water - yes Amazonas air - no yes 0 soil - no water - yes Maranhao air - yes yes 0 soil - no water - yes Mato Grosso air - no yes 1 soil - no water - yes Para air - yes yes 8 soil - no water - no Rondonia air - no yes 59 soil - no Roraima nla n/a n/a water - yes Tocantins air- no yes 7 soil - ves I Sources: 1) Information provided by OEMA officials, 1994; 2) ABEMA. 1993.  TABLE 3.0: Baseline Data on Control and Enforcement Institutions and Activities 1. Number of 2. Number of 3. Forestry 3a. Date 3b. 3c. Number of Offices 4. State Environmental Environmental Battalions (or Established Number of Outside Headquarters & Attorneys Impact Studies Impact Reports similar) Soldiers Their Location Offices for STATE (EMAsI Received In (RIMAs) Issued In Environmental 1994 (Jan. - Sept.) 1994 (Jan.-Sept.) Cases Acre 1 1 no yes Amapa 0 0 no yes Amazonas 0 2 no . . . . . yes Maranhgo 7 5 yes April 1991 150 0 yes 3 Mato Grosso 3 3 yes December 1989 175 (Caceres, Pocone & Barra do yes Bugres) 2 Para 5 8 yes October 1993 120 (Curion6polis & Eldorado in yes Carajas) 12 (Costa Marques, Ariquemes, Machadinho, Jaru, Alta RondOnia 0 0 yes January 1986 130 do Oeste, Pimenta Bueno, yes Vilhena, Cabixi, Calama, Guajara-Mirim & Sao Miguel do Guapore) Roraima n/a n/a no . . . . no Tocantins 4 4 yes July 1994 150 0 yes Sources: 1) Information provided by OEMA officials, 1994; 2) ABEMA, 1993.  TABLE 4.0: Baseline Data on Zoning Institutions and Activities ._____________ ________________ State Zoning Commissions (CEZEEs) 1. Date 2. Secretariat 3. State 4. Number of 6. MembershIp 6. Number of Established Provided By Executing Members in Composition Meetings Held In 1994 STATE Agency for CEZEE (Jan.-Sept.) Zoning Acre August 1991 Secretariat of Planning Secretariat of 7 State Government 3 Planning Sectoral Agencies Amapa December 1991 Secretariat of Planning Secretariat of 112 State Government Sereanniatgo Sectofal Agencies Amazonas July 1991 Secretariat of Secretariat of 7 State Government O Environment Planning Sectoral Agenciee Maranhglo October 1991 Secretariat of UEMA IMeranhoao State Government O Environment State University) Sectoral Agencies Secretariat of State Government Mato Grosso August 1991 Secretariat of Planning Planning Sectoral Agencies Secretariat of Parhl February 1992 Environment (under IDESP 7 State Government O Para February 1992 presidency of Sectoral Agencies Secretariat of Planning) State end Federal Rondonia January 1992 Secretariat of Planning n/a 13 Agencies, and NGOs Special Executive Technical Secretariat Special Executive State Government Roraima November 1991 (coordinated by Technical 7 Agencies I Secretariat of Secretariat Environment) State Government Tocantins April 1992 Secretariat of Planning n/a 7 Agencies end State 3 University of Tocantins Sources: 1) Information provided by OEMA officials, 1994; 2) MMA, 1994.  51 TABLE 5.0: Baseline Data on State Environmental Councils (COEMAs) 1. Date 2. Number of 3. Number of Members 4. Functions 5. Status STATE Established Meetings (Jan.-Sept. and Composition 1994) 19 Also for science and Acre January 1992 3 (Majority representation from technology; deliberative, By -laws state government agencies) nonmative, and recourse approved Consultative only; limited to 22 studying and proposing state By-laws not Amapi November 1990 3 (Majority representation from environmental policies; draft approved yet state government agencies) law proposed to expand functions 13 (Majority representation from Also for science and teocnology; By-lws Amazonas June 1985 0 state government agencies; consultative and deliberative; approved presided over and appointed by not normative Govemor) 32 (Equal representation from Deliberative, normative. and By-laws Maranhao April 1992 2 state government, D recourse approved environmental NGOs, and civil society) recuro_eprve 27 (Equal representation from Mato Grosso July 1979 9 state governrment, Consultative, deliberacuve, By-laws environmental NGOs, and civil normatve, and recourse approved ______________________society) 13 ParS July 1993 10 (Majority representation from Deliberative, nornmative, and By-laws not civil society and environmental recourse approved yet NGOs) 9 Deliberative, normative, Rondonia December 1993 0 (Majority representation from deliberative, and recourse; By-laws not rstate government agencies) cannot revise licensing approved yet state goernment gencies)decisions ______ Roraima December 1992 nla (Majority representation from Consultative and limited By-laws not civil society) deliberatve approved yet Tocantins June 1994 0 (Majority representation from Delberatve, nouratve, end By-laws not state government agencies) recourse approved yet Sources: 1) Information provided by OEMA officials, 1994; 2) ABEMA, 1993.  52 TABLE 6.0: Baseline Data on Municipal Environmental Councils (CONDEMAs) STATE 1. Number in 2. Location 3. Date First CONDEMA STATE State Established Acre 1 Rio Branco August 1994 Amapa 1 Macapa July 1993 Amazonas Manaus November 1993 Alc6ntara, Carolina, Caxias, Maranhao 8 Cumurua, Timon, Barra do September 1991 Corda, G. Aranha. & Mirador Barra do Bugres, Cuiabi, Mato Grosso 6 Jaciara, Rondon6polis, Dom June 1989 Aquino, & Caceres Para o Rondonia 0 . Roraima 1 nia nil Tocantins 0 Sources: 1) Information provided by OEMA officials, 1994; 2) ABEMA, 1993.  53 BRAZIL PILOT PROGRAM TO CONSERVE THE BRAZILLAN RAIN FOREST NATURAL RESOURCES POLICY PROJECT ANNEX 2: PROJECT COSTS  t  Annex 2A - Page I BRAZIL NATURAL RESOURCES POLICY PROJECT PROJECT COST SUMMARY % of Subtotal Total Total Cost PART 1 - Strenthening of State Environnental Institutions 1. Improvinp Orqanizational CaPacity for Integrated Environmental Management 1.1 Improving Management and Organizational Systems (OEMAs) 1,491,818 1.2 Strengthening Human Resources (OEMAs, Attorney General's Offices and other State Entities) 5,181,818 1.3 Installing Improved Interconnected Environmental Information Systems 3,150,682 1.4 Providing Complementary Infrastructure and Equipment 5,237,484 Subtotal - Improving Organizational Capacitv 15,061,802 19.1% 2. _arrnonizing and Adiusting the Legal Framework 359 0.8% 3. Promoting Environmental Awareness, Dissemination of Knowledge and Public Discussion 3.1 Carrying out Information, Education and Communication Programs 2,138,555 3.2 Increasing Public Participation in Public Hearings for Licensing, and in Monitoring and Enforcement 720,000 3.3 Supporting Dissemination of, and Establishing Demand for, New Scientific and Technological Knowledge 585,365 Subtotal- Environmental Awareness 3,443,920 4.4% 4. Orcanization of Environmental Management System at Regional Level 4.1 Defining GTPP Operations 3,818 4.2 Establishment of GTPP 568,182 4.3 Regional Support to Environmental Management 81,364 Subtotal- Regional SIGEA Organization 653,364 0.8% 5. Creating Conditions for Inteqrated State Planning and Subproiects Preparation 5.1 Establishing and Maintaining Working Groups and Support Units 1,354,545 5.2 Technical Assistance to State Entities for State Planning, Project Coordination and Subproject Preparation 6,081,823 Subtotal-Inteqrated State Planning, Project Coordiantion and Subprojects Preparation 7,436,368 9.4% 6. Strengthening of COEMAs 1065582 1.3% TOTAL COST PART 1 -STRENGTHENING OF STATE ENVIRONMENTAL ENTITIES 28,271.395 35.8%  Annex 2A - Page 2 BRAZIL NATURAL RESOURCES POLICY PROJECT PROJECT COST SUMMARY % of Subtotal Total Total Cost PART 2 - Zoning. Monitoring. Control and Enforcement (Z,M.C&E) 1. Special Activities In Support of Intearated Environmental Management 1.1 Stengthening for Zoning Activities 1,041,000 1.2 Geoprocessing and Remote Sensing 2,148,545 1.3 Study on the Territorial Data of the Amazon Region 315,455 Subtotal- Environmental Management Support Activities 3,505,00 4.4% 2. Z.M.C&E Integrated Subpro*ects (Including Targeted Strengthening to non State Entities and Technical Assistance) 37,795.966 47.8% Ln 3. Emergency Enforcernent Activities 2,250,000 2.8% @ TOTAL PART 2 - Z,M.C&E 43.55096 55.1% PART 3 - Prolect Administration 1. Support to Project Comission 636,364 2. Support to Technical Secretariat 1,909,091 3. Technical Support Requested by States 818,182 4. Project Evaluation 272,727 TOTAL PART 3 - PROJECT ADMINISTRATION 3.636,364 4.6% TOTAL PROJECT BASE COST 75.458,724 95.5% Contingencies \1 3,541,276 4.5% TOTAL PROJECT COSTS 79,000,W0 100.0% \1 Total physical and price contingencies are estimated at 10% of Part 1, Part 2-2 and Part 3. %APCOSTAA.WKI - 10/20/1994  Annex 28 - Page I BRADIL - NATURAL RESOURCE POLICY DEVELOPMENT PROJECT PROJECT COST ESTIMATEs SuppP!s Technkil Other Toli Per Olenm Trawe A