united nations development programme · web viewunited nations development programme. country:...

United Nations Development Programme

Country: Ecuador

PROJECT DOCUMENT

Project Title: Financial Sustainability for the National System of Protected Areas (SNAP)

UNDAF Outcome(s)/ Indicator(s): By 2014, the corresponding institutions and local stakeholders will promote –and the social stakeholders will have more skills and tools to exercise their right to– a healthy and safe environment and environmental sustainability including the conservation of biodiversity, the integral management of natural resources and environmental management.

UNDP Strategic Plan Environment and Sustainable Development Primary Outcome:Sustainable and equitable environmental planningExpected CP Outcome(s)/ Indicator(s): Institutional reform and enhancement of authorities’ capacity to prioritize and mainstream in the National Development Program issues related to conservation, access and sustainable use of biodiversity and environment planning.

Expected CPAP Output(s)/ Indicator(s): 1.1.1 Joint initiative on positive synergies between fight against poverty and environmental planning taking into account specific gender needs, 2.1.1 No. of legal and institutional instruments that support the National Environmental Authority in the fulfilment of monitoring duties; 3.1.1 No. of designed and implemented financial sustainability mechanisms in agreement with the stakeholders, men and women alike; 3.2.1 No. of executed communitarian projects on biological diversity management with a gender and intercultural approach, 4.1.1 No. of policies, strategies, plans and adaptation programs within national and local development plans.

Implementing partner: Ministry of the Environment (MAE)

Brief DescriptionThe long term goal of the project is to improve the sustainability of the National System of Protected Areas (SNAP), so that it provides development results through a healthy and sustainable environment and guarantees the Rights of Nature (as established in the Constitution). The project objective is to implement a field-tested, financial and institutionalized operational framework for an expanded Ecuadorian National System of Protected Areas. Hence, it will contribute to enhancing the financial sustainability of Ecuador’s SNAP by addressing the four principal barriers to financial sustainability: (i) Laws, regulations, policies, and institutional responsibilities are not conducive to long-term financial sustainability of the SNAP; (ii) Institutions and individuals responsible for management of protected areas do not have strong capacities for financial and business planning, and cost-effective results-based management of PAs; (iii) System-wide, there is limited recognition of the contribution of SNAP to economic growth and the reduction of inequalities so, there is still weak support from decision-makers and the general public; and (iv) There are insufficient experiences with practical mechanisms for diversifying reserve incomes and containing costs through partnerships among the state, local communities, and private reserve owners.

The project’s policy development and institutional strengthening actions at the systemic level will be complemented with demonstration of financial sustainability within 9 protected areas representing public (6), private (2), and communal (1) areas. The demonstration sites have been (and will be) selected based on consultations and comprehensive technical and financial criteria to ensure that in the long term this experience can be strategically upscaled and/or replicated to the whole system.

1

Programme Period: 2010-2014 Total Budget: Atlas Award ID: 00059162 Total Allocated Resources: 19,931,844Atlas Project ID: 00073902 GEF 6,400,000PIMS: 4142 TNC 596,000Start Date: April 2010 FUNDAR

MAE3,850,2225,670,000

End Date: May 2015 Private Forest Network 1,885,622LPAC Meeting Date: Conservation International 50,000Management Arrangements: NIM Cash Transfer and Implementation by UNDP’s Regulations

FANUNDP

1,300,000180,000

Agreed by (Government): Date/Month/Year

Agreed by (Executing Entity/Implementing Partner): Date/Month/Year

Agreed by (UNDP): Date/Month/Year

2

TABLE OF CONTENTS

1. SITUATION ANALYSIS......................................................................................................................................5

Part 1A: Context....................................................................................................................................................51.1 Globally Significant Biodiversity..............................................................................................................51.2 The National System of Protected Areas (SNAP).....................................................................................61.3. Policy and institutional context for the management of protected areas...............................................101.4 Socio-economic context..........................................................................................................................15Part 1b: Baseline Analysis...................................................................................................................................161.5. Threats to biodiversity and ecosystem services in protected areas........................................................161.6. Management effectiveness of PAs within SNAP.....................................................................................181.7 Baseline Financial Situation of the SNAP..............................................................................................191.8. Baseline trend of development of the SNAP...........................................................................................231.9 Desired long-term solution and barriers to achieving it........................................................................23

2. PROJECT STRATEGY....................................................................................................................................28

2.1 Conformity with GEF Policy..................................................................................................................312.2 Project Goal, Objective, Outcomes and Outputs....................................................................................312.3 Project Indicators, Risks and Assumptions.............................................................................................542.4 Incremental Cost Assessment..................................................................................................................582.4 Cost-effectiveness....................................................................................................................................602.5 Country Ownership: Country Eligibility and Country Driven-ness.......................................................62

2.5.1 Country Eligibility................................................................................................................................................622.5.2 Country Driven-ness.............................................................................................................................................62

2.6 Sustainability...........................................................................................................................................642.7 Replicability............................................................................................................................................662.8 Coordination with other related initiatives.............................................................................................66

3. PROJECT RESULTS FRAMEWORK AND TOTAL BUDGET AND WORK PLAN.............................70

4. MANAGEMENT ARRANGEMENTS............................................................................................................86

4.1 Institutional Arrangements.....................................................................................................................864.2 Project Implementation Arrangements...................................................................................................864.3 Audit arrangements.................................................................................................................................934.4 Use of institutional logos on project deliverables..................................................................................93

5. MONITORING FRAMEWORK AND EVALUATION................................................................................93

5.1 Project start............................................................................................................................................945.2 Quarterly.................................................................................................................................................945.3 Annually..................................................................................................................................................945.4 Periodic Monitoring through site visits..................................................................................................955.5 Mid-term of project cycle........................................................................................................................955.6 End of Project.........................................................................................................................................955.7 Learning and knowledge sharing............................................................................................................96

6. LEGAL CONTEXT...........................................................................................................................................97

7. Annexes................................................................................................................................................................98

3/ 100

ACRONYMS AND ABBREVIATIONS

APC Community-Indigenous-Afro Ecuadorian Protected Areas

APGS Regional Government Protected Areas

APPRI Private Protected Areas

DNBD National Directorate of Biodiversity

FAN National Environmental Fund

FAP Protected Areas Endowment Fund

FSP Full Size Project

FUNDAR Agricultural and Rural Development Foundation

GDP Gross Domestic Product

GEF Global Environment Facility

GHG Greenhouse Gas

GNP Gross National Product

GTZ Gesellschaft für Technische Zusammenarbeit

INEFAN Ecuadorian Institute for Forest, Natural Areas and Wildlife

IUCN International Union for Conservation of Nature

M&E Monitoring and Evaluation

MAE Ministry of Environment

MEF Ministry of Finance

METT Management Effectiveness Tracking Tool

NGO Non Governmental Organization

NTFP Non Timber Forest Products

PA Protected Area

PANE Natural Protected Areas Heritage of Ecuador

PES Payments for Environmental Services

PPG Project Preparation Grant

PPR Project Progress Reports

RBPE Ecuador’s National Private Forest Network

RD Regional District

SENPLADES Planning and Development National Secretariat

SNAP National System of Protected Areas

SSPN Under-Secretariat of Natural Heritage

TNC The Nature Conservancy

TULAS Unified Text of Secondary Environmental Legislation

UNCBD United Nations Convention on Biological Diversity

UNDP United Nations Development Program

WB World Bank

4/ 100

1. SITUATION ANALYSIS

Part 1A: Context

1.1 Globally Significant Biodiversity

1. Ecuador straddles the Equator on the Pacific Coast of South America. It is bordered to the north by Colombia and to the south and east by Peru. It has a surface area of 256,370 square kilometers (0.19% of the world’s surface), making it the smallest Andean country. In spite of its small size, Ecuador is ranked 8th in the list of 17 “megadiverse” countries of the world. It has the highest biodiversity per unit area for the South American continent and houses 2 of the 34 hot spots of the world, Tumbes-Chocó-Madgalena and Tropical Andes.

2. In addition to Galapagos Islands, considered as the fourth natural region of Ecuador, the mainland is divided into three primary areas: the Pacific Coastal Area (rich in dry forest and mangrove biomes), the mountainous region of the Andes (rich in Andean forests and ‘paramos’), and the Amazon Jungle (rich in tropical forest biome). The wide ranges of latitude and altitude along the Equator, together with marine features such as the Humboldt Current along the coast have given rise to a large variety of climatic zones even within these four main regions. In turn this supports significant habitat and species diversity both across and within each region.

3. Indeed Ecuador is considered to have amongst the highest biodiversity of animal and plant species in the world by surface area, reaching 9.2 species per square kilometer (excluding all the marine species and habitats). It has an estimated 25,000 species of plants and 15,306 vascular plants listed (approximately 10% of the world’s total), of which 4,173 plants are endemic and around 8,200 orchids alone have been identified. The fauna of Ecuador is also very rich, with an estimated 800 species of freshwater fish and 450 marine fish, 422 amphibians species (third in the world), 375 reptile species, 333 mammal species, 1,618 bird species (more than half the bird species of the continent and more than a sixth of the total bird species of the world) and over one million insect species, of which around 4,500 are butterflies.

4. Furthermore, it has a high level of endemism (second in the world), as a result of the interaction of ecological, climatic and paleo-geographic factors. It hosts almost 15% of all endemic bird species of the world, which mainly live in the Andes, the Coast and the Amazonian Regions. In addition to its natural wealth, it is a multi-ethnic country with recognized cultural and archaeological wealth.

5. However this biodiversity is under increasing pressure from threats driven by economic activities. The main threats are habitat loss and fragmentation caused principally by deforestation and desertification; and over exploitation of certain species. These main drivers include petroleum production, mining, forestry, sheepherding and agriculture. Aquaculture and fishing are also increasingly placing intense pressure on fragile ecosystems. Close to 28% of GDP comes from these sectors (see section 1.5 of the Baseline Analysis). Much of the informal economy, especially in rural areas, also depends indirectly on extractive industries. In addition climate change is expected to increase pressures. For example increased variability and overall decline in rainfall as well as increase in temperatures are predicted over large parts of Ecuador’s west coast that will increase sudden fires that are common during summer in the whole country due to its equinoctial position.

6. Without properly established and implemented legal and economic tools, incentives and effective alternatives, these economic practices will continue to prevail, to the detriment of Ecuador’s biological heritage. Losses are already significant. Natural vegetal ecosystems in Ecuador have been calculated to amount to 55% of the mainland surface in 2001. The remains of dry inter-Andean vegetation are only 5%, while Andean rainforest remains are calculated at 21%.

5/ 100

7. In order to protect its Biodiversity, the Ecuadorian Government has embarked on a number of initiatives and approaches. Central to this project is their strategy to establish the National Protected Areas System (SNAP) and Natural Areas Patrimony of Ecuador – PANE. This policy started with the protection of critical ecosystems such as Galapagos Islands (Galapagos National Park 1936) and the Páramo of Cotopaxi Volcano (Pululahua Geo-Botanic Reserve, in 1966) which were at risk of disappearing. Since then, 39 new public protected areas have been added. The Ministry of Environment, with assistance from local and international organizations, has continued this policy to conserve critical ecosystems through protected areas, seeking to incorporate representative areas of all its ecosystems into a National System. Nonetheless the SNAP still faces a number of constraints including under representativity and management deficiencies derived to a large extent from sub optimal financial framework described in more detail in the following sections.

8. The proposed project will build on past initiatives and contribute to the sustainability of the National System of Protected Areas (SNAP) by implementing a field-tested, financial and institutionalized operational framework for an expanded Ecuadorian National System of Protected Areas. In the long term this expanded SNAP will increase ecosystem representativity and contribute to the country’s development results by providing a healthy and sustainable environment and guaranteeing the Rights of Nature (as established in the Constitution). The strategy of the project described in Section 2 includes policy development and institutional strengthening actions at the systemic level complemented with demonstration of financial sustainability within 9 protected areas representing public (6), private (2), and local governmental (1) areas. These demonstration sites, selected through consultations and technical and financial criteria, will provide lessons that can be strategically up-scaled and/or replicated to the whole system. They are Mache Chindul, Cayambe Coca, Galera San Francisco, Illinizas, Chimborazo, Cuyabeno-Yasuni, Abras de Mantequilla, Mindo NW, and Manabi.

1.2 The National System of Protected Areas (SNAP)

9. The Natural Protected Areas Heritage of Ecuador. Recognizing the importance of conserving its unique biodiversity, as described above, the Government of Ecuador has established 41 public protected areas (PAs) that are referred to as the Natural Protected Areas Heritage of Ecuador (or PANE by its Spanish acronym). This was once known as the National System of Protected Areas (SNAP) but is now a sub-system of an expanded National System of Protected also known as the SNAP as explained below. Protected areas within the existing PANE sub-system are established on State-owned land and mandated by the Constitution (Article 86, Number 3). Prior to the creation of the most recent PANE Protected Area of Yacuri (Dec. 2009), this sub-system encompassed 4,822,186 hectares of land (approximately 18.8% of the country’s total land area), as well as 14,220,468 hectares of marine area. The sub-system is distributed over all 24 Ecuadorian provinces, covers all four of the primary geographic regions, and ranges in altitude from 0 to 6,700 meters above sea level. It includes a range of management categories, as indicated below.

Table 1 Ecuador’s Natural Protected Areas Heritage of Ecuador (PANE) – a sub system of the new National System of Protected Areas (SNAP)

Protected areas No. Total area (Ha)

% of SNAP

IUCN Category

Governance Authority

I PANE (Central Government’s PAs)1 National Parks 9 2,883,086 14.99% II MAE2 Biological Reserves 3 16,124 0.07% Ib MAE3 Marine Reserves 2 14,220,468 73.98% Ia MAE4 Ecological Reserves 10 1,225,429 6.38% Ia MAE5 Geobotanic Reserves 1 3,383 0.018% Ia MAE6 Faunal Production Reserves 4 667,334 3.47% VI MAE7 Wildlife Sanctuaries 9 24,146 0.13% Ib MAE8 National Recreation Areas 2 2,683 0.014% II MAE

6/ 100

Protected areas No. Total area (Ha)

% of SNAP

IUCN Category

Governance Authority

Sub total (not including new Yacuri PA in PANE)

40 19,042,653 99.05%

10. Given that PANE protected areas are established on public lands, most are inhabited by a variety of local and indigenous communities. These communities generally engage in subsistence and small-scale production activities: maize cultivation, milk production (<5 liters per animal), small animal husbandry (chicken, hogs, and cuy – guinea pigs), and marine fishing, among others. The Ecuadorian Constitution of 2008 recognizes the rights of these populations to use the natural resources within their territories. Accordingly, the National Biodiversity Strategy proposes actions that are consistent with local communities’ livelihoods. As such, these communities comprise an important constituency in achieving conservation actions and sharing benefits generated by the SNAP. However, to date, there is limited participation by communities in PA management. This not only contributes to an increase in resource use pressures from communities but also limits the possibilities for defraying management costs by involving local people in management activities, as pointed out by MAE authorities.1

11. With respect to PANE’s ecological representativity, excluding the Galapagos National Park and Marine Reserve and the Yacuri Protected Area, 80.27% of the 4,822,186 hectares on Ecuador’s mainland is classified either as: very high, high or medium in terms of priority for conservation [2,047,193 Ha of very high priority; 1,503,123 Ha of high priority, and 320,918 Ha of medium priority] 2,3. These include 40 of the 46 vegetation formations found in Ecuador4. In addition to harboring unique biodiversity, the PANE is a source of key environmental services, especially those related to hydrological services that meet electricity and water supply needs of Ecuadorian cities. Salazar and Rodriguez (2007) calculated that water-related environmental services provided a total value of 3.4% of GDP, while potential carbon-related environmental services would contribute an additional value of 24.7% of GDP.

12. Despite the fact that PANE incorporates areas from the majority of ecosystems within the country, there are some remaining gaps. The 6 vegetation formations not covered are coastal foothill semi-deciduous forest, Bálsamo Mountain range, Andes lower montane semi-deciduous forest and other vegetation types located in central and southern inter Andean valleys (sierra) of Ecuador such as Andes montane dry shrub and the Southern Andes humid shrub.5 Moreover, 25 of these vegetation formations

1 Under Secretary of Natural Heritage of MAE expressed a lack of participation of communities in PA conservation and asked to support benefit sharing practices as incentives for participation (Tannya Lozada, pers.com.)2 This range of priorities was developed by Sierra et al. based on several variables including assessing representation and biological risk. Representation covers at least 10% of an original vegetation formation of the 40 vegetation formations in PANE’s protected areas. In addition to representation, Sierra et al. fixed other variables to set priorities for conservation areas including Ecosystem priority due to exposure to human pressure, and Priority due to species-level ecosystem attributes: Sierra, R., F. Campos y J. Chamberlin (1999). Areas Prioritarias para la Conservacion de la Biodiversidad en el Ecuador Continental. Un Estudio Basado en la Biodiversidad de Ecosistemas y su Ornitofauna. Proyecto INEFAN/GEF, EcoCiencia and Wildlife Conservation Society. 171 pp.3 Ministry of Environment, Strategic Plan for the National System of Protected Areas of Ecuador 2007-2016, Final Report of GEF/WB Project consultancy, REGAL-ECOLEX, Quito.4 An updated study of ecosystems conservation gaps was done in 2007 with similar findings but using a different methodology: Cuesta-Camacho, F. y M. Peralvo, 2007, Identificación de vacios de Conservación de la Biodiversidad Terrestre en el Ecuador Continental. Informe Final de Trabajo, Ministerio del Ambiente del Ecuador, Dirección Nacional de Biodiversidad y Áreas Protegidas, Quito Ecuador.5 Vegetation types are based on Sierra et al. 1999 classification. Sierra, R., C. Ceron, W. Palacios, & R. Valencia, 1999, Mapa de Vegetación del Ecuador Continental, Scale 1:1,000,000, Proyecto INEFAN/GEF-BIRF, Wildlife Conservation Society and EcoCiencia, Quito, Ecuador.

7/ 100

are underrepresented and 21 are represented with less than 10% of original surface in the PANE protected areas subsystem.6

13. In view of this, in 2008, MAE and its partners identified a list of critical areas for conservation. This identifies some 933,000 hectares as priority for new conservation areas. The recent creation of 2 PANE areas (Galera San Francisco Coastal Marine Reserve and Yacuri) resulted from the identification of these critical areas. However still only 8% of these priorities have some kind of protection 7. Options to protect these critical conservation areas are not all restricted to public lands. In fact a number of sites already count with private, communities and local governments’ initiatives that provide some protection. For example, the Chocó-Manabí Conservation Corridor, which is part of the Hotspot Tumbes-Chocó-Magdalena Corridor has several private reserves and is among the most vulnerable on the critical list precisely because it hosts the remains of a unique vegetation formation in Ecuador (tropical deciduous forest and dry forest of central coast region).

14. Complementary to MAE’s list of critical areas of conservation, MAE’s Socio Bosque Program has identified 2.2 million hectares of Forest under private or communal property ownership and protection (Socio Bosque Program & MAE, 2009). These are known in Spanish as Bosques Protectores and hereafter referred to in this document as Protected Forest8.

15. In a bid to overcome these gaps, environmental actors in Ecuador have pushed towards a more ambitious vision of a comprehensive national system of protected areas (known as the “new” SNAP) that builds and expands on the existing PANE sub-system. This was articulated in the Strategic Plan for the SNAP for 2007-2016. The long-term vision is to include not only PANE previously referred to as SNAP, but also three new sub-systems. Thus the proposed “new” SNAP will consist of the following four sub-systems: (i) the Natural Protected Areas Heritage of Ecuador (PANE, or former “old” SNAP); (ii) Private Protected Areas (APPRI); (iii) Community-Indigenous-Afro-Ecuadorian Protected Areas (APC); and (iv) Regional Government Protected Areas (APGS). There is consensus amongst key environmental players (and confirmed through consultations in the Project Preparation Grant - PPG), that the expansion of the SNAP to include new sub-systems would provide a means to further address conservation gaps, improve connectivity among PAs, and involve more stakeholders in PA management9.

16. The institutional reforms advancing in Ecuador (See section 1.3 on policies) and the SNAP strategic plan both recognize the obligation of the Government to support alternatives for sustainable development in the PAs and their buffer zones as ways to increase social participation in the management of the SNAP, alleviate conflicts, and contribute to the equal sharing of benefits. In effect, a cornerstone in this regard is the new 2008 Constitution of Ecuador. It recognizes this expanded vision of SNAP to include community, private and local governments’ protected areas, as well as the need to promote participation, consultation and the collective rights of communities. Nonetheless although the new 2008 Constitution of Ecuador makes the legal creation of these new sub-systems possible, Ecuador still lacks the legislation and other instruments to be able to make these a viable reality on the ground. The proposed project will address some of the most important aspects needed to achieve this, and will coordinate with other projects financed by local authorities and international donors, such as IADB, KfW, and others.

6 Freile, J F. & Santander T. 2005. Áreas importantes para la conservación de las aves en el Ecuador. pp. 283-470, Serie de Conservación de BirdLife No. 14. As well as in: Sierra R., F. Campos &J. Chamberlin, 1999, Áreas prioritarias para la conservación de la biodiversidad en el Ecuador Continental, un estudio basado en la diversidad de ecosistemas y su ornitofauna, Ministerio del Ambiente, Proyecto INEFAN-GEF-BIRF, ECOCIENCIA, WCS, CDC, AS, ASU, 171 pp..7 Ministerio del Ambiente. 2008. Revisión del Alcance y Situación Actual del Patrimonio de Áreas Naturales Protegidas del Ecuador (PANE). Ministerio del Ambiente del Ecuador. Quito.8 Information on hectares of private and communal forests per Province is available on request.9Ministry of the Environment, Study of Gaps and Priority Biodiversity Conservation Areas in Mainland Ecuador, 2007

8/ 100

17. While the PANE sub-system is currently in existence, the other three sub-systems form an important part of the Strategic Plan for 2007-2016. The PANE sub-system is described above. The following paragraphs provide details of the other sub-systems.

18. The proposed private PAs sub-system (APPRI) is in the process of being developed but does not yet exist. The legal basis for the establishment of the APPRI is a mandate in the Constitution of 2008 (Articles 3 and 23), and compliance by the Ministry of Environment (MAE) is obligatory. The MAE has the duty to determine legal and technical indicators to frame and manage this sub-system. Many of the private forests border on PANE protected areas. Therefore, the technical team of MAE is challenged to establish priorities for areas to be included into the future APPRI sub-system. By including these in the fold of the SNAP and ensuring that they are properly managed for conservation, the national environmental authority can enact APPRIs as important buffers against pressures on PANE territories. The main benefits of the establishment and incorporation of the APPRI areas to the SNAP are ecosystem representation improvement10, the promotion of combined production models, nature conservancy, exchange of conservation experiences and mutual support between members. There is also public motivation for creating incentives for these areas to develop research and environmental education programs.

19. Potential APPRIs are privately owned areas of ecological relevance. Properties can vary from small farms of less than 5 hectares to large farms with more than 40 hectares. Owners tend to use these lands to produce perennial crops like cacao, coffee, banana, citric and annual crops like maize, rice, vegetables and cereals; as well as timber extraction, fuelwood consumption, animal production (hogs, chicken) and milk production. In some areas, owners have tree plantations (predominantly teak and eucalyptus).

20. There is already an embryonic APPRI under development as many private landowners have already designated some of their land for conservation. One hundred and ninety three (193) Private Protected Areas are recognized as Protected Forest and registered in CIAM (Environmental Information Center of the Ministry of Environment of Ecuador), covering 2.23 million hectares. These equate to the IUCN VI category. Currently, 70 of these areas are designated as Private Protected Forests under the Private Forests Network of Ecuador, covering 70,000 hectares. Private Protected Forests require management plans and one person or institution responsible for their management. Currently, owners of these lands tend to engage in agriculture, animal husbandry, livestock, and grazing activities. Since these areas are not used for timber exploitation, landowners must identify biodiversity-friendly ways of generating revenue from these areas for their maintenance. The project proposes to work with these owners to address this issue.

21. The proposed community PA sub-system (APC): Similar to the APPRI sub-system, the APC sub-system is mandated by the 2008 Constitution but does not yet exist. However some communal areas are already providing protection to key areas although there is yet no official register or estimation of numbers. Both the new Constitution of Ecuador and Ecuadorian law (Law of Communes- Community law) recognize communal land ownership. The community has the right to use the land but usually they cannot obtain an individual property title. Many are established as ancestral land by different communities and represent an ecological and cultural importance to their communities. The communities living in these areas are typically engaged in subsistence and production activities such as agriculture, grazing, animal husbandry, fishing, hunting and use of wood as fuel.

22. The Strategic Plan 2007-2016 for the SNAP considers the incorporation of these areas as a means to realize its conservation goals particularly in biological corridors to be managed under an ecosystem

10 MAE, MAGAP and SENPLADES are conducting studies that will provide more specific detail on ecological representativity expected to be covered by APPRI. The results of these studies are expected by the time the project begins implementation. SOURCE: interview with Max Lascano, Coordinator of Socio Bosque Program, January 2009.

9/ 100

and communitarian approach. The new Constitution also recognizes the contribution these communal areas can make to achieving national conservation goals. In ecological terms, these areas are important as many potential APC areas are located in many buffer zones and bringing them within the SNAP will increase the size of protected habitat blocks and increase connectivity. Others fall in land with high (and very high) importance in terms of ecological representation and conservation. For instance, the Abras de Mantequilla wetlands area, which was declared a RAMSAR site in 2000 (one of eleven in Ecuador), falls within the Andes lower montane semi-deciduous forest ecosystem that is currently not covered in the PANE sub-system. This communal PA is considered a potentially important example of the APC sub-system because it already has an active protection status, has a land use plan that includes areas of protection and conservation, and also has a management scheme with the potential to create networks and synergies among institutions, organizations and interest groups.

23. In addition to their biological importance and in common with the APPRI subsystem these communal APC areas are mentioned as a mechanism of financial sustainability of the SNAP by the Strategic Plan 2007-2016 as a means of sharing the costs of reaching conservation goals across a wider range of stakeholders. With appropriate support, these communities can play an important role in efforts to promote community-based forest stewardship. The Ministry of Environment is considering working to incorporate in areas where inhabitants of communities have guaranteed property rights (e.g. Abras de Mantequilla) and where communities have preserved part of their land as natural forest.

24. The proposed APGS sub-system is in the process of being set-up but does not yet exist. As in the other two sub-systems, MAE is charged with determining legal and technical indicators to frame and manage this sub-system, and will strategically select areas to be part of it. However decentralized Autonomous Governments (GADs) have the authority to strategically establish these areas as part of their land planning and management. There have been significant efforts to this end by some municipal governments around the country that have advanced initiatives to conserve areas, create protection forests and demonstrate the public utility of them. In fact more and more local governments are developing incentives for such areas and recognize that protected areas could be a significant source of income generation for their budgets. Data for ecological representativity in these areas is not available however they are considered to have a role particularly in corridors and ecosystems in which PANE PAs are limited.

25. While this sub-system is not the main focus of this project’s intervention it will be addressed through other intiatives11 MAE will establish coordination arrangements with these in order to replicate lessons learnt to this sub-system properly encompass relevant intervention in these areas. The exclusion of this sub-system from the proposed project will not affect the strategy proposed herein. Rather it is expected that the APGS sub-system will benefit from the experiences gained during the implementation of this project and lessons learnt from this project will subsequently be tailored more appropriately, in coordination with MAE and other donors, to address the complex context of this particular sub-system.

1.3. Policy and institutional context for the management of protected areas

PA policy issues26. New Constitution : State reform processes developed in recent decades in Ecuador have promoted a series of rules and regulations for the protection, conservation and sustainable use of natural resources that have high relevance for this project. Ecuador is embarking on a new development model based on the respect for the rights of nature, social equity, and the sustainable use of resources. This new vision

11 This proposed sub-system was not included in the PIF as the complex issue of decentralization and the related dynamics of environmental policy and regulations needed for advancing this sub-system called for a separate and specific initiative and significant resources. Since that time, several initiatives are being developed to mobilize new resources that will address this sub-system through other international projects including a CI-FAO proposal to GEF V and certain aspects of a pending KfW project.

10/ 100

implies breaking with the prevailing anthropocentric vision of development and constitutes a tremendous challenge in the current global context. One of the most significant reforms and key for this new model and for this project, is the new 2008 Constitution of the Republic of Ecuador, which states that the major driving force in policy is the fulfillment of Sumak Kawsay12 and the Rights of Nature. Regarding Natural Protected Areas, Article 397 of the Constitution stipulates that the Government should undertake to "ensure the inviolability of Natural Protected Areas, so as to ensure biodiversity conservation and maintenance of ecological functions ecosystems. The management and administration of natural protected areas will be in charge of the Government".

27. With respect to the SNAP, the new Constitution states that this system should will ensure the conservation of biodiversity and maintain ecological functions, and will be composed of sub-systems, including public sub-system, municipal government protected areas, community areas, indigenous and Afro-Ecuadorian areas, and private areas. Furthermore it indicates that the Government has an obligation to allocate the necessary financial resources for the financial sustainability of the system and encourage the participation of communities, peoples and nationalities that have ancestrally inhabited protected areas administration and management. It also establishes the prohibition of extractive activities of non-renewable resources within protected areas and in intangible areas. This latter is of extreme importance as until now exploitation has been allowed in PAs and is a major threat (see Section 1.5). However, these resources can be exploited exceptionally through a request of the Presidency of the Republic and a declaration of national interest by the National Assembly.

28. Of further relevance is Ecuador’s National Development Plan (NDP)13. The NDP is a tool which outlines the basic national policies and strategies through which to achieve sustainable and equitable development. The NDP gives central importance to environmental issues and specifically the need to strengthen and consolidate the implementation of SNAP. It proposes a strategy to strengthen the SNAP and natural heritage through public funding, management of the environmental authority and economic mechanisms that ensure its financial sustainability. It further states that biodiversity should be managed as a strategic resource, enhancing all social, cultural and economic partners. Furthermore, it is imperative “to ensure the exemption within the protected areas of mining, new oil concessions, infrastructure of risk, commercial logging, industrial forestry, farming and fishing, unsustainable livestock and aquaculture...” The project complements this and provides a unique opportunity to support in making this a reality.

29. As part of the legal reform process to allow for greater policy coherence, especially under the new Constitution of Ecuador, the Ministry of Environment began to draft a new Environmental Code in 2008. While it is not fully adopted, the Draft Environmental Code regulates many aspects of protected areas, including economic alternatives for the financial sustainability of the SNAP. The draft Code defines the SNAP as all legally established natural areas to ensure coverage and connectivity of terrestrial, marine, coastal-marine and cultural resources. The administration and management of SNAP will take place from a systems perspective and therefore, management plans should consider the interdependencies protected areas, forests and protective forests, ecological corridors and fragile ecosystems and the responsible institutions for these.

30. The Code establishes that the SNAP is composed of sub-systems defined within the Constitution, including marine and marine-coastal sub-systems. All areas belonging to the sub-systems are declared as such by the Ministry of Environment through a ministerial agreement.14 The Code further states that the Ministry of Environment is the authority responsible for the stewardship, planning, coordination, implementation of activities, creation, management, monitoring and evaluation of the SNAP. Moreover,

12 Sumak Kawsay is a Quichua word that means life at its fullest in harmony with nature. 13 National Development Plan 2007 - 2010, Official Gazette Supplement No. 310, April 7, 2008 (also referred to as the National Well-Being Plan)14 Environmental Code, Article 130.

11/ 100

the Code explicitly mentions environmental and ecological services, and defines them as those that provide benefits to ecosystems, people, communities, peoples and nations. The benefits can be environmental, ecological, social, cultural, spiritual or economic,15 and cover product life cycles, structure, natural and historical functions and evolutionary processes, and current practices by individuals and communities.

31. In 2008 along with the NDP, the government issued a Policy and Strategic Plan for Natural Protected Areas (2007-2016)16. As mentioned previously, the Plan proposes the establishment of three new PA sub-systems to enable private, community-managed and regional PAs, and recognizes the need to support sustainable development alternatives in PAs and their buffer zones as a mechanism to strengthen social participation in SNAP management, to mitigate conflicts, and to contribute to equitable benefit sharing. One of the four goals outlined in the document is to “Improve the financial sustainability of the PANE and analyze mechanisms for the management of other SNAP sub-systems”. The Plan proposes several strategies for achieving this goal, including diversification of revenue mechanisms and new instruments for reinvestment, more effective cost management, and establishment of alliances with different sectors and stakeholders for collaborative management of PAs, all of which are supported by the project.

32. One product of the SNAP Strategic Plan is the SNAP Financial Sustainability Strategy (FSS)17. The FSS is a guiding document for this project as it details numerous strategies for improving the financial sustainability of the SNAP and its sub-systems, including: a) increased fiscal resources through reorientation of state investments; b) diversification of self-funding mechanisms and instruments for control and reinvestment; c) management of resources, cost reductions and effectiveness; d) capitalization of the FAP and other funds for the financing of PAs; e) establishment of alliances to generate benefits for and integrate communities into planning and sustainable development processes; and f) voluntary contributions and donations from domestic and international sources.18

33. Another notable policy development in line with the NDP and the SNAP strategy is the Yasuni Initiative Ishpingo, Tambocha, Tiputini (ITT) launched in 2007. This seeks to maintain crude oil reserves in the ground as part of a strategy to protect and conserve areas of great natural and cultural value in the post-extractive development model. Through this proposal, the country commits to maintaining untapped approximately 846 million barrels of oil indefinitely in return for international financial contributions amounting to at least 50% of the revenue that the exploitation of these oil resources would generate.19 Part of these resources would be used to fund effective conservation of the 41 public protected areas that make up the SNAP, in addition to the management of community areas owned by indigenous and Afro-Ecuadorian communities. In this respect, the initiative could contribute to the financial sustainability of the SNAP, covering the financial needs of the protected areas 20. The 2008 Constitution guarantees legal functioning and sustainability of the Yasuni ITT Initiative as it recognizes the rights of people to live in a healthy and ecologically balanced manner. Significant advances have been made on defining viable mechanisms for setting up a Yasuni ITT Fund and a number of countries have indicated their interest in collaborating thus presenting a significant potential source for revenues for the future expanded SNAP.

15 Ibid., Article 279.16 Ministerial Agreement No. 009, published in Official Gazette Supplement No. 343, May 22, 2008.17 The strategy is a product of the WB/GEF project National System of Protected Areas18 The project proposes to update the Strategic Plan due to the fact that the New Constitution and laws to come have changed

some of the principles on which it was based when conceived and written.19 Larrea, Carlos. Iniciativa Yasuní ITT: La gran propuesta de un país pequeño.

20 This initiative is directly related to the concept of well-being and the recognition of the Rights of Nature because it will protect natural resources as part of development and improve the living conditions of the populations directly involved in these areas and guarantee the rights of uncontacted tribes so they can maintain their lifestyle.

12/ 100

34. Prior to these new policy elements, Ecuador had a number of particularly relevant and recent environmental policies and laws which also provide a suitable context for the proposed project. These include the National Biodiversity Strategy and Policy (NBSP) in 200721, described in the Country Ownership section, as well as the Unified Text Environmental Law (TULAS),22 which will be instrumental for application of these policies in the short term. The TULAS is a set of environmental regulations governing the functions of environmental authorities, environmental management, forestry regime, biodiversity, coastal resources, environmental quality and special arrangements for Galapagos. Concerning Protected Areas, it stipulates that the MAE is responsible for the declaration of the area, managing of Government natural areas in accordance with the respective Management Plan and the implementation of appropriate entrance fees. The amount charged for entrance fees to each SNAP protected area is also regulated through the TULAS.

35. Regarding the provision of services within the protected areas, TULAS states that the MAE may grant concessions and enter into contracts for loans, leases and other legal figures for the provision of services or sustainable resource use within PANEs. Several activities that are permissible within protected areas are subject to payments for rights of granting patents of tourism management, and service revenues. Finally, it stipulates that the revenue collected from payment of tourist operation patents, membership fees and services be used through the Annual Budget in the management of protected areas.

36. As evident from the above, Ecuador has a myriad of policies and instruments related to protected areas that could lend to the strengthening of the SNAP, especially with an unparalleled innovation as put forth by the unique Rights to Nature clause in the 2008 Constitution. The strategic lines presented in the NBSP, NDP, TULAS and Yasuni ITT Initiative further provide a strong base for Ecuador to achieve financial sustainability of biodiversity conservation, with special emphasis on natural protected areas, namely the SNAP.

Management of public PAs (PANE sub-system)37. The implementation of PA Policy in Ecuador centers on the Ministry of Environment (MAE) as the national authority responsible for the management of the country’s biodiversity. MAE has a Sub-secretariat of Natural Heritage, which is responsible for the National System of Protected Areas (SNAP) and biodiversity matters. Within this Sub-secretariat, the National Directorate of Biodiversity (DNBD), through its Protected Areas Unit, coordinates and supervises the SNAP. DNBD is responsible for the administration of the SNAP, guaranteeing the sustainable use of biodiversity, regulating access to genetic resources, and rehabilitating fragile ecosystems.

38. Under the new de-centralized structure of the MAE, ten Regional Districts (RD) have been established, each managed by a Regional Director. In some cases, the RD has jurisdiction over an entire province, while, in others, it may cover two or three provinces. Each RD is a financially decentralized unit, capable of managing its own budget based on an operational plan. Each is charged with reporting annually on budget execution to the Integrated Financial Management System (SIGEF) of the Ministry of Economy and Finance. The RDs are directly responsible for the handling and management of any PANE areas within their jurisdiction. The administrative units of protected areas report to the corresponding Regional Director. This structure has ensured the integrity of protected areas that face geographic isolation, and has benefited from political support at the regional level.

39. The Ministry of Finance (MEF) allocates financial resources for management of PAs directly to the Regional Districts according to requests outlined in the RDs’ annual operational plans. Under this system, financial control resides at three different levels: the RDs, MAE headquarters with the DBPA,

21 Executive Decree No. 2232 of 9 January 2007, published in Official Gazette No. 11 of January 30, 200722 The Unified Text Environmental Law (TULAS) was published as Decree No. 3399 in the Official Register No. 725 of 16 December 2002.

13/ 100

and the MEF, none of which have the capacity to effectively generate a financial report at the level of the system of protected areas.

40. The Ministry of Defense (MOD), which includes the Navy, maintains management and co-management arrangements with the MAE. For instance, the Arenillas Ecological Reserve is a PA managed by the MOD because the site was an army base before being declared a PA. The Ecuadorian Navy is also part of the Inter-institutional Administrative Authority responsible for the Galapagos Marine Reserve.

41. The Ministry of Tourism, as the national authority in matters of tourism, is responsible for the implementation of the Tourism Law and the Special Regulation for Tourism in Protected Areas. Specifically, it is in charge of promoting, planning and controlling tourist activities, as well as the regulation of minimum levels of service quality and tourist activities that take place in protected areas.23

42. Local government: There are three levels of local government in Ecuador namely, provincial, municipal and county government. With respect to management of the PANE Protected Areas, the central Government is directly responsible for the administration and management of the majority of areas, but Cajas National Park presents an isolated example of decentralization or delegation of responsibilities to local governments, as it is administered by the Municipality of Cuenca. In the future, it is expected that local governments would have a more direct role as the sub-systems are fully established and local governments create their own protected areas. This is bolstered by the Ecuadorian government’s implementation of a decentralization process that allocates important financial resources to local governments, enhancing their decision-making capacities; in 2006 the municipalities and provincial councils executed 37% of the national public investment with 15% of the central budget.

43. Protected area administration units: Protected areas within the PANE sub-system have administrative units. Staff within these units is responsible for day-to-day implementation of management plans, budget management. Annex 3 provides the organic structure of MAE.

44. The system of public protected areas (PANE) falls under the responsibility of the National Biodiversity Directorate (DNBD). Fifteen staff members work in the DNBD head office and 191 technical and administrative personnel work in the 41 PANE areas. Typical staffing in PAs includes: (i) Senior management section composed of a director, deputy, and an administrative assistant; (ii) nature patrolling staff; (iii) economic and accounting department for the regional districts, 4-5 people; and (iv) logistics support unit. The management activities include identifying types of recreation activities, mechanisms for their materialization and regulation; collect, maintain and process information on recreational resources at the PA and plans for their exploitation; maintain a relationship (including contracts) with tourism authorities, companies and agencies; develop mechanisms for engagement of local residents and private sector in recreational activities at the PA and catering for tourists; control enforcement of rent and lease agreements; issue permits for tourism; develop recreational products (including web-pages, booklets, brochures, movies); provide information services for tourists. In addition, management activities in the PAs must include identification of critical ecological areas, as well as ecological monitoring. The logistics support of a PA should ensure construction of the necessary recreation and tourism facilities. The nature patrol staff should, together with the recreational staff, holds preventive campaigns among local residents regarding positive and negative impacts on the state of the PA.

Management of private and communal PAs (APPRI and APC sub-systems)23 Special Regulation for Tourism in Protected Natural Areas, Article 6.

14/ 100

45. Currently, the APPRI sub-system is not established and has no formal management of its areas. What exists is a set of owners’ conservation efforts on their own land. Some have formed a network – the Red de Bosques Privadas de Ecuador (Private Reserves network) -to support each other in conservation practices. Currently the RBPE has 70 private reserves and a President and a Board of Directors who are in charge of gaining support from international organizations, national government and communities for their conservation goals, as well as fundraising, writing proposals and increasing group membership.

46. Similarly, the APC sub-system does not exist nor does it have formal management regimes in place. It is basically comprised of community conservational efforts on their own territory. In the case of this project, only one such communal effort was chosen for field-testing. Located in Abras de Mantequilla Wetland, a community represented by the NGO FUNDAR has the organizational capacity to act as a counterpart. They have a President and a Board of Directors who are in charge of gaining support from international organizations, national government and communities for their conservation goals. They also are in charge of fundraising, writing proposals and increasing group membership.

47. MAE is not directly involved in the management of either private or communal protected areas but indirectly supports them through its Socio Bosque program. Created in 2008, this is a voluntary incentive program that provides a monetary incentive to communal or private landowners who voluntarily commit to conserve forest land for 20 years.

48. Both communal and private PAs look for support from local communities and local governments through signing agreements on environmental education and environmental awareness. In many cases these activities are taking place with the help of volunteers

1.4 Socio-economic context

49. Ecuador’s total population is nearly 14 million.24 Roughly 50% live along the Coast, 45% in the Andes, 4.5% in the Amazon, and 0.5% in the Galapagos. Around 40% of the population lives in rural areas. Quito, the capital, and Guayaquil, the principal port, are the two biggest cities, with 2.2 and 2.3 million inhabitants, respectively25. Population growth has declined in the last years, with a yearly average increment of 1.4% (2001-2004) compared with 2.1%, registered a decade earlier. Around 94% of the population identifies itself as mestizo (indigenous combined with different cultures and nationalities), while 5% speaks one of the 14 indigenous languages, according to the 2001 Census. Throughout history, indigenous cultures have maintained a strong traditional relationship with their local natural resources. Many of these ancestral lands and resources are now located in protected areas.

50. The country presents high poverty rates and extreme socio-economic inequalities. In Ecuador, 38.3% of the population lives under the poverty line (Indirect Method, 2006),26 while close to 60% of the population lives under the basic needs poverty line. Ecuador’s Gini Index (a measure of statistical dispersion commonly used as a measure of inequality of income or wealth) is 0.46 (June, 2009). Malnutrition is also a problem affecting roughly 22% of the children under 2 years of age. This is reflected in Ecuador’s ranking of 80th among 175 countries in the 2007 Human Development Index HDI. In 2005, Ecuador advanced eighteen (18) positions, mainly because life expectancy of the population increased to 74.3 years and the per capita GNP reached US$ 3,641. In spite of such positive indicators, Ecuador is far from reaching its Millennium Development Goals. These Goals would only be achieved by the year 2015 following steady economic growth and income redistribution, combined with the implementation of integrative State policies directed to achieving cross-sector collaborations.

24 http://www.inec.gov.ec/web/guest/inicio 25 INEC, Proyecciones Población 2001-2010, Proyección Cantonal, from http://www.inec.gov.ec/web/guest/ecu_est/est_soc/cen_pob_viv26 http://www.inec.gov.ec/web/guest/ecu_est/est_soc/enc_hog/pobreza

15/ 100

http://www.inec.gov.ec/web/guest/ecu_est/est_soc/enc_hog/pobreza

http://www.inec.gov.ec/web/guest/inicio

51. Traditionally, Ecuador’s economy has been extremely volatile due to its dependency on several international variables, and several natural disasters due to the El Niño climatic phenomenon, which destroyed physical and social infrastructure, as well as the fishing and agricultural sectors on the Coast. In recent years, petroleum has accounted for more than half of the country’s export earnings and one-fourth of public sector revenues. The Ministry of Finance of Ecuador estimates GDP to reach US$56,964 million (nominal values) for 2010, increasing to US$72,038 million for 2013.27 This evolution is substantially dependent on its petroleum resources, which are expected to stay between US$ 6 and 8 billion between 2010 and 2013. However as indicated previously (see Section 1.3), the country is moving towards a new development paradigm that seeks to move away from this heavy dependence on extractive activities.

52. Another important contributor to Ecuador’s economy, and relevant to this proposal, is tourism. Foreign tourists accounted for 12.36% of all visitors entering the country in 200828 and the tourism sector accounted for approximately 4.2% of GDP in year 2003.29 Within the tourism sector, ecotourism or nature-related tourism represents a growing sub-sector, with 60 to 80% of international visitors going to protected areas. The national system of protected areas (SNAP) receives over 500,000 visitors per annum with a large proportion being nationals. In 2008, public protected areas received a total of 547,475 visitors, both nationals and foreigners, which is an increase of 4.7% since 2007. Of these visitors, 367,073 were mainland tourists (124,247 or 33.85% foreigners and 242,826 or 66.15% domestic)30. Visitor fees are the main source of income for the SNAP; SNAP received approximately US$ 900,000 from tourism fees in 2006 (approximately 15% of its basic financial needs).

53. In spite of this, and as part of national planning efforts on the way, the SNAP is preparing a strategy for effectively investing in the improvement of tourism facilities and attractions. 31 While there are some ecotourism programs in place within PAs, these are quite limited. Within the 40 mainland PAs (excluding Galapagos), 8 areas (Cotacachi-Cayapas, Cotopaxi, Machalilla, Cajas, Chimborazo, Pasochoa, Cayambe Coca, Boliche) accounted for 89.95% of the national visitation and 91.44% of foreign visitation32. A well managed diversification plan could dramatically increase visitors across the PA system and increase revenues and local community economic benefits. Tourism in protected areas is an activity that generates benefits for conservation, private enterprise and local communities, but can also become a threat to the conservation of the sites generating these benefits. With this in mind, in 2009, the MAE elaborated Recommendations for a Sustainable Tourism Program for the Natural Protected Areas Heritage of Ecuador (PANE). The government has already approved a National Strategic Plan for Sustainable Tourism 2007-2020 which includes improvement in sustainable tourism linked to PAs. The proposed project is in a position to significantly leverage, influence and support the implementation of this plan.

Part 1b: Baseline Analysis

1.5. Threats to biodiversity and ecosystem services in protected areas

54. As indicated previously the major threats to biodiversity in Ecuador are driven by the economic activities such as petroleum production, mining, forestry, sheepherding and agriculture. Protected areas are not immune to these pressures even those in rural areas as much of the informal economy also

27 The goals of inflation for the period 2010 - 2013 would be between 3.35% and 3.38%28 MINTUR, 2009 - National Protected Areas and Wildlife, 200929 MINTU (2003), Satellite Accounts on Tourism. See also http://www.conpehtchile.cl/wp-content/uploads/2008/12/turismo-y-economia-algunos-elementos-para-su-medicion-y-analisis.pdf 30 MINTUR, 2009 - National Protected Areas and Wildlife, 200931 Ver Senplades (2007), National Strategic Plan for Sustainable Tourism 2007-2020 32 MINTUR, 2009 - National Protected Areas and Wildlife, 2009

16/ 100

http://www.conpehtchile.cl/wp-content/uploads/2008/12/turismo-y-economia-algunos-elementos-para-su-medicion-y-analisis.pdf

http://www.conpehtchile.cl/wp-content/uploads/2008/12/turismo-y-economia-algunos-elementos-para-su-medicion-y-analisis.pdf

depends indirectly on extractive industries. The most significant pressures are described below making specific reference to the protected area selected as pilots for this project.

55. Timber extraction : Demand for Ecuador’s timber has increased steadily (9.7 cubic meters/ year). Most of the public protected areas are affected by this threat. For instance, the METT for the Cuyabeno Faunal Reserve lists timber extraction as one of the major threats. In recent years, however, there have been agreements between the indigenous communities in the zone and MAE reserve staff that have led to a decrease in extraction rates. Timber extraction is also listed as the major threat in the Mache-Chindul Ecological Reserve. Indirect drivers of unsustainable logging include high discount rates that act as a perverse incentive for other uses of forest resources, and lack of access to improved technology and knowledge systems which perpetuate unsustainable timber extraction practices.

56. Changes in agricultural land use patterns : New settlements are increasingly occurring in the buffer zones of Protected Areas. Farmers typically practice low-productivity agriculture and sheepherding characterized by inefficient soil and water conservation practices. This creates a vicious cycle that increases encroachment into PAs in search for new land. In private forests that have not yet been legally declared as protected forests, current and expected legislation create incentives to clear 50-80% of the forest in order to avoid public expropriation of private lands. Livestock rearing is another driver of biodiversity loss in PAs. The prevalence of high density grazing puts pressure on paramos and coastal forests and leads to further degradation of pastures. The relative instability of agricultural commodities prices, compared to livestock commodities, has created incentives to switch land use, especially on the Coast. Farmers also use livestock as savings and securities for emergency expenses. Further, the government has implemented a public scheme that subsidizes livestock activities through low-interest credit to farmers and this has led to a conflict between agricultural and conservation efforts. Extensive cattle-rearing and subsistence agriculture is listed as one of the major threats in the Mache-Chindul Ecological Reserve, Chimborazo Faunal Reserve, Cayambe-Coca Ecological Reserve, and Los Illinizas Ecological Reserve. In coastal and marine areas, such as Galera San Francisco, aquaculture is listed as a major threat.

57. Harvest and consumption of forest and marine resources : An estimated 492,494 people living in protected areas and their buffer zones use fuel wood as their main source of energy; an estimated 5 million cubic meters of wood is lost every year as fuel wood. Alternative options for reducing dependence on forest for fuel wood are not available to villagers, or are too costly to obtain. Similarly, the demand for NTFPs by new settlements of farmers has increased steadily leading to unsustainable harvest practices that damage trees. In marine and coastal PAs, high demand for resources such as lobsters and sea cucumbers, is leading to overexploitation. Marine bottom trawling near the Galera San Francisco Marine Reserve is a case in point.

58. Oil industry impacts on tropical forest : Ecuador’s dependency on oil exportation represents approximately 34% of state revenues. It is estimated that about USD 4.9 billion in revenues comes from oil fields in natural reserves. Until the recent Constitution, the oil industry was allowed to operate not only in national parks and reserves, but also in indigenous territories. While the NDP and Constitutional commitment to fulfill Sumak Kawsay and the Rights of Nature suggest this is no longer possible, as noted above, these resources can still be exploited exceptionally through a request of the Presidency of the Republic and a declaration of national interest by the National Assembly. In addition, Article 25 of Chapter 5 of the Mining Law allows the National Assembly and the President of the Republic to permit mining activities in Protected Areas (if those activities are considered part of the National Interest). Since the early 1970’s, about 30% of the Ecuadorian Amazon has been deforested and/or polluted and entire indigenous cultures, such as the Tagaeri and Huaorani, have been placed in danger of extinction as a result of the oil industry and accelerated colonization facilitated by the oil roads. Population close to oil production sites has increased over the last 20 years at a faster rate than population growth among the general population. The Cuyabeno Faunal Reserve is particularly affected by petroleum production

17/ 100

and related serious spills (particularly PETROECUADOR’s oil production in the northwest and southwest of Cuyabeno Faunal Production Reserve).

59. Natural vegetation fires : Due to its equinoctial position, sudden fires are common during summer in the whole country. Further, increased variability and overall decline in rainfall as well as increase in temperatures are predicted over large parts of Ecuador’s west coast, which are likely to exacerbate forest fires.

60. Coastal contamination : In coastal and marine areas, discharge of household sewage and urban waste water is a major threat. For instance, in the Galera San Francisco Marine Reserve, reserve staff indicates that sewage runoff is a particularly serious issue due to the proximity of several local municipalities that dump waste directly into the rivers that flow into the reserve.

1.6. Management effectiveness of PAs within SNAP

61. In the face of these extensive threats, Ecuador’s protected areas require strong management to fulfill their potential as effective conservation tools. However despite advances made in recent years in some PAs, managing effectiveness still varies across the Public PAs and remains sub-optimal. Levels in private reserves and communal reserves are also deficient although there are few cases of objective measurement of effectiveness. During the project development the management effectiveness of the sample set of pilot PAs was measured using the Management Effectiveness Tool (METT) corroborating the general trends of sub-optimal management levels.

Table 2 Summary of METT Scores for Pilot PAs

Pilot Areas by sub-systemMETT Score by Category Total score

as % of maximum possibleCONTEXT PLANNING INPUT PROCESS OUTPUTS OUTCOMES

PANEReserva Cayambe Coca 100.0% 44.4% 50.0% 46.70% 33.30% 66.70% 56.86%Reserva Ilinizas 100.0% 29.6% 37.5% 26.70% 33.30% 41.70% 38.24%Reserva Mache Chindul 100.0% 40.7% 37.5% 33.30% 33.30% 33.30% 41.27%Reserva Galera San Francisco 100.0% 25.9% 8.3% 11.10% 0.00% 25.00% 19.61%Reserva Chimborazo 100.0% 40.7% 45.8% 31.10% 50.00% 50.00% 47.06%Reserva Cuyabeno 100.0% 51.9% 45.8% 46.70% 33.30% 33.30% 53.92%Average Sub Total PANE 100.00% 38.9% 37.5% 32.60% 30.53% 41.67% 42.83%APPRI Bosque Nublado Northwestern 66.7% 63.0% 41.7% 37.8% 50.0% 58.3% 54.90%Bosque Seco Manabí 33.30% 22.20% 20.80% 24.40% 33.30% 38.20% 27.45%Average Sub-Total APPRI 50.00% 42.6% 31.3% 31.10% 41.65% 48.25% 41.18%APCAbras De Mantequilla 66.70% 29.60% 12.50% 28.90% 33.30% 33.30% 31.37%Average Sub-total APC 66.70% 29.60% 12.50% 28.90% 33.30% 33.30% 31.37%

62. The reasons for low scores are several and include the interrelated issues of deficient law enforcement and financial and operations deficiencies. In Public PAs within the PANE sub-system despite legal backing, law enforcement is deficient even though there is an agreement between the MAE, the Ecuadorian Army and the National Police. Institutional support of the PANE sub-system by National Authorities could be greatly strengthened. This is mirrored in PANE’s small budget (see analysis in next section), which in turn means low staff numbers, lack of training, limited planning, limited engagement of local communities, and inefficient reserves’ management. While most of the protected areas in the PANE sub-system have management plans, these plans become ineffective after a

18/ 100

few years because it is not possible to execute them fully. Few or none of the reserves have business plans.

63. Although Private reserves are recognized as Protected Forest in the Unified Text of Secondary Environmental Legislation (TULAS, described earlier) law enforcement in these areas is also deficient and land invasions are common. Limited support from the government results in private owners dedicating most of their time and money to productive activities that allow them to provide for their households and as a result, do not have enough resources for staffing, skills development, and reserve management. Most of the private reserves do not have management plans, so planning is based purely on insufficient personal efforts and good intentions of owners. Consequently, some reserves disappear within a few years. None of the reserves have business plans. The result of this is a loss of revenues and opportunities, as reflected in the METT values through poor scoring on “inputs” and “process”.

64. Community reserves also suffer from inadequate legal support, even though in the TULAS they are recognized as community protective forests. Similar to Private Reserves mentioned above, law enforcement is minimal in community areas. These areas are regularly affected by external land invasions. Because land tenure is based on communities’ rights, transaction costs for developing businesses in those areas are generally high as it is difficult to gain consensus from all community members. Land tenure uncertainties and limited government support result in a constant battle by communities to keep their reserves alive. Community leaders dedicate most of their time and money to maintain consensus and, as a result, there are not enough resources for staffing, skills development, and reserve management. Although these areas have management plans and can establish their own entrance fees, these fees can be a source of resentment because of how revenues are shared among members. Most of the community areas do not have business plans. Planning is based on good faith. Some reserves disappear within a few years because community members do not see direct or tangible benefits from their reserves.

1.7 Baseline Financial Situation of the SNAP

65. The deficiencies in management effectiveness are in part determined by funding shortages. As indicated above, this leads to low staff numbers and equipment, lack of training, limited planning, limited engagement of local communities, and inefficient reserves’ management. This downward management spiral affects the reserves’ revenue generating potential which further aggravates funding deficiencies. The revenues (supply) and expenditures (demand) of Ecuador’s protected areas in the baseline scenario are analyzed in the following paragraphs, followed by an analysis of the institutional and legal arrangements that connect the supply to demand. All three components are needed to achieve PA financial sustainability and deliver the level of management effectiveness required for PAs to meet conservation objectives.

66. Current Revenues: Current annual financing available for managing PAs within the PANE sub-system amounts to US$2.7 million. This consists of self-generated revenues, government core budget allocations, agreements with other organizations, private contributions, and resources from the Protected Areas Endowment Fund (FAP). Designed by the MAE in collaboration with international partners and various Ecuadorian environmental organizations, the FAP has an endowment of US$12 million that finances 12 of the 36 PANE PA units.33 The table below provides a breakdown of revenues by category:

Table 3 Revenue Sources for PANE

33 FAP is managed by the National Environmental Fund (FAN); this is the first time that the MAE has established a partnership with a private organization from civil society to promote the implementation of the National Environmental Strategy for Sustainable Development.

19/ 100

Revenue Sources for PANE Annual Revenue(USD)

Share of total

1 Generated by the PAs: 810,000 30%(i) Entrance fees (500,000 or 60% of self-generated revenues) 34

(ii) Renting of Cabins(iii) Renting of camp sites(iv) License fees for Tour Guides(v) Permits for tourism operations(vi) Documentary filming(vii) Scientific Research(viii) Wildlife management

2 Government core budget allocations 945,000 35%3 Agreements with other organizations 243,000 9%4 Private contributions 405,000 15%5 Protected Areas Endowment Fund (FAP) 270,000 10%

Total 2,673,000 100% Source: Análisis de las necesidades de financiamiento del Sistema Nacional de Áreas Naturales Protegidas del Ecuador, 2003.

67. Current Expenditures: Of the USD 2.7 million flowing to PANE areas, approximately USD 2.5 million goes towards current direct expenses (72% of which is for staff salaries), and only US$215,000 goes towards investment expenses. This limited investment in infrastructure not only constrains management effectiveness but also limits the possibilities of attracting more tourists and hence generating more revenues.

68. Adequacy of available funds to ensure ecosystem integrity and economic viability of PAs: The MAE has carried out studies to determine the costs of managing the PA system effectively by looking at two scenarios for the PANE35. In the “basic” scenario, financing of USD 6.3 million was estimated as the amount necessary to guarantee minimum PA management and integrity, including the implementation of two programs: 1) administration, control and surveillance; and 2) participatory planning. In the “optimal” scenario, financing of USD 12.2 million was estimated as the amount necessary to implement activities that could support long-term goals in every PA unit. In addition to the two programs of the basic scenario, the integral scenario includes three other programs: 1) community development and environmental education; 2) tourism and recreation; and 3) environmental monitoring, research and natural resource management. Thus, compared with the current revenue flows (USD 2.7 million), under the “basic” scenario, the annual financing gap for the PANE sub-system is USD 3.6 million, and under the “integral” scenario the gap is as high as USD 9.5 million.

69. Scoring of the PANE sub-system by the UNDP Financial Scorecard: The application of the UNDP Financial Scorecard to the PANE sub-system (see summary in Table below and details in Annex 2) revealed that there are limited legal, regulatory and policy mechanisms to generate more revenues for the PANE sub-system. Only a few fiscal instruments and incentives promote PA financing, and there are limited procedures to reinvest revenues generated by the system. Although, there is regulatory and legal support to create Funds, only one Fund has been created (FAP) and it has yet to garner the full support of the State. The situation with regard to business planning and cost-effective management at the level of individual public PA sites is not the best. In terms of tools for mobilizing revenues, while there is a fee system, it is not possible to adjust this fee regularly, nor is there any provision for assessing the effectiveness of the fee system. For instance, there are transaction costs for changing

34 According to the Ministry of Environment in its Analysis of financing needs of SNAP, SNAP currently receives 260,745 visitors/year, 68% national visitors and 32% of international visitors. Tourism is the fourth largest income-generating activity in Ecuador35 Ministry of Environment, Analysis of financing needs of SNAP, Quito, Ecuador, 2005

20/ 100

reserves’ entrance fees: absence of an analysis of supply and demand, lack of benefit-cost analysis, or information of carrying capacity or ecological analysis.

Table 4 Summary of Financial Scorecard applied to the PANE sub-system Financial Scorecard Component Score Maximum Possible

Score-MPSScore as % of MPS

Component 1: Legal, institutional and regulatory frameworks 40 88 45Component 2: Business planning and tools for cost-effective management 20 61 34Component 3: Tools for revenue generation by Pas 28 72 39Total 88 221 40

70. Assessing the financial situation of private and communal protected areas was more challenging than assessing the PANE sub-system, primarily because these do not yet exist as functional sub-systems. The project preparation team, therefore, applied the Financial Scorecard to a sample of protected areas that are likely to be selected to become a part of these sub-systems and that are also pilot areas of the project. For the APPRI sub-system these were the Manabí Dry Forest (comprised of a network of 6 reserves) and the Northwestern Cloud Forest (comprised of a network of 12 reserves); and for the APC sub-system it was applied to the Abras de Mantequilla wetland area. These areas represent organized private and communal initiatives. The summary of the financial situation of the 2 APPRI and 1 APC pilot areas is provided in the table below, and indicate that the financing gap for these areas is significant.

Table 5 Financial Analysis for the APPRI and APC pilot areas (2009, USD)Financial indicator APPRI pilots APC pilot

Manabi Dry Forest Mindo/Northwestern Cloud Forest

Abras de Mantequilla

(1) Total annual central government budget allocated to PA management

0 0 0

(2) Total annual government budget provided for PA management (including donor funds, loans, debt-for nature swaps)

0 0 770,00036

(3) Total annual direct contribution from owners of individual protected areas

54,000 40,960 0

(4) Total annual revenue generation from PAs, broken down by source

11,700 14,400 16,500

a. Tourism - total 11,700 14,400 16,500- Tourism taxes 0 0 0- Entrance fees 11,70037 14,40038 8,80039

- Additional user fees 0 0 7,70040

- Concessions 0 0 0b. Payments for ecosystem services (PES) 0 0 0c. Other (specify each type of revenue generation mechanism)

0 0 0

(5) Percentage of PA generated revenues retained in the PA system for re-investment

21.67% 35.17% 2.14%

(6) Total finances available to the PA system [(1) + (2) + (3) + {(5)*(4)}]

56,535 46,025 770,353

Costs and Financing Needs(7) Total annual expenditure for PAs (operating and investment costs)

11,700 17,000 N/A

(8) Estimation of financing needs

36 Agro Bank, part of Food Support Project PL480, organic agriculture project ACCRI37 Fee is USD 8.00 per visitor38 2,880 visitors in the area; Fees vary, average is 5.00 USD39 Fees from 1,100 visitors in 2008; Fee is 8.00 USD.40 Canoe rent fee of 7.00 USD for 1,100 visitors in 2008.

21/ 100

Financial indicator APPRI pilots APC pilotManabi Dry Forest Mindo/Northwestern

Cloud ForestAbras de Mantequilla

A. Estimated financing needs for basic management costs and investments to be covered

27,560 40,000 N/A

B. Estimated financing needs for optimal management costs and investments to be covered

235,000 276,000 N/A

(9) Annual financing gap (financial needs – available finances)41 A. Net actual annual surplus/deficit 15,860 6,023.04 N/AB. Annual financing gap for basic expenditure scenarios

15,860 6,023.04 N/A

C. Annual financing gap for optimal expenditure scenarios

223,300 236,000 N/A

71. For the APPRI sub-system, represented here by Mindo/NW and Manabí pilot areas, legal, regulatory and policy mechanisms to generate revenues are very limited. With the exception of the Socio Bosque Program, there are no fiscal instruments and incentives to promote either creation or financing of these areas. There are limited avenues to reinvest revenues generated by the sub-system. In fact, most of these private protected areas are supported financially by the private owners’ other economic activities, such as agriculture, ranching, forestry, and so on. Few APPRI PAs have monetary resources to support their system, even though there is regulatory and legal support to create such Funds. There is no financing strategy for the entire sub-system, although owners have recently created a network to support each other. This network, however, is financed by projects designed and developed by the reserves’ owners and there remains great uncertainty about long term financial planning and management. (The summary of the Financial Scorecard applied to APPRI pilots is in the table below).

72. For the APC sub-system, represented here by Abras de Mantequilla, there are no legal, regulatory and policy mechanisms to generate revenues and support financing of protected areas within the APC sub-system. These areas are supported financially by the community members’ other economic activities, such as agriculture, ranching, forestry and so on, as well as by some project-related funds (for example, the organic agriculture project in Abras de Mantequilla). Even though there is regulatory and legal support to create Trust Funds, APC areas do not have access to resources from Funds. There is no sub-system wide strategy. A few communities have created a system that works, but this is due mainly to the fact that their efforts were aimed at establishing a sustainable production program rather than a conservation program per se. Abras de Mantequilla wetland is a case in point. It was created as a program to support farmers, and wetland conservation was a byproduct of it. The area is highly dependent on an externally funded project, which creates uncertainty about the reserves’ survival and long run financial planning and management. (The summary of the Financial Scorecard applied to the APC pilot is in the table below.)

Table 6 Summary of Financial Scorecard applied to the APPRI and APC sub-systemsScore as % of Maximum Possible Score

Financial Scorecard Component APPRI(average for pilots)

APC(pilot area)

Component 1: Legal, institutional and regulatory frameworks 17 14Component 2: Business planning and tools for cost-effective management 30 10Component 3: Tools for revenue generation by Pas 14 9Total 20 11

1.8. Baseline trend of development of the SNAP

73. The MAE has taken important strides in strengthening the existing SNAP system and proposing new priorities for its expansion, under the aegis of a WB/GEF-supported project (National System of

41 Financing needs as calculated in (8) minus available financing total in (6)

22/ 100

Protected Areas), which ended in December 2007. Under this project, the MAE strengthened the legal and regulatory framework for co-management of protected areas; designed and implemented participatory management plans and pilot concessions for services in two priority PANE protected areas; consolidated FAP to cover the recurrent costs of up to eleven priority protected areas; and consolidated the monitoring and information system for SNAP management.

74. While the WB/ GEF project focused mainly on management aspects of SNAP, it also produced important strategic planning tools that have helped define MAE priorities in terms of protected area financing namely, the SNAP Strategic Plan for 2007-2016, Financial Sustainability Strategy of SNAP, and a Study of the Economic Valuation of SNAP’s goods and services. The SNAP Strategic Plan for 2007-2016 lists four main goals, one of which is to achieve the long-term financial sustainability of the PANE sub-system and implement financial mechanisms for the management of other sub-systems of the SNAP. As described earlier the plan proposes various strategies to achieve this goal, including the diversification of income generation mechanisms, new tools for reinvestment, more cost-effective administration, and the establishment of new alliances with different sectors and interest groups to generate participatory procedures for administration of the PAs. Together, these documents set the future policy direction for Ecuador’s protected area system and provide the essential baseline/ foundation on which the project can build. Indeed, since then a number of critical policies have been developed regarding the SNAP as described in previous sections.

75. However, the WB-GEF project did not foresee the generation of funding for the implementation of these tools, so the financing problem of SNAP continues. One of the lessons learned is the need to generate funding for the implementation of the plans and strategies, which aim to ensure proper SNAP management. Without the GEF project proposed herein, the process of translating this strategic vision into on-the-ground action, and implementing new policies, will be slow. Protected areas that already form part of the SNAP will continue to operate, but with budget restrictions that would limit the effective capacity to conserve biodiversity. The process of expanding the SNAP to include APPRI and APC areas will also suffer. Taking into account current trends and drivers of biodiversity loss, this slow and inadequate pace of consolidating the SNAP at the baseline level would inevitably result in the loss of globally-significant biodiversity.

1.9 Desired long-term solution and barriers to achieving it

76. Having made important advances in recent years in consolidating its network of protected areas, the SNAP Strategic Plan is now prioritizing the consolidation of the SNAP to include regional government, private and community protected areas, as well as strengthening the current 41 state protected areas (PANE). To consolidate and strengthen the expanded SNAP, there is a need to develop the ability to secure stable and sufficient long-term financial support and improve cost-efficiencies in PA management. The Government has developed a number of policies such as the NBSP, NDP, and Yasuni ITT Initiative that provide a strong base to achieve financial sustainability of this expanded SNAP. The Yasuni ITT Initiative, if successful, has the potential to fully fund SNAP as 25% of the resources would be earmarked for the SNAP and this is estimated to be about a quarter of at least USD 350 million per year. However, whether these new resources materialize or not, the important issue is that there are a number of barriers that impede the realization of financial sustainability. These are described below and relate to the policy environment, capacities and experiences with sound financial management within the SNAP. It is essential to address these barriers as a priority so as to ensure strong national capacities capable of deploying resources in the event that the Yasuni ITT initiative is successful. If the Initiative is not fully successful, then by removing the barriers described below, the project will have strengthened capacities for effective deployment of already available resources and for identifying alternative funding sources.

23/ 100

1.9.1 Barrier 1: Laws, regulations, policies, and institutional responsibilities/ mandates are not conducive to long-term financial sustainability and cost-effective management of the SNAP

77. Allocation of government core budget resources within the SNAP: Since the 2001 decentralization process, management of PA finances has been complicated, with government core budget funds flowing from the Ministry of Finance (MEF) through ten Regional Districts (RDs) and then to individual PAs. Under the current system, the allocation of financial resources is guided neither by national conservation priorities nor by management efficiency, but by the relative size of the area and by the level of threats that each area faces. Further, neither the MEF nor the MAE through its 10 RDs has adequate financial oversight or the capability of generating financial reports at the level of the SNAP that provide a transparent accounting of resource generation and allocation.

78. Allocation of self-generated revenues: In terms of the allocation of self-generated revenues, such as through tourism, the existing national environmental legal and regulatory framework, specifically the Unified Text of Secondary Environmental Legislation (TULAS42), is perpetuating inefficiencies in the allocation of financial resources. For instance, TULAS IX specifies that all revenues generated by tourism must be returned to two different accounts, one under the MAE and the other under the Regional District. The resources allocated to the MAE account are then distributed to the entire system on the basis of the size of each area and the level of threats; resource allocation criteria do not include national conservation priorities or management effectiveness. Further, there is insufficient flexibility on the reinvestment of self-generated profits in infrastructure and equipment. A ministerial agreement passed in December 2009 enables up to 50% to be reinvested. Because the current administrative and budgetary structure is based on RDs, protected areas are not independent financial and administrative units, and SNAP is not an executive unit of expenditure. Hence it has been difficult to answer questions such as how much is spent on protected areas, what is the structure of expenditure within each protected area, how is the principle of cross-subsidization to be applied, which indicators measure the quality of expenditure in terms of improved management of protected areas, how to quantify the needs of protected areas, and how to allocate resources in protected areas. Finally, the legal and regulatory framework is not clear on how revenues from activities other than tourism should be used, such as PES and commercialization of carbon stocks.

79. Maximizing the resource mobilization potential of PAs: While TULAS mentions tourism concessions within PAs as a means of revenue generation, the lack of a clear supporting regulation limits the full resource mobilization potential of providing tourism concessions within PAs. License fees for tour guides and permits for tourism operations are a significant revenue source for PAs, but there is still untapped potential.

80. Stakeholder involvement in PA management: At present, TULAS restricts the participation of private landowners and communities in the management of public protected areas, which, in turn, limits the possibilities for identifying the most cost-effective management arrangements. What limited involvement by private landowners and communities currently exists is not regulated. If such regulations were in place, more private landowners and communities could take on some responsibilities for PA management in return for sharing park revenues, with appropriate checks and balances. The Cajas National Park is a case in point, where an agreement has been signed for such an arrangement, resulting in a less costly way of managing the PA.

81. Inclusion of private and community areas as PAs within the SNAP: At present, community and private areas that want to pursue conservation objectives can only do so by declaring themselves as Protected Forests, which, under the Forest Law, places some restrictions on the use of resources, such as wood, fishing, agriculture, reinvestment of revenues, taxing, etc. Private actors dedicated to

42 Book IX of the TULAS includes regulations on entrance fees for each protected area within the SNAP (which until now consists only of PANE areas).

24/ 100

conservation remain a small group (represented by the Private Forests Network). They face significant opportunity costs associated with the decision to choose conservation goals for their lands over conventional revenue-generating activities such as agriculture, forestry, and fishing. The current legal and regulatory framework provides limited incentives for private actors to choose conservation goals. Current incentives, coded in the Forest Law and in the last Reforming Law for Tax Equity include: (i) exemption from rural property tax on those forest lands covered with natural or cultivated protected forests, vegetation with timber species, and other classes of forests; (ii) exemption from agrarian reform for private forest lands covered with protected forest or permanent production forests and other lands with plans of reforestation; and (iii) exemption from income tax for public or private, local or regional conservation areas. In order for private and community areas to function fully and effectively as protected areas and to benefit from government financing, they need to be included by law within the SNAP. The MAE has begun the process of designing criteria for identifying and including community (APC) and private protected areas (APPRI) within the SNAP. This process needs to be completed so as to ensure full recognition of these areas under the law.

82. Financing of the proposed new sub-systems of the SNAP: At present, TULAS has no clear guidance for securing the financial sustainability of the newly proposed sub-systems of protected areas (namely, APPRI, APC, and APGS). When these areas become part of the SNAP, they will be affected by the same weaknesses of the current law that the PANE areas confront. One way to avoid this situation is to allow APPRI, APC and APGS areas to function in a different way by law, and not require them to be part of the same pool and system of resource allocation as PANE areas. Additional amendments to the legal and regulatory framework are needed to ensure that these protected areas are properly established, with appropriate mandates and resources.

1.9.2 Barrier 2: Institutions and individuals responsible for management of protected areas do not have the capacity for financial and business planning, and cost-effective management of PAs

83. Current institutional roles and responsibilities for management of the SNAP are shared between the central and regional levels of the MAE. At the central level of MAE, the National Directorate for Biodiversity (DNBD) is responsible for management of the PANE sub-system, and focuses on strategies, policies and mechanisms for its further development. The direct management of PAs within the PANE sub-system falls to the 10 regional districts of the MAE, each of which has technical, administrative and financial independence over management of PAs within their jurisdiction.

84. However, all levels of MAE are afflicted by a low capacity for effective financial planning, coordination and management. This is due in part to severe financial constraints, which prevent the MAE from having a full assembly of staff dedicated to PA management. Further, those currently employed do not have the necessary skills and knowledge related to conservation practice, resource mobilization, or financial and management planning. In spite of the fact that funds are supposed to be audited by the central authority, there is neither accountability nor transparency in procedures. Only a few protected areas have updated and complete management plans and/or business plans, through donor funding.

85. The MAE does not have the resources to develop and make available the management tools necessary to effectively aid PA staff to fulfill their responsibilities. There is limited access to monitoring and evaluation software, and inadequate online connectivity among all PAs within the SNAP. There is no systemic plan for monitoring and evaluating the evolution of the Strategic Plan for the SNAP. This restricts the ability of authorities to track the achievement of goals, measure performance, and share experiences across the system.

86. Similarly, representatives of the private sector and communities that are interested in pursuing conservation goals lack the capacity to effectively develop and manage the necessary resources for the

25/ 100

successful operation of protected areas. Private and community actors do not have the capacities to carry out all the necessary management functions, such as buffer zone management, building community relationships, revenue generation, and so on.

87. The capacity of staff in individual PAs to practice collaborative management with buffer zone communities, including private and community areas, is limited. This undermines efforts to improve conservation and sustainable use of biodiversity within the PA. When the relationship with internal and adjacent communities that enjoy usufruct rights is not good, the motivation for resource exploitation in an unregulated and unsustainable manner increases, in turn, increasing pressures on the PA. This situation is more common in public PAs where collaborative management with communities is limited due to the absence of mutually beneficial programs and effective management. In the case of private and community areas, the interests of the community and private actors are effectively internalized. Two examples of good practices in this regard are the Abras de Mantequilla wetland area and collaborative conservation efforts with the Achuar community.

88. Finally, very few administrators of the public PAs, private landowners and local communities have experience with management models that conserve biodiversity through the generation of alternative income sources (e.g., tourism, payment of environmental services). Most area managers of PAs within the PANE sub-system are unaware of environmental goods and services generated by the PA and are not familiar with models for managing these goods and services to engender resource mobilization and conservation goals. The tendency, therefore, is to underestimate the revenue-generating potential.

1.9.3 Barrier 3: System-wide, there is limited recognition of the contribution of SNAP to economic growth and equity, and this is manifested in weak support from decision-makers and the general public

89. Even though Ecuador has assigned 18.7% of its national territory to the SNAP, the environmental sector receives very little national attention and also very few budgetary resources. For example, the Protected Areas Fund (FAP) generates approximately USD 600,000 per year for the SNAP, which, in relative terms, represented 0.0025% of GDP or 0.77% of the 2008 budget of the MAE. Providing finance for the conservation of SNAP is not considered a strategic priority by the Government. The prevailing perception, particularly in non-environment ministries and offices of the Executive Government, is that PAs are a restriction on economic development. Those responsible for making decisions that impact the financial situation of the SNAP, such as the MEF, are not fully aware of the ecological, social and economic benefits that Ecuador’s system of protected areas offers, and as such do not allocate significant resources to it, as reflected in the current national budget.

90. Although the expenditure capacity of the State is limited, especially that of the Central Government, the proposed annual national budget for 2010 to 2013 is expected to increase from US$ 18 to US$ 20 billion. From this, the amount assigned to investment is 39.6%; the rest is allocated to current expenses, interest rates and debt service. The current expenses, especially the salaries of government personnel, have increased in the last years, and now represent 24.1% of total expenditures contemplated in the budget proposal. Health would receive US$ 1,244 million in 2010 (5.8% of total budget) while the environmental sector will only receive US$ 102 million (0.56% of national budget). 43

91. There is very little knowledge of the economic contributions of the SNAP, despite the recent evaluation on the subject.44 This study used market information to demonstrate that economic benefits from SNAP reached about 3% of GDP. These results spurred MAE to present a strategic plan for the SNAP 2007-2016 to the National Secretariat for Planning and Development (SENPLADES). However,

43 Observatorio de Política Fiscal, 2009 with support from the UN.44 Salazar, R., Rodríguez F., et al, MAE (2008) Valoración Económica de los Bienes y Servicios Ambientales y Estrategia Financiera del Sistema Nacional de Áreas Protegidas. Quito.

26/ 100

the impact was limited because campaigning was limited and SENPLADES wanted to focus on financial benefits represented by actual revenue flows, and did not place importance on the economic benefits embodied in the study results. In addition, the abovementioned study concentrated on market values of only a few selected ecological goods and services from protected areas.

92. This lack of awareness of the important contributions the SNAP makes to long-term productivity and returns in other economic sectors such as tourism, agriculture, fisheries, and hydropower, to name a few, carries over into the private sector and the general public. This greatly constrains the ability to mobilize additional resources for the SNAP from both the government and private investors. It also limits the possibilities for diversifying partnerships for management of the SNAP.

1.9.4 Barrier 4: There are insufficient experiences with practical mechanisms for diversifying reserve incomes and containing costs through partnerships among the state, local communities, and private reserve owners

93. The SNAP does not have sufficient sources of income even for its basic functions, and most of the funds received by the SNAP are uncertain and variable (see section on the Financial Situation of SNAP). Ecuador has not evaluated or fully developed other potential strategies for the generation of income for supporting the SNAP. Further, there is limited experience with mobilizing the new sources of conservation finance through effective partnerships between reserve management, local communities and private land owners. Potential alternative financing sources include:

94. Tourism revenues: At present, revenues from visitors to PAs are the prime source of self-generated income for the SNAP. However, this potential is clearly not being maximized. For instance, the SNAP does not place adequate emphasis on undertaking strategic investments that can improve the facilities and attractions for tourism. As a result, ongoing ecotourism programs within PAs are not able to realize their full potential.

95. Payments for environmental services (PES): The SNAP provides a range of environmental services that are critical for productivity and returns in other economic sectors. Examples include water supplies for irrigated agriculture, human consumption and hydroelectricity; carbon storage; pollination services; among others. These services, which are effectively being provided for “free” to users, have not been evaluated in any protected areas within the SNAP. While globally there are examples of establishing market-based mechanisms to calculate these financial values, there have been no efforts in Ecuador to explore and establish such mechanisms.

96. Environmental Trust Funds: The Protected Areas Fund (FAP) currently supports 11 of 41 PA units within the PANE sub-system of the SNAP. An additional infusion of capital into FAP could provide support for some or all of the other 30 PA units, as well as the PAs that form part of the new sub-systems of the SNAP (APPRI, APC, APGS). The Yasuni ITT Initiative, proposed by the Government in June 2007, is yet another source of funds that could significantly transform the financial situation of the SNAP. The Government has formally announced its intention to leave the country’s largest oil reserves permanently off-limits to exploitation. The nearly 1 billion barrel Ishpingo-Tambococha-Tiputini (ITT) oilfields reside under the eastern third of Yasuni National Park, an area of high biodiversity and home to two indigenous tribes that live in voluntary isolation from the outside world. Ecuador depends on oil exports for one third of government revenue. In return for its decision to keep the oil underground indefinitely in the Yasuni ITT field, Ecuador will receive international donations that will go towards a capital fund, administered by an international trust fund with the participation of the main donors. If the Yasuni ITT Initiative is successful, the SNAP would be fully funded because under the initiative 25% of the resources would be earmarked for the SNAP and this is estimated at about a quarter of at least USD 350 million per year.

27/ 100

97. Most importantly, in order for the new resources (produced by the above means) to be effectively deployed in ways that assure the generation of global environmental benefits, it is essential that there not only be mechanisms in place for equitable sharing of benefits, but also for effective verification of the conservation actions at the local level. These capacities are currently lacking in PANE, private and communal areas.

98. On the cost side of the equation, there is limited experience in PANE areas with reducing reserve management costs through greater involvement of local communities in reserve management. Similarly, partnering with private land owners in private reserves and communities in communal reserves is another effective way of reducing overall costs to the SNAP of maintaining protected areas. MAE, as the leading national authority for managing the system of protected areas needs to develop capacities and build-up practical experiences with these alternative models of reserve management so as to significantly magnify the conservation impact of the SNAP in the most cost-effective manner.

2. PROJECT STRATEGY

99. Ecuador is embarking on a new development model, based on the respect for the rights of nature, social equity, and the sustainable use of resources. A key part of this model is the commitment to develop an expanded and financially sustainable National System of Protected Areas– SNAP- that will include sub-systems under diverse governance and property regimes and conserve a representative cohort of the country’s natural heritage. The Government has developed a number of policies such as the Socio Bosque Program, NBSP, NDP, TULAS and Yasuni ITT Initiative that provide a strong base to achieve financial sustainability of this expanded SNAP. Nevertheless, a number of barriers currently impede this financial sustainability, including resource constraints and deficiencies in key financial and operational management capacities, among others. The Government of Ecuador is requesting GEF support to remove these barriers and put in place a framework for the financial and operational efficiency of the new SNAP, facilitating integration of its sub-systems with aligned standards and efficiencies across the constituent PAs. This will ensure sustainable financing in the short-term and provide the basis for the expansion in the future through the addition of new PAs and the creation of conservation corridors and landscapes to achieve conservation objectives and increased ecosystem resilience.

100. Based on assessments conducted through PPG resources and consultations with stakeholders, the project strategy will pursue 3 main approaches that are in line with the SNAP Financial Sustainability Strategy and also embrace the new guidelines related to the 2008 Constitution in terms of the Rights to Nature and to the National Well-Being Plan (NDP). These approaches are:

(i) diversifying revenue generation at PA and systems levels by lifting legal, regulatory and capacity barriers that impede different revenue mechanisms or that act as disincentives for on-site revenue generation; and by testing resource generation mechanisms;

(ii) improving operational effectiveness and thereby cost effectiveness of PA management through the definition of a results-based system for resource allocation and reporting, management and business planning, and capacity building to ensure that investments in PAs are better managed and linked to conservation benefits, among others;

(iii) reducing SNAP cost burdens by working with buffer zones and communities to develop sustainable livelihoods options (and businesses) so as to reduce threats at the source; and by facilitating participation in PA management. Both of which will reduce management costs, share the financial burden of PA costs, and promote benefit sharing.

28/ 100

101. Focusing on these 3 elements will be beneficial whether or not new resources for SNAP are leveraged through the Yasuni ITT Initiative or REDD+ schemes. If new resources are negotiated, the project’s focus on the above 3 elements will ensure the SNAP is better able to effectively channel and utilize those resources efficiently. If resources do not materialize, capacities put in place by the project will ensure that existing resources are efficiently and effectively deployed and enable the identification of alternative funding mechanisms.

102. To develop these three approaches, the project will strengthen key systemic, institutional and individual capacities to design and set up the financial and operational framework of the expanded SNAP through:

(i) developing an enabling environment through supportive legal and policy and institutional guidelines with appropriate institutional arrangements, structures, responsibilities, and standards so as to improve the financial sustainability of the PANE, private and communal sub-systems of the SNAP;

(ii) strengthening individual and institutional capacities for results-based financial planning, management and monitoring so as to improve long-term net sustainable income of the SNAP;

(iii) increasing societal appreciation among communities living in protected areas, public authorities and private and public investors (national and international) of the benefits of PAs and the value of services they provide; and

(iv) enhancing knowledge, skills and competencies through field testing of cost-effective management models based on community participation and cross-sector partnerships.

103. To ensure that the resultant financial and operational framework is adequately ground-truthed, the project will work at two complementary levels: systemic and local.

104. At the systemic level, the project will provide technical assistance for legislative and policy reform, and complement institutional strengthening activities to enhance the financial sustainability of the expanded SNAP, i.e. not only focusing on the existing PANE sub-system but ensuring that the private and community areas that are to be made part of the SNAP also have improved prospects for financial sustainability. In turn, financial sustainability will enable the SNAP to more effectively fulfill its role in conserving Ecuador’s unique biodiversity. Capacity building at the systemic level will also include a system-wide funding strategy, business plan, diversified funding portfolio, and a results-based management system that links expenditure to conservation benefits and increases efficiencies. Actions at the systemic level will be informed by lessons generated in pilot areas.

105. To complement this at the local level, the project will support on-site interventions that will enable ground-truthing of the new legal and policy frameworks, and testing and development of new tools for enhancing PA management effectiveness, including different PA governance types and financial mechanisms. Field demonstrations will help develop sustainable financing models and improved management effectiveness through (i) developing different approaches to financial management tools, such as strategic and business planning as well as results-based management; (ii) identifying and demonstrating revenue generation mechanisms for PA operations; and (iii) developing partnerships with local communities in PAs and buffer areas to develop sustainable business initiatives based on PA potentials, with the aim of reducing threats and management costs. These models will later be replicated at the systemic level and will also contribute toward improving the levels of management effectiveness at these sites, reducing threats in some, and thus providing immediate biodiversity benefits

106. A preliminary list of 45 pilot sites (7 for APPRI, 8 for APC and 30 for PANE) was analyzed during the PPG with the participation of key stakeholders. Nine pilot areas have been selected, representing public, private and communal protected areas so that lessons and experiences can be

29/ 100

applied to other PAs with similar ownership contexts within the SNAP. The private pilots are in effect 2 networks, one consisting of 12 reserves and the other of 6 reserves. Even if all of these areas are not incorporated into the SNAP as a private sub-system, the project will still leave the network of private reserves as a stronger entity with enhanced capacity to generate global environmental benefits.

107. The selection criteria included: size, ecosystem representativeness, region representativeness, habitat diversity, species richness, species endemism, responsiveness to threats, variety of ecological niches or wildlife zones, goods and environmental services, potential value, connectivity, threats, presence of indigenous and afro-Ecuadorian communities, communities’ participation in areas’ conservation, human dependency on natural resources, and socioeconomic aspects of local people and communities living close to or within the PA. Details on the methodology and final selection are provided in Annex 1. Together, the pilot areas will provide practical experience with achieving financial sustainability (through cost-effective management arrangements and increased income sources) in a mix of governance contexts – public, private, and communal. The main characteristics of the pilot areas are provided in detail in Annex 1 Table 3 and summarized in the Table below.

Table 7. Characteristics of Pilot Protected AreasPilot PA (Category and

Year created)Main Vegetation formations Registered Species Area

(Hectares)Governance

Total # EndemicEcological Reserve Mache Chindul (1996)

Humid & Sub-humid Evergreen forest, and Dry Forests

2,153 111 119,172 Public (PANE)

Ecological Reserve Cayambe Coca (1970)

Evergreen Forest, montane evergreen forest, Montane cloud forest, Grassland paramo, Boggy Moor, high humid montane scrub

787 >100 403,103 Public (PANE)

Galera San Francisco (2009)45

Marine & Coastal ecosystems NA 292 54,604 Public (PANE)

Ecological Reserve Illinizas (1996)

Evergreen Forest, Humid Montane scrub, Montane Cloud Forest, Herbaceous and dry Páramo, Gelidofitia

>668

145 149,900

Public (PANE)

Wildlife Reserve Chimborazo (1987)

High Montane Evergreen forest; Herbaceous and dry Heath; Gelidofitia

>184 47 58,560 Public (PANE)

Wildlife Reserve Cuyabeno (1987)

Tropical Humid Forest Floodplains; Wetlands

13,320 NA 603,380 Public (PANE)

National Park Yasuni (1979)

Tropical Humid Forest Floodplains; Wetlands

3,796 NA 982,000 Public (PANE)

RAMSAR site Abras de Mantequilla (2009)

Andes lower montane semi-deciduous forest ecosystem

NA NA 67,000 Communal

Mindo NW Protected Forest

Premontane, Montane, & Lower Montane Rainforest. Tropical Rainforest.West-mesothermal Rainforest

NA

>50 13,000

Private

Manabi Protected Forest Tropical Dry Forest NA NA 20,000 Private

45 This project will complement the work to be undertaken through a related IDB/GEF project in this PA. That project will put in place a sustainable fisheries management regime which will reduce the threats to the PA and in turn decrease the management costs. The UNDP project will provide capacity building in financial planning and management and work with the PA staff and fishermen communities in other cost reducing activities. Thus together the projects would be able to determine good approaches for NSI in a marine PA that has very different conditions to terrestrial areas. In doing so, marine related issues could be incorporated into the system level financial framework being defined in the UNDP GEF project and thereby initiate replication to the marine sub-system. Similarly, through the pilot, this financial system for the SNAP will be able to directly incorporate lessons learnt from other marine pilots through the IDB project. MAE will coordinate the different initiatives under development so as to avoid any duplication with this project’s activities.

30/ 100

108. The decentralized Autonomous Governments sub-system (APGS) will not be a direct focus of this project’s intervention. As described earlier (see Section 1.2) this sub-system requires a separate and specific initiative and significant resources to sufficiently address the complex issues of decentralization and the related dynamics of environmental policy and regulations needed for advancing this sub-system. Indeed resources are being mobilized through other international projects to that end. The exclusion of this sub-system from the proposed project will not affect the strategy proposed herein. Rather it is expected that the sub-system will benefit from the experiences gained during the implementation of the project and will subsequently be tailored more appropriately, in coordination with MAE and other donors, to address the complex context of this particular sub-system, thereby ensuring further sustainability. MAE will establish coordination arrangements with relevant initiatives in order to properly encompass the intervention in these areas.

2.1 Conformity with GEF Policy

109. The project is consistent with Strategic Objective 1 (SO1) of the GEF’s biodiversity focal area, which is to catalyze the sustainability of protected areas systems. Further, the project objective fits well with Strategic Programs 1 and 3 (SP 1, SP 3) under the biodiversity focal area, i.e. “Sustainable financing of PA systems at a national level” and “strengthening terrestrial PA networks.”

110. Specifically, the project will contribute to SP 1 by providing technical assistance to a) design appropriate policies and laws to allow protected areas to manage the entire revenue stream from generation of income to investment (Outcome 1); b) establish business plans that include multiple funding sources and have a long-term perspective that matches expenditure to revenue (Outcomes 2 and 3); c) consolidate agencies responsible for managing protected areas with sufficient capacity to manage protected areas based on sound principles of business planning as well as principles of biology conservation (Outcomes 1 and 2); and d) achieve full recognition of the support to protected area conservation and management provided by communities living in and near protected areas (Outcomes 3 and 4). Additionally, Output 4 under Outcome 4 of the project will also recognize and support the efforts of private conservation actors.

111. The project will also contribute to the stated objective of SP 3 of ensuring better terrestrial ecosystem representation in protected area systems through filling ecosystem coverage gaps. At present, Ecuador’s existing system of protected areas consists only of public areas. The ecological coverage and connectivity of this system can be greatly enhanced by recognizing and linking private areas and community-managed areas (that currently have the status of protected forests) as protected areas belonging to the SNAP. The need to include private and communal and municipal PAs has been recognized by the Constitution of 2008, but these sub-systems still need to be designed, and mechanisms and structures need to be out in place to make them a reality. The project intervention at the systemic and local levels will cover special situations and needs of private and communal areas to achieve financial sustainability and enhance management effectiveness so that these areas can fill gaps in representation, performance and connectivity. It will also include targeted activities to facilitate the replication of lessons to the future sub-system for decentralized government PAs and coordination with interventions that focus specifically on these types of PAs.

2.2 Project Goal, Objective, Outcomes and Outputs

112. The long term goal to which the project will contribute is the improved sustainability of the National System of Protected Areas, so that it provides development results through a healthy and sustainable environment and guarantees the Rights of Nature, or ecosystem rights, as established in the 2008 Constitution. The immediate objective of the project is to field-test and institutionalize a financial and operational framework for the expanded Ecuadorian National System of Protected Areas. The impact of the project will be measured through the use of tools such as the Financial Scorecard and the Management Effectiveness Tracking Tool, and these will be the cornerstone of a comprehensive Results

31/ 100

Based Management, Monitoring and Evaluation System to be implemented by the project. The project objective will be achieved through the following outcomes and outputs.

Outcome 1: Laws, standards and institutional guidelines for improving the financial sustainability of the PANE, private and communal sub-systems of the SNAP are formally put in place with the technical support of the project.

113. This project component will focus on deficiencies in existing laws and supporting regulating acts that are a barrier to sustainable financing of PAs. It will also provide technical support for strengthening institutional structures and incentive systems so that they support management effectiveness and financial sustainability of the SNAP more effectively. In so doing, the Outcome will put in place a stronger enabling environment characterized by (i) strengthened governance frameworks for sustainable PA financing (measured by increased scores in the 9 elements of Component 1 of the UNDP Financial scorecard), (ii) a Law for the SNAP and supporting regulations, (iii) staffing competency profiles and institutional procedures in SNAP/MAE that are tailored for new financial frameworks at the central managerial level (MAE), at the supervisory level in regional directorates, and at the PA level in PA management units, and (iv) pilot institutional foundations for financing private reserve networks. The demonstration activities planned in the pilot areas of the project will inform the policy development and institutional strengthening activities under this Outcome. The systemic-level changes will, in turn, enable replication of the project strategy to other protected areas within the SNAP. This Outcome will be realized through the following Outputs:

Output 1.1: Legal framework for the National System of Protected Areas (law and supporting regulating act) developed and approved

Output 1.2: Policy recommendations and guidelines for improving financial sustainability of SNAP are developed

Output 1.3: Institutional foundations of SNAP strengthened to support greater management effectiveness and financial sustainability

Output 1.1: Legal framework for the National System of Protected Areas (law and supporting regulating act) developed and approved

114. The new law for protected areas will recognize the following: (a) a more efficient system for allocation of government resources to different PAs based on management efficiency and national conservation priorities; (b) an efficient system for re-investment of self-generated revenues to meet needs of the PA, including investment needs, based on the operational plan of the PA; (c) diversification of the resource mobilization potential of PAs; (d) participation of private land owners and communities in PA management, when it represents the most cost-effective management arrangement; (e) inclusion of private and community areas that improve ecosystem representation as PAs within the SNAP based on defined criteria, and giving these areas official status, thereby allowing them access to funding from the government core budget and from existing and any new financing mechanisms that are to be established; and (f) additional fiscal incentives for private land owners and communities to designate their lands for conservation.

115. The government has already begun the process of developing this law 46. The project will support this process by undertaking an analytical review of the main legal and policy gaps that pose barriers to sustainable financing of PAs. Laws to be analyzed include, but are not limited to, the Forestry Law, TULAS, Reforming Act on Tax Equity, and the Environmental Code (currently being drafted). The laws and bills will be assessed to identify how they can directly support financial sustainability of the

46 Bills for Environmental law are currently under development and expected to generate rules and codes during 2010. Meanwhile, on 9 November 2009, a bill for an Organic Law on Biodiversity was presented by National Assembly member Lourdes Tiban (http://www.asambleanacional.gov.ec/tramite-de-las-leyes.html).

32/ 100

SNAP, and specific amendments will be proposed for putting in place a new legal framework conducive to the sustainable financing of PAs. Furthermore, once activities are well underway in the pilot areas, experiences from these pilots will be used to inform the amendments to the legal framework.

116. The analytical review will be carried out by a team of legal consultants. They will also be tasked with reviewing best practices on legal frameworks for sustainable PA financing from the region and around the world. The analytical review will be followed by a consultative dialogue involving inputs from government, non-government, and research institutions in order to facilitate legal reform. The dialogue and follow-up process will be led by an inter-sectoral group with representatives from MAE, MEF, Ministry of Tourism, RBPE, FUNDAR and other conservation actors like TNC, CI, UNEP, and local conservation NGOs. Finally, resources will be dedicated to the promotion and dissemination of information related to the new legal framework to a wide audience, in order to facilitate the process of approval of the law by the National Government and Assembly.

117. As lessons are learnt from the pilot interventions through Outcome 4, and related policies defined, where relevant the project will work with the MAE to further consolidate the regulatory framework required for implementation across the entire SNAP.

Output 1.2: Policy recommendations and guidelines for improving financial sustainability of SNAP are developed

118. There will be two main lines of action under this output. The first is to develop policy recommendations on improving financial sustainability based on lessons learnt from the work in the pilots, and the second is to develop an expanded technical selection matrix for incorporating new areas into the SNAP.

119. As regards the first line of action under this output, the project will undertake an analytical review and consultation process to define recommendations and guidelines that MAE can use to strengthen policies for financial sustainability and management effectiveness of the SNAP. Policy recommendations will be informed by the experiences generated in pilot areas. Key policy areas to be covered include: (a) allocation of government core budget to PAs on the basis of defined criteria that include management effectiveness and national conservation priorities; (b) reinvestment of SNAP self-generated revenues back in protected areas; (c) management of tourism agreements within PAs and related benefit-sharing; (d) management of other avenues for mobilizing resources such as PES and commercialization of carbon stocks; (e) transparent accounting of resource generation and resource allocation at the level of SNAP and individual PAs; and (f) fiscal incentives for private and community actors to choose conservation goals.

120. The policy recommendations and guidelines will be developed by a team of consultants by examining the experience in the project’s pilot areas and drawing on regional and global best practices. The recommendations and guidelines will be vetted through consultations with important stakeholder groups representing the views and interests of communities, private land owners, public institutions, national and international NGOs, and research institutes.

121. As regards the second line of action under this output related to the selection matrix for incorporating new areas within SNAP, MAE has already advanced on estimating ecological gaps within the SNAP47 as part of Ecuador’s commitment to the CBD Program of Work for Protected Areas (PoWPA) and to define national conservation targets. Advances reported in 2008 referred to protected areas that formed part of the SNAP at that time, in other words, all public protected areas of the PANE. This included the setting of ecological and protection goals such as ecological corridors, restoration of

47 Ecological gap refers to the comparison between the distribution of biodiversity and the status of protection/ conservation and its significance within a country Ecological gap assessment: An Overview (CI, WCS, TNC, CBD, Bird Life, WWF, WCPA (http://www.cbd.int/doc/training/pa/wgpa-02/pa-2008-02-10-gap-en.pdf)

33/ 100

http://www.cbd.int/doc/training/pa/wgpa-02/pa-2008-02-10-gap-en.pdf

critical ecosystems, preserving key biodiversity elements, and analyzing protection gaps. It was determined that an essential part of the strategy for closing these gaps would be to establish biological or ecological corridors that consist of mosaics of private and communal protected areas and the promotion of sustainable land uses in order to maintain intact habitat blocks within the landscapes. This would not only increase the area under protection in absolute terms, but also increase connectivity between established protected areas, and thereby increase overall resilience particularly in the face of climate change (2008)48. The incorporation of private and communal PAs, and in the future of potential new PAs, would be undertaken in part based on their role in these connecting corridors. As a continuation of the ecological gap assessment and to adjust previous studies to emerging new policy in the Constitution and Well-being Plan, the MAE has included a number of additional criteria for selection of key corridors and new PAs into the SNAP. These include integrating protected areas to maintain ecological functions, creating and strengthening bi-national and multi-national reserves, promoting social equity and benefit-sharing, and gaining participation of indigenous and local communities and other key actors in SNAP conservation efforts. These will be used to establish a selection matrix through which, over time, new areas will be incorporated into the SNAP.

122. Another essential criterion for selection of an area to form part of the SNAP should be a comparison of potential benefits in closing the ecological gap versus the additional costs of incorporating the new areas or promoting sustainable land use across the landscape within the corridors. In line with the Well-being Plan, these benefits will not only include the ecological benefits of increasing ecological representativity of the SNAP and ecosystem resilience, but others such as potential benefit-sharing with communities within these areas. The project will work with the MAE to expand the selection matrix by developing criteria related to these costs and benefits. This will ensure that incorporation of new areas into the SNAP will maximize benefits and fit within the overall budget available at any given time.

123. To this end, the project will work to assess the costs and benefits of the different management models in the pilots to be undertaken in Outcome 4, and use the Results-Based Management system (RBM) to be developed under Outcome 2. It is expected that estimates of the costs for incorporating private areas of different sizes and governance models will be obtained from these pilots. For example, the pilots will shed light on whether costs of management of private reserves can be covered by tourism or require increased incentives to cover the opportunity cost of non-production. Similarly, the work in Abras de Mantequilla will provide insights into the costs of management in communal reserves, while the PANE pilots will indicate the cost effectiveness of different resource generating mechanisms and of working with communities in state protected areas through alternative livelihoods and agreements with park management. Information from the RBM will present the related benefits to each of these approaches.

124. In parallel, a series of technical workshops and consultations will be supported to complete the ecological gaps assessment and analyze this along with the funding gaps that will be updated in Outcome 2. Resource generation modeling, in part based on the valuation studies in Outcome 3, will also be developed to provide more accurate estimates of potential resource availability at the systemic and site levels. This will include monitoring of the progress of the Yasuni ITT Initiative that is expected to provide an important percentage of potential revenues for the SNAP over 30 years. Consideration of revenue potentials at the systemic level as well as the site level will help define how many PAs that have no revenue potential but are critical to cover conservation gaps can be included in the SNAP, for example through cross-subsidization.

125. Based on the results of these consultations, modeling, pilot area experiences, and the assessment of revenue potential at systemic and site levels, the project will develop field-tested financial

48 CBD technical workshop held in Salinas, Ecuador (2008).

34/ 100

sustainability criteria and work with the MAE to include them in the selection matrix for incorporating new areas into the SNAP. In this way, the expansion of the SNAP can be achieved on a solid financial basis, thereby ensuring that the new Constitutional requirements are upheld.

Output 1.3: Institutional foundations of SNAP strengthened to support greater management effectiveness and financial sustainability

126. In parallel to the definition of the legal framework for the SNAP, the project will work to strengthen the institutional foundation for implementation of the law, implementation of policy recommendations, the operationalization of the results-based management system (Outcome 2) and for long-term staff tables required for financial sustainability. The MAE is currently undergoing institutional reforms that will result in the definition of new structures, procedures and processes. The focus of these ongoing reforms is on capacitating national institutions to deal with the new system of decentralized environmental management (National Decentralized Environmental Management System or Sistema Nacional Descentralizado de Gestión Ambiental - SNDGA). This process is covering the much broader arena of environmental management, and, as part of this, SNDGA is supposed to create a dynamic base of institutional support for the SNAP. The project will complement this process by focusing specifically on strengthening the capacity of these newly configured institutions with regards to financial sustainability and results-based management of the SNAP.

127. This output will, therefore, provide technical assistance and will support a number of workshops in which the results of the financial scorecards will be analyzed to determine key aspects that can be incorporated into the reform process so as to advance the capacities for financial management of the SNAP. This will consider not only those new procedures and processes in the MAE but will also cover the regional directorates and the PA level pilots. It will consider aspects such as defining staff profiles required for financial management of the SNAP, and identifying a plan for building up staff resources over time. It will also consider potential incentives that could be developed for staff that have increased their cost efficiencies at the site level (as measured through the Results-Based Management system). Additionally, as emerging best practices are identified in the pilot areas and codified through the handbook series in Output 2.4, lessons learnt will be incorporated into institutional procedures and manuals. This may include the clearer definition of reporting procedures on revenues and expenditures from the Regional Directorates to the MAE.

128. In parallel to the work on the MAE, the project will also work to strengthen the institutional foundation of the Private Forest Network (RBPE) in order to replicate the experiences of the pilot areas generated under Outcome 4. The RBPE has an estimated 50 members representing 70 reserves, and replication of lessons through the network will ensure additional global benefits over time, regardless of whether the private reserves are included in an expanded SNAP. The project will strengthen the private forest network through two complementary approaches. The first line of action is through results-based management, which will enhance the criteria related to spending and investment, thereby improving the achievement of objectives and goals.

129. The second is through the strengthening of the network’s access to specific funding mechanisms. A key mechanism will be the Socio Bosque programme. Currently the RBPE network has not benefitted from this funding source as the different requirements have constrained access (existence of management plans; documentation regarding land tenure etc). The project will work with the Network to develop better understanding of this mechanism and specific guidance tools that will facilitate members to access the resources. Resources from Conservation International will be used to support a set of private reserve owners from the pilot areas to access Socio Bosque resources thereby increasing financial sustainability, as well as to develop the capacities and guidance tools for the Directorate of the Network to replicate to other reserves.

35/ 100

130. The project would also work with the Network to explore potential funding mechanisms such as a revolving fund that could be established with financial contributions from farmers that participate in the project’s pilot areas under Outcome 4. Initial calculations have shown that reserve owners participating in pilot areas are willing to contribute to a funding mechanism such as a revolving fund to enable new reserves to replicate lessons learnt. The pilot projects funded through that Outcome, along with results from Outcomes 2 and 3, will provide information on the feasibility of such a revolving fund as they would provide the income distribution structure that could enable capitalization of the fund and establish overall targets. Small amounts of project resources would be reserved to develop the design of a fund should this assessment be favorable and to mobilize resources for initial capitalization.

131. The design would contemplate the preconditions of a revolving fund. For example, in order to access the revolving fund, applicants would have to be members of the RBPE. They would have to agree to the structure of allocating repayments to the fund to making further loans to other private reserve owners. Other criteria would be that loans would be allocated for activities identified as fulfilling criteria related to profitability, sustainability, participation and replicability. Such a Fund would effectively strengthen the network of RBPE as it would create financial incentives and attract new members to the network. It would also provide a potential model for the APPRI within the SNAP.

Outcome 2: Strengthened capacities for results-based financial planning, management and monitoring are in place for improving long-term net sustainable income of the SNAP

132. This project component will focus on improving capacity for business planning within the SNAP, and make tools available for cost-effective management. The emphasis will be on financial management. Attention will be given to management planning insofar as this can reduce management costs and improve financial health of the SNAP. Business planning needs to be nested within an effective management plan, and current capacity in PANE areas is low for both developing and implementing management plans as well as business planning. The situation in terms of similar capacities in private and communal areas is even worse (as highlighted by the Financial Scorecard when applied to a sub-set of PANE, private and communal areas). At the central level, MAE has limited capacity to manage financial issues at the system level and lacks access to technological tools for effective financial planning, management and coordination. The component will, therefore, develop and provide the right tools for management, business planning, and monitoring and evaluation. It will also train personnel from MAE, and from public, private and communal PAs on the effective use of those tools.

133. The end result of this Outcome will be (i) strengthened capacities and access to tools for business planning and cost-effective management of the sub-system of public PAs (measured by the 5 elements of Component 2 of the UNDP Financial Scorecard); (ii) strengthened capacities and access to tools for business planning and cost-effective management of private PAs (RBPE) and communal PAs (Abras de Mantequilla) (measured by the 5 elements of Component 2 of an adapted UNDP Financial Scorecard); (iii) an increase in the percentage of PAs with updated Management Plans and Business Plans; (iv) an increase in the percentage of staff in public PA units, MAE central unit, MAE regional directorates, RBPE, Abras de Mantequilla with requisite skills for financial management and results-based M&E system; (v) improvement in ability to account for and link expenditures with management effectiveness of the PAs within SNAP; and through this, (vi) provide evidence or basis for more efficient and effective resource allocation. This Outcome will be realized through the following Outputs:

Output 2.1: Strategic plan for the SNAP covering public, communal and private sub-systems developed and in use

Output 2.2: Management and Business Plans for the pilot areas developed and in use Output 2.3: Results-based management and M&E system to track administrative, financial, and

technical issues is installed and operating

36/ 100

Output 2.4: Training program for financial planning & management and M&E (budgeting, operational planning, monitoring, reporting, accountability and results-based management)

Output 2.1: Strategic plan for the SNAP covering public, communal and private sub-systems developed and in use

134. The existing Strategic Plan for the SNAP, covering the period 2007-2016, was developed in 2007 and only covered the 36 public protected areas that existed at that time. Since then, the number of public protected areas has grown to 41. In addition, private and communal protected areas now have Constitutional backing to be included in an expanded SNAP. This output will, therefore, focus on updating the existing Strategic Plan for the SNAP to address ecological representation gaps, increase ecosystem resilience, and enhance the production of ecosystem goods and services by the SNAP. The system-level Strategic Plan will be comprised of three sub-plans, each addressing the strategic direction of the public (PANE), private (APPRI) and communal (APC) sub-systems respectively. The development of a Strategic Plan for the SNAP will be a process for determining the direction and expansion goals of the SNAP system over the short, medium and long term. It will look at the policy and legal framework as well as the current and future environment facing the SNAP. It will define goals for each of the sub-systems, and guidance on how these are to be achieved. In the case of public PAs, goals will relate to improving effectiveness of how PAs are managed to reach conservation goals and financial sustainability. For private and communal PAs, in addition to these goals, the Strategic Plan will address short, medium and long term goals for expansion, as well as the process to be followed to enable these sub-systems to become operational components of the SNAP.

135. Furthermore, the Strategic Plan will examine the potential costs of realizing the goals for the entire system. The existing analysis of the funding gap facing PAs was conducted in 2003. It is not only outdated, but also does not analyze financial gaps in the expanded SNAP with the new sub-systems. This project output will define the methodology for determining funding needs under basic and optimal scenarios of the new SNAP. In addition, financial needs under an additional scenario will be explored – that of conservation costs under a changing climate. Ecuador has identified different climate change scenarios under its National Communication to the UNFCCC. The project will work closely with this team to assess the biodiversity conservation implications of the different temperature, rainfall, and sea-level rise scenarios forecasted in different regions of the country. Changes in rainfall and temperature patterns, as well as sea level, may require additional management actions to be taken in different protected areas. If necessary, a modified methodology for assessing funding needs under the 3 different scenarios will be developed for the different sub-systems. The methodology will then be applied to all PAs – public, private and communal – once the selection matrix is agreed upon (Output 1.2).

136. The output will subsequently examine different revenue projections for the entire SNAP system, based on experiences in the pilot PAs, and taking into account the latest developments under the Yasuni ITT Initiative. This assessment, together with the financial gap analysis referred to above and the increased capacities for financial planning (Output 2.4), will be used to develop a business plan for the short, mid and long term implementation of the updated Strategic Plan. Ultimately, the process of developing the Strategic Plan will be highly consultative, and will ensure representation and participation of government and community stakeholders of the PANE sub-system, all RBPE members, as well as representatives from private areas that are not yet part of the RBPE, and representatives of communal PAs.

Output 2.2: Management and Business Plans49 for the pilot areas developed and in use

49 The terms Management Plan and Business Plan are being used in the project as defined in IUCN’s Guidelines for Management Planning of Protected Areas (2003).

37/ 100

137. This output will be focused on the selected pilot areas. Of the public areas that have been selected as pilot sites, only 1 area has no management plan (MR Galera San Francisco).This will be developed through the related IDB GEF project that focuses on marine protected areas. The remaining 5 areas have a management plan but these are outdated. In the case of the Northwestern Cloud Forest Network (representing the private sub-system), only 3 of the 12 reserves within this network have management plans, and these too need to be updated. The Manabi pilot area (also representing the private sub-system) consists of 6 reserves, none of which have management plans. An additional issue that needs to be taken into consideration for the management plans in private reserves is that the RBPE has used its own methodology for developing these management plans and there is a need to analyze, adapt and standardize this methodology with that used in the rest of the pilot areas. The standardization would consolidate general characteristics of the SNAP while respecting individual specificities of each sub-system. For Abras de Mantequilla (communal pilot area), while there is a management plan, it was not developed using standard methodologies, and local stakeholders do not consider it to be a practical tool. As a result, it is not being implemented. Consequently, there is a need to demonstrate the importance of a consultative and well-defined management plan to maximize the success of conservation efforts.

138. This output will therefore first focus on developing/ updating Management Plans for the pilot areas. In the case of the PANE pilot areas, the project will work with staff from the PAs and local stakeholders, following standard consultative methodologies, to finalize and/or update management plans as the case may be. The main interlocutors for the 2 private pilot areas will be the representatives of the private forest reserves and other local communities, and for the communal area they will be FUNDAR and other community representatives.

139. The management plan will provide the essential policy framework for the development of Business Plans for the pilot areas. At present, all the available business plans are outdated. The Business Plans50 will clarify how costs of implementing the Management Plans are to be covered. Another key input into the preparation of business plans will be the economic valuation studies carried out in the pilot areas under Outcome 3. The process of preparation of the management and business plan will be led by teams comprised of PA staff/ representatives from private areas/ representatives from communal areas (as the case may be), and complemented by experts in specific fields. The objective will be to not only develop these products but also train current staff during the process of preparation. Implementation of the management and business plans will be led by the PA administrative units in PANE pilot areas, by RBPE and reserve owners in the private pilot areas and by FUNDAR in the communal pilot area.

Output 2.3: Results-based management and M&E system to track administrative, financial, and technical issues is installed and operating

140. This output focuses on developing a system for results-based management planning, monitoring and evaluation for the SNAP, which is compatible with existing systems used by the government51. The RBM system will provide a better overview of the costs and benefits of constituent PAs within the SNAP and thereby guide future allocation of resources within the SNAP. It will also inform the selection matrix in Output 1.3. Following the concept of results-based management adopted by the OECD, the project will evaluate the needs of the SNAP and analyze compatibility with existing national systems. It will then design a new system to be tested in the PANE pilot areas, as well as the private and communal pilots. Because the needs of the PANE, APPRI and APC sub-systems are likely to be

50 The term Business Plan is being used as defined in IUCN’s Guidelines for Management Planning of Protected Areas (2003) as follows: Business plans are plans to help the protected area be more financially self-sufficient. These examine the “customer base”, goods and services, marketing and implementation strategy for the protected area.51 For example the SIGEF system that is used to execute payments according to operational planning of the institutions, and SIGOB that is used by the presidency to follow-up on the achievement of government objectives.

38/ 100

different, individual systems will be tailored. The system for PANE areas will be implemented by MAE, for private areas by RBPE, and for the communal area (Abras de Mantequilla) by FUNDAR.

141. The system will be used initially as a tool for monitoring and evaluating project results and impacts in the pilot areas. As illustrated in the figure below, the short term objective of the RBM system will be to monitor the achievement of results at the level of the pilot PAs. Ecological and financial indicators and the associated baseline and target values from the project’s log frame will be integrated in the system and tracked. All baseline and target information collected for the pilot sites through application of the METT and UNDP Financial Scorecard will also be included. The Project’s annual reports, monitoring reports, and results of field visits will also be uploaded in the system, as will the findings of independent mid-term and final evaluations. The system will serve as a tool for monitoring the accomplishment of the Strategic Plans, Management Plans and Business Plans prepared through the project. It will be able to generate reports on different indicators at any time, depending on the frequency of information upload, which will provide a transparent process for financial resource management and the ability to inform all stakeholders on the operation of PAs and related institutions.

142. Once the system is fully operational and applied to the pilot areas for results-based management and M&E of project activities, the project will upscale the system to evaluate performance of the SNAP at the systemic level (i.e., covering all protected areas within the SNAP). As part of the scaling-up of the application of the prototype RBM system from the pilot areas to the expanded SNAP, all PAs in the SNAP will have a METT-type tool applied to them to provide information on management effectiveness. To do this, a series of workshops will be held to define a suitable methodology for measuring management effectiveness and will subsequently be applied to all PAs. In addition, ecological indicators will be defined for each PA as part of the “results” part of the RBM. As illustrated in the figure below, the medium to long term objective of the RBM system will be to monitor the achievement of national strategic goals vis-a-vis the SNAP.

Figure 7 Scope of the RBM System over the Short, Medium and Long Term

39/ 100

MID

AN

D LO

NG

TERM

:RB

M sy

stem

app

lied

to S

NAP

as

a sy

stem

SHO

RT T

ERM

:RB

M sy

stem

app

lied

to

pilo

t PA’

S

SUBSYSTEMS(NATIONAL LEVEL)

SNAP AS A SYSTEM (NATIONAL LEVEL)

Nati

onal

Str

ateg

ic

Goal

s for

pub

lic,

priv

ate,

and

com

mun

al

PA sy

stem

s

Management Plan Targets


“Business Cases”for at least 3 ecologically sustainable,

economically viable and socially

acceptable businesses




Business Plan Targets


Financial Plan and BudgetingTargets


Strategic Plan for SNAP as a system

Annual Institutional GoalsAnnual Results

Pilo

t PAs

’Str

ateg

ic

Goal

s

MID

AN

D LO

NG

TERM

:RB

M sy

stem

app

lied

to S

NAP

as

a sy

stem

SHO

RT T

ERM

:RB

M sy

stem

app

lied

to

pilo

t PA’

S



SNAP AS A SYSTEM (NATIONAL LEVEL)SNAP AS A SYSTEM (NATIONAL LEVEL)

Nati

onal

Str

ateg

ic

Goal

s for

pub

lic,

priv

ate,

and

com

mun

al

PA sy

stem

s





























Pilo

t PAs

’Str

ateg

ic

Goal

s

143. The process of developing the system will be led by a team of experts, representatives from MAE’s central unit (DNBD) and its regional directorates, representatives from SIGEF and SIGOB, and representatives from the pilot protected areas. In addition to developing the system, the project will impart comprehensive training to relevant stakeholders in the implementation of the system under Output 2.4.

Output 2.4: Training program for financial planning & management and M&E (budgeting, operational planning, monitoring, reporting, accountability and results-based management)

144. This output will focus on providing the training necessary to support Outputs 2.1, 2.2, and 2.3. A training-of-trainers approach will be adopted, with an initial focus on a relatively small group of MAE DNBA staff (5), MAE Regional Directorates staff (12), staff from the pilot PAs (20), RBPE staff (2), and FUNDAR staff (2). The trainees will be expected to impart training to others and lay the foundation for replication of the overall project strategy within the SNAP. For example, the 17 MAE trainees will be expected to train approximately 100 additional staff. The project will support the planning, monitoring and evaluation of the training conducted by the core group of trainers. The training program will be linked to MAE’s government educational center, and efforts will be made through the project to integrate the training program into the education center, thereby ensuring institutional and financial support post-project. The training program will directly benefit each sub-system and the entire SNAP, and it is anticipated that these beneficiaries will continue to support the training program. Training content will relate to the following areas:

Results Based Management Concepts Strategic Planning Management Planning Business Planning

o Financial Planningo Budgeting by Results

Project Managemento Operational Planning

Monitoring and Evaluationo Accountabilityo Reporting

145. To support the training program and in order to facilitate replication of the project strategy to other protected areas within the SNAP, technical handbooks and manuals will be prepared for the use and application by managers of public, private and communal protected areas. These materials will be essential for developing a common understanding among the different partners (public sector staff, private land owners, communities) of the concepts and principles critical to realizing financial sustainability of the SNAP. The handbooks and manuals will draw on the experiences generated in the pilot PAs as case studies and are expected to cover the following topics.

Results Based Management Monitoring and Evaluation Establishing responsible business Negotiating cross-sector partnerships Alternative funding mechanisms

Outcome 3: The value of SNAP is better recognized among communities living in protected areas, public authorities, and private and public investors (national and international)

40/ 100

146. This project Outcome focuses on enabling the key actors of the SNAP (MAE, Regional Directorates, and PA managers) to negotiate increased resources from public and private investors. An economic valuation of the goods and services generated by the SNAP was conducted under the World Bank/ GEF project52. This Outcome will build on and utilize the results of this study to leverage greater support for the SNAP from a range of stakeholders. By substantiating and raising the profile of these economic values, the key actors mentioned above will be able to (i) mobilize more government funding53; (ii) mobilize greater financial contributions from the private sector; (iii) ensure greater support for institutional change and policy reform processes that are needed to support the SNAP; and (iv) mobilize greater international resources from emerging international funding mechanisms such as REDD.

Output 3.1: Site specific economic valuations conducted to complement the existing study

147. An economic valuation of SNAP was performed on 33 of the 36 public protected areas that comprised the SNAP in 2008, in order to obtain a valuation based study to underpin the Strategic Plan of the SNAP. While it provides a good macro-level assessment of the economic values of goods and services, it is of limited use for developing business plans and facilitating specific negotiations on resource mobilization for the project’s pilot areas for the following reasons:

The study was limited to the assessment of the top 5 environmental goods and services54 that were selected based on perception and subjective criteria obtained in workshops with the technical team of the protected areas.

The main focus was on hydrological services provided by SNAP. The assessment of water balances was carried out using a mathematical process of attribution of data to the nearest comparable station. But for the project’s pilot sites, the evaluation should be based on more precise data.

Although the methodology for valuation is internationally accepted, it shows a static scenario, and does not take into account information on resilience and carrying capacity in order to obtain future scenarios on the supply of environmental goods and services

The study did not cover the economic values of goods and services generated by private and communal protected areas.

148. Therefore, targeted micro-level studies will be undertaken in the pilot areas to address these gaps and demonstrate the importance, value and potential of each of the pilot protected areas to the local and national economy. The economic valuation studies will be modeled on a regional effort being led by UNDP to highlight the contribution of biodiversity and ecosystem services to growth and equity in the Latin America and Caribbean region (see Box 1). The approach will compare the contribution of the pilot PAs to economic sectors under two different scenarios – (1) the business as usual scenario where management effectiveness is low and there is no financial sustainability, and (2) the sustainable ecosystem management scenario wherein financial sustainability is assured and management plans are implemented well. The objective is to demonstrate the economic contributions of well-managed protected areas, thereby providing the basis for mobilizing financial support for a robust protected areas system.

149. The studies will highlight to policy makers the main strengths and weaknesses of each pilot area and eventually facilitate the creation of policies or regulations that will help realize these economic

52 Study of the Economic Valuation of SNAP’s Goods and Services (product of the WB/GEF project National System of Protected Areas under the Institutional Strengthening component)53 Currently, government expenditures on environmental issues represent 0.38% of total expenditures in the 2009 budget (Ministerio de Economía y Finanzas, Ejecución Presupuestaria Resumen Anual, información de SIGEF).54 The study considered Water supply – storage and retention; Biodiversity – reproduction and scenic beauty; Water Regulation; Biodiversity – species refuge; Regulation of Atmospheric Gases – carbon fixation and storage.

41/ 100

potentials. Each pilot area offers a unique set of circumstances and economic potentials. Not all areas will necessarily have marketable use values and the economic potential of some areas may rest in existence and bequest values. The micro studies will serve to bring such distinctions to the forefront and guide the development of different financial strategies to fit the different pilot PAs. The studies will, thus, provide MAE staff and PA managers with better information on economic potentials for feeding in to the development of business plans (Outcome 2) and the establishment of sustainable income generation models (Outcome 4), as well as for entering into negotiations for more resources (Output 3.4). Box 1, below, details the suggested methodology to be used.

42/ 100

43/ 100

Output 3.2: Biomass stock assessments for PANE undertaken

44/ 100

Box 1: Suggested Methodology for Economic Valuation Studies in Pilot PAs

The suggested methodology for the economic valuation studies to be undertaken in the pilot PAs (Output 3.1) will be modeled on a regional effort being led by UNDP to highlight the contribution of biodiversity and ecosystem services to growth and equity in the Latin America and Caribbean region. This will be discussed with government representatives, NGOs, academia, and national researchers during the initiation phase of the project before coming up with a final terms of reference for the studies. Expertise from the regional UNDP effort will also be tapped to provide inputs to the design of the studies in the project’s pilot PAs. The suggested methodology is described below.

Part 1:1. Construct a conceptual model of all existing interactions between the pilot PAs and the economy (preferably divided along productive sectors). The model should be concise and descriptive rather than analytical or mathematical. In particular, emphasis should be put on differentiating indirect and direct benefits from final goods and services generated in ecosystems located in the pilot PAs, as well as direct and indirect uses of inputs generated in those ecosystems. Relations of substitutability and complementarity should form a key part of the construction of this model.2. Within the model, identify the current (as existing today) policy instruments or strategies that generate funding for protected area management (for example, entrance fees to PAs). 3. Based on the conceptual model, identify actual and potential environmental inputs that the pilot areas specifically provide to the economy. This analysis should be sectoral and should put special emphasis on the following list of economic sectors: Forestry, fisheries, tourism on site and tourism associated service sector, agriculture, and hydropower.4. Again based on the conceptual framework, identify actual and potential environmental goods and services that the pilot PAs provide to human settlements, such as protection from natural disasters, water supply, property values, recreation and overall social welfare effects not covered by sectoral analysis in the previous point.

Part 2:5. Select, in consultation with national and local authorities and stakeholders, the most strategic environmental inputs and goods and services to be analyzed further within this study. Part 1 should be the key input in this consultation.6. Conduct an economic assessment of those strategic environmental inputs and services of the pilot PAs. The analysis should be organized by economic sector, and should analyze not only indicators of income generation (current and potential income) but also other indicators such as employment, distributional effects, tax revenues and trade balance. The assessment should cover 2 different scenarios for each sector – i.e., comparing the level and nature of impacts in the business as usual scenario (where PAs are managed as they are currently) compared with the sustainable ecosystem management scenario (where PAs are well-managed).7. Assess the costs of managing the pilot PAs. This should clarify the differences between current expenditures on management, costs of basic management needs, and costs of optimal management needs. The analysis should also consider efficiency indicators for these spending (for example, costs per hectare or km of coastline), and compare to equivalent measures from international experiences.8. Use the service/benefit (activity 6) and cost (activity 7) assessments to ascertain how and under what conditions SEM will yield greater net benefit than BAU, basically trying to quantify the relationships modeled in (3) above. The optimal scenario would be expected to generate more economic value.9. Provide economic arguments for SEM decision making at local level for a selection of specific interactions which are not easily reflected in the sectoral approach. The cases will be chosen as part of the consultation with decision makers. This objective can be understood as the actual measurement of the relationships modeled in (4) above. 10. Based on the specific analysis done for the pilot PAs, make concrete suggestions for raising additional funding for the sustainable management of these areas, differentiating between specific instruments like taxes, charges and fees and more broad strategies like certification, REDD, etc.

Part 311. Prepare a set of simple but strong key economic and political messages backed up by credible data from the results of the above analysis. For example: SEM is pro-growth; 12. Hold a workshop at the beginning and at the end of the study to explain to national stakeholders and relevant government agencies on the results, methodologies and the use of economic tools.

150. This output will specifically focus on the economic value of PANE PAs embodied in its carbon stocks. Forest conservation and restoration activities in protected areas can successfully reduce greenhouse gas emissions, while also conserving biodiversity and contributing to human well-being. Recent developments in the international arena on placing a market value on carbon stocks (suggest that financial incentives for maintaining and enhancing these carbon stocks could soon become a reality (under the REDD financial incentive mechanism). This output will, therefore, apply an internationally agreed upon methodology to determine the carbon stocks in the PANE sub-system (covering all 41 areas) to enable decision makers to better explore emerging international funding mechanisms such as REDD, and/or increase government funding to the SNAP as part of national climate change mitigation / adaptation strategies.

151. The main purpose of biomass assessments is to tap into alternative revenue generating mechanisms for the PAs. Biomass assessment will provide information on how much carbon has been absorbed and stored in the PAs. The project will use currently available expert methodologies (measuring diameter of trees, diameter of the shaft and expansion of roots) to compare these measurements with well known international tables to determine the amount of carbon absorbed and stored in PANE PAs. Biomass information will be useful for MAE and Ecuador to negotiate funding (in the future) from REDD+ schemes. While there are few examples of this kind of negotiation to date, authorities in MAE consider that new carbon regulations in industrialized countries create a potential market for carbon stored in the PANE PAs.

152. Previous GEF projects have not included biomass assessments. Currently, there is a FAO-GEF project under reformulation that proposes to focus on reforestation with indigenous communities from Chimborazo. Close collaboration will be maintained with this team on biomass measurement methodologies to enhance synergies between the two initiatives. Similarly this Output links closely with the proposed pilot in Mache Chindul (see Outcome 4, Output 4.1)

Output 3.3: Communication campaign based on SNAP’s economic and social value is implemented to demonstrate tangible benefits

153. This output will design and implement an innovative communication strategy based on the economic benefits that the SNAP’s conservation can contribute to urban and rural populations, as identified by the economic valuations in Outputs 3.1 and 3.2 (for example, water provision for energy generation and agriculture, flood control, climate regulation, job opportunities through tourism in PAs, and genetic diversity). It is important to note that one of the final recommendations made by MAE at the end of the GEF-3 project was to prepare and make a broad communication campaign that unfortunately has not yet been carried out. The idea of this campaign is to communicate in commonly understood terms the benefits that each area provides to the whole country, as well as the benefits (from water, as measured in GEF 3 and carbon, as will be measured in GEF 4) that the entire SNAP provides and can provide to Ecuador and globally.

154. The purpose of the communication campaign is to raise awareness of the benefits of SNAP among the general public, productive sectors, and national government. The communication campaign will be developed at two levels. The first level will be nationwide through reports that explain the impact of the major contributions made by protected areas, and the ecological processes in those areas, on the economy and society-at-large. The second will be at the level of individual PA contributions, based on the valuation studies (output 3.1 and 3.2) related to the direct and indirect goods and services, and to productive activities and social welfare.

155. The campaign will be tailored to the following audiences: (i) Communities who live in buffer zones in order to better engage them in conservation activities by highlighting linkages between a well-maintained PA and their well-being; (ii) Productive sectors that benefit from environmental goods and

45/ 100

services generated by the PA in order to show the contribution to long-term productivity; (iii) Local governments to emphasize the services PAs generate for human settlements such as water supply and shoreline protection; (iv) Government ministries to highlight that increasing fiscal revenues to SNAP should be viewed as an investment in essential ecological infrastructure; and (v) Public opinion in order to raise awareness and demand for environmentally responsible products.

156. The development of the communication campaign will take place through several roundtable meetings led by MAE. Alliances will be sought with international conservation organizations and, at the national level, from socially responsible businesses. The process will also involve local and provincial governments, park workers and local staff from MAE.

157. The communication campaign will be oriented to help match funding targets and promote conservation as a necessity for a sustainable future. The campaign will bolster the negotiating capacity of protected areas and the commitment of industries or companies that are currently benefiting from protected areas. Furthermore, the campaign will be supported by information generated under outputs 3.1 and 3.2, and will incorporate beneficiaries and involved actors. Finally, the campaign will be disseminated through mass communication media such as TV spots, radio, press, and brochures made available in each information center in all the protected areas that form the SNAP.

Output 3.4: Capacities of stakeholders to negotiate funding with different partners are developed

158. This output will build the capacities of MAE, DNBD, and local park staff in the pilot PAs to negotiate greater funding from potential investors, based on the technical evaluations prepared under Outputs 3.1 and 3.2 and drawing on the information materials prepared under Output 3.3.

159. Part of the reason for poorly negotiated budgets for PAs is that there exists a significant communication barrier between those that allocate resources and those that ask for them. As a first step to bridge this constraint staff within DNBD, regional directorates and pilot PAs need to develop their own understanding of the economic contributions of PAs (Output 3.1) and also the processes and criteria used for resource allocation within the Ministry of Finance. Similarly, those allocating budgets to the SNAP and the subsystems need to understand the context in which different terminology is applied to PA management. In several cases, terminology – such as business plans – has widely different meanings in the world of finance and the world of PA management, and this presents a real barrier in communication between different fields of expertise. Thus, in addition to building capacities within the DNBD on economic valuation and budgeting processes, a series of short pamphlets will be developed with key terminology and concepts related to PA management and financial sustainability within the context of Ecuador, the new Constitution, and the government procedures for budget allocation.

160. In conjunction with the above, staff within DNBD, regional directorates, and pilot PAs need to improve their negotiation skills. Therefore, this output will provide training on negotiation skills. This would involve practical sessions to explore the different types of negotiation styles and skills that staff members could develop; the main steps in negotiation procedures; and the types of information that would need to be prepared in advance to facilitate negotiations in different contexts (international; regional, local; private, public, etc.). This will build on advances and information from the results based management system in Outcome 2 and the communication strategy in output 3.3.

161. Once these skills have been strengthened, and based on the recommendations from the valuation studies in the pilot PAs (Output 3.1 and 3.2) on important economic benefits being provided by each pilot PA, the project will support negotiations with the relevant “consumers” of these benefits. There are often differences in how individual sectors perceive the same issues and a different understanding of terminology. For instance, finance sector staff may view benefits narrowly as actual revenue flows, while biodiversity staff understand benefits in terms of current and future revenue flows, as well as

46/ 100

social benefits. Therefore, the project will convene round table discussions so that issues of terminology can be addressed.

162. It is expected that, through these negotiations, agreements will be reached in each of the pilot PAs to mobilize additional resources from the following potential sources: (i) public sources such as MEF, local governments, Ministry of Tourism, Ministry of Energy; (ii) private endowments; (iii) private sector companies as part of their corporate social responsibilities; (iv) international REDD+ schemes for avoided deforestation; and (v) the proposed fund under the Yasuni ITT Initiative.

Outcome 4: Replicable cost-effective management models for net sustainable income are field-tested through community-based and cross-sector partnership approaches.

163. Protected area "financial sustainability" refers to the ability to meet all the costs associated with the management of a protected areas system. This includes the provision of sufficient and predictable resources to cover the management costs of constituent PAs so that they meet their conservation objectives. This entails reviewing revenues and expenditure across the system seeking to (i) maximize predictable revenue/ resources/income and (ii) minimize management costs, both oriented to meet PA conservation objectives. The Outcome seeks to address both these two approaches at the field level, developing and testing models in different scenarios to definite a suite of models to advance sustainability of the entire SNAP. To that end this outcome will focus on developing models of cost-effective management and net sustainable income generation in pilot PA for replication to other PAs and scalable for all sub-systems of the SNAP.

164. These models will address challenges related to "supply" issues for generating more revenue –or income-, and "demand" challenges for accurately defining PA financing needs, administrative expenses and keeping them as low as possible. Regarding the “demand” side, the project will finance pre-requisite factors that ensure cost-containment, such as: (i) developing the systematic process of defining costs and identifying cost-effective ways to meet those minimum costs (pre-requisite for good financial planning); ii) enabling PA managers to make strategic financial decisions, such as re-allocating spending to match management priorities, as well as identifying appropriate cost reductions and potential cash flow problems. The intention is to build capacities in the pilot areas that would be then scalable via training to other PAs in the SNAP.

165. On the “supply” side, the Outcome will field-test different models to achieve higher income, balancing the supply and demand in the PAs. It will put in place the following: (i) ecologically sustainable, economically viable, and socially acceptable income-generation opportunities and (ii) develop approaches and strategies at the site level for increasing the net sustainable income (NSI) for each pilot PA.

166. Both income-generating opportunities and cost-containment strategies will enhance financial sustainability of the PA s by: (i) involving local resource users that live in the PAs in activities that both reduce pressures on the natural resource base and meet their income needs; (ii) negotiating participative, benefit-sharing and communitarian ways to reduce the costs incurred by the PA administrative unit to control ecologically harmful activities (cost containment); and (iii) generating agreements for investing in new income streams that can later be re-invested in the management and upkeep of the PA. Increasing the net sustainable income (NSI) in each pilot PA - and thereby reducing the financial gap - is expected to increase management effectiveness within the area and in turn improve the achievement of conservation objectives. The results-based management system developed through Outcome 2 and the negotiation and valuation provided through Outcome 3 will facilitate the fulfillment of this premise.

167. The cost effective models for increasing the NSI will provide initial experiences that can be replicated to the rest of the SNAP. To facilitate this task, in addition to testing specific models, this Outcome will also include an evaluation of each approach and define potential replication sites. The

47/ 100

models will also provide the basis on which long term business plans can be developed for the SNAP, its sub-systems, and the pilot PAs through Outcome 2. Outcome 1 will focus on the legal reforms necessary to ensure that these new revenue streams can indeed be reinvested in the upkeep and maintenance of the PAs. Thus, while this Outcome 4 will test site specific models, Outcomes 1 and 2 will provide the systemic capacities for replication and for sustainability and, thus, further increase the project’s contribution to capturing global benefits.

168. The “supply” income-generation opportunities and “demand” cost containment approaches will be developed based on the Constitutional principles of protecting the rights of nature while also recognizing the rights, freedoms and justice for inhabitants near PAs. To this end, the approaches and methodologies will vary in their application to the APPRI, APC, and PANE pilots.

169. During project preparation discussions held with the project preparation committee, the MAE and SENPLADES determined that the selected income generating opportunities and cost containment approaches and pilots would also be in line with Amartya Sen’s Capabilities Approach (1992; 1999) and Elinor Ostrom’s work that demonstrates how common property can be successfully managed by user associations and through complex cross-sector partnerships. The graph below depicts these approaches, equating them to the different components of this project.

Broadercontextual variables

MicroSituational variables

Learning and norm-adopting individuals

Levels of trust thatother participantsare reciprocators

Netbenefits

Levels ofcooperation

Source: Poleete, Janssen, and Ostrom (2010, chap.9)

Cross Sector Partnership Strategy of Negotiation(for CCBI MINGA of Public and/or Private Investment)

COMPONENT 2RBM

COMPONENT 3VALUATION

COMPONENT 3NEGOTIATION

Broadercontextual variables

MicroSituational variables

Learning and norm-adopting individuals

Levels of trust thatother participantsare reciprocators

Netbenefits

Levels ofcooperation

Adapted from Poleete, Janssen, and Ostrom (2010)

Cross Sector Partnership Strategy of Negotiation(for CCBI MINGA of Public and/or Private Investment)

COMPONENT 2RBM

COMPONENT 3VALUATION

COMPONENT 3NEGOTIATION

COMPONENT 4CCBI

$: Transfers

E: Negotiation

$: Cooperation

$: Businesses

E: Participation

E: Results-Based Management

170. Outcomes 2 and 3 will provide the results-based management (RBM), negotiation and valuation bases for the creation of Corporate Citizen Business Initiatives (CCBI) to test approaches covering not only “supply” but also “demand” sides of Net Sustainable Income Generation. These CCBI are essentially formal agreements between different partners to undertake revenue generation and/or cost containment activities and businesses in line with natural values and carrying capacities of each PA. Outcome 3 will enhance the selection of these potential businesses through its valuation Output and the establishment of partnerships through the negotiation output. The results based management system in Outcome 2 will facilitate the oversight of the CCBI selected and the flow of resources to them for initial activities.

171. The project will identify, select and implement CCBIs. The selection process will be carried out with the support of the GEF Small Grants programme that now successfully manages funds from a number of sources and works with communities throughout the country. The SGP will assist in the preparation of differentiated methodologies for the pilots within each sub-system, supported by technical committees to assess the different approaches required. The project’s technical committee will supervise these activities and approve the corresponding methodologies, models and activities to be piloted. Likewise, the selection process of the CCBIs for resources (grants) to implement the pilots will follow the selection process developed by the SGP.

48/ 100

172. The models to be tested and the selection of CSBI will occur during year 1 and some of 2, building on the initial advances of Outcomes 1, 2, and 3. These include a number of key policy instruments that need to be set up by the project first. One simple example is the Environmental Code that will affect the final selection and design of each model. Another is the process of updating management plans in Outcome 2 that will provide better estimates of costs and also enable consultation with communities to define best approaches for participation in managing and threat reduction strategies. It is expected that by the middle of year 2 pre-requisites for these models will be in place, so that the CCBI be selected during the second half of year 2, and be fully operational at the start of year 3 in order for pilots to be fully functioning and monitored for a minimum of three complete years (36 months).

173. While each pilot will demonstrate specific CCBI governance and financing models, a number of planned interventions are common to all sites. Among them: (i) supporting the establishment and operations of an Extended Advisory Commission for the project that may later be incorporated as the basis of a management committee that is expected to be mandated in the new SNAP law; (ii) undertaking marketing studies to guide the development of income generation businesses based on the valuation, awareness building, negotiation and partnership building activities in each pilot under Outcome 3; (iii) the final selection and implementation of the businesses and the definition of benefit-sharing approaches between communities, private sector and the PA management; (iv) defining the appropriate structures, protocols, operational systems and capacities for collaborative management partnerships for each site; (v) supporting the development of limited PA infrastructure and equipment needed to improve PA operations and contribute to the success of the demonstrations at each site; and (vi) undertaking evaluations to determine the effectiveness of each model in increasing the NSI and to determine the replication potential. At the start of the project, meetings and workshops will be held with stakeholders involved in each site so as to adjust the final design of the intervention and establish the rights and obligations of each party.

174. As the specific barriers faced are different for public (PANE), private and communal areas, the pilots have been divided into three main Outputs: (i) Sustainable net income models (business cases) selected, funded and producing in pilot PANE areas; (ii) Sustainable net income models (business cases) selected, funded and producing in pilot private protected area; (iii) Sustainable net income models (business cases) selected, funded and producing in pilot communal area. A fourth output to be funded largely through MAE resources will be developed for piloting Sustainable Net Income models (business cases) in one local government PA. This will be selected once final negotiations for other donor projects have been completed. MAE will establish coordination arrangements with these projects in order to properly encompass the intervention in the decentralized government pilot PA.

Output 4.1. Sustainable net income models (business cases) selected, funded and producing in pilot PANE areas

175. The approach for improving the NSI in PANE would be a mix of new income opportunities and increasing participation of communities in management for cost-containment. Income generating opportunities within the PANE pilots would be pursued through the establishment of Corporate Citizen Business Initiatives (CCBI), constituted in partnership with the Government, a private or public entity (national or international), and a community within the PA (cross-sector partnerships). These businesses would be developed based on the natural resource potential of the given PA and on the basis of (i) market studies undertaken for the resource that offers most favorable economic potential (Outcome 3) and (ii) where relevant, carrying capacity and sustainable-catch level assessments if business opportunities involve extraction of natural resources. Setting up of these partnerships would also be facilitated by work on developing cross-sector partnerships and negotiations undertaken in each PANE pilot under Outcome 3. Using results from Outcomes 1 and 2, MAE will supervise the models to ensure they are managed in compliance with the law and use proper techniques for assuring RBM.

49/ 100

176. Once established with proper agreements, the CCBIs would be eligible to present their initiatives to a selection process, in response to a call for proposals. The mechanism to be used for selection, disbursement and oversight is based on the highly effective Small Grants model 55. The selection of the models will be overseen by SPG and undertaken through a competitive process that will be guided by local, national and international academia; NGOs, researchers, and public or private organizations that are already involved with the PPG; and other respected institutions capable of ensuring that the public-private-community arrangements would be beneficial not only for short or long term income growth in the PA, but be based on long-term sustainability for the overarching SNAP level.. The final identification will be determined using the initial advances of Outcomes 1, 2, and 3 during the project’s implementation. However, in an effort to jump-start the process to determine the design and viability of this Outcome, the pre-identification of opportunities for generating or increasing net sustainable income in each PANE pilot area was guided by the Technical Advisory Committee convened under the project preparation phase by MAE as part of the PPG. This included representatives from (i) the National Biodiversity Working Group (NBWG) that included several specialists in PA management, (ii) academia, and (iii) NGOs, including representatives from IUCN’s Commission on National Parks and Protected Areas. This process indicated that income generation models in the PANE would work mainly in the energy, water, tourism and agro production sectors, as follows:

177. Tourism revenues: At present, revenues from visitors to PAs are the prime source of self-generated income for the SNAP. However, this potential is clearly not being maximized. In those PANE pilots that have this potential, the project will undertake strategic investments that improve the facilities and attractions for tourism involving communities and newly established CCBIs so that ongoing ecotourism programs within PAs are expected to realize their full potential. PANE pilots pre-identified for these are:

a) In Chimborazo, the project will trademark tourism as the highest mountain in Ecuador and develop alpaca production with local communities as part of the attraction. Specifically, the idea to be field-tested during project execution is the possibility of Andean camelids and tourism activities. 56 There are a number of roads going to/from Quito, as well as at least 2 or 3 other viable ways to arrive at the PA from other directions. The project will build on existing infrastructure and focus tourism marketing on the reserve’s unique location along the equator, making it one of the “closest mountains to the heavens.”

b) In Cuyabeno/Yasuni, the project will focus on attracting tourism interested in seeing some of the most diverse genetic diversity on the planet, as the number and variety of species is higher than in any other terrestrial ecosystem. Its forests are home to more species of trees and shrubs per hectare in the world (664 species) and consequently represent an even greater diversity of wildlife, making it an

55 This was originally set up in Ecuador through GEF support and has since expanded to include other resources. Participation, democracy, flexibility, and transparency are cornerstones of the SGP approach. When considering sustainable livelihoods initiatives, SGP considers the social, environmental and cultural aspects of the local inhabitants of an area, and gives great care to understanding a community’s means of subsistence and the manner in which they change and adapt to new conditions, influences, and adopt multiple strategies to obtain the means of subsistence. In areas of high poverty, it is of upmost importance to consider families’ means of subsistence and livelihood in order to generate sustainable alternatives, while ensuring harmony with the conservation and management of natural resources. As such, SGP methodology looks to strengthen the generation of innovative initiatives that are flexible and sensitive to the needs of the community, permitting them to strengthen traditional activities in some cases, while in other cases introducing new technologies that are compatible with their ancestral means of livelihood. With this in mind, the SGP will support this Outcome through a call for proposals that includes the selected areas. SPG will identify and select proposals for community projects that aim to decrease pressures on natural resources and strengthen biodiversity conservation, based on community projects that integrate mechanisms of financial sustainability and management of the selected areas. SGP will avail the expertise of its National Steering Committee to the NSI Model selection exercise for this Outcome.56 Merged as the second depends on the trade of the first, as made in the case of Arequipa Region, in Peru See Cox (2003), “Politics of Conservation and Consumption: the Vicuña Trade in Peru”, available at http://etd.fcla.edu/UF/UFE0001367/cox_a.pdf

50/ 100

http://etd.fcla.edu/UF/UFE0001367/cox_a.pdf

area of great scientific interest and tourism potential.

178. Payments for environmental services (PES): The PANE pilot areas provide a range of environmental services that are critical for productivity and returns in other economic sectors. Examples include water supplies for irrigated agriculture, human consumption and hydroelectricity; carbon storage; pollination services; among others. These services are effectively being provided for “free” to users and the project will fully explore approaches for raising revenues for the continued provision of these services through different mechanisms in 3 PANE areas.

a) In Mache Chindul the project will work with communities and park administration to improve land use and reduce deforestation and conversion of land to marginal cropland and pasture. This will be based on a similar experience in the neighboring area of Bilsa Biological Reserve where an NGO Fundacion Jatun Sacha has worked with government and international partners to preserve 2,000 hectares of tropical forest. Drawing on the experience of Jatun Sacha, the project will provide technical assistance to communities for undertaking sustainable land use practices. It will also put in place a small grant mechanism to provide financial support to communities for modifying land use and ensure the fair and transparent sharing of resources to all participating families. In addition it will set up a system for monitoring and verification of these sustainable land use practices and the affect they have on avoided deforestation. This would include the application of internationally recognized methods for the establishment of historical baselines of deforestation rates for the PA and the measuring of the reduction of deforestation, degradation and loss of carbon stocks over the life of the project. As negotiations for new sources of conservation finance progress, such as the Yasuni ITT Initiative and REDD+ schemes brokered at the national level, these mechanisms for resource transfer and verification set-up by the project can ensure the effective deployment of new resources.

b) In Los Illinizas the project will work with resident local and indigenous communities to conserve the main water sources and improve their water use so as to ensure that downstream hydrological services being provided by the reserve are not compromised. In return, the project will explore the possibility of negotiating payments from one of the main potential downstream water users which is a hydro-power project that is being planned in the lower forests at the base of the reserve. Resource transfers to communities for improved management water resource will be channeled through a small grant mechanism.

c) In Cayambe-Coca the project will pursue improved watershed protection by resident communities within the reserve in return for financial compensation from downstream municipal water suppliers. This will include negotiations between MAE and the relevant municipalities. Resource transfers to communities for improved watershed management will be channeled through a small grant mechanism. These mechanisms could be similar to those used in the FONAG experience (in Quito), or ETAPA mechanisms used in El Cajas Park (Cuenca).

179. There are also a number of economic compensation payment schemes under development in Ecuador regarding environmental goods and services. For example, the new Environmental Code under preparation will establish a sub-national system of environmental services as part of the National Decentralized System of Environmental Management. This will be managed by the National Environmental Authority that will be mandated with the rating of environmental services to seek economic compensation. Once the new law is ready, the project’s technical committee could better assess what additional mechanisms are legally feasible.

180. In parallel to the income generating opportunities in the above PANE pilots, the project will explore state-private-community partnerships in PA management (Cuyabeno and Galera) as follows:

a) In Cuyabeno/Yasuni, the pilot will work with indigenous communities within the reserve to develop participatory management models that can be replicated later on to other public protected areas (PANE) through private and eventually public financing. It will build on lessons learned from TNC’s

51/ 100

experiences in the Ecuadorian Amazon area, involving sustainable production approaches with indigenous communities and capacity building in legal frameworks, management and other related topics that aim to provide the basis for increased participation in PA management. The project will work with these initiatives to evaluate and codify experiences so as to replicate appropriate mechanisms and tools in the Cuyabeno PANE reserve. The project will work with Indigenous Peoples living in 3 areas: Cuyabeno, Recay, and Cofan-Bermejo during 2010 and 2011 to codify experiences to date, and will foster coordination between MAE, Fundacion Natura, Cofan, and Shuar communities to develop new models in which the communities participate in the management and control of the public (PANE) area (Cuyabeno/Yasuni). TNC will co-finance this and provide technical support through its already functioning programs.

b) In Galera San Francisco, the project will build on the work to be undertaken through a related IDB/GEF project that will put in place a sustainable fisheries management regime which will reduce the threats to the PA. This is expected to decrease the management costs. The UNDP project will work with these fisheries committees to involve them in key management functions such as patrolling to reduce costs further As such, the project will work in Galera San Francisco to provide communication equipment for marine-communal park scouts. This will guarantee security for them, as well as minimize the costs for management. It will work with the PA management team to apply the concepts of NSI and results based management developed through this UNDP project applying them to the very different conditions of a marine PA. In this way, the project seeks to initiate the direct replication of lessons learnt to the marine sub-system that is the focus of the IDB project. Similarly through this pilot, the financial system for the SNAP will be able to directly incorporate those lessons learnt through the IDB project. MAE will coordinate the different initiatives under development so as to avoid any duplication with this project’s activities.

Output 4.2 Sustainable net income models (business cases) selected, funded and producing in private pilot protected areas

181. The approach for improving the NSI in private areas would be to work with private landowners that have coalesced to form their own conservation networks and support them in identifying and implementing measures for increasing incomes earmarked for conservation and containing conservation management costs. By working in partnership with private owners, the cost to the system of realizing fully functional private protected areas that generate conservation benefits will be minimized as these partners are best placed to carry out conservation actions on their lands with appropriate technical and financial support from the project.

182. The project has identified two networks of private forest reserves as pilot areas – the Mindo/North West Cloud Forest and Manabi. Each of these areas is comprised of a network of private reserves within the Private Forests Network (RBPE) – 12 and 6 reserves respectively. The project will support the private land owners in increasing production in those parts of their lands that are not set aside for conservation through biodiversity-friendly means. This would be done with the intention of a) increasing profits so that they offset the opportunity cost of their set-asides, and b) reducing pressure on the set-asides themselves. Sustainable production models to be tested include agro-forestry systems and sustainable tourism management (as there are already a lot of visitors to these sites). Where relevant, partnerships will be developed with surrounding communities to support tourism management and participation in other aspects of reserve management. Reforestation with native species will also be considered as a means for improving connectivity between areas set aside for conservation. Further, environmental education programs will be developed with reserve owners to generate broad-based local support for the reserves. In parallel to enhancing the ability for self-financing of reserve management, the project will support private owners with gaining access to existing funds such as the Socio Bosque Program that is designed to offer financial incentives to private owners for natural forest conservation.

52/ 100

183. The identification and selection of the models will be undertaken in consultation with academia, NGOs, researchers, and international organizations to ensure that the management models for the private pilot areas are beneficial not only in terms of short term income but also for long-term sustainability. UNDP, through the SGP approaches, will be responsible for granting resources to the Private Forests Network (RBPE). MAE will provide oversight to ensure that resources are allocated to initiatives that have strong replication potential for APPRI and the entire SNAP. Technical evaluations will also be conducted by MAE in order to maintain focus on the goal of financial sustainability of SNAP as a whole. The sustainable income generation activities will be assessed yearly, in order to measure performance. Resources will be provided for regular exchange of knowledge and experiences between the pilot areas and other private reserves to facilitate replication post-project.

184. The project will be supporting these pilot areas in partnership with other cofinanciers namely TNC, CI and RBPE, with the latter making a significant contribution through the time and expertise of their network members.

Output 4.3 Sustainable net income models (business cases) selected, funded and producing in pilot communal areas.

185. This Output seeks to increase the sustainable net income for the Reserve principally by supporting alternative livelihoods and practices to reduce threats to the wetland and increasing the participation of communities in conservation efforts thus reducing management costs. In this sense this pilot would be firmly based on principles related to Ostrom’s theories on how common property can be successfully managed by user associations. FUNDAR (Foundation for Community Support in Wetland Conservation Abras de Mantequilla) would lead the implementation of the pilot, however, several related organizations will be directly involved. These include the Asociación "El Recuerdo", “La Amalia", Peasant Association "18 de Noviembre" or Peasant Association "Peasant Alliance". Similarly the pilot would be supported by the Municipality of Vinces and the Provincial Council of Los Rios. It would also build on the successful experiences of the Small Grants Programme in the reserve.

186. In keeping with the overall strategy of the project, the focus is to preserve the ecosystem of wetlands while also improving the quality of life of the population living on the borders of the wetland, through the development of profitable and sustainable production activities. The strategy thus consists of diversification of the agricultural production base (for food safety and security) with the expected result of the progressive development of agro-ecology in the wetland, together with soil recovery and improved use of resources, especially water. The project will also put emphasis on the gradual replacement of the most dangerous chemicals and the development and promotion of organic and biological production. The main vehicle through which new practices would be delivered is by building on an existing Community Credit Fund and expanding this for biodiversity conservation considerations (see below).

187. Work to reduce pressures on the wetland biodiversity would have four main lines of action. The first would work with small scale farmers on the edges of the wetlands to identify and implement more sustainable agro-ecological practices thereby reducing the impact on the wetlands from upstream land-uses – particularly those that involve agrochemicals. This would include undertaking market and supply chain studies to identify the most favorable products and production practices; training in organic certification processes for the selected products; and setting up and implementing the pilot plots for new agricultural practices and products. The specific area for agro-ecological production will be determined in the updated management plan (under Outcome 2) and through consultations to be undertaken in year 1 of the project. By the end of the project, agro-ecological management of at least 50 hectares of land surrounding key wetland sites are expected to have organic production certification (representing sub-communities of 10 families with an average of 5 members per family). Replication will be expected through the expansion of the credit system (see below), through training courses and through working

53/ 100

with municipalities to ensure that municipal norms are developed for regulating or banning the use of hazardous chemicals and encouraging local production and consumption of agro-ecological products.

188. The second line of action would seek to reduce the pressures on fish population. To date, details on the impact and types of pressures are not fully known (as generally happens in communal areas). Consequently, the project will develop this information through the community exercises required in the development of the management plan in Outcome 2, as well as the valuation studies to be undertaken as part of Outcome 3. The project will support social and ecological studies to establish a) the maximum rates of sustainable harvest of fisheries in the wetlands, and b) appropriate fishing gear and techniques that promote sustainability. Application of these new techniques would be supported through training as well as the availability of micro credit for purchasing new gear. The project would also work to develop municipal and ministerial norms for regulating fishing gear and fishing volumes.

189. A third line of action would support the development of a plan to ensure ecotourism activities are based on a sound knowledge of the ecosystem and envisage benefits for the population living in the area. This will also include a feasibility study of an ecotourism company that gives support to public-private partnerships under formation. Nowadays, only 20 to 30 visitors per month visit the reserve, however, during the wetland’s festivals –particularly in September - some 3,000 people visit the area. While there is some infrastructure present, additional infrastructure is needed (basic services such as eating areas, restrooms and communication facilities). It is estimated that appropriate infrastructure could multiply by 10 the number of visitors per month. FUNDAR has agreements with local private investors that built an ecotourism-based hotel. The Foundation will coordinate and bring support (in the form of private investment) for building critical tourist facilities, establish links with national and international operators for tourism in the wetlands, and provide training programmes for community tourism microenterprises.

190. The fourth line of action would be to increase protection of water bodies within the wetland through reforestation of river courses with native species, not only preventing sedimentation but also forming corridors for wildlife. The project will engage local academia (Universidad de Los Rìos) and local government (Municipio de Vinces) in order to define specific environmental actions to be executed, so as to make the most of community mingas (voluntary communal labour) and other available resources. During interviews conducted by the PPG in Abras de Mantequilla, members of the community mentioned the following activities as probable initiatives for this line of action: organizing mingas for reforestation, park-guarding, tourism guiding, environmental education for community children, training for adults, establishment and management of nurseries for native fish species, among others. The communities also verbally reported an estimation that around 3% of the wetland is under pressure by deforestation. Through the abovementioned actions, the project would expect to restore at least 200 hectares of original vegetation along the river banks, equivalent to 0.3% of the wetland. The project would therefore reforest approximately 10% of the critical zones, with exact figures to be provided by the project through the elaboration of the management plan.

191. In order to finance the implementation of these activities, the abovementioned lines of action would be linked to a specific funding mechanism for new production and conservation activities that builds on an existing credit mechanism set up by FUNDAR in the 1990s. The project would further capitalize this micro-credit system to be able to expand the coverage to more families and to develop specific funding windows for selected conservation activities. The new credit mechanism would develop a contract that commits the beneficiary to a) dedicate the equivalent of one day a month to conservation activities that would be defined through the updated management plan and delivered through the traditional mingas; and b) deliver a return of 10% of the net income (which amounts to US$39/beneficiary57) to cover conservation work. The disbursement of resources for capitalization

57 With 12% interest rate payable with a 15% net return rate for community producers a 27% expected gross rate of return is expected and with a credit default of 2% a net income of 2,704,000 is expected providing a 390 per beneficiary

54/ 100

would be made in two installments, with the second payment occurring post midterm and dependent on an evaluation of the effectiveness of this mechanism. In total, the expansion of this fund is expected to cover 3000 credits that would benefit some 7,000 people (based on 267 credits per semester with one family receiving 2 credits per year and an average 5 members per family).

2.3 Project Indicators, Risks and Assumptions

192. The project indicators are provided in the Project Results Framework of Section 3. This includes the Project Objective and Outcome indicators along with their baseline and target values and means of verification. Progress indicators for specific Outputs and activities will be developed and measured as part of the annual operational plan and progress reporting exercises.

193. At the Objective level the project will measure the increase in protected area effectiveness - and thus its contribution to GEF 4 indicators- using a number of protected areas scorecards. Given the focus of the project on finance and operational framework, particular emphasis is being placed on the increase in ratings of the UNDP Financial Scorecard. During project preparation this Scorecard was applied to a sample of protected areas and will be reapplied at mid term and end of project. In order to indicate improvements in the new sub-systems, additional focus will be put on the increase in financial capacity of two sub-networks of the Private Forest Network in Ecuador, for example, as measured through improvement in the Total Average Score using an adjusted UNDP Financial scorecard for the APPRI sub-system.

194. As a further measure of the project’s impact on the sustainability of Ecuador’s SNAP, the reduction in the gap between available funding and levels needed for management to meet established basic standards for SNAP and its PAs will be used as an indicator at the objective level. This will be complemented by the existence of specific funds for biodiversity conservation in the communal PA of Abras de Mantequilla, through mechanisms replicable to other PAs in the APC sub-system.

195. The consolidated financial and operational framework developed through the project for the new SNAP will translate into increases in the aggregate score of the financial scorecard. Over the mid to long term this will increase the management effectiveness of individual protected areas as financial management and planning are improved, and revenues generation and distribution improved. The METT scorecard was applied to a selected sample of PAs to measure the baseline so as to provide a reference point to indicate this increase in management effectiveness as a result of this overall framework. This will be reapplied to verify improvements at the project’s mid-term and part of the Final Evaluation. A management effectiveness tool will also be agreed upon to measure all constituent PAs of the SNAP and applied to 34 sample PAs at mid-term and project end.

196. As a final measure of the project’s impact on the globally significant biodiversity and ecological sustainability of Ecuador’s SNAP, the project will count the number of hectares of private, communal, and public PAs in key ecosystems that have been incorporated into the SNAP based on an expanded and formally adopted selection matrix. This, together with the abovementioned indicators, will provide an input to measure the project’s contribution to the GEF 4 expected Outcome of the Strategic Program SO1-SP1.

197. At the Outcome level the financial scorecard will be further employed. In addition to the aggregate rating that measures financial sustainability at the systemic level, this scorecard provides a detailed breakdown of key components in this sustainability and the different elements required for putting these in place. Project design has been informed by this analysis and specific Outcomes were created to address those components and elements critical for Ecuador. Thus not all elements and components of the scorecard are expected to show equal advances. As such the Outcome level will use as indicators the disaggregated ratings for the elements within the component being targeted in the given

55/ 100

Outcome. These will be complemented by other indicators. Details are provided in the Logframe Matrix and are summarized below:

198. Outcome 1: The functioning of laws, standards and institutional guidelines for improving the financial sustainability of the PANE, private and communal sub-systems of the SNAP will be measured by the increased scores in 9 elements of Component 1 of UNDP Financial scorecard - Strengthened Governance frameworks for sustainable PA financing. In addition it will be measured by the approval of a General Law of SNAP and supporting regulations (including strategies and regulations for all the overall system as well as for private and community sub-systems of the SNAP); Staffing competency profiles and institutional procedures in SNAP/MAE that are tailored to the new financial frameworks at Central Managerial (MAE), supervisory in regional directorates, and Park Rangers level; and pilot institutional foundations for financing private reserve networks and sub-systems, including access to funding from the Socio Bosque programme and at least one other funding mechanism.

199. Outcome 2: The strengthened capacities for results-based financial planning, management and monitoring, that are set for improving sustainable net income accounting of SNAP will be measured by an increased score in 5 elements of Component 2 of UNDP Financial scorecard. This will be complemented by strengthened capacities for business planning and other tools for cost-effective management for two sub-sets of the RBPE and Abras de Mantequilla as measured by the 5 elements of Component 2 of an adapted UNDP Financial scorecard; increased % of protected Areas with updated management plans and business plans in PANE and RBPE; increase in % staffing of technical-administrative SNAP staff (system-wide; PA site level and RBPE) with skills required for the financial management and results based M&E system; and the improvement in accounting for, and assessing expenditure linked to management effectiveness of the PAs of SNAP.

200. Outcome 3 : The enhanced recognition of the value of SNAP among communities living in protected areas, public authorities and private and public investors (National and International) will be measured by the increase in the assigned budget for the SNAP by the National Government; increase in the % of resources assigned to the budget from new funding mechanisms based on international resources (Yasuni ITT and carbon markets); increase of visits per year to Pilot PAs, as a result of marketing strategies implemented (within the determined carrying capacity); and increase in Budget from new sources based on intersector partnerships in Pilot PAs.

201. Ou tcome 4 : The field-testing of replicable cost-effective management models through community-based and cross-sector partnership approaches will be measured by the % of improvement on Tools for revenue generation shown by an increased score in the 7 elements of Component 3 of the UNDP financial scorecard; a reduced funding gap through improving net income in Pilot PAs; and pilot specific indicators to be developed as CBSI initiatives are selected.

202. The risks related to the project were evaluated during the project preparation phase, and risk mitigation measures have been internalized into the design of the project. Ten main risks to realizing the project objective have been identified, and are summarized below along with the measures included in the project design for mitigation. Other assumptions guiding project design are elaborated in the Logical Framework. The project rests on assumptions that imply the continued political and economic stability of the country as well as the continued commitment expressed by the national government and other key stakeholders to develop the integrated framework for the SNAP.

Table 8 Risks and MitigationRisk Rating Mitigation StrategyUncertain political and institutional framework in Ecuador, including

High Ecuador’s National Constitutional Assembly is reforming the structure of the State, which could change the administrative structure that supports PANE and the proposed new sub-systems of SNAP (APPRI, APC, APGS). These changes could potentially lead to set-backs and loss of focus on the changes desired in

56/ 100

Risk Rating Mitigation Strategyfor the environmental sector, could compromise the systemic changes and on-the-ground actions in PAs required to realize the project objective.

policies, institutional processes, and institutional capacities. However, political instability is not new to the country, and the approach to mitigating the impacts of this risk is to maintain dialogue with a range of national actors who have participated in the creation of the SNAP Strategic Plan. During the project development phase, UNDP has built a dialogue not only with political authorities and a number of government staff, but also with other non-government actors. The Private Forest Network and the NGO FUNDAR are critical partners in this project. In addition, UNDP has built alliances with other international NGOs working on protected areas in Ecuador such as TNC and CI. It has also kept up a dialogue with other donors supporting PAs in Ecuador such as KfW, IDB and FAO. Independent experts and researchers have also been engaged in project discussions. This broad-based support will help to ensure that the project can influence any new processes introduced for changing administrative structures in ways that support the project objective and not undermine it. To that end the project has included specific outputs to facilitate and guide processes and changes to align them to overcome barriers to financial sustainability.

Cofinancing commitments are not realized making it difficult to fund project activities critical for effective realization of the project objective.

Low UNDP has kept-up a dialogue with potential cofinancing partners through out the project development phase. Consultations have been undertaken to determine how cofinancing resources can best be allocated within the project strategy to realize the project objective. There are clearly many areas for synergies with cofinancing partners and this is the motivation for each cofinancing partner to be involved in this project. This spirit of open dialogue and mutual reinforcement of shared conservation objectives will be maintained with all cofinancing partners. In terms of cofinancing from the RBPE and FUNDAR, these actors have been heavily engaged in determining project interventions in the pilot areas and have bought-in to the benefits of the project strategy to conservation and local well-being.

External factors such as changes in international policy on payments for environmental services through carbon markets or the Yasuni ITT impede the ability to mobilize conservation finance from these new sources.

Medium This is not so much a direct risk to realizing the project objective. Even if these external factors impede the ability to mobilize additional conservation finance through REDD+ and the Yasuni ITT Initiative, the project will still have put in place a policy and institutional environment that supports financial sustainability. It will also be able to demonstrate financial sustainability in pilot areas through currently available financial sources. However, if REDD+ and the Yasuni ITT Initiative become reality, then the financial situation of the SNAP will move onto a completely different trajectory. There will not only be a sizable increase in resources, but also systems and capacities in place to deploy those resources efficiently. Further, the systems and capacities put in place by the project could allay possible reservations among the donor community on the absorptive capacity in the country.

High level of political support for the project approach of strengthening the financial sustainability of the SNAP is lacking and this could make it difficult to gain approval of laws, standards and institutional guidelines for financial

Medium The project follows on the heels of another GEF project that was notable for its success in coalescing national actors around a Strategic Plan for the SNAP. Thus, political support for the SNAP today is far better than in previous years. The project will build on this foundation by emphasizing the economic and equity benefits offered by the SNAP (specifically by the pilot PAs) through its technical assessments and associated outreach activities under Outcome 3. It will ensure that these benefits are translated into terms most easily understood by decision makers. Furthermore, as it has incorporated the principles of the emerging new development model (embodied in the new Constitution and NDP), political support is likely to continue and increase as these principles are demonstrated through pilot interventions.

57/ 100

Risk Rating Mitigation Strategysustainability of the SNAP.Public stakeholders are accepting of a business approach (results based management linked to sound financial planning and resource allocation) to PA management.

Medium The project will demonstrate the success of this approach in the pilot areas and ensure that this is widely publicized to reveal the benefits of taking a business approach to PA management. Reluctance to accept new approaches is to be expected, and the project will address this by dedicating resources to training on the new approaches and making available handbooks and other materials that can help government staff overcome reluctance due to a lack of knowledge.

Representatives from conventional public authorities (Economy and Finance, production sectors) do not buy-in to the economic benefits of the SNAP being highlighted by the environment sector.

High A study of the economic values of SNAP has already been conducted under a recently completed World Bank GEF project. The study proved to be useful for focusing political attention on the SNAP and succeeded in the development and approval of a Strategic Plan for the SNAP. However, there remains some skepticism. UNDP will ensure that it brings in the expertise and approach being pursued through a regional initiative58 that aims to assess economic and equity benefits in ways that make sense to conventional public authorities. The approach is to highlight that PAs are the essential environmental infrastructure for many economic sectors that continues to be taken for granted and not enough is being done for re-investing in the maintenance and upkeep of this infrastructure. Furthermore, it will prepare stakeholders from traditional conservation areas to be better equipped to negotiate with those from the finance sector using the findings of these studies to better justify the case for increasing PA resource allocations to the SNAP.

Communities are not convinced of the benefits that SNAP provides to their well-being

Medium The project will ensure that assessment of the benefits of PAs places equal emphasis on how PAs enhance the well-being of local communities. Outreach materials and methods will be specially developed for this important stakeholder group.

Private investors are not convinced of the benefits to them of a better financed and better managed system of PAs.

High The project will ensure that the benefits PAs generate to production sectors by supplying various “free” ecosystem services are highlighted. The project will support round-table discussions with specific investors to ensure that there is a full appreciation and understanding of these benefits.

Communities and private forest owners are hesitant to adopt improved approaches for cost-containment and revenue generation being proposed by the project.

Medium Private forest owners from the private pilots and community representatives from the communal pilots have been actively engaged in the project development phase and see the value of the project strategy, at least at a broad level. The project will build on this to secure buy-in to specific approaches and models being proposed for the pilot areas. The best means for ensuring spontaneous adoption is to ensure that the new approaches/ models being offered are economically feasible and socially accepted (in addition to being ecologically viable). Thus, all new approaches/ models will be studied from these three angles, bringing best available national and international expertise to bear, and consulting with community representatives and private forest owners, to ensure that adoption of the new models is in their best long-term interest.

A changing climate over the long-term could upset the ecological balance in the SNAP such that the cost-effective

Low The project will ensure that expertise on climate change and its impacts on SNAP is actively involved in all relevant activities of the project (e.g., determining overall financial needs of the SNAP, developing business plans for pilot areas, selecting approaches/ models for cost containment and revenue generation). This will help ensure that there is some foundational capacity to review and assess approaches/ models in light of climate change that can be built on further in the

58 Biodiversity and Ecosystems: Why These are Important for Sustained Growth and Equity in Latin America and the Caribbean

58/ 100

Risk Rating Mitigation Strategymodels of today are no longer so under a modified climate.

future should the need arise.

Average rating Medium

2.4 Incremental Cost Assessment

203. Under the business-as-usual scenario, Ecuador’s SNAP is likely to continue to be comprised primarily of public PAs (PANE areas). The PANE areas will not realize their full potential in terms of generating global biodiversity benefits and effectively conserving the globally significant biodiversity that the system harbors. This is primarily because of persistent weaknesses in the financial situation and management effectiveness of these areas. Further, the potential for improving the ecological representation of the SNAP by recognizing and supporting conservation efforts in ecologically important areas that are either communal areas or owned by private land owners will not be realized. Any global conservation benefits that are being generated in these areas in the business-as-usual situation are purely a result of spontaneous efforts by disparate communities and private land owners. These benefits can be greatly enhanced if these independent conservation actors are supported in their efforts, not on a piece-meal basis, but as an integral part of a government-led strategy to recognize and include these communal and private areas. During the PPG, national stakeholders undertook a mapping of baseline conservation efforts by government, donors, NGOs, and private actors. These are listed in the table below.

Table 9 Baseline programs of the government, NGOs, donors, private actors that relate to enhancing conservation through protected areas

Related Project Outcome Baseline sources

Brief Description of the Project Budget US$

Laws, standards and institutional guidelines for improving the financial sustainability of the SNAP

MAE Establishing the proper limits of each PA (thereby linking to budget allocations).

14,311

FAP Establishing the proper limits of each PA (thereby linking to budget allocations).

229,854

Total – Outcome 1 Baseline Funding 244,165 Strengthening capacities for results-based financial planning, management and monitoring IN PAs SNAP.

UNDP Program for the conservation and sustainable management of the natural and cultural heritage of the Yasuni Biosphere Reserve (2008- 2011)

618,000 UNIFEM 172,064 Hábitat 72,904 UNESCO 562,886 FAO 860,516 UNWTO 237,200 MAE Educational programs, training activities. 24,916 FAP Educational programs, training activities. 27,200 KfW Strengthening SNAP in priority areas with responsible

participation of regional and local actors (2001-2015) 5,807,334

MAE 946,050 GTZ 5,961,600 Others 2,394,749

Total – Outcome 2 Baseline Funding 17.685.420 Awareness and investment of public & private investors in SNAP

KfW Strengthening SNAP in priority areas with responsible participation of regional and local actors

7,743,113 MAE 1,261,400 GTZ 7,948,800 Others 3,192,998

Total – Outcome 3 Baseline Funding 20.146.311 Cost-effective management models in PAs f

MAE Conservation and Management activities of the Areas (includes basic management activities in PA)

1,397,649

59/ 100

FAP Conservation and Management activities of the Areas, infrastructure provision; includes management activities

440,515

MAGAP Marine and Coastal Biodiversity Conservation in Ecuador (This includes the IDB funded project PROPESCAR)

3,150,000 MAE 1,150,000 USAID 13,000,000 GEF 4,230,000 FAN-GIATF

Projects to be funded through the Galapagos Trust Fund for invasive species control reduces management costs of GNPS

3,740,000

GTZ Improving living conditions of the population and the management and conservation of non-renewable natural resources in RBGS through livelihoods (cacao and production and marketing of oyster mushrooms) (2009-2012)

1,298,355

UNDP Community livelihoods activities and participation in the conservation and management of the Biosphere Reserve of Yasuni (RBY). (2008-2011) This is funded through MDFG spanish fund

927,000 UNIFEM 258,097 Hábitat 109,356 UNESCO 844,330 FAO 1,290,774 UNWTO 355,800 KfW Strengthening SNAP in priority areas with participation of

local actors (2011-2015) 5,807,334

MAE 946,050 GTZ 5,961,600 Others [1] 2,394,749

Total – Outcome 4 Baseline Funding 47,301,608 Grand Total Baseline Funding 85,377,504

[1] Municipalities and NGOs

204. The GEF Alternative scenario is to shift the SNAP on to a path of greater financial sustainability and improved management effectiveness by addressing the key barriers (see section on Barriers) that impede not only public PAs (PANE) but also communal and private PAs from realizing these goals. Through GEF financing, which will be complemented by financing from government (MAE, FAP), international NGOs (TNC, CI), a national NGO (FUNDAR), and private land owners (through the Private Forest Network – RBPE), the alternative strategy will greatly enhance Ecuador’s capacity to better secure its globally significant biodiversity for future generations.

205. Summary of costs : There will be significant incremental costs associated with addressing the barriers and realizing these benefits. The cost of additional measures that need to be implemented are estimated at US$85,377,504 million. Some of the ongoing interventions in the baseline (see Table above), which would continue irrespective of the GEF alternative, are nevertheless critical to realizing the global benefits under the Alternative Scenario (such as government spending on maintenance of PANE areas and on institutional reform within the MAE). As such, these efforts are being considered as cofinancing in line with the GFE’s policies on Incremental Cost and Cofinancing. In addition, cofinancing has been mobilized from TNC, CI, FUNDAR, and RBPE to defray the costs of the Alternative scenario (see budget section for details on cofinancing contributions). The GEF is being requested to contribute US$ 6.4 million towards the total project cost.

206. The expected global benefits to be realized through this project include, over the short-term, the enhanced ability of nine protected areas pilots to conserve globally significant biodiversity within their boundaries, including 1,388,719 hectares within six public PAs, the territories of two networks of private reserves totaling 33,000 hectares, and 67,000 hectares of a community-managed wetland PA. All

60/ 100

these areas have been selected based on their coverage of globally significant ecosystems that are currently under-represented in the SNAP. These pilots have high levels species and habitat diversity and significant number of endemic species. Summaries of these numbers where available are provided in Table 7 of this prodoc and more details given in Annex 1 Table 3. Furthermore, over the long-term, additional global benefits will be realized by strengthening of the entire SNAP (an area of 4,767,260 hectares of terrestrial PAs and 1,411,000 ha of marine PAs), and through replication in other public, private and community-managed PAs throughout Ecuador. The Abras de Mantequilla wetlands area, which was declared a RAMSAR site in 2000 (one of eleven in Ecuador), offers potential as a model for replication for other community-managed PAs in the new APC sub-system, while the two networks of private forests will serve as models for the new APPRI sub-system. Furthermore, establishment of new private and community-managed PAs, many of which border existing PANE PA units, will generate benefits for biodiversity within these areas by acting as buffer zones/ social fences and improving connectivity. Finally, global environmental benefits will be generated indirectly through the added ecological security afforded to PAs as the generation of increased and stable financial flows will allow SNAP at both the system and site levels to undertake the conservation management functions needed to mitigate threats to biodiversity.

207. Expected national and local benefits : National benefits include improved national capacity for meeting national commitments for biodiversity conservation under the CBD and the Program of Work on Protected Areas. Direct financial benefits will also accrue to local communities that will participate in demonstrations of sustainable models of income generation in the pilot areas through the small grants and credits to be provided under the auspices of the project.

2.4 Cost-effectiveness

208. In line with the GEF Council’s guidance on assessing project cost-effectiveness59, the project development team took a qualitative approach to identifying the alternative with the highest value and feasibility for achieving the project objective. With GEF investment, the project will support the development of financial mechanisms for SNAP that will enable long-term funding for the conservation of approximately 18.8% of Ecuador’s total land area, thus, facilitating the conservation of highly important ecosystems. By supporting the financial sustainability of SNAP’s subsystems, the project will help increase total protected surface area, which also reduces risk for long term sustainability of the larger system as a whole. At the same time, combined State investment and self-generated resources represent an important counterpart to new investments by other parties. In addition, the project will support the establishment of new PA sub-systems for private and community-managed PAs, which will allow new stakeholders to take direct management and financial responsibility for PAs forming part of the broader national system. This will spread the burden and risk for financing of PA management across a wider stakeholder base than the current approach that relies solely on government budget allocations, and it will furthermore reduce the costs of managing public PAs by creating neighboring private and community-managed PAs that will act as buffer zones and reduce human pressures, and the costs of controlling them.

209. In particular, the results based framework in Outcome 2 (Output 2.2) is essentially a tool for ensuring cost efficiencies in that it will enable resource allocation to be based on the delivery of conservation benefits that have been achieved through the most cost effective approaches. The actions to be implemented by the project can be adequately demonstrated within the pilot areas. If the new innovative financing mechanisms are successful and the management actions successfully demonstrated, then the SNAP will be able to upscale the innovations to the remaining areas with internal or new external funding, over time, and thereby reduce management costs significantly. In addition, the project design sought collaboration with PAs with baseline actions and investments oriented towards the project objective. The PANE PAs demonstrate a significant baseline in terms of

59 Cost Effectiveness Analysis in GEF Projects, GEF/C.25/11, April 29, 2005

61/ 100

management plans60 that will enable the GEF increment to focus mainly on the remaining 2 APPRI, and 1 APC PAs for the full management planning aspects rather than on all 9. Finally, the rationale to concentrate the project activities on a small number of PAs will allow for better response to the barriers to effective management and is expected to yield a larger increase in METT scores per dollar invested than if the project actions had been spread out among all 41 PANE PAs, for example. This increase in effectiveness should translate into an increase in revenues and an increase in financial flows to other PAs in the long term.

210. The systemic (policy/regulatory) and institutional mechanisms (including human resources) will be enhanced to work more effectively, which will significantly leverage resources and reduce duplication. The project will focus on intersectoral networking as a mechanism to foster and acquire synergies, savings in learning/training costs, as well as maximizing impacts. Coordinated capacity building of SNAP institutions and individual PAs will avoid duplication in training costs and unnecessary overlaps in expertise, and will allow for the consolidation of standards and approaches to financial planning and management in different institutions, so that the cost effectiveness of distinct PA management categories can be determined. This, in turn, will reduce costs and waste of financial resources. Capacity building at the systemic level will include a system-wide funding strategy, business plan and a diversified funding portfolio, as well as a results based management system that links expenditure to conservation benefits and increases efficiencies. Support for new strategic action plans and instruments will help re-align and enhance the PA system based on the SNAP Strategic Plan and Financial Sustainability Strategy. Hence, the project will improve the ability of the PA system to secure sufficient, stable and long-term financial resources and allocate them in a timely manner.

211. The project pilots are also cost-effective in several ways. The pilot sites were selected using several criteria related to cost-effectiveness, such as co-financing opportunities61. Moreover, the sites were selected for their high revenue generation potential, along with their biodiversity significance in the existing PA system. The pilot demonstrations will therefore effectively build capacity, while capturing PA revenue and tangible benefits to biodiversity and thus further increasing the project contribution to capturing global benefits. In addition, the project will support the implementation of collaborative and decentralized co-management among various stakeholders through the APPRI, and APC sub-systems, thereby demonstrating their potential as a cost-effective strategy to share responsibilities and costs of PA management, while removing barriers to effective PA management. Furthermore, the project will create additional financial mechanisms to be tested in these pilots that will contribute leveraged funding to the PA system, increasing the benefit per dollar invested. The pilots are cost-effective means of determining the financial feasibility of project results before considering them for up-scaling. The cost information from the pilots will add important information to support the decision to replicate best practices from the project across larger geographic and thematic areas.

212. Cost effectiveness will also be monitored as an integral part of the monitoring and evaluation process. The project budget provides for independent financial auditing on a yearly basis. Furthermore, cost effectiveness is ensured through a prescribed project management process that will seek the best-value-for-money. UNDP and MAE rules employ a transparent process of bidding for goods and services based on open and fair competition and selection of best value and best price alternatives. Procurement will be managed by UNDP in coordination with MAE, ensuring the application of all effective regulations. An independent committee is utilized for all procurement of personnel and selection of contractors.

60 As mentioned earlier, of the 7 public areas that have been selected as pilot sites, only 1 area has no management plan (MR Galera San Francisco). The remaining 6 areas have a management plan. While these are outdated, the task of updating them (through Output 2.2) is less costly than having to start from scratch, as is the case for the 2 private and 1 communal areas.61 See Annex 1 for site selection criteria.

62/ 100

213. Also, in the absence of the project (the cost of doing nothing), existing PAs will continue to lack enough resources for their maintenance, and the establishment of the new sub-systems will be severely crippled. SNAP will continue to depend on low government budget allocations or decreasing international donations, will rarely benefit from the participation or funding from the private sector, will not be able to develop and benefit from sustainable productive uses within their borders, and will continue to have minimal collaboration with neighboring landowners in conservation and threat reduction activities. The current system is ineffective in that it hardly covers the actual expenses of SNAP. This scenario threatens the unique biodiversity found in SNAP. In contrast, by the end of the project, the SNAP and its sub-systems will utilize a system-wide financial planning and management framework to allocate costs efficiently to priority uses across the system and to eliminate duplication of effort. Finally, the project will develop pro-poor markets for environmental services that will have a positive impact on vulnerable populations, increasing the levels of equity through cost effective activities – a measure that will reduce risk of encroachment on the PAs given alternative economic activities.

2.5 Country Ownership: Country Eligibility and Country Driven-ness

2.5.1 Country Eligibility 214. Ecuador signed the UNCBD on June 9, 1995 and became a Party to the Convention on February 23, 1993. Ecuador has also effectively fulfilled various assessment and reporting requirements under the Convention. It is, therefore, eligible to receive funding from the GEF. It is eligible to receive development assistance from the World Bank and UNDP.

2.5.2 Country Driven-ness 215. As mentioned earlier, Ecuador published its National Biodiversity Strategy and Policy (NBSP) in 200762, which not only carried out an analysis of natural resources in Ecuador, but also established potential risks to and uses of biodiversity, as well as identified priorities of intervention in relation to biodiversity and management measures required to achieve the goals outlined in this policy. Of particular relevance to this project are the policies directly related to the strengthening of the SNAP, as the project falls in line with the recommendations to strengthen the representation of ecosystems not covered by the SNAP, resolve land tenure conflicts, develop mechanisms for functional connectivity of protected areas, promote sustainable use in buffer zones, and prevent the development of mining, petroleum, agriculture and aquaculture in protected areas.

216. In addition, the project provides a mechanism to act on the NBSP’s call to diversify the revenue base of the SNAP through the implementation and development of activities that promote sustainable use of natural resources, activities of controlled impact such as tourism, preservation of environmental services and commercial “umbrellas”, and other low impact activities.63 The NBSP considers designing economic incentives, trade and certification, and environmental services aimed primarily at key protected areas and endangered ecosystems with rich biodiversity. 64 It also identifies several sources of funding such as debt-for-nature swaps, lump sum payment for environmental goods and services, grants, inter-sectoral transfers of tax revenue from property and environmental services to finance public sector work and local private investment and sustainable business.65

217. The project’s link to national priorities is further demonstrated by the relevance of the Policy and Strategic Plan for Natural Protected Areas66 and the National Development Plan (NDP)67. As discussed

62 Executive Decree No. 2232 of 9 January 2007, published in Official Gazette No. 11 of January 30, 200763 Ibid., Pp. 71 and 7264 Ibid., Pp. 7565 Ibid., Pp. 7566 Ministerial Agreement No. 009, published in Official Gazette Supplement No. 343, May 22, 2008.67 National Development Plan 2007 - 2010, Official Gazette Supplement No. 310, April 7, 2008.

63/ 100

in detail in Outcome 4, the NDP demonstrates Ecuador’s commitment to environmental issues and specifically the need to strengthen and consolidate the implementation of SNAP and economic mechanisms that ensure its financial sustainability. Furthermore, it emphasizes the necessity and feasibility of alternative mechanisms to implement economic benefits for SNAP. The project complements this and provides a unique opportunity to support Ecuador in its efforts to make this a reality.

218. As set forth by the 2008 Constitution of the Republic of Ecuador, the project is a decisive step towards realizing Sumak Kawsay68 and the Rights of Nature. Furthermore, the objective of the project is fully compatible with the country’s new development model, based on the respect for the rights of nature, social equity, and the sustainable use of resources. This new vision implies breaking with the prevailing anthropocentric vision of development and constitutes a tremendous challenge in the current global context. In particular, it places emphasis on establishing a solid public policy base for pragmatic sustainability and economic growth of the PAs, moving away from dependence on a sacrificial and exploitative model of the use of the country’s natural heritage and embracing sustainable use, creating a flow of Systemic Net Sustainable Income for SNAP and the Ecuadorian Society.

219. In practice, the proposed project supports key elements of Ecuador’s Strategic Plan for SNAP (2007-2016), particularly its goal to “Improve the financial sustainability of the PANE and analyze mechanisms for the management of other SNAP sub-systems”. The Plan proposes several strategies for achieving this goal, all of which are supported by the project. The Plan also proposes the establishment of three new PA sub-systems to enable private, community-managed and regional PAs, and recognizes the need to support sustainable development alternatives in PAs and their buffer zones as a mechanism to strengthen social participation in SNAP management, to mitigate conflicts, and to contribute to equitable benefit sharing.

220. One product of the SNAP Strategic Plan is the SNAP Financial Sustainability Strategy (FSS)69. To date, implementation of the FSS remains unfunded, and therefore the proposed project represents the primary mechanism for implementing the FSS. The proposed project also will work in coordination with the Protected Areas Fund (FAN), which currently provides 20% of the total budget of Ecuador’s protected system. The FAN has also been responsible for securing new money for the SNAP from private foundations (e.g. Moore and MacArthur); has worked together with national NGOs to secure contributions from oil companies to support conservation projects; and has created a special sub-account for receiving individual donations (many people in Ecuador want to contribute to protection of the environment but do not want to donate money directly to the government). The FAN has been requested by the Government of Ecuador to provide guidance on how this money can be most effectively spent, including guidance on protected area management policies. The proposed project will work together with the FAN to identify spending priorities and cost effectiveness strategies at the systemic level, and to generate additional contributions to existing financial mechanisms.

221. The current legal backdrop demonstrates Ecuador’s commitment to strengthening the SNAP and provides an unparalleled opportunity to show the potential that can be realized through such innovation as put forth by the unique Rights to Nature clause in the 2008 Constitution. The strategic lines put forth in the NBSP and NDP further demonstrate the efforts made by Ecuador to achieve financial sustainability of biodiversity conservation, with special emphasis on natural protected areas, namely the SNAP.

68 Sumak Kawsay is a Quichua word that means life at its fullest in harmony with nature. 69 The strategy is a product of the WB/GEF project National System of Protected Areas

64/ 100

2.6 Sustainability

222. Environmental Sustainability: The project will support long-term viability of globally significant biodiversity in Ecuador by enhancing the financial and operational framework of the SNAP. Based on the 2008 Constitution’s Rights of Nature to safeguard reproductive lifecycles, the project will prevent/mitigate the negative impacts of key threats to PAs through the design and implementation of: i) Implement RBM and M&S, as frameworks of interest for international cooperation. ii) Request cooperation to help cover integral scenario for US$ 12.2 million per year. iii) Create business partnerships in favor of sustainability and directed towards conservation and development. iv) Cover basic financial scenario with fiscal resources. v) Guarantee resources for covering current expenses in PA’s. All of these inputs will foster the design and application of mechanisms, engaging in strategic interactions between various stakeholders to allow social control and guarantee sustainability. The project focuses on a strategy of negotiation which fosters sustainable growth in financial and management terms, while remaining participatory in nature, and will ultimately be reflected in improved and sustainable conservation indicators. In the short term, management effectiveness of existing PAs and the long-term viability of ecosystems under protection will be improved. Additional increases in ecosystem representativity are projected for the medium to long term through the formal creation and inclusion of the new APPRI, APC and APGS sub-systems through outputs 1.1 ; 1.2; 1.3; outputs 2.1; 2.2; 2.3; 2.4; outputs 3.1; 3.3; 3.4; and outputs 4.2 and 4.3. Finally, complementing the more sustainable protection of existing ecosystems, the project will also contribute to overall environmental sustainability in Ecuador by improving the environmental management of private and communal areas, especially those surrounding PAs to act as buffer zones and corridors connecting PAs.

223. Financial Sustainability: Ensuring environmental and institutional sustainability is insufficient if the SNAP system cannot achieve long-term financial sustainability. Protected areas in Ecuador are currently under-funded and without this project have little prospect of creating the mechanisms necessary to ensure sufficient long-term funding. Financial barriers therefore constrain efforts to ensure biodiversity conservation in the existing PA estate as well as the long-term goal of expanding the PA estate to cover ecosystem gaps. The project will design and implement legal and policy changes so that PA management institutions and individual PA Units within the existing PANE sub-system and future APPRI, APC and APGS sub-systems are better able to generate, manage, and allocate financial resources. In coordination with the SGP and relevant stakeholders, the project will implement Pilot activities that will test the potential, determine standards and build capacities for the chosen revenue generating activities that guarantee financial sustainability.

224. By the end of the project, the gap between funding levels for PA units within the different sub-systems of the SNAP and the budget required for effective management of these PAs will have decreased. In the short term, the gap reduction will be achieved through mechanisms, such as increased revenues from visitor fees, tourism concessions, payment of water provision, funds for nature-based tourism, and others which are deemed compatible with the management plans of the selected pilot protected areas, as well as the valuation of their environmental goods and services. Furthermore the capacities put in place through the different project components will enable the mobilization of additional resources over the medium term to further reduce the funding gap. Strategies based on public-private partnership, private investment and community work and management will be essential in developing a truly nature/conservation-based tourism strategy, in accordance with the National Development Plan and the SNAP Policy and Strategic Plan as defined by the MAE. In the longer term, the gap will be further reduced through more efficient PA management savings, in line with the concept of Sustainable Systemic Net Income.

225. Institutional sustainability: At present, the MAE, through the Sub-secretariat of Natural Heritage’s Directorate of Biodiversity and Protected Areas, is responsible for the National System of Protected Areas (SNAP), but the current PANE sub-system is characterized by a significant imbalance in

65/ 100

ecosystem representation (as noted earlier). Ecuador is seeking to correct this imbalance through full establishment of the APPRI, APC and APGS sub-systems, but given the financial constraints of the Government and incipient relevant mechanisms, implementation of these new sub-systems has not been possible. For PA practitioners to best apply their skills and knowledge, the Project will address the need to improve the enabling environment for effective in situ conservation in Ecuador. Through Outcomes 1 and 2, the Project will support capacity building activities and other initiatives aimed at creating the appropriate institutional environment and human capacities for effectively managing PAs at the System, sub-system and site levels.

226. Systematic strengthening of the skills and knowledge base will aim at both the national-level bureaucrats and the staff/people involved in PA management at the local operational levels. Institutional sustainability elements include developing occupational standards for PA positions; re-aligning and training MAE staff for new/revised functions and mandates; setting up inter-institutional coordination and cooperation mechanisms such as cross-sector partnership, implementation of RBM and M&E as frameworks of interest for international cooperation, and others that will be developed based on field-testing; promoting agency training strategies; and piloting of the APPRI and APC management models as part of the SNAP institutional framework. These various PA management sub-systems will be consolidated in the new SNAP that will manage PAs under different ownerships but under the same national standards and objectives. The project will build on existing institutions, the 2008 Constitution, NDP and experience of long-term MAE staff to help institute an overarching SNAP political and strategic framework to coordinate the establishment, administration, management and financing of public, private and communal PAs in both the terrestrial and marine environments. The sense of ownership by MAE, in conjunction with UNDP, the Private Forest Network, and long-standing organizations such as FUNDAR, further guarantees institutional sustainability.

227. Social sustainability: Efforts to ensure sustainable support from diverse stakeholders are a key component of the project design. It was developed in a highly participatory fashion, including staff from key public institutions, the private sector, NGOs and other stakeholders from the civil society, including those with actual and potential PA ownership and/or management responsibilities. The project will continue to promote the participation of institutional stakeholders, including governmental agencies and representatives of private and communal protected areas. At the level of individual PAs, local communities will be sought as partners, in particular in implementing pilot demonstrations on ecotourism and in developing proposals jointly with PAs to implement sustainable natural resources projects. In recognition of the dependence of the communities and nearby areas on the surrounding habitat and the generation of environmental activities, the project will develop a social cooperation and participation strategy to allow public-private alliances and responsible environmental investment to reach products, areas and services that can maximize the wellbeing of the communities. These activities are vital to change existing perceptions among local communities of protected areas as constraints to economic development and progress. Finally, sustainable support from all levels of society will be strengthened by the project’s awareness-raising programs regarding the economic and social values provide by the SNAP and biodiversity conservation.

2.7 Replicability

228. Fundamental to the design of the proposed GEF SNAP project is a strategy to establish a national system of protected areas that will expand to include more protected area units over time. All existing PAs are potentially eligible to join the SNAP from its inception, if they meet the SNAP eligibility criteria. During the project implementation period, it is expected that most of the initial PAs within the SNAP will come from the existing public PA sub-system, gradually followed by the private (APPRI), communal (APC), and regional (APGS) PA sub-systems.

66/ 100

229. To support the inclusion of additional PA units into the SNAP over time, and thus the replication of project lessons, the project is designed to establish a sustainable long-term enabling framework for protected areas in Ecuador. Financial management and revenue generating mechanisms will benefit all PAs, as will the definition of clear operational standards for different PA sub-systems within the SNAP and the information management system for protected areas. In addition, the models developed for PA management plans and business plans, as well as the experience of developing and documenting them, will be available to support replication once the project ends. In fact, as part of the selection criteria for pilot activities, all must demonstrate potential for replicability and scaling-up. Furthermore, the training of MAE staff, as well as the experience gained through executing this project in accordance with the implementation arrangements, will ensure that pilot experiences become an obligatory reference for future replication in other parts of the country. This will link the systemic capacity building of SNAP institutions for new roles and procedures with the training of PA practitioners for cost effective management, which will contribute to the national capacity to replicate project achievements (see Outputs 1.3 and 2.4 for a description of the project strategy for replication of demonstration activities). Finally, the strategy for replicating PA revenue strategies and mechanisms is described under Outcome 4.

230. The work done in the four components - institutional, capacities, valuation, and mechanisms - will foster institutional capacity to reproduce and replicate the mechanisms, in accordance with the newly established laws, norms, manuals, guides, systems, , studies and evaluations capable of producing the expected replicability and up-scaling throughout the entire SNAP. Project experiences and pilot activities will be analyzed, and relevant lessons learnt will be communicated widely to stakeholders at national, regional and global levels using a variety of media and through the established network with other GEF-funded PA Financing projects regionally and globally. Horizontal exchange mechanisms will be developed for enabling the sharing of knowledge and experience from field staff in one PA to another. This knowledge sharing will also involve a wide variety of stakeholders in and around PAs, through electronic media, periodic bulletins, personal exchange within and outside the country (among rangers, technicians, researchers, local stakeholders, etc.).

2.8 Coordination with other related initiatives

231. Links with UNDP Country Program: The proposed project is fully consistent with United Nations Development Assistance Framework 2010-2014 (UNDAF), agreed to by the Government of Ecuador and approved by Executive Board in August 2009. The UNDAF focuses mainly on five areas: Capacities, Opportunities, Quality and Life Expectancy; Production, Employment, Food Security and Supportive Economic System; Environmental Sustainability and Risk Management; Reform of State, Participation, Justice and Human Rights; and Development, Peace and Border Integration in the Northern Zone. In the area of Environmental Sustainability and Risk Management, UNDP Ecuador has prioritized supporting the government’s efforts focused on strengthening and linking the environmental, social and economic policies under the leadership and framework provided by the National Plan of Life. This includes support for the strengthening of legal and institutional frameworks related to national environmental policy, for the implementation of financial sustainability strategies and mechanisms, for the promotion of communitarian initiatives related to the sustainable use of natural resources, as well as for the creation and strengthening of capacities among the government members. The proposed project will contribute substantially to the Direct Outcome 5: By 2014, the correspondent institutions and local stakeholders will promote –and the social stakeholders will have more skills and tools to exercise their right to– a healthy and safe environment and environmental sustainability including the conservation of biodiversity, the integral management of natural resources and environmental management.

232. Linkages with other projects: This project is complemented by inputs from other organizations whose contributions will make it possible to remove the barriers identified in the project preparation phase.

67/ 100

233. For example, the Private Forests Network of Ecuador (RBPE), will contribute to the project by implementing use and management plans within the private protected areas in Mindo/Northwest and Manabí. They will also make contributions to legal issues which may be replicated in the other protected areas of the country. Along the same lines, IUCN (International Union for Conservation of Nature) is carrying out improvement and management plans in the Sangay Reserve and a program of sustainable use in the Yasuní Reserve. Meanwhile, the National Environmental Fund (known as FAN, for its initials in Spanish) implemented the Protected Areas Fund in 11 of the 41 protected areas that make up the Natural Protected Areas Heritage of Ecuador (PANE) through the course of last year, and will continue to develop new initiatives along those same lines. The FAN’s implementation plan summarizes the priority activities for each year in the areas where this mechanism is present, and the SNAP project will consult with this throughout implementation.

234. The Foundation for Rural and Agricultural Development (FUNDAR) has made great progress in implementing financial sustainability mechanisms through agricultural production and community organization, by grouping together organic farmers, and in established organic product certification, methods which may be replicated in other protected areas. Furthermore, the Ecuadorian Alliance of Sustainable Tourism, held workshops in different protected areas of the country to model the capacity-building of local tourism companies as well as relevant public sector institutions in the area of tourism, by providing the tools necessary to ensure that local stakeholders will be able to fully take over this development process in the near future.

235. TNC (The Nature Conservancy) is organizing the eleventh conference on biodiversity in Ecuador, together with the Ministry of Environment, an event which will help to increase awareness of the efforts made by Ecuador on the subject of biodiversity.

236. The MAE is also executing a number of initiatives that are strongly linked to this UNDP/GEF SNAP project as follows:

237. Implementing participatory management plan for the forest conservation area Colambo – Yacuri: This initiative aims to understand the current reality of the present system of forest control in the country, and based on this, develop a participatory forest monitoring and control mechanism. It will support and improve forest law enforcement, process of control and monitoring of forest management, participation of civil society, local governments, NGOs, and GOs. MAE will develop links between this and the SNAP project in the form of co-operation and action to achieve conservation goals and participation.

238. Rainforest Protection Morona – Pastaza: This initiative aims to maintain the ecological balance in the territory of the Achuar, promoting sustainable use of adapted and non-renewable natural resources in the Achuar territory and improved living conditions of the Achuar. MAE will develop links between this and the SNAP project in the form of co-operation with indigenous populations, ecological maintenance and co-participation of communities in conservation and resource generation.

239. Protection Project for Gran Sumaco (with the Government of Germany): This aims to identify how to interpret and document lessons learned regarding the production of fine flavor cacao agroforestry systems, and production and marketing of oyster mushrooms as measures implemented by the PPGS, and how this has affected the living conditions of the population as well as the management and conservation of non-renewable natural resources in RBGS. MAE will develop links between this and the SNAP project in the form of co-management with communities in agroforestry issues especially fine flavor cocoa and around the reserve

240. IBD will implement a coastal marine Project that has a strong focus on biological data collection from the Ecuadorian coast and determine sources of employment of local populations, i.e. social information. The biological information attained will be used to determine productive or extractive

68/ 100

opportunities in the area, and form a sustainable fisheries management regime which will reduce the threats to the PA and in turn decrease management costs. The IDB project includes the Galera PA and this has also been included in the present project to increase coordination and synergies between the two initiatives. In this pilot PA the UNDP project will provide capacity building in financial planning and management and work with the PA staff and fishermen communities in other cost reducing activities and the concepts of NSI. Thus together the projects would be able to determine good approaches for NSI in a marine PA that has very different conditions to terrestrial areas. In doing so, marine related issues could be incorporated into the systems level financial framework being defined in the UNDP GEF project and thereby initiating replication to the marine sub-system. Similarly, this financial system for the SNAP will be able to directly incorporate lessons learnt from other marine pilots through the IDB project. MAE will coordinate the different initiatives under development so as to avoid any duplication with this project’s activities.

241. The main objective of the KfW project is to help ensure the sustainability of biodiversity and the natural foundations of life. Furthermore, it aspires for the SNAP to be strengthened in priority areas with responsible participation of regional and local actors. To achieve this, the project will focus on four outcomes: (i) the strengthening of 19 PANE PAs; (ii) technical-financial support to the management of new PAs, organized under the SNAP structure, and the creation of connectivity corridors between the PANE PAs, with a sustainable management of their natural resources and with payment mechanisms for conservation incentives; (iii) promotion of measures to increase the financial sustainability of the PAs to ensure their operation and maintenance, personnel with minimal supervision and ability to cover the running costs of PAs; and (iv) support activities for the communication and diffusion of the project at all levels and to the monitoring and evaluation of results. The MAE will guide the coordination of these projects to avoid duplication and encourage synergies.

242. A FAO/GEF proposal to be executed by CI will provide technical and financial support to strengthen biodiversity conservation through the creation of the Municipal Protected Areas Subsystem (APGS) of the SNAP. The project consists of three components: (1) the technical, legal and administrative design of the APGS in coordination with MAE and the Association of Municipalities; (2) support for the creation and development of a protected areas network in three Municipalities on Ecuador’s coast (Guayaquil, Manta and Muisne); and (3) strengthening municipal capacities for the management of APGS. This is fully complementary to UNDP’s SNAP project presented here which does not specifically address the APGS sub-system. However lessons learned and new frameworks on financial sustainability will be beneficial to the future APGS and MAE will ensure proper coordination between these projects to encourage synergies and exchanges.

243. The Yasuni ITT Initiative aims to support the conservation and management of the Biosphere Reserve of Yasuni (RBY). This intervention will allow progress on the seventh Millennium Development Goal (MDG) via helping to conserve one of the greatest biodiversity areas of the world through economic options for community management. It will support actions to address climate change through the non-emission of greenhouse gases and adaptation. The program will progress in meeting the MDG 1 by giving priority to vulnerable populations. It will also help to protect the rights of peoples living in voluntary isolation. The conservation of RBY is a national priority and the program will have the Ministry of Environment as the lead partner. The proposal is consistent with the prioritization made by the UN and AECI, and involves UNESCO, UNIFEM and UN-HABITAT gender and land management approaches in the context of tending to the equitable management of natural resources with the support of FAO, UNWTO and UNDP. Proper assessment for synergies and general coordination between the projects will be guided by MAE, with GEF funds. Specifically, the UNDP/GEF SNAP project will work to ensure strong national capacities capable of deploying resources in the event that the Yasuni ITT initiative is successful.

69/ 100

244. One area in which the proposed GEF SNAP project and the abovementioned initiatives will coordinate extensively is in capacity building for PA management. Each of the projects is focused on specific elements or skills that together will greatly increase the ability of Ecuador’s SNAP institutions to manage a diverse array of protected areas. The GEF SNAP project will take the lead role in ensuring coordination and avoiding duplication of effort in capacity building efforts, and perhaps most importantly, in ensuring that the benefits of and models for capacity building disseminate throughout the SNAP.

245. To facilitate these links, the Steering Committee of the SNAP project has been charged with overseeing that coordination mechanisms established between projects are both timely and effective. The Technical Committee for the SNAP Project will be responsible for overseeing this coordination on a more regular basis. MAE, as the main executing agency of all these projects, has committed to establishing regular and effective coordination mechanisms between them. These include; holding joint workshops to discuss annual progress reports and coordinate operational work plans, and quarterly meetings of project coordinators. Information strategies of all projects will be designed to further advance coordination and lessons sharing.

70/ 100

3. PROJECT RESULTS FRAMEWORK AND TOTAL BUDGET AND WORK PLAN

This project will contribute to achieving the following Country Programme Outcome as defined in CPAP or CPD: Institutional reform and enhancement of authorities’ capacity to prioritize and mainstream in the National Development Program issues related to conservation, access and sustainable use of biodiversity and environment planning.Country Programme Outcome Indicators: 1.1.1 Joint initiative on positive synergy between fight against poverty and environmental planning taking into account specific gender needs. / 2.1.1 No. of legal and institutional instruments that support the National Environmental Authority in the fulfillment of monitoring duties. / 3.1.1 No. of designed and implemented financial sustainability mechanisms in agreement with the stakeholders, men and women alike. / 3.2.1 No. of executed communitarian projects on biological diversity management with a gender and intercultural approach. / 4.1.1 No. of policies, strategies, plans and adaptation programs within national and local development plans. Primary applicable Key Environment and Sustainable Development Key Result Area (same as that on the cover page, circle one): Catalyzing environmental finance Applicable GEF Strategic Objective and Program: BD-SP1 PA FinancingApplicable GEF Expected Outcomes: Protected area systems secure increased revenue and diversification of revenue streams to meet total expenditures required to meet management objectives / Reduction in financing gap to meet protected area management objectivesApplicable GEF Outcome Indicators: Total revenue and diversification in revenue streams

Indicators Baseline End of Project Target Means of Verification

Risks/Assumptions

Project Goal:Improving the sustainability of the National System of Protected Areas, so that it provides development results through a healthy and sustainable environment and guaranteeing the Rights of Nature (as established in the Constitution).

Project Objective: A field-tested financial and operational framework is institutionalized for an expanded Ecuadorian National System of Protected Areas (SNAP)

1. Increase in financial capacity of the Ecuadorian SNAP as measured through improvement in the Total Score of the UNDP Financial Scorecard that includes the following 3 components:

Governance frameworks that enable sustainable PA financing

Business planning and other tools for cost-effective management

Tools and systems for revenue generation and mobilization

Scores for scorecard component and total are shown below as % of the total possible score.

Scorecard %* 1. Governance frameworks that enable sustainable PA financing

45

2. Business planning & other tools for cost-effective management

34

3. Tools and systems for revenue generation & mobilization

39

Total 40 (*PANE is the sub-system of public protected areas). The baseline for the scorecard is for the SNAP in 2008, which then effectively covered only the PANE sub-system)

Target scores for scorecard components and total are shown below as % of the total possible score

Scorecard % 1. Governance frameworks that enable sustainable PA financing

83

2. Business planning & other tools for cost-effective management

85

3. Tools and systems for revenue generation & mobilization

60

Total 76These targets are for the PANE sub-system. The scorecard will be applied to the complete SNAP when the APPRI and APC sub-systems are fully established. It will also be applied to the sub-systems separately to track progress

UNDP Financial Scorecard applied at project start, MTE and TE70

The evolving political and institutional framework in Ecuador, including for the environmental sector, do continues to favor the systemic changes and on-the-ground actions in PAs required to realize the project objective.

Cofinancing commitments are

70 The Financial Scorecard will be applied again by Project Initiation, as part of the inception of the project as there have been several changes in MAE staff since the application in end 2008. Also it will serve as an instrument to guide discussion on different elements of the project with the newly established project team and incorporate updated financial data based on 2009 figures reported in early 2010.

71/ 100


Risks/Assumptions

upheld for activities critical for effective realization of the project objective

Evolving international policy on payments for environmental services through carbon markets or the Yasuni ITT continue as envisaged facilitating the ability to mobilize conservation finance from these new sources

2.Increase in financial capacity of two sub-networks of the Private Forest Network in Ecuador as measured through improvement in the Total Average Score using an adjusted UNDP Financial scorecard (Components as above)71 The scorecard will also be applied to the entire

Private Reserves Network RBPE (70 PAs) at the start of the project.

Targets for the RBPE will be determined at project start

UNDP Financial Scorecard applied at project start, MTE and TE72

3. Reduction in gap between available funding and resources needed for SNAP-PA management to meet established basic standards

The funding gap estimated in 2008 for PANE PA was US$ 2,752,454 – or 41% - per year. (This will be reconfirmed by year 2 with updated basic scenario assessments for SNAP PA and a new scenario for climate change).

Funding gap is reduced 15% by end of project and capacities and mechanism in place to reduce this further.Note: This reduction does not consider the resources that will SNAP receive in case of Yasuní-ITT initiative success.

Project reports, NPAS financial reports.

4. Existence of specific funds for biodiversity conservation in the communal PA of Abras the Mantequilla (Ade M) through mechanisms replicable to other communal PA

There are specific monetary resources allocated for communal biodiversity conservation in this PA, around US$ 400.000

Communal work is not guided by conservation priorities.

Funding needs are not known.

Specific mechanism operating in FUNDAR for: Providing monetary resources to famers in the

communal reserve to improve biodiversity conservation and restoration. Increase by at least 50%.

Optimizing communal work to priority BD actions.

Capturing additional resources for PA management of the PA from local governments and other sources.

Estimates of funding needs are available for basic management for closing them

Annual reports of FUNDAR credit mechanisms that will include its contribution to conservation.

5. Increase in management effectiveness of constituent PA in SNAP as measured by an agreed upon tool

Baseline to be determined by mid-term evaluation when the SNAP has defined the methodology it will adopt for measuring management effectiveness (this will include METT like parameters and will be defined as part of Outcome 2)

By end of project: All PA in the SNAP will have improved

management effectiveness by >15% The increased in pilot areas will be higher (see

indicator 6)

METT application to 34 sample PA at MTE and TE

6. Increase of Management

PANE pilots (avg.) 2009 38%E.R. Cayambe Coca 50%E.R. Illinizas 33%

PANE (avg.) pilots target 2015 82%E.R. Cayambe Coca 84%E.R. Illinizas 79%

Verification of METT at project MTE and TE

71 Note: Adjusted Financial Scorecard was adjusted by the Project Preparation Team, the questions considered systemic, were answer as a perception of the system situation. All the interviews UNDP Financial Scorecard applied at project start, MTE and TE were made to people working in the protected areas.72 The Financial Scorecard will be applied again by Project Initiation, as part of the inception of the project as there have been several changes in MAE staff since the application in end 2008. Also it will serve as an instrument to guide discussion on different elements of the project with the newly established project team and incorporate updated financial data based on 2009 figures reported in early 2010.

72/ 100

BaselineScorecard NWFR

(Cloud Forest)

Manabi(Dry

Forest)Component 1 17% 14%Component 2 30% 10%Component 3 14% 9% Total 20% 11%

TargetScorecard NWFR

(Cloud Forest)

Manabí(Dry

Forest)Component 1 76% 58%Component 2 75% 52%Component 3 79% 51% Total 77% 55%


Risks/Assumptions

Effectiveness of Pilot PAs (as measure by the METTs) provides improved conservation to the following ecosystems:

Life Zones PANE

Ha.

Tropical Forest 397.101,87Flooded Forest 235,653.74Montane Forest 329,752.78Intervened Forest

99,193.29

Dry Forest 1,000.00Paramo 142,334,12Shrubbery 19,766.54Natural Vegetation

1,239,011.74

E.R. Mache Chindul 38%M.R Galera San Francisco 20%W.P.R. Chimborazo 40%W.P.R. Cuyabeno 48%Yasuni TBDAPPRI (avg.) Baseline 2009 36%Manabí D.F. 23%Northwestern C.F. 49%APC (avg.) Baseline 2009 28%Abras de Mantequilla 28%

E.R. Mache Chindul 83%M.R Galera San Francisco 83%W.P.R. Chimborazo 77%W.P.R. Cuyabeno 83%Yasuni TBDAPPRI (avg.) Target 2015 82%Manabí D.F. 81%Northwestern C.F. 83%APC (avg.) Target 2015 80%Abras de Mantequilla 80%

7. Number of hectares of private; communal and public PA in key ecosystems that have been incorporated into the SNAP based on an expanded and formally adopted selection matrix

At present the selection matrix for incorporation of new PAs into SNAP does not include cost-effectiveness or results based criteria not address other important factors such as connectivity.

There are no private or communal PAs officially incorporated into the SNAP

All new PA (private; public and communal) included into the SNAP will provide additional conservation to key ecosystems by(a) closing existing gaps or (b) increasing connectivity across landscape and (c) have identified strategies to ensure the full covering of basic scenarios needs

Decrees of inclusion into SNAP and Financial report

Outcome 1:Laws, standards and institutional guidelines for improving the financial sustainability of the PANE, private and communal sub-systems of the SNAP, are formally put in place with the technical support of the project.

1. Strengthened Governance frameworks for sustainable PA financing, as measured by increased scores in the 9 elements of Component 1 of UNDP Financial scorecard

Element %Legal, policy and regulatory support for revenue generation by PAs

33%

Leggal, policy and regulatory support for revenue sharing within the PA system

11%

Legal and regulatory conditions for establishing endowment or trust funds

78%

Legal, policy and regulatory support for alternative institutional arrangements for PA management

42%

National PA financing strategies 54%Economic valuation of PA systems 50%Improved government budgeting for PA systems

50%

Clearly defined institutional responsibilities for PA management and financing

33%

Well-defined staffing requirements, profiles and incentives at site and system level

44%

Total for Component 1 45%

Element %Legal, policy and regulatory support for revenue generation by PAs

83%

Legal, policy and regulatory support for revenue sharing within the PA system

78%

Legal and regulatory conditions for establishing endowment or trust funds

78%

Legal, policy and regulatory support for alternative institutional arrangements for PA management

83%

National PA financing strategies 100%Economic valuation of PA systems 83%Improved government budgeting for PA systems

100%

Clearly defined institutional responsibilities for PA management and financing

67%

Well-defined staffing requirements, profiles and incentives at site and system level

78%

Total for Component 1 85%

UNDP Financial Scorecard applied at project start, MTE and TE

High level of political support for the project approach of strengthening the financial sustainability of the SNAP continues to grow

2. Law for the SNAP and supporting regulations

Currently the SNAP, has been defined as the union of Public PA (PANE), Private PA (APPRI),

A General Law of SNAP approved to the National Congress by end of 2010; and operational by end

Official Record of

73/ 100


Risks/Assumptions

Communal PA (APC) and Sectional Government PA (APGS).

Its creation and composition has been mentioned on the 2008 Constitution and National Policies documents as the SNAP Strategic Plan.Nowadays, despite been defined and mentioned, there isn’t a law or regulation that make possible the incorporation of APPRI, APC and APGS to the System.

of project including regulations and financial strategies for overall system and for private and community sub-systems.

The law incorporates clear criteria to include APPRI, APC and APGS to the SNAP, with the objective of reducing the ecological gap.

By the end of the project, at least 1 area of each sub-system will be part of the SNAP.

law and regulatory norms

3. Staffing competency profiles and institutional procedures in SNAP/MAE are tailored for new financial frameworks at i)Central Managerial (MAE) ; ii)Supervisory in regional directorates; iii) Park Rangers level

Management of SNAP is currently under the authority of the Under-Secretariat of Natural Heritage, and delegated to its directorate in charge of DNBD.

The MAE also has regional directorates on each province of Ecuador. Based on the location of the PA, they depend on each regional directorate.Approximately less than 10%have specific skills for financial management and financial sustainability of the SNAP.

Targets will be determined by year 2 once the once the Law is declared; the institutional reforms completed in the MAE and full results framework has been defined under Outcome 2.

At end of project staff positions include at least one post for financial managers at Central and regional levels and 50% of all staff tables and procedures are tailored to new financial frameworks

MAE manuals;

SNAP Strategic plan

Project reports

4. Pilot institutional foundations for financing private reserve networks & sub-systems

Currently none of the private reserve network have access to funding from the Socio Bosque Programme

14 of the private reserve network have access to funding from the Socio Bosque ProgrammeAt least one other funding mechanism for RBPE is designed

Project reports

Outcome 2:Strengthened capacities for results-based financial planning, management and monitoring, are set for improving sustainable net income accounting of SNAP.

1. Strengthened capacities for business planning and other tools for cost-effective management for SNAP as measured by the 5 elements of Component 2 of UNDP Financial scorecard:

Element %Site-level business planning 44%Operational, transparent and useful accounting and auditing systems

44%

Systems for monitoring and reporting on financial management performance

25%

Methods for allocating funds across individual PA sites

0%

Training and support networks to enable park managers to operate more cost-effectively

28%

Total for Component 2 % 34%

Element %Site-level business planning 78%Operational, transparent and useful accounting and auditing systems

100%

Systems for monitoring and reporting on financial management performance

92%

Methods for allocating funds across individual PA sites

100%

Training and support networks to enable park managers to operate more cost-effectively

78%

Total for Component 2 % 85%


Representatives from conventional public authorities (Economy and Finance, production sectors) show buy-in to the economic benefits of the SNAP being highlighted by the environment sector.

2. Strengthened capacities for business planning and other tools for cost-effective management for two –sub-sets of the RBPE and Abras de Mantequilla as measured by the 5 elements of Component 2 of an adapted UNDP Financial scorecard.

BaselineRBPE Communal

Element NWFR(Cloud Forest)

Manabi(Dry Forest)


Element 1 6% 33% 39%Element 2 42% 0% 58%Element 3 25% 0% 92%Element 4 50% 0% 50%

TargetRBPE Communal

Element NWFR(Cloud Forest)

Manabi(Dry Forest)


Element 1 61% 70% 78%Element 2 75% 50% 92%Element 3 75% 50% 95%Element 4 90% 50% 95%

Adapted UNDP Financial Scorecard applied at project start, MTE and TE

74/ 100


Risks/Assumptions

(Refer to note on second objective indicator)

Element 5 47% 0% 47%Total 30% 10% 56%

Element 5 87% 50% 95%Total 75% 54% 92%

3. % of Protected Areas with Updated Management Plans and Business Plans PANE RBPE

Management Plan Business PlanPANE 0% 0%RBPE 0% 0%

Management Plan Business PlanPANE 20% 20%RBPE 25% 25%

4. % staffing of technical-administrative SNAP staff (system-wide; PA site level and RBPE) with skills required for the financial management and results based M&E system

Baseline value TBD by Year 1 of project.

Based on a pre-design of the RBM and M&E system once METT information has been collected. The project will then define the standards and required competencies and skills needed for this system at MAE, PANE, Private and Community levels.

By end of project; 50% (41) Site Level, (At least one person from

each PANE area) 50% (5) MAE (At least 50% of the DNBD

personnel that is in charge of PAs) 50% (23) MAE provincial directorates (At least

1 person of the MAE Provincial Directorate) 100% (22) RBPE (The project will train the

coordinators, and they will train at least one person from each reserve)

100% (3) Abras de Mantequilla (At least 3 people involve in the Project Coordination of the Area will be trained)

Training reports;Project reports

5. Improvement in accounting for, and assessing expenditure linked to management effectiveness of the PAs of SNAP

MAE, RBPE, FUNDAR, do not have an integrated Results based management & M&E System that links expenditures and Management effectiveness. The status of essential components for a future system are: Financial: Financial baseline: SIGEF73; SIGOB74 at

highest level but no specific system for SNAP

No financial reporting from regional directorates

Preliminary Financial Scorecard for SNAP which contained PANE PAs

Resource allocation: Budget allocated based on size of PA The efficiency of resource allocation is not

linked to management effectiveness or conservation benefits/accomplishment

Operational: Preliminary METT scores for pilot projects;

no system wide methodology for measuring

By end of project, the SNAP has an integrated financial, operational and results based information (METT and key indicators) and is being used to undertaken M&E of efficiencies and determine resource allocation all M&E components are established and the following will be operational:Financial: Financial baseline based on solid data All regions reporting in agreed upon format

Basic financial M&E operational based on Annual Operational Plans, budget formulation and management

Financial Scorecard systematized and institutionalized

Resource allocation: Resource allocation based on new RBM

system Operational: SNAP Management effectiveness tool

institutionalized Ecological Indicators of representative species/ecosystems

RBM reports and project reports

73 The Integrated Financial Management System (SIGEF) is a software tool that is part of the solution for the development of the Administration of Public Finance System, brings together a set of services that meet the registration requirements, operation, control and consultation by the institutions of the nonfinancial public sector in the country with the objective of transforming public administration in a mission of service to society in terms of transparency, discipline and control to achieve optimum levels of efficiency, effectiveness and efficiency .74 Information System for Democratic Governance (SIGOB) is a system created with the aim of developing methodologies and tools to support government policy action by senior management of the government, thus helping to maintain or create conditions for democratic governance. These tools are aimed at reducing the gap between the decisions the authorities and the capacity to implement them.

75/ 100


Risks/Assumptions

management effectivenessEcological: Biological indicators defined through GEF 3

project but not fully developed or in use Established GIS system that is capable of

measuring vegetation cover change Overall: There is no institutional interpretation of data

to support decision making

selected during Year 1Overall: RBM system and institutional capacity that

allows for interpretation of data to support decision making.

Outcome 3:The value of SNAP is better recognized among communities living in protected areas, public authorities and private and public investors (National and International).

1. Increase in the assigned budget for the SNAP by the National Government.

Baseline Budget 2008SNAP US$ 1,160,000

Target Budget 2015 % IncreaseSNAP US$ 1,450,000 25%

Government reports

Representatives from conventional public authorities (Economy and Finance, production sectors) show buy-in to the economic benefits of the SNAP being highlighted by the environment sector.Valuation studies are effective in influencing communities and private investors opinions on the benefits that SNAP provides to their well-being

2. Increase on the % of resources assigned budget from new funding mechanisms based on international resources (Yasuni ITT and carbon markets)

Baseline Budget 2008SNAP US$ 1,470,000

Target Budget 2015 % IncreaseSNAP US$ 1,837,500 25%

Government reports

3. Increase of visits per year to Pilot PA, as a result of marketing strategies implemented (within carry capacity)

Area # VisitsPANE 110,116E.R. Cayambe Coca 8,561E.R. Illinizas 2,676E.R. Mache Chindul 100M.R Galera San Francisco -W.P.R. Chimborazo 84,000W.P.R. Cuyabeno 9,336Yasuni TBDAPPRI 4,343Manabí D.F. 1,463Northwestern C.F. 2,880APC 1,100Abras de Mantequilla 1,100

Area % IncreasedPANE TBDE.R. Cayambe Coca TBDE.R. Illinizas TBDE.R. Mache Chindul TBDM.R Galera San Francisco TBDW.P.R. Chimborazo TBDW.P.R. Cuyabeno TBDYasuni TBDAPPRI TBDManabí D.F. TBDNorthwestern C.F. TBDAPC TBDAbras de Mantequilla TBD

Note: The Target will be determined, once the management plans have developed studies that include carry capacities.

Registration at gates of PA visitors, information should be crossed with the revenues generated by entrance fees.

4. Increase on Budget from new sources based on intersector partnerships in Pilot PAs

Private Municipal

Baseline 2009 Private MunicipalPANEE.R. Cayambe Coca 23,069 0E.R. Illinizas 8,580 0E.R. Mache Chindul 340 0M.R Galera San Francisco 0 0W.P.R. Chimborazo 85,110 0W.P.R. Cuyabeno 151,060 0Yasuni TBD TBD

Target Private MunicipalPANEE.R. Cayambe Coca >100,000 >50,000E.R. Illinizas >100,000 >50,000E.R. Mache Chindul >50,000 >10,000M.R Galera San Francisco >50,000 >20,000W.P.R. Chimborazo >135,110 >10,000W.P.R. Cuyabeno >180,000 >30,000Yasuni

PA reports and RBM reports

76/ 100


Risks/Assumptions

APPRIManabí D.F. 11,700 0Northwestern C.F. 14,400 0APCAbras de Mantequilla 16,500 0

APPRIManabí D.F. >26,700 >2,000Northwestern C.F. >20,000 >2,000APCAbras de Mantequilla >50,000 >20,000

Outcome 4: Replicable cost-effective management models is field-tested through community-based and cross-sector partnership approaches.

1. % of improvement on Tools for revenue generation as measure by the following seven elements of component 3 of UNDP financial scorecard:


Communities and private forest owners continue to show interest and support for adopting improved approaches for cost-containment and revenue generation being proposed by the project.

2. Reduced funding gap through improving net income on Pilot PA by the end of the project.

BASELINE 2009Area

Funding Gap

PANE 26.4%E.R. Cayambe Coca 38.3%E.R. Illinizas 23.5%E.R. Mache Chindul 24.5%M.R Galera San Francisco 11.2%W.P.R. Chimborazo 25.5%W.P.R. Cuyabeno 35.7%Yasuni TBDAPPRI 15.6%Manabí D.F. 11.2%Northwestern C.F. 19.9%APC 33.2%Abras de Mantequilla 33.2%

TARGET 2015Area

Funding Gap

PANEE.R. Cayambe Coca <10%E.R. Illinizas <10%E.R. Mache Chindul <10%M.R Galera San Francisco <10%W.P.R. Chimborazo <10%W.P.R. Cuyabeno <10%Yasuni <10%APPRIManabí D.F. <10%Northwestern C.F. <10%APCAbras de Mantequilla <10%

Adapted UNDP Financial Scorecard applied at project start, MTE and TE

3. Pilot specific indicators will be developed as CBSI initiatives are selected

TBD TBD

77/ 100

Element %Number and variety of revenue sources used across the PA system

58%

Setting and establishment of user fees across the PA system

40%

Effective fee collection systems 42%Marketing & communication strategies for revenue generation mechanisms

33%

Operational PES schemes for PAs 50%Concessions operating within PAs 8%PA training programmes on revenue generation mechanisms

33%

Component 3 39%

Element %Number and variety of revenue sources used across the PA system

92%

Setting and establishment of user fees across the PA system

47%

Effective fee collection systems 67%Marketing & communication strategies for revenue generation mechanisms

100%

Operational PES schemes for PAs 67%Concessions operating within PAs 8%PA training programmes on revenue generation mechanisms

67%

Component 3 60%

TOTAL BUDGET AND WORKPLAN

Award ID:00059162

Award Title: PIMS 4241 Financial Sustainability for the National System of Protected Areas (SNAP)

Business Unit:ECU10

Project ID:00073902

Project Title: PIMS 4241 Financial Sustainability for the National System of Protected Areas (SNAP)

Executing Agency: Ministry of Environment (MAE)

Outcome

Responsible Party/

Implementing Agent

Fund ID Donor Name

Atlas Budgetary Account

Code

ATLAS Budget Description Year 1 Year 2 Year 3 Year 4 Year 5 Total

Outcome 1: Laws, standards and institutional guidelines for improving

the financial sustainability of the PANE, private and

communal subsystems of the SNAP are formally

put in place with the technical support of the

project.

MAE 62000 GEF 71300 Local Consultants 159083 50414 0 0 14004 223500

MAE 62000 GEF 71600 Travel 13000 0 0 0 160014600

MAE 62000 GEF 72100 Contractual Services Companie 0 125000 0 0 0

125000

MAE 62000 GEF 72400 Communication & audivisual 0 8000 0 0 0

8000

MAE 62000 GEF 72500 Supplies 13394 2378 793 793 174419100

MAE 62000 GEF 74500 Miscellaneous Expenses 7950 1400 0 0 1050

10400

MAE 62000 GEF 75700 Training, Workshops and Conferences 9400 0 0 0 9400

18800

SUBTOTAL GEF OUTCOME 1 202,826 187,191 793 793 27,797 419,400

SUBTOTAL UNDP OUTCOME 1 0 0 0 0 0 0

SUBTOTAL GEF + UNDP OUTCOME 1 202,826 187,191 793 793 27,797 419,400

Outcome 2: Strengthened capacities for business

planning, and management and

monitoring of financial resources are in place for

the SNAP

MAE 62000 GEF71200

International Consultants 6,000 19,500 4,500 0 0 30,000

MAE 62000 GEF71300 Local Consultants 77,034 173,327 134,810 0 0 385,172

MAE 62000 GEF 71600 Travel 8,525 30,833 3,267 0 0 42,625

78/ 100

MAE 62000 GEF72100

Contractual Services Companie 70,400 275,902 5,698 0 0 352,000

MAE 62000 GEF72500 Supplies 7,795 16,674 14,506 0 0 38,975

MAE 62000 GEF74500

Miscellaneous Expenses 4,576 9,051 9,253 0 0 22,879

MAE 62000 GEF75700

Training, Workshops and Conferences 63,181 180,233 72,491 0 0 315,906

SUBTOTAL GEF OUTCOME 2 237.511 705,520 244,525 0 0 1,187,556

MAE 04000 PNUD71300 Local Consultants 0 0 0 14,000 14,000 28,000

MAE 04000 PNUD71600 Travel 0 0 0 10,000 10,000 20,000

MAE 04000 PNUD72100

Contractual Services Companie 7,511 21,956 7,511 7,511 7,511 52,000

MAE 04000 PNUD75700

Training, Workshops and Conferences 0 0 0 30,000 30,000 60,000

SUBTOTAL UNDP OUTCOME 2 7,511 21,956 7,511 61,511 61,511 160,000

SUBTOTAL GEF + UNDP OUTCOME 2 245,022 727,476 252,036 61,511 61,511 1,347,556

Outcome 3: The value of SNAP is better

recognized among communities living in protected areas, public authorities and private and public investors

(national and international)

MAE 62000 GEF71300 Local Consultants 96,274 224,639 240,088 0 0 561,000

MAE 62000 GEF71400 Contractual Services 20,593 48,051 51,356 0 0 120,000

MAE 62000 GEF71600 Travel 22,425 52,324 72,951 0 0 147,700

MAE 62000 GEF72100

Contractual Services Companie 203,214 152,410 152,410 0 0 508,034

MAE 62000 GEF72500 Supplies 0 0 25,000 0 0 25,000

MAE 62000 GEF75700

Training, Workshops and Conferences 103,748 132,368 121,635 0 0 357,750

SUBTOTAL GEF OUTCOME 3 446,253 609,792 663,439 0 0 1,719,484

MAE 04000 PNUD72100

Training, Workshops and Conferences 2,889 8,444 2,889 2,889 2,889 20,000

SUBTOTAL UNDP OUTCOME 3 2,889 8,444 2,889 2,889 2,889 20,000

SUBTOTAL GEF + UNDP OUTCOME 3 206,102 160,855 155,299 2,889 2,889 528,034

Outcome 4: CCBI (Corporate Citizen

MAE 62000 GEF 71200 International Consultants

0 22062 0 0 15976 38038

79/ 100

Business Initiatives) for replicable cost-effective management models is

field-tested through community-based and

cross-sector partnership approaches.

MAE 62000 GEF71300 Local Consultants 0 153785 153785 153785 153785 615140

MAE 62000 GEF71400 Contractual Services 0 29000 29000 29000 29000 116000

MAE 62000 GEF71600 Travel 0 19019 19019 19019 19019 76076

MAE 62000 GEF72100

Contractual Services Companie 0 47850 0 0 34650 82500

MAE 62000 GEF72200

Equipment and Furniture 0 76076 76076 0 0 152152

MAE 62000 GEF72400

Comunication and Audiovisual Equipment 0 0 25359 25359 25359 76076

MAE 62000 GEF72500 Supplies 0 0 12679 12679 12679 38038

MAE 62000 GEF72600 Grants 0 0 414083 414083 414083 1242250

MAE 62000 GEF74200

Audiovisual and printing prod costs 0 0 25359 25359 25359 76076

MAE 62000 GEF74500

Miscellaneous Expenses 0 0 12679 12679 12679 38038

MAE 62000 GEF75700

Training, Workshops and Conferences 0 0 43359 43359 43359 130076

SUBTOTAL GEF OUTCOME 4 0 347,792 811,398 735,322 794,615 2,680,460

SUBTOTAL UNDP OUTCOME 4 0 0 0 0 0 0

SUBTOTAL GEF + UNDP OUTCOME 4 0 347,792 811,398 735,322 794,615 2,680,460

ManagementMAE 6200 GEF

71200International Consultants 12000 12000 12000 12000 12000 60000

MAE 6200 GEF71300 National Consultants 6000 6000 6000 6000 6000 30000

MAE 6200 GEF71400 Contractual Services 40220 40220 40220 40220 40220 201100

MAE 6200 GEF71600 Travel 11600 11600 11600 11600 11600 58000

MAE 6200 GEF72400

Comunication and Audiovisual Equipment 3000 3000 3000 3000 3000 15000

MAE 6200 GEF72500 Supplies 5800 5800 5800 5800 5800 29000

SUBTOTAL GEF PROJECT MANAGEMENT 78,620 78,620 78,620 78,620 78,620 393,100

SUBTOTAL UNDP PROJECT MANAGEMENT

0 0 0 0 0 0

80/ 100

SUBTOTAL GEF + UNDP PROJECT MANAGEMENT 78,620 78,620 78,620 78,620 78,620 393,100

GEF PROJECT TOTAL965,210.55 1,928,915.46

1,798,774.17 814,734.53 901,031.95 6,400,000.00

PNUD PROJECT TOTAL10,400.00 30,400.00 10,400.00 64,400.00 64,400.00 180,000.00

GEF + PNUD PROJECT TOTAL975,610.55 1,959,315.46

1,809,174.17 879,134.53 965,431.95 6,580,000.00

TOTAL BUDGET PER LINE

Atlas Budgetary

Account Code

ATLAS Budget Description Total per Line US$

% per Line

71200 International Consultants 128,038 2.00%71300 National Consultants 1,814,812 28.36%71400 Service Contracts (Ind) 437,100 6.83%71600 Travel 339,001 5.30%72100 Service Contracts 1,067,534 16.68%72200 Equipment 152,152 2.38%72400 Comunication and Audiovisual Equipment 99,076 1.55%72500 Supplies 150,113 2.35%72600 Grants 1,242,250 19.41%74200 Audiovisual and printing prod costs 76,076 1.19%74500 Miscellaneous Expenses 71,317 1.11%75700 Training 822,532 12.85%

Total 6,400,000 100%

TOTAL BUDGET PER YEAR

Atlas Budgetary Account Code ATLAS Budget Description

Amount Year 1 (USD)

Amount Year 2 (USD)

Amount Year 3 (USD)

Amount Year 4 (USD)

Amount Year 5 (USD) Total (USD)

71200 International Consultants 18,000.00 53,562.04 16,500.00 12,000.00 27,975.96 128,038.0071300 National Consultants 338,390.86 608,164.70 534,682.77 159,785.00 173,788.76 1,814,812.0971400 Service Contracts (Ind) 60,813.31 117,271.06 120,575.62 69,220.00 69,220.00 437,100.0071600 Travel 55,549.74 113,776.02 106,837.10 30,619.00 32,219.00 339,000.8572100 Service Contracts 273,613.50 601,162.28 158,107.97 0.00 34,650.00 1,067,533.7572200 Equipment 0.00 76,076.00 76,076.00 0.00 0.00 152,152.0072400 Comunication and Audiovisual Equipment 3,000.00 11,000.00 28,358.67 28,358.67 28,358.67 99,076.00

81/ 100

72500 Supplies 26,988.72 24,851.77 58,777.46 19,271.86 20,222.90 150,112.7172600 Grants 0.00 0.00 414,083.33 414,083.33 414,083.33 1,242,250.0074200 Audiovisual and printing prod costs 0.00 0.00 25,358.67 25,358.67 25,358.67 76,076.0074500 Miscellaneous Expenses 12,525.81 10,450.69 21,931.90 12,679.33 13,729.33 71,317.0775700 Training 176,328.60 312,600.90 237,484.69 43,358.67 52,758.67 822,531.52

Subtotal GEF 965.210.55 1,928,915.46 1,798,774.17 814,734.53 892,365.29 6,400,000.0071300 National Consultants 0.00 0.00 0.00 14,000.00 14,000.00 28,000.0071600 Travel 0.00 0.00 0.00 10,000.00 10,000.00 20,000.0072100 Service Contracts 10,400.00 30,400.00 10,400.00 10,400.00 10,400.00 72,000.0075700 Training 0.00 0.00 0.00 30,000.00 30,000.00 60,000.00

Subtotal UNDP 10,400.00 30,400.00 10,400.00 64,400.00 64,400.00 180,000.00Total GEF + UNDP 975,610.55 1,959,315.46 1,809,174.17 879,134.53 956,765.29 6,580,000.00

Budget Notes:

Budget Line NotesOutcome 1: Laws, standards and institutional guidelines for improving the financial sustainability of the PANE, private and communal sub-systems of the SNAP are formally put in place with the technical support of the project.71300 Local Consultants

Consultants will be required to generate information in different contexts of this Outcome, and cover a wide range of activities as follows: Output 1.1,a more in depth study of the current legal framework ruling SNAP to provide inputs to the new framework (1 Consultant for 4 weeks at US$ 1,000 per week = US$ 4,000), workshops to discuss and further identify requirements of the new legal framework (A team of 4 consultants during 8 weeks at US$ 1,000 per week = US$ 32,000), establish the new legal framework and institutional arrangements for sustainability of SNAP (3 consultants during 14 weeks at US$ 750 per week = US$31,500), workshops for the presentation of the new legal framework (32 weeks at US$ 750 per week = US$ 24,000). Output 1.2, requires consultants to support the design of the institutional arrangements underlying the new approaches to financial sustainability, RBM etc (64 weeks at US$ 750 per week = US$ 48,000); to orient and develop dissemination of national policy (16 weeks at US$ 750 per week = US$12,000). Output 1.3, institutional strengthening of MAE (4 Consultants for 16 weeks at US$ 375 per week = US$24,000), institutional strengthening of RBPE (4 Consultants for 20 weeks at US$ 375 per week = US$30,000), and fund design for RBPE (48 weeks at US$ 375 per week = US$ 18,000).To complete this suite of consultants and achieve the proposed activities under their responsibility, a total amount of US$ 223,500 is needed.

71600Travel

Total Travel expenses for this Outcome are US$ 14,600: Output 1.1 considers transportation for consultants for US$ 3,600 (20 trips at US$100 per trip, and 32 trips at US$ 50 per trip) (two kinds of trips) plus consultant travel expenses costs calculated at US$ 7,800 (156 days at US$ 50 per day). Output 1.2, the estimated travel expenses are US$ 3,200 (16 trips at US$ 50 per trip and 48 days at US$ 50 per day).

72100Contractual Services

US$125,000 has been budgeted for a medium size media and communication strategy and process for the new legal framework.

72400Commun. & audiovisual

An estimated $8,000 is required to publish documents (160 Publications at US$ 50 per publication) of new policies from MAE governing financial sustainability related issues in SNAP.

72500Supplies

In order to support the workshops for discussion of the new legal framework, US$ 19,100 is required for materials, such as office supplies to enable active participation and achievement of each event. Output 1.1 (US$ 13,700), Output 1.2. (US$ 2400), Output 1.3 (US$ 1,800), and Output 1.4 (US $1,200)

74500 In most outputs, it is expected that the consulting teams will incur costs that were not specified at the beginning of the project due to for example

82/ 100

Budget Line NotesMiscell. Expenses unexpected additional travel or consultations. In order to avoid budgetary problems US$ 10,400 has been considered enough to cover these

unforeseen expenses: Output 1.1 (US$ 6,300), Output 1.2 (US$ 2,100), Output 1.3 (US$ 2,000).75700Training Workshops and Conferences

US$18,800 for training and capacity building of landowners and technicians working in the pilot areas related to: the new requirements of the new legal framework of SNAP, its dissemination, and the guidelines to financially improve the sustainability of the SNAP.Output 1.1 (US$ 12,200) including transport for workshops assistants (280 at US$25 per trip) and events for workshops to enable participation of a wide range of stakeholders (2 at US$ 500 per event, 6 at US$ 400 per event, 6 at US$ 300 per event).Output 1.2 (US$ 6,600) including transport of workshop assistants to (160 at US$25 per trip) and events for workshops (2 at US$ 400 per event, 6 at US$ 300 per event).

Outcome 2: Strengthened capacities for results-based financial planning, management and monitoring are in place for improving long-term net sustainable income of the SNAP.71200International Consultants

International consultants will be required to provide expertise regarding potential costs and needs of PA management under different climate change scenarios and other aspects related to the financial needs analysis in Output 2.1, and also for supporting the design of Strategic & Business plan for the SNAP (2 Consultant for 12 weeks at US$ 1,250 per week = US$ 30,000).

71300National Consultants

Consultants costed at US$385,172.09 will be required to generate information in different contexts of this outcome, these cover a wide range of activities:Output 2.1, financial needs analysis including climate changes scenarios (8 Consultants for 12 weeks at US$ 300 per week = US$ 28,800).Output 2.2, requires consultants to design management, logistic and operational planning for 6 PANE pilot PA (12 Consultants for 60 weeks at US$ 222.22 per week = US$ 160,000; partially funded by TNC), design management, logistic and operational planning for FUNDAR pilot PA (80 weeks at US$ 300 per week = US$ 24,000). Output 2.3, Inputs to the design and implement the Results based management system (72 weeks at US$ 1,000 per week = US$ 72,000) –related to the collection of specific data for the system such as potential ecological indicators; tools for measuring management and conservation effectiveness in PA etc Output 2.4, to design the training program for financial planning: beginning with the training of trainers program completing activities funded by TNC), followed by training MAE, RBPE, FUNDAR, APGS program (192 weeks at US$ 168.60 per week = US$ 33,372 and finally, to design and make handbooks (96 weeks at US$ 708.33 per week = US$ 68,000; partially funded by UNDP).

71600Travel

Total Travel expenses for this Outcome are US$ 42,624. Given the wide range of topics for consultants and the need to undertake field visits for several of the planned activities transportation for consultants will be required budgeted at US$ 24,616 (126 trips at US$100 per trip, 396 trips at US$ 30.34), and consultant costs calculated at US$ 18,008 (240 days at US$ 50 per day, and 198 days at US$ 30.44 per day).


US$352,000 has been budgeted for study of interest in communities and stakeholders and to support the process of designing and implementing the RBM and M&E systems that will be in charge of a company specialized in such systems. Similarly certain aspects of M&E activities of the project may be sub-contracted to ensure that there is consistency in operational planning and reporting of the project and the emerging RBM system.

72500Supplies

In order to undertake workshops associated with the different outputs US$ 38,974 is required for materials, such as office supplies, that are needed to completely develop each activity. Output 2.1 (US$ 1,200), Output 2.2. (US$ 3,600), Output 2.3 (US$ 20,000), Output 2.4 (US$ 14,174).

74500Miscellaneous Expenses

In most outputs, it is expected that the consulting teams will incur costs that were not specified at the beginning of the project. In order to avoid budgetary problems US$ 22,879 has been considered enough to cover these unforeseen expenses, especially related to the implementation of the Results Based Management system. Output 2.1 (US$ 1,200), Output 2.2. (US$ 600), Output 2.3 (US$ 20,000), Output 2.4 (US$ 1,079).

75700Training, Workshops and Conferences.

US$315,905.52 for training and capacity building of landowners, technicians working in the pilot areas and in the MAE headquarters to: develop management plans, contracts, monitoring and evaluation, results based management, planning, among others. Output 2.1 (US$ 1,800) training workshops (6 at US$300 per event); Output 2.2 (US$ 7,200) training workshops (12 at US$300 per event) and transport for assistants (240 at US$15 per trip); Output 2.3 (US$ 17,500) for training workshops (10 at US$750 per event) and computer rental (200 at US$50 each one per day); Output 2.4 (US$ 14,655) event for workshops (60 at US$ 244.25 per event), followed by a training program made up of 12 workshops for APC, PANE and APPRI members. Each workshop will cost US$ 34,000 that sums a total of US$ 408,000. US$ 133,250 are going to be co-funded by RBPE and FUNDAR and US$ 274,750 are going to be funded by GEF.

Outcome 3: The value of SNAP is better recognized among communities living in protected areas, public authorities and private and public investors (national and international)

83/ 100

Budget Line Notes71300National Consultants

The total budget for National Consultants in this Outcome is US$ 561,000, distributed between the Integral Economic Valuation and the Biomass Stock Assessment. GEF resources are required to provide key technical expertise and complement resources provided by MAE.Output 3.1 (US$ 345,000) includes the valuation of the 6 areas of PANE (US$112,500) (3 Teams of 7 consultants for 40 weeks at US$ 250 a week for 6 of them and US$ 375 per week for one of them), the valuation of APPRI pilot PA (US$ 75,000) (1 Teams of 7 consultants for 40 weeks at US$ 250 a week for 6 of them and US$ 375 per week for one of them), valuation of APC pilot PA (US$45,000) (1 Teams of 7 consultants for 24 weeks at US$ 250 a week for 6 of them and US$ 375 per week for one of them); Output 3.2, the Biomass Stock Assessment will need 5 teams of 3 consultants for 48 weeks at US$ 300 with a total budget of US$ 216,000.


For the Biomass stock assessment there is a need to ensure the adherence to standardized methodologies and approaches in each site and thus 5 team coordinators will be hired for a 48 weeks period, to carry on with the studies at PANE level at a cost of US$ 120,000 (5 Coordinators for 48 weeks at US$ 500)

72100Service Contracts

US$508,033 has been budgeted for service contracts for outsourcing of technical assistance and logistical support in development of a) outreach and capacity building activities seeking to create awareness and capacities for on the value of PA; b) negotiations to use this information for increased revenue generation and c) specific surveys required as inputs to the valuation studies and biomass assessments. Output 3.1, Valuation of 6 Pilot PA (6 Soil survey and 6 Water analysis at US$ 1,000 each = US$ 12,000; 6 Socio-Economic Studies at US$ 9,000 each = US$ 54,000), Valuation of APPRI PA (2 Soil survey and 2 Water analysis at US$ 1,000 each = US$ 4,000; 2 Socio-Economic Studies at US$ 9,000 each = US$ 18,000), Valuation of APC PA (1 Soil survey and 1 Water analysis at US$ 1,000 each = US$ 2,000; 1 Socio-Economic Studies at US$ 7,400 each = US$ 7,400). Output 3.2, 40 Soil Survey at US$ 1,000 = US$ 40,000. Output 3.3, Media Campaign US$ 208,633 (Partially funded by UNDP), Output 3.4, 9 Studies for Mapping Actors per Area at US$ 6,000 each = US$ 54,000; 9 Studies of consulting, financial and business simulation at US$ 12,000 = 108,000

71600Travel

Total Travel expenses for this outcome is US$ 147,700, Output 3.1 considers transportation for consultants for on PANE US$ 625 (25 trips at US$50 per trip) for trips on APPRI, APC US$ 500 (10 trips at US$ 50 per trip) plus consultants’ costs calculated in PANE US$ 4,500 (90 days at US$ 50 per day), and in APPRI, APC US$ 2,250 (45 days at US$ 50 per day); Output 3.2, the estimated expense is US$ 3,200 (160 trips at US$ 20 per trip) and travels expenses US$ 64.000 (3200 days at US$ 20 per day).; Output 3.3, for the communication campaign the estimated expense is US$ 72,000 (480 trips at US$ 50 per trip and 960 days at US$ 50 per day).

72500Supplies

US$ 25,000 has been estimated for publications required by the communications campaign of the studies carried on in this output.

75700Training

US$357,750 for training and capacity building; Output 3.1 (US$ 4,050) including training workshops (18 at US$ 150 per event, and 9 at US$ 150); Output 3.2 (US$ 4,500) including training workshops (30 at US$ 150); Output 3.3 (US$ 7,200) including training workshops (24 at US$ 300); Output 3.4, Negotiation Course (9 at US$ 4,000 each = US$ 36,000), Stakeholder management training and confidence-building (9 at US$ 4,000 each = US$ 36,000), Negotiation Workshops (9 at US$ 8,000 each = US$ 72,000), Team Building Coaching (9 at US$ 4,000 each = US$ 36,000), Business Simulation Workshop (9 at US$ 6,000 each = US$ 54,000), Route Maps Preparation for Negotiation (9 at US$ 4,000 each = US$ 36,000), Exchange visits between pilot areas (9 at US$ 2,000 each = US$ 18,000), Evaluation of negotiation skills (9 at US$ 6,000 each = US$ 54,000); total US$ 342,000.

Outcome 4: Replicable cost-effective management models for net sustainable income are field-tested through community-based and cross-sector partnership approaches.71200International Consultants

The expertise of international consultants is envisaged for different revenue generation and funding mechanisms in PAs of different types for which for APPRI 1 international consultant at US$ 38,038 (Partially Co-financed by MAE)


The total budget for National Consultants in this Outcome is US$ 615,140. Output 4.1 (US$ 343,250) includes support for the design of models, mechanisms, strategies, business for PANE (6 at US$ 23,333 each, total US$ 140,000) complementing activities financed by FAP, 6 rounds of negotiation for PANE pilots (US$ 7,500 each, total US$ 45,000); the PANE Methodology Design for PPD (6, one for each pilot at US$ 3,750, total US$ 22,500), 1 Evaluation and supervision of the business initiatives (US$ 18,750), evaluation of pilot governance, cost efficiencies, revenue generation/ mechanisms to replicate (6 at US$ 13,500 each, total US $81,000), plan for replication US$ 36,000 (6 at US$ 6,000); Output 4.2, 4 consultants to assist with the implementation of new mechanisms (US$ 47,547 each, total US $ 190,190; Output 4.3 (US$ 81,700) includes the 1

84/ 100

Budget Line Notesdesign of models, mechanisms, strategies, business for APC (US$ 30,000 each), 1 Credit mechanism design for APC (US$ 11,000 each), the APC Methodology Design for PPD (1 for each pilot at US$ 5,000), 1 Evaluations and supervision of the business initiatives (US$ 5,000), evaluation of pilot governance, cost efficiencies, revenue generation/ mechanisms to replicate (1 at US$ 18,000 each), plan for replication (1 at US$ 12,700)

71400Service Contracts Ind

1 technical assistant to support the process for the RBPE US$ 58, 000 (232 weeks US$ 250 per week), 1 technical assistant to support the process for the FUNDAR US$ 58, 000 (232 weeks US$ 250 per week)

71600Travel

US$76,076 is the amount to be used in travel, for the personnel involved in the implementation the process during 3 years, in output 4.2, to implement the new mechanisms for financial sustainability.

72100 Contractual Services Comp.

A contract with a specialized company is envisage to carry out the dissemination (socialization) of the pilot experience, this will have a cost of US$82,500, on PANE (US$ 67,500) and APC (US$ 15,000)

72200Equipment & Furniture

It is expected that some equipment will be needed to implement the pilot NSI financial approaches and mechanisms, at an estimated cost of US$ 152,152, to be spent in Output 4.2 (APPRI) on the implementation of the new mechanisms in period of 3 years.

72500Supplies

US$ 38,038 Is the supply budget for the implementation process, to be spent in Output 4.2 (APPRI) on the implementation of the new mechanisms in period of 3 years.

72400Comm.& Audiovisual

US$ 76,076 Communication and Equipment budget required under Output 4.2 (APPRI) for the implementation of the new mechanisms in period of 3 years.

72600Grants

US$ 842,250 has been budgeted for the pilots to be developed in output 4.1 by communities’ partnerships (CSI) in the PANE pilots. These will be identified and selected through methodology developed by SPP. US$ 400,000 corresponds to the contribution to the fund used by FUNDAR for small farmers. These resources will provide for broader coverage and the inclusion of resources for conservation activities and more biodiversity friendly production practices Dispersal will be in two parts the second following the mid term evaluation. Total US $ 1242,250.

74200Audiovisual and printing prod costs

US$ 76,076 Audiovisual budget to be spent in Output 4.2 (APPRI) on the implementation of the pilot mechanisms.

74500Miscell. Expenses

US$ 38,038 Is the Miscellaneous budget for the implementation process, to be spent if necessary in Output 4.2 (APPRI) on the implementation of the new mechanisms

75700Training

US$ 130,076 total budget will be spent on: Output 4.1, 6 invitations to present business plan initiatives at US$ 3,000 each, 6 agreement signed for implementation at US$ 3,000 each, total US$ 36,000 Output 4.2, Training and Learning costs to implement pilot approaches and mechanisms on APPRI US$ 76,076; Output 4.3 Training and Learning costs to implement pilot approaches and mechanisms, 1 round of negotiation US$ 10,000, 1 invitation to present business plan initiatives at US$ 4,000, 1 agreement signed for implementation at US$ 4,000 each, total US$ 18,000

Project Management71200International Consultants

International consultants will be required to undertake independent mid-term and terminal evaluations to assist the PMU ; in addition small amounts of resources have been allocated for supporting information exchange with other relevant projects in the region if required to consolidate project management and synergies (30 weeks Consultant at US$2,000 per week = US$ 60.000).


Consultants are envisage to assist the PMU for specialized task over the life of the project such as providing guidance in certain operational and managerial systems that could enhance project management (80 Consultant weeks over the 5 years at US$ 375 per week = US$ 30.000).

71400 Service Contracts (Ind)

a) National Project Coordinator: Under the supervision of the national project director, will provide support for the project implementation that includes elaborating the general planning (operative and financial). 232 weeks at US$ 575 = 133,400 b) Project Assistant: Support logistic and operative activities, including manage project information to the National Project Coordinator. 232 weeks at US$291 = 67,700

71600Travel

Total Travel expenses is US$ 58.000, (2 trips each month during the project 58 months at US$500 per trip) has been foreseen to cover: (a) travel expenses of the project manager/or project management team members and consultants for field visits to the pilot events for project planning,

85/ 100

Budget Line NotesM&E, supervision of project progress and coordination with counterparts and key stakeholder, (b) inception workshop; and (c) project board meetings.

72400Comm.& Audio -visual equipment

Printing and Publish Budget US$ 15,000

72500Supplies

In order to undertake all the consultations workshops such as operational programming and meetings with other project a budget of US$29,000 over the 5 years has been envisaged.

COFINANCING BUDGET

Outcome 1 Outcome 2 Outcome 3 Outcome 4 Project Management TOTAL

GEF 419,400 1,187,556 1,719,483,75 2,680,460,00 393,100,00 6,400,000,00The Nature Conservancy Cash 0 259,600 0 280,400 0 540,000 In-kind 0 56,000 0 0 0 56,000FUNDAR Cash 0 0 0 400,000 0 400,000 In-kind 0 82,722 8,400 3,214,100 145,000 3,450,222MAE Cash 290,000 428,000 2,609,000 1,673,000 0 5,000,000 In-kind 9,240 38,385 84,000 0 538,375 670,000RBPE Cash 0 0 0 0 0,00 0 In-kind 2,400 102,322 70,000 1,565,900 145,000 1,885,622Conservation International Cash 50,000 0 0 0 0 50,000 In-kind 0 0 0 0 0 0FAP/MAE Cash 0 0 0 0 0 0 In-kind 0 0 0 1,300,000 0 1,300,000PNUD Cash 0 160,000 20,000 0 0 180,000 In-kind 0 0 0 0 0 0TOTAL COF 351,640 1,127,029 2,791,400 8,433,400 828,375 13,531,844TOTAL 771,040 2,314,585 4,510,884 11,113,860 1,221,475 19,931,844

86/ 100

INCREMENTAL COST ANALYSIS

Baseline (B) Alternative (A) Increment (A-B)Outcome 1: Laws,

standards and institutional guidelines

for improving the financial sustainability of the PANE, private

and communal subsystems of the

SNAP are formally put in place with the

technical support of the project.

Baseline: 244,165 a) Baseline 244,165 GEF: 419,400

MAE 14,311 b) Cofinancing 351,640Total Cofinan, 351,640

FAP 229,854 MAE 299,240 TOTAL: 771,0400 0 RBPE 2,400

Conservation International 50,000

c) GEF 419,400

d) Total Alternative 1,015,205

Outcome 2: Strengthened capacities for business planning, and management and

monitoring of financial resources are in place

for the SNAP

Baseline:17,685,42

0 a) Baseline 17,685,420 GEF: 1,187,556

UNDP 618,000 b) Cofinancing 1,127,029Total Cofinan, 1,127,029

UNIFEM 172,064 The Nature Conservancy 315,600 TOTAL: 2,314,585Hábitat 72,904 FUNDAR 82,722 UNESCO 562,887 MAE 466,385 FAO 860,516 RBPE 102,322 UNWTO 237,200 PNUD 160,000 MAE 970,966 c) GEF 1,187,556 FAP 27,200 d) Total Alternative 20,000,005 KfW 5,807,334 GTZ 5,961,600 Others 2,394,749

Outcome 3: The value of SNAP is better recognized among

communities living in protected areas, public authorities and private and public investors

(national and international)

Baseline:20,146,31

1 a) Baseline 20,146,311 GEF: 1,719,484

KfW 7,743,113 b) Cofinancing 2,791,400Total Cofinan, 2,791,400

MAE 1,261,400 FUNDAR 8,400 TOTAL: 4,510,884GTZ 7,948,800 MAE 2,693,000 Others 3,192,998 RBPE 70,000 PNUD 20,000 c) GEF: 1,719,484 d) Total Alternativa 24,657,194

Outcome 4: Enabling framework in

place for up-scaling PES geographically

throughout Argentina and thematically to other PES schemes.

Baseline:47,301,60

8 a) Baseline 47,301,608 GEF: 2,680,460

MAE 3,493,699 b) Cofinancing 8,433,400Total Cofinan, 8,433,400

FAP 440,515The Nature Conservancy 280,400 TOTAL:

11,113,860

MAGAP 3,150,000 FUNDAR 3,614,100

USAID13,000,00

0 MAE 1,673,000 GEF 4,230,000 RBPE 1,565,900 FAN-GIATF 3,740,000 FAN 1,300,000 GTZ 1,298,355 c) GEF: 2,680,460 UNDP 927,000 d) Total Alternativa 58,415,468 UNIFEM 258,097 Hábitat 109,356 UNESCO 844,330 FAO 1,290,774 UNWTO 355,800

87/ 100

KfW 5,807,334 GTZ 5,961,600 Others 2,394,749

Project Management

Baseline: 0 a) Baseline 0 GEF: 393,100

b) Cofinancing 828,375Total Cofinan, 828,375

MAE 538,375 TOTAL: 1,221,475 FUNDAR 145,000 RBPE 145,000 c) GEF: 393,100 d) Total Alternativa 1,221,475

Total

Total Baseline85,377,50

4 a) Baseline 85,377,504 GEF: 6,400,000

FAP 697,569 b) Cofinancing 13,241,844Total Cofinan,

13,531,844

MAGAP 3,150,000 The Nature Conservancy 596,000 TOTAL:19,931,84

4

USAID13,000,00

0 FUNDAR 3,705,222 GEF 4,230,000 MAE 5,670,000 FAN-GIATF 3,740,000 RBPE 1,740,622

UNDP 1,545,000Conservation International 50,000

UNIFEM 430,161 FAN 1,300,000 Hábitat 182,260 PNUD 180,000 UNESCO 1,407,217 c) GEF: 6,400,000

FAO 2,151,290 d) Total Alternative105,019,34

8 UNWTO 593,000

KfW19,357,78

1 MAE 5,740,376

GTZ21,170,35

5 Others 7,982,496

4. MANAGEMENT ARRANGEMENTS

4.1 Institutional Arrangements

246. UNDP is the Implementing Agency for this project. The project fully complies with the comparative advantages matrix approved by the GEF Council.

4.2 Project Implementation Arrangements

247. The project will be implemented through a National Implementation arrangement under the Harmonized Approach to Cash Transfer (HACT). Implementation arrangements seek to establish a bridge between the Ministry of the Environment (MAE), the Private Forests Network of Ecuador (RBPE), and FUNDAR. Knowledge and information provided through the executing institutions, as

88/ 100

well as best practices and lessons learnt through the implementation of pilot projects, will provide the tools to ensure effective coordination and follow-up among the institutions involved in the project.

248. UNDP will support the project as a GEF Implementing Agency. In Ecuador, UNDP supports national efforts towards meeting the Millennium Development Goals by sharing knowledge and best practices learned from the UNDP global knowledge network. UNDP contributes actively towards the establishment of alliances between central government agencies, local governments, social organizations, agencies of the UN System, and other multi- and bilateral donors. UNDP has supported the development of national capacities to develop biodiversity conservation policies since the elaboration of Ecuador’s National Biodiversity Reports and through the execution of the NCSA. UNDP demonstrates a number of comparative advantages in the context of this project, among which the following are of particular interest:

The provision of flexible, effective, and opportune technical assistance focused toward strengthening institutional capacities both at the national and local level.

A well-established capacity to mobilize resources for development at the national and local level in Ecuador.

Access to global information networks, experience and knowledge that can be used to strengthen the implementation of the project.

Neutrality, credibility and social trust aimed at facilitating agreements as well as prevention and mediation of social conflicts. Given the number of government and institutions at the central and provincial level, as well as the local communities and other agencies to be involved, UNDP is well placed to mediate in potential conflicts among these stakeholders.

Experience in establishing governance systems and mechanisms for sustainable financing of PA systems in different countries of LAC and a long lasting cooperation for the implementation of diverse development projects under different approaches in Ecuador that are relevant to this theme including: governance, institutional strengthening, capacity building, and non-governmental and community participation. Moreover, UNDP has experience working with different environmental projects in Ecuador that involve multiple stakeholders and aim to support the strategies and mechanisms related to the promotion of sustainable development.

249. The project will be executed by the Ministry of Environment (MAE), as the Lead Executing Agency, and co-executed by the Private Forests Network of Ecuador (RBPE) and FUNDAR within the areas corresponding to the APPRI and APC sub-systems75, respectively. MAE, FUNDAR and RBPE will develop institutional and coordination agreements before MAE signs this project document with UNDP. The formal linkages of MAE with these two institutions will ensure the necessary coordination with the key stakeholders at the local level and will facilitate an expedited initiation of the project.

250. The project will be executed under the UNDP-Ecuador National Implementation modality (NIM) following the HACT approach. Thus, execution of activities as well as contracts for required goods and services will follow government rules in what concerns PANE, and UNDP standards and procedures for what concerns the APPRI sub-system (RBPE) and APC sub-system (FUNDAR).

251. With specific reference to Outcome 4 the Small Grants methodology and mechanism will be employed for direct investments for small projects aimed at implementing local initiatives for the conservation and sustainable use of natural resources within the PANE and upon request within the

75 These institutions have been pre-selected to implement activities of the project in view of their advanced work in the field and their knowledge of local conditions and stakeholders.

89/ 100

APPRI and APC sub-systems. This mechanism was developed originally through the GEF Small Grants programme and now successfully manages funds from a number of sources and works with communities throughout the country. The SGP will assist in the preparation of differentiated methodologies for the pilots within each sub-system, supported by technical committees to assess the different approaches required. The funds channeled through this mechanism will be disbursed and managed according to SGP’s technical and operational procedures and UNDP’s disbursement regulations, taking into account the eligibility criteria established by the SGP and the logical framework matrix and guidance from the Project Steering Committee.

252. As the Lead Executing Agency, MAE will be responsible for the project’s coordination, management and monitoring of the project work plan. Through the Undersecretary of Natural Heritage, the National Biodiversity Directorate (NBD) of MAE will be the maximum authority in charge of those processes. Likewise, members of the planning, management and finance areas from the Ministry will participate, both in the technical committees and the activities related to the outcomes.

253. The co-financing funds will be managed by each executor, agency, or partner according to their own administrative, financial, legal, and technical principles and procedures. They will report the execution of their resources, the activities committed, and the results obtained (for what is related to the Project objectives and activities only) in the M&E System implemented by the NBD of MAE.

EXECUTING ARRANGEMENTS254. The project will establish i) a Project Steering Committee, ii) a Project Technical Committee, and iii) a Project Management Unit which includes a National Project Coordinator and a Project Assistant.

255. Project Steering Committee (PSC): The PSC will be composed of the Minister of Environment or representative, the Representative of AGECI and UNDP’s Resident Coordinator. It will be chaired by the Minister of Environment and will meet at least once a year to discuss political and strategic issues associated with the project management and start-up, as well as key issues for the support of the PA System. It will also oversee the political consistency with the other GEF projects that contribute to the strengthening of the PA system.

256. In each session, the National Project Coordinator will present a report on advance of the Project activities and expected or achieved results. These sessions will also be attended by special guests, including the Project Director, the National Project Coordinator, and the UNDP representative. The PSC’s functions include:

Supervising the overall development of the project and its related activities Monitoring the achievement of Outcomes Approving the Annual Operational Work Plan and budgets Ensuring multi-sectoral coordination and agreements with similar programs Suggest corrective actions to strategic and implementation difficulties that may arise.

257. Project Technical Committee (TC): The TC will include three representatives from the Ministry of Environment (one from the NBD, one from the Management and Financial Area, and one from the Planning Direction), a representative from each participating institution, and a representative from AGECI. The Minister of Environment or his/her representative will chair the TC. It will hold quarterly meetings and shall be in charge of the following:

Supervise the Annual Operational Work Plan Track the project’s progress Support the Project Management Unit

90/ 100

Propose modifications and/or improve the activities as needed and in accordance with the established Outcomes of the project

Ensure coordination of MAE/GEF/UNDP projects on protected areas.

258. Project Management Unit (PMU): This Unit will be responsible for the implementation of project-related activities, including the supervision of external consultants. Operationally it will be linked to MAE’s National Biodiversity Directorate (NBD) and will be led by the National Project Coordinator (NPC) with support from the Project Assistant. They will work closely with the NBD under the responsibility of the Director of Biodiversity and the Undersecretary of Natural Heritage. These technical and political counterparts will dedicate 20% of their time to the project and this is included in the in-kind co-funding from the institution. The PMU functions will include:

Ensuring project implementation and management is consistent with the objectives and results presented in the Project Document and its Logical Framework.

Ensuring inter-institutional support and coordination by all the institutions committed to the project implementation; including the institutions that participate in co-funding project-related activities.

Supervising the development of those project-related activities that have been subcontracted with external consultants.

Permanent project monitoring, with special emphasis on the identification of obstacles and complexities preventing normal execution, and proposing plans, solutions, and the relevant action to overcome these.

Convening the Project Technical Committee whenever necessary and for better project management.

Ensuring the active participation of different stakeholders during project implementation.

259. National Project Director (NPD): MAE will designate a member of the NBD as the project director. The NPD will supervise activities, ensure timely Government input and will be entirely responsible to the Government and UNDP for project outcomes and products in accordance with governmental rules. The NDP will also report to the PSC.

260. National Project Coordinator (NPC): The NPC will have the main responsibility for the execution of project-related activities, for monitoring indicators, and for the overall strategy and coordination of the project to ensure that objectives are achieved. This includes co-financing resources and/or activities conducted by other institutions that are collaborating with the project. Likewise, the NPC will ensure that the work plans and associated budgets are executed in line with the parameters described in the logical framework of the project and according to schedule. The NPC will lead and be in charge of the Project Management Unit, and will report to the Project Technical Committee. His/her responsibilities include the following:

Prepare, develop, and fulfill annual work plans and budgets associated with the project’s objective and outcomes as set out in the logical framework and timeframe.

Be accountable for starting up activities and for obtaining expected results within the project timeframe, as well as unexpected activities required for the fulfillment of project objectives.

Lead, co-ordinate and supervise project implementation as well as the PMU. Coordinate and supervise project implementation at an operational level, providing any

necessary guidance and support, ensuring that project stages are consistent with the general structure. In particular, he/she must prepare and coordinate with MAE the operational

91/ 100

aspects for contracting professional services (studies, monitoring, and equipment purchases) and input required for the execution of any activities. Similarly, he/she is to take into consideration any necessary mechanisms for monitoring compliance of external contracts and subcontracts.

Coordinate and supervise the professional team contracted for the project, providing the necessary guidance and support to ensure that the implementation of each project component is consistent with the project objectives and overall structure.

Evaluate the project’s progress and budgetary expenses regularly, with acute regard for the project impact indicators. To this effect, he/she must ensure systematic updating of information required for monitoring. Reporting procedures shall be effected through a written Progress and Budget Report to be submitted to the Project Steering Committee one month before the meeting to be held at least once a year. Likewise, the NPC shall prepare the reports required by GEF, as well as the quarterly progress reports (QPR) for UNDP.

Prepare Executive Progress Reports as required by the National Project Director. Similarly, the NPC should coordinate the external audits and evaluations as requested by UNDP. At least two evaluations will be required during the project’s life (one mid-term and one final evaluation), with terms of reference agreed on by the Project Technical Committee and following GEF guidelines. External audits shall be performed on a yearly basis in accordance with UNDP standards and procedures. Any budgetary changes made within the annual operational plan should be reported and justified for submission and the consideration of the Project Technical Committee.

Establish and ensure the coordination and information mechanisms necessary for project implementation. This includes the maintenance of information channels with the Project Steering Committee, and other relevant actors pursuant to the implementation of the project. Additionally, the NPC shall coordinate with other GEF projects on protected areas and biodiversity conservation, if any, and other initiatives related to this issue.

Share and transfer information from the experience generated by the project implementation, and thus provide spaces for discussion and analysis of the information generated.

Coordinate monitoring and evaluation functions for which the presence of a technical expert is contemplated. Ensure fulfillment of UNDP-GEF monitoring and evaluation procedures.

261. Project Assistant, under the supervision of the National Project Coordinator will provide support for the project implementation. This will include support to the NPC in the general planning (both operative and financial) and oversight of the Annual Operational Work Plans, the preparation and reporting of project related meetings, the monitoring and evaluation of contracts and sub-contracts, keeping accounts of budgetary expenses, supporting the preparation of reports, and in general, assisting the NPC in the project management.

262. Technical Support, under the supervision of the National Project Coordinator, will act as the PMU’s liaison between FUNDAR and the RBPE. They will be in charge of the activities to be executed locally in accordance with the logical framework.

263. In addition to activities executed through the PMU, technical counterparts and associated Government services, specific tasks and products will be undertaken by external consultants hired through competitive processes in accordance with government procedures. For some specific components, activities will be undertaken by third parties acting as Responsible Parties. These will be selected through competitive processes according to competencies. Amongst these are the Private Forests Network of Ecuador (RBPE) and FUNDAR, which were pre-selected to implement components

92/ 100

of the project in view of their advanced work in the field and their knowledge of local conditions and stakeholders.

264. The proposed governance structure for the project and the division of responsibilities among the key institutions are represented in the figure below:

265. In its capacity as Executing Agency, the MAE will be responsible for the technical and financial execution following its own proceedings. It will be responsible for: (i) directing the project, (ii) meeting its stated outcomes and projected outputs in a timely manner, and (iii) making effective and efficient use of the financial resources allocated in accordance with the Project Document.

FINANCIAL ARRANGEMENTS 266. For activities related to PANE, MAE will request from UNDP all financial funds via quarterly cash transfers based on the HACT procedures. Cash transfers for activities detailed in AWPs will be made by UNDP using the following modalities:

267. Cash transferred directly to the Implementing Partner prior to the start of activities (quarterly direct cash transfer).

268. All activities as well as contracts for required goods and services will follow government rules. All cash transfers to the MAE are based on the Annual Work Plans agreed between the MAE and UNDP.

National Project Coordinator (NPC)

Project Steering Committee (PSC)AGECI Ministry of Environment

Executive

UNDP/GEF

Senior supplier

UNDP CO Ecuador

Project assurance

Project Support

Project organizational structure

Technical Support FUNDAR Technical Support

Private Forest Network RBPE

Project Technical Committee (TC): Three representatives from the Ministry of

Environment, a representative from each participating institution, and a

representative from AGECI.National Project Director (NPD)

Biodiversity Direction at MAE

93/ 100

269. Direct cash transfers shall be requested and released for project execution periods not exceeding three months. Reimbursements of previously authorized expenditures shall be requested and released quarterly or after the completion of activities. UNDP shall not be obligated to reimburse expenditure made by the Implementing Partner over and above the authorized amounts. Following the completion of any activity, any balance of funds shall be reprogrammed by mutual agreement between MAE and UNDP, or refunded. Cash transfer modalities, the size of disbursements, and the scope and frequency of assurance activities may be revised in the course of programme implementation based on the findings of programme monitoring, expenditure monitoring and reporting, and audits.

270. MAE agrees to cooperate with UNDP for monitoring all activities supported by cash transfers and will facilitate access to relevant financial records and personnel responsible for the administration of cash provided by UNDP. To that effect, the Implementing partners agree to the following:

Periodic on-site reviews and spot checks of their financial records by UNDP or its representatives, based on HACT procedures.

Programmatic monitoring of activities following UNDP’s standards and guidance for site visits and field monitoring,

Special or scheduled audits. UNDP will establish an annual audit plan based on its regulations and those of HACT. The audits will be undertaken by private audit services.

271. To facilitate assurance activities, MAE and UNDP will agree to use a programme monitoring and financial control tool allowing data sharing and analysis.

272. For activities related to APRI and APC, UNDP standards and procedures will be applied, where MAE will request payments for activities to be carried out by FUNDAR and the RBPE.

Commitments of UNDP

273. In case of direct cash transfer, UNDP shall notify the MAE of the amount approved and shall disburse funds to the Implementing Partner in the designated bank account.

274. UNDP shall not have any direct liability under the contractual arrangements concluded between the MAE and a third party vendor.

275. As part of the activities and budget monitoring, UNDP will present annual financial statements relating to the status of UNDP/GEF funds (CDR) as registered in the ATLAS system. These statements will be certified by the executing Agency. In addition, UNDP will be in charge of selecting a recognized independent auditor that will conduct an annual audit of the project execution, according to the procedures set out in relevant documents. The cost of these audits will be charged to the project budget.

Commitments of Government

276. A standard Fund Authorization and Certificate of Expenditures (FACE) report, reflecting the activity lines of the Annual Work Plan (AWP), will be used by MAE to request the release of funds based on planned expenditure. MAE will use the FACE to report on the utilization of cash received. MAE shall identify the designated official(s) authorized to provide the account details, request and certify the use of cash. The FACE will be certified by the designated official(s) of the Implementing Partner and must attach the project report of the previous quarter and the plan for the next quarter.

277. Cash transferred to Implementing Partners should only be spent for the purpose of activities agreed to in the AWPs.

94/ 100

278. Funds disbursed from MAE to the FUNDAR and RBPE coordination teams must be spent only on activities agreed to in the AWPs and the project document. Cash received by the Coordination teams shall be used in accordance with established national regulations, policies and procedures consistent with international standards, in particular ensuring that cash is expended for activities as agreed to in the AWPs, and ensuring that reports on the full utilization of all received cash are submitted to the MAE within three months after receipt of the funds. Where any of the national regulations, policies and procedures are not consistent with international standards, UNDP regulations, policies and procedures will apply.

4.3 Audit arrangements

279. Audit Arrangements: The Audit will be conducted in accordance with the established UNDP procedures set out in the Programming and Finance manuals by the legally recognized auditor.

280. To facilitate scheduled and special audits, MAE will provide UNDP or its representative with timely access to:

all financial records which establish the transactional record of the cash transfers provided by UNDP;

all relevant documentation and personnel associated with the functioning of MAE’s internal control structure through which the cash transfers have passed.

281. The findings of each audit will be reported to the MAE and UNDP. MAE will furthermore

Receive and review the audit report issued by the auditors. Provide a timely statement of the acceptance or rejection of any audit recommendation to

UNDP Undertake timely actions to address the accepted audit recommendations. Report on the actions taken to implement accepted recommendations to UNDP.

4.4 Use of institutional logos on project deliverables

282. In order to accord proper acknowledgement to GEF for providing funding, a GEF logo should appear on all relevant GEF project publications, including among others, project hardware and vehicles purchased with GEF funds. Any citation on publications regarding projects funded by GEF should also accord proper acknowledgment to GEF.

5. MONITORING FRAMEWORK AND EVALUATION

283. The project team and the UNDP Country Office (UNDP-CO) supported by the UNDP/GEF Regional Coordination Unit in Panama will be responsible for project monitoring and evaluation conducted in accordance with established UNDP and GEF procedures. These will work seamlessly with the Ministry of Environment of Ecuador to achieve the best results in implementing the Project and to seek involvement and ownership of the technicians and officials of the institution in M&E activities. The Project Results Framework in Section 3 provides performance and impact indicators for project implementation, along with their corresponding means of verification. The GEF METT and UNDP Financial Scorecard will also be used to monitor progress on securing financial sustainability of the SNAP. The following sections outline the principle components of the M&E plan and indicative cost estimates related to M&E activities. The project’s M&E plan will be presented to all stakeholders at the Project’s Inception Workshop and finalized following a collective fine-tuning of indicators, means of verification, and the full definition of project staff M&E responsibilities.

95/ 100

5.1 Project start

284. A Project Inception Workshop will be held within the first 2 months of project start with those with assigned roles in the project organization structure, UNDP country office and where appropriate/ feasible regional technical policy and programme advisors as well as other stakeholders. The Inception Workshop is crucial to building ownership for the project results and to plan the first year annual work plan. The Inception Workshop will address a number of key issues including:

Assist all partners to fully understand and take ownership of the project. Detail the roles, support services and complementary responsibilities of UNDP CO and RCU staff vis à vis the project team. Discuss the roles, functions, and responsibilities within the project’s decision-making structures, including reporting and communication lines, and conflict resolution mechanisms. The Terms of Reference for project staff will be discussed again as needed.

Based on the project results framework, the GEF METT, and the UNDP Financial Scorecard, finalize the first annual work plan. Review and agree on the indicators, targets and their means of verification, and recheck assumptions and risks.

Provide a detailed overview of reporting, monitoring and evaluation (M&E) requirements. The Monitoring and Evaluation work plan and budget should be agreed and scheduled.

Discuss financial reporting procedures and obligations, and arrangements for annual audit. Plan and schedule Project Board meetings. Roles and responsibilities of all project

organization structures should be clarified and meetings planned. The first Project Board meeting should be held within the first 12 months following the inception workshop.

285. The Inception Workshop report will be a key reference document and will be prepared and shared with participants to formalize various agreements and plans decided during the meeting.

5.2 Quarterly

Progress made shall be monitored in the UNDP Enhanced Results Based Management Platform.

Based on the initial risk analysis submitted, the risk log shall be regularly updated in ATLAS. Based on the information recorded in Atlas, a Project Progress Reports (PPR) can be

generated in the Executive Snapshot. Other ATLAS logs can be used to monitor issues, lessons learned etc. The use of these

functions will be a key indicator in the UNDP Executive Balanced Scorecard.

5.3 Annually

286. Annual Project Review/ Project Implementation Reports (APR/PIR): This key report will be prepared to monitor progress made since project start and in particular for the previous reporting period (30 June to 1 July). The APR/PIR combines both UNDP and GEF reporting requirements. The APR/PIR includes, but is not limited to, reporting on the following:

Progress made toward project objective and project outcomes - each with indicators, baseline data and end-of-project targets (cumulative)

Project outputs delivered per project outcome (annual) Lesson learned/good practice. AWP and other expenditure reports Risk and adaptive management ATLAS QPR Portfolio level indicators (i.e. GEF focal area tracking tools)

96/ 100

5.4 Periodic Monitoring through site visits

287. UNDP CO and the UNDP RCU will conduct visits to project sites based on the agreed schedule in the project’s Inception Report/Annual Work Plan to assess first hand project progress. Other members of the Project Board may also join these visits. A Field Visit Report/BTOR will be prepared by the CO and UNDP RCU and will be circulated no less than one month after the visit to the project team and Project Board members.

5.5 Mid-term of project cycle

288. The project will undergo an independent Mid-Term Evaluation at the mid-point of project implementation on the 6th month of the 3rd year (June, 2013). The Mid-Term Evaluation will determine progress being made toward the achievement of outcomes and will identify course correction if needed. It will focus on the effectiveness, efficiency and timeliness of project implementation; will highlight issues requiring decisions and actions; and will present initial lessons learned about project design, implementation and management. Findings of this review will be incorporated as recommendations for enhanced implementation during the final half of the project’s term. The organization, terms of reference and timing of the mid-term evaluation will be decided after consultation between the parties to the project document. The Terms of Reference for this Mid-term evaluation will be prepared by the UNDP CO based on guidance from the Regional Coordinating Unit and UNDP-GEF. The management response and the evaluation will be uploaded to UNDP corporate systems, in particular the UNDP Evaluation Office Evaluation Resource Center (ERC). The METT and Financial Scorecard will also be completed during the mid-term evaluation cycle.

5.6 End of Project

289. An independent Final Evaluation will take place three months prior to the final Project Board meeting and will be undertaken in accordance with UNDP and GEF guidance. The final evaluation will focus on the delivery of the project’s results as initially planned (and as corrected after the mid-term evaluation, if any such correction took place). The final evaluation will look at impact and sustainability of results, including the contribution to capacity development and the achievement of global environmental benefits/goals. The Terms of Reference for this evaluation will be prepared by the UNDP CO based on guidance from the Regional Coordinating Unit and UNDP-GEF. The Terminal Evaluation should also provide recommendations for follow-up activities and requires a management response which should be uploaded to PIMS and to the UNDP Evaluation Office Evaluation Resource Center (ERC). The METT and Financial Scorecard will also be completed during the final evaluation.

290. During the last three months, the project team will prepare the Project Terminal Report. This comprehensive report will summarize the results achieved (objectives, outcomes, outputs), lessons learned, problems met and areas where results may not have been achieved. It will also lay out recommendations for any further steps that may need to be taken to ensure sustainability and replicability of the project’s results.

Table 10: Indicative Monitoring and Evaluation Work plan and corresponding budgetType of M&E

activityPersons/institutions

responsibleBudget US$ Timeframe

Inception Workshop Project Coordinator UNDP Other participants

$ 5,000 Within the first two months of project implementation

Inception Report Project Team UNDP N/A Two weeks after the workshop

Measurement of Means of Verification for Project Purpose

Project Team UNDP External Consultants

$ 45,000Yearly for progress indicators and start, mid and end for impacts as per logframe

97/ 100

http://erc.undp.org/index.aspx?module=Intra



Type of M&E activity

Persons/institutions responsible

Budget US$ Timeframe

Indicators + Project Progress and Performance

Ministry of Environment

Conduct METTs PMU and consultant $5,000 Mid-term and endAnnual Reports: ARR and PIR

Project Team UNDP N/A Annual

Quarterly progress reports Project Team N/A Quarterly

Combined Delivery Reports (CDRs) Project Manager N/A Quarterly

Problem Log Project Manager UNDP N/A Quarterly

Risk Log Project Manager UNDP N/A Quarterly

Lessons Learned Log Project Manager UNDP N/A Quarterly

Mid-term evaluation Project Team UNDP External Consultants

$ 35,000 Halfway point in the life of the project

Final Evaluation Project Team UNDP External Consultants

$ 45,000 Two months before project closure

Final Report Project Team UNDP N/A One month before project closure

Lessons Learned Project Team UNDP

$ 10,000 (average $ 2,000 per year)

Annual

Audits UNDP Project Team External Consultants

$ 10,000 (average $ 2,000 per year)

Annual

Visits to field sites (UNDP staff travel costs to be charged to IA fees)

UNDP Country Office UNDP-GEF Regional

Coordinating Unit (as appropriate)

Government representatives

Other Steering committee members

$10,000 (average one visit per year)

Annual

TOTAL ESTIMATED COST: Excluding project team staff time and UNDP staff and travel expenses US$ 165,000

5.7 Learning and knowledge sharing

291. Results from the project will be disseminated within and beyond the project intervention zone through existing information sharing networks and forums. The project will identify and participate, as relevant and appropriate, in scientific, policy-based and/or any other networks, which may be of benefit to project implementation though lessons learned. The project will identify, analyze, and share lessons learned that might be beneficial in the design and implementation of similar future projects. Finally, there will be a two-way flow of information between this project and other projects of a similar focus.

98/ 100

6. LEGAL CONTEXT

292. This document together with the CPAP signed by the Government and UNDP, which is incorporated by reference, constitute together a Project Document as referred to in the SBAA and all CPAP provisions apply to this document.

293. Consistent with Article III of the Standard Basic Assistance Agreement, the responsibility for the safety and security of the implementing partner and its personnel and property, and of UNDP’s property in the implementing partner’s custody, rests with the implementing partner. The implementing partner shall:

put in place an appropriate security plan and maintain the security plan, taking into account the security situation in the country where the project is being carried;

assume all risks and liabilities related to the implementing partner’s security, and the full implementation of the security plan.

294. UNDP reserves the right to verify whether such a plan is in place, and to suggest modifications to the plan when necessary. Failure to maintain and implement an appropriate security plan as required hereunder shall be deemed a breach of this agreement.

295. The implementing partner agrees to undertake all reasonable efforts to ensure that none of the UNDP funds received pursuant to the Project Document are used to provide support to individuals or entities associated with terrorism and that the recipients of any amounts provided by UNDP hereunder do not appear on the list maintained by the Security Council Committee established pursuant to resolution 1267 (1999). The list can be accessed via

http://www.un.org/Docs/sc/committees/1267/1267ListEng.htm. This provision will be included in all sub-contracts or sub-agreements entered into under this Project Document.

99/ 100

http://www.un.org/Docs/sc/committees/1267/1267ListEng.htm

7. ANNEXES

SEE SEPARATE FILE

100/ 100

united nations development programme · web viewunited nations development programme. country:...

Documents