PROJECT INFORMATION DOCUMENT (PID) CONCEPT STAGE Report No.: Project Name. Rio de Janeiro Sustainable Rural Development Project Region

Transcription

1 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized PROJECT INFORMATION DOCUMENT (PID) CONCEPT STAGE Report No.: Project Name Rio de Janeiro Sustainable Rural Development Project Region LATIN AMERICA AND CARIBBEAN Sector General agriculture, fishing and forestry sector (80%); Other social services (20%) Project ID P Borrower(s) STATE GOVERNMENT OF RIO DE JANEIRO Implementing Agency Environment Category [ ] A [] B [ ] C [ ] FI [ ] TBD (to be determined) Date PID Prepared August 15, 2008 Estimated Date of October 15, 2008 Appraisal Authorization Estimated Date of Board December 15, 2010 Approval 1. Key Development Issues and Rationale for Bank Involvement Background and Agricultural Profile 1 : The State of Rio de Janeiro (SoRJ) is one of Brazil s 26 states and is located in the geopolitical region of the Southeast. With a total area of 43,864 square kilometers, it is divided into eight administrative regions 2 and has approximately 15.4 million inhabitants (about 9% of the national population). The economy is driven by the industrial and service sectors, which contribute to 51% and 42% of state gross domestic product (GDP), respectively. Overall the SoRJ accounts for 15% of national GDP (US$139.0 billion in 2006). Although small in comparison (0.5% of state GDP), the agricultural sector is important to the SoRJ s economy. Outside of the metropolitan area of the city of Rio de Janeiro, agriculture s contribution to GDP rises to nearly 5%. And when included with agro-industrial activities, agriculture contributes to more than 25% of state GDP. The importance of agriculture is further evidenced in terms of rural employment (it accounts for over 40%) and land use (more than 60% of total state area is dedicated to agricultural activity). Three administrative regions, including the North and Northwest, also known as North and Northwestern Fluminense (NNWF), and the Serrana, are the agricultural powerhouse of the SoRJ. With 36 municipalities and nearly 2.0 million inhabitants 3 (over 10% of total state population), they produce the majority of agricultural goods in the state (66%). This includes 1 Unless otherwise stated, all data in this section is derived from the Rio de Janeiro State Government s Secretary of Planning and Institutional Coordination (SEPCI). 2 The eight administrative regions of the SoRJ include: (i) North; (ii) Northwest; (iii) Mountain (Serrana); (iv) Center-South; (v) Coastal Floodplains; (vi) Metropolitan; (vii) Paraíba River Middle Valley; (viii) and Ilha Grande Bay. There are a total of 92 municipalities in the state. 3 According to the 2005 census, the NNFW regions have 22 municipalities and 1,064,484 inhabitants while the Serrana region has 14 municipalities and 519,071 inhabitants.

2 coffee (21,000 tonnes or 99% of the state total), sugarcane (5.7 million tonnes or 97% of the state total), cereals (43,000 tonnes or 90% of the state total), vegetables (630,000 tonnes or 67% of the state total), milk (2.5 million liters or 54% of the state total), and fruit (195,000 tonnes or 42% of the state total). Agriculture is thus vital to economic and social well-being in the SoRJ. This is especially true in the NNWF and Serrana regions, where more than half of the state s rural population (about 300,000 out of a state total of 550,000 4 ) reside and which are responsible for 60% of agricultural employment in the state. These regions also have the largest concentration of family farmers in the SoRJ (an estimated 80,000 out of a state total of 100,000 5 ) whose main occupation and source of income is agriculture. The importance of small family farms is underscored by the fact that they represent some 90% of total land holdings, over half of which correspond to holdings of only ten hectares (ha) or less, and small-scale farming employs roughly twice the number of people per unit area than the larger holdings. Despite its importance, agriculture in the NNWF and Serrana regions continues to underperform. This is reflected in historical practices, which includes the use of outdated and inadequate technology, sugarcane and coffee production dominated by boom and bust cycles, and weak farmer organization. Low productivity is also evidence of underperformance. For example, sugarcane productivity, which is the most important agricultural product in the SoRJ, is only 58 tonnes/ha compared to 80 tonnes/ha in neighboring São Paulo and Paraná; its quality is also poor in comparison. 6 At 15 sacks/ha, coffee productivity is another illustration, which is well below the national average, as is cattle farming. 7 The underperformance of the agricultural sector is further indicated by the existence of weak linkages to markets with high demand for agricultural products. As a result, there is significant untapped potential in internal (i.e., other administrative regions in the state) and national markets (i.e., São Paulo and Minas Gerais). In addition to overcoming constraints related to the underperformance of agriculture, the SoRJ s rural sector faces other key challenges. First is a compromised natural resources base. Although home to an extremely diverse and unique mix of vegetation and forest types, including globallyimportant resources in the case of the Atlantic Forest (Mata Atlântica), 8 such areas continue to be under severe pressure primarily as a result of de-forestation (related to land conversion and charcoal production, among other things) and soil erosion (caused by, inter alia, deforestation, overgrazing, and poor agricultural practices). Indeed, the SoRJ had the highest rate of deforestation (about 17%) of all of the Brazilian states covered by the Atlantic Forest from Recurrent droughts and some preliminary evidence of climate change also contribute to a fragile and compromised natural resources base. These patterns are particularly relevant to the NNWF and Serrana regions, which have the largest remaining stands of the Atlantic Forest in the SoRJ. 4 Estimated Population Count, 2007, Brazilian Institute of Geography and Statistics (IBGE). 5 Ibid. 6 Rio de Janeiro Technical Assistance and Rural Extension Institute (EMATER), Ibid. 8 The SoRJ has the highest percentage of the Atlantic Forest with respect to total area among all of Brazil s states.

3 Another key challenge facing the rural sector in the SoRJ is poverty. The NNWF and Serrana regions, in particular, have some of the lowest socio-economic indicators in the state, as well as in all of Brazil (comparable to the Northeast). While over 60% of the rural population lives in poverty (an estimated 185,000 people), approximately one-third of those are in conditions of extreme poverty. 9 Accordingly, per capita income in these regions is estimated to be just 32% of the average per capita income for the SoRJ and 39% for all of Brazil. Other basic education and health indicators follow suit. Factors that are commonly attributed to this situation include: the lack of dynamism and largely rural character of these regions; continued economic dependence on a rudimentary agriculture predominately based on monoculture and cattle ranching; and the incipient nature of regional industrialization, markets, and agro-industrialization processes. Government Strategy. Brazil s state and federal governments have established a policy agenda that supports rural poverty reduction through integrating sustainable environmental and social practices and increasing the agricultural production and diversification of family farming. In the SoRJ, the government recognizes the importance of supporting small-scale agriculture in the context of increased competitiveness and market access. This is especially relevant to the NNWF and Serrana regions which produce the vast majority of agricultural goods in the state. For this reason, the Government of RJ (GoRJ) grants significant and increasing shares of its supply of agricultural credit (46%) and agricultural technical assistance (38%) to these regions. The GoRJ has also taken important steps to overcome critical environmental and food security challenges. For example, a 2006 policy forbids the expansion of sugarcane and other biofuel production in subsistence farming areas. Despite the progress, further work is required to better leverage support for productive activites in unison with environmental concerns through promoting tighter coordination and planning with other sectors. The GoRJ has recently taken actions to operationalize its rural development strategy through the implementation of the Rio de Janeiro Sustainable Integrated Ecosystem Management in Production Landscapes of the NNWF GEF Project (GEF). The project was designed to support pilot activities that promote the long-term conservation and rehabilitation of agro-ecosystems, as well as the implementation of sustainable land management practices that provide environmentally-sustainable economic opportunities for rural communities. After a slow initial start-up period following its effectiveness in December 2005, the project has achieved significant advances in community organization and is now beginning to implement local development plans and investment subprojects. In addition to the GEF, the GoRJ is implementing other programs in support of its rural development strategy. These include: (i) the State Credit Program for Agricultural Production and Diversification (Moeda Verde), which includes credit lines for fruit and livestock production and diversification; (ii) the State Microcatchment Program for Sustainable Rural Development (SRD) (Rio Rural), which provides rural extension and infrastructure to rehabilitate microcatchment resources (i.e., erosion control for rural roads); and (iii) the National Smallholder Agriculture Program (PRONAF), which provides credit and assistance for smallholders to facilitate conditions for increasing productive capacity. 9 Rio de Janeiro End of Hunger Map, 2004, Center for Social Policy, Getulio Vargas Foundation. This critical poverty assessment combines two elements in its definition of the poverty line: (i) less than half of the minimum wage; and (ii) additional per capita income needed to ensure the minimum amount of calories as reflected by WHO requirements.

4 Rationale for Bank Involvement. There are four main reasons that justify Bank involvement in the proposed project. Foremost is its knowledge and experience with international best practices. The Bank can bring value added in the form of its knowledge and experience on an array of subject matters acquired through its analytical and project work both in LAC and other regions of the world. Among topics central to the proposed project include: improved competitiveness through increasing small-scale farming productivity, value added, and market access. Other important related topics include: decentralization, social accountability, and instruments for the long-term financing of sustainable production practices and natural resources conservation. A second reason for Bank involvement is its in-country knowledge and experience. The Bank has acquired knowledge of local and participatory development and poverty alleviation in Brazil through both economic sector work and project implementation, in particular, projects in other South and Southeast Brazilian states, some of which are ongoing (i.e., Rio Grande do Sul, Santa Catarina, Paraná, and São Paulo). A third reason for Bank involvement is government interest. The GoRJ has great interest in testing the development, demonstration, and evaluation of mechanisms to adopt and mainstream a new territorial approach across the state. This includes a number of organizational, productive, and environmental innovations for which it has requested Bank support. Bank involvement is further justified to complement and build on ongoing activities. This includes pilot activities supported under the GEF as well as other non-bank financed rural and environmental operations in the SoRJ (i.e., KfW s Pro-Mata Atlântica Forest Program and the GoRJ s PRONAF, Moeda Verde, and Rio Rural). 2. Proposed Objective The PDO is to increase small-scale farming productivity and competitiveness in specific territories of the SoRJ through the promotion of environmentally-sustainable practices and socioeconomic improvements in farming communities. 3. Preliminary Description The proposed project, which would be implemented over a six-year period, would have an estimated overall cost of US$73.0 million. The proposed lending instrument is a Specific Investment Loan (SIL) of US$36.5 million. The target population consists of an estimated 36,704 small-farming families and rural residents (some 150,000 people in total) in the SoRJ. This corresponds to approximately 30% of the total rural population in the state. The target population primarily resides in one main territory that includes the NNWF and Serrana administrative regions, representing a total area of roughly 23,112 square kilometers (53% of the total area of the state). However, replication activities would also be carried out in two other territories, which include the Paraíba River Middle Valley and Metropolitan administrative regions, and the Coastal Floodplains administrative region. Overall, activities would be concentrated in 22 municipalities in the NNWF regions and 14

5 municipalities in the Serrana region, and replication activities would be carried out in 23 municipalities located across the three other administrative regions. Thus, the project would impact a total of 59 municipalities (out of a total of 92 in the state). The selection and prioritization of municipalities at the regional level, as well as participating communities within those municipalities at the local level, would be based on production potential, social and environmental considerations. Building on selection criteria adopted by the GEF, five socioeconomic criteria and one environmental index have been used for the selection of municipalities, covering: prevailing land use and soil management practices; concentration of small producers; existing level of community organization; prevalence of biodiversity; and presence of springs or other sources of surface or ground water. A Participatory and Negotiated Territorial Development (PNTD) 10 approach would be used to diagnose and organize territorial management to unleash the agricultural production potential of the SoRJ in the targeted regions while promoting sustainable practices and improving the socioeconomic conditions of farming communities. This would be achieved by: (i) establishing an institutional framework in support of PNTD and environmental awareness, as well as by promoting decentralized interventions to increase the capacity and organization of local farmers; (ii) supporting, based on the above, the transition to more efficient production systems and the sustainable use and conservation of the resources base and social development through financing different categories of competitiveness-related investment proposals and facilitating multisectoral coordination and interventions; and (iii) replicating this methodology in other heavily agriculture-oriented regions throughout the SoRJ outside of the priority areas (the NNWF and Serrana regions). The PNTD approach of the proposed project is predicated on comprehensive diagnostic and planning exercises across different levels (regional, municipal, etc.) with a wider scope beyond project activities. To support the decentralization of planning and decision-making responsibilities, the project would thus strengthen local institutional capacity to more effectively and efficiently respond to the arising, better articulated, and integrated demands at the local level. The PNTD approach would build on the strategy currently being implemented by the GEF, which is characterized by a participative planning model, as well as the full involvement, empowerment, and self-management of community-based organizations (which includes the active participation of women and youth). To help consolidate these processes, a complementary strategy would focus on promoting value added and increased market access for small farmers through a territorial development approach. To achieve the PDO, the proposed project would finance four components: (1) Small-farmer Production Incentives; (2) Policy and Institutional Frameworks for Territorial Development; (3) Capacity Building for Territorial Development; and (4) Project Coordination and Information Management. The preliminary descriptions are described in the following. Component 1: Small-farmer Production and Marketing Incentives (estimated US$49.0 million, 68.0% of total project cost) 10 FAO Participatory and Negotiated Territorial Development, More than a Methodology: A Strategy for Territorial Interaction and Integration. Land Tenure and Management Unit.

6 The objective of this component is to support the transition to more efficient and competitive production systems while promoting the sustainable use of natural resources and social development through an integrated SRD approach. To do so, the proposed project would finance three categories of investment proposals divided into three subcomponents. The first subcomponent, (1.1) Promotion of Sustainable Production and Marketing Activities, would support integrated investments that address value added and market-related issues identified in targeted areas. Building on local planning exercises, as well as training and adaptive research efforts provided under Component 2, this subcomponent would finance individual and group investments, including sustainable production (on-farm focus), value chain development (off-farm focus), and natural resources conservation. Although climate change impacts are not expected to be particularly acute in project areas, they do warrant attention. This subcomponent would therefore put in place adaptation incentives. This would include support to enhance land and water management practices to respond to increasing climate variability (i.e., to increase the resistance of systems to bridge longer periods of drought by increasing soil infiltration capacity to reduce surface runoff, minimize rain-water loss, and stabilize water flows). The second subcomponent, (1.2) Sustainable Road Maintenance for Improved Market Access, would create an institutional framework for sustainable road maintenance to improve small farmers access to markets. It would do so by supporting the development of Municipal Road Maintenance Consortia and supplying them with the training and equipment needed to carry out pilot road works for increased erosion control and transitability along rural roads (i.e., strengthening on-farm and off-farm gullies, simple grading and re-gravelling, improving drainage systems and intersections, and constructing small culverts and soakage pits). Ultimately, this subcomponent would improve tertiary roads by preventing the generation of erosive run-off onto farmers fields, enhance overall road accessibility to small farming communities, and lower operation and maintenance costs The third subcomponent, (1.3) Healthy Productive Environment, would finance investment proposals that improve the basic infrastructure of rural populations to enhance the overall living and work environment. At the individual level, this would include habitation and sanitation improvements. Examples at the community level would include improvements to existing community centers and water supply and sanitation systems, as well as supporting telecommunication and information centers. Main outcome: Farm-level, community, and municipal/regional investment proposals financed. Component 2: Policy and Institutional Frameworks for Territorial Development (estimated US$7.0 million, 9.0% of total project cost) The objective of this component is to improve governance for SRD in the SoRJ by: (i) promoting the restructuring of public institutions in the rural sector; (ii) improving multi-sectoral coordination and consultation mechanisms; and (iii) expanding and formalizing public-private

7 partnerships and promoting beneficiary awareness of existing incentives to ensure continued financial support to sustainable productive activities. In doing so, this component would establish or strengthen partnership mechanisms to create a conducive enabling environment for SRD at all levels, as well as increase the mobilization of different partners in a coalition to: advocate a common vision of SRD; share analyses; improve coordination across all levels; set the foundation for strengthening and harmonizing policy dialogues and strategies (and facilitate their implementation); and more effectively implement SRD projects. This would be carried out through three subcomponents. The first subcomponent, (2.1) Strengthening Rural Institutions, would support the establishment of institutional arrangements and processes within SEAPPA and its partner organizations to promote collaborative and permanent SRD strategies at municipal and regional levels, as well as with agricultural entities operating in the SoRJ. The second subcomponent, (2.2) Improving Multi-sectoral Coordination Mechanisms, would support advocacy for SRD and coalition development to strengthen existing and establish new multi-sectoral activities and programs. This would assure synergy, coherence, and the complementarity of actions between different government sectors and actors that intersect in the rural ambient (i.e., agriculture, education, health, environment, and rural infrastructure). The third subcomponent, (2.3) Supporting a Public-Private Partnership System, would encourage the expansion and formalization of public-private partnerships through developing a system that promotes beneficiary awareness of existing incentives and ensures continued support to sustainable productive and conservation activities beyond the life of the project. This system would be based on four elements: (i) PES, which includes the development of the operational base for the PES mechanism currently being designed under the GEF; (ii) mainstreaming SRD activities within existing rural credit schemes; (iii) reviewing current investment programs and public expenditure frameworks to identify constraints and entry points for SRD to increase the predictability of financial flows; and (iv) public-private partnerships to support new agribusiness and implement Brazil s relevant social responsibility policies and regulations. Main outcomes: Policies, incentive frameworks, and institutional structures and capacities at state and decentralized levels promoting the implementation of SRD throughout the SoRJ. Component 3: Capacity Building for Territorial Development (estimated US$10.0 million, 14.0% of total project cost) The objective of this component is to increase the capacities of actors in key rural areas to promote increased agricultural-focused economic activity and balanced development in those areas, by inducing organization, planning and behavioural changes at different levels. Related activities would serve as a vehicle for sustained efforts in stimulating local potential and quality of life by overcoming competitiveness constraints and effectively managing pressing socioeconomic and environmental issues. This would be carried out through five subcomponents. The first subcomponent, (3.1) Training for Territorial Development, would finance the preparation of beneficiaries and project staff for the implementation of the project s technical

8 strategy. This subcomponent would serve as the building block for actions that would contribute to the gradual development of more sustainable landscapes on a larger scale, hence comprising a major input to sustainable territorial development. Related activities could include: production of didactic materials and dissemination of information for beneficiaries, training of technicians/agents in territorial development, organization-strengthening activities in territorial development, and environmental programs and projects in schools. The second subcomponent, (3.2) Local and Territorial Planning, would build on progress achieved by the GEF to form the backbone of the proposed project s capacity-building strategy. Relying mostly on rural extension services, this subcomponent would promote the project among rural communities by, inter alia: providing information; assisting group formation; creating opportunities for legitimized, committed, and informed leadership; helping beneficiaries to diagnose and prioritize needs through planning both at individual and group levels; strengthening local organizations in conceptual, socio-political, financial, and entrepreneurial issues; transferring knowledge on available legal and institutional resources to local actors, governments, and technical agencies; and supporting the technical administration of state and local governments. This subcomponent would also facilitate the provision and coordination of services to small-farmers and rural communities to improve the efficiency of service delivery, which is expected to increase the demand for agricultural inputs (i.e., equipment, tools, seeds, seedlings, and materials) through existing commercial channels. Moreover, this subcomponent would include policy studies and workshops to support territorial development. The third subcomponent, (3.3) Rural Citizenship Networks, would increase awareness about people s rights, responsibilities, obligations, and limitations, as well as reinforce networking and mutual trust. More specifically, this subcomponent would support the participatory organization of beneficiaries in local decision-making structures (including the strengthening of community organization and self-governance) and the creation or strengthening of existing sustainable development networks (i.e., fair trade, farmer, fishery, and agro-ecological). It would also support the establishment, strengthening, and integration of rural citizenship networks through such activities as regional meetings, exchanges, and forums. In addition, this subcomponent would finance policy studies, consultations, and coalition-building activities to develop alternative sustainable funding options for selected public services. The fourth subcomponent, (3.4) Environmental Education, would support the implementation of local Agenda to boost stakeholder awareness regarding the need for and commitment to addressing environmental problems to improve rural livelihoods. This would be implemented at both the municipal and local level. The fifth subcomponent, (3.5) Adaptive Research, would fill key information gaps and address production, procedural, environmental, and marketing issues to underpin technical and social change among targeted areas. Technical and socioeconomic research topics (to be undertaken by public research institutions, universities, etc.) would respond directly to the needs arising from demand-led development plans. This would also include technical and economic feasibility 11 Agenda 21 is a comprehensive blueprint of action to be taken globally, nationally, and locally by organizations of the United Nations, governments, and major groups in every area in which humans impact the environment. For details, visit

9 studies (i.e., bioenergey competitiveness at state and local levels, and carbon sequestration). In addition, this subcomponent would support studies to identify a list of potential new crops that could be grown in the project area in response to climate change (this is particularly relevant to areas of the NNWF that are affected by droughts). Examples of studies include: additional water demand needed to offset the yield effects of recent droughts; potential climate change impacts and response priorities; and farm-level adaptation options. Main outcomes: Small-scale farmers and other local populations trained and planning and implementing development plans and investment proposals for SRD supported by rural extension, research, and strengthened networks. Component 4: Project Coordination and Information Management (estimated US$7.0 million, 9.0% of total project cost) The objectives of this component include: overall project management; the design and implementation of a monitoring and evaluation (M&E) system; and the establishment of a SRD information system. This would be carried out through two subcomponents. The first subcomponent, (4.1) Project Management, would build on the existing GEF Implementation Unit (PIU). 12 Procurement, financial management, and reporting areas would be scaled-up for the administration of loan resources and oversight of loan-funded activities. Accordingly, the SEAPPA, where the PIU is located, would continue to be responsible for overall project coordination, management, and implementation. It would count on the support of the State Secretariats of Environment (SEA), 13 Health (SESDC), and Education (SEE). Within SEAPPA, the State Extension (EMATER) and Research (PESAGRO) agencies would be key onthe-ground project implementers. Municipal governments and a broad cross-section of civil society would also play an active role in project-supported activities. The PIU would sign working agreements with agencies and institutions that have a strong presence in the region for extension as well as for research, monitoring, and other implementation activities that warrant support. The second subcomponent, (4.2) Information Management, would build on the existing M&E information systems and data banks for the ongoing GEF. A Management Information System (MIS) would be developed to: monitor and assess project implementation in relation to overall objectives, baseline situation, inputs, and outputs; promote accountability for resource use against objectives; provide and receive stakeholder feedback; systematically document the demonstration effect; and produce inputs for dissemination of project results and lessons learned. In the process, the MIS would generate a comprehensive set of procedures and tools to address information management on natural resources degradation and sustainable land management across different levels (from local farmers and land users to state-level decision makers). Importantly, the MIS would also validate the demonstration effect by documenting non-project supported replication activities across the state. 12 The PIU was established through the SEAPPA s Sustainable Development Directorate. This unit would be expanded to support the implementation of the new project. 13 The executive branches of the SEA would also be involved, including the areas of Forestry (IEF), Environment (FEEMA), and Water Resources Management (SERLA).

10 4. Safeguard Policies that Might Apply Safeguard Policies Triggered Yes No TBD Environmental Assessment (OP/BP 4.01) Based on the assessment of potential impacts presented above, a Category B designation is proposed for the project. It is being designed to ensure compliance with the requirements of the Bank umbrella policy on EA (OP 4.01). Despite the largely positive or neutral project impacts anticipated, submission of an EA and an EMF is considered prudent to ensure conformity with this Bank policy. The Borrower submitted a first draft EA/EMF in August Mitigation measures proposed in the draft EA/EMF would be mainstreamed in Component 1. These would require strict subproject screening, evaluation, approval, and monitoring procedures. Given that many subproject typologies would be similar to those funded under the current GEF, the EA procedures applied under the GEF would be adopted and expanded to include the new types of investments. Moreover, the EMF would describe the process for setting up fully accountable management practices for preventing and mitigating adverse impacts, including an environmental management manual for rural roads works and detailed guidelines for site selection, design, construction, and monitoring arrangements for basic infrastructure works. The Borrower would submit a revised draft EA/EMF by end of October Natural Habitats (OP/BP 4.04) OP4.04 would be triggered because increased agricultural productivity and improved transport could indirectly result in adverse impacts on natural habitats. However, the project would not result in significant conversion or degradation of critical and other (non-critical) natural habitats. On the contrary, it is expected that the agricultural productive investments would take place in areas that have been traditionally dedicated to agriculture and would therefore not involve conversion of natural habitats. In addition, increased agricultural productivity will be a result of integrated agro-ecosystem management practices such as those being currently tested and adopted by farmers in the GEF. Moreover, the project would support conservation practices and improved land use planning and management that would lead to more sustainable use of agricultural lands, conservation of natural habitats (support to private protected areas), and the rehabilitation of degraded natural habitat. Despite these anticipated positive impacts, the second draft EMF being currently prepared by the Borrower would explicitly forbid any project activities in areas supporting critical natural habitats. It would also ensure that any activity in the buffer zone of a protected area would be designed to help reduce pressure on the protected area itself. Forests (OP/BP 4.36) OP 4.36 would be triggered because the project would support reforestation, natural forest regeneration, and sustainable production systems. As a result, the project s M&E system would track compliance for forestry-related activities that may require attention to forestry management standards. Pest Management (OP 4.09) OP 4.09 would be triggered because the project may lead to increased pesticide use. Although the project would not directly finance the procurement of any pesticides or other chemical amendments this safeguard policy, minor amounts of pesticides would probably continue to be used by a small portion of farmers supported by the project. In instances of pesticide use, disposal containers may be requested by communities to reduce associated health and

11 Safeguard Policies Triggered Yes No TBD environmental risks. The project would also support TA for the adoption of organic agriculture and of proven, economically, and environmentally sustainable IPPM. This approach would be designed to increase farmer productivity (yields), reduce input costs and human health risk, and minimize adverse environmental impacts through the virtual elimination of pesticide use. The IPPM approach would further improve the sustainability of agro-ecosystems by focusing on improving the knowledge and skills of farmers to better enable resource management. A section on pest management will be included in the second/final draft EA/EMF Plan (to be also incorporated into the Operational Manual). Physical Cultural Resources (OP/BP 4.11) OP 4.11 would be triggered by the project. Although it is not expected that project implementation would have any negative impact on physical cultural resources, chance findings during implementation activities are possible. To handle such findings, Brazil has a well-developed legislative and normative framework, which is under the oversight of the National Institute for Protection of Historical and Archeological Sites (IPHAN). Additionally, SEAPPA has proven experience and adequate procedures to recover chance findings in line with existing rules. These procedures would be incorporated into the Operational Manual during preparation. Indigenous Peoples (OP/BP 4.10) The project was screened for the presence of indigenous people in the targeted areas. Indigenous people are not present in the 59 targeted municipalities of this operation. Involuntary Resettlement (OP/BP 4.12) OP 4.12 would be triggered because road maintenance activities could result in the acquisition of new land. As a result, client would prepare a Resettlement Policy Framework to deal with any potential loss of assets issues that might occur. Safety of Dams (OP/BP 4.37) Projects on International Waterways (OP/BP 7.50) Projects in Disputed Areas (OP/BP 7.60) 5. Tentative financing Source: ($m.) Borrower 36.5 International Bank for Reconstruction and Development 36.5 Total Contact point Contact: Alvaro J. Soler Title: Sr. Rural Development Specialist Tel: (202) asoler@worldbank.org