FOR OFFICIAL USE ONLY RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF

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1 Public Disclosure Authorized Document of The World Bank FOR OFFICIAL USE ONLY Report No: BR Public Disclosure Authorized Public Disclosure Authorized RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF RURAL ENVIRONMENTAL CADASTRE AND FIRE PREVENTION IN PIAUÍ STATE PROJECT TO FUNDAÇÃO AGENTE APPROVED ON APRIL 8, 2014 GRANT FROM THE BRAZIL CERRADO CLIMATE CHANGE MITIGATION TRUST FUND January 20, 2016 Public Disclosure Authorized Environment and Natural Resources Global Practice Brazil Country Management Unit Latin America and the Caribbean Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.

2 Regional Vice President: Country Director: Practice Manager/Manager: Task Team Leader: Jorge Familiar Martin Raiser Raúl Ivan Alfaro-Pelico Bernadete Lange

3 DATA SHEET Brazil RURAL ENVIRONMENTAL CADASTRE AND FIRE PREVENTION IN PIAUÍ STATE PROJECT BRAZIL CERRADO CLIMATE CHANGE MITIGATION TRUST FUND LATIN AMERICA AND CARIBBEAN ENVIRONMENT AND NATURAL RESOURCES. Report No: BR. Basic Information Project ID: P Lending Instrument: Specific Investment Loan Regional Vice President: Jorge Familiar Original EA Category: Partial Assessment (B) Country Director: Martin Raiser Current EA Category: Partial Assessment (B) Senior Global Practice Director: Practice Manager/Manager: Team Leader: Paula Caballero Original Approval Date: 08-Apr-2014 Raúl Ivan AlfaroPelico Current Closing Date: 30-Jun-2016 Bernadete Lange Recipient: Fundação Agente Responsible Agency: Secretariat of Environment and Water Resources State of Piauí -PI Restructuring Type Form Type: Short Form Decision Authority: Country Director Approval Restructuring Level: Level 2 Explanation of Approval Authority: 18-month extension of Closing Date Financing ( as of 05-Dec-2014 ) Key Dates Project TF Status Approval Date Signing Date Effectiveness Date Original Closing Date Revised Closing Date P TF Effective 08-Apr Apri Apr Jun Jun-2016

4 Disbursements (in Millions) Project TF Status Currency Original Revised Cancelled Disbursed Undisbursed % Disbursed P TF Effective USD Policy Waivers Does the project depart from the CAS in content or in other significant respects? Yes [ ] No [ X ] Does the project require any policy waiver(s)? Yes [ ] No [ X ] A. Summary This Restructuring Paper seeks the approval of the Country Director to undertake a Level Two Restructuring of TF Rural Environmental Cadastre and Fire Prevention in Piauí State Project to extend the Project s Closing Date by 18 months from June 30, 2016 to December 31, 2017, and to revise the Results Framework of the Project. This is the first extension of Closing Date for this Project. This Project is part of the Brazil Cerrado Climate Change Mitigation Trust Fund (TF071814), which is a single-donor trust fund with Bank and Recipient-executed components funded by the Department for Environment, Food and Rural Affairs of the United Kingdom (DEFRA) to support the implementation of the Cerrado Program. Launched in 2012, the single-donor trust fund (TF071814) has been supporting activities and projects under a two-pronged approach: (i) promotion of farmers compliance with the Brazilian Forest Code, based on strengthening the monitoring and enforcement of mandatory environmental reserve requirements through environmental registration of rural properties; and (ii) promotion of controlled burning, prevention of forest fires, replacement of burning with more sustainable agricultural practices, and strengthened firefighting capacity. The Cerrado Program comprises the following Projects, all under implementation: Rural Environmental Cadastre (CAR) and Fire Prevention in Bahia Project, implemented by the Bahia State Secretariat of Environment (SEMA-BA) (P / TF015228). The project s main activities are to: (i) assist rural landholders to bring their lands into compliance with the Forest Code by implementing the CAR (in the State of Bahia, the system is called CEFIR [Catastro Estadual Florestal de Imóveis Rurais/State Forestry Cadastre of Rural Properties], developed by the State as a broader system than the CAR and covering other environmental aspects); (ii) promote sustainable productive activities; and (iii) strengthen municipal governments capacity to prevent and control forest fires. Rural Environmental Cadastre and Fire Prevention in Piauí Project, implemented by the Secretariat of Environment and Water Resources in Piauí (P / TF016192). The project s main activities are to (i) assist rural landholders to bring their lands into compliance with the Forest Code by implementing the CAR; (ii) promote

5 sustainable productive activities; and (iii) strengthen municipal governments capacities to prevent and control forest fires. Platform of Monitoring and Warning of Forest Fires in the Brazilian Cerrado Project, coordinated by National Institute of Spatial Research (Instituto Nacional de Pesquisas Espaciais, INPE) (P / TF018566). The project s objective is to develop a system to monitor and analyze forest fires and produce fire alerts in priority States of the Cerrado Biome as a pilot system. The Project includes a reconfiguration of the structure of INPE s Burning System, both internally in INPE as well as in users Internet access, by adapting the system to the state of the art in remote sensing, geoprocessing, information technology, and decision intelligence. This project will complement the implementation of an Early-Warning System Preventing Forest Fires and a System for Monitoring the Vegetation Cover Project, under the Brazil Investment Plan (BIP), funded by the Forest Investment Program (FIP). ProCerrado Federal Project (P / TF0A0093), coordinated by the Department of Policies to Combat Deforestation of the Ministry of Environment (MMA), in partnership with its operational agencies. The project s main activity is to build capacity in federal agencies to coordinate and execute actions to reduce deforestation and fires in the Brazilian Cerrado. The project supports the PPCerrado s coordination unit, the development of state strategies to recover degraded areas, and the development of the National Policy for Fire Management, Burning Control, and Combating and Preventing Forest Fires. It also strengthens ICMBio s capacity to prevent and combat forest fires in critical protected areas within the Cerrado Biome. Non-Lending Technical Assistance - DEFRA Cerrado Climate Change Mitigation Program (P / TF015227), a Bank-Executed Technical Assistance Project, to provide the analytical work, technical assistance and training necessary for the Ministry of Environment and its partners to achieve the goal of mitigating Climate Change in, and improving environmental and natural resource management of the Cerrado biome as defined in the main TF Program (TF071814). The Project Development Objective (PDO) of Rural Environmental Cadastre and Fire Prevention in Piauí State Project is to promote the reduction of climate change impacts in the Cerrado of Southern Piauí State by: (i) promoting the environmental regularization of landholdings in the targeted municipalities; and (ii) preventing and combating forest fires through the integration of local actors and promoting the adoption of sustainable production practices in the targeted municipalities. The Project is supported by the Brazilian Forest Code (Law of 2012) which requires that: (i) all private rural landholdings maintain a percentage of native vegetation as Legal Reserves (Reservas Legais, RLs); and (ii) Areas of Permanent Preservation (Áreas de Preservação Permanente, APPs), such as riparian forests along watercourses, steep slopes, mountain tops, etc., also be maintained by landholders. The Forest Code also obliges landholders to register their landholdings in the CAR, which is an electronic register of rural landholdings maintained by an official environmental entity whose aim is to effectively monitor, supervise, control, plan and ensure the environmental compliance of landholdings. This register contains details of the total area of individual farms, the areas earmarked for alternative land use, APPs and RLs. The CAR

6 will provide essential information for monitoring and controlling private rural land use, including compliance with reforestation obligations. It is important to highlight that the rural environmental cadaster implementation is a priority for the Federal Government. The strong commitment by the Ministry of Environment (MMA) and the States to implement the SICAR was evidenced during Project preparation. MMA has done an enormous investment to provide satellite images for the mapping of rural landholdings in order to create a database of the SICAR s geographic information system (GIS), aimed at the implementation of the CAR. B. Project Status The Rural Environmental Cadastre and Fire Prevention in Piauí State Project, a Grant (from the Brazil Cerrado Climate Change Mitigation Trust Fund) in the amount of US$4.4 million, which is implemented by Fundação Agente, was declared effective on April 14, To date, the Project has disbursed US$ 0.44 million (10 percent of the grant amount). Before the Bank could officially start preparation of this project (along with the others under the Program) and to better fulfill the Program's objective, a thorough analysis of the possible areas of intervention was done in coordination with the selected partners. This identification phase took longer than expected but was crucial to have a clear decision of where the interventions would be more important and have a greater impact. To guarantee that all parties involved in the Program were fully aware and committed, and that the Program and its Projects were a complementary effort to the overall Cerrado Program being implemented and coordinated by MMA, the identification and preparation period lasted longer than originally planned, and the original timeframe of the Program was extended, as approved by the Donor. In addition, the Rural Environmental Cadastre and Fire Prevention in Piauí State Project is the first World Bank Project that Fundação Agente implements, and their capacity had to be strengthened in order to guarantee an effective and efficient implementation. They picked up a good pace of implementation at the end of the 2014 calendar year; but due to the change in the State Government at the beginning of 2015, the Project had a small set-back on the activities that were being prepared, and processes had to be put on hold for a while, which caused some delays in finalizing some procurement processes for the main activities of the Project. The Bank, along with the MMA team undertook a mission in June 2015 to review the Project and the State priorities, and agreed on an action plan to accelerate Project activities. The current scenario is positive, both Fundação Agente is well trained and capable of implementing the activities, and -PI has a team in place that knows the Project and the State, and all activities that have been planned are under implementation. The Bank team is confident that these additional 18 months will contribute to the achievement of the Project s objective and the Program s overall goals.

7 C. Proposed Changes Financing Change in Grant Closing Date(s) and Results Framework: Explanation Extension of Closing Date: The proposed extension of Closing Date, from June 30, 2016 to December 31, 2017, is being requested since the Brazil Cerrado Climate Change Mitigation Trust Fund had its Closing Date extended to June 30, 2018, as approved by the Donor (Department of Environment, Food and Rural Affairs - United Kingdom of Great Britain and Northern) to guarantee each of the Projects under the Program to have, as originally forecast, a 3-full year implementation period. Revision to Results Framework: During Project preparation the parties involved had difficulties in determining the Results Indicators for Component 2 (Prevention and Control of Forest Fires). Once implementation started, -PI identified that some of the foreseen indicators were not appropriate or would not be possible to accurately measure. With the support from MMA and other technical entities that work with fire prevention and monitoring, -PI was able to review the proposed indicators and their feasibility. Based on the various meetings held, - PI proposed the revision of the Indicators as detailed in the revised Results Framework at the end of this document. Brief description of the changes below: PDO Indicator related to hotspots observed in the targeted municipalities was revised to hotspots APPs and RLs observed in the targeted municipalities. PDO Indicator related to the Number of actions to combat forest fires in the targeted municipalities was replaced by a new indicator related to number of controlled fire authorizations issued in the four selected municipalities. Intermediate indicator related to the number of staff in the State and Municipal environmental agencies trained to use CAR and analyze and validate the registrations under the Project was revised to the number of Persons trained to register landholdings in the SICAR. Intermediate indicator Landholdings registered into the CAR system as a result of the Project was deleted since it was a repetition from the PDO indicator. In order to process this request, the Bank team confirms that: (i) the project objectives continue to be achievable; (ii) all safeguards are being complied with; and (iii) the Implementation Progress is rated Moderate Satisfactory. Procurement post-review and financial management missions were

8 carried out. The arrangements in place were considered moderately satisfactory. The Recipient is in compliance with all major legal covenants including audit requirements concerning this Grant. Ln/Cr/TF Status Original Closing Date Current Closing Date Proposed Closing Date Previous Closing Date(s) TF Effective 30-Jun Jun Dec Jun-2016

9 ANNEX 1: RESULTS FRAMEWORK AND MONITORING Brazil Cerrado Climate Change Mitigation: Rural Environmental Cadastre and Fire Prevention in Piauí State Project Project Development Objective (PDO): The Project s main objective is to promote the reduction of climate change impacts in the Cerrado of southern Piauí by: (i) promoting the environmental regularization of landholdings in the targeted municipalities; and (ii) preventing and combatting forest fires through the integration of local actors and promoting the adoption of sustainable production practices in the targeted municipalities. PDO Level Results Indicators* Indicator: Land users adopting sustainable land management practices as result of the project Indicator: Land area where sustainable practices have been adopted as result of the project. Indicator: Number of hotspots observed in Areas of Permanent Preservation (APPs) and Legal Reserves (RLs) in the targeted municipalities REVISED Indicator: Number of actions to combat forest fires in the targeted municipalities DELETED Indicator: Controlled fire authorizations issued in the four selected municipalities, as a result of the Project - NEW Core Unit of Measure Baseline Cumulative Target Values** YR 1 YR 2 YR3 YR 4 YR5 Frequenc y Number 0 0 2,000 2,600 2,600 - annual Number hectares % Number , , ,000 - annual Average of hotspots observed in APPs and RLs in the targeted municipaliti es during the last 10 years prior to the Project To be defined in YR % -15% - annual annual Number annual Data Source/ Methodolo gy SICAR SICAR INPE Responsibilit y for Data Collection Description (indicator definition etc.) Number of small landholdings enrolled in SICAR This indicator measures the land area that as a result of the project enrolled in SICAR Decrease in percentage of hotspots observed in the APPs and RLs in the target municipalities, areas that are not eligible for legal deforestation authorization Actions carried out in target municipalities Number of authorizations issued

10 Intermediate Result (Component 1): Rural Environmental Regularization INTERMEDIATE RESULTS Electronic Rural Environmental Cadastre System (SICAR) operating in, with the ability to conduct Rural Environmental Cadastre (CAR) in coordination with IBAMA/MMA and municipal agencies. Landholdings registered into the CAR system as a result of the Project DELETED Persons trained to register landholdings in the SICAR REVISED % 0% 25% 50% 100% 100% --- Semiannual SICAR Number ,000 2, semiannual SICAR Number semiannual Intermediate Result (Component 2): Prevention and Control of Forest Fires SICAR operating in Staff in State and Municipal environmental agencies trained to monitor hotspots under the Project. Staff in State and Municipal environmental agencies trained in techniques to prevent and control forest fires under the Project. Number of landholders trained in alternatives to the use of fire under the Project. Number of targeted Municipalities equipped to combat forest fires. Number semiannual Number Number semiannual Number semiannual Training activities held by the Project Training activities held by the Project Training activities held by the Project