Document of The World Bank FOR OFFICIAL USE ONLY Report No: 78693-AR RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF BIODIVERSITY CONSERVATION IN PRODUCTIVE FORESTRY LANDSCAPES PROJECT GEF GRANT TF090118 JUNE 28, 2007 TO THE ARGENTINE REPUBLIC JULY 22, 2013 Sustainable Development Department Argentina, Paraguay and Uruguay Country Management Unit Latin America and the Caribbean Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. Regional Vice President: Hasan Tuluy Country Director: Penelope J. Brook Sector Manager / Director: Laurent Msellati/Ede Ijjasz-Vasquez Task Team Leader: Peter Jipp 2 ARGENTINA BIODIVERSITY CONSERVATION IN PRODUCTIVE FORESTRY LANDSCAPES CONTENTS Page A. SUMMARY......................................................................................................................................... 4 B. PROJECT STATUS .......................................................................................................................... 4 C. PROPOSED CHANGES .................................................................................................................. 4 ANNEX 1: REALLOCATION OF PROCEEDS.................................................................................... 8 ANNEX 2: EXTENSION OF CLOSING DATE .................................................................................... 9 3 A. SUMMARY The GEF Biodiversity Conservation in Productive Forestry Landscapes (TF090118) was approved by the Board on June 28, 2007. Effectiveness was delayed unexpectedly for 18 months due to new national procedures requiring a Presidential resolution before the grant could be countersigned. Shortly following effectiveness, the line agency was restructured, further impacting implementation, which continued to be slow through 2011. Since that time, however, implementation has steadily improved and the project has made progress on all components and provides valuable experiences for replication. On June 5, 2013, the client requested a first extension for 18 months to make up for the initial setbacks and to complete the project objectives. This would be a first extension. A reallocation of funds from the unallocated category is also proposed. The project is blended to the IBRD Sustainable Natural Resource Management Project (Ln. 7520). B. PROJECT STATUS The project is rated as moderately satisfactory. Progress was slower than anticipated, due mainly to delays in effectiveness and the restructuring of the line agency. (Due to changes in country approval procedures, a Presidential resolution was unexpectedly required before the grant could be countersigned, taking 18 additional months to process by the government. In addition, the executing agency was upgraded to a Ministry and the project was transferred internally, with key personnel being lost and delays incurred in re-staffing and reorganization.) Since 2011, the situation began to stabilize and progress has slowly improved. In addition, the line agency’s Forestry Directorate (DPF) has been very supportive of the project and its objectives, throughout the delays, providing an impressive amount of support, which is not reflected in the disbursements. For example, in concert with the project unit, the DPF has successfully supported policy and regulatory reform to incorporate biodiversity concerns into forestry practices; established and staffed a new environmental management unit within the directorate (under the project’s guidance); updated the terms of reference for all of the agency’s extension agents to support biodiversity and environmental objectives; and supported an enabling environment conducive to incorporating over 135,000 ha of certified sustainably managed plantations – all actions which will have a long-term effect to support and sustain the development objectives of the project. With project implementation rated moderately satisfactory, steady progress has been made on the policy, technical, and institutional activities needed for mainstreaming biodiversity conservation into the productive forestry sector. As of today, activities in all components have made progress toward their objectives. Institutional capacity has been improved by training virtually all of the Forestry Directorate’s technical staff, along with provincial forestry and environmental officials in biodiversity and best management practices in forest plantations in 7 provinces. In addition, innovative subprojects, designed to mainstream biodiversity aspects into forestry have been awarded to 237 landholders. An estimated 23,000 ha would be put under biodiversity-friendly practices by the end of the project, and at least 5 biological corridors established. Many activities that are needed for the successful completion of the project are already underway but not yet completed. 4 C. PROPOSED CHANGES Financing A detailed planning exercise of project activities until the end of the project demonstrated the need to reallocate funds from the unallocated category to the other disbursement categories (Table A.2 of Schedule 2, Section IV). The suggested reallocation follows the same proportion of the distribution of the original budget and is completely compatible with the objectives of the project. For a detailed reallocation of proceeds please see Annex 1 of this document. (There are no outstanding audits for the project.) Closing date An 18-month extension of the closing date of the project is requested, which would amend the closing date from August 31, 2013, to the February 28, 2015. 5 ANNEX 1 Reallocation of Proceeds ARGENTINA – BIODIVERSITY CONSERVATION IN PRODUCTIVE FORESTRY LANDSCAPES PROJECT P094425 TF090118 Restructuring Paper 1. Proceeds for Argentina, Biodiversity Conservation in Productive Forestry Landscapes Project, GEF TF090118, P094425 will be reallocated as follows: Category of Expenditure Allocation % of Financing Current Revised Current Revised Current Revise (1) Goods n/a 172,000 205,749 100% 100% (except as covered by Category (4) below) (2)Consultants’ n/a 2,175,000 2,435,500 100% 100% services (except as covered by Category (4) below) (3) Training n/a 1,200,000 1,415,442 100% 100% (4) Goods, n/a 2,400,000 2,646,419 100% 100% works, Non- Consultant Services and consultants’ services under Subprojects. (5) Incremental n/a 150,000 296,890 100% 100% Operating Costs (6) Unallocated n/a 903,000 100% 100% TOTAL 7,000,000 7,000,000 AMOUNT 2. Briefly summarize project implementation progress. The project is rated as moderately satisfactory. Progress was initially slow due to factors outside the project’s control. However, in the last two years, the situation has stabilized and progress has 6 improved with steady progress on the policy, technical, and institutional activities needed for mainstreaming biodiversity conservation into the productive forestry sector. For example, legal and regulatory reforms have been made to incorporate biodiversity into national policies (ref. SAGyP Resolution no. 810/2011 and Regulatory Framework, Law XVI, no. 106). A new environmental unit has been established in the DPF and is helping to promote and manage environmental and best practices for forestry (ref. project progress reports). All technical personnel in the DPF and participating provinces have received training on mainstreaming biodiversity along with material support, and biodiversity is being discussed on a regular basis during formal review meetings concerning plantation incentives under Law 25.080. Innovative subprojects designed to mainstream biodiversity aspects into forestry with producers have been awarded to 237 landholders, and others are ready to be awarded upon confirmation of an extension. Moreover, many activities that are needed for the successful completion of the project are already underway but not yet completed, such as the biological corridors, pilot projects for biodiversity conservation, and strategic environmental assessments. 3. Activities planned through an extended project closure date in order to estimate the financing required for implementation indicate the need to reallocate funds from Unallocated (category 6) to Goods (category 1), Consultancies (category 2), Training (category 3), Goods, works Non-Consultant Services and consultants’ services under Subprojects (category 4) which constitute the core activities of the project. The amounts for the reallocation correspond to those estimated for each component at appraisal and are therefore completely consistent with the project objectives. 7 ANNEX 2 Extension of Closing Date ARGENTINA – BIODIVERSITY CONSERVATION IN PRODUCTIVE FORESTRY LANDSCAPES PROJECT P094425 TF090118 Restructuring Paper 1. The closing date for Argentina, Biodiversity Conservation in Productive Forestry Landscapes Project, P094425 will be extended from August 31, 2013, until February 28, 2015. It is an innovative one-of-a-kind project, which seeks to mainstream biodiversity conservation into production forestry. Lessons learned from the project are already informing the design and implementation of other Bank operations including The Chile Sustainable Land Management project, the Chile Securitization and Carbon Sinks project and the China Hunan Forest and Restoration project. 2. Now that the institutional environment is stable, qualified staff are on board, and the project has developed a rhythm for procurement, contracting and implementation, project objectives are considered achievable and activities are expected to be completed during an extended timeframe of 18 months. An action plan acceptable to the Bank has been received for the proposed extension. 3. Among the major activities to be carried out during an extended timeframe for implementation include the implementation of subprojects to mainstream biodiversity protection into productive forestry practices for 505 rural families; the implementation of six strategic environmental assessments covering the provinces of Misiones, Corrientes, Entre Rios, Buenos Aires, Neuquén, Río Negro, Chubut; implementation of a biodiversity monitoring program in plantations in the target provinces; and 14 subprojects for biodiversity conservation in plantations and use of native species in production, among others. An estimated 23,000 ha would be put under biodiversity-friendly practices by the end of the project, and at least 5 biological corridors established. Because the integration of biodiversity concepts in production forestry is a new concept, the project will also provide extensive capacity building activities including university level training in five forestry schools, development of field manuals and guides for extension agents and small producers. The universities are already cooperating and ready to host the training events. Finally, the project has been invited to present its findings on biodiversity and ecological functions of forest plantations at the 4th Congress on Argentine and Latin American Forestry later this year. Because the congress is well attended by the private sector, as well as the scientific community, it is an opportunity to further the project’s goal of mainstreaming conservation into productive forestry concerns by disseminating valuable lessons learned to producers. 4. This will be the first extension of the project. (An amendment to the grant agreement was approved in May 2010 related to financial management procedures.) 8