GLOBAL ENVIRONMENT FACILITY - ~~~/506.y Russian Federation Biodiversity Conservation Project Project Document May 1996 THE WORLD BANK GEF Documentation The Global Environment Facility (GEF) assists developing countries to protect the global environment in four areas: global warming, pollution of international waters, destruction of biodiversity, and depletion of the ozone layer. The GEF is jointly implemented bythe United Nations DevelopmentProgramme, the United Nations Environment Programme, and the World Bank. GEF Project Documents - identified by a green band - provide extended project- specific information. The implementing agency responsible for each project is identified by its logo on the cover of the documenit. Global Environment Division Environment Department World Bank 1818 H Street, NW Washington, DC 20433 Telephone: (202) 473-1816 Fax: (202) 522-3256 Currency Eauivalents Currency Unit = Ruble I ruble = 100 kopecks Market Exchanee Rates Ruble per US$1 Period Average End of Period 1993 1,018 1,247 1994 2,212 3,550 1995 4,566 4,640 1996 (as of March 31) 4,764 4,856 ReciDient's Fiscal Year January 1 - December 31 Weinhts and Measures Conversions Metric System US System I meter (m) = 3.2808 feet 1 kilometer (km) = 0.6214 mile 1 square meter (m2) = 1.196 square yards 1 metric ton (ton) = 1.102 short tons Acronyms and Abbreviations CD Component Director IUCN World Conservation Union cM Component Manager MEPNR Ministry of Environmental CPPI Center for Project Preparation and Protection and Natural Resources Implementation NBS national biodiversity strategy CV curriculum vitae NCB national competitive bidding EA environmental assessment NGO non-governmental organization EIA environmental impact assessment NPV net present value EFP Environmental Framework NRM natural resource management Program PD Project Director EMP Environmental Management PIG Project Implementation Group Project * PM Project Manager ERR economic rate of return PPA Project Preparation Advance FFS Federal Forest Service PPAR Project Performance and Audit FSU former Soviet Union Report GC General Consultant SDR Special Drawing Rights GEF Global Environment Facility SOE statement of expenditure GET Global Envimnment Trust Fund SW staff weeks GOR Government of Russia TA technical assistance IBRD International Bank for TOR Terms of Reference Reconstruction and Development WCMC World Conservation Monitoring ICB international competitive bidding Centre IDA International Development WWF World Wide Fund for Nature Association IEPNM Institute for Economic Problems of Nature Management Report No. 15064-RU Russian Federation Biodiversity Conservation Project Project Document May 1996 Infrastructure, Energy and Environment Division Country Department III Europe and Central Asia Region PART I: PROJECT SUMMARY I RUSSIAN FEDERATION BIODIVERSITY CONSERVATION PROJECT PART 1: GRANT AND PROJECT SUMMARY Recipient: The Russian Federation Beneficiaries: Ministry of Environrental Protection and Natural Resources; Federal Forest Service Amount: SDR 13.8 million (US$ 20.1 million equivalent) Project ID No.: RU-GE-8801 Terms: Grant Financing Plan: Local Foreign Total ---------US$ million equivalent----- GETGrant 11.0 9.1 20.1 Govt. of Russia 4.8 0.0 4.8 Govt. of Switzerland 0.5 0.6 1.1 TOTAL 16.3 9.7 26.0 Economic Rate of Not Applicable Return: Maps: IBRD 27085, 27267, 27290, 27268, 27289 THE RUSSIAN FEDERATION BIODIVERSITY CONSERVATION PROJECT PART 1: Grant and Project Summary 1. Background. The Russian Federation, at one eighth of the world's land mass, contains an enonnous diversity of vast ecosystems which represent some of the last few remaining areas where the dynamics of ecological processes and wildlife populations can operate naturally. The eight biogeographic zones encompass 54 ecological zones and contain associations of species which are outstanding in terms of uniqueness, endemism and biodiversity. Of equal importance is the role of the huge expanses of forest and tundra which act as a significant carbon sink. Although much of Russia's biodiversity falls outside of the protected area system, this system which covers 6% of the country, is the largest, one of the most important and until recently, one of the best organized in the world (see map IBRD 27085). 2. The Government of Russia (GOR) recognizes that with the current transition of the Russian economy there will be impacts on biodiversity and nature protection. Indeed these impacts are already significantly undermining environmental protection and biodiversity conservation. Agricultural and forestry resource use occurs in changing and ill-defined administrative and legal circumstances, further complicated by the uncertainty generated by the land reform and privatization process. Administrative and political decentralization has assigned the responsibility of policy implementation to a local level, which has resulted in a loss of coordination and a minimal implementation of laws and activity regulation. The consequent unsustainable use of natural resources is augmented by the fragmented institutional structure - particularly evident in the Protected Area administration - which is unifornly and simultaneously beset by a lack of coordination, efficacy, finance and clarity. At the Federal level, the Ministry of Environmental Protection and Natural Resources (MEPNR) is entrusted with the task of overall coordination of activities related to Protected Areas, while certain types of Protected Areas are administered by other line agencies, such as the Federal Forest Service (FFS) in the case of National Parks. 3. Consequently, there is an urgent need for a clearly defined methodology which will reconcile the current dynamism in economic and political development with the restraint required to prevent significant biotic depredation. In order for an ecologically sustainable use of natural resources to occur, environmental concems must be comprehensively incorporated into the private, public and community decision making process. This implies that decision makers have to understand the essential importance of the nature of environmental objectives vis-a-vis other development objectives; the most effective means and potential actions to attain those objectives; and the ways in which such environmental concems can be effected in practical temis. 4. This project is associated with the Environmental Framework Program of the Russian Federation (EFP), and specifically with the Environmental Management Project (EMP) loan from the Bank to the Russian Federation which has provided financing for the core components of the EFP. The EFP has been designed to enhance the current system of environmental management in the Russian Federation. The EFP is estimated to cost a total of US$282 million over a period of approximately four to five years. It addresses environmental and natural resource management issues at a federal, regional and local levels in demonstration areas across a wide spectra of natural areas. It has eight principal components: i) institutional and policy strengthening; ii) air quality management; iii) water quality and water quality management; iv) hazardous waste maiWgement; v) biodiversity conservation and natural resources management; vi) conservation and management of cultural and natural heritage; vii) the National Pollution Abatement Facility; and viii) Center for Project Preparation and Implementation (CPPI). Of these, the EMP, with a total cost of US$ 110 million, concentrates on core elements of i, iii, iv, vii and viii. This 2 Grant and Profect Summary project, although financially distinct from the EMP, consists of the core biodiversity component of the EFP and therefore is associated with, and will be implemented under, the same organizational arrangements as the EMP (see Figure 1.1). 5. Lessons from Previous Bank/IDA Involvement. The proposed project was developed in concert with the Environmental Management Project. It draws substantially from the project's Project Preparation Advance (PPA). The PPA (see Annex 1.2 for a sumrnmary of PPA activities) was particularly successfiul, not only in disbursement effectiveness ($780,000 was disbursed in seven months), but also in making significant progress in developing project methodology and organizational issues as well as initiating very comprehensive and innovative work in Biodiversity Policy Matrices and protected area Gap Analysis. The project also benefited from lessons learnt from other bi-lateral and NGO projects currently being implemented in Russia. Additionally, in terms of experience drawn from other GEF Biodiversity projects, it draws on other countries' projects during the GEF Pilot Phase. The key lessons include: (a) the importance of a national strategic framework for biodiversity policy; (b) the need to build in financial sustainability and long-term commitment from the Government; (c) the need to involve local people and regional administrations in design and implementation; (d) the role of macroeconomic and sector policies in establishing an appropriate incentive framework for resource conservation; (e) the need to expand the protected area system and improve management technologies for unprotected habitats with high biodiversity and environmental values. Finally, the community participation programs supported under the project incorporate lessons learned from several on-going pilot activities in Russia managed by NGOs, the Government and other donor agencies. 6. Rationale for GEF Funding. Funding from the GEF is justified for three reasons. 7. Global Importance of the Biodiversity of the Russian Federation. The vast range of endemic and non-endemic species in Russia represents a significant percentage, which is now vulnerable, of the world's total biodiversity. Additionally, the expanses of forest and tundra act as a significant carbon sink. The rapid destruction of this, aligned to the high rates of tropical forest deforestation (the other major arboreal sink) will have a significant affect on global climatic processes. The protected area system is in a process of dissolution which is diminishing its effectiveness. Given the global importance of the country's biodiversity, immediate action is required to halt this process and develop management regimes more aligned to current social economic conditions. 8. Financial Necessity. Russia's economic circumstances are difficult. The freeing of wholesale and consumer prices, the rise in credit (16% of GDP went in the form of loans to state enterprises), accompanied by a weakened financial position has led to high inflation rates, as high as 10% per month in 1993 and currently down to approximately 4-5% per month. Since 1991, imports and exports have declined by 30 and 22 percent respectively, with the external balance still worsened by extensive capital flight. GDP has declined by 40% as a result in the decrease in foreign trade and the sharp cutback in foreign investment and defense expenditures. Fiscal policy during the past few years has been characterized by a significant decline in budgetary revenues with Federal fiscal revenues declining from 17 percent of GDP in 1992 to 11 percent in 1994. Income distribution worsened significantly between 1991 and 1994 with the share of income accruing to the richest fifth of the population nearly doubling in proportion to the share of the poorest fifth. As a result, up to one third of the population may have fallen below the poverty line. Therefore, those scarce resources which are available are used to address concerns which are perceived to be priority issues - economic restructuring, developing a social safety net etc. National financial resources are not likely to be available for biodiversity issues which may appear to be a long term priority even though of global significance. Recognizing that this is a time that the economy is in transition, the GEF's Grant and Project Smwmary 3 role of focusing on these incremental issues within the framework of EFP and EMP will be of crucial importance. Many opportunities for biodiversity conservation will be lost without short term GEF assistance as institutions, policies and structures take time to adapt and be replaced in many cases by new financial mechanisms and structures. 9. Social participation. There is an urgent need to develop mechanisms to encourage the participation of local communities into the management of protected areas. Their current exclusion from this process has been a major factor in the protected areas' financial unsustainability. Such participation will need to concentrate on education, training and arbitration measures as well as looking specifically at the development of constructive relationships with indigenous peoples. 10. Proiect Financin2. The total cost of the project is estimated to be US$ 26.0 million equivalent, for which the GEF grant of US$ 20.1 million equivalent is proposed. The GOR will provide USS 4.8 million equivalent to finance institutional strengthening actions and ecosystem protection services (budgeted under the Federal Targeted Program of State Support of State Natural Zapovedniks and National Parks Up To the Year 20001/). The Swiss Government is expected to provide a grant of US$ 1.1 mnillion equivalent to parallel finance components on public support and education programs. This is in addition to the US$ 2.7 million equivalent provided by the Swiss Government which, under a broad framework program of biodiversity conservation priorities, will be used to support sustainable forest management and the enforcement of the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES). Other initiatives under this franework program include support (minimum US$ 12 million equivalent) from the US Government, EU TACIS and other donors. 11. Proiect Obiectives. The main objective of this project will be to assist the Russian Federation maintain optimum levels of biodiversity in accordance with the principles of economic and environmentally sound sustainable development. The project will assist in ensuring the enhanced protection of biodiversity, within and outside protected areas, in conformance with the Government's obligations under the Convention on Biological Diversity. More specific objectives include: i) supporting the development of federal and regional biodiversity strategies; ii) developing and implementing mechanisms and approaches which will mainstream biodiversity conservation and environmental protection into the policy making process; iii) assessing the protected area institutional framework and subsequently strengthening its effectiveness; iv) enabling the participation of all interested stakeholders, including aboriginal peoples and local communities into biodiversity conservation; and v) developing an inter-regional demonstration of inter-sectoral biodiversity conservation and environmentally sustainable natural resource management. The realization of these objectives will: i) substantially strengthen the economic feasibility and sustainability of biodiversity conservation within the Russian Federation; ii) leave a legacy of integrated planning demonstrating the necessity of combining financiaUeconomic policy, socio-economics and appropriate normative and resource allocation mechanisms to ensure sustainable biodiversity conservation; iii) help safeguard numerous endangered and vulnerable species including the Siberian Tiger (Panthera tigris altaica), Snow Leopard (Pantheria uncia) and Pallas's Sea Eagle (Haleaetus leucoryphus Pall.); iv) provide a realistic policy to ensure the protection of Lake Baikal; and, v) facilitate the integration of native peoples into protected area management. These objectives will be monitored according to the Guidelines for Monitoring and Evaluation of GEF Projects, and will include key monitoring criteria on biological, socioeconomic, financial, institutional and other factors. These key project performance indicators have been identified I/ Approved by a Decree of the President of the Russian Federation (Decree No. 1032, dated Oct. 10, 1995). 4 Grant and Project Summary during appraisal (see Annex 5.1), and quantifiable evaluation criteria would be further refined during the Project Launch Workshop, as agreed at negotiations. 12. Proiect Description. The proposed project would comprise four components. 13. The Strategic Overview Component (13 percent of total costs) will assist in the strengthening of the federal and regional biodiversity strategies already envisaged by the Russian Government under its commitments upon ratification of the Convention on Biological Diversity (17 February, 1995). It will enable the development of a federal strategy and will also develop the methodologies and procedures for regional strategies. As part of the latter activity, a model regional strategy for the Nizhniy Novgorod region will be created. The initial strategies will consist of i) an assessment of extent, status and vulnerability of biodiversity; ii) current normative instruments which affect biodiversity conservation; and, iii) an action plan which will define remedial actions. After their completion, significant analytical and participatory actions will be undertaken to mainstream environmental protection and biodiversity conservation into federal and regional development policies. They will include a rigorous analysis of the economic linkages between biodiversity conservation and sound economic policy and the development of training programs to disseminate this information, as well as an assessment of potential conservation funding mechanisms. In addition, a biomonitoring information system will be established to assist policy makers take appropriate account of biodiversity issues. GET funds will be used to procure foreign and local consultants' services for the above strategies, action plans and policy support assistance, as well as to purchase specialized computer and GIS equipment for the biomonitoring information system. 14. The Protected Areas Component (53 percent of total costs) will complement the GOR's federal program for the support of natural protected areas up to the year 2000, and its current process of reorganization of the institutions and mechanisms for nature protection. It will assist in increasing the efficiency of the federal management, while assuring that appropriate management and financial functions are devolved to the regions within a modified institutional structure. In parallel with this, the component will improve biodiversity conservation by focusing on seven ecologically representative regions of high biodiversity value. These include: Northwestern Russia, Center of European Russia, Upper and Middle Volga, Northern Caucasus, Lake Baikal, Southern Siberia and the Far East. The component will implement specific activities which will: i) systematically address training and professional development needs; ii) extend educational outreach and community participation; iii) consolidate coverage of vulnerable areas requiring protection; iv) strengthen the protection and enforcement services for the protected areas; and v) develop a national protected area date base. The GET grant will finance consultants' services and professional development/training packages for the above activities, as well as procurement of urgently required field research and monitoring equipment, vehicles and computer and office equipment, and miscellaneous infrastructure works for the selected protected areas. 15. Tfhe Lake Baikal Regional Component (25 percent of total costs) will provide a practical regional demonstration of the inter-sectoral and administrative coordination necessary for the incorporation of biodiversity conservation into a development policy which meets acceptable and sustainable economic and social welfare targets. The component presents an integrated three-pronged program to directly address these issues and entails a set of inter-related initiatives to strengthen natural resource management and thus biodiversity conservation capability and effectiveness at the inter-regional, the regional, and community levels. It will enable the adoption and implementation of an inter-regional biodiversity conservation and natural resource management strategy. Simultaneously, three model regional demonstration projects will be implemented which will entail significant improvements in land and resource management practices, and in the system of planning and decision-making for the purposes of biodiversity conservation and the Grnt md Project Sufmary S improvement of local socio-economic conditions. At the community level, support will be provided for biodiversity initiatives that will facilitate essential applied research in biodiversity conservation, as well as small scale community initiatives, the work of environmental non-governmental organizations, and the activities of native peoples which promote biodiversity conservation. The GET grant will finance monitoring and computer equipment, and consultants' services for the inter-regional and regional activities, and will finance the annual programs of small grants at the community level. 16. Project Management and Coordination Component (9 percent of total costs) will supplement the implementation structure established and already functioning satisfactorily under the EMP to implement the project activities (details of this organization are set out below). 17. Proiect ImDlementation and Organization. The project will significantly follow the implementation structure established and already functioning under the EMP. The MEPNR, with the participation of the FFS, will have overall responsibility for execution of the project, but will delegate certain administrative functions under the project to the CPPI established under the EMP and used during the Project Preparation Activities (PPA) process. The CPPI will have responsibility for coordination between implementing entities and multilateral and bilateral donors, for procurement, disbursement, financial and technical management, and project identification and preparation. The Project Implementation Group (PIG) will operate as a department of the CPPI. The MEPNR will provide policy guidance with regards to the project and oversee operations of the PIG, through a Biodiversity Supervisory Committee chaired by the MEPNR's Deputy Minister for Biological Resources (Project Director ex- officio). Such policy guidance will be necessarily coordinated with the Inter-ministerial Commission on Environmental Protection and Natural Resource Use already established by the Governnent. The Project will be led by a Project Manager selected according to Terms of Reference approved by Bank and reporting to the ex-officio Project Director, with team managers assigned to the individual components. The Lake Baikal component will be administered by regional teams to be established at each of the regional administrations (Irkutsk, Ulan-Ude and Chita) which will be under the policy guidance of a working group of the already existing Governmental Commnission for Baikal, which is chaired by the Minister of the MEPNR and equal voting power is shared by the Federal government and the regional governnents. The teams for the Strategic Overview and the Protected Areas components will be located in Moscow. These teams will be supported by local and foreign consultants to be hired under the project with a high local to foreign person-month input because of the extensive experience of Russian institutions in this field. A more detailed description of the project management structure is provided in paragraphs 5.1-5.4 of the Technical Annex. 18. Proiect Sustainabilitv. Sustainability is sought to be ensured by: (i) developing a self-sustaining Biodiversity Strategy and Action Plan linked to the economic, social and political decision making process through the Inter-ministerial Commission on Environmental Protection and Natural Resource Use and the EMP; (ii) dealing with sectorial and inter-sectorial issues and linkages at national and regional level; (iii) strengthening institutional capacity to provide the long term basis for regulation, organization and management, and (iv) developing comprehensive and innovative financial mechanisms to support biodiversity conservation and protected areas. These mechanisms will include environmental trusts, fiscal policy, resource use allocation mechanisms, mitigative license fees, cost sharing approaches, visitor permits, appropriate development of ecotourism facilities and optimum staffing levels of protected areas to ensure the effective implementation of management plans and biodiversity protection. While ensuring that sustainability is a key development objective of this project, the Federal and local government levels are already expected to contribute to the incremental costs of this project. At the Federal level the Federal Program of State Support of Natural Protected Areas Up To the Year 2000, approved within the 6 Grnt axd Proled ct.wmary Government, but awaiting endorsement by the parliament provides for three to five fold increase in recurrent funding for protected areas and some related biodiversity conservation activities in the MEPNR. Support for protected areas has been provided at local (oblast) levels and the regional components will be exploring opportunities for the development of sustainability at this local level. As well the project appraisal has refined a decreasing level of support for expenditures which though necessarily established by the project will remain after project completion. These expenditures will therefore be progressively taken up by the goverunent. 19. Community and NGO Involvement. The project has provided for extensive involvement of local communities and non-governmental organizations (NGOs) in its implementation. The PPA for this project benefited from significant NGO involvement, not only in the preparation of the material, program and details, but also in informal and formal consultation and discussion. At the intemational level IUCN and WWF (US), and at the national level WWF (Russia), the Socio-Ecological Union (SEU) of Russia, (through its various sub-organizations) played particularly constructive roles, as did local NGOs in the Lake Baikal region, including Baikal Wave and the Baikal Fund. The project makes provision for NGO, local community and native culture participation throughout all three of the sub-components in the following ways: The Strategic Overview Component will make an assessment of native cultures' relationship to biodiversity and will encourage local community and native peoples participation in the establishment of regional biodiversity strategies. NGOs will be consulted and involved in the development of the Federal Biodiversity Strategy. Within the Protected Areas Component, NGOs will be involved in designing the education programs and will be an important target group in the outreach programs as well as participating in the Regional Associations. Local communities are targeted as one of the main focal points as community participation is considered to be essential in ensuring the continued survival of the protected area system. In the same way, the role of native cultures in helping to find ways to protect biodiversity will be examined and there are measures to introduce new categories of protection to reflect the importance of this activity. In the Lake Baikal Component, a significant part of the community biodiversity initiatives will involve NGOs, local communities and native cultures, and will include applied research by academic institutions, community development linked to biodiversity conservation and sustainable development as well as small scale grants to individuals to encourage integrated natural resource management which enhances biodiversity protection (see Annex 3.6 for details of the implementation of local biodiversity initiatives). 20. Aereements Reached. The following agreements have been reached with the Recipient: (a) Prior to negotiations, the following actions have been taken by the Recipient: (i) the MEPNR and the Federal Forest Service have issued a Memorandum of Agreement, satisfactory to the Bank, detailing their respective responsibilities for implementation of project components on protected areas under their control; (ii) by the order of the Minister of the MEPNR, a Project Supervisory Committee has been established and its key members appointed; (iii) the State Ecological Expertise has reviewed the proposed Project and officially confirmed that the Project fully complies with the requirements of the federal environmental legislation; and (iv) a Project Manager under Terms of Reference acceptable to the Bank has been appointed by the MEPNR. (b) At negotiations, (i) the MEPNR has confirmed by a Ministerial letter both the Government's contributions to the Project and its commitment to ensuring appropriate Gran wed Proled Swmwy 7 interactions between federal and regional protected area nanagement organizations; (ii) clear arrangements shall be confirned by the MEPNR and the Sviss Governnent through an exchange of letters, by June 30, 1996, to the effect that Project activities to be financed by the Swiss Goverunent shall be supervised by the Project's Supervisory Conmnittee; (iii) Lake Baikal Supervisory Corunittee shall be established, reporting to the Goverrnental Commission for Baikal and to the Project's Supervisory Cofmmittee; and it shall include six representatives of the administrative bodies of the Republic of Buryatia and Irkutsk and Chita Oblasts and six representatives of the Baikal region's NGO comununity; and (iv) in order to formally associate the Project with the EMP, the EMP Loan Agreement will need to be amended to refer to the Project as a part of the EMP; the letter of amnendment shall be signed on the day of Grant Agreement signing. (c) Prior to effectiveness, that: (i) the Project Implementation Group will be established with functions, procedures and staffing acceptable to the Bank; and (ii) the General Consultant will be hired by the CPPI under terms of reference and in accordance with procedures satisfactory to the Bank. (d) Prior to disbursement, that: (i) for expenditures under the Strategic Overview Component - a decree or other appropriate pronouncement acceptable to the Bank, will be issued by the executive authorities of at least one relevant oblast expressing support and providing for the implementation of the regional biodiversity strategies; and (ii) for expenditures under the Lake Baikal Regional Component - the Governmental Commission for Baikal will issue a general resolution enabling the Project's implementation, and the administrations of Chita and Irkutsk Oblasts and the Government of the Republic of Buryatia will issue clear implementing resolutions providing for the creation, staffing and operations of the implementation bodies under the Lake Baikal component. 21. Environmental Asmects. The project will be subject to fornal environmental assessment procedures for natural resource management development activities as a function of its policy and regulatory support. In addition the project is expected to have a positive environmental impact through the improved managmt and protection abilities of the protected area system of the Russian Federation as well as the introduction of new land use and conservation measures through the implementation of the Federal and regional biodiversity Strategies and in the Lake Baikal regional comnponent. The project has been screened as Category C (no Environmental Assessment or environmental analysis is required). However, the project may support some activities with potentially adverse minor impacts, such as small-scale civil work construction in nature reserves and development of new enterprises. These activities will require environmental screening carried out in accordance with guidelines acceptable to the Bank. 22. Social Aspects. The project will not involve any resettlement. Protected area management plans and biodiversity strategies will pay particular attention to the impact of project activities on cultural property and the development of sound mitigation measures to ensure adequate protection. Similarly, the project will closely monitor the needs of ethnic minorities living within or adjacent to project areas. In particular, the terms-of-reference for biodiversity strategies, nature reserve management plans and community projects will require detailed review of minority issues to ensure that they are not adversely affected by project activities and that the social and economic benefits they receive are consistent with their cultural preferences. Minorities will participate directly in the design and implementation of project activities and all components will be screened to avoid adverse impacts for indigenous peoples. Where indigenous 8 Grant agd Piwj Sea, ry peoples are affected by the sub-components then, as according to Bank requirements, an indigenous peoples' development plan satisfactory to the Bank will be an integral part of the component. 23. Project Benefits. The benefits from this project would accrue at four levels, global, national, regional and local. * From the global perspective the project would further stabilize and secure an effective protected area network which would ensure the viability and safety of some of the world's most endangered species and areas of richest biodiversity. Also at this level, it would help safeguard the vast expanses of vegetation and habitat which act as a vital carbon sink. * At the national level the project will ensure the protection of the Russian Federation's biodiversity at a time of profound economic and political change which would otherwise pose immediate and profound threats to its safety. It will also strengthen the institutional, planning and renewable resource management capacity of the Government thereby helping to develop a viable and sustainable economy. Moreover, it will develop a funding mechanism to ensure that Russia is able to meet the incremental costs which arise from the responsibility of protecting such large areas of globally important biodiversity. * At a regional level it will not only serve to protect biodiversity but will also form a model for the synthesis of environmental protection and sustainable development in an area of substantial biodiversity importance. Furthermore, it will establish a training program for protected area administrators and managers, thereby ensuring that the requisite skills are dispersed throughout Russia. * At the local level it will ensure the existence not only of particular protected areas and the vulnerable species within them, but also by explicitly linking the welfare of communities to the protection of biodiversity, develop greater economic self-sufficiency, so providing regional and local socio-economic benefits and securing sustainable regional development. It will also engender a trained core of local officials and enable concrete, visible local action for biodiversity protection. Furthermore, it will allow for the positive participation of local and indigenous people into resource management actiWies, which will enhance their ability to maintain cultural identity, retain traditional association with customary practices and sustain economic viability. 24. Risks. The main risks include: (a) unsustainable resource use because of the present political and economic situation which is creating adverse impacts on biodiversity; (b) weakening of the Federal institutional structures and slow fornation of new structures with greater regional autonomy, which compounds resource use issues; (c) wide geographic spread that adds to complexity and need for close management and supervision; and, (d) inadequate participation of local communities in the implementation of either the regional biodiversity strategies or the new protected area management plans, thereby prolonging the unsustainable use of natural resources both within and outside of the protected areas. All of the above will be closely reviewed under the project's monitoring and evaluation program and supervised by Bank missions. The project counters these risks by: * developing national and regional programs which demonstrate the economic benefits in incorporating the economic values of biodiversity conservation and other environmental externalities into the decision making process; Grtt md ProJect Swmxary * strengthening and clarifying institutional responsibility while simultaneously re-structuring resource use allocation mechanisms and enabling local community participation to ensure greater levels of transparency; * ensuring that the program has a clearly defined regional focus which involves local poople and indigenous peoples in definite projects with tangible benefits; * maintaining a strong focus on developing; (a) innovative financing mochanisms for conservation; (b) comprehensive outreach programs by protected areas; and, (c) redefining staff requirements to re-oriented protected area management plans will greatly improve the protected area systems' economic efficiency and capability. * establishing an integrated regional model in Lake Baikal which by developing strong regional interests to biodiversity protection, demonstrates the economic linkages of biodiversity conservation to sustainable development and strongly supports the involvement of local communities. * inclusion of a general supervision consultant to assist in the management and supervision of the project. 10 Gramt axd Project Smvary Schedule A RUSSLAN FEDERATION BIODIVERSITY CONSERVATION PROJECT Estimated Costs and Financing Plan (US$ million equivalent) Local Foreign Total % Foreign % Total Exchange Costs Estimated Project Cost Strategic Overview Component 1.5 1.4 2.9 48 13.1 ProtectedAreas Component 6.9 4.8 11.7 41 53.1 Lake Baikal Regional Component 3.8 1.7 5.5 31 24.4 Project Management and Coordination Component 1.6 0.5 2.0 22 9.4 Base Cost 13.8 8.3 22.1 38 100.0 Physical contingencies 1.3 0.7 2.0 7.8 Price contingencies 1.1 0.7 1.8 7.0 Total Proiect Cost 16.3 9.7 26.0 38 114.8 (totals may not add due to rounding) Financing Plan GET Grant 11.0 9.1 20.1 45 77 Government of Russia 4.8 0.0 4.8 0 19 Government of Switzerland 0.5 0.6 1.1 55 4 Total 16.3 9.7 26.0 38 100 Grant and Project Swmary 2 1 Schedule B RUSSIAN FEDERATION BIODIVERSITY CONSERVATION PROJECT Disbursements Category Amount of GET grant % of expenditures (US$ million) to be financed (1) Goods 2.9 100% of foreign expenditures, 100% of local expenditures (ex-factory costs), 80% of local expenditures for other items procured locally (2) Consultant Services, Training and Study Tours 13.3 100% (3) Community Investment Grants 2.5 100% (4) Incremental Operating Expenses 1.4 100% of local expenditures incurred up to June 30, 1998, and 50% of local expenditures thereafter Total 20.1 GET Grant's Estimated Disbursement Profile (US$ million) Bank's Fiscal Year 1996 1997 1998 1999 2000 2001 2002 Annual 0.2 3.8 5.4 5.1 3.4 1.7 0.5 Cumulative 0.2 4.0 9.4 14.5 17.9 19.6 20.1 12 Grant and Project Swnmary Schedule C RUSSIAN FEDERATION BIODIVERSITY CONSERVATION PROJECT Sunmmary of Proposed Procurement Arrannements (US$ thousand equivalent) ' Project Element Procurement Method Non GET Total Financed Costs ICB NCB Other' Goods Field/Research and Professional 350 1,715 831 2,065 Equipment (350) (884) (1,234) Office and Computer Equipment 817 102 817 (715) (715) Vehicles 1,831 895 1,831 (936) (936) Total Goods 350 4,363 1,828 4,713 (350) (2,535) (2,885) Services Consultants 11,102 773 11,102 (10,329) (10,329) Training and Study Tours 2,157 886 2,157 (1,271) (1,271) Professional and Legal Services 1,986 1,265 1,986 (721) (721) Publications 1,025 20 1,025 (1,005) (1,005) Total Services 16,270 2,944 16,270 (13,326) (13,326) Other Applied Research/Community Grants 2,500 2,500 (2,500) (2,500) Incremental Operating Expenses 2,531 1,144 2,531 (1,387) (1,387) Total Other 5,031 1,144 5,031 (3,887) (3,887) TOTAL 350 25,663 5,196 26,013 (of which GET) (350) (19,748) (20,098) Totals are rounded. Figures in parentheses represent the amounts financed by the GET grant, including contingencies. 2 Other GET procurement methods include Consultancy Services-Technical Selection (US$14.2m), International Shopping (US$3.0m) and National Shopping (US$2.6m). Grit and Prject Semunary 13 Schedule D RUSSIAN FEDERATION BIODIVERSITY CONSERVATION PROJECT Timetable of Key Project Processing Events Step Timing (a) Time taken to prepare the project: 42 months (b) Prepared by: MEPNR (with GEF PPA-funded assistance of local and foreign consultants) (c) First Bank mission: April 1992 (d) Appraisal mission departure: October 1995 (e) Negotiations: April 1996 (f) Planned date of effectiveness: June 1996 (g) List of relevant Project Completion Reports and Project Performance Audit Reports: None The project was prepared and appraised by the following: Andrew Bond (ENVLW) (Task Manager), Justin Mundy (EC3IV), Alfredo Sfeir-Younis (ENVLW), Andrey Kushlin (EC3IV) and Gennady Pilch (LEGEC), with contributions from Nicholaas Bouwes, Stephen Berwick and Paul Grigoryev (consultants). The mission also extensively benefited from contributions by international and Russian consultants funded under the GEF Project Preparation Advance (PPA)?'. Marc Blanc (EC3DR) and Jocelyne Albert (ENVGC) provided operational and policy guidance. Peer reviewers are Kristalina Georgieva (EMTEN) and George Ledec (LATEN). The Division Chief is Jonathan Brown and the Department Director is Yukon Huang. A detailed list of individuals that contributed to the GEF PPA is provided in Annex 1.2. PART II: TECHNICAL ANNEX RUSSIAN FEDERATION BIODIVERSITY CONSERVATION PROJECT Table of Contents CHAPTER 1: Country and Sector Background ................................................1 A. Introduction ................................................I B. Biological Diversity in the Russian Federation ...............................................3 C. Associated Environment Management Project ............... .................................4 D. Lessons Learned from Previous Bank Involvement ................................................5 CHAPTER 2: Project Background ................................................7 A. Strategic Overview ................................................7 B. Protected Area Systems ............................................... 11 C. Lake Baikal ............................................... 13 CHAPTER 3: Project Description ............................................... 15 A. Project Objectives ............................................... 15 B. Detailed Project Description ............................................... 15 Component One: Strategic Overview ............................................... 15 Component Two: Protected Areas Component ............................................... 18 Component Three: Lake Baikal Regional Program ............................................... 22 CHAPTER 4: Project Cost and Financing Plan ................................................ 25 A. Project Costs ............................................... 25 B. Financing ................................................ 25 C. Procurement ............................................... 25 D. Disbursement ............................................... 27 CHAPTER 5: Project Organization and Management ............................................ 29 A. Organizational Structure and Responsibilities ............................................... 29 B. Involvement of NGOs and Local Communities ................ ............................... 32 C. Environmental and Social Aspects ............................................... 33 D. Project Monitoring, Evaluation and Supervision ............................................... 33 E. Project Accounting, Financial Reporting and Auditing ............................................... 34 CHAPTER 6: Benefits, Justification and Risks ............................................... 37 A. Project Benefits ............................................... 37 B. Justification for GEF Involvement ............................................... 37 C. Risks ............................................... 38 CHAPTER 7: Agreements Reached and Recommendation ............................................... 39 BOXES IN TEXT 2.1 Biodiversity Policy Matrix 10 2.2 Species Protected in Russia's Nature Reserves 12 2.3 Biodiversity of the Baikal Region 13 3.1 Model Regions and Sites for Protected Areas Activities 16 FIGURES IN TEXT 1.1 Environmental Framework Program 5 5.1 Organizational Structure of the Project 30 ANNEXES 1.1 List of Existing and Government-Proposed Protected Areas 43 1.2 Overview of Activities Carried Out under the PPA and Key Contributing Experts 49 3.1 Strategic Overview Component 55 3.2 Strategic Overview Policy Support Sub-Component: Terms of Reference 59 3.3 Protected Areas Component: Cost of Sub-Component Activities 70 3.4 Guidelines for Preparing Management Plans for National Parks and Other Protected Areas 73 3.5 Lake Baikal Regional Component 77 3.6 Implementation of Local Biodiversity Initiatives (Lake Baikal) 87 4.1 Detailed Project Costs 89 4.2 Procurement Plan and Arrangements for Major Contracts 97 5.1 Monitoring and Evaluation Program 107 5.2 Project Implementation Timetable 111 5.3 Terms of Reference for Project Management 113-128 MAPS IBRD 27085 - Russian Federation. Vegetation Types and Protected Areas IBRD 27267 - Russian Federation. Representation of Protected Areas IBRD 27290 - Lake Baikal Regional Component. Major Ecosystems and Protected Areas IBRD 27268 - Lake Baikal Regional Component. Land Use and Model Watersheds. IBRD 27289 - Lake Baikal Regional Component. Industrial Impact and Population RUSSIAN FEDERATION BIODIVERSITY CONSERVATION PROJECT CHAPTER 1: Country and Sector Background A. Introduction 1.1 In the past 70 years, the Russian Federation has inherited an enormously costly environmental legacy from decades of inefficient economic development that basically failed to include environmental factors in macroeconomic and sector development strategies and national investment plans. There are ongoing costs across the economy from, for example, natural resource loss and pollution, that are not stated explicitly in the national accounting process or sector budgets but are obviously a significant percentage of GNP. The Russian Federation is not unique in this respect, most industrializing countries followed a similar development path, although in many cases, made more dramatic structural adjustments at an earlier stage of development. In the past, many countries in transition from a centralized state economy to a more market orientated system, adopted a policy of economic efficiency in its limited traditional sense of ignoring many environmental issues, to pursue the adjustment process. Currently, however, many reasons can be found for incorporating environmental and natural resource management concerns directly into the economic adjustment process as is being done in Russia and some other countries of the FSU. 1.2 As a country searches for new sources of growth and comparative advantage, it may (as in the case of Russia) use natural resources such as forests, lands, oil, gas, minerals, water, and vegetation much more intensively. It is plausible that natural resource intensive exports would be expanded and promoted to replace the old traditional exports. In such a case, decision-makers have to cost existing natural resources used in trade at their full opportunity cost, to avoid giving a false sense of comparative advantage in the short and medium term. If these resources are not adequately costed at the macro level, use rates of those resources will be much higher, and serious misallocation of resources, environmental degradation, or depletion may occur. In some cases, irreversible damages may also occur in the country (for example, destruction of biodiversity resources and fragile ecosystems). An important general point regarding adjustments during such transition periods is that any set of reforms implemented at the national level (such as privatization, industrial restructuring, monetary and market liberalization) will have a great influence and impact on the allocation of resources, on the environment and the use and management of natural resources ("natural capital" for short). These policies are not at all neutral with regard to natural resources, the environment or biodiversity. 1.3 Another argument for including environmental concems in macro-planning is that the solution to many environmental quality and resource management problems rests on major institutional and organizational changes (for example, regarding property rights, taxes and subsidies, regulations, laws, and private sector participation). If the reform process does not take into account these institutional realities at the beginning, some of the most important sources of national capital depletion and degradation will be very difficult to correct at the end of the process. For example, if property rights, user rights, or management rights over a significant amount of forests, for instance, are given to an economic agent during the reform process, without appropriate environmental assessment it will be almost impossible to reverse those rights after the reform process; or if they are reversible, the reassignment will be at very high costs. 1.4 Government decision-makers in the executive and legislative branches at the federal, regional and local levels in the Russian Federation are searching for ways to restructure and reform the economy to 2 Biodiversity Conservation Projet promote efficient and more sustainable economic growth. This is an impossible goal without taking environmental quality and natural resource management factors into consideration. Some important initial steps have been taken, but much more needs to be done at all levels of legislative and executive government, or this initial momentum will be lost, along with the enormous opportunities that currently exist for influencing the reform process. The Environmental Framework Program of the Russian Federation (EFP) and the Environmental Management Project (EMP), with which this project is associated, are designed to help the Government of Russia to meet this urgent need and to take advantage of these opportunities. Geographic Context 1.5 The Russian Federation covers 17,075,400 square kilometers (kin2), almost twice the size of the United States and 70% of the territory of the FSU. Its population in 1991, 148.5 rnillion, was exceeded only by China, India, the United States, Indonesia and Brazil. Even though its population density is low on average by world standards, it is characterized by wide regional variations from as high as 52-77 per km2 in the economically well developed regions in European Russia, to less than 1 per km2 in parts of Siberia. Russia is home for about 120 nationalities or ethnic groups of which 82% represent ethnic Russians. This situation is reflected in the country's complex system of administration. There are 20 republics within the Russian Federation, as well as five autonomous regions and 10 autonomous districts. The remainder of the Russian Federation is administratively divided into 6 territories (krays) and 49 regions (oblasts). 1.6 Extending halfway around the northern hemisphere and covering much of eastern and northeastern Europe and all of northern Asia, the territory of Russia displays an enormous variety of landforms and ecological systems. The major ecological/climatic zones stretch east to west across the country, and are made up of various tundra subzones in the extreme northern areas, mostly above the Arctic Circle, that give way to a vast forest belt covering approximately two-thirds of the entire country. The forest zone may be further divided into two subzones: taiga forests and mixed forests. The taiga is characterized by the preponderance of coniferous forests of spruce, larch, fir and Siberian stone pine. Deciduous species birch, aspen and alder are of secondary importance. In the mixed forests, so called "broad-leaved" species (for example, oak) appear together with conifers. Further south the land turns to open steppes, and finally to hot drylands and semi-deserts (see map IBRD 27085). Massive mountain ranges such as the Urals, the Caucasus and the mountain areas of Siberia (for example, the Altay, the Sayans, Lake Baikal and the Trans-Baikal regions, and the mountains of the Far East) interrupt these lowland features. Positioned in latitudes where precipitation mostly exceeds evaporation, Russia contains many long rivers, lakes and wetlands. Rivers such as the Volga in European Russia and the Ob and Yenisey in Siberia are among the world's longest. Lake Baikal is the deepest freshwater lake in the world and contains 20% of the world's total freshwater, more than all of the Great Lakes of North America combined. Biodiversity Cos ermvtion Project 3 B. Biological Diversity in the Russian Federation 1.7 The vast landscapes of the Russian Federation represent one of the last opportunities on Earth to conserve relatively intact ecosystems large enough to allow ecological processes and wildlife populations to fluctuate naturally. The country holds some of the world's most important repositories of biological diversity in areas such as the Far East of Russia, considered one of the major "cradles of biodiversity", where the Maritime (Primorskiy) Kray is recognized by the IUCN as a world center of plant diversity with more than 3,000 higher plant species, as is the Lake Baikal Region which has approximately 2,500 species. In the southem Far East of Russia, more than twelve million hectares (ha) have remained undisturbed due to its inaccessibility; this, the largest remaining contiguous ecosystem in Russian Far East and Eurasia, which protects habitat and complete ecosystems for an extensive range of endangered and vulnerable species. Another extraordinarily floristically rich region is the Northern Caucasus, where approximately 3,700 species of 803 genera and 142 families of vascular flora are represented. These unique assemblages of species surpass the diversity and level of endemism found among temperate forests anywhere else in the world. 1.8 While the enormous size of the country and the large continuous stretches of similar habitat can sometimes obscure the wealth of diversity, Russia hosts some of the world's rarest species as identified by IUCN in the Red List of Threatened Animals. These include, among others, the Siberian Tiger (Panthera tigris altaica), Anatolian Leopard (Panthera pardus orientalis), Siberian Musk Deer (Moschus moschifereus), Asiatic Black Bear (Ursus Thibetanus), European Bison (Bison bonasus), Oriental Stork (Coconia boyciana), Siberian Crane (Grus leucogeranus) as well as one of the most endangered of the world's endangered species, the Snow Leopard (Pantheria uncia). Nature Reserves in Russia 1.9 A significant proportion of this biodiversity is protected by Russia's nature reserve system which, covering nearly 6% of the country, is the largest, one of the most important, and until recently, one of the best organized systems in the world. It consists of Zapovedniks (strict nature reserves used for research and biosphere conservation, occupying 1.42% of Russia), National Parks (protected, but allowing limited tourism, agriculture, and grazing, occupying 0.38% of Russia), Zakazniks (special purpose reserves, established to safeguard certain flora or fauna populations, usually for a specified period, occupying 4% of Russia), and Natural Monuments (Pamyatniki Prirody) (see map IBRD 27085 and Annex 1.1). 1.10 As of December 31, 1994, Russia had 89 Zapovedniks, covering a total area of 29,120,800 ha, and 28 National Parks, covering 6,443,100 ha. According to a 1991 inventory, there were more than 1,000 Zakazniks with a total area of 44 million ha. Federal-level Zakazniks number 69, occupying 11.5 million hectares. Although Zapovedniks have been established in all of the thirteen of the physical-geographic zones (Arctic, Fenno-Scandinavia, Russian Plain, Caucasus, Urals, Western Siberia, Caspian-Turgay, Central Siberia, Southern Siberian Mountains, Yana-Kolyma, Baikal-Dzhugdzhur Mountain Region, Amur-Sakhalin, Northern Pacific Region), they are not evenly distributed throughout these zones. For example, 24 Zapovedniks have been established in the Russian plain region, while the Arctic zone currently has only two Zapovedniks (see map IBRD 27267). 1.11 The 82 Zapovedniks administered by the MEPNR comprise more than 40% of the world's total of strict scientific reserves (IUCN Category I). Russia has an extremely distinguished history of research in these reserves, sixteen of which are part of the UNESCO Biosphere Reserve program, and an enormous amount of scientific data has been amassed in them over the decades. Russian nature reserves protect a 4 Bfodiverity ConservatU Project significant number of species, many of which are listed in Russian and International Red Data Books of Rare and Endangered Species. Box 2.2 provides additional information on species representation in the protected areas system. C. Associated Environment Management Project 1.12 This project is a part of the EFP and is associated with the Environmental Management Project financed by a loan from the Bank to the Russian Federation. The EFP has been designed to enhance the current system of environmental management which has been characterized as fragmented and uncoordinated with more than ten government agencies having some responsibility for environmental concerns. These agencies have found it extremely difficult to realize their objectives. This is mainly explained by the legacy of a system of centralized management of the economy that emphasized production over efficiency, concentrated pollution-intensive industries in enormous complexes, compartmentalized decision-making, and treated natural resources as free goods. 1.13 The failure of the previous, centrally planned Soviet system to efficiently and effectively manage regional economic development and environmental issues was implicitly recognized in the Russian Federal Treaty of March 14, 1992', that formally devolves much of the former powers and resources of the central ministries and committees to regional and local level agencies. The trend toward decentralization has major implications for solving environmental and natural resource management problems. These changes, while creating much uncertainty and confusion, also present unprecedented opportunities for providing strategically targeted support and assistance, based on sound economic, social, environmental, and natural resource management principles. The Environmental Framework Program and the Environmental Management Project have been designed to support these changes. 1.14 The EFP is estimated to cost a total of US$282 million over a period of approximately four to five years. It addresses environmental and natural resource management issues at a federal, regional and local levels in demonstration areas across a wide spectra of natural areas. It has eight principal components: (i) institutional and policy strengthening; (ii) air quality management; (iii) water quality and water quality management; (iv) hazardous waste management; (v) biodiversity conservation and natural resources management; (vi) conservation and management of cultural and natural heritage; (vii) the National Pollution Abatement Facility; and (viii) Center for Project Preparation and Implementation. Of these, the EMP, with a total cost of USS 110 million, concentrates on core elements of (i), (iii), (iv), (vii) and (viii). This Project, although financially distinct from the EMP, represents the core biodiversity component of the EFP and therefore is associated with, and will be implemented under, the same organizational arrangements as the EMP (see Figure 1.1). 2' Treaty of the Delimitation of the Objects of Jurisdiction and Powers between the Federal Bodies of the State Authority of the Russian Federation and the Bodies of Authority of the Republics within the Russian Federation. Bbdvity Couseruetiou Project 5 Figure 1.1. Envirnmental Fmework Program in Rusia WORLD ~~~~~~~Grant Agreement - US$ 20 Mai USIA t ,~~~~~~~~~~~~~~~~~~~.... ...................... ..................................................................... W O R I ..I... ... .rr A r n t - U S 2 C n/ RANK GEF - - ~~~~~~~~FEDERATION Loan Agreement - USS I10 fEon Project commorw~~atmi Proejd llav~~~_talhnagement ~ ~ ~ (U G6 udlm (US$l Srnillior) (1f B26 =wi '' Frmneworitmoq - co. MHISTRY OF ENVRONMENTAL PROTECTION AS IMPUEMENT*4G AGENCY D. Lessons Learned from Previous Bank Involvement 1.15 The proposed project is able to draw on the extensive and successfuil PPA initiated for this programn as well as several projects which are currently being implemented in Russia. The PPA included preparatory data analysis on: (i) an assessment of Russia!s biodiversity, including an initial gap analysis, identification of a policy matrix and current biodiversity programs; (ii) a workshop on biodiversity economics; (iii) a needs analysis for natural resource and protected area management training programs; (iv) a workshop on biodiversity conservation management and ecotourism; and, (v) the definition of the Lake Baika regional program including data on the harmonization of environmental standards, development of the regional program and the Loca Biodiversity Initiative sub-component. The PPA was extremly successful in defining and imnplanenting effective means to utilize project funds, and the Gap Analysis and Policy Matrix studies were outstanding studies which are of importance and relevance beyond Russia. 1.16 Additionally, in terms of experience drawn from other GEF biodiversity projects, it draws on project experience from other countries under the GEF Pilot Phase and from NGOs in Russia. The key lessons include: (a) the importance of a national straegc fr-amework for biodiversity investments; (b) the need to build in financial sustainability and long-term commitment from the Governmnent; (c) the need to involve local people and regional adminisrations in design and implementation; (d) the key role of 6 B1odive ity Cosemetronu ProJect macroeconomic and sector policies in establishing an appropriate incentive framework for resource conservation; (e) the need to expand the protected area system and improve management technologies for unprotected habitats with high biodiversity and environmental services values. Finally, the commnunity participation programs supported under the project incorporate lessons learned from several on-going pilot activities in Russia managed by NGOs, the Government and other donor agencies, particularly (a) the importance of integrating local communities into the assessment of community needs through participatory rural appraisal techniques; and (b) the need to establish clear, mutually agreed contracts that identify the respective rights and responsibilities of reserve staff and local communities in resource use within and outside reserves. RUSSIAN FEDERATION BIODIVERSITY CONSERVATION PROJECT CHAPTER 2: Project Background A. Strategic Overview 2.1 Experience from a variety of countries suggests that successful biodiversity strategies involve three elements: identifying priority problems, defining priority actions, and ensuring effective implementation. Effective implementation can only be achieved if the strategy's conservation objectives are realistic and consistent with broader political, economic, and social conditions. Rigorous analysis of the losses of biodiversity, their causes, and the social and economic impact of these losses on society can help to identify and clarify the priority issues. But such expert analysis needs to be balanced with stakeholder involvement, both in identifying problems and exploring solutions. Environmental strategies must involve those who are either responsible for the problems or who are adversely affected by them, those who control the instruments for solving the problems, and those who have relevant information and expertise. The more diversified the actors involved, the greater the opportunities for exchanging information and improving understanding. 2.2 A strategy planning framework which balances rigorous analysis with effective and broad participation faces two major challenges in the Russian Federation. First, to convince the Govermment to view the biodiversity strategy as a continuous, cyclical process within the overall planning framework for sustainable social and economic development (environmental planning and policy-making cannot be worthwhile or productive if it is viewed as a one-time event). Second, to help build local and regional strategies, so that the details of policies and action plans promoted at a national level can increasingly be generated by the institutions and communities who will be responsible for implementing them. A realistic strategy for biodiversity conservation will necessarily involve trade-offs among economic, social and ecological objectives. Such decisions cannot be determined by scientific or analytical methods alone. They involve value judgments and political decisions, and therefore require broad participation in decision making. Participation by stakeholder groups is critical for all major tasks within the strategy development process. Effective participation can provide the basis for a realistic strategy built on a broad knowledge base, with understanding and commitment from key groups, and with strong links to promising local initiatives. 2.3 Effective planning for biodiversity conservation at a national level will require the early involvement of regional entities. In many cases, formulation of general policies will need to be complemented by more specific planning and implementation at the regional level. Regional governments should become parties of the strategy process at its early stages. The ability to create and implement regional strategies for biodiversity conservation consistent with broad national policies is likely to be key condition for success in such a vast country as Russia. The Strategy Process 2.4 The traditional approach to strategies has been to carry out these major steps in sequence, one after the other. Studies and information gathering would be followed by the publication of a strategy document, which would be followed by action planning, which would be followed by implementation, and finally evaluation. But experience now shows that this sequential approach has several critical weaknesses: i) it encourages an excessive emphasis on the preparation of a strategy document; ii) there is no 8 Biodiversity Conservation Profect commitment to periodically reviewing and adjusting the strategy; iii) implementation tends to be unnecessarily delayed; and, iv) feedback into the next round of the cycle generally receives inadequate attention. 2.5 Many of the problems with the traditional, sequential approach can be avoided if the strategy is planned and implemented as a series of repeating steps within a continuing cyclical process. The following four-phased process has been found to be the most constructive, and it is this process to which the project will adhere: Phase 1. Organizing the strategy: (Establishing the institutional framework and designating leadership). Phase 2. Launching the strategy: (Making plans for the strategy, including participation and communications plans, setting priorities, preparing a preliminary statement of goals and objectives, hiring staff and consultants). Phase 3. Strategy Development, Action Planning. and Implementation: (a) Assessment and Study: (Gathering and evaluating information on the status and trends of the nation's biodiversity and biological resources, laws, policies and organizations, program budgets, and human capacity). (b) Strategy Formulation: (Determining goals and operational objectives, involving stakeholders in identifying and analyzing options for future actions, consulting closely with other environment and development plans and strategies). The first strategy formulation being completed 2-3 years after the strategy has been launched. (c) Action planning - (Determining who will do what, where, how, and with what resources, with timetables). (d) Implementation (launching practical activities as well as policy and institutional changes, having stakeholders shift from being planners to implementors) should be continual. Phase 4. Evaluation and Monitoring: The results of evaluation and monitoring (establishing indicators of success, adjusting future action plans based on accumulating experience, reporting progress to different audiences) are reviewed and the entire strategy process adjusted as necessary at least every 18 months. The first two phases, "Organizing the Strategy" and "Launching the Strategy" are necessarily sequential. But the three elements in the third phase do not have to be carried out in sequence (with the exception that action planning should follow strategy formulation). Any of these elements can begin once the strategy has been organized and launched. The cyclical approach to the Biodiversity Strategy process requires a comprehensive management regime, but this is particularly important in Russia, where a biodiversity conservation strategy, in order to cope worth the demands of the transition period may be best viewed as a process for managing and adapting to change. Biodiversity Conservation Prolect 9 Policy Support 2.6 While the federal and regional strategies enable a clear assessment to be made of the current status of biodiversity conservation, they are not in themselves sufficient to ensure the mainstreaming of biodiversity conservation into policy making. This can only occur if the economic linkages between environmental protection and economic development are analyzed and articulated clearly. 2.7 Important economic policy decisions are being made without consideration of their impacts on biodiversity. This not only leads to unforeseen - and often avoidable - environmental costs but causes many potential economic benefits and viable investment opportunities linked to biodiversity to be overlooked or underestimated. Consequently, there is an urgent need to improve the quality and quantity of economic information on biodiversity which flows to decision-makers. This means new and technically sound economic analysis of topics such as agricultural and energy subsidies, forest management laws and regulations, benefits from non-timber forest products, natural resource ownership and access rights, pricing of tourism services, genetic property rights, biotechnology, international trade agreements and constraints facing indigenous peoples. Such analyses are particular valid for the Russian Protected Area system, where in real terms, the budgets have fallen by 70-90% over the past few years. This has placed enormous pressure on conservationists and park managers to generate their own funding as well as to demonstrate the actual and potential economic benefits of biodiversity conservation in comparison to development alternatives. Innovative and significant work was undertaken in the PPA to identify major sectorial impacts on biodiversity and the linkages between economic dynamics and ecosystem integrity. Box 2.1 provides a very summarized matrix derived from this activity. 2.8 In economic terms, biodiversity losses can be attributed to two fundamental forces. First, the increasing demand for unconverted land and unexploited natural resources attributable to expanding human population densities, income growth and inequitable distributions of income and wealth. Second, the investments being made in managing and regulating natural resource use and environmental impacts are inadequate. This under-investment in biodiversity arises because the true rate of return earned by natural resource owners from land conversion or resource over-exploitation is usually less than the perceived rate of return (i.e., externalities have been ignored). This underestimation of the value of biodiversity conservation can be attributed to (a) market failures, (b) missing markets for global benefits, and (c) inefficient and misguided government policy interventions. 2.9 Specifically, economic approaches can be used to analyze different aspects of the biodiversity problem in Russia, including: i) demonstrating the potentially significant economic values of the sustainable use of biological resources; ii) exploring ways to realize the economic revenues from biological resources; iii) explaining why biodiversity is threatened, despite these economic values; iv) finding cost-effective ways to mitigate the negative environmental impacts of economy-wide policies; v) analyzing the impact on biodiversity of Russian laws, regulations, decentralization, and social and economic policies; vi) strengthening the economic case for biodiversity protection, generating additional funds for the protected area system, and to clarify the trade-offs between conservation and development alternatives. 10 Biodirmity Comermatio Project Box 2.1: Biodiversity Policy Matrix Macroeconomic processes in Russia in 1989-1996 Types of natural communities and biosystems and their relation to negative environental changes Off- Lake Freh Swamp Tund- Ta- Forest Fost Steppe Mad- SoilU Nenarl BdW elom Staid wamr & wat- la p of steppes of & ow & biota in protec red 302 wsin bodie lend Central Southem semi- aocn am ed ees Ruaie Ruisi desert cn a Socil wd politicdinatability * * * U U * _ _ 0 Autwrhy. smnicself- . _ * ioldtion ofregiors Exdin of nhit of local udlhrtiecs to conorunc Sb ip nse m pices for ea 0 U * . * * U 0 * O *O Infilaion. econonuc recession * O Stcltu chdws in 0 _ .0 eoonomy, militeuy-indusial_ convrnion Pniivzauon ofthe mna of 0 0 0 O O 0 0 0 O 0 0 O protiction in uowly Debp in warian reformn ss .0 A" Andindzial . refoms ame in b lance G _ovannmt regulation of 0 0 0 0 O O -ice onuec Op oftnutonal _ * * O O 0 e4onomy to the World nwsket Weakrsofaudority * Pubc takes active pat in o oO O o o 0 o 0 Key: Intensity of processes that cause negative change Intensity of processes that reduce negative change low medium high very high low medium high very high * * S *Oo C 0 Source: AdptedbyBankstafffrornGEFBiodivenityPPA A Martynov(1995). 2.10 During the PPA, the establishmnent of a trust fund to further support the protected area system was explored. Conservation funds do exist in Russia, although their structure and operations do not resemble the kinds of national conservation funds which have been established recently around the world. These existing fimds currently provide about 5% of the total funds for nature conservation in Russia and biodiversity is only one of many environmental activities supported by these funds. The Environmental Protection Law of 1991 established Ecological Funds at federal, regional, and district levels. Currently, their only sources of funds are fines and charges for violations of environmental protection laws, mainly pollution limits. The Environmental Protection Law directed that such funds raised at the district level be Biodiversity Coservation Project 12 distributed as follows: 60% to remain in the district fund; 30% to go the regional fund, and 10% to go the federal fund. The monies collected by these ecological funds are spent on programs established by local Environment and Nature Resources Committees and by local authorities. Any surplus funds are deposited in banks or invested in ecologically-oriented enterprises. The use of funds is decided by the fund managers, who are appointed by Government agencies. The MEPNR appoints the managers of the Federal Fund, while regional administrations (sometimes in cooperation with the MEPNR's regional branches) appoint the managers of the regional funds. 2.11 A Seminar on the Economics of Biodiversity was conducted in March 1995, during the PPA phase to explore economic approaches to biodiversity. This workshop was the first of its kind in Russia. Preparation of case studies for the workshop brought together economists, scientists, protected area managers, ecologists, geographers, and others to use methods of analysis which were completely new to the country. Work initiated at this workshop will be continued and expanded in the project and in the further development of the National Biodiversity Strategy. B. Protected Area Systems Institutions and Management 2.12 The main legal enactment regulating the issues of nature conservation in Russia is the Environmental Protection Law (1991). The law defines the major types of specially protected natural areas and their protection regimes. Other legislative acts pertinent to the preservation of natural and cultural heritage of Russia include the Decree of the Supreme Soviet of Russian Federation # 447-1 of December 25, 1990 "On Urgent Measures for Conservation of National Natural and Cultural Heritage". At the end of 1994 a new Law "On Protected Areas" was adopted by the RF creating a framework to strengthen protected areas systems and increase coordination between them. This is the first national law dedicated solely to protected areas. It describes all legal aspects for planning and management in all categories of protected areas. The law divides responsibilities over different types of protected areas between federal and regional authorities. 2.13 Russia's protected areas fall under the jurisdiction of several federal agencies within various ministries, including the MEPNR, the FFS, the Ministry of Culture, the Ministry of Agriculture, the Ministry of Defense, and the Academy of Sciences. Most of the eighty-eight Zapovedniks are managed by the Division of Nature Reserve Management in the Department of Biological Resources and Nature Reserve Management which is in the MEPNR. Several other agencies also manage Zapovedniks including two by the universities of St. Petersburg and Voronezh respectively, four by the Academy of Sciences and one by the regional forest service of Bashkortostan Republic. The MEPNR houses a Division of Finance which allocates funding. 2.14 National parks are established and financed by the Federal governnent, and 26 out of 28 are under the authority of the FFS. This has, within its Department of Especially Protected Forests, a Division of National Parks, staffed by five administrators. The National parks are directly managed by the Forest Service's regional units, except three which are directly under the FFS. Two National parks are subordinate to Regional administrations (Moscow city and Yaroslavl Region). Zakazniks and Nature Monuments make up the central component of regionally administered protected areas. Zakazniks that are established by the federal Government usually have a staff of professional game managers, or rangers. If the Zakaznik is created at a regional level, enforcement of the protection regime is exerted by regional 12 Biodiversity Conservatiox P'roject administrations of the MEPNR. Land users (various state enterprises) are legally responsible Dox 2.2. s- zcms wPDO lNlA S f -l for managing and protection of Zakamiks and NATIJR RESERVES Nature Monuments. : 2.15 This historic reserve system is a - _ systematic and comprehensive attempt to maintain i7s -01X, whet SO Z:o s odated. ml more : and protect a significant sample of the world's Zapvadi9 have bafi crested since then so -bese biodiversity. But the system now faces serious .ft.f.. .hould be used only as idicator of the threats. At least one half of the Zapovedniks and PMu. m one third of the National Parks are in or approaching a critical state, and the system itself is -apo iisprotected 168 species of- twestria in jeopardy. Exploitation of natural resources is 1 ls (69% of teistrial arnms fond1 in increasing, often supported by local - , 65 mn ecies lted in the l D administrations. Increasing use and access to Daa Book of Rsia, 25 (3 marine species) were public lands under privatization and deregulation has intensified the threats to protected ecosystems, Zapovedniks protetd 515 species of birds (83% of while adjacent lands are often subject to birds found in Russia). Of the 109 birds listed in the clearcutting, mining, agriculture, and pollution lRed Data Book of Russia, 60 were identified in from industrial activities. There is no clear and Zapovedniks. consistent enforcement of laws and regulations, and Zapovedniks protected 40 species of repties (61% of ; penalty provisions, if applied are deficient, to reptiles found in Russia). Of the 11 reptiles lisled in guarantee the long-term survival and financing of the Red Data Book of Russia, 5 were identified in the protected area system. Compounding these Zapovenks. threats, levels of funding available to support the Zapovedniks protected 26 species of amphibians (96% protected area networks have fallen precipitously. of amphibians found in Russia). Of the 4 amphibians In real (constant price) terms, financial support for liste in the Red Data Book of Russia, 3 were idcatified the Zapovednik network has declined to less than d' Zmaveks. 20% of the 1985 level. Serious shortcomings are -Thre is little infomation available on species apparent at all levels of protected areas 4dversity and ecosystem types in National Pwks.- management: interagency cooperation, However, rough estimates conclude that up to 800 departnental functions, and operation of individual vasulr plants and up to 200 vertebrates (to 190 birds protected areas. Management structures within the :%d50 mammals3 have been recorded in Nationai responsible federal agencies are weak and fragmented. Reliable data on species diversity in Zakasiks and NatIl Monwnents are not available. 2.16 Planning for conservation programs in individual reserves is inadequate, and neither __V Zapovedniks or National Parks are required to develop management plans. Work conducted by scientists in nature reserves is poorly integrated into management and policy development. Even the limited funds available for individual protected areas are not being used effectively. Virtually all reserve budgets are now spent on wages and salaries. But staff wages do not even reach subsistence levels. Infrastructure maintenance is ignored. Offices, laboratories, vehicles, and other equipment are deteriorating while many protected areas have become almost defenseless against the growing pressures around their borders. Most Zapovednik and National Park directors lack specific experience or training in protected area management, although they often have a diverse and valuable range of skills. There is a severe lack of training programs to build on these diverse skills, and to provide a common understanding of the nature reserves' purpose and the tools by which this could be implemented. Bodlversity Conservation Project 13 Equally, the population as a : whole is largely unaware of Bzex 23. Blodvaeiy erd s Be" Ragm the protected area system . - while communities in the Bsio Syc -- Nuwbet ofSpecie vicinity of protected areas are ofPun frequently feel alienated by -W .... Total Subject to Specil oteon R _Iomaxne the system. fo : fiS C. Lake Baikal IUCN, surya ASSR USSR md Red Book and RSFSR Red Rtgional Lbsl 2.17 Lake Baikal Reooks provides compelling reasons . . . ..... .. . .. ............ ................ for assistance. It is one of those areas like the Great Alg 1,300 Rift Valley in Africa, which Fungi 700 7 30-40 by its sheer uniqueness is of Lichie 4S0 12 6 30-40 BryWhyt- 230 2 - 10 -15 supreme global importance. su ts 12000 27 130 20 -30 Lying in a deep tectonic depression, at 30 million An . years old it is the planet's spong 10 -. oldest lake, the deepest point TurbeUlaa 100 Rotifers so- of 1,637 m makes it the oligodaes - 90 . deepest and at 31,500 km2 it Mollusks 10 3 is one of the largest. It Spiders 190 5- 7 contains 20% of the world's Myriopodq 10 - Insects 5,000 17 28 1 - 20 freshwater, sustaining 2,600 Fisht 55 2 5 species of biota, two thirds of Anp4hibia 5 4 which are endemic. The Re357 24 96 6 diversification of adjacent Mannl 83 4 26 landscapes, from alpine tundra, mountain and boreal Soure: GEF Ptroje Prepration Advance, 1995 coniferous forest to steppe and semi-desert - together with the lake itself, constitutes an area of exceptional diversity with 2,500 species of flora (10% of which are endemic) and 400 species of birds. The Baikal watershed (338,770 kin2) is predominantly located in Russia where it falls under the jurisdiction of Irkutsk Oblast, Buryatia and Chita Oblast. The IUCN Red Data Book and that of the Russian Federation (1988) indicate that 10 species are threatened or endangered, including the Swan Goose (Anser cygnoides), Pallas's Sea Eagle (Haleaetus leucoryphus Pall.), Siberian ld Dog (Cuon alpinus Pall.) and the Snow Leopard (Panthera uncia). Currently, the protected area network in the region consists of 5 Zapovedniks (2 of which are Biosphere Reserves), 3 National Parks, 27 Zakazniks and several dozen botanical and zoological Natural Monuments. In addition, in 1987 a forestry protection zone was established which prevents logging from the shore to the ridge line around the lake (see map IBRD 27268). 2.18 The region has an extremely rich and diverse cultural history as attested to by numerous archaeological sites, many of which are also of global significance. Today, the region's native peoples are represented by Buryats, Evenks, and Soyots. Although cultural traditions have been eroded this century, many skills and traditional knowledge still abound. There is also a strong desire to bring back many of these traditions today. A complex of economic, social and institutional characteristics and processes and 14 Biodiveisity Conservation Project resulting land, water and resource use policies and practices, however, has led to considerable, yet still largely localized, environmental degradation with attendant stresses on the region's biodiversity. 2.19 The transition period, with the attendant dynamics of decentralization and market liberalization has deepened the administrative authorities dependence upon the natural resources in the area as well as forcing the industrial sectors to search for wider and different markets. In common with much of Siberia, the region is faced with an outmoded industrial infrastructure of insufficient flexibility to be readily adaptable, the economic viability of which is further undermined by the rising cost of fuel and the declining transport subsidies which used to enable access to far-distant potential markets. The transition period has had contrasting impacts on the environment. On one hand, the production decreases have led to a small reduction of 5% in pollutants, but on the other, economic exigency has substantially reduced the efficacy and potential of environmental protection and monitoring as well as distorting resource allocation mechanisms. 2.20 The region is faced by difficult economic and social problems and inevitably policies which seek to address these are considered to be of the highest priority. The efforts to increase production and maintain increasingly eroded living standards inevitably create policy options with often complex trade-offs. This can mean that attempts to forge a development model within concepts of sustainability and reduced environmental impact are frequently frustrated. Anthropogenic influences in the region (see map IBRD 27268) are increasingly significant and include: agriculture, now a major source of chemical discharge, has increased steppe landscapes which are now subject to substantial soil erosion from overgrazing; significant industrialization which began in the 1950's with the creation of the Irkutsk Hydroelectric Power Station (1956), followed by chemical plants and the construction of the Selenga and Baikalsk paper mills and has led to industrial pollution whether atmospheric or of effluent, becoming a major source of environmental degradation with at least 150,000 ha of forest affected as well as between 5-10,000 km2 of the lake; forestry which occupies 70% of the territory and is increasingly subject to forest fires (over 1,500 equaling 50,000 ha per annum), and pests and diseases (30,000 ha destroyed by Siberian Bombyx); hunting, which has led to significant species decline and in some instances extinction (recent data - excluding poaching which may be of equivalence - indicates that the average annual take of sables (Martes zibellina) was 6,000, squirrel (Scurius) 450,000 and muskrat (Ondatra zibethica) 95,000). 2.21 The protection of Lake Baikal and the adjacent habitat requires a coordinated approach to resource use in the region. Such coordination, which would assign the lake as the single unit of account, against which all development policies would be measured, implies that a clear assessment of comparative advantage forms the basis of regional development. This, at first, might seem antithetical to the individual regions which are attempting to maximize revenues: To counter this, an instrument is required which can help form the necessary conceptual, legislative and project base which helps develop the over-arching inter-regional development plan based upon ecologically and economically sustainable criteria. RUSSIAN FEDERATION BIODIVERSITY CONSERVATION PROJECT CHAPTER 3: Project Description A. Project Objectives 3.1 The main objective of this project will be to assist the Russian Federation maintain optimum levels of biodiversity in accordance with the principles of economic and environmentally sound sustainable development. The project will assist in ensuring the enhanced protection of biodiversity, within and outside protected areas, in conformance with the Government's obligations under the Convention on Biological Diversity. This will be achieved by: i) supporting the development of federal and regional biodiversity strategies; ii) developing and implementing mechanisms and approaches which will mainstream biodiversity conservation and environmental protection into the policy making process; iii) assessing the protected area institutional framework and subsequently strengthening its effectiveness; iv) enabling the participation of all interested stakeholders, including aboriginal peoples and local communities into biodiversity conservation; and, v) developing an inter-regional demonstration of inter-sectorial biodiversity conservation and environmentally sustainable natural resource management. The realization of these objectives will: i) substantially strengthen the economic feasibility and sustainability of biodiversity conservation within the Russian Federation; ii) leave a legacy of integrated planning demonstrating the necessity of combining financial/economic policy, socio-economics and appropriate nornative and resource allocation mechanisms to ensure sustainable biodiversity conservation; iii) help safeguard numerous endangered and vulnerable species including the Siberian Tiger (Panthera tigris altaica), Snow Leopard (Pantheria uncia) and Pallas's Sea Eagle (Haleaetus leucoryphus Pall); iv) provide a realistic policy to ensure the protection of Lake Baikal; and, v) facilitate the integration of native peoples into protected area management. These objectives will be monitored according to the Guidelines for Monitoring and Evaluation of GEF Projects, and would be expected to include key monitoring criteria on biological, socioeconomic, financial, institutional and other factors. These key indicators will be identified and agreed to during appraisal. B. Detailed Project Description4' 3.2 The project will include the following three components. Component One: Strategic Overview (USX 3,405,000)y' Sub-component (a): National and Regional Biodiversity Strategies (US$ 575,000) 3.3 This activity will strengthen the development of the federal strategy, develop the methodologies and procedures for regional strategies, and create a model regional strategy at Nizhniy Novgorod. These initial strategies will: Estimated breakdown of the GEF-financed component costs by financier, by project year, and by expenditure type is provided in Annex 4.1, Tables B and C. 5' Total costs with contingencies are used in this chapter. 16 Bfodiversity Conservatfon Project - assess the extent, status and Boi 3. 1. Model Regions/Sites for Protected Areas Activities vulnerability of biodiversity; Regi Z h National Paks - detail current normative -I instruments which affect Kostomukasikiy -Kenozeralky biodiversity conservation; Rdeyukiy Yuiyd V5 N,zimevnk,y Valdayasiy - develop an action plan which Center Bryanskiy Les Orlovskoyc Polesyc will define remedial activities. Tsentral-Chernozernnyi Meabdr l Kaluzhakie Zasek - Smolenakoyc Poozeryc UWer and Kerdenslkiy - Samuskaya Luka 3.4 Effective implementation and Middle Volgp - ZhigulevAkiy - Chavash Varmane sustainability will be assured by the federal l Shul] n Tash - Khva4yskiy strategy being under the ultimate authority of Northern Teberdnsky -Prielbruukiy the established Inter-Ministerial Commission on .K hrdino-Bkkhy Environmental Protection and Natural Resource Baikal Baikslo-Lenskiy -Pnbaikalsk,y Use (the Commission) which, under the * Barguznshky Z &Nhuk&Lskiy chairmanship of a Deputy Prime Minister, is Southern -Altaysky responsible for coordinating natural resource Siberia Kaunsby Kuzettskiy Alatau use and management across line ministries. A -Ubsu-NurkSo Kotlovin5 Secretariat will be formed to orchestrate data Fa East - Sikhote-Alinskiy collection, creation of the federal strategy and L zovskiy action plan, policy analysis, stakeholder . Khankayakiy participation and development of regional Klmgadnskiy strategies, initially at Nizhniy Novgorod, where Botchinskiy preparatory and design activities have already ! .Kuilskiy been advanced. The Secretariat will also oversee evaluation and monitoring activities and will be in the Policy and Regulatory Support Unit in the CPPI. Inter-ministerial coordination will be developed by the assigning personnel in each line ministry who will be responsible for integration and implementation of the strategy and work directly with the Secretariat and as required in the regions, such as Nizhniy Novgorod. 3.5 A clear implementation schedule will be followed for the federal strategy. It will be carried out in four pihases: i) initial organization (May - October 96); ii) launch (November - December 96); iii) strategy development, action planning and implementation (January 97 - 99); and iv) evaluation and monitoring, a continuous process with major reviews every eighteen months. The regional pilot strategy (as well as subsequent regional strategies, which will be funded at a later stage under the Policy Support Sub- component) will also follow this format. The GEF funding will cover consultants' services, workshops and publications. Sub-component (b): Biodiversity Policy Support (US$ 1, 725, 000) 3.6 This sub-component will strengthen the effectiveness of the biodiversity strategies, at federal and regional levels, by undertaking significant analytical and participatory actions which ensure that key concepts in biodiversity economics are introduced to decision-makers and researchers. This will support the mainstreaming of biodiversity and environmental values into policy formulation and implementation. Support will be provided for: - analysis of economic linkages and impacts on biodiversity as part of a iterative policy support program. This will set the curricula and education programs for the regional Biodiverslty Consertion Prolect 17 training courses. The former will be comprehensive and continuous and will be part of the review of the strategies (US$215,000); - developing and publishing guidelines, source materials and training programs on regional strategy development (US$200,000); - setting up a series of stakeholder working groups - through the NGOs and unions - which have access to the biodiversity secretariat/regional authorities (US$75,000); - development of 3 additional regional biodiversity strategies, after a review 30 months after project implementation. Samara and Rostov-on-Don have already expressed an interest (US$435,000); - assessment of biodiversity economics which will i) develop a training program on environmental and biodiversity economics; ii) develop case studies and applied instances around the country, focusing on protected areas and sites of critical biodiversity importance which will develop precedent; iii) disseminate case history and methodologies to administrations, NGOs, protected area managers and the public (US$500,000); - assessment of potential conservation finance mechanisms, including inter alia: i) a feasibility study on the development of creating a National Conservation Fund. The study would assess regional and local implementation and adaptivity; taxation liability, sources of funding, management structure, operational and procedural rules and legal status. If, following the feasibility study, the Government decides to create a fund, the project would support consultants activities to enable its establishment. Such a fund, if created, would support a range of conservation programs including protected areas, biodiversity projects instigated by communities and NGOs and applied research into biodiversity conservation issues; and ii) the possibility for utilizing debt conversion opportunities to finance environmental activities may be explored, if considered appropriate (US$300,000). Sub-component (c): Biomonitoring Information System (BIOTA) (USS 1,105,000) 3.7 The lack of accurate, recent and accessible data is one of the most critical impediments to effective environmental policy formulation in Russia. Data must be available for all Ministries and development agencies and a concerted effort will be made to ensure that they are actively involved in the design and preparation of the system. The project will establish a meta-data base center in the MEPNR which will integrate scientific data, archival materials, and maps on the state and dynamics of ecosystems and natural communities. The center will, after project establishment rely on relatively small financial support for maintenance from the MEPNR as major data sets will be the responsibility of the cooperating agencies and institutions. World wide examples of such systems including the ERIN system now operating in Australia will provide guidelines for the establishment and on going support for such a system. The center will maintain close connections with the World Conservation Monitoring Center (WCMC) and IUCN and will also form one of the regional hubs of the Biodiversity Data Network coordinated by WCMC. The Center's activities will include: - creating a network of qualified producers and users; - technical and consultative support for ecological information systems; 18 BBodiversity Conservatiox Projed a training program on GIS applications for biodiversity conservation personnel, environmental and administrative organizations; the distribution of data-base and GIS information; analysis and preparation of information for applied environmental purposes; design and distribution of methodologies and GIS approaches to assist in biodiversity monitoring and evaluation; establish appropriate linkages to the protected area data sets (also supported by this project in Component Two) Component Two: Strengthening Protected Area Systems (USS 13,819,000) 3.8 This component will strengthen the protected area system. It will address the most urgent problems which can be summarized as: i) lack of institutional incapacity to direct and manage the protected area system; ii) ineffective material and technical capabilities of Zapovedniks and national parks; iii) lack of public awareness (nationally and internationally) about the need to preserve Russia's biological diversity and protected areas; iv) poorly developed mechanisms for development of the system, i.e., creation of new types of protected areas and supporting and maintaining those protected areas which already exist; and, v) lack of preparation in academic institutions for professional level training in protected area management. This component will counteract these problems and is divided into five sub-components each with a subset of model projects that will: i) facilitate institutional change in management of protected areas; ii) improve operational and planning capabilities; iii) build public support in Russia and the intemational community; iv) create new protected areas; and, v) provide trainingWin all aspects of protected areas management. Criteria for program elements and model projects (improvement in the management of protected areas, innovation, urgency, probability of success, sustainability of results, cost effectiveness, public support building and the potential for developing inter-organization partnerships) and in the case of model projects also included socio-economic and biodiversity value, were established in the PPA. 3.9 A significant proportion of this component will be implemented in the first two and half years of the project at the end of which there will be a major project review. There will be an initial focus on 7 regions - Northwestern Russia, Center of European Russia, Upper and Middle Volga, Northern Caucasus, Lake Baikal, Southern Siberia, and the Far East - reflecting the range of ecosystems and problems that are most suitable models for replication helping to ensure broad understanding and applicability (see Box 3.1). Each region will provide 4 to 8 model protected areas (a total of 27 Zapovedniks and 14 National Parks for the duration of the Project) as sites for activities described below. The approach also ensures that a range of biodiversity is addressed by working at the regional landscape level as well as at the species level, and the multiple sites assure reproducibility as well as system-wide applicability of products. Sub-component (a): Institutional Support (USS 882,000) 3.10 All institutional levels of nature reserve management require support. Although this may necessitate some reassignment of authority, and each level - federal, regional and local - will be strengthened. One of the current distortions of the system is that the institutions' mutual inter-dependence is obscured. This component, while modifying and clarifying some of these relationships, ensures that financial control, policy setting and management will be coordinated and will ensure effectiveness for biodiversity conservation. The MEPNR and the FFS will be strengthened by establishing mechanisms, procedures and capacities for coordinating financial and policy responsibilities for nature reserves. Bodwiversty Conservation Prm/ect 19 Training programs will be run in personnel and financial management, dispute mediation and data base management. - A Joint International Expert Council on Protected Areas will be established. This Council will convene twice a year and serve as both a contact for the project to the international science establishment and provide technical advice on project implementation. Extended applied research programs for protected area activities will also be funded. - Regional Associations will be formed and strengthened. These will provide the formal coordination between national parks and Zapovedniks and between Regional Zapovedniks Directorates. The latter will have been delegated responsibility from the MEPNR for the coordination and maintenance of policy and similar management standards. The regional associations will ensure full stakeholder participation by being composed of representatives of local communities, indigenous peoples, NGOs, regional Environmental Committees, as well as Zapovednik and National Park Directors. The offices, capabilities, and equipment of the Regional Directorates serve to house both the MEPNR and Forest Service Regional Protected Area offices and functions. A director, technical and support staff would be hired, an office set up and management plans reviewed. A plenary meeting of all protected area managers will be held at the end of 2 years to review the regional operations concept and develop methodologies for its wider application. Also, complementary to the project activities, though not funded by the Project, a Federal Coordinating Commission (FCC) on Protected Areas will be established by the Government to improve interagency coordination and management. The FCC will coordinate the Federal Forest Service, Ministry of Agriculture's Game Management Departmnent, and the MEPNR's Department for Nature Reserve Management. Quarterly meetings will be held to review issues, initiatives, their management, and coordination. A small Secretariat will be established with linkages to institutions such as the Academy of Science. Sub-component (b): Operations and Planning (US$ 2, 745, 000) 3.11 Management of core functions in both Zapovedniks and National Parks requires major adjustments. Facing significant budgetary cuts in real terms, protected areas must streamline research and protection operations and monitoring and preservation of ecosystems and species diversity. These sub-component programs improve the capacity of protected areas for goal and project-oriented planning, and for monitoring, implementing and evaluating protection and conservation initiatives. This has seven elements: - establishment of an information system for 110 protected areas through the procurement of and training on PC's and 5 regional workstation servers; - creation of linkages to BIOTA to facilitate planning and management. Identification of priority areas for acquisition and model sites for the first two years of this project; - development of management plans and fund-raising and financial planning for 10-12 model protected areas in 3-5 model regions; 20 Biodiversity Comnwarat ion PriOect - establishment of ecosystem monitoring units at each Regional Office and consist of 5 Units (measurements and analysis, lab, communications, administration, data management - to be mostly funded through the Federal budget); - further encouraging scientific research in the parks and Zapovedniks by fostering publication and participation, via grants, in related technical communities around the world; and, - support of ex-situ conservation for the most acutely threatened species, including translocation, housing and restoration. Sub-component (c): Public Support and Education Programs (UJSS 2,903, 000) 3.12 The PPA conference held in Sochi highlighted the need for constituency building and establishing proactive community relations. Directors of Zapovedniks and National Parks are trying hard to improve the visibility of their reserves locally and regionally, to start educational programs, to engage in conflict resolution and community outreach activities, and to establish mutually beneficial relationships with local and regional governments and other entities. This sub-component will support this process by the following three activities: - establishment of a Coordinating Center for Environmental Education and Public Support staffed by 11 professionals. They will initiate model programs in the 16 model protected areas focusing on training trainers. Collections and exhibits will be constructed and school projects with attendant kits and materials will be developed. This sub-component will be funded by the Swiss Government (US$668,000); - publications and promotional materials will take 3 forms: a) the publication of field guides for the biota of the 5 regions as well as brochures for the initial 16 model protected areas; b) support the production of targeted film and television programs; and, c) publication of a newsletter, technical Journal of Applied Conservation, and other specialist publications; and, one or two model ecotourism projects based on ecological carrying capacity within the context of a regional land use plan. A package of policy and incentives will be developed for each region. Biodiversity Conservation Project 21 Sub-component (d): Ecosystem Protecton (US$ 6,448,000) 3.13 The gap analysis component of the PPA determined that the current system of protected areas, although extensive, is neither representative nor sufficiently comprehensive to protect many areas of vulnerable and important biodiversity (see Map IBRD 27267). The present transition period offers a window of opportunity for the expansion of the system to appropriate levels. However, it will have to be extended before land privatization, which is increasing, so raises land values as to make purchase costs exorbitant. This sub-component addresses these issues by complementing the recently adopted Federal Program of State Support of Natural Protected Areas Up To the Year 2000, and moreover, establishing a consistent mechanism to coordinate expansion of the protected areas network. Many large tracts of wilderness in Russia remain unprotected. Currently, the federal Government lacks a nation-wide strategy for planning and establishing protected areas so that negotiations during the process of designating new protected areas are ad hoc, leading to insufficient, poor quality arrangements. As new property rights evolve, land acquisition and the attendant issues of compensation, management agreements and equity will become increasingly complex, so that new mechanisms for creating and designating natural areas are urgently required to ensure that ecologically vulnerable and important areas are adequately protected from inappropriate use and ownership. The protection of biologically integrated landscapes is significant because while animals such as waterfowl, sturgeon, and salmon migrate across international boundaries, institutions and protection does not. Animals bound to use such routes are excellent indicators of the viability of nature in a region. The program will work to avoid conflicts by developing methods for reaching compromises between all stakeholders. Among the most valuable natural areas are those territories which are used by native peoples in the north of European Russia and Siberia. Creating protected areas in these regions requires consideration of the needs and interests of these indigenous peoples. The following activities will be implemented: gap analysis in 3 areas per region (15 areas in total) over 2 years will identify poorly represented biotic communities, followed by management plans which ensure that the protected area is based upon the annual requirements of the region's biota. The protected area will maintain viable ecosystems and populations based on keystone representatives of species guilds and their carrying capacity; activities to strengthening the protection services for protected areas by developing policy and legislation and ensuring compliance with the law. The activities include training and professional development in information/education/public relations/conflict resolution, modes and management of enforcement and enforcement planning, CITES (Convention on International Trade in Endangered Species of Wild Fauna and Flora) related customs enforcement, and media production; case reviews of successful local involvement in protected area systems around the world, regular consultation with stakeholders, studies of attitudes and determinants of decision-making, and professional development and training in land use planning. The project will create sustainable economic development plans for local communities; S site specific projects will ensure ecosystem restoration of degraded and/or fragmented areas in critical areas which require protection, with strengthening the existing protections service through the procurement of the lacking special equipment and vehicles; 22 Btodiversity Conservation Project establishment of new areas requiring protection, based on criteria such the area's contribution to the maintenance of viable wild populations, the reduction of habitat fragmentation, value as rare species habitat and contribution to poorly represented biomes; and, the protection of biologically integrated landscapes as habitat for migratory species will be supported initially in the watersheds of the Dnieper, Don, Volga, and Amur rivers. Inventories (emphasizing tagging and ringing), international data base construction, study tours and implementation plans will be followed by initial implementation and legal formulation. Sub-component (e): Training (US$ 841,000) 3.14 This sub-component will develop a comprehensive training program for protected area staff, in order to augment the current program which is neither comprehensive nor adequate. No sustained reform is possible without systematic training in the Zapovednik and National Park systems. A comprehensive staff recruitment and training system is needed which: provides existing staff with essential skills, organizes professional exchanges for protected area managers, produces and publishes handbooks and training materials, selects students at universities and trains them to become protected area managers and, in the long run, creates special training for managers in institutes of higher education. This system needs a built- in mechanism that evaluates current staff qualifications, training needs, and plans staff development policies. A large gap in the education system is the lack of curricula and training related to protected areas management, legislation, policy, planning, and practices. A comprehensive program for improving protected area staff qualifications and integrating conservation themes into education curricula was developed during the PPA and is ready for immediate implementation. The training program to be supported by the project will result in 900 personnel being trained over five years, publication of key management handbooks and development of curricula at existing academic institutions. In addition, annual meetings for protected area managers and staff will be helo, Both will have a focal topic. They will rotate among the Protected Areas/Regional Headquarters, with every 4th year being held in Moscow. The latter distinct sub-component (annual courses for protected area managers) will be financed by the Swiss Government. Component Three: Lake Baikal Regional Program (USS 6,340,000) 3.15 The Lake Baikal component will establish a regional model (complementary to the activities undertaken under components I and 2 above), capable of duplication, which will demonstrate the inter- sectorial and administrative coordination necessary to incorporate biodiversity protection into a development policy which meets acceptable and sustainable targets of economic growth and social- economic development. This requires a region-wide system of integrated natural resource management which treats the lake as the unit of account by integrating biodiversity values into regional economic policy and using biodiversity as the key indicator of sustainable development. All three sub-components will build on the considerable volume of preparatory work undertaken during the PPA. 3.16 The component will consist of three levels of activity - inter-regional, regional and local. This will ensure the full participation of all levels of government as well as comprehensive stakeholder and public participation. Biodiversity Conservation Profdct 23 Sub-component (a): Inter-regionalActivities (USS 950,000) 3.17 These activities will include a set of essential actions which will be carried out in each of the administrative areas, but which will be closely coordinated. They have also been designed to interrelate with similar but national scale components in Component One of the project and one of the features of the project will be to provide case experience on the linkages that will be required between similar activities at national and regional levels. Activities to be funded (mostly as consultants' services) will include: - analysis of linkages between economics and environmental protection (development of matrices); - biodiversity and environmental economics; - data collection and dissemination; - evaluation and monitoring; - analysis of sources of growth and comparative advantage; - policy trade-offs and determination of transparent resource allocation mechanisms; - development of uniform regional legal, environmental and economic regulatory mechanisms; and - study of biodiversity conservation issues leading to development of Biodiversity Strategies. Sub-component (b): RegionalActivities (US$ 2,890,000) 3.18 These activities will develop model biodiversity conservation activities in the Goloustnaya River, Tugnuy-Sukhara Rivers and Khilok River watersheds and will include agriculture, forestry and land improvement initiatives within an ecosystem approach. It will encourage the participation of programs implemented in remote settlements aimed at improving the use of land, water and forest resources and environmental education, as well as the creation of essential and ecologically appropriate production and social infrastructure. It will incl