Malawi - Environmental Management Project

Documenet of The World Bank Report No. 15768 -- MAI STAFF APPRAISAL REPORT REPUBLIC OF MALAWI ENVIRONMENTAL MANAGEMENT PROJECT May 14, 1997 Environment and Agriculture Africa Region  CURRENCY EQUIVALENTS Currency Unit = Malawi Kwacha (MK) US$ 1.00 = MK 15 (as of October 1996) SDR 1.00 = US$ 1.44 (as of October 1996) WEIGHTS AND MEASURES Metric System GOVERNMENT FISCAL YEAR April I - March 31 ABBREVIATIONS AND ACRONYMS CAS Country Assistance Strategy CURE Coordinating Unit for the Rehabilitation of the Environment DEO District Environmental Officer DDC District Development Committee EAD Environmental Affairs Department EIA Environment lImpact Assessment EIS Environmental Information Systems EMA Environmental Management Act EMP Environmental Management Project ESP Environmental Support Programme GDP Gross Domestic Product GEF Global Environment Facility IAPSO Inter-Agency Procurement Services Office IPCC Intergovernmental Panel on Climate Change MASAF Malawi Social Action Fund MOREA Ministry of Research and Environmental Affairs MNR Ministry of Natural Resources NEAP National Environmenital Action Plan NCE National Council for the Environment NEP National Environment Policy NGO Non-Governmental Organization SOE Statement of Expenditure TCE Technical Committee on the Environlmenlt NRC Natural Resources Committee l,NDP United Nations Development Programme The preparation of this operation has been the work of many people in Malawi, and has been facilitated by Japanese Trust Fund resources. The World Bank Appraisal mission which visited Malawi in June/July 1996, comprisecl Messrs/Mmes: Robert Clement-Jones (Mission Leader, AFTEI), James Coates (Principal Economist, AFTAI), Pickford Sibale (Research Specialist, World Bank Resident Mission, Malawi), Agnes Kavinya (NGO Liaison Officer, World Bank Resident Mission, Malawi), Jeri Larson :(Operations Analyst, AFTAI), David Smith (Consultant, NGO Specialist), Robin Le Breton (Consultant, Natural Resources Management Specialist). Project negotiations held in January 1997 also involved Elizabeth Adu (Principal Counsel, LEGAF), Steve Gaginis (Disbursement Officer, LOAAF)3 Jaime Roman (Principal Procurement Officer, AFTSI) and Ella ,Bomsby (Task Team,Assistant, AFTEI). VICE PRESIDENT MR. CALLISTO MADAVO COUNTRY DIRECTOR MS. PHYLLIS POMERANTZ TECHNICAL MANAGER MS. CYNTHIA C. COOK TASK TEAM LEADER MR. ROBERT CLEMENT-JONES  REPUBLIC OF MALAWI ENVIRONMENTAL MANAGEMENT PROJECT CONTENTS Page No. CREDIT SUMMARY 1. ENVIRONMENTAL SUPPORT PROGRAMME ................................................1 COUNTRY BACKGROUND ............................................... I IMPORTANCE OF THE ENVIRONMENT ............................................... I ISSUES IN THE ENVIRONMENT ............................................... 2 ENVIRONMENTAL MANAGEMENT FRAMEWORK ................................................ 4 ENVIRONMENTAL AGENDA ............................................... 7 DONOR ASSISTANCE FOR THE ENVIRONMENT ............................................... 8 LESSONS LEARNED ............................................... 8 RATIONALE FOR IDA INVOLVEMENT ............................................... 9 2. THE ITF CONTRIBUTION TO THE PROGRAM ................................................ 9 OBJECTIVES AND SUMMARY ................................................ 9 DETAILED DESCRIPTION ................................................ 10 3. PROJECT COSTING AND FINANCING ............................................... 13 C'OST ESTIMATES ................................................ 13 F ..INANCING .................................................14 PROCUREMENT ................................................14 DISBURSEMENT ............................................... 1 6 ACCOUNTS AND AUDITING ............................................... 17 4. PROGRAM ORGANIZATION AND IMPLEMENTATION ............................................... 17 PROGRAM IMPLEMENTATION ............................................... 1 7 MONITORING AND EVALUATION ................................................ 19 MID-TERM AND IMPLEMENTATION COMPLETION REVIEW ................................................ 19 IMPLEMENTATION SUPPORT PLAN ................................................1 9 5. BENEFITS AND JUSTIFICATION ................................................ 20 PROGRAM IMPACT ................................................ 20 RISKS ................................................ 20 ECONOMIC ANALYSIS ............................................... 21 SUSTAINABILITY ................................................ 22 6. AGREEMENTS REACHED ................................................ 23 AGREEMENTS REACHED DURING NEGOTIATIONS ................................................ 23 CONDITIONS OF EFFECTIVENESS ................................................ 24 CONDITION OF DISBURSEMENT ................................................ 24 RECOMMENDATION ............................................... 24  ANNEXES ANNEX 1 ORGANIZATIONAL STRUCTURE ANNEX 2 ENVIRONMENTAL SUPPORT PROGRAMME - ROUNDTABLE ANNEX 3 ENVIRONMENTAL SUPPORT PROGRAMME - INDICATIVE FINANCING COMMITMENTS ANNEX 4 COMMUNITY MOBILIZATION AND ENVIRONMENTAL MICRO-PROJECTS ANNEX 5 IMPLEMENTATION SUPPORT PLAN ANNEX 6 COST TABLES ANNEX 7 PERFORMANCE MONITORING INDICATORS ANNEX 8 MIDDLE SHIRE LAND DEGRADATION ANNEX 9 PROJECT IMPLEMENTATION PLAN - TABLE OF CONTENTS  REPUBLIC OF MALAWI ENVIRONMENTAL MANAGEMENT PROJECT Credit Summary Borrower: Government of the Republic of Malawi Implementing Agencies: Ministry of Research and Environmental Affairs, Ministry of Natural Resources, Ministry of Transport (Meteorological Department), other Government Departments, Non-Government Organizations, Communities. Beneficiaries: Government and Non-Government Organizations, Communities. Poverty: Not applicable. Amount ITF/IDA: SDR 8.7 million (US$ 12.4 million equivalent) Terms: Standard with 40 years maturity Financing Plan: See Schedule A Net Present Value: Not Applicable Staff Appraisal Report: No. 15768 -- MAI Map: IBRD 24575 Project Identification No.: MW-PA- 1664  I  1. ENVIRONMENTAL SUPPORT PROGRAMME COUNTRY BACKGROUND 1.1 With nominal per capita income of US$140 (1994), Malawi is one of the poorest countries in the world. According to the recent Poverty Profile (1995), thirty percent of the population have incomes which do not assure basic caloric needs. Malawi's population of about 11 million is growing at about 3.0 percent, and population density, at 170 inhabitants per km2, is among the highest in the region. The population is predominantly rural (85%), dependent largely on subsistence agriculture, with over 55 percent having less than I hectare of arable land. Agriculture is mostly rainfed, and is highly susceptible to climatic variability. Drought has occurred during three of the last four years. Malawi's social indicators also reflect the level of poverty. Life expectancy is only 45 years, 7 years less than in countries with similar income levels, and appears to be declining due to the impact of HIV/AIDS prevalence which is one of the highest in the world. As much as 59 percent of the population is illiterate. Water and sanitation and rural infrastructure are also inadequate with only half of the population having access to safe water. 1.2 Malawi enjoyed healthy growth during the first years of independence, with per capita incomes increasing between 1966 and 1980 at an annual average rate of 3 percent. However, during the last 15 years, Malawi has suffered from a series of shocks in the form of droughts, increases in oil prices and interest rates, decreases in tobacco prices (Malawi's major export), and civil war in Mozambique which significantly increased transport costs and brought more than I million refugees. Recent years have seen a series of structural adjustment programs aimed at stabilizing the economy and removing impediments to growth, including measures to enhance trade, improve agricultural pricing and marketing to increase returns to smallholders, and most recently to tackle the pressing demand for land reform. IMPORTANCE OF THE ENVIRONMENT 1.3 Malawi is endowed with a diversified natural resources base which includes some of the most fertile soils for agriculture in Southern Africa. The country has substantial forest and water resources, and a remarkably rich flora and fauna. If properly utilized, these resources can provide the basis for sustainable development of the country. The total land area of Malawi is 9.4 million hectares. Of this, about 3 million hectares is suitable for rainfed agriculture using traditional methods of management. At present about 50 percent of the total land area is under cultivation, indicating that a significant proportion of marginal land is being exploited. Malawi's forests and woodlands occupy about 35 percent of the country's land area. Forest resources are vital in the Malawi economy, providing over 90 percent of the country's energy needs in addition to timber and many other non-wood forest products. 1.4 The surface water resources of Malawi comprise a network of river systems and lakes covering 20 percent of the country's territorial area. Surface water is totally dependent on rainfall, with the river systems drying up to a large extent in the dry season. Malawi contains some of the world's most important wetland ecosystems, including the shoreline plains of Lakes Malawi, Chiuta and Chiulwa, a diversity of dambo ecosystems, and the marshes of the Lower Shire River. The country's electricity is derived almost exclusively from a series of hydroelectric schemes on the Shire River, and is vulnerable to prolonged drought which can cause the level of Lake Malawi to fall with lower flows into the Shire River. Lake Malawi has a rich biodiversity with 500-1000 endemic species of fish, and its fish catches provide 70 percent of the animal protein consumed in the country. Endowed with a rich flora and fauna -I-  Malawi has five National Parks and four wildlife reserves accounting for 11 percent of the country's area, and in 1980 established the world's first fresh water national park at Lake Malawi. 1.5 The Government of Malawi has become increasingly concerned about the deterioration of the country's environment, and the associated loss of natural resources. A participant in the Earth Summit in 1992, Malawi subsequently launched the preparation of a National Environmental Action Plan (NEAP) which was adopted in late 1994. Malawi's new Constitution, adopted in May 1994, reflects the commitment of the country to address its environmental problems. Chapter III, section 13 (d) calls upon the State: "To manage the environment responsibly in order to: (a) prevent the degradation of the environment; (b) provide a healthy living and working environment for the people of Malawi; (c) accord full recognition to the rights of future generations by means of environmental protection." ISSUES IN THE ENVIRONMENT 1.6 The National Environmental Action Plan identified nine key environmental issues: soil erosion, deforestation, water resources degradation, high population growth, depletion of fish stocks, threats to biodiversity, human habitat degradation, climatic change and air pollution. The underlying causes of environmental degradation in Malawi are poverty and the growing imbalance of population to land resources. Traditional land use practices that once helped preserve the integrity of natural resources are no longer able to cope with the additional stresses placed upon them. With very limited access to land, the poor place heavy demands on the natural resources base for subsistence and survival, and generally lack the resources to intensify agricultural production. Forest products of all types (including charcoal, fuelwood, bushmeat) are one of very few sources of cash income for the rural poor. The poor and especially poor women are particularly vulnerable to the degradation of natural resources which provide supplementary foods, medicines, water, and fuel. Women play a critical role as custodians of the resources and educators of children. One quarter of the households in Malawi are headed by women. About 42% of these female headed households cultivate under 0.5 hectares of land, and endure the problems of the smallholder sector, such as limited land holdings, declining agricultural productivity and low earnings and difficulties unique to women farmers. These include limited access to agricultural extension services, differentials in wage rates for agricultural labor and more household tasks such as gathering wood and water. Land 1.7 Soil erosion is one of the principal types of land degradation, posing a threat to soil fertility, crop production, food security and sustainable agricultural production. In Malawi, soil erosion is a major cause of siltation with potentially disastrous consequences for hydro-electricity production. A lack of reliable data and monitoring systems make it difficult to do a thorough quantitative analysis of the impacts of land degradation and estimates vary considerably. The NEAP does single out soil erosion as the first among nine important environmental issues. Forest Resources 1.8 The rapid expansion of agriculture from the mid 1970s has led to extensive deforestation, estimated at an annual rate of about 3.5 percent. Total forest cover is estimated to have declined by - 2-  about 40 percent during the period 1970-90. Although clearing for agriculture has been the main source of deforestation, this has been exacerbated by the increasing demand for woodfuels and timber products. The legal and policy framework in the forestry sector has also contributed to uncontrolled exploitation of woodland and forest resources. With all rights to these resources vested in the State, local communities have lacked the appropriate incentives to manage and protect them. Weak public sector institutions such as the Forestry Department, reinforced by often antagonistic, "command and control" policies, have led to high levels of distrust between communities and public authorities. Water 1.9 Although total water resources in Malawi are considered adequate to meet the needs of the growing population, these resources are becoming increasingly degraded through sedimentation, biological contamination and effluents. Silt loads in surface water runoff leads to significant problems in water quality, including turbidity, increased suspended solids, water flow problems and water treatment costs. As indicated above, high sediment loads have caused siltation of rivers and reservoirs, requiring costly dredging to maintain water and electricity production. 1.10 Almost 50 percent of all illness in Malawi is attributed to water borne diseases. As a result of inadequate sanitation facilities and other sources of organic pollution, the bacteriological condition of the rivers is poor throughout the year. Three quarters of the rivers show fecal coliform counts in excess of 500 per 100 ml. in the dry season which is dangerously above WHO standards. In urban areas, groundwater resources are becoming increasingly contaminated through poor sanitation facilities. The chemical contamination of stream water in urban and peri-urban areas is becoming a common problem due to the improper disposal of industrial waste. Eutrophication of water bodies and the growth of water weeds including water hyacinth threaten fish resources and other economic uses. Bilharzia, long endemic in parts of Malawi, has recently appeared in some locations along Lake Malawi, which could threaten tourism in the country. Fisheries 1.11 Although reliable data are not available, evidence suggests that Malawi's fish resources are under threat from overfishing and declining water resource quality. Increased fishing efforts and deteriorating water resources quality are associated with declining catch rates. In Lake Malombe fish production dropped from 10,000 tons per year in 1986 to 200-300 today. Localized declines are being observed in Lake Malawi, although it is difficult to assess the overall production potential of the entire lake. The degradation of breeding areas and overfishing has also threatened entire species, such as the Ntchila spp., which, abundant in the 1950s, is now almost extinct. Biodiversity 1.12 Malawi's rich biodiversity, which includes more that 6000 species of flora of which many are endemic or near-endemic, is under threat from forest and land degradation. The scientific, agricultural and medicinal values of this biodiversity is only beginning to be appreciated. Many species are now only found in forest reserves and conservation areas, although these too suffer from encroachment and degradation. Wild fauna are also threatened by loss of habitat and poaching and this degradation of the wildlife estate undermines efforts to develop and expand the tourism industry. In this sector, similar to that of forestry, local communities have borne most of the cost of wildlife and conservation activities, and yet legally have received only very limited benefits. Only recently has this begun to change with much greater emphasis being placed on the role and rights of communities living in or near protected areas. -3 -  Human Settlement 1.13 In the rural areas, about 40 percent of the population do not use pit latrines, which has an impact on surface and other water resources. Although predominantly rural, Malawi has annual urban growth of about 7-10 percent in the four main urban areas - Blantyre, Lilongwe, Mzuzu and Zomba. These cities are facing enormous problems in the face of this very rapid growth. Typical problems include: inadequate waste disposal and water systems (with severe endemic and epidemic disease hazards) - only 30 percent of the urban population is connected to waterborne sewerage or septic tanks; few established solid waste landfill sites; high degrees of informal settlement or "squatting"; rapid degradation of forest resources in urban and peri-urban areas due to energy demand; a lack of recreational facilities; degraded and polluted water courses, and above all, virtually no resources to tackle these urgent problems. Institutional (community-based) structures to help address these problems are virtually non-existent. The solutions currently being financed by the donors are often high cost - e.g., water borne sewerage systems for Lilongwe when water availability is a major problem for many parts of the city. Also the general ability to pay for operation and maintenance is very limited, particularly in the poorer areas. The problems are serious and the situation is expected to deteriorate even further over the next several years due to even more rapid population growth. Tackling these issues and planning for the future will require a significant investment in capacity development at the local level, and a highly paLrticipatory process of urban environmental planning. Climate Change 1.14 As an agricultural economy, principally dependent on rainfed subsistence farming, Malawi is highly vulnerable to drought and other extreme climatic events. If, as suggested by the Intergovernmental Panel on Climate Change (IPCC), climatic variability increases over the coming decades, Malawi will suffer from an increased incidence of drought and changing weather patterns. Meteorological monitoring and drought proofing will become essential tools in helping Malawi to adapt to longer term trends, and will also have short term benefits in helping to smooth out fluctuations in agricultural output and GDP. ENVIRONMENTAL MANAGEMENT FRAMEWORK Background 1.15 The National Environmental Action Plan (NEAP), adopted in December, 1994, was prepared using a highly participatory approach involving government, the private sector, non-government organizations (NGOs) and traditional leaders. The NEAP identified the critical environmental issues facing Malawi, and outlined a series of actions that should be taken in order to redress the problems of resource degradation. The NEAP represented a crucial step towards establishing a policy and institutional framework for environmental management, and identified the following elements necessary to facilitate its implementation: (a) clearly defining institutional responsibilities and strengthening capacity; (b) formulating guidelines for Environmental Impact Assessment (EIA) and instituting a mechanism for their implementation; and (c) developing an Environmental Policy and Framework Law. 1.16 The NEAP, while identifying a list of priorities for investment and capacity building, did not go into great detail or adequately address the tradeoffs between different interventions. The Government of -4-  Malawi therefore decided to develop the Environmental Support Programme (ESP) which would have as its overall objective to "integrate environmental concerns into the socioeconomic development of the country". The ESP is intended to support the umbrella framework incorporating strategies, policies and priority programs to address environmental problems. The ESP covers the actions of many different actors (government, non-government, community level) all of which play a crucial role in environmental management in Malawi. The ESP is also designed to solicit resources to tackle Malawi's key environmental issues, while providing a framework to help reduce duplication of effort. 1.17 The design of the ESP has taken place in a highly participatory fashion, involving a number of Task Forces, a series of consultative exercises for community-based pilot activities, technical inputs from a broad array of local and foreign sources including expertise from other African countries. Successive drafts of a synthesis report for the ESP have been prepared and used to define more precisely the policy, institutional and investment priorities which can be supported by the Government and by the international community. Although not covering every activity falling under the broad category of environment and natural resources management, the ESP document (copy on file) includes the main elements of policy reform and institutional development, and itemizes an investment program valued at over US$120 million (over 5 years). In May 1996, an ESP Roundtable held in Lilongwe, brought together a broad range of Government departments and agencies, including members of municipalities and local government, NGOs and donors, to discuss the strategy contained in the draft report on the ESP and provide feedback on program priorities and focus. 1.18 The brainstorming and priority setting exercises undertaken during the Roundtable underscored the following three themes: (i) the need for community participation and involvement in any effort to improve environmental management and encourage the sustainable development of natural resources; (ii) the need for capacity building, at the community level, and in the agencies and NGOs charged with improving environmental management; (iii) the need to improve coordination amongst the different actors involved in improving environmental management. In addition, participants ranked the following topics very high in designing interventions: (iv) environmental education, (v) land degradation; (vi) water resources management; and (vi) pollution in urban settlements. Annex 2 contains a summary of the workshop. Subsequent workshops have been held on watershed degradation in the Shire River catchments, on environmental education for which a national strategy has been prepared, and on community-based natural resource management. Policy Framework and Legislation 1.19 The National Environment Policy (NIEP) (copy on file) was adopted by the Cabinet in February 1996. The NEP seeks to: (a) promote the efficient utilization and management of natural resources; (b) facilitate the restoration and maintenance of essential ecosystems and ecological processes; (c) enhance public awareness of the importance of sound environmental management; and (d) promote cooperation between government, local communities, women's groups, NGOs, and the private sector in the management of the environment. 1.20 To provide a sound basis for environmentally sustainable development, the NEP specifies guiding principles and strategies for both national and sectoral policies. At the national level, the NEP recognizes that poverty is one of the root causes of environmental degradation. Poverty alleviation is therefore critical for natural resource conservation and sustainable utilization. Proper economic incentives are more effective than enforcement to induce people to undertake sustainable resource use - 5 -  and improved environmental management requires an enabling economic framework in which the opportunity cost of using natural resources is reflected in their market prices. A key element in the NEP is the recognition that communities have a right to benefits from sustainable utilization of natural resources on all public and customary land. 1.21 The NEP sets out the principles for institutional coordination, focusing on advocacy, policy formulation, authority to oversee compliance, and legal status derived from appropriate legislation. The NEP outlines the generic requirements for improved environmental management, including framework legislation, environmental planning, impact assessment, environmental education and public awareness, private sector and community participation, demographic planning, and land tenure focusing on empowering local communities to manage common property resources while protecting their rights. The Policy also provides overall guidance on policies for agriculture, forestry, fisheries, parks and wildlife, water resources, energy, industry, mining, and tourism. 1.22 The Environmental Management Act (EA-) (copy on file) was approved in June 1996. This environmental framework law establishes the institutional and legal framework for environmental management in Malawi. The Act sets out the duties and responsibilities of the Minister, the Director of Environmental Affairs, the National Environmental Council, the Technical Committee and District Environmental Officers. The EMA provides for the introduction of Environment Impact Assessment (EIA) together with appropriate powers for the Minister and the Director of Environmental Affairs. Other key elements of the legislation include: a series of provisions on environmental management, pollution control, and legal sanctions, and; provision for the establishment of the Environmental Fund for the "protection and management of the environment and the conservation and sustainable utilization of natural resources". 1.23 Under the NEP and embodied in the EMA, provision is made for a review cf all sectoral policies and legislation. To the extent that there are inconsistencies between sectoral legislation and the EMA, the provisions of the EMA will prevail. This work has already started, commencing with a full review of sectoral legislation to be followed by modifications where necessary to legislation and policies. Present Institutional Arrangements 1.24 The NEP and the EMA establish the institutional structures for environmental management in Malawi. The National Councilfor the Environment (NCE) is a high-level body whose Chairman is appointed by the President. Membership includes the Principal Secretaries of Ministries, the General Managers of the Bureau of Standards and the National Herbarium, and nominees from the private sector, NGOs, the National Commission for Women in Development, and the University of Malawi. Meeting at least four times per year, the NCE will have an advisory and watchdog role on environmental management, on integrating environmental considerations in all aspects of economic planning and development, and ensuring inter-agency coordination. The EMA also makes provision for a Technical Committee on the Environment (TCE) designed to provide technical and scientific advice to the NCE, conduct studies and propose standards and guidelines for environmental control and management. At the District level, there is provision for the appointment of a District Environmental Officer (DEO) to work through the District Development Committee (DDC). Other committees that have been established include the Parliamentary and Cabinet Environment Committee. 1.25 The Environmental Affairs Department (EAD) within the Ministry of Research and Environmental Affairs (MOREA) has the overall mandate for the coordination of environmental programs. The specific responsibilities of the EAD are to: (a) act as Secretariat to the National Council for the Environment; -6-  (b) in close collaboration with line ministries, formulate environmental policies and strategies and advise government; (c) assist line ministries to integrate environmental considerations in their sector strategies; (d) collaborate with macro-economic authorities to establish natural resources accounting systems; (e) coordinate with all stakeholders in environmental management; (f) advise concerned ministries and other agencies on environmental regulations; enforcement and compliance, assist in arbitration in environmental issues; (g) monitor adherence to international environmental treaties; (h) develop environmental information systems (EIS); (i) promote environmental training, education and public awareness; (j) support initiatives in decentralization as they relate to environmental management; and, (k) coordinate preparation of regular "state of the environment" report. 1.26 The Environmental Affairs Department is a "light" structure which has been restructured to comprise four Divisions: Monitoring and Management, responsible for monitoring, environmental impact assessments and pollution control; Education and Outreach; Policy and Planning and Legal which includes legislation and regulations, compliance and enforcement, and international conventions (see Annex 1). The EAD is being strengthened and its 18 established positions were fully staffed by July/August 1996. 1.27 The EAD is responsible for coordination of cross-sectoral environmental matters. Implementation of projects and programs is the responsibility of technical ministries, departments and other implementing organizations. The Ministry of Natural Resources, comprising the Departments of Forestry, Fisheries and National Parks and Wildlife are primarily responsible for these natural resources, while the Ministry of Agriculture has responsibility for agricultural extension, research and soil conservation. The Ministry of Irrigation and Water Development has primary responsibility for water resources in Malawi, together with the national Water Resources Board. The Ministry of Energy and Mining has overall responsibility for energy policy and planning. 1.28 A network of environmental focal points has been established in each of the appropriate implementing agencies, consisting of senior staff who will be permanent contact points for EAD. These focal points will have specific responsibilities for coordinating environmental activities and bring major environmental issues to the attention of the EAD, and will receive specific training in environmental planning, management and EIA. Linkages are also being developed with local governments (municipalities and Districts). Agreement was reached during negotiations on the official designation of the focal points (para. 6.1 (d)). 1.29 In parallel with the EAD, there is an apex environmental NGO, CURE (Coordinating Unit for the Rehabilitation of the Environment). CURE provides a coordinating and information dissemination function for environmental NGOs, many of which worked on refugee and relief programs. CURE has also provided training in participatory appraisal techniques, and serves as a clearing house for information on environmental activities being undertaken by NGOs and community-based organizations. ENVIRONMENTAL AGENDA 1.30 The Environmental Agenda has been well identified in Malawi through the highly participatory processes of the NEAP and the ESP. In the face of the many constraints, reversing or slowing down -7 -  environmental degradation in Malawi will be a complex challenge for which there are no easy answers or quick solutions. The process of tackling the policy and legislative issues is well advanced and much progress has been made in establishing the institutional framework. Maintaining the momentum to strengthen the institutions concerned is now essential to implement the new legislative framework. A key element of the agenda will be to translate the good intentions expressed in the policy into the effective empowerment of local communities. 1.31 As highlighted by the ESP Roundtable, the most critical points of emphasis on the agenda include: effective participation of the population, requiring the implementation of new approaches to environmental management which empower and provide capacity to communities; capacity building at all levels (communities, government and non-government structures and organizations); improved coordination to ensure that the many interventions by the different actors are working in the same direction; significant emphasis on raising environmental awareness through education and communication. DONOR ASSISTANCE FOR THE ENVIRONMENT 1.32 The NEAP and ESP process has already engendered contributions from a range of sources including notably, USAID, which has committed about US$40 million in both balance of payments resources, in support of policy and institutional changes, and project funding for priority capacity building and investment activities. Other donors including UNDP, Japan, EU, KfW/GTZ, UK-ODA, DANIDA, Netherlands, and CIDA have contributed to preparation activities and/or have made funding commitments to elements defined in the ESP. Total commitments or expressions of interest from donors in the broad category of environment amount to about US$120 million over five years. Full details are provided in the ESP document. LESSONS LEARNED 1.33 IDA's participation in the Environmental Support Programme is based on a major multi- stakeholder preparation effort following from a highly participatory NEAP process. This effort has drawn from experience in other countries in Africa and elsewhere and from ongoing operations in Malawi. Only the GEF/SADC Lake Malawi/Nyasa Biodiversity Conservation Project has been provided directly for environmental purposes. However, much of the prior and ongoing IDA lending (agriculture, forestry, social infrastructure, urban, water) has a direct impact on the environment. The main lessons, including those from similar Environmental Support Programs are: (i) avoid overly ambitious goals and try to minimize the inevitable complexity of this kind of program to the extent possible; (ii) set clear priorities through a process of consensus building and enhancing ownership of program objectives on the part of the relevant stakeholders; (iii) take a highly participatory approach to program preparation and implementation; and (iv) start with a modest and flexible program to strengthen institutional capacity and initiate the process of change. It has to be recognized that implementing a process of environmentally sustainable development is a long-term challenge, particularly when the pre-conditions are not favorable. Developing a strong policy, legal and institutional framework for environmental planning and management is a critical element in this process. This framework can be expected to evolve over time as institutions mature and as programs are implemented. In terms of overall environmental management, the key lessons applied to this ESP include the principle that empowerment of the groups most closely affected by environmental degradation is a sine qua non. Providing people and local communities with the tools (intellectual, physical and legal) to face these challenges requires, in most cases, changing traditional (usually top-down and hierarchical) attitudes and practices. -8 -  RATIONALE FOR IDA INVOLVEMENT 1.34 The Government's request for IDA assistance is a logical outcome of the partnership between Malawi, the Bank, and other donors which has been developed over the past years during the preparation of the NEAP and the ESP. To date, the Bank's efforts have been focused on providing support to a Malawian-driven process, rather than designing a specific IDA project. With IDA's role being one of "lender of last resort", it is only at this stage that the definition of an IDA contribution to the ESP can be achieved. Significant progress has already been made towards the development of a sound legal, policy and institutional framework, a large measure of consensus and awareness-raising has been achieved, and the level of ownership of the overall program is very high. Given the severity of Malawi's environmental problems and the likely social and economic impact of continued deterioration of the natural environment which could undernine Malawi's growth prospects, fully integrating environmental considerations in Malawi's development process is essential. Continued support for environmental management is entirely consistent with the Bank's central focus of poverty reduction as expressed in the Country Assistance Strategy (CAS). It is also consistent with efforts to decentralize decision-making and empower local communities. Finally, ITF's contribution is designed to complement other donor interventions in this area and other IDA operations (including National Water Development, Malawi Social Action Fund, Agricultural Services, Local Government, and the ongoing adjustment operations). 2. THE ITF CONTRIBUTION TO THE PROGRAM OBJECTIVES AND SUMMARY 2.1 The ITF contribution, the Environmental Management Project (EMP), designed to complement the activities of other donors, will support the Government of Malawi's efforts to implement the ESP which will focus on: (i) strengthening the coordination capacity of MOREA, the ESP's lead agency, and improving its regulatory, information management, promotion and coordination capabilities; (ii) a broad-based program of environmental education; (iii) promoting a shift in the responsibility for sustainable resource management, and the reversal of degradation, to the community level; and (iv) supporting initiatives in key areas of environmental degradation. Underpinning the ESP is the environment and natural resources management policy and legislative review process supported by USAID and UNDP. An important design element is the gradual transfer of the management of natural resources from government departments to the local communities. In Malawi, this approach has been called "co-management of natural resources". It has been tried on a pilot basis in parts of the country, with reasonable success, and has been used more broadly in other countries in Southern Africa. Although not proven to work under all circumstances, it presents perhaps the only remaining solution for effective natural resource management in the situations of high population density, and weak enforcement capability, which prevail in Malawi. 2.2 The ITF-financed Environmental Management Project, is estimated to cost some US$13.7 million. ITF would finance four main components (amounts include price and physical contingency allowances): (i) Institutional Capacity Building and Strengthening of the Environment Information System (US$ 3.0 million); (ii) Environmental Education (US$ 2.0 million); (iii) Community-Based Environmental Management (US$ 6.1 million) and (iv) Environmental Actions and Studies (US$ 2.6 million). 9-  DETAILED DESCRIPTION 2.3 Institutional capacity building (US$ 3.0 million). The ESP will be coordinated and monitored by MOREA. This component of the EMP would include support for training and operations, to enable it to carry out its policy, monitoring and control functions. The training of persons selected as focal points in line departments, regional and district administrations and NGOs would also be covered. MOREA's information systems, financial and logistical management capabilities would be strengthened. Support would include training courses, workshops, vehicles, equipment, technical assistance and operating costs as needed. USAID and UNDP are also involved in these activities, in a fashion complementary to the ITF. Agreement was reached during negotiations that a training program for MOREA, environmental focal points and designated staff in other institutions, will be furnished to IDA by December 31, 1997 (para. 6.1 (b)). In order for MOREA to fulfill its mandate effectively it will require sufficient contiguous office space to house the staff under recruitment. During negotiations the Government indicated that it expected this issue to be resolved by December 31, 1997. In addition to general support for institutional development, two specific areas of MOREA's activities have been identified for improvement: * Environment Information System. A vital aspect of MOREA's role is to monitor the status of the country's natural resources, the effectiveness of its resource management programs, and to understand the causes of degradation and misuse. The USAID is providing support for this function with a technical assistance team, training and equipment through its NATURE program, focusing on the Middle Shire Valley. The ITF resources would complement the USAID funded activities, and, based on an assessment of effective demand for environment and natural resource information, broaden the scope of the information system, including information provided by communities involved in formalized resource management. * Environmental Impact Assessment and Regulation. The regulations governing the preparation of environmental assessments are under review by Parliament, and should be approved shortly. ITF would support a unit in MOREA charged with reviewing, auditing and participating in the environmental impact assessment process. Support would include training, technical assistance and equipment necessary to provide the expertise and data management capabilities to exercise this function effectively. This activity will rely on the information provided through the Environment Information System as well as on the awareness created through the Environmental Education component. Agreement was reached at negotiations, that the guidelines and regulations for environmental impact assessment will be published by December 31, 1997 (para. 6.1 (a)). 2.4 Environmental education (US$ 2.0 million). The component would draw on the strategy developed in a USAID/UNDP/World Bank-funded study carried out in May 1996, and would provide resources for both formal and non-formal approaches to building environmental awareness and educating the population in the benefits of sound environmental management and the consequences of misuse of renewable natural resources. The objectives of this activity are to: (i) increase public environmental awareness and participation; (ii) integrate environmental education into the formal education system; (iii) improve the quality of environmental information and access to such materials; and (iv) identify formal and non-formal systems for dissemination of environmental information, decentralizing this to the lowest level. Expenditures would cover such costs as preparing, producing and disseminating publications, posters and audiovisual materials on environmental topics, holding workshops, and providing input into curriculum design for public and private schools on environmental topics. 2.5 Community-BasedEnvironmentalManagement (US$ 6.1 million). The objective of the component is to develop the capability of communities to manage the natural resources which they - 10-  control and depend on for a livelihood. It is founded in the belief that many communities in Malawi have the capacity to manage their commonly held resources sustainably, and execute their own development projects, but lack the impetus and initial capital to get started. These activities would be facilitated through both NGOs and line departments of the Ministries involved in natural resources management. To enhance the sustainability of community level natural resources management, it will be necessary for communities to benefit directly from these interventions. Agreement was reached at negotiations that communities who have entered into co-management arrangements for forestry and wildlife areas under the ESP to share the revenues earned from the sustainable exploitation of such reserves (para. 6.1 (c)). Without fixing a specific percentage going to communities, it was agreed that this would be based on experience to date where at least 30 percent of revenues earned are allocated to communities. 2.6 Community Mobilization and Environmental Micro-Projects. This component, to be implemented with support from NGOs, would focus on communities capacity building to improve environmental management in both rural and urban areas. Small-scale environmental activities, based on proposals originating in communities would also be funded. This component would operate under the supervision of a Steering Committee. At afirst stage, community level activities would be initiated by systematic client consultation and "community mobilization" provided by an NGO and funded under the program. In the course of the community mobilization, community environmental management committees or equivalent, would be identified or formed. These committees would prepare community environmental management plans. At a second stage, these management plans would be financed from a "micro-projects" window. These "micro-projects" would be put forward by the community committees. As necessary, technical assistance would be provided from an appropriate source (NGO, Government or other entity). Selection of communities would be based on a set of criteria indicating environmental and/or natural resource problems, potential for successful resource management, and an indication of community involvement. During the pilot phase, 16 communities are included in selected Districts. Later on, groups of 8 to 10 communities in targeted Districts would be covered (see Annex 4 for details). 2.7 Forest Resources Co-Management. To overcome encroachment problems and to increase production from the Forest Reserves and woodlands owned under customary tenure, communities adjacent to the selected reserves and in areas of potential for forest development, would be encouraged to enter into agreements with the Forest Department on the co-management of these resources. Such communities would be "mobilized" using mechanisms outlined above. The co-management of some of the smaller plantations within the Forest Reserves may also be included. On a pilot basis, communities with forestry resources would be organized to put in place a sustainable wood production and marketing operation. Also, under this component, limited support could be provided to the Forestry Department to develop strategies for management of indigenous forests, implementing the Forestry Policy, and developing a regional forestry planning capacity. Agreement was reached at negotiations that the Government would carry out a functional and expenditure review of the Forestry Department by March 1998, focusing on disengagement from commercial plantation activities (para. 6.1 (e)). 2.8 Biodiversity conservation in Protected Areas in the Lower Shire. A system for the co- management of wildlife in National Park periphery zones has been developed and practiced in pilot areas in Northern Malawi. Using these techniques, ITF would support community capacity building to be carried out under the community natural resources co-management program, for the communities bordering Protected Areas at Lengwe National Park, Majete and Mwabvi Game Reserves and would provide limited support for training of field staff in community-based management techniques. Contingent on agreement on the role of the Department of National Parks and Wildlife in support of the co-management approach to wildlife management, and on the basis of the community consultative and planning process, minimal infrastructure would be rehabilitated in these areas. - 11 -  2.9 Urban Environmental Management. Urban environmental problems were highlighted in the NEAP, and in para. 1.13. IDA would support limited interventions in Lilongwe, Blantyre, Zomba, and Mzuzu to complement IDA's current involvement in improving municipal management through the ongoing Local Government Development Project. This component would complement other activities in urban areas, by focusing on community mobilization through NGOs to develop strategic urban environmental service plans, and drawing on the environmental micro-projects funds for community based activities such as installation of public water kiosks to be managed by the communities, on-site sanitation, urban open space and watercourse reclamation. Limited funding would be included for emergency pollution abatement measures, such as the sewage treatment facility in Zomba. 2.10 EnvironmentalActions and Studies (US$ 2.6 million). IDA would support a series of targeted actions in areas of high priority on the environment agenda. These resources are intended to support planning and implementation of environmental programs or tackle critical problems, and will be allocated through the Annual Work Planning exercise. Planning is well advanced for some of the actions which could include: * Climate Change and Long Lead Forecasting Pilot. Malawi's rainfed agricultural economy is vulnerable to variations in precipitation and temperature. In recent years, dramatic advances have been made in understanding the dynamics of the southern Africa climatic regimes and how these regimes are connected to global phenomena such as the El Niflo/Southern Oscillation (ENSO) events. Improvements in global climate modeling and new understanding of ENSO "teleconnections" or links with climate forcing factors, is enabling climate prediction to become a practical and applied science. Long lead climate forecasts are now being used in various agricultural economies around the world. South Africa has taken the lead in climate research and prognostic science. This component would enable the Meteorological Department to develop such forecasts, tailored to the needs of key users, some of whom could be expected to pay for tailored information. * Water Hyacinth Control. This fast growing weed, present for some years in the Lower Shire, has now been sighted in southern Lake Malawi and in the northern portions of the Shire river. It threatens to seriously affect fishing, hydropower generation, water transport, water supply systems, tourism and biodiversity in the catchment. ODA is financing a thiree year research program to establish the effectiveness of biological control methods. The project would provide additional finance, to develop the institutional framework and supjport field operations needed to deal with the threat. IDA support would be contingent on the commitment of the Government to address this environmental problem in a vigorous and holistic manner. A first step would be the identification of the appropriate coordination and implemnentation agency for a control program which brought together all relevant stakeholders. * Bilharzia Control. This debilitating disease is endemic in parts of Malawi, and has recently appeared in certain locations along Lake Malawi. Infection rates are high in water side locations, especially among young people. The disease can be contracted at some of Malawi's most valuable tourist sites. In addition to affecting the health of the exposed populations, the disease will affect the revenue earning ability of lake-side resorts, an important source of foreign exchange for the country. Eradication of bilharzia requires a multi-faceted approach involving health education, fisheries regulation, snail habitat treatment, waiter supply and sanitation improvements, and medical treatment of infected patients. A national program for bilharzia abatement is under review by the World Bank, for funding under health related operations and within the context of Malawi's overall health program. Support for further preparatory and pilot activities could be funded from this project. * Lake Malawi National Park. This park on the Nankumba peninsula requires improved management and infrastructure. Studies of the park have been carried out with CIDA and GEF - 12 -  financing. The project would provide additional finance to put in place the actions recommended by the studies (such as improving waste treatment in the lakeside villages, relocation of certain facilities). Such support would depend on agreement between Govemment and the enclave communities on a suitable approach to park management. * Supportfor the Policy Planning Unit (PPU) in the Ministry of Lands and Valuation. With the establishment and operation of the Presidential Land Commission, the demands placed on the PPU, for policy, analytical and implementation of the Land Commission recommendations will increase. In order for the PPU to be able to respond to this growing demand, resources will be needed for additional logistical support and short-term assistance. 3. PROJECT COSTING AND FINANCING COST ESTIMATES 3.1 The total cost of the EMP is estimated at US$ 13.7 million, including physical contingencies estimated at US$ 0.6 million and price contingencies at US$ 0.7 million over the 5 year implementation period. Cost estimates exclude taxes and duties. The base exchange rate was Kwacha 15 for one US dollar (June 1996). The distribution of local and foreign costs by component is shown below. Table 1: Project Cost Summary (US$ millions) % Foreign % Total Component Local Foreign Total Exchange Base Costs MOREA Institutional Strengthening 0.2 1.3 1.6 85 13 Environment Information System 0.4 0.4 0.8 47 7 Environmental Impact Assessment 0.1 0.2 0.3 71 3 Subtotal Institutional Development 0.8 2.0 2.8 72 22 Environmental Education 1_0 0.8 1.8 42 14 Subtotal Environmental Education 1.0 0.8 1.8 42 14 NGO-Based Community Environmental 1.6 0.5 2.1 24 17 Management I Forest Resources Co-Management 0.6 1.0 1.6 63 13 Wildlife Co-management 0.7 1.1 1.8 59 14 Subtotal Community Environmental 2.9 2.6 5.5 47 44 Management Environmental Actions and Studies 1.2 1.2 2.4 49 19 Subtotal Environmental Actions and Studies 1.2 1.2 2.4 49 19 Total Base Cost 5.9 6.5 12.4 52 100 Physical Contingencies 0.3 0.3 0.6 52 5 Price Contingencies 04 0.3 0.7 46 6 TOTAL PROJECT COSTS 6.6 7.1 13.7 52 111 Note: Totals may not add up due to rounding 3.2 Contingencies. Physical contingencies vary between 5 and 10 percent, depending on the expenditure item. On price contingencies, it is estimated that international inflation will be some 2.3 - 13 -  percent per annum over the 5 year life of the credit. It is assumed that the local exchange rate would adjust to compensate for differences between local and international inflation. FINANCING 3.3 The ITF would finance 90 percent of expenditures, with a credit of US$ 12.4 million. The Government would contribute some 10 percent of total expenditures by providing an increasing share of local costs, principally operating costs and allowances, and the costs of local training efforts. A financing table, by type of expenditure, is shown below. Table 2: Financing of Expenditures, by Category Government % ITF % Total _ _________________________ Amount Amount Amount I Foreign 0.1 t 7.0 98.9 71 51.8 If Local (Excl. Taxes) 1.3 19.5 5.3 80.5 6.6 48.2 Total Project 1.4 10.0 12.4 90.0 13.7 100.0 PROCUREMENT 3.4 Procurement of works and goods for all ITF-financed components shall be ijn accordance with the "Guidelines for Procurement under IBRD Loans and IDA Credits," published January 1995, and revised in January 1996 and August 1996 and shall be subject to the restrictions for the Interim Trust Fund (ITF). World Bank Standard Bidding and Contract documents shall be used for all ICB and consultant contracts. Procurement arrangements are summarized in Table 3. 3.5 Works. The Category of Works includes civil works for the construction of small buildings within three protected areas and the rehabilitation of some 50 km of minor roads. Contracts are expected to be small, and unlikely to attract interest from international bidders. Civil works contracts estimated to cost equivalent of US$500,000 or less per contract up to an aggregate amount of US$1.2 million may be procured through contracts awarded on the basis of National Competitive Bidding (NCB), in accordance with the procedures satisfactory to IDA. 3.6 Goods. Procurement of vehicles and equipment by several implementing agencies, wherever practicable, shall be combined into single contract(s) of US$100,000 or more and would be procured through ICB. Furniture, office equipment and supplies would be procured under NCB procedures for contracts estimated to cost less than US$ 100,000 up to a total of US$300,000 in aggregate. Contracts on goods estimated to cost less than US$30,000 may be procured using national shopping, up to an aggregate amount of US$300,000. Goods, up to an aggregate amount equivalent to US$300,000 may be procured through the United Nations Inter-Agency Procurement Services Office (IAPSO). 3.7 Consulting Services. Institutional, environmental, feasibility and other studies would be carried out by consultants to be employed by the respective implementing agencies, whose qualifications, experience and terms and conditions of employment shall be satisfactory to IDA. Consultants shall be engaged in accordance with the "Guidelines for Use of Consultants by World Bank Borrowers and by the World Bank as an Executing Agency", published August 1981, and will also be subject to ITF restrictions. Letter of Invitation (LOI) and Standard Form of Contract for Consultants' Services (published by the World Bank in June 1995) or other similar forms shall be used wherever applicable. Local and foreign experts may be recruited in specialized fields to assist in community mobilization and -14-  co-management, environmental information systems, environmental education and other environment related fields, finance and training. Recruitment of NGOs under the Community Mobilization Component will be managed by the MOREA, and such NGOs will be contracted for the provision of training and other services. No government salaries will be funded under the project. Where staff are engaged in project related field work, personnel allowances (per diems) will be paid using Government approved standards. No sitting allowances will be paid. 3.8 Micro-Project Grants. Goods and works, estimated to cost less than US$20,000 and up to an aggregate amount of US$ 1,000,000 financed under the micro-projects grants component will be procured directly by communities and NGOs in accordance with the provisions of para. 3.15 of the Guidelines and the modalities set out in the PIP. These grants, authorized by the steering committee, would cover such expenditures as: small-scale construction materials, inputs for establishment of nurseries, protection of woodland areas and watercourse reclamation, improved drainage and sanitation, and installation of public water kiosks. Table 3: Procurement Method by Type of Expenditure (US$ million) Procurement Arrangements (US$ '000) International National Competitive Competitive | Consulting Bidding Bidding Other Services Total A. Civil Works - 1.0 - | 1.0 (0.9) - _ _ (0.9) B. Vehicles and Equipment 1.8 0.3 0.6 2.7 (1.8) (0.3) (0.6) (2.6) C. Consultants - 2.8 2.8 (2.8) (2.8) D. Training 4.1 4.1 (3.3) _ (3.3) E. Community Grants - l 1.0 1.0 _________________________________ j ________________ j j___________ (1.0) _____________ (1.0) F. Operating Costs X 2.3 2.3 - X 1 1(1.8) - (1.8) Total 1.8 1.3 7.8 2.8 13.7 ________________________ (1.8) (1.2) (6.7) (2.8) (12.4) Notes: Totals may not add up due to rounding. (**) Includes IAPSO 3.9 Prior Review Procedures and Reporting. The Annual Workplan prepared each year by the implementing agencies for review by IDA shall include details of the items to be procured (goods and services) and the procedures to be adopted for such procurement within the limits given earlier and to be agreed by IDA. Requirements for IDA's prior review of procurement are as follows: (a) Procurement of Goods. and Civil Works Contracts. Invitation for bidding, draft bidding documents, bid evaluation and award recommendations, for all contracts exceeding US$100,000 for each contract, would all be subject to prior review and no objection by IDA; (b) Contracts with Consulting Firms and Individual Consultants (Technical Assistance Personnel). Terms of reference for all consultant services would be subject to prior review and approval by IDA. Budgets, shortlists, selection procedures, letters of invitation, proposals, evaluation reports and contracts estimated to cost US$100,000 or more for consulting firms and US$50,000 or more for individuals would be subject to - 15 -  prior review and approval by IDA. All sole source contracts and amendments to contracts raising the contract value for firmns above US$ 100,000 and individuals above US$50,000 shall be subject to prior review and clearance by IDA; (c) Specific training activities would be undertaken in accordance with an annual training program reviewed and approved by IDA; (d) Contracts below the prior review threshold would be subject to ex-post review by IDA on a selected basis (one in five). DISBURSEMENT 3.10 The proposed ITF Credit of SDR 8.7 million would be disbursed over five years with an expected Project Completion Date of June 30, 2002 and a Closing Date of December 31, 2002. 3.11 Disbursement Procedures. Disbursements from the Credit would be in accordance with the normal IDA procedures set out in the Disbursement Handbook (November 1992). Once agreement has been reached on the annual work program and budgets with the implementing agencies (MOREA, MNR, NGOs) disbursements from the credit can be made following the standard procedures, including: reimbursement of expenses incurred by implementing agencies against submission of disbursement requests, direct payment to suppliers or replenishment of special accounts. Disbursement for expenditures under the Micro-project component would require that appropriate arrangements had been entered into between the Government and the community concerned (para. 6.3). 3.12 MOREA will centralize the disbursement procedures for the implementing agencies involved in implementation of ITF-financed components. Agreement was reached during negotiations that a Financial Controller and a Procurement Officer with expertise in the management of IDA-financed projects will be stationed, by credit effectiveness, in MOREA's Administration and Gjeneral Department for the initial years of the project to facilitate the management of the Special Account, as well as procurement procedures and financial reporting (para. 6.2 (a)). 3.13 To facilitate disbursement, IDA will advance US$1,000,000 into a Special Account, in convertible currency opened in a commercial bank acceptable to IDA. Upon effectiveness the advance amounts will be deposited to the respective Special Account against disbursement application(s). Reimbursements should be grouped for replenishment of these Special Accounts and submitted for reimbursement every month or whenever the Special Account balances are reduced to one third of the original amount, whichever comes first, through the standard channel of disbursement procedures for the Special Accounts. The account may be used to pay for expenditures in either local or foreign currencies through the commercial banking system, against any category of expenditure. All replenishments should be fully documented except in the case where statements of expenditure (SOEs) are authorized. 3.14 The implementation agencies may claim reimbursements on the basis of Statements of Expenditures (SOEs) for: (a) Civil works costing less than US$100,000 equivalent. (b) Goods costing less than US$ 100,000 equivalent. (c) Training, consultants contracts, studies and operating costs for single items costing less than US$100,000 equivalent for firms, and less than US$ 50,000 for individuals. - 16-  3.15 The respective implementing agency shall retain all the relevant supporting documentation for reimbursements of SOEs for inspection by IDA. During the course of the annual audit of the Project Accounts, the auditors shall certify that all expenditures claimed under SOE. Table 4: Disbursement of ITF Credit Amount Allocated in Percentage of Actual Category of Expenditure US$ 000 Expenditure Financed by ITF 1. Civil Works Contracts 800 90% 2. Vehicles and Equipment 2,400 100 % of foreign 100% of local (ex-factory cost) 90 % of local for other items procured locally 3. Consultants' Services 2,500 100% 4. Training 2,800 100% through June 30, 2000, 60% through June 30, 2001 and 40% thereafter 5. Goods and works for Micro-projects 900 95% 6. Operating Costs 1,600 100% through June 30, 2000 60% through June 30, 2001 and _________ _ _ 40 % thereafter 7. Refunding of Project Preparation Advance 800 8. Unallocated 600 TOTAL 12,400 1 3.16 The disbursement categories for the ITF credit are presented in Table 4 above. Disbursement percentages are calculated taking into consideration the identifiable taxes and duties. ACCOUNTS AND AUDITING 3.17 The implementing agencies would maintain separate records and financial accounts for the ITF- financed components, using generally accepted accounting principles. A set of consolidated financial accounts would be prepared every year. Responsibility for preparation of the component accounts would rest with the financial controller appointed for this purpose in the implementing agency for each component. The ITF-financed Financial Controller in MOREA would consolidate the financial statements for ITF-funded activities, and arrange for the annual audit of the accounts in MOREA and the relevant implementing agencies. Agreement was reached during negotiations that the accounts for each of the components would be audited by independent auditors satisfactory to IDA (para. 6.1 (g)). A certified copy of the accounts, together with the auditors management report, would be submitted to IDA within 6 months of the end of the financial year. The certificate would include a statement covering the adequacy of the records and accounts used to support disbursements against Statements of Expenditure. 4. PROGRAM ORGANIZATION AND IMPLEMENTATION PROGRAM IMPLEMENTATION 4.1 The National Council for the Environment will be a high level statutory body under the Environment Management Act, empowered to "recommend to the Minister (of Research and Environmental Affairs) measures necessary for the harmonization of activities, plans and policies of lead agencies and non-governmental organizations concerned with the protection and management of the - 17-  environment and the conservation and sustainable utilization of natural resources."1 The leader of the Council will be appointed by the President. The Council will also include the Secretary to the President and Cabinet, all the Principal Secretaries, a member from the Malawi Chamber of Commerce, a member from the NGO community, and other high level officials. The Council will make recommendations to the Minister on all key policy decisions related to environmental management, and set the stage for the coordination of environmental activities under the Program, of which the proposed IDA project is a portion. 4.2 In addition, a Technical Committee on the Environment (of between 10 and 20 members) will be formed under the Council, to provide more detailed inputs into the Program, recommending on criteria and standards for environmental control and regulation, and taking the lead in recommending studies or mitigation actions. This will provide a "working forum" for members of the various agencies engaged in the implementation of the ESP to resolve coordination difficulties and address common issues. 4.3 The Environmental Affairs Department in MOREA will have the main responsibility for coordinating the ESP, including the IDA-financed activities. However, other than training its own staff, developing capacity, enforcing Environmental Impact Assessment legislation and managing the Environment Information System, this Department will not be responsible for the direct implementation of any program components. 4.4 Project activities will be carried out by NGOs, by the line departments in the Ministry of Natural Resources (Forestry, National Parks and Wildlife, and Fisheries), and by other agencies (e.g., Meteorology Department). The Water Hyacinth Component is likely to be implemented under contract with an international research institute. The network of designated Environment Focal Point staff (stationed in participating agencies) will be trained to deal with environmental issues and information management, and will be responsible for the transmittal of environment and natural resource information to MOREA. Other training, including community mobilization and co-management techniques will be provided to the relevant field level staff in the line ministry departments, and to the NGOs participating in the program. 4.5 The Community Environmental Mobilization and Micro-Projects component would be managed through the Outreach Unit of MOREA, which would be strengthened for this purpose, and supervised by a Steering Committee drawn from the public sector (including MOREA), the private sector, and the NGO community. Agreement was reached at negotiations that proposals for NGO based "mobilization" of villages, and for financing village environment and natural resource action plans and micro-projects would be approved by the Steering Committee. Funds would be granted to the village, which would contract services from NGOs or other providers as necessary. These activities are complementary to the activities financed under Malawi's Social Action Fund (run by a Government department). Activities would be reviewed to ensure that the interventions are sensitive to gender. Model contracts will be prepared between MOREA and the NGOs for the community mobilization, training and micro-projects activities, and the modalities for administration and management of this component will be spelled out in the PIP. Agreement was reached at negotiations that, prior to disbursement of funds for the micro- projects component, the Government and the communities would enter into arrangements set out in the PIP covering the terms and conditions for the use of the grants (para. 6.3). 4.6 ITF/IDA funding will be allocated to the various components on the basis of an Environment Management Project Annual Workplan and Budget, prepared by the participating agencies, and submitted to MOREA (and the Ministry of Finance) for review and approval. This document would be based on the Project Implementation Plan, adoption of which is a Condition of Effectiveness (para. 6.2 Environment Management Act, 1996, Section 12 (c). - 18 -  (b). It will be reviewed annually by IDA and other participating donors, and this exercise, to be completed by March 31 of each year, would be the key tool for ensuring focus, compatibility and complementarity amongst the many activities supported under the program by the various donors. Where feasible, funding will be based on the attainment of results specified in advance. Agreement was reached at Negotiations that a draft of the Annual Workplan would be submitted to IDA for review and comment by January 31 st of each year, and the final Annual Workplan would be submitted by March 31 st of each year. The Workplans for other activities under the ESP, which support and complement the activities under the Project, would be submitted to IDA by January 31 of each year (para. 6.1 (f)). MONITORING AND EVALUATION 4.7 A strong monitoring and evaluation system will be part of the program. The monitoring and budgeting system would be linked to ensure that the successful activities receive continued support. Disbursements of funds to implementing agencies would be linked to the fulfillment of monitorable indicators. Methods for enhancing the sustainability of the program would be investigated and built into implementation mechanisms where appropriate. One feature of the ESP will be to strengthen the Environmental Information System, in order to track environmentally important features in hot spots around the country. In addition, through the Annual Workplan exercise, a series of monitorable implementation indicators will be established which will allow MOREA to track the implementation effectiveness of the collaborating agencies and NGOs. One important feature will be to bring in the communities involved in improved natural resource management under the program to contribute their observations on natural resource status and use to the national monitoring system. Agreement was reached at negotiations that the Government would submit progress reports on the implementation of the Project every six months, and provide progress reports on the ESP every year starting December 31, 1997 (para. 6.1(h)). Agreement was also reached during negotiations on key indicators, for inclusion in the progress reports. A set of draft performance indicators are shown in Annex 7. MID-TERM AND IMPLEMENTATION COMPLETION REVIEW 4.8 The ESP and the ITF/IDA-financed contribution are inherently complex ventures, due to the need to address environmental problems in a holistic fashion, and hence to engage a large number of stakeholders in addressing such problems. There will be a large number of implementing agencies supporting activities spread out in the "hot spots" for environmental action around the country. It is essential that a thorough, zero-based, Mid-Term review of the Environment Support Program and the ITF/IDA contribution, be undertaken with the participation of all the major stakeholders. This review should assess the effectiveness of the activities designed to strengthen the institutional framework for environment management (and the effectiveness of MOREA in particular), as well as the effectiveness of the NGOs and the community level activities, and progress in carrying out the various studies, and putting in place a response to recommendations. The outcome of this review should be brought to the attention of the National Council for the Environment, as well as high level representatives in donor organizations, so that measures can be taken to address fundamental problems, including adjustments in implementation responsibilities, fund management and allocations as needed. Agreement was reached during negotiations that preliminary documentation for a joint Mid-Term review would be prepared for IDA review by December 31, 1999 (para. 6.1(i)). By June 30, 2000 a Mid-Term Review will have been carried out and an action plan drawn up with a timetable for implementation of agreed recommendations. IMPLEMENTATION SUPPORT PLAN 4.9 The IDA commitment to implementation support of the ITF/IDA contribution to the ESP will have to be very intensive, particularly at the early stages. The complexity of the decentralized - 19-  implementation network, and the need to nurture the development of the lead agency, MOREA, require that attention be paid to this project from persons with a range of environmental expertise. In particular, support will be needed over the first three years in institutional strengthening (for MOREA), in the establishment of the procedures for Environmental Impact Assessment, in the setting up of the Environmental Information System, and in the implementation of the community nmobilization and co- management activities. Also, given the lack of prior exposure to IDA procurement and disbursement regulations in the lead ministry, implementation support missions should include expertise in these areas to ensure that the appropriate systems are set up, and correct procedures followed from the start of the project. The World Bank Resident Mission will play a critical role in this effort, complemented by three implementation support missions planned for the first two years of implementation staffed to address these issues (Annex 5). 5. BENEFITS AND JUSTIFICATION PROGRAM IMPACT 5.1 The Environmental Support Programme is designed as a long-term response to the problems of environmental degradation in Malawi. The purpose is to integrate environmental considerations in the overall development of the country. This is essential to reduce the cost and impact of unsustainable exploitation and deterioration of the natural environment which not only undermines Malawi's growth prospects in all sectors - including agriculture, tourism, industry, fishing - but also jeopardizes current production levels and diminishes the quality of life for the citizens of Malawi. 5.2 The proposed program will help Malawi face these challenges. It will contribute to the strengthening of the institutional and policy framework, enhance public awareness, and promote pilot community-based initiatives in environmental protection and conservation. The prcgram will help Malawi implement the EIA process to ensure that environmental considerations are fully integrated in future investment in Malawi. The ESP is also expected to contribute to the process already underway of empowering local communities and developing new ways of doing business which have more direct poverty reduction impact. RISKS 5.3 The three major risks to program implementation are noted below. The first relates to the relative newness and limited resources of the central coordinating unit - the EAD in MOREA. These factors coupled with the weak overall capacity in the public sector, and the potential fragmentation of effort induced by the plethora of donor interventions, could impede effective implementation of the ESP. Key factors and specific measures to mitigate these risks include: maintaining a coordination-only function for the EAD, with implementation the responsibility of sectoral ministries; capacity building and institutional strengthening for the EAD and line ministries are included as explicit objectives of the ESP, and funding for this will be assured by USAID, UNDP, IDA and other donors; decentralization to the lowest possible level of all pilot investment activities, with specific focus on developing community- based organizations and NGOs. On the question of fragmentation of effort, the ESP has been elaborated with one specific objective being donor coordination. Willingness to pool efforts and contribute to an overall process has been strongly manifested by the entire donor community. Maintaining this willingness will require continued effort by the EAD, and coordination mechanisms have been developed during the preparation of the ESP. It should also be noted that strong demand for an influential environmental coordinating unit has been expressed at all levels of Malawian society. - 20 -  5.4 The second refers to the nature of environmental programs, which are cross-sectoral and involve many stakeholders. These features, together with the demands for institutional capacity development, inevitably lead to some complexity and uncertainty in the design and implementation of specific investments. Key mitigating factors include: design flexibility to accommodate changes as lessons are learned from implementation experience; decentralization to the extent possible; operating agreements between the different entities involved in program implementation (e.g., the Community Mobilization and Micro-Project Pilot Activities); use of existing institutions rather than creating new ones. 5.5 The third relates to the fact that improving environmental management over the medium to long term will mean changing the incentive structure with respect to the management of natural resources. Inevitably there are competing interests in the use, ownership and benefits to be derived from natural resources such as water, land, forestry, wildlife, and fisheries. However, it is by no means certain that conflicting interests can always be reconciled. Policy changes which enable local communities to derive much greater benefits from sustainable use of natural resources are a necessary condition to improved environmental management, but effectively empowering communities requires more than a policy decision, and does not happen overnight. The ESP aims to test and develop the concepts of community management and empowerment, as perhaps the only remaining solution to improved natural resources management in Malawi. Significant uncertainties, particularly over access to land and other resources, remain, and long term political will is a critical determinant of success in this endeavor. The recent creation of the Presidential Land Commission will help address the questions of ownership, but the potential for conflict over natural resources remains high. ECONOMIC ANALYSIS 5.6 The proposed IDA project, which is directed largely towards institutional strengthening and pilot programs, is not susceptible to detailed cost-benefit analysis and rate of return calculation. No attempt is made to reorder or assign priorities to specific interventions in the ESP. However, several attempts have been made to estimate the overall economic value of environmental products and damages in Malawi, as a means of both highlighting the importance of natural resources to the Malawian real economy and of helping to order priorities for intervention. The NEAP itself contains preliminary estimates of damages related to environmental degradation, and the ESP document discusses the economic implications of a "4no-action" state. The estimates present (in 1994 market prices) the annual costs of the four highest priority environmental problems as follows: * soil erosion ($165 million) * deforestation ($55 million) * water pollution and lack of sanitation ($15 million) * degradation of fisheries ($4 million) 5.7 These estimates are based on very sketchy data and extrapolation from data in other countries (e.g., Nigeria), with the result that they are probably only of illustrative value. More recently, a review of available data on soil erosion and deforestation in the analytical framework of "Genuine Savings", indicates that the rates of genuine savings in Malawi, in a worst case scenario, have ranged from 7% to 19% since 1980. This compares to a savings ratio of about zero over the same period using the standard measure (National Accounts) of net savings (i.e. national savings less the value of depreciation of produced assets). Other environmental problems, particularly water resources degradation and associated health impacts may, however, be of much greater significance. 5.8 Preliminary analysis, during the preparation of the ESP, has examined the damage costs of two specific problems - water hyacinth infestation and bilharzia. Although difficult to fully quantify, the gross economic value of the fisheries at risk from water hyacinth in the Middle and Lower Shire rivers is -21 -  US$1-2 million. To this should be added the potential cost of clearing intakes for the hydropower plants, and water supply schemes for domestic and industrial use, obstruction of waterborne transport, and increased health hazards (mosquitoes, snakes, crocodiles). In the case of bilharzia, studies have demonstrated the significant economic losses associated with infection (through loss of working days). In addition, bilharzia is likely to have an impact on Malawi's tourism industry which is estimated to generate about US$8 million per annum in value added. Since the Lake Malawi environment captures about 70% of tourist time, the threat of bilharzia could have a major impact on tourism revenues, and would at least dampen growth. Economic analysis of the problem of degradation of the Middle Shire River catchment and siltation of the Shire River is included in Annex 8. 5.9 These examples only give a broad indication of the costs and likely benefits of environmental damage and interventions. Much work is needed to determine the benefits which accrue to individual households and to the economy at large. As an integral part of the ESP, training (e.g., in environmental economics) and capacity building (e.g., in EIS) are included to help develop the data and analytical capacity to improve the quantitative justification for tackling Malawi's environmental problems. Through the use of analytical tools such as the "Genuine Savings" model, efforts will be made to "green" national income accounts, as provided for under the Environmental Management Act. SUSTAINABILITY 5.10 The highly participatory NEAP and the ESP preparation processes, have led to very broad ownership of the objectives and principles contained within them, and the need for sustained support to improving environmental management in Malawi. In the short- to medium-term, donor assistance will be essential to implement the ESP, since Malawi is dependent on external financing for more than 95% of the public investment budget. Ultimately, it will not be through the application of marginal additional resources that sustainability will be achieved, but through the overall development process. There is agreement that responsibilities need to be devolved to the lowest level possible, and that it is the duty of all citizens and entities in Malawi to play a role in environmental management. Forging a path towards environmentally sustainable development will require a continuing process of adjustment over a prolonged period, together with a redirection of resource flows consistent with those actions. This process is not likely to be a smooth transition because of its inherently political nature. 5.11 An important feature of the project is its focus on capacity building at the community level, and the creation of the social capital and the incentive structure sufficient to induce sustainable use of community natural resources. If this is successful, the pressure to continue Government-funded programs will diminish. Once the "one off' investment in community mobilization has been made (through NGOs), and small additional investments in community natural resource action plans have been put in place, the returns in terms of behavior by community members, and the results in terms of the sustainability of resource management should be visible. A key feature of the approach is that the communities perceive, and receive, tangible benefits from adopting a more conservationist and sustainable approach to resource management, on wildlife, forests, fish or soil. In particular, revenues from eco-tourism, or harvesting of wildlife or forest products should be shared with the local communities. 5.12 In the design of the ITF/IDA contribution to the ESP, care has been taken to ensure that the recurrent costs associated will be minimized. Much of the capacity building expenditure represents one- off training and complementary expenditure to support other donor activities in existing institutions. Recurrent cost implications, while minimal, will be progressively taken over by the national budget. For the line departments, particularly the Departments of Forestry and National Parks and Wildlife, improving revenue flows can be accomplished through increased stumpage rates for commercial forest exploitation, and through proceeds from enhanced tourism. Privatization or concession-leasing of forest - 22 -  resources (e.g., Viphya), and of National Parks or Game Reserves (e.g., Mwabvi or Majete) together with improved revenue retention and distribution mechanisms provide another model for financial sustainability. No staff would be added to MOREA or MNR, although the filling of important vacancies would be an important condition for continued IDA involvement. ITF/IDA funding would complement Government's resources and improve the operational capabilities of existing institutions with training, improved equipment and operating cost finance. The implication is that, after 5 years of implementation, the current annual operating budget of MOREA (about US$ 300,000) would have increased by 70%. It is expected that this additional resource requirement, in support of a new and important Government function, will not be difficult to meet. 6. AGREEMENTS REACHED AGREEMENTS REACHED DURING NEGOTIATIONS 6.1 During negotiations, the following agreements were reached: (a) publication of guidelines and regulations on environmental impact assessment by December 31, 1997 (para. 2.3); (b) preparation of a capacity building and training program for MOREA, environmental Focal Points and designated staff in other institutions, acceptable to IDA, to be completed by December 31, 1997 (para. 2.3); (c) agreement would be obtained from the Ministry of Finance (by December 31, 1997) to allow communities who have entered into co-management arrangements for Forestry or Wildlife areas, under the ESP, to share in the revenues from the sustainable exploitation of these resources (tourism fees, timber and forest products fees and sales) (para. 2.5); (d) that, by December 31, 1997, the Ministries and other agencies executing activities under the ESP would formally designate staff with the appropriate qualifications and levels of authority as the Environmental Focal Point for that Ministry (para. 1.28); (e) undertaking by March 31, 1998 a functional and public expenditure review of the Forestry Department (para 2.7); (f) the Annual Workplan for the Project would be provided to IDA for comment by January 31 of each year. Final versions of the Annual Workplans would be provided to IDA by March 31 of each year. The Workplans for other activities under the ESP, which support and complement the activities under the Project, would be submitted to IDA by January 31 of each year (para. 4.6); (g) the accounts of the main components would be audited by independent auditors satisfactory to IDA. A certified copy of the accounts, together with the auditors management report, would be submitted to IDA within 6 months of the end of the financial year (para. 3.17); (h) progress reports on the implementation of the Project would be provided to IDA every six months, and for the ESP as a whole every year, starting December 31, 1997 using indicators acceptable to IDA (para. 4.7); (i) by December 31, 1999 the Government will provide IDA with a detailed assessment, by component, of implementation achievements, problems and proposed solutions of the ESP, and the IDA contribution to the ESP, sufficient to support a joint Mid Term Review which would be carried out by the Government and the Association by June 30, 2000 (para. 4.8). - 23 -  CONDITIONS OF EFFECTIVENESS 6.2 The conditions of effectiveness are: (a) that a Financial Controller and a Procurement expert, with qualifications, terms and conditions satisfactory to IDA, be in place in the Administration and General Department of MOREA (para. 3.12); and (b) adoption of the Project Implementation Plan (PIP) with the detailed costings and implementation schedules for the first year's Annual Workplan; satisfactory to IDA (para. 4.6). CONDITION OF DISBURSEMENT 6.3 Prior to disbursement of funds for microprojects grants, appropriate arrangements (as set out in the PIP) to have been entered into between the Government and the community concerned. These arrangements will establish the responsibilities of each of the parties, the flow of funds, and the reporting requirements of each of the parties (para. 4.5). RECOMMENDATION 6.4 With the above assurances, agreements and conditions, the proposed project would be suitable for an ITF credit of SDR 8.7 million (US$ 12.4 million equivalent) to the Government of the Republic of Malawi. - 24 -  Annex 1 ENVIRONMENTAL SUPPORT PROGRAMME FUNCTIONAL ORGANOGRAM OF ENVIRONMENTAL AFFAIRS DEPARTMENT Nainl Coni fo|nSTYO Cabinet Committee| the Enviromnment REEAVRCHMENDA for the Environment AFFAIRS l Parliamentary PRINCIPAL SECRETARY Committee for the l1 I Environment Technical ENVIRONMENTAL Network of Committee on the AFFAIRS Environmental Environment DEPARTMENT Focal Points 1 x Director of Environmental Affairs I 1 x Deputy Director of Environmental Affairs |Education and Moiorn and Policy and | Outreach Management Legal Division Plnin Division Division Division Education_& Awareness Inspection - Legislation & Regulations - Policy _ Environmental Standards - Compliance&Enforcement - Planning _ Commutreacatn - Environmental Monitoring - International Conventions - Environmental Research _Outreach Env. Impact Assessment Pollution Control   Annex 2 ESP - ROUNDTABLE (Malawi Institute of Management - 7-8 May) 1. The ESP Roundtable was attended by a broad group of representatives of agencies of local and central governments, NGOs, donors and the media. The purpose of the Roundtable was to: (a) gain general understanding and acceptance of the programme approach to the execution of the Environmental Support Programme - led by the Malawi Government - under a common policy umbrella; (b) broaden an understanding of the various environment related programmes and projects currently underway; (c) identify key issues in the execution of the ESP, and develop a consensus on how to deal with them; (d) contribute to the development of a common approach to standard elements of the programme (such as micro-projects, community natural resources co-management, environmental education); and (e) identify donor support for different elements of the ESP. 2. The Roundtable was professionally facilitated and involved the use of computerized groupware to identify and discuss key issues. 1/ Priority issues were identified and working groups were established to discuss the top seven in detail and make recommendations for action. These were: * Participation was identified as the top priority for improved environmental management. Specific emphasis was given to facilitating the development of community action plans and effectively empowering local communities. Key recommendations and proposed actions included the need to change from the top-down planning approach, to inform and educate local communities, through NGOs, and providing a mechanism to channel funds to communities. It was recommended that the existing community structures be used to the maximum extent possible, and that training be provided at all levels. * Capacity building: proposed actions included identifying and prioritizing skills gaps at all levels including local communities, NGOs, MOREA and line ministries, followed by putting in place training programs with intensive use of local training institutions. Capacity development for the implementation of the Environmental Support Program should also be tied to improved performance and the use of monitorable indicators. Funds for capacity building at all levels should be disbursed on the basis of good performance. Information management is central to the development of environmental management capacity. * Coordination of the different activities in environmental management was seen as critical for the successful implementation of the ESP. The working group recommended that A full Roundtable Report is available on file.  MOREA should be strengthened to carry out its functions, and that the ESP is the main tool for MOREA to coordinate priorities. The key action proposed was for MOREA together with the Ministry of Finance and EP&D to arrange regular meetings with donors. Other recommendations included: reviewing MOREA's coordination capacity and preparing an action plan for strengthening it; rationalization of working groups and cornmittees, and provision of the resources to meet and to carry out their functions; organization of regular coordination meetings with key stakeholders; strengthening links between CURE and MOREA; more effort by CURE to work in the Northern and Central Regions; demonstration of commitment by donors towards being coordinated; regularly updating the Environmental Focal Point Directory; using the EIA process and Environmental Informat.ion Systems to improve coordination and monitoring of the environment; examining opportunities for a single monitoring and evaluation process and annual reporting system for the ESP. * Environmental Education should be aimed at all levels of society, both through formal and non-formal education channels. Specific actions proposed included: development of a national environmental education strategy; promotion of innovative ways of informing the population through audio-visual, radio, and traditional media, using daily life experiences; establishment of environmental education steering committees; training and sensitization of leaders at the local and national levels; MOREA to play a coordinating role for the promotion of EE; donors should support the implementation of the strategy. (The Roundtable was able to provide additional input for environmental education and communication strategy developed and jointly funded by the UNDP, USAID, and the WB. * Water Resources Management was one of three priority thematic areas of concern in environmental management. The key recommendation was to consider the establishment of a river basin management system, with catchment stakeholder groups. A combination of regulation (policies, legislation and enforcement) and positive incentives was proposed for catchment protection. Water quality control policies and regulations should be implemented or established where they do not exist. Existing programmes for water hyacinth control and Bilharzia eradication should be strengthened with increased resources. i Land Degradation was the second major thematic area. The key recommendation for action was to take a community development approach to combat land degradation and deforestation, building on NGO and community based organization efforts. Critical areas identified included the Middle Shire, the area around Lake Chilwa and the Nankumba Peninsular. Rather than developing new Government run projects in the Middle Shire, efforts should build on existing programs. Key actions included: making an inventory of all NGO and government current activities in the areas identified; define target areas and activities; identify stakeholders and establish coordination mechanisms; find financing for these activities. Other recommendations focused on the need to use indigenous knowledge and cultural practices, and to review existing training programs and facilities to maximize use of local facilities and resources to develop capacity in this area. The need to improve the national capacity to adapt to climate change and drought through the use oiF improved meteorological information was also recommended. * Urban Settlement environmental issues were highlighted. Key recommendations included: the need to review the effectiveness of existing national policies on urban land tenure and management of infrastructure and services; capacity building at the community level to  identify problems, and plan and manage urban infrastructure and services; financing of future urban service provision to be tied to community and other lead agencies' organization, participation and cooperation. These activities should be coordinated by the Ministry of Local Government, MOREA, the Ministry of Housing and Local Authorities. 3. Other issues raised (but not discussed in specific working groups) included decentralization, population, gender concerns, alternative energy, and bush fires. 4. Overall, the Roundtable highlighted the need to focus on institutional and capacity development as critical constraints to tackling specific problems of environmental degradation. The implementation of the ESP will require significant efforts to ensure that all stakeholders participate, that capacity building takes place at all levels, that there is strong demand for a coordination function within Government and among NGOs, and that environmental education and awareness underpin the entire process.  I  Malawi: Environmental Support Program - Indicative Financing Commitments Components by Financiers US$ Millions GOM IDA IFAD ADB USAID USAID USA ODA JICA KFW NORWAY EU UNDP UNDP GEF TBI Total UNEP National Environmental Management Capacity Buildi 0.55 5.00 5.60 0.30 0.83 0.09 2.00 14.37 Soil Conservation and Fertility 0.20 0.92 0.66 0.17 20.74 2.31 25.00 Forest Resource Conservation and Management 0.10 1.80 1.79 4.00 2.69 0.05 0.23 8.00 18.66 Water Resources Conservation and Management 0.15 0.78 0.51 1.44 National Parks and Wildlife 0.43 1.80 8.11 10.33 Fisheries Resources 0.02 1.49 5.50 2.50 9.52 Community Based Environmental Management 4.00 Human Settlements and Demographic Planning 9.87 9.87 Non-Project Assistance 30.50 30.50 1.42 14.32 0.66 1.79 40.10 0.17 0.30 4.18 9.87 8.11 0.05 20.96 0.83 0.09 5.50 15.32 123.68 w4   Annex 4 MALAWI - ENVIRONMENTAL SUPPORT PROGRAMME ENVIRONMENTAL MANAGEMENT PROJECT COMMUNITY MOBILIZATION AND ENVIRONMENTAL MICRO-PROJECTS Concept 1. The objective of the component is to develop the ability of communities to improve environmental aspects of their lives, including manage the natural resources which they control and depend on for a livelihood. It is founded in the belief that many communities in Malawi do have the capacity to manage and execute their own development projects, but often lack the impetus and initial capital to get started. 2. This component will help promote the mobilization of communities to improve environmental management in rural and urban areas. The component would be facilitated largely by NGOs with the active involvement of line departments in Govemment. Activities under the component would be initiated by systematic client consultations and "transformation training" provided by the NGO electing to work with or chosen by the community. Follow up activities could be financed from "micro-projects" funds, managed by MOREA, to support environment enhancing activities for the community. 3. In environmental management, communities, while indirectly benefiting from the externalities of improved resource management, may not perceive environmental degradation to be more important than for example, schools or health clinics. Environmental problems thus have to be pro-actively targeted at the community level. The community micro-projects would be designed, implemented and monitored by the communities supported, if they so choose, by NGOs, the private sector or extension workers. Funds would be administered by the Accounting Unit in MOREA, with the final review and approval decisions to be taken by the Community Mobilization and Micro-projects Steering Committee. 4. Theftrst stage of the process would be the capacity building, during which the community will identify its needs and priorities through a participatory appraisal process, and formulate a community environmental action plan. The plan will identify microprojects to be submitted to the Steering Committee for approval. The plan would also identify the committee or group within the community charged with carrying out the action plan, including the associated microprojects. The second stage would be to finance implementation of those elements of the environment action plan approved by the Steering Committee. This implementation phase would be led by the village committee identified for this purpose, and could be supported by an NGO designated by the village. This could be the same NGO which assisted in community mobilization. 5. It must be recognized that although many of the concepts have been tested on a small scale in earlier trials, this component is essentially an extended pilot operation. The concepts and structures outlined below will be the subject of continuous monitoring during implementation and will be adjusted as necessary following annual implementation reviews, and on the basis of regular consultation with the communities, participating NGOs and Government line departments. Particular emphasis will be placed on maintaining the community as the central focus of the program, and facilitating communities to identify their own needs and challenges for environmental management, rather than prescribing certain actions or activities for them. Monitoring will also aim to ensure that the administrative burden does not  become too great to enable this to be replicated on a larger scale, and to ensure that there is convergence of approach among different schemes. Structure and Governance Steering Committee 6. The Community Mobilization and Environmental Microprojects activity would have a Steering Committee consisting of representatives of the Government (MOREA, Ministry of Finance, Ministry of Natural Resources, Ministry of Economic Planning and Development), the NGO community, and the private sector. The Steering Committee would review proposals on the basis of the criteria specified below, its consistency with regional and sectoral priorities, and MOREA policy and guidelines. Where necessary additional inputs would be sought from participating NGOs and communities. Coordinating Body 7. MOREA would provide the leadership in the implementation of this component, through a special team constituted within the Outreach Unit of the Environmental Affairs Department. This team would include a contracted Coordinator of Community Mobilization and Environmental Microprojects (CMEM), supporting staff, a vehicle and office equipment. While the team is expected to provide leadership in carrying out this component, actual implementation would be contracted out as follows: * entering into contractual agreements as required with an agency for the training of NGOs in community mobilization (including Participatory Rural Assessment techniques); * entering into contractual agreements with NGOs for carrying out (i) community mobilization activities; (ii) preparation of community environment action plans; and (iii) monitoring the implementation of such action plans. In addition, the CMEM Team in MOREA, under the guidance of the Steering Committee and other parties, would be responsible for: * registering the NGOs who would participate in the program; * defining the areas to be targeted under the program; * receiving and providing initial review and feed back (as needed) on commtnity mobilization proposals, ensuring that each proposal met the required criteria, and would be carried out according to standardized procedures; * presenting the various proposals from the eligible communities and NGOs to the Steering Committee for approval; * collecting the reports and monitoring the NGOs as the community mobilization activities are completed; * overseeing the administrative and financial requirements of the program; and * commissioning periodic evaluations of the program by outside agencies. Funding Mechanisms: 8. The funds for this activity will be managed by MOREA. Activities would be carried out on a contractual basis. One agreement, between MOREA and the training agency, will set out the procedures for training NGOs in participatory rural assessment and preparation of community environment action plans. A second set of agreements, between MOREA and each of the participating NGOs, would set out the responsibility of the participating NGOs in mobilizing communities and in monitoring the implementation of the community environment action plans once approved. A third set of agreements -2 -  would be established between MOREA and the community and would specify the nature of the grant to be provided to the community for the implementation of the approved micro-project, and would set out the responsibilities of the various parties in ensuring this grant is correctly used. Funds for financing community micro-projects would be paid (in cash or kind) directly to the community as a grant, upon authorization by the Steering Committee. MOREA will establish and maintain an accounting system for the implementation of this component, through its central accounting system (to be reinforced with an accounts clerk who would focus exclusively on this task). Capacity Buildingfor Communities Implementing NGOs: 9. Capacity building of the communities in environmental awareness (including natural resource management) would be carried out by NGOs, in collaboration with the relevant line ministries (i.e. Departments of Forestry, and Parks and Wildlife). After an initial publicity campaign, interested NGOs could apply to MOREA's Environmental Microprojects Team to determine eligibility to be in the program (see criteria below). Eligibility would be determined based on: * track record in community based activities; * experience, interest or commitment to natural resource management activities at the community level; * administrative capacity (ability to carry out agreed tasks, manage funds and report on them responsibly and accurately); * ongoing activities with communities in the geographic area of relevance to the ESP. 10. The agreements for community mobilization would be standardized, and would be prepared on the basis of negotiations between MOREA and representatives of the NGO community. Initial features of such agreements have been developed in the course of project preparation, and were field tested in the Pilot phase of this component. A key principle would be to reimburse the NGO for direct costs incurred in carrying out the activity. Under the first (mobilization) phase of the agreement, the NGOs would carry out a participatory rural assessment, and work with the community towards the formulation of a community environmental action plan. This phase would conclude with the presentation of the action plan by the community to MOREA. 11. In view of the desire to keep MOREA at arms length from actual implementation activities, and in light of MOREA's limited capacity to carry out community based activities, the responsibility for monitoring implementation of approved community action plans at the village level would also be contracted out to the NGOs involved in community mobilization. Under this second phase of the contract, the NGO would monitor the community's efforts to use funds provided by MOREA to implement the action plan, and assist where necessary to ensure a satisfactory outcome. Following completion of village activities under the community environment action plan, the supervising NGO would prepare a brief report on the activities completed. Eligible Communities 12. Criteria for communities to receive "mobilization" training and capacity building could include: * they are located in one of the priority areas for environmental intervention defined by MOREA under the ESP; -3 -  * communities to be "mobilized" should have shown some interest in, and commitment to, improving management of their natural resources; 13. Interested communities would participate in the program through participating NGOs, DDCs and other channels and request to be included in the CMEM program. Community Based Environmental Micro-projects 14. The second stage following community mobilization activities, and the formulation of the environmental action plan, would be the financing of "micro-projects", i.e. activities or investments in the community environmental action plan, which are related to improved environmental and natural resource management. Communities could receive support and encouragement from the NGO which provided the initial training. Technical assistance (from NGOs, line Ministries, or other sources) would be identified, to assist the community in achieving its targets. Funds would be provided to the community on a grant basis. Eligibility criteria could include the following to ensure that proposals: * are a relevant piece of a coherent environmental management plan prepared by the community committee charged with environmental and natural resource management responsibilities; * include commitment by the community to behavior change and some kind of material contribution in labor or materials (at least 10 percent of the total value of the proposed micro- project); * include financial provision for outside "technical assistance" where necessary to ensure successful implementation of proposed project. This assistance could be contracted from a local NGO, or other source to be defined by community; * do not include items which could be funded under MASAF (i.e. heavy infrastructure such as boreholes, water supply systems, school buildings, and health posts); * are graduated and iterative. The community will have to build credibility that it can indeed use the resources effectively. In this sense, the first community "project" would be relatively small, with an initial financial contribution of a maximum of, say, US$1,500-$3,000 for rural micro- projects. On successful completion of this, the community would be eligible to apply for a second or third project. These amounts are indicative and will be reviewed during the course of implementing the program. A ceiling of US$5,000 is indicated for the set of microprojects to be implemented under any given community environmental action plan in rural areas. A ceiling of US$20,000 has been set for microprojects in an environmental action plan in urban areas; * include indicators of success, suggested by the community, for the micro-project to measure progress during implementation. The community would also undertake to provide information on the impact of the project (say on reforestation of areas, or reduction of soil loss, improved waste management). 15. The collaborating NGO would continue to work with the community, if requested, in coordinating and supervising microproject implementation, under contract to MOREA. Communities could, through the use of microproject funds, engage an NGO or other entity to provide more costly technical support (say in the design of civil works) needed to implement the action plan. With the experience gained, the community will then be empowered to seek finance for further projects from other funding sources, such as MASAF and the EU Community Development Fund. 16. The microproject proposals would be worked out by the community along with the NGO which provided them with mobilization training. Once the environmental action plan was satisfactory, it would be submitted to MOREA and the Steering Committee for review and approval. MOREA would maintain a registry of projects and would contract an assessment of their execution, as warranted. -4 -  Line Ministry Activities 17. Within the context of the ESP, the line departments, including of Forestry, and Parks and Wildlife, will be planning and implementing co-management activities which involve community mobilization. The departments concerned have only limited capacity for doing the capacity building work in communities and would therefore rely largely on NGOs and other organizations to carry this out. In particular, the Wildlife Department is likely to use NGOs in working with the communities surrounding the Protected Areas to develop co-management arrangements. This could be done either through direct contract, and financed out of the Departmental allocations for the co-management activities, or otherwise through the community mobilization component. This will allow the Departments to ensure that the activities are carried out in the priority areas that they have selected (e.g., forest reserve areas). Subsequently, the communities may wish to implement activities using the microproject funds. In this case they would apply for the funds in accordance with the same criteria as those established for NGO initiated activities. Training should also be provided for staff in line Departments in capacity building for communities. -5 -  I  Annex 5 MALAWI ENVIRONMENTAL SUPPORT PROGRAMME ENVIRONMENTAL MANAGEMENT PROJECT: IMPLEMENTATION SUPPORT SCHEDULE Project Mission Activity Skill Requirement Year N0 SW PYI I Launch: review of organization and management, - Task Team Leader 2 accounting system, procurement arrangements and plan, - Financial 2 Sept. 1997 service contracts, training program, community based Analyst/Disbursement 2 environmental management, work plans PYI. - Procurement Specialist 2 April. - Institutional Specialist 2 19971 - Community/Natural March. Resource Specialist 1998 2 Review of procurement, accounting, training M & E system, EIS, donor coordination, community based - Task Team Leader Feb. 1997 environmental management, ElAs and enviromnental - M & E/EIS Specialist 2 education. -Sociologist 2 - Environmental Education 2 Specialist 2 - EIA Specialist 2 3 Review of field activities, training, procurement, disbursements, accounting, M&E, donor coordination. - Task Team Leader 2 June 1998 Discuss PY1 perfornance and PY2 work program. - Procurement Specialist 2 -Community/Natural 2 Resource Management Specialist PY 2 4 Oct. 1998 Review of field activities, training, procurement, - Task Team Leader 2 April accounting, disbursements, M&E/EIS. - Ecologist 2 1998/ - Institutional Specialist 2 March -M&E/EIS Specialist 2 1999 Financial Analyst 2 5 - Task Team Leader 2 March 1999 Review of field activities training, procurement, accounting - EIA Specialist 2 and disbursements. Discuss PY2 performance and PY3 -Climate Change Specialist 2 work program. ..2 -Health Specialist 2 -Procurement Specialist  Sept. 1999 Review of activities, procurement, disbursements, -Task Team Leader 2 financial perfonnance, and donor coordination. -Financial Analyst 2 7 -Sociologist/Ecologist April March Feb. 2000 Mid-term review and discuss annual work plan for PY4. -Task Team Leader 2 2000 -Project Design -EcologistVSociologist 2 - progress in institutional development -M&E Specialist 2 - effectiveness of training programs -Institutional Specialist 2 -effectiveness of policy and legal frarnework -Procurement Specialist 2 - effectiveness of the NGO and community level activities -NGO Technical Expert 2 -progress in carrying out the various studies -monitoring and evaluation -Procurement -Financial Performance -Audits -Disbursements -Donor Coordination PY4 8 Aug. 2000 Review of activities, procurement, disbursements. - Task Team Leader 2 - Ecologist/Sociologist 2 - Procurement Specialist 2 April 2000/ 9 Review of activities. Discuss PY 4 performance and PY5 - Task Teamn Leader 2 March work program. - Financial Analyst 2 2001 Feb. 2001 - M&E Specialist 2 PY5 0 O Review of activities, procurement, disbursements. -Task Team Leader 2 2001/ Aug. 2001 -Ecologist/Sociologist 2 March -Procurement Specialist 2 2002 11 l Feb. 2002 Review of PY5 activities, procurement, disbursements. -Task Team Leader 2 -Financial Analyst 2 l_________ -M&E Specialist 2 12 April 2002/ Dec. 2002 Program Closing Date. June 2003 13 Review of activities, disbursements, implementation -Task Team Leader 2 June2003 completion report June2 J-  Malawi Environmental Management Project Project Cost Summary (Kwacha '000) (USS '000) % Total % Total Foreign Base Foreign Base Local Fortign Tntal xhange Costs Local Fortign Total Exchange Costs A. Institutional Development MOREA Institutional Strengthening 3,SS5.0 20,137.5 23,692.5 85 13 237.0 1,342.5 1,579.5 85 13 Environment Information System 6,532.5 5,767.5 12,300.0 47 7 435.5 384.5 820.0 47 7 Environmental Impact Assessment 1.469.3 3.679.5 5.148i8 71 3 98.0 245.3 343.3 71 3 Subtotal Institutional Development 11,556.8 29,584.5 41,141.3 72 22 770.5 1,972.3 2,742.8 72 22 B. Environmontal Zducation Environmental Education 15.301.2 11256.0 26.557.2 42 14 1.020.1 750.4 1.770.5 42 14 Subtotal Environmntal Education 15,301.2 11,256.0 26,557.2 42 14 1,020.1 750.4 1,770.5 42 14 C. Commanity Environmental management NGO-Based Community Environmental Management 23,178.8 7,533.8 30,712.5 25 17 1,545.3 502.3 2,047.5 25 17 Forest Resources Co-Management 9,130.1 15,347.6 24,477.8 63 13 608.7 1,023.2 1,631.9 63 13 Wildlife Co-management . 11.,067.4 15,750.8 26.818.1 59 14 737.8 1.050.1 1.7.87.9 52 14 Subtotal Community Environsental Management 43,376.3 38,632.1 82,008.4 47 44 2,891.8 2,575.5 5,467.2 47 44 D. Environmental Actions and Studies Environmental Actions and Studies 8,617.5 6,907.5 15,525.0 44 8 574.5 460.5 1,035.0 44 8 Climate Change 2,425.5 4,602.0 7,027.5 65 4 161.7 306.8 468.5 65 4 Water Hyacinth Control Program 6,311.8 4,117.0 10,428.8 39 6 420.8 274.5 695.3 39 6 Natural Resources Policy Formulation 94s.0 2,130.0 3_.0750 69 2 63.0 142.0 205.0 69 2 Subtotal Environmental Actions and Studies 18.2q998 17,756.5 36,056.3 49 19 1.220.0 1.13.8 2.403.8 49 19 Total BASELINE COSTS 88,534.0 97,229.1 185,763.1 52 100 5,902.3 6,481.9 12,384.2 52 100 Physical Contingencies 4,653.1 5,110.5 9,763.6 52 5 310.2 340.7 650.9 52 S Price Contingencies 59395,5 48.784.5 108.179.9 45 58 374.8 314.4 689.1 46 6 total PROJECT COSTS 152,582.5 151,124.1 303,706.6 50 163 6,587.2 7,137.0 13,724.2 52 111 Thu Jan 23 18:12:32 1997 19-1 Project Cost Summary  Malawi Environmental Management Project Project Cost Summary (Kwacha '000) lUSS 1000) t % Total t % Total Foreign Base Foreign Base Local ForeigU IoLal Exchange Soats LocaL Eoreiga Total BxehanLg Costa I. Iavetment Coat. A. Materials 70.5 70.5 141.0 50 - 4.7 4.7 9.4 50 D. Civil Works Rehab.of Park Buildings 3,675.0 1,575.0 5,250.0 30 3 245.0 105.0 350.0 30 3 Construction Buildings 3,136.9 1,344.4 4,481.3 30 2 209.1 89.6 298.8 30 2 Rehab.of Park Roads 292.-5 i,282.5 4,27S.0 30 2 199.5 BS.A 285.0 30 _ 2 Subtotal Civil Works 9,804.4 4,201.9 14,006.3 30 8 653.6 280.1 933.8 30 8 C. Vehiclea 1,668.0 15,012.0 16,680.0 90 9 111.2 1,000.8 1,112.0 90 9 D. 8quipment&Furniture 838.1 7,547.9 8,386.5 90 5 55.9 503.2 559.1 90 5 S. Technical AsJidtasce Technical Assistance International - 21,720.0 21,720.0 100 12 - 1,448.0 1,448.0 100 12 Technical Assistance National 5.821.9 - S.821.9 - 3 388.1 388.1 -3 Subtotal Technical Assistance 5,821.9 21,720.0 27,541.9 79 15 388.1 1,448.0 1,836.1 79 15 F. Training Study Tours - 2,625.0 2,625.0 100 1 - 175.0 175.0 100 1 In Country Courses 7,555.1 7,555.1 15,110.3 50 a 503.7 503.7 1,007.4 so 8 External Courses - 7,668.0 7,668.0 100 4 - 511.2 511.2 100 4 Workshops 11,521.2 - 11,521.2 - 6 768.1 - 768.1 - 6 Publications and Materials 859.5 - 8S9.5 - - 57.3 - 57.3 - - Community Mobilization(Rural) 12656.3 _ 1.406.3 14-062.5 10 8 843.8 93.8 9375 10 _a8 Subtotal Training 32,592.1 19,254.4 51,846.5 37 28 2,172.8 1,283.6 3,456.4 37 28 G. Studies 5,853.8 5,853.8 11,707.5 50 6 390.3 390.3 780.5 50 6 V. Micro Projects Grants Rural Community Projects 7,087.5 787.5 7,875.0 10 4 472.5 52.5 525.0 10 4 Urban/Peri Urban Communities 2,812.5 2.812.5 5.625.0 50 3 187.-5 187.5 37 5.0 so 3 Subtotal Micro Projects Grants 9,900.0 3,600.0 13,500.0 27 7 660.0 240.0 900.0 27 7 I. Other Investment Costs 5,715.0 5.715.0 11.430J. so 6 381.0 381.0 762.0 so 6 Total invetaent Coats 72,264.2 82,975.4 155,239.6 53 84 4,817.6 5,531.7 10,349.3 53 84 II. Recurrent Coots A. OperatingMNaintenance Costs O0M for Vehicles 3,795.7 8,856.8 12,652.5 70 7 253.1 590.5 843.5 70 7 OLM Other 333.3 777.0 1.110.0 70 1 22.2 5.1.8 74.0 70 1 Subtotal Operating&Xaintenance Coat. 4,128.7 9,633.8 13,762.5 70 7 275.2 642.3 917.5 70 7 B. Supplies&Materials 4,620.0 4,620.0 9,240.0 50 5 308.0 308.0 616.0 50 5 C. Allowances&Perdiems 7.521 Q1- 7 - 7 24 .50; - 501.4 - 4 Total Recurrent Costa 1S.269.3 14.253.j _.523Ji 47 16 1,084.7 950.3 2,034.9 47 16 Total BASELINE COSTS 88,534.0 97,229.1 185,763.1 52 100 5,902.3 6,481.9 12,384.2 52 100 Physical Contingencies 4,653.1 5,110.5 9,763.6 52 5 310.2 340.7 650.9 52 5 Price Contingencies S9.39S 5 48.784.S 108.179.9 45 s5 374.8 314.4 689.1 46 6 Total PROJXCT COSTS 152,582.5 151,124.1 303,706.6 50 163 6,587.2 7,137.0 13,724.2 52 111 Thu Jan 23 18:12:34 1997 20-1 Project Cost Summary  Malawi Environmental Management Project Expenditure Accounts by Components - Totals Including Contingencies (us$ '000) Commninity Environmental Management Institutional Development Environmental NGO-Based MOREA Environment Environmental Education Community Forest Institutional Information Impact Environmental Environmental Resources Wildlife Strengthening System Assessment Education Management Co-Manacement Co-management I. lnvestment Costs A. Materials S. Civil Works Rehab.of Park buildings - - - - - 394.1 Construction Buildings - - - - 13.1 - Rehab.of Park Roads - - - - - - 309-3 Subtotal Civil Works - - - - - 13.1 703.4 C. Vehicles 165.0 55.6 - 70.6 31.9 459 0 316.9 D. Equipnent&Furniture 98.6 147.8 18.1 14.7 5.3 79.4 91.1 B. Technical Assistance. Technical Assistance International 616.0 - 130.8 361.7 117.4 21.2 195.6 Technical Assistance National - - 2.4 40.1 - 63.8 4.8 Subtotal Technical Assistance 616.0 - 133.2 401.8 117.4 85.0 200.4 F. Training Study Tours 163.0 - - 27.2 - - - In Country Courses 169.2 33.0 100.8 155.8 28.9 201.3 272.6 External Courses 250.1 - 43.3 96.7 - 100.3 - Workshops - 32.7 26.1 763.1 - 38.5 - Publications and Materials - - 63.5 - - - Community Mobilization(Rural) - - - - 1.0S9.i - - Subtotal Training 582.3 65.7 170.2 1,106.2 1,088.1 340.1 272.6 G. Studies 127.5 112.2 - 13.3 6.7 - 98.6 R. Micro Projects Grants Rural Community Projects - - - 587.5 - - Urban/Peri Urban Communities - - - - 418 9 - Subtotal Micro Projects Grants - - - 1,006.3 - - I. Other Investment Costs - - 37.2 363.8 - - - Total Investment Costs 1,589.4 381.3 358.7 1,970.4 2,255.6 976.5 1,683.0 II. Recurrent Costs A. OporatingsMaintenance Costs O&M for Vehicles 51.0 17.0 - - 17.0 490.2 250.7 O& Other __ _ _ __ Subtotal Operating&Maintenance Costs 51.0 17.0 - - 17.0 490.2 250.7 B. Supplies&Materials 56.7 315.9 13.8 - 5.7 140.6 39.7 C. Allowances&Perdiems 42 5 198.5 - - 17 0 196-2 - Total Recurrent Costs 150 2 531.5 13.8 - 39 7 827 0 290.4 Total PROJECT COSTS 1,739.6 912.7 372.4 1,970.4 2,295.3 1,803.5 1,973.4 Taxes - _ _ _ _ _ _ Foreign Exchange 1,478 .6 425.4 266.2 828.7 557.2 1,123.8 1,154.4 Thu Jan 23 18:12:38 1997 21-1 Expenditure Accounts by Components - Totals Including Contingencies  Malawi Environmental Management Project Expenditure Accounts by Components - Totals Including Coutingencias (us$ '000) Enyixm yLa1ign^anL Water Natural Environmental Hyacinth Resources Actions and Climate Control Policy studies Change Proaram Formulation- Total I. Invustuant Costs A. Materials - 10.0 - 10.0 D. Civil Works Rehab.of Park Buildings - - - 394.1 Construction Buildings 305.0 - 1.9 - 319.9 Rehab.of Park Roads -_-__ - - - 3093 Subtotal Civil Works 305.0 - 1.9 - 1,023.3 C. Vehicles - 31.9 66.9 - 1,197.8 D. Equipment&Furniture - 70.3 78.8 5.3 609.4 Z. Technical AmLstance Technical Assistance International - 81.9 - 64.3 1,589.0 Technical Assistance National - 9.6 308.1 - 428.7 Subtotal Technical Amistane- - 91.5 308.1 64.3 2,017.7 P. Training Study Tours - - - - 190.2 In Country Courses - 100.1 - 48.9 1,110.6 External Courses - - 44.9 26.9 562.2 Workshops - - - 060.4 Publications and Materials - - 63.5 ComAunity Mobilization(Rural) - --_- - __- 059 1 Subtotal Training - 100.1 44.9 75.8 3,845.9 G. Studies 390.0 69.9 36.7 - 855.0 R. Micro trojecta grants Rural Cowmunity Projects - - - - 587.5 Urban/Peri Urban Communities -_-_-_-_418- Subtotal Micro Projects Grants - - - 1,006.3 I. Other Investment Costs 450 1 - - - 851.1 Total Sinveatent Conte 1,145.1 363.7 547.4 145.4 11,416.5 SS. lcurrant Coste A. OperatingAMaintenanc- Costs 001 for Vehicles 17.0 86.1 28.3 957.3 06M Other - M 8 28 3 - 6:1 Subtotal Operating&Kaintenance Costs - 71.8 114.4 28.3 1,040.5 B. Supplies&Naterials - 56.7 39.3 28.3 696.7 C. Allowances&Perdiems - 25-5 6981 22.7 570.6 Total Recurrent Coats - 154 0 221.a 794 2,307-7 Total PROJlCT COSTS 1,145.1 517.7 769.2 224.8 13,724.2 Taxes _ _ _ _ _ Foreign Exchange 511.2 337.4 299.7 154.4 7,i37.0 21-2 Expenditure Accounts by Components - Totals Including Contingencies  Malawi Environmental Management Project Project Componenta by Year (us$ '000) Totals Including Contingencies 1997 199A 1999 2000 2Q Ttal A. Institutional Davelopment MOREA Institutional Strengthening 513.1 405.3 321.3 368.5 131.4 1,739.6 Environment Information System 235.1 272.6 156.6 137.3 111.3 912.7 Environmental Impact Assessment 175.5 91.4 76.8 22.8 5.9 372.4 Subtotal Institutional Development 923.7 769.3 554.7 528.6 248.6 3,024.8 A. Environmental Education Environmental Education 214.2 566.3 453.2 386.1 .3S, 350Q. -1-.922.4 Subtotal Bnvironmental Education 214.2 566.3 453.2 386.1 350.6 1,970.4 C. Community Environmental Management NGO-Based Community Environmental Management 234.2 303.1 464.1 581.8 712.1 2,295.3 Forest Resources Co-Management 655.7 435.3 284.5 222.2 205.8 1,803.5 Wildlife Co-management 528.3 558.9 260.7 481.3 144.2 1.973. . Subtotal Community Environsental Management 1,418.2 1,297.2 1,009.3 1,285.3 1,062.1 6,072.2 D. Environmental Actions and Studios Environmental Actions and Studies 212.5 337.2 250.3 170.7 174.4 1,145.1 Climate Change 179.6 110.6 79.8 81.6 66.0 517.7 Water Hyacinth Control Program 279.6 111.5 149.1 130.5 98.5 769.2 Natural Resources Policy Formulation _7 .... 32.6 _ 162 16 ._C _22Lt Subtotal Environmental Actions and Studies 7s9.6 G30.8 SllB 399.1 355.5j i2_656.8 Total PROJECT COSTS 3,315.7 3,263.6 2,529.0 2,599.1 2,016.8 13,724.2 Thu Jan 23 18:12:42 1997 22-1 Project Components by Year  Malawi Environmental Management Project Project Components by Year -- Investment/Recurrent Costs (US$ 000) Totals Including Contingencies 1997 199SJL 1999 2O000 2001 Tot Mw A. Institutional Development YORSA Institutional Strengthening Investment Costs 484.4 376.0 291.3 337.7 100.0 1,589.4 Recurrent Costs _ 287 29-4 30.1 30.7 31.4 4 1502 Subtotal MOREA Inetitutional Strongthening 513.1 405.3 321.3 368.5 131.4 1,739.6 Environment Information System Investment Costs 107.3 175.0 56.7 35.3 7.0 381.3 Recurrent Costs 127.8 97.6 99L8 102.Q 104. 3 51.315 Subtotal Environment Information System 235.1 272.6 156.6 137.3 111.3 912.7 Environmental Impact Ase-sment Investment Costs 175.5 88.0 73.4 19.3 2.3 358.7 Recurrent Costs - 33 3.4 3 .36 L138 Subtotal Environmental Impact Assessment 175 5 91 4 76. 8 ._22_Q 5 9 372.A Subtotal Institutional Development 923.7 769.3 554.7 528.6 248.6 3,024.8 S. *nvironmntal 7ducation nvironmental Education Investment Costs 214-2 566. 3 453i2 386.1 .350.6 1970. 4 Subtotal gnvironmental Education 214.2 566.3 453.2 386.1 350.6 1,970.4 C. Community Environmental Management NGO-Based Community Environmental Management Investment Costs 226.6 295.3 456.2 573.7 703.8 2,255.6 Recurrent Costs 7.6 7.8 7.9 8 1 8-3 39.7 Subtotal IGO-Eased Community Environmental Management 234.2 303.1 464.1 581.8 712.1 2.295.3 Forest Resources Co-Management Investment Costs 521.3 278.8 119.0 43.7 13.8 976.5 Recurrent Costs 1345 1565 1 1i5- 178.5 19 0. 227 Subtotal Forest Resources Co-Management 655.7 435.3 284.5 222.2 205.8 1,803.5 Wildlife Co-management Investment Costs 485.5 499.0 199.5 418.7 80.2 1,683.0 Recurrent Costs 42.8 59.8 61.2 62 6 64-0 290-4 Subtotal Wildlife Co-management 528.3 558 9 276Q7 481 A 144 2 1 971 4 Subtotal Community Rnvironmental Management 1,418.2 1,297.2 1,009.3 1,285.3 1,062.1 6,072.2 D. Environmntal Actions and Studies Environmental Actions end Studies Investment Costs 212.5 337.2 250.3 170.7 174.4 1,145.1 Climate Change Investment Costs 137.0 83.7 52.3 53.5 37.2 363.7 Recurrent Costs 42. 5 26_2 27.6 28. S40282 28 B Subtotal Climate Change 179.6 110.6 79.8 81.6 66.0 517.7 Water Hyacinth Control Program Investment Costs 233.0 65.0 107.1 87.6 54.6 547.4 Recurrent Costs 46.6 46-5 42.0 4292 43.8 221-8 Subtotal Water 8yacinth Control Program 279.6 111.5 149.1 130.5 98.5 769Q2 Natural Resources Policy *ore lation Investment Costs 72.8 56.0 16.7 - - 145.4 Recurrent Costs 15.2 1.5R5 15.9 162 16.6 72_4 Subtotal Natural Resources Policy Formulation 87-9 71 - 326S L" 162 1L.6. 2aa 8 Subtotal Environmontal Actions and Studies 7S9 .6 630.8 511.8 399.1 355 .5 2,656-1 Total PROJECT COSTS 3,315.7 3,263.6 2,529.0 2,599.1 2,016.8 13,724.2 Total Investoent Costs 2,870.2 2,820.3 2,075.7 2,126.3 1,524.1 11,416.5 Total Recurrent Costs 445.5 443.3 453.3 472.8 492.7 2,307.7 Thu Jan 23 l8:12:44 1997 23-1 Project Components by Year -- Investment/Recurrent Costs  Malawi Environmental Management Project Expenditure Accounts by Years (US$ '000) Totals Including Contingencies 1997 1998 1999 2000 2001 Total I. Tnvetment Costs A. Materials 8.5 0.8 0.8 - - 10.0 B. Civil Works Rehab.of Park Buildings 55.8 10.9 - 315.8 11.6 394.1 Construction Buildings 214.4 105.5 - - - 319.9 Rehab.of Park Roads 8.0 168.6 557 - - 309.3 Subtotal Civil Works 355.2 285.0 55.7 315.8 11.6 1,023.3 C. Vehicles 690.4 382.5 11.1 113.7 - 1,197.8 D. Equipment&Furniture 229.0 199.4 64.5 93.2 23.3 609.4 F. Technical Agdstance Technical Assistance International 437.6 467.2 342.3 206.9 134.9 1,589.0 Technical Assistance National 132.3 60.6 93.1 87.9 54.9 ...A2D.L Subtotal Technical Assistance 569.9 527.8 435.4 294.8 189.8 2,017.7 P. Traiaing Study Tours 53.1 81.5 55.6 - - 190.2 In Country Courses 258.3 297.1 270.8 162.8 121.6 1,110.6 External Courses 93.8 186.1 166.5 113.5 2.3 562.2 Workshops 51.3 208.7 220.6 183.6 196.2 860.4 Publications and Materials 3.7 21.7 26.6 7.4 4.1 63.5 Community Mobilization(Rural) 66.4 136.0 208.8 284.5 363.3 1.059.1 Subtotal Training 526.7 931.1 948.8 751.8 687.5 3,845.9 G. Studies 307.6 197.9 176.9 84.2 88.4 855.0 H. Micro Projects Grants Rural Community Projects 36.8 75.5 115.8 157.8 201.5 587.5 Urban/Peri Urban Communities 39.95 40.4 S2.7 126.B 129.6 418.2 Subtotal Micro Projects Grants 76.3 115.8 198.5 284.6 331.1 1,006.3 1. Other Investment Costs 106.2 179.9 184.0 188.2 192.3 ___1.1J_ Total Investment Costs 2,870.2 2,820.3 2,075.7 2,126.3 1,524.1 11,416.5 II. Recurrent Costs A. OperatingaMaintenance Costs O&M for Vehicles 163.1 191.9 196.3 200.8 205.3 957.3 O&M Other 29.0 13.1 13.4 13,7 14.0 83.1 Subtotal Operatipg&Maintenance Costs 192.2 204.9 209.7 214.4 219.3 1,040.5 B. Suppliesh&aterials 160.0 133.9 131.3 134.3 137.2 696.7 C. Allowances&Perdiems 93 4 104.5 112.4 124.1 136.2 570-6 Total Recurrent Costs 44S.5 443.3 453.3 472.8 _A.22.2 2,307.7 Total PROJRCT COSTS 3,315.7 3,263.6 2,529.0 2,599.1 2,016.8 13,724.2 Thu Jan 23 18:12:47 1997 24-1 Expenditure Accounts by Years  Malawi Environmental Management Project Procurement Accounts by Financire (US$ '000) Local Duties The Government IDA _ Total For. (EXcI. & 2AmlC_nL t Amonut t Amount % Exch. Taxes) Taxes 1. Civil Works 102.3 10.0 920.9 90.0 1,023.3 7.5 306.7 716.6 - 2. Vehicles and Equipment 61.2 2.3 2,607.1 97.7 2,668.3 19.4 2,056.6 611.7 - 3. Consultants - - 2,872.7 100.0 2,872.7 20.9 2,016.2 856.5 - 4. Training 713.2 18.5 3,132.7 81.5 3,845.9 28.0 1,413.2 2,432.8 - S. Community Grants - - 1,006.3 100.0 1,006.3 7.3 268.0 738.3 - 6. Personnel Allowances 131.4 23.0 439.2 77.0 570.6 4.2 - 570.6 - 7. Operating Costs 353.4 20.3 13.33.8 79.7 1.737.1 12.7 1.076.3 660.. - Total 1,361.5 9.9 12,362.7 90.1 13,724.2 100.0 7,137.0 6,587.2 - Thu Jan 23 18:12:29 1997 17-1 Procurement Accounts by Financiers  (US$ 000) Costs Financing to be Availabl Financed The Government 1DA Project Cumulative Amqunt Costs cash Flow Cash Flow 1 - 1,657.9 -1,657.9 -1,657.9 2 1,632.6 1,657.9 -25.2 -1,683.1 3 1,632.6 1,631.8 0.8 -1,682.3 4 1,610.1 1,631.8 -21.7 -1,704.0 5 1,610.1 1,264.5 345.6 -1,358.3 6 1,256.7 1,264.5 -7.8 -1,366.1 7 1,256.7 1,299.6 -42.8 -1,409.0 8 1,033.1 1,299.6 -266.4 -1,675.4 9 1,033.1 1,008.4 24.7 -1,650.7 10 648.8 1,008.4 *-359.6 -2,010.3 11 648.8 - 648.8 -1.361.5 Total 12,362.7 13,724.2 -1,361.5 -1,361.5 Thu Jan 23 18:12:30 1997 18-1 Disbursements by Semesters and Government Cash Flow   ENVIRONMENTAL SUPPORT PROGRAM - PERFORMANCE MONITORING INDICATORS Narrative Indicators Measurement Assumptions Project Development Objectives Improved Policy and Institutional Adoption of National NEP adopted in February 1996, Improved policies will actually Framework Environment Policy and EMA enacted in June 1996. EMA make a difference and that there Environment Management sets out role of EAD, and Public will be sufficient capacity and Act. Role of MOREA and Services Commission expedites political will to implement the EAD established and agreed recruitment of staff new policies Promulgation guidelines and By December 1997 regulations under the EMA Revision and review of forestry 9/98 sectoral policies and fisheries 9/98 legislation parks and wildlife 9/98 soil conservation 9/98 land tenure 9/99 water/irrigation 9/98 Improved capacity to manage natural Increased staffing for Full staffing complement achieved Capacity development will be resources and environment at all MOREA and maintained 12/96, and annually sustainable - staff turnover, levels monitored thereafter political support for institutions concerned remains high. Must Effective coordination of: Frequency of meetings maintain momentum through training and replacement of staff * National Council for the Twice per year when turnover occurs. Environment * Parliamentary Committee During each Session Availability of Funding. * Technical Committees on At least three times per year the Environment regular with focal points - specific * ministries agenda * NGOs regular organized by CURE * donors monthly - thematic  Preparation of annual Annual Review process WorkPlans Effective establishment of Official designation of focal points environmental focal points by 12/97 network EIS - Establishment of Demonstration pilot for Shire River Incentives for data collection and effective EIS system - mapping and data input supply sufficiently strong for accomplished (12/98) focal points and others to supply data Training Establishment and implementation of training programs for MOREA, line Ministries, NGOs, Communities 12/97. Annually thereafter, numbers of training course and people trained Effective empowerment of Areas of forest and public Forest resources co-managed Community empowerment communities for CBNRM land brought under effective Hectares/Numbers of Communities provides sufficient incentive for management by communities mobilized and empowered annually communities to take control of their resource base National parks and wildlife areas co-managed, numbers of Government commitment to co- communities mobilized. management remains strong. Agreement by Ministry of Finance on revenue sharing by communities 12/97 Enhanced Environmental Awareness Greater public awareness and Surveys, active participation of all Continued support at political informed population levels of society in environmental level and active participation by management groups including Newspapers, radio, dance groups, parliamentarians, Ministers, environmental clubs, choirs traditional leadership structures  Outputs Improved environmental capacity and Functioning lead Ministry, Efficient allocation of resources, Very efficient financial coordination functioning committees (e.g. client satisfaction. Records of monitoring and control system NCE), donor groups, NGOs meetings, and account of decisions taken Functioning Environmental Quantitative: numbers of EIAs Sufficient trained personnel to Impact Assessment Process approved conduct and analyze EIAs Functioning Environmental Quantitative: number of users, Information Systems size of databases, number of projects using system Better trained groups working on Numbers of people, Qualitative: surveys, client Timely delivery of high quality environmental management in Malawi communities trained consultation, continued flow of training courses resources Enhanced Environmental Education Quantities of materials Quantitative: Numbers of training Effective coordination of effort distributed courses (to be included in training among different Government program to be developed during agencies, NGOs and donors to Materials prepared and 1997). Qualitative: training minimize duplication of effort disseminated through formal effectiveness (post-course and maximize leverage of and non-formal education evaluation). Annual Report on ESP resources channels training Enhanced Community Mobilization and Numbers of communities Quantities: Effectiveness Maintenance of Government Implementation of Local Environmental mobilized for natural (To be evaluated during annual commitment to community Activities resources/environmental work review and planning empowerment management exercises). Community satisfaction Numbers of communities Annual evaluation (numbers) of implementing co- communities, projects and management and participants environmental micro- projects  Components Institutional Capacity Building and Procurement and Annual Report on progress and Maintaining the momentum of Strengthening of the Environmental distribution of inputs, procurement and disbursement capacity development, with Infonnation Systems provision of training indicators necessary staff. Continued resources commitment of resources. Effectiveness of capacity to procure inputs and manage financial systems Maintain commitment and resource application. Sufficient capacity to implement programs. NGOs are sufficiently motivated and organized to continue work. Environmental Education Development and supply Annual Report and Work Plan Full collaboration with all of materials elements of formal and non- formal education system, synergy with other initiatives Community Based Environmental Timely supply of financial Annual Report and Work Plan Efficient management of Management resources program and line Departments Environmental Actions and Studies Diverse Annual Report and Work Plan  Annex 8 MALAWI - ENVIRONMENTAL SUPPORT PROGRAM MIDDLE SHIRE LAND DEGRADATION Objective 1. The purpose of this annex is to review the currently available information on land degradation of the Middle Shire catchments and siltation of the Shire River. Some indication of the economic significance of the siltation is given. The efficiency of countermeasures are discussed, and ongoing efforts by the World Bank and/or other donors in collaboration with domestic institutions are discussed. Land Degradation and Rehabilitation 2. Land degradation takes on many forms, but the one in focus in Malawi is soil erosion. This has been identified as the main environmental problem in the National Environmental Action Plan. While the cost estimates of environmental damage due to erosion provided in the NEAP can be questioned, there is no doubt that there is considerable scope for investment in low-cost, manual conservation techniques. This annex only deals with the siltation in the Middle Shire River Catchment. Benefits and Costs of Middle Shire River Catchment Management 3. The Shire River is of vital economic importance to Malawi as it: * contains almost all of the country's power generating capacity * supplies water to major urban centers such as Blantyre and Limbe * supports a locally significant artisanal fishery * supplies irrigation schemes for valuable crops. 4. The problem in the Middle Shire River Catchment is one of long-standing siltation in combination of low water level in Lake Malawi. As a result, the Shire River actually stopped flowing from 1915 to 1937. While this gives some perspective to the current reported problems, it should be recogized that new installations of hydropower and water supply makes the economic damage of interrupted or diminished water flows greater than ever. 5. In late 1995, the Lake reached its lowest level since 1954, and the flow dropped to about 129 cumecs, compared to a required base flow of 170 cumecs. It has been estimated that a further fall in the lake level of only one more cm would have caused the flow to cease entirely, as the lowest lake bar at Samama (the outlet of the lake into the Shire) has been rising to clog the water channel. This build-up of sediment at entry is related to the siltation in the Upper Channel from Mangoche to Liwonde. In view of this, an emergency project including pumping of up to 70 cumecs from the Lake and into the Upper Channel (which will reduce lake level with about 7.5 mm), dredging at Nkula Falls and combined with long-tern catchment conservation, is under way. 6. Sizing the magnitude of the problem, a recent study2 has estimated that gross field erosion in the 7,350 km2 Middle Shire River study area is in the order of 25 million tons per annum. On the basis of  subjective but explicitly specified sediment delivery ratios for each of the ten catchments, the net sediment delivery into the Shire River is estimated to about 3.3 million tons per annum. 7. The urgency of catchment protection should not be driven by the magnitude of sunk costs--which have been referred to in the debate about protective measures. Rather, the future potential losses of economic values at stake should be considered. 8. First, consider the value of hydropower. The total hydropower sales in 1 995 (as projected in 1992) amount to about GWh 844, while the projected tariff was USc6.64/Kwh.3 T'his implies a total projected (full collection) revenue of about $56 million. Adding a provision for some consumer surplus, say up to USc1O/kWh we arrive at about $84 million in annual gross value of hydiropower production. Most of the costs of hydropower are fixed, making the net loss of power interruptions approach the gross value. In fact the cost of unforeseen power outages would be even higher per Kwh than indicated above. 9. Second, consider urban water supply. Data on gross sales of water are culTently not available, but there is some information about the defensive expenditures that are incurred as a result of siltation for the major water urban water user; Blantyre (pop. 0.5 million). The costs fall into four categories:4 * Installation of dredging machinery used in emergency clearing of the water intake (installation cost about $30,000) - Installation and running of a pontoon dredging system that evacuates sediment into downstream water 0.5 km below intake (installation about $50,000 plus running costs about $7,000 per year, mostly for fuel). * Adding of polymers, a liquid coagulant used to decrease water turbidiity (about $330,000 per year); - The potential construction of a sediment barrier with a scraping mechanism. While this is still under study, a guesstimate is that it would cost in the order of $30,000-$70,000 to construct. Hence the major defensive expenditures are not sunk costs. 10. Third, fisheries are affected by both the level of water flow and the level of turbidity in the water. In the worst case scenario, flow would be entirely clogged, and marshes would gradually dry out. The latest available data5 shows that the catch of fish in Lower and Middle Shire amounted to about 3,000 tons in 1992 and 1993. This was a significant decline from the peak year of 1989, with about 12,000 tons of catch. Applying the national average unit price, the value of 3,000 tons in 1993 was about MK5.55 million. Using the exchange rate for 1993 (World Bank, 1993), this equals $1.4 million. While this is a gross value, the major input cost is labor, and shadow price of this factor of production must be considered low.6 Hence, the net values at stake are not considerably lower than that. In terms of employment, the statistics only show results for the Lower Shire. This indicates a population of fishermen and assistants (i.e. fishermen that do not own their boats) of about 2,000 in 1994-5. 11. Given this list of actual and potentially significant costs of increasing sedimentation, one must explore possible solutions. Green et al (1996:8) states that a reduction of erosion will depend mainly on the introduction of conservation farming on the 4,900 km2 of land that is under cultivation in the study area, but that "The slow improvement likely to result from the measures involved would have little or no effect on sedimentation in the short, or probably even in the medium-term.". The report, however, goes on to make the case for selective conservation interventions, based on-site damage considerations, i.e. the soil loss impact on farm productivity. -2 -  12. Technically, there are ways and means to drastically reduce the soil loss from cultivated land. Amphlett (1986)7 studied soil loss and a set of other parameters in four catchments with comparable size, slope, altitude and soil type, during 3-4 years. The results show a drastic average reduction in soil loss from almost 11 t/halyear for the "traditional cultivation" catchment, via 3 tlha for the "physical conservation" treatment, to about 0.1 t/ha for the "full land use plan" catchment. While reservations about the accuracy of these measurements have been pronounced by a source close to the study, the sediment yield could be reduced substantially with a simple package of soil conservation measures. 13. The crucial issue is: how much this would cost? The absence of "model" conservation catchments outside Agricultural Research Stations indicate that financial rationality is insufficient to drive such measures. The poor economic performance of large-scale mechanized conservation works in Malawi has been documented by Mwakalagho (1 985) . Later projects, however, have developed manually based low-cost techniques. Even so, the overhead costs tend to be high, and it is vital to integrate other farm improvements to raise productivity with conservation. 14. Detailed cost estimates developed for the proposed "Promotion of Soil Conservation and Rural Production Project" (GFA, 1996) 9, which benefit from the implementation of a pilot project, show a total cost of about $23 million for the agricultural component. The project document assume that some 100,000 to 200,000 farmers will have joined the project at its closure.10 Assuming an average farm size of 1 ha per household, this implies a unit cost of $115-230/ha, including donor contributions, Government of Malawi counterpart funds, and local labor. It should be emphasized that the project will not only promote soil and water conservation measures (expected to contribute directly to only some 20% of the project's benefits) but also a package of yield improving measures including new varieties of maize, legumes and agroforestry techniques. 15. Using these figures for the Middle Shire River catchment, a rough calculation could illustrate the magnitude of the problem. If all the 490,000 ha of cultivated land in the Middle Shire River were to be treated at a unit cost of $150, the total cost would be staggering ($73.5 million). Targeting only one third of the most erosion-affected areas of the cultivated land above Nkula would then amount to some $21 million in investment cost. 16. The exact impact of this type of targeted intervention cannot be foreseen with any precision, but a numerical example can serve to illustrate the magnitudes involved. Assuming that this type of conservation would reduce the sediment yield with a 75% efficiency on treated land, i.e., areas with very severe and severe erosion above Nkula, the order of magnitude in overall reduction could be about 1 million tons of sediment per year. The annualized cost of the investment of $21 million (at 10% over 20 years) is about $2.5 million. Ignoring the time profile of the project, the unit cost would therefore be about $2-3 per ton of sediment retained. 17. The cost of sediment retention through soil conservation can be compared with the cost of dredging. For the Nkula pondage, this has been estimated to $3-6 per m3, much depending on the dumping site. l Assuming the bulk density of surface soil is about 1.4 g/cm3, this corresponds to a dredging cost of about $2-4 per ton. 18. Far from all sediment that is released into the Shire River is trapped in structures below, however. There is very little information on the "trap efficiency" of dam structures, but Green et al (1996:7) report that the Nkula Falls reservoir may have lost half of its 3 million m3 storage over the last 15 years, which implies an annual rate of about 140,000 tons. This is only about 7 percent of the total sediment delivery estimated to enter the River above Nkula Falls.12 Using this assumption, the cost for - 3 -  preventing one ton of sediment to be trapped in Nkula pondage through watershed conservation would be $29-43 ($2-3/0.07). With such a low trap efficiency, it appears more cost-effective from an off-site damage perspective, to dredge the sediment that settle into the dam, rather than invest in soil conservation measures. 19. The point remains, however, that there could be localized areas that (a) are above the pondage that (b) yield considerable sediment per hectare due to steep slopes and local and highly erodible soils, and (c) have a high sediment delivery ratio into the river due to proximity to the River and local drainage conditions, where the off-site benefits of conservation would make a significant contribution to the economic rationale to conservation. 20. Translating this off-site externality into a financial rationality for the farmers would require a transfer mechanism. This can only be established in an institutional environment where a holistic view of the catchment is taken. The downstream beneficiaries could then pay for the service of upstream catchment protection. This would not be a "subsidy" but an integral part of payment for ensured water and power supply. 21. So far, the discussion has taken an off-site damage perspective on soil erosion. Obviously, there would be some on-site benefits to soil conservation measures. How significant could they be? The answer depends very much on (a) assumed initial levels of productivity and (b) the soil loss yield decline function applied. 22. The initial yield level can be illustrated with data adapted from the Agricultural Support 13 Programs farm models Table 1: Baseline Gross Margins Cultivation type Crop yield (kg/ha) Gross margiin ($/ha) Local maize 800 55 Local maize w. fert. 1,500 67 Hybrid maize w. fert. 2,750 104 23. Assuming that the most common type of cultivation in the area is local maize, as in the rest of the country, the base line gross margin is only about $55 per hectare. If it is assumed that all input costs are taken ex-ante, that is that there is no saving in costs due to lower yield (which is not literally true), the losses in gross margin can serve as a measure of net economic losses. 24. As intervention would be selective in the larger catchments, we need to relate the prevented losses to explicit baseline conditions of erosion. Targeting an area of about one quarter of the land would cover the areas most affected, as shown in the table below. -4 -  Table 2: Erosion Severity Classes in the Middle Shire River Erosion severity Avg. loss t/ha % of Area Slight 10 28 Moderate 30 41 Severe 55 23 Very severe 75 8 Source: Adapted from Green et al (1996:16). 25. A soil loss of 75 t/halyear equals about 0.54 cm. (140 t/cm/ha, i.e. assuming a bulk density of 1.4g/cm3 and 55 tons corresponds to about 0.39 cm. Applying the Boj6 & Hamilton (1996: 14-15) values of a yield loss of 3% per centimeter, implies an annual yield loss of about 1-2% per year. This equals a dollar or less per annum in gross margin loss per hectare. Even allowing for the accumulated impact of consecutive years of erosion, this is not enough to justify anything but very low cost investment in soil conservation. This may be a reason why so little spontaneous conservation activity can be observed. Ongoing Soil Conservation Projects 26. It should be added that there are already considerable efforts underway to combat land degradation, sponsored mainly by the EU, UNDP/FAO and IFAD, as well as many NGOs. With regard to the World Bank's involvement, there are two projects of particular relevance. 27. First, the comprehensive Agricultural Services Project (ASP)14 identifies "land resources and conservation" as one of its five main areas of activity in its extension component. In the financing plan a total of about US$1.8 million (2.8% of total costs) is specified under the conservation component. ADB is listed as contributing almost all of this, while GOM contributes the rest. Hence, there is no direct IDA contribution, but the project harbors undisbursed resources which could contribute to conservation activities in priority areas. 28. ASP aims to train all extension staff in the country in low cost soil and water conservation practices so that it becomes a mainstream activity in all Extension Planning Areas (EPAs). This process is not organized by watershed, and will be disseminated to any individual or group that is interested. Hence, targeting specific catchments in the Middle Shire River would require an additional and separate effort, but would be possible to achieve within the framework of the program. 29. Second the recently effective National Water Development Project'5 which specifies soil conservation measures in selected catchments: Lunyangwa River, Chifuga/Chitete Rivers, Mpamadzi/Mariku Rivers, Mwanza River and Mzimba River. (The second to last is a tributary to the Shire River). The measures will include restricting cultivation on steep river banks and other unsuitable locations, revegetation and farmer education in 15 catchment basins for these measures. The costs are specified as a total of US$1.6 million, of which 1.0 million constitute the local contribution. The total comprise only 2% of the project cost of US$130 million. 30. The principle for selecting target catchments is that they are directly delivering water to an intake for an urbanized area. A list of 56 rural catchments and a few urban ones has been established for -5-  the project. Only some of them are in the Middle Shire River, and the exact extent of intervention in each one has not been defined. The extension message will be developed in collaboration with MOALD, FD and MOREA. A special Task Force involving them will be formed, but so far contacts have been limited to discussions held during the time of project design. 31. The conclusions to be drawn from this review are that: * significant economic values are at stake in preserving an uninterrupted and less sediment- laden flow in the Shire River; * based on off-site impacts only, the scope for cost-effective soil conselvation measures, which could complement dredging to ensure sufficient water supply, iis very limited; * translating the economic rationale for control of off-site damage due to soil erosion into a financial incentive for farmers would require an institutional entity capable of managing payments from downstream users to upstream managers; * there are already significant activities on-going to address land degradation that utilize existing domestic capacity to a high degree, and some of these could target selected areas in the Shire River; * the World Bank has two projects that can be used to apply limited resources to this problem; * further targeted interventions could also be sponsored by the financial mechanism for community-driven projects included in the ESP; * the analysis to date demonstrates the need for a much improved system for gathering and analyzing environmental information as a basis for policy and strategic decision-making. See Bojb and Hamilton (1996) Malawi: Genuine Savings. World Bank (processed) Green, R.I., V.A.L. Mkandawire, H.L. Kandaya and M.I.M. Kapila (April, 1996) Study to Identify Sources of Siltation in the Middle Shire river Catchment Area. MOREA and British High Commission. Lilongwe. 3 World Bank (May 19, 1992) Malawi Power V Project. Staff Appraisal Report. Report No. 10055-MAI. World Bank, Washington, D.C. 4 Estimates made on the basis of data from the Blantyre Water Board (May, 1996). 5 Department of Fisheries, Economic Report (1993) and Frame Survey Results (1994, 1995), unpublished data. 6 See World Bank (May 24, 1993) Republic of Malawi: Agricultural Services Project. Staff Appraisal Report. Washington, D.C. which puts the shadow price at zero. 7 Amphlett, M.B. (1986) Soil Erosion Research project, Bvumbwe, Malawi. Hydraulics Research, Wallingford. Report OD 78. In collaboration with the Ministry of Agriculture, GOM. 8 A Critical Appraisal of Physical Soil Conseration in the Lilongwe Rural Development Project. MSc Thesis. University of East Anglia, Norwich, UK. 9 GFA (1996) Promotion of Soil Conservation and Rural Production. Working Draft Report (February). Financing Proposal and background Documents of the Project. 10 GFA (1996) Background document 6, p. 15. See annex 2 for average holding size per household and relative distribution. The derived national average is 1.12 halhousehold. If 200,000 hectares are affected by the project at its completion, this is only 4 % of the total of 4.6 million hectares under cultivation in 1990 (Ibid., Background Document 1: p. 2) " Shepherd, J. Malawi: Sediment and Siltation. Briefing note for Mr. Wolfensohn, dated August 14, 1995. 12 Green arrives at only 4 percent using different assumptions. 13 World Bank (May 24, 1993) Republic of Malawi: Agricultural Services Project. Staff Appraisal Report. Washington, D.C. 14 World Bank (May 24, 1993) Republic of Malawi: Agricultural Services Project. Staff.Appraisal Report. Washington, D.C. 15 See World Bank (June 1, 1993) Republic of Malawi: National Water Development Project. Staff Appraisal Report. Washington, D.C. -6 -  Annex 9 MALAWI - ENVIRONMENTAL SUPPORT PROGRAMME ENVIRONMENTAL MANAGEMENT PROJECT: IMPLEMENTATION PLAN TABLE OF CONTENTS 1. Introduction 2. The Program (a) Scope (b) Objectives (c) Description (d) Risks (e) Costs 3. Implementation Arrangements (a) MOREA Organizational Structure (b) ESP Implementation Agreements with other Donors (c) Management Responsibilities 4. Planning 5. Procurement 6. Procedures (a) Procurement Procedures (b) Implementation Procedures 7. Financing (a) IDA (b) Government (c) Others 8. Disbursements (a) Accounts Management (b) Schedule of Disbursements 9. Accounting and Audits 10. Monitoring, Evaluation and Reporting ANNEXES   MAP SECTION   IBRD 24575 33 o To Dor Es So 1am 36 MALAWI r Noekee K4gKrg ... 'ADMINISTRATIVE ohis-h+ t9 \ > DIVISIONS 12 K Nkhwowo \ . This mop hos been prepored 7 ',hitombo L 7 REGIONS by The World B. k's staff r b6 AE IN S eof-eders and is fo, the'e intereol use of ToeWorld Bank DISTRICTS Groop.The denomirnions used -lL snstono 6 end the boundorieo shoono on thisrmop do not imply, onhe feRUMPHI porr of The World Book Group, _ . K6 aony Iodyent on the laq Koro.oo statis ot ony terrtoy or any cmR.- PRINCIPAL ROADS endorsement or.acceptance of such boundaries. E N J RIVERS k Endee i, LtC Ta \ TOWNS Meuzu Nkhbto (3 DISTRICT CAPITALS OS; ? 8)95t. AcEustrai * 10) NATIONAL CAPITAL { \ I\Kf'A / Muoroo ,oo<a2Y IM/ALAWI ) DISTRICT BOUNDARIES '2