The World Bank€¦ · Financing (AF) in the amount of US$100 million to the Rural Alliances Project II (Proyecto de Alianzas Rurales II, PAR II, P127743) financed by the International

Document of

The World Bank

FOR OFFICIAL USE ONLY

Report No: PAD2175

PROJECT PAPER

ON A

PROPOSED ADDITIONAL LOAN

IN THE AMOUNT OF US$100 MILLION

TO THE

PLURINATIONAL STATE OF BOLIVIA

FOR THE

RURAL ALLIANCES PROJECT II

April 11, 2017

Agriculture Global Practice Latin America and Caribbean Region

This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.

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CURRENCY EQUIVALENTS (Exchange Rate Effective Nov 8, 2016)

Currency Unit = Bolivianos BS BS 6.86 = US$1

FISCAL YEAR

January 1 – December 31

ABBREVIATIONS AND ACRONYMS

AF BS BMZ CDD

Additional Financing Bolivianos Federal Ministry for Economic Cooperation and Development (Germany) (Bundesministerium für wirtschaftliche Zusammenarbeit und Entwicklung) Community-Driven Development

CPF CUT DA

Country Partnership Framework Treasury’s Single Account (Cuenta Única del Tesoro) Designated Account

EIRR EMPODERAR

Economic Internal Rate of Return Self-managed Productive Initiative for Rural Development (Emprendimientos Organizados para el Desarrollo Rural Autogestionario)

ENPV ESMF

Economic Net Present Value Environmental and Social Management Framework

EX-ACT FM

Ex-Ante Carbon-Balance Tool Financial Management

FIRR FNPV FPS

Financial Internal Rate of Return Financial Net Present Value Productive and Social Investment Fund (Fondo de Inversión Productiva y Social)

GHG Greenhouse Gas GoB GRS HA

Government of the Plurinational State of Bolivia Grievance Redress Service Hectare

IBRD IDA IFR INDC

International Bank for Reconstruction and Development International Development Association Interim Financial Report Intended Nationally Determined Contribution

IPPF IRI IRR ISDS ISR KfW KPI

Indigenous Peoples’ Planning Framework Intermediate Result Indicator Internal Rate of Return Integrated Safeguards Data Sheet Implementation Status and Results Report Kreditanstalt für Wiederaufbau Key Project Indicator

MDRyT Ministry of Rural Development and Land (Ministerio de Desarrollo Rural y Tierras)

M&E Monitoring and Evaluation NCU OP PAD

National Coordination Unit Operational Policy Project Appraisal Document

iii

PAR PDES PDO PICAR

Rural Alliances Project (Proyecto de Alianzas Rurales) Economic and Social Development Plan (Plan de Desarrollo Económico y Social) Project Development Objective Community Investment in Rural Areas Project

PIU PP

Project Implementation Unit (EMPODERAR) Procurement Plan

PPSD RF

Project Procurement Strategy for Development Results Framework

ROU RPF

Regional Operating Unit of EMPODERAR Resettlement Policy Framework

SA SAP SAS SBD

Social Assessment System of Project Administration (Sistema de Administración de Proyectos) System of Subprojects Administration (Sistema de Administración de Subproyectos) Standard Bidding Document

SDR SICOES

Special Drawing Rights Online National System for Public Procurement (Sistema de Contrataciones Estatales)

SIGMA Integrated Management and Administrative Modernization System (Sistema Integrado de Gerencia y Modernización Administrativa)

SIGG SMF

Geo-referenced Management Information System (Sistema de Información Gerencial Georeferenciada) Social Management Framework

SNIP SPO STEP

National System of Public Investment (Sistema Nacional de Inversión Pública) Small Producer Organization Systematic Tracking of Exchanges in Procurement

TCO TIOC

Native Community Land (Tierra Comunitaria de Origen) Indigenous Native Peasant Territory (Territorio Indígena Originario Campesino)

U.S. VBP WBG XDR

United States Gross Value of Production (Valor Bruto de la Producción) World Bank Group Currency code Special Drawing Rights

Vice President: Jorge Familiar Country Director: Alberto Rodriguez

Senior Global Practice Director: Acting Practice Manager:

Juergen Voegele Garry Charlier

Task Team Leader: Luz Diaz Rios

iv

BOLIVIA RURAL ALLIANCES PROJECT II

ADDITIONAL FINANCING

TABLE OF CONTENTS

Project Paper Data Sheet .................................................................................................................... v

Project Paper ...................................................................................................................................... 1

I. Introduction ................................................................................................................................ 1

II. Background and Rationale for Additional Financing ................................................................. 1

III. Proposed Changes....................................................................................................................... 4

IV. Appraisal Summary .................................................................................................................. 11

V. World Bank Grievance Redress ............................................................................................... 15

Appendices

Appendix A: Results Framework and Monitoring and Evaluation ................................................. 16

Appendix B: Revised Estimate of Project Costs and Absorptive Capacity ..................................... 39

Appendix C: Revised Project Coverage and Beneficiary Selection ................................................ 47

Appendix D: Revised Project Description and Components ........................................................... 49

Appendix E: Changes in Implementation Arrangements ................................................................ 55

Appendix F: Changes in Project Procurement ................................................................................ 59

Appendix G: Economic and Financial Analysis .............................................................................. 65

Appendix H: Greenhouse Gas Accounting ...................................................................................... 81

Appendix I: Key Documents in the Project Files ............................................................................ 83

Appendix J: Map .............................................................................................................................. 84

v

ADDITIONAL FINANCING DATA SHEET Bolivia

Additional Financing for Rural Alliances Project II (P158532)

LATIN AMERICA AND CARIBBEAN

Agriculture Global Practice

Basic Information – Parent

Parent Project ID: P127743 Original EA Category: B - Partial Assessment

Current Closing Date: 30-Nov-2017

Basic Information – Additional Financing (AF)

Project ID: P158532 Additional Financing Type (from AUS):

Scale Up

Regional Vice President: Jorge Familiar Proposed EA Category: B

Country Director: Alberto Rodriguez Expected Effectiveness Date: 01-Dec-2017

Senior Global Practice Director:

Juergen Voegele Expected Closing Date: 30-Nov-2021

Acting Practice Manager/Manager:

Garry Charlier Report No: PAD2175

Team Leader(s): Luz Diaz Rios

Borrower

Organization Name Contact Title Telephone Email

Plurinational State of Bolivia Mariana Prado Minister of Development Planning

591-2-2310774 [email protected]

Project Financing Data - Parent (Rural Alliances Project II-P127743) (in USD Million)

Key Dates

Project Ln/Cr/TF Status Approval Date

Signing Date Effectiveness Date

Original Closing Date

Revised Closing Date

P127743 IDA-51700 Effective 23-Oct-2012 12-Dec-2012 09-May-2013 30-Nov-2017 30-Nov-2017

Disbursements

Project Ln/Cr/TF Status Currency Original Revised Cancelled Disbursed

Undisbursed

% Disbursed

P127743 IDA-51700 Effective XDR 32.90 32.90 0.00 28.22 4.68 85.76

Project Financing Data - Additional Financing BO Rural Alliances Project II (P158532) (in USD Million)

vi

[X] Loan [ ] Grant [ ] IDA Grant

[ ] Credit [ ] Guarantee [ ] Other

Total Project Cost: 130.6 Total Bank Financing: 100.00

Financing Gap: 0.00

Financing Source – Additional Financing (AF) Amount

Borrower 0.00

International Bank for Reconstruction and Development 100.00

Local Farmer Organizations 30.6

Financing Gap 0.00

Total 130.6

Policy Waivers

Does the Project depart from the CAS in content or in other significant respects? No

Does the Project require any policy waiver(s)? No

Team Composition

Bank Staff

Name Role Title Specialization Unit

Luz Diaz Rios Team Leader (ADM Responsible)

Senior Agribusiness Specialist

Agribusiness Specialist

GFA04

Jose Yukio Rasmussen Kuroiwa

Procurement Specialist

Senior Procurement Specialist


GGO04

Lucas Carrer Financial Management Specialist

Financial Management Specialist

Financial Management Specialist

GGO22

Alexandre Borges de Oliveira

Team Member Lead Procurement Specialist


GGO04

Angela Maria Caballero Espinoza

Safeguards Specialist

Social Development Specialist

Social Specialist GSU04

Carla Jerez Abascal Team Member Team Assistant Team Assistance LCCBO

Elena Segura Labadia Counsel Senior Counsel Legal Specialist LEGLE

Francisco Obreque Arqueros

Team Member Agricultural Specialist Agriculture Specialist GFA04

Jorge Trevino Team Member Senior Water Resources Spec.

Water Specialist GWA04

Juan Carlos Enriquez Uria

Safeguards Specialist

Senior Environmental Specialist

Environmental Specialist

GEN04

Juan Carlos Martell Rivera

Team Member Senior Procurement Specialist


GGO04

vii

Julio Sanjines Gonzales Team Member Senior Procurement Specialist


GGO04

Maria Virginia Hormazabal

Team Member Finance Officer Finance Specialist WFALA

Mario I. Mendez Team Member Program Assistant Team Assistance GFA04

Patricia Gutierrez Team Member Team Assistant Team Assistance LCCBO

Extended Team

Name Title Location

Dennis Escudero M&E Specialist Lima, Peru

Maria del Mar Polo Agricultural Economist Rome, Italy

Locations

Country First Administrative Division

Location Planned Actual Comments

Bolivia Tarija Department of Tarija X X

Bolivia Santa Cruz Department of Santa Cruz

X X

Bolivia Potosi Department of Potosi X X

Bolivia Pando Department of Pando X

Bolivia Oruro Department of Oruro X

Bolivia La Paz Department of La Paz X X

Bolivia Cochabamba Department of Cochabamba

X X

Bolivia Chuquisaca Department of Chuquisaca

X X

Bolivia El Beni Department of El Beni X X

Institutional Data

Parent (Rural Alliances Project II-P127743)

Practice Area (Lead)

Agriculture

Contributing Practice Areas

Additional Financing BO Rural Alliances Project II (P158532)

Practice Area (Lead)

Agriculture

Contributing Practice Areas

Climate Change, Water

Consultants (Will be disclosed in the Monthly Operational Summary)

Consultants Required: Consultants will be required

1

BOLIVIA – Additional Financing for Rural Alliances Project II (P158532) I. Introduction

1. This Project Paper seeks the approval of the Executive Directors to: (i) provide an Additional Financing (AF) in the amount of US$100 million to the Rural Alliances Project II (Proyecto de Alianzas Rurales II, PAR II, P127743) financed by the International Development Association (IDA), Credit 51700-BO; and (ii) undertake a Level 1 Restructuring to allow for the application of new safeguard policies OP/BP 4.37 Safety of Dams and OP/BP 7.50 Projects on International Waterways.

2. The AF aims to scale up activities to enhance the impact of a Project that has proven effective in improving rural income and reducing poverty in Bolivia. The AF will enable the Project to reach an additional 27,825 rural households, largely indigenous, via support to approximately 768 new productive alliances. By financing public infrastructure subprojects (municipal subprojects), it will also reach about 5,460 direct beneficiaries (households) representing approximately 21,840 people. As in the parent Project, the AF will continue promoting strong engagement by women, who are expected to represent at least 30 percent the total beneficiaries of AF alliance investments.

3. The AF will maintain the parent Project’s range of activities and investments via productive alliances; however, it will adopt a more strategic focus on climate resilience aspects, particularly targeting irrigation and water use efficiency. This will be done by: (i) opening a ‘resilience window’ to receive calls for proposals that support climate-resilience investments, which will cover about 75 percent of the Project funds allocated to support alliances; (ii) adjusting the grant ceiling per beneficiary for adopting climate-related practices; and (iii) providing specialized technical assistance on irrigation, water use efficiency and climate-smart practices as integral parts of participants’ business plans. The funds allocated to alliances will not only serve to improve access to markets, as PAR has done over the last ten years, but also to strengthen climate-resilient production systems. To complement on-farm investments, the Project will continue co-financing public infrastructure subprojects (municipal subprojects). It is estimated that about 48 infrastructure subprojects will be financed in the AF phase, with about two-thirds of the subprojects aiming to improve the efficiency of agriculture water supplies and distribution.

4. Other changes to the parent Project to be introduced by a Level 1 Restructuring include: (i) adjusting the Project’s Results Framework to reflect enhanced investments in climate resilience; (ii) updating safeguard requirements as a result of triggering two additional safeguard policies: OP/BP 7.50 Projects on International Waterways and OP/BP 4.37 Safety of Dams; and (iii) revising institutional arrangements for municipal subprojects (Subcomponent 2.b.).

II. Background and Rationale for Additional Financing 5. Bolivia’s recent economic growth ranks among Latin America’s highest and has helped to lower the country’s poverty rate from 59 percent in 2005 to 39 percent in 2015. But weak global economic growth and climate-related shocks challenge Bolivia’s ability to continue reducing poverty and inequality. Like other countries in the region, Bolivia relies heavily on natural resource extraction, but global economic factors, including low commodity prices, are making it difficult for the country to sustain the levels of investment that characterized previous years.

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6. Damaging weather events, such as floods in 2013 and a severe drought in 2016, have also taken a toll on Bolivia’s economy. The 2016 drought affected approximately 177,000 families. In late 2016, the Government declared a national state of emergency due to water shortages in large swaths of the country, including seven out of the 11 major cities where water rationing was being strictly enforced. The combined impact of El Niño weather cycle, poor water management and climate change have been implicated as major factors leading to the drought. The agriculture sector is highly vulnerable, with about 624,000 hectares (ha) of agricultural land and 566,000 head of cattle threatened by the current drought. Agricultural losses were concentrated in the Santa Cruz Department (lowlands), while more than one-half of the losses in livestock occurred in the Oruro Department (highlands).

7. Beyond the current crisis and the need for urgent assistance, the mid- and long- term scenarios for agriculture in Bolivia look uncertain. In some areas of the country, drought conditions are likely to be more frequent, more intense and longer lasting. In addition, crop yields in several regions are projected to decrease as a consequence of higher temperatures. Reducing agriculture’s vulnerability to climate change is an imperative in Bolivia to ensure food security and to harness the economic potential of the agriculture sector. With the proposed AF, PAR II will mainstream resilience aspects in the investments supported by the Project, with a strong emphasis on irrigation and water use efficiency, as part of Government efforts to mitigate the effects of a harsher climate, and as a forward-looking strategy to boost farmer preparedness.

8. The AF is consistent with the Government of the Plurinational State of Bolivia (GoB) and World Bank Group (WBG) development agendas for 2016-2020, which prioritize promoting inclusive economic growth, reducing poverty and inequality, and building capacity to cope with climate change. The AF of the PAR II will contribute to reaching the targets set forth in the Economic and Social Development Plan (PDES), particularly under Pillar 1, Result 2 (Reducing Moderate Poverty), and under Pillar 6 (Sovereignty with productive Diversification). It is important to note that as part of its Intended Nationally Determined Contribution (INDC), the GoB has committed to triple the irrigation area and double food production under irrigation by 2020; with the proposed AF, PAR II will contribute to these objectives. Furthermore, the AF is aligned with the World Bank Group Country Partnership Framework (CPF) for the Plurinational State of Bolivia FY16-FY20 (Report #100985), discussed by Executive Directors on November 4, 2015, by supporting Pillar 1 (Promoting Broad-Based and Inclusive Growth), particularly Objective 3 (Improving Opportunities for Income Generation, Market Access, and Sustainable Intensification); and Pillar 2 (Supporting Environmental and Fiscal Sustainability and Resilience to Climate Change and Economic Shocks).

9. The World Bank has been a strategic partner of the GoB in its efforts to reduce rural poverty and create opportunities for rural households via the Rural Alliances Projects I and II. In the first phase of the Project (P083051), implemented between 2006 and 2011, the GoB invested US$64.8 million, benefiting more than 28,500 rural households via 768 alliances. The recently implemented impact evaluation of PAR I revealed that the Project was highly pro-poor and inclusive, and it significantly improved agricultural income at the household level (an increase of 63 percent on average), with the farmers in the poorest quintile benefiting the most from these income gains. Women represented 30 percent of total direct Project beneficiaries.

10. With the ongoing PAR II (P127743), it is expected to finance a total of 522 productive alliances, directly benefiting more than 18,600 poor rural households from 120 selected municipalities. PAR II was approved on October 23, 2012 by the Board of Executive Directors, with an IDA Credit in the amount of SDR 32.9 million (equivalent to US$50 million at the time of

3

approval). The Project became effective on May 9, 2013, and is scheduled to close on November 30, 2017. PAR II is expected to meet the targets set for its Key Project Indicators (KPI) by the closing date. By March 2017, the Project Development Objective (PDO) indicator reporting increased sales for 188 alliance plans reaching completion had attained a level of 35 percent, lower than the target value of 50 percent; the low achievement level reflected the impact of adverse weather events, but also adjustments made to the methodology applied for aggregating sales data. In addition, exchange rate fluctuations between the SDR relative to the US$1, which adversely affected the actual amount of the Credit in US$, and increased costs of inputs and materials, caused a financial gap, and gave rise to the need to revise the original target values for some Intermediate Results Indicators (IRI). The number of model 1 alliances2 financed by PAR II has, therefore, been reduced from 645 to 522, and the number of municipal subprojects has been reduced from 26 to 14 (the revised figures are presented in Appendix A).

11. As of January 2017, the IDA Credit 51700-BO had disbursed SDR 28.2 million (85.7 percent of the total Credit amount). PAR II has sustained a steady implementation and disbursement pace, and all Credit proceeds supporting transfers to producers have been fully committed. The Project has consistently been rated Satisfactory with respect to its progress towards the achievement of the PDO and Implementation Progress. The Project has complied with all legal covenants. Financial Management performance has consistently been rated Satisfactory. All audits and financial reports have been submitted on time, with no qualifications. Procurement was downgraded from Satisfactory to Moderately Satisfactory during two consecutive Implementation Status and Results Reports (ISR). An in-depth Procurement Review took place in May 2016, as a result the Procurement rating was upgraded to Satisfactory in July 2016. Safeguard Compliance has been consistently rated as Satisfactory.

12. The AF will continue supporting the pro-growth and pro-poverty alleviation agenda of the GoB and will put greater emphasis on enhancing resilience to climate change. The high climate vulnerability of Bolivia’s agriculture sector is partly due to the fact that a large proportion of agriculture is rain-fed. Only 11 percent of the cultivated land is under irrigation, and in many irrigated areas low water efficiencies prevail. About 5.7 percent of investments made under PAR II, via productive alliances, have supported irrigation modernization aligned with higher water efficiency. Those funds have allowed small producer organizations (SPO) to install irrigation equipment or replace key parts such as sprinklers, and build small tanks and pipes. The AF will target these investments more strategically by providing technological packages that dramatically improve water use efficiency and by increasing the grant ceiling per beneficiary to make the technological upgrade more affordable. Through collaboration with other important actors, such as the Vice-Ministry for Water Resources and Irrigation, municipalities, and irrigation associations, the Project will reach the areas with greatest potential. The AF will also support complementary climate resilient investments. At AF appraisal, it was estimated that about 75 percent of the financing for productive alliances and about two-thirds of the financing for municipal subprojects will generate climate co-benefits, thus, in aggregate terms, about 60 percent of the AF funds are expected to generate climate change co-benefits.

1 At the time of Board approval, the IDA Credit 51700-BO was equivalent to US$50 million. By October 2016 the US$ equivalent amount was US$45.5 million. 2 Model 1 alliances represent the majority of PAR II investments and support access to technologies and productive assets by small producer organizations. Alliances models 2 and 3 are of a minor scope, provide basic services, and have been formulated on a pilot basis.

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III. Proposed Changes

Summary of Proposed Changes

The AF proposed activities and scope will consolidate and scale-up PAR II interventions, operational approach and procedures. The proposed changes include: i) Revisiting the Project’s Results Framework and Monitoring Indicators Matrix to: (a) reflect the renewed strategic focus on climate resilience aspects via irrigation and water use efficiency investments and the adoption of climate-smart practices and technologies; (b) align it with World Bank guidance on core indicators; (c) account for the new targets associated with the AF funds and revise targets for the parent Project; and (d) eliminate redundant or input-related indicators, and clarity on indicators’ scope/measurement; (ii) Expanding the Project’s geographic area from 120 municipalities to all 339 municipalities of the country (see Appendix C on Revised Project Coverage and Beneficiary Selection); iii) Financing approximately 768 new alliances. The Project envisions that approximately 75 percent of the monetary transfers to producers via alliances will be aligned with on-farm irrigation and water use efficiency investments, as well as support to the adoption of other climate-smart practices; iv) Financing about 48 municipal subprojects, with two-thirds of the investments supporting irrigation improvements; v) Triggering of two additional safeguard policies: Projects on International Waterways (OP/BP 7.50), and Safety of Dams (OP/BP 4.37); vi) Adjusting institutional arrangements to add fiduciary responsibilities to the Productive and Social Investment Fund (Fondo de Inversión Productiva y Social, FPS) in the implementation of Subcomponent 2.b. (municipal subprojects); vii) Reallocating Credit proceeds of the parent Project, mainly from the unallocated category to the alliance and municipal subprojects category to deal with the financial gap that resulted from exchange rate fluctuations between SDR and US dollars; and viii) Introducing minor changes to the components to reflect the emphasis of the AF on climate resilience.

Change in Implementing Agency Yes [ ] No [ X ]

Change in Project's Development Objectives Yes [ ] No [ X ]

Change in Results Framework Yes [ X ] No [ ]

Change in Safeguard Policies Triggered Yes [ X ] No [ ]

Change of EA Category Yes [ ] No [ X ]

Other Changes to Safeguards Yes [ ] No [ X ]

Change in Legal Covenants Yes [ ] No [ X ]

Change in Loan Closing Date(s) Yes [ ] No [ X ]

Cancellations Proposed Yes [ ] No [ X ]

Change in Disbursement Arrangements Yes [ ] No [ X ]

Reallocation between Disbursement Categories Yes [ X ] No [ ]

Change in Disbursement Estimates Yes [ ] No [ X ]

Change to Components and Cost Yes [ X ] No [ ]

Change in Institutional Arrangements Yes [ X ] No [ ]

5

Change in Financial Management Yes [ X ] No [ ]

Change in Procurement Yes [ X ] No [ ]

Change in Implementation Schedule Yes [ ] No [ X ]

Other Change(s) Yes [ ] No [ X ]

Development Objective and Results PHHHDO

Project’s Development Objectives

Original PDO: The Project’s objective is to improve accessibility to markets for small rural producers in the Selected Areas by: (a) promoting productive alliances between different small rural producer organizations and purchasers; (b) empowering rural producers through the establishment and strengthening of self-managed grass-root organizations; (c) increasing access to productive assets, technology and financial services; (d) promoting more effective, responsive and accountable service organizations at the local level; and (e) enhancing environmental sustainability of productive practices.

Change in Project's Development Objectives PHHCPDO

N/A

Change in Results Framework PHHCRF

The Results Framework (RF) and Monitoring Indicators Matrix is revised to: (a) reflect the renewed strategic focus on resilience aspects, particularly on irrigation and water use efficiency investments; (b) align it with World Bank guidance on core indicators; (c) account for the new targets associated with the AF funds and revise targets for the parent Project; and (d) eliminate redundant or input-related indicators, and provide clarity on indicators’ scope/measurement. Changes to the RF matrix include: (i) PDO Indicators: - Adding an indicator at PDO level to reflect increased focus on disseminating of improved technologies/practices (particularly those aiming at reducing climate vulnerability), as key to enhancing market access; - Removing a redundant indicator (Producer organizations that register income and costs, and are accountable to their members); and - Adding a core indicator at the PDO level on the aggregated number of beneficiaries, with disaggregation of direct beneficiaries (with gender disaggregation), and indirect beneficiaries. (ii) Intermediate Results Indicators: - Deleting four output-related indicators (because they are not outcome-oriented); - Adding five indicators to reflect effective implementation of business plans; capacity strengthening to service providers; improved irrigation; improved management information system, and collaborative partnerships in the implementation; - Adding two supplementary indicators to address more explicitly opportunities for citizen engagement and beneficiary feedback; and - Adjusting three indicators to provide further clarity on their scope/measurement. (iii) Updating target values for indicators of the parent Project: - Reducing the target value for the sales indicator (PDO indicator) from 50% to 35%; and - Reducing the target value for intermediate indicators to reflect the reduction in target values as result of decreased available resources due to exchange rate fluctuations between the SDR and US dollar.

Refer to Appendix A: Revised Results Framework and Monitoring Indicators.

Compliance

Change in Safeguard Policies Triggered PHHCSPT

6

Safety of Dams (OP/BP 4.37) is triggered due to the renewed emphasis on supporting investments in irrigation and water use efficiency, which could potentially rely on the storage capacity and efficient operation of existing dams and reservoirs for water supply. An Environmental Management Framework (EMF) was prepared under the parent Project. The Revised EMF for the AF includes all the needed measures to comply with OP/BP 4.37 Safety of Dams. The EMF was disclosed in-country and on the World Bank’s website.

Projects on International Waterways (OP/BP 7.50) is triggered because of the renewed emphasis on supporting irrigation and water use efficiency investments. The Bank approved an exception to riparian notification on the basis that irrigation sector investments via alliance and municipal subprojects will be of limited local scale (on small parcels and small-scale off-farm infrastructure), and focused on the rehabilitation and modernization of existing irrigation systems. In the AF phase, irrigation investments will focus on achieving higher water use efficiencies of the schemes and promoting better water management, while preserving the soil, increasing productivity, and protecting the environment. Under no circumstance will a subproject exceed the original scheme, change its nature, or alter or expand its scope and extent to make it appear a new or different scheme. Consequently, the proposed activities are not likely to adversely affect the quantity or quality of the water flowing to downstream riparians, and the Project will not affect other riparians’ water use.

Current and Proposed Safeguard Policies Triggered: Current (from Current Parent ISDS)

Proposed (from Additional Financing ISDS)

Environmental Assessment (OP) (BP 4.01) Yes Yes

Natural Habitats (OP) (BP 4.04) Yes Yes

Forests (OP) (BP 4.36) Yes Yes

Pest Management (OP 4.09) Yes Yes

Physical Cultural Resources (OP) (BP 4.11) Yes Yes

Indigenous Peoples (OP) (BP 4.10) Yes Yes

Involuntary Resettlement (OP) (BP 4.12) Yes Yes

Safety of Dams (OP) (BP 4.37) No Yes

Projects on International Waterways (OP) (BP 7.50) No Yes

Projects in Disputed Areas (OP) (BP 7.60) No No

Conditions

Source Of Fund Name Type

IBRD Operational Manual Effectiveness

Description of Condition

The Operational Manual has been updated and duly adopted by the Borrower and FPS in a manner acceptable to the World Bank.

Source Of Fund Name Type

IBRD FPS Subsidiary Agreement and FPS Agreement

Effectiveness

Description of Condition

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(i) The FPS Subsidiary Agreement has been signed on behalf of the Borrower and FPS; and (ii) the FPS Agreement has been signed on behalf of the Borrower, through MDRyT (through EMPODERAR), and FPS.

Risk

Risk Category Rating (H, S, M, L)

1. Political and Governance Moderate

2. Macroeconomic Moderate

3. Sector Strategies and Policies Moderate

4. Technical Design of Project or Program Substantial

5. Institutional Capacity for Implementation and Sustainability Substantial

6. Fiduciary Substantial

7. Environment and Social Moderate

8. Stakeholders Low

OVERALL Substantial

Finance

Loan Closing Date - Additional Financing Rural Alliances Project II (P158532)

Source of Funds Proposed Additional Financing Loan Closing Date

International Bank for Reconstruction and Development 30-Nov-2021

Allocations - Additional Financing Rural Alliances Project II (P158532)

Source of Fund

Currency Category of Expenditure Allocation

Disbursement % (Type Total)

Proposed (in Millions) Proposed

IBRD US$ (1) Goods, consulting services, Operating Costs and Training under Part 1 of the Project

5.03 100.00

IBRD US$

(2) (a) Works, goods, non-consulting services and consulting services under Subprojects under Parts 2 (a) and (b) of the Project

79.28 100.00

IBRD US$

(b) Consulting services (including financial audits) under Part 2 (c) of the Project and FPS Operating Costs

3.94 100.00

IBRD US$

(3) Goods, consulting services, non-consulting services, Training and Operating Costs under Part 3 of the Project, and the Project financial audits (but excluding Part 2 (c)(ii) of the Project)

11.50 100.00

8

IBRD US$ Front-end Fee 0.25 100.00

Total: 100.00

Reallocation between Disbursement Categories parent Project

The unexpected decrease in the available US$ equivalent amount of the parent Project due to exchange rate fluctuations between SDR and US$ (the US$ equivalent amount of the Credit decreased from US$50 million at the time of Board approval to US$45.5 million by October 2016), and the increased costs of inputs and materials, resulted in a financial gap in the parent Project. US$2.8 million under the unallocated category are reallocated to finance alliance and municipal subprojects, among other minor reallocations.

Parallel Financing. Parallel financing in the amount of €20 million is to be provided by the German Government/BMZ (Federal Ministry for Economic Cooperation and Development) and implemented by the Kreditanstalt für Wiederaufbau (KfW) to the Emprendimientos Organizados para el Desarrollo Rural Autogestionario (EMPODERAR). This will constitute a separate project complementing PAR II investments in four departments (Cochabamba, Tarija, Santa Cruz, and Chuquisaca). Both institutions have been working jointly with EMPODERAR to harmonize scope and procedures, to the extent possible, to facilitate their implementation, ensure complementarity, and share operational costs.

Ln/Cr/TF Currency Current Category of

Expenditure Allocation

Disbursement % (Type Total)

Current Proposed Current Proposed

IDA-51700 XDR Goods, consultants’ services, Operating Costs and Training- Part 1

2,400,000 2,026,300 100.00 100.00

IDA-51700

XDR

Works, goods, consultants’ services, non-consulting services under Subprojects under Parts 2a and 2b

20,900,000 23,630,000 100.00 100.00

IDA-51700 Consultants’ services under Part 2c (i) and FPS Operating Costs

1,200,000 931,000 100.00 100.00

IDA-51700

Goods, consultants' services (including audits), Training and Operating Costs under Part 3 of the Project

5,600,000 6,312,700 100.00 100.00

IDA-51700 Unallocated 2,800,000 -

Total: 32,900,000 32,900,000

Components

Change to Components and Cost

The AF will maintain the original three components: (1) Institutional Strengthening; (2) Implementation of Rural Alliances; and (3) Project Management, Monitoring and Evaluation. The overall nature of the activities under the three components will not change. In the AF phase, however, Components 1 and 2 will be strengthened by deepened support for productive improvements, leading to more resilient and sustainable production systems via irrigation and water use efficiency investments and the promotion of climate-smart practices. Major AF investments within these three components include:

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Component 1: Institutional Strengthening (Total: US$7.83 million; US$2.8 million equivalent IDA 51700-BO; US$5.03 million IBRD AF). Activities under this component will remain highly focused on the preparation and implementation of calls for proposals. Investments under the AF will strengthen activities aimed at enhancing the capacity of SPOs. Furthermore, in the AF phase, the scope of the capacity strengthening activities to service providers will be expanded to cover technical skills to ensure that service provision to SPOs is up-to-date in terms of available technologies. Training of service providers in modern irrigation techniques and climate-smart practices will receive special attention. Given the relevance of the irrigation and water use efficiency investments, the Project will specifically strengthen the capacity of SPOs to incorporate resilient aspects in their business plans. A special resilience window for the submission of business plans proposals incorporating investments in irrigation and water use efficiency will be opened (in alignment with the targeted call for proposals).

Component 2: Implementation of Rural Alliances (Total: US$117.2 million; US$34 million equivalent IDA 51700-BO; US$83.2 million IBRD AF). The component will remain focused on supporting alliance proposals and public infrastructure subprojects (municipal subprojects). The component will finance about 768 new productive alliances with an estimated investment of US$65.5 million. The Project envisions that approximately 75 percent of total Project investments in alliances will be aligned with on-farm irrigation and water use efficiency projects, such as individual and/or collective small water store (ponds); on-farm investments to modernize irrigation techniques (drip, sprinkler or modern gravity techniques); as well as the adoption of other climate-smart practices. The AF will apply differentiated requirements for counterpart funds from the SPO, and differentiated investments ceilings per beneficiary in alignment with the typology of investment and SPO financial capabilities (see Appendices C and D). The component will also finance about 48 small public infrastructure works (municipal subprojects), with a total estimated investment of US$13.7 million. It is expected that two-thirds of municipal subproject investments will finance complementary works aimed at improving off-farm irrigation and water use efficiency. The projected investment grant ceiling for each public subproject is estimated at US$500,000. The prioritization of irrigation investments under the AF will be aligned mainly with opportunities to complement off-farm irrigation investments already made by the Vice Ministry of Water Resources and Irrigation. About US$3.9 million will support activities under Subcomponent 2.c., as defined in the parent Project (including the financial audits for the municipal subprojects). Component 2 is expected to provide climate change co-benefits by supporting the modernization of irrigation systems and the achievement of higher water use efficiency, as well as the adoption of climate-smart practices, to enable the adaptation of agriculture production methods to the changes in the environment caused by climate change.3

Component 3: Project Management, Monitoring and Evaluation (Total: US$20.2 million; US$8.7 million equivalent IDA 51700-BO; US$11.5 million IBRD AF). This component will support the incremental costs associated with Project administration and monitoring, such as the adjustments required to the Georeferenced Management Information System (SIGG, for its acronym in Spanish), and the public information system, including the costs associated with their operation; baseline information collection; and the Project’s impact evaluation. It will also support studies and consultations needed to inform and support Project activities (e.g. market-related studies; sectorial studies). Refer to Appendix D: Revised Project Description and Components. Changes in component costs appear below, reflecting AF resources and the proposed reallocation of the parent Project’s Credit proceeds between categories.

Current Component Name

Proposed Component Name Current Cost

(US$M)

Proposed Cost

(US$M) Action

3 Although the Project remains demand-driven, the AF attempts to shape such demand, by including mechanisms and incentives to support irrigation modernization and the adoption of climate-smart practices. Therefore, it is estimated that about 75 percent of the financing for alliance subprojects and about a two-thirds of financing for municipal subprojects will generate climate change co-benefits.

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Institutional Strengthening Institutional Strengthening 2.8 7.83 Revised

Implementation of Rural Alliances

Implementation of Rural Alliances

34 117.22 Revised

Project Management, Monitoring and Evaluation


8.70 20.20 Revised

Front-end Fee 0.25

Total: 45.5 145.50

Other Change(s)

Change in Institutional Arrangements

To streamline the implementation of AF Subcomponent 2.b. (municipal subprojects), the institutional arrangements will be adjusted by delegating the administration of financing resources aligned with Subcomponent 2.b. activities to the FPS. Under the original design, EMPODERAR performs most of the activities for Subcomponent 2.b., such as: defining the municipal subprojects pipeline, funding the preparation of feasibility studies, and paying contractors. Meanwhile, the FPS is responsible only for appraising the municipal subprojects and procuring and overseeing (from a technical and safeguard perspective) the civil works. The proposal to assign fiduciary responsibilities to the FPS in the implementation of Subcomponent 2.b. activities derives from recent changes in public procurement rules, which are hindering the implementation of municipal subprojects. These include:

- Cumbersome registration procedures. Currently, the process for budget registration associated with municipal subprojects, comprising both the counterpart funds provided by municipal governments and the grants provided by the Project, is taking considerably more time than estimated at the time of Project preparation because the financial resources have to be formally registered by three different entities (MDRyT, EMPODERAR and the specific municipality). - New requirements for registering procurement processes. Furthermore, the online national System for Public Procurement (Sistema de Contrataciones Estatales, SICOES) authorizes the uploading of bidding documents only when the budget for the respective contract is already registered under the same agency that procures the bid.

This process counteracts the current Project institutional arrangements for Subcomponent 2.b., since all resources of PAR II are registered under the official budget of MDRyT and EMPODERAR, including those for public works, in spite of the fact that FPS is responsible for managing bidding processes for municipal subprojects. Therefore, to allow for the proper implementation of the original PAR II, FPS has to request a waiver to continue handling bids in SICOES, resulting in additional delays. These changes in the Bolivian public administration have become the norm and are not likely to be reversed in the mid-term.

To reverse these unforeseen obstacles that have emerged during implementation, EMPODERAR will transfer to FPS the responsibility for managing the financing resources for Subcomponent 2.b., including the payment of contractors that perform the civil works. This will allow FPS to register the budget for subprojects and manage the procurement in a more straightforward manner. It is important to note that, other than this change, the same distribution of roles and responsibilities will be maintained in the AF as in the parent Project. To reflect the new fiduciary responsibilities, the Borrower will establish an agreement with the FPS under terms and conditions acceptable to the World Bank. Further information is provided in Appendix E.

Changes in Financial Management

The change in the institutional arrangements for the implementation of Subcomponent 2.b make necessary the following adjustments in the flow of funds and Financial Management arrangements: (i) FPS will manage a separate designated account in U.S. dollars for the portion of the loan allocated to the subcomponent; and (ii)

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FPS will undertake responsibility for Financial Management tasks, including the preparation and submission of interim financial reports (IFR) and audited financial statements for the respective sections of the Project.

FPS has a long track record of working with the World Bank and other donors on similar types of subprojects. It is a well-established entity that has put in place acceptable Financial Management arrangements which, with minor adjustments to accommodate its interaction with EMPODERAR and the municipal governments, can adequately support Project implementation under the proposed institutional arrangements for Subcomponent 2.b. activities. Further information is provided in Appendix E.

Changes in Procurement

PAR II AF will procure goods, works and services in accordance with the World Bank's Procurement Regulations for Borrowers: Procurement in Investment Project Financing, July 2016, and the provisions stipulated in the Loan Agreement. The application of the New Procurement Framework for this Project will not require major changes in procedures and it is not expected to experience delays due to the new regulations; most of the procurement arrangements will remain the same. An in-depth assessment of the procurement capacity of EMPODERAR and FPS was carried during Project preparation and no major risks were identified.

EMPODERAR will start using the Systematic Tracking of Exchanges in Procurement (STEP). The fiduciary staff have been trained. EMPODERAR is expected to maintain the trained personnel, carry out best practice procurement planning and monitoring and control systems, and maintain the capacity to meet the World Bank’s procurement contract reporting requirements. The World Bank's work in Bolivia includes a comprehensive procurement training program for existing and new lending operations involving close monitoring and support from the World Bank. The Project Procurement Strategy for Development (PPSD) has been prepared (a summary is presented in Appendix F). The Procurement Plan for the first 24 months has also been prepared. The procurement audit will cover verification of both quality and quantity of works, goods and services procured. Further information is provided in Appendix F.

IV. Appraisal Summary

Appraisal Summary

Economic and Financial Analysis PHHASEFA

Through PAR II investments, SPO are empowered to implement demand-driven partnerships (alliances) with the commercial private sector. The Project essentially facilitates the establishment of these partnerships, the preparation of business plans and their co-financing, and monitors progress and results; it also enhances municipal infrastructure aimed at supporting the productive goals of the rural alliances. Anticipated benefits to SPO members include increases in net income, primarily due to increases in production and/or productivity (yield), cultivated area, volume of marketed product, and/or in product quality (unit price), as well as to improved linkages to markets.

The Economic and Financial Analysis (EFA) for the Project has been updated to include activities to be financed by the AF. For the purposes of the analysis, representative models of 33 alliance subprojects were selected. They represent the prevalent/dominant subsectors and value chains supported by PAR II. The analysis considers that about 75 percent of the investments under alliances will support upgrades related to irrigation and water use efficiency. The analysis indicates that the expected economic returns are highly positive and that the results are robust in the face of risks. The overall financial (FIRR) and economic (EIRR) internal rates of return of the analyzed direct investments in the AF phase are 29 percent and 42 percent, respectively. This is lower than the calculations made for the parent Project, mainly due to more realistic assumptions about the effect of the investments on the different productive systems analyzed. The overall returns calculated for the Project are conservative, as they do not account for the Project’s indirect benefits, such as increased well-being

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of beneficiary communities as a result of more food availability, and the establishment of sustainable business relationships between producers, buyers, municipalities, etc. If all other direct costs (e.g. model 2 and 3 alliances and technical assistance subprojects) and indirect costs (e.g. alliance preparation and technical assistance for alliances implementation) are included, the FIRR and EIRR decline to 25 and 37 percent, respectively. Considering Component 3 (Project Management and Monitoring and Evaluation), the FIRR and EIRR drop to 22 and 32 percent. Despite this decline, FIRR and EIRR are still well above the opportunity cost of capital. In the last scenario, a 20 percent reduction of net incremental income was calculated to test the robustness of the results against adverse technical, climate, or market related events. As a result, the FIRR decreases to 17 percent and the FNPV is reduced to US$20.46 million, and the Project continues to be profitable. Based on the results of the EFA, PAR II AF is economically and financially feasible. Further information on the ex-ante economic and financial analysis is provided in Appendix G.

Technical Analysis

As in the parent Project, a key technical consideration during the AF refers to quality issues in the design of producer organization subprojects, as well as their implementation. EMPODERAR already has a list of approximately 420 consultants that provide services to alliances subprojects during the preparation of business proposals and their implementation. Activities have been included in the current AF design to expand the list of service providers and to provide training, particularly in the new areas to be covered following the Project’s geographical expansion. Furthermore, the AF will particularly target training activities aimed at strengthening the capacity of service providers on issues related to irrigation modernization and climate-smart practices. PAR II applied a very detailed process for the technical and financial assessment of business proposals, which is aimed at ensuring sound investments. This will be maintained in the AF phase, but adjustments will be made to reduce the complexity of the evaluation process and align it with the Project’s renewed emphasis on resilience aspects. The implementation of municipal subprojects has been delayed in part due to complex implementation arrangements, which are addressed in the AF phase by providing FPS with fiduciary responsibilities in the implementation of the Project, including procurement activities, budget registration and payments to contractors.

Social Analysis PHHASSA

PAR II has an overall Satisfactory track record with respect to the implementation of social safeguard policies, including supporting and supervising implementation by SPO and technical service providers. The social safeguards instruments revised by the Borrower and approved by the World Bank for the AF phase include: the Complementary Social Assessment (SA), the revised Social Management Framework (SMF), and the revised Resettlement Policy Framework (RPF).

Complementary Social Assessment (SA). The Borrower conducted a complementary SA for the extended Project area, which was divided into six ecoregions:4 Amazonia, Yungas, Altiplano, Valles, Oriente and Chaco. The SA analyzed the particular social, cultural, and productive features in each of these regions, with emphasis on the TCO/TIOCs5 and their regulations. The social instruments that were part of the original SA in the parent Project, such as those for detecting potential social dynamics that might affect the subproject, were revised to account for the new Project area. In terms of social risk, the SA has identified potential risks to local groups. Issues such as the possible increase in inequality if minority indigenous groups are excluded from the Project because of their particular conditions are discussed in detail in the Project documentation. The revised SMF

4 An eco region is a geographic area with ecologic, environmental, sociocultural and economic production similarities. 5 The Political Constitution developed the concept of TIOC (Territorio Indígena Originario Campesino) to be the legal condition of titled indigenous territories. The Constitution states that the category of TCO (Tierra Comunitaria de Origen) will be subjected to an administrative procedure conversion to be changed to TIOC. Supreme Decree No. 727 provides that existing TCOs be legally known as TIOC.

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includes measures and instruments for reducing or mitigating these risks by considering particularities of each region and cultural issues related to the indigenous minorities inside them.

Indigenous Peoples. Most potential beneficiaries identify themselves as indigenous (58 percent of the population).6 For this reason, as in the parent Project, PAR II AF will operate as an Indigenous People Project (IPP) in compliance with the OP/BP 4.10. Despite confirming the adequacy of the risk mitigation approach adopted in PAR II, the complementary SA flagged the risk of possible exclusion of minority indigenous groups from the Amazon, Chaco, Oriente and Yungas eco regions due to the informal status of many producer groups in these areas and the lack of capacity and/or willingness of these groups to co-finance productive subprojects. To minimize this risk, during the calls for proposals, the EMPODERAR will strengthen the process of information collection and consultation with indigenous minorities, particularly with those groups that are not fully integrated into the market society. Furthermore, the AF has included differential financial counterpart requirements for vulnerable groups to provide greater opportunities for these groups to benefit from the Project.

Resettlement Policy Framework (RPF). As in the parent Project, the Involuntary Resettlement Policy (OP/BP 4.12) will continue to be triggered in the AF because of the possibility of minor physical impacts on land and assets in complementary municipal infrastructure investments (Subcomponent 2.b.). This possibility is considered remote; during the last ten years of PAR implementation (PAR I and PAR II combined), the policy has never been activated. EMPODERAR has updated the Resettlement Policy Framework (RPF) to reflect the new Project area, and to address comments provided by the World Bank on the RPF approved under the parent Project.

Gender issues. The complementary SA concluded that there are multiple factors that undermine women’s engagement in productive activities and that young women are the most affected, with few economic and educational opportunities in the six eco-regions. To address these issues, the Project will continue promoting women’s participation and empowerment by, among others, facilitating women’s access to and engagement in training and decision-making in the subprojects. The Project will pay special attention to traditional and extant gender roles in production to avoid any negative impact derived from the interference or disruption of social and productive traditional networks. EMPODERAR will make extra efforts to hire more female technical staff for training, technical assistance and technology transfer.

Children. The complementary SA estimated that the Project should continue to positively impact households, since higher economic incomes are likely to improve the quality of life and expand educational opportunities. The risk of Project activities causing possible negative indirect effects on children who might be required to help with family production in the alliance subprojects at the expense of attending school, was not identified during the SA, but it cannot be disregarded. Therefore, during the AF implementation, to better understand the scope of this risk and minimize its impacts, EMPODERAR will particularly encourage the beneficiaries to send their children to school, and it will monitor school dropout rates. In beneficiary records collected by the Project, families will be requested to indicate whether or not they have school-age children; if so, the Project will request the families to document that children are attending classes and/or engaged in school.

Grievance Redress Mechanism (GRM). EMPODERAR will expand the scope of the existing GRM nationwide and ensure its functionality for any beneficiary during Project implementation. EMPODERAR will also sustain and improve the communication channels developed in the parent Project, including by carrying out beneficiary surveys, to ensure a high level of transparency with all stakeholders. This will help manage expectations, address potential conflicts and reduce social risks. The public information system will be finalized under the parent Project and will become fully operational during the AF phase.

Consultations and disclosure: The SA included a systematic consultation process. For each stakeholder group, consultations assessed characteristics, interests and stakes in the Project, level and type of influence, consultation and participation framework, concerns, likely Project impacts, as well as barriers, risks, and risk mitigation measures. Six consultation workshops and various group interviews, involving a total of 496

6 Sistema de Información Gerencial Georeferenciada SIGG. PAR II, 2016.

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participants, were held in six regions between August and September 2016. The social safeguards instruments prepared by the Borrower (SA, SMF, and RPF) and approved by the Work Bank were publicly disclosed in-country and the World Bank’s external website on December 14, 2016.

Environmental Analysis

PAR II has had a Satisfactory track record overall in implementing Environmental Safeguards policies and supporting and supervising their implementation by SPO and technical service providers. In fact, the Project has progressed from using a “do not harm approach” to promotion of good practices, such as manure management, which enhance the positive environmental outcomes of the Project.

The Environmental Assessment Category remains as B. The safeguards policies triggered by the parent Project remain active: Environmental Assessment (OP/BP 4.01); Natural Habitats (OP/BP 4.04); Forests (OP/BP 4.36); and Pest Management (OP/BP 4.09). Two additional environmental safeguards policies are triggered: Projects on International Waterways (OP/BP 7.50) and Safety of Dams (OP/BP 4.37). An updated EA for the Project has been undertaken by the Borrower that includes the six eco regions (Amazonia, Yungas, Altiplano, Valles, Oriente and Chaco).

The Environmental Management Framework (EMF) of the Project has been updated to account for the geographic expansion of the Project and accommodate the renewed emphasis of the Project on irrigation activities (on- and off-farm). The EMF has enriched the environmental baseline of the Project and identified potential sites for subprojects. Moreover, the EMF assessed the potential socio-environmental impacts of the AF and defined mitigation measures for impacts to flora, fauna, soil, societies, etc. The EMF defines all necessary requirements to comply with Safety of Dams (OP/BP 4.37) and the Bolivian regulatory framework, including requirements for dam assessment and mitigation measures following the guides and recommendations of the National Inventory of Dams of the Ministry of Environment and Water. This Inventory classifies the state of the country's dams, among others, by their current operational and safety status. For the dams to be linked to Project investments, the Project, with the support of qualified engineers, will carry out on-site assessment of the dams in operation to certify that they comply with the conditions of operation, maintenance and safety identified in the National Inventory. It is important to note that extensive stakeholder consultations took place during Project preparation, and consultations will continue through implementation. Under PAR II a detailed integrated pest management manual was prepared, that has been updated to cover new crops in the expanded areas of the Project’s AF. The EMF also introduces the prohibition of pesticide use and management by minors. The Environmental Safeguard instruments were prepared by the Borrower and approved by the Bank, and publicly disclosed in-country and the World Bank’s external website on December 14, 2016.

Risk

The overall risk of the AF is updated to Substantial following the assignment of higher risk ratings to two risk categories: Project Technical Design, and Institutional Capacity for Implementation and Sustainability.

Project Technical Design: The risk rating is upgraded from Low to Substantial to reflect the renewed focus on irrigation and water use efficiency investments. The Project’s implementation approach remains focused on supporting alliance investments by SPO and complementary infrastructure investments. These are areas in which EMPODERAR has gained considerable experience through the implementation of PAR I and PARI II. However, the increased emphasis in the AF phase on irrigation and water use efficiency will require strengthening technical capacities at all levels (by the PIU, the regional project offices, and service providers); more importantly, it will require significant efforts to consolidate a sizable demand for irrigation investments, which are costly. It is expected that the specific mechanisms created under the AF to stimulate such demand will translate into a significant response by SPO. However, to manage the risk of a low demand response, at the end of the first call for proposals carried out in the AF phase, the Borrower and the World Bank will assess

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the demand response for irrigation and water use efficiency investments, and they will identify adjustments that might be required in light of such response.

Institutional Capacity for Implementation and Sustainability: The risk rating is upgraded from Moderate to Substantial to reflect the large size of the AF investment, the focus on irrigation investments, as well as parallel financing of €20 million to be provided by BMZ to the EMPODERAR. The BMZ loan will complement PAR II AF investments. These combined investments will almost triple the investments made under the parent Project and therefore might pose absorptive capacity risk, particularly in relation to implementation quality. EMPODERAR will build on and strengthen existing institutional capabilities. The agency has gained solid implementation experience through PAR I and II, and it has been successfully coordinating implementation activities under Subcomponent 2.b. with the FPS. This level of coordination is expected to continue in the AF phase. EMPODERAR has also gained substantial experience in financial management and procurement at both Project and SPO levels over the past decade. The FPS, meanwhile, has been a co-implementing agency for several World Bank-financed projects in Bolivia, demonstrating appropriate implementation capacity. In the AF phase, EMPODERAR will establish four additional and properly staffed regional units, two of which will result from the upgrading of existing sub-regional units. EMPODERAR will also train technical consultants to help with the preparation of subprojects in addition to the 420 consultants that are already part of EMPODERAR’s pool. An important focus of the training will be on technical and financial aspects related to irrigation and water use efficiency-related investments. EMPODERAR will achieve further administrative efficiencies by simplifying administrative and technical procedures, particularly for the financial and technical evaluation of business plan proposals, which involve some complex and cumbersome steps. Qualified technical staff at the PIU and regional levels will be hired to support the Project’s emphasis on resilience aspects.

Fiduciary Risk remains Substantial given the high risk country procurement environment and the nature of the decentralized implementation approach, which involves a large number of SPOs with limited knowledge and experience in Bank procurement regulations and procedures. PAR II has included a set of mechanisms that have proven effective in managing these risks, such as: deposits can be made only to authorized subproject accounts; subproject funding is disbursed in tranches; tracking systems include fiduciary alerts; and mechanisms are in place ensuring social control for subprojects. At the EMPODERAR level, procurement audits have been implemented and will be continued under the AF, as per request of the Borrower. The establishment and operation of an online public information system will ensure that key Project information is publicly disclosed, helping to ensure transparency and accountability.

Macroeconomic Risk is upgraded from Low to Moderate to reflect the current country macroeconomic conditions.

V. World Bank Grievance Redress 13. Communities and individuals who believe that they are adversely affected by a World Bank supported project may submit complaints to existing project-level grievance redress mechanisms or the World Bank’s Grievance Redress Service (GRS). The GRS ensures that complaints received are promptly reviewed in order to address project-related concerns. Project-affected communities and individuals may submit their complaints to the World Bank’s independent Inspection Panel, which determines whether harm occurred, or could occur, as a result of non-compliance with World Bank policies and procedures. Complaints may be submitted at any time after concerns have been brought directly to the World Bank's attention and World Bank Management has been given an opportunity to respond. For information on how to submit complaints to the World Bank’s corporate GRS, please visit http://www.worldbank.org/GRS. For information on how to submit complaints to the World Bank Inspection Panel, please visit www.inspectionpanel.org.

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Appendix A: Results Framework and Monitoring and Evaluation BOLIVIA – Additional Financing for Rural Alliances Project II (P158532)

Adjusted Indicators 1. Table A.1 below compares the indicators of the current Results Framework with those proposed under the AF. Table A.2 presents the adjusted Results Framework for the whole Project, while Table A3 presents the definition of indicators for the AF phase. Table A.4 presents the revised Results Framework for the parent Project.

Table A.1. Proposed Changes in the Indicators

7 Under the scope of the PAR II AF the term ‘rural’ excludes urban centers such as capitals of departments or cities with population equal or higher than 50,000 inhabitants.

Original PAR II Proposed PAR II AF Justification for the Change/Comment

Project Development Objective (PDO) The objective of the Project is to improve accessibility to markets for small rural producers in the selected areas by: (a) promoting productive alliances between different small rural producer organizations and purchasers; (b) empowering rural producers through the establishment and strengthening of self-managed grass-root organizations; (c) increasing access to productive assets, technology and financial services; (d) promoting more effective, responsive and accountable service organizations at the local level; and (e) enhancing environmental sustainability of productive practices.

No change Although the PDO remains unchanged, the definition of “Selected Areas” is revised in the AF to support rural beneficiaries not only in the 120 municipalities selected in the parent Project, but also in all the 339 municipalities of the country.7

PDO Indicators

Indicator 1 Increase in the average volume of sales of the product(s) involved in the alliances.

No change

Indicator 2 Producer organizations that register income and costs, and are accountable to their members.

Dropped This indicator is redundant, as it is linked to (i) indicator 2.3: producer organizations that obtain positive net incremental real income from alliance product(s), which requires a reporting of income and costs; and (ii) indicator 2.4: producer organizations whose leaders are periodically accountable to their members, which deals with issues of accountability.

Indicator 3 becomes Indicator 2 Producer organizations that maintain or improve their commercial relations

No change

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(alliances) for at least two productive cycles. Indicator 3 Added

Producer organizations members that apply improved technologies/practices as defined in the business plans.

This indicator is added to reflect a renewed emphasis on improved technologies/practices (particularly those with a focus on climate resilience).

Indicator 4 Added Direct Project beneficiaries

This indicator is included because it is a “Core Indicator.” PAR II Results Framework presents, at the intermediate level, the number of beneficiaries disaggregated by direct transfers (Indicator 2.2), and by municipal subprojects (Indicator 2.6), but it does not present the aggregate number of beneficiaries.

4.1. Direct beneficiary producers from SPOs (disaggregated by men and women)

This indicator was originally included as an intermediary indicator 2.2, and registers the number of direct small rural producers (households) of SPOs that benefit from the Project.

4.2. Beneficiaries of public investment subprojects (there is no disaggregation).

This indicator is included to register the number of small rural producers that benefit from public investment subprojects. It was originally included as intermediary indicator 2.6.

Intermediate Results Indicators

Component 1. Institutional Strengthening

1.1 Producer organizations that receive assistance to be formalized.

No change

1.2 Alliances with signed financing agreement for integral support.

Reworded Alliances with signed financial agreement for Project support.

This indicator combines 1.2, 1.3 and 1.4.

1.3 Alliances with signed financing agreement for technical assistance

Dropped

1.4 Public investment subprojects with signed financing agreement.

Dropped The indicator is dropped because it is a process-related indicator with outcomes reflected in the Indicator 2.5. Executed public investment subprojects.

1.5 Organization members that receive managerial training.

Reworded SPOs that receive training and support for organization strengthening.

The indicator is reworded to reflect both training and broad support provided by the Project to strengthen SPOs. 1.5.1 Women who receive managerial

training.

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Added. Service Providers to SPOs that benefit from capacity building to improve their knowledge (disaggregated by men and women)

The PAD of PAR II includes activities to strengthen capacities of service providers (facilitators, “acompañantes,” and technical assistance advisors); however, it was not registered in the Results Framework. In the AF, these activities will be reinforced.

Component 2. Implementation of Rural Alliances

Added Percentage of Business Plans of supported alliances that are duly implemented.

Added to reflect the correct execution of the business plans.

2.1 Supported alliances that fulfill their commercial aims in the framework of agreed arrangements.

No change

2.2 Household from alliances that receive financing support.

Moved to PDO

2.2.1 SPO households represented by women who receive financing support.

2.3 Producer organizations that obtain positive net incremental real income from alliance product(s).

No change

2.4 Producer organizations whose leaders are periodically accountable to their members.

No change

2.5 Executed public investment subprojects.

No change

2.6 Households that benefit from public investment subprojects.

Moved to PDO

2.7 Alliances that apply environmental measures satisfactorily.

No change

Added Area provided with improved irrigation.

Added to reflect the Project’s investments in irrigation modernization.

Component 3. Project Management, Monitoring and Evaluation

3.1 Level of Financial execution of the Project's Annual Operational Plan (OAP).

Dropped Indicator dropped because it is an output indicator.

3.2 Producer organization subprojects without delays in the verification of expenses.

Dropped Indicator dropped because it is output indicator.

Added Management Georeferenced Information System improved and operating (To become Indicator 3.1).

Indicator added to emphasize the need to strengthen Project management through systems that incorporate the new information technologies.

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Monitoring and Evaluation 2. PAR-EMPODERAR employs a consolidated Monitoring & Evaluation (M&E) System that incorporates lessons learned during the implementation process of PAR I and PAR II. This system includes all procedures, tools and organizational structures used to generate, manage and report technical, administrative and financial information pertaining to the execution of the Project at the national, regional and local levels.

3. The M&E system is based on a comprehensive Georeferenced Management Information System (Sistema de Información Gerencial Georeferenciada, SIGG), which is a multi-level, multi-user computing platform accessible through a website, and which permits internal and external users to generate reports in real time. This software is used to plan, monitor, control implementation during the cycles of alliances, as well as to report indicators of inputs, outputs and outcome of each subproject, as well as indicators of the Project’s results framework. Information is inserted into the SIGG as activities are carried out by project personnel and consultants, and verified first by the Regional Operating Unit (ROU) and finally by the National Coordinating Unit (NCU) of EMPODERAR in order to ensure the quality of data registered in this system.

4. Activity and indicator reports are linked to administrative processing and even to payments for ROU personnel and consultants who provide implementation and monitoring support (facilitadores and acompañantes). The SIGG is thus also linked to the financial management and reporting system. The SIGG includes a set of process indicators at the component level, which have been agreed to by the World Bank and which permit real-time monitoring of advances in implementation and the ability to take corrective action. Productive, economic and financial indicators for each subproject

3.3 Project's Public Information System installed and operating.

Adjusted (become indicator 3.2). Indicator targets presented as text (yes/no) is changed to percentage.

The system is not yet operational. In the AF phase, the system will be in place and operating providing information about the alliance cycle and interaction with the public.

Added Supplemental 3.2.1. Grievances responded within the stipulated service standards for response times.

A supplemental indicator is added to demonstrate citizen engagement through records of responses and feedback.

Added Supplemental 3.2.2 Percentage of members of beneficiary SPOs that expressed satisfaction with the support provided by the Project, via alliances.

A supplemental indicator is added to consolidate beneficiary satisfaction.

Added. Collaborative/strategic partnerships with public and private institutions established. (To become Indicator 3.3).

This indicator reflects the Project’s establishment of strategic institutional partnerships.

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can be registered and reported though the system periodically and with consideration for the farming cycle.

5. A mid-term review will be conducted by the end of the second year of Project implementation to evaluate progress. The review’s recommendations will be considered to undertake any necessary adjustments. A final evaluation of the Project’s overall performance will be carried out at the end of the Project.

6. An impact evaluation will be carried out using the same econometric methodology applied to PAR I and PAR II. This will involve the use of a quasi-experimental methodology, such as propensity score matching, to determine the impact of the PAR II AF on the beneficiaries. This analysis will focus on measuring and comparing high-level indicators, such as household income and poverty rate, in the control groups and the beneficiary groups. In accordance with the GoB, other high level indicators will be considered in this analysis.

21

Table A.2: Adjusted Results Framework

Project Name:

Additional Financing for BO Rural Alliances Project II (P158532)

Project Stage:

Additional Financing Status:

Team Leader(s):

Luz Diaz Rios Requesting Unit:

LCC6C Created by: Luz Diaz Rios 12-Oct-2016

Product Line:

IBRD/IDA Responsible Unit:

GFA04 Modified by: Luz Diaz Rios 05-March-2017

Country: Bolivia Approval FY: 2017

Region: LATIN AMERICA AND CARIBBEAN

Lending Instrument:

Investment Project Financing

Parent Project ID:

P127743 Parent Project Name:

Rural Alliances Project II (P127743)

.

Project Development Objectives

Original Project Development Objective - Parent:

The Project’s objective is to improve accessibility to markets for small rural producers in the Selected Areas by: (a) promoting productive alliances between different small rural producer organizations and purchasers; (b) empowering rural producers through the establishment and strengthening of self-managed grass-root organizations; (c) increasing access to productive assets, technology and financial services; (d) promoting more effective, responsive and accountable service organizations at the local level; and (e) enhancing environmental sustainability of productive practices.

Results

Core sector indicators are considered: Yes Results reporting level: Project Level .

Project Development Objective Indicators

Status Indicator Name Core Unit of Measure Baseline Actual

(Current) End Target

Revised Increase in the average volume of sales of the product(s) involved in

Percentage Value 0 35 35

Date 15-Jan-2013 30-Nov-2016 30-Nov-2021

22

the alliances Comment This value is based on the analysis of 104 business plans that have completed implementation.

The final target has been reduced to reflect improved methods for calculating aggregated sales as well as climate variability.

Marked for Deletion

Producer organizations that register income and costs, and are accountable to their members


Date 15-Jan-2013 30-Nov-2016

Comment

Revised Producer organizations that maintain or improve their commercial relations (alliances) for at least two productive cycles


Date 15-Jan-2013 30-Nov-2016 30-Nov-2021

Comment

New Members of beneficiary SPOs that apply improved technologies/practices as defined in the business plans.

Percentage Value 0 70

Date 30-Nov-2016 30-Nov-2021

Comment

New

Direct Project beneficiaries (beneficiary households of the alliances)

Number Value 0 18,609 46,434

Date 15-Jan-2013 30-Nov-2016 30-Nov-2021

Comment

Female beneficiaries (receiving financial support)


Date 15-Jan-2013 30-Nov-2016 30-Nov-2021

Comment

23

New Beneficiaries of public investment subprojects (there is no disaggregation) (households)

Number Sub-Type Supplemental

Value 0 4,900 10,360

Date 15-Jan-2013 30-Nov-2016 30-Nov-2021

Comment


Status Indicator Name Core Unit of Measure Baseline Actual

(Current) End Target

Revised 1.1 Producer organizations that receive assistance to be formalized

Number

Value 0 796 1,150

Date 15-Jan-2013 30-Nov-2016 30-Nov-2021

Comment

Revised 1.2 Alliances with signed financial agreement for Project support

Number Value 0 522 1200

Date 15-Jan-2013 30-Nov-2016 30-Nov-2021

Comment

Revised 1.3 SPOs that receive training and support for organization strengthening

Number Value 0 522 1,290

Date 15-Jan-2013 30-Nov-2016 30-Nov-2021

Comment

New 1.4 Service providers to SPOs that benefit of capacity building to improve their knowledge

Number Value 0 514

Date 30-Nov-2016 30-Nov-2021

Comment

Female beneficiary of capacity building activities


Date 30-Nov-2016 30-Nov-2021

Comment

Marked for Deletion

Organization members that receive managerial training

Number Value 0 3,155

Date 15-Jan-2013 30-Nov-2016

Comment

24

Women who receive managerial training

Percentage Sub Type Supplemental

Value 0 34

Date 15-Jan-2013 30-Nov-2016

Comment

Marked for deletion

Household from alliances that receive financing support


Date 15-Jan-2013 30-Nov-2016

Comment

SPO households represented by women who receive financing support


Date 15-Jan-2013 30-Nov-2016

Comment

New 2.1 Business Plans of supported alliances that are duly implemented


Date 30-Nov-2016 30-Nov-2021

Comment

Revised 2.2 Supported alliances that fulfill their commercial aims in the framework of agreed arrangements


Date 15-Jan-2013 30-Nov-2016 30-Nov-2021

Comment

Revised 2.3 Producer organizations that obtain positive net incremental real income from alliance product(s)


Date 15-Jan-2013 30-Nov-2016 30-Nov-2021

Comment

Revised 2.4 Producer organizations whose leaders are periodically accountable to their members


Date 15-Jan-2013 30-Nov-2016 30-Nov-2021

Comment

Revised 2.5 Executed public investment subprojects

Number Value 0 14 62

Date 15-Jan-2013 30-Nov-2016 30-Nov-2021

25

Comment

Revised 2.6 Alliances that apply environmental measures satisfactorily


Date 15-Jan-2013 30-Nov-2016 30-Nov-2021

Comment

Marked for deletion

Households that benefit from public investment subprojects

Number Value 0 4,900

Date 15-Jan-2013 30-Nov-2016

Comment

New 2.7 Area provided with improved irrigation investments

Hectare (ha) Value 0 15,960

Date 30-Nov-2016 30-Nov-2021

Comment

New 3.1 Management Geo-referencing Information System improved and operating


Date 30-Nov-2016 30-Nov-2021

Comment

Marked for deletion

3.1 Level of Financial execution of the Project's Annual Operational Plan (OAP)


Date 15-Jan-2013 30-Nov-2016

Comment

Marked for deletion

Producer Organization Subprojects without delays in the verification of expenses


Date 15-Jan-2013 30-Nov-2016

Comment

Revised 3.2 Project's public information system installed and operating


Date 15-Jan-2013 30-Nov-2016 30-Nov-2021

Comment

New 3.2.1. Grievances responded within the stipulated service standards for response times

Percentage Sub Type

Value 0 80

Date 30-Nov-2016 30-Nov-2021

26

Supplemental Comment Citizen engagement

indicator

New 3.2.2 Members of beneficiary SPOs that expressed satisfaction with the support provided by the Project, via alliances

Percentage Sub Type Supplemental

Value 0 70

Date 30-Nov-2016 30-Nov-2021

Comment

New 3.3 Collaborative/strategic partnerships with public and private institutions established

Number Value 0 94

Date 30-Nov-2016 30-Nov-2021

Comment

27

Table A.3: Results Framework and Monitoring and Evaluation (PAR II AF) Proposed Project’s Development Objective - Additional Financing (AF): to improve accessibility to markets for small rural producers in the Selected Areas by: (a) promoting productive alliances between different small rural producer organizations and purchasers; (b) empowering rural producers through the establishment and strengthening of self-managed grass-root organizations; (c) increasing access to productive assets, technology and financial services; (d) promoting more effective, responsive and accountable service organizations at the local level; and (e) enhancing environmental sustainability of productive practices.

#

Indicators

Unit of measure

Core

Baseline

PAR II AF Frequency Data Source

Responsibility for data

collection

Description (indicator

definition, formula) Year 1 Year 2 Year 3 Year 4 PDO Indicators

R1

Increase in the average volume of sales of the product(s) involved in the alliances

Percentage 0 0 20 30 35 Annual

M&E System - Individual and aggregated Information of SPOs

UOD- M&E Unit

This indicator is calculated by subtracting the annual volume of sales of the product obtained by the SPOs in a situation with project minus the total volume of sales of the product obtained by the SPOs in a situation without a project. The result is divided by the total volume of sales of the product that the SPOs obtain in situation without a project. This value is multiplied by 100 to find the incremental value. The final target has been calculated considering the information of 104 business plans that completed implementation, and by considering the perspectives of parties involved in Bolivia’s agriculture

28

sector that are suffering and may cope serious problems of productivity as result of the climate change.

R2

Producer organizations that maintain or improve their commercial relations (alliances) for at least two productive cycles



UOD- M&E Unit

This indicator is calculated by counting the total number of SPOs of the alliance model 1 that maintain or improve their commercial relationship (with commercial partners or buyers) for at least two productive cycles, divided by the total number of SPOs financed by the Project. This value is multiplied by 100.

R3

Members of beneficiary SPOs that apply improved technologies/practices as defined in the business plans.



UOD- M&E Unit

The focus here is on climate resilience practices/technologies. This indicator is calculated by counting the total number of direct beneficiaries that apply improved technologies and/or practices (e.g. efficient water use and management; soil conservation & management; crop and livestock management, etc.). The calculation methodology is developed taking a simple random

29

sample of beneficiaries of the business plans and counting how many producers apply at least one improved practice or technology. Then, the total of producers that apply such practices/measures is divided by the total number of producers benefiting from the business plans. This ratio is multiplied by 100.

R4 Direct producer beneficiaries from SPOs

Number x 0 4,555 14,070 25,305 27,825 Annual


UOD- M&E Unit

This indicator is calculated by multiplying the average number of households for each SPO (35 for alliances of the model 1, 2, 3); and 140 for regional TA subprojects

Female beneficiaries

Percentage x 0 30 30 30 30 Annual


UOD- M&E Unit

R4.1

Beneficiaries of public investment subprojects (there is no disaggregation)

Number x 0 1,313 2,626 4,126 5,460 Annual


UOD- M&E Unit

This indicator is calculated by multiplying the average number of households benefiting from each public investment subproject (350 for local roads and

30

bridges and 80 for irrigation) for the number of public investment subprojects (6 bridges/roads subprojects and 42 irrigation subprojects).

Intermediate Results Indicators Component 1. Institutional Strengthening

1.1

Producer organizations that receive assistance to be formalized

Number 0 69 188 319 354 Annual

Official document of legal status of SPOs signed by the regional governments

UOD- M&E Unit

This indicator is calculated by counting the number of the producer organizations that receive direct technical support to be formalized/legalized in order to participate in the alliance models.

1.2

Alliances with signed financial agreement for Project support

Number 0 129 354 615 678 Biannual

Financing agreements signed with producer organizations

UOD- M&E Unit

This indicator is calculated by counting the number of the SPOs of the model 1 alliances (678), that concrete an agreement in order to be supported.

1.3

SPOs that receive training and support for organization strengthening


Training programs in organizational capacities

UOD- M&E Unit

This indicator is calculated by assuming that 100% of the SPOs supported by the project (model 1, 2 and 3; and TA subprojects) receive training and technical support in order to

31

consolidate their organizations.

1.4

Service Providers to SPOs that benefit from capacity building to improve their knowledge


Directory of service providers (facilitator agents and technical assistants)

UOD- M&E Unit

This indicator is calculated by assuming that 886 business plans will be formulated. It is assumed that a service provider will prepare on average 2.5 plans (354 service providers for the formulation process). Each service provider will monitor 6 alliances of the model 1, 2 and 3; and regional TA subprojects

Female beneficiaries

Percentage 0 30 30 30 30 Biannual

Directory of service providers (facilitator agents and technical assistants)

UOD- M&E Unit

Component 2. Implementation of Rural Alliances

2.1

Business Plans of supported alliances that are duly implemented.


Documents of alliance plans that complete the investment and business phases

UOD- M&E Unit

This indicator is calculated by counting the number of model 1 alliances financed by the Project that satisfactorily complete the investment and business cycle, divided by the total number of model 1 alliances financed by the Project (678). This value is multiplied by 100.

32

2.2

Supported alliances that fulfill their commercial aims in the framework of agreed arrangements

Number 0 110 301 523 576 Annual

Register of achieved results in the stage of operation of the business and completion of the alliances

UOD- M&E Unit

This indicator is calculated by assuming that at least 85% of the model 1 alliances realized their business transactions (purchase and sale) with their commercial partners in accordance with the established agreement.

2.3

Producer organizations that obtain positive net incremental real income from alliance product (s)



UOD- M&E Unit

This indicator is calculated by subtracting the Net Income (Total Income – Total Cost) that SPOs annually obtains in a with-project situation less the Net Income (Total Income – Total Cost) versus the in the without-project situation. Then, the number of the SPOs that obtain a positive Net Income (Net Income (with project) – Net Income (without project)) is calculated and divided by the total number of SPOs, multiplied by 100. In order to report the value in real terms, the price is fixed for a base year.

33

2.4

Producer organizations whose leaders are periodically accountable to their members

Percentage 0 20 50 70 80 Biannual


UOD- M&E Unit

This indicator is calculated assuming that at least 80% of the SPO’s leaders are periodically accountable to their members.

2.5 Executed public investment subprojects

Number 0 0 2 27 48 Annual

Official documents of the delivery of public infrastructure

UOD- M&E Unit

This indicator is calculated by counting the number of different types of public investment subprojects implemented by the Project.

2.6

Alliances that apply environmental measures satisfactorily


Monitoring reports in the operation phase of the alliances

UOD- M&E Unit

This indicator is calculated by assuming that at least 80% of the SPOs that are required to apply environmental measures as per their business plans, apply them properly.

2.7 Area provided with improved irrigation

Hectares x 0 0 3185 8715 15960 Biannual

Monitoring reports of the beneficiaries and crop area under irrigation incorporated

UOD- M&E Unit

This indicator is calculated by counting the improved crop area under irrigation that is incorporated with the direct support of the Project (SPOs model 1).

Component 3. Project Management, Monitoring and Evaluation

3.1

Management Geo-referencing Information System improved and operating

Percentage 0 100 100 100 100 Biannual M&E System (website)

UOD- M&E Unit

This indicator will be reported by evaluating the level of development and functioning of the computing platform

34

modules (online and offline modules)

3.2

Project's Public Information System installed and operating

Percentage 0 100 100 100 100 Biannual Information System (website)

UOD- M&E Unit

This indicator will be reported by evaluating the level of development and functioning of the whole modules of the computing platform.

3.2.1.

Grievances responded within the stipulated service standards for response times

Percentage 0 80 80 80 80 Biannual Information System

UOD- M&E Unit

The standard period for responses should not be longer than 30 days, since the date the claim is received. This indicator is calculated by counting the total number of grievances responded by the Project during the first 30 days through of the module of interaction with Project beneficiaries of the Information System, divided by the total number of grievances received. This is multiplied by 100.

3.2.2

Members of beneficiary SPOs that expressed satisfaction with the support provided by the Project, via alliances

Percentage 0 80 80 80 80

At least twice

during the Project’s

life.

Information System

UOD- M&E Unit

This indicator is measured through surveys among beneficiary producers carried out at MTR and at project closing. The level of satisfaction is measured considering the

35

following aspects: i) quality of service received by the beneficiaries, ii) results achieved by the beneficiaries as consequence of the Project implementation.

3.3

Numbers of collaborations/strategic partnerships with public and private institutions established


Agreements signed with public and private institutions

UOD- M&E Unit

This indicator is calculated by considering that one strategic alliance will be established for each public investment subproject (48), regional technical assistance subprojects (9) and model 3 alliance (37).

36

Table A.4: Results Framework and Monitoring and Evaluation (Original PAR II- Revised)

Indicator Name Unit of

measurement

Original end target

Adjusted end target

Explanation

Indicators of PDO

Indicator 1. Increase in the average volume of sales of the product(s) involved in the alliances

Percentage 50 35

The end-target value for volume of sales has been adjusted to reflect improved methods for calculating aggregated sales. The aggregate sales volume is calculated on the basis of actual increase in volume, not on the aggregation of percentage increases achieved per alliances, which provides a different estimation. The adjustment also reflects the effects of climate variability.

Indicator 2. Producer organizations that register income and costs, and are accountable to their members

Percentage 80

80

Indicator 3. Producer organizations that maintain or improve their commercial relations (alliances) for at least two productive cycles

Percentage 70 70


1.1 Producer organizations that receive assistance to be formalized

Percentage

300 300

1.2 Alliances with signed financing agreement for integral support

Number 645 522

To reflect budget reduction as a result of exchange rate differences.

1.3 Alliances with signed financing agreement for technical assistance

Number 100 110

37

1.4 Public investment subprojects with signed financing agreement

Number 26 14


1.5 Organization members that receive managerial training

Number 4,305 3,885


1.5.1 Women that receive managerial training

Percentage 30 30

2.1 Supported alliances that fulfill their commercial aims in the framework of agreed arrangements

Percentage 85 85

2.2 Household from alliances that receive financing support

Number 25,000 18,609 To reflect budget reduction as a result of exchange rate differences.

2.2.1 SPO households represented by women that receive financing support

Percentage 30 30

2.3 Producer organizations that obtain positive net incremental real income from Alliance product (s)

Percentage 80 80

2.4 Producer organizations whose leaders are periodically accountable to their members

Percentage 80 80

2.5 Executed public investment subprojects Number 26 14

2.6 Households that benefit from public investment subprojects

Number 10,100 4,900

Adjusted to reflect actual number of families benefiting directly from public works. The average number of indirect household beneficiaries of municipal subprojects was lower than estimated at the parent Project, because the number of executed subprojects was reduced from 26 to 14. The target of this indicator refers to the number of households

38

2.7 Alliances that apply environmental measures satisfactorily

Percentage 80 80

3.1 Level of financial execution of the Project's Annual Operational Plan (OAP)

Percentage 80 80

3.2 Producer organization subprojects without delays in the verification of expenses

Percentage 80 80

3.3 Project's Public Information System installed and operating

Percentage Yes Yes

39

Appendix B: Revised Estimate of Project Costs and Absorptive Capacity BOLIVIA – Additional Financing for Rural Alliances Project II (P158532)

1. The proposed AF IBRD loan in the amount of US$100 million to the Rural Alliances Project (PAR II, P127743, IDA-51700-BO) was determined based on the operation’s implementation track record and disbursement capacity. The AF will scale-up the number of beneficiaries and geographic coverage of the Project to reach producers in current and new areas, thus maximizing development impact and results. An important focus of the scaling-up phase will be on enhancing resilience aspects, particularly in relation to irrigation and water use efficiency. The original IDA Credit for SDR 32.9 million became effective on May 9, 2013, and has a closing date of November 30, 2017. The Project experienced a budget gap as a result of the unexpected fluctuation in the exchange rate between SDR relative to the US$, which has reduced the value of the Credit from US$50 million to US$45.5 million. With current credit funds, the Project will finance a total of 522 alliances (model 1), 123 fewer than the original target. A total of 14 municipal subprojects (investments around public infrastructure works) will be financed, 12 fewer than the original target.

2. As of January 2017, the Project has disbursed a total amount of SDR 28.2 million (85.7 percent of the Credit amount). PAR II has sustained steady implementation and is engaging 522 productive model 1 alliances and more than 100 model 2 and 3 alliances, benefiting 18,609 families, and 14 municipal subprojects, benefiting around 4,900 families. The budget allocation for grant transfers to producers is expected to be fully disbursed in the second quarter of 2017.

3. World Bank financing costs are estimated at around US$145.5 million, including the ongoing Credit IDA 51700 and the proposed AF. Table B.1 shows the allocation of funds by component. The AF of US$100 million, of which US$83.2 million is earmarked for implementation of rural alliances, is expected to additionally benefit approximately 27,825 producers through productive alliances, and 5,460 families through municipal subprojects. The AF allocation across the three Project components is indicated in the following table.

Table B.1: Project Cost (Including the Original Credit IDA-51700-BO and the Proposed AF)

Component Credit IDA- (US$ million)

Additional Financing

(IBRD) (US$ million)

Total (US$ million)

Institutional Strengthening 2.8 5.03 7.83

Implementation of Rural Alliances 34.0 83.22 117.22


8.7 11.5 20.02

Front-end Fee 0.25 0.25

Total 45.5 100.0 145.5

4. This Appendix provides information on the methodology and assumptions made to estimate the total Project costs for the AF. Based on work done using the World Bank COSTAB software, detailed costs are presented by component, expenditure accounts, procurement accounts and

40

disbursement accounts. The analysis includes not only the financing to be provided by the World Bank, but also the resources to be received from producer organizations and municipal government sources (direct beneficiaries of the Project’s activities). Costs Summary Tables and Detailed Costs Tables by Component are available in the Project File.

5. Duration of the Project: It is anticipated that the AF for the PAR II will become effective by December 1, 2017 (Year 1 of the Project), and will run for four years.

6. Project components and outputs: Costs have been broken down into the three main Project components: (1) Institutional Strengthening; (2) Implementation of Rural Alliances; and (3) Project Management, Monitoring and Evaluation. Each component has been split into subcomponents that are further divided into a number of outputs and their sequenced activities. Basic costing information was estimated by the National Project Preparation Team of EMPODERAR. Costs estimates are based on unit costs expressed in U.S. dollars (US$) at a conversion rate of Bs 6.86 = US$1, which is assigned by the Bolivian Central Bank.

7. Project costs are subdivided into investment costs and recurrent costs (or incremental operating costs). Investment costs include the following categories: (i) goods and equipment; (ii) training, workshops and meetings; (iii) studies; (iv) consulting services; (v) productive alliance subprojects; (vi) municipal subprojects and (vii) Project activity operating costs (necessary to implement Project activities during project life). Recurrent costs include salaries and allowances for project staff; operation and maintenance costs, such as the cost for the vehicles and equipment purchased; and office operating costs. For the duration of the AF, World Bank financing will cover the investment and recurrent costs listed above.

8. The main assumptions used for the COSTAB analysis are as follow: (i) non-physical and price contingencies have been applied; (ii) the exchange rate is calculated in constant purchasing power parity from the base of US$1 = Bs 6.86 to adjust for differences in domestic and international inflation and keep the real exchange constant; and (iii) taxes are included in the Project budget. The Project is unlikely to receive a general tax waiver, and the individual reimbursement of the tax of each purchase will raise transaction costs substantially. The Value Added Tax (VAT) is the most important tax that will have to be paid by the Project.

9. The total Project cost of US$130.60 million, including the IBRD loan and contributions of beneficiaries and municipalities, is made up of three components as summarized in tables B.2 and B.3, below. The Institutional Strengthening Component constitutes 3.9 percent of total Project costs, and the implementation of Rural Alliances Component represents 87.2 percent of total Project costs, of which producer organization subprojects is the biggest subcomponent (71 percent of total Project costs- including regional technical assistance subprojects), followed by municipal subprojects (14.1 percent), and support to Project implementation (2.0 percent). The Project Coordination and Management component makes up 8.8 percent of total Project costs.

10. Based on an overall envelope of US$92.1 million for investments in producer organization alliances/subprojects, about 678 business plans under model 1 (integrated support) are expected to be financed at average total subproject costs of US$134,959 per business; 45 model 2 subprojects (technical assistance support) at US$11,429 per subproject; and 37 model 3 subprojects (access to credit support) at US$2,857 per subproject. Related to the regional technical assistance subprojects, 9 subprojects will be financed at an average total cost of US$71,429 each. With regard to municipal subprojects, a total of 48 subprojects will be financed at average total subprojects cost of US$357,682 each (80 percent PAR, and 20 percent municipal contributions).

41

Table B.2 Project Components Costs Summary

COMPONENTS

TOTAL PROJECT COSTS

Amount (US$'000) Amount (Bs'000)

% Total Cost Total Costs World Bank Finance

Other Contributions

Total Costs

A. Component 1: Institutional Strengthening

1. Communication and Dissemination 835 835 5,727 0.6

2. Institutional Capacity Support to SPOs

2,971 2,971 20,384 2.3

3. Capacity Building for Technical Service Providers and Eligible Municipalities

481 481 3,301 0.4

4. Appraisal of Alliances/Municipal Subprojects (publication, dissemination of Project activities, evaluations of Rural Alliances; preparation of pre-feasibility and/or feasibility studies)

742 742 5,093 0.6

Subtotal 5,030 5,030 34,506 3.9

B. Component 2: Implementation of Rural Alliances

1. Producer Organizations Subprojects 92,695 65,529 27,166 635,894 71.0 2. Implementation of Municipal Subprojects

17,169 13,735 3,434 117,779 13.1

3. Support to SPOs for Subprojects' Implementation

2,691 2,691 18,458 2.1

4. Support to FPS for Municipal Subprojects

1,265 1,265 8,677 1.0

Subtotal 113,820 83,220 30,600 780,808 87.2

C. Component 3: Project Management, Monitoring and Evaluation

1. Preparation, Implementation and Supervision

11,170 11,170 76,626 8.6

2. Information Systems 50 50 343 0

3. Studies and Market Intelligence 280 280 1,921 0.2

Subtotal 11,500 11,500 78,890 8.8

Front-end Fee 250 250 1,715 0.2

TOTAL PROJECT COST 130,600 100,000 30,600 895,918 100

11. Costs by expenditure accounts: Investment costs represent 92.0 percent of total Project costs, and recurrent costs, 8.0 percent (table B.4). The two main expenditure categories are “producer organizations subprojects,” with an important 71.0 percent of total Project costs due to the considerable amount of money invested in productive alliances. Municipal subprojects constitute the second largest expenditure account, representing 14.1 percent of the total Project cost.

42

Table B.3. Project Components Cost by Year

COMPONENTS (US$ '000) (Bs '000)

2018 2019 2020 2021 Total 2018 2019 2020 2021 Total A. Component 1: Institutional Strengthening

1. Communication and Dissemination

252 220 207 156 835 1,730 1,510 1,418 1,069 5,727


1,671 884 271 145 2971 11,462 6,065 1,860 996 20,384


159 163 98 62 481 1,092 1,118 669 422 3,301

4. Appraisal of Alliances/Municipal Subprojects (publication, dissemination of Project activities, evaluations of Rural Alliances; preparation of pre-feasibility and/or feasibility studies)

217 396 129 0 742 1,490 2,717 886 0 5,093

Subtotal 2,299 1,663 705 363 5,030 15,774 11,411 4,833 2,488 34,506 B. Component 2: Implementation of Rural Alliances

1. Producer Organizations Subprojects

14,161 34,051 35,885 8,599 92,696 97,147 233,594 246,166 58,987 635,894

2. Municipal Subprojects (including support to FPS)

0 768 9,601 8,065 18,434 0 5,269 65,862 55,324 126,456


177 666 1,055 793 2,691 1,217 4,566 7,236 5,439 18,458

Subtotal 14,339 35,485 46,540 17,456 113,820 98,364 243,429 319,264 119,750 780,808 C. Component 3: Project Management, M&E

1. Preparation, Implementation and Supervision

3,578 2,947 2,908 1,738 11,170 24,544 20,217 19,946 11,919 76,626

2. Information Systems 50 0 0 0 50 343 0 0 0 343 3. Studies and Market Intelligence

0 140 0 140 280 0 960 0 960 1,921

Subtotal 3,628 3,087 2,908 1,878 11,500 24,887 21,178 19,946 12,880 78,890 Front-end Fee 250 0 0 0 250 1,715 0 0 0 1,715

TOTAL PROJECT COSTS 20,516 40,236 50,152 19,696 130,600 140,740 276,017 344,044 135,117 895,918

Table B.4: Expenditure Accounts (US$)

COST CATEGORIES TOTAL

(US$ '000) (Bs '000) %

I. Investment Costs A. Goods and Equipment 860 5,898 0.7

B. Training, Workshops and Meetings 1,690 11,596 1.3

C. Studies 2,660 18,251 2.0

D. Consulting Services 3,318 22,764 2.5

E. Producer Organizations Subprojects 92,696 635,894 71.0

F. Municipal Subprojects ((including support to FPS)

18,434 126,456 14.1

G. Project Activities Operating Costs 476 3,265 0.4

Total Investment Costs 120,135 824,123 92.0

II. Recurrent Costs

A. Salaries 7,422 50,911 5.7

B. Operation and Maintenance 2,794 19,168 2.1

Total Recurrent Costs 10,216 70,080 7.8

Front-end Fee 250 1,715 0.2

TOTAL PROJECT COSTS 130,600 895,918 100.0

43

Table B.5: Procurement Accounts (US$)

CATEGORY

PROCUREMENT METHOD

Local Competitive

Bidding

Consulting Services

Local Shopping

Direct Contracting

Community Participation

in Procurement

Total

A. Goods & Equipment 343,900 - 515,850 - - 859,750

B. Training, Workshops and Meetings - 676,176 1,014,264 - 1,690,440

C. Studies 399,067 1,143,991 1,117,387 - - 2,660,445

D. Consulting Services - 627,600 - 2,690,700 - 3,318,300

E. Producer Organizations Subprojects - 642,857 - - 92,053,049 92,695,906

F. Municipal Subprojects (including support to FPS)

17,512,063 921,688 - - - 18,433,750

G. Project Activities Operating Costs - - - 476,049 - 476,049

H. Salaries - 7,050,425 - 371,075 - 7,421,500

I. Operation and Maintenance 139,711 - 698,554 1,955,951 - 2,794,216

Front-end Fee - - - 250,000 - 250,000

TOTAL PROJECT COSTS 18,394,741.0 11,062,737.0 2,331,791.0 6,758,039.0 92,053,049.0 130,600,356

12. Procurement accounts and main procurement methods are showed in table B.5 above. The most common procedure used across productive alliances projects is “community based procurement,” for which projects provide training and capacity building to producer organizations. The Central Project Unit and Regional Operative Units verify and clear the producer organizations payment requests both technically and financially. Typically, matching grants are disbursed in three tranches into SPOs’ accounts. These accounts are managed by an alliance committee, which controls the use of the grant funds and ensures compliance with procurement rules.

13. Disbursement arrangements have been kept simple to facilitate Project implementation, record keeping and disbursement administration by the Borrower. Therefore, the numbers of disbursement categories have been kept to a minimum, using broad category descriptions as showed in table B.6. Recurrent Costs include salaries, allowances and operation and maintenance costs.

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Table B.6: Summary of AF by Disbursement Account (US$)

CATEGORY

WORLD BANK BENEFICIARIES MUNICIPAL

GOVERNMENTS TOTAL

Amount % Amount % Amount % Amount %

1. Goods and Equipment

859,750 100 0 - 0 - 859,750 0.7

2. Consulting Services 5,978,745 100 0 - 0 - 5,978,745 4.6 3. Trainings, Workshops and Meetings

1,690,440 100 0 - 0 - 1,690,440 1.3


15,000,000 0.81 0 - 3,433,750 0.19 18,433,750 14.1


65,529,300 0.71 27,166,606 0.29 0 - 92,695,906 71.0

7. Recurrent Costs 10,691,765 100 0 - 0 - 10,691,765 8.2 Front-end Fee 250,000 100 250,000 0.2 TOTAL PROJECT COSTS

100,000,000 77.3 27,166,606 20 3,433,750 2.7 130,600,356 100.0

14. Financing plan: A summary of the Project’s financing plan is given in tables B.7, B.8, B.9 and B.10 below, which refer to Word Bank, beneficiaries (producers of all rural alliance/producer organizations subprojects) and municipal government sources. As a major financier, the World Bank will contribute a total amount of US$100 million, equivalent to 76.6 percent of total project costs, followed by beneficiary sources of US$27.2 million (20.8 percent of total project costs), and municipal government contributions of US$3.4 million (2.6 percent).

15. Beneficiary financing of US$27.2 million will be used mainly to complement investments in producer organization alliances. Contributions from producer organizations will be mainly made in cash (but not exclusively) to co-finance the subproject proposal costs for up to 30 percent (all type of models and subprojects), except for organizations of Group 1 (comprising A and B communities, see appendix C), whose counterpart will be at least 20 percent of total subproject costs. Municipal government contributions are estimated at US$3.4 million, representing 20 percent of the total costs of municipal subprojects.

16. The Project is expected to complete the disbursement of the proposed AF amount by November 2021. PAR II is in full operational mode and has an experienced and competent implementation team. Provided that the existing implementation capacity is enhanced, the disbursement capacity of the Project can be sustained, and US$21.47 million is expected to be disbursed by November 2018, as shown in table B.10 below.

Table B.7: Summary Financiers of Total Project Costs (US$)

ENTITY AMOUNT PERCENT

- World Bank 100,000,000 76.6

- Beneficiaries 27,166,606 20.8

- Municipal governments 3,433,750 2.6

Total 130,600,356 100.0

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Table B.8: Summary Project Components Costs by Financiers (US$)

COMPONENT WORLD BANK BENEFICIAIRES

MUNICIPAL GOVERNMENTS

TOTAL

Amount % Amount % Amount % Amount % A. Component 1: Institutional Strengthening

1. Communication and Dissemination

834,880 100 0 0 0 0 834,880 0.6


2,971,400 100 0 0 0 0 2,971,400 2.3


481,250 100 0 0 0 0 481,250 0.4

4. Appraisal of Alliances/Municipal Subprojects (publication, dissemination of Project activities, evaluations, etc.)

742,470 100 0 0 0 0 742,470 0.6

Subtotal 5,030,000 100 0 0 0 0 5,030,000 3.9 B. Component 2: Implementation of Rural Alliances


65,529,300 70.7 27,166,606 29.3 0 0 92,695,906 70.9


15,000,000 81.37 0 0 3,433,750 18.63 18,433,750 14.1


2,690,700 100 0 0 0 0 2,690,700 2.1

Subtotal 83,220,000 73.12 27,166,606 23.87 3,433,750 3.02 113,820,356 87.1 C. Component 3: Project Management, Monitoring and Evaluation

1. Implementation Management 11,170,000 100 0 0 0 0 11,170,000 8.6 2. Public Information System 50,000 100 0 0 0 0 50,000 0 3. Studies and Market Intelligence 280,000 100 0 0 0 0 280,000 0.2

Subtotal 11,500,000 100 0 0 0 0 11,500,000 8.8 Front-end Fee 250,000 100 0 0 0 0 250,000 0.2 TOTAL PROJECT COSTS 100,000,000 76.57 27,166,606 20.8 3,433,750 2.63 130,600,356 100

Table B.9: Summary of Project Expenditures Account by Financiers (US$)

CATEGORY WORLD BANK BENEFICIAIRES MUNICIPAL

GOVERNMENTS TOTAL

Amount % Amount % Amount % Amount %

I. Investment Costs

A. Goods and Equipment 859,750 100 0 - 0 - 859,750 0.7

B. Training, Workshops and Meetings

1,690,440 100 0 - 0 - 1,690,440 1.3

C. Studies 2,660,445 100 0 - 0 - 2,660,445 2.0

D. Consulting Services 3,318,300 100 0 - 0 - 3,318,300 2.5

E. Producer Organizations Subprojects

65,529,300 70.69 27,166,606 29.31 0 - 92,695,906 71.0

F. Municipal Subprojects (including support to FPS)

15,000,000 81.37 0 - 3,433,750 18.63 18,433,750 14.1

G. Project Activities Operating Costs

476,049 100 0 - 0 - 476,049 0.4

Total Investment Costs 89,534,284 74.53 27,166,606 22.61 3,433,750 2.86 120,134,640 92.0

II. Recurrent Costs

A. Salaries 7,421,500 100 0 - 0 7,421,500 5.7

B. Operation and Maintenance 2,794,216 100 0 - 0 - 2,794,216 2.1

Total Recurrent Costs 10,215,716 100 0 - 0 - 10,215,716 7.8

Front-end Fee 250,000 100 0 0 250,000 0.2

TOTAL PROJECT COSTS 100,000,000 76.57 27,166,606 20.80 3,433,750 2.63 130,600,356 100.0

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Table B.10: Financing of Investment/Recurrent Costs by Year (US$)

CATEGORY FINANCING

2018 2019 2020 2021 Total

I. Investment Costs

World Bank 13,358,308 27,263,622 34,934,844 13,977,510 89,534,284

Beneficiaries 5,105,387 9,059,525 10,276,632 2,725,062 27,166,606

Municipal governments

- - 1,785,550 1,648,200 3,433,750

Total Investment Costs 18,463,695 36,323,147 46,997,026 18,350,772 120,134,640

II. Recurrent Costs

World Bank 2,758,135 2,849,633 2,910,913 1,697,035 10,215,716

Beneficiaries - - - - -

Municipal governments - - - - -

Total Recurrent Costs 2,758,135 2,849,633 2,910,913 1,697,035 10,215,716

Front-end Fee 250,000 250,000

TOTAL PROJECT COSTS

21,471,830 39,172,780 49,907,939 20,047,807 130,600,356

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Appendix C: Revised Project Coverage and Beneficiary Selection

BOLIVIA – Additional Financing for Rural Alliances Project II (P158532)

1. Project geographical coverage. During the past decade of PAR implementation (PAR I and PAR II projects), the geographical area in which these projects operate has been adjusted in response to opportunities for scaling up activities to cover a larger number of beneficiaries. Under PAR I (P083051), criteria used to determine the Project’s geographical focus included a combination of growing market demands (demographic growth as a proxy) and poverty levels. In the case of PAR II (P127743), these criteria were expanded to include information collected from the Vulnerability Analysis and Mapping (VAM 2003), leading to a coverage area encompassing 120 municipalities. The Additional Financing provides an opportunity to reach small-scale producers (with surplus production), poor or in vulnerable situations, in all the municipalities of the country (339). Thus, small scale producers (poor or in vulnerable situations) belonging to a small producer organization (SPO) throughout the country will potentially be eligible to receive Project support.

2. Project beneficiaries. As in the parent Project, the target beneficiaries of PAR II AF are small-scale producers in rural areas with surplus production, however, the characteristics of those beneficiaries are more clearly defined in the AF compared to PAR II. The AF beneficiaries are small-scale family farmers who produce a marketable surplus, as well as those living in poverty or otherwise vulnerable (not those at the subsistence level). Therefore, beneficiaries of PAR II AF will largely consist of a population of small-scale rural producers defined by a combination of the following criteria:

(i) the size of the production unit by region and type of production system (according to national definitions);

(ii) having agricultural activities as a main source of income; and

(iii) the level of actual or potential collective action—meaning beneficiaries will need to belong to a formalized group of producers or a group with potential for formalization. The Project will support the formalization of groups that already demonstrate some level of collective action, but that do not have the official documents that recognize them as a formal producer organization.

3. Demand-driven approach. As in the parent Project, in the AF phase, groups of small-scale, surplus producers, as defined in paragraph above, will be eligible to propose business ideas. Criteria for the selection of specific ideas that will move to the business plan development phase will remain the same as in the parent Project. The same criteria applied by the parent Project for the approval of business plans will be valid during the AF phase. Thus, the portfolio of AF alliance investments will continue to be the result of a demand-driven process. However, in the AF phase, the Project will introduce mechanisms and incentives to support greater demand by SPOs for resiliency-related investments, particularly those linked to irrigation modernization and water use efficiency, and smart climate practices and technologies. Furthermore, in the AF phase, the Project will be particularly aware of possible risks of fragmentation of initiatives geographically and, to the extent possible, will take advantage of economies of scale of alliance investments.

4. Enhancing efforts to reach the poorest producers. The recent categorization of rural poverty by the GoB combines data from the National Household and Population Census (2012) and the National Agriculture Census (2013); the first defines criteria for the level of satisfaction of basic

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needs, and the second for the Gross Value of Production (VBP, as per its Spanish acronym). On the basis of these two criteria, rural communities are classified by the government as A, B, C, D or E. Type A and B communities experience the highest levels of poverty. Most of these communities are located outside the targeted geographical area of the parent Project. Therefore, in response to the interest of the GoB to expand the Project’s support to type A and B communities, the Project will enhance targeting mechanisms for reaching these communities and provide opportunities for their participation via increased dissemination campaigns and support for group formalization. More flexible requirements for counterpart funding (20 percent of the total costs of the business plan) will be applied to SPOs largely consisting of members of these types of communities. For SPOs with a majority of farmers belonging to communities categorized as C, D, and E, the requirements for counterpart funding of the parent Project apply (30 percent of the total costs of the business plan). A large proportion of the irrigation investments and more sophisticated production upgrades are expected to be undertaken by SPOs in categories C, D, and E.

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Appendix D: Revised Project Description and Components

BOLIVIA – Additional Financing for Rural Alliances Project II (P158532)

1. Project Development Objective (PDO): The PDO remains focused on market accessibility and will not be modified from the parent Project. However, the associated result framework will be modified to reflect corporate guidance in relation to core indicators, and the increasing focus of the Project’s investments on building climate resilience. As in the parent Project, small producer organizations (SPOs) will identify opportunities for business upgrades; consolidate those opportunities into business plans; and co-fund and implement those plans. Although the Project will maintain its demand-driven focus, it will introduce mechanisms to shape demand by SPOs in alignment with the increased emphasis on the resilience of the Project’s investments. In the AF, the Project will more strategically support climate resilient investments via irrigation modernization and climate-smart practices. Investments under the business plans will be complemented with investments under municipal subprojects to improve productive infrastructure and facilitate market linkages.

2. Project Area: PAR II geographical coverage includes 120 municipalities in five regions of Bolivia. In the AF, the Project will expand benefits to SPOs also in the remaining 219 municipalities of the country, thus covering 339 municipalities in total. In the AF, the number of beneficiaries of BP investments is estimated at approximately 27,825, while those benefiting from municipal subprojects are estimated to total about 5,460. As in the parent Project, beneficiaries of PAR II AF include farmers producing surpluses in poverty situations or who are otherwise highly vulnerable (including to climate risk). Detailed description of the Project’s geographical coverage and beneficiary selection is presented in appendix C.

3. PDO Level Results Indicators: The Project will track progress toward the PDO through the following indicators:

Indicator 1: Increase in the average volume of sales of the product(s) involved in the alliances

Indicator 2: Producer organizations that maintain or improve their commercial relations (alliances) for at least two production cycles

Indicator 3: Producer organizations members that apply technologies/practices as defined in the business plans

Indicator 4: Direct Project beneficiaries – Direct producer beneficiaries from SPOs (disaggregated by men and women) and beneficiaries of public investment subprojects (without disaggregation)

4. The results framework has been fine-tuned to reflect: i) the latest corporate guidance on core indicators, specifically in relation to the number of beneficiaries (including gender disaggregation); and ii) the strengthening of investments in climate resilience, including irrigation investments. Redundant indicators and output-oriented indicators have been removed from the results framework (see appendix A for details).

5. Project Components: The AF will maintain the original three components: (1) Institutional Strengthening; (2) Implementation of Rural Alliances; and (3) Project Management, Monitoring and Evaluation. The overall nature of the activities under the three components will not change. However, in the proposed Additional Financing, Components 1 and 2 will be strengthened by deepened support

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for productive improvements, leading to more resilient and sustainable production systems via irrigation and water use efficiency investments and the promotion of climate-smart practices. Under the current portfolio of PAR II investments, about 9 percent of agriculture investments target irrigation improvements such as purchasing and installing irrigation equipment (sprinklers, drip systems) and small tanks and pipes. The AF will continue financing the aforementioned on-farm irrigation investments, but more strategically, via improved irrigation modernization and technical assistance. It is estimated that approximately 75 percent of the investments in alliance plans will support better on-farm water efficiency through modern irrigation technologies, as well as the adoption of climate-smart practices. Complementary off-farm irrigation investments (via municipal subprojects) will improve efficiencies and connect farms with water catchment areas. Component 3 will finance the incremental operating cost for alliance mobilization, operations and administration of the EMPODERAR, as well as complementary studies. The AF is expected to be implemented over a four-year period. Table D.1 presents the Project’s expected coverage. Details are outlined below.

Table D.1: Project Coverage

6. Component 1: Institutional Strengthening (Total: US$7.83 million; US$2.8 million equivalent IDA-51700-BO; US$5.03 million IBRD/AF). This component will continue supporting pre-investment activities for the creation and strengthening of rural alliances. As in the parent Project, this component will support activities to:

a) promote the Project concept and outreach via communication and dissemination campaigns targeted to SPOs, commercial partners, municipal governments and other local entities that could leverage support for SPOs;

b) strengthen capacities of eligible SPOs to form rural alliances; identify potential business opportunities (business profile—perfil de negocio) and fully prepare business plans (planes de negocio); formalize their organizations; and improve their marketing and business skills. During the AF phase, given the relevance of the irrigation and water use efficiency investments, the Project will particularly strengthen the capacities of SPOs to

Current Credit (Revised targets) Current Credit + Proposed Additional Credit

Project area 120 municipalities in five selected geographical regions, covering seven departments across the country in the following areas: (1) “Central Valleys” area (2) “Southern Valleys” area (3) Tropic (4) Chaco area (5) “North” areas

339 municipalities in 9 departments (countrywide)

Rural alliances

- 522 model 1 rural alliances (645 original target)

- 14 municipal subprojects (26 original target)

End-of-project target: - 768 rural alliances (678 model 1- integral) - 48 municipal subprojects

Beneficiaries - 18,609 households

- 4,900 (10,100 original target) beneficiary households of complementary public works

- 27,825 households benefiting from alliance models (including TA subprojects)

- 5,460 households benefiting from complementary public works

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incorporate resilient aspects in their business plans. A special window for the submission of business plans proposals incorporating investments in irrigation and water use efficiency will be opened. The Project will continue strengthening the strategy for supporting rotating funds, which were initiated in the parent Project and support knowledge exchange of SPOs (giras de aprendizaje) particularly as they relate to exchange of knowledge and experience using climate-resilient practices and technologies;

c) strengthen capacities of service providers and local governments through training to familiarize them with the rural alliance concept and processes, thereby ensuring that potential providers acquire the necessary knowledge and skills to support alliance formation, implementation and consolidation. In the Additional Financing, the scope of the capacity strengthening activities will expand to cover technical skills to ensure that service provision to SPOs is up to date in terms of available technologies and technical knowledge. Training of service providers in modern irrigation techniques and climate- smart practices will receive special attention. The component will also finance activities such as the establishment of a technical service provider database for the regional operating units (ROUs), including an outreach program to expand the number of available relevant providers, particularly in the departments of expanded geographical coverage; and

d) support the processes related to the appraisal of alliances, inter alia, the publication and dissemination of results of calls-for-proposals, the carrying out of financial, social, environmental and technical evaluations of rural alliances, including irrigation and water use efficiency investments, and the preparation of feasibility studies for municipal subprojects.

7. Component 2: Implementation of Rural Alliances (Total: US$117.2 million; US$34 million equivalent IDA-51700-BO; US$83.2 million IBRD/AF). This component will provide grants to co-finance investments found technically and financially feasible under Component 1. These include grants to co-finance the implementation of competitively selected business plans/rural alliances (Subcomponent 2.a.); and the implementation of public infrastructure subprojects—municipal subprojects (Subcomponent 2.b.). The AF will finance the same alliances models supported under the parent Project, including: model 1, integral support; model 2, technical assistance support; model 3, access to credit; and municipal subprojects. Model 1 will remain at the core of Project activities, while model 2 and 3 alliances will remain at the pilot stage. The co-financing conditions for model 3 remain as in the parent Project; however, for model 2, in the AF phase, up to 30 percent of the grant support could be used for goods/works with demonstrative purposes. The AF will also pilot a new model for regional technical assistance to consolidate technical assistance needs of groups/networks of producers. Details of the models are provided in the Operational Manual of the Project.

8. To reflect the renewed focus of the Project on resilience aspects, the Project will create a ‘resilience window’ for model 1 alliances (budgeted with about 75 percent of the funds allocated to monetary transfers to producers) to support open call for proposals aligned with irrigation and water efficiency-related investments, as well as other climate-resilient practices. In the case of irrigation investments, the Project will focus especially on opportunities to link project-related on-farm irrigation with existing off-farm irrigation infrastructure. Given the differentiated nature of beneficiary targeting and the typology of investments, different co-financing requirements will be applied to model 1 alliances. Beneficiaries with lower financial capacities to undertake investments

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will benefit of lower counterpart funding requirements. Furthermore, SPOs benefiting of irrigation and water use efficiency investments, as well as other climate-resilience practices, will benefit from a higher grant ceiling per beneficiary (See table D.2). In relation to counterpart requirements, in-kind contributions (labor and local materials) by producer organizations could also complement required cash contributions, as specified in the POM.

Table D.2: Model 1 (Integral Support)

9. Subcomponent 2.a. Producer Organization Subprojects (Total: US$95.7 million; US$30.2 million equivalent IDA 51700-BO; US$65.5 million IBRD/AF). This subcomponent will finance works, goods and technical assistance services under business plans, covering approximately 768 SPOs. The scope of the investments remains the same as in the parent Project, including:

(i) on-farm infrastructure, such as minor irrigation works, storage facilities and community centers for product processing, and water harvesting structures;

(ii) soil conservation measures, such as terracing, land leveling and watershed treatments, among others;

(iii) provision and utilization of equipment, tools, machinery, veterinary supplies, seeds and other vegetative material and agriculture and livestock inputs; and

(iv) support for access to financial services, business management, market and marketing, information technology, organic certification and other technical productive services.

Eligible SPOs Scope of Investments/Type of

Business Use of Funds

a. New SPOs establishing alliances for agriculture/livestock-related investments

b. SPOs beneficiaries of PAR I and II, to widen membership and undertake resilience investments (only in areas identified with greater need and exposure to climate shocks)

Agriculture/livestock production and goods (including non-wood forest products)

Works, goods and technical assistance services. May include public infrastructure investments under municipal subprojects (Subcomponent 2.b.)

Producer Typology Funding by the Project

(Grant) Financing Ceilings

Group 1 Up to 80% of total cost of business plan investment.

Up to BS 16,000 per household (traditional window); and up to BS 21,000/household (resilience window)

Group 2 Up to 70% of total cost of Business plan investment

Up to BS 16,000 per household (traditional window); and up to BS 21,000/household (resilience window)

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10. In the AF phase, the Project will more strategically target on-farm irrigation modernization via business plans covering individual and/or collective small water stores (ponds), and on-farm investments for modernization of irrigation techniques (drip, sprinkler or modern gravity techniques). Considering the higher costs of investments (estimated at approximately US$4,500/ha), the Project’s financing ceiling per beneficiary will be higher (up to BS 21,000/household) for those business plans including irrigation modernization. The Project envisions that the percent of the funds transferred to SPOs via business plans that will be aligned with on-farm irrigation and water use efficiencies, as well as the adoption of other climate-smart practices, will reach approximately 75 percent. SPOs that have received financing support under PAR I and PAR II will enjoy the same grant financing conditions and ceilings when they serve as a conduit to benefit a new SPO member. However, SPO members that benefit of PAR I and PAR II will receive support under the additional financing phase only as it relates irrigation modernization and water use efficiency investments. Business plan financing will be further governed by procedures outlined in the Operational Manual of the Project.

11. Subcomponent 2.b. Municipal Subprojects (Total: US$16.3 million; US$2.6 million equivalent IDA 51700-BO; US$13.7 million IBRD/AF): This subcomponent will continue financing the implementation of subprojects in support of the productive goals of the rural alliances and consists of the following activities:

(i) Public minor irrigation infrastructure subprojects (rehabilitation or improvement);

(ii) Rural road rehabilitation or improvement; and

(iii) Small vehicular or pedestrian bridges.

12. Under the AF, it is expected that two-thirds of the investments under municipal subprojects will represent investments in irrigation subprojects. Irrigation improvements will generally imply: i) the construction of more resistant infrastructure, ensuring higher water flow rates, but without increasing water capture levels; and ii) improvements in primary and secondary coated pipes or conduits, replacing open irrigation channels. These types of infrastructure are the responsibility of municipalities, with average costs ranging between US$5,000 to US$6,000 per hectare (ha). The basic selection criterion is the contribution of the municipal subproject to the success of the rural alliances. The maximum referential amount to be financed by the Project per municipal subproject is US$500,000 (see table D.3). The National Fund of Productive and Social Investment (FPS) will take on responsibility for implementing the municipal investment subcomponent (Subcomponent 2.b.), including the management of financial resources (IBRD and counterpart funding by municipalities). Municipal subproject financing will be further governed by procedures outlined in the Operational Manual of the Project.

13. Subcomponent 2.c. Support for Alliance Implementation and Municipal Subproject Implementation (Total: Total US$ 5.24 million; US$ 1.3 million IDA-51700-BO; US$3.94 million IBRD/AF): This subcomponent will: (i) continue to support SPOs via advisers (acompañantes), who are consultants selected by the SPOs and who accompany alliance implementation by providing support to subproject execution, engagement with purchasers, and implementation of institutional strengthening strategies; and (ii) covers support to municipal subproject implementation including FPS fee and costs of the external financial auditing.

14. Component 3: Project Management, Monitoring and Evaluation (Total: US$20.2 million; US$8.67 million equivalent IDA-51700-BO; US$11.5 million IBRD/AF). This component will support the incremental costs associated with project administration and monitoring, such as the adjustments required to the Georeferenced Management Information System (SIGG) (Spanish

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acronym) and the public information system, as well as the costs associated with their operation; and baseline information collection and the impact evaluation of the Project. Component 3 will also support studies and consultations needed to inform and support Project activities.

Table D.3: Municipal Subprojects

Type Scope of Investments/Type of Business

Grant Financing and Ceilings

Municipal Subprojects Minor public irrigation infrastructure subprojects; Rural road rehabilitation or improvement; and Small vehicular or pedestrian bridges.

Up to 80% of municipal subproject total cost. Investment ceiling by the Project up to US$500,000.

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Appendix E: Changes in Implementation Arrangements BOLIVIA – Additional Financing for Rural Alliances Project II (P158532)

1. As in the parent Project, the proposed Additional Financing (AF) will be implemented by the Ministry of Rural Development and Lands (MDRyT) through the Unidad Desconcentrada EMPODERAR. The Project Implementation Unit (PIU) at EMPODERAR is comprised of both a National Coordination Unit (NCU) and Regional Operational Units (ROUs). The PIU will continue managing a project-designated account and transferring sub-grants to the small producer organizations (SPOs), and using overall fiduciary arrangements as defined in the parent Project.

2. EMPODERAR will continue operating based on a modular structure and at the same time strengthen its capacity to ensure appropriate implementation of the expanded Project. Since the beginning of PAR I, EMPODERAR has been employing a modular scheme that consists of replicating a common mode of operation in each ROU under the leadership and supervision of the NCU. As defined for the parent Project, ROUs will continue handling key aspects of the subproject cycle, including promotion, facilitation and identification of potential alliances; subproject ex-ante evaluation; field supervision; local coordination; and monitoring. By creating two additional ROUs for the Oruro and Pando departments, EMPODERAR will carry out calls for proposals and manage subprojects coming from throughout the country. Furthermore, the NCU will include fiduciary staff (subject to the number of subprojects), whose main function is to provide guidance to SPOs in administrative matters and undertake full responsibility for the review of disbursement requests and expenditure reports (Rendiciones de cuenta) presented by SPOs.

3. Despite the original institutional arrangements proven effective for executing the Project, recent changes in the rules for public investment in Bolivia have stalled the implementation of Subcomponent 2.b., and thus merit an adjustment of the arrangements in the AF phase. Under the original design, EMPODERAR performs most of the activities for Subcomponent 2.b., such as: defining the municipal subprojects pipeline; funding the preparation of pre-feasibility/feasibility studies; and paying contractors. Meanwhile, the FPS was only assigned the function of appraising the municipal subprojects and procuring and overseeing (from a technical and safeguard perspective) the civil works. Although this arrangement was operative when PAR II commenced, and even during PAR I, it is no longer effective due to changes in administrative procedures, as follows:

(i) Currently, the process for registering the budget that will support the implementation of the municipal subprojects, including both the counterpart funds provided by the municipal government and the grant provided by the Project, is taking a considerably longer amount of time than estimated at the time of project preparation because the financial resources have to be formally registered by three different entities (MDRyT, EMPODERAR and the specific municipality).

(ii) Recently, the online national System for Public Procurement (Sistema de Contrataciones Estatales) (SICOES) only authorizes the uploading of bid documents provided the budget for the respective contract is already registered under the same agency that procures it. This restriction works against the current institutional project arrangements for Subcomponent 2.b., given the fact that all resources of PAR II are registered under the official budget of MDRyT and EMPODERAR, including those for public works, in spite of the fact that FPS is responsible for bidding procedures for municipal subprojects. Therefore, to allow for the proper implementation of the original PAR II Project, FPS had to request a waiver to continue handling bids in SICOES, resulting in additional delays.

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These changes to Bolivian public administration have become the norm and are not likely to be reversed in the mid-term.

4. In order to streamline implementation of Subcomponent 2.b., the AF will adjust the original institutional arrangements as follows:

(a) The responsibility in the administration of financial resources for the implementation of Subcomponent 2.b. will move from EMPODERAR to the FPS. This implies that, besides FPS’ regular functions related to the appraisal of municipal subprojects and procuring and overseeing (from a technical and safeguard perspective) civil works, it will also manage the financial resources and directly pay contractors. Since the Bolivian legal framework provides FPS with a straightforward manner to register budget for works that are co-financed by subnational governments, this change will speed up the implementation of this subcomponent.

(b) To implement municipal subprojects, FPS and EMPODERAR, will sign agreements with each municipal government.

(c) To materialize this adjustment, FPS will be enabled to utilize the following disbursement methods to withdraw funds from the loan: (a) reimbursement, (b) advance, and (c) direct payment. Under the advance method, a Designated Account (DA) in U.S. dollars will be opened and maintained to facilitate Project implementation.

(d) It is important to note that EMPODERAR will continue defining the portfolio of municipal subprojects based on the demand emerging from the SPOs, and hiring consultants that prepare the detailed designs (pre-investment phase). These activities are performed under Component 1.

5. The general definitions for Financial Management in the parent Project will remain in place; however, the changes in Subcomponent 2.b. will translate into assigning new financial duties to FPS. EMPODERAR will continue executing the Project through the National Budget in compliance with local regulations and guidelines emanating from the Ministry of Economy and Public Finance and the Vice Ministry of Public Investment and External Financing. Likewise, the EMPODERAR will continue using the Country Public Financial Management Systems (SIGEP) and the Treasury Single Account, and defining processes and procedures in compliance with the Governmental Administration and Controlling Law (Ley SAFCO). As a result of the change in Subcomponent 2.b., the aforementioned definitions will not only apply to EMPODERAR, but also to FPS, and the Project will adjust the following aspects

(a) With respect to accounting and information systems, while EMPODERAR will continue utilizing SIGG (Georeferenced Management Information System) and SAS (System of Subproject Administration—Spanish acronym), FPS will apply its own accounting and information system (SAP—System of Project Administration, Spanish acronym), with a query interface to transfer data to the SIGG.

(b) In addition to the regular internal financial reports (IFRs) prepared and submitted by EMPODERAR, FPS will prepare separate IFRs for its respective part of the Project, maintaining the semi-annual frequency defined for EMPODERAR in the parent Project.

(c) In addition to EMPODERAR’s annual audit, FPS will send audited financial statements for its respective part of the project to the World Bank on an annual basis.

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6. Following the general practice of the current portfolio, the following disbursement methods may be used to withdraw funds from the loan: (a) reimbursement, (b) advance, and (c) direct payment. Taking into account the nature of the activities and prior experiences, it is expected that the advance option will become the preferred option. Overall disbursements from the World Bank will follow standard policies and procedures illustrated in figure E.1 below, and further described in the disbursement letter. Under the advance method and to facilitate Project implementation, two designated accounts in U.S. dollars will be opened and maintained by the EMPODERAR and by the FPS as part of the Treasury’s Single Account (CUT, Spanish acronym) system. In keeping with the current arrangements established by the Vice-Ministry of Treasury and Public Credit for the operation and the use of a CUT in U.S. dollars (CUT-ME),8 the designated accounts will be opened and maintained as a separate Libreta within the CUT in U.S. dollars, which will also operate with a separate Libreta within the CUT in bolivianos, from which all payments will be processed. The minimum value of applications is US$200,000 for direct payment and reimbursement.

7. In essence, the flow of funds and disbursement arrangements will only change with respect to Subcomponent 2.b, by including the following:

(a) While, according to PAR II’s original design, only EMPODERAR will use a designated account (DA) in U.S. dollars and a Libreta in Bolivianos, in the AF, each of the authorized agencies, EMPODERAR and FPS, will process payments from its respective DA in U.S. dollars and Libreta in Bolivianos. The maximum amount of loan proceeds that may be on deposit in a designated account (the “Ceiling”) is US$5 million for the EMPODERAR account and US$3 million for the FPS account

(b) Participating municipalities will provide their counterpart funds (co-financing) for municipal subprojects following standard policies and mechanisms set forth in FPS Operational Manual and Institutional Manual.

(c) FPS will account for operating costs at entity level by adding an aggregated 7 percent to the cost of each single subproject. The Operational Manual of the Project will define the specific mechanisms to disburse FPS operating costs.

8. FPS has a long track record of working with World Bank and other donors on similar type of subprojects. The FPS is a well-established entity that has put in place acceptable financial management arrangements which, with minor adjustments to accommodate its interaction with EMPODERAR and the municipal governments, can adequately support Project implementation under the revised institutional arrangements for Subcomponent 2.b. activities proposed in the AF. The implementation arrangements for procurement will basically follow the parent Project, although PAR II AF will apply the new procurement framework from the World Bank. Appendix F elaborates on the implications of the new procurement framework for the operation.

8 Supreme Decree No. 29236, dated August 22, 2007.

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Figure E.1: Flow of Funds and Disbursement Methods

[Dir

ect

Pay

men

ts]

(World Bank) Loan Account

Suppliers, Contractors, and Consultants

Operating Account

(Local Currency Bs)

(Libreta CUT Bs)

Designated Account

EMPODERAR (US$)

(Libreta CUT US$) Treasury Account

(Counterpart Funds)

[Advances] [Reimbursement]

Designated Account

FPS (US$)

(Libreta CUT US$)

Operating Account

(Local Currency Bs)

(Libreta CUT Bs)

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Appendix F: Changes in Project Procurement BOLIVIA – Additional Financing for Rural Alliances Project II (P158532)

I. Introduction

1. Procurement for the proposed Additional Financing (AF) will be carried out in accordance with the World Bank's ‘Procurement Regulations for Borrowers: Procurement in Investment Project Financing, July 2016.’ A single Project Procurement Strategy for Development (PPSD) has been prepared by both implementing units, i.e. EMPODERAR and FPS. A summary of the PSSD strategy is presented below. Additional procurement provisions relating to Project implementation have been incorporated in the procurement plan (PP), which covers the first procurement activities to be conducted by the above mentioned entities during the years 2018 and 2019. Additional procurement provisions relating to Project implementation have been incorporated in the textual part of the procurement plan. The AF will scale-up activities and will maintain the range of activities and investments of the parent Project, expanding its coverage countrywide.

II. PPSD Summary

2. The proposed Project constitutes Additional Financing to an operation that has been performing satisfactorily from a procurement standpoint for a long time. Since the approval of the first Rural Alliance Project in 2006, the International Development Association (IDA) has financed over US$100 million, under PAR I (P083051, already closed) and PAR II (P127743, ongoing) operations. Under the latter, all the funds applied to transfers to farmers and municipal subprojects have already been committed.

3. The AF to PAR II will expand the scope and coverage of the activities implemented by the Project, which have the objective of improving access to markets and climate resilience for small-scale rural producers. The proposed Additional Financing will be implemented countrywide and will benefit an additional 27,825 rural households via support to about 768 new productive alliances (678 integral model) and about 5,460 families via municipal subprojects. A large proportion of the Project’s beneficiaries are expected to compromise indigenous people.

4. The proposed AF to PAR II will target the same type of goods, works and services of previous satisfactory operations. These are all low-value, low complexity procurements and the largest monetary chunk will follow Community-Driven Development (CDD) arrangements detailed in the Operational Manual of the Project. Besides the CDD components, the Project will finance PIU staff and a large number of individual consultants. A small sum of funds will be used for procurement of vehicles and office furniture and equipment. From a procurement standpoint, this Additional Financing will be basically an expansion of the same types of procurements that have been carried out by the Borrower under the ongoing operation. The emphasis on irrigation investments will imply that a large proportion of the procurement will involve procurement of irrigation equipment, but the purchase of such equipment does not change the nature of project procurement by SPOs, as these kind of goods have already been procured by a percentage of beneficiary organizations under PAR II.

5. In addition, despite the fact that this Project will move to the new procurement framework that became effective on July 1, 2016, changes in respect to the processes and procedures that will be followed by the Borrower are minimal.

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6. More specifically, the proposed operation will finance the following components:

US$5.03 million for institutional strengthening, to be implemented by EMPODERAR

US$83.2 million for implementation of rural alliances, comprising investments by US$65.5 million following CDD procedures detailed in the POM, to be implemented by SPOs and supervised by EMPODERAR; and about US$13.7 million to support public infrastructure works (municipal subprojects), to be implemented by the FPS. About US$3.9 million will support activities under Subcomponent 2.c., as defined in the parent Project, such as technical support via “acompañantes,” as well as auditing and operating costs of the FPS

US$11.5 million for Project management and pertinent studies, to be implemented by EMPODERAR

7. The Project management component for EMPODERAR will finance mostly PIU staff and individual consultants; a smaller portion will pay for low-cost studies to be provided by firms, and an even smaller portion will finance vehicles, computer, and office furniture and equipment. The detailed breakdown by contract can be found in the procurement plan.

8. The municipal subprojects will finance a plethora of small and simple infrastructure projects, such as the reconstruction of small bridges, roads and of irrigation infrastructure. Details of the component can be found in the procurement plan and individual contracts are not expected to exceed US$500,000. Small contracts (in value) for supervision consultants will also be financed.

9. As in the parent Project, two agencies will be responsible for implementing activities for the proposed Project, and both have proven to have adequate capacity to implement procurement for a project with the characteristics of this Additional Financing. One of the two agencies, EMPODERAR, reports to the Ministry of Rural Development and Land and has over ten years of continuous operation. During this period, it satisfactorily implemented over US$200 million of World Bank lending through various operations, including PAR I (US$59 million), PAR II (US$45 million), and Community Investment in Rural Areas Project (PICAR) (US$100 million). These operations have similar procurement arrangements and similar type of goods, works and services to the proposed Additional Financing. The FPS is a second implementing agency that is responsible for execution of several projects financed by the World Bank in Bolivia. This agency has proven capacity to implement the subcomponent of municipal subprojects. In addition to the two agencies, the SPOs will be in charge of the CDD subcomponent, and the resulting processes are subject to review by EMPODERAR according to procedures detailed in the POM. This arrangement follows the successful experience of previous operations. The SPO implements the activities in compliance with procurement and financial management rules detailed in a Field Operation Manual,9 which forms part of the POM, and remains valid under the AF phase.

10. The proposed Additional Financing will not introduce material changes to the procurement processes and procedures that are familiar to the Borrower; however, the country procurement environment is risky and the design of the operation with decentralized implementation involving a large number of SPOs results in a risk assessment rating of Substantial. A slow-moving bureaucracy with poor and conflicting accountability may hinder implementation. This assessment will be monitored and updated during implementation through procurement post-reviews and project supervision.

9‘Manual de Adquisiciones y Contrataciones para las Organizaciones de Pequeños Productores,’ as per its Spanish name.

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III. Detailed Procurement Issues

11. Procurement capacity and arrangements remain adequate. Since the last review, the EMPODERAR has been improving its contract information system, Georeferenced Management Information System (Sistema de Información Gerencial Georeferenciada–SIGG). It has also recruited a dedicated procurement specialist and a procurement analyst. The EMPODERAR will increase the procurement fiduciary team according to implementation needs. These conditions need to be maintained to avoid procurement staff turnover and increase familiarity with World Bank policies and regulations. On the other hand, for the needs of the Project, FPS has the adequate staffing size for the procurement activities, and no further adjustments are expected.

12. Procurement of Works. Works procured under this Project may include the construction and remodeling of small bridges, small roads, irrigation systems, etc., and other related civil works infrastructure. Requests for Bids, Request for Quotations, Request for Proposals (RFP), and Direct Selection will be required. Procurement of works will be based on bidding documents satisfactory to the World Bank. The procurement of works will not start until the Technical, Economic, Social and Environmental Study has been cleared.

13. Procurement of Goods. Goods procured under this Project will include items deemed necessary to carry out Project activities. Requests for Bids, Request for Quotations, RFP, Direct Selection, and Force Account packages will be required. Procurement of works will be based on bidding documents satisfactory to the World Bank. The ‘fit for purpose and value for money’ approach will be applied for the procurement of technical equipment

14. All procurement notices shall be advertised on the Online National System for Public Procurement (Sistema de Contrataciones Estatales) (SICOES) website, and at least one local newspaper of national circulation. International open competition notices and contract award information shall be advertised in the United Nations Development Business online, in accordance with the provisions of paragraphs 5.22, 5.23, and 5.24 of the Procurement Regulations.

15. Selection of Consultants. Consulting firms may be contracted for training and capacity building activities, technical studies, audits, evaluations, and support to the SPOs. The procurement of consulting firms will be carried out using World Bank’s standard Request for Proposals (RFP). Consulting firms will be selected following Quality and Cost-based Selection (QCBS) for all contracts in the estimated amount of more than US$100,000.

16. Selection of Individual Consulting Services. Individual consulting services will be contracted mostly for Project management and for technical advice, mainly in the substantive matters of the Project. The terms of reference, job descriptions, minimum qualifications, terms of employment, selection procedures, and the extent of World Bank review of these procedures to contract “Consultores de línea” and documents shall be described in the POM and the contract shall be included in the Procurement Plan. Services by individual consultants may also be contracted to accompany the alliances in the preparation or implementation of their subprojects. The Project implementation support personnel may be selected by the executing agency according to its personnel hiring procedures for such activities, as reviewed and found acceptable by the World Bank.

17. The government website (SICOES) and a national newspaper shall be used to advertise expressions of interest as the basis for developing short lists of consulting firms and individual consultants, and to publish information on awarded contracts in accordance with the local legislation.

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18. Training. Training will include expenditures (other than those for consultants’ services) incurred by the Borrower to finance logistics for workshops, meetings, and seminars, and reasonable transportation costs and per diem of trainees and trainers (if applicable), training registration fees, and rental of training facilities and equipment. The procurement will be done using a national approach (open or limited) and request for quotations/shopping procedures as discussed below. Direct contracting may be used for the payment of registration fees, up to a ceiling amount to be established annually in the Procurement Plan.

19. Producer Subprojects. Under a grant mechanism, the Project will finance demand-driven subprojects submitted by alliances and approved by the NCU. Procurement of goods, works, and technical assistance, financed through the subprojects, will be carried out directly by the SPOs using mostly a national approach (open or limited) and request for quotations/shopping procedures and commercial practices for goods and works. Producer subprojects generally envisage a large number of small value contracts for goods and both non-consulting and consulting services, and a large number of small works scattered in remote areas. Commonly used procurement procedures include national approach (open or limited) and request for quotations inviting prospective bidders for goods and works located in and around the local community, direct contracting for small value goods, works, and non-consulting services, and the use of community labor and resources. The Operational Manual of the Project and the Field Operational Manual describe all procurement arrangements, methods, and procedures including: the roles, the responsibilities, and the extent of participation of the community in general (including, in certain circumstances, community tender committees as may be needed); simplified steps for all applicable methods of procurement; provisions for any technical or other assistance required by the alliances; payment procedures; procedures for maintenance of records; simplified forms of contracts to be used; and the roles and oversight functions of the implementing agency, etc. SPO committees will receive training, guided by the project's procurement specialist, on procurement guidelines and preparation of simplified subproject procurement plans.

20. Operating Costs. The Project will finance project-related operational costs of the EMPODERAR program, including: salaries, travel costs and subsistence for missions of project staff (excluding civil servants) and members of SPOs; the establishment and operation of the monitoring and evaluation system, including baseline studies and impact evaluations; procurement, technical and financial audits; operation and maintenance of project offices, including utilities and telecommunication; and acquisition, operation and maintenance of office and field equipment, including vehicles, needed for Project activities. These operating costs will be administered in accordance with the World Bank’s Procurement Regulations or with the National Procedures, as appropriate. This procurement also will be carried out using the World Bank’s Standard Bidding Documents (SBD) or National SBD as agreed with the World Bank.

21. Procurement Audit. The audit scope should cover verification of both quality and quantity of works, goods and services procured and proper use of funds, specifically for investments related to rural alliances and municipal subprojects, under component 2.

22. Procurement Plan. A Procurement Plan (PP) covering the first 24 months of Project implementation has been prepared. It will also be available in the Project’s database and in the World Bank’s external website. The procurement plan will also be downloaded into STEP (Systematic Tracking of Exchanges in Procurement). Review requirements are included in the PP. Based on the finding of the post-procurement reviews, the World Bank may recommend the revision of the prior review requirements.

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23. Frequency of Procurement Supervision. In addition to the prior reviews to be carried out by the World Bank, the capacity assessment of EMPODERAR has recommended semi-annual supervision missions, including field visits and post reviews of procurement actions. Contracts subject to post review will be reviewed by the World Bank and based on the findings of these reviews and the proposed ratings, the World Bank may determine the revision of the prior review requirements.

24. Procurement Support. EMPODERAR and FPS have satisfactory experience in implementing World Bank-financed projects, and competent expertise in managerial, technical, fiduciary and safeguard areas. However, due to the dispersed location of alliances, low capacity of producer organizations and municipal governments, the decentralized model of implementation (delegation of key activities to Regional Operating Units) and country-wide risks, the following additional measures will be taken during implementation: (i) periodic training to EMPODERAR personnel; (ii) ex-post reviews of a sample of alliances and of project purchases during each supervision mission; (iii) on-demand assistance provided by the procurement specialist in the Bolivia office; and (iv) at least two independent procurement reviews during the life of the Project.

25. Thresholds for procurement methods and prior review are described in the following table.

Table F.1: Thresholds for Procurement Methods and Prior Review

Expenditure Category

Contract Value (Threshold) (US$,

thousands) Procurement Method Market Approach

World Bank Prior Review or as

Indicated in the Procurement Plan

1. Works

> 5,000 Request for bids Open, limited, international, single stage

All

200–5,000 Request for bids Open, limited, national, single stage

Post Review < 200 Request for quotations

Open, limited, national, single stage

Regardless of value DC Direct, single stage All above US$100,000

2. Goods

> 500 Request for bids RFP

Open, limited, international, single stage

All above US$0.5 million

50 – 500 Request for bids RFP

Open, limited, national, single stage

Post review < 50 Request for quotations

Open, limited, international national, single stage

Regardless of value DC Direct, single stage All above US$100,000

3. Consulting Services

> 500 QCBS Open, international, short list

All

< 500 QCBS, QBS, CQS, FBS, LCS (according to Procurement Plan)

Open, national, short list

All ToRs Selection process reviewed twice yearly (ex post)

Regardless of value Direct Selection Direct All

4. Individual Consultants

> 200 IC Open, limited All

< 200 IC Open, limited All ToR. Selection process reviewed twice yearly (ex post).

Regardless of value Direct Selection Direct All above US$100.000

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Note: CQS = Selection Based on the Consultants’ Qualifications; DC = Direct Contracting; FBS = Selection under a Fixed Budget; IC = Individual Consultant; LCS = Least-cost Selection; QBS = Quality-based Selection; ToR= Terms of Reference.

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Appendix G: Economic and Financial Analysis BOLIVIA – Additional Financing for Rural Alliances Project II (P158532)

I. Project Development Impact

1. Through the Project financing, organized producers are empowered to implement demand-driven partnerships (alliances) with actors in the commercial private sector. The Project also aims to improve and enhance municipal infrastructure, such as irrigation infrastructure, rural roads and bridges, to support the productive goals of the rural alliances. The Project comprises three components: (1) Institutional Strengthening: which supports pre-investment activities to consolidate small producer organizations (SPOs) capacity; the preparation of rural alliances’ investment plans; building capacity among service providers to support rural alliances; dissemination of Project activities and outreach to the SPOs; and evaluation of rural alliances investment plans; (2) Implementation of Rural Alliances, which provides grants to co-finance the implementation of feasible investment plans formulated under Component 1, for both producer organizations subprojects and municipal subprojects; and (3) Project Management, Monitoring and Evaluation (M&E), which supports the incremental costs associated with the Project administration and M&E, as well as studies.

2. Principal outcomes and benefits expected to emerge from the Project include increased incomes for producer organizations, primarily due to increases in production and/or productivity (yield), cultivated area, and volume of marketed product and/or product quality (unit price). Social impacts consist of essentially increased seasonal and permanent employment within the producer organizations. Another expected benefit that is more difficult to measure is better linkages among SPOs, whose strengthened capacity for business development enables them to work more effectively and efficiently with market partners in long-term market relations. As of January 2017, the Project had disbursed SDR 28.2 million (85.7 percent of the total loan amount), and has supported a total of 522 investment plans benefiting 18,609 families, and 14 municipal subprojects, benefiting around 4,900 families.

3. An Additional Financing (AF) of US$100 million has been proposed to the World Bank for financing the scaling up and expansion of this well performing project, thus maximizing its development impact and results. In the AF phase, the Project will also have a renewed strategic focus on irrigation investments. The purpose of this appendix is to provide an analysis of the financial and economic evaluation of the total project cost related to this AF. The AF will scale-up the Project by establishing approximately 768 new producer organization alliances, of which 75 percent of the investment is expected to support irrigation modernization at farm level, and over 48 municipal subprojects, of which about two-thirds will support communal irrigation systems.

II. Rationale for Public Sector Provision/Financing

4. Evidence across the world indicates that economic growth and reductions in poverty and inequality are linked to the ability of the poor to improve their opportunities for income generation via productive investments that support sustainable intensification, diversification and access to markets. The recent impact evaluation carried out for PAR I found significant income increases (as much as 63 percent) among the beneficiary producers as a result of participating in PAR.

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Producers in the lowest income quintile experienced the largest income gains. PAR I contributed to a significant reduction in the incidence of moderate poverty and extreme poverty in the beneficiary population: moderate poverty was reduced in 11.7 percentage points, while the respective figure for extreme poverty was 10.1 percentage points. The Project also reduced poverty intensity – the producers that remained below the poverty line were less poor thanks to their participation in the Project. PAR I also reduced the inequality of income among beneficiaries that were poor. To sustain gains in productivity and competitiveness, farmers still need to reduce their vulnerability to external shocks, especially those resulting from increasing climate variability. Complementary investments during the AF phase in irrigation modernization, water management and other climate-smart practices will be key to increasing agriculture resilience and sustaining gains in of reducing poverty and inequality. Public investments in irrigation represent proactive efforts by Bolivia’s government to mitigate the effects of climate shocks and movement away from reactive public responses attempting to help farmers to cope with the effects of disaster. The support of PAR II AF to strengthen farmer capacity to address environmental sustainability and resilience to climate change will promote inclusive and more sustainable economic growth, and therefore provides a strong justification for public investments in the type of demand-driven intervention approach implemented by the Project.

III. Value Added of World Bank Support

5. The World Bank has considerable experience in assisting the GoB in its efforts to reduce rural poverty and create opportunities for rural households, via the Rural Alliances Program - PAR. As in many countries in the Latin America and Caribbean region, the World Bank has played a key role by supporting the rural productive alliance model, especially by enhancing capacities of small-scale producers and their associations, and by promoting initiatives related to sustainable productive intensification and market access. Through the lending provided by the World Bank to the GoB, more than 1,300 rural alliances have been financed since 2006, generating investments of around US$98 million in rural areas and supporting more than 67,697 beneficiaries. As mentioned, the impact evaluation of PAR I revealed that the Project was highly pro-poor and inclusive, and significantly improved agricultural income at the household level.

6. PAR is a successful project, generating options for productive diversification and growth in the local, regional and national economy. The GoB and the World Bank have been working closely to develop this analytical and operational mechanism to support public efforts to reduce poverty and support property in rural areas by including young farmers and women as active actors of the development agenda. Hence, PAR II is a central component of World Bank’s support for and collaboration with the GoB. The proposed AF is consistent with World Bank and GoB development agendas for 2016-2020, which prioritize inclusive economic growth, reducing poverty and inequality, and building capacity to cope with climate change.

IV. Methodological Approach Used for the Ex-Ante Financial and Economic Analysis of the PAR II AF

7. The main aim of the ex-ante Financial and Economic Analysis (EFA) is to examine the financial viability of the producer organizations subprojects and municipal subprojects that will be supported by the AF and assess their potential for increased profitability and income as a result to

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the AF interventions. As shown in table G.1, producer organization subprojects comprise the largest subcomponent (US$92.05 million), followed by municipal subprojects (US$18.43 million). The Project will finance approximately 768 producer organization subprojects and 48 municipal subprojects (of which two-thirds will support irrigation infrastructure). Producer organization subprojects include approximately 678 model 1 alliances (of which 70 are irrigation alliances at farm level); 45 model 2 alliances; 37 model 3 alliances, and 9 regional technical assistance subprojects.

Table G.1: Total Project Costs for the AF PAR II

COMPONENTS (US$ '000)

2018 2019 2020 2021 Total

A. Component 1: Institutional Strengthening 1. Communication and Dissemination 2,52 2,20 207 156 835

2. Institutional Capacity Support to SPOs 1,671 8,84 271 145 2,971

3. Capacity Building for Technical Service Providers and Eligible Municipalities 159 1,63 98 62 481

4. Appraisal of Alliances/Municipal Subprojects (Publication, dissemination of Project activities, evaluations of Rural Alliances; preparation of pre-feasibility and/or feasibility studies)

217 396 129 - 742

Subtotal 2,299 2,299 1,663 705 363

B. Component 2: Implementation of Rural Alliances 1. Producer Organization Subprojects 14,161 34,051 35,885 8,599 92,696 2. Implementation of Municipal Subprojects (Including support to FPS)

- 768 9,601 8,065 18,434

3. Support to SPOs for Subprojects' Implementation 177 666 1,055 793 2,691

Subtotal 14,339 35,485 46,540 17,456 113,820

C. Component 3: Project Management, Monitoring and Evaluation

1. Preparation, Implementation and Supervision 3,578 2,947 2,908 1,738 11,170

2. Information Systems 50 - - - 50

3. Studies and Market Intelligence - 140 - 140 280

Subtotal 3,628 3,087 2,908 1,878 11,500

Front-end Fee 250 - - - 250

TOTAL PROJECT COST 20,516 40,236 50,152 19,696 130,600

8. For the purpose of the financial and economic analysis of the proposed AF, incremental benefits to be attained by the producer organizations subprojects (model 1) and municipal subprojects have been estimated based on the results of PAR II.

9. For the productive alliances (producer organization subprojects), 33 crop and enterprise models were developed based on information from the Ministry of Rural Development and Land, the Georeferenced Management Information System, and the ongoing SPO investment plans from the first and second calls for proposals of PAR II. Out of these 33 models, 11 represent on-farm irrigation investments. The incremental benefits reflected in the crop models are based on increased productivity on a target area of approximately 15,960 hectares in four years and increased production though multiple cropping cycle per year for some crops. Data for the financial and economic analysis was collected by the Project team and a consulting company undertook a feasibility study of these investments.

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10. The financial and economic analysis of municipal subprojects uses average parameters and results obtained by a sample of eight subprojects (5 communal irrigation systems and 3 bridges and secondary roads’ rehabilitation) executed by FPS and PAR II. Basic parameters for municipal subprojects include investments costs, number of beneficiary families, annual benefits, and operational and maintenances costs.

11. A detailed ex-ante cost-benefit analysis was conducted covering a 10-year period, based on the primary and secondary data collected. In all cases, some adjustments were made to generate conservative indicators. In addition to the internal rate of return (IRR), the following parameters were estimated (by alliance and by family): incremental annual net income, employment generated (family, seasonal and permanent), and incremental net present value (NPV) using a discount rate of 12.81 percent as the opportunity cost of capital. The IRR and NPV were calculated from a financial and economic perspective, using market and economic prices, respectively. For the economic analysis, conversion factors for Bolivia, estimated by the National System of Public Investment (SNIP, in Spanish abbreviation)10 were used to transform market prices into economic prices and a social discount rate of 12.67 percent. Table G.2. displays the conversion factors used in this analysis.

Table G.2: Shadow Prices Bolivia (SNIP)

Shadow Prices Results

Currency 1.24%

Unskilled Rural labor 0.47%

Unskilled Urban labor 0.23%

Skilled Labor 1%

Semi-skilled labor 0.43%

Discount Rate - Weighted Average Cost of Capital 12.81%

Social Discount Rate 12.67%

12. Based on the results of the above-mentioned analysis, average incremental net income flows were calculated for each investment type of rural alliance. This provides the basis for the extrapolation of results among total investment by multiplying the average incremental cost and revenue streams by the total number of subprojects to be supported. Aggregation of the producer organization alliance investment models were added to the municipal subprojects models for estimating the overall financial and economic results from the Bolivian economy perspective. The following sections present the main assumptions made for the financial and economic analysis (EFA) and summarize the results. Average and aggregated results for each investment type are also presented below. Background tables are presented in appendix G.1 (Producer Organization Alliances) and appendix G.2 (Municipal Subprojects).

V. Efficiency of Producer of Producer Organizations Subprojects

13. The EFA of the investment supporting irrigation modernization at farm level – approximately 460 productive alliance subprojects or 77 percent of total investment in producer organizations subprojects model 1 – was based on production crop models, which consider both “without project 10 For further details on conversion factors refer to http://www.iidee.net/archivos/Inversion/%20Fconv%20Bolivia.pdf

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situation” and “with project situation” to assess the incremental benefits: increased production and productivity due to water provision. The target area is of approximately 15,960 ha irrigated in four years. Considering the Project’s demand-driven approach, the geographic site distribution of the incremental irrigated area of 15,960 ha is currently unknown. For the purpose of this ex-ante analysis, the crop models were identified based on the following assumptions: (1) investments will focus on communities that already operate communal irrigation systems provided by the GoB, and that only need the on-farm conveyance structures; (2) crops selected are those with the most critical need for irrigation to increase yields and stabilize production, and that are currently imported, but where Bolivia could have a competitive advantage for import substitution with proper irrigation (potato, tomato, onion); and (3) communities and producers with better capacity to manage irrigation technologies and related agronomic practices will be targeted. Table G.1 of appendix A provides a summary of selected crops, geographic site distribution, yields and unit production costs for the without and with project situations. The selected crops are: potato, onion, carrot, tomato, green bean, alfalfa, sugar cane, barley, peach, grape, apple and pear. As presented in table G.1.1 of appendix G1, the direct investment costs of US$70.5 million for irrigation modernization at farm level (approximately 460 subprojects supported) will generate an FIRR of 23 percent and an EIRR of 40 percent.

14. The EFA of the remaining 217 productive alliances subprojects under model 1, or 23.9 percent of the total producer organizations subprojects investment, was based on enterprise models. Representative samples of 21 alliance subprojects were selected within the 16 most prominent values chains supported by PAR II, under the assumption that these will also receive the bulk of the financing under the AF and assessed for the purpose of this analysis. These sub-sectors include: cattle meat (16 percent of total subprojects); cattle milk production (15 percent); potato (11 percent); peach (11 percent); natural honey (8 percent); orange (6 percent); grapes (6 percent); coffee (5 percent); maize (4 percent); fattening chickens (4 percent); mango (3 percent); pork (3 percent); cacao (3 percent); banana (2 percent); groundnuts/peanuts (2 percent) and eggs (2 percent). Crop and livestock budgets show incremental costs, revenues and net income comparing the with and without project situations. Data on key production parameters such as yields, inputs, labor and marketing costs were collected from the subproject investments plans. Table G.1.1 of appendix G1 presents summaries of basic parameters for the with and without project situations. Incremental benefits result from increases in the scale of production (crop area, herd size), increased productivity through adoption of improved crop and livestock production technologies, and better prices due to quality enhancement. Some productive parameters and assumptions were adjusted to generate conservative indicators.

15. Table G.3 below shows the financial and economic impact expected on the 21 representative sub-projects analyzed. Results indicate that the proposed AF could be instrumental for significantly increasing sales through the organizations. All subprojects analyzed were found to have financial internal rates of return (FIRR) above 12.81 percent (opportunity cost of the capital in Bolivia). The FIRR and financial net present value (FNPV)of the average alliance investment plan are 28 percent and US$58,560 and the economic internal rate of return(EIRR) and economic net present value (ENPV) are 36 percent and US$76,465, respectively. These results are below the original parent Credit (with FIRR and EIRR of average alliance plan of 60 and 67 percent respectively). The main reasons for this reduction is due to some adjustments and more realistic assumptions on the effect of the investments on the different productive systems analyzed. The detailed enterprise models involving the average SPO and beneficiary are presented in the Project

70

Files. The average beneficiary SPO will contribute an additional 0.9 family jobs under the value chain.

Table G.3: Financial and Economic Indicators - Summary by analyzed productive alliances

– Prices of 2016 expressed in US$ (at Bs 6.9 to US$1)

16. As mentioned before, the selected subprojects are assumed to be representative of the future sub-project portfolio under the AF. Results are therefore extrapolated to the 217 subprojects (excluding the on-farm irrigation projects) using their respective shares in the total number of subprojects funded under PAR II. Appendix G1 table G.1.4 shows that the direct investment costs of US$19.6 million for model 1 productive alliances (approximately 217 producer organizations subprojects supported, excluding the on-farm irrigation projects) will have a FIRR of 29 percent and an EIRR of 32 percent.

17. Based on the above-mentioned results, the aggregated results for all producer organization subprojects (678 model 1 alliances and a direct investment of US$91.50 million) are displayed in table G.4 and table G.1.5 of appendix G1. The aggregated FIRR is 26 percent and the aggregated EIRR 37 percent, while the aggregated FNPV is US$41.76 million, and the ENPV amounts to US$74.79 million. The above analysis is based exclusively on direct investment costs of 645 model 1 alliances. Considering others direct costs (model 2 and 3 alliances and regional technical assistance (TA) subprojects) and proportionate indirect costs, such as alliance preparation and

71

technical assistance for alliances implementation, the FIRR and EIRR decrease to 22 percent and 31 percent, respectively (see table G.4, below).

18. Sensitivity analysis was conducted based on the last situation – including proportionate indirect project costs – applying a 20 percent reduction of net incremental income to test the robustness of the results against adverse technical, climate or market related events. The results are quite robust, with the FIRR decreasing only slightly to 17 percent and the FNPV to US$13.15 million. Applying economic prices, the EIRR falls slightly to 27 percent; the ENPV to US$44.9 million.

Table G.4: Financial and Economic indicators for the Producer Organizations Subprojects

Expected Results in

Scenarios: FIRR EIRR

FNPV ENPV US$ US$

1. Direct Investment Costs (Model 1)

26% 37% 41,764,278 74,795,548

2. Including all other Direct Costs (Models 2 and 3 and Regional TA Subp.) and Indirect Costs

22% 31% 32,849,837 66,508,582

3. Sensibility Analysis: Reduction of 20% in the Net-incremental Income

17% 27% 13,538,781 44,910,683

VI. Efficiency of Municipal Subprojects 19. Based on an overall envelope of US$17.16 million for investment in municipal subprojects, about 48 subprojects will be financed at average total costs of US$357,682 per each subproject (80 percent PAR II and 20 percent municipal contributions). The 48 subprojects are estimated to include rehabilitation of 42 communal irrigations systems and 6 bridges and/or secondary roads.

20. The ex-ante financial and economic analysis of the municipal subprojects is based on average parameters and results obtained by a sample of eight subprojects (5 improvements of communal irrigation channel systems and 3 constructions of vehicle and pedestrian bridges) executed by FPS and PAR II. For both type of subprojects, assumptions were made to estimate the avoided product losses as a consequence of the public infrastructure rehabilitation. =or communal irrigation systems, three main types of befits were quantified: (i) expansion of cultivated area and diversification to more profitable crops; (ii) increases of crop yields and (iii) decreases of post-harvest losses. In the case of the bridge construction, an average decrease of 20 percent in post-harvest losses was assumed within the local production area of the beneficiaries. Tables G.2.1 and G.2.2 of appendix G2 provide a description and basic parameters (i.e., investment type and scale, beneficiary families, annual benefits, investment costs and annual maintenances costs) of the analyzed municipal subprojects. Using the parameters described above, average financial and economic indicators were estimated and are presented in table G.2.3 of appendix G2. The average FIRR was estimated at 38 percent for communal irrigation channels and 33 percent for bridge and road rehabilitations, while the average EIRR was 63 percent and 39 percent, respectively.

72

21. As shown in table G.5 below, the aggregated ex-ante FIRR and FNPV for all municipal subprojects is 38 percent and US$24 million. The second scenario includes indirect costs of alliances preparation and implementation support; and the FIRR decreases to 34 percent and the resulting FNPV to US$22.6 million. Finally, a sensitivity analysis was conducted based on the last situation applying a 20 percent reduction of net incremental income to test the robustness of the results against adverse conditions. The results are quite robust, with the FIRR decreasing to 27 percent and the FNPV to US$14 million. Applying economic prices, the EIRR falls to 42 percent and the ENPV to US$32 million.

Table G.5: Financial and Economic indicators for Municipal Subprojects

Expected Results in Scenarios: FIRR EIRR FNPV ENPV

US$ US$

1. Direct Investment Costs 38% 55% 24,259,126 47,092,884

2. Including Indirect Costs (Subproject Preparation and Implementation TA)

34% 51% 22,634,126 45,877,491

3. Sensibility Analysis: Reduction of Net Incremental Income

27% 42% 14,348,554 32,737,221

VII. Aggregate Economic and Financial Efficiency of the PAR II Project

22. The overall incremental benefits estimated cover the bulk of the investments financed under the Project: model 1 producer organization subprojects (including irrigation subprojects) and municipal subprojects. Applying the total incremental benefits streams to the analyzed direct investment costs of US$110.48 million, the FIRR is 29 percent and the EIRR 42 percent. The FNPV (with 12.81percent as discount rate) and ENPV (with 12.67 percent as social discount rate) amount to US$66 million and US$122.3 million, respectively.

23. If all other direct costs (for model 2 and 3 alliances, and regional TA subprojects) and indirect costs (for preparation of alliances and TA for alliances implementation support) are included, the FIRR and EIRR decline to 25 percent and 37 percent respectively. Considering Component 3 (Project Management and M&E), the FIRR and EIRR drop to 22 and 32 percent. Despite this decline, FIRR and EIRR are still well above the opportunity costs of capital. In the last scenario, a 20 percent reduction of net incremental income was calculated to test the robustness of the results against adverse technical, climate or market related events. As a result, the FIRR decreases to 17 percent and the FNPV is reduced to US$ 18.8 million, and the Project continues to be profitable.

24. Based on the above-mentioned results, the proposed AF is economically and financially feasible.

73

Table G.6: Financial and Economic Indicators for AF PAR II

Expected Results in Scenarios: FIRR EIRR FNPV ENPV

US$ US$

1. Direct Investment Costs Analyzed 29% 42% 66,023,404 122,298,040

2. Including All other Direct and Indirect Costs (Components 1 &2)

25% 37% 55,483,963 112,368,073

3. Including Project Component 3 Costs 22% 32% 43,983,963 100,068,155

4. Sensibility Analysis: Reduction of Net-Incremental Income

17% 26% 20,462,632 62,847,363

74

APPENDIX G.1 Producer Organization Alliances Table G.1.1 Summary of Producer Organizations Irrigation Investments

Weighted Yield

Production Costs

YieldIncremental

YieldProduction

CostsHa Ton/Ha Ha Ton/Ha Ha Ton/Ha Ha Ton/Ha Ha Ton/Ha Ha Ha Ton/Ha US$/Ha Tn/Ha % US$/Ha

Total 3,340 1,440 1,440 5,680 4,360 15,960 100Potato 1,200 2 400 9 2,000 4 1,260 4 4,860 30.5 5.5 500 10.0 82.0 2,700Onion 240 4 320 11 390 8 950 6.0 6.4 690 15.0 134.0 1,262Carrot 240 7 240 300 20 270 1,050 6.6 11.2 1,344 13.0 16.0 1,679Tomato 360 360 400 540 17 1,660 10.4 17.2 4,278 20.0 16.0 4,221Green Bean 800 600 1,400 8.8 1.1 522 1.4 27.0 710Alfalfa 500 2 200 3 700 4.4 1.8 1,086 4.0 122.0 1,086Sugar Cane 1,080 53 230 2 1,310 8.2 53.0 1,602 70.0 32.0 20,082Barley 360 140 500 3.1 0.8 630 2.4 200.0 670Peach 600 1 300 3 900 5.6 2.6 595 11.0 323.0 6,484Grape 140 720 9 720 9 1,580 9.9 8.0 1,891 12.0 50.0 4,000Apple 200 500 700 4.4 3.8 1,858 7.6 100.0 3,395Pear 200 150 350 2.2 4.8 1,256 5.5 15.0 1,436

Irrigated Area Total

% Over Total

Without Project With Project (Scenarios)

CropsAltiplano Amazonia Chaco

Interandean Valleys

Mesothermic Valleys

75

Table G.1.2. Average and Aggregated Financial and Economic Indicators - Producer Organizations Irrigation Investments

Discount Rate 12.81% Año 0 Año 1 Año 2 Año 3 Año 4 Año 5 Año 6 Año 7 Año 8 Año 9 Año 10

Crops HaPotato 4,860 8,796,600 8,796,600 8,796,600 8,796,600 8,796,600 8,796,600 8,796,600 8,796,600 8,796,600 8,796,600

Onion 950 961,400 961,400 961,400 961,400 961,400 961,400 961,400 961,400 961,400 961,400

Carrot 1,050 95,252 95,252 95,252 95,252 95,252 95,252 95,252 95,252 95,252 95,252

Tomato 1,660 2,514,714 2,514,714 2,514,714 2,514,714 2,514,714 2,514,714 2,514,714 2,514,714 2,514,714 2,514,714

Green Bean 1,400 38,360 38,360 38,360 38,360 38,360 38,360 38,360 38,360 38,360 38,360

Alfalfa 700 52,064 52,064 52,064 52,064 52,064 52,064 52,064 52,064 52,064 52,064

Sugar cane 1,310 69,777 69,777 69,777 69,777 69,777 69,777 69,777 69,777 69,777 69,777

Barley 500 180,000 180,000 180,000 180,000 180,000 180,000 180,000 180,000 180,000 180,000

Peach 900 842,400 842,400 842,400 842,400 842,400 842,400 842,400 842,400 842,400 842,400

Grape 1,580 2,075,460 2,075,460 2,075,460 2,075,460 2,075,460 2,075,460 2,075,460 2,075,460 2,075,460 2,075,460

Apple 700 1,084,020 1,084,020 1,084,020 1,084,020 1,084,020 1,084,020 1,084,020 1,084,020 1,084,020 1,084,020

Pear 350 131,775 131,775 131,775 131,775 131,775 131,775 131,775 131,775 131,775 131,775

Total area 15,960 16,841,821 16,841,821 16,841,821 16,841,821 16,841,821 16,841,821 16,841,821 16,841,821 16,841,821 16,841,821 2. Total Investment 70,556,050 13,468,400 23,416,650 27,089,850 6,581,150 3. O&M 5% 673,420 1,844,253 3,198,745 3,527,803 3,527,803 3,527,803 3,527,803 3,527,803 3,527,803 3,527,803

(13,468,400) (7,248,249) (12,092,282) 7,061,926 13,314,018 13,314,018 13,314,018 13,314,018 13,314,018 13,314,018 13,314,018

FNPV 16,782,422 FIRR 23%

Social Dicount Rate 12.67% Año 0 Año 1 Año 2 Año 3 Año 4 Año 5 Año 6 Año 7 Año 8 Año 9 Año 101. Incremental net Income

Crops HaPotato 4860 13,073,400 13,073,400 13,073,400 13,073,400 13,073,400 13,073,400 13,073,400 13,073,400 13,073,400 13,073,400

Onion 950 1,380,920 1,380,920 1,380,920 1,380,920 1,380,920 1,380,920 1,380,920 1,380,920 1,380,920 1,380,920

Carrot 1050 148,154 148,154 148,154 148,154 148,154 148,154 148,154 148,154 148,154 148,154

Tomato 1660 2,486,107 2,486,107 2,486,107 2,486,107 2,486,107 2,486,107 2,486,107 2,486,107 2,486,107 2,486,107

Green Bean 1400 77,840 77,840 77,840 77,840 77,840 77,840 77,840 77,840 77,840 77,840

Alfalfa 700 113,554 113,554 113,554 113,554 113,554 113,554 113,554 113,554 113,554 113,554

Sugar cane 1310 164,202 164,202 164,202 164,202 164,202 164,202 164,202 164,202 164,202 164,202

Barley 500 183,000 183,000 183,000 183,000 183,000 183,000 183,000 183,000 183,000 183,000

Peach 900 1,623,240 1,623,240 1,623,240 1,623,240 1,623,240 1,623,240 1,623,240 1,623,240 1,623,240 1,623,240

Grape 1580 2,575,293 2,575,293 2,575,293 2,575,293 2,575,293 2,575,293 2,575,293 2,575,293 2,575,293 2,575,293

Apple 700 1,245,405 1,245,405 1,245,405 1,245,405 1,245,405 1,245,405 1,245,405 1,245,405 1,245,405 1,245,405

Pear 350 141,225 141,225 141,225 141,225 141,225 141,225 141,225 141,225 141,225 141,225

Total area 15960 23,212,339 23,212,339 23,212,339 23,212,339 23,212,339 23,212,339 23,212,339 23,212,339 23,212,339 23,212,339 2. Total Investment 14,761,366 25,664,648 29,690,476 7,212,940

3. O&M ‐ 592,610 1,622,942 2,814,896 3,104,466 3,104,466 3,104,466 3,104,466 3,104,466 3,104,466 3,104,466

(14,761,366) (3,044,919) (8,101,079) 13,184,503 20,107,873 20,107,873 20,107,873 20,107,873 20,107,873 20,107,873 20,107,873

ENPV (US$) 48,192,101

EIRR 40%

1. Incremental net income

Incremental Financial Flows

Incremental economic flows

FINANCIAL ANALYSIS

ECONOMIC ANALYSIS

76

Table G.1.3. Summary of Analyzed Alliances – Basic Parameters – Price of 2016 Expressed in US$

Families PAR II OPPs TOTAL

GROSSINCOMES

for Incremental

sales

% Incremental

sales

PRODUCTION

COSTS

NET INCOME

OPP

NET INCOMEFAMILY

NOR-0259-1-360-2 Banana 24 31 31 1.21 1.48 22% 37 45 92% 95% 34 43 40,494 17,354 57,848 80 84 883 32% (7,968) 8,852 369 NOR-277-1-232-2 Banana 22 32.2 54.2 21 21 0% 675 1136 95% 95% 641 1079 38,484 16,493 54,978 145 145 63,548 68% 42,040 21,508 978 NOR-0808-1-349-2 Cacao 21 67 67 0.30 0.36 20% 20 24 90% 98% 18 24 38,043 17,464 55,507 4,411 4,411 24,470 31% 2,555 21,915 1,044 NOR-0210-5-376-2 Coffee 34 52 60 3 3 0% 143 167 80% 85% 115 142 61,367 26,300 87,667 673 673 18,304 24% 1,790 16,514 486 CHC-0734-1-112-2 Maiz 20 67 67 4 6 41% 261 369 87% 90% 227 332 19,535 8,372 27,907 146 173 24,327 73% 17,500 6,827 341 CHC-0126-1-121-2 Peanut 22 90 120 2 2 17% 135 210 95% 95% 128 200 39,842 17,075 56,917 957 1,000 76,826 63% 54,081 22,745 1,034 NOR-0220-1-300-2 Mango 90 216 216 12 13 11% 2586 2870 80% 90% 2069 2583 159,765 68,471 228,235 254 254 130,502 25% 7,390 123,113 1,368 NOR-0220-1-267-2 Mango 31 65 65 13 14 12% 819 917 80% 91% 655 835 55,022 23,581 78,603 254 254 45,496 27% 3,359 42,137 1,359 Asoc. Productores PaucaOrange 31 39 39 0.68 0.72 6% 26 28 90% 97% 23 27 56,047 24,020 80,067 215 215 715 14% 34,324 (33,608) (1,084) VAS-0119-1-184-2 Peach 31 12 12 10 12 18% 122 144 25% 25% 31 36 39,101 16,757 55,858 943 943 5,095 18% - 5,095 164 NOR – 0218-1-218-2 Potato 29 52 55 6.75 8.1 20% 351 446 90% 98% 316 437 30,540 13,089 43,629 391 391 47,227 38% 34,733 12,494 431 VAC-0303.2-206 Grape 22 8 8 3 4 21% 22 27 95% 100% 21 27 26,022 11,152 37,174 1,014 1,014 5,812 27% 3,653 2,159 98 LIVESTOCKTRO-0739-4-315-2 Pigs 24 70 848 0.06 0.07 17% 39 828 100% 100% 39 828 43,636 22,479 66,115 2,029 2,029 112,921 142% 108,641 4,281 178VAC-0303-1-188-2 Cattle - Milk 43 187 200 15.67 15.67 0% 791,178 848,225 97% 97% 770,924 826,510 79,312 34,527 113,839 0.54 0.54 29,807 7% (24,541) 54,348 1,264 TRO-0712-1-182-2 Cattle - Meat 27 85 133 0.20 0.23 15% 15.71 27.66 100% 100% 16 28 48,841 20,932 69,773 2,464 2,464 25,145 65% 5,471 19,674 729TRO-0745-4-323-2 Cattle - Meat 62 678 835 0.41 0.44 7% 247.83 336.31 100% 100% 248 336 112,067 48,029 160,096 1,476 1,476 60,285 16% 17,829 42,456 685VAS 607-1-178-2 Chicken - eggs 30 94 96 0.002 0.002 0% 145.98 174.64 100% 100% 146 175 54,202 23,229 77,431 1,567 1,567 46,007 20% 19,100 26,906 897 NOR-0210-1-257-2 Chicken - eggs 33 10,584 41,160 0.0025 0.0025 0% 26,460 102,900 100% 100% 25,930 100,840 53,972 23,131 77,103 2,029 2,029 196,957 0% 125,615 71,342 2,162 CHC-0126-1-155-2 Bees honey 22 63 148 0.015 0.016 7% 1.4175 3.552 95% 95% 1.35 3.37 21,093 9,040 30,133 3,913 3,913 7,935 151% 4,383 3,552 161VAS - 0602-1-259-2 Bees honey 40 77 184 0.009 0.010 9% 1.42 3.68 93% 93% 1.32 3.42 50,757 21,753 72,509 3,913 3,913 8,236 160% 3,845 4,391 110 NOR-0210-1-257-2 Broiler chickens 21 10,584 36,632 0.003 0.003 0% 26.46 91.58 98% 98% 25.93 89.75 37,967 16,272 54,239 2,029 2,029 129,487 246% 124,830 4,657 222

Without PAR II

WithPAR II

US$

AGRICULTURAL

WithPAR II

Without PAR II

WithPAR II

Without PAR II

WithPAR II

US$ Without PAR II

WithPAR II

Increm. Without PAR II

RuralAlliance

Activity Number Without PAR II

WithPAR II

DESCRIPTION / PRODUCTIVE BASE MARKETED PRODUCTION YEAR 1 INVESTMENT

SALE PRICE(US$)

INCREMENTAL INDICATORS YEAR 1

Rural Alliance SURFACE (Ha) /

HERD (Heads, units, hives)

YIELDS(Tn/Ha) / (Tn/Head) …

TOTAL PRODUCTION

(Tn)

% over TOTAL

PRODUCTION TOTAL (Tn)

PRODUCTION

77

Table G.1.4: Financial and Economic Indicators - Producer Organizations Investments (Model 1 Subprojects Excluding On-Farm Subprojects)

Table G.1.5: Financial and Economic Indicators - Producer Organizations Investments (All Model 1 Subprojects)

FINANCIAL ANALYSIS

AGGREGATED MODEL 1 - SUBPROJECTS excluding on-farm irrigation subprojects

-20,946,115 2,322,965 4,682,838 5,443,233 1,996,386 10,570,270 12,575,577 15,008,679 12,570,499 16,352,518 21,707,509

IRR 29%

FNPV (US$) 24,981,856

ECONOMIC ANALYSIS

AGGREGATED MODEL 1 - SUBPROJECTS excluding on-farm irrigation subprojects

-18,432,581 2,238,810 4,459,695 5,243,251 2,172,998 10,382,363 12,428,786 14,718,548 12,628,894 15,986,908 19,831,991

IRR 32%

ENPV (US$) 26,603,447

Y0 Y1 Y2 Y3 Y4 Y5 Y6 Y7 Y8 Y9 Y10

(34,414,515) (4,925,284) (7,409,443) 12,505,159 15,310,405 23,884,289 25,889,596 28,322,697 25,884,518 29,666,536 35,021,527

FIRR 26%FNPV 41,764,278

Y0 Y1 Y2 Y3 Y4 Y5 Y6 Y7 Y8 Y9 Y10

(33,193,947) (806,109) (3,641,384) 18,427,754 22,280,871 30,490,236 32,536,659 34,826,421 32,736,767 36,094,781 39,939,864

EIRR 37%NPV 74,795,548

Incremental Net Benefits

Incremental Net Benefits

MODELO 1

FINANCIAL ANALYSIS

Year

ECONOMIC ANALYSIS Year

78

APPENDIX G.2: Municipal Subprojects Table G.2.1. Description of Analyzed Municipal Subprojects

Without Project With Project

Chuquisaca Construction of 32 m length and 1 track vehicle-bridge in Japo community

292,455 476 117.60 None 20%

Cochabamba Construction of 18 m length and 1 track vehicle-bridge in Chaupiloma Bajo Community

155,689 60 18 None 14%

Cochabamba Construction of 33 m length and 1 track vehicle-bridge in the municipality of Vinto

259,562 524 0 None 23%

Cochabamba Improvement irrigation channel system, pedastrian bridge, and a vehicular bridge in Mallco Rancho

92,738 171 31 20% 5%

Cochabamba Lining of the main irrigation channel in Caramarka

452,279 154 155 15% 5%

Cochabamba Construction of 4 water storage ponds (12,120 m3 capacity), 11.560 ml of pipe, works of art and 75 hydrants and irrigation systems

117,918 87 117 20% 10%

Valles Construction of a Pressurized irrigation scheme

211,192 75 330 Potato, Corn, Groundnut, Soy

Potato, Corn, Groundnut, Pea, Soy, Oat (Fodder), Peach, Citrus, Watermelon, Alfalfa.

27% 0%

Valles Construction of 4 water storage ponds (12.120 m3 capacity), installation of pipes and irrigations systems

148,065 87 106 Alfalfa, Peas, Barley, Onion, Green Bean, Corn, Potato, Wheat

Alfalfa, Peas, Barley, Oat, Onion, Corn, Potato, Tomato, Broccoli, Carrots, etc.

25.14% 0%

Investment Description Department Main Activity

None (Potato; Late Potato; Oca; Papaliza; Green Beans; Oat; Onion)

Product Diversification

Japo

Vehicular Bridge Construction

None (Potato; Corn; Wheat; Barley; Bean; Peach; Other Products )

None (Potato; Oca; Papaisa; Corn; Wheats; Beans)

None (Apple; Corn; Vegetables; Horticulture; Others)

Irrigation Channels Improvement

None (Corn; Fodder Maize; Early Potato; Green Beans; Onion)

None (Fodder Maize; Corn; Alfalfa; Fodder Oat; Carrot; Early Potato, Green Onion)

Chaupiloma Bajo

Charinco

Increased Yield

Decreased Postharvest

Losses

Total Investment

(US$)

Benefited Families

MAIN EFFECTS OF THE INVESTMENT

Incremental Cultivated Area (Ha)

Incremental Irrigated Area

(Ha)

Chiñata y Catachilla

Mallco Rancho

Caramarka

Kaluyo Chico

Salinas del Campo

79

Table G.2.2. Summary of Municipal Subprojects – Basic Parameters and Indicators

Assets Labour Total

InvestmentBenefits Goods Labour Net Benefit

Net Benefit after tax

U/Labour Equiv.

Chuquisaca 476 270,705 50,268 292,455 214,376 42,503 58,253 113,619 85,214 23,301 Cochabamba 60 112,644 45,139 157,783 45,675 3,470 (7,481) 49,685 37,264 (2,992) Cochabamba 524 204,975 76,965 281,940 189,514 1,298 622 187,594 140,696 249

353 196,108 57,457 244,059 149,855 15,757 17,132 116,966 87,725 6,853

Cochabamba 171 193,346 96,184 289,530 102,603 7,498 19,938 75,167 56,375 7,975 Cochabamba 154 296,017 156,263 452,279 381,876 77,981 81,695 222,200 166,650 32,678 Cochabamba 154 97,791 20,127 117,918 112,496 326 3,688 108,482 81,361 1,475 Valles 75 137,486 73,706 211,192 624,292 263,657 85,217 275,418 206,563 34,087 Valles 87 92,440 55,625 148,065 407,565 108,928 66,247 232,391 174,293 26,499

128 163,416 80,381 243,797 325,766 91,678 51,357 182,731 137,049 20,543

Department FamiliesMain Activity

Japo

Average

Chaupiloma Bajo

Investment(US$)Incremental Annual Flows (Private Costs)

US$

Kaluyo Chico Salinas del Campo

BRIDGES AND SECONDARY

IRRIGATION CHANNELS

Charinco Average

Mallco Rancho Caramarka

Chiñata y Catachilla

80

Table G.2.3. Financial and Economic Impact Assessments – Summary by Municipal Subproject

12.81%

Y0 Y1 Y2 Y3 Y4 Y5 Y6 Y7 Y8 Y9 Y10 IRR NPV

1 JAPO Chuquisaca (320,973) 85,214 85,214 85,214 85,214 85,214 85,214 85,214 85,214 85,214 85,214 23% $128,4942 CHAUPILOMA BAJO Cochabamba (157,783) 37,264 37,264 37,264 37,264 37,264 37,264 37,264 37,264 37,264 37,264 20% $40,7443 CHARINCO Cochabamba (281,940) 140,696 140,696 140,696 140,696 140,696 140,696 140,696 140,696 140,696 140,696 49% $432,002

(760,696) 263,174 263,174 263,174 263,174 263,174 263,174 263,174 263,174 263,174 263,174 33% $601,240(253,565) 87,725 87,725 87,725 87,725 87,725 87,725 87,725 87,725 87,725 87,725 33% $200,413

1 MALLCO RANCHO Cochabamba (289,530) 56,375 56,375 56,375 56,375 56,375 56,375 56,375 56,375 56,375 163,741 17% $45,101

2 CARAMARKA Cochabamba (452,279) 166,650 166,650 166,650 166,650 166,650 166,650 166,650 166,650 166,650 336,255 36% $451,843

3 KALUYO CHICO Cochabamba (117,918) 34,753 72,517 72,517 72,517 72,517 72,517 72,517 72,517 72,517 116,737 50% $229,020

4 SALINAS DEL CAMPO Valles (211,192) (94,404) 139,706 139,706 139,706 139,706 139,706 139,706 139,706 139,706 218,903 35% $326,992

5 CHIÑATA Y CATACHILLA Valles (148,065) 10,351 163,188 163,188 163,188 163,188 163,188 163,188 163,188 163,188 218,713 68% $554,341

Agregate (1,070,919) 163,375 435,249 435,249 435,249 435,249 435,249 435,249 435,249 435,249 835,636 33% $1,052,956

Average (243,797) 34,745 119,687 119,687 119,687 119,687 119,687 119,687 119,687 119,687 210,870 38% $321,459

12.67%

Y0 Y1 Y2 Y3 Y4 Y5 Y6 Y7 Y8 Y9 Y10 IRR NPV

1 JAPO Chuquisaca (462,876) 141,453 141,453 141,453 141,453 141,453 141,453 141,453 141,453 141,453 141,453 28% $279,500.982 CHAUPILOMA BAJO Cochabamba (146,804) 45,539 45,539 45,539 45,539 45,539 45,539 45,539 45,539 45,539 45,539 28% $91,946.133 CHARINCO Cochabamba (307,983) 187,283 187,283 187,283 187,283 187,283 187,283 187,283 187,283 187,283 187,283 60% $640,635.70

(917,663) 374,275 374,275 374,275 374,275 374,275 374,275 374,275 374,275 374,275 374,275 39% $1,012,082.82(305,888) 124,758 124,758 124,758 124,758 124,758 124,758 124,758 124,758 124,758 124,758 39% 337,361

1 MALLCO RANGO Cochabamba (329,131) 88,198 88,198 88,198 88,198 88,198 88,198 88,198 88,198 88,198 251,153 25% $182,177.852 CARAMARKA Cochabamba (473,703) 233,952 233,952 233,952 233,952 233,952 233,952 233,952 233,952 233,952 470,803 49% $785,072.263 KALUYO CHICO Cochabamba (119,628) 48,214 98,566 98,566 98,566 98,566 98,566 98,566 98,566 98,566 158,380 65% $351,290.994 SALINAS DEL CAMPO Valles (217,032) (37,488) 274,658 274,658 274,658 274,658 274,658 274,658 274,658 274,658 383,174 68% $931,097.165 CHIÑATA Y CATACHILLA Valles (123,534) 38,456 242,239 242,239 242,239 242,239 242,239 242,239 242,239 242,239 180,472 110% $895,384.39

(1,263,028) 371,332 937,613 937,613 937,613 937,613 937,613 937,613 937,613 937,613 1,443,982 57% $3,145,022.65(252,606) 74,266 187,523 187,523 187,523 187,523 187,523 187,523 187,523 187,523 288,796 63% $629,004.53Average

Main activity Department

BRIDGES AND SECONDARY ROAD

IRRIGATION CHANNELS SYSTEMS

BRIDGES AND SECONDARY ROAD

IRRIGATION CHANNELS

ECONOMIC ANALYSIS

Agregate Average

Economic analysis

Financial analysis

Social Discount Rate

Discount rate

Agregate

FINANCIAL ANALYSIS

Year

Agregate Average

Main activity Department Nr. Year

81

Appendix H: Greenhouse Gas Accounting BOLIVIA – Additional Financing for Rural Alliances Project II (P158532)

1. Corporate Mandate. In its 2012 Environment Strategy, the World Bank adopted a corporate mandate to conduct greenhouse gas (GHG) emissions accounting for investment lending in relevant sectors. The ex-ante quantification of GHG emissions is an important step in managing and ultimately reducing GHG emissions, and is becoming a common practice for many international financial institutions.

2. Methodology. To estimate the impact of agricultural investment lending on GHG emissions and carbon sequestration, the World Bank has adopted the Ex-Ante Carbon-Balance Tool (EX-ACT), which was developed in 2010 by the United Nations Food and Agriculture Organization (FAO). EX-ACT enables assessment of a Project’s net carbon balance, defined as the net balance of carbon dioxide (CO2) equivalent GHGs that were emitted or sequestered as a result of Project implementation, compared to a without project scenario. EX-ACT estimates the carbon stock changes (emissions or sinks), expressed in equivalent tons of CO2 per hectare (ha) and year.

3. Project Boundary

Table H.1: Improved Annual Crop Management Practices

Crop Improved

Agronomic Practices

Nutrient Manage

ment

No Tillage /Residues

Management

Water Managem

ent

No Residue Burning

Manure Applica

tion

Area (ha)

Potatoes, Tomatoes, Carrots, Onions, Green Vegetables, etc.

12,430

Potatoes, Tomatoes, Carrots, Onions, Green Vegetables, etc..

2,040

Table H.2: Improved Livestock Mitigation Options

Livestock Categories

Head Number (Mean per Year) Technical Mitigation Options (%)

Feeding Practices Breeding

Start Without Project

With Project

Start Without With Start Without With

Dairy Cattle 4,000 4,120 4,400 15 15 100 10 10 20

Alpacas 1,500 2,060 1,650 0 0 100 0 0 15

82

Table H.3: Changes in Use of Inputs

Inputs Amount Applied per Year Start Without With

Urea (tons of nitrogen (N) per year - urea is 46.7% N) 31 35 42

Chemical N-fertilizers (tons of N per year) 173 190 230

Compost (tons of N per year) 1,166 1,749 5,678

Phosphorus (tons of P2O5 per year) 386 423 483

Potassium (tons of K2O per year) 173 190 230

Insecticides (tons of active ingredient per year) 24 26 19

Fungicides (tons of active ingredient per year) 24 26 19

4. Data sources. SIGG PAR II Project, MDRyT, National Institute of Statistics (Instituto Nacional de Estadisticas—INE), National Agricultural Census 2013, FAO Fertilizers Database.

5. Key assumptions. The Project coverage is countrywide. Bolivia has a tropical climate, and its dominant soil type is low activity clay. The Project implementation phase is four years, and the capitalization phase is assumed to be 16 years. The 20-year implementation period is standard in the use of EX-ACT.

6. Results. The net carbon balance quantifies GHGs emitted or sequestered as a result of the Project compared to the scenario if the Project does not occur. Over the Project duration of 20 years, the Project constitutes a carbon sink of 237,549 tCO2-eq. The Project provides a sink of 11 tCO2-eq per ha, equivalent to 0.6 tCO2-eq per ha per year. The main carbon sink is primarily from improved annual crop management practices, and the main carbon emission source is from increased use of compost.

Table H.4: Results of the Ex-Ante GHG Analysis

Project Activities

Over the Economic Project Lifetime (tCO2-eq)

Annual Average (tCO2-eq/year)

GHG Emissions Without Project

Scenario (1)

Gross Emissions

With Project Scenario

(2)

Net GHG Emissions

(2-1)

GHG Emissions Without Project

Scenario (3)

Gross Emissions

Project Scenario

(4)

Net GHG Emissions

(4-3)

Improved Annuals

(55,431) (631,454) (576,023) (2,772) (31,573) (28,801)

Improved Livestock

174,718 176,857 2,139 8,736 8,843 107

Inputs 226,661 562,996 336,336 11,333 28,150 16,817

Total 254,528 16,979 (237,549) 12,726 849 (11,877) Per Hectare

12.1 0.8 (11.3) 0.6 0.0 (0.6)

83

Appendix I: Key Documents in the Project Files BOLIVIA – Rural Alliances Project Additional Financing (P158532)

Document Name Date

Economic and Financial Analysis Dec 22, 2016

Cost Tables Dec 22, 2016 (updated at negotiations to

include Front-end Fee)

Environmental Analysis Dec 11, 2016

Social Analysis Dec 13, 2016

Operational Manual of the Project Advanced draft Dec 20, 2016

Public Consultation Proceedings August and September 2016

Revised Environmental Management Framework

Approved by the World Bank on Dec 14, 2016

Revised Social Management Framework Approved by the World Bank Dec 14, 2016

Climate Risk Screening Prepared on December 7, 2016

84

Appendix J: Map BOLIVIA – Additional Financing for Rural Alliances Project II (P158532)