The World Bank ENVIRONMENTAL SERVICES PROJECT (P130492) REPORT NO.: RES27558 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF ENVIRONMENTAL SERVICES PROJECT APPROVED ON JULY 8, 2014 TO MINISTRY OF FINANCE ENVIRONMENT, NATURAL RESOURCES & THE BLUE ECONOMY EUROPE AND CENTRAL ASIA Regional Vice President: Cyril E Muller Country Director: Linda Van Gelder Regional Director: Steven N. Schonberger Practice Manager/Manager: Kseniya Lvovsky Task Team Leader: Drite Dade The World Bank ENVIRONMENTAL SERVICES PROJECT (P130492) ABBREVIATIONS AND ACRONYMS AF Additional Financing ESP Environmental Services Project IPARD Instrument for Pre-Accession for Rural Development of the European Union MTE Ministry of Tourism and Environment PDO Project Development Objective The World Bank ENVIRONMENTAL SERVICES PROJECT (P130492) BASIC DATA Product Information Project ID Financing Instrument P130492 Investment Project Financing Original EA Category Current EA Category Partial Assessment (B) Partial Assessment (B) Approval Date Current Closing Date 08-Jul-2014 30-Sep-2019 Organizations Borrower Responsible Agency Ministry of Finance Ministry of Environment Project Development Objective (PDO) Original PDO The Project Development Objective (PDO) is to support sustainable land management practices and increase communities’ monetary and non-monetary benefits in targeted Project areas which are mainly in erosion prone rural upland areas. This PDO is to be achieved through the support of alternative livelihoods and provision of environmental services and through sustainable utilization of wood andpasture products in the long term. The Project will particularly focus on enhancing the financial, economic, and institutional sustainability of land use and natural resources management, and will help build capacities of Albania farmers, community organizations and government institutions to efficiently use EU funding. OPS_TABLE_PDO_CURRENTPDO Summary Status of Financing Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed IBRD-84010 08-Jul-2014 25-Jul-2014 29-Jan-2015 30-Sep-2019 10.00 4.18 5.00 TF-18238 10-Oct-2014 27-Jan-2015 29-Jan-2015 30-Sep-2019 7.31 3.81 3.50 The World Bank ENVIRONMENTAL SERVICES PROJECT (P130492) TF-17364 25-Jul-2014 25-Jul-2014 29-Jan-2015 30-Sep-2019 2.88 1.17 1.71 Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING 1. This Restructuring Paper (RP) proposes one-year extension of the project closing date from September 30, 2019 to September 30, 2020, and provision of Additional Financing (AF) in the amount of US$2 million equivalent (or SEK 20 million) from the Swedish Government. This will bring the total financing of the Environmental Services Project (ESP) to about US$22.2 million including US$10 million from IBRD, US$2.88 million from the Global Environment Facility, and US$9.3 million from the Swedish Government. The new contribution from the Swedish Government will also include US$0.2 million to the World Bank to cover the implementation support costs for the additional one year. 2. The AF financing will be processed separately but will be implemented within the proposed extended original project closing date. The proposed AF will provide support to scale up the ESP investments and activities to increase the impact of the original Project by covering additional municipalities with forest and pasture management plans. This will result in additional 45,000 ha of forest and pasture lands covered with management plans. The proposed AF will also fill in the financing gap from the second round of IPARD-like (Instrument for Pre-accession for Rural Development) forestry grants which received a large number of high-quality applications that exceeded the financing available. The number of successful applications is 100 (out of 151) and 25 of the winning grants will be supported under the AF. 3. Progress against the PDO and implementation progress are currently rated Moderately Satisfactory. Key ESP achievements to date include: (i) completion of field measurements and data processing for the National Forest Inventory covering 2/3 of Albanian territory and field measurements for the remaining territory to be finalized end of September, (ii) successful grant applications evaluation for the 2nd call of IPARD-like forestry grants, (iii) completion of registration of forest and pasture lands in 19 municipalities (data uploaded in State Cadaster Agency IT system and first certificates issued to municipalities), while contract for the remaining 42 municipalities is under full implementation, (iv) ongoing roll-out of the Albanian Forest Information System in the Ministry of Tourism and Environment (MTE - former Ministry of Environment) and all municipalities, (v) the preparation of forest and pasture management plans is expected to start within September 2019. The Forest Policy Document (2019-2030) was adopted by the Council of Ministers on December 31, 2018 and a draft law on forestry is in the consultation phase. A National Forestry Agency was established by Government Decree on July 17, 2019, and the ESP will support this process under the institutional strengthening component. The ESP overall disbursement from the above mentioned three sources of funding is 47 percent, while commitment is 80 percent. The ESP’s implementation arrangements remain adequate (fiduciary, safeguards, monitoring and evaluation) in terms of staff and effectiveness. There are no outstanding financial audits for the project and financial management is satisfactory. The environmental and social safeguards performance of the Project has been satisfactory. The Environmental and Social Management Framework is properly applied. The ESP investments did not have any negative environmental impacts, but rather helped reverse land and watershed degradation through both physical interventions for forest and pasture regeneration and the empowerment of rural population and municipalities to properly manage their natural resources. The Integrated Safeguards Data Sheet has been updated. The World Bank ENVIRONMENTAL SERVICES PROJECT (P130492) II. DESCRIPTION OF PROPOSED CHANGES 5. The RP proposes a second level restructuring comprising: (i) revisions of the PDO outcome indicator and targets and the introduction of new intermediate indicators, (ii) reallocation of loan proceeds, and (iii) a one year extension of the original project closing date from September 30, 2019 to September 30, 2020 to ensure sufficient time for the completion of activities under the AF and completion of key activities like forest registration and national forest inventory. 6. Specifically, the proposed changes include: (a) extension of Project closing date to September 30, 2020 (b) reallocation of loan proceeds to cover full costs of registration of forest and pastures activity (c) revision of the PDO indicators that was agreed at the Mid-Term Review will be formally introduced, and targets will be adjusted to reflect increased scope of activities to be supported with Additional Financing, namely: (i) The outcome indicator related to people in targeted communes with increased monetary or non-monetary benefits from agricultural lands and its sub-indicator disaggregated by gender will be dropped. This outcome indicator was included at project design based on previous project experience in supporting agricultural activities (fruit tree cultivation in abandoned agricultural lands) and micro-catchment planning. While the above activity was eligible for both calls of IPARD-like forestry grants, there was no interest of the beneficiaries. The team assessed that the main reason for that was provision of similar grants by Agency for Rural Development and Agriculture through their national subsidies program and the ESP not supporting micro-catchment planning given the institutional changes and further decentralization. It was agreed that this indicator is not relevant to achievement of the PDO. (ii) The intermediate indicator on forest areas brought under management plans will be revised. (iii) The intermediate indicator on payment for environmental services will be revised. (iv) A new indicator on forest and pasture registration will be added. (v) Earlier numerical errors in the targets will be corrected. (vi) Two new intermediate indicators are added on citizens’ engagement (beneficiaries participating in project consultation activities during implementation; and forest and pasture users’ associations reporting that forest and pastures management plans represented the views of the community). 7. A detailed time-bound plan for project activities was agreed with the MTE and will be closely monitored to ensure their timely completion and achievement of the PDO, so that no further extensions of the closing date are needed. The World Bank ENVIRONMENTAL SERVICES PROJECT (P130492) III. SUMMARY OF CHANGES Changed Not Changed Results Framework ✔ Components and Cost ✔ Loan Closing Date(s) ✔ Reallocation between Disbursement Categories ✔ Safeguard Policies Triggered ✔ Implementation Schedule ✔ Implementing Agency ✔ DDO Status ✔ Project's Development Objectives ✔ Cancellations Proposed ✔ Disbursements Arrangements ✔ Disbursement Estimates ✔ Overall Risk Rating ✔ EA category ✔ Legal Covenants ✔ Institutional Arrangements ✔ Financial Management ✔ Procurement ✔ Other Change(s) ✔ Economic and Financial Analysis ✔ Technical Analysis ✔ Social Analysis ✔ Environmental Analysis ✔ IV. DETAILED CHANGE(S) The World Bank ENVIRONMENTAL SERVICES PROJECT (P130492) OPS_DETAILEDCHANGES_COMPONENTS_TABLE COMPONENTS Current Current Proposed Proposed Cost Action Component Name Component Name Cost (US$M) (US$M) Component 1. Strengthening Institutional Capacity to improve environmental services from integrated landscape management Component 2. Planning and Provision of IPARD like Grants to improve land management Component 3. Introducing Payment for Environmental Services Component 4. Supporting Project Implementation TOTAL 0.00 0.00 OPS_DETAILEDCHANGES_LOANCLOSING_TABLE LOAN CLOSING DATE(S) Original Revised Proposed Proposed Deadline Ln/Cr/Tf Status Closing Closing(s) Closing for Withdrawal Applications IBRD-84010 30-Sep-2019 30-Sep-2020 30-Jan-2021 TF-17364 30-Sep-2019 30-Sep-2020 30-Jan-2021 TF-18238 30-Jun-2019 30-Sep-2019 30-Sep-2020 30-Jan-2021 OPS_DETAILEDCHANGES_REALLOCATION _TABLE REALLOCATION BETWEEN DISBURSEMENT CATEGORIES Financing % Current Allocation Actuals + Committed Proposed Allocation (Type Total) Current Proposed IBRD-84010-001 | Currency: EUR iLap Category Sequence No: 1 Current Expenditure Category: GO, NON CS part 1(A), 2(C), 4(A) 4,679,850.00 1,690,442.94 5,239,472.93 100.00 100.00 The World Bank ENVIRONMENTAL SERVICES PROJECT (P130492) iLap Category Sequence No: 2 Current Expenditure Category: Subprojects part 2(B) 2,601,900.00 1,242,478.08 2,042,277.07 100.00 100.00 Total 7,281,750.00 2,932,921.02 7,281,750.00 TF-17364-001 | Currency: USD iLap Category Sequence No: 1 Current Expenditure Category: NON CS, TR, CS, IOC prt 1(A),2(a),3 2,880,000.00 978,720.85 2,880,000.00 100.00 100.00 Total 2,880,000.00 978,720.85 2,880,000.00 TF-18238-001 | Currency: USD iLap Category Sequence No: 1 Current Expenditure Category: G,W,CS,non-CS,TR,OC,P1,2a,c,3a,c,4 5,640,000.00 2,303,321.82 5,002,439.51 100.00 100.00 iLap Category Sequence No: 2 Current Expenditure Category: Subprojects part 2B 1,670,000.00 726,607.15 2,307,560.49 100.00 100.00 Total 7,310,000.00 3,029,928.97 7,310,000.00 OPS_DETAILEDCHANGES_COMPLIANCE_TABLE COMPLIANCE Safeguard Policies Safeguard Policies Triggered Current Proposed Environmental Assessment (OP) (BP 4.01) Yes Yes Performance Standards for Private Sector No No Activities OP/BP 4.03 Natural Habitats (OP) (BP 4.04) Yes Yes The World Bank ENVIRONMENTAL SERVICES PROJECT (P130492) Forests (OP) (BP 4.36) Yes Yes Pest Management (OP 4.09) Yes Yes Physical Cultural Resources (OP) (BP 4.11) No No Indigenous Peoples (OP) (BP 4.10) No No Involuntary Resettlement (OP) (BP 4.12) No No Safety of Dams (OP) (BP 4.37) No No Projects on International Waterways (OP) (BP No No 7.50) Projects in Disputed Areas (OP) (BP 7.60) No No . The World Bank ENVIRONMENTAL SERVICES PROJECT (P130492) . Results framework COUNTRY: Albania ENVIRONMENTAL SERVICES PROJECT Project Development Objectives(s) The Project Development Objective (PDO) is to support sustainable land management practices and increase communities’ monetary and non-monetary benefits in targeted Project areas which are mainly in erosion prone rural upland areas. This PDO is to be achieved through the support of alternative livelihoods and provision of environmental services and through sustainable utilization of wood andpasture products in the long term. The Project will particularly focus on enhancing the financial, economic, and institutional sustainability of land use and natural resources management, and will help build capacities of Albania farmers, community organizations and government institutions to efficiently use EU funding. Project Development Objective Indicators by Objectives/ Outcomes RESULT_FRAME_TBL_PDO Indicator Name DLI Baseline Intermediate Targets End Target 1 2 3 4 5 To support sustainable land management practices in targeted project areas Land area where sustainable land mgt. practices were adopted as a 0.00 0.00 0.00 3,000.00 4,000.00 7,500.00 7,500.00 result of proj (CRI, Hectare(Ha)) To increase communities' monetary and non-monetary benefits in targeted project areas People in forest&adjacent community with monetary/non-monetary 0.00 2,000.00 benefit from forest (Number) The World Bank ENVIRONMENTAL SERVICES PROJECT (P130492) RESULT_FRAME_TBL_PDO Indicator Name DLI Baseline Intermediate Targets End Target 1 2 3 4 5 People in forest and adjacent community 0.00 1,000.00 with benefits from forest-female (Number) People in forest&adj. commy with benefit from forest-Ethnic 0.00 10.00 minority/indigenous (Number) People in targeted communes with increased monetary or non-monetary 0.00 0.00 0.00 500.00 800.00 1,000.00 1,000.00 benefits from agricultural lands (Number) Action: This indicator has been Marked for Deletion Females in targeted communes with increased monetary and 0.00 0.00 0.00 50.00 150.00 500.00 500.00 non-monetary benefits from agricultural lands (Number) Action: This indicator has been Marked for Deletion People in targeted communes with increased 0.00 1,000.00 monetary or non-mentary The World Bank ENVIRONMENTAL SERVICES PROJECT (P130492) RESULT_FRAME_TBL_PDO Indicator Name DLI Baseline Intermediate Targets End Target 1 2 3 4 5 benefits from agricultural lands. (Number) Action: This indicator has been Marked for Deletion Females in targeted communes with increased monetary and 0.00 500.00 non-monetary benefits from agricultural lands. (Number) Action: This indicator has been Marked for Deletion People in forest&adjacent community with monetary/non-monetary 0.00 0.00 0.00 500.00 1,000.00 2,000.00 2,000.00 benefit from forest (Number) People in forest and adjacent community 0.00 0.00 0.00 300.00 800.00 1,000.00 1,000.00 with benefits from forest-female (Number) People in forest&adj. commy with benefit from forest-Ethnic 0.00 0.00 0.00 2.00 5.00 10.00 10.00 minority/indigenous (Number) The World Bank ENVIRONMENTAL SERVICES PROJECT (P130492) PDO Table SPACE Intermediate Results Indicators by Components RESULT_FRAME_TBL_IO Indicator Name DLI Baseline Intermediate Targets End Target 1 2 3 4 5 6 7 Component 1. Strengthening Institutional Capacity to improve environmental services from integrated landscape management Forest and Pasture Areas Registered 0.00 262,029.00 870,000.00 870,000.00 (Hectare(Ha)) Land management specialists and users 0.00 0.00 500.00 1,000.00 1,500.00 2,000.00 2,000.00 trained (Number) Members of Forest Pasture Users' 0.00 0.00 100.00 500.00 800.00 1,000.00 2,000.00 Associations trained (Number) Female members of Forest and Pasture 0.00 0.00 50.00 100.00 300.00 400.00 800.00 Users's Associations trained (Number) Individual famers 0.00 0.00 200.00 500.00 600.00 800.00 1,000.00 trained (Number) Female farmers 0.00 0.00 100.00 200.00 300.00 400.00 500.00 trained (Number) Ministry staff 0.00 100.00 300.00 400.00 500.00 600.00 700.00 trained (Number) Female land 0.00 0.00 100.00 1,000.00 4,000.00 8,000.00 800.00 management The World Bank ENVIRONMENTAL SERVICES PROJECT (P130492) RESULT_FRAME_TBL_IO Indicator Name DLI Baseline Intermediate Targets End Target 1 2 3 4 5 6 7 specialists and users trained (Number) Beneficiaries participating in project consultation activities 0.00 2,000.00 during implementation (Number) Rationale: Action: This indicator is Citizens' engagement indicator. New Female benficiaries participating in project consultation 0.00 500.00 activities during implementation (Number) Action: This indicator is New Component 2. Planning and Provision of IPARD like Grants to improve land management % of grant applications fulfill the requirements 0.00 0.00 20.00 40.00 60.00 60.00 60.00 (Percentage) % of the grant budget 0.00 0.00 0.00 10.00 40.00 100.00 100.00 disbursed (Percentage) % of grants budget 0.00 0.00 0.00 5.00 10.00 15.00 15.00 disbursed to female The World Bank ENVIRONMENTAL SERVICES PROJECT (P130492) RESULT_FRAME_TBL_IO Indicator Name DLI Baseline Intermediate Targets End Target 1 2 3 4 5 6 7 applicants (Percentage) % of grants budget disbursed to 0.00 0.00 0.00 10.00 10.00 50.00 50.00 50.00 farmers (Percentage) Action: This indicator has been Revised % of grants disbursed to Forest and Pasture Users' 0.00 0.00 0.00 10.00 10.00 50.00 50.00 Associations (Percentage) Action: This indicator has been Revised Pasture area brought under management 0.00 0.00 20,000.00 30,000.00 50,000.00 70,000.00 70,000.00 plans (Hectare(Ha)) Action: This indicator has been Revised Forest area brought under management 0.00 0.00 30,000.00 60,000.00 90,000.00 114,000.00 114,000.00 plans (CRI, Hectare(Ha)) Action: This indicator has been Revised The World Bank ENVIRONMENTAL SERVICES PROJECT (P130492) RESULT_FRAME_TBL_IO Indicator Name DLI Baseline Intermediate Targets End Target 1 2 3 4 5 6 7 % of forest and pasture users’ associations reporting that forest and pastures 0.00 80.00 management plans represented the views of the community (Percentage) Action: This indicator is New Component 3. Introducing Payment for Environmental Services Percentage of estimated sediment delivery to reservoirs in 0.00 0.00 0.00 10.00 10.00 pilot areas covered by PES (Percentage) Number of contracts for environmental services provided as 0.00 0.00 0.00 4.00 7.00 10.00 10.00 part of Payment for Environment Services (PES) pilot (Number) Action: This indicator has been Marked for Deletion IO Table SPACE The World Bank ENVIRONMENTAL SERVICES PROJECT (P130492) The World Bank ENVIRONMENTAL SERVICES PROJECT (P130492)