`Document of

The World BankFOR OFFICIAL USE ONLY
Report No: PAD2015

INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT
PROJECT APPRAISAL DOCUMENTON A
PROPOSED GRANTS FROM THE GLOBAL ENVIRONMENT FACILITY TRUST FUND
IN THE AMOUNT OF US$30.00 MILLION
TO THEFUNDO BRASILEIRO PARA A BIODIVERSIDADE
AND IN THE AMOUNT OF US$30.33 MILLIONTOCONSERVATION INTERNATIONAL DO BRASIL
FOR THEAMAZON SUSTAINABLE LANDSCAPES PROJECT
November 6, 2017

Environment and Natural Resources
Latin America and Caribbean

This document has a restricted distribution and may be used by recipients only in theperformance of their official duties. Its contents may not otherwise be disclosed without WorldBank authorization.

CURRENCY EQUIVALENTS(Exchange Rate Effective October 27, 2017)
Currency Unit = Brazilian Real (BRL)
BRL 3.27 = US$1
US$0.31 = BRL 1
FISCAL YEAR
January 1 – December 31
ABBREVIATIONS AND ACRONYMS
ABC Plan
AC
APM
ARPA
ASL
BAU
BC
BNDES
Brazil-ASL
CAR
CBD
CI-Brazil
CFT
CONAVEG
CRA
CSO
DIBIO
DIMAN
DISAT
ECI
ESMF
EX-ACT

Low Carbon Economy in Agriculture Plan (Plano Setorial de Mitigação e deAdaptação às Mudanças Climáticas para a Consolidação de uma Economia deBaixa Emissão de Carbono na Agricultura) (Plano ABC)
Advisory Council (Conselho Consultivo)
Mutual Support Arrangement (Arranjos de Apoio Mútuo)Amazon Region Protected Areas Program (Programa Áreas Protegidas da
Amazônia)
Amazon Sustainable LandscapeBusiness-As-Usual
Benefit-Cost
National Bank for Economic and Social Development (Banco Nacional de
Desenvolvimento Econômico e Social)
Brazil Amazon Sustainable Landscapes Project
Rural Environmental Registry (Cadastro Rural Ambiental)
Convention on Biological Diversity
Conservation International-Brazil (Conservação Internacional-Brazil)
Transition Fund Committee (Comitê do Fundo de Transição)National Commission for the Recovery of Native Vegetation (Comissão Nacionalpara Recuperação da Vegetação Nativa)
Environment Reserve Quotas (Cotas de Reserva Ambiental)
Civil Society Organization
Department of Biodiversity Monitoring, Evaluation and Research (Diretoria dePesquisa, Avaliação e Monitoramento da Biodiversidade)Department of Creation and Management of Protected Areas (Diretoria de Criação
e Manejo de Unidades de Conservação)Directorate of Socio-environmental Actions and Territorial Consolidation(Diretoria de Ações Socioambientais e Consolidação Territorial)
Conservation Investment Strategy (Estratégia de Conservação e Investimento)
Environmental and Social Management Framework
Ex Ante Carbon Balance Tool
ii

FAO
FAP
FAUC
Flona
FM
FUNAI
FUNBIO
GDP
GEF
GF
GHG
GOB
GRS
IBAMA
ICMBio
IFR
IPPF
ISP
KBA
KfW
MAPA
MDSA
METT
M&E
MMA
NDC
NBSAP
NGI
NPCC
OG
NGO
NPV
NTFP
PA
PAD

Food and Agriculture Organization of the United Nations
Protected Areas Fund (Fundo de Áreas Protegidas)
Protected Areas Evaluation Tool (Ferramenta de Avaliação de Unidades deConservação)National Forest (Floresta Nacional)
Financial Management
Indigenous National Foundation (Fundação Nacional do Índio)
Brazilian Biodiversity Fund (Fundo Brasileiro para a Biodiversidade)
Gross Domestic Product
Global Environment Facility
Financial Manager (Gestor Financeiro)
Greenhouse Gas
Government of Brazil
Grievance Redress Service
Brazilian Institute of the Environment and Renewable Natural Resources (Instituto
Brasileiro do Meio Ambiente e dos Recursos Naturais Renováveis)
Chico Mendes Institute for Biodiversity Conservation (Instituto Chico Mendes deConservação da Biodiversidade)Interim Financial Report
Indigenous Peoples Policy Framework
Implementation Support Plan
Key Biodiversity Areas
Kreditanstalt fur Wiederaufbau
Ministry of Agriculture, Livestock, and Food Supply (Ministério da Agricultura,
Pecuária e Abastecimento)
Special Secretariat for Family Agriculture and Agricultural Development(Secretaria Especial de Agricultura Familiar e Desenvolvimento Agrário)Monitoring Evaluation Tracking Tool
Monitoring and Evaluation
Ministry of Environment (Ministério do Meio Ambiente)
Nationally Determined Contribution
National Biodiversity Strategy and Action Plan
Integrated Management Nucleus (Núcleo de Gestão Integrada)
National Policy for Climate Change
Protected Area Management Agencies (Federal or State) (Órgãos Gestores dasÁreas Protegidas)
Nongovernmental Organization
Net Present Value
Non-timber Forest ProductProtected Area
Project Appraisal Document
iii

PCU
PDO
PEP
PEU

Project Coordination Unit
Project Development Objectives
Multiyear Strategic Planning (Planejamento Estratégico Plurianual)
Project Execution Unit
National Plan for Recovery of Native Vegetation (Plano Nacional de
PLANAVEG
Recuperação da Vegetação Nativa)
Program for Environmental Monitoring of Brazilian Biomes (Programa de
PMABB
Monitoramento Ambiental dos Biomas Brasileiros)
POC
Project Operational Committee
POM

Project Operational Manual

PPSD

Project Procurement Strategy for Development

PRA
PRADA

Environmental Regularization Program (Programa de Regularização Ambiental)
Plan for the Recovery of Degraded and Altered Areas (Plano de Recuperação deÁreas Degradadas e Alteradas)
Legal Amazon Deforestation Monitoring Project (Programa de Monitoramento da
Floresta Amazônica Brasileira por Satélite)
National Program for Strengthening Family Agriculture (Programa Nacional deFortalecimento da Agricultura Familiar)
National Policy for Recovery of Native Vegetation (Política Nacional de
Recuperação da Vegetação Nativa)
Request for Quotation
Biodiversity Secretariat (Secretaria de Biodiversidade)
Systematic Country Diagnostic
Executive Secretariat of the Ministry of Environment (Secretaria Executiva/MMA)
Secretariat of Extractivism and Sustainable Rural Development (Secretaria de
Extrativismo e Desenvolvimento Rural Sustentável)Brazilian Forest Service (Serviço Florestal Brasileiro)
Rural Environmental Registry System
Secretariat for Climate Change and Forests (Secretaria de Mudança do Clima eFlorestas)
National Protected Area System (Sistema Nacional das Unidades deConservação)Statement of Expenditure
Systematic Operations Risk-Rating Tool
Scientific and Technical Advisory Panel
Systematic Tracking of Exchanges in Procurement system
Terms of Reference
World Wide Fund for Nature

PRODES
PRONAFPROVEG
RFQ
SBio
SCD
SECEX
SEDR
SFB
SICAR
SMCF
SNUC
SOE
SORT
STAP
STEP
TOR
WWF

iv

Regional Vice President:
Country Director:
Senior Global Practice Director:
Practice Manager:
Task Team Leader:

Jorge Familiar
Martin Raiser
Karin Kemper
Valerie Hickey
Adriana G. Moreira and Claudia Sobrevilav

BRAZIL
Amazon Sustainable Landscapes Project
TABLE OF CONTENTSI.

STRATEGIC CONTEXT .................................................................................................1
A. Country Context ............................................................................................................ 1
B. Sectoral and Institutional Context ................................................................................. 1
C. Higher Level Objectives to which the Project Contributes .......................................... 3

II.

PROJECT DEVELOPMENT OBJECTIVES ................................................................4
A. PDO............................................................................................................................... 4
Project Beneficiaries ........................................................................................................... 4
PDO Level Results Indicators ............................................................................................. 4III.

PROJECT DESCRIPTION ..............................................................................................5
A. Project Components ...................................................................................................... 5
B. Project Financing .......................................................................................................... 6
Project Cost and Financing ................................................................................................. 7
C. Lessons Learned and Reflected in the Project Design .................................................. 7

IV.

IMPLEMENTATION .......................................................................................................8
A. Institutional and Implementation Arrangements .......................................................... 8
B. Results Monitoring and Evaluation .............................................................................. 9
C. Sustainability................................................................................................................. 9V.

KEY RISKS ......................................................................................................................10
A. Overall Risk Rating and Explanation of Key Risks.................................................... 10

VI.

APPRAISAL SUMMARY ..............................................................................................12
A. Economic and Financial Analysis ............................................................................... 12
B. Technical ..................................................................................................................... 12
C. Financial Management ................................................................................................ 13
D. Procurement ................................................................................................................ 13
E. Social (including Safeguards) ..................................................................................... 14
F. Environment (including Safeguards) .......................................................................... 14vi

G. Other Safeguards Policies Triggered .......................................................................... 15
H. World Bank Grievance Redress .................................................................................. 16
Annex 1: Results Framework and Monitoring .........................................................................17
Annex 2: Detailed Project Description .......................................................................................24
Annex 3: Implementation Arrangements ..................................................................................44
Annex 4: Implementation Support Plan ....................................................................................73
Annex 5: Financial, Economic, and Incremental Cost Analysis ..............................................76
Annex 6: Key Government Policies and Programs ..................................................................88
Annex 7: Transition Fund ...........................................................................................................91
Annex 8: Map of Project Intervention Area............................................................................104

vii

PAD DATA SHEET
BrazilAmazon Sustainable Landscapes Project (P158000)
PROJECT APPRAISAL DOCUMENT
LATIN AMERICA AND CARIBBEAN

Report No.: PAD2015
Basic Information
Project ID

EA Category

Team Leader(s)P158000

B - Partial Assessment

Adriana Goncalves Moreira,Claudia Sobrevila

Financing Instrument

Fragile and/or Capacity Constraints [ ]Investment Project Financing

Financial Intermediaries [ ]Series of Projects [ ]Project Implementation Start Date

Project Implementation End Date

14 December-2017

31 October 2023

Expected Effectiveness Date

Expected Closing Date

30-April-2018

30 April 2024

Joint IFCGEF Focal Area

No

Multifocal

Practice
Manager/Manager

Senior Global PracticeDirector

Country Director

Regional Vice President

Valerie Hickey

Karin Erika Kemper

Martin Raiser

Jorge Familiar

Borrower: Fundo Brasileiro para a Biodiversidade (FUNBIO), Conservation Internacional do Brasil(CI-Brazil)
Responsible Agency: Ministry of Environment
Contact:

Jose Pedro Oliveira Costa

Title:

Telephone No.: 556120282058

Secretary of Biodiversity

Email: brasl-l@mma.gov.br

Project Financing Data (in US$, millions)
[]

Loan

[]

[]

Credit [ X ]IDA Grant [ ]Guarantee

Grant

Other

Total Project Cost:

60.33

Financing Gap:

0.00

[]

Total Bank Financing:

viii

0.00

Financing Source

AmountGlobal Environment Facility (GEF)

60.33

Total

60.33

Expected Disbursements (in US$, millions)Fiscal
Year

2018

2019

2020

2021

2022

2023

2024

0000

0000

0000

Annual

12.00

12.00

12.00

8.00

7.00

6.00

3.33

0.00

0.00

0.00

Cumulati
ve

12.00

24.00

36.00

44.00

51.00

57.00

60.33

0.00

0.00

0.00

Institutional Data
Practice Area (Lead)
Environment and Natural Resources
Contributing Practice Areas
Agriculture, Climate Change, Energy and Extractives, and Water
Proposed Global Environmental Objective(s)The Project Development Objectives (PDO) are to expand the area under legal protection and improve
management of Protected Areas, and increase the area under restoration and sustainable management in
the Brazilian Amazon.
Components
Component Name

Cost (US$, millions)Component 1: Amazon Protected Areas System

30.00

Component 2: Integrated Landscape Management

19.00

Component 3: Policies for Protection and Recovery of Native
Vegetation

7.33

Component 4: Capacity Building, Cooperation, and Project
Coordination

4.00

Systematic Operations Risk- Rating Tool (SORT)
Risk Category

Rating

1. Political and Governance

Substantial

2. Macroeconomic

Substantial

3. Sector Strategies and Policies

Moderate

4. Technical Design of Project or Program

Substantial

5. Institutional Capacity for Implementation and Sustainability

Moderate

6. Fiduciary

Substantial

7. Environment and Social

Substantialix

8. Stakeholders

Substantial

9. Other
Substantial

OVERALL
Compliance
PolicyDoes the project depart from the CAS in content or in other significant
respects?

Yes [ ]No [ X ]Does the project require any waivers of Bank policies?

Yes [ ]No [ X ]Have these been approved by Bank management?

Yes [ ]No [ ]

Is approval for any policy waiver sought from the Board?

Yes [ ]No [ X ]Does the project meet the Regional criteria for readiness for implementation?

Yes [ X ]No [ ]

Safeguard Policies Triggered by the Project

Yes

Environmental Assessment OP/BP 4.01

X

Natural Habitats OP/BP 4.04

X

Forests OP/BP 4.36

X

Pest Management OP 4.09

X

Physical Cultural Resources OP/BP 4.11

X

Indigenous Peoples OP/BP 4.10

X

Involuntary Resettlement OP/BP 4.12

X

No

Safety of Dams OP/BP 4.37

X

Projects on International Waterways OP/BP 7.50

X

Projects in Disputed Areas OP/BP 7.60

X

Legal Covenants
Name
Section I.A.1 (a) and (b) of Schedule 2(FUNBIO Grant Agreement)

RecurrentX

Due Date

Frequency

Throughout project CONTINUOUS
implementation

Description of Covenant
To facilitate the carrying out of Part I of the Project, the Recipient shall: (a) maintain a Project Execution
Unit (PEU-FUNBIO) with functions, staffing and responsibilities satisfactory to the World Bank, as set
forth in the Project Operational Manual; and (b) manage the Transition Fund as set forth in the Project
Operational Manual.
Name
Section I.A.2 (a), (b), (c), (d), (e), (f),(g), and (h) of Schedule 2 (FUNBIO
Grant Agreement)

RecurrentXx

Due Date

Frequency

Throughout project CONTINUOUS
implementation

Description of Covenant
To facilitate the carrying out of Part I of the Project, the Recipient shall contractually cause MMA,
through the FUNBIO-MMA Coordination Agreement to organize, coordinate and maintain: (a) theTechnical Forum with functions, staffing and responsibilities satisfactory to the World Bank, as set forthin the Project Operational Manual; (b) the Managers Commission with composition and responsibilities
satisfactory to the World Bank, as set forth in the Project Operational Manual; (c) the Scientific
Advisory Panel with composition and responsibilities satisfactory to the World Bank, as set forth in the
Project Operational Manual; (d) the Program Committee with composition and responsibilities
satisfactory to the World Bank, as set forth in the Project Operational Manual; (e) the Transition Fund
Committee with composition and responsibilities satisfactory to the World Bank, as set forth in the
Project Operational Manual; (f) the Advisory Council with composition and responsibilities satisfactory
to the World Bank, as set forth in the Project Operational Manual; (g) the Project Operational Committeewith composition and responsibilities satisfactory to the World Bank, as set forth in the Project
Operational Manual; and (h) the Project Coordination Unit with composition and responsibilities
satisfactory to the World Bank, as set forth in the Project Operational Manual.
Name
Section I.B.1 (a), (b), and (c) of
Schedule 2 (FUNBIO Grant Agreement)

RecurrentX

Due Date

Frequency

Throughout project CONTINUOUS
implementation

Description of Covenant
To facilitate the carrying out of Part I of the Project, the Recipient shall enter into or amend, as the casemay be, and thereafter maintain: (a) an agreement with MMA (the FUNBIO-MMA Coordination
Agreement); (b) an agreement with ICMBio and MMA (the FUNBIO-ICMBio Cooperation Agreement);and (c) an agreement with each State (the FUNBIO-State Cooperation Agreements); all under terms andconditions acceptable to the World Bank (the FUNBIO Implementation Agreements).
Name
Section I.A.1 of Schedule 2 (CI-Brazil
Grant Agreement)

RecurrentX

Due Date

Frequency

Throughout project CONTINUOUS
implementation

Description of Covenant
To facilitate the carrying out of Parts II, III and IV of the Project, the Recipient shall maintain a Project
Execution Unit (PEU-CI-Brazil) with functions, staffing and responsibilities satisfactory to the World
Bank, as set forth in the Project Operational Manual.
Name
Section I.A.2 (a), (b), and (c) of
Schedule 2 (CI-Brazil Grant Agreement)

RecurrentX

Due Date

Frequency

Throughout project CONTINUOUS
implementation

Description of Covenant
To facilitate the carrying out of Parts II, III and IV of the Project, the Recipient shall contractually cause
MMA, through the CI-Brazil-MMA Coordination Agreement, to organize, coordinate and maintain: (a)the Project Coordination Unit (PCU) with functions, staffing and responsibilities satisfactory to theWorld Bank, as set forth in the Project Operational Manual, including its responsibility to supervise thetechnical aspects of Project implementation; (b) the Project Operational Committee (POC) withcomposition and responsibilities satisfactory to the World Bank, as set forth in the Project Operational
Manual, including: (i) its composition with representatives of inter alia MMA, ICMBio, SFB, the States,
FUNBIO and the Recipient; and (ii) its responsibility to foster compliance with the Project objectives;and (c) the Advisory Council (AC) with composition and responsibilities satisfactory to the World Bank,
as set forth in the Project Operational Manual, including: (i) its composition with representatives of interxialia MMA, ICMBio, SFB, the States, civil society, FUNBIO and the Recipient; and (ii) its responsibility
to provide strategic recommendations on integrated landscape management.
Name

Recurrent

Section I.B.1 (a), (b), (c), and (d) of
Schedule 2 (CI-Brazil Grant Agreement)X

Due Date

Frequency

Throughout project CONTINUOUS
implementation

Description of Covenant
To facilitate the carrying out of Parts II, III and IV of the Project, the Recipient shall enter into: (a)an agreement with MMA (the CI-Brazil-MMA Coordination Agreement); (b) an agreement with
ICMBio and MMA (the CI-Brazil-ICMBio Cooperation Agreement); (c) an agreement with SFB and
MMA (the CI-Brazil-SFB Cooperation Agreement); and (d) an agreement with each State (the CIBrazil-State Cooperation Agreements); all under terms and conditions acceptable to the World Bank.
Conditions
Source of Fund

Name

Type

GEF

FUNBIO Grant Agreement Section 5.01 (a), (b),(c) and (d)EffectivenessDescription of Condition
This Agreement shall not become effective until evidence satisfactory to the World Bank has been
furnished to the World Bank that the conditions specified below have been satisfied: (a) the execution
and delivery of this Agreement on behalf of the Recipient have been duly authorized or ratified by allnecessary corporate action; (b) the FUNBIO State Cooperation Agreement with the State of Amapá hasbeen executed in form and substance satisfactory to the World Bank; (c) the Project Operational Manual
has been adopted by the Recipient and MMA, in a manner and with contents acceptable to the World
Bank; and (d) the CI-Brazil Grant Agreement has been executed and delivered and all conditions
precedent to the effectiveness of said agreement (other than the effectiveness of this Agreement) havebeen fulfilled.
Source of Fund

Name

Type

GEF

FUNBIO Grant Agreement Section 5.02

EffectivenessDescription of Condition
There shall be furnished to the World Bank an opinion or opinions satisfactory to the World Bank ofcounsel acceptable to the World Bank or, if the World Bank so requests, a certificate satisfactory to theWorld Bank of a competent official of the Recipient, showing on behalf of the Recipient, that thisAgreement has been duly authorized or ratified by, and executed and delivered on its behalf and islegally binding upon it in accordance with its terms.
Source of Fund

Name

Type

GEF

CI-Brazil Grant Agreement Section 5.01 (a), (b),(c), (d), and (e)EffectivenessDescription of Condition
This Agreement shall not become effective until evidence satisfactory to the World Bank has been
furnished to the World Bank that the conditions specified below have been satisfied: (a) the execution
and delivery of this Agreement on behalf of the Recipient have been duly authorized or ratified by allxii

necessary corporate action; (b) the CI-Brazil Implementation Agreements have been executed on behalfof the respective parties thereto; (c) the Project Operational Manual has been adopted by the Recipientand MMA, all in a manner and with contents acceptable to the World Bank; (d) the Recipient hasretained a procurement specialist under terms of reference acceptable to the World Bank and inaccordance with the provisions set forth in Section III of Schedule 2 to this Agreement; (e) the FUNBIO
Grant Agreement has been executed and delivered and all conditions precedent to the effectiveness of
said agreement (other than the effectiveness of this Agreement) have been fulfilled.
Source of Fund

Name

Type

GEF

CI-Brazil Grant Agreement Section 5.02

EffectivenessDescription of Condition
There shall be furnished to the World Bank an opinion or opinions satisfactory to the World Bank ofcounsel acceptable to the World Bank or, if the World Bank so requests, a certificate satisfactory to theWorld Bank of a competent official of the Recipient, showing on behalf of the Recipient, that thisAgreement has been duly authorized or ratified by, and executed and delivered on its behalf and islegally binding upon it in accordance with its terms.
Source of Fund

Name

Type

GEF

FUNBIO Grant Agreement Section IV.B.1(a) and(b) of Schedule 2

Disbursement

Description of Condition
Notwithstanding the provisions of Part A of this Section no withdrawal shall be made: (a) for payments
made prior to the date of this Agreement; and (b)under Category (1) until: (i) the World Bank hasreceived a copy of the Co-financing Agreements signed by the parties thereto; and (ii) a confirmationfrom the Recipient, in form and substance satisfactory to the World Bank, that contributions for at least
one hundred million Dollars ($100 million) have been deposited in the Transition Fund.
Source of Fund

Name

Type

GEF

FUNBIO Grant Agreement Section IV.B.1(c) of
Schedule 2

Disbursement

Description of Condition
Notwithstanding the provisions of Part A of this Section no withdrawal shall be made: (c) under
Category (2) until: (i) at least one Environmental Compensation Agreement has been signed by theparties thereto, in form and substance satisfactory to the World Bank, and is effective; (ii) the WorldBank has received a letter from ICMBio confirming that appropriate environmental compensation
resources under said Environmental Compensation Agreement are allocated to the Protected Areas underthe ARPA Program; and (iii) the conditions set forth in paragraph (b) above have been met in a manner
satisfactory to the World Bank.
Source of Fund

Name

Type

GEF

FUNBIO Grant Agreement Section IV.B.1(d) of
Schedule 2

Disbursement

Description of Condition
Notwithstanding the provisions of Part A of this Section no withdrawal shall be made: (d) under
Category (3) until: (i) BNDES has issued its Approval of the Funding Proposal for the ARPA Program,as evidenced in form and substance satisfactory to the World Bank; and (ii) the conditions set forth inparagraph (b) above have been met in a manner satisfactory to the World Bank.

xiii

Team Composition
Bank Staff
Name

Role

Title

Specialization

Unit

Adriana GoncalvesMoreiraTeam Leader(ADM
Responsible)

SeniorEnvironmental
Specialist

Environment

GEN04

Claudia Sobrevila

Team Leader

SeniorEnvironmental
Specialist

Environment

GEN01

Frederico Rabello T.
Costa

Procurement
Specialist (ADM
Responsible)

Senior Procurement Procurement
Specialist

GGO04

Susana Amaral

Financial
Management
Specialist

Sr Financial
Management
Specialist

Financial
Management

GGO22

Tatiana de Abreu

Disbursement
Specialist

Finance Officer

Disbursement

WFALA

Agnes Velloso

Safeguards
Specialist

Consultant

Environment

GEN04

Alberto Coelho Gomes
Costa

Safeguards
Specialist

Senior Social
Development
Specialist

Social

GSU04

Gabriela Grinsteins

Legal Specialist

Counsel

Legal

LEGLE

Jacqueline Veloz
Lockward

Legal Specialist

Junior Counsel

Legal

LEGLE

Cassia Coutinho Barreto Team Member

Consultant

Operations

GTI04

Daniela America Suarez Team Member
de OliveiraConsultant

Monitoring

GEN04

Julia Segatto Barros

Team Member

Consultant

Communications

GEN04

Raquel Almeida Campos Team Member

Consultant

Operations

GEN04

Sofia Keller Neiva

Team Member

Program AssistantOperations

LCC5C

Tanya Lisa Yudelman

Team Member

Consultant

Natural Resources
Management

GEN07

Extended Team
Name

Title

Office Phone

Location

Locations
CountryFirst
Administrative
Division

Location

Planned Actualxiv

Comments

Brazil

Acre

Acre

X

Brazil

Amapá

Amapá

X

BrazilAmazonas

Amazonas

X

BrazilMaranhão

Maranhão

X

BrazilMato Grosso

Mato Grosso

X

Brazil

Pará

Pará

X

BrazilRondônia

Rondônia

X

BrazilRoraimaRoraimaX

BrazilTocantins

Tocantins

X

Consultants (Will be disclosed in the Monthly Operational Summary)Consultants Required?

Consulting services to be determined

xv

I.

STRATEGIC CONTEXT
A. Country Context

1.
Brazil is a vast country and its development prospects matter globally. The fifthlargest country on earth (land area and population), Brazil contains a wealth of natural resources,
including the world’s largest rain forest (the Amazon), substantial freshwater resources, valuable
agricultural land, and multiple minerals, metals, and other natural capital. Natural resources are
an important source of income and a critical input for the country’s economic development.
Although rocked by recent global economic and national political crises, over the past decade,Brazil experienced an unprecedented reduction in poverty and inequality owing to a combinationof sound macro policies and a favorable external environment. About 24.2 million Brazilians
escaped poverty and the Gini coefficient of household incomes fell from 0.59 to 0.51 from 2001
to 20151. Yet, poverty remains significant and Brazil is still one of the most unequal countries in
the world. Rural Areas host a disproportionate number of poor and marginalized communities.
Brazil’s tropical forests and freshwater reserves are important for the rural poor, constituting asignificant share of their wealth, especially in rural populations and indigenous peoples of thenorth and northeast, who experience the highest incidences of poverty. More widely, climate
adversity and water scarcity are sources of social, food security, and economic vulnerability.
Sustainable forestry, climate resilience, and agriculture are key for both poverty reduction andlong-term growth.
2.
Brazil has committed to balance growth and social progress with environmental
sustainability. During the past decades Brazil has made meaningful progress toward fostering
environmental protection and attaining sustainable development: establishing highly advanced
environmental legislation, reducing deforestation, setting aside large areas for biodiversity
protection, and creating other forms of conservation areas that reconcile conservation,
development, and poverty reduction. Brazil, an early mover in developing a national climatechange plan, has made significant progress in lowering—on a voluntary basis—its CO2
emissions.
B. Sectoral and Institutional Context
3.
The Amazon biome includes over 40 percent of the remaining rain forests on earthand plays a critical role in climate regulation regionally and globally. It also hosts at least 10
percent of the world’s known biodiversity, including endemic and endangered species, andcomprises the largest river basin in the world. The Amazon forest and river ecosystem is one oflargest natural areas that still has the potential to remain sustainably conserved and managed.
4.
The Amazon biome ranges over 9 countries, of which 60 percent lies in northern
Brazil, covering over 4 million km2 and, possibly, harboring the world's greatest biologicaldiversity. Its vast forests significantly influence regional and global climates and sequester
approximately 70 billion tons of carbon. Although sparsely populated, the region is inhabited byabout 22 million people, mostly in urban areas, but with diverse local communities, including at
1

World Bank “Brazil - Systematic country diagnostic”. Washington, D.C.: World Bank Group (2016)1

least 200,000 indigenous peoples from more than 200 ethnic groups. Such communities depend
economically and culturally on natural resources. The conservation of this region and its vastcultural and biological diversity, as well as the ecological balance that underpins its crucial rolein climate regulation, are of extreme importance for Brazil and the entire human population. 2
5.
The Government of Brazil (GOB) recognizes the Amazon’s important role inregulating global climate change and ensuring Brazil’s social and economic development.
Over the past two decades, the GOB has established and implemented many policies to promotea new vision for development in the Amazon (see annex 6). Simultaneously it has removed many
development-oriented policies that stimulated deforestation. These efforts have resulted insignificant achievements. Between 2004 and 2012, Brazil reduced its annual deforestation from27,772 km2 to 4,571 km2, the lowest rate on record3.. One key program in support of this vision
is the Amazon Region Protected Areas Program (Programa Áreas Protegidas da Amazônia,ARPA), launched in 2002 which has contributed directly to reducing 37 percent of thedeforestation in the Brazilian Amazon. This has largely been achieved through expanding theprotected area (PA) system, improving PA management and enforcement, strengthening local
community participation, and engaging with Amazonian state governments.
6.
Despite these significant achievements, the integrity of the Brazilian Amazon
continues to be threatened by deforestation and degradation. In 2015 and 2016, a significant
uptick in deforestation rates was observed, reaching almost 8,000 km2 in 2016. Several
interrelated factors underpin this trend, including export markets (for example, agricultural andforest goods, minerals, and energy) and transport infrastructure development. Aggravating
factors include shortcomings of the policy frameworks to support sustainable development invarious sectors and value ecosystem services; governance weaknesses, including gaps in andweak enforcement of legislation for nature conservation and other sustainable development
policies; and lack of appropriate land-use planning. These threats are likely exacerbated by thelack of regional coherence in laws and policies among the Amazonian countries.
7.
Nevertheless, new opportunities are opening up to further advance efforts to reduce
deforestation and degradation. Land tenure advances over the past five years in the Amazon
region including: (a) establishment and management of PAs; (b) execution of the Terra Legal
Program (under which federal lands are allocated to conservation, indigenous peoples issues,
small-scale farming, land titling, and colonization, in this order of priority); and (c) Forest Code
implementation, open new opportunities to integrate production and protection acrosslandscapes.
8.
Brazil has also been at the forefront of the international debate on climate change
and sustainable development. The 2015 nationally determined contribution (NDC) commits
Brazil to: (a) reinforcing Forest Code implementation, at federal, state, and municipal levels; (b)strengthening policies and measures to achieve zero illegal deforestation and compensate forgreenhouse gas (GHG) emissions from legal vegetation suppression by 2030, in the Brazilian
2

See Marengo, J.A. & Espinoza, J.C. 2016. Extreme seasonal droughts and floods in Amazonia: causes, trends andimpacts. Int. J. Climatol. 36:1033-1050.
3
Bebber, D.P. & Butt, N. 2017. Tropical protected areas reduced deforestation carbon emissions by one third from2000–2012. Scientific Reports | 7: 14005 | DOI:10.1038/s41598-017-14467-

2

Amazon, (c) restoring and reforesting 12 million ha of forests by 2030; and (d) enhancing
sustainable native forest management systems to curb illegal and unsustainable practices.4
C. Higher Level Objectives to which the Project Contributes
9.
The proposed Project would: (a) support government policy and legislative
objectives, particularly related to maintaining and expanding efforts to protect and restore
the Amazon forest, its associated biodiversity, ecosystem services and climate resilience;and (b) promote the adoption of sustainable production and extractive management
approaches. It directly supports Brazil’s NDC and National Biodiversity Strategy and Action
Plan’s (NBSAP). mitigation and adaptation, and conservation and sustainable use goals. The
proposed Project’s emphasis on regional knowledge exchange aligns with the NDC commitment
to South-South cooperation in forest monitoring systems, low carbon and resilient agriculture,
restoration and reforestation activities, and PA management.
The proposed Project would also contribute to the World Bank Group corporate
goals of ending extreme poverty and promoting shared prosperity. Project objectives anddesign aim to reinforce the contribution of biodiversity and ecosystem services provided by the
Amazon forest to reduce vulnerability and improve livelihoods of local communities andindigenous people, and to maintain the global environmental balance. It also aligns with theWorld Bank Group’s Country Partnership Framework for the Federative Republic of Brazil
FY18–23 (Report No. 113259-BR) discussed by the Executive Directors on July 16, 2017,
particularly Focus Area 3: Inclusive and Sustainable Development, by supporting theachievement of Brazil’s NDC land use targets, and promoting inclusive rural development andprotection of vulnerable groups. The focus on improving the sustainable management of natural
resources in the Amazon is also consistent with the 2016 Systematic Country Diagnostic (SCD)
which notes that, if well managed, the country’s land, forest, and water resources can yield
ample economic returns, provide livelihoods, render environmental services, and buttress
Brazil’s global reputation.
10.

11.
Project objectives and approaches align with the World Bank’s overarching Climate
Change Action Plan 2016–20205, which identifies climate-smart land use, water, and foodsecurity as one of the six high-impact action areas. The proposed Project also support two focal
areas of the World Bank’s Forest Action Plan FY16–206: sustainable forestry and forest-smart
interventions; and the World Bank’s general objective of promoting global knowledge exchange
and partnerships.

4

See Chiavari, J. & Lopes, C.L. 2017. Forest and Land Use Policies on Private Lands: An International
Comparison. Climate Policy Initiative. https://climatepolicyinitiative.org/
5World Bank; IFC; MIGA. 2016. World Bank Group Climate Change Action Plan 2016-2020. World Bank,
Washington, DC. © World Bank. https://www.openknowledge.worldbank.org/handle/10986/24451 License: CC BY
3.0 IGO.
6
World Bank. 2016. Forest action plan FY16-20. Washington, D.C.: World Bank Group.
http://documents.worldbank.org/curated/en/240231467291388831/Forest-action-plan-FY16-20

3

12.
The proposed Project sits under the Amazon Sustainable Landscape (ASL)
Program, a regional World Bank-led, GEF-financed initiative to protect globally significant
biodiversity and implement policies to foster sustainable land use and restoration of native
vegetation cover in Brazil, Colombia and Peru (see annex 2).
13.
Lastly, the proposed Project is estimated to contribute with 140 million tons of CO 2
equivalent in avoided emissions, identified according to the Food and Agriculture Organizationof the United Nations (FAO) Ex Ante Carbon Balance Tool (EX-ACT) methodology adopted by
the Global Environment Facility (GEF).
II.

PROJECT DEVELOPMENT OBJECTIVES
A. PDO

14.
The proposed Project Development Objectives (PDO) are to expand the area under legal
protection and improve management of Protected Areas, and increase the area under restorationand sustainable management in the Brazilian Amazon.
Project Beneficiaries
15.
The direct beneficiaries of the proposed Project would be local populations living inside
PAs (currently estimated to be 17,000 families living below the poverty line) and thesurrounding productive landscapes. Sustainable Use PAs benefit resident traditional
communities, by providing secure land and resource access. The proposed Project seeks tosecure citizen engagement through adoption of a participatory approach involving key
stakeholders such state and municipal governments, civil society organizations, local
communities and indigenous peoples’ associations. Particular emphasis is given to strengthening
the role of women in project activities. This includes actions to: (a) strengthen women’s
participation and leadership within community decision-making processes; (b) ensure thatwomen share in the economic benefits resulting from sustainable use of forest resources; andfinally, (c) support and strengthen women’s traditional role as ‘forest guardians’.
16.
Target area populations which adopt forest conservation, biodiversity-friendly productionand enhanced agroecological production practices, would accrue broader social andenvironmental benefits. More broadly, the integrated Amazon PA system and productive
landscape sustainable use activities would indirectly benefit natural resource dependent
populations and urban communities (estimated 22 million people) by serving as repositories forecosystem services and repopulating species with economic potential. Improved forest protection
and restoration will also generate environmental benefits by counteracting GHG emissions,conserving biodiversity, and maintaining other ecosystem services.
PDO Level Results Indicators
17.

The PDO level indicators and respective targets are as follows:

New area supported by the project with status as protected areas. (Target: 3 million
ha);
4

III.



Area of existing protected areas supported by the project with: (i) low, (ii) moderateand (iii) high management effectiveness as per defined criteria. (Target: 60 millionha);

Area under restoration or reforestation supported by the project (disaggregated by:(i) assisted natural regeneration, and (ii) active restoration) according to defined
criteria. (Target: 28,000 ha); andForest area brought under sustainable management plans. (Target: 1.4 million ha)

PROJECT DESCRIPTION
A. Project Components

Component 1. Amazon Protected Areas System (GEF: US$30.00 million; parallel
cofinancing7: US$185.00 million)
18.
This component will expand and consolidate an over-60 million ha PA system in theBrazilian Amazon and advance ongoing efforts to secure its long-term financial sustainability bycapitalizing the ARPA Transition Fund, an innovative financial mechanism with strong support
from public and private donors (see annex 7 for details). In the context of the proposed Project,
the Transition Fund will: (a) bring an additional 3 million ha of the Amazon region under legal
protection; (b) strengthen the consolidation of 60 million ha of ARPA-supported PAs (new and
114 pre-existing PAs); (c) strengthen the coordination, management, monitoring, andcommunication of ARPA as a whole; and (d) develop and implement strategies to raise
additional revenue for the ARPA Transition Fund.
Component 2. Integrated Landscape Management (GEF: US$19.00 million; parallel
cofinancing: US$117.36 million)
19.
This component will promote integrated landscape management in the states of
Amazonas, Pará, Rondônia, and Acre through complementary strategies that: (a) foster recoveryof native vegetation; (b) develop sustainable productive systems; (c) strengthen productive value
chains; and (d) implement innovative management arrangements between PAs with a view toimproving local communities’ livelihoods, ecosystem connectivity, and resilience. In line with
Component 3, activities will foster the adoption of practices which reduce deforestation, promoteforest recovery, and induce adoption of sustainable agricultural and extractive practices, focusing
on: (a) promoting access to innovative technologies and best practices; (b) increasing capacity
for and uptake of these approaches, particularly in community and private lands; and (c)enhancing capacity of all stakeholders to sustainably manage and restore forested areas.
Emphasis will be placed on encouraging adoption of practices that assure conservation of forest
patches in agricultural landscapes, maintain and/or increase agricultural productivity and deliver
multiple social and environmental benefits at the landscape level. Additionally, the proposed

7

The proposed Project’s parallel cofinancing commitments are summarized in the Project Cost and Financing table
in Section B.

5

Project will seek to advance Ramsar commitments in the Amazon biome, supporting recognition
and implementation of new wetland sites and promoting wetland connectivity.
Component 3. Policies for Protection and Recovery of Native Vegetation (GEF: US$7.33
million, parallel cofinancing: US$46.33 million)
20.
This component will strengthen capacity of national and state governments to develop
and implement sectoral policies and financial mechanisms with a view to reducing deforestationand promoting forest recovery, with a particular focus on the Law for Protection of Native
Vegetation (Law No. 12.651/2012, also known as the Forest Code); the National Policy for the
Recovery of Native Vegetation (Decree No. 8972/2017); the Law for the Management of Public
Forests (Law No. 11.284/2006); and selected state policies. Activities will focus on three key
areas: (a) strengthening implementation of key legal instruments for forest recovery, including,the Rural Environmental Registry (Cadastro Rural Ambiental, CAR), the related Environmental
Regularization Program (Programa de Regularização Ambiental, PRA) and Plan for the
Recovery of Degraded and Altered Areas (Plano de Recuperação de Áreas Degradadas e
Alteradas, PRADA), and the Forest Concession Policy; (b) improving forest restoration
monitoring capacity through, among others, institutional capacity building, studies, and thedesign and implementation of a national spatial planning and monitoring platform linked to theexisting Program for Environmental Monitoring of Brazilian Biomes (Programa deMonitoramento Ambiental dos Biomas Brasileiros, PMABB) to support decision making fornative vegetation recovery in the Amazon; and (c) improving financial incentives for farmers toinvest in restoration activities.
Component 4. Capacity Building, Cooperation, and Project Coordination (GEF: US$4.00
million, parallel cofinancing: US$25.09 million)
21.
This component will improve Brazilian stakeholders’ implementation and collaboration
capacity to increase project impact, further compliance with international commitments, andpromote effective and efficient project implementation through: (a) supporting the participationof Brazilian stakeholders in knowledge exchange efforts under the regional Amazon
Coordination Technical Assistance Project (P159233); (b) exploring opportunities to strengthen
collaborative environmental management with official counterparts in Peru and Colombia; (c)developing and implementing training programs, seminars, and short international internships;(d) systematizing lessons learned through project implementation; and (e) establishing andimplementing a system to coordinate, communicate, manage, provide technical support, andmonitor implementation across components, and to maintain and operate the project’s
participatory structures.
B. Project Financing
22.
The proposed Project would be financed by grants from the Global Environment Facility
to Fundo Brasileiro para a Biodiversidade (FUNBIO) in the amount of US$30 million(TFA6057) and to Conservation International do Brasil (CI-Brazil) in the amount of US$30.33
million (TFA6056), totaling US$60.33 million. There are US$373.78 million in parallel
cofinancing provided by (a) the Government of Brazil (GOB) (federal and state); (b) the ARPA
Transition Fund (with contributions from Kreditanstalt fur Wiederaufbau, KfW; WWF-Brasil,
6

Fundo Mundial para a Natureza; World Wildlife Fund for Nature, WWF-US; Gordon and Betty
Moore Foundation; Linden Trust for Conservation; Margaret A. Cargill Foundation; Anglo
American Minerio de Ferro Brasil, S.A; Natura; O Boticário; and the original Protected Areas
Fund ([Fundo de Áreas Protegidas, FAP], excluding GEF contributions); and (c) CI-Brazil.8
Project Cost and Financing
Total Project Cost
(US$, millions)

Parallel Cofinancing(US$, millions)215.00185.0030.00

2. Integrated Landscape Management

136.36117.3619.00

3. Policies for Protection and Recovery
of Native Vegetation

53.66

46.33

7.33

29.09

25.09

4.00

434.11434.11373.78373.78

60.33
60.33

Project Components
1. Amazon Protected Areas System

4. Capacity Building, Cooperation, andProject Coordination
Total Costs
Total Financing Required

GEF Financing (US$,millions)

C. Lessons Learned and Reflected in the Project Design23.
The proposed Project design builds upon over a decade of experience of PA
establishment, management, and financing in the Brazilian Amazon; and upon the growing
global experience with integrated landscape approaches, including those drawn from the recent
GEF Scientific and Technical Advisory Panel (STAP) review.9 Key lessons are presented in thefollowing paragraphs.
24.
ARPA financial sustainability concerns led to the elaboration of a Project Finance for
Permanence Strategy, which through the establishment of the ARPA Transition Fund. This Fundseeks to gradually increase federal and state governments resources, while decreasing donor
investments, so that, after 25 years, these governments will finance 100 percent of ARPA costs.
25.
Transition Fund design (annex 7) incorporates additional Phase I and II lessons, including(a) a strong and transparent governance system, that facilitates the dialogue between the
Government, civil society, donors, and the private sector, including the Transition Fund
Committee (Comitê do Fundo de Transição, CFT), which oversees Transition Fund operations,and the ARPA Program Committee, which supervises ARPA; and (b) adoption of a planning
cycle that relies on tools such as Protected Areas Evaluation Tool (Ferramenta de Avaliação de
Unidades de Conservação, FAUC), Multiyear Strategic Planning (Planejamento Estratégico
Plurianual, PEP), and Conservation Investment Strategy (Estratégia de Conservação e
Investimento, ECI) to guide the development of the biannual operating plans and budgets.

8

See annex 3, table 3.1 for detailed breakdown.
Tengberg, A., and S. Valencia. 2017. “Science of Integrated Approaches to Natural Resources Management”, A
STAP Information Document. Global Environment Facility, Washington, DC.
9

7

26.
ARPA Phases I and II institutional arrangements based on a public-private partnership
between the Government (technical responsibility) and the Brazilian Biodiversity Fund ([Fundo
Brasileiro para a Biodiversidade, FUNBIO], fiduciary responsibility), have proven successful.
Similarly, the adoption of innovative operating mechanisms and procedures, such as contas
vinculadas, adoption of standard specifications, use of the local expenses (compras locais)
modality, and the acquisition of goods regionally, among others has been effective.
27.
Beyond PAs, the preparation of the Brazil's national policy of recovery of native
vegetation (Política Nacional de Recuperação da Vegetação Nativa, PROVEG) and its
implementation mechanism, the National Plan for Recovery of Native Vegetation (Plano
Nacional de Recuperação da Vegetação Nativa, PLANAVEG) have provided several lessons for
Component 2, including the importance of (a) establishing strong institutional linkages between
governmental and nongovernmental players across a range of thematic areas (environment,
agriculture, science and technology, social organizations, and so on); (b) training technical staffof public agencies and farmers; (c) ensuring the economic viability of vegetation recovery
projects, for example, scaling projects to reduce costs; and (d) facilitating access to appropriate
financing.
28.
Additionally, practical lessons from the GEF, World Bank, United Nations, and othercountries highlight the benefits of an approach in which natural resource and development
challenges are addressed on an integrated/multisectoral basis for a particular landscape. Suchapproaches have proven to be critical to sustaining the ecosystem functions and services needed
to ensure local benefits such as enhancing peoples’ livelihoods, security, and resilience toclimate variability; and global benefits such as biodiversity conservation, carbon sequestration,and climate mitigation. Integrated landscape management approaches are increasingly
recognized as essential to the attainment of the Sustainable Development Goals. In light of this,the proposed Project expands ARPA’s scope, to integrate protected and productive landscapes
into a single initiative to improve forest conservation and management of natural resources. The
project design builds upon a clear policy and legislative framework and seeks to engage multiple
stakeholders, encouraging the emergence of a shared vision, critical elements of a successful
landscape approach.
IV.

IMPLEMENTATION
A. Institutional and Implementation Arrangements

29.
The proposed Project will be implemented by the MMA in partnership with the following
key executing agencies: Chico Mendes Institute for Biodiversity Conservation (Instituto Chico
Mendes de Conservação da Biodiversidade, ICMBio), Brazilian Forest Service (Serviço
Florestal Brasileiro, SFB), state environmental agencies, FUNBIO, and CI-Brazil.
Implementation will additionally involve the academic sector, NGOs, and civil society.
30.
The MMA’s Biodiversity Secretariat (Secretaria de Biodiversidade, SBio) will haveoverall policy-level leadership for project implementation and coordination. A multi-institutional
Project Operational Committee (POC), an executive and decision-making body comprising the
key implementing and executing agencies, will oversee project implementation. The POC will besupported by a Project Coordination Unit (PCU) in MMA and two Project Execution Units
8

(PEU), one in FUNBIO (PEU-FUNBIO) and the other in CI-Brazil (PEU-CI-Brazil), will
provide fiduciary, technical and monitoring and evaluation (M&E) support. In addition, aBrazilian Amazon Sustainable Landscapes Advisory Council (Brazil-ASL AC), a cross-sectoral
body comprising government and nongovernment representatives, will offer policy-levelguidance, ensure sectoral linkages, and serve as a forum for problem resolution, as needed.
Lastly, ad hoc Technical Working Groups will be established as needed, to provide in-depth
guidance on specific issues. The Project Operational Manual (POM) will detail the roles andresponsibilities of each of these institutional structures as well as the agencies involved in project
implementation. Detailed implementation arrangements are presented in annex 3.
B. Results Monitoring and Evaluation
31.
A project M&E unit will be established within the MMA’s PCU. This unit will lead the
project’s M&E, with support on the fiduciary aspects from FUNBIO, CI-Brazil, and each of thecomponents’ implementing partners. Progress will be tracked against the Results Framework
indicators (annex 1) and the project’s Operation Plans agreed annually with the POC andpartners.10 Quarterly financial and annual progress and M&E reports will be submitted to theWorld Bank. In addition, (a) semiannual progress reviews will be conducted by both the POC
and World Bank implementation support missions; (b) a midterm review of the project’s
implementation will be conducted jointly by the GOB, the POC, the PCU, FUNBIO, CI-Brazil,
and the World Bank; and (c) an independent end-of-project evaluation will be completed and acompletion report prepared.
C. Sustainability
32.
The proposed Project outcomes are likely to be sustainable beyond the project’s life cycle
given the strong ownership of project objectives by the GOB and that project activities aredesigned to support implementation of existing government policies and priorities, includinginternational commitments. From a technical perspective, sustainability of the project’s impact
will be promoted through a variety of measures. Sustainability of PAs will be enhanced byefforts to increase capacity among the Government and other stakeholders implicated in PA
management; advancing consolidation of PAs in support of their objectives; and furthering
Brazil’s goal to transition from almost exclusive dependency on donor financing to a long-termsustainable public financing mechanism. The development of instruments for and capacity of
government, rural, and indigenous organizations and farmers to advance implementation of theForest Code requirements to restore native vegetation and to increase the adoption of sustainableproductive and extractive practices within and around PAs, together with the capacity to identify
degraded forest landscapes and monitor restoration, will contribute to improved landscape-level
planning processes and increase ecosystem connectivity. these approaches could be replicated inother areas of the Brazilian Amazon and the lessons shared with and adapted in other Amazon
countries.

10

Work programming for activities under Component 1 will be completed on a two-year cycle in line with theoperating policies and procedures of the Transition Fund.

9V.

KEY RISKS
A. Overall Risk Rating and Explanation of Key Risks

33.
The overall risk rating of the proposed Project is assessed as Substantial. The descriptionof the principle risks and planned mitigation actions are detailed in the following paragraphs.
34.
Political and governance. The current political situation might pose a risk to the
proposed Project. In May 2017, the Brazilian Congress, for the first time since the 1988
Constitution, approved the reduction and degazetting of federal PAs in the Amazon and Atlantic
Forest regions. This decision was subsequently vetoed by the President, following concerns
expressed by civil society and the international community. While this risk remains, experience
under ARPA I and II demonstrates that these challenges can be successfully overcome.
Continuity with the proposed initiatives is likely even in the event of political changes given thatthe project (a) is grounded on long-standing public-private partnerships for channeling grant
funds (for example, ARPA); (b) focuses on well-established conservation and forest restoration
national legislation (for example, National System of Protected Areas [Sistema Nacional das
Unidades de Conservação, SNUC] Law and Forest Code); (c) focuses strongly on local
communities; and (d) promotes conservation and sustainable use of Amazon forests.
35.
Macroeconomic. The current macroeconomic situation in Brazil could potentially havean impact on the committed counterpart funding due to a potential decreased budget to federal
agencies and reduced transfers from federal to state levels. This risk is mitigated under the
proposed Project as (a) project indicators and targets are based on the available donor grantfunding, (b) the Transition Fund and project financing strategy which (i) front-load the fund withdonor contributions and gradually transitions from donor to government funding over 25 years
and (ii) require allocation of Environmental Compensation Funds (state and federal funds which
are earmarked for PAs) as a Disbursement Condition, and (c) the demonstrated institutional
capacity and commitment observed during implementation of the two prior projects (ARPA I
and II). Another macroeconomic concern is agricultural expansion (grain production and cattle
ranching), which poses an increasing risk to forest resources. To manage this risk, the proposed
Project would continue to be implemented together with administrative policies, land tenure
regularization, and other policies that have made deforestation rates plunge in the last several
years.
36.
Technical design of the project. The main technical risks are associated with forest
restoration activities as these involve coordination of multiple institutional partners and policies.
The existing legal framework mitigates this but government implementation capacity could be alimiting factor. The proposed Project design includes activities to strengthen government andnongovernment stakeholder’s capacity and to promote an enabling environment for private
sector compliance. The proposed Project also would seek to enhance revenue generation fromthe restored areas, which is a new area of intervention, outside of the traditional roles and10responsibilities of the environmental agencies. To mitigate this risk, the proposed Project would
support cross-sectoral collaboration and integration with private sector initiatives.11
37.
Institutional capacity for implementation and sustainability. The sheer geographic
scale of the Brazilian Amazon challenges the ability of government institutions to implement andenforce policies and legislation. PA staffing is an issue in remote areas, leading to high staff
rotation, and state environmental agency capacity is variable, but weak staffing, inadequate
training and limited resource availability are common issues. To address these concerns, theproject will maintain the staffing criteria applied by ARPA for PAs receiving project support andwill seek to strengthen the capacity of federal and state agencies to implement their respective
mandates by supporting the development and deployment of tools and training and theestablishment of partnerships with other local institutional actors
38.
Fiduciary. The World Bank performed an FM assessment of both FUNBIO and CIBrazil, in accordance with OP/BP 10.00 and the Financial Management Manual for World BankFinanced Investment Operations (effective March 1, 2010 and revised February 10, 2017).
Considering the proposed Project design and seeking effective and efficient management andmonitoring over the use of funds, each PEU will have its own FM arrangements. Despite theparallel arrangements, this design ensures that all FM aspects of the project will be wellmonitored. The FM arrangements (described in detail in annex 3 and annex 7) are acceptable.12.
The FM assessments identified the main risks as PEU-CI-Brazil’s lack of experience with WorldBank procedures and expected delays in the beginning of implementation. Mitigation measures
include: system customization to automatically produce the reports needed for project
accounting, monitoring and disbursements, with a close support, including training from theWorld Bank’s Financial Management team throughout project implementation.
39.
Environment and social. Overall the proposed Project’s environmental and social
impacts are expected to be positive, enhancing ecosystem connectivity and resilience andimproving the management of and benefits derived from natural resources on which local
communities, indigenous peoples, and others depend. The project is not expected to require any
involuntary resettlement. Nevertheless, there is a possibility that project-supported PA andrestoration activities might affect indigenous peoples and/or other local communities andstakeholders. By their nature, these risks are considered significant. The risk is mitigated by thestrong existing Government’s policy and legal framework to manage such concerns, and the
project-specific safeguard instruments. Furthermore, the project’s implementation partners haveover a decade of experience in satisfactorily implementing World Bank safeguard instruments.
40.
Stakeholders. Strong stakeholder participation is key to successful PAs and integrated
landscape approaches implementation. While there is substantial experience within and around
11

Coalition for Climate, Forests and Agriculture (Coalizão Brasil Clima, Florestas, Agricultura):
www.coalizaobr.com.br and ‘Alliance for the Restoration of the Amazon’ (Aliança pela Restauracao na Amazonia):
www.wribrasil.org.br
12

Arrangements are acceptable if they are considered capable of recording correctly all budgets, transactions, andbalances, supporting the preparation of regular and reliable financial statements, safeguarding the entity’s assets, andare subject to auditing arrangements acceptable to the World Bank.

11

PAs, participatory mechanisms for mobilizing stakeholders relevant to land-use planning andrestoration activities at the landscape level are less well-tested. To mitigate this risk, theproposed Project will actively involve a wide range of stakeholders from the local andindigenous communities, civil society, private sector, as well as state governments and actors
across the central government. It will reinforce the ongoing dialogue and support the existing
local forum for implementation of the Forest Code. Additionally, targeted activities such asawareness raising, training, strengthening extension services, and actively promoting dialogue
among different actors along productive value chains are expected to not only enhance individual
capacities but also contribute to building lasting local social capital.
VI.

APPRAISAL SUMMARY
A. Economic and Financial Analysis

41.
The economic feasibility simulation yields positive results not only under the baseline but
also under conservative assumptions and different scenarios (see annex 5 for details). The
analysis proved to be robust as it includes varying discount rates and also tests for changes in
anticipated results. The analysis contrasts generated welfare benefits from a ‘with project’ and“without-project” situation, accounting for opportunity costs of alternative agricultural use.
Project costs and benefits are assessed on the area of newly created PAs (3,000,000 ha), area
brought under improved forest management (57,000,000 ha), and area benefiting frominvestments in integrated landscape restoration. The latter assumes a 20 percent reduction incurrent annual deforestation rates over six years, with benefits generated from carbon
sequestration, fire prevention, erosion control, non-timber forest products, and existence value.
Improved forest management benefits are assumed to increase the economic PA value by 5
percent (of the total economic value for 1 ha forest). Project and forest conservation opportunity
costs are included, defined as the net income per hectare per year sacrificed as a result of not
putting the land to agriculture use (soy or cattle). The ”without-project” case assumes trends
follow the recent past and no police changes occur.
42.
The net present value (NPV) is estimated to be US$5.6 billion, and the benefit-cost (BC)ratio is 2.1. To verify the result’s robustness different discount are applied and a reduction of theeconomic benefits by 20 percent and 50 percent in subsequent analysis is used. The benefits are
more than two times larger than the costs in all scenarios. The NPV remain positive even if only
the six years of project implementation are analyzed and if all the cofinancing costs are included.
The net welfare outcome is only negative if the benefits are reduced by 50 percent and a six-year
period is examined. In reality, the project benefits are probably far greater, because this analysis
disregards benefits from new policies, monitoring tools, capacity building, or guidelines which
are all likely to result in benefits and to trigger further positive developments in the area ofsustainable resource management in the future.
B. Technical43.
The proposed Project seeks to expand and further consolidate the area of the Brazilian
Amazon under protection and to increase the forest area under sustainable management, within alandscape approach. Its design draws upon the experience gained under ARPA Phases I and II,
as well other PA and integrated landscape management initiatives in the Amazon and elsewhere.
12The establishment and management of PAs, long considered to be one of the best approaches toprotect biodiversity and ecosystem function, is also recognized as being effective at reducing
deforestation and safeguarding local communities’ access to resources. While there is somedebate as to whether PAs reduce deforestation or simply divert it to other areas, the strategic useof PAs, in conjunction with other policies, has clearly proven effective at reducing deforestationin the case of the Brazilian Amazon. Deforestation between 2005 and 2015 was reduced by 70
percent below the historical baseline of 1996–2005, with PAs accounting for approximately 30
percent of the overall decrease.13 Project design also recognizes the critical importance of
securing financial sustainability for PA efforts if gains on the ground are to be maintained,
providing support to the Government in its quest to transition over 25 years from donor to publicfunding for ARPA. Similarly, the proposed Project recognizes the critical importance ofincreasing ecosystem connectivity if the globally, nationally, and locally important ecosystemservices provided by the Amazon forest are to be maintained and made more resilient. To thisend, it also focuses on building both government and private capacity to implement forest
restoration activities within and between PAs and enabling sustainable economic benefits to be
derived from forests. The proposed Project builds upon strong institutional arrangements whichhave been tested over the past 15 years, expanding the focus to develop tools, capacity, andincentives for the restoration of native vegetation.
C. Financial Management
44.
The World Bank performed a preliminary FM assessment of both PEU-FUNBIO andPEU-CI-Brazil. The overall conclusion of the FM assessment is that: (a) the FM arrangements
for the proposed Project are considered adequate; and (b) the funds flow, disbursements,
monitoring, auditing, and supervision arrangements have been designed to respond to theproject’s implementation arrangements. Annex 3 provides further details on FM anddisbursement aspects.
D. Procurement
45.
A full capacity assessment of CI-Brazil to implement procurement following World Bank
regulations has been carried out. Their Procurement Department has only one professional who
is trained on the former Procurement Guidelines, with little practical experience. CI-Brazil plans
to assemble a full-time dedicated unit for this proposed Project, including one procurement
manager and two procurement coordinators. In addition, a procurement specialist will becontracted at the beginning of the project to build the CI-Brazil procurement team’s capacity.
The hiring of this procurement specialist with Terms of Reference (TOR) acceptable to theWorld Bank is a condition of effectiveness. It is anticipated that training and intensive support
will be needed at the beginning of the project. A full capacity assessment is not necessary for
FUNBIO as the institution has been applying the World Bank Procurement Guidelines for over
15 years. Furthermore, as the proposed Project seeks to capitalize the existing ARPA Transition
Fund, there are no project level procurement implications for implementation of Component 1.

13

Soares-Filho, Britaldo. 2016. Role of Amazon Protected Areas, Especially the Conservation Units Supported by
ARPA, in Reducing Deforestation. Rio de Janeiro: FUNBIO.

13

E. Social (including Safeguards)
46.
Overall the proposed Project impacts are expected to bring socioeconomic benefits toforest-dependent people (traditional communities and indigenous peoples,) through improved
management of natural resources upon which their livelihoods depend, introduce innovative andbest practice in agriculture and agroforestry, diversify livelihoods, promote food security, andincrease resilience.
47.
OP 4.10 Indigenous Peoples is triggered because project activities might affectindigenous peoples. About 60 percent of Brazil's indigenous population or approximately
420,000 indigenous persons live in the Brazilian Amazon region, which comprises 98 percent ofregularized indigenous lands in Brazil, covering almost 21 percent of the regional territory(approximately 90 million ha). PA and indigenous land overlaps are common throughout Brazil,
particularly in the Amazon, the proposed Project aims to assist the development of procedures
and methodologies to support the Government’s work in these areas, promoting the resolution of
conflicts and shared and integrated management of overlapping areas, thus enhancing protection
for both biodiversity and indigenous peoples. As the exact location for the implementation of the
proposed Project’s activities have not yet been defined, the MMA and FUNBIO jointly
conducted a social assessment paying special attention to indigenous peoples in the Amazon andthe potential impacts of PAs, landscape management, and biodiversity conservation on theirtraditional livelihoods. The MMA and FUNBIO also prepared, consulted on, and publicly
disclosed an Indigenous Peoples Policy Framework (IPPF) setting out the principles andguidelines to be complied with when project activities affect indigenous peoples. The IPPF also
spells out screening procedures to ensure that the proposed Project will not support activities in
PAs where the overlapping with indigenous lands or land claims has led to land tenure conflicts.
48.
OP 4.12 Involuntary Resettlement is also triggered. The proposed Project is not expected
to support any activity requiring the involuntary taking of land. Consequently, physical andeconomic displacement should be completely avoided. However, OP 4.12 is triggered because
under Components 1 and 2, the creation, consolidation, and management of PAs as well asactivities related to landscape management may potentially cause adverse impacts related torestrictions on land use and access to natural resources by traditional communities withcustomary tenure or recognizable usage rights. To mitigate these potential adverse impacts, the
MMA prepared and publicly disseminated a Process Framework before appraisal.
F. Environment (including Safeguards)
49.
This Category B project is expected to generate a positive impact on the environment.
The creation and consolidation of PAs has proven to be a viable strategy to reduce deforestation
and biodiversity loss in the Brazilian Amazon. The positive impact is expected to be expandedwith the support to sustainable landscape management practices within PAs and private lands toenhance ecosystem connectivity. To maximize biodiversity benefits, the proposed Project will
apply existing science-based instruments to define priority areas for PA creation and vegetation
restoration, such as the Map of Priority Areas for the Conservation and Sustainable Use of
Brazilian Biodiversity, and data from the continuous Legal Amazon Deforestation Monitoring
Project (Programa de Monitoramento da Floresta Amazônica Brasileira por Satélite, PRODES)
and Amazon TerraClass studies, among others.
14

50.
National environmental legislation is robust and includes specific rules and proceduresfor the creation of PAs aimed at reducing social impacts and maximizing biodiversity benefits.
The Recipient is experienced with the application of World Bank safeguards procedures insimilar World Bank-supported operations. The project Environmental and Social Management
Framework (ESMF) reinforces and complements the national legal framework, defining
preventive procedures and mitigation measures to address key aspects that will require attention
during implementation, such as forest management for timber and non-timber products, pest
management, application of consultation procedures for PA creation, and participation ofindigenous peoples, among others.
51.
The following environmental safeguards were triggered for the proposed Project: OP 4.01
Environmental Assessment, OP 4.04 Natural Habitats, OP 4.36 Forests, OP 4.09 Pest
Management, and OP 4.11 Physical Cultural Resources. Possible negative impacts are expected
to be few, localized, small, and reversible. The impact assessment under the ESMF prepared by
the MMA and FUNBIO includes specific guidance and preventive and mitigation measures toaddress all possible negative impacts identified.
52.
The social and environmental safeguard instruments (ESMF, IPPF, and Process
Framework)
have
been
publicly
disclosedintheofficial
websites(http://programaarpa.gov.br/documentos-fase-iii-do-arpa/;
https://www.funbio.org.br/projetopaisagens-sustentaveis-amazonicas/) of FUNBIO and the MMA and consulted online and at two
face-to-face workshops. The first workshop was held on May 30, 2017 in Manaus (Amazonas
State); the second on August 1, 2017, in Rio Branco (Acre State). The relevant stakeholders wereinvited and the locations of the two workshops were chosen to facilitate the participation ofindigenous peoples, riverine and traditional communities from the Amazon region, and theirrepresentative organizations. The comments received were integrated into the social andenvironmental safeguards instruments, which also include a detailed annex on the consultation
process. The ESMF, IPPF and Process Framework were adopted by the GOB with final incountry disclosure on August 15, 2017, and through the World Bank website on August 23,
2017.
G. Other Safeguards Policies Triggered
53.
The proposed Project triggered OP 7.50 International Waterways. The activities financed
are designed to protect and recover large expanses of biodiversity rich forests, which containcountless perennial and seasonal bodies of water, many of which fit the description ofinternational waterways provided under OP 7.50. No negative impact is expected to such bodies
of water. Proposed activities should positively affect these waterways by conserving the foreststhat protect them, either within PAs or within private lands in sustainably managed landscapes,
thus maintaining or improving water quality and river flows. Supported activities that may use or
involve water are (a) eventual watering of seedlings produced with project support forreforestation activities, and (b) sustainable fisheries management of wild stocks in lakes andrivers. The ESMF includes guidance on the prevention of impacts to international waters and an
exemption to the riparian notification requirement has been obtained (see annex 3).

15

H. World Bank Grievance Redress
54.
Communities and individuals who believe that they are adversely affected by a WorldBank supported project may submit complaints to existing project-level grievance redress
mechanisms or the World Bank’s Grievance Redress Service (GRS). The GRS ensures thatcomplaints received are promptly reviewed in order to address project-related concerns. Project
affected communities and individuals may submit their complaint to the World Bank’s
independent Inspection Panel which determines whether harm occurred, or could occur, as aresult of World Bank non-compliance with its policies and procedures. Complaints may besubmitted at any time after concerns have been brought directly to the World Bank's attention,
and Bank Management has been given an opportunity to respond. For information on how tosubmit complaints to the World Bank’s corporate Grievance Redress Service (GRS), please visit
http://www.worldbank.org/GRS. For information on how to submit complaints to the World
Bank
Inspection
Panel,
pleasevisit
www.inspectionpanel.org.

16

Annex 1: Results Framework and Monitoring
Country: Brazil
Project Name: Amazon Sustainable Landscapes Project (P158000)
Results Framework
Global Environmental Objectives
PDO Statement
The PDOs are to expand the area under legal protection and improve management of Protected Areas, and increase the area under restoration and sustainable
management in the Brazilian Amazon.

These results are at

Project Level

Global Environmental Objective Indicators
Indicator Name

Baseline

Cumulative Target Values
YR1

YR2

YR3

YR4

YR5

YR6

End Target

New area supported by
the project with status
as protected areas(ha, millions)

0.00

0.00

0.00

0.00

1.00

2.00

3.00

3.00

Area of existing
protected areas
supported by the
project with (i) low, (ii)moderate and (iii) highmanagement
effectiveness as per
defined criteria (Ha,millions)

Total: 60.00
Group 1: 10
Group 2: 44
Group 3: 6

Total: 60.00
Group 1: 10
Group 2: 44
Group 3: 6

Total: 60.00
Group 1: 8
Group 2: 44
Group 3: 8

Total: 60.00
Group 1: 5
Group 2: 40
Group 3: 15

Total: 60.00
Group 1: 3
Group 2: 38
Group 3: 19

Total: 60.00
Group 1: 0
Group 2: 36
Group 3: 24

Total: 60.00
Group 1: 0
Group 2: 34
Group 3: 26

Total: 60.00
Group 1:0
Group 2: 34
Group 3: 26

Area under restoration
or reforestation

0.00(i): 0.00

0.00(i): 0.00

0.00(i): 0.00

4.00(i): 3.40

8.00(i): 6.80

18.00(i): 15.30

28.00(i): 23.80

28.00(i): 23.80

17

supported by the
project (disaggregatedby (i) assisted naturalregeneration, and (ii)
active restoration)according to defined
criteria (Ha, thousands)
Forest area brought
under sustainable
management plans(Ha, millions) - (Core)(ii): 0.00(ii): 0.00(ii): 0.00(ii): 0.60(ii): 1.20(ii): 2.70(ii): 4.20(ii): 4.20

0.00

0.00

0.00

0.00

0.00

0.4

1.4

1.4

Intermediate Results Indicators
Cumulative Target Values
Indicator Name

Baseline

YR1

YR2

YR3

YR4

YR5

YR6

End Target

1.1 Existing protectedareas supported by theTransition Fund underimproved management(Number)

65.00

65.00

90.00

105.00114.00114.00114.00114.001.2 Capitalization of
the Protected Areas
trust fund (Transition
Fund)(US$, millions)134.00144.00154.00165.00180.00195.00215.00215.002.1 Area of ruralproperties adopting
sustainable land
management practices
supported by the
project according todefined criteria(Ha, thousands)

0.00

100.00200.00300.00500.00700.00900.00900.002.2 Sustainable use

0.00

0.00

0.00

1.00

2.00

3.00

5.00

5.00

18

protected areas undersustainable land
management practices
supported by the
project according todefined criteria(Ha, millions)
2.3 Land area undersustainable land
management practices(Ha, thousands) (Corporate)

0.00

100

200

1,304

2,508

3,718

5,928

5,928

3.1 Rural properties
adopting land use
planning tools forsustainable land
management(Number, thousands)

0.00

2.00

4.00

9.00

14.00

20.00

27.00

27.00

3.2 Incentive
mechanisms for
reducing forest loss andincreasing restoration
improved(Number)

0.00

1.00

3.00

5.00

7.00

9.00

10.00

10.00

4.1 Local people
consulted on project
activities(disaggregated bygender)(Number)

0.00(of which Male:
0.00, Female:
0.00)

Total 600
Male: 420
Female: 180

Total 1,200
Male: 840
Female: 360

Total 1,500
Male: 1,050
Female: 450

Total 1,800
Male: 1,260
Female: 540

Total 2,400
Male: 1,680
Female: 720

Total 3,000
Male: 2,100
Female: 900

Total 3,000
Male: 2,100
Female: 900

Indicator Description
Global Environmental Objective Indicators
Indicator Name

Description (Indicator Definition)

19

New area supported by the project with status as protected areas

Target values are cumulative.
Indicator captures the PDO outcome of area under legal protection according to Presidential orState Government Decrees.

Area of existing protected areas supported by the project with (i)low, (ii) moderate and (iii) high management effectiveness as per
defined criteria (million ha)

Target values are cumulative.
Indicator captures improved management of PAs as measured by the Management EffectivenessTracking Tool (METT) assessment. This scorecard is the GEF’s standard tool for assessing theevolution in PA management effectiveness, evaluating it across 6 categories: content, planning,
inputs, processes, outputs, and outcomes.
A score of 0–33 percent indicates low management effectiveness, 34–66 percent indicatesmoderate management effectiveness, and 67–99 percent indicates high management effectiveness.

Area under restoration or reforestation supported by the project(disaggregated by (i) assisted natural regeneration, and (ii) active
restoration) according to defined criteria.

Forest area brought under sustainable management plansTarget values are cumulative.
Areas can be located inside and outside of selected PAs within the project area of intervention.
These restoration actions will be implemented by the project activities in the field (planting, fireexclusion, and so on) and supported by additional activities, such as management plans withspecific recovery actions and focused training that might result in recovery actions.
Defined criteria: ‘Assisted natural regeneration’ means late-succession degraded areas underindirect restoration interventions (fire exclusion, grazing exclusion, and so on) within the project
area. ‘Active restoration’ means degraded areas under direct restoration or afforestationinterventions (enrichment, total planting, agro-forestry system, and so on) within the project area.
Target values are cumulative.
These areas can be located inside and outside of PAs and also overlap with PAs supported by the
project.
Criteria: Includes production and protection forests as well as other forests under sustainable
management for which management plans have been prepared, endorsed, and are under
implementation. Forest land classification is based upon national definitions. Management plan isdefined in accordance with national legislation.

Intermediate Results Indicators
Indicator Name

Description (indicator definition and so on)

1.1 Existing protected areassupported by the Transition Fund 
under improved management
Target values are cumulative.
Includes all PAs receiving financial and/or
technical support from the Transition Fund.
‘Improved management’ is defined as thenumber of PAs, passing from ‘consolidation’Frequency
Annual20

Data Source/Methodology
FAUC

Responsibility for Data
Collection
ICMBio and state environmental
agenciesto ‘maintenance’, as defined by the FAUC for
PA monitoring. The FAUC is based on the
METT Scorecard, adapted to the Brazilian
context.
1.2 Capitalization of theProtected Areas trust fund(Transition Fund)

AnnualReview of report provided byTransition Fund asset manager

MMA, ICMBio, FUNBIO, andstate environmental agencies

2.1 Area of rural properties
adopting sustainable land
management practices supportedby the project according todefined criteria

AnnualTarget values are cumulative.
Average rural property area estimated to be
100 ha.
Criteria: Rural properties which are (a)enrolled in the PRA according to the Brazilian
Native Vegetation Law and applicable state
implementing regulations and (b) developing
sustainable land management practices.

Project reports
Rural Environmental Registry
System (SICAR) reports

MMA and state environmental
agencies

2.2 Sustainable use protected
areas under sustainable land
management practices supportedby the project according todefined criteria

AnnualTarget values are cumulative.
 Criteria: ‘Sustainable use PAs’ are
Extractive Reserves (Reserva
Extrativista), Sustainable Development
Reserves (Reserva de Desenvolvimento
Sustentável), Public Forests and Area ofEnvironmental Protection (Área deProteção Ambiental). ‘Sustainable land
management practices’ are defined aspractices that support sustainableproductive activities related to timber andnon-timber forest product (NTFP)
extraction, processing, and trading, andsustainable forest management.

Project reports

MMA, ICMBio, and state
environmental agencies

This indicator measures the land area that as a Annual
result of the World Bank project incorporated
and/or improved sustainable land management
practices. This indicator can track progress
toward sustainability at farm scale and alandscape scales within agroecological zones,

Project reports

MMA, ICMBio, SFB, and state
environmental agencies

2.3 Land area under sustainable
land management practices

Target values are cumulative.
Measured as donor funds entering theTransition Fund over and above government
budgetary allocations.

21





3.1 Rural properties complyingwith land use planning policies

for sustainable land management
3.2 Incentive mechanisms for
reducing forest loss andincreasing restoration improvedwatersheds, or basins. The baseline value forthis indicator is expected to be zero.
Criteria: Sustainable land management
practices are defined as areas supported under
the project adopting a combination of at least
two new technologies/approaches to increase
land quality and restore degraded land, forexample, agronomic, vegetative, structural,and management measures that, when applied
as a combination, increase the connectivity
between PAs, forest land, rangeland, andagriculture land.
Indicator calculated by summing: (a) ‘Area
under restoration or afforestation supported by
the project (disaggregated by (i) assisted
natural regeneration, and (ii) active
restoration) according to defined criteria’(global environmental objective indicator), (b)‘area of rural properties adopting sustainable
land management practices supported by the
project according to defined criteria’ (IR 2.1),
and (c) ‘sustainable use PAs under sustainable
integrated land management practices
supported by the project according to defined
criteria’ (IR 2.2).
Targets are cumulative.
Number of properties with CAR validated.

AnnualAnnualTarget values are cumulative.
‘Incentive mechanism’ are defined as policies
or initiatives (federal, state, and local
governments and private sector) with focus on
deforestation reduction and forest restoration(for example, national revegetation policies
and plans, public and private rural credit
schemes, infraction regimes, and so on).

22

Project reports and
SICAR reports

MMA and state environmental
agencies

Project reports and official
government gazettes

MMA, SFB, and state
government

4.1 Local people consulted on
project activities (disaggregatedby gender)AnnualTarget values are cumulative.
This citizen participation and gender indicatorreflects the participation of local stakeholders
in the project, with a particular focus on (a)community related activities and (b) the
creation and management of new and existingareas under ARPA.

23

Project and activity records

MMA, ICMBio, SFB, and state
environmental agencies

Annex 2: Detailed Project Description
BRAZIL: Amazon Sustainable Landscapes ProjectI. Context
1.
A six-year GEF Amazon Sustainable Landscape Program was approved by the GEF
Council in October 2015 with a commitment of US$113 million and an expected US$682
million leveraged in additional financing. The ASL Program aims to protect globally significant
biodiversity and implement policies to foster sustainable land use and restoration of native
vegetation cover and comprises four national projects executed by three countries (Brazil,
Colombia, and Peru) and a regional coordinating grant (fifth child project) 14. Together, the childprojects aim to maintain 73,000,000 ha of forest land, promote sustainable land management in
52,700 ha, and support actions that will help reduce CO2 emissions by 300 million tons by 2030.
The World Bank (as lead agency), WWF, and United Nations Development Programme will
each serve as GEF implementing agencies for the Program.
2.
The theory of change of the ASL Program and each of its five subsidiary child projects,
builds on the notion that if (a) an adequate area of the Amazon is conserved under various
regimes (PAs and indigenous lands); (b) agriculture, degraded, and forest lands are managed
sustainably and with zero illegal deforestation tolerance; (c) national policies and strategies
support sustainable development aiming to minimize deforestation and loss of ecosystemservices; and (d) capacity of and regional cooperation between key players improves, theprotection of significant biodiversity and the integrity of ecosystem services of the Amazon
region can be achieved.
3.
The proposed project builds on over a decade of work in the Brazilian Amazon tostrengthen biodiversity conservation, reduce deforestation, and improve community livelihoods.
Applying ‘Open Standards for the Practice of Conservation’15 and Theory of Change
methodologies,
In line with the overarching ASL Program, the proposed Project’s theory of change(figure 1) aims to further consolidate PAs in the Amazon and increase the land area underrestoration and sustainable management. To this end, it will build national capacity to: (a)consolidate ARPA, (b) develop integrated landscape management, and (c) implement policies
14

The ASL Program supports the GEF Strategic Frameworks for Biodiversity (BD-1, Programs 1 and 2; BD-4,
Program 9), Climate Change (CCM-2, Program 4), Land Degradation (LD-1, Program 2; LD-3, Program 4) andSustainable Forest Management (SFM-1, 2, and 3).
1524and strategies for PAs and productive landscapes. More specifically, this will be achieved by: (a)expanding the area, improving management, and furthering the long-term financial sustainabilityof ARPA; (b) building capacity for and facilitating adoption of sustainable land-use practices inrural properties and sustainable use PAs; (c) strengthening capacity of federal and state
governments to implement key legal instruments for forest recovery, enhance related financial
incentive mechanisms, and monitor forest restoration; and (d) facilitating the exchange ofknowledge and experience among and between national and regional stakeholders. These
interventions together aim to strengthen protection, reduce deforestation, and improve ecosystem
connectivity, thereby furthering the integrity of the local, regional, and global ecosystem services
that the Amazon provides, including biodiversity conservation, carbon sequestration, andmaintaining the hydrological cycle. Furthermore, the project’s link with the ASL Program, inparticular, the Amazon Coordination Technical Assistance (P159233) will foster connectivity
and knowledge sharing across countries, magnifying the impact of Brazil-ASL investments withthe anticipated results being greater than the sum of its parts.

25

Amazon Sustainable Landscape Program Goal
To protect globally significant biodiversity and implement policies to foster sustainable land use andrestoration of native vegetation cover through Maintaining 73,000,000 ha of forest land, Promoting sustainable land management in 52,700 ha, and Supporting actions that will help reduce CO2 emissions by 300 million tons by 2030

PDO
To expand the area under legal protection and improve management of Protected Areas, and increase
the area under restoration and sustainable management in the Brazilian Amazon, through 3 million ha of new area with status as PA;
 60 million ha of existing PAs of which (a) 0 ha with low management effectiveness, (b) 34 million hawith moderate management effectiveness, and (c) 26 million ha with high management effectiveness; 28,000 ha under restoration or reforestation (disaggregated by (i) assisted natural regeneration, and (ii)
active restoration) according to defined criteria; and 1.4 million ha of forest area brought under sustainable management plans.

Amazon Protected
Areas System

Integrated LandscapeManagement

Policies for Protection andRecovery of Native Vegetation

Strengthening management
and sustainable financing forPAs 114 existing PAs
supported by theTransition Fund underimproved management
 Protected Areas trust fund(Transition Fund)capitalized with US$215
millions

Rural properties and sustainable use
PAs adopting sustainable integrated
land management practices.
 900,000 ha of rural properties
adopting sustainable land
management practices
supported by the project
according to defined criteria
 5 million ha of sustainable use
protected areas undersustainable land management
practices supported by the
project according to defined
criteria
 5,928,000 ha under sustainable
land management practices

Strengthening land-use planningand monitoring capacity, andimproving incentive frameworkfor decreasing forest
loss/revegetation.
 27,000 rural properties
adopting land-use planning
tools for sustainable land
management
 10 incentive mechanisms for
reducing forest loss andincreasing restoration
improved

Capacity Building and Cooperation
Stakeholder capacity and the exchange of knowledge and experience among and between national andregional stakeholders
 3,000 local people, of which 900 female, consulted on project activities

Figure 1. Brazil-ASL Project Theory of Change

26

II. Project Description
A. Project Development Objective
4.
The PDOs are ‘to expand the area under legal protection and improve management ofProtected Areas, and increase the area under restoration and sustainable management in theBrazilian Amazon.’
5.

The PDO level indicators and respective targets are as follows:

New area supported by the project with status as protected areas. (Target: 3 millionha);

Area of existing protected areas supported by the project with (i) low, (ii) moderateand (iii) high management effectiveness as per defined criteria defined criteria.
(Target: 60 million ha);Area under restoration or afforestation supported by the project (disaggregated by (i)assisted natural regeneration, and (ii) active restoration) according to defined
criteria. (Target: 28,000 ha); andForest area brought under sustainable management plans. (Target: 1.4 million ha)

B. Project Components
Component 1. Amazon Protected Areas System (GEF: US$30.00 million; parallel
cofinancing: US$185.00 million)
6.
This component aims to expand and consolidate an over-60-million-ha PA system in theBrazilian Amazon and advance ongoing efforts to secure its long-term financial sustainability bycapitalizing the ARPA Transition Fund. The ARPA Transition Fund seeks to gradually increase
the resources provided by federal and state governments to ARPA, while decreasing donor-based
investments, so that, after a period of 25 years, these governments will finance 100 percent of
ARPA costs without any support from the Transition Fund itself or any other donor funds (annex
7 describes the Transition Fund in more detail). The project will capitalize the Transition Fund in
three tranches in accordance with the following triggers: (a) declaration of project effectiveness
together with confirmation of the donor contributions received to date by the Transition Fund,(b) signature of at least one formal environmental compensation agreement, ‘Termo deCompromisso de Compensacao Ambiental’, benefitting the ARPA PAs, and (c) approval of thefunding proposal for the ARPA Transition Fund by the National Bank for Economic and Social
Development (Banco Nacional de Desenvolvimento Econômico e Social, BNDES).

27

7.
Building upon the achievements of the first and second phases of ARPA.16 in the context
of this project, the Transition Fund will support the actions detailed below.
8.
Creation of new PAs. This component aims to bring an additional 3 million ha of the
Amazon region under legal protection. To this end, it will support activities to: (a) identify new
areas to be designated for legal protection; (b) conduct the associated environmental,socioeconomic, and land tenure assessments as needed, including public consultations andworkshops; and (c) prepare the necessary regulatory framework and delimitation of theboundaries of the PAs in question.
9.
With previous project support from the GEF, Brazil has developed a robust process fordefining priority areas for biodiversity conservation in all major biomes. This process builds on
the KBA approach, expanding and deepening it through inclusion of among others, a wide rangeof complementary biological, socioeconomic, and political economy information. This approach
will be applied to the identification of new PAs to be created under ARPA, as well as drawing on
the Map of Priority Areas for the Conservation, Sustainable Use and Benefit-Sharing of theBrazilian Biodiversity,17 and the Protected Area Creation Guidebook. In accordance with these,
the Transition Fund will support the identification of potential PAs to be created, with special
consideration for the location of indigenous peoples, intensity of threats of deforestation and land
conversion, habitat connectivity, and potential to generate payment for ecosystem services
mechanisms.
10.
Following their identification, in line with the procedures for establishing PAs
determined by the SNUC,18 the Transition Fund will support the implementation of the studies
and public consultations required for their creation, including among others: (a) analysis ofenvironmental, socioeconomic, and land tenure issues in the selected priority areas; (b)preparation of an environmental and socioeconomic evaluation and public consultations,
including consultations with indigenous peoples; and (c) formal designation of PAs as specified
in the SNUC legislation followed by the drafting of and public consultation on a decree ofcreation for the PA. The initial analysis will emphasize the identification of unclaimed public
lands so as to minimize the necessity of land acquisition with governmental funds and to avoid
physical involuntary resettlement issues. This approach was successful in Phases I and II, andwill be replicated.
11.
For the project, new PAs will be defined as those created after July 30, 2017 for which:(a) environmental and socioeconomic studies have been finalized and public consultations
carried out, (b) there is no overlap with indigenous or quilombolas lands, and (c) no physicalresettlement of local population is required.
12.
Consolidation of PAs. To further enhance the effective management of the PA system,
this component will support the consolidation process of 60 million ha of ARPA supported PAs
16

ARPA is a federal program, established and implemented in partnership with state agencies, private institutions,and civil society to promote the conservation of PAs in the Amazon in perpetuity.
17
The 2007 version is currently being updated.
18
The procedures for establishing PAs determined by the SNUC are detailed in Brazilian Federal Law No.
9.985/2000, and Decree No. 4.340/2002.

28

(new and 114 pre-existing) in accordance with the prescribed benchmarks presented in tables 2.1
and 2.2. These benchmarks apply to ARPA as a whole and are used to assess consolidation
progress of and budget allocations to individual PAs. Activities are likely to include, among
others: (a) providing technical assistance to strengthen country capacity to manage theconsolidation process; (b) providing physical works, to include construction and rehabilitation of
structures such as visitor centers, office space, and guard posts; (c) preparing, implementing, andmonitoring PA management plans; (d) biodiversity monitoring; (e) implementing local andtraditional community activities (environmental education, leadership training, and strengthening
productive value chains); (f) promoting better coordination with and institutional strengtheningof local and traditional communities and organizations; and (g) providing training to relevant
staff in the management of PAs. Specific activities to be supported for each PA will be identifiedbiennially following the planning and budget allocation process of the ECI as described in annex
7.
Table 2.1. PA Consolidation Benchmarks - Grade 1
Indicator
Technical team of at least 2 employees working in
the PAManagement council officially createdManagement plan developed and discussed by the
managing council
Identifying the main points of access to the PA
Protection plan developed
Basic equipment provided for the PA operation
Update the information in the National Registry ofProtected Areas related to basic information,access to PA, human resources, and infrastructure
Government budget allocation disbursed

Verification Mechanism
Form completed in the Protected Areas Evaluation systema
and National Registry of Protected Areas
Form completed in the Protected Areas Evaluation system
Administrative Ruling for the creation of a managing
council under the managerial organization
Form completed in the Protected Areas Evaluation system
Administrative Ruling for publication of management plans
Form completed in the Protected Areas Evaluation system
Form completed in the Protected Areas Evaluation system
Technical inputs provided by the managerial organization
Form completed in the Protected Areas Evaluation systemand the National Registry of Protected Areas
Form completed in the Protected Areas Evaluation system
and National Registry of Protected Areas

Annual budget report approved by the ARPA Program
Committee
Note: a. Form completed in the Protected Areas Evaluation tool - FAUC/ARPA
Table 2.2. PA Consolidation Benchmarks - Grade 2
Indicator
Technical team with a minimum of 5 staff
members, working in the PA
Advisory Councils functioning and meeting
regularly

Identification of strategic issues for the PA, as
identified in the management plan
Demarcation points and priority corridors
identified, as in the management plan
Land tenure survey carried out

Verification Mechanism
Form completed in the Protected Areas Evaluation system
and National Registry of Protected Areas
Form completed in the Protected Areas Evaluation system
Minutes of Meetings of the Advisory Councils, certifying
the achievement of regular meetings in accordance with thebylawsForm completed in the Protected Areas Evaluation system
Form completed in the Protected Areas Evaluation system
Form completed in the Protected Areas Evaluation system

29

Signing of the Terms of Agreement withindigenous and local peoples residing in andaround PAs. Terms of Concessions for land-use
rights agreements for populations in sustainable
use PAs.

Form completed in the Protected Areas Evaluation system
Terms of Agreement or Concessions for land-use rights

Research projects implemented in PAs in
accordance with the management plan
Monitoring of at least one biodiversity or socialenvironmental indicator in each PA
Procurement of necessary equipment for each PA

Form completed in the Protected Areas Evaluation system

Basic facilities for the operation of each PA
established in accordance with the management
plan
National Registry of Protected Areas fully updated
Operating plan drafted based on the management
plan and discussed within each local Advisory
Council
Yearly budgets allocatedForm completed in the Protected Areas Evaluation system
Form completed in the Protected Areas Evaluation systemand the National Registry of Protected Areas
Form completed in the Protected Areas Evaluation system

National Registry of Protected Areas
Management plans for PA
Minutes from board meetings from Advisory Councils
Annual budget report from the managerial organization,
approved by the ARPA Program Committee

13.
PAs must meet all the benchmarks for consolidation of Grades 1 or 2 before becoming
independent of the initial consolidation support and eligible to receive maintenance support
through the Transition Fund.
14.
Maintenance of PAs. Core maintenance and functioning of fully consolidated PAs will
be supported through activities that include among others: (a) PA management and maintenance,(b) biodiversity monitoring and research, (c) review and implementation of PA management
plans, (d) surveillance and protection, (e) infrastructure maintenance, (f) maintenance andreplacement of PA equipment, (g) support for PA Council activities, and (h) training andcapacity building.
15.
ARPA coordination and management. This component will also support activities to:(a) strengthen coordination, management, and monitoring of ARPA; and (b) improve ARPA
communication. More specifically, with respect to coordination, management, and monitoring,
this component will seek to maintain and improve the efficiency and efficacy of ARPA’s
management system and participatory fora, by supporting activities to among others: (a)strengthen dialogue between all involved parties; (b) strengthen and coordinate the project’s
advisory and deliberative bodies (namely the Technical Forum, Managers Commission,
Scientific Advisory Panel, Program Committee, and CFT); and (c) supervise ARPA activity
implementation and financial execution based on monitoring reports, through direct verificationof information in the Cérebro system and field visits, and reporting to the executive instances.
Broader communication activities will also be supported with a view to raising awareness of theProgram and disseminating information on its achievements and lessons among international,
national and local stakeholders, and is expected to include activities such as participation ininternational and national meetings (for example, Biodiversity Conference of the Parties, World
Parks Congress, Brazilian Congress on Protected Areas, and so on), design and production ofcommunication materials (for example posters, brochures, videos, websites and so on).

30

16.
ARPA’s financial and logistics management will be managed by FUNBIO and aims at
ensuring the efficient management of the Transition Fund’s financial resources. To this end, thecomponent will support: (a) the satisfactory operation of the Transition Fund’s procurement
activities, (b) satisfactory operation of the Transition Fund’s FM, and (c) the development andimprovement of the innovative management systems used in ARPA Phases I and II, such as: (i)contas vinculadas that allow for more autonomy of PA administrators to spend small amounts of
their budgets; and (b) the Cérebro system used by FUNBIO and PA administrators to plan andmonitor PA budgets.
17.
Long-term sustainability of ARPA PAs. To ensure long-term sustainability for PAs,
this component will also support the process of transitioning PA financing from an almost
exclusively donor-based support to a long-term public financing mechanism. To this end, thiscomponent supports the provision of technical assistance to develop and implement strategies toraise the required additional donor revenue for the ARPA Transition Fund.
18.

Under this component, GEF financing will capitalize the Transition Fund.

Component 2. Integrated Landscape Management (GEF: US$19.00 million; parallel
cofinancing: US$117.36 million)
19.
This component aims to promote integrated landscape management in the Amazon
through complementary strategies that foster the recovery of native vegetation, develop
sustainable productive systems, strengthen productive value chains, and implement innovative
management arrangements between PAs. In line with the sectoral policies supported underComponent 3, activities will encourage the adoption of practices which reduce deforestation,
promote forest recovery and induce sustainable agro-silvo-pastoral practices with a view to both
improving local communities’ income and ecosystem connectivity. Component activities will
focus on priority locations in the states of Amazonas, Pará, Rondônia, and Acre, selected basedon the following criteria: (a) proximity to/overlap with main development axes (BR 163, BR
230, and BR 364); (b) areas with mosaics of sustainable use conservation units supported by
ARPA; (c) areas of greater deforestation pressure; and (d) complementarity with other projects.
Subcomponent 2.1: Development of Sustainable Production Systems
20.
Developing sustainable production systems requires both technical and planning
improvements, whereby more sustainable agro-silvo-pastoral techniques are deployed inaccordance with an integrative planning approach. Such good management practices need to be
applied equally in the sphere of agriculture, involving small, medium, and large farmers willingto develop and adopt low-impact production models, as well as in the context of harvesting
activities, with forest communities adopting good management practices.
21.
Technical assistance (public or private) is fundamental to achieving this paradigm shift,which seeks to promote the production of food and raw materials in harmony with theconservation of ecosystems and their services. Historically such technical assistance in Brazil haslargely focused on the dissemination of an agricultural production model that has paid limited
attention to environmental matters, without an appropriate environmental or integrated planningapproach. In addition, currently public federal technical assistance, as well as that for many31

states, is inadequate. No national body to coordinate such actions exists and state authorities lackthe human and financial resources to implement them.
22.
Strengthening technical assistance in the region will require that technicians are provided
with the skills to develop sustainable production systems, as well as to support and strengthensuch assistance. One strategy for dealing with this challenge is to develop skills in conjunction
with implementing demonstration units that serve as an example of good practice for farmers,
harvesters, and technicians.
23.
In this context, emphasis will be placed on encouraging adoption of sustainable agrosilvo-pastoral or extractive practices that assure conservation of forest patches in agriculturallandscapes, focusing on options that maintain and/or increase the productivity and deliver
multiple social and environmental benefits at the landscape level, particularly in the context ofaddressing food security and livelihood needs of beneficiary communities. Activities to besupported include, among others, (a) training for producers/harvesters and extension agents on
good harvesting, extraction, and product processing practices; (b) forest inventories andpreparation of management plans for the small-scale production of forest products; (c) training tofarmers and technicians on sustainable agricultural practices such as agroforestry and integrated
rural planning approaches at the farm level;19 (d) leadership training and institutional andcooperative capacity building; and (e) implementing demonstration plots for sustainableagricultural and sustainable forest harvesting practices.
Subcomponent 2.2: Consolidation of Productive Value Chains
24.
Successful integrated landscape management depends not only on improving agriculturaland harvesting systems, but also on strengthening associated productive value chains. Tackling
logistics, storage, and market aspects will be fundamental if products, be they agriculturally
cultivated or harvested directly from nature, are to be converted into income for the producers. In
some cases, the significant potential of local products cannot be realized due to poor market
access or a failure to add value to these products. Addressing these challenges will require a
mapping of product demand and processing infrastructures, definition of market range, anddetermination of local productive capacity and transport options (rivers, roads, railroads, and soon) based upon which a marketing strategy can be defined.
25.
To strengthen underdeveloped local productive chains, business plans will need to be
developed and implemented. For existing productive chains, actions will need to focus on scaling
up or improving social and environmental performance and/or productivity. In the latter,business and quality improvement plans could include certification schemes as well as theestablishment of sectoral accords and plans for strengthening the productive value chain as awhole.

19

The integrated rural planning approaches at the farm level are related to compliance with the Forest Code. Support
will be provided to farmers and technicians to map out and plan for appropriate spatial distribution of land uses
within the farm boundaries, for example, compulsory set aside areas of native vegetation (Áreas de Proteção
Ambiental and Reservas Legais), pasture land, agricultural land, and so on.

32

26.
Strengthened productive value chains and adding value to the diverse socio-biodiversity
products derived from Brazilian biodiversity will lead to the emergence of new income
generating options for farmers, harvesters, and communities, and in so doing create important
incentives for maintaining the standing forests. The project will also explore opportunities
related to the allocation of benefits associated with Law No. 13.123 (Law of Biodiversity)
together with the Secretariat for Biodiversity’s Department of Genetic Heritage, within the
MMA. To achieve these objectives, activities supported under the project will include among
others: (a) development of business plans for productive chains that still require them, focusing
on all stages from extraction, processing, and storage through to marketing activities, market
surveys, and logistics; (b) installation of processing units; (c) improvement of laboratories for
product testing, quality control, and certification; (d) fisheries agreements including management
plans for fisheries and their implementation; and (e) identification and fostering demand for nontimber and socio-biodiversity products.
27.
These actions will complement and explore synergies with activities planned under the
GEF’s ‘Sustainable, Accessible and Innovative Use of Biodiversity Resources, and AssociatedTraditional Knowledge in Promising Phytotherapic Value Chains in Brazil’ project. This project,
to be implemented by the MMA’s Department for Genetic Heritage (Departamento do
Patrimônio Genético), aims to promote both the demand and supply of herbal remedies derived
from genetic heritage and associated traditional knowledge, increasing the quality of life ofindigenous peoples and traditional peoples and communities and encouraging activities that use
genetic resources sustainably. It comprises three components focused on actions to: (a)strengthen local production chains such as the mapping of production chains and the purchase ofcapital goods for people and traditional communities; (b) accelerate bioprospecting andinnovation by building capacity and promoting partnerships between academia, business, andtraditional peoples and communities; and (c) promote the use of herbal remedies by the UnifiedHealth System through revision of the regulatory framework and financing of studies.
28.
The two projects have similar approaches but focus on different production chains. The
actions to be implemented will occur in complementary areas and the lessons learned will beshared to promote ongoing improvements in both projects.
Subcomponent 2.3: Improving the Value Chain for the Recovery of Native Vegetation
29.
Reestablishment of landscape connectivity will require inducing recovery of native
vegetation in strategic locations. To this end, activities under this component will seek to support
ecosystem restoration between and within PAs, thus improving the connectivity and resilience of
ecosystems and the services they provide, including biodiversity conservation, carbon storage,
and maintenance of the hydrological cycle. Successful large-scale and cost-effective restorationof native vegetation will depend upon the cost-effective implementation of a series of separate
but interlinked activities encompassing, among others, seed collection, seedling production,
establishment of nurseries, planting, and the development of plans to ensure sustainability, as
well as of well-structured product chains and affiliated services.
30.
Tackling these challenges will also require training for both extension agents andfarmers, as both have limited experience with native vegetation restoration techniques, despite
national legislative requirements to revegetate areas that have been cleared in contravention to33

the law. In addition to specific training, demonstration plots for both low-cost, low-labor naturalregeneration techniques as well as higher-cost, more labor-intensive techniques such as those
involving the active planting of seeds and seedlings will be supported. Other systems, such asagroforestry and silvo-pastoral systems, also provide options for increasing producer income
while simultaneously reestablishing ecosystem services.
31.
The above activities will be designed to align with those under Component 3 aimed atstrengthening implementation of recuperation policies and are expected to include, among
others, (a) analytical work to identify potential best practices for key value chains, including
reviewing cattle ranching policies and value chains to see if there are opportunities for mitigating
the impact of these activities on forest degradation and loss; (b) training for extension agents andrural producers in areas such as seed collection and improvement, seedling generation, andrestoration techniques; (c) support to nurseries including provision of equipment and inputs; (d)support to public laboratories in support of seed improvement for native species; (e) mapping ofseed and seedling suppliers; (f) vegetation recovery activities on public and private lands (forexample, regeneration, enrichment, planting, and agroforestry systems); and (g) field monitoringof restoration activities.
Subcomponent 2.4: Strengthening the Integrated Management of Protected Areas
32.
A significant area of the Amazon is under some form of legal protection (PAs). Until
three years ago, these areas were managed individually; however, a new integrated management
model for PAs is emerging, grouping different PAs in a single management arrangement. Thisnew model encourages management synergies between PAs, increasing physical and humanresource efficiency, and facilitating the development of strategies for the formation of mosaics
and ecological corridors.
33.
In accordance with their specific objectives and geographical proximity,
PAs can be grouped in two ways: (a) an Integrated Management Nucleus (Núcleo de Gestão
Integrada, NGI) or (b) a Mutual Support Arrangement (Arranjos de Apoio Mútuo, APM). Within
NGIs, federal PAs are planned and managed from a regional perspective, structuring the policies
and actions for biodiversity conservation and sustainable use accordingly. NGIs constitute a
formal restructuring of PA institutional arrangements, whereby contiguous or nearby
conservation units with complementary or similar management objectives are grouped andmanaged from a macro-territorial perspective. In contrast, APMs group federal PAs from theperspective of improving their capacity to achieve their individual conservation objectives. The
focus is on identifying and implementing joint actions that increase general administrative andmanagerial efficiency and effectiveness such as sharing offices and equipment and integrating
surveillance activities. A more informal or temporary institutional arrangement, the APMs can berevised or adapted when these shared actions are no longer deemed efficient or necessary.
34.
To support this process, a series of activities to complement those described underComponent 1 are planned, including: (a) preparation and/or revision of PA management plans aswell as their implementation; (b) improvements in surveillance infrastructure (guard posts andsupport stations); (c) meetings of and between PA management councils; (d) establishment andimplementation of NGIs and APMs, including elaboration of action plans, acquisition ofequipment, and training of joint councils; (e) training of managers to disseminate these new34

management models; (f) preparation and dissemination of material on the tourism potential ofPAs; (g) training and capacity building for tourism agents on community-based tourism andsustainable use PAs with tourism potential; (h) development of assessments and protocols forbiodiversity monitoring in line with PA and integrated landscape management conservation
strategies; and (j) biodiversity monitoring.
35.
In addition to the above, activities under this subcomponent will also seek to advancecompliance with Ramsar Convention guidelines, supporting the recognition and implementationof new areas of international importance for conservation and sustainable use of wetlands(Ramsar sites). Additionally, wetland connectivity will be promoted through the establishment of‘wetland corridors’ seeking to establish linkages between those existing PAs which encompass
globally significant wetlands. To this end, the project will support, among others: (a) studies forthe establishment and implementation of Ramsar sites; and (b) innovative management
mechanisms.
36.
Under this component GEF financing will cover, among others, consultancy services,non-consultancy services, infrastructure and rehabilitation, goods and equipment, public
consultations, workshops and training, and salaries and related benefits costs for CI-Brazil
employees as per the procedures defined in the POM; and operating costs (including travel andper diems).
Component 3. Policies for Protection and Recovery of Native Vegetation (GEF: US$7.33
million; parallel cofinancing: US$46.33 million)
37.
This component focuses on strengthening the capacity of national and state governments
to develop and implement sectoral policies and financial mechanisms to reduce deforestation andpromote forest recovery. It particularly focuses on the Law for Protection of Native Vegetation(Law No. 12.651/2012); the National Policy for the Recovery of Native Vegetation (Decree No.
8972/2017); the Law for the Management of Public Forests (Law No. 11.284/2006); and selectedstate policies. Activities focus on three key areas: (a) strengthening implementation of key legal
instruments for ensuring forest recovery, (b) improving capacity for monitoring forest
restoration, and (c) improving financial incentives for farmers to invest in restoration activities.
Subcomponent 3.1: Strengthening Implementation of Legal Instruments
38.
The project will focus principally on strengthening implementation of the legal
instruments detailed in the following paragraphs.
39.
Law for Protection of Native Vegetation (Law No. 12.651/2012). Three key
instruments for achieving the forest recovery objectives of the Law No. 12.651/2012 are the
CAR, the related PRA, and the PRADA. The CAR is an electronic environmental rural registermandatory for all properties in Brazil. The database provides strategic information forcontrolling, monitoring, and combating deforestation of forests and other forms of vegetation
native to Brazil; the management of native vegetation recovery; and for environmental andeconomic planning of rural properties. Based on the referred, rural properties that do not meetthe legal requirements of the minimum compulsory set aside areas of native vegetation may
choose to join the PRA to receive governmental support and undertake measures to restore the35required vegetation in situ or, in the case of RLs, compensate for deficits outside the property(that is, ex situ). The legal liabilities of the property can be addressed with instruments such as
the PRADA, whereby the person responsible for the property undertakes maintenance andrecovery of the compulsory set aside areas of native vegetation directly within their property.
These environmental recovery plans should indicate the methods, techniques, and time lines forrestoration to be conducted. The owners of properties also have other alternatives such as tocompensate indirectly for the deficit of compulsory set aside areas of native vegetation ex situ
through instruments such as servitude contracts, acquisition of areas occupied with native
vegetation, or purchase of Environmental Reserve Quotas (Cotas de Reserva Ambiental, CRA),
all in the same biogeographical region.
40.
The registration deadline for all properties is December 2017, and according to SFB data,
the process is well advanced in the states of the Amazon. Once registered, these records areanalyzed and validated by state environmental agencies. Early reviews indicate that a significant
number of these property registrations will need to be rectified before being validated. To
optimize this process, gaps will need to be addressed, such as the need to train managers,
assessing the need for further automation of analysis through the development of technologicaltools over and above those already developed by the SFB, and the design of legal operating
arrangements that increase the capacity of the responsible bodies to analyze cadastral entries. To
this end, the project will support activities such as: (a) contracting a team to carry out theseanalyses together with the responsible state bodies, (b) training of state bodies to carry out theanalyses, and (c) customization of analysis modules (online platforms) to adapt them to thereality of each state and increase efficiency of the process.
41.
In addition to analyzing and validating the CAR, states are also responsible for regulating
and implementing the PRA within their jurisdiction. Some states have already published PRA
regulations but others are still in the process of developing their implementation strategy andregulatory framework. The SFB is finalizing a federal model within SICAR, to serve as a basicmodel for state action. Nevertheless, some states are choosing to customize the PRA module
designed by the SFB, adapting it to their regional context. Landowners who participate in the
PRA are eligible to receive subsidies for the vegetation recovery process or to be compensatedfor their environmental assets. Participation in the PRA requires that the landowner presents
either a PRADA or a proposal for compensation of their environmental liabilities in another area
within the same biome through the CRA. Along with PRA implementation, states are also
responsible for developing and implementing associated monitoring mechanisms, although thistheme still needs to be developed in more detail.
42.
One of the main bottlenecks with regard to preparation of PRADAs is the lack oftechnical and scientific knowledge, among both public managers and the farmers themselves,
with respect to restoration methodologies, most suitable species to use, minimum number ofrequired species, minimum active intervention time needed to subsequently allow for the area tocontinue the recovery process itself, indicators for monitoring the phases and success of therestoration activities, and so on. Furthermore, as noted under Component 2, even technicalassistants and rural extension agents lack an integrated knowledge framework thatsimultaneously considers the environmental and agronomic characteristics of the property inquestion, the different use options for the legal reserves, and the recovery of degraded areas. In
this context, the project will support different activities related to PRADAs, including, among36

others, (a) technical training for state environmental personnel and contracted agents on theelaboration of PRADAs, (b) technical support to the state teams responsible for the elaborationof PRADAs in the field, (c) field validation of the decision trees to facilitate PRADA
elaboration, (d) studies to develop analytical and monitoring mechanism for PRADA
implementation, and (e) support for the development of platforms and other dissemination tools.
43.
National Policy for Recovery of Native Vegetation (Decree No. 8.972/2017). In
addition to efforts to operationalize SICAR-related instruments, the Federal Government has
sought to strengthen the legal framework supporting its policy for the recovery of native
vegetation. During the 13th Conference of the Parties of the CBD, held in December 2016, theGOB made a voluntary commitment with respect to two international initiatives to restore forest
landscapes, namely the Bonn Challenge and the 20 × 20 Initiative, to restore, reforest, and induce
natural regeneration in 12 million ha of forests by 2030 for multiple uses. These commitments
further reinforce the measures identified by Brazil in September 2016 with respect to theimplementation of its NDC. Additionally, during the CBD, the goals of implementing integrated
agro-silvo-pastoral systems in 5 million ha by 2030 and recovering 5 million ha of degradedpastures by 2020 were defined.
44.
In the face of the extent and diversity of ecosystems and landscapes to be recovered, theFederal Government launched PROVEG (Decree No. 8.972/2017). PROVEG aims to articulate,integrate, and promote policies, programs and actions to foster the recovery of forests and otherforms of native vegetation and boost the environmental regularization of Brazilian ruralproperties for an area of at least 12 million ha by December 31, 2030.
45.
The main implementation instrument for PROVEG will be PLANAVEG. A preliminary
version of PLANAVEG was drafted in 2014 by the MMA with the support of various partners,
and it constitutes an important starting point for encouraging discussion with various Brazilian
stakeholders on the recovery of native vegetation. Based on this preliminary version,
PLANAVEG will be established by a joint Ministerial Ordinance of the ministers for theenvironment; agriculture, livestock, and supply; and education; together with the Presidency of
the Federative Republic of Brazil.
46.
PROVEG also established the National Commission for the Recovery of Native
Vegetation (Comissão Nacional para Recuperação da Vegetação Nativa, CONAVEG),
composed of members of the Government and civil society, with the mandate to coordinate theimplementation and M&E of PROVEG and PLANAVEG, and to interact with sectors, entities
and state, district, and municipal agencies on mechanisms for PROVEG and PLANAVEG
management and implementation.
47.
In May 2017 civil society representatives launched the ‘Alliance for the Restoration of
the Amazon’. This initiative, of which the MMA is a partner, brings together institutions fromvarious sectors of society such as NGOs, research institutions, Government, and the private
sector and aims to expand the scale of restoration of the Brazilian Amazon, as well as promote
integration between different actions and cooperation between the multiple actors engaged in thesubject.

37

48.
In a context in which diverse initiatives in support of vegetation recovery policies arebeing consolidated, the project’s support will play a critical role in reinforcing PROVEG and
PLANAVEG. Project activities include, among others, (a) implementation of PLANAVEG
strategies in the Amazon, (b) M&E of PLANAVEG implementation, and (c) operationalizationof CONAVEG. In addition, activities to support the implementation of the ‘Alliance for the
Restoration of the Amazon’ will also be supported, including, among others, priority studies tostrengthen restoration activities in the Amazon.
49.
Law for the Management of Public Forests (Law No. 11.284/2006). Another key
strategic instrument for stimulating the forest economy and maintenance of the standing forest is
the granting of public forest concessions. This instrument was created in 2006 by Law No.
11.284/2006. The forest concession policy allows companies and communities to manage publicforests to extract timber and NTFPs and offer tourism services. It constitutes an essential element
for stimulating sustainable economic activities as well as to combat deforestation and land
grabbing. Despite the varied social, economic, and environmental benefits derived from forest
concessions, so far, only a few public forests are under concessions and sustainable forest
management. Brazil has about 16 million ha of National Forests (Floresta Nacional, Flonas),
divided into 67 PAs, 34 of which are in the Amazon and correspond to about 99 percent of thetotal area of the Flonas in the country. At present, only 17 forest concession contracts are inplace. These are distributed across 6 Flonas and correspond to little more than 1 million ha. Of
the 34 existing Flonas in the Amazon, 20 have approved management plans, 7 have management
plans under preparation, while the remaining 7 have yet to start the preparation work. Forest
concessions can only be granted for Flonas with a management plan and that are registered in the
National Register of Public Forests and identified in the National Forest Concession Plan (Plano
Anual de Outorga Florestal). Moreover, all public calls for forest concessions must be drawn up
based on market information, requiring additional studies to be completed over and above thoserequired for the preparation of the management plan.
50.
All these steps hinder the granting of new public forest concessions in Brazil. Within thiscontext, it is strategic to invest in the development of management plans for additional Flonas, aswell as to support the studies needed to enable the concession of those Flonas that already havemanagement plans. Another important factor that limits the increase in and expansion of forest
concessions in Brazil is the economic viability of the wood products derived from theseconcessions as they compete directly with wood products from the illegal market. Despite
national legislation requiring documentation to prove the origin of the wood, the country stilllacks the modern systems of traceability for wood necessary to automate the monitoring andcertification processes.
51.
In addition, although large areas are being conserved in public forests in the Amazon,some of these areas are degraded or are in the process of degradation. In these cases, the issuanceof reforestation concessions for degraded public forestland could be an interesting way topromote forest recovery while simultaneously generating income as, under such an arrangement,
the cost of land is not borne by the producer since the production area is public and not private.
Though promising, as of now, no models or in-depth studies have been prepared to explore theeconomic feasibility of this arrangement.

38

52.
In this context, the project will support: (a) the elaboration of management plans for PAs
with concession potential; (b) specific viability studies for concessions (timber pricing,production inventory, harvesting logistics, social economic impacts, and so on); (c) training forparabotanists to improve forest inventories; (d) the establishment of mechanisms for monitoring
and traceability of wood, through among others, the development of chips and barcodes, with aview to controlling the trade in illegal timber; and (e) the development and implementation ofmodels for reforestation concessions in degraded public forests.
53.
State policies. In addition to federal policies, it is also essential to strengthen statepolicies for biodiversity conservation, sustainable use, ecosystem recovery, and territorial
management, because states and municipalities have considerable autonomy, including regarding
environmental affairs (Complementary Law No. 140/2011). State policies can respond to local
contextual particularities in ways that federal policies cannot due to their nationwide nature.
Thus, the combined implementation of both federal and state policies in a given area can be
strategically important for ensuring the conservation and sustainable use of biodiversity. To thisend, the project will support several specific state policies which are under development, forexample: (a) the Socio-Biodiversity Program of Acre, (b) the Integrated Monitoring andEnvironmental Management Center of Acre, (c) the Green Municipalities Program of Pará, and(d) the Forest Concession Policies of the States of Rondônia and Amazonas, as well as
supporting instruments and fora for management and territorial planning (municipal
environmental committees, water basin committees, environmental secretariat fora). Morespecifically, activities include, among others, (a) feasibility studies of potential new policies, (b)studies to strengthen implementation of existing policies, (c) policy M&E, and (d) public
consultation and validation.
Subcomponent 3.2: Improving Monitoring of Forest Restoration
54.
The ability to monitor forest restoration over time is essential to the design andimplementation of landscape-level planning processes as well as for assessing the effectivenessof strategies and instruments for the recovery of native vegetation. The TerraClass Amazonia
initiative has been producing use and coverage maps of the Legal Amazon, permitting theevaluation of regional dynamics. Mapping conducted under TerraClass Amazonia identifies 12classes of land use, one of which is ‘secondary vegetation.’ This class provides important
information for the monitoring of forest restoration, indicating the regions where forest
regeneration and formation of secondary forests are occurring. The methodology used in
TerraClass Amazonia can be refined in support of a continuous and systematic monitoring
system for tracking forest restoration.
55.
The development of a restoration monitoring system, integrated with SICAR, will beessential for monitoring vegetative restoration in rural properties (by sampling), and will alsoenable tracking of the implementation efficiency of the Law for the Protection of Native
Vegetation. However, development and implementation of this monitoring system depends on
overcoming existing knowledge gaps, such as distinguishing the different stages of succession ofvegetation, differentiating between forest monocultures and recovery of native vegetation,differentiating between areas dominated by invasive alien plants and areas in early stages ofrestoration, and definition of baselines. To fill these gaps, activities under this component willseek to build technical and institutional capacity to identify degraded forest landscapes and39

monitor forest restoration through support for the design and implementation of a national spatialplanning and monitoring platform to support decision making for native vegetation recovery in
the Amazon. This platform will be integrated in the existing PMABB instituted under Portaria
No. 365/2015. In addition, support for new mapping activities in the context of TerraClass
Amazônia will be essential to ensure continuity in the evaluation of the land use and land cover
dynamics of the Amazon.
56.
Activities supported under this subcomponent include, among others, (a) training of the
PMABB actors; (b) strengthening the institutional capacity of the agencies responsible forvegetation monitoring; (c) workshops and technical studies to fill existing knowledge gaps; (d)improving monitoring and methodologies for native vegetation recuperation; (e) acquisition ofequipment; and (f) support for the creation and implementation of a national system formonitoring native vegetation recovery, integrated in SICAR.
Subcomponent 3.3: Improving Financial Incentives for Long-Term Restoration Activities
57.
The project will also seek to adapt the access rules to existing financial incentive
mechanisms such as the Sector Plan for Mitigation and Adaptation to Climate Change for theConsolidation of a Low Carbon Economy in Agriculture (Plano Setorial de Mitigação e deAdaptação às Mudanças Climáticas para a Consolidação de uma Economia de Baixa Emissão
de Carbono na Agricultura, ABC Plan)20 of the Ministry of Agriculture, Livestock and Food
Supply (Ministério da Agricultura, Pecuária e Abastecimento, MAPA), National Program forStrengthening Family Agriculture (Programa Nacional de Fortalecimento da Agricultura
Familiar, PRONAF)21 of the Special Secretariat for Family Agriculture and Agricultural
Development (Secretaria Especial de Agricultura Familiar e Desenvolvimento Agrário, MDSA);BNDES’ line of credit for forest-related investments (BNDES Florestal)22; and others to makethem more attractive to farmers, thus increasing their uptake and investment in restoration
activities. To achieve this, the project will seek to bring together key players and, in parallel,
support: (a) meetings and workshops to discuss the topic; and (b) targeted studies and research toenable decision making on financial instruments in support of producers. The workshops andstudies should provide the diagnosis required for the identification of the key issues to beaddressed, as well as the priority regions, sectors, or production chains.
58.
Activities under this component will also seek to identify and establish other types offinancial mechanisms to boost markets for products and services (for example, wood, NTFPs,
and watershed protection) generated by lands with recovered native vegetation. In so doing, newand improved revenue-generating opportunities will be created for landowners, providing an
20

The ABC Plan is one of the sectoral plans elaborated in accordance with Article 3 of Decree No. 7.390/2010. It
focuses on the organization and planning of the actions to be taken to adopt the sustainable production technologies,
selected with the objective of responding to the commitments of reduction of GHG emissions in the agricultural
sector assumed by the country.
21
Pronaf finances individual or collective projects that generate income for family farmers and land reform settlers.
The program has the lowest interest rates for rural financing, in addition to the lowest default among the country's
credit systems
22
The National Bank for Economic and Social Development’s (Banco Nacional de Desenvolvimento Econômico e
Social –BNDES’) line of project financing from 1 million Brazilian reais for reforestation, conservation, and forest
recovery as well as the sustainable use of native areas.

40

additional incentive for landowners to engage in the restoration activities required under Law
12.651/2012. One example of an innovative mechanism under discussion and to be supported by
the project, is a means by which administrative fines collected for environmental infractions canbe used to finance actions for the recovery of native vegetation. The project will support thestudies and consultancies necessary to define an appropriate governance and management
structure for this innovative mechanism, which is being promoted by the Brazilian Institute of
the Environment and Renewable Natural Resources (Instituto Brasileiro do Meio Ambiente e dos
Recursos Naturais Renováveis, IBAMA), the agency responsible for federal-level environmental
monitoring. It is anticipated that this model, once defined, could serve as a model for developing
similar arrangements at the state level.
59.
Other areas of intervention include, among others, the introduction of financial
mechanisms such as new and improved loans, forest bonds and green bonds, restoration funds,
and tax exemptions to encourage native vegetation recovery. With respect to these, the MMA’s
interventions will focus on fostering political and institutional linkages, catalyzing discussions
and encouraging partners to pursue these avenues, as these financial mechanisms are managed byother institutions (including BNDES, MAPA, Ministry of Finance, IBAMA, MDSA, andNational Environment Fund [Fundo Nacional do Meio Ambiente]).
60.
Under this component GEF financing will cover, among others, consultancy services,non-consultancy services, infrastructure and rehabilitation, goods and equipment, public
consultations, workshops and training, and salaries and related benefits costs for CI-Brazil
employees as per the procedures defined in the POM, and operating costs (including travel andper diems).
Component 4. Capacity Building, Cooperation, and Project Coordination (GEF: US$4.00
million; parallel cofinancing: US$25.09 million)
61.
This component will support activities to improve Brazilian stakeholder implementation
capacity and collaboration within and across sectors and to promote effective and efficient
project implementation, and at the same time will help advance national compliance withinternational commitments.
Subcomponent 4.1: Capacity Building and Cooperation
62.
The component will be designed to link directly to the regional Amazon Coordination
Technical Assistance (P159233), which aims to facilitate the exchange of knowledge andexperience between the four national child projects in Brazil, Colombia, and Peru, so as tostrengthen the impact of national, regional, and international processes and policies committed to
avoiding deforestation in the Amazon and promoting sustainable landscape management.
Regional knowledge exchange and learning supported under the regional Amazon Coordination
Technical Assistance will be directly linked to the implementation of activities and challenges
encountered on the ground by the four national projects and will target stakeholders at all levelsin the three countries. This practical and demand-driven approach will ensure that problems are
identified and focused solutions deployed on time. Activities financed under this subcomponentof the Brazil-ASL Project will support the participation of Brazilian stakeholders in the regional
program including, among others, participation in coordination meetings, knowledge exchange
41events, specialized workshops, on-the-job training, field visits, and study tours. This
subcomponent will also, as relevant, support actions to improve management of environmental
issues in collaboration with official counterparts in Peru and Colombia.
63.
At the national level, project implementation capacity and impact will be enhanced
through cross-sectoral and cross stakeholder capacity development. Capacity-building activities
will seek to identify and reinforce synergies between local, state, and federal stakeholders,
particularly in the biodiversity, climate change, forestry, and agriculture sectors. These efforts
will focus primarily on stakeholders in the areas where project activities will be implemented.
Initial areas of focus may include, among others, environmental assessment, restoration, andsustainable management. Training materials and structured lectures will be developed such thatthey can be readily adapted to local needs so as to better engage local stakeholders andmainstream project results. Gender, social identity issues, and traditional knowledge areconsidered critical to the integration of local communities and indigenous peoples and will beconsidered during preparation of this and all other project components. In addition to developing
and implementing the abovementioned training activities, capacity building may also include
short international internships in sectors/technical areas where there are gaps and/or Brazilian
experience lags behind that of other countries.
64.
To further encourage and strengthen cross-sector collaboration, project capacity-building
activities will target the financial groups, trade organizations, cooperatives, and all three levels ofgovernment actors along those forest product value chains which foster reforestation and/or linkto timber and non-timber sustainable production in the region. Furthermore, seminars will be
carried out under this subcomponent, to support the scaling up of experiences and promote
integration in national policies.
65.
Activities under this subcomponent will also seek to document and systematize thelessons learned at regional and national levels through project implementation, particularly thoserelated to institutional strengthening and regional integration. These lessons will serve to both:(a) improve project implementation through adaptive management; and (b) inform future efforts
to expand and deepen these regional approaches to integrated management of the Amazon
biome.
Sub-component 4.2 Project Coordination
66.
This component aims to ensure implementation efficiency and efficacy for the project asa whole through the establishment of a satisfactory management system and the maintenance ofthe project’s participatory structures. To this end, it will support the coordination,communication, management, and monitoring of implementation across all components
including, among others, (a) the costs associated with the day-to-day management andsupervision of overall project implementation, to include: (i) the operation of the PCU by the
MMA, responsible for ensuring project implementation and monitoring; and (ii) the project
execution unit in CI-Brazil (PEU-CI-Brazil), responsible for the satisfactory management ofproject funds and procurement processes as well as specific technical and M&E activities underComponents 2, 3, and 4; (b) the establishment and functioning of the various project interinstitutional structures including the: (i) POC, the project decision-making body comprising eachof the key executing agencies; (ii) multi-stakeholder Brazil-ASL AC, comprising the42

Government, private sector, NGO, and civil society, responsible for technical, strategic, andpolicy guidance and advice; and (iii) ad hoc Technical Working Groups focused on specificissues as necessary; and (c) preparation and implementation of an overarching projectcommunication strategy.
67.
Under this component GEF financing will cover, among others, consultancy services,non-consultancy services, infrastructure and rehabilitation, goods and equipment, public
consultations, workshops and training, and salaries and related benefits costs for CI-Brazil
employees as per the procedures defined in the POM, and operating costs (including travel andper diems).

43Annex 3: Implementation Arrangements
BRAZIL: Amazon Sustainable Landscapes Project
Project Institutional and Implementation Arrangements
I. Overview and Management Arrangements
1.
Overview/executing partners. Overall responsibility for the project lies with the SBio at
the MMA, however, its day-to-day implementation will be undertaken in partnership with various
agencies, as follows:(a) Coordination and supervision(i)

SBio at MMA. The lead government implementing agency, housing the PCU
responsible for coordination, supervision, and monitoring of project
implementation.

(b) Technical implementation(i)

ICMBio. A government agency responsible for management of federal PAs andthreatened species in Brazil.

(ii) SFB. A government agency responsible for forest management andimplementation of the Forest Code.
(iii) State environmental agencies, where appropriate, according to the state PAs
and forestry-related activities supported by the project, responsible for the
implementation of project activities in state areas under their jurisdiction.
(c) Grant recipients(i)

FUNBIO is a nonprofit private entity, qualified by the Ministry of Justice ofBrazil as of public interest since 2004. FUNBIO operates under the rules ofprivate law, especially the Brazilian Civil Code.

(ii) CI-Brazil is a Brazilian nonprofit organization created in 1990 and established
as a civil association under the laws of the Federative Republic of Brazil. CIBrazil is a legally independent affiliate of Conservation International Foundation
based in Arlington, VA, USA. Its mission is to promote human well-being andstrengthen society to responsibly and sustainably use and conserve nature. CIBrazil was chosen by the Government, based on its track record in land
management, restoration projects and for being a leader of the Amazon
Restoration Alliance. CI-Brazil is considered as an implementing entity for the
purposes of this project.
2.
The working relationships and roles and responsibilities of each of the project’s key
executing agencies and institutional structures are summarized in sections II and III below and44

will be spelled out in detail in the POM, as well as in a series of Cooperation Agreements to besigned between the executing partners.
3.
Cofinancing partners. The project will be financed by a US$60.33 million GEF grantand US$373.78 million in parallel cofinancing provided by: (a) the Government of Brazil (GOB)(federal and state); (b) the ARPA Transition Fund (with contributions from Kreditanstalt fur
Wiederaufbau, KfW; WWF-Brasil, Fundo Mundial para a Natureza; World Wildlife Fund for
Nature, WWF-US; Gordon and Betty Moore Foundation; Linden Trust for Conservation;
Margaret A. Cargill Foundation; Anglo American Minerio de Ferro Brasil, S.A; Natura; O
Boticário; and the original Protected Areas Fund ([Fundo de Áreas Protegidas, FAP], excluding
GEF contributions); and (c) CI-Brazil. A summary description of the source and form ofcofinancing is presented in table 3.1.
Table 3.1. Summary of Project Cofinancing
Name of Cofinancer

Sources of Cofinancing

Cofinancing Amount (US$)

MMA- SECEX

Recipient Government

97,743,401

ICMBioRecipient Government

26,092,518

SFB

Recipient Government

8,968,692

State of Acre Environmental Agency
State of Amazonas Environmental
AgencyState of Pará Environmental Agency
State of Rondônia Environmental
AgencyFUNBIO (Transition Fund)

Recipient Government

22,978,723

Recipient Government

56,487,215

Recipient Government

31,812,353

Recipient Government

16,869,652

CSO

104,613,044

CI-Brazil

CSO

8,219,049

Total
373,784,646
Note: SECEX = Executive Secretariat of the Ministry of Environment (Secretaria Executiva/MMA)

4.
Financial arrangements. The GOB has selected two agencies, FUNBIO and CI-Brazil,
to be the recipients of the GEF grant resources for Component 1 and for Components 2, 3, and 4,
respectively. They will be in charge of the FM and procurement activities of their respective
grant, ensuring that all project entities carry out their responsibilities for the implementation of
the project. CI-Brazil will additionally directly implement specific technical and M&E activities
under Components 2, 3, and 4. To this end, the World Bank will sign individual grant agreementswith FUNBIO and CI-Brazil (GEF ‘Grant Agreements’). The two GEF Grant Agreements set
forth the specific terms and agreements for grant management and project implementation, andinclude the following responsibilities, among others, (a) procuring goods and contracting services
needed for project execution with grant resources, (b) carrying out disbursements and thefinancial execution and accounting of the project, and (c) providing technical support to carry out
the project activities. The Coordination Agreements detail the relationship, roles, responsibilities,
and coordination arrangements for and between each of the recipients and the MMA.

45

Cooperation Agreements23 will be signed, as appropriate, (a) between FUNBIO andICMBio and/or the state environmental agencies with respect to the implementation of activities
in and around federal and state PAs (Component 1); (b) between CI-Brazil and ICMBio and SFB
and/or the state environmental agencies with respect to the implementation of forest management
activities (Components 2 and 3), respectively, as well as for training activities (Component 4).
These legal agreements are expected to be developed along similar lines to those governing
ARPA Phases I and II projects (P058503 and P114810) and the Marine Protected Areas (GEF
MAR) project (P128968), and will define each institution's responsibilities and obligations under
the project.

5.

6.
Legal framework: The following legal agreements, national legislation, and otherdocuments are of relevance for project implementation:(a)Grant Agreements(i)

Between the World Bank and FUNBIO (‘FUNBIO Grant Agreement’)(ii) Between the World Bank and CI-Brazil (‘CI-Brazil Grant Agreement’)(b)

Coordination Agreements(i)

Between the MMA and FUNBIO(ii) Between the MMA and CI-Brazil(c)

Cooperation Agreements(i)

Between ICMBio and FUNBIO, attended by the MMA(ii) Between ICMBio and CI-Brazil, attended by the MMA(iii) Between the SFB and CI-Brazil, attended by the MMA(iv) Between state environmental agencies and FUNBIO, where applicable, attended
by the MMA(v) Between state environmental agencies and CI-Brazil, where applicable, attended
by the MMA(d)Applicable national legislation, including: Law No. 9.985/2000,24 Decree No.
4.340/2002,25 Decree No. 4.339/2002,26 Law No. 11.284/2006,27 Decree No.

23

Recent changes in Brazilian legislation related to CSOs (Law No.13.204/2015) establishes that the legal
instruments governing relations between the government and CSOs are to be called ‘Cooperation Agreements.’
Note: there is no transfer of GEF funds under this type of agreement.
24
Establishes the SNUC and makes other provisions.
25
Regulates articles of Law No. 9.985/2000, concerning the SNUC, and makes other provisions.
26
Establishes principles and guidelines for the implementation of the Biodiversity National Policy.

46

5.746/2006,28 Law No. 12.651/2012,29 Decree No. 7.830/2012,30 Decree No.
8.235/2014,31 Law No. 13.019/2014,32 Decree No. 8.505/2015,33 and Decree No.
8.972/201734(i)

Legal Charter and Operations Manual of FUNBIO(ii) Legal Charter and Operations Manual of CI-Brazil
7.
Effectiveness conditions. To this end, the following are the required conditions for
effectiveness of the GEF Grant Agreements:(a) The execution and delivery of the FUNBIO Grant Agreement on behalf of
FUNBIO has been duly authorized or ratified by all necessary governmental and
FUNBIO corporate actors;(b) The execution and delivery of the CI-Brazil Grant Agreement on behalf of CI-Brazil
has been duly authorized or ratified by all necessary governmental and CI-Brazil
corporate actors;(c) CI-Brazil has retained a procurement specialist under terms of reference acceptable
to the World Bank;(d) The Coordination Agreements and the Cooperation Agreements have been executedon behalf of the parties;(e) The POMs, in form and substance satisfactory to the World Bank, have been
prepared and adopted by the recipients and MMA.
(f) Legal opinions from each of the recipients.
8.

All of the above conditions must be met for the project to be deemed effective.

27

Addresses management of public forests for sustainable production: establishes the SFB within the MMA; creates
the National Forest Development Fund (Fundo Nacional de Desenvolvimento Florestal); changes Laws
10.683/2003, 5.868/1972, 9.605/1998, 4.771/1965, 6.938/1981, and 6.015/1973; and makes other provisions.
28
Regulates Article 21 of Law No. 9.985/2000, on the SNUC.
29
Addresses the protection of native vegetation, changes Laws No. 6.938/1981, No. 9.393/1996, and No.
11.428/2006; revokes Laws No. 4.771/1965 and No. 7.754/1989 and the Provisional Measure No. 2.116-67/2001;
and makes other provisions.
30
Addresses SICAR and CAR, establishes general norms to the PRAs, matter of Law No. 12.651/2012 and makesother provisions.
31
Establishes complementary general norms to the PRAs of the states and federal districts, matter of Decree No.
7.830/2012, establishes the Program More Environment Brazil (Programa Mais Ambiente Brasil), and makes otherprovisions.
32
Establishes the legal regime for partnerships between public administration and CSOs to achieve public andreciprocal interests, by carrying out activities or projects in accordance with collaborative work plans anddevelopment or cooperation agreements; sets guidelines for fostering, collaborating, and cooperating with CSOs;
and changes Laws No. 8.429/1992, and No. 9.790/1999.
33
Addresses ARPA, established by the MMA.
34
Establishes PLANAVEG.

47

II. Organizational Structure and Roles and Responsibilities

9.

Overview. The SBio at the MMA has overarching policy-level responsibility for carryingout the overall institutional coordination required to implement project activities, while the SBio’s
Department of Protected Areas (Departamento de Áreas Protegidas) and Department of
Ecosystems Conservation (Departamento de Conservação de Ecossistemas) are charged withleading project implementation. A multi-institutional POC, an executive and decision-making
body chaired by the MMA, will oversee project implementation. The POC will be directly
supported by (a) a PCU based in the MMA/SBio, comprising the ARPA and the sustainable
landscapes teams and responsible for the day-to-day coordination and supervision of
implementation activities for the project as a whole; (b) focal points in each of the implementing
agencies; (c) a PEU based in FUNBIO (PEU-FUNBIO), responsible for day-to-day FM andprocurement activities for Component 1; and (d) a PEU based in CI-Brazil (PEU-CI-Brazil),
responsible for day-to-day FM and procurement activities for Components 2, 3, and 4.
Additionally, with respect to Component 1, the POC will work with the ARPA Program
Committee and the CFT, which are responsible for overseeing the implementation and financingof ARPA, respectively.
10.
The POM will detail the roles and responsibilities of each of these institutional structures
as well as the agencies involved in project implementation. A summary is presented below.
11.
Brazil-ASL AC. An advisory body comprising representatives of key governmental andnongovernmental stakeholders will be established with a view to providing policy-level andstrategic recommendations, particularly in relation to integrated landscape management
approaches, promoting linkages to relevant sectoral policies and programs, and resolving
intersectoral debates. The Brazil-ASL AC may also provide technical recommendations such as
proposing criteria, guidelines, elements, and activities for inclusion in the project’s operating plan
and will follow the monitoring of project targets and indicators. The Brazil-ASL AC will meet atleast once a year, and more frequently on an ad hoc basis as needed. It will be chaired by the
SBio/MMA, and will comprise the following 18 members:

One representative of SECEX/MMA

One representative of the Secretariat for Climate Change and Forests (Secretaria deMudança do Clima e Florestas, SMCF)/MMA

One representative of the Secretariat of Extractivism and Sustainable Rural
Development (Secretaria de Extrativismo e Desenvolvimento Rural Sustentável,SEDR/MMA)

Two representatives of the SBio/MMAThree representatives of ICMBio (Department of Creation and Management of PAs[Diretoria de Criação e Manejo de Unidades de Conserva, DIMAN], Directorate ofSocio-environmental Actions and Territorial Consolidation [Diretoria de Ações
Socioambientais e Consolidação Territorial, DISAT], and Department of48

Biodiversity Monitoring, Evaluation and Research [Diretoria de Pesquisa, Avaliação
e Monitoramento da Biodiversidade, DIBIO])

Two representatives of the SFB (Land Registry and Development Directorate[Diretoria de Cadastro e Fomento], and Forestry Concession and Monitoring
Directorate [Diretoria de Concessões e Monitoramento])



Four representatives of state environmental agencies

Two representatives of NGOs (preferably represented through collective associations
and with project relevant expertise)One representative of FUNBIO

One representative of CI-Brazil

POC. The POC is an administrative and deliberative unit and functions to ensurecompliance with proposed project objectives, considering the Brazil-ASL AC’s
recommendations. To this end, the POC will: (a) approve action strategies and define
procedures and guidelines; (b) establish criteria for the signing of agreements and contracts
envisioned under the project; (c) analyze and approve the project's operating plans andProcurement Plans; (d) review component implementation progress and budgets on a semester
basis, and resolve any identified problems and bottlenecks; and (e) analyze and issue opinions
on technical and financial reports, as well as on strategic recommendations made by theother project groups. The POC will meet at least once every six months and more frequently as
needed. It will be chaired by a representative from the SBio/MMA and will comprise thefollowing members:
12.

35



Two representatives of the SBio/MMA (including one from the ARPA Coordination
Unit)



One representative of SECEX/MMA

One representative of SMCF/MMAOne representative of SEDR/MMA

One representative of ICMBio

One representative of the SFB

One representative of the states35One representative of FUNBIO36

An individual representative of the participating states will be appointed to the POC on an annual rotating basis.

49

One representative of CI-Brazil37

13.
Technical Working Groups. In addition to seeking guidance from the Brazil-ASL AC,
the POC may periodically establish specific Technical Working Groups to analyze and provide
technical guidance on particular issues that may arise with respect to implementation. Technical
Working Groups will report directly to the POC and will typically comprise a subset of themembers of the Brazil-ASL AC complemented by additional technical experts drawn from,among others, government, universities, research institutions, NGOs, and/or stakeholders relevantto the question at hand.
14.
PCU. The PCU is the lead implementing body under the SBio within the MMA. It is
composed of the ARPA team and the Sustainable Landscapes Project team. The PCU is
responsible for the day-to-day coordination and management of project implementation. This
includes: (a) supporting, coordinating, and supervising the implementation of activities under eachcomponent by the individual implementing agencies; (b) monitoring the project’s physical andfinancial activities both within and outside PAs according to agreed targets and budgets and, as
needed, discussing and proposing adjustments to operations, project reference documents, andmethodologies to achieve objectives; (c) updating GEF Tracking Tools, in articulation withfederal and state implementing agencies; (d) guiding project implementers on the administrativeand financial procedures accepted by the World Bank, as well as providing technicalrecommendations and ensuring project safeguard compliance; (e) formulating and systematizing
documents for analysis and approval by the POC; (f) receiving operating plans; (g) collating andconsolidating the physical and financial execution reports from all implementers, in articulation
with executing agencies (FUNBIO and CI-Brazil); (h) preparing semiannual progress and M&E
reports; and (i) preparing the consolidated operating plans for the project and the general progress
report to be reviewed and approved by the POC based on implementation agencies’ proposals.
The unit, comprising MMA-financed staff, will be headed by a National Project Coordinator andsupported by at least two technical specialists, a safeguard officer, and administrative staff. The
project PCU will work in close coordination with the focal points in each implementing agency,with a view to coordinating implementation between them. The project’s PCU shall interact with
ARPA’s Coordination Unit so as to ensure integration between the project and the broader ARPA.
15.
Focal points. Focal points in each implementing agency will ensure the execution of the
project's operating plans and Procurement Plans, following POC decisions, integrated with PCU
day-to-day guidance and in cooperation with the other implementation agencies.
16.
PEUs. Two PEUs will be established, one within FUNBIO (PEU-FUNBIO) and the otherwithin CI-Brazil (PEU-CI-Brazil). These will ensure sound fiduciary management of project
resources for Components 1 and Components 2, 3 and 4, respectively. Their responsibilities will
include, among others, (a) FM, procurement, and implementation, (b) financial progress reports,(c) M&E of the project, as described in detail in the POM; and (d) technical support to carry out
the project activities, including, as appropriate, the direct implementation of specific project
activities. FUNBIO and CI-Brazil will ensure that the PEUs are staffed with qualified staff in
36
37

FUNBIO is a non-voting member of the POC.
CI-Brazil is a non-voting member of the POC.

50

adequate numbers to ensure sound programmatic and fiduciary management of project resources
until completion of the project in agreement with the terms set forth in the POM. The National
Project Coordinator in the PCU will work closely with the two PEUs to ensure smoothcoordination on questions related to finances and procurement.
17.
ARPA Program Committee. This is the governing body of ARPA, and its composition isset forth in Decree No. 8,505 of August 20, 2015 and Ministerial Order No. 37 from February 14,
2017. The ARPA Program Committee is composed of six representatives from the federal andstate governments and six representatives from civil society. Its mandate includes, among others,
overseeing Program implementation, approving operating plans, and recommending adjustments
to the POM. It meets ordinarily twice a year. Detailed responsibilities of the ARPA Program
Committee are presented in annex 7.
18.
CFT. This is the decision-making body of the Transition Fund, responsible for ensuring
compliance with the POM and related instruments including, among others, ensuring compliancewith Disbursement Conditions, approving the fund’s maximum allowable annual disbursement,
defining and supervising implementation of the Fund Investment Policy, appointment andoversight of the Fund Manager, and so on. (See annex 7 for more details.) The CFT is composedof nine voting members, of whom seven members are nominated by donors and two members arenominated by the GOB (MMA and Ministry of Planning, Budget and Management); the lattermust also be members of the ARPA Program Committee. Ordinary committee meetings are held
annually and usually three extraordinary meetings are also held within this period.
III. Key Project Implementation Agencies
19.
The roles and responsibilities attributed to each of the key implementation agencies
will be described in detail in the POM. Table 3.2 provides an overview of the key
implementation agencies and partners for each of the four components.
Table 3.2. Implementation and Administration Responsibilities
Component
Implementing Agency
1. Amazon Protected Areas ICMBio and the MMA
and state environmental
Systemagencies
2. Integrated Landscape
The MMA, ICMBio,Management
SFB, and state
environmental agencies

Administrator
Potential Partners
FUNBIO
NGOs, research institutions, grassroots organizations, state agencies, andthe private sector
CI-Brazil
Sectoral ministries, other stateagencies, NGOs, research institutions,
grass roots organizations, and theprivate sector

3. Policies for Protection
and Recovery of Native
Vegetation

The MMA, ICMBio,
SFB, and state
environmental agencies

CI-Brazil

Sectoral ministries, other stateagencies, NGOs, research institutions,
grass roots organizations, and theprivate sector

4. Capacity Building,
Cooperation, and Project
Coordination

The MMA, ICMBio,
SFB, and state agencies

CI-Brazil

National and international federal andstate government partners, research
institutions, NGOs, and the private
sector51

20.
MMA. This ministry is responsible for overall project management and communication
activities at the strategic level, evaluating and updating, as needed, project objectives and targets
in the project results matrix; monitoring performance against project goals; and supervising
FUNBIO and CI-Brazil. Partnerships with research institutions will be critical for carrying out thebiodiversity and environmental monitoring. In addition, the project will work, through close
supervision and timely actions, to continue to improve the implementation capacity that alreadyexists in all three institutions. The monitoring of project progress will be carried out by the MMA
in close coordination with ICMBio, SFB, state environmental agencies, FUNBIO, and CI-Brazil.
21.
ICMBio. This institute is responsible for ensuring the implementation of all aspects offederal PAs under Components 1, 2, 3, and 4 to include, among others, preparing proposals forthe creation of new PAs, managing the consolidation process for existing and newly created PAs,
preparing the PA operating plans, elaborating PA management plans, ensuring implementation ofmanagement actions (including surveillance and control), and providing the counterpart resources,
as well as the implementation of biodiversity and environmental monitoring. DIBIO, together
with DIMAN and DISAT within ICMBio will oversee the project actions by the institute and will
coordinate with the PCU, in the MMA, and the PEUs in FUNBIO and/or CI-Brazil.
22.
SFB. The SFB is responsible for ensuring implementation of all forest-related activities
under Components 2 and 3, including the coordination and implementation of actions related tothe concession of public forests for sustainable forest management; the coordination, in
partnership with environmental agencies, of actions related to the CAR and the execution of the
PRA. The actions are coordinated by the Forest Concession and Monitoring Department and theForest Promotion and Inclusion Department.
23.
FUNBIO. This fund is one of the two grant recipients and executing agencies and has
extensive experience in implementing World Bank-financed projects. FUNBIO will be
responsible for the FM and procurement functions for Components 1, as well as for approving andtracking the distribution of funds.
24.
CI-Brazil. Being one of the two grant recipients and executing agencies, CI-Brazil lacks
previous experience in implementing World Bank/GEF-financed projects. CI-Brazil will be
responsible for the FM and procurement functions, including approving and tracking the
distribution of funds and delivering specific technical services and M&E activities for
Components 2, 3, and 4.
25.
State environmental agencies. These are the implementing agencies responsible for,among others, (a) preparing proposals for the creation of state PAs within its territorial
jurisdiction; (b) managing the process of consolidating new and existing state PAs; (c)coordinating and implementing vegetation recovery and consolidation of socio-biodiversity
chains activities; (d) implementing the CAR, as well as the validation of the registry andexecution of the PRA (e) preparing the operating plans for participating states; (f) ensuring
implementation of actions proposed on the operating plans; (g) ensuring availability of projectmonitoring instruments (for example, tracking tools); and (h) ensuring the prompt availability ofcounterpart resources for the carrying out of the project.

52

Figure 3.1. Project’s Organizational Structure

Financial Management, Disbursement, and Procurement
26.
The project’s administrative and financial procedures will be detailed in the POM,
comprising the project specific procedures governing Components 2, 3 and 4, as well as theprocedures specific to the Transition Fund which will govern Component 1.
27.
Operating plans. The MMA, ICMBio, SFB, state environmental agencies, FUNBIO, and
CI-Brazil, where appropriate, and under the scope of their respective responsibilities, will prepareindividual operating plans and send them to the PCU. The operating plans direct the application offinancial resources allocated to the project. The PCU reviews and consolidates the different
operating plans into a single project-wide operating plan and submits it to the POC for approval.
The project’s operating plan is then sent to the World Bank for ‘no-objection.’ The PCU forwards
the final operating plan to FUNBIO, CI-Brazil, and other agencies and administrative authorities
in charge of operating plan execution. These agencies, in turn, implement the operating plan
through their internal procedures, strictly observing the terms approved by the World Bank and
POC and the contractual rules assumed with the World Bank through the grant agreements andthe POM.
28.
With respect to Component 1, programming and financing of activities will follow theestablished processes and procedures of the Transition Fund (see annex 6 for details).
Monitoring and Evaluation of Project Results
29.
A project M&E unit will be established within the PCU at the MMA to implement
M&E activities. The M&E indicators have been agreed and are presented in annex 1. M&E of53

project implementation will be conducted through: (a) activities of the PCU at the MMA,PEU-FUNBIO, and PEU-CI-Brazil; (b) semiannual progress reviews by the POC; (c)semiannual progress reviews during World Bank implementation support missions; and (d)midterm review of project implementation to be conducted jointly by the GOB, POC, PCU,FUNBIO, CI-Brazil, and the World Bank. Every six months, the PCU will transmit to theWorld Bank annual progress reports on project implementation and outcomes (project reports);
these project reports shall be furnished to the World Bank not later than two months after theend of the period covered by the report. An Implementation Completion and Results Reportwill be prepared within six months after closing of the GEF grant.
Financial Management30.
Overview. The World Bank performed an FM assessment of both FUNBIO and CIBrazil, in accordance with OP/BP 10.00 and the Financial Management Manual for World BankFinanced Investment Operations (effective March 1, 2010 and Revised February 10, 2017). The
scope of the assessments included: (a) an evaluation of the existing FM systems in place to be
used for project monitoring, accounting, and reporting; (b) a review of staffing requirements; (c)a review of the flow of funds arrangements and disbursement methodology; (d) a review of theinternal control mechanisms in place; (e) a discussion with regard to the reporting requirements,
including the format and content of IFRs; and (f) a review of internal and external audit
arrangements.
31.
Conclusion. Considering project design and seeking effective and efficient project
management and monitoring over the use of funds, each PEU will have its own FM
arrangements. Despite the parallel arrangements, this design ensures that all FM aspects of the
project will be well monitored.
32.

The FM arrangements as described below are acceptable.38

33.
FM risk rating. The overall FM risk rating associated to the project is Substantial for
PEU-CI-Brazil and Low for PEU-FUNBIO. The FM assessments identified the following risk to
the achievement of the PDO: PEU-CI-Brazil’s lack of experience with World Bank procedures.
34.

Integrated fiduciary risk rating. The integrated fiduciary risk rating is Substantial.

FM Arrangements for CI–Brazil
35.
Executing Agency. In addition to delivering specific technical services, CI-Brazil will be
responsible for carrying out the project’s administrative and FM tasks, accounting, anddisbursements for Components 2, 3, and 4.

38

Arrangements are acceptable if they are considered capable of recording correctly all budgets, transactions, andbalances, supporting the preparation of regular and reliable financial statements, safeguarding the entity’s assets, andare subject to auditing arrangements acceptable to the World Bank. The Financial Management Assessment for CIBrazil was approved for the Rio de Janeiro unit. No overhead fees or payments of salaries or other expenditure
related to headquarters Conservation International staff are eligible to be financed under the grant proceeds.

54

36.
Staffing. CI-Brazil personnel in the fiduciary and technical areas have the required
education levels, experience and knowledge of processes to perform these functions. However,specific training on the World Bank’s procedures and policies will be required
37.
Budgeting and Accounting. CI-Brazil adheres to the Brazilian Accounting Rules(Normas Brasileiras Contabilidade), Law No. 6.404/76 and 11.638/07, which together withother rules, policies, and procedures issued by the National Treasury Secretariat (Tesouro
Nacional), National Federal Accounting Council (Conselho Federal de Contabilidade), andCommittee of Accounting Guidelines (Comitê de Pronunciamentos Contábeis) is aligned withinternational accounting standards and International Financial Reporting Standards. CI-Brazil
will maintain the accounting records of the transactions under the grant encompassing the related
components activities. Besides identifying the project under its current chart of account structure,
CI-Brazil will record all transactions in the Business World system (components andsubcomponents under the ‘work order’ and categories under ‘activities’ structure). They willreconcile these records with budget and procurement report figures on a monthly basis. The
Business World system will be used by CI-Brazil as the Financial Management Information
Systems. Transactions under the grant will be accounted for on a cash basis, for disbursements,
reporting and auditing purposes.
38.
Internal controls. All project budgeting and accounting transactions will run through theBusiness World system. All payments will follow acquisition, verification of invoices (provisão),and payment (pagamento) routine. All transaction processing (recording annual budgets, budget
commitments, and payables; authorizing payments; and internal control reviews) will be carriedout by CI-Brazil that will execute payments and control the segregated project bank account.
These functions will be carried out by the Accounting and Finance Departments of CI-Brazil.
Other internal control mechanisms will include: review and reconciliation of payments, proper
access to systems, segregation of functions, and observation of internal administrative codes andprocedures. Internal controls procedures will be detailed in the POM and, if necessary, newroutines will be established during project implementation.
39.
Funds flow and disbursement arrangements. All payments will be made by thefinancial department using the Business World system, upon instructions from the PEU-CIBrazil, once expenditures have been incurred and properly documented. Payments will be madedirectly by CI-Brazil, through the issuance of a payment authorization (autorização depagamento) to service providers and contractors. To make payments, funds will be committed bysource, making possible the tracking of grant disbursements/receipts to project expenditures, due
to this earmarking mechanism within the system. No advances or decentralization of funds will
be made during project implementation.

55

Figure 3.2. Flow of Funds – CI-Brazil

40.
Disbursement arrangements. The following disbursement methods will be available:
Advance, Reimbursement, and Direct Payment. Disbursements will be primary based on the useof Advances. The World Bank will advance funds into a segregated Designated Account,
maintained exclusively for management of grant proceeds, opened in Brazilian reais at Itau
Unibanco S.A, in the name of CI-Brazil. The ceiling of the Designated Account will be fixed as
BRL 9,500,000. The PEU-CI-Brazil will report on the use of Advances and Reimbursement
requests through simplified SOEs (generated through Business World). Direct Payments will be
documented by records (copy of the invoices). There will be no decentralization or transfers offunds to any other agency.
41.
The counterpart funds will be managed separately from the Designated Account.
Counterpart funds will be properly accounted, monitored, and reported by CI-Brazil.
42.
Retroactive financing will be allowed for this project up to an aggregate amount not toexceed US$3,000,000 to be made for payments up to 12 months before the signing date of the
grant agreement for eligible expenditures but no earlier than April 4, 2017.
43.
The grant will also have a four-month grace period after the closing date, during which
the World Bank will accept withdrawal applications relating to project transactions incurred
before the closing date. The grant will have a minimum application size of US$500,000. All
disbursement details will be reflected in the Disbursement Letter. Table 3.3 specifies thecategories of eligible expenditures that may be financed out of the proceeds of the grant underComponent 2, 3, and 4 administered by CI-Brazil.
56

Table 3.3. CI-Brazil Disbursement Categories
Category(1) Works, goods, consultants’ services, non-consulting
services and training under Project Components 2, 3, and 4(2) Operating costs under Project Components 2, 3, and 4(3) Remuneration of CI-Brazil staff:
3-a - Technical staff remuneration under Project
Components 2, 3, and 4
3-b – Administrative staff remuneration under Project
Component 2, 3, and 4
Total AmountAmount of theGrant Allocated(US$)
21,000,000

Percentage of Expenditures
to be Financed(inclusive of Taxes)]
100

5,000,000

100

1,800,000

100

2,530,000

100

30,330,000

44.
Financial reporting. CI-Brazil will ensure the timely production of semiannual financial
monitoring reports (IFRs), prepared in Brazilian reais and U.S. dollars, for monitoring reasonsand that these reports will be generated from the Business World system and be submitted to theWorld Bank, within 45 days after the end of each semester. A specific ledger will be created in
the system to record all grant transactions and will be aligned with the structure of the grant cost
table to record transactions by category and component/activity. Any counterpart contribution(in-kind or cash contributions) supporting the grant’s activities will be reflected in the IFRs.
Accordingly, the format and content of the IFRs will cover the following items:

IFR 1A - Sources and Uses of Funds by disbursement category, with evidence of theWorld Bank’s share in the financing of expenditures, cumulative (project-to-date,year-to-date, and for the period) versus actual expenditures, including a varianceanalysisIFR 1B - Uses of Funds by Project Activity or Component, cumulative (project-todate, year-to-date, and for the period) versus actual expenditures, including avariance analysis

IFR 1C - Designated Account bank reconciliation

45.
External auditing. CI-Brazil’s prior external auditors (RR auditors) who issued an
unqualified audit opinion on CI-Brazil’s annual financial statements (calendar year 2015). For
project purposes, specific annual financial statements will be audited by independent auditors,
satisfactory to the World Bank, in accordance with acceptable auditing standards. The external
audit will be conducted according to TOR acceptable to the World Bank. The auditors will be
required to issue an opinion on the project’s financial statements (IFRs), according to the WorldBank’s guidelines. Auditors will also have to prepare a Management Letter, where any internal
control weaknesses will be identified, which will contribute to the strengthening of the control
environment. The auditor’s report will be submitted to the World Bank no later than six months
after the closing of the grantee’s fiscal year, and the annual audit may be financed out of grant
proceeds.
46.
Implementation Supprot Plan. FM implementation support will take place twice a year
and include: (a) reviewing of semiannual IFRs; (b) reviewing of the auditors’ reports and follow57

up of any issues raised by auditors in the Management Letter, as appropriate; (c) participating in
project implementation support; and (d) updating the FM rating in the Implementation Status andResults Report.
FM Arrangements for FUNBIO
47.
Financial Management Assessment conclusion. The overall conclusion is that
FUNBIO’s FM arrangements, as set out for this project, are acceptable and the FM risk is rated
Low.
48.
Implementing agency. FUNBIO will be responsible for carrying out the project’s
administrative and FM tasks, accounting, and disbursements for Component 1. Monitoring iscarried out jointly by the PCU, FUNBIO, and the PA management agencies (Órgãos Gestoresdas Áreas Protegidas, OGs). They are responsible for the preparation of periodic reports, on the
topics most directly related to their specific responsibilities.
49.
Staffing. The PEU-FUNBIO is well staffed, appropriately qualified, and has experiencein working with World Bank-administeredfinanced projects, KfW, and other donors.
50.
Budgeting and accounting. FUNBIO adheres to the Brazilian Accounting Rules (NBC),
Laws No. 6404/76 and 11.638/07, which together with other rules, policies, and proceduresissued by the Secretariat of the National Treasury (Secretaria do Tesouro Nacional), Federal
Accounting Council (Conselho Federal de Contabilidade), and Committee for Accounting
Guidelines (Comitê de Pronunciamentos Contábeis) are aligned with international accounting
standards. The accounting and monitoring systems in place (resource management and CérebroII) have the capacity to record the assets, liabilities, and the financial transactions of the project.
Transactions under the grant will be accounted for on a cash basis, for disbursements, reporting,and auditing purposes.
51.
Internal controls. FUNBIO has elaborate levels of approvals for specific budget
transfers/allocations to allow proper execution of activities. Control is exercised throughsegregation of functions, the oversight of FUNBIO’s financial counsel, reconciliations ofaccounts (prepared by the focal points), and different levels of access to information systems andapproval. FUNBIO also has an internal auditor who is responsible for defining preventativeinternal control procedures. The accounting records are maintained electronically and arereconciled with budget and procurement reports on a monthly basis. Expenditure reports arefurther analyzed and cash flow analyses are conducted both on an ex post basis (analyzing
weekly spending for the prior month) and on a forecast basis for the upcoming month.
Administrative procedures have been established to ensure that financial transactions are madewith consideration to safeguarding project assets and ensuring proper entry in theaccounting/monitoring systems.
52.
Fund flow and disbursement arrangements. FUNBIO will be primarily responsible for
implementation of Component 1, which aims to expand and consolidate an over-60-million-ha
PA system in the Brazilian Amazon and advance ongoing efforts to secure its long-term financial
sustainability by capitalizing the ARPA Transition Fund (see annex 7 for details). In the context
of this project the Transition Fund will: (a) bring an additional 3 million ha of the Amazon
58

region under legal protection; (b) strengthen the consolidation of 60 million ha of ARPAsupported PAs (new and pre-existing); (c) strengthen the coordination, management, monitoring,and communication of ARPA as a whole, and (d) develop and implement strategies to raise
additional revenue for the ARPA Transition Fund.
53.
Under this component, GEF financing will capitalize the Transition Fund, which wouldin turn finance, among others, consultancy services; non-consultancy services (for example,
publications; rental of vehicles, boats, and aircraft; and maintenance and repair services);
infrastructure and rehabilitation works; goods and equipment; public consultations; researchscholarships; workshops and training; and operating costs (including travel and per diems).
54.
Disbursements to the Transition Fund, will be made in three instalments (through the
Direct Payment disbursement method) of US$10 million each. In line with the description intable 3.4, each disbursement will be supported by documentation, evidencing that priorinstallment criteria has been met. Disbursements will be made directly from the World Bank, to
the Transition Fund bank account at Itau Bank International (Miami Branch), in three tranches inaccordance with the triggers shown in table 3.4.
Table 3.4. Transition Fund Disbursement Conditions
Disbursement TrancheFirst disbursement

Disbursement Condition
Upon grant effectiveness andconfirmation of the donor
contributions received to date by theTransition Fund.

Supporting Documentation
Effectiveness notice from the WorldBank and copy of the signed
contracts and deposit confirmations
as reflected in the bank statements
and notification signed by the WorldBank authorizing disbursement.

Second disbursement

Signature of at least one formal
environmental compensationagreement - ARPA TTCA (Termode Compromisso de Compensação
Ambiental)

Official letter from ICMBio
presenting directing environmental
compensation resources to the
ARPA PAs and notification signedby the World Bank authorizing
disbursement

Third disbursement

BNDES approval of the proposal for
funding the ARPA Transition Fund

Official letter from Amazon Fund
(BNDES) informing the proposal’sframework was approved(enquadramento) and notification
signed by the World Bankauthorizing disbursement

55.
Table 3.5 specifies the category of Eligible Expenditure that may be financed out of theproceeds of the grant under Component 1 administered by FUNBIO.
Table 3.5. FUNBIO Disbursement Categories
Category(1) Capitalization of the Transition Fund - First Tranche(2) Capitalization of the Transition Fund - Second Tranche

59

Amount of theGrant Allocated(US$)
10,000,000
10,000,000

Percentage of Expenditures
to be Financed(inclusive of Taxes)
100100Category(3) Capitalization of the Transition Fund - Third Tranche
Total AmountAmount of theGrant Allocated(US$)
10,000,000
30,000,000

Percentage of Expenditures
to be Financed(inclusive of Taxes)
100

56.
Funds from the Transition Fund bank account, will then be used for the implementationof ARPA. The flow of funds is illustrated in figure 3.3.
Figure 3.3. Flow of Funds for FUNBIO

57.
Financial reporting. FUNBIO will ensure the timely production of semiannual financial
monitoring reports (IFRs) in Brazilian reais for monitoring reasons, and that these will be
produced from the FUNBIO’s system, and be submitted to the World Bank, within 45 days after
the end of each semester. Accordingly, the format and content of the IFRs, agreed with therecipient, will cover the following items:

IFR 1A - Sources and Uses of Funds by disbursement category, with evidence of theWorld Bank’s share in the financing of expenditures, cumulative (project-to-date,year-to-date, and for the period) versus actual expenditures, including a varianceanalysis (attaching Memorandum of the President reports);

IFR 1B - Transition Fund Account bank reconciliation (consolidated report from theTransition Fund asset manager).
60

58.
External auditing. For project purposes, annual financial statements will be audited byindependent auditors, satisfactory to the World Bank, in accordance with acceptable auditing
standards.
59.
For previous World Bank-administered grants implemented by FUNBIO, the WorldBank agreed to accept FUNBIO’s internal regulations on auditing arrangements, which is to use
the same audit firm hired to audit FUNBIO’s accounts (for a three-year period) to also prepare a
specific audit report on each of the World Bank-administered grants under implementation
during the said period, subject to the World Bank’s yearly review of the respective TORs. The
audit will be due no later than six months after the end of the fiscal year.
60.
Implementation Support Plan. The Transition Fund will benefit from regular
implementation support by the World Bank for the lifetime of the project. FM implementation
support missions will take place twice a year and include (a) reviewing of semiannual IFRs; (b)reviewing of the auditors’ reports and follow-up of any issues raised by auditors in theManagement Letter, as appropriate; (c) participation in project supervision; and (d) updating the
FM rating in the Implementation Status and Results Report.
How the Transition Fund Operates
61.
The Transition Fund is a private financing mechanism created through contracts between
entities, individuals, legal entities, and Brazilian and foreign donors.
62.
The Transition Fund aims to provide resources and incentives for the federal andAmazonian state governments to: (a) enable the creation of 6 million ha of new PAs; (b)complete the consolidation of 60 million ha of PAs and maintain those PAs, according to theReference Frameworks established for ARPA; and (c) gradually increase the resources provided
by governments to ARPA, so that, after a period of 25 years, government funds and alternative
funding sources will finance 100 percent of the Program costs, without any additional support
from the Transition Fund or any other donor funds.
63.
To this end, the Transition Fund intends to finance the acquisition of goods and services
to be donated to the PA management agencies for exclusive use in the creation, consolidation,and maintenance of the supported PAs, provided that certain conditions are fulfilled by thefederal and state governments. The idea is that by 2039, Transition Fund resources will havebeen exhausted and, consequently, the Transition Fund will be closed and PA operating andmaintenance costs will be fully covered by the government budget and alternative funding
sources.
64.
CFT. The CFT is the decision-making body of the Transition Fund, with the purpose of
supervising/overseeing compliance with the instruments that define its functioning. The CFT is
composed of nine voting members, of whom seven members are nominated by donors and two
members are nominated by the GOB (MMA and Ministry of Planning, Budget andManagement); the latter must also be members of the ARPA Program Committee. Ordinarycommittee meetings are held annually and usually three extraordinary meetings are also held
within this period. Specific responsibilities of the CFT include, among others, the following:(a)Analyze the technical and financial results of ARPA
61

(b)

Evaluate compliance with the Disbursement Conditions, every two years, according
to the reports presented(c)

Decide, every two years, on the maximum annual withdrawal volume of theTransition Fund to pay the eligible expenses in the PAs of ARPA(d)

Determine the investment policy of the Transition Fund(e)Monitor and analyze the financial performance of the Transition Fund(f)Monitor, evaluate, and supervise fund management activities carried out by thefund’s financial manager (Gestor Financeiro, GF)(g)

Evaluate the external and independent audit report prepared in relation to the GF(h)Approve a strategy for attracting new resources to the Transition Fund, if the CFT
determines, in its sole discretion, that it is desirable to raise new resources, as well as
approve new donors and/or donations(i)

Appoint the GF and replace it in its sole discretion(j)Approve, with exclusivity, any modifications in Module 2 of the Operational
Manual of ARPA, and suggest to the ARPA Program Committee changes in Module
1 of the manual. The manual will serve as the basis to manage the fund inaccordance with the financial and operational policies, specified therein(k)Require the GF to contract, at the expense of the Transition Fund, independent
consultants for any areas or topics deemed necessary by the CFT(l)Based on the assessment of compliance with the Disbursement Conditions, identify
which PAs or PA management agencies have not met the Disbursement Conditions
biennially, and determine how to handle it(m)

Suspend the use of Transition Fund resources for ARPA if the CFT deems that the
Disbursement Conditions have not been substantially fulfilled for a period of four
consecutive years.

65.
Flow of funds for the Transition Fund. All resources donated to the Transition Fundare pooled in a single fund and are not individually tracked by the donor. These resources areused up to the limit of disbursements approved by the CFT for the given period (biannual), in
accordance with the rules contained in the Transition Fund’s Operational Manual. Transfers
approved by the CFT are made from the account of the fund in Brazil to the Operational Accountof the Program. FUNBIO as the Transition Fund’s GF will be responsible for processing all
payments for works, goods, and services. Payments will be made directly from this operating
account. All payments from this account shall be made through electronic deposits to the bankaccount of the beneficiary/supplier. The original supporting documentation will be available at
FUNBIO headquarters.

62

66.
Reporting arrangements: The Transition Fund adopts a series of standardized financial
and technical reports, designed to meet the requirements of all Transition Fund donors, ensuring
greater transparency and efficiency. FUNBIO is responsible for monitoring the detailed
execution of financial resources, financial balances, and account rendering. OGs are responsible
for monitoring the execution of resources within the PAs, following their physical-financial
performance and progress with regard to the Program’s planned targets according to the FAUC
and PEP planning tools. The OGs, together with the PCU, also monitor the execution of thegovernmental, financial, and in-kind cofinancing. The PCU is also responsible for in situ
monitoring, for monitoring PA creation and management effectiveness, progress in the
Program’s creation and consolidation targets, and the implementation of the components of theProgram. In addition, FUNBIO conducts an independent external audit every year, whichanalyzes its accounts, as well as the accounts of ARPA and the Transition Fund, both of which
will be submitted to the World Bank two months after the completion of the respective audits.
Procurement
67.
Procurement for the proposed project, including the Transition Fund39, will be carried out
in accordance with the World Bank Procurement Regulations for Borrowers under Investment
Project Financing dated July 2016 and the provisions stipulated in the Legal Agreement.
Component 1 will be executed by FUNBIO following the processes and procedures establishedin the Transition Fund Manual (see annex 7 for details).
68.
The various items under different expenditure categories are described in general terms
below. For each contract to be financed by the grant, the different procurement methods orconsultant selection methods, the need for pre-qualification, estimated costs, prior review
requirements, and time frame will be agreed between the Recipient and the World Bank in the
Procurement Plan.
69.
The World Bank's Standard Procurement Documents will govern the procurement ofWorld Bank-financed Open International Competitive Procurement. For procurement involving
National Open Competitive Procurement, the Recipient will use Standard Procurement
Documents acceptable to the World Bank that will be included in the Operational Manual.
70.
Procurement of works. Works procured under the project will include, among others,
small construction and expansion or renovation projects. Depending on the estimated amounts,
they will be carried out through Open National Requests for Quotations (RFQs) or Requests for
Bids.
71.
Procurement of goods. Goods procured under the project will include, among others:
vehicles, boats, satellite images, information technology and electronic equipment and systems,
and household supplies. The provision of goods may be carried out in accordance with themethod known as ‘Pregão Eletrônico,’ as set forth in Brazilian Law No. 10.520/2002, provided:(a) documents are acceptable to the World Bank, (b) documents include anticorruption clauses,
39

The Transition Fund procurement policies are fully aligned with the World Bank Procurement Regulations for
Borrowers under Investment Project Financing dated July 2016.

63and (c) the process is carried out under an e-procurement system previously approved by theWorld Bank.
72.
Procurement of non-consulting services. Non-consulting services under the project will
include, among others: the cost of installation of equipment, repairs and/or maintenance services,delimitation surveys, capacity-building support to the implementation and beneficiary agencies,
monitoring, reporting, and evaluation-related services, events, training, workshops, seminars,
logistics, travel services, and so on. Non-consulting services may be carried out in accordancewith the method known as ‘Pregão Eletrônico,’ as set forth in Brazilian Law No. 10.520/2002,
provided: (a) documents are acceptable to the World Bank, (b) documents include anticorruption
clauses, and (c) the process is carried out under an e-procurement system previously approved by
the World Bank.
73.
Selection of consultants. Consulting services under the project will include preparationof PA management plans, land tenure studies, works supervision, engineering designs,
communication and marketing plans, asset management, conservation finance studies,development of conservation financing mechanisms, legal advice, and preliminary studies tocreate PAs, and so on. The following methods will be used for selecting consulting firms
depending on the nature, estimated amounts, and complexity of assignments, attractiveness toforeign firms, and the need for international expertise: Quality- and Cost-Based Selection, LeastCost Selection, Selection under a Fixed Budget, Selection Based on Consultant’s Qualification,
Single-Source Selection both for consulting firms and individual consultants, and Selection ofIndividual Consultants. The threshold for international advertisement will be in the Procurement
Plan.
74.
Operating costs mean necessary and reasonable incremental costs related to technicaland administrative management, preparation, monitoring and supervision required under the
project, including among others, office equipment, supplies, travel costs (including
accommodations, transportation costs, and per diem), printing services, communication costs,
utilities, maintenance and rental of office equipment and facilities, insurance, vehicle operationand maintenance costs, and logistics services. Procurable expenses under operating costs to befinanced by the project will be procured following the World Bank Procurement Regulations for
IPF Borrowers dated July 2016 and shall be listed in the Procurement Plan.
75.
CI-Brazil technical staff remuneration means the remuneration and benefits costs paid
for the recipient’s technical staff for services provided exclusively for implementation ofComponents 2, 3, and 4 of the project, as stated in the POM and approved by the World Bank.
76.
CI-Brazil administrative staff remuneration means the remuneration and benefits
costs paid for the recipient’s administrative staff for services provided exclusively for the
implementation of Components 2, 3, and 4 of the project as stated in the POM and approved by
the World Bank.
77.
Training costs means expenditures (other than those for consulting services) incurred inconnection with the carrying out of training, seminars, and workshops, including the reasonable
travel costs (for example, accommodations, transportation costs, and per diem) of trainees andtrainers (if applicable), catering, rental of training facilities and equipment, logistics and printing
64

services, as well as training materials and equipment under Components of 2, 3, and 4 of the
project.
78.
Other. The detailed arrangements for the procurement procedures and standard bidding
documents to be used for each procurement method, as well as model contracts, are presented in
the project’s Operational Manual.
79.
Contas vinculadas. The contas vinculadas are mechanisms for distribution of funds thatallow for more autonomy of PA administrators to spend small amounts of their budgets on daily
operation and maintenance of PA offices. These items are considered operating costs and will be
procured using FUNBIO’s administrative procedures, which were reviewed and foundacceptable to the World Bank. A detailed list of expenditures eligible to be paid out of contas
vinculadas is included in the POM.
80.

Procurement assessment. There are two implementing agencies.
(a)

Assessment of FUNBIO’s capacity to implement procurement. FUNBIO
currently implements two other GEF projects with the World Bank, the Marine
Protected Areas Project (P128968) and the Amazon Region Protected Areas Project,
Phase II (P114810), and a full capacity assessment is not necessary, because theinstitution has been applying the World Bank Procurement Guidelines for over 15
years. Furthermore, due to the nature of the project, no complex procurement is
expected. FUNBIO uses a management system named Cérebro, which has a fullprocurement module. This system deals with procurement responsibilities andformalizes the decision-making process. Its bidding and contracting manual andfiling system was reviewed and found acceptable by the World Bank. Its
Procurement Unit is adequately staffed by trained personnel.

(b)Assessment of CI-Brazil. A full capacity assessment of CI-Brazil to implement
procurement in accordance following World Bank Regulations has been carried out.
Their Procurement Department is staffed with only one professional who is trainedon the former Procurement Guidelines, with little practical experience. CI-Brazil
plans to assemble a full-time dedicated unit for this project, including two
procurement coordinators. The hiring of this procurement specialist with TORs
acceptable to the World Bank is a condition of effectiveness for the project. It is
anticipated that training and intensive hands-on support will be needed in the
beginning of the project.

81.
Project Procurement Strategy for Development (PPSD). A PPSD was prepared for the
project as a whole, covering FUNBIO and CI-Brazil. It shows that both institutions areadequately equipped to handle the procurement ahead of them, with most of it falling into theselection of individual consultants and goods and non-consulting services to be contacted
through RFQs.
82.
Overall, the procurement risk associated with the project has been assessed as‘Moderate,’ because most of the selection processes are not expected to have higher complexity.

65

Table 3.6. Procurement Action Plan
Act

Description

1

Lack of procurement personnel
and experience by CI-Brazil

2

Lack of FUNBIO’s practicewith the new procurement
regulations

3

Quality of TORs and technicalspecifications

4

Weak and imprecise costestimates

5

Companies involved in fraudand corruption issues

ActionHiring of procurement coordinators
Strengthening CI-Brazil’s capacity throughongoing World Bank support and specificprocurement training

Time FrameBy effectivenessStrengthening FUNBIO’s capacity throughspecific procurement training

By effectiveness

Reach out for experts’ advice on thedefinitions of the TORs and specifications.
Technical concurrences to technical documents
to be issued by the task team leader
Base estimates on market data and not only on
official tables issued by the Government
Maintain a strict control over the companies
and individuals that are debarred bymultilateral development banks

Throughout
implementation
Before launching of eachprocurement process
Throughout
implementation
Throughout
implementation

83.
All bidding documents and contracts, regardless of the amount and procurement method,
are required to have the anticorruption clause as an eligibility condition.
Procurement Plan
84.
The Recipient has prepared a Procurement Plan for the proposed Project in the
Systematic Tracking of Exchanges in Procurement (STEP) system for the first 18 months ofproject implementation, which provides the basis for the procurement processes. This plan wasagreed upon between the MMA, FUNBIO, and CI-Brazil, and was approved by the World Bank.
The Procurement Plan will be updated in agreement with the World Bank on a biannual basis or
as required to reflect the actual project implementation needs and improvements in institutional
capacity.
Environmental and Social (including safeguards)
85.
Safeguard policy issues. This is essentially a conservation project and no potential large
scale, significant, and/or irreversible negative impact is expected from the project. Long-term
positive impacts are expected from the project, mainly related to increased ecosystem andbiodiversity connectivity, protection, and resilience, as well as increased sustainability ofagricultural lands surrounding PAs. National environmental legislation is very robust andincludes specific rules and procedure for the creation of PAs, which aim at reducing social
impacts and maximizing biodiversity benefits. The Recipient is experienced with theimplementation of World Bank safeguards in similar World Bank-financed operations, with asatisfactory track record. The project’s ESMF reinforces and complements the national legal
framework, defining preventive procedures and mitigation measures to address key aspects thatwill require attention during implementation, such as forest management for timber and nontimber products, pest management, application of consultation procedures for PA creation, andparticipation of indigenous peoples, among others. The project was assigned Category B and thefollowing safeguards were triggered: OP/BP 4.01 Environmental Assessment, OP/BP 4.04

66

Natural Habitats, OP/BP 4.36 Forests, OP/BP 4.09 Pest Management, OP/BP 4.10 Indigenous
Peoples, OP/BP 4.11 Physical Cultural Resources, and OP/BP 4.12 Involuntary Resettlement.
86.
Additionally, OP 7.50 International Waterways was triggered because all components ofthe project will finance activities designed to protect and recover large expansions of biodiversity
rich forests, which contain countless perennial and seasonal bodies of water, many of which fit
the description of international waterways provided under OP 7.50, and some supported
activities may use or involve water. More specifically, water use under the project may include
the following: (a) the production of seedlings for reforestation activities (family plots producing
20,000–30,000 seedlings per year, and three state operations for 180,000 to 1,000,000 seedlings
per year) may require watering during dry periods (although typically agriculture is rain-fed in
the Amazon) and (b) traditional sustainable fisheries management of wild stocks may besupported in lakes and rivers inside sustainable use PAs, improving the sustainability of existing
traditional practices. The ESMF includes guidance on the prevention of impacts to international
waters and an exemption to the riparian notification requirement has been obtained. It is
important to note that the Amazon Basin accounts for one of the largest volumes of freshwater
reserves on the planet and no negative impact is expected to its bodies of water. On the contrary,
project activities should positively affect these international waters by conserving the forests that
protect them, either within PAs or within private lands in sustainably managed landscapes, thus
maintaining or improving water quality and river flows. Furthermore, virtually all main rivers
and tributaries in the Amazon Basin flow from neighboring countries, particularly from theAndes, into Brazil. Therefore, all project activities will be located inside the Brazilian territory
downstream from the borders.
87.
Although the types of activities to be supported under the project are already known, theexact location for their implementation and exact activity to be implemented in each area have
not yet been defined. The MMA and FUNBIO carried out an Environmental and Social Impact
Analysis, which informed the preparation of an ESMF, IPPF, and Process Framework. All
safeguard documents were publicly consulted and their final versions are available in both the
MMA and FUNBIO’s webpages (http://programaarpa.gov.br/documentos-fase-iii-do-arpa/ andhttps://www.funbio.org.br/projeto-paisagens-sustentaveis-amazonicas/) and the World Bank’s
public website. Consultations were conducted on line and at two face-to-face workshops held in
the city of Manaus (Amazonas State) on May 30, 2017, and in the city of Rio Branco (capital
city of the State of Acre) on August 1, 2017. The relevant stakeholders were invited and thelocations of the two workshops were chosen to facilitate the participation of representatives ofindigenous peoples, riverine and traditional communities from the Amazon region, and theirrepresentative organizations. Both workshops were organized and facilitated by the MMA. As
the participation of indigenous peoples was limited in the first consultation (Manaus), a second
workshop was held to increase their participation. This second workshop (Rio Branco) convened
32 participants, comprising 18 representatives of 10 indigenous peoples and several indigenous
peoples organizations—including the two nationwide organizations40. The comments received
40

Organizations consulted include Coordination of Brazilian Amazon Indigenous Organizations (Coordenação das
Organizações Indígenas da Amazônia Brasileira) and Articulation of Indigenous Peoples of Brazil (Articulação dos
Povos Indígenas do Brasil), and representatives of the Pro-Indian Commission of Acre State (Comissão Pró-Índio
do Acre), National Organization of Indigenous Peoples of the Colombian Amazon (Organización Nacional de losPueblos Indígenas de la Amazonia Colombiana), Association of Kaxinawa Producers of the Paroa Village

67were integrated into the social and environmental safeguards instruments, which also include a
detailed annex on the consultation process.
88.
The project is expected to generate a positive impact on the environment with the
expansion and strengthening of PAs. The creation and consolidation of PAs has proven to be a
viable strategy to reduce biodiversity loss and deforestation in the Brazilian Amazon, through thecontainment of anthropogenic pressures and the promotion of the sustainable use of natural
resources. Also, the simple fact of designating land use is already hugely effective incounteracting the illegal land market, by conferring permanent private and public land ownershiprights. The positive impact is expected to be expanded with the support to sustainable landscapemanagement practices within PAs and private lands to enhance ecosystem connectivity.
Examples of such practices to be supported can include conservation agriculture, agroforestry
systems, fertility-boosting technologies, terraces, rainwater harvesting, pastoralism andrangeland management, improved grazing land management, integrated crop-livestock systems,
natural resource management, plantations and reforestation/afforestation, catchment
management, and PA management. Possible risks associated to these practices related to pest
management are addressed within the project’s ESMF according to OP 4.09 guidance. To
maximize biodiversity benefits, the project will apply existing science-based instruments todefine priority areas for PA creation and vegetation restoration, such as the Map of Priority
Areas for the Conservation and Sustainable Use of Brazilian Biodiversity, and data from thecontinuous PRODES and Amazon TerraClass studies, among others. Possible negative impacts
are expected to be few, localized, small, and reversible. The impact assessment under the ESMF
prepared by the MMA and FUNBIO addresses, among other themes, (a) potential negative andpositive impacts of project activities on natural habitats; (b) potential impacts of forest
management activities (timber and non-timber); (c) potential impacts of activities that might
require pest management (for example, seedling production for vegetation restoration andagroforestry activities); (d) potential impacts on physical cultural resources; and (e) potential
impacts on indigenous peoples and traditional communities (see OPs 4.04, 4.36, 4.09, 4.10, 4.11,
4.12 below). During project implementation, Environmental Management Plans will be preparedby ICMBio and CI-Brazil and disclosed for specific activities supported under Components 1, 2,
and 3, or as annexes to PA management plans prepared or revised under Component 1.
89.
In relation to social aspects, the project will also have positive impacts because PAs areimportant to secure land tenure for traditional communities and eliminate or greatly reduce therisk of these communities being expelled or losing access to natural resources for theirlivelihoods. The process to review and update the Amazon portion of the Map of Priority Areasfor the Conservation and Sustainable Use of Brazilian Biodiversity, supported by ARPA I in
2006, incorporated community participation aspects that contributed to mitigate potential
conflicts in the process of creation of new PAs. To further address the issue of eventual conflicts,
two measures will be taken by the ASL Project: (a) any PA creation process will involve broad
public consultation, because it is now widely accepted that public consultation allows for(Associação dos Produtores Kaxinawa da Aldeia Paroa), Association of the Movement of the Indigenous
Agroforestry Agents of Acre State (Associação do Movimento dos Agentes Agroflorestais Indígenas do Acre),Organization of the Kaxinawa Farmers of the “Colonia 27” Indigenous Land of Tarauacá Municipality(Organização dos Agricultores Kaxinawa na Terra Indígena Colônia 27 de Tarauacá), and Organization of theTarauacá River Indigenous Peoples (Organização dos Povos Indígenas do Rio Tarauacá).

68

adjustments in the PA creation processes, responding to needs and demands of local
stakeholders; and (b) the project will avoid any activity requiring the involuntary acquisition ofland. Consequently, physical and economic displacement would be completely avoided (seebelow, OP 4.12 Involuntary Resettlement).
90.
During ARPA I and ARPA II projects, 10.8 million ha of sustainable use reserves werecreated combining social demands and priority areas for biodiversity conservation. Subprojects
for alternative sustainable income generation in communities located in buffer zones of
threatened PAs were also implemented. As successfully carried out in ARPA I and II projects
and according to national legislation, the creation of PAs would also require the preparation ofenvironmental, socioeconomic, and land tenure diagnoses of the selected priority areas.
Socioenvironmental aspects and safeguards will be monitored at the PA level by the responsible
agencies and at the project level by the MMA. To the extent possible, the social assessment
carried out as part of the ESMF includes disaggregated information on indigenous women,children, the aged, and the disabled, and any differentiated impacts that may disproportionately
affect them. This information fed into the IPPF and will help inform the management plans for
the PAs. The social assessment considered potential impacts of the project on the livelihood of
traditional communities heavily reliant on the uses of forests, biodiversity, and natural resources.
Finally, the social assessment includes an assessment of labor conditions prevailing in the
productive chain of forest products, particularly concerning risks related with forced labor/childlabor.
91.
Forests OP/BP 4.36. The project may include support to community-level sustainabletimber and non-timber management activities in Flonas and other sustainable use areas wheresuch use is allowed, according to existing specific regulations applicable to each area. The ESMF
provides guidance to ensure that activities supported will be consistent with the requirements of
OP 4.36 regarding certification and procedures for small-holder or community scale forestry anddefines the sustainability and monitoring procedures to be followed by any forest-based
economic activity.
92.
Natural Habitats OP/BP 4.04. The potential positive impact of the project forbiodiversity is significant given the major focus of the project in the support of sustainable forest
landscape management systems and forest restoration and in the creation and consolidation of
PAs within the Amazon Basin. Support to sustainable productive landscapes and integrated
landscape restoration should expand benefits to natural habitats to the private areas surrounding
and between PAs, increasing connectivity and the availability of a suitable habitat tobiodiversity. The ESMF assesses potential negative impacts on natural habitats that might arise
from project activities such as small infrastructure interventions in PAs, control of pests inseedling nurseries or agroforestry systems, and economic use of forest resources, and proposespreventive, monitoring, and mitigation measures.
93.
Supported PAs should include parks, biological reserves, ecological stations, national
forests, extractive reserves, and sustainable development reserves. In the two latter types of area,
traditional communities and indigenous groups can plan land use aiming at income generation
through the continuation of their traditional practices, while averting deforestation. Traditional
communities and indigenous peoples’ land management and production practices are generallycompatible and benign in terms of impacts on biodiversity. The changing context surrounding69

community lands brings increasing pressure to carry out nontraditional forms of land use andmanagement. Project activities and capacity building will seek to foster conservation andsustainable management of natural resources while providing tools such as participatory
diagnostics and planning activities, strengthening of local organizations, and participatory M&E
that will generate an improved platform for community decision making on sustainable use of
the available natural resources.
94.
Pest Management OP/BP 4.09. The project will support the adoption of a variety ofsustainable landscape management practices within sustainable use PAs or in surrounding
private lands. These can include conservation agriculture, agroforestry systems, fertility-boosting
technologies, terraces, rainwater harvesting, pastoralism and rangeland management, improved
grazing land management, integrated crop-livestock systems, natural resource management,
plantations and reforestation/afforestation, catchment management, and PA management.
Although these activities should favor ecological methods for managing pests, some might
require the use of pesticides or other agricultural chemicals. To reduce the risk of negative
impacts from the eventual use of such pest control products, the project's ESMF includes
indication of favored methods to be supported under the project as well as preventive andmitigation measures for pest management compatible with OP 4.09 to guide these activities.
95.
Physical Cultural Resources OP/BP 4.11. It is not expected that project
implementation would have any negative impact on physical cultural resources. However,chance finds during implementation activities are possible, even though no such occurrencecame up in the previous similar ARPA I and ARPA II operations. To handle such findings,
Brazil has a well-developed legislative and normative framework, which is under the oversightof the National Institute for Protection of Historical and Archeological Sites (Instituto do
Patrimônio Histórico e Artístico Nacional), and the Indigenous National Foundation (Fundação
Nacional do Índio, FUNAI) also has established procedures for safeguarding historical or
prehistorical heritage pertaining to indigenous peoples, through the National Indian Museum
which is an agency of FUNAI. The screening and action procedures for chance finds, including
sacred sites, were incorporated into the project's ESMF and into the environmental screening
section of the project's Operational Manual.
96.
Indigenous Peoples OP/BP 4.10. During project preparation, it was determined thatindigenous peoples with the four characteristics called for in OP 4.10 are present in the project
area. As the exact location for the implementation of the activities to be supported under the
project have not yet been defined, to comply with the principles and requirements of OP 4.10
Indigenous Peoples, the MMA and FUNBIO carried out a social assessment paying special
attention to indigenous peoples in the Amazon and the potential impacts of PAs, landscapemanagement, and biodiversity conservation on their traditional livelihoods. The MMA andFUNBIO also prepared, consulted, and publicly disclosed (before appraisal) an IPPF setting: (a)the principles and guidelines to be complied with when project activities interfere withindigenous peoples as well as (b) the project's screening procedures that will ensure that the
project would not support activities in PAs where the overlapping with indigenous lands or landclaims has led to land tenure conflicts. The IPPF also includes a brief section on the issues
related with conflicts due to overlapping between indigenous lands and PAs.

70

97.
Involuntary Resettlement OP/BP 4.12. The project will not require the involuntaryacquisition of land. However, the creation and consolidation of PAs could potentially lead torestrictions in access to PAs leading to impacts on peoples’ livelihoods. A Process Framework
was prepared, consulted, and disclosed before appraisal by MMA and FUNBIO, ensuring that
affected people and communities had an opportunity to participate in the definition and design ofalternative livelihood activities or other compensation/mitigation measures.
98.
Key stakeholders were consulted during project preparation on the potential risks andimpacts of the project and the proposed mitigation measures. Face-to-face and online
consultation of safeguard documents were held and described in the project’s IPPF and ESMF.
In addition to direct mailing, a public consulting call was published by FUNBIO and the MMA
in their websites, inviting public society to download and comment on the socioenvironmental
safeguards documents. The comments/suggestions received at the two face-to-face events(Manaus and Rio Branco), as well as through an online form that allows interested people toidentify themselves or remain anonymous to ensure no-restraints to participation wereincorporated in project design and safeguard documents as appropriate.
99.
Grievance Redress Mechanism. In addition to the World Bank’s GRS described in
Section VI (H) of the main document. ARPA has had a Grievance Redress Mechanism in placesince 2013 with the purpose of making project information available to the public; reducing
risks; providing suggestions, sharing practices, and receiving feedback from the public and allactors involved in project implementation; functioning as a disincentive to fraud and corruption;
recording and providing responses to complaints and suggestions; and ensuring compliance withsafeguards. This existing mechanism was updated and incorporated into the current project and
its Process Framework (published at websites of the participating institutions:
http://programaarpa.gov.br/documentos-fase-iii-do-arpa/;
http://www.conservation.org/global/brasil/Pages/gef-paisagens-amazonicas.aspx;
and https://www.funbio.org.br/projeto-paisagens-sustentaveis-amazonicas/) provides a detailed
description of the system, its guiding principles, quality control mechanism, and complete
contact information.
100. At the level of the proposed project, the MMA, FUNBIO, and CI-Brazil are the main
channels for receiving, recording, and processing complaints and suggestions and for informing
the World Bank. However, the project’s Grievance Redress Mechanism has several layers as
described below, all of which aim to respond to complaints within seven working days either
independently or together with other layers as necessary: (a) the PA manager is the first layer ofthe system, because he/she is in constant and direct contact with communities within and aroundPAs and well positioned to provide immediate feedback to mitigate or improve any situation; (b)PA management councils, which include representatives from local communities and indigenous
peoples among their members, represent a privileged layer to address issues related to the daily
operation of PAs, as well as to present and represent the interests of their respective socialgroups; (c) each of the institutions supervising project implementation (see implementation
arrangements) has designated a focal point to function as an intermediary between on-the-ground
activities and the coordination bodies of the project; (d) individuals and communities can also
contact FUNBIO and/or CI-Brazil directly; and (e) if responses at the previous levels are notsatisfactory to those presenting a grievance, the MMA ombudsman may be contacted directly asa higher level of appeal. Detailed contact information (street and electronic address, phone and71fax numbers) for each of these layers is presented in the project’s Process Framework andpublished on the websites of all participating institutions. FUNBIO’s main contact information
is: +5521 2123 5303 and gs@funbio.org.br. CI-Brazil’s main contact information is: +5521 2173
6360 and infogef@conservation.org or GEFAccountability@conservation.org.
Monitoring and Evaluation
101. Project M&E will be carried out in four broad areas: (a) financial monitoring, (b)monitoring of implementation of project activities; (c) monitoring of PA management (including
updating GEF Tracking Tools based on the information provided by the PA coordinators); and(d) environmental monitoring. A project M&E unit will be established within the PCU in the
MMA. This M&E unit will lead the project’s M&E, with support on the fiduciary aspects fromFUNBIO, CI-Brazil, and each of the components’ executing partners. Progress will be tracked
against the indicators outlined in the project’s Results Framework (annex 1) and the actions
agreed in the project’s Operation Plans agreed annually with the POC and partners.41 Quarterly
financial and annual progress and M&E reports will be submitted to the World Bank. In addition,(a) semiannual progress reviews will be conducted by the POC; (b) semiannual progress reviews
will be conducted during World Bank implementation support missions; (c) a midterm review ofthe project’s implementation will be conducted jointly by the GOB, POC, PCU, FUNBIO, CIBrazil, and World Bank; and (d) an independent end-of-project evaluation will be also
completed, and a project completion report prepared.

41

Work programming for activities under Component 1 will be completed on two-year cycle in line with theoperating policies and procedures of the Transition Fund.

72

Annex 4: Implementation Support Plan
BRAZIL: Amazon Sustainable Landscapes Project
Strategy and Approach for Implementation Support
1.
The project Implementation Support Plan (ISP) describes how the World Bank, public
entities, and other development partners will address the risk mitigation measures and provide
the technical advice necessary to facilitate achieving the PDO (linked to results/outcomes
identified in the Results Framework). The ISP below also identifies the minimum requirements
to meet the World Bank’s fiduciary obligations.
2.
The MMA in Brazil has reasonable capacity and has performed well in previous GEFfinanced projects. The SFB does not have experience with GEF-financed projects but sits within
the MMA and will benefit from and be guided by its experience. State governments have varying
levels of capacity and will need to be engaged and supported. ICMBio and FUNBIO also haveexperience implementing World Bank/GEF-financed projects, however, being relatively new
institutions, they can still benefit from technical assistance. CI-Brazil lacks previous experiencein implementing World Bank/GEF-financed projects and will benefit from technical assistance.
The World Bank will provide guidance to these institutions as needed.
Implementation Strategy - Potential Risks
3.
As described in the project risk analysis, there are moderate risks to some stakeholders,
especially because the social safeguards of Indigenous Peoples (OP/BP 4.10) and Involuntary
Resettlement (OP/BP 4.12) have been triggered. Although the public perception of the project islikely to be positive, people’s livelihoods could be disrupted by the creation of new PAs, so
perceptions of the project could change. Face-to-face consultations on safeguard documents were
held locally in the Amazon region on May 30, 2017 in Manaus and on August 1, 2017 in Rio
Branco. Representatives of indigenous peoples and local community organizations participatedin both consultations (as described in the project’s IPPF and ESMF). Furthermore, to mitigate
any potential risk of social conflict during project implementation, the MMA, ICMBio, and
FUNBIO issued a call for public consultation on their website, inviting members of civil society
to download and comment on the socioenvironmental safeguard documents. Complementarily,
invitations to participate in the consultation process were sent through direct mailing to key
stakeholders including indigenous peoples’ associations, rural producers’ organizations,environmental NGOs, and governmental agencies, among others. The public was invited to makecomments or suggestions through an online form where interested people can identify
themselves or remain anonymous to reduce self-censuring by participants.
4.
There are some risks related to the implementation agencies. There are manyorganizations at different levels involved in implementation, and the coordination of these will
be a challenge. Additionally, some of the institutions involved are relatively new and are still
establishing their relationships with relevant partners.

73

Administrative and Fiduciary Flexibility
5.
Disbursement categories are aligned with proposed project activities allowing flexibility
in the use of funds to reach specific targets. The operating plans and Procurement Plans willallow the GOB, FUNBIO, CI-Brazil, and World Bank to plan the use of funds based on actual
opportunities and needs.
6.
The initial disbursement size and reimbursement amounts have been determined based on
the project scope and expected disbursement profile. For procurement, appropriate streamlining
and thresholds for prior and post review have been established. An audit of annual project
financial statements will be conducted by an independent auditing firm, in accordance with
TORs acceptable to the World Bank.
7.
Tables 4.1 and 4.2 provide the main activities to be carried out and respective
skills/resources required for the project implementation.
Table 4.1. Implementation Support Plan
Time

Focus

Skills Needed

Resource
Estimate
Included in project
operating plan
(US$1,000,000)

Partner Role

First
12
monthsEstablishing fiduciary systems
in FUNBIO and CI- Brazil

Procurement and FM
expertise

Establishing andoperationalizing PCU in MMA

Project management andM&E

Included in project
operating plan
(US$600,000)

Communications strategy
development andimplementation
Environmental-social
management framework inplace

Communications/knowledge
management specialists

Included in project
operating plan
(US$100,000)
Included in project
operating plan
(US$100,000)

MMA/ PCU to
identify and hostEstablishment ofcommittees/units and BrazilASL AC (and ad hoc working
groups as needed)

Organization of regularhigh-level meetings

Included in project
operating plan
(US$10,000)

MMA leadership

FUNBIO/CI-Brazil
provide staff,
space, andequipment
MMA to provide
staff and space and
CI-Brazil toprovide equipment,
travel, and per
diem (as needed)

identify, hostSocial/indigenous
peoples specialist;
environmental impact
evaluation experts

MMA/ICMBio
staff to monitor
IPPF and overall
ESMF

Table 4.2. Skills Mix Required
Skills Needed
Safeguards (social,indigenous peoples, andenvironment; othersafeguards per project
documents)

Number of Staff Weeks
World Bank
implementation support
will require 6 SWs per
fiscal year (mainly seniortechnical staff)

Number of Trips
At least two trips per
fiscal year

74

Comments
Given safeguards
complexity, extra
implementation support isneeded.

Institutional capacity
strengthening (FM,procurement, anddisbursement)
Technical Expertise
Enhancement (PA, M&E,
landscape management,
forest restoration,knowledge management,
communications, technicalsupport, and so on)

10 SWs per fiscal year
(mix of junior and seniortechnical staff)

At least two trips per
fiscal year

20 SWs per fiscal year
(mix of junior and seniortechnical staff)

At least two trips per
fiscal year

75

Additional technicalassistance may be neededin form of training of CIBrazil and FUNBIO staff.
As a high profile,landmark project for theGovernment, extra
technical assistance will
be requiredAnnex 5: Financial, Economic, and Incremental Cost Analysis
BRAZIL: Amazon Sustainable Landscapes Project
A. Global and National Relevance of the Amazon and Overviews of its Threats
1.
The economic analysis presents an incremental analysis of the economic (welfare)benefits generated by the proposed investment, resulting from the provision of global and local
environmental benefits, which are both private and public goods. The tendency to underestimate
the value of ecosystems is related, for the most part, to their ‘public good’ quality. The
ecosystems and the services that they provide are accessible to all and, thus, protected by none.
They generate shared benefits and therefore encourage free riding. Being publicly provided, they
are underpriced or unpriced and thus tend to be overused and abused. This public good characterof the ecosystem applies at the local scale as well as globally.
2.
The Amazon rain forest is of global importance in terms of carbon sequestration andbiodiversity and plays a critical role in regulation of the regional and global climate. The
Amazon forests help regulate temperature and humidity and are linked to regional climate
patterns through hydrological cycles that depend on the forests. About 15 percent of all river
freshwater on earth passes through the Amazon River, which illustrates the importance of the
Amazon for life on our planet. Besides that, there is a clear hydro-climatological connection
between the Amazon and other basins like the adjacent La Plata River. After evaporation,
moisture from the Amazon is transported to the La Plata river basin where it contributes about 19
percent to precipitation.
3.
Similarly, given the large amount of carbon stored in the Amazon forests, there is also
considerable potential to influence the global climate if not properly protected or managed. The
Amazon contains 90–140 billion metric tons of carbon, the release of even a portion of which
could accelerate global warming significantly. Land conversion and deforestation in the Amazon
release up to 0.5 billion metric tons of carbon per year, not including emissions from forest fires,
thus rendering the Amazon an important factor in regulating global climate.42
4.
Lastly, the vast biodiversity of the Amazon also has a global option or existence values.
Future generations might benefit from new medical discoveries that require natural resourcesfrom the Amazon. The global society is likely to see some value of life for its own sake and to
the importance of keeping options open for the future, too.
5.
The Amazon rain forest is also of national importance; supporting subsistence
livelihoods, providing income sources, and avoiding soil erosion. Roughly half of Brazil’s
indigenous population lives in the Brazilian Amazon. Many of them live traditionally, heavily
dependent on the forest for food, shelter, tools, and medicines. NTFP are an important source ofsubsistence livelihoods and income for people inhabiting the Amazon. Tree loss would not only
eliminate these income sources, but would also be a major cause of erosion because the roots that42

Nepstad, D, C.M. Stickler, B. Soares-Filho, and F. Merry. 2008. “Interactions Among Amazon Land Use, Forests,
and Climate: Prospects For A Near-term Forest Tipping Point.” Philosophical Transactions of the Royal Society:
Biological Sciences. doi:10.1098/rstb.2007.0036.

76anchor the soil would be eliminated. The sediments and eroded soils are eventually washed into
the rivers causing significant problems downstream, for example, for hydroelectric projects,
irrigation, and biodiversity in the river delta. Furthermore, an intact natural tropical forest
provides much better natural protection against wild fires than a forest under different use
because the amount of dry logging waste is lower and the use of fire for land clearance is absent.
6.
Finally, the Amazon also has a recreational value. Brazil attracts more than 6 million
international tourists annually, of which an increasing number are going to the Amazon. The
Amazonas state, for example, had the highest growth (51.6 percent) in the number ofinternational visitors, between 2013 and 2014.43 Easily accessible areas are particularly valuablefor tourism but—as outlined in the following paragraphs—at the same time more likely to sufferfrom land degradation.
7.
The Amazon rain forest is at risk of deforestation and land degradation due to factors
ranging from agricultural expansion to illegal mining. Agricultural expansion is by far, theleading land-use change associated with deforestation in Amazonia. The opening of pastures for
cattle ranching takes place on areas covered with mature forests, or areas that were previously
cleared by small farmers by means of slash and burn agriculture. The building of new roads or
improvement of existing roads in the Amazon has facilitated uncontrolled migration to otherwise
inaccessible areas resulting in increased land grabbing, deforestation, and expansion ofunsustainable extractive activities like illegal logging and mining. The high demand for timber
products, weak forest governance, and weak rule of law are additional drivers for illegal logging,which destroys nature and wildlife, damages communities, and distorts trade. In the Brazilian
state of Pará, for example, 65 percent of the logged wood was illegally logged. In recent years,
the levels of illegal mining have been experiencing highs due to spiking gold prices. The mostcommon form of gold mining in the Amazon is conducted in a way that is damaging to flora andfauna in the Amazon and for human health. In addition to landscape removal and watercontamination with dangerous substances like mercury, the enormous energy needs of theindustrial mining and ore processing industries create a demand, which drives deforestation forcharcoal fuel and damming of rivers for hydropower. More than 150 new dams are planned in
the Amazon basin and the effects on the forests could be dramatic and irreversible.
8.
Preventing agricultural expansion—even if driven by deforestation—has an opportunity
cost because landholders who are not using their land for agricultural activities are foregoingprofits. To fully evaluate what would happen without the project, it is necessary to account forthese costs. As outlined earlier, agricultural expansion into the Amazon, mainly through cattle
grazing and soy cultivation, is seen as the main driver of deforestation in the Amazon. The
agricultural expansion is however, limited by climatic and soil conditions as well as accessibility.
As for most drivers of deforestation, proximity to transport infrastructure and markets isextremely important for producers.44.Accordingly, the estimated agricultural opportunity costs
for the Brazilian Amazon vary substantially depending on production method (small scale versus
industrial) and regions (close to roads versus deep into the Amazon).
43

Ministério do Turismo. 2015. AM registra maior salto na demanda turística internacional, Departamento de
Polícia Federal e Ministério do Turismo.
44
Olsen, N., and J. Bishop. 2009. The Financial Costs of REDD: Evidence from Brazil and Indonesia. International
Union for Conservation of Nature.

77

9.
To significantly reduce deforestation and promote efficient land use in the Amazon
region, the project needs to address key issues across the complex set of drivers of deforestation
and barriers to sustainable land use. This proposed project aims at generating scalable results in
reducing deforestation and the loss and fragmentation of natural habitats, as well as preventing
the extinction of endangered species and improving their conservation status.
10.
Establishing new PAs and improving management effectiveness of new and existing
conservation and resource management areas (that is, forest concessions), can help contain the
expansion of deforestation. The Brazil-ASL project, along with sister projects in Peru andColombia, will invest in a number of instruments to contain deforestation in areas where theconservation of closed-canopy forests is paramount for the stability of the ecosystem andassociated environmental services, including climate change regulation. Without proper policies
and investments in the PAs and integrated landscape management, there is high risk of the
Amazon ecosystem as a whole reaching a tipping point of runaway natural forest dieback due todrought and fire that would be immensely difficult to stop. In the business-as-usual (BAU)
scenario of this analysis these threats persist.
B. Without-Project Scenario (BAU scenario)
11.
For this analysis, a BAU baseline case is used that assumes that future development
trends follow those of the past and no changes in policies will take place. This approach follows
recommendations by the Intergovernmental Panel on Climate Change 45 and the FAO46 and uses
past trends to model the BAU or the without-project scenario. The approach is moresophisticated than a no-change scenario but less complex than a future-trends scenario. The pasttrends scenario supposes that the changes in land use and practices will evolve in the same way
as they have in the past. In developing countries land-use patterns change quickly, so it is more
relevant to use recent past trends than long-term past trends. Accordingly, this analysis uses
recent trends as these seem to be more representative of the current evolution.
12.
In the BAU scenario it is assumed that the five-year average deforestation rate ismaintained. Deforestation rates have been falling from a record high of almost 28,000 km 2 in2004 to 4,500 km2 in 2012. However, in the last two years a significant uptick in deforestation
rates was observed, reaching almost 8,000 km2 in 2016, which makes an accurate forecast
challenging. Considering the past deforestation rates, this is a conservative scenario because
deforestation rates have, in some of the last 15 years, been up to four times higher. However, toaccount for the commitment by the GOB to combat deforestation such a conservative BAU
scenario seems justifiable. The amount of areas under strict protection or sustainable use hasremained virtually constant throughout the last years (see Figure 5.2) and it is therefore assumed
that in a BAU scenario, the area under protection would remain constant as well.

45

http://www.ipcc.ch/ipccreports/tar/wg3/index.php?idp=286.
FAO (Food and Agriculture Organization of the United Nations). 2011. Main Recommendations for the
Elaboration of the Baseline Scenario; Building the “Without Project” Scenario Within The EXACT Tool.
46

78

Figure 5.2. Evolution of Deforestation Rate and PAs in Brazil

Source: Nepstad, D. et al. 2014. “Slowing Amazon Deforestation Through Public Policy and Interventions in Beefand Soy Supply Chains.” Science 344 (6188):1118–1123.47

C. ‘With Project’ Scenario - Anticipated Outcomes and Their Associated Benefits
13.
With its different components and multiple areas of investments, the project will generate
a diverse portfolio of economic benefits ranging from direct use values to indirect, nonuse
values. Only some of these benefits are reflected in market prices, due to widespread market
imperfections and policy failures. Both private land users and public policy makers typicallyfocus on tangible, marketed uses, and often neglect nonmarket environmental benefits. This
undervaluation of environmental benefits results in excessive conversion of forest land to otheruses or excessive damage to nonmarket forest services in the process of extracting marketed
timber and other goods. A direct use value is, for example, the use of forest products such as
timber, fruits, and medicinal products, while at the other end of the spectrum, a commonlyreferred to indirect nonuse value is related to the mere existence of virgin tropical rain forests.
The transition from direct use to existence values is characterized by a decreasing tangibility ofthese values. The total value of a tropical rain forest comprises the sum of a large number ofdifferent values from each value category. Table 5.1 provides a limited overview of selected
examples of the four categories of benefits that could be associated with the project. Given the
difficulties of assigning monetary benefits to the entire range of economic benefits generated by
the project (for example, governance support), only selected economic benefits were included in
the quantitative economic assessment of project feasibility.
Table 5.1. Types of Forest Value
1. Direct Use

Use Values
2. Indirect Use

47

3. Option

Nonuse Values
4. Existence

Deforestation rates for subsequent years have shown an increase from the all-time low of 4,571 km2 in 2012, withlatest available figures from 2016 of 7,989 km2.
(http://rainforests.mongabay.com/amazon/deforestation_calculations.html).

79

Wood products (timber, fuel)

Watershed protection

Future direct andindirect uses

Biodiversity (wildlife)

Non-wood products (food,Nutrient cycling
Culture, heritage
Educational, recreational, andAir pollution reduction
Intrinsic worth
cultural uses
Human habitat
Micro-climatic regulation
Bequest value
Amenities (landscape)Carbon storage
Source: Bishop, J. T. 1999. Valuing Forests: A Review of Methods and Applications in Developing Countries.

14.
The area for which costs and benefits are examined consists of the new PAs, the existing
PAs brought under improved forest management, and the area that benefits from integrated
landscape restoration. For the first two types of areas, the project target values of 3,000,000 ha
forest land newly designated as PAs and 57,000,000 ha under improved forest management inexisting PAs are used. The area benefitting from integrated landscape restoration has been
calculated based on the assumed avoided deforestation. It is assumed that the integrated
landscape restoration component leads to a 20 percent reduction of the annual deforestation rateduring the project lifetime (six years) and the current five-year average deforestation rate for the
Legal Amazon of 600,000 ha is used to estimate the baseline annual deforestation rate. This ratewould remain constant in a without-project scenario. Based on this assumption, 120,293 ha peryear of deforestation will be avoided during the implementation phase of the project. This isconsidered a conservative approach because the project will most likely incentivize theprotection of forest land beyond the implementation phase of the project, generating benefits andcosts further in the future as well (for a longer time horizon the benefits are larger than the costs).
Figure 5.3 compares the without-project case (BAU scenario) to the ‘with project’ case. The
graph vividly shows that the project generates large benefits, simply by looking at the area thatwill benefit from the project. This includes areas of avoided deforestation, areas that areconverted into a PA, and areas in PAs that are sustainably managed. Other economic benefits,
like increased human capital, improved governance structures, and bequest values, were notincluded. Further, the economic benefits included in the analysis were strictly limited to those
immediately generated and associated with the project. Other benefit effects, such as, future
improvements of forest management due to the capacity building in the administration are notincluded.

80Thousands hectares

Figure 5.3. Comparison of the Sum of the Area Established as New PAs, the Area of Existing PAs Brought
under Improved Forest Management, and the Area That Benefits from Integrated Landscape Restoration,
With- and Without-Project (BAU) Scenario until 2022
470,000
460,000
450,000
440,000

With project

430,000

Without project (BAU)

420,000
410,000
400,000
2017

2018

2019

2020

2021

2022

Note: The area is the sum of the forest area, PAs, and PAs under sustainable management. It is assumed that thecurrent five-year deforestation rate prevails in the without-project scenario, while in the ‘with project’ scenario thedeforestation rates are reduced by 20 percent. In the without-project scenario the PA and the share of sustainably
managed areas remains constant, while in the ‘with’ scenario they are expanded by the target value.

D. Main Assumptions, Cost Factors, and Methodology
15.
As required for economic analysis of projects, a with- and without-project situation isused for estimating incremental benefits generated by the project.48 Taking account of the current
situation and the fact that the environmental as well as livelihood situation in the project areas is
likely to continue to decline, even a slowing but continuation of an already negative trend
represents a project benefit. For example, a slowing but continuation of deforestation and forest
degradation trend is a benefit that can be quantified by the amount of incremental carbon that is
not emitted into the atmosphere compared to the ‘without project’ situation. The NPV and BC
ratio are used as criteria to assess the economic feasibility of the project.
16.
Various studies in the scientific literature have assessed the economic costs and benefitsof the Amazon rain forest—this assessment uses data from Verweij et al. (2007).49 For thiseconomic assessment, economic benefits from only one source are used to apply a consistentcalculation method. Verweij et al. (2007) appears as the best available option for two reasons.
First, it is one of, if not, the most recent study on economic benefits in the Amazon. Second, thevalues in this study are consistent with findings from other studies and can be regarded as very
conservative as they are at the lower-bound studies of the spectrum of economic benefits for the
Amazon (table 5.2 shows upper and lower-bound estimates for the economic benefits used).
48

For a more detailed discussion of the ‘with project’ and ‘without project’ principle in project analysis andevaluation, please refer to (a) Gittinger, J.P. 1984. Economic Analysis of Agricultural Projects. Washington, DC:
World Bank, 41–43 and (b) Belli, P, Jock. R. Anderson, Howard. N. Barnum, John. A. Dixon, and Jee-Peng Tan.
2001. Economic Analysis of Investment Operations. The World Bank Institute, World Bank, 17–24.
49
Verweij, P., M. Schouten, P. van Beukering, J. Triana, K. van der Leeuw, and S. Hess. 2009. Keeping the Amazon
Forests Standing: A Matter of Values. Report for WWF Netherlands.

81

Only values from Verweij et al. (2007) are used to avoid double accounting by using‘overlapping’ categories from different sources. It should be therefore noted that it is likely thatthe actual benefits are greater because Verweij et al. (2007) do not account for medicinal
benefits, bioprospecting, watershed value, food value, or timber. Moreover, this analysis uses thelower-bound estimates from Verweij et al. (2007), which is again a very conservative approach.
For those areas that are brought ‘only’ under improved management—in contrast to those areasthat constitute a new PA—it is assumed that the improved management leads to environmental
benefits of 5 percent of the total benefits of Amazon forests.
Opportunity Costs of Land17.
To account for the opportunity costs of land resulting from foregoing agricultural profits,
this study uses values for soy and cattle ranching, which vary substantially between and withinstudies, given the diversity of production method (small scale versus industrial) and regions(close to roads versus deep in the Amazon). For example, Grieg-Gran (2006)50 estimate the
NPVs of cattle ranching between US$3 per ha for small-scale production and US$413 per ha forlarge-scale production. The NPV for soybeans is US$3,275 per ha. It should be noted that thesevalues are NPV and not annual values. For this analysis, values from Borner and Wunder(2008)51 are used, that is, US$39 per ha per year for cattle ranching and US$171 per ha per year.
These values translate into an NPV of US$367 per ha for cattle and US$1,600 per ha, forsoybeans.52 This confirms that the chosen values are in line with other studies and, if anything,close to the upper bound of the spectrum of estimates. It is assumed that 100 percent of thealternative agricultural production is going into highly profitable soybean. The rationale being,that even though soybean production takes place mainly in pasture areas—not the Amazon—it
displaces cattle ranching to forest areas and is thus, a powerful indirect driver of deforestation(Olsen and Bishop 2009).53 This approach is regarded as conservative because soybean
production is not a direct driver of deforestation and the alternative land use for the landholder is
not necessarily soybeans but cattle grazing. Due to this approach the overall costs are rather
overestimated because the production of soybean is much more profitable than cattle (US$171
per ha per year versus US$39 per ha per year).

50

Grieg-Gran, M. 2006. The Cost of Avoiding Deforestation. Report prepared for the Stern Review of the
Economics of Climate Change. London: International Institute for Environment and Development.
51
Borner and Wunder. 2008. “Paying for Avoided Deforestation in the Brazilian Amazon: From Cost Assessment to
Scheme Design.” International Forestry Review 10 (3).
52
Using the 10 percent discount rate and a 30-year period like Grieg-Gran (2006).
53
Olsen, N., and J. Bishop. 2009. The Financial Costs of REDD: Evidence from Brazil and Indonesia. International
Union for Conservation of Nature.

82

Table 5.2. Overview of Study Estimates on Economic Values of Tropical Forests

Timber a

Upper
Bound

Verweij et al.
2007
Direct Use

Lower
Bound

307

—

—

Torras et al. (2000)

b

—

c

Pinedo-Vasques et al.
d(1992)
Peters et al. (1989)

Source Upper Bound

Source Lower Bound

Food

400

—

20

Peters et al. (1989)

Non-timberrawmaterials
Recreation

707

50

22

Muniz-Miret et al. (1996)

50

3

5

Tobias and Mendelsohnf(1991)

ClimateregulationFire
prevention
Watershedvalue
Erosioncontrol

336

Indirect Use
70

59

Krutilla (1991)

Pearce (2001)

6

6

4

Verweij et al. (2007)33

Idem.

19

—

19

Fearnside (1997)

238

68

—

Torras et al. (2000)—

9

Fearnside (1997)46

Grimes et al. (1994) kehRuitenbeck (1992)

g

i

j

Idem.

Option Values
Medicinal
beneﬁts

20—

Bioprospect
24——
Rausser
and
Small
—
l
ing
(2000)m
Existence
893
10
3
Kramer and Mercer
Chopra (1993)n
beneﬁts(1997)
Grand
2593
207
141
total
Note: a). Timber benefits are excluded because it is unclear whether sustainable forest management is reallypossible, by applying multiple long rotation cycles of 20–40 years (Fredericksen, T.S., and F. E. Putz. 2003.
“Silvicultural Intensification for Tropical Forest Conservation.” Biodiversity and Conservation 12(7): 1445–1453.).
Typically, at the second harvest only 20–30 percent of the volume harvested at first harvest is available (Verweij etal. 2007).
b). Torras, M. 2000. “The Total Economic Value of Amazonian Deforestation 1978–1993.” Ecological Economics
33: 283–297.
c). Peters, C.M., A.H. Gentry, and R.O. Mendelsohn .1989. “Valuation of An Amazonian Rainforest.” Nature 339:
655–656.
d). Pinedo-Vasquez, M., D. Zarin, and P. Jipp. 1992. “Economic Returns from Forest Conversion in the Peruvian
Amazon.” Ecological Economics 6: 163–173.
e). Muniz-Miret N., R. Vamos, M. Hiraoka. F. Montagnini and R.O. Mendelsohn.1996. “The Economic Value ofManaging the Acai Palm in the Floodplains of the Amazon Estuary, Pará, Brazil.” Forest Ecology and Management
87 (1–3): 163–173.
f). Tobias, D., and R. Mendelsohn. 1991. “Valuing Ecotourism in a Tropical Rain Forest Reserve.” Ambio 20 (2),91–93.
g). Ruitenbeek, H.J. 1992. “The Rainforest Supply Price: A Tool for Evaluating Rainforest Conservation
Expenditures.” Ecological Economics 6: 57–78.
h). Krutilla, J.V. 1991. Environmental Resource Services of Malaysian Moist Tropical Forest: For Resources for the
Future. Baltimore: Johns Hopkins University Press.
i). Pearce, D.W. 2001. “The Economic Value of Forest Ecosystems.” Ecosystem Health 7(4): 284–296.

83j). Fearnside, P. 1997. “Environmental Services as a Strategy for Sustainable Development in Rural Amazonia.”
Ecological. Economics 20 (1), 53–70.
k). Grimes, A., S. Loomis, P. Jahnige, M. Burnham, K. Onthank, R. Alarco´n, W.P. Cuenca, C.C. Martinez, D.
Neill, M. Balick, B. Bennett, and R. Mendelsohn. 1994. “Valuing the Rain Forest: The Economic Value of Nontimber Forest Products in Ecuador.” Ambio 23 (7): 405–410.
l). Rausser, G. and A. Small. 2000. “Valuing Research Leads: Bioprospecting and the Conservation of Genetic
Resources.” Working Paper Series, Berkeley Olin Program in Law and Economics.
m). Chopra, K. 1993. “The Value of Non-timber Forest Products: An Estimation for Tropical Deciduous Forests in
India.” Economic Botany 47 (3): 251–257.
n). Kramer, R.A. and D.E. Mercer. 1997. “Valuing A Global Environmental Good: US Residents’ Willingness to
Pay to Protect Tropical Rain Forests.” Land Economics 73 (2): 196–210U.

Distribution of Costs and Benefits Over Time18.
A 15-year period is assumed to assess the economic feasibility of the project, alongside a
6-year sensitivity assessment. It is assumed that there are no further incremental changes ofproject-generated benefits beyond the 15-year project evaluation period. This is a rather
conservative assessment as it is likely that some of the momentum created by the project, forexample, with regard to the capacity of the administration to manage PA and forest ecosystems
in general, will continue to increase after project implementation with increasing increments
compared to a without-project situation. While project costs are only assumed to emerge for thesix years of project implementation, benefits and opportunity costs are assumed to be generated
beyond the implementation phase of the project. The distribution of benefits (increase in PAs andincrease of PAs under improved forest management) is based on the triangular number54 for six
project years, that is, the project area is divided by 21 to obtain the factor that is each year added
to the growth of the previous year.55 The rationale for this assumption regarding the growth
pattern is that designation and implementation of PAs initially require more time than at a later
point of the project. Similarly, the distribution of project costs follows a reverse pattern, having
higher investment costs in the early years and a fading out of project investments in later projectyears as can be seen in figure 5.2. Project costs are approximated using the investment costs ofthe proposed project totaling US$60.33 million.

millions

Figure 5.2. Distribution of Project Costs
70
60
50
40
30
20
10
0

2017

2018

2019

17,237,143

14,364,286

11,491,429

8,618,571

5,745,714

2,872,857

Cumulative project costs 17,237,143

31,601,429

43,092,857

51,711,429

57,457,143

60,330,000

Annual project costs

54
55

2020

The triangular number is n (n + 1) / 2, and for six project years 6 × 7 / 2.
The formula for year n is therefore: n × n (n + 1) / 2.

84

2021

2022

19.
A sensitivity analysis is applied for the main simulation parameters, notably discount rate
and project horizon to investigate analytical robustness. For the discount rate, alternative rates of
5 percent, 10 percent, and 20 percent are applied. In addition to varying discount rates,
simulation results are tested against changing benefit values. Although all assumed benefit
values are already lower-bound estimations and are only applied to the areas that benefit directlyfrom the project (excluding spillover effects and positive externalities resulting from improved
policy frameworks, research, and monitoring), benefit reductions of ‒20 percent and ‒50 percent
are tested. It has to be noted that in addition to using already conservative values, these have notbeen adjusted from their publication year to current prices, which would result in an increase invalues. This set of sensitivity assessments enables a comprehensive analysis of the economic
robustness of the project in relation to the changing or differentiated value parameters. All
sensitivity analyses are run for all discount rate scenarios. The results of the quantitative results
will be complemented with qualitative benefits to conclude overall project feasibility.
E. Results
20.
Overall, the results show positive simulation outcomes for the project, thus confirming
economic feasibility. Simulation results are summarized in tables 5.3a, 5.3b, 5.3c and 5.3d. Eachtable shows the NPV and the BC ratio for different discount rates and benefit variations. Only forsituations in which the combined input parameters are set at very ‘extreme’ low values in terms
of project impacts, does the analysis yield BC ratios close to 1. The benefits are more than twotimes larger than the costs in the majority of scenarios and create an NPV of US$5.6 billion inwhat is regarded as the most appropriate scenario.
21.
Additional checks yield positive results, even when the project lifetime is reduced to six
years and the project costs include co-financing contributions, which attests to the robustness of
the results. Under the first robustness check that uses a six-year project lifetime only, the BC
ratio ranges between 2.01 for a 5 percent discount rate and 0.99 for a 20 percent discount rate
and a reduction of the benefit values by 50 percent. This means that only in the most pessimistic
scenario would the project not generate a net welfare gain and the welfare loss in that scenario
would be very small. Under the second robustness check that uses a six-year project lifetime andincludes the co-financing contributions of US$374 million, the project yields only a net welfare
loss if the benefits are reduced by 50 percent. In the other less pessimistic scenarios the net
welfare is still positive throughout all discount rate scenarios. Overall, these results show that the
project is very likely to generate large welfare gains.
22.
The project component ‘Integrated Amazon Protected Area System’ is economically
viable as a separate component, even when GEF and co-financing costs are included. These
results apply across all simulated discount rates and even apply under the assumption that only
50 percent of the anticipated project benefits can be achieved (see table 5.3d). Even if simulated
only over a six-year project period this component yields positive results (not shown here).
Again, these results apply to all three discount rates. In fact, the benefits generated underComponent 1 alone cover the costs from all other activities, including the opportunity costs fromavoided deforestation under Component 3.

85

Table 5.3. NPVs (US$) and BC Ratio Under Different Scenarios
a. Default Scenario, Project Lifetime of 15 Years and All Costs Included (GEF + Co-financing)

Discount Rate 5%
Discount Rate 10%
Discount Rate 20%

Baseline
NPVBC Ratio
5,671,280,525
2.10
3,717,442,988
2.09
1,827,632,762
2.06

Baseline (‒20%)
NPV
BC Ratio
3,505,414,984
1.68
2,289,897,992
1.67
1,116,367,048
1.65

Baseline (‒50%)
NPV
BC Ratio
256,616,672
1.05
148,580,498
1.04
49,468,477
1.03

b. Robustness Check 1, Project Implementation 6 Years and GEF Contributions Only

Discount Rate 5%
Discount Rate 10%
Discount Rate 20%

Baseline
NPVBC Ratio
1,499,920,405
2.01
1,206,517,815
1.99
811,193,825
1.97

Baseline (‒20%)
NPV
BC Ratio
901,748,266
1.60
722,636,447
1.60
481,929,321
1.58

Baseline (‒50%)
NPV
BC Ratio
4,490,057
1.00‒3,185,604
1.00‒11,967,434
0.99

c. Robustness Check 2, Only Project Implementation 6 Years and Co-financing Costs Included

Discount Rate 5%
Discount Rate 10%
Discount Rate 20%

Baseline
NPVBC Ratio
1,170,708,328
1.64
913,613,241
1.61
573,049,605
1.53

Baseline (‒20%)
NPV
BC Ratio
572,536,189
1.31
429,731,874
1.29
243,785,101
1.23

Baseline (‒50%)
NPV
BC Ratio‒324,722,020
0.82‒296,090,177
0.80‒250,111,655
0.77

d. Robustness Check 3, Component 1 Only Over 15 Years and Including All Costs

Discount Rate 5%
Discount Rate 10%
Discount Rate 20%

Baseline
NPVBC Ratio
4,309,607,723
2.24
2,947,939,326
2.20
1,516,678,267
2.13

Baseline (‒20%)
NPV
BC Ratio
2,750,568,014
1.79
1,868,415,101
1.76
944,383,054
1.70

Baseline (‒50%)
NPV
BC Ratio
412,008,449
1.12
249,128,764
1.10
85,940,234
1.06

F. Conclusion
23.
This economic analysis conducted for the Brazil - ASL Program shows anoverwhelmingly positive economic impact. The results of the quantitative simulations are also
robust across a range of sensitivity analyses assuming significant changes in discount rates andkey benefit parameters. Throughout the analysis, benefit assumptions were always conservative
using the lower-bound values of associated nonmarket benefits attributed to the project.
24.
The quantitative analysis was also strictly limited to values that can be clearly attributed
to the project. Besides, the benefits for areas that have been explicitly conserved, protected, or
put under sustainable management by the project, additional benefits can arise from better public
service delivery resulting from capacity building of the forest administration and specialized
training to beneficiaries. Further, it was assumed that the benefits would not further change
beyond the project implementation period nor were any sort of positive spillover effects taken
into account, even though it is likely that positive effects will continue to generate positive
incremental changes compared to the ‘without project’ situation. While this approach is likely tosystematically undervalue the project impacts, it provides a high degree of robustness. If

86additional and downstream project benefits had been considered the simulations would haveyielded even stronger results.
25.
Probably one of the most important, though so far unstated, economic impacts of the
project relates to the capacity building of government institutions at the central and decentralized
levels. The enhanced capacities of government institutions will improve public service delivery
with numerous benefits and positive economic impacts. Especially with the continuingchallenges of natural resources management—not least due to climate change—the aspect ofenhanced functioning of public institutions cannot be underestimated. Enhanced functioning ofgovernment institutions will also facilitate the implementation of future projects and investmentsthat will build on and continue the achievements of this project. Similar considerations apply toknowledge generation and management achieved by the project.
26.
In summary, based on this economic evaluation, it is concluded that the project will resultin significant positive development impacts. The consideration of only a few of those benefits inthe quantitative analysis sufficed to yield positive economic results. The achieved economic
benefits comply largely with what was anticipated during the design stage of the project. This
supports the design and implementation of the project, in particular the selection of activities inwhich the project plans to invest. The analysis demonstrates that investments in sustainable
natural resource management can significantly contribute to the economic development
ambitions of a developing country with a large forest area like Brazil.

87

Annex 6: Key Government Policies and Programs
BRAZIL: Amazon Sustainable Landscapes Project1.
The following is a list of the most significant actions taken in Brazil that constitute thebaseline for the current project:(a) PAs. The legal PA has been expanded to cover 27 percent of the Brazilian Amazon
under ARPA, a partnership with GEF, World Bank, WWF, and KfW which started
in 1998. Since then, other partners have contributed to ARPA, including InterAmerican Development Bank, Fundo Amazonia (through BNDES), Moore
Foundation, and others. ARPA, most recently, established a Transition Fund with anestimated target value of around US$215 million.
(b) Indigenous lands. A network of indigenous lands was established by theGovernment which protects an additional 25 percent of the Brazilian Amazon.
(c) Biodiversity conservation targets. In the 2020 National Goals for Biodiversity(targets 14 and 15), the Government established in Resolution number 6 ofSeptember 2013 that the restoration of ecosystem services and biodiversity is
consistent with and will be an important share of Brazil’s contribution to global
climate change mitigation and adaptation efforts. The NBSAP, submitted to the
CBD on August 31, 2016, further reinforces this. It details 20 targets,56 several ofwhich are particularly relevant to the proposed project, including targets 3, 4, 5, 7,
11, 14, and 15, which promote, among others, the deployment of incentives forsustainable use of biodiversity, implementation of sustainable management plans forboth productive and extractive activities, and restoration of ecosystems and related
services. Specific 2020 targets include, to: (i) reduce the rate of loss of natural
habitats by at least 50 percent (compared to the 2009 rate) and significantly reduce
degradation and habitat fragmentation, (ii) bring at least 30 percent of the Amazon
under legal protection, and (iii) restore at least 15 percent of degraded ecosystems.
(d) Reduction in agricultural GHG emissions. The National Policy for Climate
Change (NPCC), launched by the Government in December 2009 (Law
12.187/2009), commits Brazil to a 36.1 percent to 38.9 percent reduction in GHG
emissions by 2020, relative to an agreed baseline scenario. In December 2010, theGovernment approved Decree 7390, which regulated the NPCC and stated that the
projections for 2020 would be achieved through sectoral plans and initiatives. Oneof these plans is the Low-Carbon Economy in Agriculture Plan (Portaria
Interministerial 984/2013), known as the ABC Plan, which aims at encouraging theuse of low-carbon and sustainable practices for management of natural resources,
including restoration of degraded pastures.

56

https://www.cbd.int/countries/targets/?country=br.

88

(e) Protection of native vegetation. In 2012, the GOB approved a new Law forProtection of Native Vegetation (Law 12.651/2012), which regulates land use andmanagement on private properties. The legal requirement of Brazil´s ‘new’ Forest
Code of 2012 demands that each rural property keep a portion of land as a set-aside
as both an RL’ and a permanent PA to better reconcile food, timber, and bioenergy
production while, at the same time, protecting globally important biodiversity andcarbon stocks. Non-exempt landowners who cleared more than this area of native
vegetation are required to either restore their ‘deficit’ within 20 years or compensate
by purchasing CRAs. A recent analysis estimated that Brazil has approximately 21
million ha of native vegetation deficit, the restoration of which is also an opportunity
for mitigating GHG emissions. Law 12.651/2012 also establishes innovative
instruments such as the PRA and the SICAR, a georeferenced web system that will
enable documentation of over 5 million rural properties, improving transparency andproviding a pathway to environmental compliance. This law states that after five
years from the date of its publication, financial institutions shall not grant
agricultural credit, in any of its forms, for owners of rural properties who are notenrolled in SICAR and hence are not proving compliance with the law.
Implementation of this national legislation will directly benefit from this project,because it encourages the compliance of rural properties with the law.
(f) Green resettlements program. The Government has also modified its agrarianreform resettlement scheme to a Green Resettlements Program, which starts to value
environmental assets, pays attention to both environmental restoration and foodsecurity, and promotes land titling and rural environmental registry as well as
environmental monitoring and control.
(g) Restoration of native vegetation. Affected landowners will need assistance to meetthe native vegetation recovery requirements. The GOB intends to fulfil the needs ofthese landowners by expanding and strengthening public policies, incentives, private
markets, farmer practices, and other measures to enable the recovery of native
vegetation of 12.5 million ha (after factoring in CRA trading and other ‘offsets’provided by the Forest Law) over the next 20 years. It is projected that the recovery
will occur on an exponential growth curve, starting with 400,000 ha during the first
five years and accelerating dramatically thereafter, as the enabling conditions forlarge-scale restoration come into place.
(h) NDC. From a climate change point of view, and for land-use change and forests inparticular, the recent NDC for Brazil expresses the adoption of the following
measures by the country: (i) strengthening and enforcing the implementation of theForest Code, at the federal, state, and municipal levels; (ii) strengthening policies
and measures with a view to achieve, in the Brazilian Amazonia, zero illegal
deforestation by 2030 and compensating for GHG emissions from legal suppressionof vegetation by 2030; (iii) restoring and reforesting 12 million ha of forests by
2030, for multiple purposes; and (iv) enhancing sustainable native forest
management systems, through georeferencing and tracking systems applicable tonative forest management, with a view to curbing illegal and unsustainable practices.
89

2.
In addition to the abovementioned Government measures, civil society and academic
sectors have been active partners, improving knowledge and piloting many mechanisms andtools to improve biodiversity conservation, extractive resources management by local
communities, forest management, and private land use. Donors have also supported, over theyears, a number of different initiatives to strengthen local governments, states, and federal
institutions and contribute both human capacity and funds to enable the Amazon vision to berealized.

90Annex 7: Transition Fund
BRAZIL: Amazon Sustainable Landscapes ProjectA.

Introduction

1.
ARPA is the result of efforts led by the GOB and supported by a wide range of local,
national, and international stakeholders, including civil society, academic sectors, and donors.
Component 1 - Amazon Protected Areas System of the current project will be the third in a seriesof projects supported by the World Bank and other agencies, which started with the initial ARPA
I in 2002 and was followed by a second phase (ARPA II)57 in 2012. The previous two phases of
ARPA focused on reducing the deforestation and degradation of the Brazilian Amazon by: (a)expanding the total area under formal protection; and (b) improving the management of both newand existing PAs. Together these two projects successfully brought an additional 27.6 million haof forest under protection and improved the management in 59.2 million ha. Under ARPA Phase
II, issues of financial sustainability began to be addressed, resulting in the establishment andinitial capitalization of a Transition Fund with a view to gradually shifting the financial support
for these protection efforts from donor to public financing. A total of US$215 million wasestablished as the Transition Fund target based upon financial modeling of the costs involved inconsolidating and maintaining the 60 million ha of PAs supported by ARPA I and II. Theseestimates incorporate realistic financial projections and budget increase scenarios to lessen thelong-term impact of the transition from donations to public funding, ensure an average 3.9
percent annual increase in public funding over the next 25 years, and replace the endowment
arrangement of the current FAP. The World Bank has supported ARPA through the following
projects: ARPA I (P058503) and ARPA II (P114810).
2.
The ARPA Transition Fund will be the implementation instrument for Component 1 Amazon Protected Areas System.
B.

The Amazon Region Protected Areas Program (ARPA)

3.
ARPA, the world’s largest initiative to create and consolidate PAs, was created in 2002
by Federal Decree No. 4.326/2002 as a three-phase, program with the aim of expanding andconsolidating the system of PAs in the Brazilian Amazon to sustain biodiversity conservation.
During Phase I, the Program succeeded in creating 24 million ha of new PAs and contributed tothe consolidation of 8.5 million ha of forest.58 In addition, the Program also established the FAP,an endowment fund to ensure long-term financial sustainability for the established PAs. The
Program also created a solid foundation for effective FM and monitoring.
4.
During Phase II, expected to be finalized by 2017––2018, ARPA supported to date thecreation of 4.2 million ha of new PAs, of which 2.8 million ha comprised the PA categories
57

While ARPA Phase II was launched in 2010, the second World Bank-GEF ARPA was signed in 2012.
PA consolidation is the process of supporting long-term conservation in specific project areas. This requires
obtaining sufficient financial and human resources, adequate infrastructure, supportive local constituencies, andcapacity for strategic planning, political support, and sufficient ecological information. The ARPA ECI specifies twostages of consolidation.
58

91

supported by the Program59 and thus counted toward the Program’s 13.5 million ha creation
target. ARPA also contributed to the consolidation of 6.8 million ha of existing PAs. During thisperiod, ARPA also expanded its support to 114 PAs, representing 59.2 million ha in the Amazon
region. Phase II was also notable for the implementation of 30 community-based projects aiming
at the economic development and integration of local communities within and around ARPA
PAs. The Program also supported six projects aimed at the development and testing of newmodels for integrated PA management.
5.
As a requirement for the establishment and dimensioning of the FAP, a first estimate of
the long-term consolidation and maintenance costs of ARPA PAs were obtained during Phase I.
This estimate was refined at the beginning of Phase II, based on a cost model developed using
data from Phase I of the Program. The results indicated that the principal amount of funds
required by the FAP to generate sufficient investment income to cover those costs were
estimated to be US$700 million or more. In addition to the unrealistic amount required to be
mobilized, the endowment approach was not attractive to potential donors. At this stage, aProject Finance for Permanence (Projeto de Financiamento para Permanência) approach wasdevised to replace the endowment fund as the long-term sustainable financing strategy for ARPA
PA system. This arrangement, its governance, conditions, and functioning, became known as theTransition Fund, a private financing mechanism created through contracts between entities,
individuals and legal entities, and Brazilian and foreign donors.
6.
First, a cost model was developed to estimate the costs of establishing, consolidating, andmaintaining 60 million ha of PAs. Based on the cost model, a financial model was applied toassess the funding gap in relation to the current federal and state government budgets, as well as
donor funds already committed, and estimate the required resources over a 25-year transition
period, during which donor funds would be gradually replaced by government funds,
complemented by new, alternative funding sources, to ensure the maintenance of the program’sPAs. The resulting estimate indicated the need for a total of US$215 million in donor funds tocover both consolidation in 2014–2020 and maintenance (2020–2039) costs.

59

ARPA supports five PA categories according to SNUC, established by Federal Decree No. 4340/2002. These PA
categories are Biological Reserves (Reservas Biológicas), Ecological Stations (Estações Ecológicas), National Parks(Parques Nacionais), Extractive Reserves (Reservas Extrativistas) and Sustainable Development Reserves(Reservas de Desenvolvimento Sustentável).

92

Figure 7.1. Transition Fund Financing Strategy for Permanence

7.
In 2012, partners and donors of ARPA launched the ARPA for Life Initiative, with thegoal of raising the totality of funds required by the Transition Fund. In 2014, the initiative
obtained the commitment of several donors, in addition to already secured FAP resources that,together, reached the US$215 million target (see Section E. Cost and Financial Modeling), sothat the Transition Fund commenced operating. This was officially recognized by Presidential
Decree No. 8.505/2015.
C.

The Transition Fund

8.
Goals. The Transition Fund aims to provide resources and incentives for the Federal andAmazonian state governments to (a) enable the creation of 6 million ha of new PAs, (b) complete
the consolidation of 60 million ha of PAs and maintain those PAs, according to the Reference
Frameworks established for ARPA, and (c) gradually increase the resources provided bygovernments to ARPA, so that, after a period of 25 years, government funds and alternative
funding sources will finance 100 percent of the Program costs, without any additional support
from the Transition Fund or any other donor funds.
9.
To this end, the Transition Fund intends to finance the acquisition of goods and services
to be donated to the PA management agencies for exclusive use in the creation, consolidation,and maintenance of the supported PAs, provided that certain conditions are fulfilled by thefederal and state governments (the Disbursement Conditions). The idea is that by 2039
Transition Fund resources will have been exhausted and, consequently, the Transition Fund will
be closed and PA operating and maintenance costs will be fully covered by the government
budget and alternative funding sources.
D.

Structure and Institutional Arrangements

10.
ARPA aggregates different public and private entities to achieve its objectives, asestablished in Presidential Decree No. 8.505 from August 20, 2015, which governs the Program.
Figure 7.2 briefly reflects the interaction between the main ARPA entities, including those
involved in the operationalization of the Transition Fund.

93

Figure 7.2. Transition Fund Institutional Arrangements

11.
CFT. This is the decision-making body of the Transition Fund, with the purpose of
supervising compliance with the POM and other instruments that define its functioning. The CFT
is composed of nine voting members, of whom seven members are nominated by donors and two
members are nominated by the GOB (MMA and Ministry of Planning, Budget, andManagement); the latter must also be members of the ARPA Program Committee. Ordinarycommittee meetings are held annually and usually three extraordinary meetings are also held
within this period. Specific responsibilities of the CFT include, among others, the following:(a) Analyze the technical and financial results of ARPA(b) Evaluate compliance with the Disbursement Conditions, every two years, according
to the reports presented(c) Decide, every two years, on the maximum annual withdrawal volume of theTransition Fund to pay the eligible expenses in the PAs of ARPA(d) Determine the investment policy of the Transition Fund(e) Monitor and analyze the financial performance of the Transition Fund(f) Monitor, evaluate, and supervise fund management activities carried out by thefund’s GF

94

(g) Evaluate the external and independent audit report prepared in relation to the GF(h) Approve a strategy for attracting new resources to the Transition Fund, if the CFT
determines, in its sole discretion, that it is desirable to raise new resources, as well as
approve new donors and/or donations(i)

Appoint the GF and replace it in its sole discretion(j)Approve, with exclusivity, any modifications in Module 2 of the Operational
Manual of ARPA and suggest to the ARPA Program Committee, changes in Module
1 of the manual(k) Require the GF to contract, at the expense of the Transition Fund, independent
consultants for any areas or topics deemed necessary by the CFT(l)Based on the assessment of compliance with the Disbursement Conditions, identify
which PAs or PA management agencies have not met the Disbursement Conditions
biennially, and determine how to handle it(m) Suspend the use of Transition Fund resources for ARPA if the CFT deems that the
Disbursement Conditions have not been substantially fulfilled for a period of four
consecutive years
12.
ARPA Program Committee. This is the governing body of ARPA and its compositionis set forth in Decree No. 8,505 of August 20, 2015 and Ministerial Order No. 37 from February
14, 2017. The ARPA Program Committee is composed of six representatives from the federal
and state governments and six representatives from civil society. It is attributed with overseeing
the implementation of the Program, approving operating plans, and recommending adjustments
to the Program Operational Manual, among others. It meets ordinarily twice a year. Morespecific attributions include the following:(a) Resolve on the strategic planning of ARPA, establishing procedures, guidelines, andcriteria for the formalization of agreements and contracts provided for therein(b) Monitor and evaluate the activities of ARPA(c) Articulate the participation of Amazon government agencies and state governments,
CSOs, and donors in ARPA(d) Analyze and issue opinions on technical-financial performance reports to ensure theperformance and achievement of ARPA goals(e) Analyze and approve the multiannual planning of ARPA(f) Approve any changes to Module 1 of the Operational Manual and submit
suggestions for changes to Module 2(g) Convene the Scientific Advisory Panel (Painel de Aconselhamento Científico).
95

13.
MMA. The MMA is responsible for the overall coordination of ARPA and, through the
ARPA PCU, oversees the preparation of operating plans, prepares supervisory reports, carries
out M&E of project activities, and secures compliance with project safeguards in collaboration
with ICMBio, for federal PAs, and state agencies, for specific PAs under their jurisdiction. It isalso the secretariat for the ARPA Program Committee and responsible for communication andinformation dissemination programs about ARPA.
14.
ICMBio. The governing body (OG) of federal PAs, ICMBio is a key actor for ARPA, incharge of effectively carrying out all the activities necessary for the consolidation andmaintenance of the PAs. In addition, ICMBio coordinates the technical implementation of theProgram in federal PAs, identifies and hires PA staff for implementation of activities at the local
level, and complements Program implementation funds with their own governmental budgets orother sources.
15.
OGs of the states of Acre, Amapá, Amazonas, Mato Grosso, Pará, Rondônia,Roraima, e Tocantins. These OGs are responsible for, at the state level, effectively carrying out
all the activities necessary for the consolidation and maintenance of the PAs. As ICMBio, they
coordinate the technical implementation of the Program in their respective PAs, identify, andhire PA staff for implementation of activities at the local level and complement Program
implementation funds with their own governmental budgets or other sources.
16.
FUNBIO. FUNBIO is appointed by the CFT as the GF of the Transition Fund, toperform the administration of Transition Fund resources in compliance with the provisions of the
Operations Manual and the Investment Policy. It is also responsible for procurement activities inaccordance with the operating plans and for donating the acquired goods to the PAs, OGs, andthe MMA as required. To this end, FUNBIO must comply with the procurement procedures
adopted by the Transition Fund.
17.
ARPA counseling bodies. In addition to the abovementioned entities, ARPA counts on
three counseling bodies that meet on a regular basis: the Scientific Advisory Panel, the Technical
Forum, and the PA Managers Commission. The Scientific Advisory Panel provides guidance on
proposals for the creation and adoption of existing PAs by the Program, methodological issues
related to the selection and prioritization of PAs to be supported, and Program planning,
implementation, and monitoring. The Technical Forum and the PA Managers Commission
provide guidance and problem solving recommendations on the Program’s implementation.
E.

ARPA Implementation

18.
Implementation of ARPA consists of a three-stage management cycle: (a) Program
Planning, (b) Program Execution, and (c) Program Monitoring. Each stage feeds into thefollowing one, in a continuous cycle.
ARPA Program Planning
19.
The ARPA planning process is conducted with a focus on the creation and consolidation
targets of the PAs supported by the Program. To this end, a series of instruments have beendeveloped that integrate several stages of management—from the establishment of guidelines, to96the evaluation of the effectiveness of the actions, strategic planning, and the monitoring of theresults. These instruments are as explained in the following paragraphs.
20.
PA Assessment Tool (FAUC). This is a tool that allows the evaluation of PA
management effectiveness and serves as a basis for Program planning and monitoring activities.
Developed and adapted for ARPA based on the GEF’s Tracking Tools, the FAUC allows theprocesses of PA consolidation in relation to the goals of the Program to be monitored, guiding
the efforts of PA managers and executing agencies. The FAUC evaluates 33 requirements for the
management of PAs, subdivided into six elements of evaluation (planning, inputs, processes,
products, results, and lessons learned), grouped into two integrated subsystems: Effectivenessand Advancement. The FAUC Effectiveness subsystem comprises all 33 indicators and serves toassess the effectiveness of PA management at systemic and local levels. The FAUC
Advancement subsystem comprises 16 indicators, which are considered Program benchmarks(see annex 2: Detailed Project Description), which demonstrate the progress of the status of each
PA and are used to evaluate the results of the Program. The ARPA PCU and PA management
agencies are responsible for the annual application of the FAUC, as well as for the validation of
the information inserted by PA managers in the system.
21.
PEP. Based on the results of the application of the FAUC, PA managers, andmanagement agencies use this tool to project over a three-year period how each PA plans toenhance its management effectiveness based on the 16 ARPA benchmarks.
22.
ECI. This is a computational decision support tool used by ARPA: (a) in the selection of
PA creation processes to be supported, (b) in the selection of PAs not yet supported by the
Program, to finance their consolidation process, (c) to prioritize PA consolidation actions in the
PAs already supported by the Program, and (d) in the selection of PAs supported by the Program
to advance to stage II consolidation.
23.
The ARPA PCU is responsible for validating the results, conducting the negotiation
process with PA managers and management agencies, and for the systematization of the resultsof the planning process in a document containing the proposed amount required from ARPA for
the next two-year implementation cycle.
24.
As the Transition Fund’s GF, FUNBIO is responsible for assessing the Disbursement
Conditions based on the verification and compilation provided by the MMA on the status of the
Disbursement Conditions’ indicators (for details on the Disbursement Conditions, theirindicators and weights, see section 0). The Disbursement Conditions’ formula is then applied tothe total amount required by the Program for the next two-year period that resulted from theapplication of the financial model and other Program planning tools. The result is then submitted
to the CFT, which is responsible for reviewing compliance with the Disbursement Conditions
and deciding, based on the application of the weights associated with each Disbursement
Condition, the amount of resources that will be made available for the implementation of ARPA
for the next biennium.
25.
Information on the total Transition Fund resources to be disbursed in a given biennium isused by the MMA, ARPA PCU, and PA management agencies to detail the Program’s
operational plans. Based on the planning and monitoring tools of ARPA (FAUC, PEP, and ECI),
97

the MMA makes the first proposal of budget ceilings for each PA, PA management agency, and
the ARPA PCU itself. This result is discussed with the PA management agencies for possible
adjustments and then submitted to the ARPA Program Committee. The Program Committee,
considering the CFT’s decision on the resources to be made available to the Program, evaluates
and adjusts the proposal, and informs the MMA and FUNBIO of the final decision. Once the
ARPA Program Committee has approved the ceilings, the operational plans are detailed andinserted into FUNBIO’s project management system (Sistema Cérebro).
ARPA Program Execution
26.
ARPA’s Transition Fund administrative and financial procedures are described in detailin Module 2 of the Program’s Operational Manual.60 ARPA implementation through theTransition Fund is conducted by ICMBio and state OGs, coordinated by the MMA, in
accordance with the operational plans for each PA as approved during the planning stage.
Eligible PAs and eligible expenses to be supported by the Program are also listed in the
Program’s Operational Manual.
27.
All resources donated to the Transition Fund are pooled in a single fund and are notindividually tracked by the donor. Those resources are used up to the limit of disbursements
approved by the CFT for the given biennium, in accordance with the rules contained in theTransition Fund’s Operational Manual,560 rather than of specific donors.
28.
As in Phase II of ARPA, there are two main ways of disbursing funds from the Transition
Fund: (a) acquisitions or contracting carried out by FUNBIO or (b) through conta vinculada. The
Transition Fund adopts FUNBIO’s procurement rules, detailed in FUNBIO’s Procurement
Manual,61 for all acquisitions and contracts. No Procurement Plan or similar document isprepared or submitted to donors. Under this strategy, multiple rules and requirements are
avoided, streamlining the Transition Fund’s operation. Decentralized execution is conducted
through conta vinculada, a bank account under FUNBIO’s name and managed by PA staff, tocover small expenses. Contas vinculadas are a mechanism for distribution of funds that allow
more autonomy to PA managers to spend small amounts of the PA’s budget on daily operationand maintenance of PA offices. FUNBIO reviews reported expenses and monitors (through the
Cérebro system and field visits) and approves new requests for advances of grant funds. A copyof all supporting documentation is maintained.
29.
The Transition Fund adopts a series of standardized financial and technical reports (seetable 7.1). These have been designed to meet the requirements of all Transition Fund donors,
avoiding the necessity of multiple reporting formats tailored to specific donors, with different
submission schedules, ensuring greater transparency and efficiency.
Table 7.1. Transition Fund Reports
ReportRecipientObjective

60

Responsible

Manual Operacional do Programa Áreas Protegidas da Amazônia. Outubro 2015. Available fromhttp://programaarpa.gov.br/wp-content/uploads/2015/10/MOP-ARPA-FASE-III-outubro.pdf
61
Procedimentos Operacionais de Compras e Contratações. Available fromhttp://www.funbio.org.br/transparencia/politicas-e-salvaguardas/.

98

Frequency

Report

Recipient

Report A. ARPA
implementation andfinancial progress

CFT, ARPA
ProgramCommittee

Responsible

Frequency

MMA

Semiannual
partial/annual

Allow the ARPA Program Committee
and the CFT to assess the performanceof ARPA and enable the CFT to assess
compliance with the Disbursement
Conditions

MMA

Biennial

CFT is informed about the allocation ofavailable resources to the PAs

MMA

Biennial

Provide an adaptive administration of
ARPA, including evaluation andpossible changes to the Program
benchmarks and Disbursement
Conditions by the ARPA Program
Committee and the CFT

MMAAt least every
five years

Enable program decision makers tounderstand the long-term costs ofachieving the objectives of ARPAMMA

At least every
five years

CFT, ARPA
ProgramCommittee

The MMA updates its expectation ofincreased funding from governmental
and nongovernmental sources ininvestments to fulfill the objectives of
ARPA and the Transition Fund

MMA

AnnualReport G. Validationof the cost model

CFT

Provide the CFT with an independent
understanding of ARPA's long-term
costs

FUNBIOAt least every
five years (orwhenauthorized by
the CFT)

Report H. Financial
analysis

CFT

Enable the CTF to adjust the Transition
Fund strategy based on financial
realities

FUNBIO

Annual

CFT, ARPA
ProgramCommittee

Ensure regularity of accounting

External
Auditor (hiredby FUNBIO)

Annual

CFT, ARPA
ProgramCommittee

To enable the CFT to make informed
decisions about disbursements

FUNBIO

Biennial

Donors,
CFT, ARPA
Program

Ad hocIndependent
consultant(hired by

Ad hocReport B. ARPA
comprehensive
progress report

Report C. ARPA
biennial financial
needs plan

Report D. Extended
efficiency assessment(complementary toReport B)

Report E. Cost model
review

Report F. Review ofthe financial model

Report I. Transition
Fund's externalfinancial audit
Report J.
Performance of
Disbursement
Conditions andrecommendation ofamount to be
disbursed
Report K. Ad hoc
audit of program
performance

ARPA
ProgramCommittee(approval),
CFT,
generalpublicARPA
ProgramCommittee(approval),
CFT
ARPA
ProgramCommittee,
CFT,
generalpublicARPA
ProgramCommittee,
CFT,
generalpublicObjective
Update the ARPA Program Committee
and the CFT on the ongoing verificationof financial and government
implementation objectives

99

ReportReport L. Donorspecific finance

Recipient
Committee

Donors,
CFT

Objective

Update donors regarding financial
results of their donations

Responsible
FUNBIO) as
authorized by
the CFT or
ARPA Program
Committee
FUNBIO

Frequency

Biannual

30.
To ensure the realization of the US$215 million financial commitments and the effective
contribution of alternative funding sources toward the US$215 million Transition Fund target,
additional activities carried out by the Program include ongoing efforts to (a) raise additional
funds and (b) identify alternative funding sources and propose implementation mechanisms.
These are complementary activities where more work is needed.
31.
The need to develop and test a methodological approach to reconcile indigenous peoples
claims and concerns with the creation and consolidation of the PAs in the Amazon will also be
addressed.
ARPA Program Monitoring
32.
Monitoring is carried out jointly by the ARPA Coordination Unit at MMA, FUNBIO, and
the PA management agencies (OGs). They are responsible for the preparation of periodic reportson the subjects most directly related to the specific responsibilities each carries out in theimplementation of the program (see ARPA Program Execution section). These include financial,performance and impact monitoring, as well as additional program assessment reports.
33.
FUNBIO is responsible for monitoring the detailed execution of financial resources,financial balances, and account rendering. OGs are responsible for monitoring the execution of
resources within the PAs, following their physical-financial performance and progress in the
program’s planned targets according to the FAUC and PEP planning tools. The OGs, together
with the ARPA Coordination Unit at MMA, also monitor the execution of the governmental,
financial, and in-kind co-financing. The ARPA Coordination Unit is also responsible for in situ
monitoring, for monitoring PA creation and management effectiveness, progress in the
Program’s creation and consolidation targets, and the implementation of the components of theProgram.
34.
In addition, FUNBIO conducts an independent external audit every year, which analyzes
its balance sheet and accounts, as well as the accounts of e ARPA and the Transition Fund.
Investment Policy and Asset Management
35.
The Investment Policy sets forth the policy, objectives, and restrictions that apply to theinvestment of the fund assets of the ARPA Transition Fund. As defined in the ARPA Operational
Manual, the CFT is responsible for directing and monitoring the investment management of theTransition Fund’s assets, but may delegate certain of its responsibilities to FUNBIO, committees,
professional service providers, and other support. The adoption of, or revision to, this Investment
Policy are nondelegable decisions of the CFT.
100

36.
The CFT delegates, to FUNBIO, the responsibility of engaging one or more asset
managers. Additionally, the CFT may employ additional specialists such as tax attorneys,
auditors, actuaries, and others to assist in meeting its responsibilities and obligations toadminister the Transition Fund’s assets prudently.
37.
The asset manager is one (or more) specialized company in the financial markets,
Brazilian and international, contracted through an international open selection conducted by
FUNBIO, with reference terms, including selection criteria, approved by the CFT. The financial
investments of the Transition Fund’s resources will be carried out by the asset manager on behalfof FUNBIO and shall follow the Investment Policy approved by the CFT.
38.
The asset manager(s) have full discretion to make all investment decisions for the assets
placed under its direct management, while observing and operating within all policies,
limitations, and philosophies as outlined in the Investment Policy and any limitations specifying
permissible categories of investments.
39.
The CFT also established a Finance Subcommittee, attributed with reviewing monthly
investment results, discussing these as needed with the asset manager(s) and FUNBIO, andmaking any recommendations to the CFT regarding the evaluation, selection, and replacement ofasset manager(s), as well as potential changes to the Investment Policy.
Disbursement Conditions
40.
The Disbursement Conditions are a set of indicators to support the CFT in defining theamount of resources to be disbursed every two years to the PAs supported by ARPA. Throughthe Disbursement Conditions it is possible to measure the evolution of actions and commitments
considered essential for the fulfillment of the objectives of ARPA and the Transition Fund.
41.
Eleven Disbursement Conditions have been established, which may be amended by the
CFT. Five of those are mandatory, that is, non-compliance will prevent the contribution of funds
from Transition Fund to ARPA. Of the remaining six Disbursement Conditions, two assess theexecution of ARPA as a whole, while four evaluate the execution of ARPA by PA management
agencies. Each of these conditions has its set of metrics to calculate the indicator, as well as adifferent weight in the assessment of compliance and, hence, on the determination by the CFT ofthe total amount of resources to be disbursed. Finally, frequency of assessment of the
Disbursement Conditions vary from one, two, or more years.
42.

Table 7.2 details the Disbursement Conditions, their coverage, and weight.
Table 7.2. Transition Fund Disbursement Conditions

No

2

Disbursement Condition
ARPA’s Operational Manual aligned with the objectives of
the Transition Fund
Absence of PA net area loss

3

Financial reports by PA

4

Presentation of consolidations plans

1

101

Coverage

WeightARPA

Prerequisite

ARPA
PA management
agencyPA management
agencyPrerequisite
Prerequisite
Prerequisite

No

6

Disbursement Condition
Requirement of additional resources by the MMA tocomplement the Transition Fund
Increase in the execution of ICMBio’s government budget

7

Implementation of biodiversity monitoring

8

Creation of new PAs (according to Program Planning)

9

Increase in non-salary resources

10

Consolidation performance

11

Number of employees

5

Coverage

WeightARPA

Prerequisite

ARPA
PA management
agencyARPA
PA management
agencyPA management
agencyPA management
agency

5%
5%
15%
25%
25%
25%

43.
With the exception of Disbursement Condition No. 6, failure to comply with the othernon-prerequisite conditions will result in a reduction of Transition Fund resources to be
disbursed to the PAs in proportion to the conditions’ weights. Disbursement Condition No. 6 isbased on the multiplication of the percentage increase in ICMBio’s government budget, incomparison with the previous period, multiplied by the condition’s weight.62
44.
This mechanism ensures that Transition Fund resources will only be made available tothe extent that the CFT determines that the Federal Government and PA management agencies
have fulfilled their responsibilities and/or targets for ARPA.
Cost and Financial Modeling45.
To estimate the resources required by the Transition Fund to achieve its objectives andfor ARPA PA system to be 100 percent financed by government funds and alternative funding
sources in 25 years, a two-stage approach was adopted. First, a cost model was developed, toestimate the costs of establishing, consolidating, and maintaining 60 million ha of PAs. Based on
the cost model, a financial model was applied to assess the funding gap and estimate the required
resources over the 25-year transition period.
46.
The cost estimates for the creation, consolidation, and maintenance of ARPA PAs were
produced through a detailed and consultative process involving more than 30 PA experts fromdiverse organizations, including the MMA, ICMBio, FUNBIO, and WWF. This estimation
process began in 2010 and efforts were made by the partner organizations to keep it updated.
47.
The purpose of this exercise was to estimate the medium- and long-term needs for aminimum effective conservation level of ARPA PAs, 60 million ha in total. The results werebased on post-consolidation and maintenance costs for each ARPA PA, existing or future, as
well as costs associated with the creation of new PAs. A model that considers the structure andgoals of ARPA was developed and is used to reliably estimate the resource demand for ARPA.

62

For details of the formula to apply the Disbursement Conditions, see annex 2.3, Module 2 of the ARPA
Operational Manual - Manual Operacional do Programa Áreas Protegidas da Amazônia. Outubro 2015. Available
from http://programaarpa.gov.br/wp-content/uploads/2015/10/MOP-ARPA-FASE-III-outubro.pdf.

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48.
Cost estimates were developed based on the analysis of historical expenditures for
specific management activities of Phase I ARPA PAs.63 All expenditures were classified by type(for example, PA management plan elaboration, Council Meetings, and so on) and by PA type(consolidation stage) and were adjusted considering inputs from ICMBio and PA professionals,
as well as economic conditions such as exchange rates and projected fund returns. Estimates
were then refined based on the progress of individual investments already made in PAs(considering, for example, the PA consolidation stage and whether they were managed by thefederal or state government). The expenses/cost estimates for all the PAs were aggregated to
produce the total investment estimate required by ARPA, including also expenditures/operationalcosts per year. It is important to point out that the differences between PAs were considered in
the financial model, so that the cost estimates reflected specific PA conservation objectives.
Thus, differences in PA category, logistics, threats, pressure, and PA size provided different
costs for the same ARPA benchmark.
49.
It should be noted that the consolidation goals of ARPA PAs (both Consolidation Stage I
and Consolidation Stage II PAs) refer to basic levels of environmental conservation
management. That is, ARPA supports the expenses/costs related to the acquisition of goods
and/or services necessary for PAs to be able to manage and protect their natural resources. Moreadvanced levels of consolidation would require additional resources. The expenses/costs of land
regularization, development of sustainable productive systems, development of new management
tools, and research or environmental education, among others, were not considered in theestimation exercise.
50.
Given the cost model estimates, a financial model was used to calculate the funding gap
in relation to the current federal and state government budgets, as well as donor funds alreadycommitted, for ARPA PAs. Estimates of the additional resources required over the 25-year
transition period were then obtained, including increases in government budget (separating
expenses related to salaries of PA permanent staff from those associated with maintenance costs
and investments), potential alternative funding sources (conservative models considering othergovernment-based funding sources), payment for ecosystem services (conservative estimates,considering a null contribution at that moment given the non-regulation of Brazilian Law No.
9985/2000 - articles 47 and 48), as well as additional donor funds. The total costs were estimatedfor both consolidation in 2014–2020 and maintenance (2020–2039).

63

Leonardo Geluda, Manoel Serrão, Manuela Muanis, Jon Tua, Daniela Oliveira, Marisete Catapan, and SamuelTararan. 2012.. Quanto custa o Programa Áreas Protegidas da Amazônia? : Uma modelagem financeira para as
Unidades de Conservação do Arpa. Funbio, Rio de Janeiro. 46p. (available from http://www.funbio.org.br/quantocusta-o-programa-areas-protegidas-da-amazonia/).

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Annex 8: Map of Project Intervention Area
BRAZIL: Amazon Sustainable Landscapes Project

Source: Prepared by MMA

104