Peru - Indigenous Management of Protected Areas in the Peruvian Amazon Project

Report No. PID8359 Project Name Peru-Indigenous Management of Protected Areas in the Peruvian Amazon Region Latin America and Caribbean Region Sector Environmental Institutions Project ID PEPE65200 Borrower(s) INRENA/PROMUDEH Environment Category C Date PID Prepared November 4, 1999 Projected Appraisal Date January 30, 2000 Projected Board Date April 15, 2000 1. Country and Sector Background The primary sector issues affecting protected areas and indigenous peoples' participation in conservation efforts may be summarized as follows; (i) the current System of National Protected Areas (SINANPE) under represents the Peruvian Amazon; currently, only 6.7w of this rich biome is protected; (ii) an expansion of the protected area coverage is required to maximize chances for achieving long-term biodiversity conservation from a landscape approach; (iii) expansion of areas under conservation should include the participation of the indigenous peoples of the Amazon, due to the fact that they have lived in these areas for at least the past millennium; (iv) at present the government has few funds to cover recurrent costs. In order for the project to achieve financial sustainability, recurrent costs need to be assured for establishment and running of communal reserves; (v) legal issues such as communal land tenure in the areas of conservation needs to be verified and secured such as the law for Native Communities (ley de Comunidades Nativas) and other relevant sectoral laws and regulations governing resource use in the reserves buffer zones such as prohibiting large-scale extractive activities (oil, mining, forestry); (vi) existing conservation and management efforts have not incorporated and reinforced traditional indigenous knowledge and land conservation strategies, doing so would promote conservation and strengthen indigenous cultural practices, and; (vii) poverty rates for indigenous populations are higher than in the rest of the population; therefore, conservation efforts must also address means to fight poverty. Government Strategy: In 1994, with the support of GTZ and the NGO community, the Government of Peru produced a " Master Plan for the National System of Protected Areas." The Plan identifies new protected areas that need to be established in order to achieve eco-regional representation and to protect the highest priorities from a biological perspective. This "ideal" representative system would eventually include approximately 65 areas of national importance covering between 12 and 15 percent of the territory. The national system currently includes 48 protected areas. Adding new areas to the system, however, must be done with caution, carefully weighing the positive incentives of new political support and commitment against the realities of institutional management capacities that need to be strengthened over the long term.  As a complement to these efforts, in 1995 the Bank approved a GEF-funded project to support the establishment of a National Trust for Protected Areas (PROFONANPE). The goal of this project was to build Peru's capacity to finance the recurrent costs of protected area management by complementing scarce government funds. A mid-term evaluation of PROFONANPE recently concluded that despite the initial challenges inherent with an effort of this magnitude, PROFONANPE has succeeded in raising additional funds and is becoming an important source of recurrent cost financing. Supporting the expansion of the protected area system in response to Peru's commitment is therefore warranted. The protected areas currently receiving recurrent cost support from PROFONANPE are presented in Annex 12. A Multi-Sectoral Commission for Protected Areas will be created during project design. The purpose of the commission will be to promote a unified and clear development model that adequately takes into account the cultural dimension of indigenous peoples as well as conservation and management in the reserves. The Commission will be made up of relevant governmental agencies, non-governmental agencies (NGOs) and indigenous organizations working with conservation and/or indigenous peoples. The role of the Commission will be to act as a coordinating, decision-making and advisory body to the project. 2. Objectives 1. Development Objective: The development objective of the project is to increase indigenous peoples participation in benefits from biodiversity conservation in the Peruvian Amazon through communal management of protected areas by indigenous groups. This will be achieved by: (a) establishing areas for communal reserves using participatory methods; (b) developing management plans and management agreements with the indigenous communities and federations managing the communal reserves; (c) building and strengthening institutional organizational and technical capacity to sustainably manage reserves (to be co-financed by Peru LIL); and (d) investing in pilot community development projects for sustainable use of biodiversity. 2. Global Environmental Objectives: The global environmental objective is to conserve and sustainably use important forest ecosystems in the Peruvian Amazon through the establishment of protected areas to be co-managed by indigenous people. The Amazon of Peru is a part of the largest continuous forest on the planet, which includes 40 percent of all remaining tropical forests of the world. The area under consideration is an important repository of biological diversity on earth. Given its strategic location in the upper watershed of the basin, Peru's Amazon contains a very rich biodiversity expressed in terms of unique species richness, high levels of endemism, and habitat diversity. Even though the region needs to be studied in greater detail, many areas in the Peruvian Amazon already hold world records in terms of biodiversity richness. Given these facts, conservation of these areas is of utmost importance in the goal of conserving the world's biodiversity. The new areas will be chosen based on scientific priority-setting exercises already conducted, identifying the highest priorities for biodiversity conservation. The project emerges from a commitment by the Government of Peru (GoP) to expand effective forest conservation in the Amazon region to cover at least 10t of the biome (75 million ha in Peru). To accomplish this goal, the GoP is committed to establish up to nine new protected areas in the Peruvian Amazon - 2 -  adding ca. 5.1 million hectares to areas under conservation. In parallel to this commitment, the GoP is also promoting a greater involvement of local communities (particularly indigenous peoples) in the direct management of protected areas--to help meet the above goal of having 10. of the Amazon in Peru under conservation--as well as to ensure equitable benefits resulting from the establishment of communal reserves as part of an overall strategy for rural poverty alleviation. Incorporating local indigenous communities in the direct management of these areas will help ensure long-term social, ecological, and financial sustainability. 3. Rationale for Bank's Involvement GEF support is warranted because of the global significance of the Peruvian Amazon as a site of high biodiversity. The Peru Indigenous Peoples Development LIL is closely tied with the work of this project, helping to strengthen and empower indigenous peoples to manage their own development needs as well as manage their own conservation. Part of the funding for this project is being co-financed by the LIL. This money is being used to strengthen organizational capacity as well as to fund innovative projects that attempt to promote economic benefits from sustainable natural resource use in buffer zones. Value added of Bank support lies in technical support for preparation, supervision capacity, and development of linkages with SETAI, INRENA, SINANPE, PROFONANPE and CONAM as well as with NGOs such as the World Wildlife Fund and indigenous organizations and communities. 4. Description Components: 1. Creation of New Conservation Areas: Under this component, the new areas to be designated (which will be identified through a combination of scientific and participatory processes during Block-B implementation) will be created. Once these areas are identified, participatory processes will determine the exact type of protection to be achieved in each area (i.e., management category), as well as exact boundaries. The GoP is ready to use a variety of tools, including establishing indigenous communities reserves or areas under the System of Protected Areas which allow co-management by indigenous communities (primarily Communal Reserves and National Reserves). "Biosphere reserves," which cluster several categories (titled indigenous communities, communal reserves, parks, etc) under a landscape approach is the preferred model to be followed. The final set of protected areas will be recommended for establishment through Presidential Decree. 2. Development of Management Plans: Management plans will be developed and management responsibility transferred to organized indigenous people under a "Comite de Gestion" which is recognized by Peruvian legislation. Plans will need to be approved by INRENA. The areas will then be zoned according to the Plan, including core zones of strict protection and areas of sustainable use of biodiversity resources. These uses will be based on sustainable non-timber options. No large-scale extractive activities (oil, mining, forestry) are allowed under the recognized protected areas categories. 3. Institutional Strengthening, Capacity Building and Community Development: Communities will be strengthened both in terms of organization as well as technical aspects for sustainable use. This component will be primarily co- - 3 -  financed by the LIL. The LIL objectives are to combat extreme poverty and improve the quality of life for indigenous communities of the Sierra and Amazon through strengthened organizational, technical and entrepreneurial capacity of communal indigenous organizations. Investment in community development sub-projects and biodiversity conservation will be implemented by indigenous organizations. 4. Community Led Investments: a) Community Biodiversity-Friendly Investments: sustainable use of biodversity projects on sustainable use will be implemented at each site. The decision about specific project interventions will be based on technical considerations and through participatory processes based on community interest. There are previous experiences in Peru regarding sustainable biodiversity uses (i.e., Manu, Noroeste), but these experiences have not been replicated at larger scales. A few of the promising options include wildlife breeding, orchids, ecotourism, and bioprospecting. It is expected that this component will result in long-term benefits accruing to indigenous people and will be the foundation of social sustainability. b) Community Development Projects: The objective of this component is to finance small community projects that develop, experiment and document successful participatory methods oriented towards specific community development initiatives, that have been agreed to by the authorities of indigenous communities and municipalities. Existing community development projects in different stages of development and focused on the following issues can be funded by this component: productive projects, health, etc. Technical support exists within this sub-component to allow indigenous communities to design their own initiatives for community development. It will finance activities such as: technical advice, feasibility studies and design (primarily for economic projects and low impact tourism infrastructure), management capacity building and establishing connections with potential associates and financiers. Co-financing between the two sub-components is possible and will be encouraged to enhance synergy and create incentives for biodiversity conservation. E. Monitoring and Evaluation: Standard project implementation monitoring, based on the Project Design Summary/Logical Framework, will be carried out throughout the project implementation period. This component will include support for scientifically sound monitoring and evaluation of biodiversity. Collaboration with also other, complementary initiatives will be sought. World Wildlife Fund will develop "score cards" under a participatory process which will be used to measure project impact from a biological, social, and institutional perspectives. Baseline biological information will be determined through in-depth biological assessments. 5. Financing Total ( US$m) Government 5 IBRD 5 IDA Global Environment Fund 10 World Wildlife Fund 1 Bilateral Agencies (unidentified) 3 Total Project Cost 24 6. Implementation -4-  Project Coordination: The project will be coordinated by a Project Coordination Unit (PCU) based in INRENA. During project implementation INRENA will manage conservation and biodiversity components. SETAI (the Technical Secretariat for Indigenous Affairs) will work on strengthening organizational and technical capacity of the indigenous communities and organizations to manage the reserves as well as other development initiatives (component C). Project oversight (policy guidance, etc.): A Multi-Sectoral Commission for Protected Areas made up of involved governmental sectors, NGOs and indigenous organizations will be put together during project design. The committee will base its decisions on consensus and will use this as the instrument for advising INRENA. One of the conditions for negotiations will be the participation of representatives of the Commission in negotiations. The World Bank as GEF implementing agency will provide technical, social and financial supervision during implementation of the project. Accounting, financial reporting, and auditing arrangements: It is currently anticipated that INRENA will be responsible for project financial management, reporting, and auditing following procedures acceptable to the Bank. INRENA will administer the GEF grant funds through the PCU, and will be responsible for disbursements. The financial management system to be maintained in INRENA for the project will be consistent with that established for the Peru Indigenous Peoples Development LIL. The Project Coordination Unit for the Biodiversity project will have access to financial and audit reports to ensure complementarity of expenditures on activities included in both projects. Project accounts will be audited annually, by independent auditors acceptable to the Bank. The annual audit report will be submitted to the Bank within four months of the end of each fiscal year. Monitoring and evaluation arrangements: The project coordination unit will establish a project monitoring and evaluation (M&E) program acceptable to the Bank. Procedures and M&E reports will be guided by: (a) the Project Design Summary (Annex 1); and (b) the Monitoring Plan as detailed in the Operational Manual. M&E is to be conducted through: (a) activities of the project administration unit; (b) annual progress review during Bank supervision missions not later than July 31 of each year starting in 2000; (c) Mid-term Review of project implementation to be carried out jointly by GoP, the Commission and the Bank, and; (d) periodic beneficiary assessments and other special studies. Under the project, biological monitoring will be conducted, with score-cards developed to measure project impact including biological aspects as well as the effectiveness of protected area management. WWF has expressed interest in co-financing this component and providing technical assistance during its execution. Every six months the project administration unit will transmit to the Bank progress reports on project implementation and outcomes, using the format agreed at negotiations. An Implementation Completion Report will be prepared within six months after the closing of the grant. 7. Sustainability The project's focus on long term program sustainability is covered by the enabling policy environment and building local peoples capacity for - 5-  development based on their own perspectives and relying on their own resources. Most of the responsibility for park management and enforcement will lie in the hands of the indigenous communities, who will use traditional community structures of voluntary participation by members of the community for enforcement and management. This assumption is sustainable as long as: (i) the project responds to the desires of indigenous peoples in the Peruvian Amazon; (ii) the legal framework for protected areas restricts extractive industrial activities, and; (iii) recurrent costs are manageable within GoP fiscal capabilities. 8. Lessons learned from past operations in the country/sector Experience in Peru and elsewhere show that: (i) the sustainability of protected areas is greatly enhanced when local populations benefit directly from their establishment; (ii) financial sustainability of managing the communal reserves by the government has to be ensured by continual funding of recurrent costs; (iii) local organizational capacity needs to be strengthened; (iv) environmentally sustainable activities that also provide economic benefits need to be offered as an alternative to practices that encourage "mining of natural resources", and; (v) the government needs to recognize the legal status of protected areas through supreme or presidential decrees. The Peruvian Amazon contains numerous indigenous groups who have expressed their desire to ensure the maintenance of forest integrity through conservation and through the promotion of development options that maintain forest cover to the greatest possible extent. Therefore, directly incorporating indigenous groups in the management of these protected areas builds upon the synergistic potential brought about by two complementary objectives: biodiversity conservation and indigenous people's right to self- determination. Peruvian legislation recognizes this approach through several management categories of protected areas, including communal reserves, national reserves, and the clustering of various categories within a "biosphere reserve" model. The expansion of the system of protected areas in Peru to achieve the long- term targets identified in the Master Plan is limited by the lack of financial resources. Progress towards achieving the sustainability of the present system has been good, as described above, with increased budget allocations by the central government and the growing role of PROFONANPE in transferring funds to finance recurrent costs. The system now has a total of 48 areas, all of which have permanent presence and enjoy some form of management; 39 of these areas have a Park Director on the ground. It is widely recognized, however, that additional efforts are required to achieve a level of effective management for the entire system. Economic activities from sustainable natural resource use in protected areas have helped to strengthen conservation efforts by (i) providing funds for recurrent costs, and (ii) by providing economic benefits and incentives to those living within the confines of protected areas to participate in conservation. The Manu National Park has reached a level of funding of recurrent costs and substantial progress towards social sustainability through direct community involvement in management. The Machiguenga within Manu have created a lodge, where tourists can come and visit the park. This lodge is one example of how eco-tourism and other sustainable activities can - 6 -  benefit local populations involved in conservation. From the perspective of biodiversity conservation, however, the system is incomplete and additional protected areas need to be created in accordance with the Master Plan of the Protected Areas System. 9. Program of Targeted Intervention (PTI) N 10. Environment Aspects (including any public consultation) Issues The project components do not have any negative impacts on the environment. There will be low-impact activities for eco- tourism development in buffer zones. In addition, sustainable economic activities are planned in buffer zones (e.g. agro-ecological production, sustainable harvesting of non-timber products such as medicinal plants and bio-prospecting activities). Guidelines will be developed to ensure that these activities do not harm ecosystem health or jeopardize conservation goals. 11. Contact Points: The InfoShop The World Bank 1818 H Street, N.W. Washington, D.C. 20433 Telephone: (202) 458-5454 Fax: (202) 522-1500 Task Manager Carlos Monge Peru Country Office Telephone: (51-1) 422-0282 or (51-1) 421-7239 Fax: (51-1) 421-7241 Note: This is information on an evolving project. Certain components may not be necessarily included in the final project. Processed by the InfoShop week ending November 19, 1999. - 7 -