Document of The World Bank

FOR OFFICIAL USE ONLY

Report No: 5 1896 - LAC

PROJECT PAPER

ON A

PROPOSED ADDITIONAL FINANCING GRANT

FROM THE GLOBAL ENVIRONMENT FACILITY SPECIAL CLIMATE CHANGE FUND

IN THE AMOUNT OF US$450,000

TO THE

GENERAL SECRETARIAT OF THE ANDEAN COMMUNITY

ACTING ON BEHALF OF THE PLURINATIONAL, STATE OF BOLIVIA, THE REPUBLIC OF ECUADOR AND THE REPUBLIC OF PERU

FOR THE

ADAPTATION TO THE IMPACT OF RAPID GLACIER RETREAT

IN THE TROPICAL ANDES PROJECT

November 25,2009

Sustainable Development Department Bolivia, Ecuador, Peru and Venezuela Country Management Unit Latin America and the Caribbean Region

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

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ACRONYMS AND ABBREVIATIONS

AF CPS EMF FA0 FY GEF IBRD IDA IGP IPCC-SPM

IRD

MRI NCAR NGO PR4A

SCCF SENAMHI

SGCA

TF UNFCCC

Additional Financing Country Partnership Strategy Environmental Management Framework Food and Agriculture Organization Fiscal Year Global Environmental Facility International Bank for Reconstruction and Development International Development Association Geophysical Institute o f Peru (Instituto Geofisico del Ped) Summary for Policy Makers o f the Intergovernmental Panel for Climate Change Development Research Institute (Institut de Recherche pour l e DCveloppement) Meteorological Research Institute o f Japan National Center for Atmospheric Research Non Governmental Organization Adaptation to the Impact o f Rapid Glacier Retreat in the Tropical Andes Project (Proyecto Regional Andino de Adaptacibn a1 Retroceso Rapido de Glaciares) Special Climate Change Fund Meteorological and Hydrological National Service, Peru (Servicio Nacional de Meteorologia e Hidrologia, Peru) General Secretariat o f the Andean Community o f Nations (Secretaria General de la Comunidad Andina) Trust Fund United Nations Framework Convention on Climate Change

Fiscal Year: July 1 - June 30 All dollar figures are in current U.S. Dollars

~-~

Vice President: Pamela Cox Country Director: Carlos Felipe Jaramillo Act ing Sector Manager: Jyoti Shukla Task Team Leader: Walter Vergara

FOR OFFICIAL USE ONLY

ANDEAN COUNTRIES Adaptation to the impact o f rapid glacier retreat in the tropical Andes

Additional Financing

CONTENTS

~.INTRODUCTION ................................................................................... 1

11 . BACKGROUND AND RATIONALE FOR ADDITIONAL FINANCING ......................... 1

II. I Country and sector issues ............................................................... 2 I I. 2 Risk factors. unforeseen events. institutional capacity .............................. 3 I I. 3 Opportunities P o m successful implementation. absorptive capacity of ........... 3

q.4 Project design ............................................................................. - 3 beneficiaries

III.PROPOSED CHANGES .......................................................................... 4

I V . CONSISTENCY WITH COUNTRY CPS ......................................................... 4

v . APPRAISAL OF SCALED-UP PROJECT ACTIVITIES .......................................... 5

V I . SAFEGUARD ASPECTS .......................................................................... 5

VII.EXPECTED OUTCOMES ....................................................................... 6

VI11 . BENEFITS AND Rrsw ......................................................................... 7

Ix . FINANCIAL TERMS AND CONDITIONS FOR THE ADDITIONAL FINANCING ............. 7

a restricted distribution and may be used by recipients only in the performance o f their off icial duties . I t s contents may not be otherwise disclosed without Wor ld Bank authorization .

PROJECT PAPER DATA SHEET

Source Borrower IBRD/IDA Others

Borrower: General Secretariat o f the Andean Community (SGCA)

Local Foreign Total 0 0 0 0 0 0

0.1 0.35 0.45

Have these been approved by Bank management?

Revised project development obj ectives/outcomes The project development objective and outcomes remain the same as the Parent Project.

I. Introduction

1. This Project Paper seeks the approval o f the Executive Directors to provide an Additional Grant in an amount o f US$450,000 to the General Secretariat o f the Andean Community, SGCA, for the Regional: Adaptation to the Impacts o f Rapid Glacier Retreat in the Tropical Andes Project (PRAA),GEF-SCCF P098248, TF091712.

2. The proposed Additional Grant would help finance the costs associated with Peru's efforts to better characterize the high mountain ecosystems associated to glacier retreat, and to prepare comprehensive guidelines that serve as basis for future adaptation initiatives in high mountain areas o f Peru and other neighboring countries.

3. The parent Project i s performing well to date. The proposed Additional Grant will enhance and scale-up the activities under Component 3 o f the parent Project. The extra activities to be carried out with this new grant include (i) development o f a scientific baseline for high mountain ecosystems, and (ii) definition o f guidelines to support integrated and sustainable adaptation measures.

4. The outcomes expected with these new activities include (i) improved documentation and analysis o f future projections and impacts for high mountain ecosystems in Peru, and (ii) definition o f specific guidelines for adaptation projects in high mountain ecosystems.

11. Background and Rationale for Additional Financing in the amount of US$450.000.

5. Details o f parent project - GEF-SCCF P098248, TF091712. The GEF-SCCF grant in the amount o f US$7.49 mill ion was approved by the Board on May 27,2008; it became effective on July 11,2008 and has a closing date o f September 30,2012. The objective o f the project is "to contribute to strengthening the resilience o f local ecosystems and economies to the impacts o f glacier retreat in the Tropical Andes, through the implementation o f specific pilot adaptation activities that illustrate the costs and benefits o f adaptation".

6. The "Adaptation to the Impact o f Rapid Glacier Retreat in the Tropical Andes", also called PR4A Project (Proyecto Regional Andino de Adaptaci6n) has four components:

1. Planning. Detailed design o f key selected adaptation measures (GEF-SCCF contribution US$0.4 million; total cost US$ l -1 million): 2. Investment. Implementation o f pilot adaptation measures (GEF-SCCF contribution US$5.94 million; total cost US$25.55 million). 3. Scientific Support. Monitoring o f glacier retreat in the region (GEF-SCCF contribution US$0.45 million; total cost US$2.30 million). 4. Project management (GEF-SCCF contribution US$0.70 million; total cost US$3 -77 million).

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7. The Additional Finance (AF) operation proposed will not change the Project Development Objective, nor will it change the original objectives, Project design, or Project scope. N o Project closing date extension i s required.

8. The Project i s being implemented in a satisfactory manner. A World Bank mission, from March 30 to April 8, 2009 stated the advancement o f the tasks envisaged for the first year o f activity. The Project has had Satisfactory ratings for the Implementation Performance and the Development Objectives. Institutional arrangements for the parent Project are adequate to manage the expanded project activities and will remain the sahe in the AF grant.

9. The reasons for the Borrower to request the Additional Grant relate to the need, already identified during project formulation, to improve the scientific background on high mountain ecosystems. Those areas play a crucial role in water regulation and availability, and only recently has it been found that they are especially prone to climate change impacts. The lack o f solid background scientific knowledge has awoken the interests o f Peru, and o f international donors with potentially similar problems, such as Switzerland, to perform scientific research on high mountain areas. Strengthening the knowledge base would provide all necessary inputs to formulate good adaptation guidelines and approaches. Those guidelines would have a high application span, they could be used in other countries o f the region with similar difficulties. The new activities will thus strengthen Component 3 o f the parent Project for Peru.

II. I Country and sector issues

10. Climate change represents a global challenge and i s caused by accelerated increases in greenhouse gas concentrations in the atmosphere. The Fourth Assessment Report, Summary for Policy Makers o f the Intergovernmental Panel for Climate Change (IPCC- SPM 2007), concluded that the global average surface warming following a doubling o f carbon dioxide concentrations over pre-industrial levels i s likely to be in the range o f 2 to 4.5"C with a best estimate o f about 3"C, and i s very unlikely to be less than 1.5"C. Recent research shows that climate change will be more pronounced in high-elevation mountain ranges. Thus, heavily populated, high-elevation areas in the tropics, such as the Tropical Andes, are now experiencing, and will likely continue to experience, dramatic changes in climate. In particular, global warming has been linked to the accelerated retreat o f tropical glaciers in the Andes and to an increase in the weather variability and weather extremes affecting the Andean ecosystems, with significant repercussions on ecosystem integrity and the welfare o f local populations.

11. The National Climate Change Strategy o f Peru, within i ts major goals, calls for the identification o f a national research agenda, evaluation o f the country's present and future vulnerability; and prioritized evaluation o f specific ecosystems, such as mountain ecosystems and the availability o f glacier-fed water resources. The additional activities to be included in the Project fall directly into the priorities o f the Strategy.

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I1 2 Risk factors, unforeseen events, institutional capacity

12. The Additional Financing will support the compilation o f scientific data and the development o f guidelines for the implementation o f adaptation measures for Peru. The new activities included are at a level o f studies, and do not imply on-the-ground interventions. For these reasons, no risk factors or unforeseen events are expected at the technical level.

13. The institutional capacity to complete the activities under the Additional Financing i s adequate. The Grant Recipient and implementing body i s the General Secretariat o f the Andean Community (SGCA). The SGCA will carry out the administrative and financial management o f the project. Their performance up to date, as noted during Bank's supervision visits, has always been satisfactory.

I1 3 Opportunities porn successful implementation, absorptive capacity of beneficiaries

14. The new activities will support the development o f a strong scientific baseline in high mountain ecosystems, and the development o f guidelines for adaptation measures. The results can be very useful to incorporate in current activities o f the parent Project, and can turn into an important base from which to build future collaborations in Peru and in neighboring countries facing similar challenges.

15. Peru has enough technical capacity to absorb the new tasks, and to incorporate the results into their country management efforts. A series o f well-performing local institutions, such as the Servicio Nacional de Hidrologia y Meteorologia (SENAHMI), the Instituto Geofisico del P e d (IGP) and the Institute for Research and Development (IRD), all guarantee the technical and managerial incorporation o f the new activities.

I1 4 Project design

16. The additional activities will be conducted in coordination with one or two local partners and one international partner. Additional contacts with local and international institutions wil l be assured by joint activities in the PRAA Project. Furthermore, existing experiences at the national and sub-national levels (e.g., the National Communications on Climate Change under UNFCCC) will be integrated. International collaboration i s also suggested with leading institutions such as NCAR regarding Earth System Modeling and MRI for Earth Simulator runs.

17. The expansion o f activities will strengthen Component 3 o f the parent Project, with the addition o f two extra sub-components:

18. Sub-component 3.4 (Peru). Development o f a scientific baseline for high mountain ecosystems. This sub-component will be financed by the GEF-SCCF (additional financing). It will support: a) the development o f methodologies to address

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data gaps in the climate records and time series for hydrology and climate in high mountain ecosystems; b) development o f tools and systems to ensure that in the future these records and time series are continued in a sustainable manner; c) support o f high resolution downscaling methods for the deployment o f modeling techniques for high altitude ecosystems; d) Introduction and support to the use o f tools for the integrated assessment o f climate change impacts on services and economies (e.g. water, agriculture, disasters); e) Development and application o f integrated cross-sector impacts analyses for the natural, social and economic perspectives o f climate change adaptation at regional to local level; f) Dialogue with implementation and policy side for adequate consideration in the baseline methodology; g) Training targeted at selected user institutions such as SENAHMI.

19. Sub-component 3.5 (Peru). Development of guidelines for adaptation measures. This sub-component will be financed by the GEF-SCCF (additional financing). The sub-component will support: a) Analyses of the technical, institutional, political and human dimension based on integrated assessments for different levels o f scientific complexity; b) Initiation and implementation o f an active science-policy dialogue by involving policy makers into the process of adaptation methods development; c) Supporting knowledge exchange and capacity building; d) Establishing long-term international scientific networks and collaborations, including joint publications efforts.

111. Proposed Changes

20.No changes related to parent Project are sought. The parent Project activities and design will carry on as previously planned. The new activities will be performed in parallel, without a direct effect on the others.

2 1. N o complementary changes in institutional arrangements, procurement plan, closing date and implementation schedule are foreseen. The Additional Financing will be managed by the SGCA, following their own disbursement and procurement arrangements simi lar to those o f the parent Project, which are in l ine with Bank’s requirements. The disbursement o f the additional activities i s planned as follows:

U S $ million

IV. Consistency with country CPS

22. The World Bank Group Country Partnership Strategy (CPS) for Peru, recognizes the country’s vulnerability to both climate change and climate variability and the challenge posed to the country by glacier retreat, which will impact the country’s water supply, agricultural, health, and tourism sectors. This Additional Financing further strengthens

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the CPS' strategic focus on protection and conservation o f strategic ecosystems, increasing their adaptive capacity. Some o f the lowest income population in the country, base their economies on those ecosystems. The description o f baseline information and adaptation guidelines results in a more" robust platform to minimize climate change impacts on high ecosystems. Furthermore, the activities are in line with the World Bank's Latin American region policy to promote efforts to adapt to climate change impacts, and linking knowledge and information to decision-making on climate issues.

V. Appraisal o f Scaled-up Project Activities

23. The application o f the Additional Financing will further strengthen the scientific baseline for high mountain ecosystems, improving the documentation o f climate, climate variability, and climate change for Peru, and the impacts on glacier-dependent regions o f the country. The other activity to be included i s the definition o f strategies and guidelines to support integrated and sustainable adaptation measures, required for proper formulation and long-term monitoring o f adaptation measures.

24. All the new activities envisaged for the proposed Additional Financing consist o f scientific research, data gathering, modeling, institutional capacity building and other issues that do not directly impact populations or the environment (no on-the-ground interventions will be done). There are no new considerations to be made to the appraisal o f the former parent Project. An economic analysis o f adaptation measures will be conducted under the Project, and during the implementation phase, data will be collected to assess actual benefits and measure costs. No extra analyses are required at this point. The fiduciary analysis conducted for the parent Project remains valid for the proposed Additional Financing.

25. The additional activities do not raise the environmental category o f the project, and no new safeguard policies are triggered. The activities are at the level o f studies and capacity building.

26. The required Additional Financing does not involve any exception to Bank policies.

VI. Safeguard aspects

27. The Project i s s t i l l in i ts f irst year o f implementation, and pilot activities are s t i l l in the design phase, with no further advancement. In several cases, particularly in Ecuador and Bolivia, a number o f institutional changes have delayed implementation. Given that no actual on-the-ground interventions have yet started, there are no lessons learned from the application o f the project's Environmental Management Framework (EMF). Rather, the EMF'S procedures are in the beginning stages o f being applied.

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28. That said, the activities being included under this Additional Financing comprise only studies and capacity building, with no new safeguard implications. As such, the project’s EMF will remain unchanged.

29. The consultation processes with local communities and other shareholders (regional development agencies, government institutions and NGOs) has continued at the different pilot project sites. During the last Bank supervision visit, the local communities expressed their full endorsement o f project activities in Peru.

30. Furthermore, the Project has selected CARE as the principal strategic partner to implement pilot adaptation measures in rural areas. CARE i s an institution with long, recognized experience in community work and rural sustainable development. Other strategic partners, such as the French “Institut de Recherche pour le DCveloppement” (IRD), Agrorural in Peru, and likely the Food and Agriculture Organization o f the United Nations (FAO), all have a recognized capability to deal with social and environmental safeguards.

The participant countries, through their Ministries o f Environment, have confirmed their mandate to the General Secretariat o f the Andean Community o f Nations by signing subsidiary agreements. Signees to the agreements are organizations with environment policy responsibilities and a maturing record o f dealing with environmental issues. High officials from the Ministr ies o f the Environment (vice ministers) have been appointed to supervise project implementation. Th is steering committee provides additional assuring

’ of environmental stewardship.

For all those reasons, the Bank remains confident o f the involved countries’ capabilities to conduct further social and environmental assessments moving forward, whenever required.

3 1. The Bank visited the sites during project preparation, and another visit from the Bank i s foreseen in the short term. However, at th is early stage, the outreach o f some activities and the specific communities that will benefit are not completely defined. For th is reason, the social assessments and the Indigenous Peoples Plans prepared by the countries involved and for all regions where projects will be implemented are s t i l l considered as valid.

32. The entire Project has been designed and will be implemented seeking environmental sustainability. The Bank i s closely following Project execution, with frequent supervision videoconferences and intense correspondence with all parties, and will make sure safeguard aspects o f the activities are fully taken into account.

VII. Expected Outcomes

33. The Project Outcomes are not changed. The new activities wil l strengthen them and secure their fblfillment. The Additional Financing will contribute, in particular, to both

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“Effective integration o f the implications o f glacier retreat into the regional and local planning in glacierized basins” and to “Generation o f data on glacier dynamics”.

Baseline Reduced

34. A new Intermediate Outcome Indicator, for Component 3 o f PRAA, i s proposed for the new activities: “Improved analysis o f time series and future climate chapge impact projections for high mountain ecosystems.”

YR1 YR2 YR3 YR4 -- Database with Complete Database active and

35. The design o f the new indicator i s proposed as follows:

documentation capacity

available high database with all used, personnel trained, mountain gaps indentified future data collection datasets in Peru and filled channels ascertained

Frequency and reports

Annual report

Data collection Responsibility for data instruments collection Annual review National Technical

Specialist

VIII. Benefits and R i s k s

Risk Ability o f local institutions to

36. The benefits o f strengthening data collection and developing appropriate adaptation guidelines goes far beyond the populations in which pilot projects will be executed. Investing in science and knowledge i s a win-win strategy; the results o f the new activities will be a standing block for the Government o f Peru in the present and in the future. Guidelines can be widely applied to other countries o f the Region with similar topography and difficulties.

Rating Mitigation Moderate The new funding will also provide for

37. Risks:

absorb new tools and methods. training and institutional strengthening at the Servicion Nacional de Meteorologia e Hidrologia (SENAMHI)

IX. Financial Terms and Conditions for the Additional Financing

38. The Additional Financing will be financed through a Grant from the Global Environment Facility, GEF. Thus, it will follow similar arrangements as the parent Grant Agreement, and GEF’s guidelines and rules.

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US$ Mi l l ion

1. Planning. Detailed design o f key selected adaptation measures 2. Investment. Implementation o f pilot

Component

0.40

5.94

I Original

adaptation measures 3. Scientific Support. Monitoring o f glacier 0.45 retreat in the region 4. Project management TOTAL

0.70 7.49

Additional Final Financin

39. The Project Outcomes are not modified. The additional activities will further strengthen them. One intermediate outcome indicator i s proposed for Component 3, as described in paragraph 34: "Improved analysis o f time series and future climate change impact projections for high mountain ecosystems."

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