INTEGRATED SAFEGUARDS DATA SHEET. Costa Rica FCPF READINESS PREPARATION GRANT CONCEPT STAGE

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1 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized INTEGRATED SAFEGUARDS DATA SHEET Costa Rica FCPF READINESS PREPARATION GRANT CONCEPT STAGE Report No.: Date ISDS Prepared/Updated: January 1, 2012 I. BASIC INFORMATION FCPF Readiness activities relate to strategic planning and preparation for REDD+. Specifically, countries prepare for REDD+ by: i. assessing the country s situation with respect to deforestation, forest degradation, conservation and sustainable management of forests and relevant governance issues; ii. iii. identifying REDD+ strategy options; assessing key social and environmental risks and potential impacts associated with REDD+, and developing a management framework to mitigate these risks and potential impacts; iv. working out a reference level of historic forest cover change and greenhouse gas emissions and uptake from deforestation and/or forest degradation and REDD+ activities, and potentially forward-looking projections of emissions; and v. designing a monitoring system to measure, report and verify the effect of the REDD+ strategy on greenhouse gas emissions and other multiple benefits, and to monitor the drivers of deforestation and forest degradation, as well as other variables relevant to the implementation of REDD+. The FCPF Readiness Preparation grant will finance some of the preparatory work described above. It will not finance any physical investments or pilot projects on the ground. A. Basic Project Data Country: Costa Rica Project Name: FCPF Readiness Preparation Task Team Leader: Erick C.M. Fernandes Estimated Appraisal Date: November 2013 Project ID: P Additional Project ID (if any): Estimated Board Date: To Be Determined Managing Unit: LCSAR Lending Instrument: TF Grant Sector: Forestry (AT) Theme: Climate Change (81) FCPF Readiness Fund Amount (US$m.): US$3.6 million Other financing amounts by source: GIZ US$1,708,500, National Government US$155,000, Association of Agricultural Engineers US$40,000 and Ecomarkets US$120,000 Environmental Category: B 1

2 Simplified Processing Simple [] Repeater [ ] Is this a transferred project Yes [ ] No [] Note: This document was updated for publication on August 2012 to reflect changes in personnel, schedule and budget only. B. Objectives [from section 2 of R-PP Assessment Note]: The overall, long-term objectives of the proposed World Bank/FCPF engagement in Costa Rica are: to help Costa Rica reduce carbon emissions from deforestation and forest degradation; sustainably manage forests; and conserve and enhance forest carbon stocks (REDD+) in a socially and environmentally sound manner, while accessing international financial incentives for local forest users, thereby helping to mitigate climate change at a global level. C. Description [from section 3 of R-PP Assessment Note]: The Payment for Environmental Services (PES) program will likely serve as a cornerstone of Costa Rica s REDD strategy, with potential design change improvements to be defined during the preparation phase to address issues within the REDD context. Other activities would complement PES. Costa Rica has outlined several potential actions to address the drivers of deforestation and forest degradation, and to enhance and conserve forest carbon stocks. These options, to be further analyzed and developed through analytical studies and consultations with relevant key stakeholders in the preparation phase, can be seen as falling into five main categories: (i) increasing coverage, financing, and consolidation of the existing PES program; (ii) opening the PES program to areas under active management for forest resources; (iii) improving monitoring and control systems for illegal logging; (iv) supporting cadastre and land regularization programs; and (v) improving control of forest fires. 1 The specific REDD readiness preparation activities Costa Rica intends to carry out in developing its Readiness Package are described in the R-PP and include: stakeholder consultations, analytical work, capacity-building of governmental as well as nongovernmental entities including Indigenous Peoples and campesinos, and a strategic assessment of environmental and social impacts and risks. These activities would be funded by an FCPF Readiness Preparation Grant of $3.6 million and a $ 1,708,500grant from GIZ, in addition to the national government. 2 1 See Annex 4 for the major drivers of deforestation and forest degradation as identified in the R-PP and the potential REDD strategies currently being considered. 2 The total budget for Readiness Preparation is $7,139,500, of which $3.6 million will come from the FCPF grant and $ 1,708,500from GIZ. A further $155,000 will come from the national government, $120,000 from the Ecomarkets project, and $40,000 from the Association of Agricultural Engineers 2

3 D. Location and salient physical characteristics relevant to the safeguard analysis (if known): The FCPF Readiness Preparation Grant does not entail physical investments or pilot projects on the ground. Instead, the grant will finance a number of analytical and diagnostic studies as well as a series of consultation meetings and workshops with relevant stakeholders. While Readiness Preparation is conceived as mostly strategic planning at this stage, key policy and regulatory precedents are being set at the readiness phase that will have downstream impact at the national level once the national REDD+ strategy is ready to be implemented. E. Borrower s Institutional Capacity for Safeguard Policies: The Readiness Preparation Grant will be implemented by FONAFIFO which has a successful track record of implementing a PES Program that has many of the same elements as those proposed under the potential REDD+ strategy. Payments for forest services are highly innovative, and Costa Rica has accumulated invaluable experience in this area. In particular, FONAFIFO has developed capacity to contract landholders, make payments, and monitor compliance. This track record suggests that FONAFIFO has the critical capacity and commitment to effectively engage in a REDD+ program. FONAFIFO also has experience in implementing World Bank-financed projects, i.e. the Ecomarkets I and Ecomarkets II projects, and it has demonstrated its capacity to implement environmental and social safeguards. However, given the cross-sector and national coverage of REDD, safeguards policies for FCPF activities will apply at more strategic level than the previous Bank projects undertaken by FONAFIFO. In that regard, the Bank Team has been assisting FONAFIFO to design a methodology for the Strategic Environmental and Social Assessment (SESA) process. Given the complexity of the multi-sectoral and multistakeholder nature of the REDD+ design process at various levels, it is important for FONAFIFO to strengthen its institutional capacity by recruiting additional human resources (in particular social science expertise) that will help coordinate these various platforms at the institutional and manage the process with the various stakeholder groups. F. Environmental and Social Safeguards Specialists on the Team: Mihyun Miriam Bae (Social Scientist, LCSSO) Glenn Morgan (Regional Safeguards Adviser) II. SAFEGUARD POLICIES The FCPF Readiness Preparation grant must comply with World Bank safeguard policies addressing the management of environmental and social impacts and risks. This grant will, in part, support the country s activities to identify the potential risks associated with REDD+ and mitigation options. In order to do this, the FCPF Preparation Grant will carry out a Strategic Environmental and Social Assessment (SESA) in order to integrate key environmental and social considerations into REDD+ Readiness by combining analytical and participatory approaches. The SESA will allow: (i) social and environmental considerations to be integrated into the REDD+ Readiness process, in particular in the 3

4 REDD strategy; (ii) participation of relevant key stakeholder in the identification and prioritizing of key issues, in assessment of policies, in determining institutional and capacity gaps to manage these priorities and recommendations; (iii) key stakeholders to contribute to the design of the national REDD+ strategy with specific recommendations..as part of the SESA process, an Environmental and Social Management Framework (ESMF) will be formulated to manage environmental and social impacts and risks and to mitigate potential adverse impacts for specific investments on the ground during the implementation of the national REDD+ strategy. It is envisioned that the safeguards policies mentioned below may be triggered in the REDD+ Readiness process. Yes No TBD Safeguard Policies Triggered (please explain why) Environmental Assessment (OP/BP 4.01) A Strategic Environmental and Social Assessment (SESA) will be conducted to address the potential benefits and risks of the priority strategic options and activities identified in the R- PP. The SESA will also evaluate key contextual opportunities and constraints which could influence the ability of the eventual REDD+ strategy to achieve its expected outcomes and results. The SESA will be carried out in a manner consistent with the applicable World Bank operational and safeguards policies. Since the explicit goal of the REDD+ strategy is to promote the reduction in rates of deforestation and degradation by rewarding measures to protect and conserve forests, the environmental impacts of the strategy are expected to be mostly positive. As forest cover improves so too will the associated benefits associated with forests. Not only as a sink for carbon but also for the many environmental services forests provide such as watershed protection, provision of important habitats, sustainable source of NTFP and other forest based livelihoods. The REDD+ strategy itself will not finance the harvesting or conversion of forests so there is little to no direct adverse impact associated with activities planned as part of the strategic options. The principal risk from REDD+ would arise in the event that the strategies fail to achieve their objectives thereby creating unexpected indirect adverse impacts through the unintended creation of incentives to clear forests for other purposes. This could occur, for example, if PES schemes failed to provide sufficient monetary incentive to retain areas under forest cover. Similar risks could occur for example if lack of land tenure security were to undermine commitment to maintain land under forest cover for long time periods. Natural Habitats (OP/BP 4.04) Given that the REDD+ strategy will likely work both within existing protected areas as well as other forest habitats of varying significance, OP 4.04 will apply. If the REDD+ strategies are successful, the impacts on critical forest habitats are expected to be positive, nevertheless SESA will evaluate the possible risks associated with strategic options on forest habitats within PA as well as other sensitive forest habitats under private or communal control. During the formulation of the REDD+ strategy and throughout its implementation consultations will be carried out with key stakeholders to identify potential issues of concern. During the implementation phase monitoring activities will be established to ensure that critical natural habitats are not adversely affected. It is expected that the ESMF will include provisions to assess possible impacts prior to any actions being 4

5 Yes No TBD Safeguard Policies Triggered (please explain why) undertaken on the ground Forests (OP/BP 4.36) Due to the obvious importance of REDD+ as part of Costa Rica s long term forest and environmental management programs and due to the importance forests play in the livelihoods of many communities, this policy will apply. The REDD+ Strategy itself will build largely on the experience of FONAFIFO with the Payment for Environmental Services program. During the preparation phase, these and other forestry and rural development initiatives will be evaluated in order to ensure lessons are incorporated early in the design and key social and environmental risks and potential impacts associated with REDD+ are considered in the ESMF. Pest Management (OP 4.09) At present it is not envisioned that the REDD+ strategy would finance or lead to an increased use of pesticides or other agricultural chemicals. However, it is conceivable that some forest management practices used at plantations could utilize silvi-cultural practices involving pesticides. The SESA will evaluate the potential for such use of chemicals in forest management and, if necessary, appropriate guidelines and analytical approaches would be defined in the ESMF. For the tie being the policy is indicated as To be Determined (TBD) until further information is gathered during the preparation phase. Physical Cultural Resources (OP/BP 4.11) Given the uncertainty regarding the exact locations of activities to be carried out under the REDD+ Strategy the applicability of this policy is still to be determined. The most likely way this policy would be triggered is the REDD+ activities are implemented in forest areas which would be considered as PCR under the policy definition. This could occur for example, where forests or landscapes would be considered to have historical or cultural significance such as spirit forests, sacred valleys or other features of the natural landscape. It is expected that the ESMF would include specific provisions to assess the possibility of such impacts prior to any activities being undertaken on the ground Indigenous Peoples (OP/BP 4.10) An Indigenous Peoples Planning Framework (IPPF) will be prepared to comply with the Indigenous Peoples policy (OP 4.10) for addressing issues arising from specific investments during the implementation of the national REDD+ strategy. The IPPF will be part of a separate, specific chapter of the Environmental and Social Management Framework (ESMF). Under this policy, Indigenous Peoples communities affected by REDD+ Strategy must be consulted in a culturally appropriate manner and must provide their Broad Community Support. Costa Rica also committed to comply with its obligations under ILO Convention 169 on Indigenous and Tribal Peoples. Involuntary Resettlement (OP/BP 4.12) In order to comply with the Involuntary Resettlement policy (OP 4.12), a Process Framework (PF) will be prepared (and included as a separate specific chapter of the ESMF) for managing the potential restriction of access of local communities to natural resources. Additionally, a Resettlement Policy Framework (RPF) will also be prepared (as an additional specific chapter of the ESMF) to address potential resettlement of private land owners that are currently living in the protected areas and the possible resettling and 5

6 Yes No TBD Safeguard Policies Triggered (please explain why) compensation of these private land owners from indigenous peoples territories. Safety of Dams (OP/BP 4.37) The REDD+ will not finance the construction or rehabilitation of dams nor will any REDD initiatives rely the on the performance or existing dams so the policy is not triggered. Projects on International Waterways (OP/BP 7.50) The REDD+ strategy is not likely to undertake activities which will affect the quantity or quality of international waterways so the policy is not triggered at this time. Projects in Disputed Areas (OP/BP 7.60) The REDD+ strategy will not finance activities in disputed areas as defined under the policy and therefore the policy is not triggered at this time. Piloting the Use of Borrower Systems to Address Environmental and Social Safeguard Issues in Bank- Supported Projects (OP/BP 4.00) III. SAFEGUARD PREPARATION PLAN A. Target date for review meeting of REDD Country s mid-term progress report, at which time the ISDS may be updated as needed: [] B. Time frame for launching and completing the safeguard-related studies that may be needed. The specific studies and their timing 3 should be specified in the initial ISDS and/or updated ISDS: N/A he SESA aims to integrate key environmental and social considerations into REDD+ Readiness by combining analytical and participatory approaches. An Environmental and Social Management Framework (ESMF) will be prepared to manage environmental and social risks and to mitigate potential adverse impacts for specific investments on the ground when the national REDD+ strategy is being implemented. The ESMF, will be part of the Readiness Package, which is the final product of the readiness preparation process under the FCPF. FONAFIFO organized the first National SESA Workshop (May 4-5, 2011) with relevant key stakeholder groups nationally in order to (i) inform stakeholders about Costa Rica s revised proposal for designing a national REDD+ strategy; and (ii) provide the initial platform for relevant key stakeholders to raise their issues and concerns regarding the proposal. During SESA workshop, an issue scoping exercise was carried out based on the 3 Reminder: The Bank s Disclosure Policy requires that safeguard-related documents be disclosed before appraisal (i) at the InfoShop and (ii) in-country, at publicly accessible locations and in a form and language that are accessible to potentially affected persons. 6

7 strategic REDD+ options being considered for the design of the national REDD+ strategy. Discussions focused on identifying the risks and benefits of each proposed strategic REDD+ option from the specific perspective of each of the relevant key stakeholder group and in distilling the particular issues and concerns. Stakeholder groups that participated in the SESA workshop included: (i) government agencies; (ii) indigenous peoples; (iii) donors; (iv) civil society and NGOs; (v) campesino organizations and small producers; (vi) private sector; and (vii) academia and research institutes. Each stakeholder group held their own deliberation meeting and carried out their issue scoping exercise based on the proposed REDD+ strategic options. This workshop provided the first opportunity both for FONAFIFO and the relevant key stakeholder groups to interact formally and to work towards building a more systematic participatory process in designing the national REDD+ strategy. A Workshop Proceedings was prepared by FONAFIFO and disseminated broadly on June 7, 2011, reflecting the inputs and feedback received from the key stakeholder groups during the national SESA workshop. The Workshop Proceedings was accompanied by a set of response from FONAFIFO addressing the issues and concerns raised by each stakeholder group, including a separate response matrix for indigenous peoples. The Workshop Proceedings and its response matrix is available on FONAFIFO s website. Based on the stakeholders inputs, FONAFIFO is drafting a SESA Workplan that outlines the steps of the SESA process throughout the readiness phase indicating specific timeline, milestones, analytical studies, etc. Prior to the finalization, this draft SESA Workplan will be disseminated to the stakeholders and will serve as a live document subject to revision as the design of the national REDD+ strategy evolves. A parallel communications strategy will support the information dissemination on the specifics of the strategic options, risks and benefits, to strengthen participatory platforms and process, and also to raise awareness about the overall national REDD strategy. The SESA Workplan will be finalized as a self-standing document that will contain activities, the linkages with the overall national REDD+ strategy design and specific components of the R-PP, the specific issues and studies to be carried out, budget, institutional arrangements and timeline. During the readiness phase, FONAFIFO will carry out the analytical and diagnostic studies in regards to the social, environmental, legal and policy impacts, risks and benefits in a participatory manner based on the SESA Workplan agreed with the relevant key stakeholders. The data and findings of these analytical and diagnostic studies will be summarized in a self-standing SESA Report that will include the following key elements: (i) the consultation process with respect to the analytical and diagnostic studies; (ii) the risks and benefits of the proposed options for the national REDD strategy; and (iii) the contextual challenges that could weaken and/or enhance the long-term sustainability of the national REDD strategy. 7

8 IV. APPROVALS Signed and submitted by: Environmental Specialist Social Specialist Task Team Leader: Regional Safeguards Coordinator: Sector Manager: Glenn Morgan Mi Hyun Bae Erick C.M. Fernandes Francis Fragano (acting) Laurent Mselatti 8