Document of

The World Bank

FOR OMCLAL USE ONIY

Report . 12718-UA

GLOBAL ENVIRONMENT FiWILITY

MEMORANDUM AND RECOMMENDATION

OF THE DIRECTOR

COUNTRY DEPARTMENT Ii

OF THE EUROPE AND CENTRAL ASIA REGION

OF THE

INTERNATIONAL BANK FOR RECONSTRUCTION ANYi DEVELOPMENT

TO THE

REGIONAL VICE PRESIDENT

ON A PROPOSED GRAY-"

FROM THE GLOBAL ENVIRONMENT xRUST FUND

IN AN AMOUNT EQUIVALENT TO SDR 400,000

TO

UKRAINE

FOR A

TRANSCARPATHIAN BIODIVERSITY PROTECTION PROJECT

JANUARY 24, 1994

Natural Resources Management DivisionCountry Department IVEurope and Central Asia Region MICROGRAPHICS

This document has a restricted distribution and ma}their official duties. Its contents may not otberwis Report No: 12718 UA

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CURRENCY EQUIVALENT

(April 1993)2690 Karbovanets (Kb) = US$1

WEIGHTS AND MEASURES

The metric system is used throughout this report.

GLOSSARY OF ABBREVIATIONS

CBR - Carpathians Biosphere ReserveCIS - Commonwealth of Independent States

DPRA - Department of Protected and Recreation k- easECU - Europoan Currency Unit

EC - European CommunityGEF - Global Environmental FacilityGET - Global Environment Trhst FundGIS - Geographic Information System

GDP - Gross Domestic ProductMBR - International Biosphere Reserve (Slovak, Poland and Ukraine)

IBRD - International Bank for P.econstruction and DevelopmentICB - International Competitive BiddingIM - International Monetary Fund

IUCN - International Union for the Conservation of Nature and NaturalResources

LCB - Local Competitive BiddingMEP - Ministry for Environmental ProtectionPMU - Project Management UnitSOE - Statement of ExpenditureTA - Teihnica! Assistance

FISCAL YEAR

January 1 to December 31

FOR OMCIAL USE ONLY

UKRAINE

TRANSCARPATWAN BIODIVERSITY PROTECTION PROJECT

GRANT AND PRoJEcr SUMMARY

RCPIENT: Ukraine, Ministry of Environmental Protection

AMOUNT: 400,000 SDR

TERMS: Grant

ONLENDING: Not applicable

FINANCING PLAN:

Local Foreign Total

Source (US$ M[illion)

GET Grant 0.250 0.250 0.500

MacArthur Foundation Grant 0.000 0.010 0.010

Government 0.070 0.000 0.070

TOTAL 0320 0.260 0.580

ECONOMIC RATE OFRETR: Not calculated, though substantial economic and environmental benefits.

STAFF TEC ALREPORT: Report No. 12718-UA dated January 1994

MAPS: 1. Transcarpathian Biodiversity Protection Project IBRD Map No. 254162. GEF Biodiversity Projects: East Carpathians IBRD Map No. 254173. Suggested Priorities for Environmental

Protection and Natural Resource Management IBRD Map No. 25415

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

MEMORANDUM AND RECOMMENDATION OF THE DIRECTOROF THE COUNTRY DEPARTMENT

TO THE REGIONAL VICE PRESIDENT

1. I submit for your approval the following memorandum and recommendation on a proposedGlobal Environmental Trust (GET) grant to the Ukraine for 400,000 SDR, the equivalent of US$500,000, to finance a project to protect the endangered ecosystems in the Eastern CarpathianBiosphere Reserve of Ukraine and its adjacent buffer zones.

Background

2. Seven ecological communities transect Ukraine: European broadleafed forests, the northern taiga,the interior steppe, semi-and sands and marshes near the B3lack and Azov Seas, the seaside littor&aestuaries of large rivers such as the Dnieper, and the sub-tropical pine and chaparral of Crimea. Theforest sector of Ukraine (10 million ha, 14 perceat of the land area) is under great envirownental stress,impacted by poor forestry and agricultural practices and, in some areas, by air pollution. The EastCarpathian mountains are a significant part of this forest resource and are recognized as a key center ofandemism. Steps to protect the area are urgently required.

3. The Government and the World Bank are presentty finalizing a Joint Environmental Study. Thisstudy included a review of nature reserve and park management needs in the country. Tne establishmentof reserves for the protection of unique natural ecosystems and genetic resources of plant and animals isan important challenge recognized by the Government of Ukraine1 . The network of protected areasincludes 15 strict nature reserves (Zapovedniki), 3 National Parks, 2 Biosphere Reserves and many otherprotected landscapes, zoological and botanic gardens and other locally significant reserves. Some 2percent of the country is under some form of nature protection.

4. The Government is also restructuring its national forest management plans. Tirmber cutting isprohibited on 30 percent of the forested areas. The government is taking measures to strengthen themanagement of the forests and also to extend forest cover in the country.

S. The Eastern Carpathian Mountains along the borders of the Slovak Republic, Poland and Ukrainecontain some of the least disturbed ecosystems in Eastern Europe. The Carpathians contain one quarterof the flora of Europe and many endemic and medicinal plants useful to mankind. The largest remainingEuropean stand (10,900 ha) of virgin beech forest is standing in the Carpathians. This is a remarkablenaural resource for the rest of Europe, which has lost such undisurbed areas. A part of the EastCarpathians has been formally designated by Ukraine as the Carpathians Biosphere Reserve under theUNESCO Man and the Biosphere Program.

6. Carpathians Biosphere Reserve The Ukinian Carpathians contain unique preserved areas ofbeech and spruce forests of significance for analyzing the development history of the East Carpathiansvegetation. The first reserve of beech and fir-beech forests was created in 1932 on the Stuzica mountainslopes. Since that time the Reserve has been enlarged to 2,952 ha and included in the UkrainianCarpathians Biosphere Reserve (CBR). The CBR was creatd in 1991 with a total area of 38,930 ha,which is subdivided into a reserve zone (21,879 ha), a buffer zone (8,949 ha), and a conservative naturemanagement zone (8,071 ha). The reserve zone includes the Stuzica scenic reserve, and four separately

1 Ukrain Natoa Repol, UN Conwe an Eanvironmn a evdw ent,a 1992.

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located forest or alpine areas. These areas are the Khust massif, the Ugolsko-Shyrokoluy Lansky Massif,the Chornogirs'ky massif and the Maramoros'ky massif.

Rationale for GEF Involvement

7. The GEF project has been accorded high priority by the Government. However, funds are notava!1able in Ukraine to carry out the work proposed here The Government does not want to borrowexternal resources for it at market rates of interest. The GEF project would provide the Government withurgently needed support to assess and redress the environmental damage to Ukraine's forests.

8. Tne Eastern Carpathians share transboundary ecosystems. The programs developed for theirintegrated m2nagement will be of international utility. The global significance of the areas initiallyselected is confirmed and supported by their designations by UNESCO and the World Wildlife Fund(International), being identified among the "existing ecological bricks" of Europe.

9. This project will constitnte a contribution to the GEF Portfolio. In its efforts to preserve globalbiodiversity, the GEF will encounter more of the transboundary issues being addressed in this project.It will also frequently encomnter the need to balance in-situ and ex-sltu preservation with innovativetechniques. It will, in particular, face the conflicting demands of a resident population which can beeither a force for further eroding biodiversity or a potent ally in its preservation. In these ways, theprogress of this project will be germane to ongoing activities of the GEF and have utility as a case studyin trying to incorporate community participaiton.

Project Objective

10. The objectives of this project are to:

(a) Incorporate this small Ukrainian GEF project ($500,000) as an add-on to the proposedSlovak Biodiversity Protection Project (GEF $2.3 million). The innovation beingsupported under the Ukrainian project is threefold: this would be the first GEF projectin the Ukraine, the first trilateral transboundary project supported under the GEP, andthe first three-country Trust Fund to be organized for biodiversity protection. TheMacArthur Foundation of Chicago, Illinois is willing to contribute $30'v,000 to initiatethis Carpathian Biodiversity Protection Trust Fund.

(b) Support the Ukrainian portion of the overall trilateral effort (Ukraine, Poland and Slovak)to protect habitat fragments, stop species loss and upgrade habitat management.

(c) Develop and implement the legal, institutional and administrative interventions to achievethe long term protection of the area in Ukraine as well as the abutting zones in Polandand the Slovak Republic.

-3 -

11. The project would start with an ecological perspective and includes both ln-sfu and ex-sticomponents to conserve biodiversity. This would entail a program approach involving scientific studyof the flora and fauna of the selected key endangered forests, induding threats to their viability fromhuman pressures, and developing options to ensure the conservation of species considered at risk.Modem approaches of conservation biology and restoration ecology will be used to iJentify keymanagement measures. These measures will include the identification of minimum viable populationsand cri,ical habitats and establishment of wildlife corridors or linked areas of modified land use whichwill firffier enhance biodiversity protection objectives called for by the GEF.

Project Description

12. The GEF operation would support Ukraine's effort to protect its forest ecosysten-s. Seletion ofthe parks, reserves and zones under the proposed project are based on agreed conservation priorities.Project investments include:

(a) a Biodiversity Protection Program that will initiate a range of activities including:inventory (biological and geographical), a systems extinction model, genetic studies, GIScritical habitat analysis and a Teans Carpathian Planning Group. The program willinclude the development of a national policy on incentives and easements for select landuses which buffer the protected areas. To ensure the longer term maint- s;ance of someof these innovative approaches, a plan and curriculum will be developed for the inclusionof the study of conservation biology in the tertiary forestry curricula, as forestry is thebase qualification for most of the mountain naural resource managers;

(b) a Management Resources Program to enable coordinated management of thediscontinuous reserved areas of the Carpathians Biosphere Reserve and theimplementation of the above protection program. These investments will include: (i)computer equipment and GIS facilities, (Ji) provision of transport and communicationsfor e iforcement, protection and management, and (iii) limited assistance withdemonstration activities;

(c) a Training Program that will include development of communications skldls (extension,public education, interpretation and media relations), language training, data base andcomputer training, park planning and management training; and,

(d) a Management Program that will include assistance to support a joint Ukraine GEP unit(both for the Danube Delta GEF and this project) within the Department of Protected andRecreation Areas and the establishment of a small Project Unit at the administrativecenter in Uzghorod.

i hi-situ conewvation keeps conponen of biodiversiy whin their orginal habitat or nattt envlmet as a pet oftheir evohtionsay dynamic ecosywem, wheras ex-s*u consexvazion kep then ali outside of their orginal habiat orev;areneuL

-4-

Actons Agreed

13. Daring negotiations on the Grant Agreement, assurances were obtained as follows:

(a) Grant Effectiveness. Tbe grant would be declared effective upon submission ofdocumentation satisfactory to the Bank that the Project Coordinator in Kiev and theProject Manager in Uzghorod has been appointed.

(b) Accounts. A special account would be established in a commercial bank for the projectprior to disbursement of the grant. This account would be audited annually by anauditing firm acceptable to the Bank.

(c) Pro%ct Management. A Project Coordination Unit (Ministry of Environment, Kiev)and a Project Management Unit (PMU) within the Carpathians Biosphere Reserve atUzghorod would be established prioi to disbursement of the grant.

Benefits

14. Tne principal benefit is to protect a substantial zone of international ecological importance. TheEastern Carpathian forests of Poland, Ukraine and Slovak are unique in Europe and a source of endemicbiodiversity.

15. Innovation is fostered by the integration of the various levels of biological diversity (species,population, landscape, habitat) to address issues in conservation planning (as described above).Technically, the project will break new ground in the development of the preservation of genetic materialand in the applications of GIS and simplified methods of digital processing. It is also fostered by theunique (for Ukraine) collaboration of grc :ps from a variety of interests in addition to foresters in issuesof forest planning and management, for me balancing of ex-situ with In-situ approaches to biodiversityconservation, and by the use of consultation at the local level in the identification of viable land usecompatible with the preservation of endangered natural systems.

16. The project is designed for sustainability. The long-term viability is achieved through thebuilding of institutions within Ukraine, including some which are relatively disenfranchised but importantto biodiversity such as the forestry and Protected Reserve Managements. Other facets that are designedto ensure a project legacy are the training and professional development components. The goal ofsustainable revenue generation activities based on consultation w th residents who would engage in theseactivities is another way of ensuring longevity of interventions. These activities are premised on theircompatibility with the preservation of biediversity. They include nature and culture-based tourism, theselling of minor forest products, harvest.ng game, balancing uneven-aged, small-scale forest productionwith natural regeneration, and other economically sound and environmentally compatible activities.

17. There is a demonstration value and replicability through the use of integrated planning, newtechnologies, and bilateral organizational structures that foster international resource managementapproaches. This GEF project is going to foster solutions for conserving biodiversity. As a test of thisapproach to regional issues in biodiversity, the project can have significant demonstration value.

-5^

Risks

18. The major risks are primarily technical ard managerial. The technical risk is that the basicapproach to biodiversity protection in the Eastern Carpathians protected areas be further delayed, resultingin continuing degradation of the biodiversity ecosystem. The managerial risk is that Government salariesare extremely low resulting in the departure of top scientists and technicians expected to manage andimplement the project from the service of the government and research institute. The project wouldmitigate these risks by implementing this project in late 1993, 1994 ane 1995 to initiate this protectionprogram and by providing funding to support the work of the key scientists and technicians working onthe project. Mitigation of the risks would also be achieved by the monitoring and evaluation proceduresbuilt into the terms of reference for the Project Management who will be reporting on a quarterly basis.Additionally, quality and control will be ac}ieved by the proposed small secretariat located at Uzghorodwhich would work closely with the Polish and Slovak units in the Eastern Carpathians to jointly fosterits UNESCO designation as a "Man and the Biosphere" Reserve (MaB). There are built-in quality controland monitoring elements because of the research that will be published in peer-reviewed journals ofinternational quality.

Environmental Assessment

19. The project has been reviewed by the Regional Environment Division and it has been placed inthe environment screening category "C".

Recommendation

20. 1 am satisfied that the proposed grant would comply wih the provisions of Resolution No. IBRD91-5 of the Executive Directors relating to the establishment of the Global Environment Facility andrecommend that the Regional Vice President, Europe and Central Asia Region, approve~ it.

Basil KavalskyDirector

Country Department IVEurope and Central Asia Region

AttachmentsWashington, D.C.January 24, 1994

6-

SCHEDULE AUKRAINE

TRANSCARPATHIAN BIODIVERSITY PROTECTION PROJECT

CCOST ESTIMATES3

(Current US$ Ihousands)

USS in ThousandsLocl Fowe1 TOal % Forign % Total

Exchango Base Costs

A. Blodiversity Protection Program1. Rescrve Inventozy 4.0 10.0 14.0 71.4 2.62. Acquisition Plan and Investigations 10.0 0.0 10.0 0.0 1.93. Floma and Fauna Inventozy 20.0 2.1 2?.1 9.5 4.1

4. Systems and Extinction Model 10.0 5.0 15.0 33.3 2.85. 'Jenetic and Specics Studies 35.0 10.0 45.0 22.2 8.46. GIS and Critcal Habitat Analysis 3.0 7.0 10.0 70.0 1.97. Tn Fs-Caipathias Planning 5.0 5.0 10.0 50.0 1.98. Development of National Policy 8.0 2.0 10.0 20.0 1.99. Curriculum Development 10.8 1.2 12.0 10.0 2.3

Sub-Total 105.8 42.3 148.1 28.6 27.8

B. Management Resourc Program1. Computer Equipnct and GIS 0.0 120.0 120.0 100.0 22.52. Tmnspoit and Commnications ;2.5 32.5 65.0 50.0 12.23. Assistance Wiih Demation 25.0 0.0 25.0 0.0 4.7

Sub Total 57.5 152.5 210.0 72.6 394

C. Trng Program1. Data Base and Computing 8.0 2.0 10.0 2U.0 1.92. Prof. Dcv. and Lang. Trining 85.0 0.0 85.0 0.0 15.9

Sub-Total 93.0 2.0 95.0 2.1 17.8

D. Public Education & Awareuess1. Cofmpletion of Visitor Center 20.0 0.0 20.0 0.0 3.82. Equipment 8.0 . 0 10.0 20.0 1.93. Publications and Strategy 2.0 8.0 10.0 80.0 1.9

Sub-Total 30.0 10.0 40.0 25.0 7.5

E. PROJECT MANAGEMENT1. Assist Central GEF Unit - Kiev 7.5 7.5 15.0 50.0 2.8

2. Uzghorod Project Management Unit 25.0 0.0 25.0 0.0 4.7

Sub-Total 32.5 7.5 40.0 18.8 7.5

Total BASELINE COSTS 318.8 214.3 533.1 40.2 100.0Physical Contingency 16.6 10.0 26.6 37.6 5.0Prie Contingencies 14.8 5.5 20.3 27.2 3.8

Total PROJECT COm 350.2 229.8 580.0 39.6 108.8

2/ Exclades MacAithur grants to assist with training and establishnent of Tn-National Tust.

7

SCHEIDILE

UKRATNE

TRANSCARPATAN BIODIVERSITY PROTECTION PROJECT

ESTIMATED SCHEDULE OF DISBURSEMENTS OF GET GRANT

PROCUREMENT ARRANGEMENTS(US$ Thouands)

Procurenient MethodItems ICB C Total

(1) GIS, Air Monitoring and - 100.0 100.0Supporig Equipment (100.0) (100.0)

(2) Comnundaaoos andTransport Assistane - 150.0l 1a0.0

(150.0) (150.0)(3) Techical Assist- 110.0 b 110.0

(100.0) (100.0)(4) Incremental Sdaries, - 220.0 220.0

Operations and (150.0) (150.0)Maineac

TOTAL _s0.0 ss0.0(500.0) (500.0)

NOTE: Figur in parethesis aro E Gra* Inftmatonal Shopping ($200.000) and Diet Pwase ($50,000)b Accoding to World Bank consultant guidelines.e Project Management Prgram and contracted field staff to implement tchnial activities.

DlSBtJRSENTDisbv-isent

Amount(US$ million) % Thandug

(1) Goods and Equipment 0.15 100 %(2) Technical Assitne 0.10 100 %(3) Salaries, Operations &

Maintenance 0.15 100 %(4) Un-allocated 0.10 -

TOTAL 0.50

(continued)

ESTIMATED IBRD DISBURSEMENTS(US$ million)

IBRD FISCAI, YEAR

1994 1995 1996

Annual 0.05 0.20 0.25

Cumulative 0.05 0.25 0.50

Cloing Dste: Decemer 31, S995

SCHEDULE C

TIMETABLE OF KEY PROJECT 1PROCESSNG EVENTS

(a) Time Tak to Prepate ................ 3 months

(b) Prepard by Minisy of the E ironmentwith Bank Asstance .

(c) First Bank Mis8ion .......... October 1992

(d) ApprsalMissionDepu ........ May1993

(e) Notoioaios andGrant Siging ........ Je1993

(0 Planed DateofEffivenss ........ September1993

(g) ListofRewvantPCRR andPPARS ........ No

M:\PUKRlMP3ORELZ.UIRJany 24, 1994

r_____ _____ ______ ___-_______ _____ ______-____ ______ _____ ______ _____ __RD IEBRD 25416

-° > ~~~POLAND )24-Tt T-k , rohr&oUKRAINE

FOREST BIODIVERSITY PROTECTION PROJECTTRANSCARPATHIANS OBLAST ,

[IZIPROJECT ARTLA

S 2\ *- CARPATHIANS BIOSPHERE RESERVE BOUNDARIES

SLOVAK | S 0 BOUNDARY OF 'STUZICAO NATIONAL RESERVEZONES:

COREREPUBLIC z g tnUBUFFER

TRANSITION ECONOMIC ZONE

T. \S MAIN ROADS

-OTHER, ROADS

MAJOR RAILROADS

OTHER RAILROADS

p e K J J r j f\ I O lb I no s roT , d o s s 0 S E L E C T E D C IT I E S A N D T O W N S

RIVERS

- - OBLAST BOUNDARY

--- INTERNATIONAL BOUNDARIES

0 I 0 20 3

KIIOMtTERS

Cierno Mhup Mukchkevo

RWrOLSKO- V AS0

2?'r |iN t.rOri T- > \/HS MASSIF ))0UN. I eregov NARCISSUS

POLAND~~~~~BOJDAE ~~~~~~K. BsToy \, Kush 1/D

HUNGARY J i OMAIA ROMAN IA IUNGAI d,,

DEEcM1 1993

_________________._ \- - n,, ._,_____________________________,_______ IBiR2i417

( 4. i ,-~

IOD , POLAND, SLOVAK REPUBLCADUKRAINE

I a u X |GEF BIODIVERSITY PROJECTSEAST CARPATHIANS

PROPOSED NATIONAL PARK BOUNDARY

/ ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~PROPOSED INTERNATIONAL BIOSPHERERESERVE BOUNDARY

BOUNDARY OF ISTUZICA' NATIONAL RESERVE

ZONES:

CORE

.1t / BUFFER

OaJi~~~~~~~~~~~~~~~~~~~~~~~~~~~~~O ~~~~~~~~~~TRANSITIONs- ~ MAIN ROADS

--.- RAILROAD

N, . a % ) ~ SELECTED CITIES AND TOWNS

o OTHER TOWNS AND VILLAGE

-/--~- iRIVERS

3moirill, -. INTERNATIONAL BOUNDARIES

Ru;ina

Paol(/ ; ¢ C N, s | - ~ - >> r

/5 YvAK REPUBLICToi oio RuakyPool 2b Ic

,2I Soz' U K R A I N E ? 4

lbHa Kolnd RozhAR t &- , n6 Razt

Kfnv Is. O t1 }° 8 1 ltMlR

IBRD 2541 5

200 25' 300 35 400

BELARUS .0

A} Shosik ~~~~~~~~~~~~~RUSSIAN FEDERATIONPOLAND

sob~~ ~~ ~ ~~~~~~ Ko" < in0 l a m

0~~~~~~~~~~~~~~~~~~~~~~~~~~~0

2t < r ow;~~~~ > / > ) ~zhyomy XNXK¢a D OLv;v -' C.Sff :vlSiO

SUGGESTED PRIORITIES FOR~ ~ ~~~~~~~~~~ P

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SLOVAK RErk , / A ReUSSIANrREPUB THCft 0 om~iv AKNTK

ENVIR I0MNTAL PMX TECTlON AND - Y.. d) MotorJIo , o i

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LAND~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~E9E REEVSlma s-