The World Bank Report No: ISR12185 Implementation Status & Results Costa Rica Mainstreaming Market-Based Instruments for Environmental Management Project (P093384) Public Disclosure Copy Operation Name: Mainstreaming Market-Based Instruments for Environmental Project Stage: Implementation Seq.No: 16 Status: ARCHIVED Archive Date: 23-Dec-2013 Management Project (P093384) Country: Costa Rica Approval FY: 2006 Product Line: IBRD/IDA Region: LATIN AMERICA AND CARIBBEAN Lending Instrument: Specific Investment Loan Implementing Agency(ies): FONAFIFO Key Dates Board Approval Date 08-Jun-2006 Original Closing Date 31-Jul-2012 Planned Mid Term Review Date 20-Feb-2012 Last Archived ISR Date 29-May-2013 Effectiveness Date 31-Jul-2008 Revised Closing Date 31-Mar-2014 Actual Mid Term Review Date 09-Apr-2012 Project Development Objectives Mainstreaming Market-Based Instruments for Environmental Management Project (P093384) Project Development Objective (from Project Appraisal Document) The Project Development Objective is to enhance the provision of environmental services of a national and global significance and secure their long-term sustainability through a scaled-up payment for environmental services system in Costa Rica. Has the Project Development Objective been changed since Board Approval of the Program? Yes No GEF - Mainstreaming Market-Based Instruments for Environmental Management Project (P098838) Global Environmental Objective (from Project Appraisal Document) The Project Global Environmental Objective is to enhance the conservation of globally significant biodiversity and ensure its long-term sustainability by supporting the development and implementation of market-based instruments to promote forest conservation in buffer zones of protected areas and biological corridors connecting them. Has the Global Environmental Objective been changed since Board Approval of the Program? Yes No Public Disclosure Copy Component(s) Component Name Component Cost Sustainable Financing Mechanism 16.50 Scaling up the Payment for Environmental Services Program 72.80 Increased Participation in Environmental Services Program 1.00 Overall Ratings Page 1 of 8 The World Bank Report No: ISR12185 Previous Rating Current Rating Progress towards achievement of PDO Satisfactory Satisfactory Progress towards achievement of GEO Satisfactory Moderately Satisfactory Public Disclosure Copy Overall Implementation Progress (IP) Moderately Satisfactory Moderately Satisfactory Overall Risk Rating Implementation Status Overview This is an Interim ISR to enable a re-allocation of proceeds from the GEF grant portion of the project. With a Closing Date of March 30, 2014 and occurred delays in the contracting of a large consultancy (which cannot be implemented), funds currently allocated under the consultancy disbursement category cannot be utilized and will be reallocated to the Endowment Fund (Fondo de Biodiversidad Sostenible - FBS). This reallocation will not affect the achievements of the PDO. A more substantial ISR will be prepared following the Level 2 restructuring to accommodate the re-allocation. Locations Country First Administrative Division Location Planned Actual Costa Rica Provincia de San Jose San Jose ✔ Costa Rica Puntarenas Provincia de Puntarenas ✔ Costa Rica Limón Provincia de Limón ✔ Costa Rica Heredia Provincia de Heredia ✔ Costa Rica Guanacaste Provincia de Guanacaste ✔ Costa Rica Cartago Provincia de Cartago ✔ Costa Rica Alajuela Provincia de Alajuela ✔ Results Project Development Objective Indicators Public Disclosure Copy Page 2 of 8 The World Bank Report No: ISR12185 Indicator Name Core Unit of Measure Baseline Current End Target By the end of the project, at least 310,000 Text Value 250,000 ha 310,000 ha hectares of land with environmental service Date 08-Jun-2006 30-Apr-2013 31-Mar-2014 Public Disclosure Copy contracts generating environmental servicesof Comments The unit of measure is Costa Rica's PSA program Costa Rica’s National local, national and/or global importance. hectares (ha) and not text as has long suffered from wide Development Plan has a indicated to the side fluctuations in the area under target of conserving a total of conservation. These 310,000 ha a year using PSA. fluctuations are the resultof the annual nature of most of FONAFIFO’s budget, and the five-year length of most of its conservation contracts. By the end of the project, conservation of at Hectare(Ha) Value 7400.00 20785.00 35000.00 least 35,000 ha is financed annually by funding Date 08-Jun-2006 30-Apr-2013 31-Mar-2014 from service users Comments This is the revised version of Because of the annual nature The target reflects a 10% the indicator: By the end of of most of FONAFIFO’s increase over current levels the project, at least half of the budget and the five-year (the average has been about newly-contracted area is length of most of its 32,000 ha in the last two financed by funding from conservation contracts, Costa years), and a more than service users. Rica's PSA program has long quadrupling of the area suffered from wide financed by funding from fluctuations in the areas under service users since the start conservation. of the project (about 7,000 ha in 2008). Improved efficiency of the environmental Text Value Indicator dropped. services program, as measured by indices of Date 30-Apr-2013 31-Mar-2014 services generated per dollar spent.(Index Comments Dropped-tracking this Dropped-tracking this under preparation) indicator has been found indicator has been found extremely difficult. This is extremely difficult. This is primarily due to the technical primarily due to the technical difficulty of quantifying the difficulty of quantifying the changes in the level of changes in the level of Public Disclosure Copy environmental service environmental service provision. provision. By the end of the project 50% increase (from Text Value 1,900 landholders (small- and 3,500 landholders current 1,900 to 2,850) of the number of small- medium-sized) and medium-sized landholders (less than 100- Date 08-Jun-2006 30-Apr-2013 31-Mar-2014 hectare farms) participating in the PSA Comments Because of the annual nature Program. of most of FONAFIFO’s budget and the five-year length of most of its Page 3 of 8 The World Bank Report No: ISR12185 conservation contracts, Costa Rica's PSA program has long suffered from wide fluctuations in the area under Public Disclosure Copy conservation. By the end of the project, at least half of the Text Value 0% 35,000 newly-contracted area is financed by funding Date 08-Jun-2006 30-Apr-2013 31-Mar-2014 from service users. Comments This indicator has been revised (By the end of the project, conservation of at least 35,000 ha is financed annually by funding fromservice users) - see above. Global Environmental Objective Indicators Indicator Name Core Unit of Measure Baseline Current End Target At least 190,000 ha (2,000 contracts) in Text Value 100,000 ha 190,000 ha productive landscapes in the buffer zones of Date 08-Jun-2006 30-Apr-2013 31-Mar-2014 protected areas and biological corridors in the Comments Because of the annual nature MBC are maintained annually under PSA contracts of 20 years. of most of FONAFIFO’s budget and the five-year length of most of its conservation contracts, Costa Rica's PSA program has long suffered from wide fluctuations in the area under conservation. Effective biodiversity conservation in globally Text Value 0 Indictor dropped significant areas measured by vegetation cover Date 08-Jun-2006 30-Apr-2013 31-Mar-2014 and indicator species of conservation interest Comments This indicator has proven (method under preparation, baseline to be Public Disclosure Copy ready by 12/07). difficult to measure and has been dropped as part of the June 2012 restructuring. Intermediate Results Indicators Page 4 of 8 The World Bank Report No: ISR12185 Indicator Name Core Unit of Measure Baseline Current End Target % of annual net returns from the FBS invested Percentage Value 0.00 85.00 in PES at productive landscape projects Date 28-Jun-2012 31-Mar-2014 Public Disclosure Copy located in buffer zones of protected areas and Comments biological corridors tons of CO2 from forestry activities will be Metric ton Value 0.00 238239.00 certified and sold at the global carbon markets Date 28-Jun-2012 31-Mar-2014 Comments Revenues achieved Amount(USD) Value 0.00 900000.00 Sub Type Supplemental 3.5% from fuel-tax revenues and 25% water- Text Value 3.5% 3.5% resource-usage tariffs to finance PSA. 0% 25% Date 08-Jun-2006 30-Apr-2013 31-Mar-2014 Comments % of fuel-tax revenues and % 3.5% fuel (₡12.831m) 3.5% fuel of tax used from water- 25% water (₡1.439m) 25% water resource tariff and colones (₡) of revenue received from tax FBS with capital participation of at least US$15 Text Value US$0 US$15 million total of which million, of which US$7.5 million contributed by US$7.5 million from GEF. GEF. Date 08-Jun-2006 30-Apr-2013 31-Mar-2014 Comments The indicator is US$ and not The Fund has been text as indicated to the side capitalized with the GEF and KfW contribution. Its capitalization exceeds the target of US$15 million. However, current returns (at 2%) are below expectation and addressing this will be a Public Disclosure Copy priority over the next 6 months. The FBS board has initiated a number of steps to address this issue, including (i) negotiating a lower management fee for the investment institution (Banco Nacional de CR); (ii) consolidating all funding received in one account to improve the effectiveness of Page 5 of 8 The World Bank Report No: ISR12185 applying the investment strategy; and (iii) introduce the possibility of using an international fund manager. Public Disclosure Copy At least 75% of PSA Program resources are Text Value Present percentage to be 75% placed in PSA contracts. evaluated during year 1 of project implementation Date 08-Jun-2006 30-Apr-2013 31-Mar-2014 Comments The unit of measure is Despite being transformed percent and not text as into a Governmental indicated to the side Organization which allows for 21% of administrative costs FONAFIFO has been able to maintain an efficient administration with low overhead. Contract system for payments of environmental Text Value Does not exist Differentiated system is services with differentiated payments applied. approved and under implementation Date 08-Jun-2006 30-Apr-2013 31-Mar-2014 Comments PSA activities are integrated through Text Value 0 micro-watersheds 3 micro-watersheds participatory planning on land use in at least 3 Date 08-Jun-2006 30-Apr-2013 31-Mar-2014 (micro-watershed) communities. Comments 2 land-use plans for additional micro-watersheds are under preparation Female landholders and Indigenous community Text Value 474 female-led families; and 10% of contracted area each owned lands in the program will be maintained 25,125 ha held by indigenous at least to the current level. communities Date 08-Jun-2006 30-Apr-2013 31-Mar-2014 Comments Because of the annual nature Public Disclosure Copy of most of FONAFIFO’s budget and the five-year length of most of its conservation contracts, Costa Rica's PSA program has long suffered from wide fluctuations in the area under conservation which impacts the number of women and Page 6 of 8 The World Bank Report No: ISR12185 indigenous community owned lands in the program. Public Disclosure Copy Data on Financial Performance (as of 23-Sep-2013) Financial Agreement(s) Key Dates Project Ln/Cr/Tf Status Approval Date Signing Date Effectiveness Date Original Closing Date Revised Closing Date P093384 IBRD-73880 Effective 08-Jun-2006 08-May-2007 31-Jul-2008 31-Jul-2012 31-Mar-2014 P098838 TF-56666 Effective 08-May-2007 08-May-2007 31-Jul-2008 31-Jul-2012 31-Mar-2014 Disbursements (in Millions) Project Ln/Cr/Tf Status Currency Original Revised Cancelled Disbursed Undisbursed % Disbursed P093384 IBRD-73880 Effective USD 30.00 30.00 0.00 27.78 2.22 93.00 P098838 TF-56666 Effective USD 30.00 10.00 0.00 8.79 1.21 88.00 Disbursement Graph Public Disclosure Copy Key Decisions Regarding Implementation None Restructuring History There has been no restructuring to date. Page 7 of 8 The World Bank Report No: ISR12185 Related Projects P098838-GEF - Mainstreaming Market-Based Instruments for Environmental Management Project Public Disclosure Copy Public Disclosure Copy Page 8 of 8