Document of The World Bank FOR OFFICIAL USE ONLY Report No: 79643-AR PROJECT PAPER FOR SMALL RETF GRANT (US$3,960,200) TO THE ARGENTINE REPUBLIC FOR AN INCREASING CLIMATE RESILIENCE AND ENHANCING SUSTAINABLE LAND MANAGEMENT IN THE SOUTHWEST OF THE BUENOS AIRES PROVINCE PROJECT July 22, 2013 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCY EQUIVALENTS (Exchange Rate Effective July11th, 2013) Currency Unit = AR$ 1 US$ = 5.41 AR$ FISCAL YEAR January 1 – December 31 ABBREVIATIONS AND ACRONYMS AF Adaptation Fund AGN ArgentineSupremeAuditInstitution (Auditoria General de la Nación) AR4 Forth Assessment Report (Cuarto Informe de Evaluación) BNA Bank of the Argentine Nation CC Climate Change CIM International OrganizationforMigration(Centro Internacional de Migraciones) CIMA Research Center of the Sea and theAtmosphere (Centro de Investigaciones del Mar y la Atmósfera) CONICET National Center of Scientific and TechnicalResearch(Consejo Nacional de Investigaciones Científicas y Técnicas) DA Designated Account EIRR Economic Internal Rate of Return ENSO El Niño - SouthernOscillation (ENSO) El Niño Oscilación del Sur ESMF Environmental and Social Management Framework FAUBA Faculty of Agronomy of theUniversity of Buenos Aires (Facultad de Agronomía de la Universidad de Buenos Aires) FY Fiscal Year GCCC Argentine Governmental Committee on Climate Change GDP Gross Domestic Product GEF Global EnvironmentFacility(Fondo para el Medio Ambiente Mundial -FMAM) GIA Geographic Intervention Area GIZ German International Cooperation(Agencia de Cooperación Técnica Alemana) GoA Government of Argentina IAU Internal Audit Unit IBRD International Bank for Reconstruction and Development (BancoInternacional de Reconstrucción y Fomento -BIRF) IDA International Development Association IDB Inter-American Development Bank (Banco Interamericano de Desarrollo) IEWS Information and Early Warning System INTA NationalInstituteforAgriculturalTechnology(Instituto Nacional de Tecnología Agropecuaria) IPCC Intergovernmental Panel onClimateChange(Grupo Intergubernamental de Expertos sobre el Cambio Climático) IPPF Indigenous People Planning Framework JGM Chief of theCabinet (Jefatura de Gabinete de Ministros) KM Knowledge Management LADA-FAO LandDegradationAssessment in DrylandAreas – Food and ii AgricultureOrganization (Evaluación de la Degradación de Tierras en Zonas Áridas – Organización para la Agricultura y la Alimentación) MAA Ministry of Agrarian Affairs of the Buenos Aires Province (Ministerio de AsuntosAgrarios) MAGyP Ministry of Agriculture, Livestock and Fisheries (Ministerio de Agricultura, Ganadería y Pesca) MERCOSUR Common Market from the South (Mercado Común del Sur) NAP National Action Program to Combat Desertification NCCS National Climate Change Strategy NDVI Normalized Difference Vegetation Index NPV Net Present Value OPDS Provincial Agency forSustainableDevelopment(Organismo Provincial para el Desarrollo Sostenible) ORA AgriculturalRisk Office (Oficina de Riesgo Agropecuario) P&M Policies and Measures(Políticas y Medidas) PDO Project DevelopmentObjective PDSO Development Plan of the Southwest of Buenos Aires Province PIU Project ImplementationUnit(Unidad Ejecutora de Proyecto-UEP) PPFE Program of Projects with External Financing of the Secretariat of Environment and Sustainable Development (Programa de Proyectos con FinanciamientoExterno de la Secretaría de Ambiente y DesarrolloSustentable) PROSAP Provincial AgriculturalServicesProgramme(Programa de Servicios Agrícolas Provinciales) RPF Resettlement Policy Framework SAyDS Secretariat of Environment and Sustainable Development (Secretaría de Ambiente y DesarrolloSustentable) SC Steering committee SEPA Procurement Plan ExecutionSystem(Sistema de Ejecución de Planes de Adquisiciones) SIGEN General Syndicate of the Nation (Sindicato General de la Nación) SIS Specific Intervention Site SLM Sustainable Land Management SNC Second National Communication SOE Statements of Expenditures SWBA Southwest of the Buenos Aires Province Regional Vice President: Hasan A. Tuluy Country Director: Penelope Brook Sector Director: Ede Jorge Ijjasz-Vasquez Acting Sector Manager: Emilia Battaglini Task Team Leader: Marcelo Acerbi iii ARGENTINA INCREASING CLIMATE RESILIENCE AND ENHANCING SUSTAINABLE LAND MANAGEMENT IN THE SOUTHWEST OF THE BUENOS AIRES PROVINCE PROJECT Page I. STRATEGIC CONTEXT .................................................................................................1 A. Country Context ....................................................................................................... 1 B. Sectoral and Institutional Context............................................................................ 2 C. Higher Level Objectives to which the Project Contributes ..................................... 4 II. PROJECT DEVELOPMENT OBJECTIVES ................................................................5 A. PDO.......................................................................................................................... 5 Project Beneficiaries ...................................................................................................... 5 PDO Level Results Indicators ........................................................................................ 6 III. PROJECT DESCRIPTION ..............................................................................................6 A. Project Components ................................................................................................. 6 B. Project Financing ..................................................................................................... 8 Instrument ...................................................................................................................... 8 C. Project Cost and Financing ...................................................................................... 9 D. Lessons Learned and Reflected in the Project Design ............................................. 9 IV. IMPLEMENTATION .....................................................................................................10 A. Institutional and Implementation Arrangements ................................................... 10 B. Results Monitoring and Evaluation ....................................................................... 11 C. Sustainability.......................................................................................................... 11 V. KEY RISKS AND MITIGATION MEASURES ..........................................................12 A. Risk Ratings Summary Table ................................................................................ 12 B. Overall Risk Rating Explanation ........................................................................... 14 VI. APPRAISAL SUMMARY ..............................................................................................14 A. Economic and Financial Analyses ......................................................................... 14 B. Technical ................................................................................................................ 15 C. Financial Management ........................................................................................... 15 D. Procurement ........................................................................................................... 16 E. Social (including Safeguards) ................................................................................ 16 F. Environment (including Safeguards) ..................................................................... 17 iv G. Other Safeguards Policies Triggered ..................................................................... 17 Annex 1: Results Framework and Monitoring .........................................................................18 Annex 2: Detailed Project Description .......................................................................................30 Annex 3: Implementation Arrangements ..................................................................................35 v DATA SHEET Argentina INCREASING CLIMATE RESILIENCE AND ENHANCING SUSTAINABLE LAND MANAGEMENT IN THE SOUTHWEST OF THE BUENOS AIRES PROVINCE PROJECT Small RETF Grant Project Paper . LATIN AMERICA AND CARIBBEAN LCSEN . Basic Information Date: July22, 2013 Sectors: Agricultural extension and research (25%), Crops (25%), Irrigation and drainage (25%), Animal production (25%) Country Director: Penelope J. Brook Themes: Climate change (40%), Land administration and management (20%), Water resource management (20%), Vulnerability assessment and monitoring (10%), Environmental policies and institutions (10%) Sector Emilia Battaglini/Ede EA B - Partial Assessment Manager/Director: Jorge Ijjasz-Vasquez Category: Project ID: P125804 Instrument: Grant Team Leader(s): Marcelo Hector Acerbi . RecipientMinistry of Economy and Public Finance Executing Agency: Secretariat of Environment and Sustainable Development Contact: José Cueva Title: Director de Conservación de Suelos y Lucha contra la Desertificación Telephone No: +54 11 4348-8573 Email: desersuelo@ambiente.gob.ar . Project Implementation Start Date: 31-July-2013 End Date: 30-December-2018 Period: Expected Effectiveness Date: 1-August-2014 Expected Closing Date: 30-December-2018 . Project Financing Data(US$M) [ ] Loan [X ] Grant [ ] Other [ ] Credit [ ] Guarantee For Loans/Credits/Others Total Project Cost : Total Bank 0.00 5.819 Financing : vi Total Grant 3.960 Financing Gap : 0.00 Total Cofinancing : 1.859 . Financing Source Amount(US$M) RECIPIENT (in-kind) 1.859 IBRD 0.00 Adaptation Fund 3.960 Financing Gap 0.00 Total 5.819 . Expected Disbursements (in USD Million) Fiscal Year 2013 2014 2015 2016 2017 2018 2019 2020 2021 Annual 0.00 0.00 0.50 1.50 1.50 0.46 0.00 0.00 0.00 Cumulative 0.00 0.00 0.50 2 3.50 3.96 0,00 0.00 0.00 . Project Development Objective(s) The PDO is to contribute to reducing climate and man-made vulnerability of the agroecosystems in the Southwest of the Buenos Aires Province by increasing adaptive capacity of key local institutions and actors and piloting and disseminating climate resilient and sustainable land management practices. . Components Component Name Cost (USD Millions) Component 1: Reducing Institutional and Community-level Vulnerability 1.027 Component 2: Implementing Adaptation Measures in Productive 2.291 Agroecosystems Component 3: Applying a Participatory Approach to Knowledge 0.140 Management and Monitoring and Evaluation Component 4: Developing a Sustainability Strategy 0.195 Unallocated and crosscutting costs 0.307 . Compliance Policy Does the project depart from the CAS in content or in other significant respects? Yes [ ] No [ X ] . Does the project require any exceptions from Bank policies? Yes [ ] No [ X ] Have these been approved by Bank management? Yes [ ] No [ X ] Is approval for any policy exception sought from the Board? Yes [ ] No [ X ] Does the project meet the Regional criteria for readiness for implementation? Yes [ X ] No [ ] . Safeguard Policies Triggered by the Project Yes No Environmental Assessment OP/BP 4.01 X Natural Habitats OP/BP 4.04 X vii Forests OP/BP 4.36 X Pest Management OP 4.09 X Physical Cultural Resources OP/BP 4.11 X Indigenous Peoples OP/BP 4.10 X Involuntary Resettlement OP/BP 4.12 X Safety of Dams OP/BP 4.37 X Projects on International Waters OP/BP 7.50 X Projects in Disputed Areas OP/BP 7.60 X . Legal Covenants Name Recurrent Due Date Frequency Institutional and Other Arrangements X Section 3.03 (a) of Article III of the GA Description of Covenant The Recipient shall through SAyDS, maintain the PIU, during the period of implementation of the Project, with composition, powers, functions, staffing, and resources appropriate to fulfill its responsibilities related to the implementation of the Project. Legal Covenants Name Recurrent Due Date Frequency Institutional and Other Arrangements X Section 3.03 (b) of Article III of the GA Description of Covenant The Recipient shall cause the SAyDS to carry out day-to-day coordination and management, and to facilitate supervision of the Project through qualified staff, and to ensure that the grant funds provided by this Agreement shall be used for financing activities under the Project, in accordance with sound technical, economic, financial, management, social and environmental standards and practices acceptable to the World Bank Legal Covenants Name Recurrent Due Date Frequency Institutional and Other Arrangements X Section 3.03 (c) of Article III of the GA Description of Covenant The Recipient shall ensure that the Project is carried out in accordance with the provisions of the “Guidelines on Preventing and Combating Fraud and Corruption in Projects Financed by IBRD Loans and IDA Credits and Grants”, dated October 15, 2006 and revised in January 2011 (“Anti-Corruption Guidelines”). Legal Covenants Name Recurrent Due Date Frequency Institutional and Other Arrangements X Section 3.03 (d) of Article III of the GA Description of Covenant The Recipient shall, through SAyDS, : (i) carry out the Project in accordance with the provisions of a manual (the Operational Manual) and the pertinent provisions of the Environmental and Social Management Framework (including the EMPs, the RPF and the IPPF; and (ii) cause the pertinent Participating Entities (as the case may be) to comply with the pertinent provisions of the Operational Manual and the Environmental and Social Management Framework (including the EMPs, the RPF and the IPPF, as determined by the Bank) in connection with their participation in the carrying out of Project activities. Legal Covenants Name Recurrent Due Date Frequency viii Institutional and Other Arrangements X Section 3.03 (e) of Article III of the GA Description of Covenant The Recipient shall enter into Implementation Agreements with Participating Entities. Any Implementation Agreement shall be approved by the Bank prior to the signing of such Implementation Agreement. Legal Covenants Name Recurrent Due Date Frequency Donor Visibility and Visit X Section 3.04 (a) of Article III of the GA Description of Covenant The Recipient shall take or cause to be taken all such measures as the World Bank may reasonably request to identify publicly the Adaptation Fund’s support for the Project. Legal Covenants Name Recurrent Due Date Frequency Donor Visibility and Visit X Section 3.04 (b) of Article III of the GA Description of Covenant The Recipient shall, upon the World Bank’s request, take all measures required on its part to enable the representatives of the Adaptation Fundto visit any part of the Recipient’s territory for purposes related to the Project. Legal Covenants Name Recurrent Due Date Frequency Project Monitoring, Reporting and Evaluation X Not later than forty Every semester Section 3.05 (a) of Article III of the GA five (45) days after the end of the period covered by every report Description of Covenant The Recipient shall monitor and evaluate the progress of the Project and prepare Project Reports in accordance with the provisions of Section 2.06 of the Standard Conditions and on the basis of indicators acceptable to the World Bank. Each Project Report shall cover the period of one calendar semester, and shall be furnished to the World Bank not later than forty five (45) days after the end of the period covered by such report. Legal Covenants Name Recurrent Due Date Frequency Project Monitoring, Reporting and Evaluation 31-July-2019 (Not Section 3.05 (b) of Article III of the GA later than six months after the Closing Date) Description of Covenant The Recipient shall prepare the Completion Report in accordance with the provisions of Section 2.06 of the Standard Conditions. The Completion Report shall be furnished to the World Bank not later than six months after the Closing Date. Legal Covenants Name Recurrent Due Date Frequency Financial Management X Section 3.06 (a) of Article III of the GA Description of Covenant The Recipient, through SAyDS, shall ensure that a financial management system is maintained in accordance with the provisions of Section 2.07 of the Standard Conditions. Legal Covenants ix Name Recurrent Due Date Frequency Financial Management X Not later than forty Every quarter Section 3.06 (b) of Article III of the GA five (45) days after the end of each calendar semester Description of Covenant The Recipient shall ensure that interim unaudited financial reports for the Project are prepared and furnished to the World Bank not later than forty five (45) days after the end of each calendar semester, covering the quarter, in form and substance satisfactory to the World Bank. Legal Covenants Name Recurrent Due Date Frequency Financial Management X Not later than six Annually Section 3.06 (c) of Article III of the GA months after the end of the audited period Description of Covenant The Recipient shall, on an annual basis, have its Financial Statements for the Project audited in accordance with the provisions of Section 2.07 (b) of the Standard Conditions. Each such audit of the Financial Statements shall cover the entire period during which withdrawals from the Grant Account were made. The audited Financial Statements for each such period shall be furnished to the World Bank not later than six months after the end of such period. Legal Covenants Name Recurrent Due Date Frequency Financial Management X Calendar year 2014 Section 3.06 (d) of Article III of the GA Description of Covenant The Recipient shall create a specific budget line entry for the Project in its annual budget (starting on the calendar year 2014), and shall maintain said budget line entry thereafter through its National Integrated Financial Management System. Legal Covenants Name Recurrent Due Date Frequency Procurement X Section 3.07 of Article III of the GA Description of Covenant All goods, works, non-consulting services, and/or consulting services required for the Project and to be financed, fully or partially, out of the proceeds of the Grant shall be procured in accordance with the requirements set forth or referred to in the “Guidelines: Procurement of Goods, Works, and Non-Consulting Services under IBRD Loans and IDA Credits and Grants by World Bank Borrowers”, dated January 2011 (“Procurement Guidelines”), and the “Guidelines: Selection and Employment of Consultants under IBRD Loans and IDA Credits and Grants by World Bank Borrowers”, dated January 2011 (“Consultant Guidelines”). Legal Covenants Name Recurrent Due Date Frequency Procurement X Section 3.08 of Article III of the GA Description of Covenant Any contract for Eligible Expenditures to be financed in full or in part out of the proceeds of the Grant shall be included in the procurement plan prepared by the Recipient and approved by the Bank in accordance with the Procurement Guidelines and the Consultant Guidelines, prior to initiating the procurement process for any such contract. . Team Composition Bank Staff x Name Title Specialization Unit UPI Marcelo Hector Acerbi Senior Environmental Team Lead LCSEN 318024 Specialist Tuuli Johanna Bernardini Environmental Specialist Environmental Specialist LCSEN 342173 Pablo Francisco Herrera E T Consultant Environmental Specialist LCSEN 435502 Lilian Pedersen E T Consultant Social Specialist LCSSO 315555 Armando Sanjines Procurement Specialist LCSPTR 383076 Daniel Chalupowicz FM Specialist LCSFM 307737 Maria PiaCravero Local Counsel LCC7 379516 Rachel Pasternack JPA LCSEN 411952 Emilia Battaglini Senior Environmental LCSEN 21097 Specialist Yuan Tao Counsel LEGEN 336056 Julius Martin Thaler Counsel LEGEN 335926 Ana Kuschnir Program Assistant LCC7C 159487 Claudia Nin Team Assistant LCC7C 244231 Non-Bank Staff Name Title Office Phone City Marcelo Morandi Environmental Consultant Ushuaia Hector Peña Rural Economist Ulises Martinez Ortiz Rural Engineer Buenos Aires . Locations Country First Administrative Location Plann Actual Comments Division ed Argentina Buenos Aires Provincia de Buenos X Aires . xi I. STRATEGIC CONTEXT A. Country Context 1. The Project is in line with the Country Partnership Strategy 2010–2012 (Report #48476-AR) discussed by the Executive Directors on June 9, 2009 #), as well as the Progress Report discussed in March 2011. The Project would mainly support the sustained growth objective of “rural development and the environment with a focus on promoting agricultural growth, reducing rural poverty, and improving environmental management”. 2. Climate scenarios devised for 2080/2090 in Argentina project increases in mean and extreme temperatures and changing precipitation patterns. These effects will have diverse impacts on regions, communities and economic sectors, but there are considerable underlying scientific uncertainties related with their magnitude and timing. Today, the scope and objectives of the Argentine Governmental Committee on Climate Change (GCCC) and its work on a National Climate Change Strategy (NCCS) provide an enabling environment to identify multi-benefit programs and measures that ideally combine synergies of climate mitigation and adaptation and start to apply tools developed for robust decision making under uncertainty. 3. Argentina’s economy relies heavily on natural resources mainly in agriculture, energy, and transportation. In 2008, these activities represented 31 percent of the GDP. As almost anywhere in the world, going forward implies critical decisions regarding the development path to be followed. To pursue sustainable development in today’s climate-constrained world, moregreen growth and climate resiliency considerations ought to be introduced into the key sector strategies and development plans on agriculture, industry (e.g. mining and power production) and services (e.g. tourism and transport). 4. According to the climate scenarios developed with the regional MM5-CIMA high resolution model for the 21st century 1, a considerable temperature increase is expected for the whole Argentine territory. The (IPCC) A2 scenario 2, projects more than 4°C temperature increase in the north of the country, and up to 2°C warming in Patagonia by the second half of the century. These increases, added to the warming already experienced during the 20th Century of approximately 1°C, are expected to have negative effects on several natural systems such as the generalized retreat of glaciers and higher evapo-transpiration in most areas.These effects would in turn impact water availability and consequently increase the risk of water deficits for agricultural production. For the North and central parts of the country, the SNC's forecasts indicate that increases are expected also in terms of maximum temperatures accompanied by a concentration of the rainfall regime. However, the mean rainfall levels are expected to stay approximately at their current levels. All this is expected to result in increased aridity and an intensification of the desertification processes affecting agriculture. Furthermore, since increased droughts are forecast for the winter season, it is 1 This model was based on the Hadley Centre HadCM3 model,and using different IPCC scenarios served the Second National Communication (SNC, 2007) of the Republic of Argentina to the United Nations Framework Convention on Climate Change (UNFCCC). 2 http://www.ipcc.ch/ipccreports/tar/wg1/029.htm: The A2 storyline and scenario family describes a very heterogeneous world based on self-reliance and preservation of local identities. Fertility patterns across regions converge very slowly, which results in continuously increasing population. Economic development is primarily regionally oriented and per capita economic growth and technological change more fragmented and slower than other storylines. 1 expected that cattle ranching would be especially impacted. Project Background and Context section of the Adaptation Fund (AF) Project document describes the specific climate conditions for the Project’s target area. 5. In this context, climate adaptation together with mitigation is a key development challenge for Argentina. A favorable climate is one of the most important physical assets on which the main Argentinean socio-productive activities depend. The climate-induced events with the greatest impacts on the national territory and human activities are: (i) up to 20 percent reduction of the water level in the La Plata basin (shared between 5 countries) within the next 50 years; (ii) increased water stress in northern and parts of western Argentina; (iii) potential water crisis in Mendoza, San Juan and Comahue; (iv) intense precipitation and floods in already affected zones such as the City of Buenos Aires; (v) further glacier retreat with implications for hydro-power generation and agriculture; and (vi) increased vulnerability of coastal areas to sea level rise. 3 6. Gender matters. Recent case studies 4 in Argentina have identified women being particularly vulnerable to climate impacts and found them already facing a number of direct impacts. Women have initiated adaptation strategies in terms of both ongoing and projected changes. Accordingly, specific gender approaches are needed in formulating related policies and measures (P&M). B. Sectoral and Institutional Context 7. According to the National Action Program to Combat Desertification (NAP) of the Secretariat of Environment and Sustainable Development (Secretaría de Ambiente y DesarrolloSustentable, SAyDS), the country uses over 80percent of its land for agricultural, livestock and forestry activities. 8. Climate change (CC) adaptation and mitigation, and conservation of natural resources are important pillars of the current program of the Government of Argentina (GoA), which aims at mainstreaming them into the key economic sectors. The Project has a direct link with a number of national strategies and plans, most notably with the NCCS and the NAP of the SAyDS. CC impacts are already being experienced in Argentina, and future CC projections indicate new vulnerabilities and aggravation of current ones, and the country has started to implement some specific adaptation actions. Coping strategies has mostly taken place in an autonomous, unplanned manner particularly in the agricultural sector, and besides short term economic benefits, it has caused environmental damage in terms of land degradation. 9. The SAyDS Directorate for Climate Change is the GoA focal point of the UNFCCC. Since 2009, the GCCC serves as a platform to coordinate, disseminate and validate climate change-related sectoral processes. It is currently developing the NCCS, and will coordinate the Third National Communication (TNC) activities aimed at designing CC P&M that can be integrated into sectoral development strategies. The TNC will provide science-based tools for decision-making across areas and administrative levels, including a comprehensive analysis of the challenges posed by the 3 The Second National Communication (SNC) of the Republic of Argentina to the UNFCCC (2007) 4 Bendini, M., García, M.I., Palomares, M. y Steimbreger, N: Impacto social del cambio climático. Percepciones y respuestasadaptativas (2010) World Bank,Social Development Unit, Latin American and Caribbean Region 2 evolution of climate conditions on the agriculture sector. The Fourth Appraisal Report (AR4) of the IPCC anticipated substantial dilemmas faced by agriculture, but did not include an evaluation of particular regional challenges. It is on this point that the TNC aims to inform the UNFCCC and highlight the national, sub-national and local issues faced by Argentina: the whole of its productive belt will be affected by increases in soil temperatures and changes in rainfall patterns, including the occurrence of extreme weather events. The Project-level background and context description in the Adaptation Fund Project document provides a more detailed description of the agriculture sector and related issues in political economy. 10. The SAyDS Directorate of Soil Conservation and Fight against Desertification, the GoA focal point of the United Nations Convention to Combat Desertification (UNCCD), is in charge of the NAP, within which the following related projects would complement the proposed Project: 1) National Observatory of Land Degradation and Desertification (SAyDS-CONICET), fruit of the Land Degradation Assessment in Dry Lands (LADA-FAO) project; 2) an evaluation of economic impacts of CC in dry lands in Argentina to produce CC vulnerability zoning of the Argentine regional economies; 3) proposed Global Environment Facility (GEF) project “Sustainable Forest Management in the Transboundary Gran Chaco American Ecosystem”; 4) GEF project on Sustainable Management of Arid and Semi-arid Ecosystems to Control Desertification in Patagonia, where the interventions operate on a similar ecosystem; and 5) Construction of Strategic Financial Partnerships for the Consolidation of Argentina’s NAP, a project that reviews the regulations of land use planning and soil conservation and implements the MERCOSUR Strategy to Combat Desertification. 11. Within the framework of the National Strategic Food Plan the Ministry of Agriculture, Livestock and Fishing (MAGyP) encourages development of sustainable production systems in degraded areas through forestry practices and infrastructure improvements for agricultural services to increase competitiveness, exports and employment. In the Project area (see maps in Annex 1 of the Adaptation Fund Project document 5), it implements revolving funds in support of productive activities and no-interest credit lines in support of small- and medium-scale farmers and implements the Farming Emergency Law. Further, the Project is expected to exchange lessons learnt and promote synergies with the WB-IDB executed Provincial Agricultural Services Program (PROSAP), a potential follow-up project of which could also provide important replication and scale-up options. 12. The Provincial Sustainable Development Agency (OPDS) for Buenos Aires Province operates various related activities like the Agrosolidarity Environmental Program that promotes long term improvements of quality of life and limits misuse of resources. The provincial law 13,647 includes the Development Plan of the Southwest Buenos Aires Province that assigns resources to farmers to improve sustainable land management, and the Regional Council for the Development of the Southwest of the Province to promote sustainable development among a broad range of provincial and technical institutes, universities and trade associations. Important synergy has been achieved with the National Institute for Agricultural Technology (INTA) that develops a variety of potential adaptation options for local agriculture practices and will be directly involved in Project implementation (EEA HilarioAscasubi). 5 https://www.adaptation-fund.org/sites/default/files/Proposal%20for%20Argentina%20(The%20World%20Bank).pdf 3 C. Higher Level Objectives to which the Project Contributes 13. Climate change adaptation and mitigation with and conservation of natural resources are important pillars of the Government’s current program, which aims at mainstreaming them into the key economic sectors. The institutional frameworks of several national agencies currently include development of a series of sectoral programs in line with the Project objectives. In particular, the SAyDS and the MAGyP are promoting various related national programs such as the National Climate Change Strategy (NCCS), Strategic Food Plan, Provincial Agricultural Services Program, and National Action Program to Combat Desertification (NAP) as mentioned before and described more in detail below. 14. Argentina’s institutional framework to deal with climate related issues has been strengthened since the early 2000. The SAyDS serves as the focal point for the UNFCCC through its Climate Change Directorate. In December 2009, it led the process of creating the Governmental Committee on Climate Change (GCCC), constituted by 22 organizations and aimed at ensuring wide involvement and coordination across Government and federal institutions. 15.The GCCC is currently leading the preparation of the NCCS and its Action Plan for short, medium and long term measures to mitigate CC and adapt to it. The GCCC will also serve as the Steering Committee for the execution of the TNC, where the Bank serves as the implementing agency for the GEF. The TNC provides a key tool for strengthening the national information base and institutional capacity to design and implement sectoral P&M for CC mitigation and adaptation through further analysis of mitigation potentials and climate vulnerabilities of the main economic sectors. 16. Notwithstanding the progress achieved, there are several concrete and strategic institutional opportunities where integration of CC concerns is lacking. As an example with high importance to the proposed Project, the “Strategic Plan for Agri-Food and Agribusiness 2010-2020”, launched in September 2011 by MAGyP, does not contemplate CC impacts but would nevertheless provide a substantive platform to discuss climate smart strategies building on its otherwise sustainable development approach. In the Ministry of Planning and Infrastructure, the “National Policy and Strategy for Development and Territorial Planning” provides an opportunity to discuss CC actions in terms of different scenarios for infrastructure development. 17.Since 1995, the UNCCD Focal Point has developed a NAP with the main objective of combating desertification and mitigating the effects of drought in order to contribute to sustainable development of the affected zones. Since this adaptation project falls within the framework of the PAN, it will benefit from the accumulated experience of the UNCCD Focal Point specifically in terms of review of regulations, development of an international early warning system, and the Good Agricultural Practices applied. Likewise, should implementation of a multi-sectoral fund to combat desertification be achieved, it could continue supporting adaptation measures that prove successful under this Project after its completion. 18.The Project has initiated institutional coordination with on-going World Bank activities on agricultural risk management and climate vulnerability adaptation in the Southwest of the Buenos Aires Province (SWBA). Specifically, important potential for synergy has been identified with the Livestock-Pasture Normalized Difference Vegetation Index (NDVI) insurance project for beef 4 cattle production. The Office of Agricultural Risk (Oficina de RiesgoAgropecuario, ORA) of the MAGyP monitors the water reserves in the soil, forecasts the ENSO phenomenon and related impacts on crops and develops maps on water surplus and stress for different crops. The ORA has a Risk Evaluation System and a Climate Change Area, but their maps do not include the southernmost portion of Buenos Aires. Cooperation has been proposed to establish a coordination team to manage a platform of shared and mutually strengthened information. The ORA is expected to join the key institutional cooperation tools to be created by the Project that in turn will enhance the Project’s possibilities to influence the MAGyP policies regarding climate risk in the Project area in terms of insurances, agricultural emergency measures, etc., and will be invited to participate in the Regional Observatory of Climate Change and Desertification. Similarly, the Project will seek cooperation with a recently started WB financed Sustainable Management of Natural Resources and Climate Change project in Uruguay that supports Uruguay's efforts to promote farmer adoption of improved environmentally sustainable agricultural and livestock practices that are “climate smart”. 19.A remarkable effort has also been given to identify potential synergies with the key counterparts to coordinate ongoing programs with the Project. A detailed description of projected coordination with other ongoing programs and projects in the project target area is available in pages 119-125 of the Adaptation Fund Project document; see footnote 5. II. PROJECT DEVELOPMENT OBJECTIVES A. PDO 20. The Project objective is to contribute to reducing climate and man-made vulnerability of the agroecosystems inthe Southwest of the Recipient’s Buenos Aires Province by increasing adaptive capacity of key local institutions and actors and piloting and disseminating climate resilient and sustainable land management practices. 21. Participatory planning processes will be used to identify and pilot concrete adaptation measures focusing on water, crops and livestock management to promote climate resilience. Project Beneficiaries 22. The Project aims at benefitting farmers and farmer families engaged in small and medium- sized agricultural-cattle production on dry lands within the direct and indirect intervention zones; counties (partidos) of Puán, Villarino and Patagones, and 9 further SWBA counties, respectively. Additionally, a wide range of actual and potential partner organizations working on related aspects within the area and up to national level will benefit from and contribute to a comprehensive set of capacity building and institutional strengthening measures. 22. Component 2 will apply a participatory approach to pilot concrete adaptation measures on local agroecosystems empowering especially the family farming sector with farm sizes ranging from 200 to 3,500 hectares. This farm size applies to 5,075 producers and represents 65 percent of the farms in the SWBA. Further, the Project activities are expected to provide relevant lessons also for bigger producers that own up to 3,500 hectares and beyond. Farmers will be able to visit the Specific Intervention Sites (SIS) within the Geographic Intervention Areas (GIA) and participate in hands-on workshops focusing on the piloted adaptation and land management practices. On the 5 other hand, field experience will be disseminated through capacity building sessions and printed and other communication material based on a Communication and Knowledge Management Strategy that will be prepared under component 3. Annex 6 of the AF Project document 6 describes the GIAs and SISs, their selection criteria as well as the type of direct beneficiaries and related participation criteria. PDO Level Results Indicators (i) Number of the targeted institutions that reflect institution-specific adaptation needs in their budget allocations to increase their capacity to address climate-related challenges; (ii) Productive agroecosystems in the pilot sites maintained or improved to withstand conditions resulting from climate variability and change; and (iii)Relevant threat and hazard information generated and disseminated to farmers and other stakeholders on a timely basis. III. PROJECT DESCRIPTION A. Project Components 23. The Project aims at promoting an enabling environment for climate adaptation as a continued, inter-sectoral and inter-institutional learning process, and to implement production-based adaptation measures in dry land agroecosystems, by introducing techniques for climate resilient and sustainable management of natural resources, supported by cross-institutional work aimed at (1) creating an adequate political, social, and economic framework to ensure adoption, sustainability, continuity, and further development of the adaptation efforts; and (2) bolstering and fine-tuning adaptation measures identified and chosen through institutional and community-level capacity building. 24. The Project consists of the following components: Component 1: Reducing Institutional and Community-level Vulnerability a. Improvement of response and planning capacity of local institutions, communities and farmers by promoting their participation in data collection and analysis. b. Collection andprocessing of data through the establishment of an information and early warning system on climate change and desertification (“IEWS”). c. Creation of a regional consultative observatory of public policies on climate change and desertification (“Observatory”) through institutional and sector-specific coordination among related stakeholders to utilize the information generated by IEWS in the relevant decision-making processes. d. Development of innovative and participatory capacity building and governance tools through the carrying out of specific programs targeting national, provincial and local institutions in the 6 https://www.adaptation-fund.org/sites/default/files/Proposal%20for%20Argentina%20(The%20World%20Bank).pdf 6 agricultural and environmental sectors, as well as farmers and their families, all in a gender-sensitive manner. Component 2: Implementing Adaptation Measures in Productive Agroecosystems a. Selection and appraisal of the adaptation measures to be implemented on each Specific Intervention Site through a participatory process. b. Development and application of sustainable land management practices on each Specific Intervention Site, including management practices on water, livestock and crops, as well as other activities, such as programs to improve access to markets and options to promote productive alternatives. Component 3: Applying Participatory Approach to Knowledge Management and Local Capacity Development for Adaptation to Climate Change a. Engagement of directly targeted farmers and national, provincial and local institutions in the agricultural and environmental sectors in Project monitoring, adaptation management and dissemination of lessons learned. b. Provision of training and tools to farmers for their participation in the development of local farm and/or household-specific and gender-sensitiveadaptation strategies. c. Capacity building with a focus on the development of knowledge management systems that promote: (i) continuous improvements thereof; and (ii) adaptation management. d. Development of a specific methodology to identify: (i) climate changeimplications for agriculture;(ii) potential response options thereto; and (iii) climate change response action plans. e. Promotion of training for: (i)national, provincial and local institutions in the agricultural and environmental sectors; and (ii) farmers and communitiesto enable them to carry out knowledge management tasks and engage in mutual knowledge sharing between and beyond the primary intervention Partidos of Puán, Villarino and Patagones. f. Preparation of a specific communication and knowledge management strategy to: (i) to involve national, provincial and local institutions in the agricultural and environmental sectors, as well as farmers and communities; and (ii) explore effective ways for knowledge sharing. g. Organization of joint demonstrative field visits by the PIU, farmers and communities and the Recipient’s pertinent sector agencies involvedwith promotingpractical dialogue. h. Dissemination of good practices and lessons learned at different administrative levels, including relevant international fora. 7 Component 4: Developing a Sustainability Strategy a. Generation of institutional and community level agreements for the adaptation measures to be sustained beyond the Closing Date. b. Search for continued financing for successful initiatives, through institutional arrangements that enable linking adaptation measures with the Development Plan of the Southwest of Buenos Aires Province. c. Promotion of linkages with other national-level plans, such as the Provincial Agricultural Services Program. d. Promotion of institutional arrangements targeting sustainability of the Observatory. e. Continuation of the IEWS and recommendation of its adoption by the Observatory. f. Facilitation of the development of arrangements for local accountability and supervision by the Recipient’s federal and provincial executing counterparts for an additional five-year period after the Closing Date. g. Compilation and review of potential sources of financing and development of a fundraising strategy. h. Development of a participatory program to disseminate good practices. 25. A detailed description of each component and their respective sub-components is included in Annex 2 and in the full-fledged proposal submitted to the Adaptation Fund 7. B. Project Financing Instrument 26. The Adaptation Fund was established to finance concrete adaptation projects and programs in developing countries that are parties to the Kyoto Protocol and are particularly vulnerable to the adverse effects of climate change. 27. On December, 2012 the proposal submitted by the IBRD to the AF Board seeking access to resources in support of the “Increasing Climate Resilience and Enhancing Sustainable Land Management in the Southwest of Buenos Aires Province” project in Argentina, was approved. 28. On February 25, 2013, an agreement was signed between the Adaptation Fund Board and the IBRD, in order for the latter to serve as the Project’s MultilateralImplementing Entity. 7 https://www.adaptation-fund.org/sites/default/files/Proposal%20for%20Argentina%20(The%20World%20Bank).pdf 8 29. The Project will be funded by the Adaptation Fund for a total amount of US$ 4,296,817, of which US$ 336,617 correspond to the project cycle management fee available to the IBRD. 30. The Adaptation Fund covers the financing of full adaptation costs. However, during the preparation phase it has become clear that the Project will be able to benefit of a robust in-kind contribution from the participating public institutions, which was estimated in US$ 1.859 million. Details of these estimated contributions are presented in pages 84 and 85 of the AF Project document. C. Project Cost and Financing Project cost Project Components (US$) AF Financing % Financing 1.Reducing Institutional and Community- 1,026,760 Adaptation Fund 100 level Vulnerability 2.Implementing Adaptation Measures in 2,290,702 Adaptation Fund 100 Productive Agroecosystems 3.Applying Participatory Approach to 140,000 Adaptation Fund 100 Knowledge Management and Monitoring and Evaluation 4. Developing a Sustainability Strategy 194,728 Adaptation Fund 100 Unallocated 110,000 Adaptation Fund 100 Project Execution Cost 198,010 Adaptation Fund 10 1,859,000 Recipient and 90 counterparts (in-kind) Total Project Costs 3,960,200 Adaptation Fund 68 Total Project Costs 1,859,000 Recipient and 32 counterparts (in-kind) Total Financing Required 5,819,200 Adaptation Fund + 100 Recipient and counterparts D. Lessons Learned and Reflected in the Project Design 31. The Project focuses on a potential linkage with “Building Resilience to Climate Change and Variability in Vulnerable Smallholders”, an adaptation project that has recently started implementation in Uruguay, given the thematic and technical similarities. The Provincial Agricultural Development Project, PROSAP (P102316), has been consulted during Project preparation and it would be potentially involved in the future assessment of adaptation measures through its expected role in the Observatory, as previously described. 32. The experience gained from the Mantaro Valley and other Latin American locations, as described in the Bank publication “Building Response Strategies to Climate Change in Agricultural 9 Systems in Latin America”, will be taken advantage of during Project implementation as part of the dynamics to prepare and agree on the action plans envisaged for each SIS. IV. IMPLEMENTATION A. Institutional and Implementation Arrangements 33. The Project’s executingagency will be the National Secretariat of Environment and Sustainable Development (SAyDS). At the provincial level, the Project counterpart is the Provincial Sustainable Development Agency (OPDS), which is the provincial institution with responsibility, mission and powers on environment and sustainable development in the Province of Buenos Aires. The SAyDS and OPDS have signed an institutional cooperation agreement which contemplates the Project. 34. The Project will be supported by a Steering Committee (SC) comprised of the SAyDS highest levelas well as the Government of the Province of Buenos Aires through OPDS, with the objective and necessary mandate to advice on the central intervention lines. 35. The main function of the SC would be to provide strategic and political leadership to the Project and secure effective coordination among involved senior environmental authorities at national and provincial level. The SC will ensure alignment of the Project with the Government strategies and programs underway especially with respect to consistency of the interventions at bothjurisdictional levels. Furthermore, the SC will guarantee transparency throughout Project interventions. 36. The Project Implementing Unit (PIU) will be comprised of the two SAyDS Directorates, Soil Conservation and Fight against Desertification and Climate Change, and OPDS. The PIU will be in charge of coordinating the Project activities, leading rigorous and participative monitoring and control process, developing and analyzing reports, as well as managing disbursements and controlling their proper application. The PIU will host a General Executive Coordinator who will coordinate activities with a Territorial Executive Manager. The latter will be located in an OPDS office in the intervention zone and be mainly in charge of the local institutional relations and the direct supervision of field activities. 37. The Project has identified key partners for the execution of the proposed activities. Annex 7 of the AF Project 8 document describes the planned scope of work on each activity by partner institutions. SAyDS will enter into implementation agreement with each participating entity. Procurement and FM responsibilities will be retained by SAyDS. 38. The SAyDS has experience in the implementation of projects with the Bank and GEF finance. As of today, the SAyDS has executed the Coastal Contamination Prevention and Marine Biodiversity GEF project (P049012), the Native Forest and Protected Areas project (P040808), the Biodiversity Conservation GEF project (P039787), the National Solid Waste Management IBRD project (P08996), the Second National Communication GEF project (P048173), and the Natural Resources Sustainable Management project (P100806). This background provides it with a robust basis to lead the Project in both technical and fiduciary terms. 8 https://www.adaptation-fund.org/sites/default/files/Proposal%20for%20Argentina%20(The%20World%20Bank).pdf 10 39. Financial management, disbursements, and procurement will be managed by the “Programa de Proyectos con FinanciamientoExterno” (PPFE), a unit that has been created within the Secretariat of Environment and Sustainable Development (SAyDS), under the Chief of the Minister´s Cabinet (JGM),which will be part of the PIU structure. The capacity of this proposed unit has been recently assessed by Bank staff as part of the Third National Communication (P116974) re-structuring. The institutional arrangements and capacity in place have been found acceptable to the Bank. B. Results Monitoring and Evaluation 40. The proposed M&E methodology is based on the experience of the project “Sustainable Development of Arid and Semiarid Zones of Argentina” conducted between 1999 and 2008 jointly by the SAyDS, the National Institute for Agricultural Technology and the GIZ (former GTZ). In this respect, the development of the monitoring lines will be supported by the Integrated Experts Program CIM of the German Technical Cooperation Agency through an operational agreement with the Directorate of Soil Conservation and Fight against Desertification that is valid since 2009. In principle, the methodology consists of a combination of control and monitoring activities conducted by the Project coordinators in the Implementing Unit and strengthened through organization of participatory workshops with Project stakeholders. In the workshops, beneficiaries and other Project agents will learn evaluation methodologies and become actively involved in developing indicators for later group self-assessments that are expected to trigger learning and continuous improvement processes. The proposed methodology is considered especially pertinent for a climate change adaptation project since it has a better potential for the evaluation of soft indicators and improvement of the living conditions of the local population. Annex 1 and pages 57 and 58 of the AF Project document describe Project’s results framework and the specific M&E activities. 41. The proposed M&E system will contribute to the broader understanding of what can be understood as climate vulnerability in the context of the Southwest of Buenos Aires province, what measures can be considered as meaningful adaptation measures in the rural sector, and, ultimately, what methodological approaches can be used to measure a reduction of people’s vulnerability to climatic fluctuations (and climate change). Such information is not completely available in the target region, and it is needed for improving the design of climate adaptation programs in the rural sector. Thus, the design and the results of this M&E system of the Project will provide guidance to other efforts and will contribute to the institutional strengthening of the rural and environmental sector in terms of understanding, measuring, and incorporating the climate adaptation dimension in sectoral programs. C. Sustainability 42. The whole component 4 of the project is designed to develop a Sustainability Strategy that includes the generation of necessary institutional and community level agreements for the Project measures to be sustained beyond its closure. It also considers the necessityofcreating a policy framework taking into account both regulatory and material needs that contribute to continuation of key activities by relevant stakeholders, and a commitment to demonstrable dissemination of experience and lessons. Continued financing for successful initiatives will be sought through institutional arrangements that enable linking measures with the Development Plan of the 11 Southwest of the Buenos Aires Province. Local authorities will be provided compiled information on potential sources of financing and guidance on fund raising. V. KEY RISKS AND MITIGATION MEASURES A. Risk Ratings Summary Table Risk Risk Rating Mitigation measures Stakeholder Risk: H The number of involved stakeholders (national and The Project coordination will be based on provincial government agencies and municipal mechanisms of participatory decision making aimed authorities, farmers and communities, scientific at facilitating consensus and ownership, early institutions, and NGOs) may make swift decision- detection of potential sources of conflict, and making difficult and slow down project constructive dialogue. implementation. Cost-benefit analysis will be applied to prioritize Incentives/direct benefits at community level might use of different adaptation measures. The final prove insufficient to convince people to adopt interventions will be identified through behavioral changes and new ways of cooperation in participatory consultations and expressed in a order to achieve longer-term objectives especially results-based management plan to ensure a high outside the key intervention zones. level of involvement of the local communities. The Project will also search for synergies with on-going and new programs targeting the Project’s key stakeholders in order to maximize Project benefits. Establishment of a Steering Committee at a political level and the inclusion of the Provincial Agency for Sustainable Development in the Project Implementing Unit will make it possible to strengthen related decision making and safeguard the Project activities’ pertinence and compatibility at the provincial level. The overall participatory and inclusive project design will improve provincial, municipal and beneficiary level ownership and thus enhance sustainability. Further, the Project includes direct benefits for institutional strengthening and operates through multi-institutional and sectoral structures in order to enhance transparent exchange and interplay of interests and mutual support. Special attention will be given on participation of the municipalities that are directly exposed to local public opinion. Implementing Agency Risk Capacity: L Professionals specifically dedicated to FM and Financial Management and Procurement may prove procurement will be hired for Project challenging for the PIU and certain administrative execution.Related implementation arrangements processes may delay Project execution. were analyzed during Project preparation to detect potential bottlenecks up-front and define ways to resolve them. Consequently, the FM arrangements 12 have been defined and a procurement plan for the first 18 months of project implementation developed. In addition, SAyDS has developed capacity during the implementation of the IBRD financed “National Solid Waste Management Project” (P089926) and the GEF grant “Third National Communication Project” (P116974). Governance: M Policy priorities across administrative levels The key participation of SAyDS and OPDS in the (national, provincial, and municipal) could differ COFEMA, as wellas the active participation of and/or change during Project implementation. OPDS in the PDSO will facilitate a good level of Similarly, due to lack of synchronicity between dialogue between different agencies to ensure the political cycles and dynamics of ecosystem recovery, alignment between policy priorities and project political counterparts maynot prioritize Project- objectives. related cooperation. At the implementing agency level, the SAyDS/PPFE operational processes and procedures will provide an adequate internal control framework and a proper segregation of duties, and the Project’s internal control environment will be anchored in related national legal and institutional framework: The Project will be subject to the Internal Control Standards issued by the General Syndicate of the Nation (SIGEN), and its annual financial statements audited under Terms of Reference prepared in line with the Bank Guidelines and performed by an independent auditor AGN, Argentine Supreme Audit Institution, following auditing standards acceptable to the Bank. Project Risk Design: M Establishment of the Regional Consultative Changing climatic conditions could affect the success Observatory on Climate Change and Desertification of particular adaptation measures to be piloted during and theInformation and Early Warning System as Project implementation; climate change may take a well as the overall institutional and farmer-level different form than anticipated (more or less severe capacity building included in the Project design will and different in specific aspects such as impact on enable careful monitoring of climate variability in rainfall totals, regularity, intensity, etc.) or occur the region, and consequent consideration of more slowly than anticipated. potential adjustments in Project activities. The chosen adaptive practices may prove less The Project will develop a set of communication effective than anticipated in reducing impacts of measures that will enhance stakeholders’ climate variability and change to farmers; farmers engagement in Project activities. For those farmers might not wish to adopt the chosen adaptive practices participating in the Specific Intervention Sites, the due to lack of inputs, financing, or TA. Project will ensure adequate inputs, financing, and TA. Social and Environmental: L Moderate capacity for environmental and social This risk has been partially mitigated by involving management could negatively affect achievement of the SAyDS Directorate and the OPDS on the the PDO. The PIU has no earlier experience on Project’s environmental and social assessments environmental and social management under the from their initial stages on. Detailed safeguards Bank safeguards. However, other divisions in the instruments have been prepared and disclosed, and 13 SAyDS have been implementing safeguard policies. the PIU has already attended relevant training by the Bank office in Buenos Aires. The Bank will provide further safeguards trainingat the Project launch and during Project implementation on as- needed-basis. Delivery Monitoring and Sustainability: M The Project will have an assessment and monitoring system in place aimed at alerting on lack of In case the overall Project results would prove effectiveness of any of the piloted practices.The insufficient to create expected behavioral changes Project design is based on innovatively broad across different stakeholder groups, or the planned arrangements of inter-institutional cooperation, and communication and dissemination efforts would not communication and dissemination efforts will be succeed, the Project may fail to promote expected placed among the key functions of the Project team replications and scale-up operations. from early on both within the country and the Bank. Overall Implementation Risk M B. Overall Risk Rating Explanation 43. The overall risk rating of the Project design and implementation is “Moderate”. At the moment, the main identified risk is that the farmers may not wish to adopt the chosen adaptive practices e.g. because they are skeptical of likely impacts of climate change. The economic and financial analysis conducted confirms, however, that the proposed approach and measures will generate sufficient direct benefits to the targeted farmers. The Project aims at advancing more detailed analysis on specific measures to help screening and choosing the most viable adaptation measures to be piloted and/or replicated/scaled up. This will be done in consultation with beneficiaries and other stakeholders during the implementation phase. 44. Other risks could relate to management issues between the SAyDS and the OPDS, technical staffing, and lack of field support that might prevent adoption or sustainability of adaptation measures. VI. APPRAISAL SUMMARY A. Economic and Financial Analyses 45. An economic and financial analysis has been carried-out for component 2 of the Project contemplating direct adaptation measures. The proposed direct intervention area would involve three counties with a predominance of dry land farming located in zones below the 600 mm isohyetal line (dry counties with frequent water deficit), namely: Puán, Villarino and Patagones. It is noteworthy that the Project provides important non-market values which contribute to livelihood improvement, as well as to enhanced ecosystem health which are not included in the present accounting as this would exceed the methodological complexity of a sensitivity analysis based on utility functions that were used for the herewith pursued purpose of valuation. 46. The economic valuation results of the identified Project activities present a positive economic return with a Net Present Value (NPV) of US$ 17,578,259 and an Economic Internal Rate of Return (EIRR) of 53 percent at a Discount.This value is above the original Discount Rate of 12 percent. It 14 shows that the Project is economically profitable under existing conditions; producers’ situation with Project is better than without Project. 47. A sensitivity analysis was undertaken to assess the robustness of the results of the economic analysis to hypothetical variations in key parameters. There are diverse variables that might be considered as risk factors for the Project, so it is important to assess how that factor can affect obtained economic results. One of the most serious variability factors in this Project is climate variability and change. It is estimated that in the last 38 years, moderate droughts occurred in every one out of three years. Severe drought has a probability of 16 percent, while extreme drought occurs once in a decade. These events affect crop and pasture yields, as well as livestock weight gain and reproductive efficiency. This current variability was already taken into consideration in the economic assessment using average yields of the last decade for all calculations. 48. The sensitivity analysis scenarios were built considering the climate change incidence. The first scenario assumes ten years of continuous conditions of moderate drought. In that case, the effect on yield reduction is 11 percent even when adaptation measures are adopted.The second scenario was built considering ten years of continuous severe drought. In this case, yield reduction reaches 33 percent. The third scenario assumes an extreme drought in ten years. In that case, the income reduction is 72 percent. The more detailed analysis and results of the economic evaluation are presented in Annex 12,pages139-155 of the AF Project document. B. Technical 49. The Project’s focus is on financing actions to reduce climate vulnerability of the agriculture sector in the Southwest of the Buenos Aires Province that suffers from man-made and increasingly climate change induced desertification processes by increasing adaptive capacity of key local institutions and actors and piloting and disseminating climate resilient and sustainable land management measures. Available information on land degradation and climate change, as well as discussions with Government representatives of the SAyDS, OPDS and from technical institutions such as INTA or the UNS, revealed that due to the zone’s limited agroclimatic potential, production should avoid compromising the sustainability of the resources. As for the general production orientation, the mixed system is considered to be the best if adapted to climate and market variations to provide greater flexibility to the system. It reduces risks and generates more labor possibilities and a better occupation of the territory. To improve the Project’s technical underpinnings, the Bank team carried out site visits to each pilot area, identified potential opportunities for cooperation, discussed with stakeholders about potential investment opportunities, draft working programs, and estimate the associated costs. Technical details are provided in the AF Project document 9. C. Financial Management 50. A Financial Management (FM) Assessment of the proposed arrangements as part of the restructuring for the approved project has been performed in accordance with OP/BP 10.02 and in line with Bank specific guidelines. 9 https://www.adaptation-fund.org/sites/default/files/Proposal%20for%20Argentina%20(The%20World%20Bank).pdf 15 51. The objective of this assessment was to determine whether the FM arrangements for the proposed operation are acceptable to the Bank. The entity’s arrangements are considered acceptable if its budgeting, accounting, internal control, funds flow, financial reporting and auditing arrangements: (a) are capable of correctly and completely recording all transactions and balances relating to the project; (b) facilitate the preparation of regular, timely and reliable financial statements; (c) safeguard the project’s assets; and (d) are subject to auditing arrangements acceptable to the Bank. 52. The conclusion of the assessment is that the PPFE, through the Project Implementation Unit, has adequate FM arrangements in place. The Project specific arrangements along with the government-wide FM system in place, to be located at the PPFE, meet the minimum Bank requirements, after implementation of all mitigation measures proposed in this assessment. D. Procurement 53. Procurement activities will be carried out by the PPFE; an assessment of the Recipient’s capacity was carried out by the team, and a detailed action plan was prepared to address all risks identified. The overall procurement risk has been rated as Moderate. The experience gained by SAyDS in the implementation of previous projects with international financing, such as P089926 - Solid Waste Management Project, and the fact that PPFE will maintain procurement specialized staff suggests that the proposed PIU would have reasonable institutional capacity to handle all aspects of procurement in an acceptable manner. A summary of the procurement capacity assessment and project procurement arrangements are provided in Annex 3. E. Social (including Safeguards) 54. A social assessment was prepared based on a desk review of relevant documents on social condition in the SWBA, as well as information provided by key stakeholders during several field visits in 2011 and 2012. The assessment concludes that the Project would lead to mostly positive social development outcomes and impacts. Small and medium farmers are one of the priority target groups of the Project. Positive social development outcomes and impacts include: (a) increased access to social opportunities for the target groups, through improvements in access to anticipated information regarding land degradation, climate change, and the impact in rural activities; (b) decrease in the rural migration to urban areas; (c) increased climate resilience; (d) increased access to information, more predictability, decreasing vulnerability, educational program fitting in regional conditions; (e) access to decision making processes; and (f) strengthening indigenous peoples recognition and inclusion, by promoting respect to their visions. 55. As the presence of indigenous people has been confirmed in the Project area of influence, OP/BP 4.10 has been triggered and an Indigenous Peoples Planning Framework (IPPF) prepared. However, these, mostly urban populations, are not present in the area of direct impact of the project. The OP/BP 4.12 on involuntary resettlement has been triggered under a precautionary approach to address eventual physical involuntary resettlement issues raised during the final design of pilot projects. A Resettlement Policy Framework (RPF) has been prepared. 16 F. Environment (including Safeguards) 56. Environmental Categorization: The types of pilot investments in SIS are not envisaged to lead to significant environmental impacts if risks are appropriately mitigated. Thus, the Project has been classified as a Category B following the Environmental Assessment safeguard policy (OP/BP 4.01). Specific sub-projects that will be proposed for funding will undergo environmental screening to determine eligibility for financing. Eligible subprojects will include only those for which it can be confirmed to have an environmental categorization of Category B (or C); and that do not involve complex issues with regard to other environmental safeguards policies including significant impacts on cultural property or natural habitats and impacts on critical natural habitats and involuntary resettlement. 57. Given that the investments and their specific locations are not known by appraisal, the GoA has developed an Environmental and Social Management Framework (ESMF), which includes an Indigenous Peoples Planning Framework (IPPF) and an Involuntary Resettlement Policy Framework (RPF). The three safeguards instruments and the social assessment were cleared by the respective specialist, disclosed in-country 10 on June 17 and in the Bank’s InfoShop on June 20, 2013. Project investments will undergo a social and environmental screening and/or full assessment for the pertinent works following the ESMF. If resettlement and/or the presence of indigenous population is identified in the area of influence in which the works will take place, the PIU will, prior to the carrying out of any said works, prepare and furnish to the Bank a resettlement plan and/or an indigenous peoples’ plan including relevant consultation and disclosure in accordance with the provisions of the IPPF and RPF, as applicable. G. Other Safeguards Policies Triggered 58. Because of the nature of the potential impacts of these types of minor works, the Project also triggers the following World Bank environmental safeguard policies: Natural Habitats (OP/BP 4.04), Physical Cultural Resources (OP/BP 4.11), Forests (OP/BP 4.36), Pest Management (OP/BP 4.09), and Safety of Dams (OP/BP 4.37). 10 http://www.ambiente.gov.ar/default.asp?IdArticulo=10422 17 Annex 1: Results Framework and Monitoring ARGENTINA: INCREASING CLIMATE RESILIENCE AND ENHANCING SUSTAINABLE LAND MANAGEMENT IN THE SOUTHWEST OF THE BUENOS AIRES PROVINCEPROJECT Project Development Objective: Contribute to reducing climate and man-made vulnerability of the agroecosystems in the Southwest of theRecipient’s Buenos Aires Province by increasing adaptive capacity of key local institutions and actors and piloting and disseminating climate resilient and sustainable land management practices. Impact: Increased resilience to climate variability and change at the community, municipal, provincial, and up to the national level. Indicator Cumulative Target Values AF Indicator aligned Risk Additional info on the with the Adaptation Responsibility indicator Unit of Frequency Data Source/ Fund Results Baseline for Data Measure YR 1 YR 2 YR 3 YR 4 Methodology Framework Collection WB Indicator aligned with a World Bank core indicator Outcome indicator 1 Institution 0 4 10 Continued Specific Continued Competing The number of the monitoring; communicatio monitoring: institutional targeted key institutions Number of the verification n channels will Territorial challenges is 22 11. targeted institutions at the mid- be established Implementing won’t allow that reflect term review for continued Unit/ OPDS sufficient institution-specific and Project monitoring; and Project resources to adaptation needs in closure structured Implementation mainstream their budget interviews and Unit CC concerns allocations to revision of (Medium) increase their budgetary Verification: capacity to address documents at External climate-related verification evaluator challengesAF Outcome indicator 2 Index 0 13 7 10 Continued Field Continued Recovery of The Project covers three (0-24) 12 monitoring; measurements monitoring: badly geographic intervention 11 Secretary of Environment and Sustainable Development (SAyDS), Provincial Agency for Sustainable Development (OPDS), National Institute for Agricultural Technology (INTA), Ministry of Agriculture, Livestock and Fisheries (MINAGRI), National Observatory of Land Degradation and Desertification, Provincial Ministry of Agricultural Affairs (MAA), Regional Council for development of the Southwest of the Buenos Aires Province (PDSO), Municipalities of Puán, Villarino and Carmen de Patagones, National Southern University (UNS), Center of Renewable Natural Resources in the Semiarid Zone (CERZO), School of Agronomy of the University of Buenos Aires (FAUBA), Ministry of Social Development (MDS), Provincial Public Administration Institute (IPAP), National Public Administration Institute (INAP), Regional School of Bahia Blanca of the National Technological University (UNT), Ascasubi and Bordenave Experimental Agricultural Stations (EEA) of INTA, local NGOs, Provincial Ministry of Education, and Provincial Agricultural Services Program (PROSAP). 12 The 0-24 range of the index values reflects the extreme hypothetical cases where at the end of the Project the land where pilot adaptation measures have been implemented within all of the 12 SISs would be either degrading or vice versa improving. 18 Productive technical INTA/ Project degraded land areas (GIA) and 10 agroecosystems in the Score: verification Implementation might take SISs that cover app. pilot sites maintained 0= at the mid- Unit longer than 100.700 ha. SISs or improved to Degrading term review the Project represent the following withstand conditions 1= and Project Verification: period can three types: (i) Highly resulting from Maintaine closurebased External observe, and Degraded Area; climate variability d on FAO- evaluator specifically (ii)Area with Moderate and changeAF 2= LADA extreme Degradation; or (iii) Improving methods and weather Conserved Area 14. The field surveys conditions scoring of each SIS will might be determined by compromise measurements through some of the FAO-LADA methods targeted and field controls based results on soil conservation (Medium) techniques. Outcome indicator 3 Yes/No No Yes Yes Mid-term Review of Continued Climate The indicator reflects review and Project monitoring: conditions the Information and Relevant threat and Project progress Territorial worsening Early Warning System hazard information closure reports; Implementing quickly might (IEWS), information generated and documentation Unit/ OPDS pose produced by the disseminated to related with and Project additional Observatory, varied farmers and other the Implementation population diffusion material to be stakeholders on a Information Unit groups under produced, etc. timely basisAF and Early- increasing Warning Verification: risks beyond System External the scope of (IEWS); and evaluator the Project structured (Low) interviews 13 In this case the specific, the measure to demonstrate improvement would be discussed soonest after Project implementation has started and as part of the detailed design of action plans for site interventions. While during the preparation it is clearly demonstrated that the Project area is severely affected by degradation, the action plans to be prepared for each of the Specific Intervention Sites (SIS) will develop robust baselines in order to determine the soil conservation status and tendencies under specific management conditions. 14 Specific Intervention Sites (SISs) are the specific intervention and evaluation areas where the actions undertaken will deliver direct outcomes. The indirect results that these interventions may generate are much broader, and could generate positive externalities outside the Project's area of direct influence. There are 3 types of SISs: 1) Highly Degraded Areas: Land is degraded to such a degree that only medium/long term rehabilitation alternatives can be proposed to alleviate degradation. 2) Areas with Moderate Degradation: Degree of degradation does not yet present a high impact on the environment. Mitigation practices can be applied and two intervention alternatives may be distinguished (i) changing the land use, and (ii) changing the management, while maintaining the land use. 3) Conserved Areas where resource management is sustainable. However, some aspects can be enhanced to further increase resilience in face of expected impacts of increasing climate variability and change. 19 INTERMEDIATE AND IMMEDIATE RESULTS; INTERMEDIATE OUTCOME AND OUTPUT INDICATORS PER PROJECT (SUB-)COMPONENT Indicator Additional info on the AF Indicator aligned Unit of Responsibility Risk indicator Frequency Data Source/ with the AF framework Measur Baseline Cumulative Target Values for Data WB Methodology Indicator aligned e Collection with a World Bank core indicator YR 1 YR 2 YR 3 YR 4 Component 1, Intermediate Outcome: Institutional and community level response and prevention capacities developed to reduce land degradation and desertification and local vulnerabilities of the agricultural sector to climate variability and change Intermediate outcome % 0 15% of 50% of Mid-term Representativ External Based on the currently indicator, sub- both both review and e surveys evaluator available data on component 1.1, male male Project closing (combined female-led farms within and and Creating Institutional with the the Project area, female female Tools for Climate participa particip survey needed women’s share of all the Resilience nts ants to measure beneficiary participants intermediate is expected to be a % of targeted outcome minimum of 20%. beneficiaries satisfied indicators 2.1 with more climate and 3.1) resilient agricultural services (disaggregated by gender)WB Output 1.1.1: Institutional capacity building program directed at local public officers Output indicator 1.1.1 % 0 20% 30% 50% 60% After each Reports on Continued Change of The % will be measured training the training monitoring: priorities of the total of relevant % of targeted local session to be program Territorial and of public employees in the public employees organized; Implementing trained three counties where trained verification at Unit/ OPDS authorities Project works directly. the mid-term in local Even though specific review and Verification: institutions gender objectives were Project closure External (Medium) not defined for this evaluator indicator, participation will be monitored by gender. Output 1.1.2: Information and Early-Warning System (IEWS) on Climate Change and Desertification developed and run through inter-institutional cooperation 20 Output indicator 1.1.2 Yes/No No Key IEWS IEWS IEWS Continued Frequent Continued Lack of INTA, SAyDS and inst. operati fully fully monitoring; exchange monitoring: coordinatio OPDS play the key roles IEWS developed/ conven onal operati operati verification at with the Territorial n across on the necessary inter- operational through ed and and has onal onal the mid-term participating Implementing institutions; institutional cooperation. inter-institutional the a and and review and institutions; Unit/ OPDS and Difficulties cooperationAF IEWS growin has a has a Project closure Project Project in being g growin growin progress Implementation validating planne numbe g g reports; Unit data; d/ r of numbe numbe documentatio Time under users r of r of n related with Verification: mismatches develo users users the IEWS; External between pment and structured evaluator data taking interviews and reporting (Low) Output 1.1.3: Regional Consultative Observatory of Public Policies on Climate Change and Desertification in operation Output indicator 1.1.3 Yes/No No Yes Yes Yes Yes Continued Frequent Continued Complexity The key institutions are monitoring; exchange monitoring: of the UNS, municipalities, Active participation of verification at with the Territorial institutional PDSO, NGOs, INTA at least the key the mid-term participating Implementing coordinatio EEAs Ascasubi and institutions of the review and institutions; Unit/ OPDS and n processes Bordenave, CERZO, ObservatoryAF Project closure Project Project (Medium) National Observatory of progress Implementation Land Degradation and reports; Unit Desertification (SAyDS- documentatio CONICET). Their n related with Verification: participation is the External considered active if at Observatory; evaluator least 70% of them are and structured present in meetings and interviews agree on specific action plans for each institution for the following meetings. Intermediate outcome % 0 40%of 60% of Mid-term Representativ Continued Increased The targeted population indicator, sub- both both review and e surveys monitoring: awareness refers to the 80,000 component 1.2, male male Project closure (combined Territorial and even habitants of the three Promoting Climate- and and with the Implementing capacity counties where the smart Socio-cultural female female survey needed Unit/ OPDS and won’t be Project works directly. Approaches to Land to measure Project enough to Management output Implementation change old indicator Unit behaviors % of consulted people 2.1.2 and (Medium) who report on intermediate Verification: 21 modification(s) in their outcome External Project-related indicator 3.1) evaluator practices(disaggregated by gender)AF Output 1.2.1: Training program for key local stakeholders, including specifically opinion leaders Output indicator 1.2.1 Training 0 16 32 48 64 Continued Reports on Continued Estimated 8 sessions of 2 days monitoring; the training monitoring: training days per year. Number of beneficiary verification at days Territorial Even though specific days of training the mid-term Implementing gender objectives were providedWB review and Unit/ OPDS and not defined for this Project closure Project indicator, participation in Implementation training will be Unit monitored by gender. Verification: External evaluator Output 1.2.2: Teacher training program for environmental education specifically designed for the zone Output indicator 1.2.2 Teacher 0 At At A specific Continued Continued Difficulty To provide an idea of the training least 6 least communication monitoring; monitoring: in total number of teacher Number of teacher institute 10 channel will be simple Territorial achieving training institutes within training institutes within established to surveys Implementation official the 12 counties covered SWBA that cooperate facilitate Unit credits by the environmental with the Project and communication from the education program, there offer related training between Verification: Federal are 7 such institutes educational External Teacher within the three counties institutes; evaluator Training that are direct verification at Network, beneficiaries of the the mid-term granted by Project. review and the Project closure Province's Ministry of Education (Medium) Output 1.2.3: Gender-sensitive program on appreciation of the local culture and products, the role of farmers and their family in society Output indicator 1.2.3 Activity 0 Min. two in each of the three counties, Continued Activity Continued Low Even though specific as well as a regional fair of sustainable monitoring; reports, monitoring: receptivity gender objectives were Number of cultural and alternative products and production verification media Territorial of not defined for this socio-productive experiences per year at the mid-term coverage, Implementing environmen indicator, participation in activities carried out in review and and Unit/ OPDS and tal issues in these activities will be the Project zone jointly Project closure qualitative Project civil monitored by gender. with the municipal interviews Implementation society. 22 governments (fairs, Unit Coordinatio exhibitions, etc.) n problems Verification: between External thematic evaluator supply and demand (Low) Component 2, Intermediate Outcome: Concrete adaptation measures to improve climate resilience and sustainability of productive agroecosystems defined and selected based on participatory processes and piloted by local farmers in cooperation with partner organizations Intermediate outcome People, 0 200 1400 Continued Frequent Continued The indicator follows the indicator, component male people; people; monitoring; exchange monitoring: guidance provided for 2,Implementing and 160 1120 verification at with the INTA/Territoria defining “technologies” Adaptation Measures female male male and the mid-term participating l Implementing respect to the WB core in Productive and 40 280 review and institutions; Unit and Project indicator Agroecosystems female female Project closure Project Implementation “Technologies progress Unit demonstrated in the Number of beneficiaries reports; project areas (number)”. who have adopted an documentatio Verification: This will be reflected in improved agricultural n related with External the Project Operational technology promoted by the GIAs; and evaluator Manual. the Project structured (disaggregated by interviews gender)WB AF Output 2.1: Program of interventions in Geographical Intervention Areas (GIAs), predefined on a participatory basis according to biophysical, economic and social criteria, offering a menu of options related to the management of water resources, crops, cattle and grazing lands Output indicator 2.1.1 Adapt./ 0 Target numbers will be defined during Continued Frequent Continued Because of The indicator follows the SLM the first year of Project monitoring; exchange monitoring: the guidance provided for Number of technolo implementation after the technical verification at with the INTA/Territoria socioecono defining “technologies” adaptation/sustainable gies consultations have started. the mid-term participating l Implementing mic context and “demonstrated” land management review and institutions; Unit and Project and high respect to the WB core (SLM) technologies Project closure Project Implementation degree of indicator identified/verified progress Unit dependence “Technologies through local reports; on climate demonstrated in the participatory documentatio Verification: and market project areas (number)”. consultations under the n related with External oscillations, This will be reflected in Project framework that the GIAs; and evaluator farmers the Project Operational are demonstratedwithin structured could be Manual. the GIAsWB AF interviews tempted to prioritize a short-term vision that is not 23 consistent with the project cycle. (Medium) Component 3. Intermediate Outcome: Enhanced local knowledge and capacity for adaptation and response, developed in a participatory manner Intermediate outcome Media 0-25% 24 14 16 18 media Continued Frequent Continued Other Specific champions will indicator, component articles/ media medi media articles/ monitoring; exchange monitoring: competing be identified within local 3, Applying prgrms article a article prgrms and verification at with the Territorial themes media and municipal Participatory and s/ articl s/ 4 the mid-term participating Implementing decrease structures to support Approach to political prgrm es/ prgrm politiclinttv review and institutions; Unit/ OPDS and media and related monitoring. Knowledge inttvs s and prgr s and s Project closure review of Project political Management and 2 ms 2 Project Implementation attention Local Capacity politi and politi reports and Unit (Low) Development for clintt 2 clintt structured Adaptation to Climate vs polit vs interviews Verification: Change iclint External tvs evaluator Number of related articles/programs in the local media and political initiatives in the three municipal Councils of the directly targeted countiesAF Output 3.1: Combined consultation, coordination, training, and knowledge sharing at the local level in the three counties of direct Project intervention to develop and validate intervention proposals and work plans Output indicator 3.1 Yes/No N/A Yes Yes Yes Yes Continued Workshop Continued Named targets will be monitoring; reports monitoring: defined and registered Workshops and other verification at Territorial case by case in KM events meet their the mid-term Implementing connection with planning targets in terms of review and Unit and Project of each event. participation of Project closure Implementation different stakeholder Unit groups Verification: External evaluator Output 3.2: Capacity building for indicator development and measurement plans, systems of continuous improvement, training for local application groups, and mutual knowledge sharing in terms of the proposed activities between and beyond the counties Output indicator 3.2 % 0 At least At least At At least Continued Annual Continued Based on the currently 20% of 40% of least 70% of monitoring; monitoring monitoring: available data on female- 24 % of targeted both both 60% of both male verification at visits Territorial led farms within the beneficiaries who have male male both and female the mid-term including Implementing Project area, women’s participated in related and and male participants review and structured Unit and Project share of all the training and carry out female female and Project closure interviews Implementation beneficiary participants their own means of participa particip female Unit is expected to be a M&E and continued nts ants partici minimum of 20%. improvement related to pants Verification: the measures they have External adopted through evaluator participation in the Project (disaggregated by gender)AF Component 4, Intermediate Outcome: Improved local, provincial and national level technical and institutional capacity to sustain, scale up and replicate the Project outcomes Intermediate outcome See the 0 At least one Continued Frequent Continued “Institutional indicator 4.1, last institutional monitoring; exchange monitoring: commitments” could Developing a column compromis verification at with the Territorial include specific budget Sustainability Strategy e for the Project participating Implementing allocations, hiring of new continuity closure institutions; Unit and Project staff or modifying job Number of assumed of the Project Implementation descriptions, MoUs on institutional Project progress Unit relevant topics, commitments for the results per reports; ministerial degrees, new continuity and sector and structured Verification: or revised policies and/or sustainability of the activity interviews External plans, submitted funding Project results per evaluator applications, approved sector and activity grants, related initiatives with international cooperation, etc. Output 4.1.1: Creation of a policy framework taking into account regulatory requirements and resources needed to continue the Project’s main activities, and a commitment to disseminate the experiences and lessons learned Output indicator 4.1.1 Yes/No No Yes Verification at Material External the Project produced by evaluator Guidance material closure the Project; produced on critical structured pieces of policy interviews framework, piloted adaptation practices, and potential sources of financing to support continued efforts to promote climate resiliency at different administrative levels 25 and facilitate dissemination of Project results 26 Summary table with the Project Development Indicators and Intermediate Results Indicators PDO Project Outcome Indicators Outcome indicator 1 Number of the targeted institutions that reflect institution-specific adaptation needs in their Contribute to reducing climate and man-made vulnerability of the budget allocations to increase their capacity to address climate-related challengesAF agroecosystems in the Southwest of the Recipient’s Buenos Aires Province by increasing adaptive capacity of key local institutions Outcome indicator 2 and actors and piloting and disseminating climate resilient and Productive agroecosystems in the pilot sites maintained or improved to withstand conditions sustainable land management practices. resulting from climate variability and changeAF Outcome indicator 3 Impact: Increased resilience to climate variability and change at Relevant threat and hazard information generated and disseminated to farmers and other the community, municipal, provincial, and up to the national level. stakeholders on a timely basisAF INTERMEDIATE AND IMMEDIATE RESULTS INTERMEDIATE OUTCOME AND OUTPUT INDICATORS Component 1 Intermediate Outcome: Intermediate outcome indicator Institutional and community level response and prevention Sub-component 1.1: Creating Institutional Tools for Climate Resilience capacities developed to reduce land degradation and % of targeted beneficiaries satisfied with more climate resilient agricultural services desertification and local vulnerabilities of the agricultural sector to (disaggregated by gender)WB climate variability and change Output 1.1.1: Output indicator 1.1.1 Institutional capacity building program directed at local public % of targeted local public employees trained officers Output 1.1.2: Output indicator 1.1.2 Information and Early-Warning System (IEWS) on Climate IEWS developed/operational through inter-institutional cooperationAF Change and Desertification developed and run through inter- institutional cooperation Output 1.1.3: Output indicator 1.1.3 Regional Consultative Observatory of Public Policies on Climate Active participation of at least the key institutions of the ObservatoryAF Change and Desertification in operation Intermediate outcome indicator Sub-component 1.2: Promoting Climate-smart Socio-cultural Approaches to Land Management % of consulted people who report on modification(s) in their Project-related practices(disaggregated by gender)AF Output 1.2.1: Output indicator 1.2.1 Training program for key local stakeholders, including Number of beneficiary days of training providedWB specifically opinion leaders Output 1.2.2: Output indicator 1.2.2 27 Teacher training program for environmental education specifically Number of teacher training institutes within SWBA that cooperate with the Project and designed for the zone offer related training Output 1.2.3: Output indicator 1.2.3 Gender-sensitive program on appreciation of the local culture and Number of cultural and socio-productive activities carried out in the Project zone jointly products, the role of farmers and their family in society with the municipal governments (fairs, exhibitions, etc.) Component 2 Intermediate Outcome: Intermediate outcome indicator Concrete adaptation measures to improve climate resilience and Component 2: Implementing Adaptation Measures in Productive Agroecosystems sustainability of productive agroecosystems defined and selected Number of beneficiaries who have adopted an improved agricultural technology promoted based on participatory processes and piloted by local farmers in by the Project cooperation with partner organizations (disaggregated by gender)WB AF Output 2.1: Output indicator 2.1.1 Program of interventions in Geographical Intervention Areas Number of adaptation/sustainable land management (SLM) technologies identified/verified (GIAs), predefined on a participatory basis according to through local participatory consultations under the Project framework that are biophysical, economic and social criteria, offering a menu of demonstratedwithin the GIAsWB AF options related to the management of water resources, crops, cattle and grazing lands Component 3 Intermediate Outcome: Intermediate outcome indicator Enhanced local knowledge and capacity for adaptation and Component 3: Applying Participatory Approach to Knowledge Management and response, developed in a participatory manner Local Capacity Development for Adaptation to Climate Change Number of related articles/programs in the local media and political initiatives in the three municipal Councils of the directly targeted countiesAF Output 3.1: Output indicator 3.1 Combined consultation, coordination, training, and knowledge Workshops and other KM events meet their targets in terms of participation of different sharing at the local level in the three counties of direct Project stakeholder groups intervention to develop and validate intervention proposals and work plans Output 3.2: Output indicator 3.2 Capacity building for indicator development and measurement % of targeted beneficiaries who have participated in related training and carry out their own plans, systems of continuous improvement, training for local means of M&E and continued improvement related to the measures they have adopted application groups, and mutual knowledge sharing in terms of the through participation in the Project (disaggregated by gender)AF proposed activities between and beyond the counties Component 4 Intermediate Outcome: Intermediate outcome indicator Improved local, provincial and national level technical and Component 4: Developing a Sustainability Strategy institutional capacity to sustain, scale up and replicate the Project Number of assumed institutional commitments for the continuity and sustainability of the outcomes Project results per sector and activity Output 4.1.1: Output indicator 4.1.1 Creation of a policy framework taking into account regulatory Guidance material produced on critical pieces of policy framework, piloted adaptation 28 requirements and resources needed to continue the Project’s main practices, and potential sources of financing to support continued efforts to promote climate activities, and a commitment to disseminate the experiences and resiliency at different administrative levels and facilitate dissemination of Project results lessons learned 29 Annex 2: Detailed Project Description ARGENTINA: INCREASING CLIMATE RESILIENCE AND ENHANCINGSUSTAINABLE LAND MANAGEMENT IN THE SOUTHWEST OF THE BUENOSAIRES PROVINCE PROJECT OBJECTIVES: 1. The Project objective is to contribute to reduce climate and human induced vulnerability of the agroecosystems in the Southwest of the Buenos Aires Province by increasing adaptive capacity of key local institutions and actors, and piloting climate resilient and sustainable land management practices. Participatory planning processes will be used to identify and pilot concrete adaptation measures focusing on water, crops and livestock management to promote climate resilience. 2. The Project aims at benefitting farmers and farmer families engaged in small and medium- sized agricultural and cattle production on dry lands within the direct and indirect intervention zones: counties of Puán, Villarino and Patagones, and 9 further SWBA counties, respectively.Additionally, a wide range of actual and potential partner organizations working on relatedaspects within the area and up to national level will benefit from and contribute to a critical set of capacity building and institutional strengthening measures. 3. Component 2 will apply a participatory approach to pilot concrete adaptation measures in local agroecosystems empowering especially the family farming sector with farm sizes ranging from 200 to 3,500 hectares22. This applies to 5,075 producers and represents 65 percent of the farms in the SWBA. Further, the Project activities are expected to provide relevant lessons also for bigger producers that own up to 3,500 hectares and beyond. PROJECT COMPONENTS 4. The Project strategy is based on promoting an enabling environment for climate adaptation as a continued, inter-sectoral and inter-institutional learning process. The bulk of the requested funding will be reserved for implementation of production-based adaptation measures in dry land agroecosystems by introducing techniques for climate resilient and sustainable management of natural resources (component 2). These technical interventions will be supported by cross- institutional work aimed at creating an adequate political, social, and economic framework to ensure adoption, sustainability, continuity, and further development of the adaptation efforts. The complementary pillars (components 1, 2 and 3) aim at bolstering and fine-tuning adaptation measures identified and chosen through institutional and community-level capacity building. Stakeholder ownership will be promoted through a bottom-up approach and use of participatory engagement procedures. 5. With regards to its main component (component 2), the Project design presents fundamentally a framework for implementing potential adaptation measures as per results of participatory work together with the Project beneficiaries on planning, capacity building, knowledge sharing, and dissemination. The participatory approach to Project implementation 30 will entail a wide range of group work methodologies in the field, including technical meetings, organizational encounters, social events, field visits, and study tours. Beneficiary and stakeholder participation will be operationalized taking advantage of the local social networks that currently exist in the intervention area. A “cascade approach” will be followed to facilitate direct contact between the Project Implementation Unit (PIU) and the main local opinion leaders and replication agents. The PIU will lead the planning and organization of the beneficiary and stakeholder engagement responding and adjusting to local demand and availability and maximizing efficiency and effectiveness. 6. Component 1: Reducing Institutional and Community-level Vulnerability aims at improving response and planning capacity of local institutions and communities by promoting people’s engagement in data collection and analysis from inter-institutional to household level. The rationaleof this component is twofold: (a) collection and processing of data to provide useful information to stakeholders, and (b) analyzing and debating this information to develop adequate decision-making processes at institutional as well as household level. 7. The Project will collect data and transform it into information through establishment of an Information and Early-Warning System on Climate Change and Desertification (IEWS). Further, a Regional Consultative Observatory of Public Policies on Climate Change and Desertification (Observatory) will be created through institutional and sector-specific networking among related stakeholders to conduct the created information into relevant decision-making processes. This network will benefit from participation and commitment of the regional universities, municipalities, the Provincial Agency for Sustainable Development (OPDS), and other field- based stakeholders, all under the initial coordination and guidance of the Project. In addition, innovative and participatory capacity building and governance tools will be developed through specific programs targeting institutions, agricultural producers and their families. 8. Sub-component 1.1: Creating Institutional Tools for Climate Resilience will contribute to an on-going effort to create an IEWS for climate change and desertification at the provincial level in cooperation with the relevant technical institutions. 9. Sub-component 1.2: Promoting Climate-smart Socio-cultural Approaches to Land Managementwill aim at reducing negative patterns of interaction between socio-productive systems and the natural environment through introduction and eventual adoption of change in community relations with the natural environment. 10. This sub-component on reduction of social vulnerability is fundamental for the effectiveness of the other Project components, as it addresses the issues at the root of the problem, including social processes that are interlinked with climate change issues like flooding and drought, and the responses to these climate change issues both politically and economically. It aims at transforming socio-cultural barriers into windows of opportunities through an adaptive process of change. It will include working with local teacher training institutions, opinion leaders, farmers’ families, and communities as a whole. As a result of training programs for key social disseminators such as journalists and town councilors, the aim is to induce a motivational change to promote success of the proposed adaptation measures. Respective activities will be defined in detail in close consultation with the Project stakeholders. 31 11. Component 2: Implementing Adaptation Measures in Productive Agroecosystemswill be constructed and put in practice in conjunction with local farmer families and pertinent technical institutions. The main interventions, to be selected and appraised during the Project’s implementation, will cover small-scale pilot interventions selected from a menu of options related to management of livestock and grazing lands, crops and water resources. These measures have been initially assessed by the INTA Ascasubi. 12. Critical information on the main challenges faced by the sector, which in turn was an important input to the development of the Project environmental and climate change criteria, was gathered during the preparation mission. Working closely with local sector specialists from the SAyDS, OPDS, UNS and INTA, the following technical priorities were agreed: (i) developing agriculture in soils with a minimum suitability, adjusting the cultivation method employed, (ii) increasing the area with permanent pastures in their various alternatives, (iii) stimulating alternatives which contribute nitrogen to the soil such as vetch and alfalfa, (iv) not discarding permanent no-tillage agriculture, but always analyzing its use for each case in particular without generalizing, especially taking into account the edaphic-climatic characteristics of the zone/field. The actions to be developed focus on rapidly stabilizing areas with serious symptoms of erosion. Adaptation Measures 13. In order to suit pilot adaptation measures optimally to the biophysical conditions of the productive environment and expectations of the farmers, a variety of adaptation measures will be further discussed and analyzed as part of the action plans for each SIS during Project implementation. This will include a strong training component supported by the cross cutting capacity building components. According to results of the foreseen stakeholder consultations and based on their technical and socio-economic soundness, the bottom-up approach of this Project provides flexibility for different adaptation measures and approaches. In all cases, necessary inputs and their shared management at the community level will be identified together with local stakeholders. 14. As mentioned before, final definition of and decisions upon the piloted adaptation measures remains open, but the Project approach focuses on no-regret measures. The main adaptation measures included in the Project proposal are: • Rainwater harvesting and improved irrigation technology • Enhanced crop management • Rangeland and forage management • Silvopastorile livestock production • Sustainable land management and erosion control Project implementation strategy in the field 15. Working through Geographic Intervention Areas, known as GIAs (in Spanish, ÁreasGeográficas de Intervención), has been adopted as the Project implementation strategy in order to characterize and identify the sites where direct Project interventions under component 2 32 will be specifically carried out. These areas, which have been preliminarily identified during Project preparation, will be agreed upon by stakeholders in a participatory manner, and will be selected with the objective of implementing SLM practices for future replication at sites with similar characteristics. Participants will thus be able to prioritize areas where an immediate intervention is required. These areas will not cover the whole of the Project’s area of influence, but will host the places that will be subject to direct intervention. The Project’s total area of influence will be covered by the Observatory and the IEWS, instruments conceived to act as umbrellas for the subsequent GIAs and SISs. The next sections describe the rationale and technical aspects related to this approach. 16. Component 3: Applying Participatory Approach to Knowledge Management and Local Capacity Development for Adaptation to Climate Changewill engage directly targeted farmers and partner organizations in Project monitoring, adaptive management and dissemination of lessons learned. It aims at creating public awareness and ownership of the Project. People will be trained and provided proper tools to participate in development and tailoring of local and even farm/household-specific adaptation strategies. As applicable/relevant, all activities will contemplate a gender-sensitive approach to adaptation. 17. Capacity will be built especially for development of knowledge systems that promote continuous improvement and adaptive management as Project and its partner organizations produce more climate and other necessary environmental and social data, and pertinent knowledge and experience grows. A specific methodology will be developed to address the following topics: (a) climate change and implications for agriculture and identification of potential response options; (b) prioritization of response options; and (c) development of action plans. Further, training will be offered to local groups for carrying out KM tasks, and mutual knowledge sharing between and beyond the three key counties will be promoted. A specific communication and KM strategy will be prepared to identify specific means to involve different stakeholder groups and find effective ways for knowledge sharing. Joint demonstrative field visits will be organized to promote hands-on dialogue. At the Project end, good practices and lessons learnt will be disseminated at different administrative levels, including relevant international forums. 18. Component 4: Developing a Sustainability Strategy includes the generation of necessary institutional and community level agreements for the measures to be sustained beyond the Project’s closure. It is necessary to create a policy framework taking into account both regulatory and material needs that contribute to the continuation of key activities by relevant stakeholders, and a commitment to a visible/provable dissemination strategy. Continued financing for successful initiatives will be sought through institutional arrangements that enable linking measures with the Development Plan of the Southwest of Buenos Aires Province (PDSO), adopted pursuant to provincial law 13,647 in 2007. 19. The PDSO Steering Committee includes several stakeholders that are relevant for the Project development, and thus their participation is contemplated in the Observatory under component 1. Likewise, linkage with other national-level plans will be promoted, e.g. the Provincial Agricultural Services Program. Furthermore, local authorities will be provided with the necessary tools for continuing funding of key activities. This activity will be mainly focused 33 on the continuation of the IEWS and its adoption by the Observatory. Institutional arrangements targeting sustainability of the Observatory will be promoted, expecting that it will be sustained by its constituting institutions as well as the relevant government programs. This component will facilitate development of arrangements for local accountability and supervision by the federal and provincial executing counterparts for an additional 5-year period after the Project’s closing date. 20. Thereby, a compilation and review of potential sources of financing will be conducted, and a fundraising strategy involving private and public sectors will be developed. Finally, a participatory program to disseminate good practices will be applied to trigger multiplication processes through time. 34 Annex 3: Implementation Arrangements ARGENTINA: INCREASING CLIMATE RESILIENCE AND ENHANCING SUSTAINABLE LAND MANAGEMENT IN THE SOUTHWEST OF THE BUENOS AIRES PROVINCE Project Institutional and Implementation Arrangements 1. The Project executing agency will be the National Secretariat of Environment and Sustainable Development (SAyDS), and the main counterpart will be the Provincial Sustainable Development Agency (OPDS) for Buenos Aires Province. An institutional cooperation agreement between the two will be signed on the proposed activities. The Project will be supported by a Steering Committee comprised of the SAyDS Directorates for Soil Conservation and Fight against Desertification and Climate Change, and the provincial government through the OPDS. 2. The Project Implementing Unit (PIU) will be comprised of the two SAyDS Directorates (Soils and Climate Change), and the OPDS. It will be in charge of coordinating all Project activities, leading rigorous and participative monitoring and control process and reporting on results. The PIU will be headed by a General Executive Coordinator and an Administrative Secretariat. The General Executive Coordinator will coordinate activities with a Territorial Executive Manager, who will have main responsibility of the local institutional relations and direct supervision of field activities. The Territorial Executive Manager will be located in an OPDS office located in the intervention zone. Financial management, disbursements, and procurement are planned to be managed through a new unit (the PPFE) that was recently created within the SAyDS to coordinate internationally funded projects and programs. The capacity of this proposed unit has been recently assessed by Bank staff as part of the Third National Communication (P116974) re-structuring. The institutional arrangements and capacity in place have been found acceptable to the Bank. 3. The Project has identified key partners for the execution of the proposed activities. The following table describes succinctly the scope of work for each partner institution. SAyDS will enter into implementation agreement with each participating entities. Procurement and FM responsibilities will be retained by SAyDS. Component: 1. Reducing Institutional and Community-level Vulnerability Subcomponent Expected Outcomes Participating entities Institutional response and Municipalities-IPA-INAP, INTA (Ascasubi), UNS – National, 1.1:Creating prevention capacities Provincial and Municipal Governments – PDSO – Farmer Institutional Tools developed to reduce local Association – NGOs – INTA (Bordenave) – CERZO, National for Climate vulnerabilities to climate Observatory of Land Degradation and Desertification (SAyDS- Resilience variability and change. CONICET) 1.2: Promoting Climate-smart Reduced vulnerability of Socio-cultural Cooperatives of media communication at the local level, UTN livelihoods with a special focus Approaches to – FAUBA – INTI – UNS, Ministry of Education of the Province on productive approaches. Land of Buenos Aires, Municipal governments – local civil society Management organizations 35 Component: 2. Implementing Adaptation Measures in Productive Agroecosystems Subcomponent Expected Outcomes Participating entities Concrete adaptation measures piloted with a special focus on INTA – UNS – Municipal governments --- the productive agro- ecosystems. Component: 3. Applying Participatory Approach to Knowledge Management and local capacity - development for adaptation to climate change Subcomponent Expected Outcomes Participating entities Enhanced local capacity for adaptation and response, UNS --- developed in a participatory manner. Component: 4. Developing a Sustainability Strategy Subcomponent Expected Outcomes Participating entities Technical, institutional and Municipal governments - PDSO – PROSAP – MINAGRI – material capacity developed to --- MAA – MDS – INTA – INTI sustain the results obtained and contribute to their up scaling. The Implementation Agreements shall contain, inter alia, the following provisions: (i) Recipient’s legal remedies against the Participating Entities in case they fail to comply with the Implementation Agreement; (ii) obligations of the Participating Entities, including without limitation the following: A. to provide the necessary technical support to the Recipient in order to carry out the Project activities to the satisfaction of the World Bank; B. to ensure that the Project is carried out in accordance with the provisions of the “Guidelines on Preventing and Combating Fraud and Corruption in Projects Financed by IBRD Loans and IDA Credits and Grants”, dated October 15, 2006 and revised in January 2011 (“Anti-Corruption Guidelines”); C. not to assign, amend, terminate, abrogate, repeal, waive or fail to enforce the Implementation Agreement or any provision thereof unless agreed by the World Bank; and D. to take or permit to be taken all feasible action to enable the Recipient to comply with its obligations referred to in this Agreement and in the Implementation Agreement, as applicable to the carrying out of the Project activities 36 4. The Project will not transfer grant proceeds to the Province or other participating agencies, therefore no financial arrangements will be included in the Implementation Agreements between the SAyDS and other agencies. Financial Management, Disbursements and Procurement Financial Management 5. A Financial Management (FM) Assessment of the proposed arrangements has been performed in accordance with OP.BP 10.02 and in line with Bank specific guidelines. 6. The objective of this assessment was to determine whether the FM arrangements for the proposed operation are acceptable to the World Bank. The entity’s arrangements are considered acceptable if its budgeting, accounting, internal control, funds flow, financial reporting and auditing arrangements: (i) are capable of correctly and completely recording all transactions and balances relating to the project; (ii) facilitate the preparation of regular, timely and reliable financial statements; (iii) safeguard the project’s assets; and (iv) are subject to auditing arrangements acceptable to the Bank. 7. The conclusion of the assessment is that the PPFE, through the Project Implementation Unit, has adequate FM arrangements in place. The Project specific arrangements along with the government-wide FM system in place, to be located at the PPFE, meet the minimum Bank requirements, after implementation of all mitigation measures proposed in this assessment. 8. It is noteworthy that the PPFE has been already operating other Bank projects and it is in charge of the fiduciary aspects of all the projects with international financing in the SAyDS. The PPFE is also fully staffed and equipped. Risk Assessment and Mitigation 9. The FM risk assessment process aims at identifying FM risks so as to take appropriate measures to mitigate identified Project risks. This enables the Bank to make decisions as to the appropriate level of supervision intensity, and allocate FM resources in a manner consistent with assessed risks. A detailed risk assessment is presented below: 37 Table A3-1 Risk Assessment and Mitigating Measures Risk Rating Risk Mitigating Measures Residual Risk Rating Inherent Risk 1. Country Level Moderate Moderate 2. Entity Level Moderate Moderate 3. Grant Level Moderate Moderate Overall Inherent Risk Substantial Control Risk • Budgeting Moderate Integrated accounting system Moderate • Accounting Moderate Integrated accounting system Moderate • Internal Control Moderate Formal written procedures Moderate • Funds Flow Moderate Segregated designated account Moderate • Financial Reporting Moderate Integrated accounting system Moderate • Auditing Moderate Independent external auditor Moderate Overall Control Risk Moderate Overall FM Risk Moderate Internal Control and Internal Audit 10. The Programa de Proyectos con FinanciamientoExterno de la SAyDS(PPFE) that has been created within the Secretariat of Environment and Sustainable Development (SAyDS), is subject to internal audit of the General Syndicate of the Nation (SIGEN), which is the Federal Government’s internal audit agency under the jurisdiction of the executive branch. SIGEN supervises and coordinates the actions of the Internal Audit Units (IAUs) in all agencies, approves their audit plans, conducts research and independent audits, systematizes the information from its own reports and those produced by the IAUs. If necessary, the internal audit reports on the Project performance will be reviewed during Project supervision. External Audit Arrangements 11. Annual Project financial statements will be audited based on TORs, complying with auditing standards and employing an auditor acceptable to the Bank. The audit report shall be submitted to the Bank within six months of each Fiscal Year (FY). Annual audits would cover all funding and expenditures reported in the Project financial statements. For audit purposes the FY will be the calendar year. 12. The audit reports that will be required to be submitted are presented below: 38 Table A3-2 Audit Reports’ Schedule Audit Report Due Date 1) Project Specific Financial Statements June 30 2) Special Opinions June 30  SOE June 30  Designated Account June 30 Accounting and Reporting 13. The Project will apply the Government system specially designed for the execution of multilateral financed operations, which is legally required (UEPEX). This system is compliant with Bank requirements, provides a good ex-ante internal control framework and is integrated and in line with the national budget execution process. The World Bank has strongly recommended the adoption of UEPEX for the new operation. 14. The PPFE would be responsible, in addition to the functions already described, for keeping accounting records forProject activities and preparation of annual financial statements and semiannual Interim Unaudited Financial Reports (IUFRs for reporting purposes), as follows: a) Sources and uses of funds: sources and uses of funds, for each semester and cumulative (uses by category), uses of funds by component and beginning and ending cash balances. b) Physical progress: Allocated budget and financial execution compared to physical progress and results achieved. 15. IUFRs will be solely used for reporting purposes and will be part of the progress reports submitted by the Project. 16. Draft format of Annual and Interim Financial Statements will be prepared by the Project and reviewed by the Bank by Negotiations. Supervision Plan 17. The initial supervision planning is presented in the table below. The supervision scope will be adjusted by the assigned FMS according to the fiduciary performance and updated risk. 39 Table A3-3 Financial Management Supervision Plan Type Timing Mechanism Objective On-site Visit General Integrating ♦ Review FM performance. Supervision: supervision ♦ Follow up on External Auditors Once a year missions ♦ Recommendations / raised issue ♦ Review control. ♦ Update assigned risk. ♦ Transactions review as needed IUFRs Review Semiannual Over the ♦ Review IUFRs IUFRs information submitted consistency. to the Bank ♦ Raise issues disclosed in IUFRs. Audit Review Once a Year Over the ♦ Raise issues disclosed Audit in Audit Report Report submitted Action Plan 18. FM actions to be completed by the PPFE are reflected in the table below. Table A3- 4 Financial Management Action Plan Action Responsible Completion Status Entity Date 1. Prepare the external audit TOR to be SAyDS/PPFE By approved by the Bank Negotiations 2. IUFRs format approved by the Bank. SAyDS/PPFE By Negotiations 3. Set a separate budget line in the annual budget First year Legal to keep track of Project financial execution SAyDS/PPFE annual budget dated and thereafter covenant An advanced version of the project operational By manual (OM) comprising a FM Section with Negotiations administrative procedures and processes for the project implementation, including definitions of SAyDS/PPFE responsibilities for annual and interim financial reporting, and managements of funds, and containing a chart of accounts and the external audit TOR to be approved by the Bank 40 Disbursements 19. The following Disbursement Methods may be used under the Grant: • Reimbursement • Advance • Direct Payment 20. Grant proceeds to be withdrawn by the PPFE using the advance method will be deposited into a Segregated Designated Account (DA) in US dollars. The DA will be held at Banco de la NaciónArgentina (BNA), as is the normal practice for Bank operations with the National Government. The ceiling for advances to be made into the DA would be US$ 0.5 million, estimated to be sufficient for Project execution. 21. Supporting documentation for documenting Project expenditures under advances and reimbursement methods will be: Statements of Expenditures (SOEs). SOE limits will be set at US$ 100,000 and will be presented to the Bank at least once every calendar quarter. 22. For reporting eligible expenditures paid from the Designated Account and for requests for Reimbursement: • Records evidencing eligible expenditures (e.g. copies of receipts, suppliers/contractors’ invoices) for payments for consultant services against contracts valued at USD100,000 or more for consulting firms, and USD50,000 or more for individuals (Attachment 3A – with supporting records); • SOEs in the form attached (without supporting documents) for all other expenditures, including Training, Goods and Operating Costs. 23. All consolidated SOEs documentation will be the responsibility of the PPFEand will be maintained for post-review and audit purposes for up to one year after the final withdrawal from the Grant account. 24. The PPFE will have access to the Bank’s Client Connection webpage to facilitate periodic reconciliations among its own ledgers, bank statements and the Bank disbursement records. 25. Grant proceeds will be disbursed against the following expenditure categories: 41 Table A3-5 Disbursements per Expenditure Category Category Amount of the Grant Percentage of Expenditures Allocated to be Financed (inclusive of (expressed in USD) Taxes) (1) Goods 1,620,446 100% (2) Consultants’ services 284,232 100% (3) Non Consultants’ Services and 884,611 100% works (4) Training, Travel and Workshops 816,133 100% (5) Operating Costs 198,010 100% (6) Unallocated 156,768 100% TOTAL AMOUNT 3,960,200 Procurement 26. Procurement for the proposed project will be carried out in accordance with the World Bank’s “Guidelines: Procurement of Goods, Works, and Non-Consulting Services under IBRD Loans and IDA Credits & Grants by World Bank Recipients” dated January 2011 (Procurement Guidelines); “Guidelines: Selection and Employment of Consultants under IBRD Loans and IDA Credits & Grants by World Bank Recipients” dated January 2011 (Consultant Guidelines), and the provisions stipulated in the Legal Agreement. The general description of various items under different expenditure categories is described below. For each contract to be financed by the Loan, the different procurement methods or consultant selection methods, estimated costs, prior review requirements and time frame, are agreed between the Recipient and the World Bank Project team in the Procurement Plan. 27. Procurement of Works, Goods and Non-Consulting Services: The financing of Works contracts is not foreseen in the project. Goods and non-consulting services procured under this project would include: computing equipment, software, weather stations and equipment, vehicles, equipment and supplies for agricultural technology, printing and publishing, and logistic services for workshops and meetings. Goods and non-consulting services will be procured using International Competitive Bidding (ICB) procedures unless estimated contract costs are between US$500.000 and US$100.000, in which case National Competitive Bidding (NCB) procedures apply, using Standard Bidding Documents (SBDs) agreed with, or satisfactory to the Bank. Small contracts, estimated to cost less than US$ 100.000 equivalent per contract, may be procured following Shopping procedures, on the basis of at least 3 valid quotations. All ICB process, the first two processes under any other procurement method, and all Direct Contracting processes will be subject to prior review by the Bank. Al other contracts will be subject to Bank’s post review. 42 28. Selection of Consultants: Consulting services will be contracted under this project in the following areas of expertise: project management and administration, specialized advisory, technical assistance, design of training programs, technical assistance, territory, agriculture, environment, and audits. Consulting firms will be hired through selection process using Bank’s Standard Request for Proposals. Short lists of consultant firms for services estimated to cost less than US$ 500.000 equivalent per contract may be composed entirely of national consultants in accordance with the provisions of paragraph 2.7 of the Consultant Guidelines. 29. Selection processes for hiring consulting firms will follow the method based in quality and cost (QCBS) unless the Bank agrees, after proper justification is submitted, with the use of selection methods based on quality (QBS), fixed budget (FBS), least cost (LCS), consultant qualifications (CQS) or single source (SSS). The use of CQS will be limited to contracts estimated to cost US$300.000 equivalent. Individual Consultants will be selected in accordance with provisions set on paragraphs 5.1 through 5.6 of the Consultant Guidelines. Processes based on SSS of consultants (firms and individuals), and the first two processes for the selection of consultant (firms and individuals) under each competitive selection method, regardless of the estimated contract amount will be subject to Bank’s prior review. All other contracts will be subject to Bank’s post review. 30. Special Provisions. The Recipient shall comply with the following additional provisions which shall also govern the procurement of goods, works, non-consulting services and consultants’ services under the Project, as the case may be: (a) Procurement of goods, works, non-consulting services and consultants’ services shall be carried out using: (i) standard bidding documents (which bidding documents in respect of works shall include, if applicable, a provision whereby the pertinent contractor must comply with the pertinent provisions of the ESMF and the relevant ESMP ) and standard requests for quotations/proposals (as the case may be), all acceptable to the World Bank, which shall all include, inter alia, a settlement of dispute provision and the pertinent provisions of the Anti-Corruption Guidelines, (ii) model bid evaluation forms, and model quotations/proposals evaluation forms (as the case may be); and (iii) model contract forms, all acceptable to the World Bank; (b) A two-envelope bidding procedure shall not be allowed in the procurement of goods, works and non-consulting services; (c) After the public opening of bids for goods, works and non-consulting services, information relating to the examination, clarification and evaluation of bids and recommendations concerning awards shall not be disclosed to bidders or other persons not officially concerned with this process until the publication of contract award. In addition, bidders and/or other persons not officially concerned with said process shall not be allowed to review or make copies of other bidders’ bids; (d) After the public opening of consultants’ proposals, information relating to the examination, clarification and evaluation of proposals and recommendations concerning awards, shall not be disclosed to consultants or other persons not officially concerned with this process until the publication of contract award (except as provided in paragraphs 2.23 and 2.30 of the Consultant Guidelines). In addition, consultants and/or 43 other persons not officially concerned with said process shall not be allowed to review or make copies of other consultants’ proposals; (e) Foreign bidders or foreign consultants shall not, as a condition for submitting bids or proposals and/or for contract award: (i) be required to be registered in Argentina (except as provided in the standard bidding documents referred to in paragraph 3 (a) (i) above); (ii) Be required to have a representative in Argentina; and (iii) be required to be associated or subcontract with Argentine suppliers, contractors or consultants; (f) The invitations to bid, bidding documents, minutes of bid openings, requests for expressions of interest and the pertinent summary of the evaluation reports of bids and proposals of all goods, works, non-consulting services and consultants’ services procured by the PIU, shall be published in the web page of the Recipient’s Office of National Procurement (OficinaNacional de Contrataciones), and in a manner acceptable to the World Bank. The bidding period shall be counted from the date of publication of the invitation to bid or the date of the availability of the bidding documents, whichever is later, to the date of bid opening; (g) The provisions set forth in paragraphs 2.49, 2.50, 2.52, 2.53, 2.54 and 2.59 of the Procurement Guidelines shall also be applicable to contracts for goods, works and non- consultant services to be procured under National Competitive Bidding procedures; (h) references to bidders in one or more specialized magazines shall not be used by the PIU in determining if the bidder in respect of goods whose bid has been determined to be the lowest evaluated bid has the capability and resources to effectively carry out the contract as offered in the bid, as referred to in the provision set forth in paragraph 2.58 of the Procurement Guidelines. The provision set forth in paragraph 2.58 of the Procurement Guidelines (including the limitation set forth herein) shall also be applicable to contracts for goods to be procured under National Competitive Bidding procedures; (i) Witness prices shall not be used as a parameter for bid evaluation, bid rejection or contract award; (j) The PIU shall: (i) supply the SEPA with the information contained in the initial Procurement Plan within 30 days after the Project has been approved by the World Bank; and (ii) update the Procurement Plan at least every three months, or as required by the World Bank, to reflect the actual project implementation needs and progress and shall supply the SEPA with the information contained in the updated Procurement Plan immediately thereafter; (k) Consultants shall not be required to submit bid or performance securities; (l) Contracts of goods, works and non-consulting services shall not be awarded to the “most convenient” bid, but rather to the bidder whose bid has been determined: (i) to be substantially responsive; and (ii) to offer the lowest evaluated bid, provided that said bidder has demonstrated to be qualified to perform the contract satisfactorily; (m) The types of contracts described in Section IV of the Consultant Guidelines shall be the only types of contracts to be used by the PIU in connection with the contracting of consultants’ services provided by a firm and to be financed with the proceeds of the Grant; and (n) the Recipient shall keep updated a list of contracts signed under the Project, and such list shall be produced by UEPEX in a manner acceptable to the World Bank. 44 31. Assessment of the Agency’s capacity to implement procurement. Procurement activities will be carried out by the PPFE, within the SAyDS; the latter will also be responsible for the project oversight. 32. An assessment of the Recipient’s capacity was carried out by the team and a detailed action plan was prepared to address all risks identified. The Procurement unit of SAyDS’s is satisfactorily staffed with 3 Procurement Specialists that has been involved in the implementation of previous Bank operations, and the PPFE will maintain procurement specialized staff. The experience gained by SAyDS in the implementation of previous projects with international financing such as P089926 - Solid Waste Management Project, suggests that the PPFE has reasonable institutional capacity to handle all aspects of procurement. 33. During the assessment, the organizational structure for implementing the project and the interaction between the project’s staff responsible for procurement and other actors was reviewed. Most of the issues/risks concerning the procurement component for implementation of the project have been identified, concluding that certain administrative processes could delay the project implementation; the conformation of the PPFE requires an adjustment to the procedures; and new Procurement and Consultant guidelines will be applied. The corrective measures which have been agreed are: (i) the inclusion in the Project Operational Manual, of a Procurement Section, which will include, inter alia, a general description of the procurement procedures related with the different applicable procurement/selection methods and the Standard Bidding Documents to be used for each procurement methods other than ICB; (ii) the condition that the PIU will maintain at least one Procurement Specialist with solid working experience with Bank financed projects; (iii) the inclusion in the Operative Manual of Special Provisions to address certain local procurement procedures that are not fully consistent with the Bank Procurement and Consultant Guidelines; (iv) the Bank will train the PIU coordinators and specialists in the Procurement and Consultant Guidelines of January, 2011; and (v) the Bank’s assessment of implementation progress at least once a year to identify any issues that need to be resolved. 34. The overall project risk for procurement is Moderate. 35. Procurement Plan. On July 2013, the Recipient developed a Procurement Plan for the first 18 months of project implementation which provides the basis for the procurement methods to be used. This Plan will be available at SAyDS office. It will also be available in the Project’s database and in the Bank’s external website. The PIU will upload the agreed Procurement Plan in the Bank’s publicly accessible Procurement Plan Execution System (SEPA) no later than 30 days after effectiveness is declared, and updates of such Plan are expected on an annual basis, or as required to reflect the project’s needs. 36. Frequency of Procurement Supervision. In addition to the prior review supervision to be carried out from Bank offices, the capacity assessment of the Implementing Agency has recommended annually supervision missions to visit the field to carry out post review of procurement actions. The Bank’s review shall cover no less than 1 in 10 contracts. Environmental and Social (including safeguards) 45 37. Given that the investments and their specific locations are not known by appraisal, the GoA has developed an Environmental and Social Management Framework (ESMF), which includes an Indigenous Peoples Planning Framework (IPPF) and anInvoluntary Resettlement Policy Framework (RPF). All of these safeguards instruments, as well as the Project’s Social Assessment, were disclosed in country on June 17 and at the Bank’s InfoShop on June 20, 2013. Project investments will undergo a social and environmental screening and/or full assessment for the pertinent works following the ESMF. If resettlement and/or the presence of indigenous population is identified in the area of influence in which the works will take place, the Recipient will, prior to the carrying out of any said works, prepare and furnish to the Bank a resettlement plan and/or an indigenous plan including relevant consultation and disclosure in accordance with the provisions of the IPPF and RPF, as the case may be. 38. Environmental Assessment OP/BP 4.01 (including social issues). The policy is triggered by the implementation of adaptation measures through interventions in productive agroecosystems which will be discussed, defined and put in practice jointly with local stakeholders and related technical institutions during the Grant implementation period. Given there is previous positive experience on the proposed base interventions from around the world, and the fact that no particularly sensitive environmental conditions are known to prevail in the target area, the Project is classified as a Category B. The main intervention areas will cover management of water resources, crops, and livestock and pasture management. For example, production oriented adaptation is expected to include decentralized measures to efficiently capture and store rainwater and install microsystems for irrigation. To strengthen food and agroecological diversity and directly raise the standard of living of the local population, creation of organic vegetable gardens will provide multiple benefits beyond increased climate resilience at family level. Further adaptation measures proposed for transitioning from the current situation to more climate resilient and sustainable land management approach are crop rotation, organic pest control, adjusted sowing, cover crops, sustainable land tillage, adaptation of cattle ranching systems through use of forage banks, forest grazing, and sustainable management of pasture plots. The principal adaptation measures included in the Project proposal are: (i) rainwater harvesting and improved irrigation technology, (ii) enhanced crop management, (iii) Rangeland and forage management, (iv)silvopastorile livestock production, and (v) sustainable land management and erosion control. 39. The proposed SLM interventions will include training and capacity activities. As many of these interventions could be new to project beneficiaries there may be some initial resistance to adopting non-traditional, therefore a strong knowledge sharing and training program will be develop as an important aspect of the Project. 40. A social assessment was prepared based on a desk review of relevant documents on social condition in the SWBA, as well as information provided by key stakeholders during several field visits in 2011 and 2012. The assessment concludes that the Project would lead to mostly positive social development outcomes and impacts. Small and medium farmers are one of the priority target groups of the Project. Positive social development outcomes and impacts include: (i) increased access to social opportunities for the target groups, through improvements in access to anticipated information regarding land degradation, climate change, and the impact in rural activities; (ii): decrease in the rural migration to urban areas; (iii) increased climate 46 resilience; (iv) increased access to information, more predictability, decreasing vulnerability, educational program fitting in regional conditions; access to decision making processes; and (v) strengthening indigenous peoples recognition and inclusion, by promoting respect to their visions. 41. Natural Habitats OP/BP 4.04.While during preparation it has not been possible to determine the presence of natural habitats in the Project's area of influence, the policy is triggered under a precautionary basis. The project will not result in any expansion of the agricultural frontier or conversion of natural habits to agricultural which may result in adverse impacts to natural habitats. The activities related to the SISs will be placed on already transformed areas. 42. Forests OP/BP 4.36.The policy is triggered because the Project could finance small forest plantations to build shelter belts and wind backers). In addition, and in some cases, the project could finance some management plans at farm level to ensure compliance with the native forest law at the provincial level. This law includes the identification of forests with critical conservation value. As per the requirements of OP 4.36, small and restricted pilot forest plantations (shelter belts, forestall wind-breakers) supported under the Project would not cause loss or degradation of these forests, but would rather contribute to their reforestation and conservation efforts, including the planting of trees native to the region. 43. The target area is situated in the Argentine Espinalecoregion, which characteristic feature is thorny deciduous shrub land forest. This ecoregion has been heavily modified as most of it has been used for agriculture and its forests have been highly exploited and dismantled. Both the caldenal and the talares types of sparse xerophytic forests have been exploited by removal of firewood. The caldéntrees have also been used to obtain fence posts, make wooden paving blocks for streets and to operate sawmills for making parquet floors. Furthermore, they have become seriously threatened by the expansion of the agricultural frontier that, thanks to modern irrigation systems, is now reaching areas that in the past were not suited for this type of land management. 44. Pest Management OP 4.09.This Project seeks to reduce use of and dependence on harmful agricultural chemicals and will not increase or promote use of pesticides, so a pest management plan will not be prepared. It should be noted, however, that small amounts of pesticides will probably continue to be used by a portion of pilot farmers. The Project will provide training on the proper use of pesticides and the safe disposal of containers by communities to prevent any health and environmental risks associated with pesticide use. This disposal will follow the Bank OP 4.09 guidelines as well as pertinent national laws and regulations. Also an Integrated Pest Management approach to dealing with pests will be supported 45. Physical Cultural Resources OP/BP 4.11. While it has been not possible to determine the presence of physical cultural resources in the Project's area of influence, the presence of physical cultural resources in SIS will be determined by the final design of pilot interventions during the Project implementation. The Project includes in the ESMF, screening criteria to avoid any 47 known areas to have physical resources and a process to address any chance finds which may arise during implementation. 46. Indigenous Peoples OP/BP 4.10. Based on the Bank’s screening, presence of indigenous people living in the area was confirmed ans that they could be positively affected by the Project. Given that the proposed investments are neither technically/defined nor specifically located by appraisal, an IPPF was prepared. 47. During Project preparation, the OPDS conducted several informal meetings with (i) key stakeholders, a local representative from Consejo de ParticipaciónIndígena (Indigenous People Participatory Council), (ii) academic researchers from several institutes, and (iii) field trips. Additionally, local municipalities were requested to confirm the presence of indigenous people living in the targeted rural areas. 48. Historical information refers to the Mapuches as the native people for this region. Many of Mapuchespeople were taken out from their lands, and obliged to migrate to urban areas. This was due to the civil war processes, where people were forced from their lands or needed to migrate in search of better livelihood. According to the statistics information available from Indigenous People Complementary Survey 2004-2005 (EncuestaComplementaria de Pueblos Indígenas del InstitutoNacional de Estadísticas y Censos), there are no registered mapuches communities living in rural areas. The National Indigenous People Institute informed there are mapuches communities in Carmen de Patagones city registered in ReNaCi(RegistroNacional de ComunidadesIndígenas). In addition, the presence of indigenous people was confirmed in the Project’s area of influence in the Carhué region. 49. Involuntary Resettlement OP/BP 4.12.Although no involuntary resettlement is planned under any of the components, activities under component 2 could trigger the policy. In compliance with the policy, in order to avoid, minimize or compensate for any adverse impacts in this regard, a Resettlement Policy Framework has been be developed to ensure proper consideration before and during execution of pilot interventions. Additionally, all work toward pilot interventions will include participatory planning processes with stakeholders. 50. Safety of Dams OP/BP 4.37.Although construction of and/or dependency on a planned/existing dam is not envisaged, the policy is triggered in order to ensure compliance with safety standards in case that small water reservoirs or micro irrigation systems are constructed. The ESMF will include the basic safety requirements for such works in line of the policy. Consultation 51. This Project has been prepared on the basis of a participatory process. The Project identification was made during the First Desertification Congress in Buenos Aires province during 2010. Then, and during the Project preparation phase after the Adaptation Fund Board endorsement of the concept note, the Project was presented during the Second Desertification Congress in Buenos Aires Province during August 2011. This Congress took place in Tornquist within the Project’s area of influence. The meeting was attended by more than 40 stakeholders, including, scientific and technical institutions, NGOs and farmers. During the meeting, the 48 environmental and social measures which are per se mainstreamed in the Project technical design were presented, discussed and prioritized. The meeting was also attended by OPDS representatives. In October 2011, a third round of consultations was done in the field covering more than 100 different stakeholders in the Project’s target area. During this visit, the Project concept was presented and the environmental and social measures to address climate change and land degradation were identified. Finally, the Project preparation benefited from a significant communication and disclosure effort made by the leading agencies. Project documents were uploaded to the SAyDS website, and the Project initiative was widely disseminated by the local media in the Project’s target area. Monitoring & Evaluation 52. The proposed M&E methodology would mainstream safeguard related issues. Specific indicators would be identified and discussed during the preparation of the action plans to be implemented in SIS. 49