Report No. 13620-BR

PLOT PROGRAM TO CONSERVE THE BRZILIAN RAIN FOREST

MEMORANDUM AND RECOMMENDATION

OF THE DIRECTOR

OF THE LATIN AMERICA AND THE CARIBBEAN DEPARTMENT I

TO THE REGIONAL VICE PRESIDENT

ON A PROPOSED GRANT

FROM THE

RAIN FOREST TRUST FUND

IN AN AMOUNT EQUIVALENT TO US$ 20.0 MILLION

TO THE

FEDERATIVE REPUBLIC OF BRAZIL

FOR A

NATURAL RESOURCES POLICY PROJECT

November 22, 1994

Pilot Program to Conserve the Brazilian Rain ForestCountry Department ILatin America and the Caribbean Regional Office

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CURRENCY EQUIVALENTS(As of September 30, 1994)

Currency Unit : RealUS$1.00 : R$0.85R$1.00 0 US$1.17

WEIGHTS AND MEASURES

The metric system is used throughout the report.

GOVERNMENT OF BRAZIL FISCAL YEAR

January 1 to December 31

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ACRONYMS

CEC - Commission of European CommunitiesCEZEE - Ecological and Economic State Zoning CommissionCOEMA - State Environmental CouncilCONDEMA - Municipal Environmental CouncilCP - Project Commission within MMAECU - European Currency UnitEIA - Environmental Impact AssessmentFUNAI - National Indian FoundationG-7 - Group of Seven Countries (Canada, France, Germany,

Italy, Japan, United Kingdom, and the United States)GT - Executing Entities Working GroupGTTP - Permanent Technical Working Group of Amazon

OEMAsGTZ - Deutsche Gesellschaft fur Technische ZusammenarbeitIAG - International Advisory GroupIBAMA - Brazilian Institute of the Environment and of

Renewable Natural ResourcesINCRA - National Institute for Colonization and Agrarian

ReformKfW - Kreditanstalt fur Wiederaufbau.'vMMA - Ministry of the Environment and the Legal AmazonNEP - National Environmental Project (Loan no. 3173-BR)NGO - Non-governmental organizationODA - Overseas Development AdministrationOEMA - State Environmental EntityPA - Action PlanPEA - State Environmental PlanPED - Decentralized Execution Program under NEPPGA - State Environmental Management PlanPOA - Annual Operating PlanRFT - Rain Forest Trust FundRIMA - Environmental Impact ReportSAE - Secretariat of Strategic Affairs of the Presidency of the

RepublicSOE - Statement of ExpendituresST - Project Technical SecretariatSTN - Secretariat of the National TreasuryUA - Support Unit within the OEMA

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BRAZIL

PLOT PROGRAM TO CONSERVE THE BRAZILIAN RAIN FORESTNATURAL RESOURCES POLICY PROJECT

TABLE OF CONTENTS

GRANT AND PROJECT SUMMARY ...................... vi

I. BACKGROUND .................................. 1Environmental Issues in the Legal Amazon ............... 1The Pilot Program to Conserve the Brazilian Rain Forest ... ... 2Institutional Framework for Environmental Management in the

Legal Amazon ............................ 6Lessons Learned from Previous Bank Involvement .......... 11

II. THE PROJECT .................................. 12Project Objectives .............................. 12Rationale for RFT Funding ......................... 12Project Description .............................. 13Project Costs and Financing ........................ 16Project Implementation, Organization and Management ... ..... 17

Executing EntitiesProject Coordination ResponsibilitiesProcedures and Inter-institutional CoordinationQualification and Eligibility CriteriaOperational ManualReporting, Monitoring, Evaluation and Mid-term ReviewImplementation ScheduleSupervisionLegal Arrangements

Procurement and Disbursements ...................... 26Auditing .................................... 28Project Sustainability ............................. 28Project Benefits and Risks ......................... 29Environmental Aspects ........................... 30

III. AGREEMENTS REACHED AND RECOMMENDATION ... ... 30Assurances ..... ............................... 30Conditions of Effectiveness ......................... 31Conditions of Disbursement ........................ 31Recommendation ............................... 32

SCHEDULE A-1 -- SUMMARY OF PROJECT COSTS BYCOMPONENT ................................ 33

SCHEDULE A-2 -- FINANCING PLAN .................... 34

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SCHEDULE A-3 -- SUMMARY OF PROJECT COSTS BYFINANCIER ................................. 35

SCHEDULE B-1 -- SUMMARY OF PROCUREMENTARRANGEMENTS ............................. 37

SCHEDULE B-2 -- SUMMARY OF DISBURSEMENTARRANGEMENTS ............................. 38

SCHEDULE C -- TIMETABLE OF KEY PROCESSING EVENTS .... 39

TECHNICAL ANNEXES .............................. 40

ANNEX 1: INSTITUTIONAL BASELINE DATA ON THENINE AMAZON STATES .................... 41

ANNEX 2: PROJECT COSTS ...................... 53

ANNEX 3: IMPLEMENTATION SCHEDULE .... ........ 60PhysicalFinancial

ANNEX 4: SUMMARY CONTENTS OF THEOPERATIONAL MANUAL ................... 68

ANNEX 5: PROJECT ORGANIZATION AND INSTITUTIONALMECHANISMS AT FEDERAL ANDSTATE LEVELS .......................... 76Project Coordination Structure at the State LevelProject Coordination Structure at the Federal LevelProject Procedures

ANNEX 6: PERFORMANCE INDICATORS .... ......... 86

ANNEX 7: SUMMARY OF THREE EXAMPLES OFPOSSIBLE INTEGRATED SUBPROJECTS ... ....... 95

ANNEX 8: SUMMARY TERMS OF REFERENCE FORMAJOR STUDIES ........................ 100

ANNEX 9: REPORTS AND DOCUMENTS IN PROJECTFILES ................................ 108

Map: IBRD No. 26474

This report is based on the findings of an appraisal mission which visitedBrazil in September 1994. Mission members were Carlos Bertao (LAlRF,

v

mission leader), Chris Diewald (LAIBR), Dominique Babelon (LAIPS),Coralie Bryant (LAlNR), Charles Dahan and Peter Loach (Consultants),Gustavo Rodrigues (LEGLA) and Alberto Ninio (LEGEN). The mission wasjoined by Hans Schuetz and Otto von Grotthuss (KfW), Eberhard Goll andUdo Lange (GTZ), Jose Vasconcelos (CEC), and John Palmer and GordonArmstrong (ODA), who represented co-financing agencies. The ManagingDivision Chief and the Country Department Director are Stephen J. Ettingerand Gobind T. Nankani, respectively.

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BRAZIL

PILOT PROGRAM TO CONSERVE THE BRAZILIAN RAIN FORESTNATURAL RESOURCES POLICY PROJECT

GRANT AND PROJECT SUMMARY

Grantor: Rain Forest Trust Fund (RFI)

Recipient: Federative Republic of Brazil

Beneficiaries: * Nine States in the Legal Amazon (Acre,Amapa, Amazonas, Maranhao, MatoGrosso, Para, Rond6nia, Roraima andTocantins)* Ministry of the Environment and theLegal Amazon* Secretariat of Strategic Affairs of thePresidency of the Republic* Federal and State entities involved inenvironmental management in the ninestates

Amount: US$ 20.0 million equivalent (RFT)

Terms: Grant

Fimancing Plan:

Source TOTAL (US$ million equiv)

Rain Forest Trust Fund (grant) 20.0CEC (grant) 12.0KfW (grant) 24.8GTZ (technical cooperation)' 5.8ODA (technical cooperation)2 5.0Local Counterpart 11.4

Total 79.0

Economic Rate of Return: N/A

Map: IBRD No. 26474

GTZ technical cooperation will be provided as a bilaterally associated project.

2 ODA technical cooperation will be provided as bilateral technical cooperation.

MEMORANDUM AND RECOMMENDATION OF THE DIRECTOROF THE LATIN AMERICA AND THE CARIBBEAN DEPARTMENT I

TO THE REGIONAL VICE PRESIDENTON A GRANT FROM

THE PILOT PROGRAM TO CONSERVETHE BRAZILIAN RAIN FOREST

TO THE FEDERATIVE REPUBLIC OF BRAZILFOR A

NATURAL RESOURCES POLICY PROJECT

1. I submit for your approval the following memorandum andrecommendation on a proposed grant from the Rain Forest Trust Fund (RFI)to the Federative Republic of Brazil for US$ 20.0 million. The grant wouldhelp finance a Natural Resources Policy Project, aimed at strengthening thecapabilities of the environmental entities of the nine states located in the LegalAmazon region3 and at enhancing the integration among such entities, for amore efficient management of the environment at the local level, includingzoning, monitoring, and control and enforcement activities. This project ispart of the Pilot Program to Conserve the Brazilian Rain Forest, which isfunded by the Group of Seven countries (Canada, France, Germany, Italy,Japan, United Kingdom, and the United States - G-7), the European Union,and the Netherlands, and administered by the World Bank.

1. BACKGROUND

Environmental Issues in the Legal Amazon

2. The Brazilian Amazon is a region of great cultural, biological,economic and ecological diversity. It contains the largest extent of tropicalrain forest in the world (almost 40% of the remaining tropical forests on theplanet) and contributes 20% of the global river discharge into the world'soceans. Brazilian Amazon rain forests, with an area of approximately 3.3million square kilometers, are a major carbon store, and their destruction (it isestimated that some 8% of the native forest has already been removed) wouldoccasion the release of greenhouse gases that could affect the global climate.The rich forest and aquatic ecosystems contain a large share of the world'sbiological diversity and, while not fully known, the potential uses ofAmazonian natural products are significant and increasing. Conserving theAmazon rain forest while using its resources sustainably would providesignificant benefits both to Brazilians and to the global community.

3. Recent economic and demographic changes in the Amazon region,guided by inadequate technologies, are leading to rapid changes in land usethat imply loss of natural diversity, environmental degradation and the threat

3 The Legal Amazon Region was established by Law no. 5.173, of October 27, 1966. It includesthe states of Acre, AmapA, Amazonas, Parg, Rond6nia and Roraima and part of the states of Maranhao,Mato Grosso and Tocantins.

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of climatic changes. Ignorance of the likely consequences of non-sustainableproduction systems for the environment has contributed to decisions in the pastwhich have led to accelerated deforestation. Policy-making and investmentdecisions are constrained in situations in which information is lacking on theeconomic value of the forest, its products and the environmental services itprovides.

4. Table 1 (pages 3-5) identifies the main environmental problems relatedto the use of natural resources in the Legal Amazon, more specifically itsforests and biodiversity. It details the main destructive processes that havedegraded these forests and biodiversity, and describes the main causes, typesof resulting degradation, and areas of the region in which such degradation hasoccurred.

5. Over the past several years, the Brazilian Govemment has recognizedthat previous policies have led to short-term benefits but greater long-termcosts. There is a growing public sentiment inside the country in favor ofprotecting the resources contained in its rain forests. The 1988 FederalConstitution outlined the decentralization of environmental management, butallowed for overlapping jurisdictions among the levels of government. Bystrengthening the capability of institutions responsible for environmentalmanagement in the region and by increasing transparency of environmentaldecision making, it should also be possible to elevate the level of public debateon salient policy issues.

The Pilot Program to Conserve the Brazilian Rain Forest

6. The Pilot Program to Conserve the Brazilian Rain Forest was initiatedat the request of the G-7 at the Houston Summit in 1990. Individual projectsare financed by the RFT, which was established by Resolution 92-2 of theBank's Executive Directors in March 1992, and by associated bilateral co-financing (all on grant terms). The Program is intended to support anintegrated set of projects that will contribute to a reduction of the rate ofdeforestation in the Amazon rain forests while protecting biodiversity,reducing carbon emissions, and using forest resources sustainably. Theseprojects fall within three broad sub-programs which aim to: (i) strengthen thecapacity of the public sector to set and enforce sound environmental policy;(ii) improve the management of special protected areas; and (iii) increaseresearch and the use of environmentally benign technologies in the Amazon.

7. For the first sub-program, the Brazilian government has proposed a setof activities for the institutional strengthening of the state environmentalentities (OEMAs) of the nine states located in the Legal Amazon region, andfor control and enforcement, monitoring and zoning. These were originallyconceived of as four separate projects, but are now combined in the proposedproject in order to build on the linkages among them and provide a moreintegrated approach to environmental management in the Amazon region.

TABLE 1Major Environmental Problems in the Legal Amazon:

Types of Degradation, Their Main Causes, and Areas of Occurrence

Problem Primary Types of Degradation Main Causes Areas of Occurrence

1) - Deforestation Loss of biodiversity Infrastructure construction, including Entire Legal Amazon region.through logging roads mostly near roads and urbana) clearing and burning Decapitalization of forest areas and along waterways bothprimarily for agricultural, Settlement, both official and private, of in flooded and dry land.livestock, and other Loss of soil fertility in the medium people on soils not appropriate forpurposes, and and long term agricultureb) selective extractionfor lumber. Soil erosion and sedimentation of Regulations requiring 'Improvements' for

waterways validation of land titles

Reduction of forest transpirational Land value appreciation through clearingcapacity

Financial and tax incentives for sawmills,Transfer of carbon into the agriculture and pasture landsatmosphere

Political stimulation of squattingAir pollution.

Weak state-level environmentalmanagement, control and enforcement

Demand for charcoal, particularly for thesteel industry.

TABLE 1Major Environmental Problems In the Legal Amazon:

Types of Degradation, Their Main Causes, and Areas of Occurrence

Problem Primary Types of Degradation Main Causes Areas of Occurrence

2) - Problems related to Erosion and sedimentation of Lack of job opportunities in the formal Many Amazon river sub-basins,mining waterways economy including the Tapaj6s and

Madeira, and In the states ofContamination of topsoils and Lack of regulation, licensing, control, and Amazonas, Para, Amapa, andchemical (mercury, crankcase oil, enforcement of mining processes Mato Grossoetc.) pollution of waterways andfood chain Insufficient control of illegal, wildcat Industrial mining In Para,

precious metals trade (Garimpos) Amazonas, Amapa, andIncrease In transmissible diseases Rondonia

Low technology of informal miningDestruction of habitats and loss of operations. Acre is the only state withoutbiodiversity. serious mining problems.

TABLE 1Major Environmental Problems In the Legal Amazon:

Types of Degradation, Their Main Causes, and Areas of Occurrence

Problem Primary Types of Degradation Main Causes Areas of Occurrence

3) Problems related to Endangering of species Attractive source of protein for rural and Fishing - entire Amazon basinfishing and hunting urban populations and coastal regions

Loss of biodiversity and theknowledge of how ecosystem Lack of basic knowledge of exploited Hunting - entire Legal Amazonfunctions species, leading to a disregard for fishing region, including commercial

seasons, little protection of reproduction hunting near urban areas.Stock reductions and loss of sites, and non-observance of minimum sizeprotein available for the general regulationspopulation.

High rate of waste in commercial fishingdue to inadequate fishing techniques

Weak and inefficient enforcementinfrastructure

Conflicts of authority and regulationsbetween state and federal jurisdictions.

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Institutional Framework for Environmental Management in the LegalAmazon

8. Institutional Weaknesses. Effective environmental management in thenine Amazon states is seriously impeded by their weak environmentalinstitutions and the lack of integration, within each state, between federal andstate environmental institutions, as well as between environmental anddevelopment agencies. None of the states had an environmental law or anOEMA until the late 1980s. Only three of the nine states had federal forestrypolice in 1991. State zoning commissions did not exist until 1990-1991. In thepast six years, serious efforts have been made to put these basic institutions inplace. Yet much remains to be done to strengthen them so that they canassume more prominent roles in state policy determination. Their morepowerful counterparts in productive sector secretariats are far more able toinfluence public investment choices and public policy.

9. The operational environmental agencies lack trained staff in thespecializations required -- environmental economics, forestry, hydrology,biology, botany, and management, as well as core management systems --financial management, personnel, and management information systems.Agency performance is constrained by managerial capacity gaps, little policyanalysis capacity, limited equipment, and inadequate infrastructure for zoning,monitoring, and enforcement. Additionally, there are few members of thestate judicial system with background in environmental law, and even fewerenvironmental prosecutors.

10. There are also serious gaps in communication and policyimplementation, due mainly to the lack of integration of state and federalentities located within the states. While the 1988 Constitution envisionedgreater decentralization, and outlined concurrent authority for the federal andstate governments in several environmental subsectors, there were fewinstitutional links to operationalize the Constitution.

11. Institutional Framework at the State-Level . The main principles andadministrative mechanisms of a national environmental policy were first laidout in Law 6.938 of 1981, which created the National Environmental Systemand mechanisms at the federal level for integrated environmental management..These principles were confirmed and substantially reinforced in the 1988Constitution, which significantly increased the role of states and municipalitiesin environmental management. They were attributed, jointly with the FederalGovernment, responsibility for protecting the environment and renewablenatural resources. Similarly, the Constitution established concurrentresponsibility (competencia concorrente) between the states and the FederalGovernment to enact environmental legislation; the latter formulating generalnorms and minimum standards, and each state enacting supplementallegislation respecting federal minimum standards but suited to their particularsituation. Table 2 (page 7) indicates the primary functions of the entitiesdealing with environmental management at the state level.

12. The nine states in the Legal Amazon have since structured themselvesto varying degrees to fulfill their constitutional mandate. All of them haveincluded environmental provisions in their Constitutions consistent with theirobligations as spelled out in the Federal Constitution. However, only fourstates (Amazonas, Maranhao, Mato Grosso, and Tocantins) have enacted anenvironmental law and issued corresponding regulations or environmentalcodes. Two states (Acre and Rond6nia) have enacted an environmental law

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TABLE 2Environmental Management at the State Level:

Entities and Their Primary Functions

Erl P Pol Inter-tate M Control andUnersitieing IFormulation Coordination Enforcement

OEMA _

COEMA _ .. _

jSecearimatofrPlanning l ||1s__..._ 1

|Forestry Police_ _

| IBAMA

|FUNAI |

| Federal Police

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but not issued applicable regulations. In the remaining three states (Amapa,Para and Roraima) the environmental laws await State Congress approval.

13. Institutionally, all nine Amazon states have established StateEnvironmental Councils (COEMAs). Most were recently created (generallysince 1992), and, in five states (Amapa, Para, Rond6nia, Roraima andTocantins), they are not functioning yet (their by-laws are still underdiscussion). Their composition and functions vary significantly from state tostate, as specified in Table 5.0 of Annex 1. They are very important inestablishing state environmental policies and norms, providing political supportto OEMAs' actions, ensuring transparency and public access to information,and providing a forum for public debate. However, the frequency of meetingsand relevance of their agendas had not been satisfactory (Table 5.0 of Annex1). Their strengthening is an important objective of the project (para. 35).

14. State Zoning Commissions. State Zoning Commissions (CEZEEs)were established in all nine states in 1991 or early 1992 to plan, coordinate,supervise and evaluate zoning activities (only in Para and Tocantins did theircreating decree specifically include among their functions that of suggestinghow results from zoning activities should be used to orient state planning andgovernment actions). Their membership usually consists of representatives ofstate sectoral secretariats. Only in Tocantins does its membership extend tothe state university, and in Rond6nia to local offices of federal agencies andNGOs. Their secretariat and/or presidency is provided in six states by thestate Secretariat of Planning, and in three states (MaranhAo, Amazonas andRoraima) by the state Secretariat of the Environment. CEZEEs were createdunder the leadership of the Secretariat of Strategic Affairs of the Presidency ofthe Republic (SAE), the federal agency in charge of planning, coordinating,supervising and evaluating zoning activities nationally, and of ensuringconsistency in zoning methodologies. Many CEZEEs, however, have not metregularly since their creation (see Table 4.0 of Annex 1). Under the project,CEZEEs would plan, coordinate and supervise zoning activities carried out bytheir designated executing agency, with the support of SAE.

15. State Environmental Entities. All states have established OEMAs,which are charged with formulating (or proposing to COEMA) and executingthe state environmental policies and monitoring, and controlling and enforcingenvironmental regulations. Their main activities thus include the elaborationof norms, issuance of licenses, review of environmental impact assessmentsand reports (EIAs/RIMAs), monitoring, control and enforcement, promotion ofenvironmental awareness and education, and promotion and dissemination ofenvironmentally friendly technologies. Although they have traditionallyfocussed on control of urban and industrial pollution, their responsibility alsoextends to protection of natural resources (including forests and fisheries), atask in which their activities are incipient but expanding, in light of a growingtrend towards decentralization of such functions to the states.

16. OEMAs in the nine states exist in various legal forms (see Table 2.0 ofAnnex 1). In some states, they are an integral part of the state governmentapparatus as Environmental Secretariats (or Coordination), and as such haveno legal personality and no administrative and financial autonomy (Amapa,Maranhao, Pard, Rond6nia, Roraima). In others (Acre, Amazonas), a smallsecretariat is in charge of formulating, approving, supervising and evaluatingstate environmental policy and formally issuing norms, but preparation andexecution are entrusted to a decentralized agency with legal personality andadministrative and financial autonomy (autarchy or foundation). In MatoGrosso, all functions are delegated to a foundation, accountable to a Secretary

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of Environment; and in Tocantins, a foundation responds directly to theCOEMA. While in principle foundations have advantages of being able toraise their own funds (proceeds from licensing fees, analysis of EIAs/RIMAs,fines, taxes, payments for services, etc..), in most cases these proceeds areeither channelled to special restricted funds (e.g they cannot be used to pay forrecurrent expenses), or allocated to other activities (such as science andtechnology). Sometimes they are so small that they only cover a minimalportion of the OEMAs' costs. All OEMAs, irrespective of their status, arethus overwhelmingly dependent on state budgets, which also considerablylimits their ability to make their own decisions with respect to salary levelsand hiring.

17. The OEMAs in the Amazon region suffer to varying degrees from ade-facto lack of administrative and financial autonomy, and a consequent lackof financial, physical and trained human resources. Many have high stafftumover because they are unable to offer permanent positions and reasonablesalaries. They lack technical expertise, have weak internal systems, nostrategic planning (essentially reacting to emergencies), and tend to work inisolation from other agencies (federal, municipal, NGOs, and other stategovernment sectoral agencies). Their actions are also often impaired by a lackof enforceable state regulations. The project will support the strengthening ofOEMAs in all these respects (para. 35).

18. There is a growing realization among OEMAs that they must also seekways to strengthen themselves through alliances with other agencies. Amongthese other agencies, the most relevant traditionally are federal agencies suchas the Brazilian Institute of the Environment and of Renewable NaturalResources (IBAMA), the National Indian Foundation (FUNAI) and theNational Institute for Colonization and Agrarian Reform (INCRA), but also,increasingly, state special environmental prosecutors' offices (Curadorias deMeio Ambiente) and special forestry police (Batalhoes Florestais). SpecializedCuradorias now exist in all states (except Roraima), though they are at variousstages of development (Table 3.0 of Annex 1). By having an adequatecapacity to initiate legal actions against offenders and impose criminalsanctions, they are potentially powerful allies of OEMAs as well as of thepublic. The forestry police (existent in five states, but only incipient in four ofthem, see Table 3.0 of Annex 1) are not capable of mobilizing considerableforces, which will be necessary as the enforcement of forestry regulations isdecentralized to the states. The project includes their strengthening.

19. The Amazon is more urbanized than is generally realized. Atmunicipal levels, OEMAs can leverage their actions by supporting the creationand strengthening of municipal environmental secretariats and councils(CONDEMAs) and by the establishment and strengthening of their officesoutside the capital cities. In all institutions, there are significant needs fortechnical and other training, which will be supported under the project. Theproject will also promote integration among all environmental agents present inthe states (including federal agencies) by financing integrated zoning,licensing, monitoring, control and enforcement subprojects (para. 36 (b)).

20. Although it is true that decentralization to the municipal level isessential for effective environmental management, the large size of the statesin the Amazon region (the smallest state, Amapa, is almost five times the sizeof Belgium), with the consequent difficulties in communications andtransportation, make it much more difficult to decentralize to the municipalitieswithout first strengthening environmental institutions at the state level,specifically the OEMAs and the COEMAs. Because such strengthening is a

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prerequisite for this decentralization as well as for increasing publicparticipation in environmental protection, this project will give priority to thestate level, while also encouraging a more effective presence of the OEMAs atthe municipal level.

21. Zoning. Monitoring. and Control and Enforcement Issues. Theobjective of ecological-economic zoning is to provide the public sector with theinformation necessary to plan rational land occupation and more sustainableuse of natural resources. It is accomplished through satellite and aerialimaging of the zoned area, and through biogeophysical (geological,hydrological, geomorphological, etc...) and socio-economic (sociological,economic, anthropological, etc...) studies of the area. Based on therecommendations of this research, land-use strategies are developed, publicand private investments are planned, and conservation areas are identified,preserving the native populations and fragile ecosystems and rationalizing theuse of natural resources.

22. Ecological-economic zoning, monitoring of the pattems and problemsof environmental degradation, and enforcement of the norms embodied inlegislation are three of the major functions to be performed in environmentalmanagement. In this regard, zoning is the most important tool which hasbecome recently available due to the technological advances of the 1980s. Theuse of computerized geographic information systems to analyze satellite imagescan also extend monitoring and enforcement well beyond what was possible inthe recent past.

23. The major technological breakthroughs of the mid-1980s in geographicinformation systems, satellite surveillance, and the use of the micro-computerfor digitalized mapping are now being put in place in this part of Brazil. Thecontract to establish the Amazon Surveillance System (SIVAM) has just beenawarded (not Bank-financed). During the implementation of the project, theBank will be closely following the installation of SIVAM, in order todetermine ways in which the information provided by the system can be usedto enhance the environmental monitoring and enforcement capabilities of theAmazon states.

24. There are several intermediary steps, however, before real capacitiescan be built for using these advanced technologies. Primarily, agreementsneed to be reached on the processes, institutions, and people to be engaged inthe processes. To date the concept of ecological-economic zoning in theAmazon remains essentially bio-physical, with only secondary attention tosocio-economic data and its relationship to the incentives for the choices to bemade. There is rarely a unique optimum land use, nor can technology aloneidentify one. Claiming that there is, and rushing to regulate (especially if it iswithout regard to incentives) without a review process to encourage ownership,only results in heightened conflict and enforcement stalemates. A regulationprocess based solely on restrictive legislation rarely works, even inindustrialized countries with sophisticated capacity for enforcement.

25. Beyond ecological-economic zoning, however, there is other monitoringand enforcement work that needs strengthening: conformance withmanagement plans submitted by sawmills and wood product manufacturers;licensing, fines, fee collections, and user charges; water and soil quality; andthe impacts of illegal mining. The size and scale of the Amazonian states, andthe dispersed nature of these problems, make the strengthening of theseactivities a considerable challenge. While IBAMA and the Forestry Police areon the front lines of enforcement, OEMAs also have their role to play in these

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activities, as do the municipalities. Facilitating increased coordination amongthese different organizations is central to strengthening environmentalmanagement.

Lessons Learned from Previous Bank Involvement

26. A number of lessons were learned from the implementation of theBank-financed National Environmental Project (NEP) (Loan no. 3173-BR).First of all, project experience has shown that a thorough institutional analysisshould be carried out early on in project implementation. Second, greaterattention must be given to building capacity in the implementing agencies. Inthe NEP, IBAMA proved to be extremely weak in basic respects. Heavyreliance had to be placed on a project coordination unit and other technicalexperts (their presence reduced the capacity-building impact of the project).Another lesson learned is that this kind of project needs to be designed muchmore strategically and with greater simplicity. Future projects should buildinstitutional capacity and carry out activities over a carefully designedsequence.

27. The recent restructuring of the NEP, with the allocation of sizablefunds to the execution of decentralized projects (PED), represents an importantexperience for the Bank in lending to the environmental sector in Brazil sinceit incorporates lessons previously learned. It now includes sizable funds forwhich states compete with innovative projects involving new, decentralizedapproaches to environmental management, including the use of market-basedincentives. The proposed project is following a similar approach in theintegrated subprojects component. It is expected that, in the Amazon states,the program of PED and this project's activities will be complementary, withthe proposed project focusing on the strengthening of state agencies and PEDon municipalities and community associations.

28. Another germane Bank experience is with the Rond6nia and MatoGrosso Natural Resource Management Projects (Loan numbers 3444-BR and3492-BR, respectively), currently under implementation. Both projects includeseparate institutional strengthening components targeted for, among otherentities, their OEMAs. The Rond6nia activities concentrate on training andcivil works, while the Mato Grosso activities are geared towards the purchaseof essential equipment and civil works. Both projects also include programsfor increasing decentralization of environmental policy to the municipal leveland for zoning. Experience under these projects points to the need for strongenvironmental institutions at the state level in order to pursue sustainabledevelopment. It also highlights the critical importance of timely consultationswith all segments of society (in particular conceming zoning activities).

29. Appraisal of these projects, discussions with Brazilian officialsregarding the NEP, and sector work recently undertaken on decentralizationhave shown that institutional development must also include: (i) ending thehistoric isolation of OEMAs from other state agencies; and (ii) undertaking abroader approach to institutional development -- one which encompassesattention to the legal framework, the role of the OEMAs in decision making,the agencies' intemal managerial and organizational capacities, as well as themore traditional approach of providing equipment and training.

30. In addition, a 1992 paper entitled "Institutional Development in theLatin America and Caribbean Region: Lessons of Experience and

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Recommendations for Improvement", emphasized: (i) basing project design ona thorough institutional needs assessment; (ii) establishing clear, monitorableperformance indicators of project success; and (iii) carrying out an annualreview as a setting for evaluating project performance and agreeing onnecessary adjustments.

II. THE PROJECT

Project Objectives

31. The objectives of the project are to: (i) strengthen the policy analysis,regulatory and implementation capabilities of the entities dealing withenvironmental management at the state level, so they can develop andimplement their key functions in an integrated manner; (ii) implement zoning,monitoring, and control and enforcement activities in key locations in thestates, in order to mitigate the major environmental concerns in critical areas;and (iii) support the decentralization of environmental management from thefederal to the state/municipal levels.

32. More specifically, the institutional and policy goals are to: (a) betterintegrate environmental entities at the state level with other sectoral entities,federal entities present in the states, NGOs, and the private sector, thusenhancing their capacity to set environmental policy and to intemalizeenvironmental concems in investment decisions; (b) improve the intemalconsistency of the legal framework for environmental policy, integrating it intoother sectoral laws and policies; (c) raise public awareness of environmentalproblems through the participation of civil society in the major discussionsaffecting the sector and through the dissemination of information onenvironmental quality; (d) assure that the entities in charge of the protection ofthe environment have the basic capacity to implement and enforce instrumentsof environmental policy; (e) improve the financial and institutionalsustainability of the 0EMAs; (f) enhance the capacity to respond quickly tospecific demands that are considered a priority in terms of the protection of theenvironment; and (g) strengthen the zoning, monitoring, control andenforcement capabilities of the states in critical, priority locations.

Rationale for RFi Funding

33. One of the objectives of the Bank's Country Assistance Strategy forBrazil, most recently discussed by the Board on June 29, 1993, is to identifyways to allow and encourage vigorous agricultural and industrial growth, whileat the same time strengthening institutions and initiatives that will preserve theenvironment and reduce rural poverty. The Pilot Program's overall strategy isto demonstrate the feasibility of harmonizing economic and environmentalobjectives. Through support for integration of environmental management atthe state level, and through strengthening the capacity of the main actors insuch management, the proposed project would improve the essentialinstitutional base needed for conservation of the Amazon rain forest along withthe sustainable exploitation of its resources. As such, it is fully consistent bothwith the objectives of the Country Assistance Strategy as it applies to rural andrain forest areas, and with the objectives of the Pilot Program. Innovativeaspects of the proposed project include its focus on joint management of the

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environment (state and federal agencies working together), the strengthening ofthe OEMAs in a non-traditional fashion, their integration into policy andinvestment planning of the state governments, and the treatment of zoning,monitoring, and control and enforcement activities as an integrated set ofactions involving several different entities at the local level. The proposedsystem of allocating a portion of project funds on a competitive basis, amongboth states and institutions, will create an incentive to the best performers,based on demonstrated capacity to effectively manage the environment.

Project Description

34. The project would consist of two components: (i) institutionalstrengthening of the entities dealing with environmental management in thenine states in the Legal Amazon region; and (ii) zoning, monitoring, andcontrol and enforcement activities in these states, through, inter alia, supportfor integrated subprojects which address a specific environmental problemwithin a limited geographic area of each state. The project would also financeMMA's administrative costs related specifically to the project, as well astechnical assistance to the states for integrated subproject preparation (para.41).

35. Part 1 of the project (39.4% of total project costs), would build thebasic institutional foundation needed in every state for establishing a functionalenvironmental protection system. This component will support the followingactivities common to the nine states:

(a) improvement of the environmental policy framework, through: (i)the strengthening of strategic planning and policy analysis andimplementation capacity for using existing instruments, such as reviewof EIAs-RIMAs, licensing and application of penalties, and fordeveloping new policy instruments; and (ii) greater transparency ofenvironmental decisions by promoting public access to environmentalinformation and documents, such as RIMAs;

(b) establishment of a process of needs assessment, priority setting,and strategic planning in each OEMA, through, inter alia: (i) thedevelopment of mechanisms to improve the financial sustainability ofOEMAs, taking into account the potential application of naturalresource taxes (royalties), pollution and user charges -- includingrecreational use of state conservation units; (ii) the identification ofhuman resource needs and policies, including a system of personnelperformance evaluation; (iii) the establishment of training programs forstaff; and (iv) the improvement of the analytical capacity of laboratoriesand centers which process environmental data;

(c) strengthening of state systems to address environmental issues,through, inter alia, (i) transforming the OEMAs into technical entitiesthat would support improved state investment planning and design ofstate environmental legislation, through the holding of publicworkshops to discuss the design of environmental legislation compatiblewith existing legislation in other areas (consultants with knowledge ofsuccessful OEMAs outside the region would be hired to assist in thisprocess); (ii) operationalizing an effective COEMA in each state, byrevising, if necessary, its membership and scope of authority, bystrengthening their ability to issue norms and standards, and by holding

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workshops to discuss state environmental problems; (iii) supporting theestablishment and functioning of Technical Commissions on StateEnvironmental Legislation within COEMA (CTEL); (iv) strengtheningforestry police; and (v) developing the state's capacity to adjudicateenvironmental disputes, through, for example, the training of judgesand attorneys; and

(d) enhancement of intrastate collaboration in solving environmentalproblems, through the broadening of the decision-making base of theCOEMAs and CEZEEs, and the formation of GTs to coordinate thepreparation of integrated subprojects, and of interstate collaboration,through the creation of a Permanent Technical Working Group ofAmazon OEMAs (GTTP) for staff to exchange information on technicaland regulatory issues related to the environment, and as a complementto the political working group of the region's environmental secretariesalready in place.

36. Part 2 of the project (55.5% of total project costs) will consist of threecomponents, as follows:

(a) the strengthening of specialized staff of entities dealing withecological-economic zoning, including the CEZEEs, the coordinatingagencies of zoning works (Secretariats of Planning or of Environment),and other entities in charge of the execution of zoning activities in thestates, through the provision of training, equipment and data for geo-processing and remote sensing;

(b) the carrying out of a study on the territorial data of the Amazonregion, which will consolidate the results of the "EnvironmentalDiagnosis of the Legal Amazon", made by the Brazilian Institute ofGeographics and Statistics (IBGE), and establish the system ofterritorial information of the region;

(c) the carrying out of integrated sub-projects, in which: (i) the stateswill select critical areas with prospective environmental concerns; (ii)this area will be zoned (scale 1:250,000) so that the states can identifyspecific sub-areas ("hot spots") within the critical areas where anenvironmental concem is present4; (iii) a more detailed zoning of thissub-area will be done (scale depending on the size of the sub-area andthe nature of the environmental concern); and (iv) monitoring, controland enforcement activities to mitigate the environmental concerns in thespecific sub-area will be carried out. The project is expected to financean average of three integrated subprojects per state, with an averagesubproject amount of US$1-2 million. Such integrated subprojects caninclude the selective strengthening of non-state entities for the executionof their activities under such subprojects, through the provision ofspecific training for their staff, equipment and vehicles, if needed.Annex 7 provides three examples of possible integrated subprojectsdealing with sawmill, charcoal-based pig iron plant and miningactivities; and

4 In the states of Acre, Mato Grosso and Rond6nia, all the territory of the states will be macro-zoned(scale 1:250,000) through, respectively, the KfW zoning project (as part of this project), and the Bank-financed Natural Resource Management Projects currently being carried out in the states of Mato Grossoand Rond6nia. Consequently, the zoning activities to be included in the subprojects for these states areonly those in item (iii) of this paragraph.

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(d) the carrying out of emergency enforcement activities in priorityareas of the state (ad-hoc actions outside those programmed using theintegrated subproject planning mechanisms) not to exceed US$250,000per state over the life of the project. Such activities may includenecessary related laboratory analysis and will have to be proposed byan executing entity and approved by the Project Commission (CP)5within MMA and the Bank.

37. In order to become eligible to receive funds from sub-component (b) ofPart 2, the states and the institutions will have to meet certain standards(paras. 56-59). Integrated subprojects will also be subject to technical analysisby CP, established within the Ministry of the Environment and of the LegalAmazon (MMA). Such analysis would be carried out in accordance with pre-determined criteria. All these criteria will be included in the OperationalManual (para. 62).

38. The objectives of an integrated subproject must be consistent with thoseof the Pilot Program, i.e., they should aim at reducing the rate of deforestationin the Legal Amazon by: furthering the sustainable use of natural resources(forest and water resources); protecting the forest and biodiversity; andreducing contributions to carbon emissions. Thus, activities which wouldqualify for financing could include control of: (a) deforestation and selectivelogging without adequate forest management; (b) fires in forest or contiguousareas; (c) placer mining (garimpo) activities (in particular, siltation andmercury pollution caused by these activities); (d) predatory fishing andhunting; and (e) industrial and urban pollution, but only when associated with:(i) the burning of wood or wood residues (charcoal manufacturing, woodburning in ceramics industry and burning of sawmill dust), which representsan indirect contribution of the forest to carbon emissions; (ii) threats tobiodiversity in sensitive eco-systems in priority areas; or (iii) the need tosecure the support and participation of local communities in priority areas.

39. The zoning activities under the integrated subprojects will provide thenecessary tools to orient land occupation in the priority areas, taking intoaccount the sustainable use and protection of its natural resources, therebyleading to an enhancement of the quality of life of the population in theseareas. The methodology and process proposed for zoning activities under theintegrated subprojects will be developed in workshops organized in the earlystages of project implementation, and must include the required steps forconsultation with affected groups and public hearings, the effectiveparticipation of local representatives of federal agencies, municipalities,organized civil society and affected populations in the various stages of zoningwork (including socio-economic data collection and analysis of alternatives)and public hearings on zoning recommendations.

40. The significance of the effective enforcement of the zoningrecommendations is such that, during negotiations, the representatives of theRecipient represented to the Bank that it is part of its policy in the Amazonregion, and applicable to all entities controlled directly or indirectly by theRecipient, to take into account the ecological-economic zoning orientations ofthe Amazon states before making any productive investment in such states.

5 The CP comprises nine members: one representative from MMA (only with tie-breaking votingrights), one from SAE, one from IBAMA, three from the states (to rotate every. year) and three fromNGOs.

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Similar commitments will be required from the states, as specified inparagraph 70 (k) below.

41. Additionally, the project would finance project-specific administrativecosts of MMA, which include support to the CP and to the MMA's TechnicalSecretariat (ST), as well as project monitoring and evaluation. This supportrepresents the minimum external financing necessary for successful projectimplementation, since MMA is a recently established Ministry. Thiscomponent will also finance technical assistance to the states, through MMA,for the preparation of integrated subprojects, when requested by the states. Itrepresents 5.1 % of total project costs.

Project Costs and Fimancing

42. Total project costs are estimated at US$79.0 million, including physicaland price contingencies amounting to 10% of total project costs (except for theamount allocated to integrated subprojects under Part 2). Cost estimates arebased on: (i) state proposals prepared using standard costs and a predefinedproject activities list; and (ii) budget limits agreed to for each component inthe Pilot Program Progress Report of November 1991. These estimates aresummarized in Schedule A-1 and detailed in Annex 2-A. Indicative costestimates for each state and the regional level are in the project file. Thefinancing plan, as a whole and by project component, is shown in SchedulesA-2 and A-3.

43. The project would finance, inter alia, the provision of technicalassistance and training, workshops and seminars, travel and per diem expenses(on a declining basis), the acquisition and use of equipment and vehicles, andsome civil works on a modest scale, when required. All expenditures, exceptsalaries of staff and taxes, would be eligible for financing. Only works of avalue of less than US$200,000 in the aggregate per subproject would beeligible under the integrated subproject component (Part 2), so as to limit themto small-scale construction (such as construction of outposts and surveillanceand monitoring installations). Eligible recurrent costs (such as supplies andmaterials) would be financed from external funds on a declining basis (para.80).

44. The project would be financed with grants from the RFT (US$20.0million), CEC (US$12.0 million equivalent), and the Kreditanstalt furWiederaufbau (KfW) (US$24.8 million equivalent), the technical assistance ofthe United Kingdom's Overseas Development Agency (ODA) (US$5.0 millionequivalent), and the Germany's Deutsche Gesellschaft fur TechnischeZusammenarbeit (GTZ) (US$5.8 million equivalent, in the form of abilaterally associated project), and by counterpart funds (US$11.4 millionequivalent). Technical assistance from ODA would be provided directly to thestates for institutional strengthening, project implementation and integratedsubprojects. Technical assistance from GTZ would be provided directly tothree states (Acre, Para and Amazonas), and financial assistance from KfWwould also be provided on a priority basis to these three states until the Mid-term Review, when this pre-allocation will be reviewed, taking into accountthe disbursements made. CEC funds would be disbursed through a Trust Fundexpected to be established in the Bank in early 1995. If the amount of theCEC grant is more than US$12 million equivalent, the difference will beallocated to the carrying out of integrated subprojects under Part 2 of theproject. To ensure sufficient funds to begin the proposed project, the

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effectiveness of the RFT Grant Agreement will be dependent on theeffectiveness of the CEC Grant Agreement (para. 93 (a)). The signing of theKfW Grant Agreement is expected by mid-1995, and its cross effectivenesswith the RFT Grant Agreement is not proposed, because disbursements underthe project in the first half of next year are expected to be very limited.Regarding the technical assistance of GTZ and ODA, in the case they are notformalized in due course, funds would be reallocated from the amountsallocated for integrated subprojects under Part 2 of the project (para. 36 (c)).

Project Implementation, Organization and Management

Executing Entities

45. The project would be executed by a number of participating entitiesdesignated by each state (see Annex 5). These would comprise:

(a) for the institutional strengthening of state environmental agenciescomponent (Part 1 of the project)), which, for the purposes of thecomponent, include the State Environmental Secretariats, theirexecuting entities (environmental foundations or other types ofautonomous entities), the environmental sections of State AttorneyGeneral's Offices (Curadorias de Meio Ambiente), and the stateEnvironmental Police forces;

(b) for the strengthening of zoning institutions sub-component (underPart 2 of the Project), of entities dealing with ecological-economiczoning, including the CEZEEs, the coordinating agencies of zoningworks (Secretariats of Planning or of Environment), and other entitiesin charge of the execution of zoning activities in the state (such asUniversities), through the provision of training, equipment and databases for geo-processing and remote sensing; and

(c) for the integrated subprojects sub-component (under Part 2 of theProject), the executing entities designated to implement approvedsubprojects in the respective subproject proposals. These may includefederal entities such as IBAMA, FUNAI, INCRA and the FederalPolice, and state entities such as specialized forest police forces, or theregular state police.

46. Municipal entities and NGOs would not be direct recipients of grantfunds. However, under specific subprojects, they may be indirect recipients ifthey are contracted as executing entities by a sponsoring entity as defined initems (a) through (c) above. Additionally, the project will promote the activeinvolvement of NGOs in its implementation, through their participation in theCP (at the federal level) and the COEMAs and CEZEEs (at the state level).Subprojects under Part 2 which include the involvement of NGOs ormunicipalities in their preparation will be given greater weight whentechnically assessed, as specified in the Operational Manual.

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Project Coordination Responsibilities

47. The following paragraphs describe the functions, membership andstaffing of the various bodies involved in project coordination and managementat the state, regional and federal levels.

48. At the state level, a Working Group (Grupo de Trabalho - GT) wouldbe formed in each state to coordinate project implementation. The GT wouldbe composed of one working-level representative of the OEMA (who chairsthe Group) and one from each of the state entities and state-level offices offederal entities expected to carry out the project. The appointed representativeof each entity to GT will be the person responsible for the coordination of theexecution of the project in that entity. The composition of GT and the profileof its members will have to reflect the technical (not political) character of thisgroup. GT would be in charge of: (i) coordinating the preparation ofsubprojects; (ii) reviewing executing entities' programs and budgets (ActionPlans (PAs) and Annual Operating Programs (POAs)), and consolidating them;and (iii) preparing an annual evaluation report of the project.

49. A Support Unit (Unidade de Apoio - UA) will be established withinthe structure of each OEMA to serve as the executive secretariat to GT and tocoordinate the OEMA's own activities under the project. This unit will beheaded by a person designated by the OEMA from among its staff, and willcomprise a full-time technical adviser (in the case of Acre, Amazonas andPara, the adviser will be provided under the technical assistance of GTZ) andtwo to three consultants (for financial, procurement and other aspects), allfinanced under the project. This unit would assist GT and executing agencieswith: (a) the preparation of subproject proposals and other programming andbudgeting documents; (b) the review and consolidation of these documents,and their verification for consistency with PEA/PGAs (see para. 54) andapproved subprojects; and (c) the preparation of annual evaluation reports.The unit would also assist the executing agencies in the day-to-day operationof project-related systems (accounting, reporting, disbursements) and onprocurement matters. This group would also be supported by specialistconsultants provided (upon request) by ST, or hired directly by the states andfinanced under the project.

50. At the regional level, a Permanent Technical Working Group (Grupo deTrabalho Tecnico Perrnanente - GTTP) would be constituted, withrepresentatives from each of the nine OEMAs, to: (a) identify and discusscommon problems and approaches to resolving these problems; (b) discuss andpropose uniform norms and procedures; and (c) review conflicts betweenenvironmental and other state-level or federal regulations and propose relevantchanges. GTTP would be an important technical regional forum. It wouldmeet initially every two months and would be supported by specialized ad hoccommissions and consultants financed under the project.

51. At the federal level, the responsibility for coordinating, managing, andsupervising the project would be vested in CP and ST. Their responsibilitiesand composition are summarized below:

(a) the CP would be responsible for: (i) approving consolidated stateprograms and annual budgetary allocations by states; (ii) approvingintegrated subproject proposals and "emergency activities"; (iii)recommending revisions to program norms, criteria and procedures;and (iv) commenting upon annual evaluation reports. It would consist

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of: one representative of MMA (the Project Technical Secretary, whowould preside over the CP but would have no voting rights); onerepresentative of IBAMA; one representative of SAE; threerepresentatives of the states, each appointed for one year on a rotatingbasis; and three representatives of NGOs (one from environmentalistgroups, one from social groups and one from business groups).

(b) ST would be established within MMA, under the Pilot ProgramExecutive Secretariat (SEPP), to coordinate the project at the federallevel. ST would be responsible for: (i) reviewing the five year PAsand POAs for consistency with Pilot Program rules (this function willbecome lighter as state GTs gain experience and knowledge of theproject) and approving them; (ii) submitting changes to project normsand procedures to CP, then to the Bank and relevant donors forapproval, and subsequently issuing them; (iii) preparing annual budgetsand issuing budget rules to the states; (iv) assessing the technical,financial and institutional viability as well as the sustainability ofintegrated subprojects under Part 2 of the project, and submitting itsrecommendations and grading to CP for review and clearance, then tothe Bank and relevant donors for approval; (v) consolidating POAs forsubmission to the Bank and relevant donors; (vi) preparing semi-annualprogress reports on the project's physical and financial progress, theproject's annual status report, organizing the project's Mid-termReview (see para. below), and preparing a project ImplementationCompletion Report at the end of the project; (vii) providing technicalassistance to the states (upon demand) to help them prepare and reviewPAs, POAs and subprojects; (viii) ensuring that procurement, projectaccounting and reporting and disbursement are followed, and thatstandard systems have been installed and are functioning; and (ix)maintaining the Special Account and handling disbursements from theTrust Fund. ST would be staffed with ten professionals and threesupport staff, as shown in Annex 5, Graph 2, and would be supportedby ad-hoc consultants (in particular for subproject appraisal) andtechnical personnel from other areas of MMA and SAE.

52. The establishment of CP and ST, the appointment of the projectTechnical Secretary and of the core staff of ST, as agreed, would beconditions of effectiveness for the Grant Agreement (para. 93 (b)).Assurances were obtained that MMA would subsequently maintain CP and STadequately staffed at all times (para. 92 (a)).

Procedures and Inter-institutional Coordination

53. Project management and coordination mechanisms are designed topromote decentralization at the state level in the design and adoption ofpriorities and programs, their coordination and integration, and theirimplementation, while maintaining adequate supervision and controlmechanisms at the federal level and consistency with prevailing regulationsgoverning transfers of federal funds.

54. The following procedures would apply to all project components:

(a) during the first year of the project, each state OEMA wouldprepare an Environmental Plan (Plano Estadual Ambiental- PEA), asimplified document which would present a diagnostic of the main

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environmental issues in the state, list priority themes and areas forattention, and propose critical areas within these themes and areaswhere the state should focus its efforts. The PEA will be approved bythe respective COEMA, and the states which do not have functioningCOEMAs would propose alternative review mechanisms for their PEAand subproject proposals. By the second half of the project, it isexpected that each state would be able to prepare a morecomprehensive document, an Environmental Management Plan (Planode Gestao Ambiental-PGA), a strategic planning document which, inaddition to articulating state environmental policies and priorities,would establish measurable objectives and define the means forachieving them (financial, institutional). A full PGA will be preparedand submitted to the respective COEMA in 1998. PEAs/PGAs will beprepared by the OEMA, in consultation with relevant sector secretariatsand other state and federal agencies, and submitted to COEMA forreview and approval. Proposed zoning priorities and programs wouldalso be submitted to the respective CEZEE for review and approval;

(b) integrated subproject proposals would be prepared by executingagencies under the leadership of GT, with the assistance of UA,approved by the COEMA and sent to ST. ST will carry out a technicalassessment, in accordance with the criteria set forth in the OperationalManual. All subprojects would then be submitted for approval to theBank and relevant donors;

(c) each executing entity would prepare a five-year Action Plan (Planode Acao - PA) reflecting its agreed participation in the project. Thisdocument would intemalize project planning, programming andbudgeting into each entity's operations and programs. PAs would berevised annually. Each entity would also prepare a POA, which is anannual budget (including a breakdown of expenditures by type and amonthly physical and financial implementation schedule). PAs andPOAs would be reviewed by GT for consistency with the priorities andprograms established in the PEA/PGA and approved subprojects, andsent to ST for approval. During negotiations, assurances were obtainedthat MMA will send to the Bank, for its approval, by not later thanSeptember 30, 1995, the first PAs of the OEMAs for the activitiesunder Part 1 of the project for calendar year 1996 (para. 92 (b)).Additionally, the Bank and relevant donors would review and approvethe consolidated POA for each year, to be presented to the Bank byOctober 1 of each year. The approval by the Bank of the POA forcalendar year 1995 would be a condition of effectiveness for the GrantAgreement, while the approval of subsequent POAs would be acondition of disbursement for each executing entity for each year(paras. 93 (c) and 94 (a)); and

(d) semi-annual progress reports would be prepared by each executingentity and consolidated by ST before being sent to the Bank andrelevant donors in the months of March and September of each year.Annual evaluation reports would be prepared by each GT/UA and sentto ST, the Bank, relevant donors and the COEMAs for information.

55. Activities to be financed during the first year of project implementationwould not be subject to the above process. Rather, executing entities underthe institutional strengthening component have been requested only to preparePOAs covering essential preliminary activities such as training, studies, andacquisition of basic data, as well as those required to support the creation of

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coordinating bodies. These draft POAs were reviewed during negotiations andwill be approved by ST and the Bank and later incorporated into the Sub-grantAgreements.

56. Thus, in this process, the states would have the exclusive responsibilityfor defining priorities in PEA/PGAs, and designing programs and integratedsubprojects. The role of ST would be limited to a technical assessment of PAsof OEMAs and of integrated subprojects, ensuring that proposed activities andinstitutions meet the eligibility and qualification criteria established for theproject, and that agreed monitoring, reporting, accounting, procurement anddisbursement procedures are being followed. The role of ST in reviewing andapproving PAs and POAs would be revisited during the Mid-term Review,based on the experience and capabilities developed at the state level. Adecision will be taken at that point on whether approval authority for PAs andPOAs could be further delegated. Proposed procedures and a timetable formajor processing steps are detailed in Annex 5.

Qualification and Eligibility Criteria

57. Eligibility of States. To access funds for integrated subprojects underPart 2 of the project, each state must:

(a) have signed a Subsidiary Agreement with MIMA and that suchAgreement has become effective;

(b) have environmental legislation consistent with constitutionalrequirements, duly regulated;

(c) demonstrate approved budget allocations to state environmentalinstitutions (Secretarias de Meio Ambiente and their Executing Agency,Zoning institutions, and state environmental police) from domesticsources (i.e. excluding external funds) which show positive growth inreal terms relative to the previous year; and

(d) have complied with the applicable dated commitments listed inparagraph 70 below.

58. The funds for integrated subprojects, including the associated selectivestrengthening of non-state entities, will be disbursed on a first-come-first-served basis. Because of the different stages of development of environmentalmanagement in each of the nine states, and in order to allow sufficient time forthe weaker states to develop acceptable subproject proposals, states will beexempt from conditions spelled out in items (b) and (c) of paragraph 57 above,for a period of two years (calendar years 1995 and 1996), but only up toUS$1.5 million per state. Such limit will be included in the OperationalManual. On January 1, 1997 the uncommitted balance of state reserved fundswill be available to all states, i.e., fully distributed among approvedsubprojects on a first-come, first-served basis.

59. Eligibility of Institutions. Each executing entity must have: (i)signed a Sub-grant Agreement with MMA (para. 70); (ii) demonstrated thetechnical capacity to implement its part of the integrated subproject; and (iii)demonstrated the availability of counterpart funds for the carrying out of suchpart in its budget.

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60. Eligibility of Integrated Subprojects. In order to be eligible, IntegratedSubprojects (Zoning, Monitoring, and Control and Enforcement activities)would need to: (i) be consistent with PEA/PGA and Pilot Program priorities,and have been recommended by COEMA; (ii) have been found by CP to betechnically, financially and institutionally sound and sustainable; (iii) forzoning activities, be recommended by CFEZE, followed an agreed-uponmethodology (including steps for consultation with affected groups and publichearings), and have the formal support of municipalities and local associations;and (iv) show satisfactory integration between licensing, zoning, monitoring,control and enforcement activities either already existing in the project areas orto be financed under the integrated subprojects. Eligible integrated subprojectswould then be subject to a selection process similar to that designed under thePED under the NEP, i.e., subprojects will be assessed according to a series ofcriteria and assigned points on each one of these criteria. These criteria arelisted in the Operational Manual (Annex 4). These points will then be added,and the project will be selected if the total number of points is equal or above60% of the total of points.

61. In order to ensure a reasonable geographic dispersion of funds amongthe nine states, total disbursements for integrated subprojects under Part 2 willbe limited to US$7.5 million per state. Such limit will be included in theOperational Manual. As indicated in para. 58 above, commitments forsubprojects up to U$$1.5 million per state would not be subject to theproposed state eligibility criteria during the first two years of projectexecution, but will be subject to the institutional and subproject criteria.

Operational Manual

62. Inter-institutional and project coordination mechanisms and procedures,qualification and eligibility criteria, subproject selection criteria as described inthe above paragraphs, and reporting procedures described below would beincorporated in an Operational Manual for the project. The table of contentsfor this manual is presented in Annex 4. A draft of this manual was discussedat appraisal, and during negotiations agreement on its contents was reached.The issuance of the Operational Manual would be a condition of effectivenessfor the Grant Agreement (para. 93 (d)). Assurances were obtained that theproject would be carried out as specified in the Operational Manual (para. 92(c)).

Reporting, Monitoring, Evaluation and Mid-term Review

63. Each executing entity would be required to prepare semi-annualprogress reports not later than March 31 and September 30 of each year,starting in September 1995, on the achievements of physical and financialtargets as set out in their POAs, based on a standard format. These reportswould be sent to the GTs and to ST for information, and consolidated twice ayear by ST. This semi-annual progress report would be sent to the Bank andrelevant donors. During negotiations, assurances were obtained that STwould hire a specialized consultant to: (i) by April 30, 1995, develop aproject accounting and management information system, including financialand physical progress reporting and recording of procurement activities; and(ii) by September 30, 1995, install in MMA and in each OEMA such a systemand train the relevant personnel (para. 92 (d)).

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64. The first semi-annual progress report will include an evaluation ofproject progress during the preceding year, an analysis of successes, problemsand proposed solutions, and an action plan detailing specific proposed actionsto be taken in response to problems identified. These reports, and a summaryprepared by ST, would be reviewed by CP before being circulated to theBank, relevant donors and the International Advisory Group (IAG). A set ofperformance indicators for the institutional strengthening component ispresented in Annex 6. During negotiations, assurances were obtained that theprogress in project implementation would be measured, inter alia, by theseindicators and by annual reviews to be conducted by the Bank, the relevantdonors and MMA in the month of April of each year, beginning in 1996 (para.92 (e)). For integrated subprojects, specific indicators will be developed andproposed as part of each subproject proposal, and progress would be measuredagainst the agreed indicators. On the basis of these evaluation reports, ST willprepare an annual evaluation report, which will be submitted to the Bank,relevant donors and the Pilot Program Coordination Commission (CCPP).Also on these bases, proposals will be developed (at the initiative of ST and/orCP) to modify project procedures and criteria if necessary. These proposedamendments will be reviewed by, and agreed with, CP, the Bank, and relevantdonors.

65. During negotiations, assurances were obtained that a Mid-term Reviewwould be carried out not later than October 31, 1997 (para. 92 (f)) with theparticipation of the Bank, MMA, CP, the relevant donors and the states. Sucha review will particularly focus on the: (i) review of revised five-year PAs ofOEMAs; (ii) project coordination procedures and mechanisms and whetherthey can be further delegated to the states; (iii) subproject eligibility andselection criteria and financing limits; (iv) grant allocations by components; (v)allocations by states of funds from the various sources (RFT and co-financingsources); (vi) status of implementation of recommendations of institutionaldiagnostics undertaken during the first year; and (vii) functioning of theCOEMAs and CEZEEs. By not later than August 31, 1997, ST will prepare areport, on the basis of which the Bank, ST and relevant donors will jointlycarry out the Mid-term Review. Adjustments to the project scope, norms andcriteria, procedures, institutional mechanisms, and allocation of funds will beintroduced as necessary following this Mid-term Review.

66. Finally, within six months after project completion, an ImplementationCompletion Report will be prepared. This report will evaluate the success ofthe program in reaching its objectives, based on the agreed performanceindicators. This report will be circulated for comments to CP, and then to thedonors and the IAG.

67. During negotiations, assurances were obtained that project reportingand evaluation, and adjustments to project design, mechanisms and allocationof funds, would be done as set out in paras. 63-66 above (para. 92 (g)).

Implementation Schedule

68. The Project would be implemented over a period of five years. Theproject is expected to be completed by December 31, 1999 and the closingdate will be June 30, 2000. Estimated implementation and disbursementschedules for the total project period are presented in Annex 3-A and 3-B.These schedules are based on: (i) the timetable of process steps presented inAnnex 5; (ii) the priority attached to each activity; (iii) the time necessary for

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preparation of integrated subprojects; and (iv) the need for the executingagencies to progressively increase their financial participation and assureproject financial sustainability. They also assume that the POA for 1995 willbe presented and approved by the end of December 1994, and that the firstsubprojects under Part 2 will not be approved until 1996.

Supervision

69. In view of the complexity of the proposed project, as well as thenumber of entities involved in its implementation in the Federal Governmentand in the nine states of the Amazon region, its supervision will be carried outthrough the Brasilia resident mission. About 75 staff-weeks per year havebeen allocated to the supervision of the proposed project, which representsthree times the average allocation for similar projects. The supervision of thisand other Pilot Program projects will be carried out by a unit located in theBrasffia resident mission. Additionally, KfW already has staff in Brasilia whowill also be providing supervision support to the project. GTZ and CECalready expressed their intention to relocate one staff each for the samepurposes in the near future.

legal Arrangements

'70. Subsidiary Agreements - MMA will sign with the nine states in theAmazon region Subsidiary Agreements (Convenios de Adesaol, through whichthe states would demonstrate their commitment to project objectives andprinciples and to follow established norms and procedures, provide requiredcounterpart funds, establish the support unit (UA) within the OEMA, supportthe work of executing entities, and take recommendations of CEZEE intoaccount in setting sectoral policies and planning public investments andactivities. Specifically, any such agreement will incorporate covenants bywhich each state would undertake the following (para. 92 (h)):

(a) designate their representatives to GTTP by June 30, 1995;

(b) establish (or re-configure) their COEMAs with deliberative powersand adequate representation of civil society (at least one representativefrom NGOs of each environmental, business and social segments), andwith the participation of representatives of the federal environmentalentities at the state level -- by September 30, 1995 (before the secondPOAs are consolidated for submission to CP);

(c) establish (or re-configure) their CEZEEs with deliberative powers,representation of the OEMA, and adequate representation of civilsociety (at least one representative from NGOs of each environmental,business and social segments), and with the participation ofrepresentatives of the federal environmental entities at the state level -by September 30, 1995 (before the second POAs are consolidated forsubmission to CP);

(d) demonstrate the existence of a special prosecutor's officespecialized in environmental matters (Curadorias de Meio Ambiente),by December 31, 1995;

25

(e) demonstrate that COEMA is functioning effectively, i.e. has met atleast four times during the previous twelve months, with sufficientmembers to debate and decide on matters under its mandate, and thatits decisions have been well publicized (publication in the OfficialGazette and at least one newspaper of wide circulation), by September30, 1996;

(f) demonstrate that CEZEE is functioning effectively, i.e has met atleast twice during the previous twelve months, with sufficient membersto debate and decide on zoning matters, by September 30, 1996;

(g) implement the agreed recommendations of the institutionaldiagnostic studies, in accordance with a timetable satisfactory to theBank;

(h) prepare a full PGA and have had it approved by COEMA byDecember 30, 1997;

(i) demonstrate that all RIMAs and licenses granted are available forpublic reading in the OEMA and the relevant municipality (prefeitura);that all advertisements for public hearings are published in the OfficialGazette as well as in at least one newspaper of wide circulation; andthat a list of all fines and infractions has been made available to thepublic; and

(j) ensure that all state productive investments (including those of theentities controlled directly or indirectly by the state) will take intoaccount the recommendations of the respective CEZEE, regarding landuse, ecological-economic zoning.

71. During negotiations, assurances were obtained that the signing ofSubsidiary Agreements with at least five states would be a condition ofeffectiveness for the Grant Agreement (para. 93 (e)) and that, for theremaining states, signing of a Subsidiary Agreement would be a condition ofdisbursement under the project (para. 94 (b)).

72. Sub-grant Agreements - Each entity carrying out any part of the projectwill enter into a five-year Sub-grant Agreement (Convenio de Execuco) withMMA, which will include, in the case of entities carrying out integratedsubprojects, inter alia, the establishment of coordination mechanisms amongthe entities in charge of implementing such integrated subprojects. Any suchagreement will be amended with yearly supplements (Termos Aditivos)incorporating the respective approved POA. During negotiations, assuranceswere obtained that the signing of a Sub-grant Agreement would be a conditionof disbursement for the respective executing entity, for expenditures under theproject (para. 94 (c)).

73. Cooperation Agreement - MMA and SAE will enter into acooperation agreement (Convenio de Cooperacao), establishing thecoordination mechanisms between them relating to the carrying out of theactivities described in paragraph 36 (a), (b) and (c). During negotiations,assurances were obtained that the signing of the Cooperation Agreement wouldbe a condition of disbursement for expenditures under such activities (para. 94(d)).

26

Procurement and Disbursements

74. The proposed procurement arrangements are summarized in ScheduleB-1. During negotiations, assurances were obtained that all procurement forcivil works and goods will be made in accordance with the Bank'sProcurement Guidelines and using standard bidding documents issued by theBank for International Competitive Bidding (ICB) and Limited InternationalBidding (LIB) and standard bidding documents agreed with the government ofBrazil for Local Competitive Bidding (LCB) (para. 92 (i)). Civil works,laboratory equipment, computer equipment and software, transportationequipment and general office equipment, and technical assistance and othercontracted services would be procured under the project. Procurement wouldbe dispersed in time over the implementation period and would be carried outby a number of executing entities in different states. For these reasons,packaging of procurement across the states would be difficult, and, therefore,is not proposed.

75. Civil works under the project will be small and geographicallydispersed. They include small-scale civil works necessary for the constructionof laboratories and of OEMAs' offices in a few states, and for simplestructures for monitoring and control facilities and outposts, under integratedsubprojects. Since the largest single contract is not expected to exceed US$1.5million, it is unlikely that foreign contractors would be interested.Procurement of works would therefore be carried out as follows: (i) contractsabove US$300,000 would be procured on the basis of LCB proceduresacceptable to the Bank for an estimated aggregated amount of US$1.0 million;(ii) contracts below US$300,000 would be procured using local shoppingprocedures (obtaining three quotations from any eligible contractor), up to anaggregate of US$1.0 million. Except for vehicles and computer equipment,contracts for goQds are not expected to exceed US$250,000 and thereforewould probably not be large enough to attract foreign contractors. Contractsfor goods, such as vehicles, computers and software, in excess of US$300,000will be procured under LEB procedures, among manufacturers and importerswho have established maintenance and technical assistance services in Brazil.Contracts for goods of US$300,000 or less, but above US$100,000, will beprocured using LCB procedures acceptable to the Bank, up to an aggregate ofUS$4.0 million for equipment and US$1.5 million for supplies and materials.If contracts for supplies and materials were to be above US$300,000, they willbe procured using ICB procedures. Contracts for goods costing US$100,000or less, up to an aggregate amount of US$1.6 million, will be procured usinglocal shopping procedures. Unless, otherwise agreed by the Bank, two stepsbidding procedures will be used for the procurement of computers and thepreparation of the materials necessary to carry out information, education andcommunication programs.

76. All ICB and LIB contracts for goods would be subject to prior Bankreview of bidding documents, bid evaluation, award proposals and finalcontracts. The first LCB contract for goods and for works of eachparticipating executing entity and all LCB for works contracts aboveUS$500,000 would be subject also to prior Bank review of bidding documents,bid evaluation, award proposals and final contracts. Prior review is expectedto cover about 50% of Bank-financed contracts for goods and works.

77. The selection and appointment of consultants for studies, workshops,training and technical assistance will follow the Bank Guidelines for the Use ofConsultants by the World Bank Borrower and the World Bank Executing

27

Agency, dated August 1981 (para. 92 (j)). Contracts with consulting firmsvalued at US$100,000 or more would be subject to prior Bank review (Termsof Reference (TORs), letter of invitation, recommendation for award andproposed contract). For individual consultants, prior Bank review (TORs,qualifications and conditions of employment) would be required for contractsvalued at US$50,000 or more. Below these limits, the Bank's prior reviewwould apply only to TORs. These exceptions will not apply to criticalassignments such as the definition of strategy and priorities for theharmonization of the legal framework.

78. Some discrepancies exist between the Bank's procurement guidelinesfor LCB and the Brazilian national procurement law. To avoid delays inprocurement, special provisions will be included in the Grant Agreement toensure that: (a) contracts are awarded to the bidder whose bid has beendeternined to be the lowest evaluated bid, provided that the bid evaluation isbased on factors that can be quantified objectively and the procedures for suchquantification are disclosed clearly in the invitation to bid; (b) the invitation tobid is advertised for at least three consecutive days in a newspaper of widecirculation in Brazil; (c) the invitation to bid does not establish, for purpose ofacceptance of bids, maximum and/or minimum amounts for the contract price;(d) the arrangements under the invitation to bid for joint ventures betweenBrazilian and foreign firms are approved in advance by the Bank in each case;and (e) the purchaser would not, without the Bank's prior approval, issue anychange order under a contract which increases or decreases by more than 15 %the quantity of goods (and related services) without any change in the unitprices or terms and conditions of sale.

79. Since the experience in procurement of most executing agencies islimited, the UAs will include a procurement advisor to be trained under theproject at the start of project implementation. In addition, the executingagencies will be assisted, as necessary by MMA and consultants.

80. Disbursements and Flow of Funds. The proposed grant, totallingUS$20.0 million equivalent, would be disbursed over a period of five years.Five-year disbursement schedules for each project component are presented inAnnex 3-C and summarized in Schedule B-2. First-year disbursementschedules for each state and for each project component can be found in theproject files. This indicative disbursement schedule for the first year would bethe basis for the preparation of 1995 POAs. The Bank will sign a Trust FundAgreement with CEC to administer the CEC Trust Fund (US$12.0 millionequivalent). RFT and CEC funds would be disbursed against 100% of eligibleexpenditures for works, goods and technical assistance (62.5 % RFT and37.5 % CEC). Recurrent costs (except salaries) would also be financed underthe project, but on a declining basis (90% in year 1, 75% in year 2, 50% inyear 3, 30% in year 4 and 10% in year 5). The disbursement schedule for theRFT grant is shown in Schedule B-2. Funds or technical assistance servicesfrom KFW, ODA and GTZ would be disbursed under each agency's ownprocedures.

81. Grant funds would be disbursed against Statements of Expenditures(SOEs) for: (i) consultant services for firms whose contract value is belowUS$100,000 and consultant services for individuals whose contract value isbelow US$50,000; (ii) contracts for goods valued at less than US$100,000;(iii) works contracts below US$300,000; and (iv) all administrative expenses.Supporting documentation for such expenditures would not be submitted to theBank but would be made available for inspection by Bank supervision

28

missions. All other disbursements will be made against fully documentedwithdrawal applications.

82. In order to ensure efficient and timely implementation of the project,Special Accounts for RFT and CEC funds, with initial deposits of US$2.0million from each, would be established in US dollars at a commercial bankacceptable to the Bank. Any interest earned on the proceeds of the SpecialAccounts would be credited to the project, and would be kept in separateaccounts. Replenishment of the Special Account would be supported by therequired documentation or SOEs.

83. Because of the Bank-financed Natural Resource Management Projectscurrently being carried out in the states of Rond6nia and Mato Grosso (LoansNos. 3444-BR - PLANAFLORO and 3492-BR - PRODEAGRO, respectively),which include institutional strengthening activities similar to those of thisproject, a condition of disbursement was incorporated into the GrantAgreement, to the effect that disbursements to these states under Part 1 of theproject (except for regional activities) will be made only after the amountsallocated to similar activities under the two loans are fully committed (para. 94(e)). Nevertheless, those states will be eligible to disburse for activities underPart 2 of the project, since such activities are complementary to thosecontemplated for zoning, monitoring, and control and enforcement under thetwo Bank loans.

Auditing

84. Each executing entity would maintain separate accounts, identifyingproject expenditures by category of expenditure and financing source. In orderto ensure uniformity in the presentation of project accounts and of SOEs, anaccounting system and corresponding software will be developed andintroduced in the accounting system of each entity, as part of the projectmanagement information system referred to in paragraph 63 above. ST staff(financial coordination) and Bank supervision missions would also performperiodic checks in each executing entity of the supporting documentation ofSOEs, and, in addition to checking for eligibility, evidence of payment anddelivery, would also verify that the goods, works and services purchased underthe project are being used for the purposes of the project.

85. Each executing entity would keep adequate records to reflect itsoperations, resources and expenditures in respect to the project, in accordancewith sound accounting principles applied consistently. The Special Account,and all other project accounts, would be audited annually by an independentauditor acceptable to the Bank, according to standards and proceduressatisfactory to the Bank, and the auditor's report forwarded to the Bank withinsix months from the end of each fiscal year. SOEs would be verifiedperiodically by the auditor on a sample basis in each executing agency severaltimes a year. The terms of reference for the auditors will include inter-aliaprovision of a Management Letter, and a separate opinion on the use of theSpecial Account, the project accounts and SOEs. During negotiations,assurances were obtained in these respects (para. 92 (k)).

29

Project Sustainability

86. If the proposed project is successful, it will assure to a large degree itsown sustainability. The OEMAs will be more fully integrated into policy andinvestment planning of the state government. They will have greaterinstitutional capacity, and there will be more public support for environmentalinitiatives. Methods of improving the financial sustainability of state entitieswill also be developed, through fee assignment and cost recovery for servicesrendered. Additionally, the integration of all entities into the management ofenvironmental problems at the state level will be an effective instrument totake the decentralization of environmental management in the Amazon regionout of theory and into practice.

Project Benefits and Risks

87. Benefits - The major benefit of the proposed project would be toprovide the basic institutional capacity necessary for environmental and naturalresource policy at the state level. The project would strengthen the capacity ofOEMAs in the Legal Amazon region to a level comparable to the moredeveloped states of Brazil, reducing the pressure on federal agencies to enforcepolicies in the region. Also, by providing for the integration of all entitiesresponsible for environmental management at the state level, the project wouldprovide the tools necessary to make effective the decentralization ofenvironmental management included in the 1988 Federal Constitution. Byincreasing zoning activities, lands could be monitored and supervised for theiruse in resource-depleting activities. Zoning is expected to increasingly becomenot just a map-making exercise, but a practical guide to norms of zoningregulations.

88. Risks - There are several types of project risks, most of which can bereduced through effective project management. The main risks are: (i) thepresent institutional weakness of most of the nine participating OEMAs as wellas the other federal and state institutions involved in environmentalmanagement at the state level; (ii) the very small budgetary allocations forenvironmental activities (Table 2.0 of Annex 1); (iii) the salary limitationsimposed on public employees, causing a high staff turnover; (iv) the vestedinterest of part of the political elite and the business community at the statelevel in non-sustainable resource-depleting activities; (v) the novelty of theintegration of state and federal entities jointly carrying out subprojects underPart 2 of the project; (vi) the tensions between state entities and federal entitiesat the state level created by the overlapping jurisdictions in environmentalprotection; and (vii) the change of government at both the federal and statelevels which will coincide with the launching of the project.

89. To address these risks, the project will focus, especially in the criticalyears, on strengthening the state level environmental institutions. Increasedbudgetary provisions would be a condition for access to integrated subprojectfunding. Additionally, only those integrated subprojects of a size andcomplexity that are compatible with the capacity of each state will be financed.

90. There has been close cooperation between the federal and state agenciesin the preparation of this project, and all nine of the outgoing stateadministrations have indicated their commitment to the project, such

30

commitment to be formalized through the signing of the Convenios de Adesao(para. 70). The "first-come-first-served" system for integrated subprojects willprovide incentives for states to take the necessary steps (institutional,legislative, budgetary, etc...) to strengthen their environmental capabilities.Those states which fail to do so will not obtain access to this project funding.

Envirommental Aspects

91. No significant negative environmental effects are expected. The projecthas a "C' classification for environmental assessment purposes. However, theenvironmental impact of the activities included in each subproject will beassessed before its approval, and remedial actions will be included ifnecessary.

m. AGREEMENTS REACHED AND RECOMMENDATION

Assurances

92. During negotiations, assurances were obtained that:

a. MMA would maintain CP and ST adequately staffed at all times(para. 52);

b. MMA would send to the Bank, for its approval, by not later thanSeptember 30, 1995, the PAs of the OEMAs for the activities underPart I of the project for calendar year 1996 (para. 54 (c));

c. the project would be carried out as specified in the OperationalManual (para. 62);

d. ST would hire a specialized consultant to: (i) by April 30, 1995,develop a project accounting and management information system,including financial and physical progress reporting and recording ofprocurement activities; and (ii) by September 30, 1995, install inMMA and in each OEMA such a system and train the relevantpersonnel (para. 63);

e. project progress will be monitored against the performance targetsspecified in Annex 6, and by annual reviews to be conducted in themonth of April of each year, beginning in 1996 (para. 64);

f. not later than October 31, 1997, a project Mid-term Review wouldbe carried out, and not later than August 31, 1997, the Recipientwould send to the Bank a project progress report, to serve as a basisfor the review. Agreed adjustments would be made promptlyafterwards (para. 65);

g. project reporting, evaluation, and completion reports would beprepared and submitted to the Bank as specified (para 67);

h. the Subsidiary Agreements would contain, inter alia, thecovenants listed in paragraph 70;

31

i. the procurement of goods and works would be carried out inaccordance with the Bank's guidelines (para. 74);

j. consultants would be contracted in accordance with the Bank'sguidelines for the hiring of consultants (para. 77); and

k. (i) the project accounts will be audited annually by independentauditors acceptable to the Bank: (ii) the terms of reference for theauditors will include, inter alia, provision of a Management Letter,and a separate opinion on the use of the Special Account and SOEsfor the project accounts and Special Accounts; and (iii) copies of theauditor's report will be sent to the Bank within six months of theend of each fiscal year (para. 85).

Conditions of Effectiveness

93. The following were agreed as conditions of effectiveness:

a. the CEC Grant Agreement would have been signed and becomeeffective (para. 44);

b. the CP and ST would have been established and the projectTechnical Secretary and the core staff of the ST would have beenappointed (para. 52);

c. the POA for calendar year 1995 would have been approved by theBank (para. 54 (c));

d. the Operational Manual would have been issued (para. 62); and

e. Subsidiary Agreements with at least five states would have beensigned and become effective (para. 71).

Conditions of Disbursement

94. The following were agreed as conditions of disbursement:

a. for expenditures by any executing entity in any calendar year(except 1995), that the Bank would have approved the POA for therespective year (para. 54 (c));

b. for the remaining states not included in the condition ofeffectiveness mentioned in paragraph 93 (e), that the relatedSubsidiary Agreement would have been signed (para. 71);

c. for expenditures to any executing entity under the project, that therelated Sub-grant Agreement would have been signed (para. 72);

d. for expenditures under the components described in paragraph 36(a) and (b), that the Cooperation Agreement and the related Sub-grant Agreement would have been signed (para. 73); and

e. for expenditures to the states of Rond6nia and Mato Grosso underPart 1 of the project (except for regional activities), until after theamounts allocated to similar activities under Loans nos. 3444-BRand 3492-BR, respectively, are fully committed (para. 83).

32

Recommendation

95. I am satisfied that the proposed RFT grant would comply withResolution 92-2 of the Bank's Executive Directors, and recommend approvalof the grant.

Gobind T. NankaniDirector, Country Department I

Latin America and the Caribbean Region

AttachmentsWashington, D.C.November 22, 1994

33

BRAZILPILOT PROGRAM TO CONSERVE T}IE BRAZILIAN RAIN FOREST

NATURAL RESOURCES POLICY PROJECT

SCHEDULE A-1

Stunmary of Project Costs by Component(US$ million equivalent)

% Foreign % ofComponent Local Foreign Total Exchange Base

Cost

Part 1 State Environmental Institutional Strewthenini

1. Organizational Capacity for Integrated Env. Management 13.4 1.7 15.1 11.1 20.0

2. Regularization of Legal Framework 0.6 - 0.6 - 0.8

3. Promotion of Environmental Awareness and Public Discussion 3.3 0.2 3.5 5.1 4.6

4. Organization of Env. Management Systems at Regional Level 0.6 - 0.6 - 0.9

5. Integrated State Planning, Project Implementation andPreparation of Integrated Subprojects' 3.4 4.0 7.4 53.8 9.8

6. Strengthening of COEMAs 1.1 - 1.1 - 1.4

Subtotal Part 1 22.4 5.9 28.3 20.7 37.5

Part 2 Zonin. Monitoring. Control and Enforcement (Z.M.C&E)

i. Strengthening of Zoning Institutions 3.1 0.4 3.5 12.3 4.6

2. Z,M,C&E Integrated Subproject (including targetedstrengthening of non-state institutions and tech. assist.) 30.2 7.6 37.8 20.0 50.1

3. Emergency Enforcement Activities 2.3 - 2.3 - 3.0

Subtotal Part 2 35.6 8.0 43.6 18.3 57.7

Part 3 Proiect Administration

1. Support to the Project Commission 0.6 - 0.6 - 0.8

2. Support to the Technical Secretariat 1.4 0.5 1.9 26.3 2.5

3. Technical Assistance to States 0.8 - 0.8 - 1.1

4. Project Evaluation 0.3 - 0.3 - 0.4

Subtotal Part 3 3.1 0.5 3.6 13.2 4.8

TOTAL BASE COSTS 61.1 14.4 75.5 18.9 100.0

Contingency (physical and price)2 3.5

TOTAL PROJECT COSTS 79.0

'Includes technical cooperation from ODA and GTZ

2 Total physical and price contingencies are estimated at 10% of Part 1, Part 2-2 and Part 3.

34

BRAZILPILOT PROGRAM TO CONSERVE THE BRAZILIAN RAIN FOREST

NATURAL RESOURCES POLICY PROJECT

SCHEDULE A-2

Fnancing Plan(USS million equivalent)

Million USS ObservationEguivalent

Fmiancial CooDeration

German Govemment financial cooperation 6.2 Up to DM10 million through separate bilateralfor Zoning in Acre through KFW/GTZ agreement. KfW appraised this project in July

1994.

German Govermment financial cooperation 18.6 DM30.0 million as parallel co-financing.through KfW for institutional strengthening(Part 1) and Z,M,C&E integratedsubprojects (Part 2) with priority for thestates of Acre, Para and Amazonas

CEC 12.0 US$12 million equivalent as joint co-financingthrough a Trust Fund to be established in theBank.

Rain Forest Trust Fund 20.0

Local Counterpart 11.4 US$6 million equivalent (R$5.4 million) ascounterpart of the Brazilian Government andabout US$5.7 million as counterpart of the states'executing entities.

Technical Cooneration

German Government technical cooperation 5.8 Estimated at up to DM3.5 million for Acre,for institutional strengthening, Z,M,C&E DM3.0 million for Para and DM2.8 million forintegrated subprojects, and for project Amazonas.implementation through GTZ in Acre, Pariand Amazonas.

UK Government technical cooperation for 5.0institutional strengthening, projectimplementation, and Z,M,C&E integratedsubprojects through ODA in the states ofTocantins, Roraima, Amapa and Maranhao.

Total 79.0

35

BRAZILPILOT PROGRAM TO CONSERVE THE BRAZILIAN RAIN FOREST

NATURAL RESOURCES POLICY PROJECT

SCHEDULE A-3

Summary of Project Costs by Financier(USS million equivalent)

UK German LocalComponent RFT CEC Gov. Goveriment Counterpart Total

(5)

ODA KfW GTZ(T.C) (F.Q tT.

Part 1 State Environmental Institutional StrenztheninE (4)

1. Organizational Capacity for Integrated 4.18 2.51 2.23 6.14 1.51 16.57Environmental Management (1)

2. Regularization of Legal Framework 0.17 0.10 0.34 0.06 0.67

3. Promotion of Environmental Awareness and 1.22 0.73 1.50 0.34 3.79Public Discussion

4. Organization of Environmental Management 0.27 0.16 0.22 0.07 0.72System at Regional Level

5. Integrated State Planning, Project 1.23 0.74 2.17 0.90 2.40 0.74 8.18Coordination and Preparation of Subprojects(2)

6. Strengthening of COEMAs 0.33 0.20 0.53 0.11 1.17

TOTAL PART 1 7.40 4.44 4.40 9.63 2.40 2.83 31.10

Part 2 Zoning. Monitornir, Control and Enforcenment (Z.M.C&E)

1. Strengthening of Zoning Institutions (3) 1.39 0.83 1.28 0.35 3.85

2. Z,M,C&E Integrated Subprojects (including 8.92 5.35 0.57 13.13 3.20 6.63 37.80targeted strengthening of non-state institutionsand technical assistance)

3. Emergency Enforcement Activities 0.53 0.32 0.03 0.78 0.20 0.39 2.25

TOTAL PART 2 10.84 6.50 0.60 15.19 3.40 7.37 43.90

Part 3 Proiect Administration

1. Support to the Project Commission 0.25 0.24 0.21 0.70

2. Support to the Technical Secretariat 0.73 0.74 0.63 2.10

3. Technical Assistance to States 0.32 0.31 0.27 0.90

4. Project Evaluation 0.10 0.11 0.09 0.30

TOTAL PART 3 1.40 1.40 1.20 4.00

TOTAL 20.00 12.00 5.00 24.80 5.80 11.40 79.00

36

Notes:

(1) The technical cooperation of ODA includes technical assistance for human resources training in the states of Maranhao,Tocantins, Amapa and Roraima and at the regional level.

(2) The technical cooperation of GTZ includes technical assistance for integrated state planning, project implementationand preparation of subprojects in the states of Acre, Para* and Amazonas.

The technical cooperation of ODA includes technical assistance, during four years, for integrated state planning, projectimplementation and preparation of integrated subprojects in the states of Maranhao, Tocantins, Amapa and RorAima.

(3) The financial cooperation of KfW includes US$150,000 million for institutional strengthening for zoning activities inAcre.

(4) The financial cooperation of KfW includes the equivalent of US$6.2 million (DM10 million) for zoning in Acre andUS$18.6 million (DM30 million) for institutional strengthening and integrated subprojects which will be disbursed withpriority given to the states of ParsS, Acre and Amazonas (at Mid-term Review, this priority will be revisited).

(5) The local counterpart funds include US$6 million equivalent (R$5. I million) from the Brazilian Government and US$5.7million equivalent (R$4.8 million) from the states' executing entities.

T.C. Technical CooperationF.C. Financial Cooperation

37

BRAZJL

PILOT PROGRAM TO CONSERVE THE BRAZIUAN RAIN FOREST

NATURAL RESOURCES POUCY PROJECT

SCHEDULE B-1

Summary of Procurement Arrangements(USS million equivalent)

Category of Expenditure Procurement MethodTotal

LCB Other e/ NBF Cost

Works 1.0 1.0 0.5 2.5(0.6) (0.7) (1.3)

Equipment 4.0 4.3 7.0 15.3(2.5) (2.7) (5.2)

Supplies and Materials a/ 1.5 0.6 4.1 6.2(0.9) (0.4) (1.3)

Technical Services (Consulting. Training) bl 11.5 23.1 34.6(7.2) (7.2)

Other Services c/ 2.0 1.4 4.8 8.2(1.2) (0.9) (2.1)

Travel and Per Diems d/ 4.7 7.5 12.2(2.9) (2.9)

Total 8.5 23.5 47.0 79.0(5.2) (14.8) (20.0)

LIB Umited Intemational BiddingLCB Local Competitive BiddingNBF includes procurement financed by GOB and KIW under own

procedures and technical assistance through ODA and GTZ.

a/ Supplies include operating costs such as fax and phone costsb/ Contracting of consultants and studies in accordance with Bank Guidelinesc/ Other services include services such as rentals for training and workshops,maintenance of equipment, TV and radio programs.d/ Reimbursement of expenditurese/ Other include procurement of equipment through LIB for an estimated total amount ofUS$3.3 million and an RFT-financed of US$2.0 million

NotesNumbers in parenthesis reflect RFT financing. Totals represent totalestimated costs per category, including contingencies as per Annex 2B\ESCHEDBI

38

BRAZ3LPILOT PROGRAM TO CONSERVE THE BRADLIAN RAIN FOREST

NATURAL RESOURCES POUCY PROJECT

SCHEDULE B-2

Summary of Disbursenmnt Arrangements(US$ million equiiaent)

ITEM andGerman Gov. U.K Gov. Local % of Total Cost

Categorv of Expenditures RFT CEC KIW GTZ ODA Countwroirt Expenditure(1.A) (trA)

CMI Works 1.25 0.75 0.50 RFT 50.0% 2.50CEC 30.0%KIW 20.0%

Equipment 5.19 3.11 7.00 RFT 33.9% 15.30CEC 20.3%KWW 45.8%

Supplies and Materkls 1.31 0.79 2.70 1.40 RFT 21.2% 6.20CEC 12.7%KWW 43.5%

Local 22.6%

Techrncal Servies (Consulting, 7.19 4.31 8.60 5.80 5.00 3.70 RFT 20.7% 34.60Training) CEC 12.5%

KW & GTZ 41.6%ODA 14.5%Local 10.7%

Other Services 2.12 1.28 3.00 1.80 RFT 25.9% 8.20CEC 15.6%KIW 36.6%

Local 21.9%

Trave and Per Diems 2.94 1.76 3.00 4.50 RFT 24.1% 12.20CEC 14.4%W(W 24.6%

Local 36.9%

Total 20.00 12.00 24.80 5.80 5.00 11.40 79.00

DISBURSEMENT SCHEDULES

Bank Fiscal Year 1996 1997 1998 1999 2000 Toal

Total Disbusemnert Schedule- ArnuaI

* US$ million 6.9 22.2 24.2 16.8 8.9 79.00*%ofTotal 8.7% 28.1% 30.6% 21.3% 11.3% 100.0%

- Cumulative (US$ Million) 6.9 29.1 53.3 70.1 79.0

RFT Disbursement Schedule- Annual

* USS million 1.7 5.6 6.1 4.3 2.3 20.0*%ofTotal 8.7% 28.1% 30.6% 21.3% 11.3% 100.0%

- Cumulative (US$ Million) 1.7 7.3 13.4 17.7 20.0

\MSCHEB2.WL

39

BRAZIL

PILOT PROGRAM TO CONSERVE THE BRAZILIAN RAIN FORESTNATURAL RESOURCES POLICY PROJECT

SCHEDULE C

TIMETABLE OF KEY PROCESSING EVENTS

Time taken to prepare: 10 months (November 1993 to August 1994)

Prepared by: * Nine States in the Legal Amazon (Acre,Amapd, Amazonas, Maranhao, Mato Grosso,Para, Rond6nia, Roraima and Tocantins)* Ministry of the Environment and theLegal Amazon* Secretariat of Strategic Affairs of thePresidency of the Republic* Federal and State entities involved inenvironmental management in the ninestates

First Bank mission: November 1993

Appraisal Mission Departure: September 1994

Date of Negotiations: November 1994

Planned Date of Effectiveness: March 1995

Suummary Supervision Plan: Missions are planned for 2-3 month intervals tosupervise progress closely. Technical expertisewill include ecologist, economist, zoningspecialist, financial analyst, and institutionaldevelopment specialist. One mission each yearwill be designed as an annual review. Theannual review for the third year will be theProject Mid-term Review. During such missions,project implementation and monitoring andevaluation procedures will be assessed andchanges introduced, as necessary. Supervisionstaff will mainly be located in the Brasilia office.

40

BRAZIL

PILOT PROGRAM TO CONSERVE THE BRAZILIAN RAIN FORESTNATURAL RESOURCES POLICY PROJECT

TECHNICAL ANNEXES

ANNEX 1: INSTITUTIONAL BASELINE DATA ON THE NINE AMAZONSTATES

ANNEX 2: PROJECT COSTS

ANNEX 3: IMPLEMENTATION SCHEDULE:- Physical- Financial

ANNEX 4: SUMMARY CONTENTS OF THE OPERATIONAL MANUAL

ANNEX 5: PROJECT ORGANIZATION AND INSTITUTIONAL MECHANISMSAT FEDERAL AND STATE LEVELS:- Project Coordination Structure at the State Level- Project Coordination Structure at the Federal Level- Project Procedures

ANNEX 6: PERFORMANCE INDICATORS

ANNEX 7: SUMMARY OF THREE EXAMPLES OF POSSIBLEINTEGRATED SUBPROJECTS

ANNEX 8: SUMMARY TERMS OF REFERENCE FOR MAJOR STUDIES

ANNEX 9: REPORTS AND DOCUMENTS IN PROJECT FILES

Map: IBRD No. 26474

I

41

BRAZIL

PILOT PROGRAM TO CONSERVE THE BRAZILIAN RAIN FORESTNATURAL RESOURCES POLICY PROJECT

ANNEX 1: INSTITUTIONAL BASELINE DATA ON THE NINE AMAZON STATES

TABLES

1.0: General Informnation on the Legal Amazon States

2.0: Baseline Data on OEMAs: Institutional and Budgetary

2.1: Baseline Data on OEMAs: Personnel

2.2: Baseline Data on OEMAs: Personnel Salaries

2.3: Baseline Data on OEMAs: Professional Staff

2.4: Baseline Data on OEMAs: Infrastructure

2.5: Baseline Data on OEMAs: Monitoring Capacity

3.0: Baseline Data on Control and Enforcement Institutions and Activities

4.0: Baseline Data on Zoning Institutions and Activities

5.0: Baseline Data on State Environmental Councils (COEMAs)

6.0: Baseline Data on Municipal Environmental Councils (CONDEMAs)

42

TABLE 1.0: General Information on the Legal Amazon States (1993)

Total Area No f SaeConservation State ConservationSTATE (kr21 Population uNo. of State CAes (km2) Areas as a Portion of(km2) Municipalities Areas (km2J ~Total Area

Acre 152,589 417,165 12 24,633 16.1%

Amapa 140,276 288,690 9 21,748 15.5%

Amazonas 1,565,785 2,102,901 62 29,092 1.9%

Maranhao 328,663 4,929,029 136 70,112 21.3%

Mato Grosso 881,001 2,022,524 95 43,001 4.9%

Para 1,249,382 5,181,570 105 31,589 2.5%

RondOnia 243,044 1,130,874 23 40,037 16.5%

Roraima 230,104 215,950 8 44,235 19.2%

Tocantins 286,944 920,116 79 7,783 2.7%Sources: 1) MMA, March 1994; 2) Associacio Brasiloira do Entidades do Meio Amnbiente (ABEMA), 'Diagn6sticoInstitucional dos Orgios Estaduais do Moio Ambionto no Brasil.' 1993.

TABLE 2.0: Baseline Data on OEMAs: Institutional and Budgetary

INSTITUTIONAL BUDGET

1. Institutional Nature 2. Legal 3. Date 1. Allocationa 2. Allocations 3. OEMA Budget as 4. Propoeed 6. Portion of TotalNature Established 11992, 1993, lannual average, % of State Budget OEMA Budget for State Revenues

STATE 19941 IUS}*) 1992-94) IUS$) lannual average. 1990 1995 (US$) coming from Federal931 Gov. (19901

Environmental Institute of Acre Self- 420,000Acre JIMAC) Governing 1986 449,423 654.808 0.26% 3,575,564 80.1%

(IMAC) ~~~Body 1.095,000

State Coordination of the Executive 1,230,000Amaph 1989 1,280,000 1,323,333 0.27% 2,103,071 91.1%Environment ICEMAI Law 1,480,000

Institute of Natural Resource and Self- 1,772.469Amazonas Environmental Development Governing 1989 960,893 2,253,364 0.25% 5,434,598 27.6%

(IMA) Body 4,026,730

1,881,754 J

Meranhgo State Secretariat of the Executive 1987 496.705 1,096,348 0.16% 4,219,989 64.7%Environment ISEMA) Law 910,584

Mato Grosso State Environmental Foundation Foundation in 18 3.231,219Mato Grosso (FEMA) Poubdlticn Law 1987 2,231,723 3,435,600 0.36% n/a 25.6%

(FEMA) Public Law ~~~~4,843.858

State Secretariat of Science, Executive 893,862Para Technology, end the Low 1988 445,604 670.742 0.07% 3,760,000 45.3%

Environment (SECTAM) 672,760

State Secretariat of Executive 1,166,827Rondonla Environmental Development 1991 2,567,678 2,268,168 0.33% nla 62.9%

ISEDAM Law 3,070,000

State Secretariat of the Executive 63,562Rorelma Environment, Interior and Justice Law 1992 127,098 191,053 0.06% n/a 92.9%

(SEMAIJUS) Law 382,500

Tocantins Nature Foundation Foundation In 706,289Tocantins INATURATINS) Privte In 1991 785,377 797.215 0.23% 1,511,628 70.9%

SNoTurcesNS) Privet. Lrovided byOEAttcils99;1MA1900,000

Sources: 1) Information provided by CEMA officials, 1994; 2) MMA, 1994; 3) Rosenblatt, 1994; 4) ABEMA, 1993. US$1 -RII.85.

TABLE 2.1: Baseline Data on OEMAs: Personnel (1994)

1. Staff Size 2. Statutory 3. Seconded 4. Special Appointments andSTATE Positions Personnel Temporary Personnel

Acre 113 22 15 76

Amapi 33 0 33 0

Amazonas 342 142 16 177

Maranhgo 225 53 150 22

Mato Grosso 135 45 17 73

Pars 211 28 86 97

Rond8nia 244 22 30 192

Roraima 22 0 12 10

Tocantins 55 0 39 16Source: MMA, 1994.

4,

TABLE 2.2: Baseline Data on OEMAs: Personnel Salaries (US$, monthly, 1994)

1. Gross __ 2. BaseSTATE 1.1 Mean 1.2 Minimum 1.3 Maximum 2.1 Mean 2.2 Minimum 2.3 MaximumAcre 855 545 2,651 355' 131 1.569

Amapa 841 343 1,760 n/a n/a n/a

Amazonas 332 115 716 108 67 145

Maranh5o 311 134 1,128 154 87 617

Mato Grosso 405 221 883 305 103 507

Para 483 299 1,433* 281 90 614*

Rondonia 490 172 1,228 254 69 779

Roraima 476 285 611 411 285 586

Tocantins 365 218 583 264*0 84** 469**Sources: 1) Information provided by OEMA officials, 1994; 2) MMA. 1994. 'excluding top two salaries. `US$1 =R$.85.

TABLE 2.3: Baseline Data on OEMAs: Professional Staff (1994)

1. Adminietratore 2. Attorneye 3. Agronomists 4. Biologits 5. Civil 6. Forestry 7. Chemical B. Geographers 9. Economists 10. Other 11. TotalSTATE Engineer. Engineer Engineer. -

Acre 1 1 7 8 2 1 0 4 2 17 43

Amapa 2 1 B 2 0 3 1 4 3 a 32

Amazonas 13 11 14 5 6 4 1 5 4 25 88

Maranhlo 1 6 7 3 6 2 16 13 3 15 72

Mato Grosso 4 4 6 2 8 5 3 2 5 14 53

Par 3 5 12 9 B 16 21 4 3 28 119

Rond6nla 2 3 12 3 3 16 1 6 0 17 63

Roraima n/a n/a 2 1 n/a 1 nla n/a n/a 1 n/a

Tocantins 0 1 5 0 0 2 1 0 1 5 15

Sources: 11 Information provided by OEMA officials, 1994; 21 MMA, 1994.

TABLE 2.4: Baseline Data on OEMAs: Infrastructure

1. No. of Offices 2. Treneportation 3. Communication 4. ComputerOuteide Vehicles (autos boatel Equipment (19911 EquipmentHeadquarters 119901

3.1. Telephone Lines 3.2. Telex 3.3. Fax 3.4. Radio units 4. 1. No. of PC. 4.2. No. of 4.3.(Headquarters : Reglonell (Headquarterm (Headquarters (Headquarter. UNIX Terminal. NetworksSTATE Reglonal) Reglonal) Regional)

Acre 0 9 2 3; 0 1; 0 1;0 2; 0 8 0 0

Amep6 0 11 1 6;0 1 0 1:;o 0:0 14 0 Novell

Amazonas 4 4 3 12;0 1 0 1 0 0;0 9 0 0

Maranh6o 5 5 5 13 :0 0: 0 3; 0 3 :9 10 32 0

MatoGroeso 0 4;0 4;0 1;0 1: 0 0:0 11 0 0

Pat6 0 7 0 6;0 0:0 1 0 0;0 23 0 Novell

Rond6nia 0 2 0 8; 12 2 0 1 0 0:0 8 0 Amplus 14)

Rorelma 0 8 0 8 1 0 0 1 0 1:0 7 0 Novell 121

Tocentins 1 10 0 2;0 0:0 1 0 0;0 0 0 0Sources: 1) Information provided by OEMA officials, 1994: 2) MMA. 1994: 31 ABEMA, 1993.

46

TABLE 2.5: Baseline Data on OEMAs: Monitoring Capacity

1. Laboratory 2. Remote 3. Vehicles forSTATE Facilities (water, air, Sensoring Monitoring

son) Equipment inState

water - yesAcre air - no yes 1

soil - nowater - no

Amapa air - no yes 1soil - no

water - yesAmazonas air - no yes 0

soil - nowater - yes

Maranhao air - yes yes 0soil - no

water - yesMato Grosso air - no yes 1

soil - nowater - yes

Para air - yes yes 8soil - no

water - noRondonia air - no yes 59

soil - no

Roraima nla n/a n/awater - yes

Tocantins air- no yes 7soil - ves I

Sources: 1) Information provided by OEMA officials, 1994; 2) ABEMA. 1993.

TABLE 3.0: Baseline Data on Control and Enforcement Institutions and Activities

1. Number of 2. Number of 3. Forestry 3a. Date 3b. 3c. Number of Offices 4. StateEnvironmental Environmental Battalions (or Established Number of Outside Headquarters & AttorneysImpact Studies Impact Reports similar) Soldiers Their Location Offices for

STATE (EMAsI Received In (RIMAs) Issued In Environmental1994 (Jan. - Sept.) 1994 (Jan.-Sept.) Cases

Acre 1 1 no yes

Amapa 0 0 no yes

Amazonas 0 2 no . . . . . yes

Maranhgo 7 5 yes April 1991 150 0 yes

3Mato Grosso 3 3 yes December 1989 175 (Caceres, Pocone & Barra do yes

Bugres)

2Para 5 8 yes October 1993 120 (Curion6polis & Eldorado in yes

Carajas)

12(Costa Marques, Ariquemes,

Machadinho, Jaru, Alta

RondOnia 0 0 yes January 1986 130 do Oeste, Pimenta Bueno, yes

Vilhena, Cabixi, Calama,Guajara-Mirim & Sao Miguel

do Guapore)

Roraima n/a n/a no . . . . no

Tocantins 4 4 yes July 1994 150 0 yesSources: 1) Information provided by OEMA officials, 1994; 2) ABEMA, 1993.

TABLE 4.0: Baseline Data on Zoning Institutions and Activities

._____________ ________________ State Zoning Commissions (CEZEEs)1. Date 2. Secretariat 3. State 4. Number of 6. MembershIp 6. Number ofEstablished Provided By Executing Members in Composition Meetings Held In 1994

STATE Agency for CEZEE (Jan.-Sept.)Zoning

Acre August 1991 Secretariat of Planning Secretariat of 7 State Government 3Planning Sectoral Agencies

Amapa December 1991 Secretariat of Planning Secretariat of 112 State GovernmentSereanniatgo Sectofal Agencies

Amazonas July 1991 Secretariat of Secretariat of 7 State Government OEnvironment Planning Sectoral Agenciee

Maranhglo October 1991 Secretariat of UEMA IMeranhoao State Government OEnvironment State University) Sectoral Agencies

Secretariat of State GovernmentMato Grosso August 1991 Secretariat of Planning Planning Sectoral Agencies

Secretariat ofParhl February 1992 Environment (under IDESP 7 State Government O

Para February 1992 presidency of Sectoral Agencies

Secretariat of Planning)

State end FederalRondonia January 1992 Secretariat of Planning n/a 13 Agencies, and NGOs

Special ExecutiveTechnical Secretariat Special Executive State Government

Roraima November 1991 (coordinated by Technical 7 Agencies ISecretariat of SecretariatEnvironment)

State Government

Tocantins April 1992 Secretariat of Planning n/a 7 Agencies end State 3University of Tocantins

Sources: 1) Information provided by OEMA officials, 1994; 2) MMA, 1994.

51

TABLE 5.0: Baseline Data on State Environmental Councils (COEMAs)

1. Date 2. Number of 3. Number of Members 4. Functions 5. Status

STATE Established Meetings (Jan.-Sept. and Composition1994)

19 Also for science andAcre January 1992 3 (Majority representation from technology; deliberative, By -laws

state government agencies) nonmative, and recourse approved

Consultative only; limited to22 studying and proposing state By-laws not

Amapi November 1990 3 (Majority representation from environmental policies; draft approved yetstate government agencies) law proposed to expand

functions

13(Majority representation from Also for science and teocnology; By-lws

Amazonas June 1985 0 state government agencies; consultative and deliberative; approvedpresided over and appointed by not normative

Govemor)

32(Equal representation from Deliberative, normative. and By-laws

Maranhao April 1992 2 state government, D recourse approvedenvironmental NGOs, and civil

society) recuro_eprve

27(Equal representation from

Mato Grosso July 1979 9 state governrment, Consultative, deliberacuve, By-lawsenvironmental NGOs, and civil normatve, and recourse approved

______________________society)

13

ParS July 1993 10 (Majority representation from Deliberative, nornmative, and By-laws notcivil society and environmental recourse approved yet

NGOs)

9 Deliberative, normative,

Rondonia December 1993 0 (Majority representation from deliberative, and recourse; By-laws notrstate government agencies) cannot revise licensing approved yet

state goernment gencies)decisions ______

Roraima December 1992 nla (Majority representation from Consultative and limited By-laws notcivil society) deliberatve approved yet

Tocantins June 1994 0 (Majority representation from Delberatve, nouratve, end By-laws notstate government agencies) recourse approved yet

Sources: 1) Information provided by OEMA officials, 1994; 2) ABEMA, 1993.

52

TABLE 6.0: Baseline Data on Municipal Environmental Councils (CONDEMAs)

STATE 1. Number in 2. Location 3. Date First CONDEMASTATE State Established

Acre 1 Rio Branco August 1994

Amapa 1 Macapa July 1993

Amazonas Manaus November 1993

Alc6ntara, Carolina, Caxias,Maranhao 8 Cumurua, Timon, Barra do September 1991

Corda, G. Aranha. & Mirador

Barra do Bugres, Cuiabi,Mato Grosso 6 Jaciara, Rondon6polis, Dom June 1989

Aquino, & Caceres

Para o

Rondonia 0 .

Roraima 1 nia nil

Tocantins 0Sources: 1) Information provided by OEMA officials, 1994; 2) ABEMA, 1993.

53

BRAZIL

PILOT PROGRAM TO CONSERVE THE BRAZILLAN RAIN FORESTNATURAL RESOURCES POLICY PROJECT

ANNEX 2: PROJECT COSTS

t

Annex 2A - Page I

BRAZIL

NATURAL RESOURCES POLICY PROJECT

PROJECT COST SUMMARY% of

Subtotal Total Total CostPART 1 - Strenthening of State Environnental Institutions

1. Improvinp Orqanizational CaPacity for Integrated Environmental Management

1.1 Improving Management and Organizational Systems (OEMAs) 1,491,8181.2 Strengthening Human Resources (OEMAs, Attorney General's Offices and other State Entities) 5,181,8181.3 Installing Improved Interconnected Environmental Information Systems 3,150,6821.4 Providing Complementary Infrastructure and Equipment 5,237,484

Subtotal - Improving Organizational Capacitv 15,061,802 19.1%

2. _arrnonizing and Adiusting the Legal Framework 359 0.8%

3. Promoting Environmental Awareness, Dissemination of Knowledge and Public Discussion

3.1 Carrying out Information, Education and Communication Programs 2,138,5553.2 Increasing Public Participation in Public Hearings for Licensing, and in Monitoring and Enforcement 720,0003.3 Supporting Dissemination of, and Establishing Demand for, New Scientific and Technological Knowledge 585,365

Subtotal- Environmental Awareness 3,443,920 4.4%

4. Orcanization of Environmental Management System at Regional Level

4.1 Defining GTPP Operations 3,8184.2 Establishment of GTPP 568,1824.3 Regional Support to Environmental Management 81,364

Subtotal- Regional SIGEA Organization 653,364 0.8%

5. Creating Conditions for Inteqrated State Planning and Subproiects Preparation

5.1 Establishing and Maintaining Working Groups and Support Units 1,354,5455.2 Technical Assistance to State Entities for State Planning, Project Coordination and Subproject Preparation 6,081,823

Subtotal-Inteqrated State Planning, Project Coordiantion and Subprojects Preparation 7,436,368 9.4%

6. Strengthening of COEMAs 1065582 1.3%

TOTAL COST PART 1 -STRENGTHENING OF STATE ENVIRONMENTAL ENTITIES 28,271.395 35.8%

Annex 2A - Page 2

BRAZIL

NATURAL RESOURCES POLICY PROJECT

PROJECT COST SUMMARY% of

Subtotal Total Total Cost

PART 2 - Zoning. Monitoring. Control and Enforcement (Z,M.C&E)

1. Special Activities In Support of Intearated Environmental Management

1.1 Stengthening for Zoning Activities 1,041,0001.2 Geoprocessing and Remote Sensing 2,148,5451.3 Study on the Territorial Data of the Amazon Region 315,455

Subtotal- Environmental Management Support Activities 3,505,00 4.4%

2. Z.M.C&E Integrated Subpro*ects (Including Targeted Strengthening to nonState Entities and Technical Assistance) 37,795.966 47.8%

Ln3. Emergency Enforcernent Activities 2,250,000 2.8% @

TOTAL PART 2 - Z,M.C&E 43.55096 55.1%

PART 3 - Prolect Administration

1. Support to Project Comission 636,3642. Support to Technical Secretariat 1,909,0913. Technical Support Requested by States 818,1824. Project Evaluation 272,727

TOTAL PART 3 - PROJECT ADMINISTRATION 3.636,364 4.6%

TOTAL PROJECT BASE COST 75.458,724 95.5%

Contingencies \1 3,541,276 4.5%

TOTAL PROJECT COSTS 79,000,W0 100.0%

\1 Total physical and price contingencies are estimated at 10% of Part 1, Part 2-2 and Part 3.%APCOSTAA.WKI - 10/20/1994

Annex 28 - Page I

BRADIL - NATURAL RESOURCE POLICY DEVELOPMENT PROJECT

PROJECT COST ESTIMATEs

SuppP!s Technkil OtherToli Per Olenm Trawe A £ Materils Sere Sere Wors Egpmr

PART 1 - STRENGTHENING OF STATE ENVIRONMENTAL ENTmES

1 ImproIng Organiation Capacty for lrnwatrd Evironmenbl Maragemnt

1.1 Improving Management and Organiation System (OEMAWA1.1. 1 Diagnostics and Proposed Alternatlves 486,000 79,000 22,500 20,000 364,5001 1. 2 Regional Workshops 225,000 38,250 9,000 9,000 168,7501.1.3 3mplementation 930,000 95,500 27,000 20,000 511.500 188,000 00,000

SubtdIl 1.641 21Z7 a500 49,0 1,044,7 166U000 90,0W

1.2 Strenad ring Human Reores (OEMAI. and Attomey Generals Offliesand othr Sbate Entiieas1.2.1 Assessing Existing Resources and Needs and Preparation

of Trafinng Programs 700,W00 92,000 21.000 27,000 560,0001.2.2 Carrying out Trakinng Programs 4,760,000 1,205,867 780,000 414,133 2,380,0001.2.3 Establshing Project Management Systems (Systems and Trairing) 240,000 43,200 25.200 27,000 94,600 50,000

Subtabl 5,W000 1,341,067 600,W 448,133 3034,000 5000o

1.3 Insal8ns Improved Intrconnected Environmenal Inrfrmation Sys atn1.3.1 Updating Diagnosties 129,000 25,000 9,0W0 5,000 90,000 ON132 Training of Personnel 190,802 20.882 6,0o0 21,000 151,9201.3.3 Developing Softvares 127,000 127,0001.3.4 Purchase of Equlpmert and Soflvare 1,538,073 53,000 1,485,0731.3.5 nstalatlon 312.747 312,7471.3.0 Data AcqulsItion 148,000 148,0001.3.7 Operaton and Maintenance 1,011,129 202,226 450,000 250,903 108,W0

SubohaI 3,4656751 45882 1650W0 281.226 8!920 S03,50 1,741,073

1.4 Pr ovlng Complemenbwy InrEaakucturu *nd Equipment1.4.1 Buildings (Headquarter$ Regional and Other Field Offices) 11,494,00 1,494,0001.4.2 Laboratorles 1,247,587 21,000 9,800 499,035 70,000 847,7521.4.3 Vehkiles (Automobles, Boats and Equipmert) 2,479,749 2,479,7491.4.4 Other Equlpmeri 539,8906 539,896

Sthitotal S761.232 21 W0 9,800 49935 700W0 1,~494,03 317397

SUBTOTAL- IMPROVING ORGANIZATIONAL CAPACrTY 160567.983 1,020 ga9g6W 1,297,39 40270 74 14 1494,W 65.54470

Z Humonizina and Adhusting the Legal Framuwork

2.1.1 Carrying out Detaled Legal DIagnosties 52.580 6,880 10.000 700 35,0002.1.2 DefinIng Strategy and Priorities 44,000 4,100 3,500 1,400 35,0002.1.3 EstabIlsmient and Maintenance of CTELs 244,727 21,600 18.900 31,500 102,727 70.0002.1.4 Workshops andSpecificTralning 330,088 58.000 28,000 50,088 140,000 56,000

Subotea 071t395 88_580 60_ U, !3 312,7Z7 5e1o 70,000

SUBTOTAL-HARMONIZING a ADJUSTING LEGAL FRAMEWORK 671.395 U 0 0400 !83 312.727 56000 70?.w

Annex 2B - Pags 2

BRAZIL - NATURAL RESOURCE POLICY DEVELOPMENT PROJECT

PROJECT COST ESTIMATES

Supp Technica OtherTotal Per Dhems TraVel A Mterials mv swice works . gf4merb

3. PromotIng Environrnental vrcnesV_Dissemination of Knowledge, and Public Discusdion

3.1 C wryjn out Informatbn, Education and Communiclalon Programs3. 1.1 Planting Campaigns 81,590 23.997 4,000 7,000 45.6933.1.2 Contracting Preparation 291,800 291,8003.1.3 Execution 1.979,020 1,979,020

Subtotbl .Z352410 23807 4S000 7000 3374 1.979020

3.2 Incresing Public_Parciation In Pubi Hwrigsfor Lkensin a*nd hi Monitoring and Erdorcement3.2.1 Information Disclosure to Interested Entkies 691,400 72,000 33,800 172,850 70,000 307,950 35.0003.2.2 other Activitim 100,600 50,000 50,800

Subtotl 7O 7O 6O 222_&50 700 358_550 385,0

3.3 Supporlna DIssemination dA and Etablashlng Demand forNew Scientific and Tehnmoloocal Knowledge3.3.1 EstablilNng Demand for Scierific Resewach 143,770 33,800 14,000 8,670 87,5003.3.2 AcqubsHion of Technical-Sclentlic Information for Problem Solhvig 156,828 156.8283.3.3 Production of Publications and Information Dissemination 343,304 72,000 33,600 50,311 70,000 117,393

Subtal 0 0 toW 47,60 5awt1 314,328 117393

SUBTOTAL - ENVIRONMENTAL AWARENESS 3.788312 20167 88s1e 2sa18311 72121 24549 35,

4. OCrgnkation of Ernvlonm.ntdl Manag Mnt System at Regonkl Level

4.1 Deflhn GTGP Oprations4.1.1 DefhiingGTP By-lawsandStructLre 4,200 4,200

Subtobl 4200 4-200

4.2 Estabblshig GTTP4.2.1 Approving By-laws and Strutcur 21,000 3,700 8,750 850 9,7004.2.2 Preparing Calendair and Work provam4.2.3 EstablishmentofGTTP 604,000 153,000 238,500 12,500 20,000

Subtal 026, t 7W 245 250 t50 2e9

4.3 Reginal Support kr Environmenta!l Mnagement4.3.1 TrfininginEstmblishmentolPrioritiesforEnviornmentadManagemert 35,500 19.60 14,200 300 1,4004.3.2 Training in Regional Environmental Management Project Design 35,500 19,600 14,200 300 1,4004.3.3 Definitlon and Execution of Studies on Pubilc Regulaton and Policies 18,500 2,000 1,500 15,000

Subtdal 8o,s5 41,2 290 600 17 8

SUBTOTAL- REGIONAL SIGEA ORGANIZATION 71.700 1197WO 275.1t0 13.950 23t1

Annex 2B - Page 3

BRAZIL - NATURAL RESOURCE POLICY DEVELOPMIENT PROJECT

PROJECT COST ESTIMATES

Supp2R Tochnkil OtherTotal Per Diem Travel a Matrib Seve SaMoa. Works Equlpmenbs

5. Creating Condrtions for InteWrated StatePlanning and Integrated Subprolecb Prepation

5.1 Establishing and Maintaining Working Groups IGTA) and Support Unfs5. 1.1 Establishement of GTs and Support Units 35.000 14,000 21,0005.1.2 GTs and Support Units Operations 1,455,000 252,000 252,000 863.000 210,000 78,000

Subotal t 490 2 252000 25ooo o 2 ?000 _90W0

5.2 Technical Assistance to State Entities for Pkminn9 Prolect Implmeontatkonond Integrated Subprolecbt Preopaation5.2.1 Speclaized Consutants 970,005 970,0055.2.2 Techrical Assistance for Project Implementation 5,720,000 5,720,000

Subtobtl 09Qn03S 6 05

SUJBOTAL- INTEGRATED STATE PLANNING ANDSUBPROJECTS PREPARATION J,130,00S ZS0 252.0 7.0 09Q 210, 99,000

S. Stkndtlnina of COEMA'b

0.1 Propejlng Diannosticas c COEMAs 49,296 140 4.9 38 2000

6.2 Definkin Sbrengthning Strateg and ImpleTme!Lt6.2.1 Defining and Implementing Strategy 32,360 8,400 5,250 1,210 17.5006.2.2 Training COEMAs'Members 412,000 200,700 91,800 43,900 75,8008.2.3 Other Strengthening Actions 311,732 30,000 30.000 45.000 71,732 135,000

Subtoabl 75,W2 2309100 127 90.110 104, 135,

6.3 Technical Assistance to COEMAtor Analvsd PGA and PA 70750 5600010,

6.4 Evluatlon of COEMAs 0 28,000 9.800 422

SUBTOTAL- COEMAS' STRENGTHENING 1.172.140 3S1.050 197.750 395.032 1S5

TOTAL COST PART I - STRENGTHENING OF STATEENVIRONMENTAL ENTTFIES 31.095.35 2.71O20 1,70Q0 2.453.371 13,J19. 3.470.013 1.494. 6x470

% of Coat of Skenthenin of State Endtle 100.0% 8.7% 6.7% 7.9% 42.5% 11.2% 4.8% 18.9%

Annex 2B - Page 4

BRAZIL - NATURAL RESOURCE POLICY DEVELOPMENT PROJECT

PROJECT COST ESTIMATES

AI~!ppll Technical Other

Tobi Per Dmns T1ravel a Mterial Sevie O Shervc Wors Equlpmerb

PARTE 2 - ZONING. MONITORING. CONTROL AND ENFORCEMENT (Z.MCAF1

1. bpekIl Acties o Su tegad Erwkronmeuial Manag,ement

1.1 Trainhig hor Zonina Actilies1.1.1 ZEE Methodology Workshop 53,000 23,200 22,400 2,000 5,000 400

1.1.2 TrainIng 344,800 94,800 l0,000 200,000

1.1.3 Recycling Couses 367,200 117,200 50,000 200,000

1.1.4 Zoning Economic and Methodology Standazdizatlon Study 92,400 15,400 7,000 70,000

1.1.5 Study for Preparation of Thematic Base 287,700 54,100 19,600 4,000 210,000Subtdal 1.146100 304, 149, 6000 5. 400

1.2 Geoproc"jng and Remot Senwir1.2.1 Laboratories Instalation 985,000 16,243 7,580 386,000 64,145 501,032

1.2.2 Purchase of Software 270,000 270,000

1.2.3 Other Permanert Equipments and Goods 622,200 622,200

1.2.4 Training 506,200 168.000 58.000 6.200 276,000Subtobal &3 184_243 063580 39t 330.1 1.39232

1.3 Study on th Terlariel Daa of thoe AawonReg 3470 347.

SUBTOTAL - ENVIRONMENTAL MANAGEMENT SUPPORT AC11VITIES 1156 USA 212,580 39 1.30Z1 400 1.393232

2. KM,C&E Integrated Sutbproject Oncluding Terge!td 37.795. 3.371.7 21852 .040 16.208,095 4487.182 1.000.000 7.491.134

Strongthening to non- stt. Entides and Technical Asaisance)

3. Emergewcy Erforcemwent Acvtee Z .000 206.10 133,8 180,1 1,01Z311 23773 447,4

TOTAL COST OF PART 2- ZONING. MONITORINO.CONTROL AND ENFORCEMENT 904 4.00676 2535 3 18.582.650 471. 1.000.000 9.331.824

PARTE 3- PROJECT ADMINISTRATION

1. Support to Profect Commission 700,000 200.000 150.000 50.000 300,000

2. Support to Technical Secrtariat &M_000 273.000 247,600 100.000 1,392,000 87,500

. Technkal Support Requestd by States 00 00,000 90.000 720.000

4. Proect Evaluation 300,0 70.000 30.000 200,000

TOTAL COST OF PART 3- PROJECT ADMINISTRATION 4,000000 833,0 517.500 150. t 87500

toTAL PROJECT COST 790000 7.41t.301 4.813:44 6,237,37 34514.10 8221.08 2,494 15,30,79

% of Total Project Cost 100.0% 0.4% 6.1% 7.0% 437% 10.4% 3.2% 19.4%

Notes\1 'Other Services' Includes services such as insalhion of equipmers and software, rentab for rairing and workshops, malrtenance of equipmerts, TV and radio programa

\2 'Supples and Materiab' Includes operating costs such as fax and phone costsWCOIT19WKI - I111411194

60

BRAZIL

PILOT PROGRAM TO CONSERVE THE BRAZILIAN RAIN FORESTNATURAL RESOURCES POLICY PROJECT

ANNEX 3: IMPLEMENTATION SCHEDULE

* Physical

* Fmancial

BRAZIL_- NATURAL RESOURCES POLICY PROJECT

Prolect I _lementaton Schedu6

TotalEstimated Yeaw I _ Yr 2 - I Ye3 _I Y r4 _Year5

Cost I T-2 4 2 3 ITI Z__] -2 _

PMT I - STRENGTHENING OF STATE ENVRONMENTAL ENTflfES

1. IW,rovina Oraantzation Cpacity for Intearated Evironmbl Marnaem t

1.1 ImprovnMm rsqm ntand Or%anknatlin St&mA(EMAs)1.1.1 Diagnostics and Proposed Alternatives 485,0001.1.3 Regional Workshops 225.000 **

1.1.4Implementation 930,000Sv*tobI 1,641.000

1.2 St nen.nInf r?mn ReaoN e! nowAltrnyGenerrs cffices)1.2.1 Assesslng ExIting Resowces and Needs and Preparatin

of TraIning Programs 700,000 *

1.2.2 Carrying out Training Programs 4,760,000 . * * *** * .... .** .t **** ... *,

1.2.3 Establishing Project Management Systems (Systems and Training) 240,000 e

1.3 InEmroved Interconneeted Ennm lrdor e1.3.1 Updating Diagnostics 129,000 *** ***c

1.3.2 Tralning of Personnel 1 t99,802 -------1.3.3 Develcping Softwares 127,000 *** *** ****1.3.4 Purchase of Equipment and Software 1,538,073 * , , b *

1.3.5 Installaton 312,747 ' **..

1.3.6 Data Acqusition 148,000 1.3.7 Operationand MaIntenance 1,011,129 ******** **** *** **d **** *** **i ***, *** *** *

Sutb 3,4540.751

1.4 Pr vldina ConVmnatv IrmrEtucture and Equbmmnt1.4.1 Bulkdings (Headquarters, Regional and Other Fleld Offices, Laboratorles, 1,494,000 DO * ** *, **** fll * ***

1.4.2 Equ4ments and Materiab for Laboratories 1,247,587 ""' '

1.4.3 Vehicles (Automobiles, Boats and Equipment) 2,479,749 . *' 'Z ***4 *** ****. ** *** ***

1.4.4 Other Equipment 539.890 a* * ***p *e* **** * **. **SubtW 5,751.232

SWTOTAL- IMPROVING ORGFtNETIONAL CAPACIY 10.587.9s3

2. Hwrmonxlzh and Adlustin the Leqal Framewrk

2.1.1 CarryhIg out Detailed Legal Diagnostics 52,580 ,2.1.2 Defining Strategy and Priorfites 44,0002.1.3 EstablIshing and Maintaining CTELs 244.727 **

2.1.5 Workshops and Specific Training 330,088

SUBTOTAL-HHMMONIZING a ADJUSTING LEGAL FRAMEWORK 071,35

BRAZIL - NATIMAL RESOURICES POLICY PROJECT

Project Irvlemenbatlon Schedule

TobllEstimated eawl IesYew 3 S Yew4 _ Yew 5~

3. Pramcthu Envfonmwntal Awwenesa.Dlasemrnmtion of Knowlodae. and Ptible DISCUSSIon

3.1 Cwrvlyng otd lrtmnmUtin Education and CommnunIcatIo Progrms3.1.1 PlannInig Carrpalgns at ego3.1.2 Contracting Preparation 201,800 O

3.1.3 xeCUtioni I1,070,~02M0** 44 4*M M 4*j**%'44 4.fn *

3.2 Inenasing Pitlic Pastcbpation In PubicHearhus for Licening, and hIn Monftorhm and ErFiCICnwDe3.2.1 InformnationDmsclostretolnrterested Entities 801,400 d*44 n*4*nn n ,fi M- nro.n.i44M* n.n,i,

3.2.2 Oilie Activities 100.600,Mdn*ft.fn *4fn *4,44% flM,f,Mi Mdid'4 fdM,

Stibtotsi 7U2.000

3.3 Supporthm DIssemination at. anid EstSilibhbi Demand for.New ScImm aricend Technloaglca KnfKedge3.3.1 EstakblshIng Osmnand for SelentfieResewrch 143.770 44** ** fi*4 M fn ..

3.3.2 AcquIsition of TechnIcal-ScIentifIc rInformationfor Problem SoMng 156.828 M id.n M M 44 **3.3.3Productlon of Piticafions and Irnformdion DissemInation 343.304 M t 44 44 4.fn n,f*,ffdfn n n,'M

SUBTOTAL - ENVIFtONMENTAL AWMRENESS 3783

4. Oruenlrton of EnvOirIownenta Maragenmet System at Regional Level

4.1 Defhina (IT O' beations4.1.1 DefnIngG3TTPBy-lawsandStructwfe 4,200

Stittob 4.200

4.2 EsblIshhia (ITO4.2.1 ApprovIng By-laws anid Slrtttsee4.2.2 Preparing Calendar and Work program 21,0004.2.3 Establishing GTlP 604,0004* 4***1ff nf fi nn Mf fidf4 n.fndfd*4*M'i4(44%4t 44, M

sittatd s25.0o0

4.3 RegIonal Support for Environmental angagekmet4.3.1 Training In Estaiblishment of Priorities for Envlornmental Managemenit 35,6004.32 TrainIng In Regional Envkonmental Management Project Design 35, 5004.33 DefinItion and Execution of Studies on PubIlic Regulations and Policies 138,500

Subttohl 89 oo

SUBTOTAL- REGIONAL SIGEA ORGANIZATION 78

/ l le- .Iv I age J

BRAZIL - NATURAL RESOL_RCES POLICY PROJECT

Prdlect In,Iementaltbn Scehdule

Total

Estianed Yew I J 1 43_2 Yew4 _Y

Cost TIE i]ThiI~~4 I3 4 vr 2 1 4!I~ I11

5. CrQena Conditions br triteqrated SbtePlannri and Iriearated Subprolects Preparatlon

5.1 Etbilishina and Mahintlnin Worhing Groups )-simuap t Unibe5.1.1 Establishement ot GTs and Support Units 35000 5.1.2 GTs and Support Units Operations 1.455.000 ... **d. .lfl .*, . d .... fi . , n. n. * .l fin, .. fi, nfl, .fi.d .ii ..

SubtotdI 1 490000

5.2 Technical Assistance to State Entities to PnnnProhect Invlemenbiion and Irtearated Subproledt PrspardEr5.2.1 Specialzed Consultants 970,005 n .. .n n .f. .nn .. nn. nn. nn nn nn fi.. .. fin nfl n.. n nf d i

5.2.2 Technlcal Assistance for Projec Implementation 5,720,000 **** nn nfi* find nn, *nfi inn fin, fin n nn, n *fifi, find f fd fn n.

Subtl 5,990_005

SUBTOTAL- INTEGRATED STATE PLANNING ANDSUBPROJECTS PREPARATION 8,180 05

6. Strenatheenb d COEMA.

6.1 Prpuhgna Danoilcs d COEMAs 49,298 * **

6.2 DeI,niStrenathening Strategy mid Imphtentflj SLibtobtl6.2.1 Defining and Implemeing Strategy 32,3608.2 2 Training COEMAs'Members 412,000 dd* fifi fin

6.2.3 Other Sttrngth.nlng Actions 311.732 ....*.. in.. fin.. fin in n nn n .n n n. .....

756 09

6.3 TechnIcal Assistance to COEMAs 1or Anlis of PGA and PAs 286,750 *.*. .n in *** b***d **fi i*4 in fin fin, nns find find nn. fin, fin nn, find fin? *nnrS_tbtots 285l750

6.4 Evakluion of COEMAs 80.000 . fi

Suibtotal 80000

SUBTOTAL- COEMAS STRENIGTHENING Subtobl 1.172.140

TOTAL COST PART - STRENGTHENING OF STATEENVIRONMENTAL INSTflfTIONS 31 098,

Arifex 3A- Page 4

BRAZIL - NATURAL RESOURCES POLICY PROJECT

Prolect IniemrentfIion Schedutb

Total Yew__Entimated Yesw 1 I Year 2 - Year3 Yeis 4 I YW 5

cost -2

PART 2 - ZONING. MCtITCRING. CONTROL AND ENFCRCEMENT (E.M.CaE)

I. SpecActitis hr St.port d Intrated Erw*onmenbl Maageent

1.1 Taina fyoNr Zoninu A*tKies1. 1.1 ZEE Methodology Workshop 53,0001.1.2 TralnIng 344,800 . n n . *

1.1.3Recycling Couses 367.200 find .*** ***. *fif .****1.1.4 Zoning EconomIc and Metiodology Starwadteatlon Study 92,4001.1. 5 Study for Preparation of Thematic Base 287,700 fin .**

Suboi 1.145,10,

1.2 G*_WroeauXlnaa Romofe Sensiig1.2.1 LaboratcrIes Installation s05,000 * *1.2.2 Pachase of Software 270,000 * _**1.2.3 Othr Permanent Equipments and Goods 022,2001.2.4 Training 508,200 ----------

1.3 Study on tie Twrlttal Daft of the Amnzon Roglon 347,000

SUBTOTAL EW. MANAGEMENT SUPPCRT ACTVM_ES 3 , ___ ,O_.

2. Z.M.C&EIntatednt6d Sub ojcbt eknciudktt inlstrenathenhi to non-x~i ustit ns and tectni msbt 37.705.* *** .* * *** 377 ***** ,a .** * ... * - -* ****.,*

3. Em tncvEnrenAenti tlvleS 2,250,0D0 . nj '* * * * ** * * * * ** n** ntd .* *n*

TOTAL COST PART 2 - ZMC&E 43.901.U06

PART 3- PROJECT ADMIISTSAIR ON

I. Support to Project Comiss7on 700,000f fi* *** **_ * .* .* l * ** *, . fin* ***. n f nn * fin * n .** n. fi*

2. Sup~port to TechnicAl Secretwht 2.100,00 ii*fdff,ffi ii ii i* ii fil f i iinlfn ffdd*i iiff,ff

3. Technical SupportRequested by States 0w,000 ****** *.**** fin *** n *** **n * n " ***** find 'i f nn ***( f** fine find nn* fin

4. Project Evaluation 300,000 nfl **** nfl n**

TOTAL COST PART 3- PROJECT ADMINIS1RATION 4,000,000

TOTAL PROJECT COST 79,000,000UmS1rl U.WI

Annex 3B-Page 1

BRAZIL - NATURAL RESOURCES POLICY PROJECT

Project Disbursement Schedule

Total ( U S SEstimated

Cost I Ye I Year 2 Yer 3 Year 4 Y1 rS

PART 1 - STRENGTHENING OF STATE ENVIRONMENTAL INSTITUMTONS

1 Improving Orfanization Capacity for Integrated Evironmental Managemont

1.1 Improving Management and Organization System (OEMAs)t1..1 Diagnostics and Proposed Atternatives 486.000 486,0001.1.2 Regional Workshops 225.000 225,0001.1.3 Implementation 930.000 250,000 680,000

Subtotal 1,641,000 061,000 680 000

1.2 Strengthening Human Resources (OEMAs.Attomey General's Offices and other Env. Entities)1.2.1 Assessing Existing Resources and Needs and

Prpration of Training Programs 700.000 700,0001.2.3 Carrying out Training Programs 4,760.000 300,000 2,142,000 1,866,000 652,0001.2.4 Establishing Project Manragment Systems (Systems and Training) 240,000 240,000

Subtotal 5,700,000 |1,2400 0 2142,000 1 86W,000 652,000

1.3 Installing Improved Interconnected Environm-ntal Information Systems1.3.1 Updating Diagnostics 129,000 129,0001.3.2 Training of Personnel 199,802 159,842 39,9601.3.3 Deloping Softwares 127,000 127,0001.3.4 Purchase of Equipment and Software 1,538,073 2.786 1,076,651 458,6361 .3.5 Installation 312,747 218,923 93,8241.3.6 Data Acquisition 148,000 103.600 44,4001.3.7 Operation and Maintenance 1,011,129 505,565 303,339 202,226

Subtotal 3,465,751 131786 1686,016 1,142,385 303339 202,226|

1.4 Providing Complementary Infrastructure and Equipment1.4.1 Buildings (Headquarters, Regional and Field Offices and Laboratories) 1.494.000 203,00 747.000 544,001.4.2 Equipments and Materials for Laboratories 1.247,587 20.000 623.794 603,7941.4.3 Vehicles (Automobiles, Boats and Equipment) 2,479,749 420,0O0 1,239,875 819.8751.4.4 Other Equipment 539J96 57.000 269,948 212,948

Subtotal 5 761,232 700,000 2j8S06186 2!180A616

SUBTOTAL - IMPROVING ORGANIZATIONAL CAPACITY 16L5679833 3-032.786 7.388.632 4,089 001 055 339 202.226

2. Harmonizing and Adiusting the Legal Framework

2.1.1 Carrying out Detailed Legal Diagnosbcs 52.580 52.5802.1.2 Defining Strategy and Priorities 44.000 44.0002.1.3 Establishing & Maintaining CTELs 244.727 35,000 122,364 61,182 26,1822.1.4 Workshops and Specific Training 330.088 35.000 198,053 97,035

Subtotal 671395 ! 1 Z,580 32 0416 1 S8,217 26 182

SUBTOTAL - HARMONIZING & ADJUSTING LEGAL FRAMEWORK 71 395 l 2416 158 217

3. Promotina Environmental Awaareness,Dissemination of Knowledge, and Public Discussion

3.1 Carrying out Information. Education and Communication Programs3.1.1 Planning Campaigns 81,590 81.5903.1.2 Contracting Preparation 291,800 87,540 204.2603.1.3 Execution 1,979.020 890,559 692,657 395,804

Subtotal 2,35Z41O 1j69130 1 094,819 692 C57 395,804

3.2 Increasing Public Participation in PublicHearings for Licensing, and in Monitorina and Enforcement3.2.1 Information Disclosure to Interested Partbes 691,400 74,080 207,420 207,420 138,280 64,20D3.2.2 Other Activities 100,600 7,620 30.180 30,180 20,120 12.500

Subtotal 792 000 | 81700 237,600 237 600 158 400 76,700

3.3 Supporting Dissemination of. and Establishing Demand for.New Scientific and Technological Knowledge3.3.1 Establishing Demand for Scientific Research 143,770 35,000 71,885 36,8853.3.2 Acquisition of Technical- Scientific Information for Problem Solving 156,828 78,414 78,4143.3.3 Production of Publications and Information Dissemination 343,304 34,330 137,322 102,991 68.66

SubtotSl t E 35 000 2 02 252,621 102 991 I 1

SUBTOTAL -ENVIRONMAENTAL AWARENESS 3,7188 312 | 11t 700 41 185040_ t 5

66

Annex SB-Page 2

BRAZIL - NATURAL RESOURCES POLICY PROJECT

Project Disbursment Schedule

Toai (U S )Estimated __ _ _ __ _ _ _____

Cost ed Yar I I YWY s - _ Y r2S

4 Oranisatkon o Environmontal UMoenemnt System at R-gional Level

4.1 Definine GTTP Opetions4.1.1 Defining GTTP By-laws and Structure 4.200 4.200

Subtotal 4.200

4.2 Establishing GTTP4.2.1 Approving By-laws and Strutoure and

Preparing Calendar and Work program 21,000 21,0004.2.2 Estublishing GTIP 604,000 100,000 181.2O 151,000 90,600 81,200

Subtotal 025,000 121t.000 181,200 1s1.oo 900600 a1.200

4.3 Regional Support for Environmental Mane-ment4.3.1 Training in Establishment of Prioribes for Enviommnta Management 35,500 17.750 17,7504.3.2 Training in Regional Environmental Management Project Design 35,500 17.750 17,7504.3.3 Definition and Execution of Studies on Public Reguibons and Policies 18,50w 18,50w

Subtotal ao500 35 00 t 5300

SUBTOTAL - REGIONAL SIGEA ORGANIZATION 718-700 160.700 109 700 1ta.soo so.aw 81.200

5. Creating Conditions for Integrated StaeRhnnina and Subprolect Prepaation

5.1 Establishina nd Maintaing Wosking Groups (GTs) and Support Units5.1.1 Edtbsheme nt of GTs and Support Units 35,0O0 35.0W5.1.2 GTs and Support Unit Operabions 1,455.000 140.00 436,500 363.750 291.000 223,750

Subtotal 1.490.000 t175 000 43oSOo 303.750 291,000 223.750

5.2 Tochnial Assistance to State Entities for Planing.Proiect Implementdion and Integrated Subaroject Preparation5.2.1 Specialized Consultan 970,005 70,000 339,502 242,501 194,001 124,0015.2.2 Technical Assistanc for Project Implementaion 5,720,000 610.0DO 1,520,000 1,520,000 1,520,000 550.000

Subttal 0090.005 !!0.o00 1,as.5,02 1.7e2,501 1.714,001 a74 001

SUBTOTAL - INTEGRATED STATE PLANNING ANDINTEGRATED SUBPROJECTS PREPARATION s005. 5000 2 2E,002 2L12L251 2.005.001 807.751

6. Strenethning of COEMAs

6.1 Preparing Diagnosbes of COEMAs 49,298 49.298Subtotal 49.298 4s.29a

6.2 Defining Str-ngthenins Strategy and Implementing It6.2.1 Defining and Imphmenting Straegy 32,3e0 32,38D6.2.2 Training COEMAs'Membem 412,000 68,350 240,555 103,0056.2.3 Oter Strengthening Acbons 311.732 53,860 128,36 77,362 51,574

Subtkot 75.092 154 570 3os401 1ao0457 51.574

6.3 Technical Assistance to COEMAs for Anahysc of PCA and PAs 285.750 32250 63.625 63,625 63,62s 63.625Subtotal 28.70 32.2so50 !.25 a3,025 03.025 03,a25

6-4 Evaluaion of COEMAs 80,000 40.00 40,000SubtoW ao.ol 40 000 40.000

SUBTOTAL- STRENGTHENING OF COEMAS 1.172.140 23e118 433,11 2a4.082 11519 102s2

TOTAL COST OF PART 1 - STRENGTHENING OF STATEENVIRONMENTAL INSTITUTIONS S1.os.

3 54ea 1 229 225 | 9m0 4..3 1.825.067

67

Annex 3B-Page 3

BRAZIL - NATURAL RESOURCES POLICY PROJECT

Project Disbursement Schedule

Total (U S S)Estifnated _ _ _ _ _ _ _ _ _ _ _ _

Costim_ Year I Yar Z yWar 3 Yar 4 a Y r 5

PART 2 - ZONING. MONITORING. CONTROL AND ENFORCEMENT U.C&E)

1. Special Activities for Support of Integrated Environmental Manaaement

1.1 Training for Zoning Activities1.1.1 ZEE Mdthododogy Workshop 53,000 I 53D0001.1.2 Training 344,800 170,000 174.8001.1.3 Recycling Courses 367,200 183,600 183.6001.1.4 Zoning Economic and Methodology Standardization Study 92,400 15.000 77,4001.1.5 Sbtdy for Prepaaion of Thematic Base 287,700 115.080 172,620

Subtotal 1.145.100 353.080 608 ,420 183600 0 0

1.2 Geoprocesing and Remote Sensing1.2.1 Laboratories Installaon 965,000 482.500 482,5001.2.2 Purchae of Software 270,000 270,0001.2.3 Other Permanent Equipmernts and Goods 622.200 90,000 532.2001 .2.4 Training 506,200 175,000 331,200

Subtotal 2.3e3.400 1,017500 1,345,900 0 0 0

1.3 Studv on th Territorial Data ot the Amazon Region 347.000 347.000 0 0 0

SUBTOTAL - ENV. MANAGEMENT SUPPORT ACTIVMES 3.855.W0 1.717,580 1.954.S20 1300 0 0

2. Z.M.C&E Integrated Subprojects (Includino Targetedstr-nathening to non-state instrtutions and technical assistaneo) 37.795.965 7.559,193 13,228,588 11.338.790 5,669,395

3. Emergency Entorcement AetivIties 2,250,000 450,000 450,000 450,000 450,000 450,000

TOTAL COST OF PART 2 - Z.M.C&E 49 | 2!L7 9.963.513 3 625.188 11.788.790 6.11 9 395

PART 3 - PROJECT ADMINISTRATION

1. Support to Project Comission 700,000 100.000 150,000 150.000 150,000 150,000

2. Support to Technical Secretarit 2,100.000 280,000 455,000 455,000 455,000 455,000

3. Technical Support Requested by States 900.000 100,000 240,000 160,000 80,000 320,000

4. Project Evaluation 300,000 75,000 75.000 75,000 75,000

TOTAL COST OF PART 3 - PROJECT ADMINISTRATION 4.000.000 |480000 920.000 840.000 760.000 1.000.00C

TOTAL PROJECT COST 79.000L000 7.215-464 221122738 4.031 278 16 695.159 8,945,361

100% 9% 28% 31% 21% 11%

5C0D1S79.WKI - 10/O2WI

68

BRAZIL

PILOT PROGRAM TO CONSERVE THE BRAZILIAN RAIN FORESTNATURAL RESOURCES POLICY PROJECT

ANNEX 4: SUMMARY CONTENTS OF THE OPERATION MANUAL

Operational Manual

Outline and Main Elements

Outline of Contents of Operational Manual

- Project Objectives and Description

- Policies and Principles of Resource Allocation

Eligibility of States and Institutions

- Subproject Eligibility and Selection Criteria

- Planning and programming Procedures and Calendar

- Project Coordination Responsibilities at State and Federal Levels

- Monitoring and Reporting, Procurement and Disbursements.

Annexes

- Formats for PEA/PGA, PA, POA, and subproject proposals

I

69

Main Elements of the Operational Manual

Access to Project Funds. Elifibility Criteria andSubproject Selection Criteria

A - Eligibilitv of States

(a) Signature of Acordo de Adesao (Subsidiary Grant Agreement) withMMA, including the following provisions:

* acceptance of objectives and principles of the project;

* acceptance of rules and requirements established in the RFT GrantAgreement;

* commitment to follow procedures established in the OperationalManual and other agreed procedures indicated by MMA, includingfor the transfer of funds;

* undertaking to provide counterpart funds in required amounts;

* commitment to establish GT as a coordinating mechanism betweenproject executing agencies, and a project support unit within theOEMA's structure (as condition of disbursements to the state) andsupport the work of state executing agencies; and

* taking account of recommendations of CEZEE in setting sectoralpolicies and planning public investments and activities.

(b) Continued access to project funds will depend on meeting thefollowing conditions:

* designation of representative to GTTP by June 30, 1995;

* establishment or re-configuration of COEMA, with deliberativepower and adequate representation of civil society (at least onerepresentative from NGOs and one from socio-economic segments)by September 30, 1995;

* establishment or re-configuration of CEZEE by September 30,1995, with representatives (with voting powers) of the OEMA,NGOs (at least one), and socio-economic segments (at least one),and with participation of state-level representations ofenvironmental federal entities (as consultative members);

* demonstrate the existence of a Environmental General Attorney'sOffice (Curadoria) by December 1995;

* demonstrate that, by September 30, 1996, COEMA has met at least4 times in the preceding twelve months, with sufficient quorum, to

70

decide on matters under its mandate, and that its decisions havebeen published at least in the Official Journal and one newspaper ofwide circulation in the state;

* demonstrate by September 30, 1996, that CEZEE has met at leasttwice during the preceding twelve months, with sufficient quorum,to debate matters submitted for its consideration;

* implement the recommendations of the Institutional DiagnosticStudy according to the agreed calendar;

* have a full PGA prepared and approved by COEMA by September31, 1997;

* demonstrate that all RIMAs and environmental licenses have beenmade available to concerned municipalities and the public, thatpublic hearings have been advertized at least in the Official Joumaland one newspaper of wide circulation in the state, and that the listof fines and defaulters has been made available to the public;

- demonstrate real growth in budget allocations to OEMAs fromdomestic sources relative to the previous year; and

* ensure that state policies and public investments are compatiblewith CEZ;E recommendations.

(c) except during the first two years of project implementation and foraggregated amounts not to exceed US$1.5 million per state, access to funds tofinance integrated subprojects will be conditional on states having met theconditions listed in item (b) above.

B- Eligibilitv of Institutions

- Designated state entities must have signed five-year ImplementationContracts with MMA (with yearly supplements-termos aditivos--incorporating the yearly budget);

- participating federal entities must have signed similar contracts withMMA.

C- Eligibility of Subprojects

- their objectives must be consistent with the objectives of the PilotProgram, i.e they should aim at reducing the rate of deforestation in theLegal Amazon by: furthering the sustainable use of natural resources(forest and water resources); protecting the forest and biodiversity; andreducing contributions to carbon emissions. Thus, the following typicalactivities (inter-alia) would qualify: controlling deforestation andselective logging without adequate forest management; controlling fires

71

in forest or contiguous areas; control of garimpo activities (in particularof siltation and mercury pollution caused by these activities); andcontrol of predatory fishing and hunting. Control of industrial andurban pollution would also qualify, when associated with: (i) thebuming of wood or wood residues (charcoal manufacturing, woodburning in ceramics industry and buming of sawmill dust), whichrepresents an indirect contribution of the forest to carbon emissions; (ii)when threatening biodiversity in sensitive eco-systems in priority areas;and (iii) when necessary to secure the support and participation of localcommunities in priority areas;

qualifying activities are the following: (a) monitoring, defined as thesystematic collection of data on environmental quality (water quality,air quality, vegetative cover and bio-diversity); quantification ofdeviations relative to norms and standards, and identification of causesof these deviations; and wide dissemination of monitoring data tocommunities, industry, scientists, NGOs, and state and federalgovemment agencies involved in licensing, control and enforcement;(b) control and enforcement, aimed at correcting deviations relative toestablished norms and standards and dissuading potential defaulters, byverifying compliance (control) and imposing penalties on defaulters; (c)licensing, to the extent that agents operate without the required licenses(which incorporates the norms and standards to be respected); and (d)zoning;

the purpose of zoning is to promote social and political commitment tothe use of areas and their natural resources in ways that conservenatural resources while allowing sustainable socio-economicdevelopment, based on scientific analyses of actual and potential uses.Zoning activities will include: (a) creation of institutional capabilitiesfor zoning; (b) execution of zoning on a scale of 1:250,000 of the areaof influence of the subproject; (c) execution of zoning work on smallerscales (1:100,000 or 1:50,000) in sub-areas, as required to support theplanned licensing, monitoring, control and enforcement activities underthe subproject; (d) study and recommendation of changes to sectorpolicies (incentives, investments) at the various levels of government toinduce implementation of these recommendations by the public andprivate sectors; and of targeted actions in specific areas;

- they must be consistent with priorities established in the PEA and laterPGA (themes and priority areas);

- they must be recommended by COEMA;

- they must show adequate integration between licensing, zoning,monitoring, control and enforcement activities (financed under theproject or other projects or already existing in the area);

- executing agencies must demonstrate adequate technical, financial andinstitutional implementation capabilities; and

72

- with respect to zoning, the following additional conditions must be met:

* the zoning portion of the subproject must have been reviewed andapproved by CEZEE;

* the methodology and process proposed for the subproject must beconsistent with that established in the Operational Manual (to bedeveloped in workshops organized in the early stages of projectimplementation), and must include the required steps forconsultation with affected groups and public hearings (the proposalwould include a description of the proposed processes) - effectiveparticipation of local representations of federal agencies,municipalities, organized civil society and affected populations inthe various stages of zoning work (including socio-economic datacollection and analysis and analysis of alternatives) and publichearings on zoning recommendations. These elements will be partof the methodology to be defined as part of the project;

* Protocolos de Intenqao must have been signed with municipalitiesand local associations within these municipalities located wholly orpartially in the area to be zoned; and

* states must have implemented the sub-programs of preparation forZoning, Geo-processing and Remote Sensing included under Part 2of the project.

D- Selection of Subproiects

(a) Selection Criteria and Point System:

quality of the proposed strategy and methodology proposed forzoning, monitoring, control and enforcement:

(i) Zoning:* traditional approach, with emphasis on information

processing and preparation of maps: 5 points;* as above, but including preparation of options for

sustainable use of natural resources, with popularparticipation: 10 points;

* innovative approach: as above, but including a strategyto influence public policies: 15 points.

(ii) Monitoring:* traditional approach, with emphasis on primary data

collection, without capabilities for analysis: 5 points;as above, but with program of utilization of data andgood interpretation capabilities: 10 points;

* innovative approach, understood as with interpretationcapabilities, and emphasis on available information, and

73

with a strategy for utilization of the monitoringinformation: 15 points.

(iii) Control and Enforcement:* traditional approach, with emphasis on means: 5 points;* as above, but including a program to apply these means

at strategic points: 10 points* innovative approach, including, in addition to the above,

a strategy to obtain multiplying effects and replicability:15 points

- participation of socio-economic segments in environmental managementin the area and themes of the subproject, when applicable:

* without participation: 5 points;* with participation of NGOs: 10 points;* with participation of social segments: 10 points;* with participation of both: 15 points.

- replicability:* not replicable: 5 points;* replicable only within the state: 10 points;- replicable within the Amazon region: 15 points.

- contribution to community awareness of the need for environmentalmanagement:

* no dissemination and without significant participation oflocal communities: 5 points;

* wide dissemination, but without significant participationof local communities: 10 points;

* vwide dissemination and with participation of localcommunities from the start: 15 points.

- potential contribution to adjustments to environmental managementprocedures within the state:

* plans reporting of actions only: 5 points;* plans reporting of actions and evaluation of results: 10

points;* as above, but includes a process of readjustments of

environmental management processes: 15 points.

- financial sustainability:* continued dependence on budget resources to maintain

activities at the end of the project period: 5 points;* with guarantee of self-financing at the end of the project

period: 10 points;* project activities will generate surplus: 15 points.

- degree of integration between zoning, monitoring, and control andenforcement activities within the project:

* only one type of activity: 5 points;

74

* two types of activity: 10 points;* three types of activity: 15 points.

- degree of cooperation between the various levels of government forproject execution:

* only one level of government agencies (federal or state):5 points;

* state and federal government agencies: 10 points;* municipal governments: 5 more points.

(b) Evaluation and selection methodology

The total maximum number of points is thus 150 (it will be lowerwhenever some criteria are not applicable). A subproject will be selectedif it obtains 60% of the total maximum number of points for relevantcriteria. This threshold may be adjusted during implementation.]

E- Financing Limits for Part 2

- An initial allocation6 of US$1.5 million (total costs) would be reservedfor each state during the first two years (after effectiveness), duringwhich states would be exempted from meeting state eligibility criterialisted in Section A(b). Beyond this date, uncommitted funds would bereassigned to the competitive fund.

- Funding of "emergency enforcement activities" (ad-hoc actions outsidethose programmed using the project planning mechanisms) would belimited to no more than US$250,000 per state over the life of theproject.

- Total funding per state for subprojects under Part 2 would be limited toUS$7.5 million.

6 For the states of Acre, Pari and Amazonas, the relevant allocations up to Mid-term Review willbe determined by KfW, since the funds will be coming from German financial cooperation.

75

F- Eligible Expenditures for Part 1 and 2

- All expenditures, except salaries of regular staff and taxes, would beeligible. Only works of a value of less than US$200,000 in theaggregate per subproject would be eligible under Part 2, so as to limitthem to small-scale construction (such as construction of outposts,surveillance installations, etc..). Eligible recurrent costs (such assupplies and materials) would be financed from external funds on adeclining basis, from 90% in year 1, to 75% in year 2, 50% in year 3,30% in year 4, and 10% in year 5;

- weapons would be eligible, but they would not be financed fromextemal funds.

I

76

BRAZIL

PILOT PROGRAM TO CONSERVE THE BRAZILIAN RAIN FORESTNATURAL RESOURCES POLICY PROJECT

ANNEX 5: PROJECT ORGANIZATION AND INSTITUTIONALMECHANISMS AT FEDERAL

AND STATE LEVELS

* Project Coordination Structure at the State Level

* Project Coordination Structure at the Federal Level

* Project Procedures

77 Annex 5Gmph I

BRAZIL - NATURAL RESOURCES POLICY PROJECT

Projet Coordintbon Structure at Smt, Level

T dinicslC A EuO*or COELmAComm -

CE~~E 9 Znnuig Caem, ~ ~ ~ ~ ~ ~ CEZE

Worn SE Group

Suport Uni

LNGO Is

M unxip_ and Non-C_vrwb Or9wmmo potlieipi s peedic subprowj

COELUA SMt_E n_mw. Council1F7PF _bf Zoning Cemm^"aon

OEMA Slf Envionnal Agwwy

Annex 5

BRAZIL - NATURAL RESOURCES POUCY PROJECT Graph 2

Prolect Coordinatlon Structue at Federal Level

Pilot ogramCoordinating

Cormission (CCPP)

PildPogramExecutive Seoetai

I

Proled_ Trochriam ingadTc

Nsbusem l Procuement S Monitorlng Iyoup

s Consulltants

Cornposition of CP

- One representative ot IBAMA- One representative of SAE

Finance11Codnadr)

- Three Tehreca senlti oyl aGs oresiden and reGOesentathie of MAP(non-anting)

D ivebssreweontatvso h tts(pone fProntfe yernt aMrotatingbasis)

- onve representatives of NIB .orAousMA G

79

Project Procedures

Activity Preparation Review Con olidation 4 oval

State Federal State Federal IBRD/Donors

State Environmental OEMA COEMA and COEMA andPlan (PEA) and PGA CEZEE (for CEZEE-

zoning Sent to STactivities) for

information

Subproject Proposals Executing submitted to ST appraises IBRD andentities, under CEZEE, then subprojects financingGT coordination to COEMA, and proposes donorsand with for clearance rating; approveassistance from submits itsUA and recommendatspecialist ions to CP.consultants CP clearsprovided by ST subproject.upon request, orhired by thestates.

Regional Activities ST, in GTTP CP clears the IBRD andconsultation with regional financingGTTP programs donors

approve

80

Activity Preparation Review Consolidation

State Federal State Federal IBRD/Donors

PAs - 5-year (revised Executing GT reviews GT (with ST ST checks asevery year for the Entity, with PAs for UA (consolidatio needed fornext five year period) Technical consistency support) n of state consistency

support and with PAs) with programassistance from PEA/PGA, rulesUA with (budget,

approved eligibility ofsubproject institutions,proposals, activities,with project expenditures,eligibility counterpartrules funding),(institutions, forwardsactivities, themexpenditures together with

counterpart their federalfunds) and consolidationST budget summary toinstructions. CP forforwards to clearanceST all PAs,withcommentsandconsolidation

Note: NeefrystmaicdetildeviwyTwllbesummary

|Note: Need for systematic detailed. review by ST will be reassessed at Mid-term Review.

81

Activity Preparation Review Con olidation oval

State Federal State Federal IBRD/Donors

POAs - for Executing GT (with ST CP clears, IBRD andinstitutional Entity, with UA support) consolidates ST approves relevantstrengthening and for technical verifies state POAs after donorsother activities under assistance from consistency and send checking as approveapproved subprojects GT/UA with PAs, consolida- needed for consoli-

sends all tion to CP consistency dated(POAs are reviewed POAs to ST with regionalsemi-annually in July- together with approved POAsubprojects which their PAs andhave been approved consolidation other criteriaby then may be (as above)included in the POA and send toat that point if IBRD andconsistent with relevantbudgetary donorsallocations).

Note: Need for detailed review by ST will be reassessed at Mid-term Review.

Termos Aditivos ST, based on Executing Termos IBRD andapproved POAs Entities Aditivos are relevant

signed by donorsMMA and approveexecuting Termosentities. Aditivos

82

Activity Pre aration Review Consolidation App

State Federal State Federal IBRD/Donors

Revision of program May be STS SEPP IBRD andnorms, criteria and proposed by any reviews, (Secretaria relevantprocedures state either to based on CP Executiva do donors

ST or to its recommen- Programa approverepresentative in dation. Piloto)the CP. Review approvesmay be submissionrequested by ST from STor any member afterof CP, or approval hasfollowing the beenMid-term obtainedReview. from IBRDDecision to and relevantproceed with donorsrevision votedupon within CP.ST prepares

l____________________ revised proposal

83

Activity Preparation Review Conlidationa

5= Federal State Federal IBRD/Donors

Semi-annual Progress Executing GT (with STReporting (relat6rios Entities prepare, UA support) consolidatesde acompanhamento based on reviews, reports everyffsico-financeiros) standard pre- consolidates six months,

determined twice a year sends thisformat and and sends to report to CP,indicators. ST IAG, IBRD

and relevantAll reports donors.simultaneouslysent to GT/UAand ST

Annual Evaluation Under GT, with ST preparesReports (based on coordination of UA support, annualperformance GT and with consolidates evaluationindicators measuring support from them and report andprogress towards UA, Executing sends to ST forwards it todefined objectives) Entities prepare with CP for

annual comments; comments.evaluation of Circulated to Incorporatesinstitutional COEMA, comments instrengthening CEZEE and final versionand subproject CP for forwarded toresults (in light information. Pilotof original Programobjectives and Coordinationon the basis of Commissionpre-defined (CCPP)performance (throughindicators) SEPP), IAG,

IBRD andrelevantdonors

84

Activity Preparation Review Con: olidation oval

l State Federal State Federal IBRD/Donl________ ors

Mid-term Review GT, with ST CCPP, after IBRD andsupport from consolidates obtaining donorsUA, coordinates and forwards Bank and approve,preparation of to CP, IBRD relevant followingmid-term and relevant donors' Mid-termevaluation report donors. agreement Reviewfocusing on Followingrequired changes joint review,to project ST preparesprocesses draft

amendmentforwards to to projectCOEMA, procedures,CEZEE, GTTP mechanismsand ST and

allocation offunds.Submits toCP forreview andclearance

Ex-post Impact ST prepares All CCPP IBRD andEvaluation draft Project relevant

Implementation donorsReport jointlywith the Bank _

Transfer of Funds Based on chronogram agreed upon in POAs and incorporated in Termos Aditivos, andconditional on compliance by each entity with fund release requirements (reporting ofprevious expenditures...), ST transfers advances from Special Account. Later transfersconditional on entity presenting SOEs on expenditures financed by previous transfer.

Project Accounting Each executing entity keeps separate accounts according to standard accounting model.These accounts are audited annually by independent auditors.

85

Activily Preparation Review Consolidation . la

State Federal State Federal IBRD/Don

Procurement Executing ST, IBRD,entities, based depending dependingon pre- on onestablished thresholds thresholdrules, under ST

l _____________________ guidanceNotes

- GT/UA consolidate the PAs/POAs of state-level agencies and offices (superintendencies) of federal entities participating intosubprojects.

- ST will provide temporary guidance in the field if requested by the states. Such guidance would facilitate (and hopefully speed-up)later approvals by MMA.

- Subproject proposals can be presented to ST for immediate review and approval at any time in the year. If approved, they will beincluded in PAs and POAs for the following year (or the same year if approved in time for incorporation of POA semiannualreview and if within approved budgetary allocations for the executing entities).

86

BRAZIL

PILOT PROGRAM TO CONSERVE THE BRAZILIAN RAIN FORESTNATURAL RESOURCES POLICY PROJECT

ANNEX 6. PERFORMANCE INDICATORS

PART 1: STRENGTIIENING STATE ENVIRONMENTAL ENTITIES

PART I ACTIVITIES/ DATED INTERMEDIATEOBJECTIVES SUB-ACTIVITIES INITIAL INPUTS COVENANTS OUTPUT INDICATORS MPACT INDICATORS

1. Strcngthen I .1 Strengthen 1. Firms, or specialists, to All States must 1. Mectings and workshops to I. All nine Arnaznian sttes OEMAa, by December 1999, function with greaterManagement management systems undertake institutional have implemented operstionalize recommendations authority in the tate governmental system. Their credible financial managementand (e.g. financial assessmenta are contfacted by the agreed agreed upon in institutional systems and ability to plan for financial sustainability in some corc functions armOrganizational management, personnel April 1995. recommendations assessments will have begun by indicated by:Capacities for management, of the August 30, 1995.Decentralized monitoring of policy 2. Report detailing options institutional (i) quality OEMA reporting on global, project, and subproject budgets;Ervironmenlal implementation) for strengthening OEMAs is diagnostic on a 2. First steps tomardsPolicy & available on July 30, 1995. timetable agreed strengthening internal (ii) financial reports regularly produced and publicly available;Implementation 1 1.1. Diagnostic of Report to include: by the Bank. management systems in

management needs (a) Statement of the mission of OEMAS will have been taken (iii) records of licenses, taxes, fees, fines collected are sent to seniorthe OEMA and elements of a by October 1995. management at predictable intervals.

1.1.2. Alternatives work plan to meet thatproposed mission. (b) Specific steps to 3. Discussions with state 2. Personnel Management Systems, the level of professionalism, and

strengthen the personnel and governmental actors, includirg environmental management is higher than at start of project, as indicated by:1. 1. 3. Workshops to financial management systems where necessary the COEMA,refine new appraches to improve performance. on charges in the OEMA will (i) Each OEMA has, by 1999, a personnel policy that has been accepted and is

be underway by December under implementation which has a transparent merit rectuitment process, work1.1.4. Installation of 1995. programming, fair remuneration, and annual performance evaluation.new systems

4. Minimum of 6 states have (i) Interview data indicate that personnel In the OEMAs have improvedstrengthened at least one corm working conditions, job satisfaction, fair salaries, end adequate equipment tomanagement system by January perform essential functions professionally.1997.

(iii) Annual data indicate that staff turnover has progressively decreased as well5. All states have strengthened as dependance upon seconded staff and short term consultants.a minimum of tvmo cornmanagement systems by (iv) All laboratories and scientific equipment, computers, spreadsheet softwarc,December 1998. digitalized mapping, and zoning and monilDring equipment and software are fully

utilized by trained and working staff.

(v) A regular system for monitoring personnel perlbmrance is functioning andregularly used by senior management.

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PART I ACTIVITIES/ DATED INTERMEDIATEOBJECTIVES SUB-ACTIVITIES INITIAL INPUTS COVENANTS OUTPUT INDICATORS IMPACT INDICATORS

1. Strengthen 1 .2 Strengthen human 1. Contract for human I. Contract for 1. Human Resource 1.2. Human Resources are trained and performing more effectively as indicatedmanagement resource skills in resource and training Project Assessment compleed by by:and environmental assessment signed by Accountirg and June, 1995.organizational management. March 30, 1995. Management (i) Other state actors report (in interviews) that they have called upon, or hestdcapacities for Information 2. Schedule for sub-regional from, the OEMAs on environmental policy questions more frequently since thedecentralized 1 .2.1 Assess existing 2. Preparation for the tIo System is signed delivery of program is July, start of the project.environmental human resource emergency courses --(I) by April 30, 1995. Program of courses,policy and capacities. project preparation and (2) 1995 and preparation of course syllabi by (ii) OEMA projects, programs, and policies are stronger than the programs,implementation project implementation is installed in MMA selected Brmzilian institutions is policies or projecta that they had promulgated prior to the start of the project.(cont'd) 1.2.2 Prepare training underway by June 30, 1995. and in state underway on material tailored

programs and special executing for Amazonian states by (ii) There are more trained enironmental prosecubors, judges in ervironmentalcourses. 3. Courses are prepared and agencies by August, 1995. law; and more environmental information distributed to judicial administrative

logistics for staff to receive September 30, staff.1.2.3 Deliver courses training are resolved for two 1995. 3. Two emergency coufaes - -for staffs of entities. emergency courses to Project Preparation and Project (iv) There are more OEMA stff with skills in environmental law and

commence in September 1995 Implementation- - are delivered enlbrbement, environmental economics, appraisal, monitoring, licensing,and all other courses to in each participating state by enforcement, analysis of environmental impact, and strategic planning, bycommence by November September 1995. Remaining December 1999.1995. courses to commence by

November, 1995.

4. 10% of the staff of six stateshas completed one trainingcourse by last quarter of 1995;50% of staff of each entity hascompleled training by lastquarter of 1998.

1 .3 Install an 1. Equipment is acquired for 1. An environmentalamplified installation in last quarter of information system team isenvironmental 1996. trained for each environmental 1.3 The quality of ervironmental data in the states by December 1999 isinformation system entity in the nine states between improved as indicated by:interlinking the nine 2. Linkirig the states to one April 1996 and April 1997. (i) comparison with ex ante environmental data.states, another takes place by (ii) usefulness of data to decision makers.

November, 1997. 2. Environmental data from (iii) capability of system to exchange data with one another.1.3.1 Train personnel subproject critical priority areas (iv) usefulness of data for subpmject monitoring.in environmental is entered into the system byinformation systems. September, 1997.1.3.2 Developapplications. 3. Monitorirg of the subproject1.3.3 Acquire environmental data is inequipment and pmgress by December, 1997.software.1.3.4 Install system.1.3.5 Acquireenvimnmental data;operate system.

88

PART I ACTIVITIES/ DATED INTERMEDIATEOBJECTIVES SUB-ACTIVITIES INITIAL INPUTS COVENANTS OUTPUT INDICATORS IMPACT INDICATORS

I. Strengthen 1.4 Additional I. Requests justifying space 1. Space needs are under 1.4 Monitoring and enforcement activities are improved due to equipment and

management infrastructure and needs reviewed by construction by Midterm training as indicated by:and equipment. November, 1995. Review,organizational (i) laboratories are fully utilized and well maintained as part of envirnmentafcapacities for 1.4.1 Construction 2. Contracts for construction 2. Laboratory staff are actively monitorirg.decentralized works (building, are tendered by June, 1996. monitorirg environmentalenvironmental additional space for quality by last quarter of 1997. (ii) there are more frequent and effective monitorirg and enforcement activities.policy and headquarters and 3. Laboratory personnel areimplementation regional sites) trained by October, 1996. 3. 75% of the vehicles are (iii) vehicles and equipment have enabled monitoring and enforcement activities(contd) purchased by last quarter, 1997, to increase as measured in comparison with ex ante monitorirg and enforcement.

1.4.2 Laboratories (not 4. Laboratory equipment for and are being used to improvein new laboratories is bought monitoring and enforcement.MT,RO,AC,AM,PA) within three months of the

completion of construction.1.43 Vehicles(automobiles, trucks,boats)

89

PART I ACTIVITIES/ DATED INTERMEDIATEOBJECTIVES SUBACTIVITIES INITIAL INPUTS COVENANT OUTPUT INDICATORS "ACMT INDICATORS

2. Strengthen 2.1 Detail the legal 1. All states have a completed All states must I. The legal diagnostic and A strengthened environmenbal legal framework is indicated by:Legal Framework diagnostic of the states. diagnostic and prepared a demonstrate instititional dianostics are

program for impmving their existence of a compatibilized by 1. All states have a basic environmental law and its regulations setting out2.2 Establish a legal frameworks by prosecubnr December; 1995. environmental policies and guidance for their implementation by January 1997.technical commission December 1995. officeon state environmental specialized in 2. Recommendations on 2. At least three sates have subsecDral environmental laws clarifyirg theirlegislation (camara 2. CTELs established in a envirnmental compatibilizirg legal policies and responsibilities in thee subsector (forestry, water quality, moiltecnica estadual de minimum of 6 states before mattern by frameworks are m de by erosion, fishing) by December 1997; six mome slates by December 1999.legislacso) (CTEL) March 1996. December31, June 1997.

1995. 3. The effectiveness of this legal framnwrk is indicated by:2.3 Make trainirg available to state (1) increased numbem, and values, of fines and fees imposed and collected;environmental (ii) increased numben of requesb for licenses;prosecuorss. (iii) increased numbets of court cases initiated;

(iv) increased numben of court cases upholding position of the OEMA;2.4 Workshops on (v) Reduced number of conflicts smong entitites due to clarifications aboutlegal requisites for respective roles in enforcement as a result of new legal framework.environmentalprotection.

90

PART I ACTIVITIES/ DATED INTERMEDIATEOBJECTIVES SUB-ACTIVITIES INITIAL INPUTS COVENANTS OUTPUT INDICATORS IMPACT INDICATORS

3. Strengthen 3.1 Execute a program 1. A program for public 1. Records are kept indicating 1. Simple public opinion polling indicates that public knowledgeability about statepublic access to of public environmental environmental infornation that the number of public environmental policies and their impact has increased.environmental information, education with activities planned, hearings, and public meetirgsinformation; and communication, scheduled, and staff assigned increases by 30% between 2. Media (radios, TV, newspapers) carry environmental indicators and newswiden public 3.2 Augment public responsibilities has been December 1995 and stories about policies and their enforcement more frequently than at the start ofknowledgeability; participation, and approved by the entity's senior December 1997. the project.and increase public hearings, in management and is ready to bepublic regard to environmental operationalized by 2. Number of radio 3. Universities, secondary schools, citizen groups, associations, NGOs, churches,participation in monitoring and September 1996. announcemenb, pamphlets and civic society assemblies actively seek OEMA's help on ervmirnmental affairsenvironmental enforcement, distributed, videos prepared by throughout mtates.decision making. 3.3 Acquire new OEMAs and shown to

approaches to applied audiences increases at least by 4. The participation of NGOs has increased in public hearings and publictechnology and 30% betveen November 1995 envirornmental education programs. (Records must be kept by OEMAs from the

scientific information and December 1997. start of the project in order to track this perfbnmance.)useful forenvironmental 3. Number of public requests 5. The number of municipalities with enironmental councils (Condemas) hasprotection. for action by environmental increased from the situation at the start of the project.

prosecubr increases.3.1.1 Plan informationstrategy 4. A progress report for the3.1.2 Elaborate that Mid-Term review details theinformation plan and demand for, and supply of,implement it information on applied3.1.3 Divulge technology and scientificinforrnation to information useful forinterested parties envirnmental protection in3.1.4 Increase the the states.incentives for thoseinterested to participate 5. An increasing number of3.1.5 acquire OEMAa are producing annualtechnological reports on their State'sinformation useful for environmental conditions bysolving immediate Mid Term Review.environmental problems3.1.6 produce and 6. By December 1993 statesdisseminate pamphlets, report by way of simplemanuals, publications, empirical information the usevideos, and material for made of, and results gainedradio programs. from, new applied technology.

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PART I ACTIVITIES/ DATED INTERMEDIATEOBJECTIVES SUB-ACTIVITIES INITIAL INPUTS COVENANTS OUTPUT INDICATORS IMPACT INDICATORS

4. A regional 4. 1. Create a regional I. Membership and basic work All states must I At least two meetirgs a I. The regional system for integrated environmental management led by GT'TP

system of permanent Technical methods established for the designate their year of the GIiP acting as a has contributed to the implemenbtion of the project by increasing the quality and

integrated Working Group GTTP by May, 1995. representatives forum to discuss their states' timeliness of information shared region-wide.

environmentsl (GTTP) with Calendar and plan for to GTTP by systems for environmenisl

management is membership from each meetirgs prepared by June 30, 1995. management (SEGAs) have 2. While a working group, not an executive group, the GITP has facilitated the

established and of the state June, 1995. been held regular exchagep of information about what works, and what does not, amorg

functionirg, ervironmental agencies. technical saff. Interview data provides specific examples of the ways the GTTP

2. Reports of the meeting have has strengthened information excharges.4.2 Define the bases been distributed to severalof functioning of the different entities. At lest three 3. Best practice in terms of norms and their enfbrcement is more consistent

GTTP. GaTP reports are ailable for throughout the region.public access in the states, by

4.3 Support integrated December 1997.

regional ernironmentalmanagement activities.

4.1.1 Prepare a modelfor functioning and aplan of action.

4.2.2 Establish acalendar forimplementing the plan.

4.3.3 Specify the otherregional activities.

4.3.4 Define andimplement norms andrelevant policies

5. Create I. A simplified state I. All states I. POAs for correspondirg I There is significantly stregthened environmental coordination at the state level

conditions for 5.1 Establish working environmental management must prepare years are prepared by as reflected in joint decisions taken on subprojecta, and the extension of technical

integrated state groups (GTs). plan is prepared by Working full executing agencies and assistance to those responsible for prepamtion and implementation plans.

level planning Groups (Grupo de Trabalho - environmental consolidated by respective

and effective 5.2 OEMA, through its Ul) with the Support Unit in management GT/UAs. POAs are approved 2. Participants in Working Groups share information amorg members on progress

implementation of support unit (UA), OEMA and approved by plan and hsve it by the Bank by October I, of made on combatirg environmenal degradation. Rates of deforestation, soil

subprojects. provides technical December 1995. approved by each year. erosion, and water quality is regularly reported by members to one another.

assistance to entities for their COEMAplannirg and 2. Working Groups (GTs) by December, 3. Support Unit in OEMA becomes a major source for technical assistance for

preparation of with assistance from Support 1997. plannirg, preparirg, and implementing asubpnojects grows throughout the life of

subprojects. Unit in OEMA prepare the project. This Is indicated by numbers of requests made for technical

subprject proposals. 2. A five year assistance, and the quality and timeliness of technical assistance extended.action plan for

2. POAs for 1996 have been Part A ofapproved by October I, 1995. project must be

approved by theBank bySeptember 30,1995.

92

PART I ACTIVITIES/ DATED INTERMEDIATE IMPACT INDICATORSOBJECTIVES SUB-ACTIVITIES INITIAL INPUTS COVENANTS OUTPUT INDICATORS

6. Strengthening 6.1 Diagnostic of the 1. Subprojects begin to be I) All states 1. All subpmjects are 1. Strengthened sate councils (COEMAs) are effective in norm setting,the state councils state councils, considered by COEMAs by have COEMAs recommnended by the coordinatlon of the environmental system, and widening undentanding of statefor environmental 6.2 Define and last quartr of 1996. with delibenative appropriate COEMA. envimnmenil management as indicated by:management. implement strategies powers and(COEMAs) for strengthening these adequate 2. Full POAs are prepared and (i) The frequency with which State Secretarias actively seek COEMA Input into

councils, representation of submitted to COEMA by state investment choices

6.3 Evaluate civil society (at December30, 1997.

systematically their least one NGO (ii) The number of tate norms that COEMAs have deliberated and implementedfunctionirg and fmm has increased significantly over the ex ante situation.effectiveness. environmentl,

business, and (iii) The number of environmental directives incoproated into state policies has

social segments) increased.andrepresentatives (iv) The number of draft laws proposed to the State Congresses has increased.ofenvironmental (v) The number of specializd technical committees (camatas technicas) of theagencies, by COEMA, and the quality of participation in those committees, has increased.September 30,1995.

2) All statesmustdemonstate thattheir COEMAsare functioningeffectively (ie.,have met fourtimes thepreceding yearwith quorum;decisionspublicizd inofficial journaland onenewspaper) bySeptember 30,1996.

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PART II: ZONING, MONITORING, AND ENFORCEMENT

PART 11 ACTIVITIESI DATED INTERMEDIATEOBJECTIVES SUBACTIVITIES INPUT INDICATORS COVENANTS OUTPUT INDICATORS IMPACT INDICATORS

I. Special 1.1 Trainirg for I. ZEE Methodology Workshop I) All states have 1. 75 % of of the zoning 1. Quality and usefulness of zoning in all partIcipatire states isActivilies for Zonirg Activities takes place by July 30, 1995. established or training is completed by June increased and Influences state investrnent choices.Support of reconfigured their zonifg 30, 1996.Integrated 1. .I ZEE 2. Training materials prepared commissions (CEZEE)Environmental Methodology for courses by August 1995. with deliberative policy 2. Membership and functionirgManagement. Workshop. OEMA representatives, of CEZEE is perceived to be

3. Zoning Economic and and adequate civil society more active and useful by stte1.1.2 Training Methodology Standardiztion representation (at least secretaries by mid term review.

study staru by October 1995 one NGO from1.1.3 Recycling and is completed by April, environmental, business, 3. NormatizationCourses 1996. and social segments) by development of regulatory

September 30, 1995. framework for state public1.1. 4 Zoning investments -- initiated by lastEconomic and 2. CEZEES have met at quarter of 1997.Methodology least twice during theStandardization Study. preceding 12 months, 4. Zoning equipment installed

with sufficient quorum to and operational in at least 71.1.5 Study for debate and decide zoning states by September 30, 1996.Preparation of matters by September,Thematic Base 1996.

3. Throughoutimplementation of theproject, the participatingstate's productiveinvestments (includingthose of entitiescontrolled directly orindirectly by the state)shall take into accountthe recommendations ofthe respective CEZEEregardirgland use,economic, and agro-

1.2 Geoprocessing and ecological zonirng.Remote Sensing.

1.2. 1. Laboratoryinstalled.1.2.2. Software . Laboratory installed bypufchased. March 30, 1996, and fully1.2.3. Other operational by July, 1996.equipment and goods.

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PART II: ZONING, MONITORING, AND ENFIORCEMENT

PART 11 ACTIVITIES/ DATED INTERMEDIATEOBJECTIVES SUBACTIVITIES INPUT INDICATORS COVENANTS OUTPUT INDICATORS IMPACT INDICATORS

1.3 Study on the I. Study on Territorisl Data is 1. All states have needed basic information in the data alreadyTerritorial Data of the undertaken during the second collected by IBGE to start their intensive zoning activities in criticalAmazonian Region. and third quarters of 1995, and subproject areaa by September, 1995.

delivered to states beforeSeptember 30, 1995.

2. Z,M, C + E 2. 1 Selective 2. At least four subprojects are 1. All remaining subprojects 2. Indicators (in subproject proposals) will measur:Integrated strengthening of non- approved by December 30, (beyond those approved by (a) how well they meet their goals, (e.g. to reduce deforestation -Subprojects state entities located 1996. 1996) will be approved by whether the rate of deforestation was in fact reduced in the subproject(including within states. December 30, 1998. area; (b) usefulness of the 'lessons leamed' from the demonstration; astargetted indicated charges in zoning, monitoring, or enforcement processessirengthening to 2.2 Integrated within the participating entity; (c) quality of inter-organizationalnonstate subprojects of zoning 2. Intermediste and impact collaboration within the state in this demonstration subproject, (e.g.institutions and monitoring, and indicators will be developed for municipalities, NGOs, and state level authorities); and (d) thetechnical enforcement, including each integrated subproject participation of relevant stakeholders in the decision making about theassitance). directed institutional proposal. subpmject.

strenghening.3. States will have increased the frequency and effectiveness ofmonitoring and enfbrcement activities in comparison with their ex antesituation.

9D

BRAZIL

PILOT PROGRAM TO CONSERVE THIE BRAZILIAN RAIN FORESTNATURAL RESOURCES POLICY PROJECT

ANNEX 7: SUMMARY OF THREE EXAMPLES OF POSSIBLE1NTEGRATED SUBPROJECTS

1. The profiles presented below are illustrative only. While they docorrespond to specific state proposals, or critical areas and themes examinedunder the pre-investment studies financed as part of project preparation, theydo not necessarily represent integrated subproject proposals which will bepresented by the states. These will be defined only after priority themes andareas have been defined in PEAs/PGAs and approved by COEMAs.

Example no. 1: State of Para -- Paragominas region -- Sawmill Activities

2. The Paragominas region consists of four municipalities (Paragominas,Rondon do Para, Dom Eliseu, and Ulian6polis), with a total area of 3.6million hectares and a population of 186,450. The town of Paragominas islocated 320 km southeast of Belem, on the Bel6m-Brasilia highway. Due to itsgood transportation infrastructure and proximity to the forest, it has the largestconcentration of sawmills (over 300) in Brazil, most established since the early1980s. Already, 25% of the total area of these municipalities has been alteredthrough the traditional pattern of selective logging followed by pastureestablishment. Timber that is left by logging and sawmill activities, as well asby land-clearing for agriculture and pasture establishment, is sold to theceramics industry or transformed into charcoal for the pig iron industry.Sawmill operation efficiency is low, with more than 50% of the timber wasted.The combination of sawdust incineration and charcoal production hasintroduced thick air pollution over the town, adversely affecting human health.In the absence of stronger monitoring, control, and enforcement measures,

there is no reason to expect that the deforestation of the area will diminish orsubside.

3. The integrated subproject would design mechanisms and incentives aimedat encouraging adequate forest management, waste reduction, and pollutioncontrol. It would include: (a) zoning the sawmills' area of influence (inorder to identify exploited areas, areas that are potentially exploitable forlogging and agriculture, and conservation areas to be set aside); (b) monitoringforest cover and environmental degradation in the zoned areas; (c)disseminating available forest management and pollution control technologiesamong loggers and sawmill owners through workshops and visits todemonstration areas, and providing technical assistance to incorporate thisknowledge into management plans; (d) implementing control and enforcementmeasures, including (i) requiring all sawmills to present acceptable IntegratedForestry/Industry Plans (PIFIs) as required by law; (ii) reviewing all licensesgranted to sawmills; (iii) controlling the execution of PIFIs through on-sitechecking of logging concessions and self-managed areas, and compliance withstandards of logging and replacement in other areas in which deforestationpermits are issued; (iv) controlling the origin and size of logs at sawmill gatesand along logging roads and rivers; (v) systematically applying penalties,

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including fines, the impounding of illegal logs, and, if necessary, the closingof sawmills; (vi) protecting conservation areas, including indigenous reserves(the Gurupi Biological Reserve and adjoining Amerindian reserves inneighboring Maranhao, which would require a concerted effort between thetwo states); and (vii) monitoring and enforcement of air pollution standardsthrough the prohibition of charcoal production and the incineration of sawmilldust without adequate in-situ air pollution control equipment.

4. The structure of incentives would also be reviewed, and proposedmeasures submitted to COEMA, CEZEE and other relevant authorities forapproval, to ensure that they support control and enforcement efforts andprovide financial sustainability for increased control and enforcement activities.Incentives to be considered could include: (a) additional state logging taxesfor logs which do not originate from managed forests (to supplement IBAMA'sLog Replacement Tax, which is well below forest management costs and thuscurrently provides an incentive for deforestation rather than forestmanagement); (b) substantially increased levels of fines imposed on defaulters,again calculated to provide incentives for sound forest management and airpollution control; (c) elimination of tax or credit incentives to all sawmills andcharcoal manufacturers not conforming to zoning and forest managementregulations, and air and water pollution standards; (d) provision of timed-basedtax incentives for sawmills which adopt appropriate forest conservationpractices and other industrial practices which reduce or eliminate timber wasteand pollution; and (e) review of criteria for land titling, and elimination offactors which prevent or make difficult the obtaining by sawmills of titles totheir managed forest lands (such as land clearance as a proof of exploitation).

5. The integrated subproject would be implemented through the coordinatedaction of: (a) IBAMA, which would review and monitor the execution ofPIFIs and requests for deforestation permits; (b) the OEMA of the state ofPara (SECTAM), which, in coordination with IBAMA, would review andmonitor all licenses to sawmills (for deforestation, forest management, andcontrol of air and water pollution) and would for that purpose establish anoffice in Paragominas; (c) Para's CEZEE and the state entity in charge ofzoning (IDESP), which would carry out zoning work and propose enactmentof appropriate regulations and/or propose policies to apply zoningrecommendations; (d) the state Forestry Police, which would help controllogging operations (operating checkpoints on logging roads and rivers, andassisting IBAMA with monitoring the implementation of forest managementplans); and (e) INCRA, which would carry out activities required by sawmillsto legalize ownership of their self managed areas. These institutions wouldalso be supported through the formation of a CONDEMA in the town ofParagominas, and the provision of training, technical and legal assistance tothe CONDEMA and the environmental coordinator of the municipality ofParagominas, which would assist with control of air and water pollution.Other entities and NGOs (such as IMAZON) could participate in the integratedsubproject, as a subcontractor, to guide the industry and help IBAMA in thedesign and implementation-monitoring of sustainable forest managementtechniques.

Example no. 2: State of Maranhao -- Sawmill and Pig Iron Production in theCarajas Corridor

6. The region of Aqailandia-Imperatriz faces the same problems as theParagominas area, with a total of about 250 sawmills distributed among thetwo towns. Environmental problems are acute. They are caused by acombination of factors, including logging and sawmill operations, colonization

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and livestock development facilitated by the construction of transportationinfrastructure (Belem-Brasilia highway, Carajas railroad), and by charcoal-based pig iron industries that require iron ore provided by the Carajas mine.There are six pig iron plants in the Carajas corridor, one near Marabd (Para),and five in Maranhao (including four in Acailandia and one near Sao Luis).Charcoal for pig iron manufacturing is mostly derived from sawmill residues(about 53%) and residues from clearings for agriculture and pastureestablishment (35%). Only about 12% come from forest management. Yet,the law requires pig iron manufacturers to demonstrate, by 1995, that allcharcoal used in pig iron production is derived from wood produced fromplanted or managed forests. Except for one producer (in the Cerrado near SaoLuis), none of them is anywhere near compliance.

7. An integrated subproject similar to that in Paragominas (discussed above)could be developed in this region and along the border with Para (to helppreserve what is left of the Gurupi Biological Reserve and adjoiningAmerindian reserves and other conservation areas). This subproject wouldhave the same characteristics as the Paragominas subproject, and bothsubprojects, if carried out in parallel, would significantly reinforce theirmutual impact on logging and sawmill operations in the region.

8. With respect to pig iron producers, the integrated subproject would aimat providing them with incentives to comply with the law by: (a) adopting lesswasteful pig iron and charcoal manufacturing technologies, thus reducing woodrequirements overall and improving the profitability of their currentoperations; and (b) reaching self-sufficiency within a set timeframe. Theywould be required to prepare and submit acceptable PIFIs, with a timetable toreach self-sufficiency in wood supply for charcoal production. After IBAMAhas approved these PIFIs, it would monitor its implementation with theassistance of the OEMA in Maranhao (SEMA) and the state environmentalpolice. The origin of charcoal would be regularly monitored and reported toSEMA, and penalties would be applied when pig iron producers are unable todocument sufficient charcoal production from their own planted or managedforests. SEMA would also regularly check on measures taken to reduce airand water pollution in charcoal batteries (in particular in, or near Acailandia)and pig iron plants. SEMA and IBAMA would report non-compliance toCompanhia Vale do Rio Doce (CVRD, the iron ore supplier), which hasincorporated in supply contracts with pig iron producers conditions related tocompliance by their clients with environmental regulations. CVRD is alsoprepared to provide pig iron producers with technical assistance to increase theefficiency of their operations by reducing charcoal needs (such as finesinjection technologies) and wood requirements in charcoal production, as wellas in forest plantations and management. The threat of suspension of iron oredeliveries would act as a powerful incentive to implement PIFIs as approved,and CVRD could thus be a very powerful ally in the effectiveness of thissubproject. In order to facilitate the transition of pig iron producers towardself-sufficiency, the state could also study ways to make available to themfinancial resources to implement reforestation or forest management schemes,and possibly grant them temporary tax incentives.

Example no. 3: State of Para -- Gold Mining Activities in the Tapai6s Area

9. This area, which covers about 165,718 square kilometers, is located southof Santarem along the Tapaj6s river in southwestern Para, and includes themunicipalities of Itaituba, Jacareacanga, Trairao and Novo Progresso.Development, however, has centered around the Itaituba municipality,principally due to intense garimpo (gold mining) activity, and has been

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somewhat spurred by colonization schemes made possible by theTransamazonian highway, and, more recently, by rapid development oflivestock activities (through the application of wealth derived from the garimpoactivity). The area includes a national park (Parque Nacional da Amaz6nia), aforest reserve (Reserva Florestal Mundurucania), three Amerindian reserves,and the Tapaj6s Garimpo Reserve. Total population is estimated at about180,000. Further development of agriculture, logging, and sawmill activitiesare constrained by a lack of an adequate transportation infrastructure, but thiscould change if the Transamazon and the Santarem-Cuiaba highways areimproved.

10. Garimpo activity is by far the major source of environmental degradationtoday. Although authorized garimpo activities are confined to a total area of28,000 square kilometers (Reserva Garimpera do Tapaj6s), they in fact extendto more than 100,000 square kilometers and involve an estimated population of100,000 to 125,000. Total gold production of the Itaituba municipality wasestimated in 1990 to account for 12% of national gold production and 56% ofgold production in the state of Para. Environmental degradation from thisactivity includes soil degradation due to the removal of forest cover and theloss of topsoil, siltation of large amounts of sediments into rivers (causing aloss of oxygen which endangers fish populations), water pollution by oils andgreases, and, most of all, mercury pollution of air and water. Garimpoactivity has also increased the spread of endemic diseases (in particularmalaria).

11. The integrated subproject would aim at: (a) controlling the risks offurther environmental degradation by carrying out the zoning of the affectedarea (specifically, elaborate a cadaster of garimpo operations, identifyconservation areas and areas where agricultural and livestock operations can becarried out in a sustainable fashion, and subsequently implement zoningrecommendations and monitor their effect); and (b) mitigating the negativeimpacts of garimpo activities through combined licensing, monitoring,technological promotion, and control and enforcement actions. These actionswould include: (i) disseminating available technologies that recover mercuryand reduce its use; (ii) licensing all larger operations ("closed garimpos", i.e.,operations owned or controlled by a few individuals, usually the purchaser ofgold) and garimpos organized in cooperatives, which increasingly controlgarimpo activities (licenses would be granted on the basis of Piano deRecuperacio de Areas Degradadas (PRADs) and Planos de Controle Ambiental(PCAs) required by law and EIAs for any new garimpos, and would beconditional on the adoption of mitigating measures with respect to the use ofretorts by all workers and traders to recover mercury during amalgam burningoperations, the construction of detention ponds, and mercury recovery fromthese ponds); (iii) monitoring the adoption of these measures through regularvisits and sample checks; (iv) promoting, through educational campaignsamong individual garimperos, the adoption of mercury conservation andrecovery techniques in exchange for legalization of their operations and theprovision of social services to them as well as all garimpo workers; (v)carrying out enforcement, through removal of garimperos from conservationareas, and non-licensed areas, and imposing penalties on operations not incompliance with licensing conditions; and (vi) systematically monitoringmercury pollution of air, water, fish and humans in the area and downstream.

12. Incentives to comply and regularize garimpo activities could also bestudied, including the provision during a limited period of tax incentives ortitles. Sustainability of actions implemented under the integrated subprojectcould be ensured through a combination of penalties imposed upon defaulters,and other means such as payment of a pollution levy.

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13. The integrated subproject could be implemented through the coordinatedactions of: (a) Departamento Nacional da Producao Mineral (DNPM, thefederal agency with the authority to grant mining concessions), which willgrant mining concessions and help identify and disseminate environmentallyneutral technologies; (b) SECTAM, which will concede, control and enforcethe implementation of environmental licenses, establish monitoring points anddisseminate monitoring results among garimperos, the scientific community,public agencies involved in the integrated subproject, and populationspotentially affected by river pollution and mercury contamination; (c) thefederal and/or state police, which will provide support for enforcementactivities (in particular the removal of illegal garimpo activities from indianlands and conservation areas; (d) IDESP, which will carry out zoning work;and (e) COEMA and CEZEE, which will review, develop and promote theenactment of zoning regulations, norms and standards, and establish incentivesgoveming garimpo activities in the state of Para. The municipality of Itaitubawill help in the collection of royalties and assist in the monitoring of garimpoactivities. Associations of communities located along the Tapaj6s river(possibly advised by NGOs such as "Saude e Alegria") will participate in thecollection and reporting of monitoring information, information on illegalgarimpo activities, and environmental and health awareness programs amongthese communities and garimpeiros (placer miners).

i

1 u

BRAZIL

PILOT PROGRAM TO CONSERVE THE BRAZILIAN RAIN FORESTNATURAL RESOURCES POLICY PROJECT

ANNEX 8: SUtMMARY TERMS OF REFERENCE FORMAJOR STUDIES

I - DIAGNOSTIC OF STATE ENVIRONMENTAL INSTITUTONALAND ORGANIZATIONAL SYSTEMS7

Part 1 of the Natural Resource Policies Project addresses the need forinstitutional capacity. It starts with strengthening the capacities of theorganizations themselves in light of their mission, and strategy for meetingtheir priority goals, in environmental protection. Strengthening organizationalcapacities does not mean increasing their size. It means strengthening internalmanagement systems in order to induce increased productivity andprofessionalism of personnel within organizations. Productivity gains cannotbe actualized with training alone, particularly if the structure of theorganization and its internal incentives does not provide opportunities foreffective professional work. Therefore, organizational capacity must proceedin parallel with training programs. Two central aspects of organizationalcapacity are personnel management and financial management. In meetingswith state representatives during the preparation and appraisal of this project,they repeatedly came back to their organizational capacity problems, especiallywith their terms of employment, systemic weaknesses, as well as the need fortraining.

OBJECTIVES

The objectives of the diagnostic of the environmental institutional andorganizational systems in the Amazonian state environmental agencies are to:

1. Clarify the mission of state environmental agencies, and their prioritiesin order to perform improved environmental protection more effectively.Develop a detailed strategy for addressing those priorities. In light of themission and strategy, to undertake an in-depth diagnostic of each state'sspecific framework and internal organizational structure.

2. Identify the structural changes needed, and the managerial andorganizational systems which would enable the state environmentalorganizations to deliver integrated environmental management on a state-widelevel.

3. Recommend the specific changes needed in core management systems -- for example, in personnel management and financial management. To makespecific recommendations on what should be done, by whom, and on whattimetable, to carry forward institutional strengthening.

1 The full text and appended material for these terms of reference are availablein the project files.

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MAIN ACTIVITIES

1. Nine State Senior-Level Workshops. Subject of workshops: (i) mission ofstate environmental agency, priorities, and strategy for addressing priorities,(ii) structural changes needed, if required, to address environmental priorities,(iii) specific changes required in core management systems, (iv) calendar ofstep steps, including where necessary, follow-up negotiation meetings, andother subsidiary workshops needed for other key stakeholders.

A. Participants in Senior-Level Workshop to include: President ofEnvironmental Organization; Secretary of Administration; Secretary ofEnvironment; Secretary of Planning; Representatives from Secretary ofFinance; Two Representatives from State Assembly; Governor or Lt.Governor;

B. State entities which are exploring alternative structural forms, such asbecoming foundations, in order to attain more autonomy in recruitment,retention, and remuneration, and in use of financial resources raised throughfines, fees, user charges are likely to need a series of meetings andnegotiations in order to resolve what is to be done, by whom, and when inorder to achieve structural change. For other changes in the standing of theenvironmental agency in state policy determination, or for changes in internalmanagement systems, (e.g. salary systems), subsidiary meetings with differentstakeholders will be necessary.

2. Agreement on Workshop Reprt Recommendations. The report of thesenior leaders workshop should be a succinct statement of recommendations, acalendar of next steps, and a call for next meetings and the nature of theirparticipants in order to further progress on the recommendations.

3. State Environmental Agencies Workshops. Subject of Workshops:Development of mission statement and priorities of the state agency, andessential changes for strengthening internal management systems in order toaddress priorities.

A. A report outlining the implementation strategy must be detailed andspecific in assigning responsibility for agreed upon tasks and next steps.Specific attention must be paid within this strategy on incentives for staff forimprovements in performance, improvements in personnel systems, andspecific steps to strengthen financial management systems within theenvironmental agency;

B. Given the current acceptance that internal management problems,especially in personnel, incentives, and work programming the diagnostic mustthen also: (1) detail the problems in the personnel systems and financialmanagement systems of the state agency. ( In the case of the personnelsystems, special attention should be paid to the incentives for performance,including criteria actually utilized in recruitment, retention, promotion, andremuneration.) (2) specify alterative steps towards improving these factors; and(3) identify what actions can be undertaken, at which level, and by whichoffices, in order to improve these factors. In the case of the financialmanagement systems, special attention should be paid to the possibility forbetter management of current financial resources, improved recordmanagement, and improved accountability. The long run goal of financialsustainability for some activities must be discussed in the course of thisdiagnostic.

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4. Meetings as needed to negotiate recommendarions on organizationalstrengthening (structure, rules, roles in regard to core organizational operation,especially in regard to personnel and financial management) in order to deliverintegrated environmental management.

PRODUCTS

1. Nine Reports on Recommendations from Senior Level Workshops.

2. Subsidiary Reports from Environmental Agency Workshops. These reportswill detail specific changes, agreements reached, steps taken to operationalizeimprovements, and recommendations for next steps in organizationalstrengthening to be undertaken over the remaining life of the project.

3. Qperational Manuals for Strengthening Organizational Operations.

4. Budgets for the Diagnostic Process.

5. Report on Fine Tuning Internal Management Systems. After the internalorganizational changes have been put into operation, a report will be issuedidentifying what fine tuning or adjustments are required to ensure the utility ofthe systems in improving the performance of the organization.

I - ASSESSMENT OF HUMAN RESOURCE NEEDS ANDPREPARATION AND DELIVERY OF TRAINIG PROGRAM FORSTATE ENVIRONMENTAL ENTITIES'

OBJECTIVES

The objectives of the human resource assessment and training programare: (1) to strengthen the potential for decentralized and deconcentratedenvironmental protection, and towards that end, (2) to enhance the capacitiesof Amazonian state environmental entities to undertake more active roles in themaking and implementing of state environmental protection policies.

These terms of reference call for contractors to: (1) execute the humanresource assessment called for under Part 1 of the project; (2) refine theprogram of courses to be offered in light of that assessment; (3) identify thebest sources to develop the course materials; (4) identify and contract for thedelivery of those courses; (5) utilize wherever possible a clustered sub-regionalapproach for their delivery; and (6) implement the training program, deliveringthe courses over the life of the project.

The human resource assessment and training program is to address theneeds of Amazonian OEMAs, planning secretariats, zoning commissions,forestry police, and environmental prosecutors, as well as judges involved inenvironmental litigation. Preliminary data on the OEMAs will be utilized inthe course of this assessment and in preparing the delivery of a substantialtraining program.

' The full text and appended material for these terms of reference areavailable in the project files.

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MAIN ACTIVITIES

1. Refine training needs for participating state entities (OEMA, CEZEE,Forestry Police, Secretariats of Planning, Curadorias, etc..) in the institutionalstrengthening component (Part 1 of the project). The agreed upon program ofcourse offerings is to be revised and completed when undertaling thisassessment.

2. Identify Brazilian and intemational institutes, universities, firns, orfoundations able to provide curriculum materials, expertise, and/or possibletrainers able to provide material relevant to the needs reflected in theassessment, and in the program of course offerings. Wherever possible thesecourses are to be prepared using case material from the region, ensuring thatthe material communicated in the course meets the operational needs of thestaff in attendance.

3. Prepare two courses to be delivered in each of the nine states within theinitial months of the project: Project Preparation and Project Implementation.Participants in these courses will be preparing integrated subprojects underPart 2 of the project, therefore in these courses every effort should be made tomake use of the case material on potential integrated subproject themes andareas. State of the art methodologies for problem identification, and itsdisaggregation into activities which address that problem -- e.g. the logicalframework for project design used by USAID, or the ZOPP technology --should be included in the project preparation course. Methodologies forfacilitating implementation, such as performance indicators, cost spread sheetsand their analysis, and methods for resolving and managing conflict duringimplementation, must be communicated in the course on projectimplementation.

4. Refine the modalities to be used in delivering the training program,detailing how often different courses are to be offered in the regional trainingprogram, and which ones need to be supplemented by study tours or leadershipexchanges, and in rare cases, longer term training.

5. Prepare plan and timetable for actual delivery of the agreed program ofcourse offerings. Identify and prepare logistics for using three differentlocations within the region for offering courses.

6. Design and plan the rotation of courses, specifying which courses are to beoffered, how often, and in which location, specifying how this plan meets theneeds identified in the human resource assessment.

7. Prepare a detailed budget for delivery of the agreed program of courseofferings, indicating counterpart fund needs, as required.

8. Contract with firms, universities, or institutions to prepare the courses,identify instructors, and teach the courses as planned. Contract to have coursematerials translated into Portuguese, as necessary.

9. Prepare an evaluation form to be used in the courses, and a process forlearning from the evaluation process in the Mid-term Review, in order toimprove the delivery of the agreed program.

10. Training program is to include, inter alia, the following courses: ProjectPreparation; Project Implementation; Project Evaluation; EnvironmentalManagement; Management of Financial Resources; Personnel Administration;Management Information Systems; Environmental Legislation; EnvironmentalLaw and Enforcement; Environmental Economics (or Economics of Natural

104

Resources); Analysis of Environmental Policies; Environmental Informationand Roles of Civil Society in Environmental Management; Zoning, Simulationof Alternatives, Public Participation, and the Process of Normatization;Interpretation of Remote Sensing Data; Environmental Assessments andRIMAs; Integrated Environmental Management for Sustainable Development;Licensing; Managing Environmental Laboratories; Stabilizing andRehabilitating Degraded Areas; Evaluating Quality of Natural ResourceManagement.9

PRODUCTS

1. Human Resource Assessment Report. This report is to detail: (a) stafftraining needs for the OEMAs, and for federal entities within the states eligiblefor training due to their expected involvement in the carrying out of integratedsubprojects, and (b) finalization of a program of courses to be offered to meetthose needs. Due June 1995.

2. Report identifying Brazilian and international institutes, universities, firms,or foundations able to provide course material and/or trainers to prepare thecourses for delivery. Due June 1995.

3. Detailed syllabi for courses to be offered on an emergency basis (ProjectPreparation and Project Implementation), a list of possible institutions todeliver these courses, and a timetable and budget for their delivery in eachstate. Due by July 1995.

4. Report with detailed plan for rotation of courses at their subregionallocations (including study tours), timetable by course, and budget for trainingprogram. Due July 1995.

5. A comprehensive and detailed budget for delivery of the agreed activitiesfor each year of the project. Due July 1995.

6. Contract with firms, universities, or institutions to prepare coursematerials, identify and secure instructors, and teach emergency courses(Project Preparation and Project Implementation) in each state. Due July1995.

7. Contract with firms, universities, or institutions to prepare coursematerials, identify and secure instructors, and teach courses in subregionallocations. Due October 1995.

8. Project Preparation and Project Implementation programs to commenceOctober 1995 and other training programs to commence January 1996.

9 Detailed course descriptions, as reviewed by representatives of the statesduring the meetings in September, are available in project files. Lists ofpotential supplying institutions, foundations, universities, or firms are alsoavailable in project files.

;,U)

m - ASSESSMENT OF ENVIRONMENTAL LAWS ANDREG11LATIONS

OBJECTIVES

The general objective of this work is to provide a report which, on a state-by-state basis, will:

(i) confirm the results found in the pre-investment study;(ii) identify priority areas which lack a legal framework;(iii) indicate areas of legal conflict (between federal, state and

municipal legislation);(iv) recommend, through legal drafts and explanatory texts, alternatives

which improve the legal framework;(v) recommend a standard setting process, including priority areas for

standards;(vi) recommend legal instruments that promote financial sustainability

(e.g. environmental funds, fines, fees and taxes);(vii) give special attention to the quality of enforcement, such as with

administrative sanctions (e.g. fines, suspensions, and closures) andmonitoring and control instruments (auditing, reporting, andinspections); and

(viii) provide special attention to developing and/or strengthening thelocal permitting and planning process, including environmentalimpact assessment requirements and guidelines (specific priorityguidelines include deforestation, mitigation measures for degradedland, and exploitation of floodplains (varzeas)).

PROCEDURES FOR THE CONSULTING WORK

The consulting work shall be carried out in close contact with state,federal and municipal agencies as well as with non-governmentalorganizations. Such contact will be in the form of interviews and exchanges ofpreliminary drafts. The consulting shall also be carried out in closecoordination with the COEMAs and GTTP, as the project envisions thecreation of technical chambers for these entities. The GTTP will beresponsible for examining all the state reports in order to verify whether thereare any proposal conflicts among the states, and for increasing the exchange ofideas on the subject of examination. The final report shall be circulatedamong all interested parties mentioned above.

SPECIFIC ACTIVITIES PER STATE

In addition to the items listed in l.a. above, and once the findings fromthe pre-investment study are confirmed, the proposed consulting work shallalso give priority to the already identified work areas. A tentative list of someof these areas is provided below on a state-by-state basis.

a. Acre

Provide a report with recommendations, including a draft of the applicablelegal instrument, on ways to:

(i) regulate the general environmental law;

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(ii) regulate the recovery of degraded areas;(iii) regulate the provision which grants the legislature the power to

approve certain programs and projects;(iv) regulate the adoption of standards, environmental cadastre for

development activities, and annual environmental reports; and(v) regulate the protection of historical and cultural sites.

b. Amapa

Due to the current lack of legal instruments, the first measure should bethe passage of general state environmental law by the local legislature, andthen its regulation. It is recommended that no further advances in this initialstage be made until the basic legal framework is consolidated. Experience inother cases shows that the need for additional legal instruments arises when thebasic legal framework is consolidated.

c. Amazonas

Provide a report with recommendations, including a draft of the applicablelegal instrument, on ways to:

(i) update the land use law;(ii) regulate the polluter-pay principle of the state Constitution;(iii) include as an instrument, and regulate, state protected areas;(iv) regulate the protection of the subsoil; and(v) regulate public participation.

d. Maranhao

Provide a report with recommendations, including a draft of the applicablelegal instrument, on ways to:

(i) complete and update the State Environmental Code and itsregulations;

(ii) draft criteria for the application of fines;(iii) regulate the principle which provides for tax and credit incentives

for those who act in ways that are more favorable to theenvironment;

(iv) draft land-use regulations for soil conservation; and(v) examine and harmonize state and federal forestry laws.

e. Mato Grosso

Provide a report with recommendations, including a draft of the applicablelegal instrument, on ways to:

(i) assist in perfecting and regulating the general environmental lawfor the state;

(ii) legislate the adoption of new technologies and pesticides;(iii) regulate the conservation of the subsoil, underground waters, and

noise pollution; and(iv) regulate liability for environmental damage.

f. Para

Provide a report with recommendations, including a draft of the applicablelegal instrument, on ways to:

(i) assist in perfecting and regulating the general environmental lawfor the state;

10'i

(ii) legislate policies concerning soil conservation, forestry, hunting,fishing, and pollution control; and

(iii) regulate the adoption of an environmental cadastre for developmentactivities.

g. Rond6nia

Provide a report with recommendations, including a draft of the applicablelegal instrument, on ways to:

(i) regulate the general environmental law;(ii) legislate policies concerning forestry, hunting, pollution control,

and historical and cultural sites;(iii) create a framework for public participation.

h. Roraima

Provide a report with recommendations, including a draft of the applicablelegal instrument, on ways to:

(i) assist in perfecting and regulating the general environmental lawfor the state;

(ii) regulate the scope of the state environmental jurisdiction;(iii) legislate policies on water, noise pollution, and soil and subsoil

conservation;(iv) establish a legal framework for public participation; and(v) regulate the protection of historical and cultural sites.

i. Tocantins

Provide a report with recommendations, including a draft of the applicablelegal instrument, on ways to:

(i) re-examine and adjust the decree that regulated the generalenvironmental law;

(ii) provide special attention to the adequate use of legal instrumentsfrom the State of Goias;

(iii) regulate the use and conservation of soils and waters;(iv) regulate the provision of environmental education;(v) re-examine noise pollution regulations; and(vi) regulate the participation of the state in filing environmental law

suits.

t. Q.

BRAZIL

PILOT PROGRAM TO CONSERVE THE BRAZILIAN RAIN FORESTNATURAL RESOURCES POLICY PROJECT

ANNEX 9: REPORTS AND DOCUMENTS IN PROJECT FILES

Documents supporting the project:

I Documento Basico, Subprograma de Polftica de Recursos Naturais, Ministerio doMeio Ambiente e da Amaz6nia Legal, PPG7 (Brasflia, August, 1994);

2. Legislaqao Ambiental, including Relatorio Final, Roberto dos Santos Vieira andYara Maria Gomide Gouvea, August, 1994;

3. Detailed project cost tables per state;

4. Detailed TORs for the studies nos. I and II of Annex 8;

5. Pre-investmnent studies, as follows:

TOR 1: Informacao Basica para o Zoneamento Ecol6gico-Econ6mico -Relat6rio Final e Mapas-indices Temgticos, Engenharia Ambiental, Projetos eServicos, Leonam F. P. Souza, July, 1994 (2 volumes);

TOR 2: Uso e Ocupacao do Solo e Ecologia - Relatorio Final e Mapas-IndicesTematicos, Engenharia Ambiental, Projetos e Servicos, Leonam F. P. Souza,July, 1994 (2 volumes);

TOR 3: S6cio-Economia - Relat6rio Final, IBAMA, IDEAS (Instituto deDesenvolvimento Ambiente e Sociedade), June, 1994;

TOR 4: Situag1o Fundiaria, Secretaria de Assuntos Estrategicos, MAPPAEngenharia e Consultoria Ltda;

TOR 5: Uso de Sensoriamento Remoto e Sistemas de Informag6es GeograficasPara o Programa PPG-7 - Relat6rio Tecnico Final, SAE, IBAMA, ImagemSensoriamento Remoto SIC Ltda (IMAGEM), July, 1994;

TOR 6: Impactos Ambientais de Atividades Economicas, Instituto Sociedade,Populagao e Natureza, July, 1994;

TOR 7: Sistemas de Monitoramento e Vigilancia, Instituto SPN, July, 1994;

TOR 8: Sistemas de Controle e Fiscalizacao, IDEAS, July, 1994.

Documents related to the sector:

1. Diagn6stico dos Orgaos de Meio Ambiente da Amaz6nia Legal, Resultados doSeminario patrocinado pelo PNMA, 1994;

2. Diagn6stico Institucional dos Orgaos Estaduais de Meio Ambiente no Brasil,ABEMA (Associacao Brasileira de Entidades de Meio Ambiente) Report, June1993;

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3. Plano Estrat6gico de Desenvolvimento do Amazonas, PLANAMAZONAS(IDB/SUDAM/Amazonas), 1994;

4. Brazil: The Management of Agriculture, Rural Development and NaturalResources; WB Report No. 11783-BR, July 31, 1994;

5. Brazil: An Analysis of Environmental Problems in the Amazon, WB Report No.9104-BR, May 21, 1992;

6. Brazil: An Analysis of Environmental Problems in the Amazon, Annexes,WB Report No. 9104-BR, July 15, 1992;

7. Brazil: Government and Economy on the Amazon Frontier, WB Report No.12644LAC, December 30, 1993;

8. Institutional Development in the Latin America and Caribbean Region: Lessonsof Experience and Recommendations for Improvement, WB Report No. 7,LATPS, Occasional Papers Series, June 1992.

9. Decentralization of Environmental Policy: Potential for the Brazilian Amazon,David Rosenblatt, June 1994.

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