GLOBAL ENVIRONMENT FACILITY BRAZIL National Biodiversity Project Brazilian Biodiversity Fund Project Project Document March 1996, THE WORLD BANK GEF Documentation The Global Environment Facility (GEF) assists developing countries to protect the global environment in four areas: global warming, pollution of international waters, destruction of biodiversity, and depletion of the ozone layer. The GEF is jointly implemented bythe United Nations Development Programme, the United Nations Environment Programme, and the World Bank. GEF Project Documents - identified by a green band - provide extended project- specific information. The implementing agency responsible for each project is identified by its logo on thcover of the document. Global Environment Division Environment Department World Bank 1818 H Street, NW Washington, DC 20433 Telephone: (202) 473-1816 Fax: (202) 522-3256 Report No. 14523-BR BRAZIL National Biodiversity Project Brazilian Biodiversity Fund Project Project Document March 1996 Natural Resources, Environment and Rural Poverty Operations Division Country Department I Latin America and the Caribbean Region CURRENCY EQUIVALENTS Currency Unit = Real (R$) US$ 1.0 = R$ 0.95 FISCAL YEAR January 1 - December 31 UNITS OF WEIGHTS AND MEASURES The metric system is used throughout the report. ABBREVIATIONS AND ACRONYMS BDT Base de Dados Tropical (Tropical Data Base) BIN21 Biodiversity Information Network CAMPO Companhia de Promogdo Agricola (Agriculture Promotion Company) CENARGEN Centro Nacional de Pesquisa de Recursos Gen6ticos e Biotecnologia (National Research Center for Genetic Resources and Biotechnology) CIDES ComisAo Interministerial para o Desenvolvimento SustentAvel (Interministerial Commission on Sustainable Development) CNPq Conselho Nacional de Desenvolvimento Cientifico e Tecnol6gico (National Council for Scientific and Technological Development) CPAC Centro de Pesquisa Agropecudria do Cerrado (Agricultural Research Center of the Cerrado) EMBRAPA Empresa Brasileira de Pesquisa AgropecuAria (Brazilian Agricultural Research Agency) FBDS Fundagio Brasileira para o Desenvolvimento Sustentivel (Brazilian Foundation for Sustainable Development) FGV Fundagdo GetWlio Vargas (Getilio Vargas Foundation) FINEP Financiadora de Estudos e Projetos (Agency for Financing of Studies and Projects) FNMA Fundo Nacional do Meio Ambiente (National Environment Fund) FTPT Fundagdo Tropical de Pesquisa e Tecnologia Andr6 Tosello (Andr6 Tosello Foundation for Tropical Research and Technology) FUNAI Fundagdo Nacional do Indio (National Indian Foundation) FUNATURA Fundaglo Pr6-Natureza (Pro-Nature Foundation) FUNBIO Fundo Brasileiro para a Biodiversidade (Brazilian Biodiversity Fund) G-7 Group of Seven GDP Gross Domestic Product GEF Global Environment Facility GEF Trust Fund Global Environment Facility Trust Fund GIS Geographic Information Systems GOB Government of Brazil IBAMA Instituto Brasileiro do Meio Ambiente e dos Recursos Naturais Renoviveis (Brazilian Institute for the Environment and Renewable Natural Resources) KfW Kreditanstalt fir Wiederaufbau MMA Minist6rio do Meio Ambiente, dos Recursos Hidricos e da Amaz6nia Legal (Ministry of the Environment, Water Resources and the Legal Amazon) MPO Minist6rio do Planejamento e Orgamento (Ministry of Planning and Budget) NEP National Environmental Project (PNMA) (Loan No. 3173-BR) NGO Non-Governmental Organization PNMA Programa Nacional do Meio Ambiente (National Environmental Project - NEP) POA Plano Operativo Anual (Annual Operating Plan) PROBIO Projeto de Conservagio e Utilizagio Sustentavel da Diversidade Biol6gica Brasileira (National Biodiversity Project) PRONABIO Programa Nacional da Diversidade Biol6gica (National Program for Biological Diversity) RNP Rede Nacional de Pesquisa (National Research Network) RPPN Reserva Particular do Patrim6nio Natural (Private Nature Reserve Program) SNE Sociedade Nordestina de Ecologia (Northeast Ecology Society) SPVS Sociedade para ProtegAo da Vida Selvagem (Wildlife Protection Society) UFRJ Universidade Federal do Rio de Janeiro (Federal University of Rio de Janeiro) UNEP United Nations Environment Programme This report is based on the findings of an appraisal mission which visited Brazil from March 20 to 31, 1995 and a post-appraisal mission from July 24 to 29, 1995. Mission members were Messrs./Mmes. Claudia Sobrevila (Mission Leader), Daniel Gross (Senior Anthropologist), Gustavo Rodrigues (Operational Lawyer), Alberto Ninio (Environmental Lawyer), Musa Asad (Financial Specialist), Ken Creighton (Biodiversity Specialist), Ruth Norris (Conservation Specialist), Miriam Parel (Institutional Development Specialist), and Irani Escolano (Project Cost and Procurement Specialist). Ms. Loretta Sprissler (Consultant) assisted with the writing and eGiting of this report. Mr. Gobind T. Nankani is the Department Director, Mr. Orville Grimes is the Projects Adviser, and Ms. Constance Bernard is the Sector Division Chief. BRAZIL GLOBAL ENVIRONMENT FACILITY BIODIVERSITY PROJECTS TABLE OF CONTENTS PART I: PROJECTS SUMMARY Page No Grant and Projects Summary Country/Sector Background Project Objectives and Description 3 Rationale for GEF Funding 4 Associated Bank/IDA Project 4 Lessons from Bankwide Operations 5 Project Sustainability 6 Environmental Aspects 6 Project Benefits 7 Project Risks 7 PROJECT I: NATIONAL BIODIVERSITY PROJECT (PROBIO) Project 1: Objectives 8 Project 1: Description 8 Project 1: Costs and Financing 11 Project 1: Implementation, Organization, and Management 12 Project 1: Agreements Reached 15 PROJECT II: THE BRAZILIAN BIODIVERSITY FUND (FUNBIO) Project II: Objectives 17 Project II: Description 17 Project II: Components 18 Project II: Costs and Financing 18 Project II: Implementation, Organization, and Management 19 Project II: Agreements Reached 23 Schedule A Project 1 26 Project II 27 Schedule B Project I 28 Project II 29 Schedule B-1 Project 1 30 Project II 31 Schedule B-2 Project I 32 Schedule C 33 TABLE OF CONTENTS PART II: TECHNICAL ANNEXES PROJECT I: NATIONAL BIODIVERSITY PROJECT (PROBIO) Annex 1: Biome-Level Assessments 1-A Terms of Reference for Biome-Level Assessments 34 1-B Detailed Activities and Costs of One Model Assessment for the Cerrado 40 1-C Implementation Timetable of Biome-Level Assessments 42 Annex 2: Plans for a National Biodiversity Strategy 43 Annex 3: Summary of Biodiversity Information Network 45 Annex 4: Summary of the First-Round Model Sub-Projects 47 Annex 5: Project Administration 50 Annex 6: Draft Guidelines for the Operational Manual 53 Annex 7: Detailed Project Cost Tables 55 PROJECT II: BRAZILIAN BIODIVERSITY FUND PROJECT (FUNBIO) Annex 8: Organization of the Brazilian Biodiversity Fund (FUNBIO) 8-A Description of the Getdlio Vargas Foundation 63 8-B Internal Regulations of the Brazilian Biodiversity Fund 64 8-C Initial Membership of the FUNBIO Board of Directors 71 Annex 9: Financial Analysis and Management 73 Annex 10: Draft Guidelines for the Operational Manual 82 PROJECT I AND PROJECT II Annex 11: Draft Sub-Project Eligibility and Selection Criteria 84 Annex 12: Draft Monitoring and Evaluation Plan 89 Annex 13: Reports and Documents in Project Files 98 IBRD Map No. 27334 PART I: PROJECTS SUMMARY 1 BRAZIL - GLOBAL ENVIRONMENT FACILITY GRANTS AND PROJECTS SUMMARY Source of Grant: Global Environment Facility Trust Fund (GEF Trust Fund) Terms: Grant PROJECT I: NATIONAL BIODIVERSITY PROJECT (PROBIO) Recipient: Federative Republic of Brazil Beneficiaries: Ministry of Environment, Water Resources and the Legal Amazon, and public and non-profit private entities engaged in biodiversity conservation and sustainable use Amount: SDR 6.7 million (US$10 million equivalent) Total Project Costs': US$20 million (US$10 million from GEF Trust Fund and US$10 million from GOB) Financing Plan: Source TOTAL (US$ million) GEF Trust Fund (grant) 10 Government Counterpart 10 Total: 20 Project Duration: 5 years PROJECT H: BRAZILIAN BIODIVERSITY FUND PROJECT (FUNBIO) Recipient: Getdlio Vargas Foundation Beneficiaries: Brazilian Biodiversity Fund and public and private entities engaged in biodiversity conservation and sustainable use Amount: SDR 13.4 million (US$20 million equivalent) Total Project Costs : US$25 million (US$20 million from GEF Trust Fund and US$5 million from other sources) 3 Financing Plan: Source TOTAL (US$ million) GEF Trust Fund (grant) 20 Other sources 5 Total 25 Project Duration: 15 years, minimum I It is estimated that US$14.5 million of the US$20 million will be provided to sub-grant recipients who would be required to provide 25% in matching contributions. Implementing entities will thus contribute an estimated US$3.6 million. 2 It is estimated that US$26.8 million of 15-year fund (capital + income) will be provided to sub-grant recipients who would be required to provide 25% in matching contributions. Implementing entities will thus contribute an estimated US$6.7 million. This amount represents the capital of FUNBIO. However, the predicted income from investment of the US$20 million GEF Trust Fund grant and US$5 million from other sources over a 15-year period (US$9.5 million) will also be available for Project II activities (See Annex 9 for details). 11 Economic Rate of Return: N/A Map: IBRD No. 27334 BRAZIL GLOBAL ENVIRONMENT FACILITY BIODIVERSITY PROJECTS Country/Sector Background 1. Occupying nearly half the South American Continent, Brazil has a wide range of climate zones, from humid tropics to semi-arid and temperate areas, that contribute to several ecologically differentiated biogeographical zones (biomes). These include the world's largest standing tropical rain forest (Amazonian and Atlantic forests), the world's largest inland wetland (Pantanal), expanses of semi-arid thorn forests (caatinga), vast tree and scrub woodlands (cerrado), and more than 7,000 linear kIn of coastal and marine ecosystems. The country's vast size and diversity of biomes contribute to a wide diversification of fauna and flora. Many Brazilian species are unique in the world (endemic). In recent years, intervention in previously stable habitats has increased, leading to significant loss of biodiversity. Biomes are being occupied and developed at different speed and scale. Much larger areas of native vegetation have been devastated in the cerrado of central Brazil, the caatinga and the Atlantic forests. Clearly, it is necessary to take stock of the various natural and modified habitats that exist in Brazil and to develop a balanced approach to conservation and sustainable use of biodiversity, taking into account the livelihood of local inhabitants. 2. The Brazilian Government has addressed the issue of the loss of biodiversity through the following initiatives: (i) in 1988, a new constitution included a section on the environment and an emergency program which removed fiscal incentives for ranching in primary forest areas of the Amazon and intensified federal efforts to control forest burning; (ii) the National Environmental Project (NEP) financed by a World Bank loan (3173-BR), KfW loan and grant, and counterpart funds, was approved in early 1990 to strengthen the federal environmental protection agency (IBAMA), 30 conservation units, the conservation of several threatened ecosystems, and state and local environmental management; (iii) in late 1990, the Government requested GEF assistance to expand the coverage of the NEP program to additional conservation units and support a long-term financing mechanism (para. 6-7); (iv) in 1991, the G-7 Pilot Program to Conserve the Brazilian Rain Forest was established to support integrated projects to reduce deforestation in the Amazon and Atlantic forest; and (v) in 1992, the Government of Brazil was the first to officially sign the United Nations' Convention on Biological Diversity. 3. Outside the public sector, important institutions devoted to biodiversity conservation have evolved as well. By 1988, more than 300 NGOs were active at the national and local level. To catalyze NGO efforts, the Government created the National Environment Fund (FNMA) in 1988 to support communities and local governments carrying out conservation or sustainable development projects. State governments and private landowners in the Southeast have become active in biodiversity protection. Brazilian corporations have begun to take greater responsibility in the environmental area, mitigating negative impacts on biodiversity and requesting that government and private groups develop standard methodologies that could assist them in the certification of their products as environmentally sound. A few private firms are already marketing sustainably produced products. As part of the Government effort, a workshop was held in June 1994 to define strategies to 2 increase public-private partnerships in biodiversity conservation and sustainable use of resources. The Government has recently launched two additional efforts to work closely with NGOs and local-level governments in environmental protection, namely the Decentralized Environmental Projects under the National Environmental Project (NEP) financed under World Bank Loan 3173-BR, and the Demonstration Projects under the G-7 Pilot Program to Conserve the Brazilian Rain Forest. 4. Nevertheless, these public and private efforts do not constitute a coordinated national biodiversity strategy for the country. Several problems remain to be addressed: (i) uneven conservation efforts among Brazil's main biomes and within these biomes; (ii) limited access to biodiversity information; (iii) lack of participation in government projects by local communities and NGOs; and (iv) limited public-private partnerships to sustain biodiversity. To address these needs and in accordance with the Convention on Biological Diversity, the government established the National Program for Biological Diversity (PRONABIO) in 1994 to promote partnerships between the public and private sectors to support the conservation and sustainable use of biodiversity. PRONABIO develops policies; promotes research, information networks, and international cooperation; assists in the standardization of instruments and methodologies; and supports training and institutional strengthening. It also provides technical input to the Interministerial Commission on Sustainable Development (CIDES). One of the goals of the National Biodiversity Project is to strengthen the activities of PRONABIO (paras. 19-20). 5. In order to maximize biodiversity conservation efforts in Brazil, some additional steps need to be taken. Biodiversity conservation efforts in Brazil to date have suffered from serious financial difficulties, including the following: (i) an emphasis on short-term funding has created a lack of continuity and has frequently caused termination of projects before their intended results could be realized; (ii) project funding has rarely been geared to the absorptive capacity of implementing agencies and organizations, and has been hampered by the Government's administrative constraints; (iii) the Government has only limited ability to channel funds to private organizations at a time when these have become key players in biodiversity conservation; and (iv) the leveraging of additional funds for biodiversity from domestic private sources has been limited, despite the recognition by the Government and NGOs that the potential is there. In light of the above, a trust fund could be an effective mechanism for guaranteeing a long-term financial commitment and for overcoming government and donor agency budget fluctuations, as well as a mechanism to match financial flows to absorptive capacity and leverage new funds from a broader array of sources. Reliable funding improves program stability, long-range planning, training and recruitment of personnel, and the overall impact of a conservation program. Consequently, a major goal of the Brazilian Biodiversity Fund Project is the creation of a trust fund to serve as a stable financial resource base for ensuring the continuity of key biodiversity activities (paras. 32-36). 6. The proposed GEF Biodiversity Project was conceived in late 1990, as a complement to the National Environment Project (NEP) which had been approved and signed earlier in the year (para. 2). The NEP, while covering significant parks and reserves in the national system of conservation units, could not address all of the conservation needs related to Brazil's unique ecosystems and biological diversity. Consequently, the Brazilian government requested that GEF assistance be provided to expand the NEP program to a larger number of conservation units. This request was approved by the GEF Participants in May 1991, when they endorsed the first-ever GEF Work Program (Tranche 1). The project objectives as endorsed by the Participants were to: (i) decentralize management and 3 administration of selected conservation units; (ii) broaden public involvement in conservation unit protection; and (iii) create a stable financial resource base for ensuring continuity of key management activities and scientific research. The approval of the G-7 Pilot Program to Conserve the Brazilian Rain Forest at roughly the same time as the GEF funding for the Biodiversity Project provoked a refocusing of the GEF project concept to avoid duplication of effort and enhance cost-effectiveness of donor resources devoted to conservation activities in Brazil. Based on consultations between the Brazilian Government, the GEF Chairman, and the G-7 donors, it was agreed that proposed activities under the GEF project would be reviewed to ensure that they do not duplicate the G-7 Rain Forest Trust Fund Program activities. It was also agreed that the GEF-supported project would focus on testing innovative private-public sector partnerships to conserve and use biodiversity sustainably (including mobilization of new funding sources). This reinforced the Government's and the Bank's desire to search for new approaches to conserving and sustainably using Brazil's rich biological heritage, that did not rely exclusively on public sector conservation units and that could be partially insulated from the restrictive public sector budgetary cycle and procedures. 7. With the broad framework and goals agreed, the Brazilian/Bank project teams proceeded to prepare in detail the specific components that would address the constraints to effective biodiversity conservation identified above and that could ensure broad participation in and reliable funding for such endeavors. In the course of preparation, several options were analyzed. The option of using an existing Government fund such as the FNMA was discarded due to the perception that the funds belong to the government and are therefore fungible with other government revenue, possibly making some donors (especially the private sector) hesitant to contribute. The lack of specific legislation in Brazil for creating a trust fund, a mechanism used successfully in several other GEF projects, and the need for a flexible administrative structure that would operate independently, transparently, and sustainably justified the use of a private non-profit foundation under the Brazilian civil code. It was decided at appraisal and post-appraisal that the most effective way to remain true to the spirit of the project concept endorsed by the GEF participants was to use a private foundation. Following a series of consultations among Bank staff, Government representatives, scientists, NGOs, and private sector representatives, the Getilio Vargas Foundation (FGV) was chosen to house an independent fund, the Brazilian Biodiversity Fund (FUNBIO) (see paras. 33-35 and Annex 8-A). Agreement on the use of the private foundation had implications for project/grant structuring, however, since there are legal restrictions on the transfer of funds by the Brazilian Treasury to private entities (even non-profit foundations). The original comprehensive project was divided into two complementary projects with separate grant agreements (one for US$10 million to the Federative Republic of Brazil and one for US$20 million to FGV/FUNBIO). In this manner, GEF funds could be disbursed directly into the fund account without transiting via the Brazilian Treasury. The new project model remains consistent with the original project objectives, with the added bonus that there has been a shift in emphasis from a narrow focus on support for conservation units toward a sector-wide, national, and biome-level approach to biodiversity conservation. Project Objectives and Description 8. The overall goal of the two projects is to promote and support partnerships among government, non-profit organizations, academic institutions, and the private business sector in support of PRONABIO and CIDES efforts to improve Brazil's conservation and sustainable use of biodiversity. The goal would be pursued through a two-pronged strategy. The main objective of Project I is to 4 assist the Government to initiate a program for the conservation and sustainable use of biodiversity by identifying priority actions; stimulating the development of demonstration sub-projects; and disseminating biodiversity information. A detailed description of Project I is presented in paragraphs 20-30. The main objective of Project II is to support the establishment and development of a Brazilian Biodiversity Fund (FUNBIO) within the Getflio Vargas Foundation (FGV) that would administer a long-term grants program to promote conservation and sustainable use of biodiversity in Brazil. A detailed description of Project II is presented in paragraphs 33-52. The goals of the two projects are complementary. In order to ensure maximum efficiency during implementation, the following linkages between the two projects are expected: (i) FUNBIO would use for their planning process the priorities defined by the biome-level assessments and workshops, and follow the national priorities on biodiversity issues adopted by PRONABIO's Coordinating Commission; (ii) PRONABIO would issue PROBIO's calls for proposals through FUNBIO, and rely on FUNBIO to evaluate and recommend sub- projects for funding under the National Biodiversity Project; and (iii) to promote coordination between the two projects, the Ministry of Environment would be represented on both FUNBIO's Board of Directors and PRONABIO's Coordinating Commission, and a memorandum of agreement (protocolo de entendimento) would be signed between FGV and MMA. Rationale for GEF Funding 9. Brazil is acknowledged as probably the most biodiversity-rich country in the world. It is noted both for species richness and endemism. With more than 50,000 species of vascular plants (one fifth of the world total), Brazil is the most plant-rich country, and areas such as the Atlantic forests and western Amazon have been designated as biodiversity "hot spots" because of their floral diversity. One in eleven of all world mammals (394 species) are found in Brazil, together with one in six of all world birds (1576), one in fifteen of all reptiles (468), and one in eight of all amphibians (502). Many of these species are unique to Brazil, with 68 endemic mammals, 191 endemic birds, 172 endemic reptiles, and 294 endemic amphibians. The Government of Brazil has shown its commitment to conserve this biological diversity since it was the first country to officially sign the United Nations' Convention on Biological Diversity in 1992. With its broad range of tropical habitats and extensive areas of tropical forest, including vast tracts of the Amazon basin, Brazil is important for conservation of biological diversity at the ecosystem, species, and genetic levels. The two projects address program priorities identified by the first Conference of the Parties of the Convention on Biological Diversity. They will strengthen conservation, management, and sustainable use of ecosystems and habitats; promote conservation of endemic species; strengthen local and indigenous people's involvement in conservation and sustainable use of biological diversity; support projects that promote sustainability and serve as demonstration projects; and build capacity and promote innovative measures, through a trust fund, to engage major actors in biodiversity conservation. Associated Bank/IDA Project 10. The two proposed GEF projects are associated with the National Environmental Project (NEP, Loan 3173-BR) co-financed by Germany's KfW and counterpart funds. The GEF projects' objectives are complementary to the NEP's, which are: (i) strengthen Brazil's institutional framework and capacity to protect the environment; (ii) support protection of specific endangered ecosystems, in particular the Atlantic Forest, the Coastal Zone, and the Pantanal wetlands; and (iii) strengthen the regulatory framework of the environmental sector. The NEP is implemented by IBAMA and MMA, 5 with state government involvement in implementation of the ecosystems component. Since project effectiveness in 1990, NEP's implementation performance has been uneven. Initial delays in implementation caused by institutional inexperience with project management, the low absorptive capacity of the implementing institutions, the low availability of counterpart financing, and a subsequent underutilization of disbursed funds eventually resulted in a mid-term reduction of project financing and restructuring of the project. By the end of 1994, however, project implementation was back on track, with significant progress reported towards the goal of strengthening the national institutional framework for environmental protection and management. Lessons from Bankwide Operations 11. A 1994 GEF report, "Independent Evaluation of the Pilot Phase," found that (i) more consideration needs to be given to the involvement of local people, their expertise, and their priorities; (ii) projects need to build more on existing data on biodiversity and conservation priorities; (iii) more meaningful involvement of NGOs is needed throughout the project cycle, to locate "hot spots" and to establish global biodiversity networks; (iv) more creative cooperation among implementing agencies and other global organizations working in the field of biodiversity should be promoted; and (v) the degree of innovation displayed by past projects is questionable. Experience with biodiversity projects also indicates the importance of facilitating "direct" biodiversity conservation activities by communities or groups of people who have a vital interest in conservation, either because their livelihoods depend directly on biological resources, or because their quality of life depends significantly on use and existence values of biodiversity. 12. Experience with the Brazilian project portfolio, particularly the National Environmental Project (NEP, Loan 3173-BR), which aimed at improving natural resource management and biodiversity conservation, has shown several constraints in implementation: (i) projects are too complex; (ii) projects overlap in their goals; and (iii) disbursement performance has been poor. The present projects address each of these constraints. Instead of having one complex project implemented by only one organization, two projects were devised, each with a simple design to be implemented by different agencies (MMA and a private foundation). The goals of the two projects are complementary and do not overlap. The first project addresses the need for the development of a policy framework for biodiversity conservation and to support testing and dissemination of the policy. The second project supports an agile grants program adjusted to the real capacity of conservation institutions to use the funds effectively. 13. Lessons Learned in the Design of Biodiversity Trust Funds. A recent Bank paper, "Issues and Options in the Design of GEF-Supported Trust Funds for Biodiversity Conservation" (Global Environment Coordination Division, Environment Department, May 1994) offers a detailed analysis of lessons to be learned about the advantages, disadvantages, and risks associated with different structural and management options. The paper emphasizes the necessity of competent legal guidance and analysis in: the design of the trust instrument; the nomination of trustees; selection and function of the board of directors; by-laws; inclusion of essential features in operations manuals; appointment of an asset manager; appointment of advisory committees; and the structure and function of the executive secretariat. With regard to the effective disbursement of trust fund moneys, the report notes that other funds have had difficulty disbursing relatively small amounts of funding in a timely fashion, and recommends that this problem be resolved by: creating partnerships; disseminating information about 6 trust fund procedures and training local groups in the design and presentation of proposals; and emphasizing transparency in the fund's rules of management, so that procedures will be clear and frustrations avoided. This trust fund would adopt the first recommendation (partnerships) as a basic mode of operation, and would address the other two in its operational guidelines. 14. In designing the proposed operations, the above lessons have been taken into account by: (i) pursuing a participatory and objectives-oriented approach in overall project design and management; (ii) reviewing and expanding existing knowledge and data in biome-level assessments (Annexes 1-A and 1-B); (iii) eliciting financial contributions and implementation capacity from government, academic, NGO, and for-profit private sector organizations; (iv) making innovation a standard eligibility criterion (Annex 11); (v) adjusting grant funds to in-country implementation capacity; (vi) requiring co-financing from the Government and other sources; and (vii) developing a program of trust funds for the long-term sustainability of investments. Project sustainability would be enhanced by the fund design, which links disbursement of project funds to absorptive capacity and counterpart investments in selected sub-projects (see Annex 9). Project SustainabWty 15. The projects are designed to make it possible to pursue long-term objectives for biodiversity conservation and sustainable use through: (i) the testing of methods for improving financial viability and sustainability of biodiversity projects through pilot sub-projects addressing the issues of cost recovery and charges for biodiversity services (e.g. ecotourism and sustainably harvested products) or of marketing products from natural ecosystems; (ii) the establishment of a sinking fund to secure long- term funding that would not be subject to unstable macroeconomic conditions and government budget constraints; and (iii) the promotion of financial and other contributions for biodiversity conservation and sustainable use by the private sector. Environmental Aspects 16. Due to their innovative nature, sub-projects funded under the projects may have some environmental and social impacts, and therefore the projects have been given a "B" rating. However, the main objective of the projects is to only support sub-projects with a net positive or neutral environmental and social impact. Funding for approved sub-projects is intended to demonstrate the viability of less damaging alternatives to existing practices. The sub-project review process would include specific attention to the environmental sustainability and social impact of the activities financed. Eligibility criteria would include, among others: (i) respect for sound environmental practices (for example, taking care in the design of new tourist facilities and ensuring that any sub- project-supported harvesting of wild species is sustainable); and (ii) proper treatment of any sensitive social issues that would include: (a) ensuring that any involuntary resettlement (if unavoidable) would follow Bank policy and (b) promoting adequate participation by local stakeholders in the design and implementation of sub-projects. These eligibility criteria would be included in the Operational Manual (see Annex 11). Sub-projects would be monitored during implementation for their environmental and social impacts. 7 Project Benefits 17. The major benefits of the two projects is to improve natural resource management and biodiversity conservation in Brazil's major ecosystems through strategic actions and pilot initiatives. The benefits of Project I would be: (i) clear biodiversity conservation strategies would be agreed among major stakeholders, adopted by the Government and disseminated; (ii) government funding decisions and policy recommendations would be more strategic; (iii) the dissemination and use of biodiversity information would be improved; (iv) major actors in biodiversity work in Brazil would share information and experiences through electronic means; (v) new models of biodiversity conservation and sustainable use would be tested, lessons would be learned from them and when successful, they would be replicated and disseminated; and (vi) alliances among rural, local groups, and governments would be created therefore improving the decision making process for biodiversity conservation and use where actions are taking place. Project II would serve to (i) create an efficient and transparent mechanism for funding critical biodiversity sub-projects in Brazil; (ii) leverage financial resources from Brazil's private sector and from international donors so that FUNBIO can become a long-term financial source for Brazil's biodiversity conservation; (iii) support, on a steady and continuous manner, successful conservation activities that require long-term funding to realize intended results; and (iv) promote changes in the private sector's approaches to more sustainable use of biodiversity. Project Risks 18. The uneven performance of the Ministry of the Environment, Water Resources and the Legal Amazon (MMA) in past years due to its being a relatively young institution represents a potential risk for Project I. There are signs, however, that MMA is consolidating itself, with improved project implementation performance. The decentralized implementation of this project, whereby MMA would delegate implementation activities to a large array of non-profit private, academic, and government agencies, would greatly reduce any exposure to such a risk. This risk would be further diminished by clear and rigorous guidelines for project administration and monitoring that have been agreed and that would be included in the Operational Manual (see Annex 12). Another risk is the possible lack of institutional or technical expertise for carrying out successful biodiversity conservation sub-projects. The institutional capacity of the sub-project grant recipients would be carefully evaluated as one of the selection criteria. Whenever appropriate, institutional linkages would be facilitated to build additional capacity in Brazil. The potential risks associated with Project II include the possibility that the administrative structure of the Fundagio Gettilio Vargas (FGV) could overshadow the independent development of FUNBIO. This risk is counterbalanced by safeguards built into FUNBIO's Internal Regulations, which establish FUNBIO's full institutional, financial, and operational autonomy from FGV. The transparent participation process in designing FUNBIO and the broad composition of its Board of Directors would allay any perceptions of bias or favoritism that may arise in relation to FUNBIO. Other risks for Project II are related to biased sub-project funding decisions, uncertainties about future economic and investment trends (e.g., exchange and inflation rates, and the earning capacity of capital), and the fund's long-term sustainability, which will depend somewhat on the initial investment performance of the sinking fund, but more so on provisions which will allow re-investment of income and FUNBIO's ability to draw upon other sources of financing. Risks have been minimized on these issues by the broad composition of the Board of Directors that can balance out decisions and by external evaluations of FUNBIO to be undertaken. 8 PROJECT I: NATIONAL BIODIVERSITY PROJECT (PROBIO) Project I: Objectives 19. The main objective of Project I is to assist the Government to initiate a program for the conservation and sustainable use of biodiversity by identifying priority actions; stimulating the development of sub-projects through the facilitation of partnerships between the public and private sectors; and disseminating biodiversity information. Project I: Description 20. Project I would include the following components: (a) Biodiversity Assessments and Dissemination (19% of total project costs) (i) Biome-Level Assessments would be done through the organization of workshops bringing together experts from various fields to consolidate available information on biodiversity and conservation status, critically analyze the information and identify and evaluate options for conservation and sustainable use. Based on lessons learned from the Manaus-90 workshop, maps with biodiversity data would be prepared before the actual workshop, conservation priorities would be ranked, and analysis would go beyond species distribution to review ecosystems and habitat protection, economic trends, and public policies. For each major biome, priorities would be identified and strategies for conservation and resource use developed. NGOs, academic institutions, public entities, and consortia of the above would submit proposals to organize the biome-level assessments and would be selected according to established criteria. Each workshop would establish the parameters for biodiversity monitoring and identify institutions to carry out such monitoring and disseminate the results (see Annex 1-A and Annex 12). Terms of reference to select the organizers for each biome-level assessment have been approved by the Bank (see Annex 1-A) and would be incorporated in the Operational Manual. The proposal and institution (Fundarlo Pro-Natureza) to carry out the first workshop "Cerrado" have also been agreed. The detailed activities and costs of the first workshop would be used as a model for the rest of the assessments (see Annex 1-B). The activities would be divided into three stages: (1) preparation of information base for workshop; (2) workshop event, integration of results, definition of priorities; (3) establishment of a permanent working group in charge of follow-up activities including the periodic review of priorities, development of a priority action plan, and the definition of monitoring and consultation programs. The assessments would be held on a staggered basis so that all of them would be completed during the first two years of the project (see the implementation plan for biome-level assessments in Annex 1-C). Workshop results would be disseminated in the form of maps and books and through electronic and other media. Participants in each biome-level assessment would designate a small number of participants to serve as a liaison and consultative group between the Government and the different constituencies represented to ensure that the 9 recommendations of the assessments are carried out. The results and recommendations of each workshop would contribute to the National Strategy for Biodiversity Conservation and Sustainable Use to be promoted by PRONABIO. They would also be used in the preparation of the calls for proposals for new sub-projects under Project I (para.20 (b) (ii)), as well in the definition of funding priorities for the grants program under Project II (para. 36). The steps and timetable for developing the National Strategy for Biodiversity Conservation and Sustainable Use were agreed during appraisal and are detailed in Annex 2. (ii) A Biodiversity Information Network - Brazil would be established for the purpose of storing, updating, and linking information generated in the assessments (para. 20(a)(i)), and for providing an efficient means of communication about biodiversity both nationally and internationally. It would build on existing data in the Tropical Data Base (BDT) and would connect BDT and other data bases, including IBAMA-NET, the National Environmental Electronic Network financed by the NEP loan from the Bank (see paras. 2 and 10), and the National Research Network (RNP). The Biodiversity Information Network - Brazil would be accessible to government, scientific, conservation, and private-sector actors. The Andr6 Tosello Foundation for Tropical Research and Techology (FTPT) would coordinate the implementation of this component. FTPT was chosen because of its established leadership in developing Brazil's biodiversity information systems and facilitating its access to such systems worldwide. This private non-profit foundation has played an important role in several international forums sponsored by the United Nations Environment Programme (UNEP) and the Brazilian Government on establishment of the international Biodiversity Information Network (BIN21), which was designed to link information relevant to biodiversity and make it widely available by electronic and other means, in support of the Convention on Biological Diversity and Agenda 21. BIN21, which is already functioning, has its secretariat at FTPT. The Tropical Data Base node (Brazil) is maintained by FTPT. At present, there are 14 international nodes in the BIN21 network (See Annex 3 for more details). (iii) Additional Biodiversity Assessments and Dissemination Activities identified by PRONABIO and to be agreed with the Bank would be financed to support and update the Biodiversity Strategy and Action Plans, and add new subscribers to the Information Network. (b) Model Biodiversity Sub-Projects (72% of total project costs) would be financed under this component to initiate local pilot activities that would: (1) contribute significantly to conservation and sustainable use of biodiversity in a specific region or biome; (2) explore innovative forms of biodiversity protection and management; (3) test a wide variety of arrangements involving public-sector and non-profit private-sector actors, and a range of conservation goals. (i) First-Round Model Sub-Projects (18% of total project costs). In 1992, MMA requested proposals from a variety of public, academic, and non-profit conservation organizations in order to identify a pipeline of eligible sub-projects that would be ready to begin implementation upon grant effectiveness. Sub-projects for the first round of funding were chosen on the basis of the degree to which they address high conservation priorities, and the potential for success in achieving stated sub-project goals. Proposed sub-projects were also expected to incorporate the following basic elements into their design: (1) multi-institutional 10 involvement with partners representing government, non-government, and academic research institutions; (2) participation of institutions or collaborating groups with technical, financial, or operational capabilities relevant to biodiversity conservation, whose involvement would represent a broadening of the community of stakeholders in biodiversity conservation; and (3) involvement of organizations with a clear institutional mandate and well-established performance record, which through collaboration with other institutional actors could enhance the relevance of their work to biodiversity conservation. Furthermore, the following criteria were used to prioritize proposals and to make a final selection: * Potential for replicability of project methods and approaches; * Demonstration value of new techniques and approaches and potential sustainability of results; * Cost effectiveness and incrementality of project-financed activities and evidence of institutional commitments reflected by counterpart funds, facilities, or in-kind services contributed by the implementors. MMA evaluated sub-project proposals against these basic elements and criteria, and selected five sub-projects for first-round funding in 1993. One sub-project is national in scope and four are of local or regional interest: a. National sub-project: Conservation of Plant Genetic Resources. This sub-project would conserve plant genetic resources by developing and implementing a program for the sustainable management of selected wild plant species with high conservation priority value and potential for sustainable economic use. b. Local sub-projects. (i) Conservation and Restoration of Biodiversity in Gallery Forests of the Cerrado. This sub-project would assist in the conservation and restoration of gallery forests threatened by agricultural expansion in the Federal District and adjacent regions of Minas Gerais and Goids states; (ii) Management of Conservation Units in the Guaraguecaba Region, Parani state. This sub-project would contribute to the conservation of the largest of the Atlantic Forest remnants by expanding conservation units in a unique 310,000-hectare coastal area in eastern Parani state; (iii) Conservation and Restoration of Atlantic Forest in Tablelands of Linhares, Espirito Santo. This sub-project would develop a technical and scientific model for biodiversity conservation in important remnants of Atlantic Forest in northern Espirito Santo state; (iv) Restoration and Management of the Natural Ecosystems of Brejos de Altitude in Pernambuco and Paraiba. This sub-project would contribute to the conservation of the threatened forest ecosystems of the Eastern Escarpment (Borborema) in Pernambuco and Paraiba states. More details on each sub-project and implementation arrangements are presented in Annex 4. (ii) Second-Round Model Sub-Projects (54% of total project costs). The nature of second-round model sub-projects would include the following four broad areas: (i) Biodiversity conservation: activities that support long-term biodiversity conservation management initiatives; (ii) Sustainable use of Biodiversity: activities that build synergies and strengthen inter-relationship between biodiversity conservation and sustainable use and development practices in main productive sectors of the economy; (iii) Policy Analysis: analytical studies on 11 policies and incentives to support biodiversity conservation and sustainable use; and (iv) Applied research and technology development: research to support increased knowledge and technology development in biodiversity conservation and sustainable. Requests for second- round proposals would be prepared for additional model sub-projects that would involve regions, problems, and organizations not included in the first round. These requests would be based on national priorities established by the Government and on the priorities set by the biome-level assessments. At negotiations, agreement was reached that the request for proposals (editais) would be submitted to the Bank for review and approval before being submitted to the Coordinating Commission and issued (para.31-a). In order to increase the cost-effectiveness of project activities and to enhance coordination between Projects I and II, the calls would be issued through FUNBIO, the Brazilian Biodiversity Fund established to carry out Project II (paras. 37 and 42). FUNBIO would conduct a technical evaluation of the proposals received against criteria agreed with MMA/PRONABIO (see Annex 11). Guidelines for selection should ensure, among other things, that sub-projects will (i) follow good environmental practices, (ii) properly address any sensitive social issues, and (iii) mobilize matching funding from grant recipients. At negotiations, agreement was reached that the technical reviewers' recommendation on the eligibility of sub-projects and the selection of the corresponding implementing entity would be sent to the Bank for review and approval before it is approved by the Coordinating Commission (para. 31-b). Recommendations on sub-project selection would be reviewed by FUNBIO and subsequently transmitted to PRONABIO's Coordinating Commission for review and approval. Eligible entities would include public institutions, research institutions, NGOs, the private sector, and consortia of the above. Sub-project proposals would average US$500,000 for three years, with maximum funding of US$700,000. A draft Operational Manual sets down procedures for processing and approving proposals, evaluation reviews, the Technical Secretariat, the Administrative Agent, and for implementing, supervising, monitoring, and evaluating sub-projects (see Annexes 6, 11,and 12). At negotiations, agreement was reached that project implementation would be ruled by the Operational Manual (para. 31-c). Prior to effectiveness, the final version of the Operational Manual would be approved by the Bank (para. 32-a). (c) Proiect Administration (9% of total project costs). The objective of this component is to support the administration and coordination of the project including: support to PRONABIO's Coordinating Commission; supervision of biome-level assessments and the Biodiversity Information Network; evaluation and integration of biome-level assessment and workshop results; provision of support in the formulation of a draft Biodiversity Strategy; monitoring and supervision of sub-projects and workshops; monitoring and supervision of financial execution by CNPq; and the dissemination of results for the whole project. (See Annex 5) Project I: Costs and Financing 21. Project I activities are estimated at US$20 million (US$10 million from GEF Trust Fund and US$10 million from the Brazilian Government), including physical and price contingencies amounting to approximately 7% of total project costs. The estimated costs are summarized in Schedule A-1, Project I . Cost estimates are based on the following considerations: (i) workshops were estimated on the basis of previous workshops (see Annex 1-B); and (ii) for first-round model sub-projects and the National Biodiversity Network, budget limits, including contingencies, were agreed with each 12 beneficiary. For the Biodiversity workshops, the GEF Trust Fund would finance 100% of goods, 30% of services and 25% of materials and supplies. For Sub-projects (including the National Biodiversity Network), the GEF Trust Fund would also finance 100% of goods, 30% of services and 25% of materials and supplies. Project administration would be financed 100% by Government. GEF Trust Fund financing would cover eligible sub-project foreign and local expenditures net of local taxes. Sub-project implementing entities would also contribute financially to the costs of sub-projects. At negotiations. agreement was reached that the overall matching contributions by implementing entities would be at least 25% of total sub- project costs and would be required in the request for proposals (para. 314). The matching contributions by implementing entities for the first-round sub-projects was also agreed at negotiations and the values are all above 25% of the total sub-project costs (Annex 7). The matching contribution requirements by sub-project proponents would depend on the size of the grant and on whether the entity is public or private. The details of the mechanism, type and size of contributions will be spelled out in the Operational Manual. Project I: Implementation, Organization, and Management 22. Institutional Arrangements. The project would be coordinated by the Ministry of Environment, Water Resources and the Legal Amazon (MMA) and would be implemented by: (i) the Coordinating Commission of PRONABIO assisted by a small Technical Secretariat at MMA and CNPq, affiliated with the Ministry of Science and Technology, as its Administrative Agent; and (ii) the implementing entities selected to carry out project activities. PRONABIO's Coordinating Commission has been established by the Minister of the Environment, Water Resources and the Legal Amazon, according to Decree 1354, Of December 29, 1994, to set policies and make decisions regarding the project and other activities of PRONABIO. Members of the Commission include individuals renowned in the field of biodiversity conservation and have been selected from the public, academic, private, and non-profit sectors. The Technical Secretariat would be responsible for project management and implementation, and monitoring and evaluation of project activities. Prior to effectiveness, the Technical Secretariat of PRONABIO would be fully operational (para. 32-b). MMA would engage CNPq as its Administrative Agent to enter into contractual arrangements with the project implementing entities and to assist the Technical Secretariat in disbursing and accounting for project funds (para. 26). During the post-appraisal mission, CNPq's capacity to be the Administrative Agent for the project was assessed. In a follow-up letter from the president of CNPq to the Bank, certain critical issues, such as the possibility to finance NGOs, ability to issue contracts and disburse funds in a short period of time, and capacity to monitor financial execution were answered to the Bank's satisfaction. Prior to effectiveness, the contract between MMA and CNPq and contracts with implementing entities for the First-Round Sub-Projects and for the Biodiversity Information Network would be signed (para. 32 c and e). 23. Procurement Arrangements. The proposed procurement arrangements are summarized in Schedule B, Project I. Based on an analysis of the pre-approved sub-projects, expenditures would include minimal civil works, varied equipment (computers, boats, cars, scientific equipment), materials, travel expenses, and consultant services. Purchases would be dispersed in time and space over the period of the project (three to five years) and would be implemented by different environmental agencies (such as universities, institutes, and NGOs). For these reasons, packaging of procurement across sub-projects would be difficult. Also, because of the dispersed nature of expenditures under Project I, it is expected that only one international competitive bidding would be carried out. Most purchases would be expected to be made in accordance with shopping procedures 13 acceptable to the Bank, following the January 1995 Guidelines for Procurement under JBRD Loans and IDA Credits. In order to ensure that Bank procedures are fully followed, the Technical Secretariat of PRONABIO would prepare for Bank review a specific procurement program in the context of its annual operating plan, based on the guidelines described below (para. 24-25, 28). 24. Small Civil Works under the project would be geographically scattered. Since the largest contract is not expected to exceed US$300,000, it is unlikely that foreign contractors would be interested. Small works would be procured under lump-sum fixed-price contracts awarded on the basis of quotations obtained from three qualified contractors in response to a written invitation. Goods: Computer equipment for the Biodiversity Information Network estimated to cost US$ 572,000 would be procured through international competitive bidding procedures acceptable to the Bank. Outside this contract, contracts for goods are not expected to exceed US$100,000 per project beneficiary, and would be awarded through national or international shopping. If expenditures exceed US$300,000 for small works and US$100,000 for goods, contracts would be procured on the basis of National Competitive Bidding procedures acceptable to the Bank. Recurrent costs needed for the implementation of sub-projects would include materials and supplies and travel expenses, and would be procured through direct purchase. Procurement under sub-projects which are implemented by private sector entities would be undertaken in accordance with established commercial practices in the sector, provided that these are acceptable to the Bank. The threshold contract values indicated above for purchases of civil works and goods, respectively, would also apply to procurement using commercial practices. 25. The selection and appointment of consultants would follow the August 1981 Guidelines for the Use of Consultants by World Bank Borrowers and by the World Bank as Executing Agency. Contracts with consulting firms valued at US$50,000 or more would be subject to prior Bank review (terms of reference, letter of invitation, recommendation for award, and proposed contract). For individual consultants, prior Bank review (terms of reference, qualifications, and conditions of employment) would be required for contracts valued at US$30,000 or more. Below these limits, the Bank's prior review would apply only to the terms of reference. The use of standard documentation for the employment of consultants (letters of invitation and forms of contract) would be agreed with the Bank. Ex-post review would be carried out by World Bank supervision missions, at which time Bank staff would review in detail the procurement procedures used. 26. Disbursements. CNPq would manage on behalf of the Treasury a Special Account in a commercial bank acceptable to the Bank, in which GEF Trust Fund funds (a total of US$10 million, with an initial allocation of US$500,000) would be deposited and subsequently disbursed to grant recipients after notification by the Technical Secretariat. At negotiations, agreement was reached that the Special Account would be opened with the Banco do Brasil. CNPq would review and prepare appropriate documentation in support of disbursement requests, sign contracts with implementing entities, disburse funds, review and prepare appropriate documentation in support of disbursement requests, manage financial records, and have PROBIO accounts audited annually. CNPq would receive no fees for these services. Disbursement schedules for each project component are presented in Schedule B-1, Project I. Grant funds would be disbursed against SOEs for consultant services for firms whose contract value is below US$50,000; consultant services for individuals whose contract value is below US$30,000; contracts for goods and civil works, and for recurrent costs (materials and supplies and travel expenses). Supporting documentation for such expenditures would not be 14 submitted to the Bank but would be made available for inspection by Bank supervision missions. The closing date for Project I would be five years after signing the Grant Agreement. 27. Auditing. The Government would maintain a separate account for the project and would keep adequate records to reflect its execution in accordance with consistently applied sound accounting principles. At negotiations, agreement was reached that the Special Account and all project accounts would be subject to an annual audit by independent auditors acceptable to the Bank. The terms of reference for the auditors would include, inter alia, provision of a Management Letter, a separate opinion on the use of the Special Account, and SOEs for the project accounts and Special Accounts. Copies of the auditor's report would be sent to the Bank within six months of the end of each fiscal year (para. 31-). Agreement was also reached that the Secretaria Federal de Controle would be used to carry out the auditing of the project. 28. Annual Operating Plans and Progress Reports. At negotiations, agreement was reached that the Technical Secretariat of PRONABIO would prepare Annual Operating Plans that would be submitted to the Bank for approval by December 15 of the previous year (para. 31-g). The Annual Operating Plans would include a statement of specific objectives for the year, a description of the activities, expected outputs, monitorable indicators, detailed estimated budgets and a procurement plan. Prior to effectiveness, the first-year Annual Operating Plan would be approved by the Bank (para. 32- d). The Technical Secretariat would track information on all project activities provided by the implementing entities and financial transactions provided by CNPq. At negotiations, agreement was reached that the Technical Secretariat would submit to the Bank bi-annual progress reports tracking physical and financial performance targets by March 31 and September 30 of each year (para. 31-h). A model report would be sent by the Bank to the Government before the first report is due. Twice a year after receipt of the progress reports, the Bank and the Technical Secretariat would jointly carry out a supervision mission to review progress made against objectives and monitoring targets (para. 29). 29. Program Monitoring and Evaluation. The Technical Secretariat would be responsible for ensuring that project results and impacts are monitored throughout the life of the project. At negotiations, agreement was reached that the Bank would received the project performance monitoring indicators by the end of January. These were received and reviewed by the Bank and have been incorporated in Annex 12. They will also be included in the Operational Manual (para 31-i). At negotiations, agreement was reached that the Technical Secretariat would enlist the assistance of independent consultants that would meet during the Mid-Term Review and by project to review progress in biodiversity assessments, individual sub-projects, and in the overall program and to draw lessons learned (para. 31-j). Terms of reference for this review would be sent to the Bank for comment and approval. In addition, each sub-project would set specific, objective performance indicators and would periodically provide data on fulfillment of performance indicators. PROBIO's consultants specializing in biodiversity and conservation would visit sub-project sites annually to review sub-project implementation, and to make suggestions on how to improve project performance. 30. Mid-Term Review. At negotiations, agreement was reached that the Technical Secretariat of PRONABIO and the Bank would conduct a Mid-Term Review at the end of the third year to evaluate the project's implementation arrangements and its on-the-ground effectiveness in implementing sub- projects (para. 31-k). 15 Project I: Agreements Reached 31. At negotiations, the Bank and Government agreed that: a) the request for proposals (editais) would be submitted to the Bank for review and approval before being submitted to the Coordinating Commission and issued (para. 20 (b)(ii)); b) the technical reviewers' recommendation on the eligibility of sub-projects and the selection of the corresponding implementing entity would be sent to the Bank for review and approval before it is approved by the Coordinating Commission (para. 20 (b)(ii); c) project implementation would be ruled by the Operational Manual (para. 20 (b)(ii)), d) the overall matching contributions by implementing entities would be at least 25% of total sub- project costs, and would be required in the request for proposals (para. 21); e) all procurement would be carried out in accordance with Bank procedures (para. 23); f) the Special Account and all project accounts would be subject to an annual audit by independent auditors acceptable to the Bank. The terms of reference for the auditors would include, inter alia, provision of a Management Letter, a separate opinion on the use of the Special Account, and SOEs for the project accounts and Special Accounts. Copies of the auditor's report would be sent to the Bank within six months of the end of each fiscal year (para. 27); g) the Technical Secretariat of PRONABIO would prepare Annual Operating Plans that would be submitted to the Bank for approval by December 15 of the previous year (para. 28); h) the Technical Secretariat would submit to the Bank bi-annual progress reports tracking physical and financial performance targets by March 31 and September 30 of each year (para. 28); i) the Bank would received the project performance monitoring indicators by the end of January. These were received and reviewed by the Bank and have been incorporated in Annex 12. They will also be included in the Operational Manual (para. 29); j) the Technical Secretariat would enlist the assistance of independent consultants that would meet during the Mid-Term Review and by project completion to review progress in biodiversity assessments, individual sub-projects, and in the overall program and to draw lessons learned (para. 29); and k) the Technical Secretariat of PRONABIO and the Bank would conduct a Mid-Term Review at the end of the third year to evaluate the project-s implementation arrangements and its on-the-ground effectiveness in implementating sub-projects. (para. 30). 16 32. Conditions of grant effectiveness are: a) the final version of the Operational Manual would be approved by the Bank (para. 20); b) the Technical Secretariat of PRONABIO would be operational to the satisfaction of the Bank (para. 22); c) the contract between MMA and CNPq would be signed (para. 22); d) the first-year Annual Operating Plan would be approved by the Bank (para. 28); and e) the contracts with implementing entities for First-Round Sub-projects and for the Biodiversity Information Network would be signed (para. 20). 17 PROJECT II: THE BRAZILIAN BIODIVERSITY FUND (FUNBIO) Project II: Objective 33. The main objective of Project II is to provide long-term and sustainable support for conservation and sustainable use of biological diversity in Brazil. This goal would be pursued by supporting the establishment and development of a Brazilian Biodiversity Fund (FUNBIO) within the Getfilio Vargas Foundation that would administer a long-term grants program to promote conservation and sustainable use of biodiversity in Brazil. Project II: Description 34. During project preparation, the Brazilian Government and the Bank examined all the options available to create a trust fund in Brazil. The option to create a trust fund abroad was not pursued due to difficulties such as taxation and/or investment restrictions. The option of using an existing Government fund such as the FNMA was discarded due to the perception that the funds belong to the government and are therefore fungible with other government revenue, possibly making some donors (especially the private sector) hesitant to contribute. The lack of specific legislation in Brazil for creating a trust fund, a mechanism used successfully in several other GEF projects, and the need for a flexible administrative structure that would operate independently, transparently, and sustainably justified the use of a private non-profit foundation under the Brazilian civil code. The proposed foundation would administer a fund in an off-shore investment account, and administer a long-term program to promote the conservation and sustainable use of biodiversity in Brazil. 35. Following a series of extensive consultations (both formal and informal) among Government representatives, members of the scientific sector, NGOs, and private sector representatives, a foundation profile and terms of reference were developed. According to the profile, the foundation chosen to administer the fund would ultimately be expected to serve as an active, independent, sustainable and innovative catalyst for the conservation and sustainable use of biological diversity in Brazil. The foundation would function as a (i) grant maker; (ii) fundraiser; (iii) manager; and (iv) catalyst for public-private cooperation. The foundation should also be characterized by financial and administrative transparency; the avoidance of conflicts of interest; a clear mission; the ability to manage a fund in the form of a 15-year sinking fund; clear criteria for the selection of projects; and the ability to monitor project impact on biodiversity conservation. In April 1995, MMA established a Steering Committee with members from the NGO, academic, business, and government sectors to select the foundation that would administer the fund. The Steering Committee found two options acceptable. One option involved the creation of a new foundation, and the other option would be to use an existing foundation, the Getilio Vargas Foundation (FGV). The Environment Minister decided on the option to create an independent fund, the Brazilian Biodiversity Fund (FUNBIO) housed in the Getilio Vargas Foundation. A Bank post-appraisal mission evaluated FGV and the internal regulations for FUNBIO and found this arrangement satisfactory. 36. The internal regulations of FUNBIO and the membership of its Board of Directors have been approved by the Bank (see Annexes 8-B and 8-C). FUNBIO was established by the Getilio Vargas Foundation on September 28, 1995, and the first meeting of the FUNBIO Board took place on October 18 9, 1995. The President and Vice-President of the Board were selected during the first meeting of the Board. Project II: Components 37. This project would have two major components: (a) Strengthening and Operational Support of FUNBIO (22% of total project costs), including operational costs, development of a cost-recovery and fund-raising program, and special studies to strengthen FUNBIO (e.g., of incentives to involve the private sector in biodiversity protection). (b) Grants Program (78% of total project costs) that would finance FUNBIO sub-projects responding to priorities that take into account the results of biome-level assessment workshops under Project I, national government policies in biodiversity protection, and international commitments, such as the Convention on Biological Diversity, Agenda 21, CIDES and PRONABIO policies, and actions recommended by other policy units and studies. Sub- projects would be selected on a competitive basis according to established criteria. The nature of sub-projects would include the following four broad areas: (i) Biodiversity conservation: activities that support long-term biodiversity conservation management initiatives; (ii) Sustainable use of Biodiversity: activities that build synergies and strengthen inter-relationship between biodiversity conservation and sustainable use and development practices in main productive sectors of the economy; (iii) Policy Analysis: analytical studies for policies and incentives to support biodiversity conservation and sustainable use; and (iv) Applied research and technology development: research to support increased knowledge and technology * development in biodiversity conservation and sustainable. Eligible entities would include: (i) state and municipal businesses and public agencies; (ii) private businesses, either for-profit (with certain restrictions) or non-profit; (iii) NGOs; (iv) research institutions; and (v) consortia of the above. The size of individual grants would average US$250,000 per year (excluding other matching sources outside FUNBIO). The detailed procedures to call, select, contract, and monitor the sub-projects would be spelled out in FUNBIO's Operational Manual (see paras. 42-43). Project II: Costs and Financing 38. Project activities would be financed by a GEF Trust Fund Grant (US$20 million) and funds raised by FUNBIO (US$5 million) that would be deposited into a sinking fund organized for a 15-year horizon and managed by an internationally qualified asset manager in accordance with established selection criteria. These figures represent the minimum required by the Bank. Additional funds would be sought to help the fund grow. After Grant Effectiveness, the GEF Trust Fund would deposit an initial amount equivalent to US$10 million into the sinking fund account. The additional GEF Trust Fund deposits into the fund would be triggered by donations to the fund raised by FUNBIO at a ratio of two (GEF Trust Fund) to one (non-GEF Trust Fund). The overall program budget revenues and costs are presented in Schedule A-2, Project II. In addition to these estimated costs, the sinking fund is expected to generate an approximate net investment of US$9.5 million (see Annex 9), which would be made available to the program. Sub-project implementing entities would also contribute financially to 19 the costs of sub-projects. At negotiations, agreement was reached that the overall matching contributions by implementing entities under FUNBIO's grants program would be at least 25% and would be required in the request for proposals (para. 53-a). The matching contribution requirements by sub-project proponents would depend on the size of the grant and on whether the entity is public or private. The details of the mechanism, type and size of contributions will be spelled out in the Operational Manual. Project II: Implementation, Organization, and Management 39. The project would be implemented by: (i) FUNBIO, established by the Getdlio Vargas Foundation and assisted by an Asset Manager (para. 46); and (ii) the implementing entities designated to carry out approved sub-projects. 40. FUNBIO Board of Directors. The governing board of FUNBIO would consist of about 16 individuals informally representing the interests of: FGV (2); the public sector (2 from MMA); private non-profit organizations (4); private for-profit enterprises (4); and academic institutions (4). The Board members would be individuals outstanding in fields relevant to the objectives of FUNBIO. Consideration regarding geographic and gender representation have been taken into account, although primary emphasis has been placed upon the capacity of the individuals to contribute significantly to the objectives of FUNBIO. The Board was selected by MMA and FGV after consultation with the different sectors represented (NGOs, academic, business) and its membership is satisfactory to the Bank (see Annex 8-C). The Board would be autonomously responsible for overall management and direction of FUNBIO, including: setting policy; establishing goals and priorities; selecting the President and Vice-President; selecting the Executive Director; approving the Operational Manual; selecting an asset manager; making investment decisions; approving calls for proposals for funding; approving sub-projects to be financed; and monitoring sub-project implementation (Annex 8-B). Advisors of recognized expertise forming Technical Committees would advise the Board, on an ad hoc basis, on the suitability of sub-projects from the perspective of biodiversity conservation and sustainable use. During the inaugural meeting of FUNBIO's Board, on October 9, 1995, the Board appointed Roberto Bornhausen as President and Gustavo Fonseca as Vice-President of the Board. The Board also created four working groups to finalize the last requirements before effectiveness: (1) develop procedures to select the Executive Director; (2) review the report on the asset managers; (3) assess independent firms to do the auditing; and (4) prepare the draft Operational Manual. In order to ensure full coordination between FUNBIO and PROBIO (Project I), an agreement (protocolo de entendimento) would be signed between FGV and MMA. 41. Administration. The day-to-day administration of FUNBIO would be entrusted to an Executive Director and a small operating unit. Given the importance of the Executive Director's role, it is vital that the selection process be well-advertised and openly competitive. Lessons learned from previous similar projects show that basic prerequisites for successful executive performance include: a clear job description approved by the Board, a position widely and strategically advertised, a small search committee from the Board to carry out the interview process and a final selection to be made by the Board. The process for selecting the Executive Director and job description have been agreed and would be spelled out in the Operational Manual. Prior to effectiveness, the Executive Director would be hired and FUNBIO would be fully operational (para. 55-a). A program assistant specializing in fund-raising would be contracted and remunerated at least partially on a performance basis. Administrative costs would be held to an average of about 15-20%, depending upon accounting 20 procedures for program and overhead costs. This value is generally in line with other similar GEF projects and internationally accepted practice. Th,- percentage would also decline as additional funds are raised. This is expected, but no estimated values are included in the project cost analysis. FUNBIO would contract an internationally qualified asset manager to administer funds efficiently (see para. 46). Commissions and fees paid to the asset manager would be in accordance with standard practice (e.g., 1-1.5%), and would be paid out of the fund's investment proceeds (see Annex 9). 42. Criteria for Grants. FUNBIO would issue calls for proposals, as defined by the results of the biome-level workshops, and open to a wide range of institutions. At negotiations, agreement was reached that the text of any call for proposals would be submitted to the Bank for review and approval before it is issued (para. 53-b). The broad programming area would cover activities supporting the conservation and sustainable use of biodiversity (see para. 37 (b)). Sub-projects would be evaluated by technical reviewers according to selection criteria summarized in Annex 11. FUNBIO would carry out the technical evaluation of PROBIO proposals for funding (para. 20 b-ii). Different criteria would apply to public and private non-profit versus private for-profit sector sub-projects. At negotiations, agreement was reached that, if FUNBIO decides to carry out a sub-loan program for private businesses, the guidelines included in Annex 11 (Attachment 1) would be followed. In addition, a detailed plan for such endeavor and procedures would be submitted to the Bank for approval (para. 53- c). Guidelines to evaluate the environmental impact and social assessments of the sub-projects will also be applied. These guidelines should ensure that sub-projects will (i) follow good environmental practices, (ii) properly address any sensitive social issues, and (iii) mobilize matching funding from grant recipients. Grants would only be provided for sub-projects which demonstrate clearly defined environmental and public benefits. The Board of Directors would make the final decision on proposal funding. At negotiations, agreement was reached that, for the first set of approved sub-projects, the Bank will review the eligibility of sub-projects before these are submitted to the technical review (para. 53-d). The detailed programming areas and selection criteria, matching contributions from implementing entities and procedures for the grants program would be spelled out in the Operational Manual. Once approved by the Board, FGV and the implementing entities would sign an implementing agreement. At negotiations, agreement was reached that a model implementing agreement would be reviewed and approved by the Bank before the funds are disbursed to any implementing entity (para. 53-e). 43. Operational Manual. An Operational Manual for the project would lay out all the operational, financial and administrative rules and procedures for FUNBIO. The content of the Operational Manual has been discussed in previous missions and several Trust Fund Manuals from other similar projects have been shared to facilitate its preparation. At negotiations, agreement was reached that project implementation would be ruled by the Operational Manual (para. 53-f). Prior to effectiveness, the final version of the Operational Manual would be approved by the Bank (para. 55-b). The final version of the Operational Manual would be consistent with FUNBIO's internal regulations and address at least the following issues: (a) FUNBIO's objectives; (b) organizational structure (including operational procedures of the Board, profile of main positions, process to select Executive Director and other staff); (c) funding sources (including mechanisms to attract private sector participation, planned fund- raising activities); (d) detailed spending and investment rules, including acceptable levels of risk for investments, limits on capital invasion, mechanisms for re-investment of unspent income (e.g., in years with high investment performance), and mechanisms for incorporating and managing additional grants and assets provided by sources other than the GEF Trust Fund; (e) operating procedures for making grants, including how to define priorities and invite proposals, eligibility and selection criteria 21 (differentiating among non-profit and for-profit grant recipients), level of counterpart contributions from grant recipients, procedures to evaluate proposals (technical reviewers), guidelines to ensure that sub-projects will follow good environmental practices and properly address any sensitive social issue: (f) guidelines for setting administrative costs of FUNBIO, and for financing fund-raising programs and other FUNBIO activities; (g) financial management arrangements, including procurement and disbursement guidelines, guidelines for contracting an asset manager, detailed investment guidelines for the asset manager, auditing, and financial recording and reporting; and (h) monitoring and evaluation of FUNBIO performance (see Annex 12). 44. Procurement Arrangements. A Brazilian Biodiversity Fund would be established and the proceeds of the GEF Trust Fund would be applied over a 15-year period, as shown in Schedule A-2 Project . The selection of the Fund asset manager would be carried out in accordance with the August 1981 Guidelines for the Use of Consultants by World Bank Borrowers and by the World Bank as Executing Agency. Only the interest and a portion of the capital of the fund would be used (estimated US$2.5 million per year with a limit of US$3 million out the principal of the GEF Trust Fund Grant) to finance sub-project contracts and recurrent costs of FUNBIO that would be endowed with the sinking fund. Financial management fees (1-1.5% of capital) would also be used to pay the asset manager for services. Consequently, given the unique nature of this project, the standard procurement arrangements may not be meaningfully applied since the amounts of each expenditure cannot be predicted beforehand. 45. Procurement concerns would involve: (i) expenditures of about US$500,000 per year to FUNBIO for salaries, maintenance, materials, minor equipment, travel expenses, and consultant services; and (ii) expenditures of US$500,000 per year (maximum) for individual sub-project contracts throughout Brazil. These expenditures would involve minor equipment, materials, travel expenses, and consultant services. Purchases would be dispersed in time and space over the period of the project (three to five years) and would be implemented by different environmental agencies (such as universities, institutes, and NGOs). For these reasons, packaging of procurement across sub-projects would be difficult. Also, because of the dispersed nature of expenditures under Project II, it is estimated that there would be no international competitive bidding. Most purchases would be expected to be made in accordance with shopping procedures acceptable to the Bank. In order to ensure that Bank procedures are followed, FUNBIO would prepare for Bank review a specific procurement program in the context of its annual operating plan, based on the guidelines described in Schedule B, Project II. 46. Asset Manager. The funds deposited in the Brazilian Biodiversity Fund for investment (from the GEF Trust Fund and other sources) would be managed by an off-shore asset manager. Terms of reference and selection criteria to choose the asset manager have been agreed between Bank, FGV and MMA (Annex 9, Attachment 1). A financial consultant selected by FGV and appointed by the Bank is developing a long list of potential candidates for asset managers. FGV and FUNBIO's Board representatives will invite a short list of firms, evaluate proposals and select the asset manager. As a condition of Bank Board approval, the asset manager selection was satisfactory to the Bank (para. 54- a). Funds from the GEF Trust Fund would be managed by the selected asset manager in accordance with investment objectives and guidelines defined by FUNBIO's Board of Directors and specified in the contract between FGV and the asset manager, which is subject to Bank approval (Annex 9). Between negotiations and effectiveness, the Bank would review and approve the draft contract between 22 FGV and the asset manager, as well as the detailed investment guidelines for the asset manager. As a condition of Bank Board approval, detailed investment guidelines for the asset manager were approved by the Bank (para. 54-b). Prior to effectiveness, FGV would sign a contract with the asset manager satisfactory to the Bank (para. 55-c). 47. Disbursements: The GEF Trust Fund grant would be disbursed in several tranches, as indicated in Schedule B-2, Project II. The Bank would deposit an initial amount equivalent to US$9.7 million into the asset manager's account after FGV signs a contract with the asset manager satisfactory to the Bank, and after the Grant Agreement with FGV becomes effective. For retroactive expenditures and for the first three months of operational expenditures of FUNBIO (after the effectiveness date) another initial deposit of US$300,000 would also be disbursed into an operation account in a commercial bank acceptable to the Bank. Additional deposits into the fund would be triggered by demonstrated donations to FUNBIO in the ratio of two (GEF Trust Fund) to one (other sources) (US$5 million). The funds could be raised in tranches, US$250,000 at a time, each tranche triggering a new release of funds from GEF Trust Fund until all GEF funding is committed. Contracts with donors and bank statements showing deposits from these donations to FUNBIO's asset manager account would serve as means of verification. To ensure adequate capital preservation and reasonable earnings of the GEF Trust Fund proceeds, a specific rule limiting overall annual fund expenditures and capital invasion would be kept. At negotiations, agreement was reached that the limit on capital invasion would be US$3 million equivalent per year out of the proceeds of the GEF Trust Fund Grant (para. 53-h). Although the sinking fund would be operational for at least 15-year with the US$20 million from the GEF Trust Fund proceeds and with the US$5 million required from FUNBIO's fund raising efforts, the ultimate goal of the fund would be to grow and continue beyond this time frame and this amount. The 15 years time frame was adopted to ensure that an adequate amount of funds to operate FUNBIO and run a grants program would be available every year (US$2.5 to 3 million). It is expected that aside from the required US$5 million in cash (see above), FUNBIO would seek additional resources (not linked to GEF Trust Fund disbursements) for its own operations and for support of biodiversity sub-projects, through donations from national and international corporations, foundations, possible in-kind donations and licensing or royalty agreements, agencies, and bilateral donors. It is expected that the fund would grow through fund-raising activities, and last well beyond the 15-year horizon. FUNBIO's Board of Directors would determine the best mechanism to raise contributions, including matching funds from approved sub-project implementing entities. 48. Auditing. At neeotiations, agreement was reached that independent auditors acceptable to the Bank would be contracted to carry out annual external audits of FGV and FUNBIO's accounts and activities in accordance with generally accepted accounting principles. The audit report for FGV and FUNBIO would provide a separate opinion regarding its project accounts, SOEs, and financial statements, as well as a management report analyzing overall financial management, control, and effectiveness. The audit report for the asset manager would be similar, but would not include an opinion regarding SOEs and project accounts. Within six months following the close of each fiscal year, the results of financial audits would be made available to FUNBIO's Board of Directors, founders, donors, and members, as well as the Government and the Bank (para. 53-i). At negotiations, agreement was reached that FUNBIO would use the services of Price Waterhouse for purposes of FUNBIO's auditing. 23 49. Annual Operating Plans and Progress Reports. At negotiations, agreement was reached that the Executive Director of FUNBIO would prepare Annual Operating Plans (POA) to be submitted to the Bank for approval by November 15 of the year before (para. 53-j). The Annual Operating Plans would include a statement of specific objectives, a description of the activities, expected outputs, monitorable indicators, detailed estimated budgets and procurement plans. The Executive Director of FUNBIO would track FUNBIO's activities, including administration of the fund and sub-project information provided by the grant recipients and independent evaluations. At negotiations, agreement was reached that the Executive Director would submit quarterly progress reports to the Bank, tracking physical and financial performance targets, by March 31 and September 30 of each year (para. 53-k). Agreement was also reached that the first report (due in March 31) would consist of an interim analysis of implementation progress while the second one (due in September 30) full analysis of progress. A model report would be sent by the Bank to FUNBIO before the first report is due. 50. Monitoring and Evaluation. At negotiations, agreement was reached that the Bank would received the project performance monitoring indicators by the end of January. These were received and reviewed by the Bank and have been incorporated in Annex 12. They will also be included in the Operational Manual (para. 53-1). At negotiations, agreement was reached that FUNBIO and its program would be subject to two outside evaluations to assess implementation progress. Independent consultants would be enlisted in consultation with PROBIO for the Mid-Term Review (36th month) and by project completion (fifth year) to review the progress of FUNBIO's performance, the grants program, and individual sub-projects (para. 53-m). This evaluation would be carried out by the same independent consultants and at the same time as PROBIO's evaluation (see para. 29). 51. Proiect Supervision. Given the open-ended nature of the proposed project, and the practical difficulty of continuing supervision for 15 years (the lifetime of the fund), it is expected that supervision would take place for five years. The decision concerning the termination or extension of supervision beyond five years would be based on the Bank's examination of project performance, specifically, by evaluating whether the project has met its objectives. The Bank would carry out supervision of the project twice a year. 52. Mid-Term Review. At negotiations, agreement was reached that the Executive Director of FUNBIO, MMA, and the Bank would conduct a Mid-Term Review at the end of the third year to assess the project's implementation arrangements, its on-the-ground effectiveness in implementing sub- projects, and the performance of the asset manager (para. 53-n). This review would serve three functions: (i) fine-tune the project and determine any needed modifications; (ii) evaluate investment performance; and (iii) serve as the launching point for the concerted fund-raising effort to increase FUNBIO's capital. Project II: Agreements Reached 53. At negotiations: The Bank, FGV and FUNBIO agreed that: a) the overall matching contributions by implementing entities under FUNBIO's grants program would be at least 25% and would be required in the request for proposals (para. 38); 24 b) the text of any call for proposals would be submitted to the Bank for review and approval before it is issued (para 42); c) if FUNBIO decides to carry out a sub-loan program for private businesses, the guidelines included in Annex 11 (Attachment 1) would be followed and a detailed plan and procedures would be submitted to the Bank for approval before any invitation for proposals for sub-projects which include subloans is issued (para. 42); d) for the first set of approved sub-projects, the Bank will review the eligibility of sub- projects before these are submitted to the technical review (para.42); e) a model implementing agreement would be reviewed and approved by the Bank before the funds are disbursed to any implementing entity Para. 42); f) project implementation would be ruled by the Operational Manual (para. 43); g) all procurement would be carried out in accordance with Bank procedures (para. 44.); h) the limit on the use of the principal of the GEF Trust Fund Grant would be US$3 million equivalent per year (para. 47); i) independent auditors acceptable to the Bank would be contracted to carry out annual external audits of FGV and FUNBIO's accounts and activities in accordance with generally accepted accounting principles. The audit report for FGV and FUNBIO would provide a separate opinion regarding its project accounts, SOEs, and financial statements, as well as a management report analyzing overall financial management, control, and effectiveness. The audit report for the asset manager would be similar, but would not include an opinion regarding SOEs and project accounts. Within six months following the close of each fiscal year, the results of financial audits would be made available to FUNBIO's Board of Directors, founders, donors, and members, as well as the Government and the Bank (para. 48); j) the Executive Director of FUNBIO would prepare Annual Operating Plans (POA) to be submitted to the Bank for approval by November 15 of the previous year (para. 49); k) the Executive Director would submit quarterly progress reports to the Bank, tracking physical and financial performance targets, by March 31 and September 30 of each year (para. 49); 1) the Bank would received the project performance monitoring indicators by the end of January. These were received and reviewed by the Bank and have been incorporated in Annex 12. They will also be included in the Operational Manual (para. 50); m) FUNBIO and its program would be subject to two outside evaluations to assess implementation progress. Independent consultants would be enlisted in consultation with 25 PROBIO for the Mid-Term Review and by project completion to review progress in FUNBIO's performance, the grants program, and individual sub-projects (para. 50); and n) The Executive Director of FUNBIO, MMA, and the Bank would conduct a Mid-Term Review at the end of the third year to assess the project's implementation arrangements, its on-the-ground effectiveness in implementing sub-projects, and the performance of the asset manager (para. 52). 54. Prior to Bank Board approval: the following conditions have been met: a) the asset manager selection was found satisfactory to the Bank (para. 46); and b) the detailed investment guidelines for the asset manager were approved by the Bank (para. 46). 55. Prior to effectiveness: a) FUNBIO would be operational to the satisfaction of the Bank, with the Executive Director selected by FUNBIO's Board and hired (para. 41). b) the final version of the Operational Manual would be approved by the Bank (para. 43); and c) a contract with the asset manager satisfactory to the Bank would be signed (para. 46). 26 Schedule A PROJECT I BRAZIL GLOBAL ENVIRONMENT FACILITY NATIONAL BIODIVERSITY PROJECT (PROBIO) Estimated Project Costs by Components US $ '000 equivalent % % PROJECT I Foreign Base COMPONENTS Local Foreign Total Exchange Cost A. PRIORITY SETTING & DISSEMINATION 1. Biome-level Workshops Amazonia 252 28 280 10 Cerrado & Pantanal 234 26 260 10 Caatinga 270 30 300 10 Atlantic Forest 234 26 260 10 Continental Shelf 270 30 300 10 Sub-total 1,260 140 1,400 2. National Biodiversity Network 1 574 826 1,400 59 3. Other Diagnostic and Dissemination Activities 687 121 808 15 Sub-total 2,621 1,087 3,609 18 B. MODEL BIODIVERSITY SUB-PROJECTS 1. First-round Sub-projects I a. Genetic Resources 558 42 600 7 b. Local Sub-projects i. Cerrado Gallery Forests 776 24 800 3 ii. Atlantic Forest Guaraquecaba 630 78 708 11 iii. Atlantic Forest Linhares & Soreta 637 63 700 9 iv. Caatinga Brejos de Altitude 635 95 730 13 Sub-total 3,236 302 3,538 18 2. Second-round Sub-projects 5,740 3,826 9,566 40 48 Sub-total 8,976 4,128 13,104 C. PROJECT ADMINISTRATION (MMA & CNPq) 1,853 - 1,853 0 9 PROJECT I - BASELINE COSTS 13,350 5,216 18,566 Contingencies * 1,205 230 1,435 16 7 PROJECT I -TOTAL 14,556 5,445 20,000 100 * Physical and price contingencies were averaged to 7% 1- Budget limits, including contingencies, were agreed with each beneficiary 27 Schedule A BRAZIL PROJECT II GLOBAL ENVIRONMENT FACILITY BRAZILIAN BIODIVERSITY FUND PROJECT (FUNBIO) PROJECT BUDGET US$ 000 equivalent For Years 1-15 REVENUES GEF Sinking Fund (1) 34,507 TOTAL 34,507 COMPONENT COSTS % Foreign Sub Grants 26,837 30% 78% Administration (2) 7,670 20% 22% TOTAL 34,507 28% 100% DETAILED ADMINISTRATION COSTS Years (3) Years Total Annual 1-5 6-15 Average Salaries 1,615 3,400 5,015 340 Executive Director 380 800 1.180 80 Program Assistant 190 400 590 40 Secretary 119 250 369 25 Technical Assistant 119 250 369 25 Benefits (4) 808 1,700 2,508 170 Office Expenses 95 200 295 20 Printing and services 24 50 74 5 Equipment/Supplies 71 150 221 15 Travel and Representation 190 400 590 40 Other Services 380 800 1,180 80 FGV services (5) 238 500 738 50 Consultants 143 300 443 30 Contingencies 190 400 590 40 TOTAL ADMINISTRATION 2,470 5,200 7,670 520 1. Generated by GEF Trust Fund and made available to the program for sub-project activities. See investment analysis for details( Annex 9). 2. As a percentage of total costs, this is generally in line with other GEF Trust Fund projects. Also, the percentage will decline as additional private contributions are raised in years 6-15. 3. Assumes that costs in Year 1 of the project are 75 percent of annual average costs. 4. Benefits are currently under negotiation. 5. FGV will provide full office support to the project. 28 Schedule B PROJECT I BRAZIL GLOBAL ENVIRONMENT FACILITY NATIONAL BIODIVERSITY PROJECT (PROBIO) Summary of Procurement Arrangements (US$ '000) equivalent TOTAL EXPENDITURE CATEGORY ICB 1 NCB 2 Other Amount Workshops, Part A-1 and A-3 --Goods 531 3 531 (531) (531) -- Consuffing Services 1,671 4 1,671 (565) (565) -- Recurrent Costs 138 5 138 (41) (41) National Biodiversity Network, Part A-2 --Civil Works 62 3 62 (62) (62) -- Goods 572 1 572 (572) (572) -- Consulting Services 652 4 652 (190) (190) - Recurrent Costs 114 6 114 (29) (29) First Round Sub-Project Contracts -- Civil Works 152 3 152 (152) (152) -Goods 840 3 840 (840) (840) -- Consuffing Services 1,738 4 1,738 (520) (520) - Recurrent Costs 808 6 808 (202) (202) Second Round Sub-Project Contracts* -- Civil Works 220 3 220 (220) (220) - Goods 3,405 3 3,405 (3,405) (3,405) - Consuing Services 5,920 4 5,920 (2,224) (2,224) -- Recurrent costs 1,324 6 1,324 (448) (448) Project Administration -- Consuting Services 1,576 4 1,576 (0) (0) - Recurrent Costs 277 5 277 (0) (0) TOTAL ESTIMATED COSTS 572 19,428 20,000 (572) (9,428) (10,000) 1. ICB = International Competitive Bidding 2. NCB - National Competitive Bidding 3. Shopping procedures 4. Procurement of consultants and training services 5. Direct purchase (Numbers in parenthesis reflect GEF Trust Fund financing) * Recurrent costs include small materials and supplies and travel expenses 29 Schedule B PROJECT II BRAZIL GLOBAL ENVIRONMENT FACILITY BRAZILIAN BIODIVERSITY FUND PROJECT (FUNBIO) SUMMARY OF PROCUREMENT ARRANGEMENTS Small Civil Works under the project would be geographically scattered. Since the largest contract is not expected to exceed US$300,000, it is unlikely that foreign contractors would be interested. Small works would be procured under lump-sum fixed-price contracts awarded on the basis of quotations obtained from three qualified contractors in response to a written invitation. Contracts for goods are not expected to exceed US$100,000 per project beneficiary, and would be awarded through national or international shopping. If expenditures exceed US$300,000 for small works and US$100,000 for goods, contracts would be procured on the basis of National Competitive Bidding procedures acceptable to the Bank. Recurrent costs needed in the execution of sub-projects would include materials and supplies and travel expenses, and would be procured through direct purchase. Procurement under sub-projects which are implemented by private sector entities would be undertaken in accordance with established commercial practices in the sector, provided that these are acceptable to the Bank. The threshold contract values indicated above for purchases of civil works and goods, respectively, would also apply to procurement using commercial practices. The selection and appointment of consultants would follow the August 1981 Guidelines for the Use of Consultants by World Bank Borrowers and by the World Bank as Executing Agency. Contracts with consulting firms valued at US$50,000 or more would be subject to prior Bank review (terms of reference, letter of invitation, recommendation for award and proposed contract). For individual consultants, prior Bank review (terms of reference, qualifications and conditions of employment) would be required for contracts valued at US$30,000 or more. Below these limits, the Bank's prior review would apply only to the terms of reference. The use of standard documentation for the employment of consultants (letters of invitation and forms of contract) would be agreed with the Bank. Ex-post review would be carried out by Bank supervision missions, at which time Bank staff would review in detail the procurement procedures used. 30 Schedule B-1 Project I BRAZIL GLOBAL ENVIRONMENT FACILITY NATIONAL BIODIVERSITY PROJECT (PROBIO) Summary of Disbursement Arrangements Category Amount % of Expenditures from financed by the Bank GEF Trust Fund (US$000) Part Al and A3 (see Schedule A-I) goods 502 100% services 470 30% recurrent costs 33 25% Part A2 - Information Network works 62 100% goods 572 100% services 190 30% recurrent costs 29 25% Part 81- First Round Sub-projects works 152 100% goods 840 100% services 520 30% recurrent costs 202 25% Part 82 - Second Round Sub-projects works 190 100% goods 2,932 100% services 1,580 30% recurrent costs 292 25% Unallocated 1,435 100% TOTAL 10.000 * recurrent costs include materials and supplies and travel expenses 31 Schedule B-1 Project II BRAZIL GLOBAL ENVIRONMENT FACILITY BRAZILIAN BIODIVERSITY FUND PROJECT (FUNBIO) Summary of Disbursement Arrangements US$10.0 million would be disbursed to the sinking fund upon effectiveness of the Grant Agreement and additional disbursements to the sinking fund would be made in the ratio of 2 (GEF Trust Fund) to 1 (private matching contributions). The funds would be raised by FUNBIO in trenches, US$250,000 at a time, each tranche triggering a new release of funds from the GEF Trust Fund. Contracts with donors and bank statements showing deposits from these donations to FUNBIO's asset manager account would serve as means of verification, as well as any other means acceptable to the Bank. Estimated GEF Trust Fund Disbursement Schedule (US$000) World Bank Fiscal Year 1996 1997 1998 1999 2000 Annual 10,000 2,500 2,500 2,500 2,500 Cumulative 10,000 12,500 15,000 17,500 20,000 32 Schedule B-2 Project I BRAZIL GLOBAL ENVIRONMENT FACILITY NATIONAL BIODIVERSITY PROJECT (PROBIO) Summary of Disbursement Arrangements GEF Trust Fund Disbursement Schedule (US$'000) World Bank Fiscal Year 1996 1997 1998 1999 2000 2001 Annual 1,150 3,100 2,150 1,200 1,200 1,200 Cumulative 1,150 4,250 6,400 7,600 8,800 10,000 External Funds Disbursement Schedule (US$000) World Bank Fiscal Year 1996 1997 1998 1999 2000 2001 Annual 2,300 6,200 4,300 2,400 2,400 2,400 Cumulative 2,300 8,500 12,800 15,200 17,600 20,000 * Includes funds from the GEF Trust Fund and Government counterpart 33 Schedule C PROJECT I &II BRAZIL GLOBAL ENVIRONMENT FACILITY PROBIO AND FUNBIO TIMETABLE OF KEY PROCESSING EVENTS Time taken to prepare: 50 months (January 1991 to March 1995) Prepared by: Ministry of the Environment, Water Resources and the Legal Amazon Non-Governmental Organizations, academic institutions and business companies. World Bank: Claudia Sobrevila & Daniel Gross (LA1ER) Peer reviewers: Susan Shen (EA1AE) & Michele de Nevers (LA2EU) Thomas Lovejoy (Smithsonian Institution) & Jorge Sober6n, Comision Nacional para el Conocimiento y Uso de la Biodiversidad (CONABIO) First Bank Mission: March 1991 Appraisal Mission: March 1995 (Post-appraisal mission, July 1995) Date of Negotiations: December 1995 Planned Date of Effectiveness: April 1996 Supervision Plan: Project I Missions are planned for 4-6 month intervals to supervise progress. Three years after effectiveness, a Mid-Term Review is planned, during which project implementation and monitoring and evaluation procedures will be assessed and changes introduced as necessary. Technical expertise: biodiversity specialist, ecologist, community development specialist, and natural resources economist. Project II Given the open-ended nature of the proposed project, and the practical difficulty of continuing supervision for 15 years (the lifetime of the fund), it is expected that supervision would take place for five years. The decision concerning the termination or extension of supervision beyond five years would be based on the Bank's examination of project performance; specifically, by evaluating whether the project has met its objectives. The project would be supervised twice a year. Technical expertise: institutional development specialist, biodiversity and environmental specialists, social scientist, and financial analyst. PART Il: TECHNICAL ANNEXES Annex 1 Project I BRAZIL GLOBAL ENVIRONMENT FACILITY PROJECT I BIOME-LEVEL ASSESSMENTS 34 Annex 1-A Project I BRAZIL GLOBAL ENVIRONMENT FACILITY PROJECT I TERMS OF REFERENCE FOR BIOME-LEVEL ASSESSMENTS Background Priority Setting and Integration of Biodiversity Conservation Efforts. Brazil's enormous size and diversity of biomes create special difficulties for the conservation and management of biological diversity. National institutions are not well equipped to allocate resources effectively to the different biomes. Each is unique and has its particular needs. There is a lack of scientific information to determine the location and condition of the rare and threatened species and habitats, and to set priorities for investments in their conservation. Despite five and a half decades of investments in protected areas systems, despite substantial ex situ conservation efforts, and despite recent adoption of policies and creation of a national environment fund for NGOs and municipalities (FNMA), native habitats and biodiversity continue to be at risk. In part, this is due to the difficulty for national and state institutions to analyze the effectiveness of the various conservation efforts to date, learn lessons from them, build on those that have been successful, and add new practices such as sustainable use and tourism to the traditional array of protected area management techniques. There is no single program that would fit the needs of all the different biomes. Although several recent workshops and studies have made progress in this effort, there is as yet no ongoing process or entity responsible for identifying urgent actions, responding to the needs of the distinct regions, allocating resources in such a way as to meet the most urgent needs of each region, or monitoring the effectiveness of various types of investments. Workshop Objectives 1. Establish georeferenced regional data bases containing information on the distribution of species and ecosystems, land use patterns, and socioeconomic trends. 2. Consolidate information on regional biodiversity, including endemic, threatened, and vulnerable species. 3. Prepare analysis of current and potential efforts for the conservation and sustainable use of biological resources. 4. Identify the causes of habitat degradation, including economic trends and government policies, and their respective influence on biodiversity. 5. Identify priority activities for the conservation of biodiversity in each Brazilian biome. 6. Identify opportunities and options for the sustainable use of biological resources. 7. Evaluate the costs of biodiversity protection. 8. Disseminate the findings of the workshops. 35 Annex 1-A Project I Workshop Procedures Each biome-level workshop would be divided into three phases: (1) preparation, (ii) workshop event and dissemination, and (iii) follow-up. Budgets would be prepared discriminating each of the three phases. 1 Preparation (a) Produce base maps digitalized in the GIS format compatible with Arc-Info for the incorporation of biome data, as described in (b) below. (b) At the beginning of each meeting, workshop participants would receive maps on a scale of 1:2,000,000 containing the following information: i. Political divisions, hydrographic features, and geographic irregularities. ii. Remaining natural areas of the biome, based on satellite images. iii. Conservation Units (direct and indirect use) and other protected areas, both public (federal, state, local) and private, iv. Demographic characteristics and socioeconomic indicators. v. Land use patterns and other human pressure on the areas. vi. Location and status of collections of key plant and animal groups. vii. Distribution of biological/ecological communities and environmental units. viii.Biogeographic provinces. ix. Distribution of rare, endemic, and migratory species. x. Species diversity. xi. Distribution of traditionally cultivated species and related wild species. (c) Definition of key themes would be determined by participants at the beginning of each workshop, covering the following areas: i. Characterization, quantification, and critical evaluation of available information. ii. Evaluation of the representativeness of the conservation effort. iii. Evaluation of biodiversity knowledge and utilization. iv. Socioeconomic trends, public policies, and human pressures influencing biodiversity. v. Economic factors influencing the use and degradation of biodiversity. 2. Participants (a) Members of the scientific community. (b) Members of the conservationist and environmentalist community. (c) Producers and users of biological resources. (d) Government agencies (federal, state, and local). 36 Annex 1-A Project I 3. Workshop Organization (a) Location. (b) Duration. (c) Definition of workshop agenda, thematic groups by the Organizing Commission. (d) Organization of participants into thematic groups according to specialty. (e) Scheduling of group and plenary sessions. 4. Workshop, Results (a) Priority Actions i. Define priorities and necessary activities for biodiversity conservation. ii. The analysis and recommendations of the workshops should be framed not only in terms of species distribution but also in terms of habitat and ecosystem protection. iii. Produce maps indicating priority areas for conservation and inventories. iv. Define institutional responsibilities. v. Design program to follow up on workshop proposals. (b) Characterization of principal biotic communities of Brazilian biomes i. Current, indexed bibliography. ii. Maps of biogeographic provinces or regions. iii. Analysis of abundance of key indicator species in Brazilian biomes. iv. Analysis of flora, fauna, and ecological communities. v. Assessment of vulnerable and threatened species, and degree of risk. (c) Analysis of socioeconomic trends i. Potential for the utilization of natural areas in Brazilian biomes and their economic importance for human communities. ii. Social impact of the conservation of Brazilian biomes. iii. Access of communities and social sectors to the biological resources of Brazilian biomes. iv. Public policies affecting biodiversity (transportation, energy, production infrastructure, land use, taxes, etc.). v. Economic and social trends influencing biodiversity use and degradation. (d) Definition of conservation needs i. Map of priority areas for biological conservation. ii. Determination of biological importance of sub-regions or fragments. iii. Map of areas in urgent need of conservation. iv. Prerequisite social conditions for public support of biodiversity conservation. v. Representativeness of existing Conservation Units, vi. Current and future costs of operating a network of Brazilian biome reserves. vii. Identification of public policies supporting biodiversity conservation. viii. Compatibility with recommendations of National Biodiversity strategy being prepared by Government. 37 Annex 1-A Project I (e) Dissemination of workshop findings through print and electronic media. Organizers and participants would make regular use of the Biodiversity Information Network to disseminate bibliographical and other sources, and create user groups. (f) Report on the logistics, difficulties, omissions, and achievements of the workshop. Minimum Criteria for the Selection of Coordinating Institutions 1 . Each workshop would be coordinated by institutions which, alone or together, would meet the following qualifications: (a) Non-governmental organizations (NGOs) must be legally established and qualified to coordinate and carry out a workshop. (b) Workshop coordinators must have demonstrated technical capacity in the following areas: i. Conservation and monitoring of biodiversity. ii. Biological inventories and data organization, management, and processing. iii. Workshop design and implementation. iv. Production of data bases and GIS. v. Analysis of economic and political strategies related to biodiversity. (c) Proposed methodologies for the organization and implementation of workshops must be feasible and compatible with the stated objectives. (d) At least 50% of the personnel needed to develop and implement the workshop must be provided by the potential coordinating institution(s) (not including research preceding the workshop). (e) Potential workshop coordinators must have obtained past financing from outside sources for the development of projects. (f) Coordinating institutions must demonstrate competence to supervise the follow-up of priority actions defined by the workshop. 2. Three to six organizations will be invited to participate as workshop coordinators of any one workshop. Invited coordinating institutions may work in consortia with other organizations which may or may not appear on the list of invited institutions. 38 Annex 1-A Project I Selection Procedures 1. Preparation of a list of institutions to be invited to apply for workshop coordination. Confirmation of the list by the Bank. A letter of invitation, satisfactory to the Bank, would be sent to organizations with demonstrated capacity to fulfill the role of workshop coordinator for the respective biomes. Letters of invitation may also be sent to those institutions recommended by the target institutions. If a consortium of workshop coordinators is to be organized, the proposal submitted by the invited institutions should designate which organization would serve as head of the consortium. The letter of invitation would conain the components and the geographic limits to be covered by each workshop, and a proposed standard budget. 2. Project proposals for the design and implementation of workshops must be submitted to the Ministry of the Environment, Water Resources, and the Legal Amazon within 60 days from the date of the letter of invitation. (a) The project proposal must consist of: i. Complete identification and description of the social objectives of the organization submitting the proposal. ii. Staff description, including description of positions within the organization and the nature of the work performed by each staff member. iii. Resumes of personnel who would participate in the project, describing the nature, duration and frequency of their past contributions to the organization; education; employment history; publications; and relevant experience. iv. List of projects completed by the organization, including workshops, seminars, consultancies, studies, and environmental impact assessments. v. List of publications by the organization related to the theme of the workshop. vi. Description of the methodology to be used in the design and implementation of the workshop. vii. Timetable of preparation, implementation, and follow-up activities. viii.Information about the financing already obtained for activities related to the theme of the workshop. ix. Proposed budget with notes explaining any significant differences from budgets proposed in letters of invitation. x. If the candidate institutions intend to work as a consortium, proposed terms of agreement governing the administration and function of the consortium. (b) A team composed of qualified MMA officials and noted experts who are not directly or indirectly involved in the proposed projects would evaluate the proposal, including the 39 Annex 1-A Project I technical, methodological and budgetary aspects. The evaluation by the MMA will be completed within 30 days of the deadline for submitting the proposal. (c) The choice of coordinating institutions would be made according to the selection criteria described above and consideration of the proposed methodology, technical competence (see (a), above) and proposed budget. Considerations of quality will prevail in the selection process; in case of a tie, the institution(s) with the lowest proposed costs will be chosen. (d) Final selection of coordinating institutions will be submitted for Bank approval. Implementation of the Workshop 1. A Draft Agreement between MMA and coordinating institutions shall be prepared according to World Bank procedures and Instrugho Normativa No. 2 of April 19, 1993, No. 6 of October 13, 1993 of the Secretariat of the National Treasury, and Law No. 8,694 of August 12, 1993. Approval of financial plans, which may include indirect costs to cover small administrative expenses for accounting, rent, communications, fuel, transportation, electricity, and water, to the extent that these costs are not included in direct costs. The budget would be subject to negotiation after the choice of the coordinating institution. 2. Each stage of the workshop would be implemented by the professionals cited in the proposal. Any substitution must be previously approved by MMA. The contracting of consultants would follow Bank guidelines. Detailed Activities and Costs of One Model Assessment for the Cerrado (detailed costs are included in Annex 7) Component Activities and Sub-Activities Inputs Outputs Impact Indicators 1. Preparation of information base for workshop US$140,000 1. Establish coordinating Identification and Appropriate range of institutional committee, set timetable and recruitment of key participants are involved workplan for preparation, participants; final workshop, dissemination phases. schedule and TORs for Key issues are defined preparation work Participant groups established Information flow though BIN 2. Prepare background working Working papers and papers on flora, fauna, land use, identification of key vegetation, etc. issues to be addressed at workshop 3. Compile bibliographies, create Base maps, bibliography, base maps, establish electronic lists of information forum through the Biodiversity sources, institutions. Information Network (BIN). databases (GIS), identification of specialist groups II. Workshop, integration of results, definition of priorities, dissemination of findings, formation of specialist groups USS100,000 1. Distribute background Detailed agenda for material, working papers, base workshop defined and maps to key participants agreed 2. Hold workshop, integrate Issues and priorities Quality and acceptance of conclusions findings, develop maps, draft established priority action plan Definition of concrete priority action plan Establishment of electronic forum > Compatibility and linkage with C National Biodiversity Strategy tz Component Activities and Sub-Activities Inputs Outputs Impact Indicators 3. Disseminate findings, produce Publications and other final synthesis, establish products, draft priority specialist group networks action plan through the BIN 4. Define follow-up program Composition and TORs for coordinating group defined Ill. Follow-up: establish permanent working group to revise periodically priorities, develop priority action plan, and define monitoring program, US$20,000 1. Establish coordinating group Annual reports, periodic Progress toward priority goals to track implementation of updates priority action plan, revise and Measurable results related to update priorities as necessary biodiversity conservation 2. Monitor status of Regular reporting on implementation status of priority targets and actions 3. Propose projects to address New projects identified 0 priorities and proposed ___ 42 Annex 1-C Project I Implementation Timetable of Biome-Level Assessments Cost ($)1.4M Phases I, II & III Four-month intervals (project years 1 & 2) $ (x 1000) Biome-Level Priority Assessments 1 2 3 4 5 6 260 1. Cerrado & Pantanal 140 * Preparation * * * 100 * Workshop * 20 * Follow-up * * * 260 2. Atlantic Forest 140 * Preparation * * * 100 * Workshop * 20 * Follow-up * * * 300 3. Caatinga 180 * Preparation * * * * 100 * Workshop * 20 * Follow-up * * 300 4. Continental Shelf 180 * Preparation * * * 100 * Workshop * 20 * Follow-up * * 280 5. Amazonia 160 * Preparation * * * 100 * Workshop * 20 * Follow-up * * National Biodiversity Strategy * Phase 1: Preparation includes background studies, bibliographic review, database development and base map preparation. Phase II: Workshop includes workshop, integration of results and dissemination of findings. Phase III: Follow-up includes proposal development for priority actions and definition of monitoring program. 2 National Biodiversity Strategy preparation process will proceed in conjunction with the biome-level analysis and incorporate findings of the biome-level workshops. 43 Annex 2 Project I BRAZIL GLOBAL ENVIRONMENT FACILITY PLAN FOR A NATIONAL BIODIVERSITY STRATEGY The Ministry of the Environment, Water Resources and the Legal Amazon (MMA) has plans for developing a National Biodiversity Strategy in compliance with the United Nations Convention on Biological Diversity, to which Brazil is a signatory. The Ministry laid out the following tentative plans for development of a strategy. Funding for the entire sequence outlined below is available to the MMA, and consultants have been identified to carry out the first steps as outlined below. Under the terms of the Convention on Biological Diversity (Article 6), Brazil would develop a National Biodiversity Strategy. The exercise would begin with a review of each chapter in the Convention on Biological Diversity to (a) assess the status of each element of the convention in Brazil in terms of which agencies are responsible, what structures exist for complying with agreements, what resources are allocated, what gaps exist, what are the potential obstacles and/or opportunities; and (b) propose priorities, guidelines and instruments for action. The review would consider genetic resources in terms of their economic and non-economic benefits; ways of returning benefits from biodiversity to communities that are dependent upon them or serve as their custodians; and evaluate conservation efforts and human resource development needs. This review would be circulated as a draft report for comment and review as shown below and finally would be presented to the Interministerial Commission on Sustainable Development (CIDES) for review and formal approval as a National Strategy. The final disposition of the report would depend on the CIDES and the Executive Branch. The final report would not make specific allocations of resources to biodiversity but would set goals and identify areas where action is needed, and set guidelines for policy development in different sectors including sectors such as agriculture, mining, transport, land-use and zoning activities, industry, health and sanitation, and urban development. Specific action plans would be developed in each Ministry or Government agency following the fon-nal adoption of the strategy. According to the timetable outlined below, development of the proposed strategy would probably precede most of the biome-level workshops. It was agreed that the results of the National Biodiversity Strategy exercise would be taken into account in the preparation, discussions, and recommendations of these workshops. 44 Annex 2 Project I Steps Towards Development of a National Biodiversity Strategy Step Description Product Estimated Completion Date 1 Review all Chapters of the Convention on Draft for limited internal July 1996 Biological Diversity assessing the status of circulation. each article in Brazil and proposing possible initiatives for compliance as needed. 2 Compile comments; revise working Report: "Basis for a National November 1996 document. Biodiversity Strategy" 3 Hold a National Workshop on Biodiversity Workshop Results: revised December 1996 Strategy report. 4 Hold broad national consultations involving Compiled results of April 1997 government agencies, academic and consultation as a Proposed scientific institutions, private sector, National Biodiversity Strategy NGOs, etc. providing input and comments to the Workshop Report. 5 Present Report to Interministerial Resolution of CIDES or Late 1997 Commission on Sustainable Development Presidential Decree (CIDES) 45 Annex 3 Project I BRAZIL GLOBAL ENVIRONMENT FACILITY PROJECT I SUMMARY OF THE BIODIVERSITY INFORMATION NETWORK - BRAZIL The Andrd Tosello Foundation for Tropical Research and Technology (FTPT) has already established leadership in developing Brazil's biodiversity information systems and access to such systems worldwide. The Foundation has been a leader in several international forums sponsored by UNEP and the Brazilian Government on establishment of the international Biodiversity Information Network (BIN21). This mechanism for linking information relevant to biodiversity and making it widely available by electronic and other means to support the Convention on Biological Diversity and Agenda 21 is already functioning, and has its secretariat at FTPT. The Tropical Data Base node (Brazil) is maintained by FTPT. At present, there are 14 international nodes in the BIN21 network. FTPT has already secured contracts with research and other institutions agreeing to make data available to the system, and its exceptionally qualified technical staff have addressed issues of data format, access, etc. This network is already in use through the FTPT Internet gateway. Because of the currently limited access to the Internet in Brazil by non-government and non-academic users, FTPT also provides access through a dial-up service called Phoenix, available by subscription (at nominal rates) to service users who do not have Internet access. Plans for the workshops proposed under the Brazilian Biodiversity Project have already been posted to the network. FTPT has clearly established itself as the leader in electronic dissemination of biodiversity information. To select another institution to implement this component would unnecessarily duplicate a system already under construction and well positioned to succeed. The overall goal of this component is to establish a nationwide computer network to facilitate information exchange and communications among institutions, organizations, and individuals within Government, academic, NGO, and private sectors involved in activities related to biodiversity. The project design follows the principle of a distributed database network with participating institutions responsible for design, maintenance, and updating of their own databases, and the role of the foundation being principally that of providing an efficient user interface, providing training to users and participants, stimulating the formation and providing services to specialist user groups, and promoting utilization of the network by the broadest relevant constituency. Specific objectives include: (i) establishing a coordination structure for development of the Biodiversity Information Network in Brazil, which will provide a forum for developing framework agreements for information sharing, defining hardware and software needs for network compatibility and use, and identifying training needs for users; (ii) upgrading equipment, infrastructure, and staff skills of the foundation and cooperating centers to provide data access services to the BIN and development of technical applications; (iii) stimulating participation by a broad range of users by providing training, organizing seminars and workshops, and establishing a cost-effective electronic forum for special interest user groups. The BIN would explicitly provide services designed to promote efficient information flow among the components of this project, such as establishing special interest user groups in connection with the biome workshops, preparing workshop proceedings, and other 46 Annex 3 Project I relevant documents available to BIN users, and providing information services to the network as a whole. The appraisal team reviewed the proposed schedule of objectives, activities and tasks; the training, seminars, and workshop calendar; the budget; and technical equipment requirements with project staff. In general, the budgets are well justified, although the detailed lists of specific equipment items need to be revised, and specifications and costs should be updated in the Annual Operating Plan (POA) to reflect changes in available technology. Terms of reference for personnel hired by the project should be developed and reviewed by MMA. MMA should also review the revised equipment list and approve plans for distribution of equipment between the Foundation and the cooperating centers. Annual Operating Plans would be submitted to the Bank for approval before effectiveness. 47 Annex 4 Project I BRAZIL GLOBAL ENVIRONMENT FACILITY PROJECT I SUMMARY OF THE FIRST-ROUND MODEL SUB-PROJECTS Conservation of Plant Genetic Resources This sub-project would serve the purpose of conserving plant genetic resources by developing and implementing a program for the sustainable management of selected wild plant species, chosen on the basis of their high conservation priority value and potential for sustainable economic use; and establishing an initiative for the conservation and economic development of these genetic resources. To this end, the sub-project will carry out the following activities: (i) determine, survey, and map the distribution of target species population within three selected existing reserves; (ii) characterize the current genetic diversity of selected species and determine basic features of population biology and reproduction ecology necessary for enhancing natural propagation and potential off-site cultivation; (iii) provide detailed recommendations and methodological guidelines to improve management and permit sustainable harvest of seed stock from within existing protected areas; and (iv) develop extension and training programs to promote off-site propagation of target species and on-site management. The three reserves include Rio Doce State Park in the state of Minas Gerais (Atlantic Forest); Brasilia National Park (cerrado); and Ferreira Penna Ecological Station in the a Caixuana National Forest (Amazon forest). They were chosen, in part, because they have adequate infrastructure and qualified personnel for the maintenance and management of on-site gene banks of the selected target species, and because they are representative of three of Brazil's main vegetation types. This sub-project would be executed by a team at the National Research Center for Genetic Resources and Biotechnology (CENARGEN), an affiliate of the Brazilian Agricultural Research Agency (EMBRAPA), and a leading organization for the conservation and development of genetic resources in Brazil. Conservation and Restoration of Biodiversity in Gallery Forests of the Cerrado This sub-project would focus on the conservation, restoration and boundary stabilization of natural and partially degraded gallery forests in the Federal District and adjacent regions of Minas Gerais and Goids States. The initial sites are near Paracatu, Minas Gerais. Gallery forests along the streams and watercourses cover about 5% (100,000 km ) of the 2 million kn2 large cerrado biome that harbors about half the vertebrate species of this biome. These forest remnants serve as refuges and corridors for vertebrate species which also occur in adjacent habitats. The project has three principal objectives: (1) To establish baseline knowledge for three focal areas of the biota, land use practices, land cover, socio-economic conditions, and identify principal impacts and factors affecting the gallery forest remnants and adjacent natural habitats; (2) To conduct applied research and pilot interventions for restoration and stabilization of gallery forests and adjacent natural habitats; and 48 Annex 4 Project I (3) To build public support and involve local communities and farmers in restoration and stabilization of gallery forest ecosystems. With the involvement of local residents in the design stage, this sub-project would develop practical methods for conservation and restoration which are compatible with the productive activities of local people. A minimum of 100 ha of degraded areas would be planted with native gallery forest species. A network of at least ten reference farms would be established. The sub-project would be implemented by a team representing the Agricultural Research Center of the Cerrado (CPAC) of EMBRAPA (coordination), the University of Brasilia, the Remote Sensing Center of IBAMA, and the Agricultural Colonization Company (CAMPO). Management of Conservation Units in the Guaraqueaba Region in Parani state This sub-project would contribute to the conservation of the largest Atlantic Forest remnant by improving management of conservation units in a relatively isolated 310,000-ha coastal area in eastern Parand state. The area includes important estuaries, islands, marshes, coastal plains, and mountainous areas which contain large remnants of the Atlantic forest biome characterized by high degrees of endemism and a high proportion of endangered species . At present, 40% of the area is protected in six conservation units, which is likely to be insufficient to sustain the ecosystem in the long run in the absence of integrated management of adjacent areas. The project implementation plan and budget are organized around three principal objectives: (1) Strengthening the technical capacity of local government, the university and NGOs for conservation and land use planning and management, including execution of a rapid ecological assessment, updating of management plans for existing protected areas, and establishment of an environmental information system; (2) Building public awareness of environmental issues and expanding community participation in pilot programs for environmentally compatible intensification of agriculture; and (3) Establishing an NGO-academic-government partnership for development and implementation of an integrated coastal zone management plan for the region. The project would be implemented by the Wildlife Protection Society (SPVS), Curitiba (coordination), the Federal University of Parand, IBAMA, and the Environmental Institute of Parani (IAP). A cooperative agreement outlining the roles, responsibilities, and obligations of the collaborating institutions will be negotiated and signed prior to project effectiveness. Conservation and Restoration of Atlantic Forest in Tablelands of Linhares, Espirito Santo This sub-project would develop a technical and scientific model for biodiversity conservation in important remnants of Atlantic forest in northern Espirito Santo. Activities would include: (i) assessment of the functions of biodiversity in ecosystem dynamics; (ii) dissemination of information through publications; (iii) environmental education; (iv) film production; (v) scientific workshops; and (vi) planting and reforestation. The activities would be carried out in the Linhares Forest Reserve, 49 Annex 4 Project I Espirito Santo State, which belongs to the Companhia Vale do Rio Doce (CVRD), the neighboring Sooretama Biological Reserve, which is under the management of IBAMA and the surrounding private properties. The total sub-project area is 50,000 ha. It would be implemented by a team of the Federal University of Rio de Janeiro (coordination), IBAMA, the University of Sio Paulo, EMBRAPA, and CVRD. Restoration and Management of the Natural Ecosystems of Brejos de Altitude in Pernambuco and Paraiba This sub-project would contribute to the conservation of the threatened ecosystems of the Eastern Escarpment (Borborema) in Pernambuco and Paraiba States. Brejos de altitude represent the most humid area in the semi-arid Northeast and have a unique fauna and flora. They represent the most threatened ecosystem in the Brazilian Northeast. Activities, inter alia, would consist of land and water use characterization, biological inventories, environmental education, and participatory development of land use zoning plans. The sub-project would conserve a pilot area of 52 km2 and deal more extensively with a 32,000 km2 area along the escarpment, which is located about 100 km west of the coastline. The project would be implemented by a team of the Federal Universities of Pernambuco (UFPE, coordination), Paraiba (UFPB), Rural Pernambuco (UFRPE) and the Northeast Ecology Society (SNE). 50 Annex 5 Project I BRAZIL GLOBAL ENVIRONMENT FACILITY PROJECT I PROJECT ADMINISTRATION Implementation of Project I would be under the authority of MMA through PRONABIO, the National Biodiversity Program, established by the Brazilian Government in 1994 to promote partnerships between the public and private sectors to support the conservation and sustainable uses of biodiversity. Its purposes are to develop policies; promote research, information networks, and international cooperation; assist in the standardization of instruments and methodologies; provide input to CIDES, the Interministerial Commission on Sustainable Development; support training and institutional strengthening; and support model projects on the conservation and sustainable use of biodiversity. The present project is PRONABIO's first project. Structure A Coordinating Commission manages PRONABIO, and would also be the highest decision- making body for this project. The Coordinating Commission's 12 members are appointed by the Government (by the respective Ministers, or by MMA) and chosen to represent the interests of different sectors of Brazilian society. Representatives are to be chosen from MMA (one, chair), Ministry of Foreign Affairs (one), Ministry of Science and Technology (one), Ministry of Agriculture and Agrarian Reform (one), Ministry of Health (one), Ministry of Planning (one), the academic community (two), environmental NGOs (two), and the private (business) sector (two), to be nominated by representative institutions and individuals of the respective sectors. Technical Secretariat. The Technical Secretariat would be a full-time body charged with project management and coordination, with administrative responsibility for carrying out the directives of the Coordinating Commission. The General Coordinator for Biodiversity (appointed by MMA) would be its Executive Secretary and Budget Officer. Professional staff would include financial, administrative, communication/information, and logistical managers, as well as various interns. MMA would provide staff for the Secretariat and the Chairman of the Board. The operating costs of the Secretariat would be covered by counterpart funds. The Technical Secretariat would be charged of supervision of biome-level assessments; the evaluation and integration of biome-level assessment and workshop results; the formulation of a draft Biodiversity Strategy; monitoring and supervision of sub- projects and workshops; and the dissemination of results for the whole project. CNPq. The Brazilian Government has recommended that the National Council for Scientific and Technological Development (CNPq), affiliated with the Ministry of Science and Technology, serve as the Administrative Agent. 51 Annex 5 Project I Operations (1) Responsibilities and Functions of the Coordinating Commission, Secretariat, FUNBIO and CNPq The Coordinating Commission's functions include: (i) discussion and approval of general guidelines for PRONABIO; (ii) approval of priority actions of PRONABIO and for PROBIO; (iii) approval of criteria and norms for acceptance and selection of workshops and proposals for sub- projects, including approval of calls for proposals that may be issued for PROBIO; (iv) approval of workshops and PROBIO's sub-projects selected by FUNBIO, except for pre-selected sub-projects of Project I; (v) approval of contractual instruments developed by the Technical Secretariat and CNPq; (vi) approval of annual programs and budget proposals furnished by the Secretariat; (vii) approval of PROBIO's and PRONABIO's annual implementation reports covering technical, physical, and financial aspects; (viii) review of independent financial and scientific audits; (ix) adjudication of contract disputes that may arise; and (x) analysis and approval of a logical framework of goals, indicators, and investments for each year period. The Technical Secretariat would be responsible for administration and coordination of the day to day work: (i) propose operating guidelines; (ii) propose priorities and actions, following the recommendations of biome-level workshops, of CIDES, and commitments assumed in treaties and conventions, such as the Convention on Biological Diversity and Agenda 21; (iii) prepare calls for proposals for sub-projects, in collaboration with CNPq; (iv) submit sub-project reports to the Coordinating Commission; (v) prepare and submit model contractual instruments; (vi) prepare and submit annual plans and budgets; (vii) prepare and submit annual financial and technical reports; (viii) prepare and submit a one year logical framework of goals, indicators, and activities; (ix) comment on and submit to the Coordinating Commission CNPq's independent audits; (x) recommend actions related to contractual disputes; (xi) keep the Coordinating Commission informed on implementation of the project, including problems that arise and suggested corrections; (xii) supervise sub-projects and assessments; (xiii) supervise the work of CNPq; (xiv) call meetings and provide technical assistance; (xv) promote stakeholder involvement in discussions of the project by various means, including publication of reports and an informative bulletin; (xvi) assist in the preparation of the National Biodiversity Strategy; (xvii) circulate information to the scientific and conservation communities; and (xviii) execute other administrative responsibilities. CNPq's responsibilities would be to: (i) work with the Technical Secretariat to prepare calls for proposals; (ii) contract approved sub-projects and monitor sub-project implementation; and (iii) contract independent audits. CNPq would prepare quarterly financial statements, prepare and sign contracts with sub-grantees, disburse funds, review statements of expenditure, maintain financial records, and have financial statements audited annually. Quarterly financial statements would include (a) contracted projects; (b) start-up and completion dates; (c) local and international costs incurred; (d) disbursements made; and (e) balances. Biannual reports would include information on (a) accomplishment of objectives, and (b) problems encountered. Legal agreements between MMA and CNPq would include (a) clear provisions for contracting and disbursing funds from CNPq to the beneficiary; (b) clear definition of CNPq's role in providing guidance to the beneficiaries regarding preparation of financial reports; (c) rights and procedures for canceling the agreement; (d) the right to impose penalties, when necessary; and (e) formula(s) to avoid inflation-related depreciation of funds. 52 Annex 5 Project I (2) Project Implementation The project would begin with assessments and workshops to identify needs and priorities in each of five biomes: the Cerrado, including the Pantanal and Campos Rupestres; the Cdainga and deciduous forests; the Atlantic Forest (including Araucaria forest and Campos); the Amazon; and islands and the continental shelf. Results and recommendations from these workshops would be submitted to the Coordinating Commission to guide the establishment of priorities. Following these priorities, calls would be issued for additional sub-project proposals. Members of local communities would be consulted during the preparation of terms of reference for calls for proposals and during the review of final reports. Each call for proposals would define funding priorities for the period. Once the calls have been approved by the Coordinating Commission and the Bank, FUNBIO will publicize them together with FUNBIO's calls. Efforts would be made to publicize the calls for proposals among potentially interested and capable groups, and to provide technical assistance and guidance to groups interested in applying for grants. FUNBIO would carry out the technical review of the proposal submitted. Upon receipt of proposals, FUNBIO would proceed with preliminary analysis, appointment of Evaluation Committees, gathering of any additional information and materials necessary, and submission of these to the Committees. The Committees would review proposals according to pre-defined criteria, and would make recommendations (not recommended, recommended with conditions, or recommended), to be determined by a simple majority of a quorum of their members. Rules of debate and consideration, and the format for presentation of recommendations, are spelled out in the Operational Manual of FUNBIO. The Technical Secretariat of PRONABIO would submit the recommendations provided by FUNBIO to the Coordinating Commission for final approval. Upon approval, the contracting and disbursement would be handled by CNPq. Individual workshops and sub-projects would be implemented by the institutions and organizations submitting successful proposals. They would be required to provide an appropriate counterpart contribution; use funds in strict accordance with contracts; provide agreed-upon reports and audits to CNPq; reimburse funds granted in case of non-compliance; and maintain accounts and records sufficient to establish compliance. The Technical Secretariat staff and consultants hired by them would visit sub-projects periodically to verify progress as reported in the progress reports and to assist in addressing problems which might arise during implementation. 53 Annex 6 Project I BRAZIL GLOBAL ENVIRONMENT FACILITY PROJECT I DRAFT GUIDELINES FOR THE OPERATIONAL MANUAL The general topics described below, as well as Annexes 11 and 12 will be an integral part of the Operational Manual that is currently under revision by the Bank. The final version of the Operational Manual will be approved by the Bank before effectiveness of the Grant Agreement is declared. The operational manual will address the following issues: 1) Objectives of PRONABIO, role of project; 2) Overall project description (including already approved activities and sub-projects); 3) Organizational structure, Coordinating Commission, composition of members and mechanism for selecting them, roles and responsibilities of the members of the Coordinating Commission, Technical Secretariat and key staff; operating procedures of the Commission, profile or terms of reference of staff positions; 4) Funding sources. The matching requirements for grants to be made under the second round should be detailed; 5) Operating procedures for awarding of grants, including: (a) Calls for Sub-Project Proposals would be issued by PRONABIO: procedures for setting priorities for sub- project thematic eligibility and calls for proposals; procedures to determine types and size of grant to be awarded; guidelines for budget preparation, including sample forms, permissible budget categories, matching from grant recipients; procedures for publication of requests for proposals; description of dissemination vehicles (including press, mailings, notification of professional and trade associations, and NGOs); (b) Sub-Project Selection and Approval: This step will be carried out by FUNBIO. Procedures should be compatible with FUNBIO's operating manual. Details should be provided on procedures for judging proposals, including selection of technical reviewers; criteria for evaluation; guidelines to indicate and mitigate any environmental impact of sub-projects; feedback provided to proposing organizations; notification of results of evaluation. Draft eligibility and selection criteria are included in Annex 11. 6) Financial management arrangements, including guidelines for contracting with and disbursing to grant beneficiaries; financial reporting; general guidelines for procurement of goods and services. For contracting and disbursement to sub-project beneficiaries, annexes could include, e.g., model contracts, statements of expenditure, and reporting forms. 54 Annex 6 Project I 7) Guidelines for monitoring and evaluation of sub-projects and lessons learned. Draft guidelines for a monitoring and evaluation program are included in Annex 12. 8) Other items: procedures for complaints, appeals, and reconsideration; guidelines for staff conduct and client relations, including discussions of conflict of interest, confidentiality, and disclosure of information. Additional Guidelines and Suggested Annexes to the Operational Manual 1) Terms of reference for key staff; 2) Guidelines for appointing members of the Coordinating Commission of PRONABIO 3) Guidelines for identifying, developing, submitting, and selecting sub-projects (e.g., model public procurement document and contract); 4) Guidelines for settlement of disputes/claims. BRAZIL GLOBAL ENVIRONMENT FACILITY PROJECT I DETAILED PROJECT COST TABLES FIRST APPROVED WORKSHOP (Part A-1) NATIONAL BIODIVERSITY NETWORK (Part A-2) FIRST-ROUND SUB-PROJECTS (Part B-1) PROJECT ADMINISTRATION (Part C) Other detailed tables are not available as they will be developed during project implementation. PART A-1 - BOOME LEVEL WORKSHOPS - CERRADO AND PANTANAL (US$ Thousand) Breakdown of Total IneL CCont. Local Expenditures by Financiere Total icluding Contingnls For. (ExcL Dui.. & GEF The Government of Brazil 19 198 19117 1iS IIS Total Exch. Tuas) Tas Total im 1IIS 1im 7 III 1~9l Total 1us 199m 111117 19m 199m Total L Invesmnt Coaf A. Techniedl A~aistance Con ~ri 274 3.1 3.2 - - 338 - 33.8 - 338 13.7 1.6 1.6 - - 169 137 16 16 169 NffnfiPer Difm 2.0 1.0 1.1 - - 4.2 4.2 - 4.2 1.0 0.5 05 - - 2.1 10 05 05 - 21 Tran~i 4.1 2.6 2.7 - - 9.4 9.4 - .4 2.0 13 13 - - 47 2.0 13 13 - - 47 Totalhwaent Coet 33.5 6.8 7.0 - 473 47.3 - 47.3 16.7 3.4 35 - 236 167 34 35 - 236 L Recurnt Cose A. ISrvices S~rie 145.6 6.8 7.0 - - 159.3 - 159.3 - 150.3 728 3.4 3.5 - - 797 72.8 34 35 - - 797 8. Per Dla. Per dem 1.4 0.5 0.5 - - 25 - 2.5 - 25 0.7 0.3 03 - - 12 07 03 03 - - 12 C. Tranepoftation ok me. 37.8 1.0 1.1 - - 39.9 - 39.9 - 39.9 18.9 05 05 - - 199 189 05 05 - 199 D. Supples pqw.etc. 10.2 0.4 0.4 - 11.0 11.0 110 5.1 0.2 0.2 - - . 5.1 0.2 02 - - 55 Tmeil R uet Comte 194.9 8.8 9.0 - - 2127 - 17 - 212.7 97.4 4.4 4.5 - - 10.4 97.4 4.4 45 - - 1064 Total 224 15.6 1.0 - 2600 - 2M0.0 - 2600 114.2 7.8 8.0 - - 130.0 114.2 78 80 - - 1300 LOCAL MATCHMUG CONTRBUTIONS BY MLEMNTING ENTITES TOTAL FUNATURA 31 Onaesd b ~ilman 30 F-A nc D 25 Ur~ddae ^ 32 87 O0 O' n2 PART A-2 - NATIONAL WODIVERSITY ETWORK (US$ Thousand) Fw ulw The Ter omdCrd Teds klig Cmulgncias For. (Eas Dims A UF Th. ÖsUni of lM MTSim T«d Eni T~ T~ Tat iffi I 1m7 Im Im Td im Im Ii i M im L biehaeCoob A. CILWOK 20.1 20.7 21.3 - - 62.1 36.5 25.6 - 62.1 10.0 10.3 10.7 - 31.1 10.0 10.3 10.7 - - 31.1 0. E¥ ~uen Cop~e 170.5 197.6 203.5 - 571.6 335.8 235.8 - 571.6 85.3 96.8 101.8 - 285.8 85.3 95.8 101.8 - - 285.8 C. T ~Id* Atane Cns~ 69.0 71.1 73.2 213.3 125.3 88.0 213.3 34.5 355 38.6 - - 106.7 34.5 35.5 36. - 106.7 N-, pO 7.1 7.3 7.5 - 2.0 12.9 9.1 - 22.0 3. 3.7 3.8 - 11.0 3.6 3.7 3.8 - 11.0 Aérfe.t. 5.1 5.2 5.4 - - 157 92 6.5 15.7 2.5 2.A 2.7 - - 7.8 2.5 2.6 2.7 - 7.8 ~destTecimedAt s _31_._ 251.0 147.5 103.5 - 2510 40. 41S 43.1 - 1-255 40.8 418 43 - 125.5 Td~offim-C~ 271.8 301.9 311.0 - - M84.7 519.8 364.9 - 8 4.7 135.9 151.0 155.5 - 442.4 135.9 1510 155.5 - 4424 (1 IL n m-u,r C~sts A. omnc.s 8ern 129.9 133.8 1378 - - 401.8 2359 165.6 - 401 6 85.0 e.9 89 - - 200.8 85.0 86.98 9 - - 2008 8. Per Di.,m Per d~m 7.1 71 7.4 - 21.6 12.7 8.9 - 21.6 3.6 3.6 3.7 - 108 3.6 3.6 37 - - 10.8 C. Trafpf t~o Ar br. ec. 183 188 205 - 57.5 338 23.7 - 575 9.1 94 102 - - 288 9.1 94 102 - - 268 0. a5eIs P~pr.u l. 11.2 11.5 11.8 -- 34.5 20.3 14.2 - 34.5 56 5.7 5.9 - - 173 5.6 5.7 5.9 - - 17.3 T~RamurrnCods 16.5 1712 177.6 - - 5153 302.7 212.5 515.3 83.2 85 8 - 8 257.6 83.2 85. 88 - 257.6 Tald 4383 473.2 488.6 - 1.4000 822.5 5775 - 1.400.0 219.1 2366 244.3 - 700.0 2191 236.6 244.3 - - 700.0 LOCAL MATCHING CONTRIBUTIONS BY BPLUMENTING ENTITIES TOTAL Fudaco Ande Toeo rm 105 MEL~ 50 nfa*ucr 200 Misy p p omd 210 565 <D CDD 57 Annex 7 Project I page 3 of 8 J lO C- .. . . le i W3I I ftCW Ø ~ 0 PART B-1 - FIRST ROM SUB-PROCTS - LOCAL PROJECT b-I Cerrado G y Fress (US$ Thousuld) 6~~ et T~I bC Cnt Local E hEy EPEnubl T~ kw~ Comwengn For. (fL Dfs E Tho Gnm~ e d lus 1 1997 1 Total Ech TaKs) Ta ToWa 1= 1= 1I 1 IM T~ 16 1 lim 11W 69 im T~hi L Invmnet Coath A Civil Work~ Wrs - 9.2 - - - 92 12 8.0 - 92 - 4.6 - - - 45 - 4.6 - - - 4.6 - 4.0 - - - 40 05 3.5 - 40 - 20 0- - - 20 SubsEMCiviWorks - 132 - - 132 18 11.4 - 132 - 6.6 - - - 66 - 6.6 - - - 6.6 E. Equipm~nt 80 400 - - 480 65 415 - 480 40 200 - - - 240 40 20.0 - - - 240 ve~uls 279 28.7 296 - - 83 116 74.6 - 8.3 14.0 14.4 148 - - 43.1 140 144 14.8 - - 43.1 LabEqpm 21 2066 34.4 - - 2431 328 2103 243.1 11 1033 172 - - 1215 1.1 103.3 17.2 - - 121.5 Suhte~ Equpnl 380 2753 540 - 377 3 509 3264 - 377.3 190 1376 320 - - 18.7 19.0 137.6 32.0 - 185.7 C. Technical AGul@nce Car r 56 303 312 - - 671 91 581 - 671 28 152 156 - - 33.6 28 152 156 - - 33.6 NotomsEPD 10 42 43 - - 95 13 82 - 9.5 05 21 22 - - 48 0.5 21 22 - - 4.8 O Ari~rc.r- 06 73 4.3 - - 122 17 106 - 122 0.3 3.7 22 - - 6.1 0.3 3.7 22 - - 61 S.Mk~ Te~cicA.@~ce 7.2 418 39.8 - - 669 120 76. - 659 3.6 201 199 - - 44.4 3.6 20.9 199 - - 44.4 ToWIkm nCs 452 3303 103.8 - - 4794 547 414.7 - 479A 26 165.2 519 - - 239.7 26 1652 51.9 - - 239.7 a Recuren Co~t A Services Sn 80 802 824 - - 1706 230 1476 - 1706 40 401 412 - - 85.3 40 401 412 - - 853 B. Per Dihan Pr~ 61 230 23.7 - - 528 71 457 - 528 30 115 118 - - 264 30 115 118 - - 264 C. Traneporttion Ar mr. etc 12 167 86 - - 26 6 36 230 - 26.6 06 84 43 - - 133 0.6 84 43 - 13.3 D. Supprs~ Ppe,eec. 88 332 246 - - 707 95 612 - 707 4.4 16.6 143 - - 35.4 4.4 16.6 143 - - 35.4 ToalRcurunCo. 242 1532 1433 - - 3206 433 277.4 - 326 11 76.6 71.7 - - 103 121 76.6 717 - - 160.3 Toma 694 483.5 2472 - - 8El1 1079 e2.1 - amtt 34.7 241.7 123.6 - - 4000 34.7 241.7 123.6 - - 4~00 LOCAL MATCING CONTRIUTIONS BY PLEENTIG EITNES TOTAL EMA p,r- - 480 ur*v~sme db 6rss parsore 621 Prmm 133 1234 0 o 00 -4a 59 Annex 7 Project I page 5 of 8 i eli -T I.gli ;t PART B-1 FIRST ROUND SUB-PROJECTS - LOCAL PROJECT b-Ill Atlantic Forest Linhares & Soreta (USS Thousand) Brakdown of Totala Incl. Cont. Locel Expenditures by Financlers Totala including Contingencies For. (ExcL Dutles & GEF The Govemment of Brazil 196 1 1967 1 199 Total Exch. Tax*e) Taxes Total 195 1996 1967 196 1999 Total 1965 1996 1907 1960 1996 Total L Invemtmnt Costa A. Civil Works kwla~ns 3.3 - - - - 3.3 04 30 - 33 17 - - - - 17 17 - - - - 17 E. Equipnmnt Comfpu~rs 64 - - - - 6.4 07 5.7 - 64 32 - - - - 32 32 - - - - 32 Vehides 391 - - - - 391 44 34.6 - 39.1 195 - - - - 195 195 - - - - 195 Lab Eq~nhr6 72.6 6.11 1o - - 825 94 731 - 82.5 36.3 40 09 - - 41.3 363 40 09 - - 413 Subtotnl Equipmnt 118.0 8.0 1.9 - - 1260 145 1135 - 1280 590 40 09 - - 640 590 40 09 - - 640 Total Invetsmnt Cots 1214 80 19 - - 131.3 149 116.4 - 1313 607 40 09 - - 657 607 40 09 - - 657 IL Recurrant Costa A Service. Servces 2045 1725 700 - - 447.0 508 3962 - 4470 1023 862 350 - - 2235 1023 862 350 - - 2235 B. Par Dinm Perdei 16.7 13.1 9.7 - - 395 45 350 - 39.5 8.4 65 48 - - 198 84 65 48 - 198 C. Tranapotlton Akr a elt 153 137 8.5 - - 375 43 33.3 - 375 77 68 43 - - 188 77 68 43 - - 188 D. Supplim Paper,et 23.1 14.0 7.6 - - 44.8 51 397 - 44.6 11.6 70 38 - - 22.4 116 70 38 - - 224 Total RecurrentCota 2597 213.3 958 - - 568.8 64.6 04.2 - 568.8 129.9 106.6 47.9 - - 2844 1299 1066 479 - - 2844 Tota 3811 2213 977 - - 7002 7956206 - 7002 1906 1107 489 - - 3501 1906 1107 489 - - 3501 LOCAL MATCHING CONTRIBUTIONS BY IMPLEMENTING ENTTES TOTAL U rad Federal de Rio de Jnr perasnnl 625 erpm=nt 88 EMPRAPA perm 414 ff m~ 228 Unh~rsida de Seao Pao perrue 210 mails 545 Resr~ FIora de Urt s Ira u 350 Caräe NatoS de la R Sden-hque DUn 77 2737 0 00 PART B-1 FIRST ROUND SUB-PROJECTS - LOCAL PROJECT b-lv Caatinga Brejos de Altitude (US$ Thousand) Breakdown of Totale Incl. Cont Local Exponditures by Financier Total inciluding Contingences For. (Excl. Dutes l GEF The Govrnment of Brazil 1995 1996 1997 1999 1999 Total Exch. Taxe) Taxe9 Total 1998 1MB 1997 1999 1999 Total 1995 199 1997 1999 1999 Total L Invetment Co~te A. C1vi Worke insatOnM 592 34 - 626 18 609 - 626 296 1 7 - - 31 3 296 1 7 - - - 313 B. Equipntl Co1pler 176 - - - - 176 05 171 - 176 68 - - 88 88 - - - 88 Votades 335 - - - 335 09 326 - 335 167 - - - 167 167 - - 167 Lab Eqilpre 722 - - 722 20 70.2 - 722 361 · - - - 361 361 - - 36 1 Subtolal Equipmnt 1233 - - - - 1233 35 1199 - 1233 617 - - - - 617 61 7 - - - 61 7 Total %nvestent Cot 1B2 5 34 - - - 1659 52 1807 - 165.9 912 1 7 - - - 930 912 17 - - 930 IL lecurrent Cost A Service, 0' Serce 1015 930 754 - - 2699 76 2624 - 2699 508 465 377 - - 1350 508 465 37 7 - 1350 B. Transportation A fare, eit 152 105 108 - 364 10 354 - 364 76 52 54 - 182 76 5 2 5 4 182 C. Per Dim Per clem 508 376 388 - - 1272 36 1236 - 1272 254 188 194 - - 636 254 188 194 - 636 D. Supplis POpr øk 548 335 237 - 1120 31 1088 - 112.0 274 167 118 - - 560 274 167 118 - 560 Total Racurrent Coas 2223 1746 1486 - 5455 153 5302 - 5455 111 1 673 743 - - 272 7 111 87 3 743 - - 2727 Total 4048 1780 1486 - · 7314 205 7109 7314 2024 890 743 - 3657 2024 890 74 3 - - 365 7 LOCAL MATCHING CONTRIBUTIONS BY IMPLEMENTING ENTITIES TOTAL Urwrsidade Federl de Pentuco pers~nel 734 mateab 85 Ur4vrsdade Rural de Poefu~c PrsM 338 meatials 65 Unrvrsdad Fdel de Prlbe Prn 338 møterials 65 Sodledade Nordna de Ec~ ø personnel 79 mal 12 < 1716 f 62 Annex 7 Project 1 page 8 of 8 L ~ ~ 000 *1Z - Il 00 O~00~ 0 i i ~kL 1 1 -4~ - - flo ~ 0 010 oI.-I. ~I1CI~ ,9.n oJ-~4~ ~ -l- 11 1 z - - o b 1'Ej iii ~I~li z -~ r r1: o 010 1 ~ z 0.Io -~ i ~ ~ -r 1- - 0 ~I 3 ~ 0. 0 ~I; ;:~ 1 1- ff0 . d ~ O 悶 霎 卜叫 N & 目 卜叫 O 之 寫自 黃謀 參聖 !!i〕 悶悶Z 目目 聶閃 && 閑n 悶口 闌騙 ‘吋 呵」 州k 喜 勾 靈 目 卜叫 O 、•j 吧× 屋當 Oe nP r呼沐 悶oo 63 Annex 8-A Project 11 BRAZIL GLOBAL ENVIRONMENT FACILITY BIODIVERSITY PROJECTS DESCRIPTION OF THE GETULIO VARGAS FOUNDATION The Getfilio Vargas Foundation has historically provided technical assistance in the fields of economics and administration to a wide range of public and private entities. It was the first institution in Brazil to provide graduate training in public administration, economics and business; it was also a pioneer in the systematic collection and analysis of statistical data on the Brazilian economy. FGV has played a pivotal role in the development and formation of key Brazilian institutions, such as the Central Bank of Brazil and the Treasury Department. Many of its teachers and former students have occupied important positions during the last 30 years in both Government and private business. International exchange with universities in the United States and Europe is a well-established FGV practice, and more than half of all Brazilian publications in foreign economic journals are by members of its Graduate School of Economics. Because of its strong links to government, business, and the academic sector, FGV has been instrumental in the creation of effective partnerships among the various sectors. In 1990, for example, the FGV's Center for International Economics created the Committee for Private Sector Cooperation, with representatives from leading businesses in Brazil, to support the Center's research and the organization of public debates on the regional and national implications of international economic and political issues. Of key importance to the ultimate choice of the Getdlio Vargas Foundation to house FUNBIO has been its historically effective role as a respected, independent, and innovative catalyst for public-private sector cooperation in Brazil. 64 Annex 8-B Project II BRAZIL GLOBAL ENVIRONMENT FACILITY BIODIVERSITY PROJECTS INTERNAL REGULATIONS OF THE BRAZILIAN BIODIVERSITY FUND Chapter I. Designation and Characterization Art. 1 A Brazilian Biodiversity Fund (FUNBIO) is created under Article 8, No. XIII of the Getfilio Vargas Foundation (FGV) By-Laws with administrative, financial, and institutional autonomy, supported by two firms that shall be contracted by the FGV under competitive terms to: 1. Invest the funds initially provided by the GEF Trust Fund for FUNBIO and additional funds to be raised. II. Audit the investments and operational expenditures of FUNBIO. Section 1 Although FUNBIO is included within the administrative realm of FGV, it shall be operationally independent from FGV. Art. 2 FGV, in compensation for the use of its space and indirect administrative expenditures to support FUNBIO, shall utilize 6% from income generated by FUNBIO as defined in Art. 7. Art. 3 The administrative expenditures of FUNBIO shall be funded with resources from the Fund and shall not exceed 10% of its annual budget. Art. 4 The duration of FUNBIO shall be undetermined, and shall be terminated by initiative of the Board of Directors of FUNBIO, with a final decision from the Board of Directors of FGV. Section 1 In the event of the termination of FUNBIO, the activities funded by FUNBIO shall be finished and the contracts of personnel involved in the activities shall be ended. Section 2 Once FUNBIO is liquidated, the balance of funds, after expenditures described in the previous paragraph and the fulfillment of existing contractual obligations, shall be turned over to those entities whose objectives most closely match the objectives described in Art. 5 below, after consultation with the Board of Directors of FUNBIO. Chapter II. Objectives Art. 5 The objectives of FUNBIO shall be to finance programs and projects related to the conservation, sustainable use, information gathering and dissemination, technical exchange, and other activities supporting biodiversity in accordance with the Convention on Biological Diversity, PRONABIO, and directives of related government agencies. Specifically, FUNBIO shall: 65 Annex 8-B Project II I. Promote partnerships between the public and private sectors in the conservation and sustainable use of biodiversity, and in the just and equitable distribution of any benefits resulting therefrom; II. Coordinate fundraising with national and international, public and private entities. III. Contribute to the development of actions that support the conservation and sustainable use of biodiversity. IV. Select projects and sub-projects exclusively related to biodiversity and provide financial resources for their execution. V. Promote innovative projects, tests of models, and methodologies oriented to the conservation and sustainable use of biodiversity in a participative and multidisciplinary way. VI. Generate and disseminate information, prepare studies and assessments, and propose recommendations on priority actions for the conservation and sustainable use of biodiversity. VII. Implement programs on human resources training, environmental education, and development of research activities, as well as propose and implement policies and strategies in support of biodiversity. Chapter III. Assets and Income Art. 6 The assets of FUNBIO shall be constituted by: 1. Donations of goods or services by individuals, legal entities public or private, national or international, including those referred to in Art. 1 II. Goods and services from revenues from its assets. Art. 7 FUNBIO income shall be made up of: 1. Income generated from investments in-country or abroad. II. Donations from individuals or legal entities public or private, national or international for the operational expenses of FUNBIO. III. Payment for services rendered by FUNBIO in the course of meeting its objectives. Art. 8 Revenue from assets and income, when available, shall be invested in such a way as to maximize its return, following rules of prudence and specific directives approved by the Board of Directors of FUNBIO. Art. 9 Donations with associated obligation and which might bring onus made either directly to the Fund or for administrative expenses shall be approved by the Board of Directors of FUNBIO. 66 Annex 8-B Project II Chapter IV Administrative Structure Art. 10 FUNBIO's administrative structure shall be composed of the following: 1. Board of Directors. II. Executive Secretariat. Section 1 The members of the Board shall not, under any circumstances, receive compensation for their services as Board members and shall not participate in any way in the economic or financial performance of FUNBIO. Section 2 The expenditures of FUNBIO, including salaries and benefits of FUNBIO's personnel, third party contracts, and employee severance costs, shall be paid from FUNBIO's account. in accordance with Art. 3. Chapter V. Board of Directors. Art. 11 The Board of Directors shall direct FUNBIO and shall be composed of voting members and alternates from each of the entities or sectors indicated below: 1. Getilio Vargas Foundation (FGV) II. Ministry of the Environment, Water Resources, and the Legal Amazon (MMA) III. Business sector interested in environmental activities IV. Academic sector, not linked to FGV and engaged in environmental activities V. Environmental non-governmental organizations. Section 1 Each of the entities indicated in I and II above shall have two (2) voting members and two (2) alternates serving indefinite terms. Section 2 Each of the sectors indicated in III to V above shall have four (4) voting members and four (4) alternates serving four-year terms, one quarter of whom will rotate and seek reelection for one consecutive term. Art. 12 Voting and alternate members of the Board of Directors shall be recommended or selected in accordance with paragraphs of this article, and designated by the President of FGV. Section 1 Representatives of FGV and MMA shall be recommended by their respective entities. Section 2 Members of the initial Board of Directors from the sectors indicated in III to V of the previous article shall be selected in each sector in consultation with FGV and MMA from among individuals who have knowledge of the environmental field. 67 Annex 8-B Project II Section 3 The reelection of one-quarter of the members from sectors III to V will be decided by the Board of Directors, after consultation with the respective sectors and maintaining the proportional representation stipulated by the internal regulations. Section 4 The President and Vice-President of the Board shall be elected by plenary of the Board of Directors and appointed by the President of FGV. Section S The mandate of the President and Vice-President shall not be renewed beyond two (2) consecutive periods. Section 6 Voting members and alternates who miss three (3) consecutive meetings will automatically lose their mandate. Art. 13 The Functions of the Board shall be to: I. Define a strategic program for achieving the objectives of FUNBIO; II. Elect the President and Vice-President of the Board of Directors; III. Elect the new voting members and alternates in accordance with Art. 12, Section 3. IV. Approve: a) By December 15 of each year, the work plans and budgets of FUNBIO; b) By March 15 of each year, the annual report and financial statements from the previous year, audited independently. V. Approve calls for proposals; VI. Select and approve projects and sub-projects, decide on their funding amounts, and monitor their execution according to the operational norms of FUNBIO; VII. Monitor the implementation of approved work plans and budgets; VIII. Approve operational norms; IX. Authorize the transfer of budgetary resources without raising expenditures and the opening of additional credits with specification of the income that would cover them; X. Approve the acceptance of donations with associated obligations and which might bring onus. XI. Approve contracting of independent consultants; XII. Approve the selection of the Executive Secretary; XIII. Propose changes in the internal regulations; 68 Annex 8-B Project II XIV. Comment on the termination of FUNBIO. Section 1 Changes in the internal regulations and termination of FUNBIO shall depend on the decision of the Board of Directors of FUNBIO and formal acceptance of the decision by the Board of Directors of FGV. Art. 14 The Board of Directors shall meet: 1. Regularly, every four (4) months. II. Extraordinarily, upon convocation (with five days advance notice) by: a) Its President b) One-quarter of its voting members. Section 1 The quorum for decisions of the Board of Directors shall be: a) Normally, the absolute majority of its voting members, nine (9) members; b) For approval of work plans, budgets, reports, and annual financial reports, eleven (11) members. c) To recommend modifications in the internal regulations or termination of FUNBIO, thirteen (13) members. Section 2 Resolutions will be passed by simple majority vote of the voting members or their alternates, and recorded in a registry signed by all members present. Section 3 In the case of a tie, the President, or his/her substitute, shall decide the vote. Chapter VI. President and Vice-President of the Board of Directors Art. 15 The President of the Board shall: I. Represent FUNBIO actively or passively. II. Convoke the Board of Directors and chair its meetings. III. Designate rapporteurs for matters submitted to the Board IV. Supervise FUNBIO's services, carrying out necessary actions for its administration. V. Submit for appointment by the Board of Directors of FGV the names of those selected to serve as the financial manager and independent auditor. 69 Annex 8-B Project II VI. Submit for appointment by the Board of Directors of FUNBIO the name of the person selected to serve as Executive Secretary. VII. Recommend to FGV contracts with selected firms to: a) Invest FUNBIO's funds; b) Conduct independent financial audits and administrative reviews; c) Raise additional funds for FUNBIO; VIII. Present quarterly progress and financial reports to the Board of Directors. IX. Submit for Board approval: a) By November 30 of each year, a work plan and budget proposal for FUNBIO for the next fiscal year; b) By the end of February of each year, an annual report and financial statements of FUNBIO related to the previous fiscal year, including an independent auditor's report. X. Execute tasks designated by the Board of Directors. XI. The President may delegate to the Vice President or Executive Secretary the responsibilities described in I to IV of this article. Section 1 In the event of absence or inability to fulfill the duties of office, the President shall be substituted by the Vice President, or in the absence of both, one representative of FGV shall be designated by the Board of Directors to assume the presidency. Chapter VII. The Executive Secretariat Art. 16 The purpose of the Executive Secretariat shall be to provide administrative support to the Board of Directors, and in particular, to the President; it should have a simple and flexible structure and low operational costs. Art. 17 The Executive Secretariat shall be managed by an Executive Secretary, to be appointed by the President. The Executive Secretary shall perform the following duties: 1. Assume power of attorney to represent FUNBIO, actively and passively. 11. Ensure compliance with the internal regulations and operational guidelines approved by the Board of Directors; III Submit proposals and requests for financial assistance for the Board's consideration, after the necessary technical evaluation; 70 Annex 8-B Project II IV. Provide the following to the Board of Directors: a) Work plans, budget proposals, reports and financial statements, b) Evaluation of entities responsible for financial management, auditing, and fund-raising. V. Propose to FGV, through the Board of Directors in the case of b) and c) below, contracts for: a) Necessary personnel; b) Outside consultants and consultant firms; c) Implementing agencies of approved projects. VI. Supervise operational expenditures, third party contracts and other services. VII. Take part in the meetings of the Board of Directors as a non-voting participant. Chapter VIII. General Conditions Art. 18 The fiscal year will coincide with the calendar year. Art. 19 The mandates of Board members shall automatically be extended until successors are designated. Art. 20 The members of the Board of Directors shall not be liable for FUNBIO obligations. Art. 21 Once the Board accepts a donation, terms and conditions of the donations shall not be altered. Art. 22 FUNBIO shall not distribute profits, gains or any other returns to its administrators, managing institutions or directors, utilizing all of its income for the fulfillment of its stated objectives. Art. 23 To allow for the reelection of one-quarter of its members each year, the initial terms of the Board members selected by the sectors described in Art. 11, III-V, will have a differentiated duration of one, two, three and four years for each sector. 721 Annex 8-C Project II BRAZIL GLOBAL ENVIRONMENT FACILITY BIODIVERSITY PROJECTS INITIAL MEMBERSHIP OF THE FUNBIO BOARD OF DIRECTORS The following is a list of the first FUNBIO Board of Directors. The list has been reviewed and found satisfactory by the Bank. During its inaugural meeting on October 9, 1995, the Board appointed Roberto Bornhausen as President and Gustavo Fonseca as Vice President. 1 . Private Sector a) Voting Members: Roberto Konder Bornhausen (Unibanco) - President Guilherme Frering (CAEMI) Luiz Kaufman (Aracruz) Jos6 Luiz Magalhies Neto (Belgo Mineiro) b) Alternates: Carlos Nascimento (Banco Real) Leon Feffer (Suzano) Manoel de Freitas (Champion) Carlos Affonso de Aguiar Teixeira (Petrobrds) 2. Academic Sector a) Voting Members: Angelo Machado (Federal University of Minas Gerais) Jos6 Mircio Ayres (Goeldi Museum) Benjamin Gilbert (Oswaldo Cruz Foundation) Virgilio Viana (University of Sio Paulo) b) Alternates: Luiz Drude Lacerda (Federal University of Rio de Janeiro) Nanuza Meneses (University of Sio Paulo) Maria Ang6lica Figueiredo (Federal University of Ceard) Warwick Estevam Kerr (Federal University of Uberlindia) 3. Environmental Non-Governmental Organizations a) Voting Members: Gustavo Fonseca (Conservation International of Brazil) - Vice President 72 Annex 8-C Project II Garo Batmanian (World Wildlife Fund of Brazil) Jean Marc van den Weid (ASPTA) Ibsen Cimara (Brazilian Foundation for the Conservation of Nature) b) Alternates: Niede Guidon (FundagAo Museu do Homem Americano) Paula Saldanha (Terra Azul Institute) Adalberto Verissimo (Institute of Man and the Environment in the Amazon, IMAZON) Guy Marcovaldi (TAMAR Project) 4. Ministry of the Environment, Water Resources and the Legal Amazon (MMA) a) Voting Members: AspAsia Camargo (SECEX) Braulio F. de Souza Dias (SMA) b) Alternates: Lidio Coradin (SMA) Carlos Pinto (SECEX) 5. Getfilio Vargas Foundation a) Voting Members Celina do Amaral Peixoto (Directorate) Ant6nio Salazar Pessoa Branddo (Brazilian Institute for Economics) b) Alternates: Cl6vis Josd Daudt de Faro (Directorate) Ignez Guatimosin Vidigal (Center for Agricultural Studies) Annex 9 73 Project II BRAZIL GLOBAL ENVIRONMENT FACILITY BIODIVERSITY PROJECTS FINANCIAL ANALYSIS AND MANAGEMENT Background Trust funds and endowments have become increasingly important as a financing mechanism to provide the reliable, stable support to sustain effective programs promoting environmental biodiversity conservation programs. The essential features of trust funds include: (i) a capital fund which is invested with the aim of maintaining its real value while generating income to fund project activities; (ii) a decision-making mechanism to allocate the income for specified uses or to meet agreed objectives; and (iii) an administrative mechanism to distribute and monitor the funds disbursed and to evaluate the impact and cost-effectiveness funded relative to the stated objectives. The trust fund to be established under the GEF Biodiversity Projects generally shares these features. However, it differs from other trust funds in one significant way; namely, the capital fund will actually be a sinking fund, with the objective of depleting the initial capital over a period of 15 years. The real value of the capital fund will still need to be adequately sustained so it is not depleted before its expected life, and the fund will still serve as the primary base for generating income to finance specific project activities. However, financial management of a sinking fund could entail a different risk-reward investment approach than the typically highly conservative approach used when seeking to maintain in perpetuity the real capital value of a trust fund. While there is relatively little guidance available with regard to this sinking fund approach, there is growing GEF experience in the design of environmental trust funds. Preparation and analysis of the financial aspects of the proposed sinking fund draws upon such experience, which itself is based partially upon expertise from other organizations with conservation financing (e.g., the World Wildlife Fund; The Nature Conservancy; CARE; and the U.S. Agency for International Development). The analysis also draws upon research on issues and options involved in the design of trust funds conducted by the Bank, and on financial consultant reports utilized for similar projects. These reports advise on aspects relating to the investment of the capital fund, including: selection of an investment firm to manage the capital assets, appropriate contract terms, investment strategy, and estimates of realistic rates of return. However, financial analysis in general is ultimately constrained by uncertainties about future trends, in particular regarding economic climate (e.g., exchange and inflation rates), earning potential of capital, and costs of administration and project activities. Furthermore, any financi41/investment advice which is tailored towards meeting the objectives of a specific given fund may not be relevant or useful for meeting the objectives of another/different fund. Investment and Management of the Sinking Fund The specific investment strategy would be defined by FUNBIO's Board of Directors, in consultation with its asset manager and to the satisfaction of the Bank. However, the strategy would be consistent with investment criteria agreed with the Bank before Bank's Board approval. Furthermore, the strategy would seek to maximize total return, including interest, dividends, and Annex 9 74 Project II capital appreciation, while generating a minimum level of annual investment income to cover operating expenses and asset management fees, and to provide subgrants to fund project activities. Detailed spending and investment rules would be described in the Operational Manual, including acceptable levels of risk for investments, limits on capital invasion, mechanisms for re- investment of unspent income (e.g., in years with high investment performance), and mechanisms for incorporating and managing additional grants and assets provided by sources other than the GEF Trust Fund. Some preliminary basic parameters would include: (a) a relatively low-risk investment strategy (although not as conservative as with a trust fund for which capital invasion is prohibited) to ensure that capital is not depleted in less than 15 years; (b) generation of investment income which at least covers asset management fees and FUNBIO's operating expenses; and (c) capital invasion rule; since this is a sinking fund, for which all the GEF capital would be depleted at the end of 15 years, investment returns need not be re-capitalized. As such, a specific rule limiting overall annual fund expenditures is not necessary. However, to ensure adequate capital preservation for earning reasonable, an annual limit on the use of the principal of the GEF Trust Fund Grant was established at US$3 million. The capital invasion limit would be reviewed annually by FUNBIO's Board and the Bank, and mutually agreed upon adjustments would be permissible. While there are no fixed GEF requirements for offshore investments, there are precedents. Virtually all of the trust funds supported by the GEF Trust Fund are managed by off-shore asset managers (the only exception is Peru's National Trust Fund for Protected Areas, which is managed by a local financial institution). The principal reason for off-shore asset management is related to the need to preserve trust fund capital in perpetuity. And the international standard for administering trust funds is the use of conservative low-risk investment guidelines. This translates into off-shore investment accounts in high grade bonds or equities in developed markets, and in historically strong currency. In the case of FUNBIO, which is the first sinking fund to be supported by GEF, and not a trust fund in perpetuity, limited capital invasion would be acceptable, and a slightly less conservative investment strategy than in the case of a traditional trust fund could be utilized. Nevertheless, since the FUNBIO sinking fund has a relatively long life (15 years), the preservation of capital remains an important investment objective, particularly in the early years. As such, a moderately low-risk strategy with a balanced portfolio of off-shore and domestic investments would be appropriate. The definition of detailed investment objectives and guidelines was approved by the Bank as a condition of Bank's Board approval. These guidelines would be an integral part of the contract between FUNBIO and the asset manager. Future rates of return, and therefore the financial sustainability of the sinking fund, would be estimated on the basis of projections provided by short-listed investment firms interested in and qualified to manage the fund. FUNBIO/FGV identified the short list of asset managers, requested proposals, and selected the asset manager in accordance with Bank procurement guidelines. The Bank provided its approval at the different stages of the process. Terms of reference and selection criteria for selecting the asset manager were approved by the Bank and are provided in Attachment 1. Drawing on investment research prepared under other GEF environmental trust funds, Attachment 2 shows a preliminary investment analysis for the sinking fund. This analysis reflects the latest discussions regarding the release of GEF Trust Fund funds (US$10 million up front, and then tranches of US$2.5 million per year after that to match private contributions). The analysis assumes a 5% rate of return, net of investment management fees and transaction costs (estimated at 1.5% of capital). This estimate is cautious, particularly when the fund's capital does not need to be fully protected (para. 6), and it is hoped that average total returns will be higher over the life of the fund. The investment management Annex 9 75 Project II fee is also very conservative in that it over estimates the typical cost of services expected under the project. Even with these rather cautious estimates, the preliminary analysis shows that while the fund will be depleted in 15 years, about US$10 million (net of investment management and transaction costs) above the initial GEF Trust Fund capital is generated by the fund and made available to the program. Because of the significant infusions of GEF Trust Fund capital in the first five years of the project, financial sustainability in the early years of project implementation should not be a serious issue. The only potential problem, in the event that investment returns are lower than the very cautious estimates mentioned above, is a reduced amount of funds available for sub-project financing. However, to a large extent, the provision for capital invasion will mitigate this risk. Nonetheless, the issue of financial sustainability is a significant issue which should be re-examined at the time of the project mid-term review (estimated to take place at 36th month into project implementation). Long- term sustainability (e.g., beyond the life of the sinking fund) will be of the greatest importance. This will depend somewhat on the investment performance of the sinking fund, but more so on provisions which may allow re-investment of income and FUNBIO's access to other sources of financing (e.g., other local and international donors, endowments, and self-generated finance). Management of the Income FUNBIO's Activities and Budget. All proceeds of the fund, including investment income and capital, will be utilized by FUNBIO under the project, as acceptable to the Bank. In principle, FUNBIO would be a grant-maker, fundraiser, and catalyst in the area of biodiversity conservation. Its program activities would be divided among program administration for model sub-project grant- making, (limited) technical assistance to help potential beneficiaries solicit grants, fundraising locally and internationally among non-profit and for-profit sectors, and general administration. Considering that FUNBIO would not execute sub-projects, it would only require limited staffing. Initial staff would include an Executive Director, a professional program assistant, a technical assistant, and one secretary. Sub-project evaluation would be carried out on a case by case basis by technical reviewers, and would ultimately be reviewed and decided upon by FUNBIO's Board of Directors. Preliminary annual estimated costs are provided in Attachment 3. Disbursements. To finance FUNBIO's costs and activities under the project, up to US$20 million from the GEF Trust Fund would be deposited in the fund, to be managed by an internationally qualified asset manager, in accordance with the aforementioned investment guidelines. The funds from GEF Trust Fund and from other sources are expected to be disbursed into the asset manager's account over the first five years of the project in the form suggested in Attachment 2. The initial deposit would be made following Grant effectiveness. Additional deposits into the fund would be triggered by demonstrated donations to FUNBIO in the ratio of two (GEF Trust Fund) to one (other sources) (US$5 million). The funds could be raised in tranches, US$250,000 at a time, each tranche triggering a new release of funds from GEF Trust Fund until all GEF funding is committed. Contracts with donors and bank statements showing deposits from these donations to FUNBIO's asset manager account would serve as means of verification. Auditing. FUNBIO's activities and related expenditures would be audited by independent private consultants (preferably recognized firms), in accordance with generally accepted accounting principles and acceptable to the Bank. Separate audit reports would be provided for the foundation and the asset manager. The audit report for FUNBIO would provide a separate opinion regarding Annex 9 76 Project II FUNBIO; project accounts, SOEs, and financial statements, as well as a management report analyzing overall financial management, control, and effectiveness. The audit report for the asset manager would be similar, but would not include an opinion regarding SOEs and project accounts. Furthermore, technical audits of FUNBIO's activities would be conducted to ensure that established selection criteria are followed consistently. Within six months of the close of each fiscal year, the results of both financial and technical audits would be made available to FUNBIO's Board of Directors, donors and affiliates, as well as to the Government and the Bank. 77 Annex 9 Attachment 1 Project II TERMS OF REFERENCE FINANCIAL/INVESTMENT CONSULTANT In light of Brazil's recognized biodiversity importance in the world, the Global Environment Facility (GEF) has allocated US$30 million for GEF Biodiversity Projects in Brazil. Project I will be carried out directly by the Government and Project 11 by an independent fund (FUNBIO) operating within the Gettilio Vargas Foundation, a private foundation with public objectives. 2. Under Project II, the Bank will make a grant for US$20 million from the GEF Trust Fund to FUNBIO for financing biodiversity sub-projects. To manage this grant, the project will establish a sinking fund (Trust Fund) to be administered by FUNBIO and support a long-term grant program to promote conservation and sustainable use of biodiversity in Brazil. FUNBIO will contract a professional financial/asset manager to manage the Trust Fund in accordance with investment strategies and guidelines established by FUNBIO and acceptable to the Bank. FUNBIO's Board of Directors will select this asset manager from a short list of qualified firms, as acceptable to the Bank. To develop the short list, as well as provide advice regarding investment strategies and guidelines, FUNBIO would need to be assisted by an experienced financial/investment consultant. Building on recent, similar research prepared for other GEF projects with environmental trust funds (e.g., Uganda, Bhutan), the consultant should prepare a report which includes: (1) Possible investment strategies and guidelines consistent with recommended best practices for GEF trust funds and the objectives of the project and FUNBIO, with particular attention to a,;.set allocation (equity vs. bonds and liquidity, domestic vs. offshore, rates of return, etc.), dealing with various risks (inflation, exchange, market volatility) and spending/investment rules; (2) Analysis of a short list of four to six qualified investment firms (offshore and domestic, if relevant), to include coverage of the following information: (a) A statement proposing how to manage the US$20 million capital fund, disbursed over five years; (b) Recent and historical performance data; (c) A nominated management team with relevant details on its members; and (d) Suggested management fees/cost of managing the fund. (3) A summary of the services to be performed by the prospective fund managers, ranking them by priority and justifying the ranking. 7 8 Annex 9 Attachment 1 Project II SELECTION CRITERIA FOR ASSET MANAGER Investment Capability 1. Powers - Asset Manager has capability and flexibility to invest so as to reach or exceed established benchmarks. 2. Performance Record - is consistently (10 years or more) above or in line with relevant general and specific benchmarks. 3. Capacity - Asset Manager has experience and capacity in construction of balanced portfolios consisting of significant proportions of long-term fixed-income instruments, equities and cash, and has independent research and analysis capability. 4. Cost - Asset Manager is comparatively cost-effective relative to other asset managers with similar responsibilities. Experience and Reputation 1. Experience - is extensive in terms of years, foreign and local clients, and specific asset types which are relevant to the Trustee's needs and objectives. 2. Reputation and Rating - based on reference checks, reputation is excellent; international rating is top (AAA or AA) and has high client retention rates. 3. Management and Staff - are competent, highly professional, and compatible with foreign and local investors; generate significant business volume. 4. Social and Environmental Responsibility - Asset Manager is capable of adapting the portfolio to criteria that the client may impose regarding issues of social and environmental responsibility. Safety and Stability 1. Safety and Stability - Asset Manager maintains investment philosophy and portfolio which is not high risk, as demonstrated by historical and current portfolio; has no (or little) history of legal difficulties; can ensure that assets are protected from being used in any way other than that intended; is not affiliated with financially unsound institutions or politically vulnerable countries. 2. Liability - Asset Manager has a fiduciary responsibility and is held responsible for a "standard of care" which ensures that funds are not misused; is not eligible for any indemnity from the Trustee (or at most, only indemnity for losses due to Trustee negligence). 79 Annex 9 Attachment 1 Project II 3. Risk Management Systems - Asset Manager has capability and flexibility to invest in long-term assets, regularly employs mechanisms (e.g., automatic stops) for avoiding losses due to large moments in markets, capability and flexibility regarding use of hedging instruments, and capability and flexibility to diversify investments across countries and asset types. PRELIMINARY INVESTMENT ANALYSIS OF THE BRAZILIAN BODIVERSITY FUND yftarf yIea 2 ya 3 yoa 4 yna 5 you yar a yoa 9 yeur 10 yoer 11 you 12 y@ar 13 you 14 ya 15 GEF Trus Fund Contibuions 10.000 2.500 2.500 2,500 2.500 Maldng Conflafebutions 2 1.250 1.250 1.250 1.250 Capfal nomn~al, BOY 10.000 12.262 14,625 17.095 19.678 18.630 16,171 14.741 13.166 11.435 9.535 7.455 5.182 2.702 vosamnost lacom (nnooail 3 650 797 951 1.111 1.279 1.211 1.051 9568 856 743 620 485 337 176 Managmof fes & transactoa cosla 4 150 184 219 256 295 279 243 221 197 172 143 112 78 41 2.852 Avab to pcogrmn 5 1.988 2.000 2.011 2.022 2.032 2.098 2.238 2.312 2.390 2.472 2.557 2.646 2.739 2.837 34.507 Tluad epadiiurs 2.138 2.184 2.231 2,278 2.327 2,377 2.480 2.533 2.688 2.643 2,700 2.758 2.857 2.877 37.369 End of yea capital 8.512 10,875 13,345 15.928 18.630 17.464 14.741 13.166 11.435 9.535 7.455 5.162 2.702 0 i Ihe GE Teu.. Fund ee.uasons Se th 1ining Fund ar apeed oer She dis Sieea. Theoe c~ne~dene ae miksdt t4he t e.* co ~b~ du Ea~ fre Fund. 2 Au-.,s he 10 ~canffef priaes. conwdulies, eque.d 0~ et-tö-e b#~em to u~oge GFF inne Fund deiz sue-n u in wo.rs 2 ~rog. 6. ed be ie cah. 3 Ae~une a 66% w~ eme.al.4. it She . ee,n.. ~he, actual sene e eeed this ~e~n1. 4. hasee enet ~es d uae cmuts hae.b#eeeshieaed b~ i.3% .f cape. i e- avadete h. p.eg is båe-t e ehe ö aae4oepun Shem %Ma § epad e=es -. aUPeed -r the Mae fhe aankin Sund euch mheä lhe 8nd 1 *uny depeted a d4w end ya 20. k5 b. e .--S una aesa .enSures .~ ~ncrase i e a a ae e 4 2 % pe ym ta dne epecied bnd~eina. gaOyenng er ter Ihes dea Sirsng Fund ch.e haee pay out ed SS re The.Sie,e, Shere. ne.. prediiee ler rMeineear od hveeeset. dnc.Sne Se keep She cdais cets, 81 Annex 9 Attachment 3 Project II FUNBIO'S PRELIMINARY ANNUAL ESTIMATED ADMINISTRATIVE COSTS (US$ 000) Salaries 340 Executive Director 80 Program Assistant (1) 40 Secretary (1) 25 Technical Assistant 25 Benefits 170 Office expenses 20 Printing and services 5 Equipment/Supplies 15 Travel and Representation 40 Outside Services 80 Contingencies 40 Total 520 82 Annex 10 Project II BRAZIL GLOBAL ENVIRONMENT FACILITY BIODIVERSITY PROJECTS DRAFT GUIDELINES FOR FUNBIO OPERATIONAL MANUAL The general topics listed below, as well as Annexes 11 and 12 will be an integral part of the Operational Manual that is currently under revision by the Bank. The final version of the Operational Manual will be approved by the Bank before effectiveness of the Grant Agreement is declared. The operational manual will address the following issues: General Comments The operating manual should be consistent with FUNBIO's internal regulations and address at least the following issues: 1) Objectives, including a description of FUNBIO's focus and niche; 2) Organizational structure, including organizational chart (FUNBIO within FGV); composition of Board and mechanism for re-electing Board members; roles and responsibilities of the members of the Board of Directors, President, Vice-President, Executive Director and key staff; operating procedures of the Board; profile of staff positions; process for the selection of the President, Executive Director, and other staff; description of staff positions (Annexes could include terms of reference for the Executive Director or for special committees, etc.); 3) Funding sources, including existing and potential sources; mechanisms to attract private sector participation; programmed fund raising activities; 4) Detailed spending and investment rules, including acceptable levels of risk for investments, limits on capital invasion, mechanisms for re-investment of unspent income (e.g., in years with high investment performance), and mechanisms for incorporating and managing additional grants and assets provided by sources other than the GEF Trust Fund. 5) Operating procedures for awarding of grants, including: 6) Calls for Sub-Project Proposals: procedures for setting priorities for sub-project thematic eligibility and calls for proposals; procedures to determine types and size of grant to be awarded; guidelines for budget preparation, including sample forms, permissible budget categories, matching requirements for non-profit and for-profit applicants; procedures for publication of requests for proposals; description of dissemination vehicles (including press, mailings, notification of professional and trade associations, and NGOs); 7) Sub-Project Selection and Approval: procedures for judging proposals, including selection of technical reviewers; criteria for evaluation; guidelines to indicate and mitigate any environmental impact of sub-projects; feedback provided to proposing organizations; 83 Annex 10 Project 11 notification of results of evaluation. Draft eligibility and selection criteria are included in Annex 11. 8) Guidelines for setting administrative costs of FUNBIO and for financing fundraising programs and other FUNBIO activities; 9) Financial management arrangements, including guidelines for contracting with and disbursing to grant beneficiaries; contracting with and establishing investment guidelines for an asset manager, auditing, and financial reporting; general guidelines for procurement of goods and services. For contracting and disbursement to sub-project beneficiaries, annexes could include, e.g., model contracts, statements of expenditure, and reporting forms. 10) Guidelines for monitoring and evaluation of sub-projects and lessons learned. Draft guidelines for a monitoring and evaluation program are included in Annex 12. I1) Other items: procedures for complaints, appeals, and reconsideration; guidelines for staff conduct and client relations, including discussions of conflict of interest, confidentiality, and disclosure of information. Additional Guidelines and Suggested Annexes to the Operational Manual 1) Investment guidelines for the asset manager consistent with recommended best practice for GEF trust funds (see Annex 9); 2) Terms of reference for the Executive Director and key staff; 3) Guidelines for appointing Board members as well as technical and advisory committees; 4) Guidelines for identifying, developing, submitting, and selecting sub-projects (e.g., model public procurement document and contract); 5) Guidelines for settlement of disputes/claims. 84 Annex 11 Projects I & II BRAZIL GLOBAL ENVIRONMENT FACILITY BIODIVERSITY PROJECTS DRAFT SUB-PROJECT ELIGIBILITY AND SELECTION CRITERIA FUNBIO and PROBIO will provide financial support to sub-projects of governmental and non- governmental entities, including the business sector, provided these projects conserve biodiversity and/or use it sustainably, and would also contribute to the following objectives: 1) Demonstrate and test innovative models and methodologies; 2) Support environmental education and human resources training programs on biodiversity issues; 3) Support biodiversity research and assessments; 4) Meet specific objectives as elaborated by FUNBIO's Board of Directors and by PRONABIO's Coordinating Commission. Eligible entities include: (i) federal, state, and municipal institutions and agencies; (ii) private for-profit businesses (in the case of FUNBIO); (iii) NGOs; (iv) for research projects, individual researchers; and (v) consortia of the above. Financing may be in the form of contracts (with business entities, for projects involving financial benefits and profits, which will be supported by loans, according to terms spelled out in the Operational Manual) or agreements (grants to non-profit organizations and entities). FUNBIO will conduct a technical evaluation of the proposals received on the basis of selection criteria agreed with MMA/PRONABIO. Recommendations on sub-project selection will be reviewed by FUNBIO and subsequently transmitted to PRONABIO's Coordinating Commission for review and action. Projects will be selected according to criteria which will include, among others: 1) Congruence with the objectives of FUNBIO and PRONABIO; 2) Value in relation to the resources available; 3) Presentation, including conformance with forms and analysis required; 4) Compatibility with governmental environmental biodiversity programs and priorities; 5) Proposing organization's experience with biodiversity projects; 6) Proposing organization's record of compliance with environmental laws. More specific criteria could include: 1) Innovativeness for new sub-projects or replicability for demonstrated successful sub- projects; 2) Clarity in identifying the problem to be addressed; 3) Clear definition of methodology; 85 Annex 11 Projects I & II 4) Applicability and appropriateness of the proposed technologies; 5) Relevance of the proposed sub-project to the priorities defined by workshop results and/or calls for proposals; 6) Technical and administrative capacity of the proposing institution to execute the proposed sub-project; 7) Environmental sustainability, 8) Participation of the affected population in the planning, implementation, and evaluation of the results of the sub-project. 9) Social viability insofar as the proposed activities address needs identified by the affected population; 10) Adequacy of requested budget to achieve objectives in the time frame proposed; and 11) Quality of interdisciplinary linkages. Guidelines to evaluate the environmental impact and social assessments of the sub-projects will also be applied. These guidelines should ensure that sub-projects will (i) follow good environmental practices, (ii) properly address any sensitive social issues, and (iii) mobilize matching funding from grant recipients. Good environmental practices imply, for example, taking care in the design of new tourist facilities and ensuring that any sub-project supported harvesting of wild organisms is sustainable. Properly addressing social issues includes (i) ensuring that any involuntary resettlement (if unavoidable) would follow Bank policy and (ii) promoting adequate participation by local stakeholders in the design and implementation of sub-projects. Mechanisms for matching fund contributions from sub-project grant recipients were agreed at negotiations. Proposals will be judged according to compatibility with criteria specifically set forth in each call for proposals, which will be based on the list above. To be eligible for funding, all project sponsors must contribute financially at least 25% of the cost of proposed sub-projects. The matching contribution requirements by sub-project proponents would depend on the size of the grant and on whether the entity is public or private. The details of the mechanism, type and size of contributions would be spelled out in the Operational Manual. Calls for proposals will be issued through FUNBIO following their approval by PRONABIO's Coordinating Commission and the Bank. The calls will include specific selection criteria applicable to each round. For example, Attachment I lists proposed criteria for sub-projects to be implemented by private-sector for-profit businesses. 86 Annex 11 Attachment I Project II DRAFT GUIDELINES FOR PRIVATE SECTOR (BUSINESS) PROJECTS Eligibility Criteria Proposed sub-projects will be eligible for funding upon meeting the following criteria. (1) Types of business activities to be funded a) In general, FUNBIO seeks to provide support to businesses that: i. Increase the income and employment realized from a natural area while assuring its continued conservation and sustainable management; ii. Create employment and income as a result of restoration and sustainable management of degraded areas; iii. Substitute sustainable practices and technologies for existing unsustainable practices and technologies; iv. Improve markets for sustainably produced products and services; v. Enhance, rather than compete with, community-based development and marketing of products and services; vi. Provide technical and support services to businesses and other entities achieving the outcomes above. b) Business projects may be deemed eligible by complying with conditions set out in calls for proposals as issued by FUNBIO.' c) An "open" category may also be established to consider proposals for sub- projects that do not respond to a specific call for proposals but meet the criteria established herein. (2) Necessary conditions (a) The sub-project must: i. Follow all project guidelines FUNBIO may establish for sub-projects in its sector, including guidelines for the amount that may be requested, and for the percentage of FUNBIO and corporate investment. ii. Supply all information requested in application forms or guidelines.2 The assumption here is that FUNBIO will wish to support business projects linked to other investments. Thus, when FUNBIO supports a protected area or extractive reserve, for example, it may issue a call for proposals for appropriate businesses for the area. It may also issue calls for proposals in distinct sectors, such as agriculture, forestry, and tourism. 2 This should include information (quantification where possible) on the biodiversity conservation or restoration benefits to be achieved, directly or indirectly, including information about the basis upon which the expected benefits are calculated. 87 Annex 11 Attachment 1 Project II iii. Present a business plan of at least three years, including projections of progress toward sustainability and profitability if these are not achieved within the first three years. iv. Show compliance with all applicable legislation, including environmental legislation. v. Include, as part of its business plan and budget, resources for independent technical assessments of the environmental impact and sustainability of the planned activities. This includes pre-implementation environmental impact assessments of any proposed construction (roads, buildings, etc.) as well as periodic and/or end- of-project assessments, (b) If the sub-project includes civil works to be financed with FUNBIO funds, submit the following documentation: i. Complete description of the civil works; ii. Construction materials used; iii. Estimate of costs and timeline for construction; and iv. Address where the construction will occur. (c) The proposing entity must: i. Have been legally constituted for at least one year by 90 days prior to the date upon which FUNBIO will formally consider the proposal; ii. Show relevant professional experience in natural resource management or sustainable development; and iii. Demonstrate a corporate record of compliance with environmental laws and regulations and audit requirements. (d) The proposing entity must not be in a state of default; that is: i. The entity is not indebted to government or other entities. The corporation should supply standard Brazilian documentation (certificate of non-indebtedness); ii. The entity has not failed to fulfill the requirements of previous projects funded by FUNBIO, and is up to date on all accounting and reporting requirements and with payment on any loans previously granted.3 Note that many trust funds place a limit on the number of projects a single entity may present to the fund -- usually one at a time. 88 Annex 11 Attachment 1 Project II Selection Criteria Proposed sub-projects will be selected for funding according to the following criteria: (1) Relevance of the sub-project to the objectives of FUNBIO and PRONABIO. The business activity should achieve one or more of the following: (a) Complement or enhance sustainable development plans and policies for the region in which it operates; (b) Contribute to the improved management of special protected areas such as parks, national forests, extractive reserves, or indigenous reserves; (c) Test or employ innovative technologies; (d) Demonstrate the economic viability of environmentally and socially sustainable systems of natural resource management; and/or (e) Strengthen the capacity of local populations to participate in and benefit from sustainable development activities. (2) Probability that the activities will be environmentally sustainable. (3) Efficiency in use of fund resources to achieve objectives. (a) Value of conservation/sustainable development benefits relative to investment required. (b) Level of economic benefits to be generated by sustainable uses. (c) Potential to generate long-term income to the public sector for support of purposes such as protected areas (user fees, concession fees, tax revenues, etc.) (d) Amount of the businesses' own investment relative to request from FUNBIO. (4) Innovativeness and replicability of activities. (5) Social viability: Preference will be given to those business ventures that originate in the communities in which they propose to operate, or that can demonstrate involvement of local residents in planning and management; that provide markets for locally produced goods; that support or complement (as opposed to competing with) locally managed businesses; and/or that provide employment and training opportunities for local residents. (6) Unique applicability of resources from the fund (as compared to availability of other sources of finance): Implementation of this provision requires that FUNBIO acquire data about other institutions offering grants and loans for businesses, and their conditions. 89 Annex 12 Projects I & II BRAZIL GLOBAL ENVIRONMENT FACILITY BIODIVERSITY PROJECTS DRAFT MONITORING AND EVALUATION PLAN The objective of monitoring and evaluation is to provide timely information to assist project and sub-project implementing agencies in reviewing progress achieved in their work and difficulties encountered, and to measure overall project performance and impact. The monitoring and evaluation plan was agreed during negotiations and is described below. The processes to be followed by PROBIO and FUNBIO to monitor and evaluate project performance and impact are described in Section A. The specific performance impact indicators for the activities known at this stage are included in Section B. The information contained in this Annex will be included in the Operational Manual of both projects. Indicators for individual sub-projects would be developed in the proposals submitted by the potential sub-project grant recipients. Objective The overall goal of the two projects is to promote and support partnerships among government, non-profit organizations, academic institutions, and the private business sector to improve Brazil's conservation and sustainable use of biodiversity. The goal would be pursued through two separate but related projects. Project I (PROBIO) would support the Government to initiate a program for the conservation and sustainable use of biodiversity by identifying priority actions; stimulating the development of sub-projects through the facilitation of partnerships between the public and private sectors; and disseminating biodiversity. Project II (FUNBIO) would support the establishment and development of a long-term Biodiversity Fund that administer a grants program. Project II will provide an opportunity to test the effectiveness of trust funds as mechanisms for long-term financing of biodiversity conservation, and to address the associated design and management issues. Thus, two types of monitoring and evaluation will be necessary: (i) monitoring and evaluation of the GEF project per se; and (ii) evaluation of the project's impact on biodiversity conservation in Brazil, and its effectiveness in generating participation and additional funding sources to assure continuation of the funding mechanism as a sustainable source of support for biodiversity activities. A. PROCESSES TO MONITOR AND EVALUATE PROJECT RESULTS Results The results of the monitoring and evaluation system include: 1) Management of information from reports, studies, and results of workshops at both project and sub-project levels; and 90 Annex 12 Projects I & II 2) Reports and special studies submitted to the Bank. Responsibilities In general, the PRONABIO Technical Secretariat (for Project 1) and FUNBIO's Executive Secretariat (for Project II) will be responsible for project monitoring and evaluation (hereafter, "the Secretariats"). Their responsibilities in this area include the following: Sub-Project Monitoring and Evaluation4 1) Assist sub-project implementing agencies in designing their own monitoring and evaluation indicators and data collection strategies; 2) Establish, distribute, and monitor standard forms to be used for sub-projects with respect to submission of data on financial, physical, and other administrative indicators; 3) Submit to the Bank for approval, as part of the Annual Operating Plan, the design of monitoring and evaluation for sub-projects; 4) Approve and inform executing agencies about final evaluation reports on sub-projects; 5) Carry out visits to supervise sub-projects of particular interest or importance, and those with evidence of serious implementation problems; 6) Hire consultants to conduct evaluation studies of concluded sub-projects in order to select cases with important lessons or which have significant potential and size. Project Monitoring and Evaluation 1) Prepare a consolidated six-month activity report for submission to the Bank. For Project I, reporting would include the status of workshops and their expected outputs and the status of the Biodiversity Network as well as sub-projects. For Project II the report would detail the number of proposals received for sub-projects, and provide a summarized description of sub-projects and their status in the consideration/approval/implementation cycle. 2) Prepare a consolidated evaluation report on the impact of project activities, to be submitted annually to the World Bank. As discussed above, this report would evaluate project implementation and also provide information necessary to evaluate the Biodiversity Fund as a mechanism for biodiversity conservation. a) The annual evaluation report should cover (i) institutional capacity of the implementing agencies (PRONABIO and FUNBIO), including progress on indicators of board and staff development, effectiveness of technical committees, development of documents and processes; (ii) financial effectiveness, documenting adherence to guidelines These responsibilities may be formally delegated to Administrative Agents. 91 Annex 12 Projects I & II for investment (of the Biodiversity Fund in Project ll) and disbursement (for sub-projects in both projects); and (iii) any legal issues, including progress toward assuring that adequate legal instruments have been established. (See Section B-1 and B-2 for details) b) Evaluation of the Brazil Biodiversity Fund as a mechanism for biodiversity conservation. Data would be provided on (i) success relative to the objective of promoting public-private partnerships, including participation of governmental and non- governmental sectors; (ii) biodiversity impacts; (iii) social impacts; and (iv) progress in fund-raising. c) It is expected that two features of Project I -- the biome-level workshops and the national Biodiversity Network -- will be fully integrated into the monitoring and evaluation process, by providing baseline data on the current status of species and communities, and identifying and maintaining data on target areas and indicator species and communities. The Secretariats, in supervising sub-project monitoring and evaluation, would coordinate with the Biodiversity Network to assure that existing data is used for baseline and updated studies wherever feasible, and that new data are generated in formats compatible with those employed by the Network. 3) The monitoring of sub-projects is primarily the responsibility of the implementing agencies, which report periodically to the appropriate Secretariat. Implementing agencies should: a) Design the monitoring and evaluation component as part of the sub-project proposal, including monitoring indicators and indicators for evaluation of progress toward sub- project goals; b) Continuously collect data required for reporting to the Secretariat; c) Submit reports to the Secretariat every six months, based on standard forms and including additional data, as agreed with the Secretariat or its agent; d) Prepare a final report upon sub-project completion, describing to what extent the sub- project's objectives were met, problems and questions that were raised during sub-project implementation, and new or replicable experiences gained from the sub-project. Mid-term evaluations may be required by the PRONABIO Technical Secretariat for projects having a duration of three years or more; e) Cooperate as needed with supervision visits, analysis, and evaluation reports, evaluation workshops, and reviews of participants' and beneficiaries' inputs. 4) Either through their own actions or through collaboration with other entities, including the hiring of consultants, the Secretariats would: a) Provide guidelines and assistance for the design of monitoring and evaluation systems to groups of potential beneficiaries; 92 Annex 12 Projects I & II b) Provide guidelines and assistance to sub-project implementers on the use of monitoring and evaluation techniques; c) Evaluate the design of monitoring and evaluation for sub-projects when analyzing proposals, indicating whether additional assistance may be necessary; d) Identify, during evaluation of proposals, cases in which external technical assistance may be required during or after sub-project implementation. 5) The Bank would carry out biannual supervision of the project in conjunction with the Secretariats to determine whether the project is meeting its objectives. Methods and Activities Monitoring and evaluation would be carried out by the Secretariats based on sub-project data, information from the biodiversity database, and other monitoring and evaluation data identified as necessary and collected by the Secretariats and their consultants. The Bank would receive regular reports on monitoring and evaluation. Monitoring and evaluation for sub-projects would be carried out using a series of instruments, including but not limited to the following: 1) Self-monitoring and self-evaluation for all sub-projects. Reports compiled by implementing agencies could be supplemented by participatory evaluation assisted by the Secretariats or surveys of beneficiaries; 2) Monitoring and evaluation visits by Secretariat staff. Staff would periodically visit sub-project sites to verify reported progress and evaluate progress toward sub-project goals, especially for sub- projects experiencing difficulties in implementation; 3) Evaluation studies. Consultants would be hired to carry out studies on sub-project implementation and evaluation, based on random samples, or according to samples chosen by the Secretariats. The Secretariats may hire consultants to conduct studies on sub-project performance and impact in relation to critical management or technical issues. In addition to data collected on a sub-project's contributions to project objectives, in their evaluation studies, consultants would assess the environmental and economic sustainability of sub-project activities. 93 Annex 12 Projects I & II B. PERFORMANCE INDICATORS 1. Performance indicators for the National Biodiversity Project (PROBIO) Evaluation of Project Implementation The following benchmarks will be used to evaluate the effectiveness of project implementation. The benchmarks fall under three broad categories: institutional structure, administration, and biodiversity impact at the sub-project level. INSTITUTIONAL STRUCTURE * PRONABIO's Coordinating Commission has defined directives and priorities for biodiversity conservation and sustainable use, has established sub-projects eligibility and selection criteria, and is making sound funding decisions on the suitability of sub-projects. * The composition and responsibilities of PRONABIO's Coordinating Commission is being maintained in accordance to Decree 1354 of December 29, 1994. * The General Coordination Unit for Biodiversity/MMA has been responsible for the Technical Secretariat of PROBIO and has maintained its responsibilities in accordance with MMA internal regiment. * The Technical Secretariat of PROBIO is functioning efficiently and is staffed with qualified professionals and competencies to fulfill its responsibilities. * CNPq is providing efficient administrative and financial support to PROBIO. * UNDP is providing efficient technical support to PROBIO. * FUNBIO is carrying out the selection of PROBIO's sub-projects in accordance with the directives set by PRONABIO's Coordinating Commission and with the Operational Manual. ADMINISTRATION * PRONABIO Coordinating Commission has met at least twice each year and has carried out its responsibilities as established in the decree establishing PRONABIO. * At least, one request for proposals has been published each year. * Documents and processes are developed in a timely fashion, lessons are learned from applying the processes. The Operational Manual is up-dated from time to time, after consultation with the Bank, to reflect improvement in processes. * Complaints are registered and properly dealt with. * Satisfactory Annual Operating Plans are submitted to the Bank for review in a timely manner. A satisfactory work program would contain a clear statement of objectives and the proposed activities would be consistent with these objectives. 94 Annex 12 Projects I & II * Contracts with implementing entities and disbursement of funds for the various activities and sub-projects are made in a timely and efficient manner. * Satisfactory annual progress reports are submitted by the Board to the Bank in a timely basis. * Annual audits show satisfactory performance in funding approved work programs and competent record-keeping. * Procurement is made in accordance to Bank-approved procedures. * The government is committed to PROBIO as evidenced the timely release of the counterpart funds (US$10 million). BIODIVERSITY IMPACT: * The government public policies in biodiversity conservation and sustainable use have improved compared to the period before the project started: (i) clear biodiversity conservation strategies have been agreed among major stakeholders, adopted by the Government and disseminated; (ii) government funding decisions and policy recommendations are more strategic. * PROBIO has promoted the partnership and alliances among public and private sector through the active participation of non-governmental and governmental sectors in sub-projects implementation. Alliances among rural, local groups, and governments have been created therefore improving the decision making process for biodiversity conservation and use where actions are taking place. * The dissemination and use of biodiversity information have improved. Major actors in biodiversity work in Brazil are sharing information and experiences through electronic means. * PROBIO has generated new technologies, approaches and applied information for biodiversity conservation and sustainable use. These outputs are of high quality, numerous, and relevant to development. New models of biodiversity conservation and sustainable use have been tested, lessons are being learned rapidly from them and when successful, they have been replicated and disseminated. * PROBIO's sub-projects and activities have resulted in decreased biodiversity loss, deforestation, poaching and protected areas encroachment. This impact will be measured by assessing the diversity in the portfolio of sub-projects, their innovativeness in finding solutions to the various threats to biodiversity protection and in their effectiveness on the ground. The impact of the project on biodiversity conservation and sustainable use will be evaluated against baseline information provided by grant recipients in their proposals for funding. For the first- round sub-projects and workshops already approved, the monitoring indicators have been agreed and will be included in the Operational Manual. 2. Performance indicators for the Brazilian Biodiversity Fund Project (FUNBIO) Evaluation of Project Implementation The following benchmarks will be used to evaluate the effectiveness of project implementation. Success in meeting the implementation benchmarks will also serve to determine at what point the Bank 95 Annex 12 Projects I & II ceases supervision of the project. The benchmarks fall under three broad categories: institutional capacity, financial effectiveness, and the adequacy of the legal framework. INSTITUTIONAL CAPACITY * A committed Board of Directors has met at least three times each year and has carried out its responsibilities as established in FUNBIO's by-laws. * The Executive Secretariat is functioning and staffed with qualified professionals. * The Technical Committees are working effectively and have provided advise to the Board of Directors on the suitability of sub-projects from the perspective of biodiversity conservation and sustainable use. * Needed documents and processes are developed in a timely fashion, lessons are learned from applying the processes. Operational Manual is up-dated from time to time, after consultation with the Bank, to reflect improvement in processes. * The selection of activities and sub-projects is made in accordance with the Board's project eligibility and selection criteria and rules set out in the Operational Manual * Complaints are registered and properly dealt with. * Satisfactory Annual Operating Plans are submitted to the Bank for review in a timely manner. A satisfactory work program would contain a clear statement of objectives and the proposed activities would be consistent with these objectives. * The disbursement of funds for the various activities and sub-projects is made in a timely and efficient manner. * Satisfactory annual progress reports are submitted by the Board to the Bank in a timely basis. * The fund has a clear written strategy for raising additional funds and is actively pursuing further donations. * Administrative costs are kept within agreed-upon limits, not exceeding an average of about 15-20%. * Annual audits show satisfactory performance on funding approved work programs and competent record-keeping. * Procurement is made in accordance to Bank-approved procedures. FINANCIAL EFFECTIVENESS * Adherence to investment guidelines. * Adherence to disbursement guidelines, based on the "capital invasion rule". Capital invasion has been kept to the minimum agreed, not exceeding US$3 million per year out the GEF Trust Fund proceeds 96 Annex 12 Projects I & II ADEQUACY OF LEGAL FRAMEWORK All necessary legislation and other arrangements are in place to assure effective functioning of the fund, including protection from attachment and taxation. Evaluation of the Sinking Fund as a Mechanism for Financing Biodiversity Conservation. The impact of the sinking fund will ultimately be measured by what is "bought" in terms of biodiversity protection. Such an evaluation, however, would not be feasible within the time frame of the GEF project; the evaluation of changes in natural systems takes decades and requires the extensive inventory of key species to obtain data on population sizes and distribution. The collection of such data is technically difficult, time consuming, and expensive. Moreover, what can be measured is often hard to interpret both due to inherent natural fluctuation in ecological processes as well as the difficulty of determining the counterfactual case, that is, what might have occurred in the absence of the project. For these reasons, project design and implementation are used as proxies for impact. The success of the trust fund will depend on a series of factors, some of which are under the control of the project implementors and some of which are not. For example, the trust fund will require favorable market conditions to generate adequate investment returns, as well as successful fund raising yet both will depend largely on outside forces. Similarly, the effectiveness of conservation measures adopted will depend on the quality of their design as well as on national policies and socio- economic circumstances. Taking these factors into consideration, the achievement of the benchmarks below will indicate the success of the trust fund as a mechanism for financing biodiversity conservation and sustainable use in Brazil. * FUND-RAISING SUCCESS: The fund has reached a minimum capital level of $25 million dollars (the goal is to reach this capitalization level within five years from the date of the grant). In addition, FUNBIO's Board has raised funds to support sub-projects and other activities. Grant recipients have complied to their requirement of providing 25% in matching contributions. * FINANCIAL EFFECTIVENESS: The investments are providing reliable and adequate returns. This entails a minimum of 10% annual return of the investment so as to cover program needs; afford a capital reserve to offset low-yield years and have an estimated US$2.5-3 million per year investments in biodiversity sub-projects. * PUBLIC/PRIVATE SECTORS PARTERNSHIPS: FUNBIO has promoted the partnership among public and private sector through the active participation of non- governmental and governmental sectors at the Board level, Technical Committees and sub- projects implementing entities. * GOVERNMENT COMMITMENT: The government is committed to FUNBIO as evidenced by their active participation in the activities of the Board of Directors and by supporting its fund raising efforts by facilitating other bilateral or multilateral donations to flow to the fund, debt-for-nature transactions and other contributions. Commitment is also reflected by the good working relationS between FUNBIO and PROBIO. 97 Annex 12 Projects I & II * BIODIVERSITY IMPACT: The stable financing provided by the sinking fund ensures that key sub-projects will result in decreased biodiversity loss, deforestation, poaching and protected areas encroachment. The impact of the project will be measured by assessing the diversity in the portfolio of sub-projects, their innovativeness in finding solutions to the various threats to biodiversity protection and in their effectiveness on the ground. The impact of the project on biodiversity conservation and sustainable use will be evaluated against baseline information provided by grait recipients in their proposals for funding. * SOCIAL IMPACT: The sinking fund's decision-making processes have fostered local and NGO participation in the management of biodiversity, as evidenced by their active involvement in decisions about the allocation of resources to key sub-projects in Brazil. 98 Annex 13 Project I and Project II BRAZIL GLOBAL ENVIRONMENT FACILITY BIODIVERSITY PROJECTS REPORTS AND DOCUMENTS IN PROJECT FILES I. Report on Asset Managers for a Trust Fund for Brazil, October 1995. 2. Report from the General Biodiversity Coordination (MMA) on the status of activities of PRONABIO, October 1995. 3. Portaria No. 14, Fundagio Getulio Vargas, creating the Brazilian Biodiversity Fund (FUNBIO), document includes: Internal Regulations of FUNBIO and initial Board membership, September 28, 1995. 4. Final Report of the Biodiversity Consultative Group recommending the institutional arrangement for Project II, June 29, 1995. 5. Issues and Options in the Design of Global Environment Facility Supported Trust Funds for Biodiversity Conservation, 1995. 6. Draft PROBIO Operations Manual, December 1995. 7. Draft FUNBIO Operations Manual, December 1995. 8. Decree No. 1354 establishing PRONABIO, December 1994. 9. Report on the Fiscal Status of a Brazilian Biodiversity Fund. Alberto Gomes Santos Carneiro, December 1994. 10. Formal declaration of intents, Workshop on public-private partnerships in biodiversity conservation and sustainable use, June 1994. 11. First Global Forum on Environmental Funds, Santa Cruz, Bolivia, May 1994. 12. Legislative Decree No. 2, where Brazilian Congress ratifies the United Nations Convention on Biological Diversity, February 1994. 13. First-round model sub-project proposals and workshop: a) "Conservation and Restoration of Biodiversity in Gallery Forests of the Cerrado." EMBRAPA/University of Brasilia/IBAMA/CAMPO, September 1993 and February 1994. 99 Annex 13 Project I and Project II b) Restoration and Management of the Natural Ecosystems of Brejos de Altitude in Pernambuco and Paraiba." Federal Universities of Pernambuco/Paraiba/Rural Pernambuco/SNE, February 1993 and December 1993. c) "Methods and Strategies for the Integrated Conservation of Genetic Resources." EMBRAPA/CENARGEN, February, July 1993 and June 1995. d) "Conservation and Restoration of Atlantic Forest in the Tablelands of Linhares, Espirito Santo." Federal University of Rio de Janeiro, February 1993. e) "Management of Conservation Units in the Guaraqueaba, Parand Region." SPVS/Federal University of Parand/IBAMA/IAP, January 1993. f) Proposal for Biome-Level Assessment Workshop on Priority Conservation Areas in the Cerrado. Pro-Nature Foundation, September 1993. g) "Biodiversity Information Network / BIN-Brazil, Fundagio Tropical de Pesquisa e Tecnologia Andr6 Tosello, February 1993. 14. By-Laws of the GetWlio Vargas Foundation, 1992. IBRD 27334 VENEZUELA . / FR. C O L O M BI - . (SURINAME GUIANA., COLOMBIA '-[I1 * .GUYANA , \RORAIMA ",- MAPA V-1 A* AMAZONAS 4MARANHAO CEA4A N TE GO- O IA TOCANTINS( MIPE PERU '..~ -A-OGE --- GROSSO GOIAS ~ ~*} Bras[lizo *PA*ED. BOL IVI I M ANNI E A GN ,TO GROSS5000KLMT *00 DO S0L 00 MTI N PARAGU R G A ii JoI o- o CHILBZ MAJOR BIOMES OF BRAZIL MA)OR BIOMES: AMAZONIA NTOA AIA ATLANTIC FOREST AND ASSOCIATED GRASSLANDS SAEBUDRE GRASSLANDS, SHRUBLANDS (CERRADO), AND PANTANAL XERIC SHRUBLANDS AND DRY FORESTS (CAATINGA)Thbonaisclr,demntos MARINE CONTINENTAL PLATFORM (200 METER DEPTH)thsmpdnoipl,nteprtf Source: Adapted from Dinerstein, E , D.M Olson, D J Graham, A.L.o th leasausfan trioy,r Webster, S.A. Primm, M P Bookbinder, and G. Ledlec, 1995 A conservation ayedreeto cetneo assessment of the terrestrial escoregions of Lotin America and the Caribbean. sc onais L NAINLIAIA ----FBRAR STTEBUNARE --\ITENAINA BUNARE Th2onais oos eoiain an n te norainsono thsmpd/o ml,o h ato FEBRARYI99 IMAGING Report No: 14523 BR Type: PD Printed on recycled paper
Groupe de la Banque mondiale · GEF Project Document
Brazil - National Biodiversity and Brazilian Biodiversity Fund Projects
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