Document of The World Bank FOR OFFICIAL USE ONLY PROJECT PAPER ON A PROPOSED ADDITIONAL FINANCING GRANT

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1 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Document of The World Bank FOR OFFICIAL USE ONLY PROJECT PAPER ON A PROPOSED ADDITIONAL FINANCING GRANT Report No: LAC FROM THE GLOBAL ENVIRONMENT FACILITY SPECIAL CLIMATE CHANGE FUND IN THE AMOUNT OF US$450,000 TO THE GENERAL SECRETARIAT OF THE ANDEAN COMMUNITY ACTING ON BEHALF OF THE PLURINATIONAL, STATE OF BOLIVIA, THE REPUBLIC OF ECUADOR AND THE REPUBLIC OF PERU FOR THE ADAPTATION TO THE IMPACT OF RAPID GLACIER RETREAT IN THE TROPICAL ANDES PROJECT November 25,2009 Sustainable Development Department Bolivia, Ecuador, Peru and Venezuela 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 ACRONYMS AND ABBREVIATIONS AF CPS EMF FA0 FY GEF IBRD IDA IGP IPCC-SPM IRD MRI NCAR NGO PR4A SCCF SENAMHI SGCA TF UNFCCC Additional Financing Country Partnership Strategy Environmental Management Framework Food and Agriculture Organization Fiscal Year Global Environmental Facility International Bank for Reconstruction and Development International Development Association Geophysical Institute of Peru (Instituto Geofisico del Ped) Summary for Policy Makers of the Intergovernmental Panel for Climate Change Development Research Institute (Institut de Recherche pour le DCveloppement) Meteorological Research Institute of Japan National Center for Atmospheric Research Non Governmental Organization Adaptation to the Impact of Rapid Glacier Retreat in the Tropical Andes Project (Proyecto Regional Andino de Adaptacibn a1 Retroceso Rapido de Glaciares) Special Climate Change Fund Meteorological and Hydrological National Service, Peru (Servicio Nacional de Meteorologia e Hidrologia, Peru) General Secretariat of the Andean Community of Nations (Secretaria General de la Comunidad Andina) Trust Fund United Nations Framework Convention on Climate Change Fiscal Year: July 1 - June 30 All dollar figures are in current U.S. Dollars ~-~ Vice President: Country Director: Acting Sector Manager: Task Team Leader: Pamela Cox Carlos Felipe Jaramillo Jyoti Shukla Walter Vergara

3 FOR OFFICIAL USE ONLY ANDEAN COUNTRIES Adaptation to the impact of rapid glacier retreat in the tropical Andes Additional Financing CONTENTS ~.INTRODUCTION 11. BACKGROUND AND RATIONALE FOR ADDITIONAL FINANCING II. I Country and sector issues... 2 I I. 2 Risk factors. unforeseen events. institutional capacity... 3 I I. 3 Opportunities Pom successful implementation. absorptive capacity of... 3 beneficiaries q.4 Project design III.PROPOSED CHANGES... 4 IV. CONSISTENCY WITH COUNTRY CPS... 4 v. APPRAISAL OF SCALED-UP PROJECT ACTIVITIES... 5 VI. SAFEGUARD ASPECTS... 5 VII.EXPECTED OUTCOMES... 6 VI11. BENEFITS AND Rrsw... 7 Ix. FINANCIAL TERMS AND CONDITIONS FOR THE ADDITIONAL FINANCING... 7 a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not be otherwise disclosed without World Bank authorization.

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5 PROJECT PAPER DATA SHEET Borrower: General Secretariat of the Andean Community (SGCA) Have these been approved by Bank management? Revised project development obj ectives/outcomes The project development objective and outcomes remain the same as the Parent Project. Borrower IBRD/IDA Others Source Local Foreign Total

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7 I. Introduction 1. This Project Paper seeks the approval of the Executive Directors to provide an Additional Grant in an amount of US$450,000 to the General Secretariat of the Andean Community, SGCA, for the Regional: Adaptation to the Impacts of Rapid Glacier Retreat in the Tropical Andes Project (PRAA),GEF-SCCF P098248, TF The proposed Additional Grant would help finance the costs associated with Peru's efforts to better characterize the high mountain ecosystems associated to glacier retreat, and to prepare comprehensive guidelines that serve as basis for future adaptation initiatives in high mountain areas of Peru and other neighboring countries. 3. The parent Project is performing well to date. The proposed Additional Grant will enhance and scale-up the activities under Component 3 of the parent Project. The extra activities to be carried out with this new grant include (i) development of a scientific baseline for high mountain ecosystems, and (ii) definition of guidelines to support integrated and sustainable adaptation measures. 4. The outcomes expected with these new activities include (i) improved documentation and analysis of future projections and impacts for high mountain ecosystems in Peru, and (ii) definition of specific guidelines for adaptation projects in high mountain ecosystems. 11. Background and Rationale for Additional Financing in the amount of US$ Details of parent project - GEF-SCCF P098248, TF The GEF-SCCF grant in the amount of US$7.49 million was approved by the Board on May 27,2008; it became effective on July 11,2008 and has a closing date of September 30,2012. The objective of the project is "to contribute to strengthening the resilience of local ecosystems and economies to the impacts of glacier retreat in the Tropical Andes, through the implementation of specific pilot adaptation activities that illustrate the costs and benefits of adaptation". 6. The "Adaptation to the Impact of Rapid Glacier Retreat in the Tropical Andes", also called PR4A Project (Proyecto Regional Andino de Adaptaci6n) has four components: 1. Planning. Detailed design of key selected adaptation measures (GEF-SCCF contribution US$0.4 million; total cost US$l -1 million): 2. Investment. Implementation of pilot adaptation measures (GEF-SCCF contribution US$5.94 million; total cost US$25.55 million). 3. Scientific Support. Monitoring of glacier retreat in the region (GEF-SCCF contribution US$0.45 million; total cost US$2.30 million). 4. Project management (GEF-SCCF contribution US$0.70 million; total cost US$3-77 million). 1

8 7. The Additional Finance (AF) operation proposed will not change the Project Development Objective, nor will it change the original objectives, Project design, or Project scope. No Project closing date extension is required. 8. The Project is being implemented in a satisfactory manner. A World Bank mission, from March 30 to April 8, 2009 stated the advancement of the tasks envisaged for the first year of activity. The Project has had Satisfactory ratings for the Implementation Performance and the Development Objectives. Institutional arrangements for the parent Project are adequate to manage the expanded project activities and will remain the sahe in the AF grant. 9. The reasons for the Borrower to request the Additional Grant relate to the need, already identified during project formulation, to improve the scientific background on high mountain ecosystems. Those areas play a crucial role in water regulation and availability, and only recently has it been found that they are especially prone to climate change impacts. The lack of solid background scientific knowledge has awoken the interests of Peru, and of international donors with potentially similar problems, such as Switzerland, to perform scientific research on high mountain areas. Strengthening the knowledge base would provide all necessary inputs to formulate good adaptation guidelines and approaches. Those guidelines would have a high application span, they could be used in other countries of the region with similar difficulties. The new activities will thus strengthen Component 3 of the parent Project for Peru. II. I Country and sector issues 10. Climate change represents a global challenge and is caused by accelerated increases in greenhouse gas concentrations in the atmosphere. The Fourth Assessment Report, Summary for Policy Makers of the Intergovernmental Panel for Climate Change (IPCC- SPM 2007), concluded that the global average surface warming following a doubling of carbon dioxide concentrations over pre-industrial levels is likely to be in the range of 2 to 4.5"C with a best estimate of about 3"C, and is very unlikely to be less than 1.5"C. Recent research shows that climate change will be more pronounced in high-elevation mountain ranges. Thus, heavily populated, high-elevation areas in the tropics, such as the Tropical Andes, are now experiencing, and will likely continue to experience, dramatic changes in climate. In particular, global warming has been linked to the accelerated retreat of tropical glaciers in the Andes and to an increase in the weather variability and weather extremes affecting the Andean ecosystems, with significant repercussions on ecosystem integrity and the welfare of local populations. 11. The National Climate Change Strategy of Peru, within its major goals, calls for the identification of a national research agenda, evaluation of the country's present and future vulnerability; and prioritized evaluation of specific ecosystems, such as mountain ecosystems and the availability of glacier-fed water resources. The additional activities to be included in the Project fall directly into the priorities of the Strategy. 2

9 I1 2 Risk factors, unforeseen events, institutional capacity 12. The Additional Financing will support the compilation of scientific data and the development of guidelines for the implementation of adaptation measures for Peru. The new activities included are at a level of studies, and do not imply on-the-ground interventions. For these reasons, no risk factors or unforeseen events are expected at the technical level. 13. The institutional capacity to complete the activities under the Additional Financing is adequate. The Grant Recipient and implementing body is the General Secretariat of the Andean Community (SGCA). The SGCA will carry out the administrative and financial management of the project. Their performance up to date, as noted during Bank's supervision visits, has always been satisfactory. I1 3 Opportunities porn successful implementation, absorptive capacity of beneficiaries 14. The new activities will support the development of a strong scientific baseline in high mountain ecosystems, and the development of guidelines for adaptation measures. The results can be very useful to incorporate in current activities of the parent Project, and can turn into an important base from which to build future collaborations in Peru and in neighboring countries facing similar challenges. 15. Peru has enough technical capacity to absorb the new tasks, and to incorporate the results into their country management efforts. A series of well-performing local institutions, such as the Servicio Nacional de Hidrologia y Meteorologia (SENAHMI), the Instituto Geofisico del Ped (IGP) and the Institute for Research and Development (IRD), all guarantee the technical and managerial incorporation of the new activities. I1 4 Project design 16. The additional activities will be conducted in coordination with one or two local partners and one international partner. Additional contacts with local and international institutions will be assured by joint activities in the PRAA Project. Furthermore, existing experiences at the national and sub-national levels (e.g., the National Communications on Climate Change under UNFCCC) will be integrated. International collaboration is also suggested with leading institutions such as NCAR regarding Earth System Modeling and MRI for Earth Simulator runs. 17. The expansion of activities will strengthen Component 3 of the parent Project, with the addition of two extra sub-components: 18. Sub-component 3.4 (Peru). Development of a scientific baseline for high mountain ecosystems. This sub-component will be financed by the GEF-SCCF (additional financing). It will support: a) the development of methodologies to address 3

10 data gaps in the climate records and time series for hydrology and climate in high mountain ecosystems; b) development of tools and systems to ensure that in the future these records and time series are continued in a sustainable manner; c) support of high resolution downscaling methods for the deployment of modeling techniques for high altitude ecosystems; d) Introduction and support to the use of tools for the integrated assessment of climate change impacts on services and economies (e.g. water, agriculture, disasters); e) Development and application of integrated cross-sector impacts analyses for the natural, social and economic perspectives of climate change adaptation at regional to local level; f) Dialogue with implementation and policy side for adequate consideration in the baseline methodology; g) Training targeted at selected user institutions such as SENAHMI. 19. Sub-component 3.5 (Peru). Development of guidelines for adaptation measures. This sub-component will be financed by the GEF-SCCF (additional financing). The sub-component will support: a) Analyses of the technical, institutional, political and human dimension based on integrated assessments for different levels of scientific complexity; b) Initiation and implementation of an active science-policy dialogue by involving policy makers into the process of adaptation methods development; c) Supporting knowledge exchange and capacity building; d) Establishing long-term international scientific networks and collaborations, including joint publications efforts Proposed Changes 20.No changes related to parent Project are sought. The parent Project activities and design will carry on as previously planned. The new activities will be performed in parallel, without a direct effect on the others No complementary changes in institutional arrangements, procurement plan, closing date and implementation schedule are foreseen. The Additional Financing will be managed by the SGCA, following their own disbursement and procurement arrangements similar to those of the parent Project, which are in line with Bank s requirements. The disbursement of the additional activities is planned as follows: US $ million IV. Consistency with country CPS 22. The World Bank Group Country Partnership Strategy (CPS) for Peru, recognizes the country s vulnerability to both climate change and climate variability and the challenge posed to the country by glacier retreat, which will impact the country s water supply, agricultural, health, and tourism sectors. This Additional Financing further strengthens 4

11 the CPS' strategic focus on protection and conservation of strategic ecosystems, increasing their adaptive capacity. Some of the lowest income population in the country, base their economies on those ecosystems. The description of baseline information and adaptation guidelines results in a more" robust platform to minimize climate change impacts on high ecosystems. Furthermore, the activities are in line with the World Bank's Latin American region policy to promote efforts to adapt to climate change impacts, and linking knowledge and information to decision-making on climate issues. V. Appraisal of Scaled-up Project Activities 23. The application of the Additional Financing will further strengthen the scientific baseline for high mountain ecosystems, improving the documentation of climate, climate variability, and climate change for Peru, and the impacts on glacier-dependent regions of the country. The other activity to be included is the definition of strategies and guidelines to support integrated and sustainable adaptation measures, required for proper formulation and long-term monitoring of adaptation measures. 24. All the new activities envisaged for the proposed Additional Financing consist of scientific research, data gathering, modeling, institutional capacity building and other issues that do not directly impact populations or the environment (no on-the-ground interventions will be done). There are no new considerations to be made to the appraisal of the former parent Project. An economic analysis of adaptation measures will be conducted under the Project, and during the implementation phase, data will be collected to assess actual benefits and measure costs. No extra analyses are required at this point. The fiduciary analysis conducted for the parent Project remains valid for the proposed Additional Financing. 25. The additional activities do not raise the environmental category of the project, and no new safeguard policies are triggered. The activities are at the level of studies and capacity building. 26. The required Additional Financing does not involve any exception to Bank policies. VI. Safeguard aspects 27. The Project is still in its first year of implementation, and pilot activities are still in the design phase, with no further advancement. In several cases, particularly in Ecuador and Bolivia, a number of institutional changes have delayed implementation. Given that no actual on-the-ground interventions have yet started, there are no lessons learned from the application of the project's Environmental Management Framework (EMF). Rather, the EMF'S procedures are in the beginning stages of being applied. 5

12 28. That said, the activities being included under this Additional Financing comprise only studies and capacity building, with no new safeguard implications. As such, the project s EMF will remain unchanged. 29. The consultation processes with local communities and other shareholders (regional development agencies, government institutions and NGOs) has continued at the different pilot project sites. During the last Bank supervision visit, the local communities expressed their full endorsement of project activities in Peru. 30. Furthermore, the Project has selected CARE as the principal strategic partner to implement pilot adaptation measures in rural areas. CARE is an institution with long, recognized experience in community work and rural sustainable development. Other strategic partners, such as the French Institut de Recherche pour le DCveloppement (IRD), Agrorural in Peru, and likely the Food and Agriculture Organization of the United Nations (FAO), all have a recognized capability to deal with social and environmental safeguards. The participant countries, through their Ministries of Environment, have confirmed their mandate to the General Secretariat of the Andean Community of Nations by signing subsidiary agreements. Signees to the agreements are organizations with environment policy responsibilities and a maturing record of dealing with environmental issues. High officials from the Ministries of the Environment (vice ministers) have been appointed to supervise project implementation. This steering committee provides additional assuring of environmental stewardship. For all those reasons, the Bank remains confident of the involved countries capabilities to conduct further social and environmental assessments moving forward, whenever required The Bank visited the sites during project preparation, and another visit from the Bank is foreseen in the short term. However, at this early stage, the outreach of some activities and the specific communities that will benefit are not completely defined. For this reason, the social assessments and the Indigenous Peoples Plans prepared by the countries involved and for all regions where projects will be implemented are still considered as valid. 32. The entire Project has been designed and will be implemented seeking environmental sustainability. The Bank is closely following Project execution, with frequent supervision videoconferences and intense correspondence with all parties, and will make sure safeguard aspects of the activities are fully taken into account. VII. Expected Outcomes 33. The Project Outcomes are not changed. The new activities will strengthen them and secure their fblfillment. The Additional Financing will contribute, in particular, to both 6

13 Effective integration of the implications of glacier retreat into the regional and local planning in glacierized basins and to Generation of data on glacier dynamics. 34. A new Intermediate Outcome Indicator, for Component 3 of PRAA, is proposed for the new activities: Improved analysis of time series and future climate chapge impact projections for high mountain ecosystems. 35. The design of the new indicator is proposed as follows: Baseline Reduced documentation capacity YR1 YR2 YR3 YR4 -- Database with Complete Database active and available high database with all used, personnel trained, mountain gaps indentified future data collection datasets in Peru and filled channels ascertained Frequency and reports Annual report Data collection instruments Annual review Responsibility for data collection National Technical Specialist VIII. Benefits and Risks 36. The benefits of strengthening data collection and developing appropriate adaptation guidelines goes far beyond the populations in which pilot projects will be executed. Investing in science and knowledge is a win-win strategy; the results of the new activities will be a standing block for the Government of Peru in the present and in the future. Guidelines can be widely applied to other countries of the Region with similar topography and difficulties. 37. Risks: Risk Ability of local institutions to absorb new tools and methods. Rating Moderate Mitigation The new funding will also provide for training and institutional strengthening at the Servicion Nacional de Meteorologia e Hidrologia (SENAMHI) IX. Financial Terms and Conditions for the Additional Financing 38. The Additional Financing will be financed through a Grant from the Global Environment Facility, GEF. Thus, it will follow similar arrangements as the parent Grant Agreement, and GEF s guidelines and rules. 7

14 US$ Million Component 1. Planning. Detailed design of key selected adaptation measures 2. Investment. Implementation of pilot I Original adaptation measures 3. Scientific Support. Monitoring of glacier 0.45 retreat in the region 4. Project management TOTAL Additional Financin Final 39. The Project Outcomes are not modified. The additional activities will further strengthen them. One intermediate outcome indicator is proposed for Component 3, as described in paragraph 34: "Improved analysis of time series and future climate change impact projections for high mountain ecosystems." 8