Zambia - Environmental Support Program Project

Document of The World Bank Report No. 16239-ZA STAFF APPRAISAL REPORT REPUBLIC OF ZAMBIA ENVIRONMENTAL SUPPORT PROGRAM May 7, 1997 Agriculture Operations Eastern and Southern Africa Africa Region  CURRENCY EQUIVALENTS Currency Unit: = Zambian Kwacha (ZK) SDRI.00 = US$1.383 (As of March 31, 1997) US$1.00 = ZK 1,300 (As of March 31, 1997) FISCAL YEAR Januarv I - December 31 ABBREVIATIONS AND ACRONYMS CIDA - Canadian International Development Agency ECZ - Environmental Council of Zambia EIA - Environmental Impact Assessment ESP - Environmental Support Program GRZ - Government of the Republic of Zambia IDA - International Development Association IUCN - Intemnational Union for the Conservation of Nature MENR - Ministry of Environment and Natural Resources MOFED - Ministry of Finance and Economic Development MOLA - Ministry of Legal Affairs MLG&H - Ministry of Local Government and Housing MOE - Ministry of Education MPU - Micro Project Unit NESC - National Environmental Steering Committee NDF - Nordic Development Fund NORAD - Norwegian Agency for Development Cooperation PEF - Pilot Environmental Fund PID - Planning and Information Department SRP - Social Recovery Project UNDP - United Nations Development Programme WWF - World Wildlife Fund ZEEP - Zambia Environmental Education Program The preparation of this operation is the work of many, and has been facilitated by the Japanese Trust Fund resources. This report is based on the findings of an appraisal mission that visited Zambia in June/July 1996. The mission comprised Messrs/Mmes. B. Souhial. Mission Leader, F. Falloux, Technical Specialist; F. King, Senior Economist; Y. Prevost, Environmental Information Specialist: R. Robelus. Senior Environmental Specialist: T. Yudelman-Bioch, Environmental Specialist; R. Etheredge. Consultant, Planning and Budgetary Specialist; S. Muntemba, Environmental Specialist; V. Okaru, Regulation Specialist; I. Walton, Natural Resource Management Specialist; and J. Erikson. institutional Specialist. The following also participated in the post appraisal of February 1997: Messrs. M. Bekhechi. Counsel; and H. Johnson, Institutional Specialist. Peer reviewers for the document included Messrs/Mmes. R. Clement-Jones. Senior Environmental Economist; G. Yabrudy, Resident Representative: and R. Goodland, Lead Adviser. Mmes. 1P. Pomerantz and S. Ganguly are the Country Director and the Technical Manager, respectively, for the operation. Vice President: Mr. Callisto E. Madavo, AFR Country Director: Ms. Phyllis Pomerantz, AFC02 Technical Manager: Ms. Sushma Ganguly, AFTAI Task Team Leader: Mr. Bachir Souhlal, AFTAI  REPUBLIC OF ZAMBIA ENVIRONMENTAL SUPPORT PROGRAM CONTENTS 1. BACKGROUND ................................................1 A. C OUNTRY BACKGROUND ................................................. I B. THE ENVIRONMENTAL SITUATION ................................................ 2 C. ENVIRONMENTAL MANAGEMENT FRAMEWORK ................................................ 4 D. THE ENVIRONMENTAL AGENDA ................................................. 7 E. LESSONS LEARNED FROM PAST OPERATIONS ................................................ 7 F. OTHER DONOR ASSISTANCE ................................................ 8 G. RATIONALE FOR IDA INVOLVEMENT ................................................. 8 2. THE PROGRAM ................................................ 9 A. PROGRAM RATIONALE ................................................ 9 B. PROGRAM APPROACH ................................................ 9 C. PROGRAM OBJECTIVES ................................................ 1 1 D. PROGRAM DESCRIPTION .................................................11 3. PROGRAM COSTING AND FINANCING ................................................ 18 A. COST ESTIMATES ................................................. I8 B. FINANCING .1.................................................9 C. PROCUREMENT ................................................ 19 D. DISBURSEMENT ................................................ 22 E. ACCOUNTS AND AUDITING ................................................ 25 4. PROGRAM ORGANIZATION AND IMPLEMENTATION ................................................ 26 A. PROGRAM MANAGEMENT ................................................ 26 B. PHASING OF IMPLEMENTATION ........................ 28 C. COMPONENT IMPLEMENTATION ........................ 28 D. MONITORING, EVALUATION, AND REPORTING ..................................... 32 E. IMPLEMENTATION SUPPORT ..................................... 33 5. BENEFITS AND JUSTIFICATION ..................................... 34 A. PROGRAM IMPACT ..................................... 34 B. RISKS ..................................... 34 C. ECONOMIC ANALYSIS ..................................... 35 D. SUSTAINABILITY ..................................... 35 6. AGREEMENTS AND RECOMMENDATION ..................................... 37 A. ASSURANCES OBTAINED AT NEGOTIATIONS ..................................... 37 B. CONDITIONS OF BOARD PRESENTATION ..................................... 37 C. CONDITIONS OF EFFECTIVENESS ..................................... 38 D. CONDITIONS OF DISBURSEMENT ..................................... 38 E. RECOMMFNDATION ..................................... 38  ANNEXES ANNEX 1: LOGICAL FRAMEWORK AND KEY PERFORMANCE INDICATORS ANNEX 2: COMMUNITY ENVIRONMENTAL MANAGEMENT PROGRAM ANNEX 3: AGREED FUNCTIONS AND RESPONSIBILITIES OF ECZ AND PID ANNEX 4: ORGANIZATIONAL CHARTS ANNEX 5: ACTIVITY MATRIX OF DONORS IN THE ENVIRONMENTAL ARENA ANNEX 6: PROJECT IMPLEMENTATION SCHEDULE ANNEX 7: PROGRAM SUPERVISION SCHEDULE ANNEX 8: PROGRAM COST ESTIMATES ANNEX 9: DOCUMENTS IN PROJECT FILE TABLES TABLE I: PROJECT COST SUMMARY BY COMPONENT ................................................. 18 TABLE 2: FINANCING PLAN ................................................. 19 TABLE 3: PROCUREMENT ARRANGEMENTS ................................................. 21 TABLE 4: DISBURSEMENT OF IDA CREDIT BY CATEGORY ................................................. 24 TABLE 5: DISBURSEMENT PROFILE ................................................. 24 Vice President: Mr. Callisto E. Madavo, AFR Country Director: Ms. Phyllis Pomerantz, AFC02 Technical Manager: Ms. Sushma Ganguly, AFTA1I Task Team Leader: Mr. Bachir Souhlal, AFTA1I  REPUBLIC OF ZAMBIA ENVIRONMENTAL SUPPORT PROGRAM CREDIT AND PROGRAM SUMMARY Borrower: Republic of Zambia. Implementing agency: Ministry of Environment and Natural Resources (MENR). Beneficiaries: Ministry of Environment and Natural Resources (MENR), Environmental Council of Zambia (ECZ), and local communities. Poverty: Not applicable. Amount: SDR 9.3 million (US$12.8 million equivalent) Terms: Standard, with 40 years maturity. Commitment fee: 0.50% of the undisbursed credit balances, beginning 60 days after signing, less any waiver. Financing Plan: See Para. 3.4 Net present value: Not applicable. Staff Appraisal Report: No. 16239-ZA Map: IBRD 28432 Project Identification No.: ZM-PA-3253   1. BACKGROUND A. COUNTRY BACKGROUND 1.1 Zambia is a country of about 750,000 square kilometers, roughly the area of Spain and the United Kingdom combined. With a population of some 9.2 million, it is one of the least densely populated countries in Africa. It is one the most urbanized countries in Sub-Saharan Africa, next to South Africa, with about 40 percent of the population living in cities and towns. Copper has been the backbone of the economy and has had a central role in determining the demographics of the country by creating urban centers in the Copperbelt that have drawn mine workers from the rural areas with the promise of jobs and easy access to infrastructure and social services. The proportion of the population living in poverty increased from 60 percent in the mid-1970s to 69 percent in 1991. 1.2 Zambia adopted an ambitious economic reform program in 1991 aimed at reducing the role of the state in the economy through decontrol, deregulation, and privatization and at promoting faster private sector growth through reduced fiscal deficits and a more efficient public sector focused on infrastructure and human development. The overall objective of this program is to reduce poverty through faster and more broadly shared economic growth and improved provision of social services. 1.3 Impressive progress has been accomplished in the past five years, especially in liberalizing markets and reducing the role of government in commercial activities. An ambitious privatization program is underway. Over half of the parastatals have been sold or liquidated, and negotiations are underway for the privatization of the copper mining parastatal. Control on prices, interest rates, imports, and exports have all been discontinued. 1.4 Macroeconomic performance has been uneven, particularly in the early years when inflation was over 100 percent, but fiscal and monetary control have been more effective in the past two years. The domestic budget achieved a small surplus in 1996. Progress on civil service reform has also been limited, but the size of the public service has begun to decline, and plans to restructure 14 ministries have been adopted, and implementation will begin in 1997. 1.5 The rate of economic growth was disappointing in the first five years of Zambia's economic reform program. Overall GDP has been about flat since 1990; per capita GDP has fallen by about 13 percent. Growth has been elusive because of incomplete and imperfect reform implementation, the inevitable delays in investor response, and several droughts, along with the considerable legacy of more than two decades of inefficiency and mismanagement from Zambia's previous policies. Overall GDP is estimated to have grown by about 5 percent in 1996, but only because good rains brought a 15 percent increase in agricultural GDP. 1.6 The country's economy has been, and is likely to remain, driven by the wealth of its natural resources. Copper will continue to play an important role in the economy, but diversification is needed. While the natural resource endowment could provide the basis for accelerated and broad-economic growth, its improper management would constrain growth and undermine efforts to alleviate poverty.  -2- B. THE ENVIRONMENTAL SITUATION Importance of the Environment 1.7 Abundant water, land and forest resources could provide the basis for sustainable development in the country. However, increasing pressure on these resources has given rise to environmental degradation, constraints to growth and increasing poverty. The effects can be seen most directly in declining agricultural productivity, resulting from a lack of proper water and soil management; dwindling wildlife populations, as a consequence of poaching or degradation of their natural habitat; and declining fisheries earnings, as a result of overfishing and water pollution. Both air and water pollution affect the health and productivity of Zambia's work force, particularly in the urban areas surrounding mining operations. Many Zambians lack access to clean drinking water, adequate sanitation and solid waste management facilities. The adverse effects of these conditions on health and productivity tend to disproportionately impact the poor segments of society. 1.8 In recognition of the importance of the environment, the Government of Zambia has taken several steps toward its management. In 1985, it adopted a National Conservation Strategy, which laid the basis for the enactment of the Environmental Protection and Pollution Control Act in 1990 and the subsequent establishment of the Environment Council of Zambia (ECZ) as its statutory body. The Ministry of Environment and Natural Resources (MENR) was established in 1991 to set environmental policies and coordinate the ministries involved in environmental and natural resource matters. In December 1994, after a process of broad consultation, the Government finalized the National Environmental Action Plan (NEAP) which identified key environmental problems and related institutional and legislative constraints, and recommended actions for management and mitigation. Boxta1f Natnal:EnvfronmeniaAdlon Plan (see Annex 4 :lAdpteby in Decembere199 as assequel to the.Nationaltconservat.on St the NEAP gves an overview ofZamb .. environmental imsand assesthe effectieness hof legana instituions dealingwith them. Jiodsaeioptions for conom icalyand isocialy sustalnable managemet ,i0 -the erX~mn$ environment and/orms the basisf ; :fg;f:ff; 0 :;::fff;:gf:g l : y : ii ;:y:0:4 : fo the f ::;fg l .SP- 0 i gg;;;: Ke 0rpsals merging from the MEAPinclude;' A fttff0tS*000-S a cleardefinition ad afunderiistandingofnantitutonazl r iesosibiiisbetween Sthe:h IwoAiXfS X :illfttt environmentalapexunitst ( .Z,hbeteen these units and theagencies responsiblefor : mplementng environmenta litse an beteen g ent servies and thevcustodians of the eavironment part'cuiar locolmmunittes; a an expansion in ttheinstittional 0capacty t manage heenviroment ad a ratioalizatrion;f the legal fr:amberk win :which envirnmen biniti are undertaken; * the promoonWoftraditional institionsancommuni pariciatn to he create a'. emand-d^riven cutre upport animrovend OMni ad d moresstainbleuse ofnara or Of..'J o obliganvironment al imassessments omr d pt projets in ascrs; and ti;t; *0- the reatirtMon offianclngecantisms andan Inceedavailability freources XtorespondZ0000tittti t:;000g ;::e:00nvironmental needsand opportn ie.: -y - - 000 : 0 jj: S: - t 0000:iy0000t00 ;0;: 0;000000  -3 - Issues and Concerns 1.9 The five major environmental issues identified in the NEAP include: (a) soil degradation; (b) water pollution and inadequate sanitation; (c) deforestation; (d) air pollution, especially in copper mining towns; and (e) wildlife depletion. The framework for addressing these issues came out of a broad consultative process involving all segments of society. 1.10 Land. Agricultural land is abundant in Zambia, with only 6 percent of arable land currently under continuous cultivation. Nevertheless, the predominant soils in Zambia are low in nutrients, have low water retention capacities, and are generally strongly acidic. Land under cultivation is often subject to degradation as a result of erosion, deforestation, nutrient loss, and increasing of acidity levels. These problems, combined with a high rate of population growth (3.5 percent per annum) and policy-induced changes in access to land, land use and patterns of agricultural production, suggest a growing need to better manage agricultural land. 1.11 Water. Zambia is unusual in Southern Africa in that it is endowed with sufficient water resources to meet present and expected longer-term demands. Rainfall generally is good, groundwater is available everywhere in the country at less than 100 meters and reliable sources of surface water are abundant. However, recent droughts have pointed to the need for sustainable and sound management of water resources. While at present, there is no problem with the quantity of water resources in Zambia, conflicting water demands have arisen in some areas and environmental degradation has been increasingly observed. In the Kafue River Basin, for example, competing demands for hydropower generation, agricultural production, urban domestic and industrial use have created conflicts, and industrial waste in the Copperbelt and Kafue Estates has polluted much of the Basin. 1.12 Access to clean water and sanitation is a growing problem. It is estimated that 59 percent of the population has access to safe drinking water and that 55 percent has access to sanitation. There has been little extension of the country's urban water delivery infrastructure since the copper boom period ended. In response to this problem, the Bank is currently financing the Urban Restructuring and Water Supply Project to rehabilitate urban water and sanitation systems and rehabilitate small rural-piped systems. Water quality is also a cause for concern. In urban areas, increasing quantities of domestic waste and inadequate sanitation pollute groundwater supplies and surface water systems. Mining and industrial areas suffer from leaching of heavy metals and release of other forms of industrial waste into rivers. The country's extensive wetland ecosystems are also starting to be threatened. 1.13 Forest Resources. Forests and woodlands, which cover some 60 percent of the land area in Zambia, are rich in biodiversity but relatively poor in commercial timber species. Firewood and charcoal from these forests are the main cooking energy source for 90 percent of households. Deforestation, estimated at some 139,000 hectares per year in the period 1975- 1990, has reached critical levels as a result of uncontrolled settlement, illegal logging, clearing for agriculture and, to a lesser extent, shifting cultivation, forest fires, and charcoal production. Deforestation is a major contributor to soil erosion and siltation. 1.14 Air. Air quality is of increasing concern, especially in the mining areas. At present, sulfur oxide emissions from the mining industry rarely reach hazardous levels, though  -4- concentrations near some mines routinely exceed the country's newly established air quality standards, and increased incidence of respiratory diseases has been recorded in the Copperbelt. Over the medium-term, it would be economically feasible to reduce emissions by converting sulfur oxides into industrial sulfuric acid which could then be used in the leaching process to recover copper from low grade oxide ores, however, substantial investment would be required. 1.15 Wildlife. Wildlife and unspoiled habitats are a rich national heritage, a source of livelihood for rural and peri-urban communities, and a potential source of significant tourism revenues. The country, rich in biodiversity, is believed to host 233 mammal, 731 bird, 145 reptile and 156 fish species. Zambia's fauna is protected in 19 national parks covering 6.4 million hectares, while regulated hunting is permitted in game management areas covering an additional 16.6 million hectares. The private sector operates another 19 game ranches. Wildlife is currently threatened by poaching, land-use pressures, development of economic infrastructure, mining, logging, overfishing, tourism development, bush fires, and the destruction of natural habitats. Traditional chiefs, who formerly ensured sustainable use of wildlife resources, no longer have legal power to do so. A lack of institutional capacity and staffing to protect and plan for the sustainable management and utilization of wildlife exacerbates the problem. 0000~~R~ 2 Poverty al iN2bthe Core fEnvirotnmentalDegradtlonfX li Zmia00;;;0 :E vironmental degradationin Zambiais irooted in povert and the lack falternatives in peole:'s surviva: strategisinadequate understanding of environmental problems,4 weak admiistra tive andlegal fraxe;wtr and Xa breakdownlaf trational values and practices which pr helped to ensure sstainarbil ty fthe tnaturalhabitat.i The poor are gespecal vurablef tod ioion onaturiaresources and increases in pollution. The *k4ackofaccess Ntoclea waer, the depletion offeo arpolutiont due to mining :options, ad sodl drad ato ajffect the poor mostrsevere, in particur women, elderl, youth and singel headed-households. in additon, their lakofaccess: 10stsftlresources often iworsens their sittion leadnginto a downward spiraltoftwrsening poverty and environmental ddation.r Thirs,: once again, illustrates t4he.nexus5 o fynatu resource dleltion and envirnenta cdegradation C. ENVIRONMENTAL MANAGEMENT FRAMEWORK Policy Context 1.16 Key policy orientations stemming from the National Conservation Strategy for Zambia and the NEAP include: * ensuring the sustainable use of Zambia's renewable natural resources; * maintaining Zambia's biological diversity, including the range of biological material governing the quality and productivity of domesticated plants and animals, the rich diversity of wild species, as well as essential ecological processes and life-support systems; * developing an understanding and public awareness of environmental issues, and reinforcing sound traditional practices to preserve natural resources and the habitat;  -5- * fostering greater self-sufficiency within communities and building up their capacity to take control of their resources and environment; * gradually transferring the prime responsibility for environmental conservation and management from government to the people; and * tackling poverty as a root cause of environmental degradation and unsustainable use of natural resources. 1.17 In addition to these environmental policy orientations, the Government has recently taken a number of important policy initiatives which directly affect the implementation of programs in the environmental sector. Many of these initiatives are linked to the Public Sector Reform Program which is only now being implemented, after being formulated in late 1993. The three most critical policies and the implications of these policies are: * Restructuring the Public Service. The main thrust of the Public Sector Reform Program is to create a 'less costly, but more efficient Public Service,' which in practice means smaller government. * Decentralization and Strengthening of Local Government. The aim of this policy is to reduce the concentration of government by devolving powers and functions to the provinces and districts. Several ministries have already transferred staff and responsibilities to the districts. * Privatization. Consistent with the goal of 'small government' is the increased emphasis on the private sector and the transfer of responsibility for some services and agencies to the private sector, non-governmental and quasi-governmental bodies, as well as local communities. The move toward greater involvement of, and responsibility assumed by, communities is a direct consequence of this policy. Legislative and Regulatory Framework 1.18 The Environmental Protection and Pollution Control Act constitutes the overall umbrella legislation for the environment. Zambia also has a number of general and sectoral laws relating to environmental protection. Under ESP preparation, a comprehensive report assessed the legislation covering environmental management and environment-related sectors such as land, agriculture, health, forest, national parks and wildlife, local government, fisheries, international environmental cooperation, mines and minerals, and water resource management. The report shows that: (a) much of this legislation does not contain specific provisions and detailed criteria for the preservation and sustainable use of particular natural resources; (b) laws on economic development, natural resource management and environmental protection are not coordinated, with the exception of the Mines and Minerals Act of 1995, and the Mining Environmental Regulations of 1996, which require mining operators to comply with national environmental standards in mining operations; and (c) some penal and enforcement provisions in the legislation are outdated. 1.19 Furthermore, the report shows that the domestic legislation is not always consistent with the international environmental conventions that were ratified by Zambia, including: the 1968 Algiers Convention on Conservation of Nature and Natural Resources in Africa, the 1973 Washington Convention on International Trade in Endangered Species of Wild Fauna and Flora,  -6- the 1985 Vienna Convention on the Protection of the Ozone Layer and the related 1987 Montreal Protocol, the 1989 Basel Convention on Transboundary Movement of Hazardous Wastes, the 1992 Rio Convention on Biological Diversity, the 1992 Rio Framework Convention on Climate Change and the 1994 Convention to Combat Desertification. Improvement of the legal framework would also have to ensure Zambia's full compliance with international environmental conventions. 1.20 The Government is currently reviewing various laws and their implementing instruments to update and improve the overall environmental legislation. The government, through ECZ, has enacted an Environmental Impact Assessment (EIA) 1997 legislation. It is also reviewing the legislation pertaining to forest and land tenure. 1.21 An effective policy and legislative framework for effective environmental management requires: (a) laying down standards and regulations that support current laws; (b) ensuring the consistency of environmental laws and related laws e.g., investment law, land tenure legislation; (c) building implementation capacity by training staff to carry out environmental management functions; and (d) ensuring effectiveness of the judiciary. Institutions 1.22 The sheer number and diversity of government agencies involved in environmental management highlight the need for coordination and clarity in functions and responsibilities. In addition to MENR, a number of ministries have significant environmental responsibilities: Mines and Minerals; Agriculture, Food and Fisheries; Lands; Energy and Water; Tourism, under which falls the National Parks and Wildlife Service; Local Government and Housing; and Education. Under the purview of the MENR, ECZ has the main responsibility for coordinating and managing environmental initiatives by these ministries and other agencies, and responsibility for technical management of the environmental mandate, while MENR is charged with high level coordination and policy direction. In addition to being empowered to oversee the implementation and enforcement of the environmental policies drafted by the Ministry, ECZ is also responsible for setting, enforcing and monitoring standards and measures of pollution control; maintaining an information network and database; facilitating environmental education and training; supervising the environmental impact assessment process; and, when necessary, implementing high priority and cross-sectoral environmental projects. 1.23 Since their inception, the two environmental apex institutions (MENR and ECZ), have been constrained by insufficient support from Government. ECZ, which relies on the government for its regular budget, has only managed to maintain its operations through donor support from the Canadian International Development Agency (CIDA) and the Norwegian Agency for Development Cooperation (NORAD). Only half of established positions have been filled. Some current staff have received training through bilateral programs but much remains to be done on training and capacity building to enable ECZ is to fully meet its mandate. However, the agency has achieved considerable success, particularly in the field of pollution prevention and protection. 1.24 At present, MENR has limited capacity to deal with environmental issues. Its two departments--forestry and natural resources--have contributed little to the Ministry's overall ability to carry out its environmental mandate. However, MENR has a number of competent officers with environmental experience who will be brought together in a new department, the  -7- Planning and Information Department (PID). The establishment of this new departmnent, if matched with institutional support and training, would help address capacity constraints. 1.25 Through the ESP, the Government has committed itself to improving institutional performance by assigning clear institutional responsibilities in order to: (a) minimize opportunities for conflict among various agencies and bodies involved in environmental management; (b) better define the functions of relevant agencies; and (c) ensure effective coordination among government agencies and other actors such as local communities, NGOs and the private sector. D. THE ENVIRONMENTAL AGENDA 1.26 The NEAP outlines the Government's current agenda for coping with the key environmental issues and concerns presented above. Institutional and legal issues are at the forefront of this agenda. It is recognized that an effective, sustainable, prevention-oriented framework must be in place before irreversible environmental damage is done and the costs of remediation mount. While effective performance of MENR and ECZ are key to successfully achieving this goal, active and coordinated programs and initiatives by the sector ministries and agencies and cross-sectoral bodies such as the Ministry of Local Government and Housing (MLG&H) are also critical to sound environmental and natural resource management. 1.27 The main challenges lie in strengthening institutional and legislative capacities and frameworks; providing guidelines and enforcement mechanisms for sustainable natural resource management and environmental protection; coordinating and monitoring the activities of government, parastatal and private sector interests; and raising environmental awareness in the country and encouraging broader participation in the management of Zambia's natural heritage. 1.28 The Forest Act of 1973, the National Parks and Wildlife Acts of 1991 and, until recently, the Lands Act of 1975, tended to weaken traditional use and management systems.I This in turn has undermined incentives for local communities to manage their forests, wildlife and other resources. A return of custodianship of natural resources to local communities would restore the incentive to invest in and manage the resource base and local environment. Many of the programs designed to support local communities are uncoordinated (giving rise to duplication) and do not enable communities to deal adequately with environmental issues. Moreover, current understanding of the nature and magnitude of environmental and natural resource management problems facing Zambia is limited. There is a need for mechanisms to facilitate local interaction on environmental issues and provide financial resources and empower communities to manage their resources sustainably. The Land Act has since been revised in 1995 to address some of these issues. E. LESSONS LEARNED FROM PAST OPERATIONS 1.29 The Bank's assistance strategy for environmental management is based on a dialogue with the Government, lessons from previous Bank/IDA operations, and the Bank's global perspective on the environment. Although this is the first Bank Group lending specifically The Land Act was revised in 1995 while the National Parks and Wildlife Act and Forest Acts are in the process of being revised.  -8- aimed at the environment in Zambia, much of the prior lending for the agriculture and urban infrastructure sectors has had a direct impact on the environment. The main lessons learned from these operations and other ESPs implemented in the region are: (a) avoid overly ambitious goals and minimize the inherent complexity of this kind of program; (b) set clear priorities through a process of consensus building and active stakeholder involvement; (c) promote community ownership through a highly participatory approach to program preparation and implementation; and (d) start with a modest and flexible first-phase program to progressively strengthen institutional capacity and initiate the process of change. These lessons are reflected in the proposed ESP. F. OTHER DONOR ASSISTANCE 1.30 Several donors and NGOs 2 (see Annex 5) have provided support for institutional strengthening, pollution prevention programs and other environmental initiatives. However, it is recognized that these initiatives must fit within a comprehensive regulatory and institutional framework if they are to be fully effective and their full potential realized. The present fragmentation of efforts and inefficient coordination mechanisms have been a constraint to the development of future donor support for the environment. Because of this situation, there has been a strong and coordinated support from the donor community for the joint Government/Bank initiative to develop the Environmental Support Program (ESP). G. RATIONALE FOR IDA INVOLVEMENT 1.31 Rationale for IDA Involvement. The program is in line with the Country Assistance Strategy (CAS) discussed by the Board on July 18, 1996, which supports a three pronged strategy to assist Zambia's development efforts: (a) help create a stable macroeconomic environment as a prerequisite for growth and employment; (b) promote private sector development and greater public sector efficiency to stimulate more rapid and inclusive growth; and (c) target assistance to poor and vulnerable groups directly. Effective environmental management is a critical feature of the second and third prongs of this strategy, as the sustainable management and use of Zambia's natural resources is fundamental for economic development and poverty reduction. Responding to the Government's request for Bank assistance provides an opportunity to help shape Zambia's regulatory and institutional framework, establish environmental policy and financial instruments, and ensure the integration of environmental concerns into Zambia's economy. The Bank, having supported the preparation of the NEAP, has already made a substantive contribution to improving environmental awareness but much remains to be done. Continued involvement of the Bank is essential to sustain the Government's commitment to difficult but critical changes in its public investment program and its reform of the civil service, including strengthening the capacity of districts to respond to community initiatives. The Bank also has a key role to play in helping the country mobilize Global Environmental Facility (GEF) financing, given the global nature of the benefits that are expected from improved biodiversity protection. The program follows successful introduction of ESPs in other countries. As one of the first environmental, stand-alone lending operations in Southern Africa, it could serve as a guide for other countries in the Region. 2 CIDA, IUCN, NORAD, UNDP, WWF and ZEEP.  -9- 2. THE PROGRAM A. PROGRAM RATIONALE 2.1 The program would support the objectives of both the Government's development strategy and the Bank's Country Assistance Strategy which seek to reduce poverty within the framework of economic growth and protection of the environment and natural resources. Within the NEAP's long-term perspective, the program would help the Government initiate a capacity building effort to better address environmental issues. This would be part of a long-term, multi-donor effort to finance projects and programs which have been generated by, or are in line with, the NEAP priorities and recommendations. While it is important that environmental issues be dealt with in an holistic manner, it is also essential that the responsibility for integrating and strengthening environmental initiatives in program implementation remains with sector ministries. Since existing institutions and the linkages between these institutions and other stakeholders are weak, it would be important for ESP to foster intersectoral linkages, promote capacity building at central and district levels, raise awareness, rationalize environmental legislation and mainstream the use of EIAs in investment operations. ESP would also contribute to the process, already underway, of empowering local communities in their role as custodians of the natural resource base and in tackling environmental issues of local concern. B. PROGRAM APPROACH 2.2 The approach taken in designing the ESP emphasizes active involvement of the various stakeholders in program formulation in order to build a sense of ownership and facilitate implementation. The approach has proved to be successful in a number of countries and has resulted in programs which are more in tune with local capacity, while also recognizing the particular constraints with which the stakeholders themselves have to contend. The ESP approach has been designed to allow considerable flexibility in implementation and responsiveness to priorities which might emerge during implementation. The support provided would form the first phase of a long-term commitment to the improvement of the environment and the sustainable use of natural resources. It would be limited in scope and ambition and would include a number of small and challenging pilot initiatives which, if successful, could be developed into full-fledged national activities. A similar approach was successfully employed with the Bank-supported Social Recovery Project (SRP) which, now in its second stage, is considered to be one of the model programs in the country. 2.3 The program would have an institutional focus. It would concentrate on building up the capacity of the two apex organizations and developing environmental awareness and management processes in sector ministries and agencies. As part of this focus, an environmental presence would also be established at the district level, on a pilot basis, to determine how a participatory environmental management capacity could best be developed in the communities. As part of the long-term decentralization effort, the goal should be to transfer progressively the responsibility for such management from Government to the communities. 2.4 The program would combine tightly targeted initiatives with more broadly applied ones. The targeted initiatives would be employed to direct support to the poorer members of society,  -10- and to poorer communities in both rural and urban areas. It is the poor who often live in the most degraded areas and who, because of their condition and lack of options, contribute to environmental degradation. The provision of incentives to develop environmentally sound investment and income generating projects would enable communities to gradually reduce their poverty and adopt a more sustainable approach to resource utilization, thereby tackling poverty alleviation within an environmental framework. Along with targeted interventions, the ESP would support broad-based initiatives, such as the program on environmental education and public awareness and the development of environmental information systems, designed to foster a better understanding of environmental issues. 2.5 Inherent in program design is a multi-donor approach. The Bank's role is that of a facilitator and catalyst in the process, working with Government, the donors and other stakeholders to help design and prepare the ESP. The program, by creating a framework for tackling the concerns of the NEAP, would complement and reinforce the ongoing and planned activities of the core group of donors and NGOs already active in the environmental arena. Upcoming initiatives by two donors, NORAD and CIDA, would complement and be closely linked to ESP components. These initiatives have been designed in consultation with government and are directed at strengthening institutional capacity3. Other donors have indicated their interest in supporting the ESP once a sound program is developed and they are able to see the most appropriate application for their assistance. B:; : -ox 3 idStakeholder Purtf pa1kin: An A iaki that: Works0 - The NEAP sarted th cn -daivepre on Mte evoetn ambia. it-begn :~idntifi ahose ;:en,ities: with powery St ,effet cag ado thefis,ne me4 brought togehe ni aitonl cieft, and0t-t-;; ;00ff 000; :0 rp-resaes fiom:ine ministrie academicinstittionsN andthedncommuniity tro devise- at:: ma: ;M i jty i s!rategy for curbing env0ironmental and natural resouceI odegradat in Zambia V thre tatives fromh var ousgroups, themp v ent aNrResources then set fiptsorces to-Ip desig the0 r* Enviromenta Supor Progra (ES)') thfis stag of N0 impleentaton On :innovationemrgng frm thi;s pres i tu propasalfo a iot Evrnental un to p,romotue small .t.00-t.t0 scale. co rago enionmental proymal ---jects. e Goermnentgawd a workhpto maintainmomentum im the C tativa procsseand hto in ke iff:: Xactive sthdepatiipatn Aspartofastrategytokeepthe EP demand ,resons.e.. the workshop; :; :: was shditded coinidewith z the don or aprisal oth