PROJECT INFORMATION DOCUMENT (PID) APPRAISAL STAGE

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1 Project Name PROJECT INFORMATION DOCUMENT (PID) APPRAISAL STAGE IBI BATEKE CARBON SINK PLANTATION Region AFRICA Sector Forestry Project ID P Borrower(s) N/A (Carbon Finance) Implementing Agency NOVACEL sprl Environment Category [ ] A [ X ] B [ ] C [ ] FI [ ] TBD (to be determined) Date PID Prepared May 18, 2009 Date of Appraisal N/A Authorization Date of Board Approval N/A (Carbon finance projects do not go to the Board) 1. Country and Sector Background Report No For the last 45 years since the independence of the Democratic Republic of Congo, the dilapidation of the economical and social infrastructures as well as the ecosystems has reached a dramatic level. As a result, socio-economic indicators rank the country among the lowest positions in term of economic development and population welfare. Persistent poverty stands in stark contrast to the country s natural resource wealth. The country has fertile soils, ample rainfall, and immense water resources. Its enormous mineral wealth includes copper, cobalt, coltan, diamonds, gold, zinc, other base metals, and oil. DRC forests include half of Africa s rainforests (86 million hectares), as well as dry forests (45 million hectares), swamp forests (9 million hectares), and mountain forests (5 million hectares). DRC forests are the second largest bloc of tropical forest in the world (145 million hectares, or approximately 62 percent of national territory). They are critical to the livelihood of about 40 million Congolese, providing food, medicine, domestic energy, building materials, and cash. They play a vital role in regulating the global environment. They harbor much unique biodiversity: DRC ranks fifth among nations for its plant and animal diversity, and it has five natural World Heritage Sites, more than the rest of Africa combined. If they are conserved and managed well, DRC s forests could provide many national and global benefits in perpetuity. The forests around Kinshasa are disappearing because of deforestation, which is partly linked to the increasing demand for charcoal in the capital city of 10 million inhabitants. Another situation happens in the Batéké plateau, where the edaphic grassy or shrubby savannas constitute nowadays a standard of vegetation resulting from the anthropogenic action over an initial ecosystem: fires are lit several times a year by peasants for various reasons (in particular for hunting buffalos, antelopes or even small rodents), which results in the progressive disappearance of the woody species most sensitive to fire and the re-growth of herbaceous species. The grass covers again partially the soils after being burnt, but the trees and shrub hardly recover from fires. And thus the human pressure to collect trees for firewood or other uses is declining. Furthermore, this prevailing situation impedes CO2 removals by the biomass and litter pools as a major consequence.

2 Environmental protection and climate change mitigation have become an international challenge for the international community and the States, leading to international conventions or agreements. DRC, with its large forest ecosystem, has an important role to play with climate change. Aware of that, DRC has ratified the Kyoto Protocol. 2. Objectives The project will promote the reforestation of 4,220 hectares on the Bateke Plateau, to generate a sustainable source of fuelwood to the city of Kinshasa, while creating a carbon sink capable of sequestering around 2.4 million of tons of CO 2 over 30 years. The project will be implemented in the Ibi estate, village of Mbankana, Maluku municipality. The project has been designed and will be implemented by NOVACEL (Nouvelle Société d Agriculture, Culture et Élevage), a local private company founded by natives of the Batéké region in The Bateke plateau is covered by 90% herbaceous or shrubby savanna, burnt many times per year, and of 10 % of forest gallery deforested by local populations in order to settle their subsistence farming (maize, cassava) and to produce charcoal. The Ibi estate, within which the reforestation activities will take place, was constituted in The land rights to the estate were granted to the Mushiete family by the traditional chief of the area, following customary rules. The reforestation activities (4,220 ha) will take place within a 6,000 ha plot that has been legally titled by the Ministère des Affaires Foncières in the form of a 25-year lease (bail emphytéotique) to Olivier Mushiete, general director of NOVACEL. The Mushiete family signed on January 1, 2008, a long term lease (30 years renewable, effective since January 1, 2007) with NOVACEL, for the area of the reforestation project. Hence, NOVACEL currently possesses the land use rights of these 4,220 hectares, including the trees and future emission reductions for the duration of the project. Out of the 4,220 hectares, the IBCSP will establish 3,570 ha of plantations of various species of Acacia and Eucalyptus urophylla, 420 ha of various local species and promote 230 hectares of assisted natural regeneration. The project is also experimenting agroforestry techniques, intercropping trees with manioc plantations. The carbon sequestration potential of the project is around 1 million tons of CO 2 until 2017, and around 2.5 million over 30 years. A part of the wood production will be turned into charcoal to supply the city of Kinshasa, capital city of the DRC, with almost 10 million inhabitants. Harvested wood will also be commercialized locally as timber and lumber. As positive social impacts, the project will enable the creation of local permanent and temporary employment, as well services to the local community (those in the Ibi estate and neighboring villages), such as education and health facilities, as well as technical assistance in the adoption of agroforestry techniques. On the environmental aspect, the project will reduce deforestation of the remaining forest galleries. It will also improve the control of bush fires, which would favor natural regeneration of local forests. In the long term, plantations managed in a sustainable way will also provide shelter to wildlife.

3 3. Rationale for Bank Involvement The rationale for Bank involvement is provided by the 2002 World Bank Forest Policy and Strategy 1, by the significant Bank engagement in supporting DRC policy reforms, and by the strong Government demand for further collaboration. Forests are a crucial component of the Earth s web of life. Half of the Earth s species of plants and animals live in tropical forests. About 1.2 million people worldwide rely on forests to greater or lesser degrees for food, shelter, economic need and continuation of cultural and spiritual traditions. They also maintain soil and water resources by absorbing rainfall and regulating stream flows, thus reducing flooding and landslide. Forests influence climate by absorbing atmospheric carbon and replacing oxygen. But when forests are destroyed, the lands remaining are impoverished and can no longer support the same environmental functions. Deforestation is the second leading cause of greenhouse gas emissions, resulting in almost 20% of emissions. Deforestation expected to increase with urbanization in Africa, forest management presents even more challenges. Recognizing that climate change will have the most impact on developing and middle income countries, the Executive Directors of the World Bank approved the establishment of the Prototype Carbon Fund (PCF) as a pilot program to pioneer the market for project-based GHG emission reductions on July 20th, Building on the early success of the PCF, the World Bank now manages 10 Carbon Funds and 2 Carbon Facilities, which use money contributed by governments and companies in Annex I (developed) countries of the Kyoto Protocol to purchase project-based reductions of GHG emissions in developing countries. With its extended experience in the forestry sector in Africa, the World Bank is well positioned to facilitate the transaction of CERs on behalf of the Bio Carbon Fund. 4. Description The project is organized in two main components: 1. Establishment and maintenance of 4,220 hectares of fast-growing tree species on grass savannas of the Bateke plateau. 2. Implementation of social development activities to local population, including agriculture, health and education services. The use of 6,000 hectares of the Ibi estate (within which the 4,220 planting activities will take place) have been legally granted to Olivier Mushiete by the Ministère des Affaires Foncières, in October 2008, in the form of a 25-year lease (bail d emphyteose). The grantee is currently applying to state authorities for a permanent concession title. In turn, a 30-year lease has been established between Olivier Mushiete and NOVACEL for the project planting area. As consequence, NOVACEL currently possesses the land use rights, including the trees and future emission reductions for the duration of the project. 1 The 2002 Forest Policy and Strategy calls for the Bank to engage to (i) harness the DRC forests potential for reducing poverty, (ii) integrate forests in sustainable development, and (iii) protect vital local and global environmental resources.

4 Positive environmental impacts are expected to benefit the population, and the local and global environment. In general, the creation of one hectare of productive plantation translates into 40 to 50 hectares of shrubby savannas protected from shrub cutting and fire. The plantation will be itself a refuge for wild fauna and a significant increase of the numbers of local small size herbivores is to be expected. Concerning the socio-economic impact, the project is expected to generate direct benefits at the local level, mostly in the form of employment opportunities for the establishment and maintenance of the plantation. 30 permanent jobs have already been created, and around 200 equivalent full-time positions in temporary jobs. 5. Financing Source: Carbon Finance 6. Implementation Total 2 ($m.) NA The designer and implementer of the project is NOVACEL, which in charge of the overall implementation and monitoring of the plantation activities, including the agro-forestry activities. NOVACEL is currently employing 30 permanent staff and creating temporary jobs that add up to 200 equivalent permanent positions. They have an office in the Ibi estate and another one in Kinshasa. The community development component of the project will be managed by the Division of Social and Technical Development, in partnership with the NGO Gi Agro (Groupe d Initiatives Agroforestières). 7. Sustainability Sustainability of the forest and its sequestered carbon is the essence of the project. See description of the project for further details. 8. Lessons Learned from Past Operations in the Country/Sector The country draws on lessons learned from the BioCarbon Fund, which has been supporting the design and implementation of carbon finance projects in the forestry sector for over five years now. The project is benefitting from lessons learned in the area of institutional design of the project (implementation arrangement), methodological aspects (design of the Project Design Document for submission and registration by the UNFCCC Clean Development Mechanism Executive Board), financial structure (how to structure the project s cash flow) and social safeguards (providing social services to local communities). 9. Safeguard Policies (including public consultation) Safeguard Policies Triggered by the Project Environmental Assessment (OP/BP 4.01) Natural Habitats (OP/BP 4.04)

5 Environmental Assessment: The project is proposed to be Category B as the potential environmental impacts are well defined and site-specific. The net environmental impact is expected to be positive, as the reforestation project will contribute to the rehabilitation of degraded lands and the indirect decrease pressure on the forest around Kinshasa where deforestation happens mainly for supply of charcoal and fuel wood, as well as the mitigation of climate change through the sequestration of greenhouse gases. The project is not expected to have adverse impacts on human populations either. The net social impact is expected to be positive with the creation of local jobs and provision of services by NOVACEL to local communities. The project will occupy a rather small area of the large Bateke plateau, a treeless environment not considered a high value natural forest. By creating a sustainable supply of fuelwood and controlling bush fires, the project is expected to reduce pressure on natural forests and promote natural regeneration. 10. List of Factual Technical Documents Carbon Finance Document Social-Environment Impact Study May 2009 Update to the to the Socio-Environment Impact Study CDM Project Design Document 11. Contact point Giuseppe Topa Team Leader, Lead Specialist gtopa@worldbank.org The World Bank 1818 H Street, NW, Washington, DC For more information contact: The InfoShop The World Bank 1818 H Street, NW Washington, D.C Telephone: (202) Fax: (202) Web: