Public Disclosure Authorized. Public Disclosure Authorized. Public Disclosure Authorized. Public Disclosure Authorized. Report No.

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1 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Report No: I <--Please check for duplicates! Integrated Safeguards Data Sheet (Initial) Date ISDS Prepared/Updated: 12/19/2001 Section I - Basic Information Report No A. Basic Project Data Country: BRAZIL Project ID: P Project: Santa Catarina Natural Resources Management Project Task Team Leader: Graciela Lituma Appraisal Date: March 27, 2002 IBRD Amount ($m): Board Date: June 27, 2002 IDA Amount ($m): Managing Unit: LCSER Sector: VM - Natural Resources Management Lending Instrument: Specific Investment Loan (SIL) Status: Lending I.A.2. Project Objectives: The project objective is to reduce rural poverty in the State of Santa Catarina, while improving the management of natural resources. Poor farmers' families incomes and livelihoods would be improved by (i) support for Government efforts to integrate environmental and social sustainability into development and poverty reduction strategies, (ii) enhanced local governance and community participation in decision making, (iii) reversed land degradation and better protection of the State's natural resources and (iv) improvements to income-generating opportunities and living conditions for the rural poor. I.A.3. Project Description: The proposed project would be implemented over six years and would have a base cost of US$ million. Its goal would be to relieve poverty and improve living conditions among small and marginal farmers, rural laborers and indigenous people in the State of Santa Catarina. Compared to the previous Land Management II Project (LM II, Loan 3160-BR), this successor project would address more directly the constraints that are the current causes of poverty among this target group. Poverty would be reduced by: (i) supporting State Government efforts to integrate environmental and social sustainability into strategies to alleviate poverty and improve rural livelihoods; (ii) promoting enhanced decentralization and community participation in decision-making; (iii) reducing degradation and improving protection of the State's natural resources; and (iv) improving incomes and living conditions for the rural poor. The project would be implemented in about half of the 1,683 microcatchments into which the State is divided, covering an area of approximately 4 million hectares. Although the target group will be the poorest segments of the population living in those areas (about 80,000 families including indigenous families), the project would encourage the participation of all members of the microcatchment in particular for environmental activities. The project direct beneficiaries are estimated at approximately 105,000 families. It would have four components: (i) Institutional Development and Organization (US$ 25.4 million; 23.9w of base cost): An extensive training sub-component would finance preparation of both implementers and beneficiaries for behavioral changes and new modes of operation that are implicit in the new technical strategy. Training of 75,000 farmers and 14,650 municipal leaders in the principles and practice of rural diagnosis, group formation and operation, participatory planning and stakeholder monitoring would be complemented by appropriate practical or technical courses, such as techniques for

2 sustainable land management, product diversification and agro-processing. A sub-component for environmental education would boost public awareness of, and commitment to, solving environmental problems in general, reaching the above farmers and leaders plus some 3,000 other stakeholders.to allow schools within the benefiting microcatchment areas comply with Federal laws on environmental teaching, 1,000 environmental teaching projects would also be financed. A rural extension sub-component would have as its main objective the promotion of the project among the rural poor by providing information, motivating decision-making bodies about the project, assisting group formation, assisting beneficiaries in preparing microcatchment and farm plans and assembling the community demands for social as well as technical and financial support.this sub-component would support rural extension and technical assistance to individuals and communities. An adaptive and social research sub-component would respond to specific technology adaptation and information needs arising from demand-led participatory development programs. A technical assistance for structural adjustment sub-component would finance special studies and consultancies to assist the State in its structural reform efforts. (ii) Rural Investment (US$ 68.9 million; 64.9 W of base cost): A Rural Development Fund would be the instrument to induce the adoption of the project strategy within the benefited microcatchment. The fund contemplates three categories of grants: (i) those for home improvements such as piped water, sanitation or waste disposal as well as minor structural improvements to housing (available only to poorer farmers and landless laborers) residing in the microcatchment); (ii) those used for conservation and environmental purposes such as reforestation, protection of water sources or schemes to increase biodiversity; and (iii) those for income generation, whether through improvements to production systems, value-added schemes or job creation. Use of grants would be demand-led, and a consequence of the microcatchment development plans and individual plans. (iii) Environmental Management (US$ 4.1 million; 3.8w of base cost): A sub-component for watershed management would expand the incipient State efforts of integrating environmental and river basin management policies and laws. It would pilot the preparation and implementation of three river basin sub-catchment plans, using project microcatchment plans as the building blocks. Selection criteria for the watersheds/sub-catchments include the importance of the habitats they contain, threats to biodiversity, their current under-representation among existing State PA System, poor water quality due to poorly managed pig waste or pesticide use, a high concentration of the target group and the prior existence of local commitment to or implementation capacity for environmental activities. A sub-component to create ecological corridors and protected areas would oversee preparation of the regulations and its dissemination and the application of the newly enacted State PA System law and the soon to be enacted "Lei do ICMS Ecol6gico" to which Santa Catarina is committed. This would foster the creation of public and private PAs to be able to promote and develop the ecological corridors. One existing State Park (Tabuleiro) would be consolidated. Promotion of new public and private PAs, as well as consolidation of two ecological corridors, would begin. (iv) Project Management, Monitoring and Evaluation (US$ 7.8 million; 7.3w of base cost): A sub-component for project management would set up and operate the PMU at state level and 14 subsidiary units at regional levels. Regional units would act as executive arms for the stakeholder - 2 -

3 bodies responsible for participative planning, decision-making and oversight of implementation at state, regional, municipal and microcatchment levels. Project monitoring, evaluation and the distribution of findings would be supported under a sub-component for monitoring and evaluation. A sub-component for community organization would provide separate resources for the creation and operation of all categories of stakeholder bodies. The PMU would be under the Secretariat for Rural Development and Agriculture (SDA) and its head would be appointed by the Secretary of Rural Development and Agriculture. The State and regional units would be largely staffed by secondments from implementing partner organizations within the Government, particularly the State Agricultural Research and Rural Extension Enterprise (EPAGRI), SDA, the State Secretariat for Urban Development and Environment (SDM) and the State Environmental Management Foundation (FATMA). I.A.4. Project Location: (Geographic location, information about the key environmental and social characteristics of the area and population likely to be affected, and proximity to any protected areas, or sites or critical natural habitats, or any other culturally or socially sensitive areas.) The project is located in the Brazilian Southern State of Santa Catarina, and would be implemented in about half of the 1,683 microcatchments into which the State is divided, covering an area of approximately 4 million hectares. Key stakeholders are small and marginal farmers and indigenous people, whose interests would be represented through their participation in Microcatchment Associations and municipal bodies. More specifically, the project would bring economic and social benefits to this target population, consisting of an estimated 105,000 small and marginal farmers' families and indigenous people. The priority target group consists of rural poors with a net on-farm income of less than two salaries, including those classified as "marginal" (net on-farm income of less than one minimum wage), "transitional type 1" (net on-farm income of less than two minimum wages), and indigenous people. This priority target group includes an estimated 80,000 poor rural families, i.e., 75 W of families to be benefited under the project. The State holds about 15t of the country's outstanding Atlantic forest, considered one of the major world centers of plant diversity (20,000 vascular plant species, 40t endemic). These forests are distributed throughout the State, and include five important habitat types: tropical moist broadleaf forests, Araucaria or dense and mixed ombrophyle forests, restingas or coastal scrub on sandy soils, natural grasslands and mangroves. Although these forests were originally distributed throughout the country, comprising an estimated area of 1,360,000 km2, there are only 8t or less remaining of the total original cover. Out of these remnants, about 33,000 km2 are under legal protection, of which, 3t are found in the State Santa Catarina. The existing state system of parks and reserves consists of two State Parks (Tabuleiro and Serra Furada) and three Biological Reserves, covering about 100,000 hectares in 18 of the 293 municipalities of the State. These Protected Areas cover only lt of the State territory, and are widely scattered. -3-

4 The State also holds important aquatic resources, including state, national and transboundary river basins, and an outstanding coastal and marine environment. As mentioned in the above (see I.A.3), the project sub-component Ecological Corridors and Protected Areas would promote the creation ecological corridors and protected areas (private PAs (RPPN) or municipal parks and reserves). It would also promote the consolidation of the existing Tabuleiro State Park. B. Check Environmental Classification: B (Partial Assessment) Comments: Based on the assessment of potential impacts presented below (see Section II.D.1.a), the project is proposed for a Category B designation. It is being designed to ensure compliance with the requirements of the Bank umbrella policy on Environmental Assessment (OP 4.01). Despite the largely positive or neutral project impacts anticipated, submission of an EA and respective EMP was considered prudent to ensure conformity with the aforementioned Bank policy. The borrower submitted the draft EA in October 2001, and a revised EA on 11 December Key provisions of the EA will be incorporated within the project 's Operational Manual (a condition for Effectiveness). C. Safeguard Policies Triggered Policy Applicability Environmental Assessment (OP/BP/GP 4.01) Yes Forestry (OP/GP 4.36) No Natural Habitats (OP/BP 4.04) No Safety of Dams (OP/BP 4.37) No Pest Management (OP 4.09) No Involuntary Resettlement (OP/BP 4.12) Yes Indigenous Peoples (OD 4.20) No Cultural Property (OP 4.11) No Projects in Disputed Territories (OP/BP/GP 7.60)* No Projects in International Waterways (OP/BP/GP 7.50) No *By supporting the proposed project, the Bank does not intend to prejudice the final determination of the parties' claims on the disputed areas Section II - Key Safeguard Issues and Their Management D. Summary of Key Safeguard Issues. Please fill in all relevant questions. If information is not available, describe steps to be taken to obtain necessary data. II.D.1a. Describe any safeguard issues and impacts associated with the proposed project. Identify and describe any potential large scale, significant and/or irreversible impacts. Social Assessment has been completed by the borrower (see "Social Assessment Executive Summary" in Annex 11 of PCD/PAD). To implement the project, no involuntary physical displacement or relocation of people will take place. Environmental Assessment: Project activities having potential environmental impacts would mostly be those financed by the Rural Development Fund. Impacts of the majority would be positive or neutral - e.g. from improved soil and water conservation, replanting of riparian forests, water source protection, domestic sanitation and improved handling of pig waste. Impacts of any mis-directed support for - 4 -

5 agricultural diversification, agro-processing, aquaculture or rehabilitation of small rural roads could however be negative, but would be avoided by proposing mitigation measures (see Section 4 below). Indigenous Peoples (IP): The indigenous population of Santa Catarina is estimated to be about 7,000 people, with 94t living in 10 regularized indigenous lands (about 40,000 ha). The indigenous peoples include the Xokleng, the Kaingang and the Guaranis, as well as about 500 mestizos. Historically, these people have depended on the Atlantic forest resources, and their economic systems are primarily oriented to subsistence production. However, as a result of various activities undertaken in the last 100 years by the majority non-indigenous population, leading to the drastic reduction of the forest, these groups are now among the poorest segments of southern Brazilian society and have never benefited from development. Impacts of the project on livelihoods of indigenous people are expected to be positive, as the project aims at reducing poverty of poor farmers' families and indigenous people, which would result in improvements to income-generating opportunities and living conditions for these people. In this context, the project is being designed to ensure compliance with the Bank OP However, the project activities will need to be specifically adapted to the cultural uniqueness of indigenous communities living within the project microcatchments. In that light and based on the information gathered during the project preparation process, including workshops with relevant stakeholders and the social assessment study, a draft Indigenous Peoples Strategy has been prepared and submitted by the borrower (see para. 4 below). II.D.lb. Describe any potential cumulative impacts due to application of more than one safeguard policy or due to multiple project component. No cumulative or long term adverse impacts are foreseen. II.D.lc Describe any potential long term impacts due to anticipated future activities in the project area. No cumulative or long term adverse impacts are foreseen II.D.2. In light of 1, describe the proposed treatment of alternatives (if required) Not required. II.D.3. Describe arrangement for the borrower to address safeguard issues Environmental Assessment Mainstreaming of EA procedures. Mitigation measures will be integrated into the screening, evaluation, approval and monitoring procedures for sub-projects submitted to the Rural Development Fund. Requirements will be included in the Project Operational Manual. Proposals would be classified as Category 1 if no adverse impacts are foreseen and hence no mitigation measures are necessary, Category 2 if low impacts are anticipated and Category 3 if they are likely to have moderate or significant environmental impacts. For Category 2 sub-projects, environmental issues and related mitigation measures would require detailed description. These would be incorporated into the project design before the sub-project could be submitted to the municipal deliberative body for approval. Category 3 sub-projects would require an environmental assessment study and mitigation proposals to be included in the submission to municipal bodies. An Environmental License could also be required from the State - 5 -

6 Environmental Management Foundation (FATMA) for Category 3 sub-projects, such as those proposing the implementation of small agro-industries or aquaculture systems. A list of 25 illustrative types of sub-projects is categorised according to this scheme in the borrower's draft EA. Responsibility for EA and institutional arrangements. Proposed sub-projects would be categorised by the extension "facilitators" who support Microcatchment Associations. Facilitators would advise municipal PMU offices accordingly; these municipal PMU staff would be accountable for final environmental review before submitting proposals to municipal deliberative bodies. Strengthening EA capacity. All 440 microcatchment facilitators, PMU staff and key members of municipal administrations and other rural intermediaries would receive extensive training in environmental issues and procedures under the project's training component. Environmental requirements and procedures for sub-projects financed by the Rural Development Fund or from other sources would also be widely publicised among the target group and members of deliberative bodies at municipal, regional and State levels. Indigenous Peoples (IP) The Government fully recognizes a) the critical social conditions the indigenous groups living within the State; b) that the development process must foster full respect for the dignity, human rights and cultural uniqueness of indigenous peoples living in the State; d) the significance of the customary use of natural resources by these groups and c) the need for long-term sustainable management of their land, as well as the need to support their transition to more sustainable livelihoods. In this context, representatives from the relevant stakeholders (National Indian Foundation/FUNAI, Conselho Indigenista Missionario/CIMI, the Ethnology Unit of the Federal University of Santa Catarina, and University of Blumenau) participated actively in the discussions held during the project preparation workshops and meetings, and provided substantive inputs for project design, as well as to the preparation and revision of the draft Indigenous Peoples Strategy, submitted by the borrower in November 30, Targeting of project municipalities and microcatchments would be based on the application of specific criteria that combine social and environmental indicators and the concentration of indigenous people. In addition, the project would support technical assistance and investments proposed by indigenous groups living in the project microcatchments, to implement more sustainable land management and to provide improvements to income-generating opportunities and living conditions of these groups. To ensure that they receive culturally-compatible social and economic benefits, and participate in project interventions, project extensionists assisting indigenous people would receive additional training to qualify for work designed specifically for the indigenous peoples. Moreover, the project would support effective participation of indigenous groups in project management at the decision-making levels, through their representation in the four levels of project decision-making or approval, stretching from the Microcatchment Association through municipal, regional and up to State levels: at every level indigenous peoples would be included among the group of beneficiaries that would comprise the majority on decision-making bodies. In the aforementioned draft Indigenous Peoples Strategy, particular attention is given to ensure i) how Indigenous People will participate and be involved in project implementation, and ii) how - 6 -

7 more specific action plans will be formulated during implementation. The borrower will submit a revised IP Strategy by January 18, 2002, incorporating comments from the representatives of indigenous groups and from the Bank specialist familiar with the region (additional consultation and participation is being carried out by the borrower, involving the with specific indigenous groups within the State; this consultation is expected to be made before appraisal). II.D.4. Identify the key stakeholders and describe the mechanisms for consultation and disclosure on safeguard policies, with an emphasis on potentially affected people. Primary beneficiaries and other affected groups. The rural poor who would be the project's primary beneficiaries are marginal farmers or other rural dwellers with net on-farm income below two nationally-defined monthly minimum wages, as well as most of the rural ethnic minorities (i.e., indigenous people and mestizos). Secondary beneficiaries, classified as in economic transition, are those with net on-farm income between two and three minimum wages. To reach this target group the project would supplement the participatory approaches of LM II, which effectively promoted improved land management but did not secure the commitment of poorer farmers and soon weakened once that project ended, with new elements. The main thrust of the changes would be to move from a consultative mode to one in which the target group would be empowered to drive the development process based on its own needs and demands. Thus the beneficiaries or their representatives would comprise more than 50t of the membership of the four types of "deliberative" bodies (see PCD Annex 12), that are charged with deciding project actions at microcatchment, municipal, regional of State levels. Both training and implementation support for beneficiary stakeholders would emphasise the mechanisms, entitlements, obligations and skills implicit in fully participatory development. Project operational procedures and the rules of the Rural Investment Fund would be shaped to require a participatory mode of operation as a pre-condition for access to benefits. The training of project support staff would prepare and motivate them to work in the participatory mode. Other key stakeholders. Other key stakeholders in the project would include organisations within the State and municipal governments; the "deliberative" bodies at all four levels of decision-making (i.e., microcatchment, municipal, regional and state levels); intermediary NGOs such as those concerned with ethnic, poverty, gender or environmental issues; rural workers' unions; co-operatives; commercial firms involved in the meat, dairy,, and organisations such as universities and special-interest lobbying groups. Many such stakeholders have been involved in project design during the prolonged consultation process and have been heard or informed on issues of importance to them. Topics of this dialogue are recorded in project files. Dialogue has covered targeting needs, beneficiary representation mechanisms for decision-making, requirements for technical assistance, sustainability, and needs for a holistic approach and social control of the project agenda. Mechanisms to maintain this dialogue during project implementation and profit from the inputs of private or voluntary sector organisations with contributions to make, as well as to recruit new stakeholders along the way, now need attention. A workshop is planned to review and if necessary revise a plan to include ethnic minorities in the project that -7 -

8 was originally made in E. Safeguards Classification. Category is determined by the highest impact in any policy. Or on basis of cumulative impacts from multiple safeguards. Whenever an individual safeguard policy is triggered the provisions of that policy apply. I S1. - Significant, cumulative and/or irreversible impacts; or significant technical and institutional risks in management of one or more safeguard areas [XI S2. - One or more safeguard policies are triggered, but effects are limited in their impact and are technically and institutionally manageable I S3. - No safeguard issues I SF. - Financial intermediary projects, social development funds, community driven development or similar projects which require a safeguard framework or programmatic approach to address safeguard issues. F. Disclosure Requirements Environmental Assessment/Analysis/Management Plan: Expected Actual Date of receipt by the Bank 11/12/2001 Date of "in-country" disclosure 12/20/2001 Date of submission to InfoShop 12/20/2001 Date of distributing the Exec. Summary of the EA to the ED (For category A projects) Not Applicable Not Applicable Resettlement Action Plan/Framework: Expected Actual Date of receipt by the Bank Not Applicable Not Applicable Date of "in-country" disclosure Not Applicable Not Applicable Date of submission to InfoShop Not Applicable Not Applicable Indigenous Peoples Development Plan/Framework: Expected Actual Date of receipt by the Bank 11/30/2001 Date of "in-country" disclosure 12/20/2001 Date of submission to InfoShop 12/20/2001 Pest Management Plan: Expected Actual Date of receipt by the Bank Not Applicable Not Applicable Date of "in-country" disclosure Not Applicable Not Applicable Date of submission to InfoShop Not Applicable Not Applicable Dam Safety Management Plan: Expected Actual Date of receipt by the Bank Not Applicable Not Applicable Date of "in-country" disclosure Not Applicable Not Applicable Date of submission to InfoShop Not Applicable Not Applicable If in-country disclosure of any of the above documents is not expected, please explain why. Signed and submitted by Name Date Task Team Leader: Graciela Lituma 12/4/01 Project Safeguards Specialists 1: Katia Medeiros 12/4/01 Project Safeguards Specialists 2: Judith M. Lisansky/Person/World Bank 12/4/01 Project Safeguards Specialists 3: Approved by: Name Date Regional Safeguards Coordinator: Juan D. Quintero 12/4/01 Sector Manager/Director: John Redwood 12/4/01 For a list of World Bank news releases on projects and reports, click here - 8 -

9 Lucy Njuguna M:\InfoShop - Tonya's weekly directories\january 11, 2002\I txt January 7, :53 AM -9-