Part II. US-LAC Environmental Partnership Program Strategic Plan

Environmental performance of targeted LAC businesses and communities
improved through the promotion of replicable market-based models.

###### 

###### A. Linkage of the Strategy to U.S. Foreign Policy

###### 

######  The goal of this strategic objective (SO) is to improve environmental performance of targeted LAC businesses and communities through replicable models, and in doing so contribute to the alleviation of poverty and to environmentally sustainable economic development. Increasing the availability of and access to safe water, reducing environmental contamination from industrial processes, and ensuring the rationale use of key natural resources (e.g., forests, water) are critical to maintaining LAC business competitiveness in international markets and to economic sustainability. Addressing these issues is also critical to poverty alleviation, given their relationship to reducing human health risks, increasing market opportunities for natural resource managers (including community-based organizations and indigenous groups), and reducing vulnerability to natural disasters (e.g., role of forests in critical watershed stabilization).

######  By targeting interventions on select issues which advance environmentally-sound trade, sustainable forestry, industrial clean production, and sound water resources management, US-LACEP contributes directly to several key US Foreign Policy objectives. These include: poverty eradication, environmentally-sound trade in support of the Free Trade Areas of the America (FTAA), conservation of regionally and globally important biodiversity (e.g., tropical forests, coral reef ecosystems), and climate change mitigation (e.g., tropical forests).

######  [Linkage of the Strategy to the Summit of the Americas]{.underline}: US-LACEP supports: (a) Miami Summit commitments to "make trade liberalization and environmental policies mutually supportive" under the FTAA, and to advance sustainable development in the hemisphere through the Partnership for Pollution Prevention and the Partnership for Biodiversity; (b) Santa Cruz Summit Conference commitments in sustainable forestry, water resources management, civil society participation, and industrial clean production, and (c) Santiago Summit commitments in poverty eradication (e.g., potable water) and civil society participation in sustainable development (e.g., civil society input on FTAA issues including environment).

######  

###### B. Linkage of the Strategy to Agency Goals and Objectives

######  US-LACEP supports Agency Goal No. 5: "the world's environment protected for long-term sustainability," and contributes primarily to the following Agency environmental objectives: sustainable urbanization with pollution prevention, and sustainable natural resource management. 

##### Linkage of the Strategy to LAC/RSD Objectives: US-LACEP supports the LAC/RSD hemispheric economic integration Special Objective in promoting environmentally-sound trade, and the LAC/RSD poverty reduction Strategic Objective as it relates to product market development.

# **Summary of the Strategic Objective** 

1.  **Statement of the Strategic Objective**

The United States-Latin America and Caribbean Environmental Partnership
program's (US-LACEP) strategic objective is: Environmental performance
of targeted LAC businesses and communities improved through the
promotion of replicable market-based models.

The United States-Latin America and Caribbean Environmental Partnership
program (US-LACEP) will support U.S. and LAC private sector engagement
in the application of innovative, market-based solutions (e.g., economic
incentives, environmental certification programs, effluent and user
fees) to environmentally-sound trade, sustainable forestry, industrial
clean production, and sound water resources management. US-LACEP will
promote the penetration of cutting-edge, environmentally-friendly
technologies and practices into targeted sectors and localities by
identifying and addressing a diverse array of barriers. The primary
barriers can be placed in three categories: (a) policy constraints and
limited use of market-based economic instruments, (b) lack of knowledge
about cost-effective technologies and approaches, and (c) limited
available financing for environmental improvements. Once penetration is
accomplished at a pilot scale, lessons learned will be documented, and
dissemination to a broader audience within LAC sub-regions will be
promoted.

# **Analysis of Problem Addressed**

> **a. Problem Analysis**

[Development context:]{.underline} Countries of Latin America and the
Caribbean are shedding state-controlled economies in favor of
privatization and market-driven mechanisms for advancing economic
development. Emerging is an empowered private sector fueled by inflows
of foreign investment. At the same time, international trade
competitiveness and market share for LAC industries is increasingly
being influenced by environmental considerations. These trends provide a
unique opportunity for using market-based incentives to harness private,
for-profit resources in addressing the region\'s environmental
challenges. They also create significant opportunities for U.S.
businesses to provide environmental technologies and services, to
establish joint ventures in environmental enterprises, and to develop
regional and international markets for eco-certified products. Many
improved environmental technologies and practices have been introduced,
albeit on a limited scale, in the region for forestry, water, and
industrial clean production sectors. Widespread adoption of these
technologies and practices is constrained by inappropriate policies,
insufficient use of economic and other market-based incentives,
inadequate available financing, and poor awareness of the economic
benefits of improved environmental management.

Poor people in LAC are disproportionately impacted by environmental
contamination and unsustainable natural resource use. For example, the
poor's access to potable water is considerably less than those with
greater disposable income, the poor's vulnerability to natural disasters
such as hurricanes and flooding \--whose impacts are intensified due to
deforestation and poor environmental management \-- is significant, and
the poor often also bear the brunt of exposure to industrial
contamination due to their inadequate living conditions.

The poor, including indigenous populations, rely heavily on natural
resource based economic activities for their livelihoods. Unfortunately,
the poor generally lack the technical skills, access to financing, and
market linkages which would enable them to fully benefit from
sustainable resource management, including potentially higher prices
from eco-certified products (e.g., forest products) in expanding
international niche markets.

#####  Why were the US-LACEP focus areas selected? Four focus areas were selected because they are: (a) high priorities identified by the leaders of the Hemisphere through the Summit process; (b) closely inter-related and mutually reinforcing; (c) areas in which USAID has considerable expertise, experience, and demonstrated leadership in the LAC region; (d) areas with strong potential for engaging the LAC and U.S. "for-profit" private sector; (e) areas where targeted LAC regional and/or hemispheric environmental interventions will provide complementarity to USAID Mission programs (e.g., forest conservation; child survival; poverty reduction; and sustainable economic development); and (f) areas of great interest to other donors, international technical cooperation organizations, and U.S. and LAC regional investment banks. Below is a brief description of the importance of each of the environment challenge areas and recent LAC/RSD efforts to address them.

\* *Environmentally-sound Trade in Support of the Free Trade Area of the
Americas:* Heads of government committed at the 1994 Miami Summit of the
Americas to "make trade liberalization and environmental policies
mutually supportive," and to support environmentally sustainable
development. The 1996 Santa Cruz Summit Conference reaffirmed these
commitments, and, at the 1998 Santiago Summit, governments agreed to
establish a working group for integrating civil society concerns (e.g.,
environment; labor) into the FTAA process. USG priorities include:
providing timely analyses of key trade-related environmental issues to
governments, industry and the public; promoting win/win approaches to
environmentally-sound trade whenever possible; and supporting civil
society engagement in the FTAA process. In these areas, USAID has
exerted regional leadership through the Hemispheric Free Trade Expansion
(HFTE) program (*see Attachment I.)* which this program will build upon.

\* *Sustainable Forestry:* LAC forests are extremely important for their
rich biodiversity, timber and non-timber products, and key environmental
services such as stabilization of watersheds and carbon sequestration.
Sustainable forestry is a tool to help reduce LAC's alarming
deforestation rate. Needed approaches to promoting sustainable forestry
include expanding markets for eco-certified forest products including
from community managed forests, diversifying sources of income from
forests through non-timber products and services, and mobilizing
government and private sector investments in sustainable forestry,
including through carbon offset projects and the development credit
authority (DCA). US-LACEP will build upon the success of HFTE, which has
supported (1) hemispheric consultations of major stakeholders on forest
products trade and private investment in sustainable forestry, (2)
analyses of economic/business benefits of reduced impact (timber)
harvesting (RIH), (3) training in RIH, (4) development of guidelines for
sustainable harvest of non-timber forest products, and (5) assessment of
constraints to market development for Central America certified timber
products.

\* *Industrial Clean Production:* LAC export industries contribute
significantly to environmental contamination and associated human health
risks, ecosystem degradation, and impacts on key economic sectors such
as tourism. Industries are increasingly pressured by international
markets, international investors and local stakeholders to improve their
environmental performance. The HFTE Trade and Environment, and
Environmental Pollution Prevention (EP3) programs have demonstrated that
the adoption of clean production approaches and efficient use of water
and energy improves industrial performance and profits, and also helps
industries meet national and international environmental standards. In
addition, the poor benefit from clean production as a result of a
healthier environment.

\* *Sound Water Resources Management:* Water quality, quantity, and
availability pose major human health risks (particularly for the poor)
and constrain economic development and trade. Per capita water
availability is dramatically declining in the LAC region \-- neither
communities nor industries have adequate water supplies needed for
sustained growth. Water contamination is: (a) contributing to food
safety problems, thereby affecting international market access for LAC
food products; (b) undermining the viability of the Caribbean tourism
industry, a major source of export earnings and employment in the
region; and (c) contributing to an increase in water borne diseases
which affects child survival and worker productivity.

######## 

########  Why Focus on Market-based Solutions and Economic Competitiveness? LAC governments, the for-profit private sector, NGOs, and donors increasingly recognize that reducing environmental contamination and ensuring the sustainable use of natural resources will not be achieved solely through laws and regulations and their enforcement. Instead, a balanced approach is required which places greater emphasis on market forces, market incentives, and the use of market-based policy instruments (i.e., it must be economically attractive to improve environmental management). International 

######## business/trade competitiveness and market access for LAC products is increasingly being influenced by environmental considerations. USAID, through HFTE and other programs, has demonstrated that industrial clean production, water and energy-use efficiency, low-impact logging, and developing high value "niche" markets for eco-certified products represent "win-win" approaches that contribute to enhancing LAC business performance, profits, and international competitiveness. 

##  [Why Emphasize Public/Private Partnerships with US Businesses?]{.underline} There are tremendous opportunities for U.S. businesses to provide environmental technologies and services required by LAC industries and communities. Other U.S. companies (i.e., forest products, tourism, electric utilities) also have a vested business interest in market-development for certified forest products, maintaining the viability of LAC natural resource-based tourism, or investing in carbon credits. These US businesses with a stake in developing LAC environmental markets will make excellent partners because they are likely to help facilitate changes in policy, and help generate private investments necessary for environmental markets to grow. 

###  [Why is a LAC Regional Environmental Partnership Program Needed?]{.underline} The US-LACEP focuses on priority environmental issues of hemispheric concern. The program is designed to complement and strengthen Mission bilateral and regional programs and, where appropriate, support regional or hemispheric activities involving the participation of non-presence countries. US-LACEP is a "value-added" regional program which: 

-   includes multi-country and/or cross-regional activities that
    individual USAID missions cannot support, but are complementary to
    and directly supportive of mission and host country programs;

-   reflects both economies of scale and administrative efficiency in
    providing key support services that are needed by several USAID
    missions but are best managed by LAC/RSD;

-   enables the systematic exchange among LAC countries and LAC
    sub-regions of successful and potentially replicable policies,
    financing methods, technologies, and approaches;

-   facilitates the engagement of and regional coordination with other
    key USG agencies, international donors, US and LAC investment banks,
    and international technical cooperation agencies (e.g., with two
    established Summit of the Americas Inter-agency Working Groups on
    clean production and safe drinking water); and,

-   facilitates the establishment of strategic partnerships with the
    U.S. private sector to mobilize private sector investment, transfer
    sound technologies and practices, develop markets for eco-certified
    products, pursue joint business ventures in environmental
    enterprises, and help foster program sustainability.

b.  **Identification of Affected Customers**

Primary customers for US-LACEP interventions and its products are LAC
national and local governments, industries, NGO and private sector
service providers, and investors. Secondary customers include US and LAC
industry associations, LAC regional organizations, international donors,
technical cooperation agencies, and USAID Missions. Customer input into
the US-LACEP strategy development has been obtained through
Summit-related fora (i.e., Hemispheric meeting on Clean Production;
inter-agency working group meetings on water, and on clean production),
HFTE sponsored regional stakeholder consultations on trade, environment,
and investment issues for key economic sectors; and discussions
with/feedback from donors, USAID Missions, USG agencies, and potential
US partner organizations (i.e., NASDA, NPPR).

Key customer groups will be consulted during the development of results
packages and the program monitoring/evaluation plan. During the course
of US-LACEP implementation, customer feedback will be obtained on annual
work plans and the utility/impact of prior interventions. Many secondary
customers will also be directly involved in program implementation,
including co-financing activities in some cases. Their extensive
networks within the US and LAC development community will provide
valuable input in the shaping of the overall program and specific
interventions.

**3. Critical Assumptions and Causal Relationships in Results
Framework**

#####  **a. Critical Assumptions for Program Success**

-   U.S. and LAC governments maintain their commitment to Summit of the
    Americas' identified environmental challenges; and

-   LAC governments maintain their commitment to policy reform

Two critical assumptions must remain true to allow for the SO's success.
This success depends upon the importance of market forces shaping the
environmental management decisions of LAC's private sector. US-LACEP
activities will not be successful in LAC countries that do not maintain
their commitments to market liberalization, privatization, and
appropriate economic policy reforms. Since US-LACEP focuses on Summit of
the Americas' environmental challenge areas, continued U.S. and LAC
government support for the process is essential to insure timely success
of program activities.

##### **Summary of Causal Relationships**

To attain the Strategic Objective "Environmental performance of targeted
LAC businesses and communities improved through the promotion of
replicable market-based models," US-LACEP and its partners have to
overcome three primary barriers to the dissemination and acceptance of
improved environmental management technologies and practices. These
barriers\--policy constraints; lack of knowledge of cost-effective
technologies and approaches; and inadequate financing\--are addressed by
the results framework's intermediate results. For example, IR#1 "Policy
Frameworks Developed" will discern policy constraints to the adoption of
environmentally-friendly technologies and practices, and help set up the
incentive structure needed to drive their adoption. Of course, just
having the appropriate policy environment does not guarantee that
industries, governments, NGOs and other relevant stakeholders will adopt
better environmental management practices. Ignorance of cost-effective,
environmentally-friendly approaches must be transcended, and financing
must be available to pay for the "up-front" costs of new technologies,
and to train key players in the use and maintenance of these
technologies. Thus, US-LACEP and partners will promote IR#2
"Technologies and Practices Available" and IR#3 "Financing Mechanisms
Available" at the same time that policy constraints are being addressed.

4.  **The Role of Other Development Partners in Achieving the Strategic
    Objective**

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a.  **Public/Private Partnerships**

Working with partners---national and local government, private sector,
non-government organizations, financial institutions\--is an integral
part of accomplishing the intermediate results individually and in
tandem so that the SO can be achieved. Partners will help promote
interventions within an intermediate result (e.g, policy change;
financing provided), and, for specific interventions within an
environment challenge area, a partner may be the sole player promoting
activities under an intermediate results (e.g., multilateral bank
establishes innovative enterprise fund). Civil society participation
will also be essential to help pressure governments and industry so that
they promote and adopt improved environmental management, and so that
US-LACEP receives improved feedback on actual policy needs, local
conditions, and key environmental problems requiring solutions.

###### Donor Collaboration

######  There are many opportunities for donor collaboration under US-LACEP. As mentioned above, USAID will explore partnerships to enable USAID-funded activities to serve as a catalyst for, and leverage resources from, multi-lateral and bilateral donor programs, including foundations. These include working through established Summit working groups on potable water and industrial clean production that included United Nations' agencies, WB, IDB, OAS, and other federal agencies. A similar list of donors, plus several philanthropic organizations, are potential collaborators on forestry issues. 

5.  **Illustrative Approaches**

> **a. General Approach**

US-LACEP will reflect an integrated approach that addresses key policy,
technology, and financing constraints to environmentally-sound
development for the targeted challenge areas. Of course, USAID funding
can not address all elements for each environmental challenge. That is
why increased engagement through partnerships and strategic alliances
are so important. Partners, such as the LAC and U.S. "for profit"
private sector, major donors, regional investment banks, development
organizations (UNEP, PAHO, OAS), and civil society will support other
elements of policy reform, technology transfer, and increased access to
environmentally-sound investment that US-LACEP cannot fund.

For the for-profit, private sector, penetration of available
environmentally-friendly technologies and approaches is dependent on
simultaneously reducing operating costs, improving productivity, and
enabling businesses to meet environmental standards necessary for
export. In other words, US-LACEP emphasizes "win-win" approaches that
improve the environment and economic performance locally, and support
Summit of the Americas' objectives regionally.

US-LACEP builds upon the experience and foundation of the LAC trade and
environment program and other USAID efforts. Replicable models developed
in earlier programs will now be introduced into other countries and
trading blocs with support for their adaptation as needed. These will
include:

-   transferring successful industrial clean production and water use
    efficiency approaches from the Andean region to targeted parts of
    Central America;

-   hotel environmental management systems practices from the Insular
    Caribbean to Central America;

-   successful community water supply and sanitation approaches from
    Haiti, Jamaica, Dominican Republic, Honduras, and El Salvador to
    other countries/regions; and

-   low impact logging and certified timber market development
    experience from Bolivia and Brazil to the Guyana Shield and targeted
    Central American forests.

A hemispheric information dissemination program will be developed to
share successful models, lessons learned, and supporting
policy/investment analysis. Dissemination will be accomplished through
the internet, the Organization of American States, and other partner
organizations, technical journals and newsletters, mass media, and
regional workshops and meetings.

[Civil Society Engagement]{.underline}: Program success is advanced with
effective engagement of civil society in policy and investment
decision-making, and in the implementation of sustainable development
programs. Through HFTE, civil society participation was supported in
several ways, such as: (a) developing an Inter-American Strategy for
Public Participation; (b) including NGOs in regional consultations on
trade, environment, and investment for major economic sectors; (c)
supporting a hemispheric consultation (to occur later in 1999) with
substantial NGO participation, on trade-related environmental challenges
and opportunities, and on identifying trade policy issues; and (d)
training Bolivian and Ecuadorian NGOs to enable them to provide
technical services in industrial water use efficiency. US-LACEP will
build on these examples and incorporate them into program
implementation.

#### 

####  [Partnerships as an Implementation Tool:]{.underline} US-LACEP will identify and support the establishment of public/private partnerships that can catalyze policy reform, accelerate the transfer of technology, and mobilize technical and financial resources. These will be structured to contribute to achieving market-based solutions to key environmental challenges, and to attaining program sustainability after USAID assistance ends. This will require seeking partnerships in which both parties have a strong and mutual interest to work together, especially when there exists a willingness to co-finance interventions. 

*Existing Partnerships:* Currently the agency utilizes a variety of
partnership arrangements to engage the United States and LAC
\"for-profit\" private sector in supporting USAID and host country
environmental objectives (see *Attachment II* for more detail). USAID
Mission and/or Washington-based partnership arrangements include:

\(1\) direct collaboration with host country Chambers of Commerce and
business and trade associations in the energy, forestry, industry, and
tourism sectors, and;

\(2\) support for the Environmental Export Council (EEC), the
Environmental Trade Network for the Americas (ETNA), the National
Association of State Development Agencies (NASDA), and the National
Pollution Prevention Roundtable (NPPR) in their efforts to facilitate
the transfer of US environmental technologies and know-how, and identify
US environmental business opportunities.

*Development of Partnership Tools:* US-LACEP will build upon
partnerships listed above, and develop and promote the use of new and
under-utilized LAC, Global, and other agency partnership tools. Examples
of potential partnership tools include:

*Market Analysis Tools:*

Business Analyses for Targeted-Industries \-- analyzing constraints to
clean production technology adoption such as end-users' knowledge of P2
technologies, availability of credit, and business considerations
deterring environmental firms' willingness to provide services and
technologies.

*Financing Tools:*

Bankable Venture Capital Projects \-- providing assistance for gaining
access to Global Environment Facility, Inter-American Development Bank,
and other environmental enterprises' (venture capital) funds for
businesses to adopt environmentally sound technologies.

*Technology Transfer Tools:*

Caribbean/Latin America Action (C/LAA): facilitating collaboration
between U.S. and LAC business and investment sectors to transfer
environmental technologies and support business/market development for
eco-certified products.

*Mission Incentive Grants for Environmental Partnerships:*

Small grants (\$100,000 - \$200,000 per grant) with at least a 1:1
mission match in funding will be provided on a competitive basis to
enhance existing Mission private sector environmental partnerships
and/or to develop new partnerships that support Mission environmental
objectives. An estimated \$1 million/year will be used for these grants.

> **b. Illustrative Approaches by Intermediate Result**

**IR 1*: ****Policy Framework Developed*

Creating an enabling policy framework that emphasizes resource use
efficiency, sustainable resource management, and cleaner production,
while balancing regulatory and market-based policy instruments, is
crucial to promoting environmentally-sound investment and the widespread
adoption of environmentally-sound technologies and practices. US-LACEP
will support the following activities so that the proper market-based
policies and incentives for improved environmental approaches are
advanced:

-   analyses of policy constraints and market-based policy instruments
    necessary to promote the adoption of environmentally-sound
    technologies and practices;

-   development of policy guidelines and model policy frameworks, and
    subsequent hemispheric-wide dissemination;

-   regional consultations between ministers, industry leaders, NGOs,
    and investors on policy constraints and potential solutions;

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-   the engagement of civil society in providing input on environmental
    issues within the FTAA process.

Examples within the "Sustainable Forestry" challenge area provide
illustrative policy and incentive topics that US-LACEP will explore.
These include: (1) valuation of environmental and resource benefits of
forests; (2) concession policies (e.g., timber valuation, requirements
for management plans, concession letting procedures, land tenure,
overlapping concessions); (3) trade and economic policies that encourage
conversion of forests to other land use; and (4) eco-certification
processes. Select industrial clean production examples include: (1)
policies and economic incentives for clean production versus end-of-pipe
control; and (2) tariff reductions on environmental technologies. Select
water resource examples include: (1) water pricing; and (2) water
quality regulations.

**IR 2*:*** *Technologies and Practices Available*

Ultimately, improved environmental management cannot occur without the
identification, introduction, and dissemination of environmentally-sound
technologies and practices. US-LACEP will accomplish this primarily by
increasing stakeholder awareness of the economic and other benefits of
adopting these technologies, and by linking U.S.-based technology
providers with LAC industries and communities requiring these
technologies. In the past, USAID has demonstrated regional leadership in
industrial clean production, water use efficiency by industries and
hotels, low-cost wastewater management, reduced impact (timber)
harvesting, and the promotion of environmental management and
eco-certification systems. US-LACEP will document and widely-disseminate
this wealth of experience. In addition, technologies and practices such
as these will be introduced into new geographic areas, and local
constraints addressed to accelerate their adoption. US-LACEP will
incorporate the following illustrative activities to improve the
availability of environmentally-friendly technologies and practices:

-   assessment of key constraints to the adoption of clean production
    and sound natural resource use for key trade sectors \-- export
    industry, forestry, mining, tourism;

-   the introduction of new competitive and sustainable business
    concepts and practices - - clean production, low impact logging,
    water use efficiency;

-   the introduction of technologies and practices to improve potable
    water supply, water quality, and urban/industrial wastewater
    management;

-   business/market development for eco-certified products; and

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-   hemispheric dissemination of successful technologies, practices and
    approaches, lessons learned, and related policy and investment
    analyses.

Examples within the "Clean Production" challenge area provide
illustrative technologies and practices that US-LACEP will make
available. These include technologies and practices that: (1) reduce the
use of energy, water, and other raw materials; (2) minimize use of toxic
and hazardous substances; (3) increase "by product" recovery and reduce
production of wastes; (4) help industries attain ISO 14000 certification
for environmental management practices and hotels attain Green Globe
certification. US-LACEP will promote a limited range of
environmentally-friendly technologies and practices within the other
environmental challenge areas as well.

##### 

**IR 3:** *Financing Mechanisms Available*

Availability of, and access to, financing to support the adoption of
environmentally-sound technologies and practices is a significant
constraint for all of the challenge areas. US-LACEP will seek financing
for environmentally-friendly investments from a diverse array of
bilateral and multilateral donors, private banks, and local governments.
US-LACEP will also promote and support incipient, innovative financing
mechanisms. Illustrative activities to make additional financing
available include:

-   the development of policies and guidelines for the greening of
    private investment;

-   the promotion of new funding mechanisms such as the Development
    Credit Authority (DCA) and GCC carbon offset projects; an estimated
    \$500,000/year will support DCA initiatives

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-   the hemispheric dissemination of successful financing mechanisms and
    practices;

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-   the mobilization of U.S. and LAC private investment through
    partnerships; and,

###### the linking of environmental-related charges and fees to environmental conservation and protection.

#  Examples within the "Water Resources" challenge area provide illustrative financing mechanisms that US-LACEP will make available. These include: (1) industrial sector financing for technology adoption in the industrial sector; and (2) increased private sector participation in financing of municipal water and wastewater services, including water use fees. US-LACEP will also promote financing approaches and mechanisms for the other environmental challenge areas.

###### 6. Program Sustainability

# Program sustainability is being addressed through a multi-pronged approach. This includes:

1\. Developing strategic partnerships/collaboration with major donors
(IADB, WB), USAID Missions, regional organizations such as the
Organization of American States, US and LAC industry associations, and
regional financial institutions in order to leverage technical and
financial resources.

2\. Demonstrating the economic/business benefits of improved
environmental management.

3\. Promoting environmental business opportunities and market linkages
(i.e., eco-certified forest products markets; markets for environmental
technologies and services).

4\. Influencing commercial funding to support "greening" of private
investment and ensuring access by small and medium businesses to credit
at reasonable interest rates and payback periods to enable adoption of
improved environmental management.

5\. Collaborating with Missions, international donors and industry
associations in developing innovative financing methods to support
environmental enterprises and the adoption of improved environmental
management (i.e., cleaner production revolving loan funds and the
development credit authority).

6\. Strengthening institutional capacity of NGOs and industry
associations through targeted training, technical assistance and
information dissemination. This will enable them to provide
environmental services (i.e., industry audits, linkages to providers of
environmental technologies, introduction of best management practices)
to their members and/or other groups including, in some instances, on a
cost recovery basis.

###### 7. Performance

######### 

######### **a. Managing Achievement**

######### 

######### Within the first six months of program implementation, LAC/RSD/E will

######### identify, for each environment challenge area, a limited number of key issues to address, the geographic focus where activities will occur, and select the strongest potential partners. This will be done in close consultation with USAID Missions, key USG agencies, and others as appropriate. A final monitoring and evaluation plan with specific targets reflecting the above program decisions will be finalized during the first year of program implementation. 

LAC/RSD/E will manage the overall environmental partnerships program.
LAC/RSD/E in collaboration with USAID's Global Bureau will establish
criteria and procedures for awarding Mission Incentive Grants and
Development Credit Authority funds. Missions will manage Mission
Incentive Grants and Development Credit Authority activities, and report
on their results, with LAC oversight and support.

Obligation of funds and procurement will occur through a combination of
LAC issued grants and/or cooperative agreements, LAC issued IQC orders
through Global Bureau mechanisms, and transfer of funds to Global Bureau
for procurement under Global cooperative agreements and PASAs. For
Mission Incentive Grants and the Development Credit Authority funds,
missions will obligate funds through whatever ranges of procurement
mechanisms (grants, contracts, transfers to Global mechanisms, use of
Global IQCs, etc.) they deem appropriate.

##### Program Monitoring/Evaluation: To assess the impact of US-LACEP, for each environment challenge area, the following SO indicators will be tracked by country, region, and/or trading bloc, and by major interest group (government, industry, investor):

1\. Economic benefits of improved environmental management demonstrated.

> 2\. Replicable models of improved environmental management developed
> and their adoption promoted.

Program impact will be tracked through USAID Mission reports, partner
reports, and an external independent evaluation based on specific,
agreed to topic areas for policies and incentives, technologies and
practices, and financing mechanisms. SO results will also be
disaggregated by environment challenge area. At the Intermediate Result
level, results will be tracked for each environment challenge area for
the illustrative activities listed above.

b.  **Expected Results**

The definition of baselines and targets in order to define the results
expected, will be a product of the assessment conducted during the first
six months of the program. Missions will play a major role in defining
the priority environment challenge areas, key issues to address, and key
partners by geographic area. They will help define the targets in the
three arenas of policy change, technology use and financing. LAC/RSD/E
will define targets program-wide based on the results of the assessment
and create a complete monitoring and evaluation plan during the first
program year.

###### 

###### 8. Resource Requirements

[Funding Requirements]{.underline}: From FY 2000-2004, \$5.0 million in
LOP funding will be required (\$1.0 million/year) to support the
US-LACEP program. In addition, it is anticipated that \$1.5 million/year
will be made available to USAID Missions through competitive grants
(awarded by AID/W) for Development Credit Authority and environmental
partnership activities to reinforce application of replicable models and
engagement of the US private sector in Mission programs.

[OE Requirements]{.underline}: An estimated 1.5 FTE/year and \$ 10,000
to 15,000/year in travel funds for direct hire staff will be required.

[Host Country/Other Partners]{.underline}: Missions will be required to
provide a minimum of a 1:1 match on environmental partnership grants.