APPRAISAL STAGE. Managing Unit: EASER Lending Instrument: Technical Assistance Loan GEF Focal Area: Sector(s):

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1 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized INTEGRATED SAFEGUARDS DATA SHEET Date ISDS Prepared/Updated: 25 July, 2013 I. BASIC INFORMATION 1. Basic Project Data APPRAISAL STAGE Country: East Asia and Project ID: Pl23933 Pacific Project Name: Task Team Leader: Report No.: ISDSA4977 Capturing Coral Reef Ecosystem Services (CCRES) (P123933) Marea Eleni Hatziolos Estimated Appraisal Date: 25 July, 2013 Estimated Board Date: 20 September, 2013 Managing Unit: EASER Lending Instrument: Technical Assistance Loan GEF Focal Area: Sector(s): Theme(s): International waters General agriculture, fishing and forestry sector (50%), Agricultural extension and research (50%) Biodiversity (40%), Other environment and natural resources management (40%), Climate change (20%) Is this project processed under OP 8.50 (Emergency Recovery) or OP 8.00 (Rapid Response to Crises and Emergencies)? Project Financing Data (in USD Million) Total Project Cost: 6.5 Total Bank Financing: 0.0 Total Cofinancing: 2.0 Financing Gap: 0.0 Financing Source No Amount BORROWER/RECIPIENT 2.00 Global Environment Facility (GEF) 4.50 Total 6.50 Environmental Category: B Is this a Repeater project? No Is this a Transferred No project? 2. Project Development Objective(s) The Project~ Development Objective is to design and support the uptake of innovative models for valuing mangrove, seagrass and coral reef ecosystem services with the potential to enhance the

2 2 sustainability of marine-based enterprise and marine spatial planning in select coastal communities in Indonesia, the Philippines and the Pacific Islands. 3. Project Description A. Project Context 1. Coastal and Marine Resources, and their associated ecosystem services in the region are linked to globally important Marine Biodiversity, and underpin a huge part of the regional economy. Although this wealth of natural capital has the potential to be a major driver of inclusive green growth in East Asia and the Pacific, huge challenges will need to be overcome. These include resource governance regimes which allow open access and short term development planning, failure to account for environmental externalities and impacts on future generations when calculating economic benefits, inadequate scientific information to inform decisions on tradeoffs-including how natural and social systems can interact to build resilience or undermine it--and the relationship between ecosystems services, food security and livelihoods in poverty alleviation strategies. Coral reefs and associated near-shore ecosystems (e.g., mangroves and seagrass beds) reach the height of their expression in an area called the Coral Triangle (which includes parts of Malaysia, Eastern Indonesia, the Philippines, East Timor, Papua New Guinea and the Solomon Islands), These icons of marine biodiversity and ecosystem productivity are under severe threat from overexploitation and destructive use. 2. Despite their unequivocal importance to human well-being and economic activity, the services provided by these ecosystems are routinely taken for granted by communities, industry and policy makers alike. That the natural capital these ecosystems represent is not considered in the same light as other economic resources, contributes to their ongoing demise and encourages ad hoc decision making that would not be acceptable in the management of other capital resources. 3. Capturing the economic and cultural values of marine natural capital through valuation of Ecosystem Services, and quantifying the cost of lost services due to environmental degradation, has the potential to transform the development and stewardship of coastal areas by translating ecological value into intuitive and financial terms for local stakeholders as well as policy makers. This knowledge can be harnessed by decision support tools which can help to build the political rationale for change. Together with marketable goods and provisioning services, marine and coastal ecosystems also provide a range of non-market goods and services such as regulating global carbon and nitrogen cycles and protecting shorelines. Local and global drivers of change influence each of these services and it is imperative that management and policy be suitably informed to ensure the continued supply of the ecosystem services on which human well-being and prosperity depend. 4. As coastal development in the region is driving conversion of natural habitats, exposing large areas of marine space to climate related impacts, and outpacing the provision of key public sector services, Marine Spatial Planning (MSP) is being used increasingly by Local

3 3 Government to rationalize the use of marine and coastal space within their jurisdiction, If properly designed in consultation with local stakeholders, MSP can serve as an integrative tool to help strengthen resource management and biodiversity conservation by identifying the best locations for economic development compatible with conservation and sustainable use, enhance resilience to climate change impacts,and resolve user conflicts among competing economic sectors.. Similarly, within Marine Protected Areas, the majority of which are designated for multiple use, with only a small core area demarcated as "No Take", zoning of the surrounding space for compatible, sustainable use and developing the criteria for effective management remains a challenge without adequate scientific information. The CCRES project can help fill this information gap by mapping and assessing the value of coastal natural capital (e.g., coral reefs, mangroves, seagrass beds) in terms of the flow of key ecosystem sevices to surrounding communities. Identifying ways to enhance ES flows and to better capture the value from these services as inputs to sustainable economic development, climate resilience and the delivery of other social and environmental benefits, are important objectives to which CCRES will contribute. 5. CCRES will finance ecological and economic valuation studies, develop innovative tools and models to support decision-making and new opportunities for "eco-business" development, and communicate results through knowledge management to promote uptake. This will be achieved through CCRES's three integrated components: (i) Quantifying the value and market potential of coral reef and mangrove ecosystem services; (ii) Forging community-led innovation in capturing and sustaining benefits from marine ecosystem services and enhancing resilience in the face of climate change, and (iii) Promoting behavioural change through outreach, decision support and regional learning from results in selected field sites. A fourth component, Project Management and Coordination, deals with Project administrations, Monitoring and Evaluation and due diligence regarding Project FM, Procurement and reporting to the Bank. B. Project Components Component I: Quantifying the value and market potential of coral reef and mangrove ecosystem services (US$1.0 M). Despite their value to human prosperity and well-being, the services provided by ecosystems tend to be taken for granted by communities, industries and policy makers alike. That natural capital resources are not considered in the same light as other economic resources contributes to their ongoing demise and encourages ad hoc decision making that would not be acceptable in the management of other capital resources. Economic valuation and systematic management of ecosystem services (ES) have excellent potential to transform the development and stewardship of coastal areas. Translating ecological value into meaningful terms for local stakeholders as well as policy makers, Component I of CCRES aims to demonstrate how ecosystem services can be accurately valued and systematically managed to deliver pro-poor, pro-environment outcomes, and to help build the political rationale for change. Previous economic analyses have usually ignored the state or health of an ecosystem and essentially associated activities, such as tourism, with the existence of an ecosystem (implicitly

4 4 assuming that it is either present or absent). However, the real challenge facing people in tropical coastal areas is one of ecosystem decline; most ecosystems will not 'disappear'. Thus, economic analyses are needed that measure the marginal change in value as a function of ecosystem health. Valuing systems in this way is a substantial scientific challenge but CCRES integrates the necessary disciplinary backgrounds within the natural sciences, social sciences and economics. Working at a number of pilot and demonstration sites in the Asia-Pacific region, Component I of CCRES will first quantify the value of key coral and mangrove ecosystem services as a function of system state. Services include reef fisheries, ornamental species (aquarium trade), island stability, prestige diving tourism, blue carbon, and cultural benefits. By making the links between ecosystem state and ecosystem services explicit, stakeholders will gain greater insight into how reef health affects them. This is an important step in building greater constituency for reef stewardship and management. Further, by estimating the real costs of allowing reef ecosystems to degrade, a compelling case can be made at a governmental level on the threats to food security and opportunities to mitigate costs through improved management. The Component will also help operationalize the use of ecosystem services for marine spatial planning. Existing tools for marine reserve design and modeling flows of services will be tailored to the specific needs of people and eco-businesses in tropical coastal areas. Tools will allow stakeholders to visualize the production and flows of ecosystem services and therefore evaluate the consequences of different scenarios for development and management. Examples of questions that local stakeholders will be able to pose include: How should eco-businesses be distributed to maximize potential synergies while ensuring that ecosystem function is maintained at sufficiently high levels to sustain enterprise? Which coastal areas are best set aside for conservation purposes? Where might marine reserves have the greatest benefit to fisheries? Who would benefit from an improvement in watershed management? The key deliverables from the overall activities under Component I will be: * Three models will be developed relating to the valuation of eco-system services, e.g., supporting reef fisheries, eco-tourism, blue carbon, coastal defense, and water filtration. * Innovative, comprehensive decision support systems for marine reserve design which help optimize management objectives will be developed * A planning framework that incorporates models of ecosystem functions and services and decision support systems will be developed which can be tailored to stakeholder demand Component II: Using Ecosystem Services valuation to develop new markets and eco-business opportunities and inform development trade-offs (US $2.5 M). Component II will draw on the results of Component I to build business models that support the health of marine and coastal ecosystem services. Component II will examine how investment in marine and coastal ecosystem services and the strengthening of community livelihoods and resilience to climate variability might be operationalized using eco-business models. Through the development of sustainable alternative enterprises and new income generating

5 5 opportunities, communities can be empowered to move away from unsustainable coastal resource use practices and towards activities that support improved ecosystem health, increased production outcomes, and greater resilience achieved through livelihood diversification. A central feature of Component II is, therefore, to bring business thinking to scientists and concurrently, an appreciation of the importance of ecosystem services to business. Component II will do this by using a modeling approach based on systems science, participatory management principles and value-chain analysis to develop and evaluate multiple simulated eco-businesses scenarios. The model can be used to design profitable eco-business options for alternative livelihood programs linked to beneficiary projects such as the PRDP or COREMAP-CTI. Thus, the findings from Component II can inform these and other GEF and World Bank projects regarding a range of sustainable alternative livelihoods in coral reef areas in the region. Key Activities and deliverables under this component include: 1. Development of systems maps for each site detailing interactions between specific ecosystems services and social-economic sectors (direct and indirect). 2. Identifying the essential balancing and reinforcing loops impacting ecosystem service-business linkages as well as key leverage points for affecting those loops. 3. Advice on development of self-managed, community-based business that offers products and services which give consumers clear value proposition while directly or indirectly benefiting from and contributing to coastal and marine ecosystems. 4. Toolkit development for use by business entrepreneurs Component III: Promoting behavioral change through outreach, decision support and regional learning from results of demonstration pilots (US $0.6 M). Critical to catalyzing behavior change is the expansion of the knowledge base within government and management agencies, the general public and in other key stakeholder communities. Communication and outreach remains one of the critical elements for any campaign to raise awareness and influence behaviors. Component III will develop the frameworks from which to move the science findings into policy and management uptake. Component III will focus on the effective uptake of information generated from Components I and II, through the development and dissemination of the resources. Key objectives will include: (i) catalyzing behavioral change through the effective interpretation of the Project findings into appropriate formats for the various stakeholder audiences and providing mechanisms to ensure the effective uptake of the information into policy and management practices, and (ii) Ensuring the Project results are incorporated into current GEF and World Bank regional projects and future project design frameworks. An important element in ensuring effective engagement and dissemination of information at the regional, national and local levels will be the establishment of an operational mechanism withi n each of the targeted regions to improve the level of engagement and building of knowledge and understanding of coral reef resources and their values to communities. Partnerships will

6 6 be established with project partners and regional networks (e.g. Non-Government Organizations, Coral Triangle Center, PEMSEA and COREMAP III) to preview findings and information and work with the Project to disseminate the results and information resources produced. The key deliverables for Component III will be: 1. A stakeholder analysis clearly detailing who the key beneficiaries or stakeholders and stakeholder groups the Project will be targeting. 2. An understanding of the values, drivers, triggers and incentives at field sites for the key beneficiaries or stakeholders which will link into the Project's broader engagement and outreach strategy. 3. Information products e.g., models, frameworks, toolkits, etc. from the results from Components I and II. 4. Broader communication products e.g., website, policy briefs, technical manuals, information packages, etc. Project partners such as the University of the Philippines; LIPI (the Indonesian Science Foundation and its Oceanography Department) and other research institutions will also play a role in working with the Global Change Institute in developing knowledge products, information and tools which are country specific and engage with stakeholders and audiences in each country to ensure maximum uptake. A Technical Steering Committee will be established to provide technical direction on the project's activities and research and ensure the linkages and synergies across the project's components are strengthened. The Committee will oversee the quality of the research and synthesize the results from each component's projects leading to interpretation of the findings. It will also make policy and management recommendations where appropriate. Component IV: Project Coordination and Management (US $0.4 M). A partnership arrangement whereby the University of Queensland (UQ), Australia, would serve as recipient of the GEF grant funds on behalf of project beneficiaries, and as Executing Agency, will be entered into with the GEF. This arrangement, in which the University's Global Change Institute (GCI) would serve as the Project Executing Agency (PEA), has been determined to offer the optimal combination of financial accountability, technical expertise, capacity building and long-term institutional commitment (including substantial co-financing). UQ also served as executing agency under the GEF global Coral Reef Targeted Research & Capacity Building for Management Project, completed in 2010; its performance was rated Highly Satisfactory in the final ICR. 4. Project location and salient physical characteristics relevant to the safeguard analysis (if kn o wn) Although the project will be working in pilot sites in Indonesia, Philippines, and a Pacific Island Country to develop the overall framework for valuation of eco-system services, preparation of marine reserve strategy, marine spatial planning, and a framework to generate and evaluate

7 7 viable and sustainable eco-system based businesses, these sites have yet to be finalized. (It is expected that sites in Indonesia and the Philippines will be determined early in Year 1.) More importantly, this effort will be research-oriented and will involve working with the communities, business owners, and academics to generate data and develop models and frameworks. These outputs are then to be used to support eco-system wealth accounting, marine reserve planning, marine spatial planning, and eco-business proposals and feasibility studies in specific sites proposed by Bank and other government and donor-financed projects. It is important to note that the implementation of the strategies and plans prepared by this project will not be undertaken under CCRES, but will be the domain of the beneficiary projects seeking the application of the models and frameworks to their project sites, e.g., COREMAP-CTI, The Philippines Rural Development Project, and other Government financed implementation activities outside the realm of CCRES. 5. Environmental and Social Safeguards Specialists on the Team Juan Martinez, Social Safeguards Specialist ( EASIS) 6. Safeguard Policies Triggered? Explanation (Optional) Environmental Assessment OP/BP 4.01 Yes The project impacts are expected to be overwhelmingly positive. The project is designed to improve the way communities interact with the coastal resources on which they depend for essential ecosystem services, by making these services more explicit and mapping flows to demonstrate how and by whom these benefits are captured. Through such studties the Project can inform coastal development planning, and promote new business opportunities based on the benefits which can accrues to both the natural environment and dependent coastal communities from healthy marine ecosystems. Optimizing marine spatial plans to help communities better capture these benefits results in incentives for conservation and better stewardship of the marine environment. This creates the potential for a positive feedback loop or "virtual circle" of healthy ecosystems and community welfare. The project will not support implementation of the marine spatial plans and business model it develops. Uptake, to the extent it

8 8 happens, will be supported by the beneficiary projects, i.e., PRDP and COREMAP CTI, which include support for alternative livelihoods. CCRES would make use of the safeguard instruments developed under the beneficiary projects, where appropriate, to ensure that any unanticipated impacts are minimized. A separate safeguard instrument for CCRES will not be necessary given the project interventions. Instead, measures have been incorporated as part of the project design. Under Component I, the risks associated with any application of the marine spatial planning framework are safeguarded through peer-reviewed scientific findings. The project will be providing the framework or processes to regional projects such as COREMAP for possible uptake by local planning authorities. Any application of these planning frameworks would be subject to the safeguards instruments and mitigation measures established under the beneficiary projects. Likewise, for CCRES Component II, the activities will be driven by the participatory systems analysis, which will pick up on any potential risks and also identify any pathways forward to avoid these risks. There will also be a constant engagement process with country team members (from Indonesia and the Philippines) and with stakeholder groups the project is engaging with. Furthermore, the establishment of the Country Advisory Groups consisting of government agencies, NGOs, businesses, research institutions, individuals, etc., is also designed for the Project to be made aware of any potential for future risks and the development of mitigation strategies against these. Nevertheless, given that all the beneficiary projects to be supported by this project are Category B and there might be some social impacts related to restriction to access of natural resources from the development of marine spatial plans, this project is categorized as a B project. Natural Habitats OP/BP 4.04 Yes The project will work in high biodiversity habitats such as coral reefs and sea grass

9 9 beds, many of them still in a natural state. But since the objectives of the project are to protect these habitats and reduce the threats to them from unplanned development or unsustainable business practices, the outcomes are expected to be highly positive. Likewise, the beneficiary projects to which CCRES is linked aim to protect the coastal ecosystem and to enhance its sustainable management through improving the management effectiveness of Marine Protected Areas and supporting communities in the monitoring of their coral reefs to protect against destructive fishing practices and safeguard their natural capital. Forests OP/BP 4.36 No Neither CCRES nor any of the beneficiary projects offering their sites for detailed strategy/plan preparation under this project are financing activities that would affect forests and forest-dependent communities. Pest Management OP 4.09 No The project will not procure any pesticides, nor will it result in increased use of pesticides. Physical Cultural Resources OP/BP 4.11 No The project will not involve any civil works that would affect any PCR. Indigenous Peoples OP/BP 4.10 Yes The pilot sites from the beneficiary projects where CCRES will be working will not be determined until early in the Year 1. If it turns out that there are indigenous people at these sites, they would be among the beneficiaries of the Project, and CCRES would use the IP safeguard instruments prepared under those projects. CCRES will not prepare a separate IP instrument, but will instead incorporate the elements of the policy in the project design itself. These would include consultations with and engagement of stakeholders in the collection of relevant data that could feed into the design of business models arid marine spatial plans, and ensure that the views and broad community support of Indigenous Peoples are taken into account in any recommendations made with regard to Marine Spatial Plans, zoning or business practices that could affect them. Involuntary Resettlement OP/BP 4.12 Yes The valuation studies, marine spatial plans

10 10 and eco-business model that CCRES produces are meant to benefit communities, by identifying ways to link investments in maintaining or restoring ecosystem health to improving community health and wellbeing. Any such plans would be developed in consultation with beneficiaries and any implications regarding access restrictions, for instance through zoning, would be the result of consensus, as was the case under COREMAP II, the prior phase of COREMAP. In view of the possible access restriction, the policy is triggered. CCRES though will not finance implementation of these plans. However, should the recommendations emerging from these plans be supported under Beneficiary Projects, the Resettlement Frameworks of those projects will be applied. To mitigate any economic displacements that might occur as a result of zoning the marine space and to help communities transition to more sustainable use practices and governance regimes, an entire component in COREMAP-CTI, for example, has been designed to support alternative livelihoods opportunities which would be accessible to affected populations. CCRES would help identify new business enterprises and revenue streams through the development of innovative eco-business models based on sustainable use of marine natural capital and the ecosystem services they provide. Safety of Dams OP/BP 4.37 No This policy is not triggered as the Project will not finance construction or rehabilitation of any dams. None of the sites under the beneficiary projects offered for assistance in this project will fall in this category. Projects on International Waterways No There are no project components involving OP/B3P 7.50 international waterways as defined under the policy. None of the project sites under the beneficiary projects offered for assistance in this project will be located in the international water boundaries.

11 11 Projects in Disputed Areas OP/BP 7.60 No None of the sites under any of the beneficiary projects offered for assistance in this project will be located in any known disputed areas as defined under the policy. II. Key Safeguard Policy Issues and Their Management A. Summary of Key Safeguard Issues 1. Describe any safeguard issues and impacts associated with the Restructured project. Identify and describe any potential large scale, significant and/or irreversible impacts: CCRES is not envisaged to have any negative environmental impacts as there is no civil works nor livelihood activities that will be supported by the project. Impacts on natural habitats are largely positive and beneficial. If at all, the only impact that could potentially happen is the restriction of access to natural resources by communities in the pilot sites in the Philippines and Indonesia. 2. Describe any potential indirect and/or long term impacts due to anticipated future activities in the project area: The purpose of CCRES and linking the knowledge generated to various WB and GEF projects dealing with management of coastal and marine resources in the region is to create a rationale for sustainable development planning in-the coastal zone, which includes conservation of natural capital essential to the delivery of high value ecosystem services and the welfare of coastal communities. Marine spatial planning and demarcation of zones suitable for development activities consistent with ecosystem carrying capacity and best use of the resource base is part and parcel of good coastal management and the ecosystem-based approach. Thus, it is anticipated that environmental sustainability and the resilience of linked ecological and social communities will be enhanced in areas which have had the benefit of this marine spatial planning and its incorporation into long-term development plans at the local (district) level. 3. Describe any project alternatives (if relevant) considered to help avoid or minimize adverse impacts. N/A 4. Describe measures taken by the borrower to address safeguard policy issues. Provide an assessment of borrower capacity to plan and implement the measures described. The project has incorporated into its design measures to safeguard the environment and people/communities. These include stakeholder analysis and benefits mapping, community consultation, information and customized business models that can enhance economic opportunities for communities through marine spatial planning and markets linked to payments for ecosystem services. The University of Queensland has prior experience implementing WB projects and their reporting to the Bank has been exceptional. 5. Identify the key stakeholders and describe the mechanisms for consultation and disclosure on safeguard policies, with an emphasis on potentially affected people. The key stakeholders of the project are government agencies in the environment, coastal and marine, and fisheries management sectors in the beneficiary countries as well as the communities and local officials in the pilot sites (e.g., in Indonesia, the Philippines and a Pacific country). Also expected to benefit are academic and research communities working on valuation of marine ecosystem services and wealth accounting. Stakeholder analysis and consultations are inherently part of the project design, and free flow of information will be promoted among these groups.

12 12 B. Disclosure Requirements Technical Assistance Project For a TA project which will finance the preparation of a specific safeguards instrument, please indicate type of document disclosed, if any. N/A If the project triggers the Pest Management and/or Physical Cultural Resources policies, the respective issues are to be addressed and disclosed as part of the Environmental Assessment/Audit/or EMP. If in-country disclosure of any of the above documents is not expected, please explain why: This is a knowledge project will incorporates safeguards mitigation measures in the project design. Not separate safeguards instruments are required to be prepared and so none are disclosed. C Compliance Monitoring Indicators at the Corporate Level The World Bank Policy on Disclosure of Information Have relevant safeguard policies documents been sent to the World Yes I I No I I NA [X] Bank's Infoshop? Have relevant documents been disclosed in-country in a public place Yes [ I No [ ] NA [ X] in a form and language that are understandable and accessible to project-affected groups and local NGOs? All Safeguard Policies Have satisfactory calendar, budget and clear institutional Yes [ I No [ I NA [X I responsibilities been prepared for the implementation of measures related to safeguard policies? Have costs related to safeguard policy measures been included in the Yes I ] No [ I NA [X I project cost? Does the Monitoring and Evaluation system of the project include Yes [X I No [ I NA [ I the monitoring of safeguard impacts and measures related to safeguard policies? Have satisfactory implementation arrangements been agreed with Yes [ X] No [ I NA [ I the borrower and the same been adequately reflected in the project legal documents? III. APPROVALS Task Team Leader: Name: Marea Eleni Haziolosii Approved By:*0 Regional Safeguards Advisor: Name: Peter Leonard t(k( Date: c 3 Sector Manager: Name: Lain Shuker ( ~. Date