Turkey - Anatolia Watershed Rehabilitation Project

Documentof The World Bank FOROFFICIAL USE ONLY ReportNo: 28592 PROJECTAPPRAISAL DOCUMENT ONA PROPOSEDLOAN INTHE AMOUNT OFUS$20.0MILLION AND A GRANT FROMTHE GLOBALENVIRONMENT FACILITY INTHE AMOUNT OF US$7.0 MILLION TO THE REPUBLIC OF TURKEY FORTHE ANATOLIA WATERSHEDREHABILITATIONPROJECT Europeand CentralAsia Region This document has a restricteddistributionandmay be usedby recipients only inthe performanceof their official duties. Its contentsmay not otherwisebe disclosedwithout World Bank authorization.  CURRENCY EQUIVALENTS (Exchange Rate Effective January 21,2004) Currency Unit = Turkish L i r a (TL) TL 1 = US$0.00000074 US$1 = TL 1,351,000 FISCAL YEAR January 1 -- December 31 ABBREVIATIONS AND A C R O N Y M S AGM General Directorate for Afforestation and Erosion Control o f MEF (Agaqlandirma ve Erozyon Kontrolu Genel Miidiirliigu) APK Research Planning and Coordination Board of MEF (Arastima Planlama ve KoordinasyonKurulu) ARIP Agricultural Reform ImplementationProject AWRP Anatolia Watershed RehabilitationProject BCPCPS Beneficiary-Centered Problem Census Problem Solving Method CAS Country Assistance Strategy CFAA Country FinancialAccountability Assessment csos Civil Society Organizations CYGM General Directorate for Environmental Management o f MEF (Cevre Yonetimi Genel Miidiirliigu) DHKD Society for the Protection o f Nature (Dogal Hayati Koruma Demegi) EAWP Eastem Anatolia Watershed RehabilitationProject ECA Europe and Central Asia Region EMP Environmental Management Plan ERR Economic Rate o f Retum EU European Union FMR Financial Monitoring Reports FMSU FinancialManagement Sub-Unit o f the O U GEF Global Environment Facility I P M Integrated Pest Management KHGM General Directorate for Rural Services o f MARA (Koy Hizmetleri Genel Miidurlugii) KKGM General Directorate for Protectionand Control o f MARA (Koruma ve Kontrol Genel Miidiirlugu) M&E Monitoring and Evaluation MARA Ministry o fAgriculture and Rural Affairs (Tarim ve Koy Islen Bakanligi) M C Micro-catchments MCIT Micro-catchment ImplementationTeam (Mikrohavza Uygulama Ekibi) MEF Ministry of Environment and Forestry (Cevre ve Orman Bakanligi) MESU Monitoring and Evaluation Sub-Unit o f the OU MRMA Microcatchment Resource Management Associations NPV Net Present Value NTFPs Non-Timber Forest Products OGM General Directorate for Forestry o f MEF (Oman Genel Miidiirlugu) ORKOY General Directorate o f Forest and Village Relations o f MEF (Orman ve Koy Iliskileri Genel Mudurlugu) ou Operations Unit (Islem Birimi) PAD Project Appraisal Document PAS Procurement Accredited Staff  FOROFFICIAL USEONLY PDA Provincial Directorate o f Agriculture (Tarim I1Mudurlugu) PDEF Provincial Directorate of Environment and Forestry (Cevre ve Orman I1Mudurlugu) PDRS Provincial Directorate o f Rural Services (KOy Hizmetleri I1Mudurlugii) PIP Project ImplementationPlan PMG Project Management Group (Proje Yonetim Grubu) PMR Project Management Report PMT Provincial Management Team (I1 Yonetim Ekibi) P M U Project Management Unit (Proje Yonetim Birimi) PSU Procurement Sub-Unit o f the O U QAG Quality Assurance Group REA Regional Environmental Assessment SA Social Assessment SEE State Economic Enterprises SPO State Planning Organization (Devlet Planlama Teskilati) TCs Treasury Controllers TEMA Foundationfor Combating Soil Erosion for Reforestation and the Protectiono fNatural Habitats TORS Terms o f Reference TUGEM General Directorate of Agricultural Productionand Development o f MARA (Tarimsal Uretim ve Gelistirme Gene1Mudurlugu) Vice President: Shigeo Katsu CountryDirector: Andrew N.Vorkink Sector Manager: Marjory Anne Bromhead Task Team Leader: Peter A. Dewees This document has a restricted distribution and may be used by recipients only in the performance of their official duties. I t s contents may not be otherwise disclosed without World Bank authorization.   TURKEY ANATOLIA WATERSHED REHABILITATION PROJECT CONTENTS A. Project Development Objective Page 1. Project development objective 2. Global objective 3. Key performance indicators B. Strategic Context 1. Sector-relatedCountry Assistance Strategy (CAS) goal supportedby the project 3 2. Main sector issuesand Government strategy 4 3. Sector issues to be addressed by the project and strategic choices 8 C. Project Description Summary 1. Project components 9 2. Key policy and institutional reforms supported by the project 12 3. Benefits and target population 13 4. Institutionaland implementation arrangements 13 D.Project Rationale 1. Project alternatives consideredandreasons for rejection 15 2. Major related projects financed by the Bank andor other development agencies 17 3. Lessons learnedandreflected inthe project design 17 4. Indications ofborrower andrecipient commitment andownership 18 5. Value added of Bank andGlobal support inthis project 19 E. Summary Project Analysis 1. Economic 19 2. Financial 20 3. Technical 20 4. Institutional 21 5. Environmental 22 6. Social 23 7. Safeguard Policies 25  F. Sustainability andRisks 1. Sustainability 27 2. Critical risks 28 3. Possible controversial aspects 29 G. Main Conditions 1. Effectiveness Condition 29 2. Other 29 H. Readiness for Implementation 30 I.CompliancewithBankPolicies 30 Annexes Annex 1: Project Design Summary 31 Annex 2: Detailed Project Description 36 Annex 3: Estimated Project Costs 42 Annex 4: Cost Benefit Analysis Summary 43 Annex 5: Financial Summary 47 Annex 6: (A) Procurement Arrangements 48 (B)Financial Management and Disbursement Arrangements 60 Annex 7: Project Processing Schedule 65 Annex 8: Documents inthe Project File 67 Annex 9: Statement o f Loans and Credits 68 Annex 10 Country at a Glance 71 Annex 11: GEF Incremental Cost Analysis 73 Annex 12: GEF Scientific andTechnical Advisory Panel (STAP) Review 80 Annex 13: Environmental Management Framework 84 Annex 14: Summary o f Social Assessment 91 Annex 15: Procurement o f Goods, Works andServices from Govemment-owned Enterprises 98 Annex 16: Identificationand Selection Criteria for Microcatchments 103 MAP(S) Project Watersheds (IBRD 32583) Sample Microcatchment Management Plan for Forestry Activities (IBRD 32584)  BORROWEWRECIPIENT 8.60 0.05 8.65 IBRD 18.38 1.62 20.00 LOCAL COMMUNITIES 8.51 0.95 9.46 GLOBAL ENVIRONMENT FACILITY 5.67 1.33 7.00 Total: 41.16 3.95 45.11  SorrowerlRecipient: REPUBLIC OF TURKEY Responsible agency: MEF AND MARA Undersecretariat o f Treasury 4ddress: InonuBulvari, Emek,06530 Ankara Contact Person: Ms. Aysen Kulakoglu, Head, World BankProjects Tel: 90-312-213 02 97 Fax: 90-312-212 87 37 Email: %her Agency(ies): GeneralDirectorate o f Afforestation and ErosionControl (AGM),Ministry of Environment and Forestry 4ddress: GaziTesisleri No. 11, Sogutozu, Ankara Tel: 90-312-212 55 96 Fax: 90-312-212 55 32 Email: General Directorate o f Forest andVillage Relations (ORKOY), Ministry o f Environment and Forestry Address: Gazi Tesisleri No. 11, Sogutozu, Ankara Tel: 90-312-212-5536 Fax: 90-3 12-212-5562 Email: GeneralDirectorate of Forests (OGM), Ministryo f Environment and Forestry Address: Gazi Tesisleri No. 11, Sogutozu, Ankara Tel: 90-312-212-6300 Fax: 90-3 12-212-5532 General Directorate for Environmental Management (CYGM), Ministryof Environment and Forestry Address: Eskisehir Yolu 8 km, Lodumlu, Ankara Tel: 90-312-287-9963 Fax: 90-312-285-5875 General Directorate of Agricultural Production and Development (TUGEM), Ministry of Agriculture and Rural Affairs Address: MilliMudafaa CaddesiNo 20., Kizilay, Ankara Tel: 90-312-418 5982 Fax: 90-312-417 0026 General Directorate o f Control and Protection (KKGM), Ministryo f Agriculture and Rural Affairs Address: Akay CaddessiNo. 3, Bakanliklar, Ankara Tel: 90-312-418-2023 Fax: 90-312-418-2023 General Directorate of Rural Services (KHGM), Ministryo f Agriculture and Rural Affairs Address: Eshsehir Yolu 9 km., Lodumlu, Ankara Tel: 90-312-287 80 92 - Fax: 90-312-287 8091 7 PO70950 Estimated Disbursements ( Bank FY/US$m): Project implementation period: 7 years Expected effectiveness date: 09/01/2004 Expected closing date: 06/30/2012 - 2 -  A. Project Development Objective 1. Project development objective: (see Annex 1) The project's overall development objective is to support sustainable natural resource management practices in28 microcatchments inAnatolia and Turkey's Black Sea Region andthereby raise incomes o f communities affected by resource degradation. Insupport o f this objective, the project will: encourage local communities to take responsibility for planning and implementing an integrated approach to sustainable natural resource management inselected microcatchments; introduce communities to more environmentally-friendly farming andforestry productionpractices to raise landproductivity, to reduce pressures on marginal lands, and to improve household income; help reduce nutrient discharge from agricultural sources into the Black Sea; strengthen the policy formulation and regulatory capacity towards meeting European Union (EU) standards for agricultural nutrient pollution control; improve the overall framework for river basinplanning and management inthe context o f EUdirectives on water; strengthen institutional capacity to promote sustainable natural resource management and to raise public awareness about resource degradation issues. 2. Global objective: (see Annex 1) The key global environment objective is to introduce farming practices which will reduce the discharge o f agricultural nutrients into surface and ground water inwatersheds draining into the Black Sea infour provinces. The Project will help introduce improvedmanure andnutrient management practices as well as organic farming which, over the long run, will help reduce the discharge of nitrogen andphosphorus into the surface and ground waters o f Turkey andthe Black Sea. Project activities inthis area are directly linked to the Strategic Action Planfor the Protection and Rehabilitation of the Black Sea,formulated with the assistance o f the GEF. The nutrient reduction component is being prepared under the umbrella o f the Black SeaDanube Strategic Partnership-Nutrient Reduction Investment Fundunder which riparian countries are eligible for Global Environment Facility (GEF) grants for projects that help to control or mitigate nutrient discharge into the Black Sea. 3. Key performance indicators: (see Annex 1) 0 Increased quality and quantity o f forest cover, inthe project area; 0 Increase vegetation cover inthe rangelands inthe project villages compared to non-project villages by 20 percent at the mid-term and50 percent at year 7, over the baseline; 0 Increased public awareness of causes, effects and mitigating measures o f natural resource degradation as measured by baseline, mid-term, and end o fproject surveys; 0 Adoption o f environmental friendly agricultural practices by microcatchment farmers; 0 Increased income inproject villages comparedto non-project villages; 0 Reducednutrient load inselected water receiving bodies inmicrocatchment areas. B. Strategic Context 1.Sector-related Country Assistance Strategy (CAS) goal supportedby the project: (see Annex 1) Documentnumber: R2003-0181 Date of latest CAS discussion: 11/6/2003 The objective o fthe CAS is to help Turkey continue to implement hdamental reforms to reduce economic vulnerability, to achieve highand stable growth, andto continue the process o f addressing long-neglected - 3 -  a social and environmental problems. The CAS aims to assist inreducing the risk o f the reemergence o f economic crises, andthe natural disasters which sometimes precipitate these, and to help Turkey achieve its objective o f getting ready for EUmembership. The planned assistance program for FY04-06 supports poverty reduction. Inparticular, i t aims at: makingthe economy more resilient to crises (including natural disasters) that disproportionately affect the most vulnerable; contributing to sustainable economic growth that is critical to pullmany o fthe poor out o f poverty; promoting humandevelopment to create opportunities for the poor bymaking access to health andeducation more equitable and malung the social protection system more efficient; improving the delivery o f and access to services indisadvantaged areas; andincreasing empowerment through enhanced localparticipation andcivil society involvement. Specifically, the CAS focuses on four themes: sound macroeconomics and govemance; equitable human andsocial development; creating an attractivebusiness climate; strong environmental managementand disaster prevention. The Anatolia Watershed Rehabilitation Project is included inthe Country Assistance Strategy (FY04 to FY06) discussed by the Board inNovember 2003. I t is consistent with two o f the four themes articulated in the CAS, specifically focusing on equitable human and social development and strong environmental management and disaster prevention. Inthis latter respect particularly, reversing the trend o f long-term environmental degradation is identified as a priority, including support for further progress to meeting EU environmental regulations, and introducing sound practices for water, soil, and forestry management. la. Global Operational strategvlprogram objective addressed by the project: The Project's strategic objectives are directly tied to the objectives o f the Strategic Action Plan for the Black Sea, supported by GEF. The Project's objective o f reducing the discharge o f agncultural nutrients into ground and surface waters is consistent with GEF Operational Program on Waterbodies (Operational Program 8). The Project provides an opportunity for GEF to be a catalyst for actions that integrate improved land and water resource managementpractices. GEF support will reduce the costs and barriers to farmers inadopting improved agricultural practices. It will also help develop mechanisms to move from demonstration level activities to operational projects that reduce non-point source pollution from agriculture to the Black Sea. The Project is consistent with several additional GEF Operational Programs, including Operational Program 3 on Forest Ecosystems, Operational Program 12 on Integrated Ecosystem Management, and Operational Program 9 Integrated Land and Water Multiple Focal Area. Rehabilitation andimproved management o f degraded watersheds, incombination with improvednutrient and manure management will also reduce threats to biodiversity and promote increasedcarbon sequestration. 2. M a i n sector issues and Government strategy: MainSector Issues The main issues affecting the rural sector inTurkey fall into several areas, but generally reflect weaknesses inthe overall incentives framework for agncultural productionandproblems relatedto the serious degradation o f natural resources. Sectoral Policies and the IncentivesFramework: Turkey's agricultural sector has significant potential, butthis has gone largely unrealized. Over the last 20 years, agriculture grew at only about one-third the rate o f overall GNP. As a result, agriculture's contribution to nationalproduction shrank from 36 percent to 14percent, although the sector still accounts for 45 percent o f employment. A key problemwith the policy environment has been the structure o f agricultural support which has traditionally been channeled - 4 -  through a complex maze o f input and credit subsidies, output price supports, highborder protection, export controls, deficiency payments, price controls, market interventions to protect consumers, and others. This fiscally expensive and economically inefficient system is driven by short-term political concerns rather than long-term strategy. Price distortions have led to unsound agricultural practices, including overemphasis on the use o f agrochemicals with serious effects on soil and water quality. The Government is now addressing these issues inthe framework o f an overall structural reform program supportedby the IBRDAgricultural Reform Implementation Project (ARTP). Although the poverty incidence is not significantly different between urban andrural areas, a large fraction (over 40 percent) o f the poor are engaged inagriculture. There is marked inter-regional variation inthe poverty incidence. Regions with a higher poverty incidence generally derive a larger share o f their income from agriculture and have significantly lower agricultural productivity than better o f f regions. Productivity differences across rural areas are a reflectiono f differences inresource endowments, the status o f the naturalresource base, and access to public infrastructure. It is especially strikingthat the incidence ofpoverty is closely associated with altitude. Eveninwealthier regions, the incidence o fpoverty is significantly higher at higher elevation areas, compared with the lowlands, due to the precarious state o f the natural resource base and limited opportunities for income diversification. The consequent dependence on forests to provide rural goods and services for the rural poor is much greater than inother areas. Average household income inhigher altitude forest areas is anywhere from 40 to 60 percent o f the average household income inother rural areas. Between 1975 and 1990, largely inresponse to rural poverty and to risk mitigation, the population o f about 95 percent o f forest villages inTurkey declined due to out-migration. The most important cause o f out-migration was poverty, experiencedboth interms o f wealth and income and also interms o f inadequate infrastructure and social services. Inmountain villages, landfor agriculture and pasture (a crucial determinant o f income) is severely limited. On average, households inforest areas have access to 2.5 ha o f land, which compares with the average for all ruralhouseholds inTurkey o f 6.4 ha. The proximity o f the forest does provide some benefits: 57 percent o f villagers are completely dependent on wood for heating, and about halfo f these are dependent on wood for coolung as well. The scarcity o f good farming landinmountains and other forested areas has meant that communities are often dependent on mixed landuses, including grazing. Indeed, livestock management is a muchmore important livelihood strategy inthese areas than most other farming options. Degradation of Natural ResourceBase: Deforestation to meet increasing timber, fuel andfodder demands, together with overgrazing o f rangeland, farmingo f steep slopes, andthe lack o f effective soil conservation practices on agricultural landhave resulted inwidespread degradation of land and water resources. Only 6.6 percent o f the Land inTurkey does not suffer from erosion with 7.2 percent slightly, 20.1 percent moderately, 36.4 percent severely and22.3 percent very severely eroded. Land degradation has significantly reduced the carrying capacity o f rangeland and the fertility o f agricultural landinthe upper catchment areas and thus negatively affected farming households' ability to derive a livelihood inthe uplandregions, with resulting higher poverty rates inthese areas. Reducedvegetative cover has ledto marked reductions insoil moisture content thus subjecting agricultural lands to significantly higher vulnerability to drought. Land degradation has also led to unstable and increasingly torrential river flows with increased incidence o f flooding and growing sedimentationproblems. Landslides have also become a growing problem. Agriculture basedpollution of ground and surface water: Inmany areas o fthe country, particularly in low landsand fertile plains, extension workers and farmers heavily emphasize the use o f external inputs like pesticides, inorganic fertilizers and animal feed. At the same time farmers are not sufficiently familiar - 5 -  with these technologies andtheir risks. Relevant Government bodies are illequippedto legislate and implement the necessary controls to prevent the over-use o f chemicals. As a result, existing regulatory restrictions are weak and there are indications that excessive application o f agricultural chemicals has led to considerable contamination o f soil andground water, including the contamination o f drinkingwater in rural communities. Excessive input use has also led to highlevels o f nutrient loads inground water and rivers draining into the Black Sea, causing eutrophication. The Black Sea Region Transboundary Diagnostic Analysis (1996) identified Turkey's rivers which empty into the Black Seas as a key sources o fphosphorus (P) and nitrogen (N)pollution. It estimatedthat Turkey's annual discharge o f nitrogencontributed about 20 percent, and its discharge o fphosphates 12 percent, o f total Nand P respectively produced inthe non-Danube Black Sea Basin. Three o f the largest rivers emptying into the Black Sea originate inCentral Anatolia. While one o f them (Sakarya) embraces industrial as well as agricultural areas, the main source o fpollution inthe other two (Yesilirmak and Kizilirmak) is agriculture. The main sources o f river pollution from agriculture non-point sources are: (i) poor agncultural practices, including inappropriate andover-application o f fertilizers and pesticides, (ii) soil erosion, (iii) drainage and, (iv) inappropriate handling o f animal manure waste. poor Limited Institutional Capacity to Promote Sustainable Natural ResourceManagement: The current system to protect and manage Turkey's natural resources suffers from an over reliance on centralized management, a lack o f coordination among key agencies involved inrural development, limited public awareness and participation, insufficient use of economic instruments for natural resource management and, limited research on the lmkages betweennatural resource management andcommunities' socio-economic development. Inadequate Policy and Regulatory Capacityfor meetingEUStandards: Turkey's status as an EU candidate country calls for important changes inthe country's environmental policy and regulatory framework, specifically taking account o f the EUDirectives on Water Resource Use, Nitrates, and Environmental Impact Assessment. Turkey must adopt a detailed, directive-specific program to transpose the national legislative andregulatory framework ina manner consistent with the EUenvironmental acquis, andto develop a plan to finance supporting investments. Inthe medium term Turkey will needto implement the environmental acquis through the development and enforcement o f environmental and sectoral legislation. A number o f directives (for example, the Nitrates Directive) will be particularly difficult to implement for Turkey, given the current status of infrastructure and available financial resources. The Water Framework Directive has important implications for integrated river basin planningand management. Government Strategy SectoralPolicy: In 1999, the Government launched an ambitious economic reform programto create the basis for stable economic growth and to set the stage for the country's entry into the EU. The sectoral reform program encompasses three main initiatives designed to reduce the heavy burden on the budget and consumers, while promoting agricultural growth. These include: i)introduction o f a unified national programo f direct income support; ii)phasing out the system o f subsidies for fertilizer, credit and price support and linking support prices to market prices; and iii)privatization o f most State Economic Enterprises (SEES) inagriculture to reduce state involvement inthe marketing andprocessing o f agricultural products. The overall program o f agncultural policy reforms will increase Turkey's competitiveness while protecting natural resources and the poor. The Bank is supporting the Government's agriculture sector reform strategy with the IBRD-financed Agricultural ReformImplementation Project (ARIP), approved inJuly 2001. Government has also undertaken significant efforts to improve the rural - 6 -  population's access to physical and social infrastructure through substantial investments inboth. Natural Resource Management: The needto embracenatural resourcemanagement as an integralpart o f a sustainable rural development strategy was clearly identified inGovernment's NationalEnvironmental Action Plan, The NEAP spelled out the needto introduce improved agncultural practices to reduce soil degradation andground and water pollution from agnculture. The Government has initiated efforts to rehabilitate degradedareas andto promote environmentally fnendly agricultural practices. However, widespread adoption o fthese practiceshas remained limiteddue to lack of funds for expansion and promotion, lack o f coordination among various Government agencies involved inthe rural sector and an approachthat traditionally relies too much on central command and control rather than on participationby affected communities. Underthe recently completed World Bank supportedEasternAnatolia Watershed Management Project (EAWP) the Government introduced a more holistic and participatory approach to natural resourcemanagement on a watershedbasis ineleven provinces, with positive effects on the status of natural resources as well as household incomes. Among other things, the EAWP received a 'best practice' rating from the Bank's Quality Assurance Group (QAG). Underthe EAWP, the Ministryo f Forestry, the Ministry of Agriculture andRural Affairs (h4ARA) and the General Directorate o f Rural Services (Kdy Hizmetleri Gene1MiidiirliiNor KHGM) beganto coordmate and integrate their activities at themicrocatchment (MC) level .The approachresultedina series of quite positive outcomes, increasing rural incomes andreducing natural resource degradation inMCs. Inorder to buildon some o f the lessons learned, andto use Bank and GEF-financed interventions as a means for introducing further innovation in rural landmanagement, Government has decidedto introduce M C planningand managementinitiatives in severalother areas, and has agreedto integrate these activities with agricultural pollutioncontrol measures inlower partsofMCsas well asto bringaboutbetter riverbasin-wide planning.The Government has requestedfinancial support from IBRDand GEF for this effort. A recentinstitutionalreorganization hasbeenundertakento improve the effectivenessof some ofthe key institutions with environmental managementresponsibility, and to more closely align the institutional framework with EUenvironmental directives. KHGM,which hadpreviously been ina separate State Ministry,hasbeenincorporatedinto the MinistryofAgncultural andRuralAffairs. TheMinistryof Environment andthe Ministryof Forestry have also beenmerged, to create the Ministryo f Environment and Forestry (MEF). These changes should fixther facilitate implementation o f a holistic approach to rural development andnatural resourcemanagement. Inconjunctionwith these changes, and as part o f the overall program o fpublic sector reform, ProvincialDirectorates for agriculture, forestry, and the environment are also currently being restructured. The Forestry Sector Review (2001) jointly preparedby the Bank andGovernment identifiedseveral vital challenges facing the forestry sector. These include issues related to poverty, land tenure, the need to establishmultipurpose, participatory forest managementplanning, andto control soil erosion indegraded areas. The Ministry o f Environment andForestry has started to prepare a National Forestry Program, ina participatory manner, that includes a review o f the existing status o f the sector, short and long term forestry policy and strategies, and which outlines implementation strategiesand an actionplan. Preparation of the programis fundedby FAO. To date the agreedpolicy recommendation includes preparation o f watershed-basedforest resourcemanagementplans, participationo f local communities inresource managementdecisionsand interventions, andbenefit sharing and collaboration with other sectorsand stakeholders. - 7 -  3. Sector issues to be addressed by the project andstrategic choices: Buildingon the successful approaches to community based andintegrated approachto natural resource management, the proposedproject aims at addressing the following sectoral issues: e Land Degradation in Upper WatershedAreas: The project will work with communities to develop andimplement anintegratednatural resource management planinthe upper part of selected microcatchments. Communities will choose from a menu o f technical options to rehabilitate and to more sustainably use degraded forest, range, and agricultural lands. The project will provide opportunities to help raise income o f participating communities inretum for adopting and implementingrehabilitation measures. e Agriculture Based Water Pollution and Nutrient Flow into the Black Sea:The project will help introduce environmentally friendly agricultural practices aimed at reducing ground and surface water pollution and nutrient discharge into the Black Sea. It will provide training to extension staff and farmers on appropriate nutrient management strategies, organic farming, integrated pest management and improved manure handling. e Inadequate Policy and Regulatory Capacity TowardsMeeting EU Standards: The project will support the implementation o f the EUNitrates Directive through staff training andthrough the provision o f equipment to monitor nitrate levels at selected locations inthe four participating Black Sea Provinces. It will also support the preparation and implementation o f a Code o f Good Agricultural Practices, inline with EUenvironmental standards, and will strengthen the institutionalcapacity in support o f organic farming. The project will provide a framework for integrated river basinplanning inthe Yesilirmak and Kizilirmakbasin, consistent with guidanceprovided inthe EUWater Framework Directive. e Limited Awareness of Natural ResourceDegradation Issues and Mitigating Measures: Awareness of the consequences o f natural resource degradation and agriculture based pollution ando f mitigating measures is limited. The project will help develop and implement a strategy to raise awareness o f the causes and effects o funsustainable agricultural practices and o f effective approaches to improved natural resource management. e Limited Institutional Capacity to Promote Integrated Natural ResourceManagement: The project will provide concerned agency staffat the national andlocal levelwith training inthe new approach to natural resource management and effective implementation o f environmentally improved agricultural practices. This will include allowing local staff to learn frtst handfrom their colleagues, who have already gained experience with integrated natural resource management. The project will also help buildcapacityneededto meet Turkey's obligations under the Convention onthe Protection o fthe Black SeaAgainst Pollution and several additional international protocols aimed to reduce pollution inthe Black Sea. It will also help develop the capacity o fprivate smallholder and commercial farmers to use environment-friendly agricultural practices andresource management. Strategic Choices: Three strategic choices were made with respect to this project. The first decision, made duringpreparation ofthe CAS, was to limitactivities supportedbythe project specifically to natural resource management interventions, complementing sectoral policy reforms which are being addressedby AMP. The second decision was to focus on watersheds inwhich EAWPhad already successfully operated, but to expand activities into new microcatchments inthese watersheds. This decision was motivated by the needto consolidate the achievements o f EAWP, and inparticular, further to strengthen the - 8 -  institutional capacity for integrated natural resource management builtunder this project at the field level. Thirdly,the decision was taken to broadenthe activities supportedby EAWPto include agricultural pollution control andwaste management to provide scope for greater innovation andto test out farmer-based approaches to nutrient management within the framework o f MC planning. C. Project DescriptionSummary 1. Projectcomponents (see Annex 2 for a detailed description andAnnex 3 for a detailed cost breakdown): ProjectApproach: The proposed project will buildand expand on a community-based approach to natural resource management. Under this approach, natural resource degradation is seen as a multi-sectoral problem, requiring microcatchment specific solutions. MC development thus involves the integration o f forestry, soil and water conservation; crop- and livestock production; and limited off-farm income generation ina mutually reinforcing manner. A team o f provincial rural services, agriculture and forestry staffwill work with villagers to help MC communities identify andrank their principal resource management anddevelopment problems. Project staffwill present M C communities with a menu o f conservation and income generating activities appropriate to the specific M C conditions, with some o f them being conditional on the adoption o f others, so as to encourage adoption o f conservations measures which may include short term costs to communities or specific groups. Implementingagencies will simply identify anddemonstrate to concemed communities what can be undertaken to stem or reverse resource degradation, but they will not implement such measures on a massive scale. Insteadthey will create the conditions to encourage landusers themselves to adopt more productive and protective landmanagement systems. The project will introduce the innovation o fpiloting the management o f agricultural waste to limit nutrient runoff, through integration with watershed micro-catchment activities. ProjectArea andLandUse: The project will be implemented in6 provinces (Samsun, Tokat, Sivas, Kayseri, Corum, and Amasya provinces) covering: i)two main ecological regions, namely the Black Sea and Continental ecological regions; and ii)three o f Turkey's 26 major river basins, the Kizilirmak and Yesilirmak basins (which drain into the Black Sea) and the Seyhan basin (which drains into the Mediterranean Sea). The project will rehabilitate 28 MCs in5 o f the 6 provinces (Tokat, Sivas, Kayseri, Corum, and Amasya provinces), and will reduce agncultural based nutrient discharge into the Black Sea, through GEF supported activities, infour o f the provinces (Samsun, Tokat, C o m andAmasya). Each o f the 28 MCs to be rehabilitated by the project will cover between 5,000 and 15,000 hectares and the total area under development will be inthe order o f 202,000 hectares, out o f which about 30,000 ha will be the physical implementation area. Detailed information on each M C will be gathered andanalyzed during the MC planning process. Ofthe 8 million ha o f land inthe project provinces about 45 percent is agricultural land, 19percent is gazetted forest (comprising both forest and brush land) and29 percent is rangeland. Although there are significant differences among provinces, the principal landuse inthe project MCs is rangeland. Rangeland conditions vary from moderately productive but overgrazed to severely degradedand eroded. Agriculture is generally limitedto small scale, often subsistence production, including inthe Black Sea provinces. Due to limited land availability, crops are often planted on fragile slopes. The type o f crop rotation is determined by ecological characteristics o fthe productionarea as well as socio-economic conditions o ffarmers. Generally, wheat andbarley are rotated with fallow, rarely with pulses. Due to land constraints, continuous cereal production which leads to significant soil degradation is also common inmany MCs. Only about one quarter o f agricultural land is imgated, although small scale irrigation is possible inMCs with perennial streams and springs. Inlower irrigated parts of MCs, cereals are rotated with sugarbeet, oil crops, beans, maize or horticultural crops. - 9 -  RuralPopulation: With the exception of MCs inthe lower watersheds inthe four Black Sea Provinces, MCs to be includedinthe project are primarily located inrural mountainous areas. The ruralpopulationin these watersheds i s around 2 million. Many o fthe 400 or so villages inthe project area are classified as "forest villages" with limitedaccess to proper agricultural and range land. Most households inthe project area rely on crop and livestock production as their main sourceof income, with forest villagers supplementingtheir income with forestry basedwork. As a result ofthe significantly degradednatural resourcebase andlimitedaccess to infrastructure, household incomes inthe M C area are significantly below the average rural householdincome inTurkey. Many households inthe project area remainlargely in the subsistenceeconomy. A survey infour project provinces showedthat (excluding subsistence consumption) average household cashincome ranged from betweenUS$ 100to $750per year in mountainous areas, while average household income inrural areas inthe Black Sea provinces varied between USS 100per year inmountainous MCs and $ 1300per year inthe more commercialized farming areas o f Corum. Dueto low incomes anda degradednatural resourcebase, there is significant outmigration. A. Overall Project Description The project will have five components. Costs are indicative andinclude physical and price contingencies, as well as counterpart andbeneficiary contributions. Component 1:Rehabilitation of Degraded Natural Resources (US$23.5 million). This component will provide support for the planning andimplementation of a menuof activities to be implemented by village communities underthe direction of the MEF andMARA, inpartnership with communities. The component's primary objective is to protect degradedareas from further degradation, erosion and pollution. Rehabilitation interventions are focused around four sub-components as outlinedbelow andwill be implemented in28 micro-catchments and in6 provinces. The activities include a specific programfor piloting actions on reducing nutrient dischargeto the water bodies that will be implemented inthe lower parts o f watersheds o f four participatingBlack Sea provinces usingGEF funds. The mainsub-componentsare as follows: i) Rehabilitation of forest land including soil conservation by afforestation, protectionand improvement o f poor & degradedsoils, gallery plantation, rehabilitation o f oak coppices ando f degradedhighforests, participatory replantingand inventory of non-wood forest products. All implementedby MEF(AGM& OGM). ii) Rangeland Rehabilitation, including improved management o f forest rangelandsunder MEF and rehabilitation activities on rangelandoutside the forest landby MARA. iii) Rehabilitationof AgriculturalLand,including:fallowreduction,appropriateuseofmarginal agncultural land, wild tree grafting, river bankprotection, and construction and production on agricultural terraces. Implementedby MARA (KHGMand TUGEM). iv) Environment-friendly agricultural practices, including demonstrations of improved crop production practices, organic farmingand Integrated Pest Management by MARA and nutrient reduction activities implementedby MARA/MEF. Withregard to the environment-friendly practices, implementation ofselectedactivities to reducenutrient -10-  discharge into the water bodies inthe lower watersheds o f participating Black Sea provinces will be financed by the Global Environment Facility (GEF) grant, by Government andby beneficiaries. Component 2: IncomeRaisingActivities(US$17.57 million). Under this component target communities would be offered a menu o f activities designed to raise household incomes inretum for participation in conservation activities supportedunder Component 1. Income generating activities are designed to provide participating communities with the incentives to undertake conservation efforts even ifthey incur short or medium term costs ( e g short term closure of range lands, closure o f forest land) or ifbenefits can only be reaped inthe longrun(afforestation). The menu offered will vary in accordance with agro-ecological and socio-economic conditions ineach village, as well as with farmers' resources and needs. The approach will be flexible so as to be able to respond to the needs o f the villagers andflexibility will be maintainedduringproject implementation. The main income generating activities which will be financed by the project include small scale irrigation including creation o f small irrigatedperimeters and farm ponds, implemented by MARA (KHGM); investments inlivestock improvement, greenhouses and small-scale freshwater fisheries implementedby MEF (ORKOY); and farm and crop enterprise diversification (including rainfed and irrigated horticulture, irrigated forage crops, vegetable production, plantingtrees on field boundaries, agncultural processing and beekeeping) implemented by MARA (TUGEM). Component3: StrengtheningPolicy andRegulatoryCapacityTowardsMeetingEUStandards (US$0.28 million). This component will provide support for implementing the following three sub-components which emphasize participatory approaches to sustainable natural resource management, corresponding to locally expressed priorities: i) Supportfor the Application of the EUNitrates Directive through the monitoring o fnitrate levels at selected sites inthe four Black Sea provinces, as first step inimplementing the nitrates directive. ii) Development and Promotion of a Code of GoodAgricultural Practices basedon on-farm trials, demonstrations and training. The preparation andultimate application o f this code is a mandatory part o f the nitrates drective program. iii) InstitutionalSupportfor OrganicFarming:Theprojectwouldprovidetechnicalassistanceto strengthen the institutional capacity insupport o fproducing andmarketing organically produced farm products. Component4: Awareness Raising, CapacityBuildingandReplication Strategy (US$1.06 million): This component, implementedjointly by MEF and MARA) will have the following sub-components: i) Public Awareness in Micro-catchmentDevelopment: This will raise awareness amongst target beneficiaries and other stakeholders about the program approach and terms o f participation in Micro-catchment development. The goal will be to increase transparency inprogram implementation and empower beneficiaries to demand program services. ii) Public Awareness, Capacity Building and Replication Strategy: With regard to the four Black Sea provinces, the component would provide capacity buildingandpublic awareness activities at the local, national and regional level, for the training o f beneficiaries and participatinginstitutions as well as for the future replicationo f similar activities inTurkey andother Black Sea riparian countries. -11 -  Component 5: Project Management and Support Services (US$2.5 million): This component will have the following sub-components: i) Project Administration: This sub-component will support the technical assistance, financial services, logistical and operational requirements necessary to ensure the appropriate and efficient administration o fproject activities andresources by central and provincial project management units. ii) Support Services: This sub-component will fund extension, technical assistance and some study tours for project managers, technical project staff and farmers. iii) Monitoring&EvaluationSystem: Theprojectwouldprovidefortheupgradingofthepresent MonitoringandEvaluation system. iv) Fundfor applied research and technology dissemination:This sub-component will finance short-term, small scale applied research on soil, water, crop, natural resource management, agricultural pollution, livestock and forestry focusing on MC environment. Indicative Yo of GEF % of Component costs Bank financing GEF (US$M) 1I financing (US$M) inancing Component 1: Rehabilitationof DegradedNatural 23.50 50.8 6.13 87.6 Resources Component 2: Income Raising 17.57 38.9 7.95 39.8 0.00 0.0 Component 3: Strengthening Capacity for Meeting 0.28 0.6 0.00 0.0 0.18 2.6 EUEnvironmental Standards Component 4: Awareness Raising, Capacity 1.06 2.3 0.51 2.6 0.38 5.4 buildingand Replication Strategy Component 5: Project management and Support 2.50 6.0 0.31 4.4 Services Total Project Costs 44.91 100.0 20.00 99.0 7.00 100.0 ~ Front-end fee 0.20 1.o 0.00 0.0 Total Financing Required 45.11 100.0 7.00 100.0 As indicated inthe table, the GEF Grant will be financing: (a) promotion o fenvironmentally friendly agncultural practices under rehabilitation of degraded natural resources component; (b) strengthening policy an regulatory capacity component; (c) public awareness and replicationactivities; and (d) relevant project management and support services. 2. Key policy and institutional reforms supported by the project: The key institutional reforms supported by this project include (i) participatory watershed management; (ii) improved inter-agency collaboration at central and field level to facilitate effective natural resource management; (iii) direct engagement o f communities inimplementation o f M C plans, including full responsibility for operation andmaintenance o fproject supported investments; (iv) increasedresponsibility o f local level implementing agencies inplanningand implementation o f resource management activities and, (v) increased policy andregulatory capacity to meet international obligations to reduce polluting discharge into the Black Sea and move towards EUstandards on agricultural pollutioncontrol. - 12-  3. Benefitsand target population: ~ Beneficiaries Benefits Farmers and rural households living in 0 Improved longer term access to wood and non-wood forestry degradedmicro-watersheds products 0 Increased availability o f water for animal and human consumption 0 Sustainable increases incrop yields 0 Higher fodder production on rangelands 0 Improvedlivestock yields 0 Higher and more stable household incomes leadingto reduced poverty 0 Improved well water quality 0 Reduced flooding due to smoother streamflows 0 Reduced siltation and sedimentation Communities living downstream o f 0 Improved well water quality degraded areas 0 Improved downstream water quality 0 Reducedcost o f water treatment for human consumption 0 Reduced siltation and sedimentation loads 0 Reducedflooding due to smoother streamflows Non-farming households in watersheds 0 Improved water quality emptying into Black Sea and inBlack Sea 0 Safer food products rioarian countries 0 Reduced nutrient discharge to main rivers and Black Sea Commercialbeef fattening and dairy 0 Ability to meet environmental regulations with regard to producers inperi-urban areas of Black discharge into water Sea region 0 Improved water quality 0 Income from sale o f manure IAgro-processorsand commercial farmers 0 Ability to meet EUrequirements on nitrate and good agricultural oractice Ministryo fAgriculture and Rural Affairs 0 Ability to meet EUrequirements on nitrate monitoring and code (MARA) and Ministryo f Environment and o f good agricultural practice 0 Higherjob satisfaction 0 Improved technical skills w.r.t sustainable resource management and environmental friendly agricultural production techniques 4. Institutional and implementationarrangements: The project would be implemented over a seven year periodunder the same institutional arrangements as the recently completed EAW. Project Management: The responsibility for overall project management and coordination will lie withthe MinistryofEnvironment and Forestry's General Directorate for Afforestation andErosionControl (MEF/AGM). Overallproject management and supervision will be assuredby a ProjectManagement Group (PMG) andline agency specific Project Management Units. The Project Management Group comprises representatives o f each participating line agency with MEF/AGMacting as the project coordinating agency. The Project Management Group will be supportedby an Operations Unit incharge o f day to day project management andcoordination. The OUwill be established at MEF/AGMandhave - 13-  sub-units for financial management, procurement andmonitoring andevaluation. Funds will be made available to hire a social scientist and a communications specialist, as needed, to assist inthe preparation o f specific studies. At the local level each Province will establish a Provincial Project Management Team comprised o f representatives from fieldunits o f the project agencies. The Operations Unitwill be headed by AGM andbe responsible for project coordination and supervision o flocal level implementation. ImplementationArrangements:The project will be implementedby field staff o fthe relevant General Directorates o f the MEF and MARA (see Annex 2). For each microcatchment, a Microcatchment Implementation Team (MCIT) will be established with staff from relevant provincial agencies. This team will be responsibility for the elaboration and implementation o fthe M C development planincollaboration withbeneficiary communities and inclose consultation with local government units (provincial Govemor, municipality) and local NGOs. These implementation arrangements are similar to those adopted under EAWP and there thus is considerable experience with this approach, both at the local and the central level. Overall implementation responsibility for GEF-related activities will rest jointly with M A R A ' s General Directorate for Protection and Control (KKGM) and the MEF's General Directorate o f Environmental Management. The PMG's Operation's Unitwill also be responsible for handling the administration o f GEF-financed activities. ProcurementArrangements:All procurement under the project will be carriedout under the supervision of the OU's procurement sub-unit which will have four staff, including at least two professional procurement specialist (employed as consultants to the unit).Tendering for small works and small amounts o f locally available goods will be carried out by the field units o f the implementingagencies, subject to close supervision and approval by the OU's procurement sub-unit. All other procurement will be carried out by the OU's procurement unit, with implementing agencies providing necessary technical specifications, bills of quantities and terms o freference. Bids will be evaluatedby a BidEvaluation Committee comprising technical specialists o f the relevant line agency andrepresentatives o f the OU's procurement sub-unit and approved by the PMG. Not later than April 30,2005, the OUwill hire two independent, professional procurement specialists as consultants to the OUwith qualifications, experience and for a term acceptable to the Bank. FinancialManagement: Overall responsibility for financial management ofthe project rests withthe OU inthe MEF.Followingthe project financial management assessmentcamed out bythe Bank, anaction planwas agreeduponwith the MEF, andimplemented, to bringits financial managementcapacity upto standards satisfactory to the Bank As part o f this action planthe OU's financial management sub-unithas been hlly staffed with specialists satisfactory to the Bank and a computerized project financial management system has been set up. A Financial Management Manual satisfactory to the Bank has been prepared. Financial Monitoring Reports: The formats o f the Financial Monitoring Reports (FMRs) have been agreed and included inthe project Financial Management Manual andthe PIP. The OUwill prepare quarterly FMRs for submission to the PMGandthe Bank. Audit Arrangements: Annual financial statements for the project will be audited by the Treasury Controllers inaccordance with Intemational Standards on Auditingand under TORSagreed uponwith the Bank. Disbursement Arrangements: The Government will open two Special Accounts inUS$ at the Central Bank, one for proceeds from the IBRDloanand one for proceeds from the GEF grant. Allpayments willbe executed centrally by the OU's financial management sub-unit with the authorization o f the PMG -14-  Coordinator andthe Financial Manager o fthe OU. Payments exceeding 20 percent o f the authorized Special Accounts allocation will be made directly from the loan account. Disbursementswill be made against Statements o f Expenditures for: (i) works under contracts costing less than US$3,000,000 equivalent each, but excluding the contracts which are subject to prior review; (ii) goods, under contracts costing less than USS300,OOO equivalent each, but excluding the contracts which are subject to prior review; (iii)services o f consulting firms under contracts costing less than US$ 100,000 equivalent each; (iv) services o f individual consultants under contracts costing less than US$50,000 equivalent each; (v) training (subject to provision o f an agreed training plan) and (vi) incremental operating costs. Full documentation insupport o f SOEs would be retainedby the PMUfor at least one year after the Bank has received the audit report for the fiscal year inwhich the last withdrawal from the Loan Account was made. This information will be made available for review during supervision by Bank staff and for annual audits which will be required to specifically comment on the propriety o f SOE disbursements andthe quality o f the associated record-keeping. Monitoring and Evaluation: Overallproject Monitoringand Evaluation will be the responsibility o f the Project Management Group which will be supported inthis task by the Operation Unit's M&E staff. Buildingonthe M&E system ofthe EAWP, the M&Eunitwill develop andimplement anM&Esystem which will include both routine monitoring and evaluation and special-purpose M&Efocused on impact assessment. The M&E system will include targeted annual performance objectives andmonitoring indicators usingthe Key Performance Indicators inAnnex 1as a basis. A baseline survey against which project performance targets can be measured will be carried out ineach M C during the detailed MC development planningphase. The M&Eunit will produce quarterly reports for submisson to the Project Management Group covering progress inphysical implementation, use o f funds andproject impact. Reports will be produced ina format agreed with the Bank. Quarterly reports will be consolidated into semi-annual progress reports to be submitted to the Bank.The latter will also include implementation and work plans for the six months following the reportingperiod. The development o f beneficiary-based Participatory Monitoring will be developed duringthe course o f project implementation, working with Microcatchment Resource Management Associations. Reporting formats for M&ESystem have been agreed and finalized D. Project Rationale 1. Project alternatives considered and reasons for rejection: Three altematives to the proposed intervention were considered andrejected: No follow-up watershed rehabilitation uroiect: The question o fwhether the achievements o fEAWPwere sufficient to allow for sustainable natural resource management inTurkey without a follow-up project was considered andrejected on the following grounds: First, while EAWP successfully developed andtested a new approach to natural resource management, its achievements (inline with project objectives) remained limited interms o f physical coverage and number o f local implementingagency staff involved. Financial constraints and the time andresources required to mobilize and train additional staff to replicate EAWP's approach on a larger scale would make it unlikely that this would occur without m e r support by a project. Second, natural resource rehabilitation andmanagement is a long term endeavor and many o f the processes initiatedunder EAWP needto be taken a step further. Examples include range landmanagement through "participatory grazing management", participatory and equitable use o f wood and non-wood forest resources from rehabilitated forest lands andboundary tree plantations and, the need to expand the awareness o f environmentally friendly agricultural practices. Thirdand most importantly, it was felt that because natural resource degradation is such a dominant feature inmany o f Turkey's watersheds, the - 15-  economic and social costs o f not addressing this problem inan effective manner were too high. Countrv-wide coverage: Given widespread m e t demand for inclusion into the EAWPandthe needto address natural resource degradation issues ina large part of the country, the question o f whether the proposed follow-up project should aim at replicating and expanding on EAWP's approach at a national scale or should limit its interventions to a set o f strategically important watersheds with serious resource degradation issues was considered. Itwas decided to limit the project area to three river basins, including three provinces which were already covered by EAWP and four adjacent provinces which contribute significantly to Black Sea pollution. This decision was motivatedby the perceivedneed further to solidify the institutional capacity for integrated natural resource management at the field level and the ability to buildonthe momentum gained through EAWP interms of awareness and interest inparticipatory natural resource management by communities inneighboring MCs, as well as to explore the scope for innovating by tackling the problem o f agricultural waste pollution. The expansion ofthe project on a national scale would have taxed the institutional capacity for replication, given the number of agencies involved and the need for intensive supervision andmonitoring by the Project Management Group. Stand alone project for agricultural pollution control: Consideration was given to having a separate GEF financed project focusing on reducing agnculture inducednutrient discharge into the Black Sea. This option was discarded on grounds that environmentally fnendly agricultural practices should be an integral part of sustainable natural resource management andthus be integrated with other natural resource management activities on a watershed basis. Furthermore, effective participation o f all relevant stakeholders requires cooperation among all key agencies engaged innatural resource management and rural development which i s best achieved through the participatory resource management approach already developed under EAWP. - 16-  2. Major relatedprojectsfinancedby the Bank and/or other development agencies (completed, ongoingand planned). Latest Supervision Sector issue Project fPSR) Ratings (Bank-finance projectsonly) Implementation Development Bank-financed Progress(IP) Objective(DO) Sectoral Policy Reform Agricultural Reform S S Implementation Project Natural Resource Degradation Eastern Anatolia Watershed S S Rehabilitation Project Sectoral inefficiency, low productivity, Agricultural Research Project S S resource degradation Institutional Development Commodities Market S S Development Project Privatizationo f Irrigation S S Project 3ther developmentagencies Biodiversity conservation GEF financed Biodiversity and Natural Resource Management Project Environmental legislation andEU EUfinanced: Analysis o f accession Environmental Legislation Approximation Advice for Turkish Environmental Legislation P/DO Ratings: HS (Highly Satisfactory), S(Satisfactory), U (Unsatisfactory), k (Highly Unsati: 3. Lessons learnedand reflected inthe projectdesign: Internationalexperience: Participatory natural resource management using a sub-watershed approach has worked well inseveral other countries. Like the first EAWP inTurkey, the Loewss PlateauNatural Resource Management Project inChinawas followed by a secondproject andreceivedan "outstanding" rating from the Quality Assurance Group (QAG). Similar approaches have also been successfully used inBrazil (LandDevelopment 1and2 inSouthernBrazil) and inother regions. EUcountries also follow similar principles, with incentives provided to farmers to adopt sustainable farming practices. - 17-  Key lessonslearnedfrom agricultural and environmental projects inthe region include the need to: 0 actively involve concerned communities inthe identification o fproblems andproposed solutions for natural resource degradation; 0 effectively communicate project rationale, objectives and benefits to all stakeholders; 0 establish a direct linkbetween objectives o f environment friendly agricultural practices, rehabilitation efforts and tangible benefits for key stakeholders; 0 aggressively disseminate information about benefits o f improvedenvironmental management to assure widespread adoption o fnew technologies; 0 make long-term commitments to address agriculture and environmental issues throughphased programs o f interventions and broad-based participation. Country specific lessons: The project builds on some o fthe country-specific lessons gained inthe EAWP. The ICR for EAWP identified the following issues, which have been accounted for inthe design o f this operation: establish strict guidelines to assure that the project's focus remains on rehabilitation o f MCs with site specific solutions; ask village beneficiaries to contribute at least 10 percent o f the cost for all MARA activities and inform farmers about this requirement up-front so that they can take this into consideration when deciding whether or not to participate inthe project; informvillagers up-front that they will be responsible for the operation andmaintenance o f small irrigation schemes andrehabilitated rangelands following initial project financed investments. Develop and test guidelines should for the creation o fvillageheneficiary associations to take this responsibility; clear selection criteria are needed for small scale irrigation investments to assure that they are made selectively and cost effectively. development o f M C plansrequires up to one year to allow implementing agency staff to adequately diagnose the causes o f natural resource degradation, decide on technically sound rehabilitation measures and properly interact with the target groups. Implementation o f MC plans requires 3 years to assure sustainability o f interventions; the project should not initiate work inmore than two MCs per province per year to assure a manageable work load for field staff during the peak fourth year; the participatory nature and complexity o f the project call for a project duration o f at least seven years; 4. Indications of borrower and recipient commitment and ownership: This project was prepared within the scope o f the Country Assistance Strategy, as agreedbetween the Government o f Turkey andthe World Bank.Inorder to be ensure consistency with the overall public expenditure program, the loan amount was reduced based on Government's request. It is strongly supported by all line agenciescharged with implementation, motivatedby the positive results onthe ground o fearlier interventions. The Government's commitment to the proposedproject was further reflected intheir organizing inter-agency workshop to clearly identify the key lessons learnedfrom EAWP with the objective to integrate those into the design o f the follow-up project. Basedon these lessons, Government agencies undertook project preparation o f the loan portion themselves. The Government has demonstrated its commitment to reduce the discharge o f pollutants into the Black Sea byratifying several key international conventions andprotocols to this effect, includingthe Convention on the Protection of Black Sea Against Pollution. Inthe fall o f 2000, the Government requestedBank support to help it meet its international obligations to reduce pollutant discharge into the Black Sea. The - 18-  government has also indicated its commitment to approximating Turlushenvironmental legislation towards the EUacquis by requesting EUfundingfor advice on Turkish environmental legislation. 5. Value added of Bank and Global support inthis project: Experience inTurkey and elsewhere has shown that effective natural resource rehabilitation and management calls for a long-term commitment through phasedprograms o f interventions and broad-based participation. The Bank's value-added lies inits ability to make a long term commitment to help Turkey address natural resource degradation issues ina more systematic and sustainable manner. The Bank's strategy for natural resource management emphasizes the importance o f an integrated approach to watershed management andthe proposed project implements this approach. The Bank's ability to draw on experience with similar projects inother countries provides an important backing and strengthens the credibility o f the initiatives undertaken by field staff inTurkey. This operation will further strengthen the local capacity for more sustainable natural resource management andwill provide support to gradually expand the approach successfully tested under earlier interventions 6n a larger scale. The principal value added o f GEF support for the project comes from providing additional funds to help reduce barriers to farmers' adopting more environmental friendly agricultural practices and thus to allow the Government to scale up a program which has so far largely been limited to localized pilot activities. GEF fundingwill allow the Government to accelerate itsprogramo f demonstrating environmental friendly agricultural practices on a wider range o f farms and to engage ina much neededpublic awareness program on agricultural pollution. Agricultural pollution and conversion o f flood plains areas into agricultural polders is a problem with major transboundary effects inmany E C A countries, particularly those inthe Black Sea region. Some level o f financial support from the public sector and the intemational community are necessary, as program to control agricultural pollution have significant extemalities, affect transboundary pollution andinvolve an element o f public good. E. Summary Project Analysis (Detailed assessmentsare inthe project file, see Annex 8) 1. Economic(see Annex 4): 0 Costbenefit NPV=US$15.3 million; ERR = 18.6 o/o (see Annex 4) 0 Costeffectiveness 0IncrementalCost 0 Other(specify) Economic benefits o f the project fall into two main categories: (i) benefits from a restored natural resource base and, (ii) increased household income from intensification anddiversificationo f farming systems. The quantification o f economic benefits from an improved natural resource base inthe 28 project MCs includes a valuation o f three distinct benefits: (i) savings inerosion induced soil loss; (ii) increases due to yield improved agricultural land and (iii) reduced flood control costs. Other benefits, such as reduced siltation in dams, improvedquality o f dnnlungwater due to reduced sedimentation content o f the water, increased soil moisture content andreduced carbon sequestration have not been quantified due to lack o f credible data. The quantification o f incremental benefits from improved farmingtechniques anddiversification has been based on farm budgets for various project supported activities and the application o f net benefit streams for these activities to the activity target area inthe 28 MCs, takinginto consideration the expectedphasing o f project activities. As manyresource management andprotection activities are expectedto have a long term impact and may incur net costs duringthe initial project years, the ERRand the N P V were calculated over a period o f 25 years, with an annual discount rate o f 12 percent appliedto the NPV calculation. Sensitivity analysis - 19-  suggests that a 20 percent increase inproject costs combined with a 20 percent reduction inproject benefits still results in a ERR o f 14.4 percent and an NPV o f US$5.7 million. Similarly, a 2 year delay inproject benefits would result inan ERRo f 18.3 percent and an N P V o fUS$ 13.7 million.If the impact o f project activities on erosion were not to materialize the ERRwould drop to 18.1percent and the NPV to US$ 13.7 million. Excluding the irrigation component reduces the ERRto 12.3 percent and the NPVto - US$0.4 million, pointing to the critical importance o f imgation investments. The incremental cost analysis for the GEF-funded component is presented inadditional Annex 11to this PAD. Inthe baseline scenario prevailing agricultural practices are only partially corrected through ongoing Government, NGO and bilaterally supported efforts o f limitedreach and the proposed AWRP without GEF support. The cost of activities inthe baseline scenario is estimated at US$ 37.92 million. Available resources would not be sufficient to develop environmentally friendly farming practices inthe lower part o f the key watersheds that empty into the Black Sea, nor to strengthen Turkey's capacity to meet EU standards and raise public awareness about the need for agricultural pollution control, nor to support adaptive research aimed at reducing agricultural pollution while maintainingor increasing yields. The incremental cost o f activities to be supported by GEF related activities amount to US$7.0 million, which will be sought from GEF. 2. Financial (see Annex 4 and Annex 5): NPV=USS million; FRR = % (see Annex 4) Fiscal Impact: The scope and cost o f the project was reduced inlight o f Turkey's tight fiscal situation. Assurance has been sought from Government that the necessary Government counterpart contribution is consistent with the available fiscal envelope of the two implementing Ministries. Total Government financing during the project implementation period is estimated to be US$ 8.65 million (around 19 percent o f project costs). The Government's average annual contribution thus amounts to around US$ 1.2 millionper year over the life of the project, divided across 2 Ministries and7 implementingagencies. Although this is not a substantial share o f the implementing agencies' overall budget andthe Government has confirmed that this project is o f highpriority, there is a risk that the Government will not be able to make counterpart funds available on a timely basis, ifthe country's fiscal situation further deteriorates. Beyond project implementation, the fiscal impact o f the project is expectedto be minimal, as the main recurrent expense derives from the management andoperation of irrigation investments which will be entirely born by project beneficiaries. 3. Technical: The majority o ftechnologies to be promoted under the project have already beentested andvalidated in particular areas o f Turkey under other projects such as the recently completed EAWP. The promotion o f proposed technologies is backed up by operational manuals o f the Ministryo f Environment and Forestry and the General Directorate o f Rural Services which were prepared on the basis of results o f successfully completed adaptive research and experience gained under internationally and nationally financed projects. Duringproject preparationa number o ftools were usedto identify priorities, these include :(i) the Beneficiary Centered-Problem Census-Problem Solving (BCPCPS) methodused inthe villages of 12 indxative MCs, ii)a detailed baseline survey o f 12 indicative MCs, iii)farm surveys conducted with livestock owners andcrop producers inthe 4 GEF provinces, iii)a detailed baseline survey insupport of the social assessment camed out in5 selected MCs, and iv) collection o fbaseline information inanother 6 - 20 -  selected MCs for the Regional EnvironmentAssessment. Cost estimates for the proposed interventions are based on actual unitcosts o f similar interventions carried out under the EAWP and an estimate o f target areas for the combination o fproposed interventions based on initialMC plans developed for 12MCs. While the unit costs are thus accurate, overall cost estimates are a first best approximation, as actual costs will depend on the mixo factivities adopted by communities ineach one o f the 28 MCs. Specific investment identification and cost estimates for the GEF-financed agricultural pollution sub-components were based on technical designs and data preparedby consultants incollaboration with implementing agency staff and agreements reachedwith the local beneficiaries. 4. Institutional: 4.1 Executing agencies: The institutional capacity for project implementation at the field andnational level is adequate inall implementingagencies. The project builds on the institutional capacity established under the recently completed EAWP, inparticular the close cooperation inthe field between staff o f the agencies o f the two implementing Ministries and the four key agencies, namely, TUGEM, ORKOY, AGM, and KHGMand expands on these strengths by involvingCYGMandKKGM. The project will M e r strengthen the interagency collaboration and technical expertise needed to successfully develop and implement participatory M C based natural resource management plans. 4.2 Project management: Overall project management and oversight will be the task o f the inter-agency Project Management Group under the MEF. For day to day project management, the P M G will be assisted by an Operations Unit (OU) which will be staffed by financial management, procurement, and M&E specialists with qualifications satisfactory to the Bank. Funds will be provided to hire a communications specialist and a social scientist, as required, for specific studies. 4.3 Procurement issues: As the project focuses on community participation andM C specific investments, procurement o f small works and small quantities o f locally available goods will needto be carried out by the implementing agencies. These offices have limited experience with Bankprocurement procedures and will thus needto be closely supervised by the OU's procurement sub-unit.To assure adherence to Bank procurement guidelines, it was agreed that field office staff will only proceedwith procurement decisions uponreceiving approval by the OU's procurement sub-unit. All field offices will use standard Bank procurement documents which will be translated into Turkish for this purpose. The experience o f the EAWP showed that procurement o f larger contracts by individual implementing agencies was not an effective way to assure timely procurement inline with Bank procurement guidelines. Therefore, the procurement function will be centralized and carriedout by specialized staff o fthe OU's procurement sub-unit, with line agencies providing technical specifications and participating inbid evaluation through their representation inthe Bid Evaluation Committee. 4.4 Financial management issues: The financial management assessmentconcluded that the existing FMcapacity inthe MEF was not adequate for meeting the Bank'sminimumrequirements. To address these deficiencies, a financial management action planwas prepared and agreed uponwith MEF. The action planto improve the OUs -21 -  financial management capacity andthe project's financial management system have been implemented, 5. Environmental: Environmental Category: B (Partial Assessment) 5.1 Summuize the steps undertaken for environmental assess~nentand EMP preparation (including consultation and disclosure) and the significant issues and their treatment emerging from this analysis. The project is expected to have overall very positive environmental impacts. It will contribute to reduced erosion, increased vegetative andforest cover, improved land management, andwill reduce the discharge o f polluting nutrients into waterways. Broader positive environmental impacts include the institutional measures to support application o f the EUNitrates Directive and public awareness buildinginthis regard. A Regional Environmental Assessment was commissioned by Government, to providethe analytical framework to better addressenvironmental concems inthe design, implementation, andmonitoring o f project interventions. The Regional Environmental Assessment confirmed that the project is not expected to result inany significant environmental risks or negative environmental impacts. A range o f potential, minor negative impacts are, however, possible. These have been identified, and mitigation measures have been incorporated into the project's design. They include: 0 potential impacts resulting from poorly designed soil erosion control measures such as terracing; 0 potential impacts resulting from the rehabilitation or construction o f access roads; 0 potential impacts on forest villages which may find traditional access to forests restricted; 0 potential impacts associated with the possible use o fpesticides inthe production o f tree seedlings for afforestation andmicrocatchment rehabilitation; and 0 concems about dam safety, resulting from the construction o fnumerous small farm ponds and irrigation tanks. The Regional Environmental Assessment was reviewed indraft, andrevised based on the comments from the client and the Bank. The final Regional Environmental Assessment was translated into Turkish, and was made widely available inTurkey. A consultation on the reviseddraft was held on February 20,2003 andinvolved project agencies andNGOs. 5.2 What are the main features o fthe EMP andare they adequate'? The EMF describes mitigation steps which have been incorporated into the project's design. These include: 0 design standards for the construction o f various erosion control measures have been reviewedto ensure that they represent prevailing 'best practice,' 0 prevailing national standards for forest roads construction have been reviewed for their adequacy in addressing potential environmental problems, and these will be adopted as a contractual obligation of roads subcontractors; 0 With respect to forestry activities, communities and individualswith interests inthe use and management o f forest resources will be identified and consulted during the participatory preparation of microcatchment plans. The project will not limit communities' traditional use o f forested areas. 0 The extent o fplanned pesticide use was examined, which is very minor. Measures have been incorporated into the project to limit their use, consistent with principles o f Integrated Pest Management. 0 Standards for the construction o f small dams and farm ponds were reviewed to ensure that dam safety measureshave been adequately incorporated into their design by qualified engineers. 0 The impact o fwater abstraction on the Black Sea, as a result o f the project was reviewed and is - 22 -  expected to be negligible, and a waiver to the requirement to notify riparians was sought and received. 5.3 For Category A and B projects, timeline and Stahis o f EA: Date o f receipt o f final draft: 01/15/2003 The Regional Environmental Assessment was received and disclosedbefore the project was Appraised. 5.4 How have stakeholders been consulted at the stage of (a) environmental screening and (b) draft EA report on the environmental impacts and proposed environment management plan? Describe meclianisms of consultation that were usedand which groups were consulted? The Terms of Reference for the Regional Environmental Assessment were preparedbased on experience gained from consultation processes undertaken inthe EAWP, and reported on inthe ICR. The draft Regional Environmental Assessment was discussed extensively with MEF andwith the project agencies andNGOsbefore the project was Appraised. Public consultations on the Regional Environmental Assessment were carried out ina national workshop, held inFebruary 2003. 5.5 What mechanisms have beenestablished to monitor and evaluate the impact o f the project on the environment? Do the indicators reflect the objectives and results o f the EMP? The project's Monitoring and Evaluation system has incorporated environmental performance indicators, which are to be based on special studies outlined inthe EMP. 6. Social: 6.1 Sumarize kcy social issues relevant to the project objectives, and specify the project's social development outcomes. The project area is located in areas of highpoverty. The majority o f the populationdepend on a combination o f cropping, livestock andnon-fam activity as the primary livelihood strategy. Land degradation inthe upper catchments due to deforestation, overgrazing andunsustainable agricultural practices over time have had a negative impact on local livelihood strategies and contributed to the incidence o fpoverty. Because of its highvisibility, overgrazing by goats has been singled out as a cause o f landdegradationandlarge livestock owners have come increasingly coming under pressure from the rest of the community agnculturalists to reduce their herds and switch to other economic activities. The project willhelp alleviate some o fthis tension byproviding incentives to livestock owners to switch away from livestock or to adopt more sustainable management practices. Inaddition, the project implementation plan and other relevant material outlines conflict resolution measures inherent inthe BCPCPS process to ensure that potential conflict situations are resolved up-front and that livestock owners will participate effectively inthe development of M Cplans. Insome areas, localcommunities haveprotestedagainst the reinstatement o f pasture leases to nomadic shepherds from provinces outside the project area due to the damage inflicted bythe seasonalmovement ofthese animals ontheir agricultural lands. The project will ensure that nomadic shepherds are not deprived of their legal access to pasture grounds. Inthe southeastem part o f the project area, significant portions o f land that fall officially under the jurisdiction o f the MEF are either occupied by humansettlements or are beingcultivated under usufructary andother tenure claims. There are concems among local communities that the project will strengthen the Ministry's claim over these lands. InM C s where such contested landclaims occur, the project will work together with local communities to transfer long term management responsibility to community members andstrengthen the role o f local communities inprotecting the forest lands. Conflict resolution remains at the heart ofthe BCPCPS process. Social Development Outcomes: The project is expected to result inincreased equity, community - 23 -  empowerment andsocial inclusion. Labor intensive project interventions such as tree planting and construction will provide poor villagers with income-earning opportunities, w h l e improvedagricultural and forestry productivity anddiversification o f income sources will enhance the livelihood strategies o f poor villagers. The project's emphasis on participation inthe conservation o f naturalresources is at the core o f successful resource management and essential for improvedlivelihood strategies. Project interventions at the M C level will be demand driven primarilythrough the inclusion o f all concerned inthe development o f M C plans. 6.2 Participatory Approach: How are key stakeholders participating in the project`? Project preparation activities involved all key stakeholders: national, regional and local government authorities; NGOs; local communities including land-owning farmers, landless farmers, andlivestock owners. The project's approach to sustainable natural resource management on a MC basis rests on the active participation o f M C communities. As part o f the BCPCPS process, a team o f provincial rural services, agriculture andforestry staffwill work with villagers to help MC communities identify and rank their principal development problems andthen identify andrank proposed solutions which can be implementedunder the umbrella o f the project. Project implementation staffs contributionto these consultations is limitedto facilitation. The resulting MC development plan spells out proposed activities andparticipation requirements of all involved. Eachproject agency works together with a group of volunteers from the M C villages to determine the scale and site o f interventions regardmg forestry, agricultural, and irrigation development activities included inthe M C plan. The planmust be supportedby all involved and is posted inthe village for review/objection by all. To assure full participation and ownership o f MC plans by concerned communities, one full year is allocated to MCplandevelopment, with M C implementation occurring duringthe following three years. Duringthe problem andsolution identificationprocess, particular efforts are made to encourage women's participation, so as to assure that gender issues are mainstreamedinto M C development planning and implementation. Provincial implementing agency staff will receive training on community mobilization and other participatory techniques. 6.3 How does the project involve consultations or collaboration with NGOs or other civil society organizations? Civil society organizations have shown interest inthe project andwere consulted during preparation. These include the Turkish Foundation for Combating Soil Erosion, for Reforestation, and for the Protection o f Natural Habitats (TEMA). The Association for Livestock Producers was also consulted. CSOs andNGOs are expected to play a role duringproject implementation inmonitoring, training, and awareness raising. 6.4 What institutional arrangements have been provided to ensure the project achieves its social development outcomes? The project will create at the local level MC Resource Management Associations (MRMA)that will mobilize the community to participate inproject implementation andto take up responsibility for post-project operation and maintenance. The development o f participatory monitoring strategies will rely on the involvement ofthese Associations. At the field level, for each province, a Provincial Project Management Team (PMT) consisting o f the participating line agencies will be formed to ensure coordination between agencies and effective delivery o f goods andservices to the project beneficiaries. For each microcatchment, a Microcatchment Implementation Team (MCIT) will be established. 6.5 How will the project monitor performance interms of social development outcomes? - 24 -  The project will use the fmdings ofthe Social Assessment to design andimplement a comprehensive baseline survey which will form the basis for measuring changes inperception, welfare, and incomes associated with the project interventions. A participatory monitoring andevaluation program will be developed to keep track o f the project's overall social development outcomes. An independent M&E program will be initiated to keep track o f the safeguards issues. 7. SafeguardPolicies: 7.2 Describe provisions made by the project to ensure compliaiice with applicable safeguard policies. Environmental Assessment (Operational Policy 4.01): A RegionalEnvironmental Assessment (REA) to address the potential environmental impacts o f the project was prepared and reviewedby the Bank prior to appraisal. The REA includes a review o f national laws and regulations relevant to the project. The project comprises a series o f sub-projects, w h c h are to be defined during project implementation as a result o f the participatory microcatchment planningprocess. The REA describes a methodology for screening M C plans for environmental impacts, andfor proposing and introducingmitigating steps, which will be handled as part o f the regular criteria-based M C selection process. When microcatchment plans are prepared, particular mitigating steps may be triggered. The project will support the establishment o f capacity within the implementingagencies to ensure that subprojects are assessedfor their potential impacts, and environmental management plans are preparedand implemented incompliance with the national requirements as well as Bank policy on environmental assessment (OP 4.01). The REA describes the procedures andarrangements betweenthe implementing agency, the environmental authority andthe borrower entities for subproject environmental screening, assessment, consultations and disclosure. Generic EMPs for investments indifferent subsectors (farmponds, feeder roads etc.) are provided as examples. EMP recommendations are incorporated into the Project ImplementationPlan anddescribe screening standards, mechanisms, examples, and procedures related to Safeguards issues. Pest Management (Operational Policy 4.09): The only sub-component which may involve the use (butnot the purchase with IBRDor GEF funds) o f abiotic pesticides is the component which results inthe production oftree seedlings. The project will not be directly financing the purchase o f pesticides, but the agents contracted for nursery productionmay use pesticides inconjunction with tree seedling production. The Regional EA reviewed current practice inthe use o f pesticides for tree seedling production inTurkey. The REA describes 'best practice' pesticide handling intree seedling production, and recommends that these practices are incorporated into the contracts o f sub-contracted agents. Farmers inmicrocatchments will be encouraged to reduce the use o fpesticides and to adopt Integrated Pest Management approaches. - 25 -  Forestry (Operational Policy 4.36): The project l l l y complies with OP 4.36 on Forests as it aim to "reduce deforestation, enhance the economic contribution o f forested areas, promote afforestation, reduce poverty and encourage economic development". I t supports an integratedandparticipatory approach to M C natural resource management, particularly through activities aimed at rehabilitating degraded forest lands and income generation activities geared towards compensating communities for short term costs associated with afforestation. Dam Safety (Operational Policy 4.37): Under the income generation component, the project will finance small scale irrigation, including construction o f concrete ponds, diversion weirs and small dams. Highest priority will be given to irrigation ponds at strategic places throughout the M C areas as this will allow to reach the largest number o f beneficiaries. Construction o f dams will only occur inMCs with extreme water shortage. Based on the experience with EAWP, these dams are expected to be less than 15 mhigh. The implementingagency for this component, KHGM, has a long experience with the design, construction and maintenance o f over 600 small dams throughout the country. Duringproject preparation and appraisal, it was determined that KHGMhas the relevant knowledge and experience to design, construct andmaintain small dams and that it has proper design standards to guarantee the safety o f small dams. Generic dam safety measures are being designed by qualified engineers. Operation and routine maintenance of imgation infrastructure will be the responsibility o f beneficiary communities under the supervision andguidance o f KHGM.Under the project KHGMwill provide relevant local communities withtraining on dam surveillance, operation andmanagement to assure that they can effectively carry out their responsibilities. Although it is unlikely that the project will include construction o f dams higher than 15 meters, a panel o f independent experts, consisting o f a dam engineer and a hydrologist with qualifications satisfactory to the Bank,has beendesignatedwho would be calleduponto carry out anindependent review o fthe investigation, design, and construction o f the dam and the start o f operations, as spelled out inOP 4.37. Independent experts shall ensure compliance with the large dams reporting requirements. No private land will be acquired for the construction o f dams and resettlement is therefore not an issue. Involuntary Resettlement (Operational Policy 4.12): This OP does not apply to the project because all dams to be built under the project will be very small andbe constructed on public land located inthe mountainous upper part o f watersheds. No private land will be acquired for dam construction andthe dam locationwill be selected such that the reservoirs will only flood rocky, barren land. No grazing or other public landfrom which communities mightderive a livelihoodwill be affected. The loan agreement will include a covenant to this effect. Projects in International Waterways (Operational Policy 7.50): This OP does not apply because the MCs inwhich the project will providefor small scale irrigation are locatedinthe upper mountainous areaso fthe three major watersheds and water for irrigation purposes will be taken from springs or small streams inthe MCs. The springs from which water will be diverted into small concrete ponds are not directly linkedto the national rivers inthe project provinces that flow into the Black Sea or Mediterranean Sea. Furthermore, many o f the springs which will be used for diversion are infact already usedby farmers andthe project will improve the storage and water use efficiency inthese areas. The small streams are thirdor fourth level tributaries o fthese national rivers. About 15 diversion schemes, irrigating about 20 ha each, will be constructed along these small streams ineach ofthe three national river catchments. The project's emphasis on extension will result inreduced agriculture-based pollution o fground and surface water. - 26 -  F. Sustainability and Risks 1. Sustainability: This project i s a follow-up project to the recently completed EAWP and has been prepared at the explicit request o f the Government. Preparationwas carried out by agencies o f the two implementing Ministries (MARA andMEF)with limited support from consultants. This direct engagement o fall implementing agencies at the central and at the field level has significantly contributed to project ownership and commitment. To further cement the cooperation of implementing agencies at the local level, the Ministry of Environment andForestry submitted a law to Parliament (which was subsequently passed) which encourages collaboration between MARA,MEF, andlocal communities for all watershed-based activities (Statute 6831, Article 58). InMay 2003, the new Government merged the Ministries o f Environment and Forestry, creating the Ministry o fEnvironment and Forestry. KHGM, which used to be under a State Ministry,was transfered to MARA. These actions not only reducedthe number ofimplementingagencies for the project, but increased the chances of success by makingthe collaboration much easier. The project's community-based participatory approach leads to the preparation o f M C plans which are locally developed andimplemented (withthe support o fimplementing agencies) rather thanby implementing agencies themselves, is expectedto create a sound basis for project sustainability at the M C level. Communities will be fully responsible for operation andmaintenance o f investments provided for by the project, andthey have to agree to do so as a condition o f the project proceeding at a particular site. Therefore the Government will not incur substantial additional costs at specific sites upon project completion. The Project will create conditions for more sustainable landuse through increased productivity o f non-marginal land, reduced variability inproduction (through terraces and small scale irrigation) and household income (through income diversification), and improved vegetative covers rendering the land more resistant to drought and erosion. The training and institutional strengthening insupport o f sustainable natural resource management to be provided to implementing agencies at the central andfield level and to local communities under the project are expected to significantly contribute to project sustainability. Inthe mediumterm, the critical challenge for Government willbeto take the lessons learnedthrough the AWRP and to mainstream these types o f activities into the budget process. la. Replicability: Replicability is a fundamental feature o f project implementation, as the approach to developing MC management plans is replicated over the life o fthe project, and indeed, builds on lessons o f replicability learned inEAWP. - 27 -  2. Critical Risks (reflecting the failure of critical assumptions found inthe fourth column of Annex 1): Risk Risk Rating Risk Mitigation Measure From Outputs to Objective Project agencies do not maintain N The M C planning andbudgeting process cooperation and collaboration provides a framework for collaboration by all implementingagencies; All implementingagencieswere closely involved inprojectpreparation; The project builds on the successful inter-agency collaboration establishedduring EAWP; Implementingarrangementsprovide for inter-agency supervisory committees at national andlocal levels; Target communities do not participate in M The M C planningand budgeting process planningandimplementation provides a framework for collaboration by all implementing agencies; All implementingagencieswere closely involvec inproject preparation; The project builds on the successful inter-agency collaboration establishedduring EAWP; Implementingarrangementsprovide for inter-agency supervisory committees at national andlocal levels; A key criteria for M C selection is confirmed interest andparticipationby communities; MCplansare only be developedwith full participationby communities; Participation inrehabilitationefforts with only long term benefits and/or short term benefits is supportedby income generation activities; The project's flexible approachwill allow to tailor interventions to the interestsand needso f each community From Componentsto Outputs Lack or untimely releaseof counterpart M Project andloan size were downscaled in agreement with SPO to secure availability o f counterpart funds; M Project teams at the national and local level will be establishedafter appraisal, however, staff turnover has been anticipated bypreparation o f andprovisionoftraining inproject methodologies throughout the project period.; - 28 -  Inputswill not be available on time N Inputneedsare identifiedat endofMC planning year, allowing for sufficient time for procurement. Procurement o f inputswill mostly occur at local level; Government reorganization. S Government reorganizations occur inmany Decentralization is on-going. projects. Training has beenprovided for. The project life is 7 years, which allows for implementation delays due to reorganizations. Overall Risk Rating M 3. Possible ControversialAspects: There are no controversial aspects. G. Main Conditions 1. EffectivenessCondition For the Loan: All conditions precedentto the effectivenessof the GEF Grant Agreement or the right of the Borrower to make withdrawals thereunder, except only to the effectivenesso f the LoanAgreement have beenfulfilled. For the GEF Trust FindGrant: All condtions precedentto the effectivenessof the LoanAgreement or the. right ofthe Borrower to make withdrawals thereunder, except only to the effectivenesso fthe GEF Trust FundGrant Agreement havebeen fulfilled. 2. Other [classify according to covenant types used in the Legal Agreements.] 0 Not later than April 30,2005, the OUwill hire two independent,professional procurement specialists as consultantsto the OUwith qualifications, experienceand for a term acceptable to the Bank 0 The infrastructure facilities under the Project shall be constructedonly onpublic landwhere no means of livelihood o f any communities shall be affected. 0 All measuresnecessary for the carrying out ofthe Environmental Management Planshall be taken ina timely manner, ensuringthat adequate informationon the implementation of the saidmeasures is suitably included inthe progressreports. 0 The PMG, OU, Provincial Project ManagementTeams andMicro-catchment ImplementationTeams are maintained throughout Project implementation in a manner satisfactory to the Bank. 0 The Project Implementation Plan (PIP) shall be maintained throughout the Project and the PIP shall not be amended, repealedor waived without the prior approval o fthe Bank. 0 A mid-termreviewofthe Project shall be carried out byNovember 30,2008. H. Readinessfor Implementation [7 1.a) Theengineeringdesigndocumentsfor the first year'sactivities are complete andready for the start ofproject implementation. H 1.b)Notapplicable. H2. Theprocurementdocumentsforthefirstyear'sactivities arecomplete andready forthestartof - 29 -  project implementation. El3. TheProjectImplementation Planhasbeenappraisedandfoundtoberealisticandofsatisfactory quality. 04. Thefollowingitemsarelaclungandarediscussedunderloanconditions(SectionG): 1.Compliance with Bank Policies E!1.ThisprojectcomplieswithallapplicableBankpolicies. 0 2.ThefollowingexceptionstoBankpoliciesarerecommendedfor approval. Theprojectcomplieswith all other applicable Bankpolicies. w Pet& A. Dewees Marj&y-Anne Bromhead 4 Andrew N.Vorkink Team Leader Sector Manager Country Director - 30 -  Annex 1: Project Design Summary TURKEY: ANATOLIA WATERSHED REHABILITATIONPROJECT ion Hierarchy of Objectives CriticalAssumptions Sector-related CAS Goal: jector Indicators: sector/ country reports: [fromGoal to Bank Mission) 'rovide support for equitable <educedpoverty in degraded e ESW (occasional); Turkey maintains its iuman and social vatershed catchments e Government reports and commitment to collaborate levelopment studies with international institutions inits efforts to reduce poverty, improve income disparities . while managing its natural resourcebase in an efficient and environmentally friendly manner 'rovide support for strong 'rogress i s made in adopting mvironmental management iU environmental standards, md disaster prevention md introducing sound xactices for water, soil, and 'orest management 5EF Operational Program: 3utcomeI Impact ndicators: The project's objective of 1 Improvement in water Adoption o f Turkey maintains its *educingnutrient discharge to pality and in water receiving nutrient-friendly farming commitment to GEF and the :he water bodies feeding into lodies inproject areas practices by project farmers international community in :he Black Sea are consistent adopting measures to reduce NithGEFOPNo. 8, Water 1 Adoption and Water quality monitoring at pollution in the Black Sea Jody based Operational mplementation o f legislation selected sites Program, and will help restore InEUNitrate Directive 3alance to Black Sea xosystems. I -31 -  Data CollectionStrategy Hierarchyof Objectives - Critical Assumptions 'reject Development _IC D htcome I Impact 'roject reports: from Objective to Goal) Ibjective: ndicat0rs: rhe Project's Overall 0 Increasein vegetative %aseline,mid-term and final successful implementation o f Ievelopment Objective is to cover inproject MCs ample surveys o f stakeholderhis and other relatedprojects, ntroduce sustainable natural above baseline by 20% by iractices intargeted is required esource management the midterm and by 50% nicrocatchments iractices in 28 degraded by closing nicro-catchments and thereby 0 Increasein soil fertility aise incomes o f communities on sloping lands as .ffectedby resource measured by humous legradation. content in project MCs from 10%above the baseline by the midterm and by 20% by closing 0 Increase inhousehold incomes in participating M C communities by 10% above baseline at midtermandby 40% at closing 0 Increasedpublic awareness o f causes, effects and mitigating measures o f natural resource degradation as measured by awareness surveys rhe Global Environmental 0 Adoptionof daseline and project-end Ibjective is to introduce environment-friendly assessment o f impact o f arming practices which will practices (e.g. crop environmental friendly educe the discharge of rotation, crop nutrient technologies adopted iutrient and other agricultural management with soil )ollutants into surface and testing, use o f organic ;roundwater in watersheds matter) by 30% o f Iraining into the Black Sea. farmers in4 Black Sea Provinces 0 Adoption o f improved manure handling and storage facilities by 55%-60% o f farmers in areas where such practices are piloted - 32 -  Key Performance Hierarchy of Objectives Indicators CriticalAssumotions Iutput from each Output Indicators: 'roject reports: (from Outputs to Objective) :omponent: . Rehabilitation of 28 M C plans developed and innual Project reports; Favorable actions by IegradedNatural fully implemented participating institutions tesources: 22,700 ha o f forestry land &E reports; regarding adoption of the 'roductivity o f forest, rehabilitated improvedpolicy framework. angeland and agricultural 4,150 ha o f rangeland ;IS surveys; and in 28 M C improved. rehabilitated Farmers show commitment to 7,000 ha o f agricultural land Iousehold surveys; usingnewly introduced rehabilitated environment-friendly igricultural statistics; agronomic practices IUexpert reports Ievelopment and testing o f Packageso f practices iackage o f investments and successfully tested, and iractices for reducing nutrient adoptedby at least 65 % o f Lischarge into water-bodies. farmers in pilot areas !. IncomeGeneration: 3,900 ha o f imgatedland 'roject progress reports Farmers actively participate in lualifying farmers provided developed income vith training and materials to generatioddiversification :ngagein activities to raise 495 ha o f terraced agriculture activities and extension staff mdor diversify farm income are adequately equipped to At least 60 % o f farmers in introduce them MCs provided with training innew agriculture based income geneneration / diversification activities. 168 dairy cattle units improved 169 dairy sheep units improved 10 fishponds constructed 80 greenhousesdeveloped I. StrengtheningPolicyand Water quality monitoring Nater quality monitoring ZegulatoryCapacity: program developed and eports 'olicy documents and implemented ,egulatoryprovisions drafted. Code for good agricultural practices completed Lelevant regulatory Locuments TA and training insupport o f organic farming and marketing o f organic products 'roject progress reports was provided as planned. - 33 -  4. Public Awareness, Capacity Building & Replication Strategy: Responsibility o f local Public awareness campaign iwareness strategies and community enhanced through for project implemented locumentation shared resource planning activities Public awareness campaign for reduction o f agriculture basedpollution implemented Increasedawareness o f threats Replication strategy for to pollution o f national and nutrient discharge reduction ieplication strategy report trans-boundary water bodies ieveloped. from animal waste and agricultural chemicals. Farmers provided with increasedaccess to marketing and technical information. 5. Project management and support services Effective project management Effective M&E system 'roject progress reports system :stablished. Timely monitoring and reporting as ?lanned. Increased technical and iesearch result reports community development Staff trained as planned capacity of implementing agency staff 4pplied research projects :ompleted Project ComponentsI nputs: (budgetfor each aroject reports: (from Components to Sub-components: zomponent) Outputs) 1. Rehabilitation of E 23.5 million hpervision reports; Counter-part funds are DegradedNatural Resources available in a timely manner 2uarterly and Annual project a. Forest Land eports; Farmers actively participate b. Rangeland inplanningand c. Agricultural Land :inancia1 management reports implementation d. Environment-friendly Agricultural Practices Project agencies maintain active cooperation and collaboration 2. Income Generating 6 17.57 million - 34 -  Activities a. Small-scale Irrigation b. Agricultural Terraces c. Forest Activities d. Crop & Farm Enterprise Diversification e. Livestock improvement f. Greenhousedevelopment g. Fish pond construction 3. Strengthening Policy and JS$ 0.28 million Regulatory Capacity: a. Nitrates directive b. Code for Good Ag. Practices c. Institutional support for organic farming 4. Awareness raising, JSS 1.06 million Capacity Building & Replication Strategy a. Public awarenessraising and replication strategy b. Capacity building 5. Project management, JS$ 2.50 million monitoring, and support services a. Project administration b. Support services - 35 -  Annex 2: Detailed Project Description TURKEY: ANATOLIAWATERSHED REHABILITATIONPROJECT Estimated Project Componentcosts are Indicative Project Costs, and include IBRD, GEF, Government, and Local community inputs. By Component: Project Component 1 US$23.50 million - Rehabilitation of DegradedNatural Resources This component consists o fa menu o frehabilitative measures to be implemented by village communities under the direction o f the Ministryo f Environment and Forestry and the Ministryo f Agnculture and Rural Affairs. The component's primary objective is to protect degraded areas from further degradation, erosion andpollution. Activities are focused around four sub-components as outlined below and will be implemented in 28 microcatchments in6 provinces. The activities include a specific program for piloting actions on reducing nutrient discharge to the water bodies that will be implemented inthe lower parts o f watersheds o f four participating Black Sea provinces using GEF h d s la: Regeneration of Forestry Land: The objective o fthe sub-component is to put inplace measures to conserve soils andvegetation inwatershed catchments, and to introduce mechanical andbiological approaches toward catchment conservation, management, andrehabilitation inforestry land. Physical measures will involve the establishment o f terraces which will inturnbe stabilized by tree planting. Where appropriate, natural regenerationwill be encouraged. Riverbanks will be protected by the establishment o f gallery plantations. Extensive natural stands o f oak will be rehabilitatedby enrichment plantings and enhanced coppice management. Silvicultural treatments will be introduced to improve the quality o f degraded high forests. To gain a better understanding o f the potential contribution o f non-timber forest products (NTFPs) to local economic development, the sub-component will also finance an inventory o f locally important NTFPs with a view towards developing and introducing locally-derived management plans. lb: Rangeland Rehabilitation. This sub-component will provide resources to rehabilitate and improve the carrying capacity o f degraded range-lands. This will include the adoption o f sustainable rangeland planning andmanagement principles, includinglimitingthe number o f animals admittedto a particular grazing area andfencing offareaswhich needprotection. The project would provide for fencing to control grazing access; sward enrichment (seeding and fertilizing); removal o f stones andunpalatable plants from rangelands; construction o f shelters; water points and salt licks and, land rehabilitation. IC: Rehabilitation of Agricultural Land. This sub-component will focus on three main areas, including fallow reduction, improved use o fmarginal land and, river bankprotection. Thefallow reduction program aims at introducing edible and feed legumes to increase moisture retention and soil fertility, while decreasing erosion and improving landproductivity. The project will raise farmers' awareness o f the damaging effects o f growing annual crops on steeply sloped marginal land and promote the adoption o f more suitable production techniques for such land, such as contour tilling and replacement of food crops with perennial crops and bushy plants with market potential. River bank rehabilitation will seek to halt river bank erosion which result inflooding and destruction o f adjacent agricultural lands. The main activity will be river bank strengthening withrocks and gabions. Terracing will be introduced onprivately owned arable landwhere continued agricultural productionwould result inerosion andwhere it is difficult to capture soil moisture. - 36 -  Id: Environmentally Friendly Agricultural Practices. Under this sub-component, MARAwould promote the adoption o f improvedpractices including organic farming, crop productionpractices, appropriate fertilization andIntegratedPest Management, through advice and demonstrations inthe 28 microcatchments. Inthe lower parts o f watersheds o f the four participating Black Sea provinces, M A N E Fwouldpromote the following practices, gearedto reducing nutrient discharge:(i) manure management; (ii) nutrient management; (iii) organic farming; and (iv) water/soil quality monitoring program to measure the impact o fthese practices on nutrient discharge. Inthe area o f manure management, the project would initially support the piloting o f improved community-level andon-farm livestock manure storage facilities, improved manure collection and application to agricultural land. For poultry units,the project would primarilyprovide technical assistanceto help enforce compliance with existing legislation and to develop a more efficient system for manure collection and utilization. Following an impact evaluation o f these pilots, project activities would be extended on a wider scale as o fthe thirdproject year. Inthe areaofnutrient management, the project provide farmers with technical advice onnutrient management on the basis o f laboratory tested soil samples. Inthe area o f organic farming, the project ' would support production testing, promotion and marketing advice for organic produce. Inthe area o f integrated pest management the project would provide farmers with IPMrecommendations for various crops tailored to their specific production area and the establishment o f computerized early pest warning systems. The project would finance the following investments under Component 1:civil works associated with implementing catchment rehabilitation activities outlined inmicro catchment management plans (e.g. terraces, riverbank strengthening works) and manure storage facilities; equipment (e.g. manure handling equipment, laboratory equipment, computers and software) in support o f manure and nutrient management, organic farming, water and soil quality monitoring ;agricultural inputs and fencing insupport o f forest, range and agricultural land rehabilitation, training and technical assistance and operating costs associated with GEF supportedactivities to reduce nutrient discharge into the Black Sea. Project Component2 US$17.57 million - Income Generation Under this component target communities would be offered a menu o f activities designed to raise household incomes for those who participate inresource conservation activities supportedunder Component 1. Income generating activities are designed to provide participating communities with incentives to undertake conservation efforts even ifthey incur short o f medium term costs (e.g. short term closure o f range lands; permanent closure o f protected forest lands) or ifbenefits can only be reaped inthe longrun(afforestation). The menu offered to communities will vary inaccordance with agro-ecological and socio-economic conditions o f each village, as well as with farmers' resources and needs. The component includes the following sub-components: 2a: Small ScaleIrrigation. Small-scale irrigation (which was the most popular activity under EAWP, and i s expected to continue to be so) involves development o f one or more water sources, a conveyance system to the irrigation area and a distribution system to the boundaries o f the farmers plots. With the objective o f raising family incomes through production o f highvalue crops, the project will provide for the construction of small scale irrigation facilities including: 0 Diversion constructions (weirs) providing controlleddiversion from the rivers and varying according to the river bed and resource conditions; 0 Concrete irrigation channels where field conditions permit, providing conveyance without pressure with minimumloss o fwater; 0 Pipedwater conveyance structures inrough ground where open channel construction is not possible or - 37 -  where water is conveyed from source under pressure; 0 Farm reservoirs comprising small dams between 7.00 - 15.00 m inheight and storing winter andspring flows from the watershed. Farm ponds where the water flow rates is less than 20 Us. Works will include exploitation o f as yet unexploited water sources as well as improvement o f existing small scale irrigation schemes. Duringthe M C planningphase a thorough investigation o f all potential water sources ina given M C will be carried out. Firstpriority will be given to the development o f irrigation ponds locatedat strategic places through the microcatchment areas, so that a larger segment o f the village population can benefit. Streams will have second priority. Only inextreme water short catchment areas without springs and only seasonal streams, will the development o f small dams be taken into consideration. Itis estimatedthat the total commandarea inthe 28 project MCswill be about 3,000. Where suitable small-scale freshwater fisheries may be developed inselected MCs. 2b: Agricultural Production on Terraces. The project would establish terraces on farmland where continued practicing o f agriculture would result inerosion and where capturing o f soil moisture is problematic. Technical advice andwhere necessary seeds for demonstrations will be provided for planting alternative irrigated and rainfed crops (e.g. fodder crops, fruits and vegetables) on terraced land. 2c: Forestry Based Income Diversijication: This Sub-component seeks to help forest communities make better use o f forest resources while conserving the resource base and would includeparticipatory tree plantingandgrafting o fwild trees inforest land. 2d: Farm Enterprise Diversijication: This sub-component seeks to help farmers diversify and raise their agnculture based income through the introduction o f high-value non traditional niche and forage crops, grafting o f wild trees, tree planting on field boundaries, apiculture and small scale agro-processing. The project would provide for demonstrations, technical support and marketing advise to help farmers shift to the productiono f non-traditional highvalue niche crops such as lavender, thyme, raspberry, rosehip, orchid, triticale, organic products, pharmaceutical plants or seedlings for ornamental plants. Grafting o f wild fruit and nut trees aims to improve the quality and quantity offruits andwouldbe supportedthrough the provision o f grafting materials, technical organization o f and grafting by experienced grafters and farmer training. Greenhouse horticulture may be supported. Apiculture allows to raise farmer incomes without puttingadditional pressure on the land and is inparticular demand by particularly landless farmers and goat keepers. To increase the durability andvalue added o f crops, farmers would be introduced to simple ago-processing methods which meet food safety and quality standards necessary to sell processed products inurban markets. Inan effort to reduce householddependence on the naturalresource base, improved breeds o f cattle and sheep may be provided. Under project Component 2, the project will finance civil works for irrigation and agricultural terraces; simple ago-processing equipment, farmer training intechnical aspects o f income raising activities, marketing advice and operating costs associated with implementing agency staffs' operational travel. Project Component 3 US$ 0.28 million - StrengtheningPolicy and Regulatory Capacity This Component aims at strengthening the policy and regulatory capacity towards meeting EU standards in the area o f agricultural pollution. Itwill consist of the following three sub-components: 3a: Supportfor Implementation of the EU Nitrates Directive. The project would support the monitoring of nitrate levels at selected sites inthe four Black Sea provinces as a first step inimplementingthe EU - 38 -  Nitrates Directive. The objective would be to monitor areas o f intensive agriculture inthe watersheds o f the Kizilirmak andYesilirmak Rivers andidentify ``vulnerable zones". 3b: Development and Promotion of a Code of GoodAgricultural Practices. The project would provide technical assistance for the preparation of a Code o f GoodAgricultural Practices inline with EU requirements. The preparation and ultimate application o f such a code is a mandatory part o f the EU Nitrates Directive program. 3c: Institutional Supportfor OrganicFarming. The project would provide technical assistance to support production and marketing o f organically produced products. Under Component 3 the project would finance technical assistance andtraining insupport o f these activities, as well as equipment and operating costs to monitor water and soil quality. Project Component 4 US$1.06 million - Public Awareness, CapacityBuildingandReplication Strategy Under Component 4 the project would finance public relations campaigns and informationalmaterials, training, andtechnical assistance as well as computer andother equipment for the rural tele-centers. This component will have the following three sub-components: 4a: Public Awareness in MCDevelopment: This sub-component is intended to help raise awareness amongst target beneficiaries and other stakeholders about the program approach and terms o fparticipation inM C development. The goal will beto increase transparency inprogramimplementation andto empower beneficiaries to demand program services. With regard to the four Black Sea provinces, the sub-component would provide for public awareness activities at the provinical and national levels, as well as for future replication o f similar activities inTurkey and Black Sea ripariancountries. Project Component 5 US$2.50 million - ProjectManagementand Support Services Through 4 sub-components, Component 5 would finance technical assistance,training, office equipment and incremental operating costs associated with project management: 5a: Project Administration. This sub-component will provide resources for logistical, operational, and support services, as well as financial services necessary to ensure the efficient administration o f project activities and resources by central andprovincial project management units. 5b: Support Services: This sub-component will fund extension, technical assistance andlocal andregional visits for project managers, technical project staff and farmers, surveys, and technical designs for monitoring and evaluation. 5c: Monitoring and Evaluation: The project provides for upgrading the existing M&Esystem. 5d: Fundfor Applied Research and TechnologyDissemination: The project would finance short-term, small-scale applied research. This would include soil, water, crop, natural resources management, agricultural pollution, livestock and forestry applied research. ImplementationArranpements Project activities will be implemented by the relevant General Directorates o fthe Ministryo f Environment - 39 -  and Forestry, and the Ministryo f Agriculture and Rural Affairs as follows: JAME OF AGENCY RELATEDUNITS ROJECTCOMPOSEST Iinistry of Environment iD o f Afforestationand Erosion control ovcrall planning and id Forestry (MEF) 4GM) coordination 'budgeting soil conservation by afforestation protection and improvement o f poor and degraded soil gallery plantations rehabilitation o f rangelands ii the forest area participatory afforestation 3D ofForestry (OGM) rehabilitationo f oak and degraded forest inventory o f non-wood forest products iDofForest andVillage Relations livestock improvement 3RKOY) freshwater fisheries development greenhouse development iD o f Eniironmental Management Construction standards for CYGM) manure handling facilities stream water quality monitoring public awareness and replication strategy for nutrient discharge reduction linistry o f Agriculture anc iD o f Development and Agricultural range land rehabilitation .ural Affairs (MARA) 'roduction (TUGEM) outside the forest area agricultural land rehabilitation agriculturalbased income raising activities demonstrations iD ofProtection and Control (KKGM) manure management, nutrient management, organic farming water & soil quality monitoring nitrate level monitoring code o f good ag. practice public awareness campaign demonstrations GD o f Rural Services (KHGM) protection and rehabilitation o f agricultural land small scale irrigation and irrigation facilities, includini farm ponds riverbank and creek rehabilitation wet and dry terracing -40-  VAME OF AGENCY lELATEDUNITS PROJECT COMPONENT 'rovincial vlinistry o f Environment itthe time ofAppraisal, a 0Overall planning and md Forestry (MEF) :organization o f regional and coordinationibudgeting rovincial directorates was underway 0soil conservation by iiiththe aim ofmore fully afforestation ecentralizing implementation 0protection and esponsibilities. improvement o f degraded soil 0gallery plantations 0 rehabilitation o f range lands inthe forest area participatory afforestation 0inventory o f non-wood forest products 0wild tree grafting 0rehabilitation oak and degraded forests 0nutrient management 0stream water quality monitoring 0public awareness and replication strategy for nutrient discharge reduction 0 livestock improvement 0 freshwater fisheries development 0 greenhouse development Ministry o fAgriculture At the time of Appraisal, a 0 rehabilitation o f indRural Affairs reorganization o f regional and rangelands outside o f :MAW provincial directorates was underway forest areas with the aim o f more fully 0 rehabilitation o f agr. land 0 ag. based income raising activities 0 manure management, 0 nutrient management, 0 organic farming 0 MC water & soil quality monitoring 0 nitrate level monitoring 0 code o fgood ag. practice 0 public awareness campaign 0 demonstrations 0 small scale irrigation 0 riverbank rehab. 0 terracing -41 -  Annex 3: Estimated Project Costs TURKEY: ANATOLIA WATERSHED REHABILITATIONPROJECT Foreign Total US $million US $million 1.73 20.28 Component 2: Income GeneratingActivities 13.80 1.04 14.84 Component 3: Strengthening Policy and Regulatory Capacity 0.18 0.07 0.25 towards MeetingEUStandards Component 4: Awareness Raising, Capacity Building, and 0.78 0.23 1.01 Replication Strategy Component 5: Project Management and Support Services 2.16 0.29 2.45 Total Baseline Cost 35.47 3.36 38.83 Physical Contingencies 3.10 0.20 3.30 Price Contingencies 2.58 0.20 2.78 Total Project Costs1 1 41.15 3.76 44.91 Front-endfee 0.20 0.20 Total Financing Required 41.15 3.96 45.11 IIdcrititiabletaxes andduties are 3.58 (L'SSm) andthe totalproject cost, net of'taxes, is 31.53 (tiS$m). Therefore; thc project cost sharingratio is 57.9246 of' total project cost net oft3xes. - 42 -  Annex 4: Cost BenefitAnalysis Summary TURKEY: ANATOLIA WATERSHED REHABILITATION PROJECT Summary of Benefits and Costs: The analysis takes a holistic view o fthe project impacts and interventions. While some interventions may have higher or lower internal rates o f retum (IRR) when considered inisolation, they complement each other and will yield full benefits within the context o f integrated microcatchment MC rehabilitation. Accordingly, the present cost benefit analysis has been carried out in four stages: (i) estimation o f net financial benefits o f project activities aiming at natural resource rehabilitation and erosion control, intensification and diversification o f farming systems, and employment generation; (ii) construction o f representative M C models (financial); (iii) economic analysis at the project level (28 MCs); and (iv) sensitivity analysis to test the robustness o f the results. This analysis indicates that the proposed combination o f interventions should be attractive from the financial point o f view to target communities in MCs at various altitudes, but that the financial performance o f MC development plans largely depends on the balance betweenrehabilitative and income generating interventions. Details of this last analysis are not presented inthis annex, but are available inthe project files. Net Financial Benefits of Project Activities Natural Resource Rehabilitation and Erosion Control The benefits o f rehabilitation and conservations measures have been measured intwo steps: (i) income streams from rehabilitative investments ( e g additional wood production) and, (ii) benefits from reduced erosion as measured by reduced soil loss, higher agricultural yields andreduced flood damage. Direct Income from Rehabilitative Investments: Among the protective project interventions, only participatory planting, range landmanagement and range landrehabilitation are expected to yield tangible benefits to the communities, with the benefits inmost cases only accruing after 5-10 years. Given their costs to participating communities, it is essential that these protective activities be complemented by income generating activities which will allow M C communities, inparticular those persons who will lose from protective interventions, to derive and increase their household income from alternative sources. Table 1 below summarizes financial benefits o f rehabilitative measures. It must be noted, however, that while the mainbenefits o f these rehabilitative measures can not be captured by measuring direct incremental income generated from these investments, the mainbenefit o f these investments is the rehabilitation andrestoration o f the resource base inthe M C area. This is a pre-condition for the generation o f benefits o f essentially all other project benefits andfurthermore has significant additional environmental benefits some o f which are hfficult to quantify, while others will be quantified inthe next section. ITable 1: Summary of Benefits from Forestry and Range Land Rehabilitation /Firstyear inwhich IYear inwhich fullbenefits /Incrementalbenefitsha at full positive net benefits are reaped maturity 1IRR occur (TL milha) 25 yrs Participatory planting 5 20 5,23 1 Range land management 5 6 19 -0.2% Range landrehabilitation 6 8 19 -2.9% -43-  increased infiltration o frain water and thus water content o f forestry andagricultural landleading to greater availability o f water for animal andhuman consumption and higher soil moisture; (vi) improved environmental conditions due to increased vegetative cover leading to better conditions for wildlife, carbon sequestration andmore humidlocal microclimates; (vii) reducedcost o f water treatment for human consumption downstream as a result o f reduced water turbidity. Methodological difficulties and absence o f data, prevent the quantification o f all benefits. The present cost-benefit analysis includes a quantification o f the benefits from reduced soil loss, progressive improvement o f soil quality and thus agricultural yields and o f reduced flood control costs. The quantification o f benefits from reduced siltation o f dams was not included, as the project area only affects less than 1percent o fthe catchment area o f concemed dams. A conservative estimate is that about 1.5 million tons o f sediments are lost to erosion annually inthe 28 project MCs'. Results elsewhere inTurkey showed that erosion decreases from 16,000 tons per km2 o f fallow (nude soils) to 1,360 tons on pastures and to negligible values on forest land. Therefore afforestation activities could reduce erosion by up to 100percent. Under the project, the combination o f forestry and rangelandmanagement and improvement activities has been assumed to reduce erosion by 80 percent. However, this will be slow to materialize and this result is assumed to materialize progressively after 5 years andto reach full potential after 10 years. Then, an estimated 1.5 million tons o f soil which would have been eroded without project will be "saved" from erosion. To quantify the value o f this reduction in soil loss, soil losses intons were translated into soil losses inarea, with one 1ton o f soil loss translating into 3m2o f lost soil). The cost o f this loss was valued at the average net retum o f land subject to erosion in the project area, which is about US$68/ha per year. As a consequence, one ton o f sediment lost, corresponding to a permanent loss of 3 m', would lead to an annual productivity loss o f US$0.021. A loss o f 1.5 million tons o f sediments corresponds to an annual loss o f about US$31,000. However, the loss o f soil beingpermanent, these productivity losses would cumulate over time andreach US$ 310,000 per year after 10 years. Under the project, erosion would progressively be reduced by 80 percent and it is estimated that inPY 20, annual savings would reach 400 billion TL, or USS 300,000 per year. Effectsonyields: Bothfarmers andtechnical services recognizethat erosion is negatively affecting agncultural yields inthe project area. However, no reliable data exists for Turkey which would allow to document this impact. Inthe absence o f specific data related to the project area or Turkey, the following very conservative assumption has been applied: productivity would decrease by 1percent every year without project as a result o f continuing erosion; these losses would progressively be reduced andyields would stabilize after 5 years as a result o f erosion control activities. This very conservative assumption would lead to an annual saving o f about 380 billionTL (USS 280 thousand) after 10years. FloodControl.Damage causedby floods averages about US$ 1.12 million per year inthe three major watersheds concerned by the project. Reduced erosion has a great impact on the frequency and scope o f floods by sharply reducing the peaks o f water flow both through increased infiltration and slowing down the flow where vegetation cover is restored. However, at an average area o f 40km2,the 28 MCs covered by the project account for only about 2.4 percent o f the area o f these watersheds. Therefore the reduction o f erosion resulting from project implementation has been assumed to progressively reach 50 percent o f 2.4 percent of these damages which can be attributed to the 28 MCs forming the project area. After 10 years, annual savings would reach about US$ 30,000. BenefitsofAgriculturalIntensificationandDiversification - 44 -  Crop Budgets: Crop budgets were developed for each ofthe main income generation activities to be promotedunder the project. The following assumptions underlie these budgets: (i) budgets were prepared in TL andfarm gate prices were used; (ii) perennial crops, a projectionover 20 years was done, with full for productionassumed to gradually occur between year 3 and year 10, depending on the crop; (iii) family labor was considered as a financial cost, hired labor (assumed to represent 10 percent inthe case o f annual crops and 30 percent for perennial crops) was valued at TL 6 millionper labor day. Net annual benefits per hectare were calculated for annual crops and average annual incomes (over 20 years) and financial rates o f return (FRR) for the perennial crops. Detailed results o f these crop budgets are available inthe Financial andEconomic Analysis Project PreparationReport inthe project files. Fallow Reduction:An activity model for fallow reduction shows that the average net annual income per ha from agriculture would more than double from a very low 213 million TL to 461 million TL . I t is estimated that the incremental availability o f fodder for animal feeding could reach a total o f 4,585 tons at full development, iffallow reduction is implemented on 1,834 ha, leadingto incremental annualbenefits o f TL 334 billion as o fyear seven. SmallScale Irrigation:The project would provide for the development of about 3,940 ha o fnewly irrigated landwhich would allow to convert from the current extensive productiono f cereals to a more intensive cultivation o f higher value crops. Cost-benefit models for two typical irrigation schemes were prepared (irrigation pond covering 5 ha or irrigated land, irrigation dam covering 30 ha). Financial rates o f return (calculated over 20 years) are estimated at 30 percent and 27 percent for irrigation pond and irrigation dam respectively. Fromthe farmers' viewpoint, the investment is even more profitable as they would have to bare only a small share o f the investment cost estimated at 20 percent. The financial rates o f return from their viewpoint are estimated at respectively 92 percent and 81 percent. Further details are available inthe project file. Impact OnAnimal Husbandry:The project will provide grant financing for dairy cow and sheepkeeping activities by inhabitants o fproject MCs who agree to arrangements for improved range management, to compensate them for their losses from reducedgoat flock sizes. The support will include the provision o f two improved cows incalf or o f 30 sheep and one ram, and support towards the construction or improvement o f a 5-animal stall or sheep pens. Experience suggests that former goat keepers prefer to first switch to sheep keeping rather than shifting to cow keeping which may require more skills. Nevertheless the project will make sure that the number o f sheep introduced through this activity will not lead to overgrazing. Furthermore, inline with the spirit o f coordinated MC planning, the project will require that the farmers it supports will also be engaged infodder crop production supportedby TUGEM to ensure that their livestock does not pose a threat to rangeland. Support is envisaged for 168 dairy cow units (i.e. 2 improved cows per unit)and 169 dairy sheep units (i.e. 30 sheep and 1ramper unit). The average support per investment will be about USD 7,850 for dairy sheep and U S D 10,800 for dairy cows. ORKOY envisages about 50% in-cash or in-kind(or some combination thereof )co-funding from beneficiaries. Summary of Benefitsand Costs: For purposes o f the project's overall cost benefit analysis the entire project area (28 MCs) has been considered and treated as a giant MC inwhich all project activities are implemented over a 7 year period. The phasing o f physical activities was multiplied by net economic retums per unitas calculated inthe economic activity models and crop budgets. The costs o f all other activities for which no benefits were estimated were included inthe calculations. Financialprices were replaced by economic values inthe crop budgets and activity models. Another major difference between financial and economic models is that the latter attribute a value to the economic cost o f family labour -- not the case inthe financial models. - 4 5 -  The economic rate o fr e m (ERR) was calculated over a 25 years period (as most o fthe activities are expected to have a long term impact) .The ERR including all project benefits is 18.6 percent and the net present value (NPV) calculated with an annual discount rate o f 12percent is 20.7 trillion TL, or US$ 15.3 million. Benefits from irrigation activities make up a large part o f the IRRand NPV. InProject Year 20, they account for about 60 percent o f the entire economic benefits, while benefits from agricultural activities account for about 18 percent and benefits from erosion reduction for about 22 percent. Main Assumptions: 1. This estimate is based on an observed annual average sedimentation o f 453 tonsikm2 inthe rivers o f the three major watersheds to which the participating 28 MCs belong andthe assumption that the project MCs contribute to these sediments inproportion to their area (average area o f 40 km2 per MC). This is a conservative estimate, as erosion is above average inthe selected MCs and the observed sediments are averages over 30 years which do not take into account recent increases in erosion levels. 2. Status Report: "Erosion inTurkey" prepared inFeb 1998 inthe context o f a Forestry Sector Reviewjointly undertakenby the MoF andthe WB'. 3. Estimates are based on average soil depth o f 20cm and average soil density o f 1m3=1.665tons, see Financial and Economic Analysis Project Preparation Report (inproject files) for details. Sensitivity analysis/ Switching values of criticalitems: ERR NPV (US$million) BaseCase 18.6% 15.3 Costs increasedby 20% 16.7% 12.0 Benefits decreasedby 20% 16.3% 7.6 Cost +20% and Benefits-20% 14.4% 5.7 Benefits delayed by 2 years 18.3% 13.7 The sensitivity o f the net project benefits to the materialization o ftwo key project benefits was also tested. First,an estimation ofeconomic benefits ifthe impact from conservation activities on erosion would not materialize. The results indicate that the project would still be economically feasible even inthe absence o f erosion reduction benefits. Second, to show the importance o f irrigationdevelopment inthe economic viability o f the project, the irrigation sub-component was subtracted from the analysis. Without irrigation benefits, the project wouldjust barely be economically viable. Results are summarized inTable 3. ERR NPV (US$ million) BaseCase 18.6% 15.3 Erosion Control Benefits not Materializing 18.1% 13.7 KOImgationSub-component 12.3% 0.4 - 46 -  Annex 5: Financial Summary TURKEY: ANATOLIA WATERSHED REHABILITATION PROJECT Years Ending December31 IYear I I Year2 I Year3 Iyear4 IYear5 IYear6 1 Year 7 Total Financing Required Project Costs InvestmentCosts 2.7 6.9 8.0 8.1 6.6 4.1 1.8 Recurrent Costs 0.4 0.6 0.8 1.o 1.2 1.4 1.4 Total Project Costs 3.1 7.5 8.8 9.1 7.8 5.5 3.2 Front-end fee 0.2 Total Financing 3.3 7.5 8.8 9.1 7.8 5.5 3.2 Financing IBRDllDA 1.o 3.6 4.0 4.1 3.6 2.5 1.1 Government 0.8 1.7 1.8 1.8 1.6 1.1 0.7 Central 0.6 1.6 1.7 1.7 1.5 1.o 0.5 Provincial 0.2 0.1 0.1 0.1 0.1 0.1 0.2 Co-financiers Local Communities 0.2 0.9 1.4 1.7 1.7 1.6 1.2 Global Environment 1.3 1.3 1.6 1.5 0.9 0.3 0.2 Facility Total Project Financing 3.3 7.5 8.8 9.1 7.8 5.5 3.2 Main assumptions: - 47 -  Annex 6(A): Procurement Arrangements TURKEY: ANATOLIA WATERSHED REHABILITATIONPROJECT Procurement Procurement o f goods, works and technical services financed bythe World Bank andGEF will be done in accordance with the World Bank Guidelines: Procurement under IBRD Loans and IDA Credits (issued in January 1995, Revised January andAugust 1996, September 1997 and January 1999). Consulting services and technical assistance financed by the World Bank and GEF will be done in accordance with the World Bank Guidelines: Selection and Employment of Consultants by the WorldBank Borrowers (issued inJanuary 1997, revised September 1997, January 1999 and May 2002). The Bank's Standard BiddingDocuments and Request for Proposals will be used. Works, goods and services which are not financed by the Bank would be procured inaccordance with the arrangements agreed between the financier andthe Government. A General Procurement Notice will be annually published in UNDevelopment Business. II.Implementation: There will be two Ministries responsible for the implementation o f this project, which are namely: 1. MinistryofEnvironmentandForestry (MEF) e General Directorate o f Afforestation andErosion Control (AGM) e General Directorate o f Forestry (OGM) e General Directorate o f Environmental Management (CYGM) 0 General Directorate o fForestry and Village Relations (ORKOY) 2. MinistryofAgnculture andRuralAffairs (MARA) e General Directorate o fAgricultural Production and Development (TUGEM) e General Directorate o f Protection and Control (KKGM) e General Directorate o f Rural Services (KHGM) Ministryo fEnvironment and Forestry (MEF) willbethe coordinating agency for the proposedproject and play key role inthe implementation o fthe project. Project Management Group (PMG) will be responsible for overall project management. A Project Coordinator will headthe P M G and membership will comprise representatives o f all Ministries/central agencies (implementing agencies) listed above having project activities. The P M Gwill be responsible for: i) overall project coordination; ii)review and approval o f microcatchments plans; and iii)annual budget proposals for all project activities. An Operations Unit (OU) will serve the PMG. Within each implementing agency, a Project Management Unit (PMU) at the central level will oversee project activities. At the provincial level, ProvincialProject Management Team made up of line agencies will be responsible for managing project implementation. The OU will be located at the premises o f MEF-AGMand will have 3 sub-unitsto the satisfaction of the Bank: i)Financial Management; ii)Procurement; andiii)Monitoring and Evaluation. Procurement Sub-Unit (PSU): will have four procurement specialists (including one primarily for handling - 4%-  GEF expenditures) andwill be responsible from coordinating allprocurement activities o fthe project, one o f them being the leader o f the procurement team. Financial Management Sub-Unit (FMSU): will have a financial manager, an accountant and a disbursement officer andwill be responsible from all project financial management activities. MonitorinP and Evaluation Sub-Unit (MESU): will have two M&Especialists, employed for at least four months a year (one o f whom will focus on GEF activities), and a secretaryiinterpreter. All procurement activities withinthe scope o fProject will beunder the responsibility o f OU-PSU, where at least two professional (individual consultant/one o f them will primarly work for GEF) procurement specialists will be employed. It was agreed that procurement related decisions that will be taken at the related implementingagency will be discussed at the Project Management Group (PMG) and implemented by the BiddingCommittees which will comprise o fexperienced technical staff from relatedimplementing agency as well as procurement staff from OU. Ifneeded, update(s) inthe procurement planwill be proposed by the implementingagencies, and after the approval o f the PMGiOU the updated procurement plans will be send to the Bank's clearance. Any revision inthe procurement plans shall not be valid without Bank'sprior concurrence andno-objection (please seeparagraphIVbelow). Procurement activities that will be managedat the provinciallevel will be closely supervised by relevant central agency and OU, and the field offices will take no procurement action, unless the decision is approved by OU. The implementing agencies listed above will be primarilyresponsible inpreparation o f the procurement documents such as advertisements, scope o f works, terms o freferences, technical specifications, delivery sites, drawings, bill o f quantities etc..In order to apply the Bankprocurement procedures andrules properly, ImplementingAgencies will obtain the participation o fthe PSUprocurement experts when they prepare the biddmgdocuments. The PSUprocurement experts will also help the implementing agencies duringthe evaluation stage o fthe expressiono f interests andbidsiproposals, establishing short lists, contract negotiations (consultants services only) andcontract preparations interms o f Bank's procurement procedures. All the Bank financed procurement activities will be performed under the management o fthe OU-PSU, and without the clearance o f the OU-PSU on the procurement activities no procurement will be performed. The procurement documents which are subject to prior review o f the Bank will be send to the Bankthrough OU-PSU (please see Section IV below). The contracts will be signed by the relevant Implementing Agencies after all clearances from the OU-PSU and the Bank are obtained. The cop(ies)y o f the contracts will be send to the OU-PSU for their records and payment purposes. The contracts will be executedby the relevant ImplementingAgencies. The contract payments will be done by OUagainst evidences and invoices submitted by the ImplementingAgencies. MEFandMARAhave fieldunits inall o fthe 81 provinces. The project area includes 6 provinces inthe Central Anatolia and Black Sea Regions o f Turkey and the fieldunits o f these ministries will be responsible for tendering small construction works andprocuring small size o f locally available goods. However, they have a limited experience andno training inthe Bank's procurement procedures. Whenever required, the provincial project staff will be trained by OU-PSU specialists regarding the procurement activities. All biddingdocuments for the procurement o fBank financed goods, works and services shall beprepared bythe implementing agencies with the participation o fOU-PSU experts. At the provincial levelthe responsible team o fthe line agencies will prepare the small size procurement documents under the - 49 -  supervision o f central management o fthe relevant agencies andPSU. All the procurement documents will be cleared by OU-PSU before any action. A Project Launch Workshop shall beheldafter the effective date o fthe LoadTrust FundAgreement to reaffirm the PSU's and implementation units' understanding of the procurement procedures under the Anatolia Watershed Rehabilitation Project. In.ProcurementArrangements: The following procurement methods will be applicable for the procurement o f goods, works and services. (a) Procurement of Goods: The goods to be financed by the Bank include the following: agricultural seeds; fruit tree seedlings; seeds for forest trees; forest tree seedlings; greenhouses; fishponds; dairying; breeding;fertilizer; bees; beehives and kits laboratory; field, ofice, survey equipment andmachinery. International Competitive Bidding(ICBI: These contracts will be procuredthrough ICB in accordance with the Bank's Procurement Guidelines. National Competitive Bidding (NCB): The contracts for the procurement o f locally available goods estimated to cost less than US$300,000 per contract will be procuredthrough N C B inaccordance with the Bank's Procurement Guidelines. International Shopping (IS): The contracts for the procurement o f readily available off-shelf goods estimated to cost less than US$ 100,000 per contract will be procuredthrough I S on the basis of at least three quotations obtained from suppliers from two eligible source countries inaccordance with the Bank's Procurement Guidelines. National Shopping. (NS): The contracts for the procurement o f locally available off-shelf goods estimated to cost less than USS50,OOO per contract will be procured through N S on the basis o f at least three quotations obtained from domestic suppliers inaccordance with the Bank's Procurement Guidelines. Direct Contracting (DCI: The procurement of goods, which (i) would be an extension o f an existing contract, (ii)mustbe purchased from the original supplier to be compatible with the existing equipment, (iii) ofaproprietarynature,(iv)mustbeprocuredfromaparticularsupplierasaconditionofa are performance guarantee, (v) must be purchased from the only available source, with the Bank's prior agreement, will be done through D C inaccordance with the Bank's Procurement Guidelines. (b) Procurement ofWorks andTechnical Services: The works to be financed by the Bank include the following; afforestation services for soil conservation, 0 protection and improvement services for degraded soils, 0 plantation and rehabilitation services for forestry areas, 0 construction of small scale irrigation works, riverbed rehabilitation, 0 construction o f agricultural terraces, 0 construction of central and farm stores for manure management, - 50 -  0 construction of green houses, 0 construction o f fishponds. International Competitive Bidding(ICB): These contracts will be procured through I C B inaccordance with the Bank's Procurement Guidelines. National Competitive Bidding(NCB): The contracts for the procurement o ftechnical services and construction works estimated to cost less than US$ 3 million per contract will be procured through N C B in accordance with the procedures acceptable to the Bank and also inaccordance with the Bank's Procurement Guidelines. When falling under the legal framework governed by the Borrower's Public Procurement Law No. 4734 dated January 04,2002 and Amendment Law No:4761 dated June 12,2002 and Amendment Law No.4964 dated July 30,2003, the following procedures with respect to NCB will apply: Eligibility:Biddingshall not be restricted to domestic bidders. N o restriction shall be applied to foreign bidders who wish to submit a bid. Procedures:The OpenProcedure, as defined inthe Public Procurement Law, shall be followed inall cases. Invitations to bidshall be advertised inthe Official Gazette andinat least one widely circulated national daily newspaper allowing a minimumo f 30 days for the preparation and submission o f bids. Assessmentof Bidders'Qualifications:Inthe procurement o fgoods and works, where pre-qualification is not used, the qualifications o f the bidder who is recommended for award o f contract shall be assessedby post-qualification, applying minimumexperience, technical and financial requirements which shall be explicitly stated inthe bidding documents and which shall be determined by a `passffail' method, not through use o fa meritpoint system. Participationby Government-ownedEnterprises:Except as otherwise noted, Govemment-owned enterprises inthe Republic o f Turkey shall be eligible to participate inbidding only ifthey can establish that they are legally and financially autonomous, operate under commercial law and are not a dependent agency o f the Government. Furthermore, they will be subject to the same bidand performance security requirements as other bidders. Participationby Joint Ventures: Participation shall be allowed fromjoint ventures onthe condition that suchjoint venture partners will bejointly and severally liable under the Contract. BiddingDocuments: Procuring entities shall use the appropriate standard biddingdocuments for the procurement of goods, works or services, and shall contain draft contract andconditions o f contract acceptable to the Bank. BidEvaluation:Evaluation ofbids shallbe made instrict adherence to the monetarily quantifiable criteria declared inthe biddingdocuments and a merit point system shall not be used. Extension o fbid validity shall be allowed once only for not more than 30 days. N o further extensions should be requested without the prior approval o f the Bank. Contracts shall be awarded to qualified bidders having submitted the lowest evaluated substantially responsive bid.N o preference shall apply under National Competitive Bidding. PriceAdjustment: Civilworks contracts of long duration (e.g. more thaneighteen (18) months) shall - 51 -  contain an appropriate price adjustment clause. RejectionofAll Bids: Allbids shall not be rejectedand new bidssolicited without the Bank's prior written concurrence. Contracts:All contracts shall be inwriting, signedand stamped by authorized signatories o fthe Purchaser and the Supplier and contain identical terms and conditions o f contract to those included in the tender documents. Securities:BidSecurities should not exceed 2% (two percent) ofthe estimatedcost o fthe contract; Performance Securities not more than 10%(ten percent). No advance payments shall be made to Contractors without a suitable Advance Payment security. The wording o f all such securities shall be included into the bidding documents and shall be acceptable to the Bank. Minor Works (MW):The contracts for the procurement o f small scale rehabilitation, plantation and construction works estimated to cost less than USS 100,000 per contract will be procured through h4W based on at least three quotations obtained from qualified domestic contractors inresponse to written requests. (c) Procurementof ConsultingServices: The consulting services to be financed by the Bank include the following: monitoring and evaluation, agricultural marketing, soil and water pollution monitoring, livestock waste management, simple ago-processing, code o f good agricultural practices, organic agriculture, public awareness, communication specialist. Oualiw andCost Based Selection (OCBS): The consulting services to be contracted to consulting firms will be procuredon the basis o fQCBS procedure inaccordance with the Bank's Consultants Guidelines. Selection Based on Consultants' Oualifications ((20):The consulting services to be contracted to consulting firms estimatedto cost less thanUS$ 100,000 will be procured on the basis o f CQ procedure in accordance with the Bank's Consultants Guidelines. Individual Consultants (IC): The consulting services for strengthening project management and implementation to be contracted to individual consultants will be procured on the basis o f Individual Consultants inaccordance with the Bank's Consultants Guidelines. For the individual consultants to be hired for more than six months duration, the positions will be advertised for expressions o f interest in international and/or national media depending on the expertise required andselection will be based on comparison o f qualifications o f those expressing interest. Single Source Selection (SS): The consulting services, which (i) would be a natural continuation o f previous work carried out by the firm, (ii) must be selected rapidly due to an emergency need, (iii) an has exceptional nature where only one firm is qualifiedor has experience o f exceptional worth for the assignment, (iv) is estimated to cost less thanUS$ 100,000, with the Bank's prior agreement, will be done procured through SS in accordance with the Bank's Consultants Guidelines. (d) Procurementfrom GovernmentOwnedEnterprises: Itis recognizedthat the agncultural inputssuch as forestry seedlings, fruitbearing forest seedlings, fruit - 52 -  tree seedlings, forest tree seeds, agricultural seeds, bee hives etc. to be provided under the project have unique characteristics (such as sensitivity to local soil conditions, topography, climate) which would render competitive biddingas goods through ICB or even N C B procedures impractical. Nevertheless, it is recognizedthat at least some o f this type o f material may be available from private sources on the localized marketplace andin some instances could be purchased through local competitive biddingwhen suitable items meet the quality standards (including disease free condition) specified. It is only when suitable agncultural inputs are not available on the open market or suitable sources on the open market have been exhausted, that purchases from Government Owned Enterprises (GOEs) or agencies would be allowed. Furthermore, when more than one GOE source is available, the project authorities should insure that the purchases would be made from GOEthat would be the most economical while still satisfying the quality aspects o f the project. Incategorical terms, the procurement o f these agricultural inputs would follow the following steps: When the suitable agricultural input is available from private sources on localizedmarketplace; it will be procured: (i) nationalshoppingproceduresforcontractslessthanUS$50,000equivalent, through (ii) localcompetitivebiddingproceduressatisfactorytotheBankforallothercontracts. through When the suitable agricultural input is only available from GOEs, it will be procured: (i) themosteconomicalsourcewhenmorethanoneGOEsourcewithsuitableagriculturalinputis from available, (ii) directcontractingwithaGOEwhenitistheonlysourceofsuitableagriculturalinput. by As result, the Bank (OPCPR) agrees, on an exceptional basis, with the procurement o f above listed agricultural inputs and services from government owned enterprises and agencies under the scope o fthe project, if andwhen they can not be procured from private sources inlocal market. The subject agencies are the Government agencies andthey are not eligible according to paragraph 1.8 (c) o f the Bank's Procurement Guidelines. More specifically, they are not legally and financially autonomous; they do not operate under commercial law; they are the dependent agencies o f the Borrower or the Sub-Borrower i.e. implementingMinistries. However, because o f specific nature o f the project and when there is no private sector alternatives for these agncultural inputs and services, the direct procurement from government owned enterprises will be considered. Therefore, the implementing agencies shall procure some agricultural inputs and services (e.g. digitized maps) from government owned enterprises under the scope o fthis project through the above-explainedmethodology. The details o f these procurements are explained inAnnex 15 to this Project Appraisal Document. (e)Training and StudyTour Expenditures: The P M G shall prepare detailed training programs for every six months inconsultation with the implementing agencies. The Training Programs shall contain time schedules for workshops, seminars, studytours andtravels etc. including detailed information onthe content, itinerary, location, number o f beneficiaries, cost estimates for each activity etc. These training programs shall be submitted to the Bank for review andclearance before implementation. After the Bank's clearance, the program shall be implemented inaccordance with the agreed procedures without requiring the Bank's clearance o f each component o f the training program. The status o f the training program will be included as part o f progress reports andwill be updated andor modified as may be mutually agreed between the related Ministries and the Bank. The training services expenditures consist o f subsistence and travel (local andor international) costs - 53 -  incurredby trainees, training fees, provision o f training materials and handouts, trainers' fees etc. These expenditures will be directly reimbursed subject to the presentationby the PMGo f Statement o f Expenditures. (0OperatingCostsofOU(RecurrentCosts): The incremental operating costs associated with the project include OU, PMG andP M U staff salaries, bank charges and to maintain Special Account. All incremental operating costs will be financed by the Government. The other operating costs including operating andmaintenance cost o f office equipment, stationary and cost o f advertisement for procurements under the project shall be financed through Loan proceeds. IV.ProcurementReviewBvThe Bank The PSU shall use the latest versions o fthe Bank's Standard BiddingDocuments (SBD) for the procurements financed by the Bank. Schedulingof Procurement. Procurement o fgoods, works and services for the project will be carried out inaccordance with the agreedprocurementplan,whichwill beupdatedas necessary andincludedinthe progress reports for Bank review and approval. The Bank will review the procurement arrangements proposed by the Borrower, including contract packaging, applicable procedures, and the scheduling o f the procurement processes, for its conformity with Bank Procurement and Consultant Guidelines, the proposed implementation program and disbursement schedule. (a) PriorReview: The following procurement action and documentation would be subject to Prior Review by the Bank. Goods, Works and TechnicalServices: Prior review o f BiddingDocument (including, Invitation to Bid, Instructions to Bidders and BidData Sheet, General and Special Conditions o f Contract, BidForms, Schedule o f Requirements, Techmcal Specifications, Bill o f Quantities), BidEvaluationReports; Recommendations o f Contract award. Consultant Services: Prior review o fprocurement documents andactions which will include: QCBS:Prior review o f (1) short listing criteria for consultingassignments; (2) Consultants Short Lists; (3) complete Request for Proposal (WP) package (including Invitation, Information to Consultants and Data Sheet, General and Special Conditions o f Contract, Technical Proposal standard forms, Financial Proposal standard forms, and Form o f Contract); (4) Terms of Reference, including description o f services, consultants' reporting requirements, and required qualifications o f consultants' key personnel; (5) Technical and Financial Evaluation Reports (including official minutes) and Recommendations for contract award; and (6) Negotiated Draft Contract. IndividualConsultant(INI))contractsof US$50,000 and above: Prior review of :(1) Consultants Short Lists; (2) Draft Contract Agreement; (3) Terms of Reference, including description of services and consultants' reporting requirements; and (4) Agreed Draft Contract. IND contractsof below US$50,000: Prior review of: (1) criteria for short listing consultants; and (2) Terms o fReference will be conducted. - 54 -  The Bank's prior review o f procurement action would cover the following; i.AllICBcontractsforgoodsandworks ii.FirstthreeNCBcontractsforgoodsandworks iii.FirstthreeMinorWorkscontracts iv. Firstthree IS andN S contracts v. All contracts awardedunder Direct Contracting Procedures vi. All contracts awarded to Government OwnedEnterprises vii. All contracts with consulting firms estimatedto US$ 100,000 or more each viii. All contracts with individualconsultants estimated to US$ 50,000 or more each ix. All contracts awarded under Single Source Selection x. The Terms o f Reference for all consultant contracts with consulting firms and individuals A complete set o fprocurement documentation, as specified above, for contracts which require prior review, shall be submitted to the Bankbefore taking any action for review and clearance by the Bank's Procurement Specialist andthe relevant technical staff. (b) PostReview: The procurement documents for all other contracts shall be subject to the Bank's post review on a random basis, one infive contracts. Post review o f the procurement documents will normally be undertaken duringthe Bank supervision missionor as the Bank may request to review any particular contracts at any time. Insuch cases, the PMGshall provide the Bank for its review the relevant documentation including bidding documents issued to the bidders, letter o f invitation to quote, minutes o f bidopening, bidevaluation reports, copies o fbidproposals, signed contracts etc. The periodic post reviews shall be conducted by the Bank's Procurement Specialist. The outcome o f the post review will be communicated by the Bank to the P M G at the earliest time. V. ProcurementMonitoringandReportinp: The PSU will keep a complete andup-to-date record o f all procurement documentation and relevant correspondence inits files, which will be reviewed by the Bank staff during supervision missions. The Procurement Plan for the project shall be preparedlconsolidatedby the PSU and furnished to the Bank for its review and approval inaccordance with the provisions o f the Bank's Procurement Guidelines. The Procurement Plan, which indicates the procurement arrangements, contract packaging, applicable procurement method, scheduling o fprocurement process, estimated cost etc. will be updated annually by the PSU. All procurements shall be undertaken inaccordance with the Procurement Plan. Monitoring reports on procurement progress will be submitted as part o f progress reports on program implementation. The report shall include all informationrelated with the completed, on-going andplanned contracts. VI. ActionPlanTo BuildUPTheAgency's Capacitv: Tasks Completed: The procurement file containing the upto date procurement documents such as guidelines, templates o f procurement notices, standard bidding documents for the procurement o f works and goods under ICB, NCB, MW and IS/NS methods, StandardRequest for Proposal document for the consultants services, standard consultants contracts for large and small assignments and for time based and lumps-sum payments, evaluation report formats have been prepared inhardcopy andinelectronic versions on diskettes andprovidedto the implementingagencies staff during the preparation o f the capacity - 55 -  assessment. Although they are familiar with the Bank's documents, the latest versions o fthe documents shall be used inthe new project. The OUhas arranged for translating the relatedprocurement documents, into Turlush such as National Competitive Bidding, Minor Works, National Shopping andwill provide the translations to the Implementing Agencies and their provincial directorates. April 2004-May 2004: OU shall appoint at least 2 persons who will be worlung full-time for the procurement activities under the scope o f the project. The qualifications o f the procurement staff shall be reviewed by and agreed with the Bank. Since the project activities require close coordination among various agencies together with provinciallregional directorates, these 2 persons shall work very closely with the other agencies too. Each implementing agency shall also appoint at least 1person for the procurement activities under the scope o f the project. The assigned persons will participate the training course which will be arranged by the Bank for the Borrower`s staff inApril 2004. At least two experiencedprocurement consultants shall be recruited before the LoadGranteffectiveness (January 2005). These positions will be advertised after the LoadGrant signing (November 2004) to get these consultants inplace immediately after the loan effectiveness date. The procurement consultants shall have at least 3 years experience with Bank financed projects and shall work very closely with the staff o f OUand all implementingagencies mainly for the preparation o fbidding documents primarilyfor large procurements. The TOR and C V o f the procurement consultants shall be reviewed and approved by the Bankbefore signingthe contract. January 2005: The former PAS has already organized two-days procurement familiarization seminar in early 2002, for project related staff from related departments o f the implementingMinistries who would be potentially involved indifferent aspects such as technical, financial, legal aspects o f the project. This seminar served as both introductiono f Bank's procurement procedures andupdating their previous knowledge. Another similar seminar shall be scheduled during the Project Launch Workshop to be held in January 2005 after the Loan effectiveness date for the whole project staff again. Withinone year after the Loan Effectiveness: None o fthe staff has any formal training on the Bank's procurement except that they'gained experience while working inthe Bank financed projects. At least 2 staff of OU shall attend procurement training offered by ILO Turin in the early stages o f the project. Inthe lifetime of the project: Inorder to overcome the problems at the bidevaluation stage; qualifiedandexperiencedtechnical staff of implementing agencies, especially those who have some knowledge o fthe Bank's procurement and evaluation procedures should be appointed as evaluation committee members. At the beginning o f each procurement, just after the finalization o f the biddingdocuments, evaluation committee members should be appointed and they should start reviewing andbeing familiar with the bidding document and evaluation methodology stipulated inthe bidding document. Then, before the receipt o fbids, procurement staff should meet with the evaluation committee members to explainthe Bank's evaluation methodology. The Ministries` intemal approval procedures should be reconsideredto avoid long delays and if possible, delegation o f approval authority up to certain monetary values should be taken into consideration. The OU should start usingelectronic filing and electronic communication as early as possible to improve its capacity. - 56 -  0 EachBank Supervision Mission shall include the procurement specialist assigned to this project to assist the OU staff for updating the procurement plan andresolving pending procurement issues to overcome delays. Procurementmethods(Table A) E. Front End Fee 0.20 0.20 (0.20) (0.20) TOTAL 5.00 22.33 0.00 27.33 (3.50) (16.50) 0.00 (20.00) Turkey Anatolia Watershed Rehabilitation Project GEF Financed Components - - Table A: Project Costs by Procurement Arrangements (US$ million equivalent) - 57 -  r Table 8:Thresholds for ProcurementMethodsand Prior Review-Loan ContractsSubjeci ExpenditureCategory Contract Value Threshold Procurement (US$ thousands) Method to Prior Review (US$ million) > or equal 100 NCB 0.50 1. Works e100 MW 0.20 2. Goods e50 NS 0.15 3. Consultants' <I00 CQ 0.21 Services e50 IND 0.72 4.Training Subjectto provisionof approvedtraining plan Table B: Thresholdsfor ProcurementMethodsand Prior Review- GEF ContractValue Threshold Procurement Contracts Subjeci ExpenditureCategory (us$thousands) Method to Prior Review (US$ million) > or equal 100 NCB 0.90 1. Works e100 MW 0.25 2. Goods e50 NS 0.12 > or equal 100 QCBS 1.oo 3. Consultants' Services e100 CQ 0.10 e50 IND 0.25 4.Training Subjectto provision of approved training plan - 58 -  Overall Procurement RiskAssessment :High Frequency o f procurement supervision missionproposed: One every 6 months (includes special procurement supervision for post-review/audits) Overall ProcurementRisk Assessment ---.-....--- . Section I: Capacity of the ImplementingAgency inProcurementandTechnical Assistance requirements The capacity of the implementingagency to conduct procurement has been assessed. The overall procurement assessmentis high-risk.The following action plan is recommendedas a result of this assessment: (1) The procurementfile containing all the up-to-date Bank procurement documents such as guidelines,SBDs, RFP, etc. is to be providedto the Project Management Group both in hard copy and electronically. This had been completed by Appraisal.; (2). The PASshall organize two-days procurementtraining during the project launch workshop for PMG staff and the other staff who may be involved in the review of procurement- related documents, to familiarize themselves with the Bank's procurement procedures; (3) The Explain briefly the ProcurementMonitoringSystem: Procurement implementationprogresswill be monitoredthrough progress reports and supervision missions. Each supervision mission will include the project procurementspecialist for updating the procurement plan and for conducting Indicate name of ProcurementStaff or Banks staff Dart of Task Team resoonsiblefor the .___ - procurementin the Project: Salih K. Kalyoncu (ECSPS) Exolain brieflv the expected role of the Field Office in Drocurement:There are two orocurement specialists inthe Country Office. One of them will be iesponsible for this project and the other will provide back-up service in the absence of assigned staff. - 59 -  Annex 6(B): Financial Managementand DisbursementArrangements TURKEY:ANATOLIAWATERSHED REHABILITATIONPROJECT FinancialManaPement 1. Summaryofthe FinancialManagementAssessment An assessmento f the financial management arrangements for the project was undertaken inOctober 2003, andupdated inJanuary andMarch2004. The assessmentconcludedthat the Ministry ofEnvironment and Forestry (MEF) Operations Unit (OU) satisfies Bank's minimumfinancial management requirements. The detailed financial management assessmentquestionnaire is included inthe project files. A summary o f the financial management assessment and its conclusions follows: Financial Management Assessment Rating Comments 1. Implementing Entity Satisfactory OUhas been establishedand have experience inmanagingBank-financed projects. 2. Funds Flow Satisfactory Arrangements are discussed and agreed 3. Staffing Marginally There is a full time finance coordinator in Satisfactory place. 4. Accounting Policies and Procedures Satisfactory Draft financial manuals andpolicies are prepared. 5. Internal Audit NA N o reliance placedon internal audit 6. External Audit Satisfactory The project will be audited by the Treasury Controllers. 7. Reporting and Monitoring Satisfactory Format o f the FMRsare agreed with the OU. 8. Information Systems Satisfactory I Accounting software used satisfactorily for other projects is customized for AWRP. Overall Financial Management Rating I Satisfactory Country Issues: A Country FinancialAccountability Assessment (CFAA) for Turkey was carried out in2001. The CFAA report identifiedmajor weaknesses inTurkishfinancial accountability, inboth the public and the private sectors. Inview o f this the CFAA concluded that to ensure Bank funds are used for the purposes intended ringfenced financial management arrangements are more appropriate for the implementation o fBank financed investment projects rather than relying upon government systems. Audits o f most Bank-financed projects inTurkey are carried out by the Treasury Controllers (TCs). The regular work o f the TCs focuses primarily on compliance auditing, and their financial statement audit skills are limited. This has led to problems with the quality o f their reports submitted to the World Bank. However during last year various bank-financed programs have been carried out to enhance the capacity o f the TCs, including training with private sector audit firms and a two-month training program heldby the Scottish Institute o f Chartered Accountants. The quality o f the audit reports submitted for the 2001 year end audits o f the projects have improved a lot compared to the previous years. Ofmore fundamental concern as specified inthe CFAA is the independence o f the TCs, given their subordination to the Treasury, which is responsible for the implementation o f Bank-financed projects. There are no mitigating measures within this project for this as this is considered a macro level issue to be addressed through reforms ingovernment auditing. - 60 -  Finunciul ManugementAssessment Implementing Entity: The OU Financial Management Sub-Unit (FMSU) will be responsible for all project financial management activities. All payments will be centralized at the OU. Relevant line agencies will prepare the technical specifications or Terms o f References (TORS)for the goods, works, services required and will be responsible for the procurement process with help from the procurement sub unit o f the OU. Responsibility for accepting and overseeing the related items procured, for monitoring contract performance, and for obtaining the approval o f the Ministryo f Finance Budget and Payment offices will also be the responsibility o f the relevant implementing agency. The OU/FMSU will make the payment from the Special Accounts (there will be two Special Accounts) based on the payment order o f the related implementing entity. The OU will document the format andthe contents o f the informationrequired from each line agency to make payments inthe project financial management manual. The riskassociated with implementing entities are assessed as moderate. The implementing ministries have experience with implementation o f World Bank loans. The relationship between the OU andthe ministries will be monitored closely. Funds Flow: There will be two Special Accounts for the project: one for disbursements from the World Bankloanand one for the disbursements from GEF.Botho fthese SpecialAccounts will be inUS Dollars and will be at the Central Bank o f Turkey. All payments to the contractors, suppliers and consultants will be made from these Special Accounts with the authorization o f the Head o f P M G and the Financial Manager o f the OU/FMSU. Payments will be made directly from the loan account for amounts over 20% o f the authorized special account allocation. Fundsrequired for the World Bank and the GEF financed portions ofthe project will be describedinthe annual budgets o f each implementingentity and the responsibility for ensuring that the counterpart funds are allocated inthe annual budget belongs to each implementing entity. Inthe preparation o f the following year's budget, the implementingentity staff will work together with the F M S Uto determine the amount o f project funds required to complete the planned activities inthat particular year. Then the implementing entities will make sure that this amount is included inthe entity's budget when they apply to the State Planning Organization (SPO) and the Ministryo f Finance. The payments for the counterpart funds will be made directly by the Ministryo f Finance's payment office at the implementing entity. The OU/FMSU will get a copy o fthe payment document relating to the counterpart funds so that they are included and documentedinthe overall project accounting. The payments for the IBRD/GEFfunds will be made by the FMSU from the special accounts. The implementing entities will be responsible for receiving approval from the Ministryo f Finance payment and budget offices to facilitate this payment. There will also be contributions from local communities inthe project. Local community contributions (individual beneficiaries, cooperatives, municipalities) will be in-lund, including the value o f labor and existing equipment used on the project. The monetary values o f these contributions together with their recording arrangements will be considered after the arrangements are finalized andwill be documented in the project financial management manual. The risk associated with funds flow is considered as moderate andbudgeting for the project byboth implementing ministries will be monitored closely to avoid any delays indisbursements. StafJing: The OUunder the direct responsibility o fthe PMGwill work as a specialized organizational unit o f MEF and will act as a "service provider" to the implementing entities. The OUwill have three sub-units; (i) procurement sub-unit, (ii) financial management sub-unit and (iii) sub-unit. The financial M&E management sub-unit currently has a full time financial manager with qualifications satisfactory to the bank.MEFwill submit the names o fproposedstaff for, the accountant andthe disbursement officer - 61 -  positions to the bank by April 30,2004. The riskassociated with staffing is considered as moderate. The assignment o fthe accountant and the disbursement officer to the OUwill be monitored closely. Accounting Policies and Procedures: The project accounting will be maintained separately within the OU. The project accounting willbe on a cashbasis. The MOF has purchaseda computerized accounting system according to technical specifications agreed upon with the Bank. The accounting system, allows for proper recording o f project financial transactions, including the allocation o f expenditures inaccordance with respective components, disbursement categories andsources o ffunds. Accounting procedures have been set out inthe draft financial management manual for the project. The financial management manual covers (a) the financial and accounting policies and procedures for the project (b) organization o f the financial management (FMSU staffresponsibilities) (c) the financial management information system (d) disbursements (e) budgeting and financial forecasting (f) project reporting and (g) project planningprocedures. The risk associated with accounting policies andprocedures i s considered as negligible. Reporting and Monitoring: The OUwill maintainrecords and will ensure appropriate accounting for the funds provided. Financial statements for the project will be preparedby the OU. The Financial Monitoring Reports (FMR) will be prepared quarterly and will be submitted to the Bank no later than 45 days after the end o f the quarterly period. The format and the contents o f the FMRhave been agreed upon with the Bank. The financial management manual o f the project includes a section on the FMR. The FMR includes financial reports, output monitoring reports andprocurement reports. The risk associated with reporting and monitoring is assessed as moderate. Information Systems: The OUhas purchased a computerized financial management system also capable o f producing the project financial reports. The technical specifications for the system were agreedupon with the Bank. Software has been installed and staffhave beentrained. The riskassociated with information systems is assessed as negligible. SupervisionPlan: Duringproject implementation, the Bank will supervise the project's financial management arrangements intwo main ways: (i) review the project's quarterly financial management reports as well as the project's annual audited financial statements and auditor's management letter; and (ii) duringthe Bank's supervisionmissions, review the project's financial management and dsbursement arrangements (including a review of a sample o f SOEs and movements on the Special Accounts) to ensure compliance with the Bank's minimumrequirements. As required, a Bank-accredited Financial Management Specialist will assist inthe supervision process. 2. Audit Arrangements Internal Audit.: There is no internal control department which carries regular audits o f the departments withinthe Ministryof Environment and Forestry and therefore no reliance will be placed on internal audit. ExternalAudit: Annual project financial statements for the project will be audited by the Treasury Controllers inaccordance with International Standards on Auditing (ISA) and under TOR cleared by the Bank. 3. FinancialRisk Analysis From a financial management perspective, the proposed Project is considereda moderate risk project. A - 62 -  summary o f the risk assessment for the project is as follows: Risk Rating Comments Inherent Risk 1. CountryFinancialManagement High Basedonthe CFAA Risk 2. ProjectFinancialManagement Moderate Flow of funds couldbe slow due to budgeting Issues constraints, Overall Inherent Risk Moderate ControlRisk 1. ImplementingEntity Moderate Experiencedimplementingministries. 2. FundsFlow Moderate Allocation of funds inthe budget will be monitored closely. 3. Staffing Moderate Assignment of accountant andthe disbursement officer to the OU will be monitored. 4. AccountingPoliciesand Procedures Negligible 5. Intemal Audit NIA 6. Extemal Audit Negligible 7. Reportingand Monitoring Moderate The informationsystem is capableofproducingthe reports andtimely productionof these reportswill bemonitoredclosely. 8. Information Systems Negligible Overall Control Risk Moderate 3. DisbursementArrangements Use of statements of expenditures (SOEs): Disbursements will be made against Statements o f Expenditures for: (i) works under contracts costing less than US$3,000,000 equivalent each, but excluding the contracts which are subject to prior review; (ii) goods, under contracts costing less than USS300,OOO equivalent each, but excluding the contracts which are subject to prior review; (iii) services o f consulting firms under contracts costing less than US$ 100,000 equivalent each; (iv) services o f individual consultants under contracts costing less than US$ 50,000 equivalent each; (v) training and (vi) incremental operating costs. Full documentation insupport o f SOEs would be retainedby the P M U for at least one year after the Bankhas receivedthe audit report for the fiscal year inwhich the last withdrawal from the LoanAccount was made. This information will be made available for review during supervision by Bank staff and for annual audits which will be required to specifically comment on the propriety o f SOE disbursements and the quality o fthe associated record-keeping. Special Account: The GOTwill open and maintaintwo Special Accounts inUS dollars at the Central Bank o f Turkey. The Special Account will be used following procedures to be agreedwith the Bank, and will have an authorized allocation o f USS2,000,000 for the IBRDloan and USS700,OOO for the GEF grant. The Project Coordinator and the Financial Manager will be authorized to sign the withdrawal applications, with two signatures required. At the start o f the project, the initial deposit will be limited to US$l,OOO,OOO for the IBRDloan and to USS350,OOO for the GEF, andthe remaining portions o f the authorized allocations will be requested only after cumulative disbursements from the loan reach a level o fUS$4,000,000 and $1,200,000 from the grant. The minimumapplication size for payments directly from the Loan Account for issuance o f Special Commitments is 20 percent o f the Special Account authorized allocation. Applications for replenishment o f the Special Account will be submitted to the Bank on a monthly basis, or - 63 -  when the balance o f the Special Account is equal to about halfo f the initial deposit or the authorized allocation, whichever comes first, andwill include a reconciled bank statement as well as other appropriate supporting documents. Allocation of loanlgrant proceeds (Table C) Table C: Allocation of LoanlGrant Proceeds Financing Percentage 70% of all expenditures 100%o f foreign expenditures; 100% of local expectirures (ex-factory costs) and 85% o f local expenditures for other items procured locally ~Consultant Services 0.60 78% Training 0.20 Incremental Operating Costs 0.80 Unallocated 1.a0 Total Project Costs with Bank 19.80 Financing Front-endfee 0.20 100% ITotal I 20.00 Table C: Allocation of GEF Proceeds __ ExpenditureCategory Amount in US$ Financing Percentage Civil Works 3.4 70 Yo Goods 1.3 100%of foreign expenditures; 100%of local expectirures (ex-factory costs) and 85% o f local expenditures for other items procured locally ConsultantServices 0.8 78 Yo Training 0.4 100Yo IncrementalOperatingCosts 0.6 50 Yo Unallocated 0.5 Total 7.0 - 64 -  Annex 7: Project Processing Schedule TURKEY: ANATOLIA WATERSHED REHABILITATION PROJECT Time taken to prepare the project (months) 12 26 First Bank mission (identification) 0911512000 Appraisal mission departure 06/20/2003 06/20/2003 INegotiations 11/05/2003 04111I2004 \Planned Date of Effectiveness II 0211512005 II II Prepared by: The Anatolia WatershedRehabilitation Project was preparedbythe Govemment of Turkey. The Project Preparation Team was ledby Ismail Kucukkaya andHanifiAvci (AGM). Proiect PreparationTeam: Ministryof Environment andForestry: MevlutDogan, MevlutDuzgun, SuadeArancli, Selim Karaca, Sibel Erzincanli, Erkan Ispirli AGM: I.Kucukkaya, Hanifi Avci, Yilmaz Altas, Hanifi Akbiyik, Erdogan Ozevren, Banu Karabiyik, IsmailBelen, Tuncay Oztekin, Mahmut Simsek, Halit Babalik, ErsenTipi, M.Sacma, RidvanAtman ORKOY: HuseynKaraosmanoglu, Davut Odabasi, Muhammet Bayburtlu, Dr.Gulzade Kahveci, Dr. Askin Kirac OGM: U.Tufekcioglu, Atilla Kurmus,BahattinOrs, Ali Temerit, Nejat Turan KHGM: Sait Yildirim, Yakup Saglam, Ceyhun Alogu, Mustafa Algan, Suleyman Demir, Ali Caglar Gelikcan, Tenfik Fikret Alkaranli, Davut Ozgur, Kubilay Yilmaz, Celal Yenginol, Yurdanur Surmeli, KaniBilgic, Suleyman Kaldirim, NevzatErdogan, Yuksel Turkyilmaz TUGEM: Ahmat Savas Intisah, Sule Ozevren, BirsenCapanoglu, Refi Ratip Ozlu, Ismail Cozoglu, Eyup Koksal, MahmutCevik, EyupYuksel, Mehmet Ozgun, Sule Ozevren, Orhan Yazganarikan, Birsen Capanoglu, Ismail Cozoglu KKGM: Dr.0.FarukMutlu, Abdulmecit Yesil, HasimToksoy, Omer Tiktik, Ali Kasaci, Yalcin Bagsiz, Aynur Ebinc, Yesim Basaran, Filiz Soydal CYGM: Sedat Kadioglu, Saliha Degirmencioglu, Yakup Zeyrek, Ozgur Cakmak, EmineErcan, Nuray Taneri, GuzinArat, GuvenUlusoy, BilalDikmen, Sibel Gucver, Mahmut Dagoran, Tuncay Demir Consultantsto the ProiectPreparationTeam: Philip Metcalf(Waste Management Specialist); Ramesh Kanwar (Soil andWater Quality Monitoring Specialist); Frank Anderson (M&E Specialist); Keith Openshaw (Environmental Assessment Specialist); Sema Alpan (Environmental Assessment Specialist); Akin Atauz (Social Assessment Specialist); Surkal Co. (Household Questionairre for GEF component); NazifKolankaya(Soil andWater Quality Assessment); PeterBrul(Organic Farming Specialist); FerkoBodnar (Nutrient Management Specialist); Suha Satana (Financial Analyst) - 65 -  Preparation assistance: Preparation of GEF-related activities was funded inpart by a GEF PDF B Grant (USS300,OOO). IBank staff who worked on the Droiect included: Name Specialitv S. Nedret Durutan Team Leader, Agriculturalist Peter Dewees Team Leader, Forest Economist Joop Stoutjusdijk Irrigation Specialist Rasit Pertev Senior Agricultural Economist Jitendra Srivastava Agriculturalist Cuneyt Okan Operations Specialist Elmas Arisoy Procurement Specialist Salih Kalyoncu Procurement Specialist Seda Aroymak Financial Management Specialist Julian Lampietti Social Assessment Specialist Shahridan Faeiz Social Assessment Specialist Tijen Arin Environmental Economist Dilek Barlas Lawyer Rohit R. Mehta Senior Finance Officer Ulker Karamullaoglu Program Assistant Consultants to the World B nk: John Cole Agriculturalist Meeta Sehgal Economist Benoist Veillerette Economist Raffaele Suppa Economist - 66 -  Annex 8: Documentsin the Project File* TURKEY: ANATOLIA WATERSHED REHABILITATIONPROJECT A. Project Implementation Plan B. Bank Staff Assessments Anatolia Watershed Management Project, Social Assessment, January 12,2003 Anatolia Watershed Management Project, Procurement Assessment, January 2003 Anatolia Watershed Management Project, Financial Management Assessment, October 2003 Eastem Anatolia Watershed ManagementProject: ImplementationCompletion Report, May 20, 2002 Eastem Anatolia Watershed Management Project: Project Performance Assessment Report (OED draft, November 18,2003) C. Other ProjectPreparationReportsandWorking Papers Worlung Paper 1:Basic Data for ThirteenProvinces Working Paper2: Baseline Household Survey infour Provinces Working Paper3: Menuof Project Activities for Micro-catchment Rehabilitation & Income Generation Working Paper 4: Manure Management System Working Paper 5: Pollution from Agro-Industry Working Paper 6: Water and Soil Quality MonitoringProgram Working Paper 7: National LevelStrengthening of Policy & Regulatory Capacity Working Paper 8: Designo f Public Awareness Campaign, Capacity Buildingand Replication Strategy Working Paper9: Project Organization andManagement Working Paper 10: Regional Environmental Assessment Working Paper 11:Operational Manual for Micro-catchment Rehabilitation Working Paper 12: Project Cost Tables Worlung Paper 13: Project Benefits, Financial & Economic Evaluation, plus Incremental Cost Analysis for GEF Working Paper 14: Project Monitoring & Evaluation System Working Paper 15: Project Procurement Plan Working Paper 16: FinancialManagement System Working Paper 17: Operational Manual for Manure Management System Working Paper 18: Operational Manual for Water & Soil Quality MonitoringSystem Working Paper 19: Nutrient Management & Demonstration Program for Conservation Tillage *Including electronic files - 67 -  Annex 9: Statement of Loans and Credits TURKEY: ANATOLIA WATERSHED REHABILITATIONPROJECT 30-Mar-2004 Differencebetween expected and actual OriginalAmount in US$ Millions disbursements' Project ID FY Purpose IBRD IDA GEF Cancel. Undisb, Orig Frm Rev'd PO82801 2004 EXPFIN2 303.10 0.00 0.00 0.00 300.07 -3.03 0.00 PO59872 2003 BASICED 2 (APL#2) 300.00 0.00 0.00 0.00 292.96 149.83 0.00 PO70286 2002 ARlP 600.00 0.00 0.00 0.00 398.79 332.12 0.00 PO74408 2002 SRMP 500.00 0.00 0.00 0.00 378.58 219.37 0.00 PO69894 2001 PRlV SOC SUPPRT 250.00 0.00 0.00 0.00 131.65 107.32 0.00 PO44175 2000 BIODIV/NTRLRESMGMT(GEF) 0.00 0.00 8.19 0.00 5.72 3.51 0.00 PO68368 2000 MARMARA EARTHQUAKEEMGRECON 505.00 0.00 0.00 0.00 300.13 300.00 66.04 PO68792 2000 ERL 759.60 0.00 0.00 0.00 375.00 375.00 375.00 PO09073 1999 INDUSTRIALTECH 155.00 0.00 0.00 0.00 5139 51.39 0.00 PO09072 1998 PRlVOF IRRIGATION 20.00 0.00 0.00 0.00 1.38 1.38 1.38 PO48852 1998 NATLTRNSMGRID 270.00 0.00 0.00 27.79 173.43 201.22 -9.44 PO08985 1998 CESME ws a SEWER 13.10 0.00 0.00 2.70 5.56 8.26 0.82 PO09076 1995 HEALTH2 150.00 0.00 0.00 20.17 24.00 50.67 50.67 Total: 3825.80 0.00 8.19 50.66 2438.65 1797.03 484.46 - 68 -  TURKEY STATEMENTOF IFC's HeldandDisbursedPortfolio Feb29 - 2004 InMillionsUS Dollars Committed Disbursed IFC IFC FY Approval Company Loan Equity Quasi Partic Loan Equity Quasi Partic 1995196 CBS BoyaKimya 0.00 0.65 0.00 0.00 0.00 0.65 0.00 0.00 1994 CBS Holding 4.00 0.00 0.00 0.00 4.00 0.00 0.00 0.00 1996101 CBS Printas 0.00 0.01 0.00 0.00 0.00 0.01 0.00 0.00 1992 CayeliBakir 2.10 0.00 0.0'0 0.00 2.10 0.00 0.00 0.00 1990102 Conrad 3.50 0.00 0.00 0.00 3.50 0.00 0.00 0.00 1998 DemirLeasing 0.56 0.00 0.00 0.00 0.56 0.00 0.00 0.00 2002 EKS 13.40 0.00 0.00 0.00 13.40 0.00 0.00 0.00 1995 Entek 20.50 0.00 0.00 13.25 20.50 0.00 0.00 13.25 1998 FinansLeasing 0.56 0.00 0.00 0.00 0.56 0.00 0.00 0.00 1999 Finansbank 5.56 0.00 0.00 5.18 5.56 0.00 0.00 5.18 1998 Garanti Leasing 0.56 0.00 0.00 0.00 0.56 0.00 0.00 0.00 1999 GumussuyuKap 4.00 0.00 3.58 0.00 4.00 0.00 3.58 0.00 2001 Gunk01 7.38 0.00 7.38 0.00 7.38 0.00 7.38 0.00 1998 IndoramaIplik 5.63 0.00 0.00 0.00 5.63 0.00 0.00 0.00 1998100102 IpekPaper 17.70 0.00 0.00 0.00 17.70 0.00 0.00 0.00 1990 KepezElektrik 4.05 0.00 0.00 0.00 4.05 0.00 0.00 0.00 1988190 Kiris 10.87 0.00 0.00 0.00 10.87 0.00 0.00 0.00 1991 Kula 11.oo 5.15 0.00 0.00 0.00 5.15 0.00 0.00 0.00 2003 MESA Group 0.00 0.00 0.00 5.50 0.00 0.00 0.00 2002 MilliRe 50.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1998102 ModemKarton 10.00 0.00 0.00 0.00 10.00 0.00 0.00 0.00 1991 NASCO 10.18 0.00 0.00 3.55 10.18 0.00 0.00 3.55 2004 Oyak Bank 50.00 0.00 0.00 0.00 50.00 0.00 0.00 0.00 2002 Pasabahce 7.50 0.00 0.00 0.00 7.50 0.00 0.00 0.00 1998 PinarET 5.50 0.00 0.00 0.00 5.50 0.00 0.00 0.00 2000 Pinar SUT 15.55 0.00 0.00 0.00 11.95 0.00 0.00 0.00 1999 SAKoSa 20.04 0.00 0.00 12.77 20.04 0.00 0.00 12.77 1990 Silkar Turizm 2.74 0.00 0.00 3.12 2.74 0.00 0.00 3.12 2002103 Sise Ve Cam 67.31 0.00 0.00 42.07 67.3 1 0.00 0.00 42.07 1998102 Soktas 3.00 0.00 0.00 0.00 3.00 0.00 0.00 0.00 1999 TEB Finansal I.67 0.00 0.00 0.00 1.67 0.00 0.00 0.00 1982183189191196199 Trakya Cam 0.00 0.61 0.00 0.00 0.00 0.61 0.00 0.00 I999102 TurkEkonBank 17.78 0.00 15.00 0.00 17.78 0.00 15.00 0.00 2001 TurkishPEF 0.00 10.00 0.00 0.00 0.00 1.37 0.00 0.00 1999 UnyeCement 13.40 0.00 0.00 0.00 13.40 0.00 0.00 0.00 1999 Uzel 9.48 0.00 0.00 5.69 9.48 0.00 0.00 5.69 1998 Viking 8.60 0.00 0.00 0.00 8.60 0.00 0.00 0.00 1995 Yalova Acrylic 2.50 0.00 0.00 1.33 2.50 0.00 0.00 1.33 1998 Yapi KrediLease 0.53 0.00 0.00 0.00 0.53 0.00 0.00 0.00 1998 ALease 0.56 0.00 0.00 0.00 0.56 0.00 0.00 0.00 2001103 Adana Cement 2.50 0.00 0.00 0.00 2.50 0.00 0.00 0.00 1998 Akbank 25.00 0.00 0.00 0.00 25.00 0.00 0.00 0.00 1996101103 Altematif Bank 4.00 0.00 0.00 0.00 1.oo 0.00 0.00 0.00 Arcelik 18.97 0.00 0.00 0.00 18.97 0.00 0.00 0.00 Total Portfolio: 620.89 19.48 25.96 122.48 517.78 10.85 25.96 122.48 - 69 -  Approvals PendingCommitment FY Approval Company Loan Equity Quasi Partic 2001 Akbank 0.03 0.00 0.00 0.00 2004 Akbank BLoanInc 0.00 0.00 0.00 0.02 2003 CayeliExpan 2 0.02 0.00 0.00 0.00 2004 MeteksanSistem 0.01 0.00 0.00 0.00 2002 MilliReasurans 0.00 0.00 0.01 0.00 2004 OPET Petrolculuk 0.03 0.00 0.00 0.05 2003 Sisecam Exp. 0.00 0.00 0.00 0.01 2002 TEB I11 0.00 0.00 0.00 0.05 2004 Turkish Leasing 0.04 0.00 0.00 0.00 Total Pending Commitment: 0.12 0.00 0.01 0.13 - 70 -  Annex 10: Country at a Glance TURKEY: ANATOLIA WATERSHED REHABILITATION PROJECT Europe8 Lower- POVERTYand SOCIAL Central middle- Turkey Asia income Developmentdiamond' I 2002 Population,mid-year(millions) 69.6 476 2,411 GNi percapita (Atlas mefhod, US$) 2,500 Life expectancy 2,160 1,390 GNI (Atlas method,US$billions) 174.0 1,030 3,352 - Average annual growth, 1996-02 Population(%) 1.7 0.1 1.o Laborforce (%) 2.2 0.4 1.2 GNI Most recent estimate (latest year available,1996-02) per capita Poverty (% ofpopu/afionbelownationalpoverfyline) Urban population(% oftotalPopulafionJ 67 63 49 Lifeexpectancyat birth (years) 70 69 69 i Infantmortality (per 1,000livebirfhsJ 33 25 30 Child malnutrition(% of childrenunder5) 8 11 Access to improvedwater source Access to an improvedwater source (% ofpopulation) 82 91 81 Illiteracy(% ofpopulationage f5+J 14 3 13 - Gross primary enrollment (% ofschool-agepopulation) 101 102 111 Turkey Male 105 103 111 Lower-middle-incomeWOUD I Female 96 101 110 KEY ECONOMICRATIOSand LONG-TERMTRENDS 1982 1992 2001 2002 Economicratios. 1 I GDP (US$ billions) 64.4 158.9 145.2 182.8 Gross domestic investmenVGDP 17.0 23.9 16.8 21.3 Exports of goods and services/GDP 11.9 14.4 33.7 28.8 Trade Gross domestic savings/GDP 13.8 20.9 19.2 19.6 T Gross nationalsavingslGDP 18.5 24.4 20.7 20.7 Current account balance/GDP -1.5 -0.6 2.3 -0.8 Interest payments/GDP 1.8 2.0 3.6 3.4 TotaldebVGDP 30.6 35.6 78.4 71.9 Totaldebt service/exports 29.4 32.1 44.0 49.0 Presentvalue of debVGDP Presentvalue of debVexporIs 1982-92 1992-02 2001 2002 2002-06 (average annualgrowth) - GDP 5.1 2.8 -7.5 7.8 4.7 Turkey GDP per capita 2.7 1.0 -9.0 6.1 3.6 Lower-midd/e-mcomegroup STRUCTUREof the ECONOMY 1982 1992 2001 2002 Growthof investmentand GDP("A) (% of GDP) I Agriculture 22.7 15.3 12.8 13.0 Industry 25.1 29.9 26.1 25.4 Manufacturing 17.7 10.9 15.8 16.0 0 Services 52.2 54.7 61.1 61.6 Privateconsumption 76.3 66.2 66.6 66.3 Generalgovernmentconsumption 9.9 12.9 14.2 14.0 Importsof goodsand services 15.0 17.3 31.3 30.5 1982-92 1992-02 2o02 (average annualgrowth) Growthof exports and imports(%) Aqricuiture 1 4 11 -6 0 7 6 4o Industry 7 2 2 6 -7 2 5 7 20 Manufacturing 7 2 3 3 -8 0 8 2 Services 4 2 3 1 -6 2 7 0 Private consumption 4 3 2 2 -9 2 2 6 Generalgovernmentconsumption 3 4 4 4 -8 5 5 4 40 Grossdomestic investment 5 0 11 -420 357 -Exports -O-lmpotis Importsof qoods and services 8 8 8 3 -248 157 - 71 -  Turkey PRICESand GOVERNMENTFINANCE 1982 1992 2001 2002 Domestic prices (% change) Consumer prices .. 70.1 53.9 44.8 Implicit GDP deflator 28.2 63.7 54.8 43.5 Government finance (% of GDP, includes current grants) Current revenue 19.0 29.3 28.2 Current budget balance -1.3 -14.7 4 . 7 Overall surplus/deficit ...... -10.7 -20.9 -12.3 TRADE I 1982 1992 2001 2002 (US$ millions) Export and import levels (US$ mill.) Total exports (fob) 5,890 14,891 34,373 39,827 60.000 Textiles 1,145 5,603 10,344 12,066 Processedagricultural products 1,571 2,293 1,876 1,705 Manufactures 4,655 13,440 28,695 32,673 40,000 Total imports (cif) 8,843 22,871 41,399 51,270 Food 123 1,398 848 1,211 20,wo Fuel and energy 3,943 3,903 8,316 8,955 I I Capitalgoods 2,214 7,970 7,344 8,949 0 Exportprice index /1995=100) 95 76 75 96 97 98 99 00 01 Import price index (1995=100) 90 81 80 Exports 8Imports Terms of trade (1995=100) .. 105 94 93 O2 BALANCEof PAYMENTSI / 1982 1992 2001 2002 (US$ millions) 1 Current account balance to GDP ("A) Exportsof goods and services 7,818 23,343 50,403 54,608 Importsof goods and services 9,592 26,706 45,816 55,095 I ~ T Resourcebalance -1,774 -3,363 4,587 -487 Net income -1,455 -1,670 -5,000 -4,549 Net currenttransfers 2,277 4,059 3,803 3,496 Current account balance -952 -974 3,390 -1,540 Financingitems (net) 1,120 2,458 -16,314 1,328 Changes in net reserves -168 -1,484 12,924 212 Memo: Reserves includinggold /US$ millions) 2.027 15.252 30.192 38.067 Conversionrate (DEC.local/US$l 162.9 6.881 3 1,228.367##/#### EXTERNAL DEBTand RESOURCE FLOWS 1982 1992 2001 2002 /US$ millions) 1 Composition of 2002 debt (US$ mill.) Total debt outstandingand disbursed 19,716 56,554 113,806 131,407 IBRD 1,962 5,564 4,707 5,367 A: 5,367 IDA 187 148 95 89 G: 15.155 8: 89 Total debt service 2,968 9,086 24,623 28,632 IBRD 209 1,207 723 708 IDA 3 6 7 7 Compositionof net resourceflows Officialgrants 307 506 0 334 Officialcreditors 762 -509 74 797 Private creditors 146 3,604 -2,187 3,811 Foreigndirect investment 55 779 2,769 862 Portfolioequity 0 -1,194 -4,611 -1,180 World Bank program Commitments 648 686 2,200 1,650 A - I E 3 E Bilateral Disbursements 500 286 1,537 1,031 B IDA - D Othermultilateral - F Private Principalrepayments 86 733 437 442 IC-IMF G Short-term --- Net flows 415 -447 1,100 588 Interestpayments 127 480 292 272 Net transfers 288 -928 808 316 uevelopmenttconomics I / 2001and 2002 are basedon the new classification. - 72 -  Additional Annex 11: GEF Incremental Cost Analysis TURKEY: ANATOLIA WATERSHED REHABILITATIONPROJECT Introduction 1. The Turkey Black Sea Agricultural Pollution Control Project (APCP) (to be funded under the GEF WB Partnership Investment Fundfor Nutrient Reduction inthe Black SedDanube Basin) has been fully blended with the Turkey Anatolia Watershed Rehabilitation Project (AWRP). The global environmental benefit expected from APCP is the reduction o f nutrients from agricultural sources flowing into the Black Sea, which would contribute to the alleviation o f eutrophication o f the Black Sea. This annex presents the baseline and GEF alternative scenarios, andanalyses the incremental cost o f achieving the global benefits under the GEF Alternative. Background 2. Over the past three decades, the Black Sea has experienced significant losses inaquatic biodiversity, fisheries, public health and tourism due, inpart, to eutrophication causedby extensive flows o fnutrients (nitrogen andphosphorus) from point (industrial and municipal wastewater) and non-point (agricultural) sources. Background diagnostic analyses have identified that upstream Danube riparian countries (including Bulgaria, Georgia, Romania, Ukraine, Turkey andRussia) contribute to the nutrient pollution. Nutrient flows into the Black Sea and its tributaries decreased inthe 1990s, mainly due to the economic downturn inthe transition countries, but are expected to increase inthe near future as a result o f resumption o f industrial activities and renewed intensification o f agriculture. A GEF Partnership on the Black Sea andDanube Basin was established inMay 2001 to take coordinated actions for the rehabilitation o f the Black SeaDanube environment. The Partnership is ledby the GEF and its implementing agencies, the World Bank, UNDP and UNEP, and funded through a US$95 million GEF grant over several tranches. The WB executed, US$70 million Investment Fundfor Nutrient Reduction inthe Black SeaDanube Basin i s financing investments inimproved agricultural practices, wastewater treatment and restoration o f wetlands, as well as policy and legal revisions, andcapacity buildingfor enhanced monitoring and enforcement. The UNDP and UNEP are implementingtwo regional projects aimed at regulatory reform and capacity buildingina basin-wide integrated fashion. 3. With a Black Sea coastline o f approximately 1,700 kmand with three large rivers, Sakarya, Kizilirmak, Yesilirmak, originating inCentral Anatolia andemptying into the Black Sea, Turkey is one o f the contributors o f pollutants to the Black Sea. According to the Black Sea Transboundary Diagnostic Analysis (1996), Turkey's annual discharges o fNand P to the Black Sea are estimated at 38,000 t/y and 5,800 tly, respectively. These amounts make up about 20 percent and 12percent, o f the total Nand P, respectively, produced inthe non-Danube Black Sea Basin. 4. The Nutrient Reduction Action Plan for Turkey prepared with GEF assistance identified agricultural non-point source pollution as a very important source o f nutrient loads inYesilirmak and Kizilirmak. The main causes o f river pollution from agncultural non-point sources were identified as (i) poor agricultural practices, including inappropriate and excessive application o f agricultural chemicals, such as fertilizers; (ii) inappropriate management, storage and disposal of animal manure and waste; (iii) soil erosion resulting from unsustainable land use and (iv) poor drainage. There is indication that excessive application o f agncultural chemicals has also led to widespread contamination o f wells which provide dnnking water to rural communities, thus threatening public health. The Action Plancalls for the - 73 -  development o f sound agricultural management and participatory integrated river basinmanagement. 5. The Kizilirmak andYesilirmak basins are intensively cultivated andhome to ago-processing enterprises. Kizilirmak, Turkey's longest river with 1,15lkm, andYesilirmak originate inthe Central Anatolian Plateau and empty into the Black Sea at the Bafra and Carsamba Deltas inthe Samsun Province. Inbothdeltas, intensive horticultural andsmall-scale livestock productionis carriedout. Along Yesilirmak to the south o f Samsun, Amasya and Tokat are also significantly engaged inintensive cultivation o f fruits, vegetables and crops, and in as small-scale livestock production. Inthe upper regions o f Kizilirmak, to the southwest o f Samsun, the land is under intensive rice cultivation inaddition to crop production. Large-scale poultry production is prevalent inC o m while plastic house or green house vegetable production (with highlevels o fchemical use) isbecoming popular inthe BafraDelta. 6. Nutrient Loadsfrom Yesilirmak and Kizilirmak. The Turkey -Black Sea EnvironmentalPriorities Study (1998) funded by the GEF Black Sea Environmental Programme estimated nutrient discharges for Yesilirmak andKizilirmak (Table 1). Intensive crop cultivation, livestock production and agro-processing which is dominant inthe Kizilirmak and Yesilirmak Basins and believed to be the most important source o f nutrient flow intothese rivers. Inparticular, the Bafra and Carsamba Deltas, where intensive horticulture is practiced, are nutrient hotspots. Kizilirmak Yesilirmak Total N 4,730 7,768 Total P 278 414 Source: Turkey - Black Sea Environmental Priorities Study (1998) Baseline Scenario 7. Inthe baseline scenario, the Government ofTurkey andthe NGOscommunity would continue their ongoing and planned activities inthe agriculture and environment sector. These include activities aiming at water pollution control inthe Black Sea region as well as relatedpolicy and capacity buildingmeasures, namely (i) annual Government expenditures inmonitoring and control activities inthe 14provinces o f the Yesilirmak andKizilirmak Basins; (ii) AWRP, but excluding the Black Searegion; (iii) EU-funded the Water Quality Analysis Project, (iv) a GTZ funded erosion control project inthe eastem Black Sea region, and(v) Dutch-funded activities to align environmental regulations withthose o fthe EU. 8. The General Directorate for Protection and Control (KKGM) of the Ministryo f Agriculture and Rural Affairs (MARA)would continue its water quality monitoring and control activities inthe 14 provinces o f the Yesilirmak and Kizilirmak basins. In2002, Government funding allocated to GDCP's provincial directorates for their work inwater quality control amounted to approximately US$17,000. Additionally, approximately US$20,000 were allocated to Provincial Control Laboratories inSamsun, Amasya, Tokat, Ankara andKayseri. Assuming that the same amount would be allocated for these purposes duringthe project period, 2004-2010, the total amount is estimated at US$259,000. 9. AWRP which is a follow-up to the successful EastemAnatolia Watershed Rehabilitation Project, would be implemented inthe Seyhan, Ceyhan andGoksu Basins which drain into the Mediterranean Sea. The objective o f the project is to support sustainable natural resource management andraise income o f the communities indegraded watersheds inAnatolia. Inthe baseline scenario, there would be no incentive to extend AWRP's effective integrated andparticipatory microcatchment management approach to the introduction and popularization o f environmentally friendly agricultural practices inthe Black Sea basin. - 74 -  Furthermore, without APCP, original AWRP provinces would not benefit from the emphasis on proper manuremanagement andfertilizer use methods.The total cost ofAWW, without APCP, is estimatedat USS57.05 million, of which US36.62 millionwill be covered from a World Bank loan andthe rest by the Government and project beneficiaries. 10. MEFis carrying out aprogram to monitor land-basedsources ofpollution to the Black Sea Region.The project cost of $500,000 has been allocated by Government to MEF for 2004 to finance implementation. 11. Furthermore, the EU-fundedWater Quality Analysis Project o f approximately US$9 millionhas supported capacity building, notably equipment and training, in 10 laboratories inTurkey. Inthe absence of concrete data, we conservatively assume that approximately USSO.5 million has been spent onupgrading the SamsunWater Analysis Laboratory. 12. Another relatedproject inthe Black Sea region focuses on erosion control andnatural resources managementinBayburt, Coruh Valley. Fundedby the Germanbilateral cooperation agency, GTZ, the project has been implementedby the NGO TEMA since 2000 andwill continue through 2007. The total project cost is approximately USS4million. 13. Itshouldalso bementioned that the MEF, inits capacity as the coordinating agency for efforts to harmonize environmental legislation with the EUacquis, is cooperating with the Government o f Netherlands to align Turkish regulations with EC Water Framework andEnvironmentalImpact AssessmentDirectives. Both activities will last two years at a cost o f 800,000. An agreement has also beensignedbetweenthe Turkish and Dutch governments, inthe framework of which MEF's priority areas o fBlack Sea water quality improvement and construction of wastewater treatment infrastructure inthe Black Sea region will be addressed. Finally, while not directly part of the baselinescenario for APCP, it is also worth mentioning that the Turkish Government is also beneficiary o f the Dutch MATRA project "Implementation o fWater Framework Directive inTurkey". The main aim o f the project is to implement the Water Framework Directive andto analyze water use arrangements inTurkey with a focus on the BuyukMenderes Watershedlocatedinthe Westempartofthe Turkey. 14. The Yesilirmak Basin Development Project whichwas carried out between 1996and2001 under the support o fthe Govemor's Offices o f the provinces Samsun, Amasya, Tokat, Conun and Yozgat, should also be mentionedas it helpedput inplace capacity that will be very usehl inthe implementation o f APCP. The project aimed at landuse planning taking into account ecological concems, modem natural resourcemanagement, erosion prevention, identification o fwater pollutionsources andtheir monitoring, rangelandrehabilitation, identificationof forest areas andtheir monitoring, monitoring o furbanization and industrialization, and resolving issues inplanned development. In 1998, satellite images and data on climate, soil, settlement areas androads were collected. In 1999, data neededfor a GIS infrastructure were completed. This GIs capability will contribute significantly to the implementation o fAPCP. 15. Turkeyhas also carriedout two consecutiveLocalAgenda 21 projects with UNDP funding. The projects have coordinated by IULA-EMMEInternationalUnion of Local Authorities Section for Eastem Mediterranean andthe MiddleEastand designed and executedby local committees madeup o f local authorities, NGOs and educational institutions. The purpose o f the projects was to have local authorities, via their commitment to Local Agenda 21, foster a participatory, multi-sectoral process to achieve the goals o fAgenda 21 at the local level through the preparation and implementation o f long-term, strategic action plans that addresspriority local sustainable development concems. To this end, city-wide consultative mechanisms(City Councils and other platforms), as well as working groups and special task - 75 -  forces have been constituted from amongst differenttypes of local actors and citizens ina significant numberof cities. Inthe Black Sea region, the provinces of Samsun, Kastamonu, Bolu, Carum, Trabzon and Zonguldak have beenpart of the these projects and some o f them electedto form working groups focusing on environment and sustainableagnculture issues. These formations provide a good civil society basis for the implementation of the APCP project. A cost estimatefor this part of the project is not available. 16. Finally, Turkey has playeda prominent role in efforts to rehabilitate the Black Sea. Inparticular, since the early 1990sTurkey has hosted the Black Sea Environment Programmebased inIstanbul andhas contributed about 40 percent o f the operating costs o f this organization. 17. The total cost ofthese baselineactivities are US$ 61.66 million over the period 2004 -2010. O f these, US37.92 million are baseline activities specifically associatedwith AWRP. GEFAlternative Scenario 18. GEF Alternative will aim at reducingnutrient dischargesfrom agricultural sources into the Yesilirmak and Kizilirmak rivers. Project activities to achievethis benefit are (i)promoting environmentally-fnendly farmingpractices, including proper animal waste management; (ii) strengthening policy and regulatory capacity for meeting EUstandardsinagricultural pollution control; (iii) raising public awareness to disseminatethe benefits of the proposedproject activities and developing a replication strategy to promote project activities inother similar areas inTurkey as well as inBlack Sea riparian countries; and (iv) applied research.These activities will be fully blendedinthe components of the Anatolia WatershedRehabilitation Project. 19. Under the "Environment-friendly Practices" component, the project will construct storage and provide handling facilities for livestock waste management. Itwill also provide training to farmers. Such activities are a first inTurkey andwouldnot have happenedwithout the project's financial and technical contribution. Advice on crop nutrient managementwill also be made an integral part o f extension advice to farmers, supportedbyprovision o f simple field equipment for soils analysis andpart payment o f KHGM soil analysis services usedby farmers. The project will train MARA and MEF staff on crop nutrient management.The outcome o fthese activities will be morejudicious application andpartial replacement by manure o f synthetic fertilizers whichwill lower the run-offo f excessivenutrients. Demonstration o f financial gains from more rational use of fertilizers will help convert farmers to suchpractices and ensure sustainability and replicationby farmers inother partso f the region. The project will also support the development of organic farming inthe project area which by definition will contribute to nutrient reduction. 20. The implementation ofthe EUNitrates Directive and adoption ofa Code of GoodAgricultural Practiceswill provide the regulatory baclung for the above activities andhelp ensure sustainability and replicability. The project will support institutionaldevelopment inMARA and MEF.Awareness raising campaigns at the provincial andnational levels will fkrther support the dissemination o f knowledge about environmentally friendly activities. 21. Applied researchwill concentrate on conservation tillage andits potential to reduce nutrient leakages. Annually up to 20-40 percent decreases inNand P flows have beenrecorded on demonstration plots inother parts o f Turkey and other countries. The component will aim to achieve wider application o f the practice inthe Black Sea regiono f Turkey by emphasizing the financial gains conservation tillage holds for farmers. - 76 -  22. As the above project description demonstrates, the GEF Alternative will provide the Government of Turkey with capacity to systematically control agricultural nutrient pollution which does not currently exist inTurkey. Itwill foster collaboration ofagencies involvedwhichis also lacking. Furthermore, by adopting AWRP's integrated participatory micro-catchment (MC) managementapproachthe project will ensure that project interventions reflect M C preferencesand that villagers are committedto sustainable resource management. The MCs will also serve as basic water quality monitoring units. 23. The project activities describedabove will result inestimated reduction o fnutrient flows o f 20 kg/ha Nand 2.5kgha P annually. These estimates are transferred from the case o fthe Romania Agncultural Pollution Control Project. It is believed that per hectare savings would be the same inboth countries. Project activities will be carried out on about 50,000ha (4 M C s and one irrigationperimeter o f approximately 10,000 ha each). O fthis agricultural area i s estimated at 20,000 ha. Assuming that by the endof the project, 50 percent ofthe farmers adopt environmentally friendly agricultural practices supported bythe project, the reduction ofannualNandPrun-off at the fann level wouldbe 200 tons Nand25 tons P. Furthermore, conservatively assumingthat in 10years suchpractices are adopted on 30 percent of the 1.7 millionha o f agricultural area inthe four project provinces, annual reductions o fNand P run-off at the farm levelwouldreach 11,000tons Nand 1,300 tons P, respectively, by 2003. Inthe longrun,the effect will be multiplied as nutrient saving practiceswill be more widely adopted inTurkey's Black Sea Basin. The incremental costs ofthese benefits is estimatedat US$7.00 million, which will be requestedfrom the GEF. - 77 -  c Table 1: Incremental Cost Matrix USDmillio Component Cost Category Cost" Local Benefits Global Benefits (US$ million) 1. Rehabilitation o f Baseline 17.38 Reduction o f resource degraded natural degradation resources I /WithGEF Alternative 23.51 Financial gains from Reduction o f (Introduction of rational nutrient nutrientrun-off to environment-friendly management; reduced the Black Sea. practices, incl. manure health risks from ground management, nutrient and surface water management, organic contamination. farming and waterisoil quality monitoring.) Increment 2. Income raising Baseline 17.57 Increasedhousehold activities incomes inrural areas. With GEF Alternative 17.57 Increment 0 3. Strengthening Baseline 0.10 Limited harmonization policy and with EUdirectives. regulatory capacity towards meetingEU standards With GEF Alternative 0.18 Enhanced capacity o f Enhanced (Policy and regulatory regulatory agencies to sustainability and capacity building, incl. monitor and enforce water replicability o f implementation o f the quality regulations. nutrient reducing Nitrates Directive, Improved quality o f activities in preparation o f a Code o f agriculturalproduce and Turkey's Black Sea Good Agricultural more secure access to Basin. Practices and support for European agricultural institutional developmenl markets. for organic farming.) Possibility o f capturing local and international niche marketsfor organic produce and associated incomes. IIncrement 0.18 4. Awareness /Baseline 0.68 Farmers become aware o f raising, capacity sustainable resource building and management practices and replication are more likely to adopt strategy them. With GEF Alternative 1.06 Inadditionto the above, Replication and (Farmer training on farmers understand sustainability o f environment friendly financial benefits from environment agricultural practices, proper manure and friendly agricultural public awareness raising nutrient management practices in the at the national level, and practices as a result o f project region and - 78 -  creation o f a replication which they more likely to across the country. strategy.) adopt them. Increment 0.38 5. Project Baseline 2.19 Project implementation Management with financial, fiduciary, environmental and social due diligence. With GEF Alternative 2.50 Project implementation with financial, fiduciary, environmental and social due diligence. Increment 0.31 Total Baseline 37.92 With GEF Alternative 44.92 Increment 7.00 - 79 -  Additional Annex 12: GEF Scientificand Technical Advisory Panel (STAP) Review TURKEY: ANATOLIA WATERSHED REHABILITATIONPROJECT Scientific and technical soundness The scientific andtechnical basis o fthe project is sound. Itaddressesthe critical issue o f reducing nutrient pollution o f the Kizilirmak, Yesilirmak Rivers flowing into the Black Sea. Itbuilds upon and is linkedwith the "Strategic Action Plan for the Protection and Rehabilitation of the Black Sea" (BSSAP), formulated with the assistance of the Global Environment Facility (GEF). The proposal builds upon and extends the practical demonstration o f implementation and benefits o f pollution reduction projects Eastem Anatolia Watershed Management Project (EAWP). I t seeks, with reasonable recognition o f the social constraints o f patriarchal "elder" decision malung, to build understanding andacceptance of andcommitment to identifying and operating within the constraints o f the ecological systems that underlie agricultural production. Global environment benefits and costs Nutrient pollution o f the Black sea has been identified as an environmental issue o f global significance. If thisproject achieves its objectives it will have clear benefits inaddressing a significant source ofnutrient pollution o f the Black Sea from Turkey. With similar success incomparable projects being undertaken in other country catchments draining into the Black Sea this project will contribute substantially to the global goals o f reduced agricultural pollution o f the Black Sea The context o f GEF goals and guidelines The project clearly addresses the objectives of the integrated land and water and water quality within the context of watershed agricultural andenvironmental management. It addresses the objectives o fproviding a basis for achieving sustainability and it applies the guidelines with respect to incremental costs and the log-frame. GEF Operational Program Number 8, "Waterbody Based Operational Program 'I,which focuses "on seriously threatened water-bodies andthe most important trans-boundary threats to their ecosystems". The Project is also consistent with GEF Operational Programs 12 "Integrated Ecosystem Management" and 9 "Integrated Land and Water Multiple Focal Areas OperationalProgram". Regional Context Discussedabove. The project is important inthe context o f the rehabilitation o fthe Black Sea. Replicability This project builds on experience of projects addressing agricultural pollution and watershed rehabilitation of major river systems draining into the Baltic Black andMediterranean Seas. It is replicatingand extending this experience inthe socioeconomic context o f the EAWPby addressing 3 Mediterranean watersheds from EAWP and 2 additional Black Sea watersheds. The clearly stated intention inthe design concept is that this extension will consolidate and hrther develop experience and capacity to replicate similar practices inother catchments. - 80 -  Sustainabilitv This is a key element o fproject design. I t has been developed inthe light o f experience o f local participation and conditions inEAWP. The ongoing sustainability will depend on demonstration of benefits and on community and particularly appreciation by decision-makers o f the economic, environmental and social benefits o f altemative agricultural methods and on a reasonable flow-on o f those benefits from landowners to others inthe communities. Contribution to future strategies andpolicies Success with this project should contribute to the broader adoption o fpollution minimizing agricultural practices inthe catchments o f the Black and Mediterranean Seas. Involvement o f stakeholders The project proposal recognizes stakeholder involvement as a critical issue. It discusses the issues o f patriarchal elder decision making, the capture o f benefits by elites and the vulnerability o f younger men to exclusion from decision malungconcerning landandresources for which they will eventually be responsible. The discussion on extension addresses demonstration sites andpublic awareness programs. It can be inferredthat the demonstration sites are targeted largely at the decision makers. There is no specific mention o f a role for school based education inthis process. Inclusion of a school based curriculum element would have to be addressed sensitively but other environmental projects have demonstrated the benefits o f accelerating the acceptance o f information into communities through school children having good information and discussing it within family groups. A further stakeholder issue that is perhaps understatedrelates to the humanhealth benefits o f improved water quality. This is an issue often o f particular interest to women as careers o f the sick and sickly andexplicit treatment o f that issue inthe public awareness strategy could provide another avenue o fpersuasion to customary decision makers. Riskassessments To the extent that Icanjudge, being unfamiliarwith the field operating situation, the risks seem to be reasonably discussed and Iconcur with the assessments Ihaveinsufficientoperationalexperienceinthetargetareatomakesubstantialcommentonthedetailof funding allocations. However inthe lighto fcomments above onreplication andcommunity education I would suggest that the design team consider the adequacy o f the budget components for Component 4 (a) Public Awareness and Replication Strategy. Unless there is some other source o f provision for development and delivery o f school andcommunity education materials a total expenditure U S D M 0.39 from a total budgeto f USDM69.70 appears insufficient. Imake this comparison inthe light o f my experience inother projects seeking to develop community involvement and"ownership" andmy understanding o f the scale o f the areas being addressed. The allocation for component 4 (b) Capacity Buildingseems reasonable andIwouldnot suggest reducing that. Conclusion This is a soundly designed project drawing on the experience o fsimilar projects to tackle critical issues o f -81 -  agricultural pollutioninways that appear to be appropriate to the socio-economic situation described for Anatolia. Subject to specific consideration o f the targeting, resourcing andbudget adequacy of provisions for Component 4 (a) Public Awareness and Replication Strategy Irecommendthat it should proceed. RA Kenchington RAC Marine Pty Ltd 17 February 2003 - 82 -  Bank Responseto STAP Reviewer's Comments (i)StakeholderInvolvement. "...thereisnospecificmentionof arolefor schoolbasededucationinthis process.. .Afurther stakeholder issue that isperhaps understated relates to the human health benefits of improved water quality. This is an issue often ofparticular interest to women as carers of the sick and sickly and explicit treatment of that issue in thepublic awareness strategy couldprovide another avenue ofpersuasion to customary decision makers". The project team concurs with the STAP reviewer that school-based education would be a useful tool to inform and train potential beneficiaries inresource management and conservation techniques, including environmentally friendly agncultural practices as proposed under the Project. It is expected that as a result o f the participatory approach ofthe project, whereby communities will actively determine and evaluate public awareness activities duringproject implementation, school-based programs will become a significant avenue for dissemination of knowledge and provision of training innatural resources management. Towards this, the Project Management Unit will design an appropriate school-based program and allocate necessary funds for its implementation. The public awareness campaign designed under the Project to disseminate information on project benefits, includes the importance of clean dnnking water and its implications for humanhealth. The project will encourage the participation of women so as to assure that gender issues are mainstreamed into M C development, planningandimplementation. (ii) The design team consider the adequacy of the budget componentsfor Component 4 (a) Public Awareness and Replication Strategy. Unless there is some other source of provision for development and delively of school and community education materials a total expenditure USDM0.39from a total budget of USDM69.70appears insufficient. Project costs were revised and finalized during the appraisal mission inJanuary 2004, inpart to take account ofthis concern. The allocation for the component on Public Awareness and Replication Strategy i s US$1.06 million, o f a total project cost o f USD 45.11million. - 83 -  Additional Annex 13: Environmental Management Framework TURKEY: ANATOLIA WATERSHED REHABILITATION PROJECT Introduction Onbalance, the Anatolia Watershed Rehabilitation Project is expected to have significant positive environmental impacts. It is expected to contribute to reduced erosion, increased vegetative and forest cover, improved landmanagement, andwill reduce the discharge o f polluting nutrients into waterways. Wider positive environmental impacts will be an outcome o f institutional measures implementedby the project to support application o f the EUnitrates directive and public awareness buildinginthis regard. The project was screened by Bank Safeguards staff who concluded that it should be rated as a Category B project, with potential adverse environmental impacts on humanpopulations or environmentally important areas. These impacts are site-specific; few ifany o f them are irreversible; and inmost cases mitigatory measures can be readily designed andimplemented. Inorder more closely to consider the project'spotential negativeenvironmental impacts, Government commissioned a Regional Environmental Assessment to provide the analytical framework better to address environmental concerns inthe design, implementation, and monitoring o f project interventions. The Regional Environmental Assessment confirmed that the project is not expected to result inany significant environmental risks or negative environmental impacts, but indicated that a range o fpotential, minor negative impacts are, however, possible. The Regional Environmental Assessment identified these impacts, andmitigation measureshave been incorporated into the project's design. Potentialnegative environmental impacts include, 0 impacts resulting from poorly designed soil erosion control measures such as terracing; 0 impacts resulting from the rehabilitation or construction o f access roads; 0 impacts on forest villages which may findtraditional access to forests restricted; 0 impacts associated with the possible use o f abiotic pesticides during the establishment and operation o f tree nurseries which are to provide seedlings for afforestation and for microcatchment rehabilitation; 0 impacts associated with dam safety, resulting from the construction o f numerous small farm ponds and irrigation tanks. Project investments are to be made on the basis o fpriorities identified through a participatory and community-based planningprocess ineach o f the 28 microcatchments where the project is to be operating. The project itselfwill be supporting this planningandpriority setting process, andso the project's likely environmental impacts can only be described inthe abstract ex-ante, on the basis o f the technologies which are likely to be supported inproject microcatchments. Inthis respect, the project comprises a series o f 28 microcatchment sub-projects, each with their own potential environmental impacts. The project's Environmental Management Framework seeks to balance the need for screening new microcatchment management plans for their potential environmental impacts, for puttinginplace mitigation measures which are consistent with prevailing best-practice technical standards andwhich will be triggered dependmg on the mix o f activities which are adopted ineach microcatchment, for monitoring environmental performance ineach microcatchment, and for makingfurther corrections as monitoring and evaluation activities identify environmental concerns andthe need for further mitigation during implementation. The Regional Environmental Assessment was reviewedby Government and by the Bank, and was subsequently revised. The revisedRegionalEnvironmental Assessment was translated into Turkish, and - a4 -  was made widely available. A consultation on the revised draft was held on February 20, 2003 and involved a range ofcivil society organizations andgovernment agencies. The REA describes a methodology for screening microcatchment plans for environmental impacts, and for proposing and introducing mitigating steps, which will be handled as part o f the regular criteria-based microcatchment selection process. The project will support the establishment o f capacity within the implementingagencies to ensure that subprojects are assessedfor their potential impacts, and environmental management plans are prepared andimplemented incompliance with the national requirements as well as Bankpolicy on environmental assessment (OP 4.01). The REA describes the procedures and arrangements between the implementing agency, the environmental authority and the borrower entities for subproject environmental screening, assessment, consultations and disclosure. Generic EMPs for investments indifferent subsectors (farm ponds, feeder roads etc.) are provided as examples. EMP recommendations are incorporated into the Project ImplementationPlan anddescribe screening standards, mechanisms, examples, andprocedures related to Safeguards issues. Screening A screening exercise, which reviewed38 sets ofproject activities, was camed out as part o fthe REA to determine the extent o f possible negative environmental impacts. A screening matrix was developed which assessed these llkely impacts o f these activities, andwas completed inconjunction with a detailed review of 6 microcatchment plans which had been completed prior to Appraisal. The objective o fpreparing the screening matrix was both to ensure that potential impacts are adequately identified upstream and that these can be mitigated as part of the project, but also to provide guidance to project staff for the implementation o f microcatchment managment planenvironmental screening duringproject implementation. The screening process identified a range o f possible negative environmental impacts. Possible negative environmental impacts Potential for increased soil erosion Ground preparation inforest areas, both with machines and by hand, and the manual construction o f terraces will be undertaken, as required, insome forest areas. Insome agricultural areas, the prevailing land-use practice has been to plough perpendicular to the contour, rather than with the contour. Where these practices are widespread, erosion could clearly be worsened by the introduction o f various cropping measures through the project. Onbalance, when poorly implemented, a range o f practices to be supported bythe project could actually leadto increased erosionrather than to erosion control andinthe absenceo f various mitigation measures, ground preparation activities can leadto soil compaction. Access road rehabilitation or construction There are three types o f roads to be constructedunder the project. Provisions have been made for the construction o f around 80 kmof service roads by AGM inproject microcatchments, primarilyalong ridges. Another 60 kmo f B-type secondary forest roads are to be constructed by GDF. Finally, the project is expected to buildaround 30 kmo f service roads inmicrocatchments to provide access to imgation channels andpipes by KHGM for their operation and maintenance. Generally speaking, the primary potential negative environmental impacts related to the construction o f roads include habitat losdfragmentation (associated with the footprint o f the road); alteration o f drainagehatural hydrologic regime; stream erosion; soil erosion anddownstream sedimentation; slope instability and landslides; and resultant secondary impacts (e.g., increased access to formerly remote areas, - 85 -  increasedresource extraction and resultant impacts to biodiversity and physical environment, economic impacts such as employment - both temporary (road construction impacts) and permanent (ongoing maintenance andresource extraction impacts)). Traditional access to forests Itis conceivable that the community-basedparticipatory planningprocess may identify degraded forested areas within microcatchments which would benefit from protection, or from otherwise restricting access to traditional use. This determination will be made on a microcatchment-by-microcatchment basis. Restrictions inaccess may affect household access to common grazing resources or to fuelwood, but likely not to Non-timber Forest Products (which can largely be extractedwith minimal negative impacts). Pesticide use The only sub-component which may involve the use o f abiotic pesticides (but not their purchase with IBRD funds) is the component whichresults inthe productionoftree seedlings. The project will notbe directly financing the purchase o f pesticides, but the agents contracted for nursery productionmay use pesticides in conjunction with tree seedling production. More generally, farmers who are involved with the project may use pesticides as part o f their on-going farming practices, but their use is neither advocated nor financed by the project. Dam safetv Under the income generation component, the project will finance small scale irrigation, including construction o f concrete ponds, diversion weirs and small dams. Highest priority will be given to irrigation ponds at strategic places throughout the M C areas as this will allow to reach the largest number o f beneficiaries. Construction o f dams will only occur inMCswith extreme water shortage. Basedon the experience with EAWP, these dams are expected to be less than 15 high. Damsafety concerns are issues where poor design and construction standards may result indam failure. No landacquisition or resettlement i s expectedto be required, as dams will be constructed on public lands. Mitigation measures Potential for increased soil erosion All terracing is to be carried out manually. Mechanicalterracing was abolished by the MoF after bad experiences during the early stages o f the EAWRP. When undertaking ground preparation, including terracing, to reduce erosion, to improve degraded forest and range areas, andfor reforestation, care must be taken not to exacerbate erosion and to increase flash flooding. This will be done by first undertaking a classification of soil types depth, slope and rainfall and then adhering to prescriptions for terracing according to internationally acceptable criteria, as outlined the instructions published by AGM. (Issues to be Taken into Account in the Erosion Control Activities, Instruction No: 14, Ankara, 1999; Instructions No, 6,7 and 8 regarding erosion control activities, in-forest rangeland rehabilitation activities and reforestation activities respectively; Guidelinesfor Terracing, TOPRAKSU, Ankara; and Technical Speclficationsfor Biddingfor Terracing KHGM (Ankara-2000)). These Instructions conform to international best-practice standards. Onagncultural land, where fields are narrow and contour ploughing may not be practical, alternatives to `slope' ploughing include minimumtillage. Terracing and the planting of perennial crops will be - 86 -  introduced. It was observed inMalatya that, by planting fruit trees andvegetables on terraces, while plantingeither fodder or vines on slopes, agricultural benefits to farmers are increasedand environmental benefits are improved. The demonstration o f alternatives to slope ploughing with the appropriate agronomic package, including dnp irrigation on terraces, is essential as is farmer participation inthe planning and execution o f alternatives. Early commitment o f farmers should be sought for re-vegetation o f terraces, including perennials, immediately after they have beenprepared. Withrespect to the potential for soil compaction, deep rippingwill only be applied where the soil will benefit from infiltration. It should be confined to where trees are to be planted or sown, or on a limited basis where rangeland areas are to be re-seeded. Buildingon experience gained through EAWRP, most rangelands will be improvedthrough enclosure. When soils are disturbed, exposed ground will be re-vegetated quickly to prevent erosion andto improve water retention. Water harvesting will be considered on rangelands to be rehabilitated inorder to sustain the vegetative cover and to improve the soil-water balance. Gullyplugging,especially at an early stage will prevent loss o ftopsoil andfertility. The number and frequency o f gullies will be assessed ineach microcatchment inorder to optimise environmental benefits andto minimize costs. The lessons learnt from the EAWRPingully pluggingmust be transferred and implemented inthe AWRP. Gullies can be prevented through appropriate and sufficient vegetation cover, correct land preparation practices (especially for arable farming), reduction o f fallow and the use o f suitable harvesting methods and equipment. Access road rehabilitation or construction Access road construction standards have been developed by GDF invarious Instructions which describe technical and administrative specifications and conditions for road construction bidding, including a format for special provisions and a sample contract (Forest Roads,Road Construction Works, Gen. Dir. o f Forestry, Ankara, 19%). Roads are to be constructed with the specifications o f4 mplatform width plus 1 mditch width(5 m.intotal) and0.5 msub-grade width, a minimumcurve radius of 10-12mand maximum slope o f 10%. These standardsshould be updated to more fully incorporate more recent environmental best practice standards inroad construction. When undertaking road construction, maximum slopes should not exceed standards set for the soil type and terrain. Culverts should be installed to prevent erosion andbridges built across streams or rivers o f a specified width. Where the soil is disturbed through cut and fill, the exposed ground should be re-vegetated quickly to prevent erosion. There will be clauses inthe roadbuildingcontract concerning environmental protection such as no cutting o f trees without approval, replacing cut trees with appropriate species, where to dump excavated soil, no use o f explosives without approval from MoE, how to maintain a temporary camp etc. Maintenance o f roads is important to prevent erosion, ruttingandwater logging etc. Planting vegetation along the roadside should stabilize the soil and improve the microclimate. Traditional access to forests Withrespect to forestry activities, communities and individuals with interests inthe use andmanagement o f forest resources will be identified and consulted duringthe participatory preparation o f microcatchment plans. The project is not expectedto limitto any significant extent communities' traditional use o f forested areas. The project fully complies with OP 4.36 on Forestry as it aims to "reduce deforestation, enhance the economic contribution o f forested areas, promote afforestation, reduce poverty and encourage economic development," through an integrated and participatory approach to microcatchment natural resource - a7 -  management, particularly through activities aimed at rehabilitating degraded forest lands and income generation activities geared towards compensating communities for short term costs associated with land management and protection. Pesticide use All farmers that use or will use permitted herbicides, insecticides andpesticides ontheir arable and horticultural crops will be trained inthe storage, handlinganduse o f these chemicals as well as with respect to the careful disposal o fthe containers ina manner consistent with the Directive on the Method and Principles of Registration of Pesticides and Similar Agents usedfor Plant Protection as well as other regulations anddirectives. The use of appropriate clothing will be encouraged through demonstration. It is not envisaged that the any pesticides will be procured with project funds. Alternatives to chemicals, such as disease resistant strains (fiomlocal wild varieties) and integrated pest management will be demonstrated. Local people may know o f natural predators andplants with naturally occumng insecticide properties: such indigenous knowledge should be tapped. The control o f ticks and other parasites is important in animal husbandry; therefore, pastoralists will be trained inthe handling and use o f control agents. The procurement o f any abiotic pesticides, including those on WHO 1A and 1B lists will not be allowed through the project. More generally, Turkey has signed the Rotterdam Convention covering the use o f chemical control agents. Pesticides are differentiated according to their toxicity with the eventual goal o fphasing out the use o f pesticides which are hazardous for the environment and humanbeings. The use o f following pesticides is banned inTurkey: 2,4,5-T, Aldrin, Binapacryl, Captafol, Chlordane, Chlordimeform, Chlorobenzilate, DDT, Dieldnn, Dinoseb and its salts, HCH (mixed isomers), Heptachlor, Hexachlorobenzane, Lindane, Pentachlorophenol, Hg (Mercury) compounds, Endrin, Leptephos, As (Arsenic) compounds, Fluorodifen, Chlorpropylate, Daminozide (Alar 85), Taxophane, Zineb, Azinphos ethyl, Dibromochlorpropan(DBCP), Methylarsenic (MSMA). From the list o fpesticides, which are subject to PIC (Prior Informed Consent) according to the intemational legislation only the following preparatives which are incompliance with PIC limitations are not banned, and the rest are either banned or not registered licensed at all: Monocrotophos, Methamidophos, Phosphamidon, Methyl parathion, Parathion. The Aqua Products Law (No. 1380 o f 1995) lists pesticide concentrations allowed in inlandwater bodies, and there are guidelines on products which can be used for phyto-sanitation published by the MARA General Directorate o f Protection and Control (Plant Protection Products 2002, MARA, TISIT, Istanbul, 2002). Dam safe& The implementingagency for this component, KHGM, has long experience with the design, construction and maintenance of over 600 small dams throughout the country. Duringproject preparation and appraisal, it was determinedthat KHGMhas the relevant knowledge andexperience to design, construct and maintain small dams and that it has proper design standards to guarantee the safety o f small dams. Operation and routine maintenance o f irrigation infrastructure will be the responsibility o f beneficiary communities under the supervision andguidance o f KHGM.Under the project KHGMwill provide relevant local communities with training on dam surveillance, operation andmanagement to assure that they can effectively carry out their responsibilities. Although it is unlikely that the project will include construction o f dams higher than 15 meters, a panel of independent experts, consisting o f a dam engineer and a hydrologist with qualifications satisfactory to the Bank, has been designated who would be calledupon to carry out an independent review o f the investigation, design, and construction o f the dam andthe start o f operations, as spelled out inOP 4.37. No private land will be acquired for the construction o f dams and resettlement is thefore not an issue. - 88 -  There should be no major negative environmental effects when buildingirrigation channels, ponds, small reservoirs andrealigning water courses. Reservoir construction is mainly to regulate water flow and provide water balance to the soil since rainfall is very irregular between the seasons. Flooding i s expected to be reducedby roughly 40-60%. There may be some initial erosion, but this can be quickly stopped throughre-vegetation. Some o fthe irrigation and pond work etc. will be put out to tender. There are internationally acceptable technical specifications published by KHGM(Ankara-2000) for small irrigation dams (upto 15 mhigh).Duringthe tendering process, provisions will be made to ensure that environmental standards are adhered (i.e. limitedtree cutting, replacing cut trees, re-vegetation o f bare soil, dumping o f excavated soil). Monitoringenvironmentalperformance Environmental monitoring standards are to be incorporated into the project's Monitoringand Evaluation system, which is to be undertakenby staff inthe Project Operations Unit.Monitoringo f environmental performance will focus both on a range o f environmental indicators (areas reforested, pastures rehabilitated, sediment load, etc.) as well as on implementation o f mitigation measures (compliance with roads construction standards, compliance with terrace construction standards, etc.) Institutionalresponsibilitiesandcapacitybuilding Itwas agreed during Appraisal that a mechanismwouldbe established withinthe Project Operations Unit formally to screen Microcatchment Management Plans, once these have been prepared, in a manner which is consistent with the guidance providedinthe REA. The Project Operations Unit will also be responsible for ensuring that mitigation measures describedinthe REA are hlly incorporated inthese plans. Environmental performance will be monitoredas part o f the M&E system, andwill be supervised by the Bank duringproject implementation. Capacity to undertake these tasks is weak. The project will provide resources to train project staff inthe development and implementation o f environmentally-sound microcatchment management methods and approaches, including screening andmitigation o fpossible negative environmental impacts. Other issues Involuntary Resettlement (OP4.12): A review o fpossible issues surrounding resettlement concluded that this OPdoes not apply to the project. No landacquisition is involved. Inparticular, this review concluded that all dams to be builtunder the project will be very small andbe constructed on public landlocated in the mountainous upper part o f watersheds. No private land will be acquired for dam construction andthe dam locationwill be selected such that the reservoirs will only floodrocky, barren land. No grazing or other public land from which communities might derive a livelihoodwill be affected. The loan agreement will include a covenant to this effect. Projects in International Waterways (OP7.50): Various concerns were raised duringproject preparation that the OP on Projects inIntemational Waterways mightbe triggered because o f the small scale irrigation component. The matter was thoroughly reviewedby Bank legal staff who concluded that the OP does not apply because their impact on abstraction of water flowing into the Meditteranean and Black Seas would be negligible. The small streams (many o f which are already intensively used by local farmers) are thirdor fourth level tributaries o f these five national rivers. A number o f diversion schemes, irrigating about 20 ha each, will be constructed along these small streams ineach o f the five national river catchments. - 89 -  Considering the annual flow of these large rivers, the total annual abstraction is negligible (less than 0.1% inthe riverwiththe smallest annual flow). The project's emphasis onextensionwill result inreduced agriculture basedpollution of ground andsurface water. - 90 -  Additional Annex 14: Summary of Social Assessment TURKEY: ANATOLIA WATERSHED REHABILITATIONPROJECT 1.0 Social Development Outcomes This Annex summarizes the key social issuesrelevant to the project objectives. The detailed social assessmentis available inthe project documents. The project will contribute to the following social development outcomes: m.Labor intensive project interventions such as tree planting and construction works will offer poor villagers income-earning opportunities. Improvements inagricultural and forest productivity and new employment opportunities will enrich the livelihood strategies o f poor villagers. Empowerment. The project emphasises people's participation inthe conservation o f particular natural resources essential for their livelihood strategies. Local communities will be empowered to organize andmobilize themsleves andbe fully involvedinthe planningandmanagement o ftheir naturalresource base. Social Inclusion. Project intervention at the MC level will be demand driven primarily through the involvement o f local communities indeveloping their own micro-catchment management plans. In addition, the application o fthe farmer-centred-problem-census-problem-solving (FCPCPS) approach has helped strengthen inter-agency collaboration and will W h e r improve access o f local communities to goods and services generated by the project. 2.0 Method A social survey usingbothqualitative and quantitative methods was conducted inJuly-August 2002 infive MCs located infive different provinces. The MCs were selected based on their locationineach o f the five catchments (Kyz);lyrmak, Yehilmak, Seyhan, Ceyhan, East Mediterranean- Goksu) andreflecting different climatic andvegetation conditions. Ingeneral, there are two types o f MCs corresponding to the two different categories o f intervention inthe project: Type Irefers to the MCs where erosion controland landmanagement is the mainconcern and forms the bulko f the MCs covered under the project. Type I1 refers to the MCs where interventions are targeted at controlling agncultural pollution and corresponds with the GEF financed sub-component o fthe project. Inthe social survey, the MCs studied were the Gogden, Orcan and Kabaktepe MCs under Type I, and Kazova andIlyasli under Type 11.The surveys included in-depth interviews with village muhtars (village heads), and focus group discussions particularly with women and livestock producers. The quantitative household survey (QHS) was undertaken in25 villages representing 566 households inthe project area. 3.0 Description of Project Beneficiaries The population o fthe five project provinces total 10million where more than halfthe number live inrural space. Within the project sites (28 MCs encompassing an estimated 200 villages) the estimatednumber o f project beneficiaries are 98,000. The majority o f the population depend on agncultural-based activity as the primary livelihood strategy. Each watershed, however, have different patterns o f cropping, livestock, and non-farm activity. A detailed description o f the 5 surveyed MCs is provided inthe project files. Table 1 shows the general characteristics o f the MCs surveyed. -91 -  Table 1: General characteristicsof MCs surveyed IGOGDEN IILYASLI IKABAKTEPE IKAZOVA IORCAN No. ofvillages 4 8 3 8 7+4 Total population 1 500 4 313 495 3515 11 864 of the M C Total area of the 17 271 7 196 5 780 4 883 8 772 MC(ha) Forest area ofthe 6 240 368.2 1 905 180.5 4 871 MC(ha)* Total agricultural 15 351 13.790 1952 12 308 13 402 land (ha) Rangeland (ha) 5 034 Nla 2 057 nla 40 No. of cattle 132 2 170 1996 4 499 1325 No of sheep and 13 350 1220 2 300 3 700 9 330 goats Non-farm income is a major source o f cash for these communities, especially inType IMCs. There is substantial seasonal movement o f labor which varies inintensity between the MCs. Most o f the migration are to cities and tourist centers andtake place duringthe construction and tourism seasons. Most o f the migration are done by the young men o f the villages. Insome MCs, such as Gogden, Orqan and Kabaktepe, there have been net outmigration o f the population. 4.0 Poverty The project has been designed to target the rural poor inthe selected watersheds. The provinces o f the project are spread across the second, third and fourth quartile o f the 1997 Turkey Human Development Index. Withinthese provinces, the project MCs are located inzones o fhighpoverty. The annual cash income o f the families inthe surveyed MCs is between 1,500 million TL and 6,000 million TL - the lowest being inOrqan andthe highest is inKazova. The annual income o f the lowest group o f family (inOrqan and Kabaktepe) indollar equivalent is about USD 920.24. The average daily income o f the family is USD2.52with a per-capita income (assuming a family o f 5) at USD 0.50. This is half o f the level defining absolute poverty inTurkey which is USD 1.0 a day per-capita. The better o f fhouseholds (inKazova) have a daily income o fUSD10.08 per family and a per-capita income o f USD 2.017. This stands at only two times above the absolute poverty line, which is suggestive o f the very low incomes inthe project area. InType IMCs, the poorestfamilies do notgenerally make cashexpenditures onhousing, most fooditems, heating inwinter, and for most o f the agricultural /livestock input and labor expenditures. Families practice subsistence agnculture (producing mainly cereals, vegetables, fruits, dairy products) to avoid cash payments for food items. Barter is used to obtain greater variety intheir diet. Very little cash expenditure is made for agricultural inputs (seed, animal fertilizer etc). Duringthe harvest season, labor i s obtained through exchange among families. Indry agriculture areas very little machinery and chemicals are used. In general, the daily cash expenditure items o f the poor families are: sugar, tea, oil, cigarettes, fuel for cooking andtransportation. The monthly and annual cash expenditures include electricity, telephone, clothing and school expenditures. Health expenditures are met through the use o f the green cards which allows access to free state health care. For families inthe Type I1MCs, there is greater use o f cash inthe economy. Cash expenditures are made on all spheres o f life. However, the practice o f purchasing chemical inputs for agriculture on credit has created a serious debt problem for many families. Inthe past, obtaining credit to purchase inputsfrom farmer cooperatives was a livelihood strategy to defer payment untilthe harvest was - 92 -  sold. The recent removal of agricultural subsidies by the government, however, accompaniedbyrapid inflation has inflated the cost of inputsandpushedthe farmers into a debilitating debt cycle. The QHS found significant variation in the distribution o f land ownership o f irrigatedand dry agricultural land. While some householdsmay have little or no irrigated landthey may own large holdings of dry agriculturalland. The distribution o f agricultural and dry land size within the survey area can be seen inthe detailed social assessment. The QHS also found that there is a class of householdswho do not own any land at all. These households can constitute as low as 3.4% of the population (inIlyasli) and as highas 16.4% of the population (inOrcan). The 2002 Turkey poverty assessment found a strong correlation between land ownerslllp andpoverty. Inthis regard, the social assessment identifiedhouseholdswith little or no landas a particular vulnerable group inthe project. Table 2 shows the distribution o f landless householdsinthe MCs surveyed. GoZ)den Orqan Kabaktepe Kazova Ilyasli % of landowners 96.7 83.6 95.7 92.0 96.6 % without any land3.3 16.4 4.3 8.0 3.4 Total 100.0 100.0 100.0 100.0 100.0 5.0 Beneficiary Priorities Land-ownina farmers. Their mainpriority is to increase cash income through increased agricultural efficiency and yields. Specific expectations include development o fwater resources, advancednew seeds for apcultural production, fruit tree saplings, grafts. Inaddition, there was also interest intraining on techniques for improving agricultural efficiency and on entrepreneurial skills for market oriented production. Landlesspoor. This includes owners of small land-holdings, women andyoung men. Their mainpriority is to have greater short-term employment opportunities andtraining innon-assetbasedincome generating activities. Livestock owners. This group has similar priorities with the landlesspoor. Inaddition, they require compensationfor givingup their goats andfor funds to help start-upnew businesses. Inthe long run,they expect the project to assist themincattle grazing through improvedrangeland management. Middle-income topoor farmers in Tvpe11MC. Their mainpriority i s assistanceto switch to alternative agricultural productionincluding moving to environment-hendly agriculture. Better-offfarmers in Tvpe11MC.Assistance from project to decrease input expenditure andnew approaches andtechniquesto improve their profit margin. 6.0 Vulnerable groups The SA identifiedpoor families, women, young males andlivestock owners as groups who are vulnerable to risks arising from the project. - 93 -  Poor families. This group includes families with little or no land. The basic socio-economic characteristic of the family is its dependence on paid labor. Commonly children above 8 years are already included inthe wage-earning category. The family is usually large with a highnumber o f children inthe younger age groups. The family lives on subsistence farmingand the combination o f different livelihood activities o f different family members. This group will be left out should the project place emphasis only on improving agricultural productivity. Recognizing this the project has incorporated labor intensive project interventions such as tree plantingandconstruction works that will offer poor villagers income-earning opportunities. Improvements inagricultural and forest productivity and new employment opportunities will enrich the livelihood strategies o f poor villagers. Women. Women are engaged inagncultural activities, livestock management, and as wage labor. They receive relatively less formal education. After the age o f 12-13 school attendance decreases markedly for girls insome MCs (especially inpoorer MCs like Orqan). The survey found that women were excluded from the development o fthe M C plans even though these plans had an impact on their economic andsocial life. During focus group discussions with women groups, the SA found a strong demand for more information about the project. Women expressed a highinterest to participate inalternative income generating activities promotedby the project. This includes training for new income-generating activities. Recognizing this the project has incorporated training for women officials to achieve greater access to the women o fthe villages andensure participation o f women inthe project implementation. Youngmen. Young men are a vulnerable category inthe project because o f their subordinate status inthe village structure. The households inthe project area can be described as patriarchal and extended with brides moving to the household o f their husband's family. The married couple and unmarriedchildren live within the same extendedfamily house or landbelonging to the family.Income o f all familymembers are pooledinto one householdbudget which is controlled by the male head o f the household (usually the father). Landis owned exclusively by the heado f the family. Because o f the leading position o f the patriarch inthe household, village level decisions are made largely between the patriarchs (referred to as the old men o f the village). While this is not by itself a problem, the young menare concerned that the project brings a unique riskinintroducingrapid changes to the village. Inthis context, they worry that their voice will not be heard inany decision-making process. Inparticular, they are concerned that issues o f land use, which they will inherit at a later time, will be decided without their input and consideration. 7.0 Social Risks The potential social risks associated with the project are summarized below:. CaBture of benefits bv elites. Within the villages there are uneven power relations between the rich landed farmers and poor and landless farmers. Rich and powerful families are called zengin. The muhtur (village head) tends to come from the zengin class and is a mano f considerable influence inthe village. There is a riskthat the project emphasis onimproving landproductivity may bemanipulated bythe elite to their benefit while neglecting the poor who tend to be landless. The project addressesthis potential risk by ensuring effective participation o f stakeholders through the FCPCPS approach and by targeting the most vulnerable groups inthe village. This includes designing activities that don't require land ownership such as bee-keeping The project has learnt from the EAWRP that simply giving out bee hives to farmers is insufficient. Most o f the farmers are involved inmultiple livelihood activities anddo not have the time to rotate their hves during different seasons. Recognising this, the project will provide special training on bee keeping andfacilitate village-level organization o f bee keeping. This may involve identifying individuals dedicated to managing the hives for the other farmers on a profit-sharing basis. ,providing greater wage-earning opportunities such as tree-planting and construction, and offering vocational training such as - 94 -  wild tree grafting, pruningandsimple agro-processing. Administrative cauacitv. This is a complex project involving many different interventions and the participation o f many different stakeholders. While the project aims to institute protectionmeasures to rehabilitate degraded lands, it also offers a suite o f benefits to the villages for accepting the changes to their traditional mode o fpractice. Inthis context, coordination between agencies becomes an important requirement to ensure timeliness o f project interventions. Livestock owners, for example, should not be fenced out o f their grazing ground before being offered a substitute or benefits to switch to alternative activities. The risk arises during implementation because o f the multiple agencies involved whose different internal processes and procedures may result in some agencies lagging behindthe others and failing to deliver the project benefits ina timely manner. At the same time, the sequencing o f interventions is also dependent on the particular circumstances o f the MC. The project addresses this riskby ensuring closer andeffective collaborationbetweenthe agencies especially at the provincial level. The project will also provide training to the provincial level agencies on community mobilization andcommunication to ensure effective local participation andbe able to respond effectively to the demands o f individual MCs. Villagecultivation of forest lands. Inthe southeastern part o f the project area, significant portions of land that fall officially under thejurisdiction o f the Ministry o f Forestry are either occupied by human settlements or are being cultivated under usufructary and other tenure claims. The most common activity i s the production o fpistachio (through the grafting o f wild pistachio trees) which forms an important source of cash for the local communities. There is anecdotal evidence that lands under such claims are better managed than those without. Insome MCs, villagers pay a collection tariff (a very small symbolic amount) to the Ministryto collect the harvests. Notwithstandingthis, there are grave concerns among local communities that the conservation focus o f the project will strengthen the Ministry's claim over these lands and result inthe acquisition o ftheir lands andpistachio groves. InMCs where such contested land claims occur, the project will work together with local communities to transfer long term management responsibility to community member and strengthen the role o f community inprotecting the forest. To better inform the project about potential conflicts and develop conflict resolution mechanisms, the P I Uwill ensure that a social scientist be on its team. Different urioritv of beneficiaries. This applies to Type I1MCs. The project beneficiaries, especially in tobacco growing areas, have voiced concern that their main concern is their worsening economic condition. The project emphasis on pollution reduction measures, inthis light, may not be adopted by all the beneficiaries. The social assessmentidentified that the beneficiaries would like assistance to switch to alternative crops as a response to the crisis within the tobacco economy. The project recognizes that there is an opportunity to encourage the farmers to switch notjust to different crops but to more sustainable agncultural practices. The project addresses this by providing training and extension services as well as facilitate the beneficiaries' access to the direct income support for cushioning the impact o f the subsidy removal under the WB financed Agricultural reform Implementation project (ARIP). - 95 -  Livestock Owners. Livestock owners, particularly those involved insheep and goat management, are at the focus of behavioral change inthe project. Within the villages there is already pressure from crop producers on the livestock owners to reduce their sheep andgoat holdings. The project will help alleviate some o f this tension by providing incentives to livestock owners to switch away from livestock or to adopt sustainable livestock management practices. The project operational manual will specify conflict resolution measures to ensure that potential conflict situations are resolved up-front and that livestock owners will participate effectively inthe development o f Microcatchment management plans. The PIU social scientist will take the lead inmanaging this issue and will emplace an independent monitoring and evaluation system. Insome areas, the reinstatement o f pasture leasesto nomadic shepherds from provinces outside the project have come under protest by crop producers who allege that their landresources are being degraded by the seasonal movement o f these animals. The project will ensure that nomadic shepherds are not deprived o f their legal access to pasture grounds. 8.0 Participation Thisproject builds onthe success o fthe previous EAWRP which emphasizedthe strong participation o f all stakeholders especially at the M C level. The EAWRP has also bred a greater appreciation and understanding o fparticipation among the implementing agencies which hadtraditionally beenused to a top-down culture o f doing business. The project will buildon this new awareness among government officials, especially at the provincial level, to provide training on community mobilization and other PRA techniques. This will make the agencies much more effective inensuring participation at the local level and engaging with the communities in a more constructive manner. Inaddition, training will be provided for women officials to achieve greater access to the women ofthe villages and ensure participation o f women inthe project implementation. The project will also create at the local level MC Resource Management Associations (MRMA)that will mobilize the community to participate inproject implementation andto take up responsibility for post-project operation andmaintenance to ensure sustainability. 9.0 Safeguard Issues The construction o f small dams inthe Type IMCsmay trigger the Bank's operational policy on involuntaly resettlement (OP 4.12) through two possible scenarios: 1.Possible acquisition o fprivate lands for small dam construction. The Type IMCs are located inareas with limited water resources. It is anticipated that there will be a highdemand by the project beneficiaries for the project to develop their water resources. The project will do this largely through the development o f irrigation ponds and streams. Only inextreme water-scarce catchment areas without springs and only seasonal streams, would the development o f a small dam be accepted. These dams have a body height o f 7.0-20.0 m and cover a surface area o fbetween 0.3 - 4.0 ha.The Government of Turkey has given a guarantee that private lands will not be acquired for the construction o f small dams under the project. A covenant will be included inthe legal agreement to reflect this. The project will also incorporate this restriction into the operational manual and put inplace a monitoring and evaluation program to ensure compliance. 2. Possible restriction o f access to grazing gsounds on public lands. The small dams mentioned above will be built on the upper sections o f the participating microcatchments. These dams will be built mostly in steep gullies and flood infertile lands which are not usedby local communities for agncultural or grazing purposes. Since the exact locationof these small dams will only be known duringthe implementation o f the project, there is a small possibility that some traditional grazing grounds on public landsmay be flooded resulting inthe changing o f land use and, therefore, restricting access to livelihood resources. The Government o f Turkey gives an assurancethat the small dams will only be constructed inpublic lands that - 96 -  are not used for grazing purposes. A covenant will be included inthe legal agreement to reflect this commitment. The project will also incorporate this restriction into the operational manual and put inplace a monitoring andevaluation program to ensure compliance. - 97 -  Additional Annex 15: Procurement of Goods, Works and Services from Government Agencies TURKEY: ANATOLIA WATERSHED REHABILITATIONPROJECT The implementing agencies are proposing to procure materials, some agncultural inputs and services from government agencies under the scope o fthe proposedproject. Below is the brief information about the procurements inthis nature: 1.Forestry Seedlings: Under the scope o f project; forestry seedlings (i.e. pine, cedar, acacia, fur) shall be plantedunder the supervision o f General Directorate o f Forestation (AGM) ineach year for a period o f 7 years in5 provinces. The total quantity o f the seedlings to be used will be about 22 million. The forestry seedlings are available inthe market for very small quantities where maximum few thousands of seedlings are available at once, but with a questionable quality (mostly contaminated with diseases). However, significant amounts o f disease free seedlings can only be supplied by the Forestw Nurseries that are specialized in seedling production. These nurseries are operating under Provincial Directorates o f the Ministry o f Forestry and they are the only available and reliable source o f supply. 2. FruitBearing Forest Seedlings: Under the scope of project; fruit bearing forest seedlings (i.e almond, walnut, wild cherry) shall be planted bythe General Directorate o fForestation (AGM) ineachyear for a periodo f 7 years in5 provinces. The total quantity o f the seedlings to be used will be about 200,000. The fruit bearing forest seedlings are available inthe market for very small quantities where maximum few thousands o f seedlings are available at once, butwith a questionable quality (mostly contaminated with diseases). Or, the requiredtype and/or species may not be available at all inthe market. However, significant amounts o f disease free seedlings can only be supplied by the Forestry Nurseries that are specialized in seedling production. These nurseries are operating under Provincial Directorates o f the Ministry o f Forestry and they are the only available and reliable source o f supply. 3. FruitTree Seedlings: Under the scope o fproject; fruit tree seedlings shall be provided to the farmers ineach year during a period o f 7 years in6 provinces. These seedlings are generally available inthe market but insmall quantities where maximumfew hundreds seedlings can be available at once. First, Ministry o f Agriculture and Rural Affairs (MARA) will try to procure the needs from the local market through National Shopping andLocal Competitive Bidding procedures. Ifthe required amount andtypeharieties o f seedlings can not be procured from the market, then remaining needwill be supplied by the Amicultural Seedling Production Directorates, whose primary responsibility is production o f good quality, disease free seedlings, under Provincial Directorates o f the Ministryo fAgriculture. This seemsto bethe main source o favailable andreliable supply. 4. Forest Tree Seeds: Under the scope o fproject; forest tree seeds shall be planted under the supervision o f General Directorate o f Forestation (AGM) ineach year during a period of 7 years in5 provinces. The total quantity o fthe seedlings to be used will be about 100tones. - 98 -  These seeds are generally available inthe market for small quantities where maximum few hundreds kilos o f seeds can be available at once. First, General Directorate o f Forestation (AGM) will try to procure the needs from the local market through National Shopping and Local Competitive Biddingprocedures. Ifthe required typeivariety o f seeds can not be procured from the market, then remainingneed will be supplied by the Forestrv Nurseries under ProvincialDirectorates o f the Ministryo f Forestry. This seems to be the main source o f available andreliable supply. Onthe other hand, sufficient amount o f seeds, sometimes, may not be available inthe Forestry Nurseries. Insuch cases, villagers or workers will be hiredto collect the seeds from forest lands. 5. Agricultural Seeds: Under the scope o f project; agricultural seeds shall be provided to the farmers ineach year during a period o f 7 years in6 provinces. These seeds are generally available inthe market for small quantities where maximum few hundreds kilos o f seeds can be available at once. First, Ministryo f Agriculture and Rural Affairs (MARA)will try to procure the needs from the local market through National Shopping andLocal Competitive Bidding procedures. Ifthe required typeipattems o f seeds can not be procured from the market, then remaining need will be supplied bythe Agricultural Production Directorates located under each Provincial Directorate o f the Ministry o f Agriculture. This seems to be the main source o f available andreliable supply. 6. Bee Hives: Under the scope o f project; bee hives shall be made available for villagers ineach year during a period o f 7 years in5 provinces. The total quantity o fthe beehives to be used will be about 360 units, where 1unit contains 15 hives. These bee hives are generally available inthe market for small quantities where few units can be available at once. First, Ministryo f Agnculture andRural Affairs (MARA)will try to procure the needs from the market through National Shopping and Local Competitive Biddingprocedures. Ifthe required amount and type or race o fbees can not be procured from the market, then the remaining need will be supplied by Production Stations located insome regions under the Ministryo f Agnculture. This seems to be the main source o f available andreliable supply. 7. Digitized1/25000Scale Maps: The digitizedmaps for the selected micro-catchments will be required to prepare implementation plans for the micro-catchments. These maps have to be procured inthe early stages o f the project, lets say inthe first three years. This type o f 1i25000 scale maps are available only at the General Headauarters o f Cartography. This is the only source o f digitizedmaps inTurkey. The total estimated cost o f digitized maps is about US$ 50,000 ConclusionandRecommendation: Based on the above given reasons andjustifications, the Bank (OPCPR) agrees, on an exceptional basis, with the procurement o fabove listed agricultural inputsand services from government agencies under the scope o f the project, ifandwhen they can not be procured from private sources inlocal market. The above underlined agencies are the Government agencies and they are not eligible accorhng to paragraph 1.8 (c) o f the Bank's Procurement Guidelines. More specifically, they are not legally and financially autonomous; they do not operate under commercial law; they are the dependent agencies o f the Borrower or the Sub-Borrower i.e. implementingMinistries. However, because o f specific nature o f the project and when - 99 -  there i s no private sector alternatives for these agncultural inputs and services, the Bank (OPCPR) agrees the direct procurement from govemment agencies for the concerned agncultural inputs. There are several reasons why I C B is not an appropriate method for supplyinginputs (seeds and seedlings) for agricultural and forestry interventions and why govemment agencies have to be used as suppliers in addition to the private sector companies. The reasons are given below under 3 categories: i)forest seedlings for afforestation and erosion control activities on the state land, ii)fruit tree seedlings for agricultural activities on the farmers' land, andiii)seeds for agricultural activities on the farmers' land. A. Forest seedlings for afforestation and erosion control activities on the state land These seedling can only be provided from the Nurseries under the Ministryo f Forestry. Turkey wants to conserve its biodiversity. Turkey has a very rich biodiversity andhomes a number o f endemic (means only grown inTurkey) species. The country is making serious effort to conserve this richness and wants to use its own species inforestry activities instead o f bringingnew and foreign species from outside. Genetic oollution is not desired. Turkey is also rich in genetic diversity and committed to protect this. Infact, successfully implemented a GEFproject (which was the first one inthe world at this size) to conserve this diversity in-situ. Bringingseedlings even for the same species means new genetic material that results ingenetic pollution that is not desired at all. Origin o f the seedling material is extremely important. Research indicates that success o f the plantations depends on several factors that include the origin o f the material and the quality o f the seedlings. Therefore, 125 nurseries were established inTurkey by the General Directorate o f Afforestation and Erosion Control under Ministryo f Forestry to improve the success o f the plantations. Eachnursery serves an area o f 200 km diameter and 100-150 m elevation range between location of planting and the nursery. For each planting are, the field staff inform the appropriate nurseries about the seedling needs a season inadvance. Nurseries collect seeds from the selected species from their service area, produce the seedlings, make them ready for the planting seasonand wait for the request for the transportation date. Supplying seedlings from one region to another region even inTurkey cause failures inplantations due to inappropriate origin. Buyinginbulk is not appropriate. There will be 6 provinces inthe Project anda total o f about 28 micro-catchments (MCs) will be included where forestry activities will be conducted. M C s that are scattered ina province have their unique features interms of climate, soil, and topography that dictate the plantingtime. Duringspring and fall, ina M C when soil is inappropriate condition, terraces are made andas soon as favorable conditions occur, seedlings are planted. Incase o f delays due to a variety o f reasons i.e. late amval o f seedlings, problems inproviding labor, there is a substantial risk o f losing soil moisture. Inthis case, another rainy season has to be waited. While inMC A, the soil moisture is suitable for planting inMarch, inM C B, condhons occur only inApril. This could happen within the same province. Onthe other hand, provinces also differ widely interms o fecological conditions where planting times show great variation. Planting time is site-specific and seedlings are made ready for planting according to these local conditions. Therefore, buyinginbulk (millions) and making them survive untilthe right conditions occur for plantingis not possible. When the Nurseries are informed about the exact planting dates by the field people, seedlings are transferred to the MCs. The seedling reach to the planting area within 1-2 days following the request. Completion planting is needed inthe following years. Despite all the efforts, survival rates for the - 100-  planted seedlings are not 100%. There are factors beyondthe control o f the project staff that effects the survival rate: conditions inthe MCs are harsh mainly due to the elevation; quality is not perfect for every single seedling, imperfect operation always occur inmanual planting and inthat seasonweather conditions could be unfavorable, mainly drought hits the plantation. Therefore, after the first planting year, dead seedlings need to be replaced with new ones. Same genetic material needs to be supplied timely for this operation. Private sector inTurkev is not developed enough to seedlings for forestry activities. There are number o fprivate nurseries inTurkey selling forest species but as omamental plants for parks and gardens. They do not have the infrastructure to supply the species indemand timely, with the right origin, and in large quantities. B. FruitTree Seedlings for AgriculturalActivities Depending on the scale o fthe need, availability, quality, and timeliness o f the delivery, procurement can be done from: i)nurseries under Ministry o f Agriculture andRural Affairs (MARA), ii)agricultural research institutes (MARA), iii)TIGEM; a state economic enterprise that produces seedlings for h i t tree species and multiplies seeds for farmers mainly for some field crops that are not usually supplied by the private sectors due to low profitability; and iv) private companies. Buyinpinbulk is not appropriate. There willbe 6 provinces inthe Project and a total o fabout 28 micro-catchments (MCs) will be included where agricultural activities will be conducted. This is a participatory project where the decisions for the private land are made by individuals living inthe MCs. Duringspringand fall, ina M C when soil is inappropriate condition and weather temperatures are favorable, farmer arranges his labor, prepares his landand plants the seedlings. For fruit trees, temperatures have particularly important, early and late frosts need to be taken into consideration. All these characteristics show great variation with elevation and topography. As mentionedabove, MCs that are scattered ina province have their unique features interms o f climate, soil, and topography that dictate the plantingtime. Inother words, plantingtime is site-specific andseedlings need to be made ready for plantingaccording to these local conditions. Buyinginvery large quantities andkeeping them untilthe rightconditions occur for planting is not possible. Government nurseries andor privatesector are informed about the exact planting dates by the local agncultural people and seedlings are transferred to the MCs ina short period o f time and delivered to the farmers. It should be notedthat, in this participatory project, relationships depend on the trust. Private sector nurseries inTurkev is not developed enough to provide good quality, disease free seedlings. There is number o f small private nurseries inTurkey providing h i t tree seedlings but these are not certified. It means one should depend on the verbal guarantee o f the seller, since it is not always possible to detect diseases andidentify varieties visually. Inmany cases, hundreds o f seedlings that were planted turned out to be diseased, a mixture o f different varieties, different ages andthe result was a total failure. Insuch cases the cost o f this failure is very high, farmers lose their confidence inthe project staff. Private sector nurseries inTurkey do not have the infrastructure to supply good auality, disease free seedlings inbulk. Insome cases, the private nurseries are trustworthy but they do not have the infrastructure to provide the demanded species and varieties inbulk.Insuch cases, whatever is available is procured from these nurseries andthe remainingneeds are supplied by the government nurseries. -101 -  C. Procurementof Seeds for Agricultural Activities Dependingon the scale o f the demand, availability, quality, andtimeliness o f the delivery, procurement has to be done from: i)agricultural research institutes under MARA, iii)TIGEM; a state economic enterprise that produces seedlings for fruit tree species andmultiplies seeds for farmers mainly for wheat, barley, forage crops and pulses that are not usually supplied by the private sectors due to low profitability; and iv) private companies. Varieties that are adapted to local conditions have to be used. Inmost o f the MCs, agricultural production is made under rainfedcondtions since irrigation is very limited. This means cereals (wheat and barley); pulses (lentil and chickpea) and forage crops (vetch, sainfoin) are the major crops for these conditions. Turkish agricultural research institutes developed a number of varieties for these crops that are adapted to local conditions (elevation, climate, soil and local quality preferences). Infact, Turkey is the gene center for these crops. Therefore, the varieties developed by the agricultural research system need to be supplied to the M C farmers and these are produced by the government agencies. Private seed sector has limitedinterest incereals. forage crops andpulses. Private sector inTurkey is the major actor invegetable, maize, soybean, and sunflower hybridseed (every year new seed needs to be purchased) production. These are mostly the distributors o f the international big companies. However, the interest by these companies for wheat, barley, forage crops and legumes is very limited. Since these are produced with standardconventional seeds (same seed could be used for about 5 years), the profitability is comparatively very low. Therefore, for these crops, the main seed supplier i s the government. However, ifthe companies can provide certified seed inthe amount requested, seed purchase is also made from them. For project purposes, the seeds for vegetables, maize and sunflower are mostly purchased from the private sector companies. - 102-  Additional Annex 16: Identificationand SelectionCriteria for Microcatchments TURKEY: ANATOLIAWATERSHED REHABILITATION PROJECT This Annex describes the process used in selecting microcatchment areas for intervention. This process, which involves three levels o f selection at the level o f the watershed, the province, andthe microcatchment, has been well developed and successfully implemented inthe course o f the Eastern Anatolia Watershed project. (a) Selection of watershedforproject funding: The main criterion is whether or not the river can be classified as an international waterway. Ifso classified, it can not be included inthe project. Inthe event that a watershed is not classified as an international waterway, then selection would be on the basis o f severity o f natural resource degradation. The proximity o f a watershed to an area that had already benefited from microcatchment rehabilitation would be taken into account to achieve a broader impact. (b) Selectionof Province: The maincriterion is location inrelationto untreated pockets o f degradationwithin a watershed. The watershed could be either one that has already benefited from microcatchment rehabilitation, or an unimproved watershedwhere the objective would be to capture the synergies from dealing with several sub-catchments. The overall objective would be to avoid rehabilitation works being too widely scattered over the country leading to excessive unit costs andreduced impact. In addition, the capacity o f the implementingagencies at the field level would be taken into account in selecting a Province. All agencies should be sufficiently staffed to carry out the planning and implementation simultaneously inseveral microcatchments. (c) Selection of Microcatchments: The criteria used for the selection of microcatchments are as follows: 0 Severity or magnitude o f naturalresource degradation: has to be rated as severe, a cause o f poverty and already subject to flooding and landslides; 0 Size o f microcatchment: 5,000 to 10,000 hectares; 0 Location: adjacent to another microcatchment either one that has already benefited from microcatchment rehabilitation, or an unimproved microcatchment where the objective would be to capture the synergies from dealing with several microcatchments. The overall objective would be to avoid rehabilitation works being too widely scattered over a watershed leading to excessive unit costs and reduced impact. 0 Accessibility o f microcatchment: adequate degree of access for contractorsltransporters; 0 Level o f rural poverty: as demonstratedby rural out-migration andmeasured through estimated annual incomes; 0 Riskofnatural disaster through flood and/or landslides: risk to be ratedhigh; 0 Possibility o f reversing the natural resource degradation ina sustainable and economic way: investments should lead to sustainable rehabilitation o f degraded natural resources; 0 Willingness o f microcatchment community to participate inthe project: prepared to make in-kindand/or cash contributions andtake responsibility for specific activities (e.g. rangeland management, conservation o f new plantations and use o f irrigation water); and 0 Level o fpotential for introducing income raising activities: sufficient agricultural resource base to be used as leverage for better natural resource management. -103-  MAP SECTIOK