MOLDOVA
AGRICULTURAL POLLUTION CONTROL PROJECT
GEF Project Document
Europe and Central Asia Region
ECSSD
Date: January 5, 2004
Team Leader: Aleksandar Nacev
Sector Manager/Director: Marjory-AnneBromhead
Sector(s): General agriculture, fishing and forestry sector
Country Manager/Director: Luca Barbone
(80%), General public administration sector (20%)
Project ID: P075995
Theme(s): Other environment and natural resources
Focal Area: I - International waters
management (P), Other rural development (P),
Environmental policies and institutions (S)
Project Financing Data
[ ] Loan [X] Credit [X] Grant [ ] Guarantee [ ] Other:
For Loans/Credits/Others:
Amount (US$m): US$4.95
Proposed Terms (IDA): Standard Credit
Commitment fee: 0.00-0.50%
Financing Plan (US$m): Source
Local
Foreign
Total
BORROWER/RECIPIENT
1.04
0.00
1.04
LOCAL COMMUNITIES
0.72
0.00
0.72
GLOBAL ENVIRONMENT - ASSOCIATED IDA FUND
2.38
1.55
3.93
GLOBAL ENVIRONMENT FACILITY
3.08
1.87
4.95
LOCAL GOVTS. (PROV., DISTRICT, CITY) OF BORROWING
0.10
0.00
0.10
COUNTRY
Total:
7.32
3.42
10.74
Borrower/Recipient: GOVERNMENT OF MOLDOVA
Responsible agency: MINISTRY OF ECOLOGY, CONSTRUCTION AND TERRITORIAL DEVELOPMEN
Estimated Disbursements ( Bank FY/US$m):
FY
2003
2004
2005
2006
2007
Annual
0.56
1.00
1.20
1.10
1.09
Cumulative
0.56
1.56
2.76
3.86
4.95
Project implementation period: 5 years
Expected effectiveness date: 06/15/2004 Expected closing date: 12/31/2009
Supplementing the following IDA project
Date: May 22, 2002
Team Leader: Pierre Olivier Colleye
Sector Manager/Director: Marjory-AnneBromhead
Sector(s): General finance sector (74%), General industry
Country Manager/Director: Luca Barbone
and trade sector (20%), Sub-national government
Project ID: P060434
administration (4%), Other social services (2%)
Lending Instrument: Adaptable Program Loan (APL)
Theme(s): Rural markets (P), Rural non-farm income
generation (P), Administrative and civil service reform (P),
Rural services and infrastructure (P), Infrastructure
services for private sector development (P)
OPCS PAD Form: Rev. March, 2000

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A. Project Development Objective
1. Project development objective: (see Annex 1)
The development objective of the project is to increase significantly the use of environmentally
friendly agricultural practices by farmers and agro-industry in Moldova in order to reduce nutrient
discharge from agricultural sources to the Danube River and Black Sea. In support of this, the
project will assist the Government of Moldova to: (i) promote the adoption of mitigating
measures by farmers and agro-industry for reducing nutrient loads (nitrogen and phosphorous)
entering local water bodies; (ii) strengthen national policy, regulatory enforcement and
institutional capacity for agricultural nutrient pollution control and organic farming; and (iii)
promote a public awareness campaign and replication strategy so that project activities could be
replicated in similar areas within Moldova and other Black Sea riparian countries.
The proposed Agricultural Pollution Control Project (APCP) would provide a mix of investments
and policy related activities to mainstream environmental concerns in Moldova's agricultural
sector. It will be implemented in close association with the US$25 million IDA-funded Rural
Investment and Services Project (RISP), an Adaptable Program Lending (APL), which has been
"designed to foster post-privatization growth in the agricultural sector by improving the access of
new private farmers and rural businesses to what they need to succeed - legal ownership status,
knowledge, know-how, and finance". The first tranche of the APL, in the amount of US$10.5
million was approved in mid-2002. The APCP will assist farmer and agro-industry beneficiaries
of RISP to put in place the mitigating measures necessary to reduce nutrient discharge from the
agricultural sector. It would also assist the Government of Moldova in harmonizing its legislative
framework with relevant European Union (EU) directives and honoring its international
commitments to reduce nutrient loads to the Danube River and Black Sea.
Project Global Environmental Objectives: The global environmental objective of the project is to
reduce the discharge of nutrients into surface and groundwater in watersheds draining into the
Danube River and Black Sea. An ancillary benefit is increased carbon sequestration from tree
planting and ecologically sustainable land use practices and decreased methane emissions from
farming and livestock practices, both of which have significant implications for climate change
mitigation. The Project will help introduce improved manure and nutrient management practices
as well as organic farming which, over the long run, will help reduce the discharge of nitrogen,
phosphorus and other agricultural pollutants into the surface and ground waters of Moldova and
the Black Sea. Project activities are directly linked to the "Strategic Action Plan for the Protection
and Rehabilitation of the Black Sea" (BSSAP), formulated with the assistance of the GEF. The
nutrient reduction component is being prepared under the umbrella of the Black Sea/Danube
Strategic Partnership-Nutrient Reduction Investment Fund under which riparian countries are
eligible for Global Environment Facility (GEF) Grants for projects that help control or mitigate
nutrient discharge into the Black Sea.
The proposed project is Moldova's contribution to a regional effort seeking to reduce nutrient
flow to the Danube River and Black Sea. It is one in a series of pilot projects that have been
successfully launched in several Black Sea riparian countries to reduce non-point source pollution
from agriculture and thereby improve the waters of the Black Sea - Agricultural Research,
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Extension and Training Project in Georgia, Agricultural Pollution Control Project in Romania and
Wetlands Restoration and Pollution Reduction Project in Bulgaria.
2. Key performance indicators: (see Annex 1)
Key indicators to measure project impact will include the following:
l
increased awareness of environmental issues in agriculture and agro-industry
l
increased percentage of farmers and agro-processors/industries implementing environment-friendly
practices;
l
improved soil and water quality in the pilot watershed area;
l
adoption of a Code of Good Agricultural Practices;
l
implementation of policy framework for non-point source pollution commensurate with EU criteria
l
improved quality of rural drinking water.
B. Strategic Context
1. Sector-related Country Assistance Strategy (CAS) goal supported by the project: (see Annex 1)
Document number: 18896-MD Date of latest CAS discussion: 04/07/99
The proposed project is consistent with the Bank's Country Assistance Strategy (CAS), as set forth in the
IBRD, IDA and IFC joint memorandum dated April 17, 1999. The CAS identifies three priorities for
assistance in order to improve economic growth and thereby improve prospects for reducing poverty and
social hardship in Moldova: macroeconomic stability and growth; private sector development; and public
sector reform. Towards this, the CAS envisages "support for reforms in agriculture and enterprise to
stimulate a supply response and promote private sector-led growth" (CAS Progress Report, May 3, 2002).
The proposed GEF-funded APCP supports the agriculture and private sector development objective of the
CAS by directly addressing the major development challenge of protecting and enhancing the environment
as privatization of the agricultural sector proceeds in the country. The project will seek to promote
low-cost, high-yielding agricultural technologies, enforcement of existing legislation covering agro-industry
and environment, development of the legal framework to address the EU Nitrates Directive as well as
assistance to prepare a Code of Good Agricultural Practices. The mitigating measures to reduce nutrient
loads in water bodies will also include investment and policy/institutional support for organic farming,
thereby promoting the production of ecologically sound agricultural products which will help boost the
country's volume of agricultural exports, regain traditional export markets and tap lucrative new markets in
western Europe.
Moreover, as articulated in Government's Interim Poverty Reduction Strategy Paper (I-PRSP) of April
2002, one of the three pillars of the government's poverty reduction strategy is "sustainable and inclusive
economic growth that will provide the population with productive employment". In Moldova, poverty is
especially prevalent in rural areas where agriculture is the dominant means of livelihood. The political and
economic upheavals of the transitional years impacted the agricultural sector resulting in decreased
productivity and loss of traditional markets. Since agriculture is the most important revenue source for the
rural poor population, the I-PRSP accords high priority to agricultural and rural development. The
proposed project will promote sustainable growth in agriculture by encouraging the adoption of
environmentally friendly practices (in both agricultural production and agro-processing) which will help
increase rural incomes and living standards by promoting rural entrepreneurship, agricultural production,
economic diversification, and trade, especially in rural areas.
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1a. Global Operational strategy/Program objective addressed by the project:
The Project will implement priority actions identified in the Black Sea/Danube Strategic Partnership -
Nutrient Reduction Investment Fund, Black Sea Strategic Action Plan, Danube River Strategic Action Plan
and Danube River Basin Pollution Reduction Program supported by GEF. The Project's objective of
reducing non-point source nutrient pollution from agriculture is consistent with GEF Operational Program
Number 8, Waterbody Based Operational Program, which focuses "mainly on seriously threatened
water-bodies and the most important trans-boundary threats to their ecosystems." Under the Program,
priority is accorded to projects that are aimed at "changing sectoral policies and activities responsible for
the most serious root causes or needed to solve the top priority trans-boundary environmental concerns."
The project's approach of combining good agricultural practices with ecologically sustainable use of
natural resources identified under the Danube River Pollution Reduction Program, also makes it consistent
with several additional GEF Operational Programs, including program number 3 "Forest Ecosystems",
program number 12 "Integrated Ecosystem Management" and program number 9 "Integrated Land and
Water Multiple Focal Areas Operational Program" which supports "more comprehensive approaches for
restoring and protecting the international waters environment". Rehabilitation and improved management of
degraded watersheds, in combination with improved nutrient and manure management will also reduce
threats to biodiversity and promote increased carbon sequestration.
The project will provide an opportunity for the GEF to be a catalyst for actions to bring about the
successful integration of improved land and water resource management practices. GEF support will help
reduce costs and barriers to farmers adopting improved and sustainable agricultural practices. It will help
develop mechanisms to move from demonstration level activities to operational projects that reduce
non-point nutrient pollution to the Danube River and Black Sea.
2. Main sector issues and Government strategy:
Environmental Issues: During the last few decades, the Black Sea suffered severe environmental damage,
mainly due to coastal erosion, eutrophication, conversion of wetlands, increased nutrient run-off from
agriculture, invasion of exotic species, and inadequate resource management all of which led to a decline of
its biological diversity, loss of habitat and long-term ecological changes. Black Sea Environmental Program
(BSEP) studies revealed that 58% of the total dissolved nitrogen and 66% of the total dissolved
phosphorous flowing into the Black Sea come from the Danube river basin. More than half of all nutrient
loads into the Danube river originate from agriculture, about one-fourth from private households and about
10-13% from industry.
The entire territory of Moldova (33,800 sq km) lies in the Black Sea Basin. About 34 % of the country
drains into the Prut River, a tributary of the Danube, approximately 60% into the Nistru (Dniester) River
and the rest into a series of small rivers that empty directly into the Black Sea. For over five decades,
unsustainable land use, excessive application of inputs, such as fertilizers, and use of heavy machinery
resulted in severe degradation of the land and environment (notably soil, water and biodiversity). Soil
erosion washes away an estimated 10 million tons of fertile soil annually. During the Soviet era, large
cattle, pig and poultry farms were established near rivers that lacked efficient manure management
practices. The discharge of untreated animal waste and manure is, in fact, one of the major pollutants of
Moldova's surface and ground water. The continued lack of efficient manure management practices is
having significant implications for groundwater pollution and drinking water supply for rural settlements in
Moldova. Samples analyzed from about 70% of shallow wells which are the main source of drinking water
supply for rural communities revealed nitrogen concentrations in excess of the maximum acceptable levels.
(UN/ECE. The Republic of Moldova: Environment Performance Review. Geneva, 1998)
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Nutrient discharge from agriculture is the most important contributor of water pollution in Moldova. Other
sources are inadequately managed municipal and industrial wastewater treatment plants. Nutrient run-off
to the rivers stems from: (i) environmentally unsustainable crop and soil management practices; (ii)
inappropriate management, storage and disposal of animal manure, including dumping of manure in
household backyards and river banks; (iii) over-grazing; and (iv) mismanagement of wetlands. From the
Prut River basin alone, approximately 12.5 thousand tons of nitrogen and 1.5-2.0 thousand tons of
phosphorous are being discharged each year. Annual run-off from manure is estimated at 10.5 thousand
tones for nitrogen and 2.5 thousand tones for phosphorus (Nutrient Balancer for Prut River Basin Project,
1994).
Agricultural pollution, together with over-fishing, mismanagement of game sources, poaching, draining of
wetlands, excessive tree cutting have also led to the degradation of biodiversity, which has reached a severe
level in the Lower Prut River Basin. Hydropower stations built upstream have exacerbated the problem by
changing the site conditions in the area. Native flora and fauna species are severely threatened and, in
some cases, facing extinction. Privatization of farm land assets has led to farmers keeping livestock near
their households - in backyards or barns adjacent to houses - which is resulting in nutrient pollution
problems for the local drinking water supply. Groundwater pollution with nitrates and microbial organisms
has major implications from the point of view of drinking water supply for rural settlements in Moldova.
A number of studies have been conducted over the past decade on nutrient run-off and various other
aspects of environmental degradation in the Republic of Moldova and particularly in the Prut River Basin
which have concluded that a principal cause of water degradation in Moldova is excessive nutrient
discharge from agricultural sources. Some of these studies include:
l
UNDP/GEF Strengthening Implementation of the Nutrient Reduction Measures and Transboundary
Cooperation (1998, Danube Programme);
l
Nutrient Balance for the Prut River Basin Project (1995, Danube River basin Programme);
l
Study on the Quality of the Rural Drinking Water (1997, The World Bank, in two pilot areas);
l
Evaluation of Wetland and Floodplain Areas in the Danube River Basin;
l
Development of Agricultural Strategy (2000, Tacis Programme);
l
First Agricultural Project of the WB in Moldova;
l
Prut River Management Project (2000, Tacis CBC Programme, GIS mapping of the quality of surface
and underground waters).
Agricultural Issues: Agriculture is the mainstay of Moldova's economy contributing approximately 33%
to GDP and accounting for 65% of the country's exports. With agricultural land covering 85% of the
country's territory (33,800 sq. km), in good years the agri-business sector accounts for 75% of the
country's total exports. The sector employs 40% of the republic's estimated population of 4.3 million (54%
of the country's population lives in rural areas where almost all of the labor force is engaged in agriculture).
This specialization in agricultural production is due to favorable climatic conditions and higher than
average soil fertility. Fertile chernozem soil dominates over 72% of the total agricultural land within the
country, which represents the highest percentage anywhere in the world.
Arable land represents 71% of the agricultural land; perennial plantations comprising orchards and
vineyards account for 14%. Pastures take up the remaining 15% of agricultural land. As a result of land
reform efforts started in 1992, over 80% of the agricultural land, and the overwhelming majority of state
and collective farms were privatized. Individual farmers now supply about 75% of the country's
agricultural produce. In all there are approximately 400,000 individual farms, averaging 1.5 ha in size.
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Main agricultural products include grains such as wheat and maize, vegetables, fruits, tobacco, sugarbeet
soya beans, etc.
Agriculture provides the raw materials for Moldovan food processing industries such as wine and
beverages, sugar, oil and fats, bakeries, food concentrates, dairy products, meats, canned fruits and
vegetables, etc. It's share of over 50% in total industrial output reveals the importance of the food industry
to the Moldovan economy. Agricultural exports are the single most important source of foreign exchange
income.
For nearly a decade since independence in 1991, Moldova's agricultural sector performed poorly, with a
decline in production and exports. Agricultural GDP in 2000 was less than half of its 1990 level. While the
overall economy grew by 2% in 2000, agricultural GDP declined by 3%. Most of the decline was the
result of lower productivity with yields down 20-60% due to withdrawal of subsidies, fewer opportunities
to obtain credits and reduction in input use. The contraction in the agricultural sector resulted in farmers
opting for subsistence agriculture which emerged as the dominant food supply chain for immediate
households as well as extended families in urban areas. However, in the past few years, with the growing
acquisition of private land by farmers and the increasing dominance of private initiatives, the agricultural
sector is rebounding. Farm lands that were left fallow in the rural areas in the early years of transition are
now increasingly under cultivation. A vibrant and efficient commercial agricultural production sub-sector
is also gradually emerging. Outputs from subsistence as well as commercial private farming are generally
not captured by official statistics since these ouputs often move through informal channels. The resurgence
in the agricultural sector provides a window of opportunity for the proposed project to ensure that the
benefits accruing from the improved agricultural sector are sustainable. As the agricultural sector grows, it
is critical to sensitize and educate the new farmers and agro-processors to the need for mainstreaming
environmental concerns into their agricultural practices so that the resultant agricultural sector is healthy
and sustainable and does not become a candidate for "clean up" efforts in the future.
With the agricultural sector's importance to the economy, in terms of GDP, employment, population, and
the large and increasing incidence of poverty among the rural population (55% of population lives below
national poverty line), Moldova will not be able to achieve sustainable overall economic growth without
generating sustainable growth in the agricultural sector. Key policy, structural and institutional issues and
constraints identified in the "Agricultural Strategy for Moldova ­ Accelerating Recovery and Growth"
includes the weak institutional capacity, a less than conducive legal, regulatory and operating environment
for the adoption of environmentally sustainable agricultural practices, the still fragile private enterprises in
rural areas with a tendency to try to revert to old style collective approaches and the slow transformation of
the agro-processing sector. The RISP addresses many of these constraints and the proposed APCP will
create synergies and provide additional grant funds to complement the RISP's credit and advisory
components, with support for tackling environment problems related to agro-industry and crop and
livestock production.
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Government Strategy: Agricultural pollution control and wetland ecosystem protection are considered
priorities by the Government of Moldova as documented in the following: (i) National Program of Strategic
Actions for the Environmental Protection for 1995-2020 (1995); (ii) National Environmental Action Plan
for 1996-1998 (1996), which included a program of activities to reduce or prevent pollution through better
environmental management and sustainable use of natural resources; (iii) Governmental Strategy of
Sustainable Development of the Republic of Moldova (2000) which emphasized sound agricultural
practices, restoration and rational use of natural resources, elimination of pollution sources, water quality
control, and waste management as national priorities, and (iv) Biodiversity Conservation Strategy and
Action Plan (2001).
In line with its strategy of reducing nutrient loads to the Danube River and Black Sea, the government of
Moldova has signed the Convention on Co-operation for the Protection and Sustainable Use of the Danube
River (Sofia, 1994) and is a member of the International Commission for the Protection of the Danube
River (Danube Commission). Moldova is also party to the: (i) Statement on Lower Danube Green
Corridor signed by Bulgaria, Romania, Ukraine and Moldova, on 5 June, 2000, in Bucharest, Romania;
and (ii) Protocol on the Establishing of the Trans-boundary Biosphere Reserve of Danube Delta and
Scientific Reserve "Prutul de Jos," signed on 27 July, 2000 between Romania and Moldova. The
government has also signed a number of international conventions on environmental protection and
biodiversity conservation, including the Convention on Protection and Use of Trans-boundary Water
Courses and International Lakes (Helsinki, 1992), the Convention on Wetlands of International Importance
especially as a habitat of aquatic birds (Ramsar, 1971), the Convention on Biological Diversity (Rio de
Janeiro, 1992), the Convention on the Conservation of Migratory Species of Wild Animals (CMS) (Bonn,
1979) and the Convention on Environmental Impact Assessment in Trans-boundary Context (Espoo,
1991), the Convention on Conservation of European Wildlife and Natural Habitats (Bern, 1997) and the
Convention on International Trade in Endangered Species of wild Fauna and Flora (CITES), Washington,
March 3, 1973.

A key element of the government's overall strategy for agriculture is the revitalization of the agricultural
sector through accelerated recovery and growth which in turn will reduce rural poverty. It aims to promote
post-privatization agricultural support services as well as on-farm environmental management to create an
enabling environment to fully realize the sector's potential. The main objective of the Government's
program is to implement a model of development based on private sector growth and the development of
export industries in areas in which Moldova has a comparative advantage. In the near term, the
Government's main priorities are to: (a) overcome the general crisis in the agriculture and processing
industry; (b) improve national food security; (c) increase the production of competitive high, value-added
agricultural and food exports; and (d) promote rural area development as a natural, social and cultural
framework for the revitalization of the economy. In order to achieve this, the Government is committed,
with support under SAC III and the RISP, to implementing reform oriented agricultural policies while
correcting problems of the past decade. The Ministry of Ecology, Construction and Territorial
Development (MECTD) and the Ministry of Agriculture and Food Industries (MAFI) support the APCP as
strongly complementing the Rural Investment Services Project (RISP). The combined program of grants
(APCP) & credits (RISP credit lines) will allow the Government of Moldova to mainstream environmental
and public health considerations into its agricultural sector which has significant economic and social
implications for the recovery of the economy.
3. Sector issues to be addressed by the project and strategic choices:
Sector Issues: The Project would extend and deepen the ongoing and proposed reforms of the sector by
addressing the following key issues:
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l
Integrating environmental concerns into agricultural practices to make them more sustainable,
including use of tested, low-cost technologies to protect soils, reduce surface run-off, prevent
break-down of soil organic matter levels and increase retention capacity so as to reduce over the long
term the discharge of the nutrient load into the Moldovan ground and surface waters, and, ultimately,
the Danube River and the Black Sea;
l
Developing appropriate policies, policy reforms and initiating legislation, in order to create the enabling
environment for mainstreaming environmental concerns in agriculture;
l
Enforcement of relevant legislation regarding agro-processing plants and village-level waste
management;
l
Capacity building with private farmers to use modern resource management techniques and all-round
more environment-friendly agricultural practices;
l
Developing an understanding of the EU Directives and how the main principles can be incorporated in
Moldovan agriculture.
Strategic Choices: A strategic choice to be made was whether to work with the Ministry of Ecology,
Construction and Territorial Development or with the Ministry of Agriculture and Food Industries to
prepare the project and which ministry should be entrusted with overall responsibility of project
implementation.
It was agreed that since the proposed project addressed both environmental and agricultural issues, both
MECTD and MAFI should be involved with project preparation and implementation. However, as in-house
experience and capacity of MECTD to address environmental issues and implement environment projects
was greater than that of MAFI, it was agreed that MECTD would serve as the line ministry with overall
responsibility for project preparation. An increasing role for MAFI is envisaged during project
implementation, including responsibility for policy and regulatory matters concerned with organic farming
and the code of good agricultural practices. Clear agreements have been reached on the mandate of each
ministry under the project .
This is the first instance where the two ministries are working together on a common objective of
mainstreaming environmental considerations into Moldova's agricultural sector. The value added of such a
combined effort is significant as experiences of both ministries can be brought to bear on the design and
implementation of the project. Collaboration between the two ministries also has the added advantage of
influencing support in the Ministry of Finance for environmentally sustainable development projects and to
include such projects in the national portfolio. The potential for conflicting priorities and approaches to
project preparation and implementation exist; however, the Agricultural Steering Committee made up of
representatives from various ministries and national and local agencies involved in the proposed project
(MAFI; MECTD; Ministry of Finance; National Bank of the Republic of Moldova; and National
Association of Food Production and Processing) and the Consolidated Agricultural Projects Management
Unit (CAPMU), in charge of overall implementation of Bank-supported agricultural projects (including the
proposed project), provide an effective forum for discussing issues and reaching agreements. The mandate
of the Committee is to provide project oversight advice and assistance in resolving issues associated with
project implementation, and ensure commitment and active participation of the concerned ministries.
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C. Project Description Summary
1. Project components (see Annex 2 for a detailed description and Annex 3 for a detailed cost breakdown):
Project Area: Project actions will be implemented at two levels:
country-wide in conjunction with RISP where the 400,000 farms (on 2.3 million ha),
whether farmed individually or in association, as well as agro-processors would be
potential beneficiaries of information on, and investments in, environment-friendly
agricultural practices;
at a selected pilot watershed area in the Hincesti and Leova raions (counties) about 30 km
south west of Chisinau.
Geographically, the watershed pilot area lies in central Moldova within the basin of River
Lapusnita, a main tributary of River Prut which in turn is a large tributary of the Danube River.
These raions were selected as they met the following criteria: (a) country representativeness in
terms of agro-industrial practices as well as soil, climate and other geo-ecological conditions; (b)
catchment represents national agricultural patterns - arable lands, grasslands, vineyards, orchards,
processing industry (vine factories, mill processing, etc.); (c) nutrient pollution of ground and
surface water excessive and typical of most streams in Moldova - studies revealed that nitrates
pollute over 65% of the shallow wells within residential areas which exceeds national and
international standards; (d) local authorities/communities aware and concerned about
environmental problems and actively motivated to address these; (e) accessible road network and
communication necessary for demonstration purposes and dissemination of project activities.
The pilot watershed area covers eleven communes located in the Hincesti (9 communes) and
Leova (2 communes) raions and comprises about 50,000 hectares with a population of more than
43,000, or 14,000 households, in 18 villages. Over 66% of the pilot area is used for agricultural
purposes. The principal activity of local farmers is crop farming; main crops include grains (mainly
wheat and maize), vegetables (cabbages, cucumbers, beets and carrots) and fruits (grapes,
tomatoes) grown on arable lands. Other important crops include tobacco, sugarbeet and soya
beans. Vineyards and orchards comprise a significant share of the land: 17% and 7% respectively.
Over 15% of the agricultural area comprises grasslands and pastures used for livestock grazing.
Most of the livestock is held by private individual owners. Livestock in the watershed area
include: cattle (over 5,000 heads); pigs (over 9,000 heads); sheep and goats (15,000 heads);
horses (1,000 heads); and poultry (166,000 heads). The principal agro-industrial activity in the
region is associated with wine production and a number of important wine making factories are
situated within the pilot area. The agro-processing sector is also characterized by small
enterprises such as flour mills, oil pressing plants, fruit and vegetable processing plants, canning
factories, etc.
Project Components: The project will support activities under four components to be
implemented over five years as follows:
(i) Promotion of mitigation measures for reducing nutrient loads in water bodies. The
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component would be implemented at two levels: (a) in close association with the Rural
Investment Services Project's components for business development, rural support services and
rural finance; and (b) in a pilot watershed area in the Hincesti and Leova raions comprising part of
the Lapusna tributary of the Prut river.
(a) Activities under RISP
The IDA-funded RISP, an Adaptable Lending Program, in the amount of US$25.0 million is
currently under implementation in Moldova. The first tranche in the amount of US$10.5
million was approved in mid-2002; under the first tranche US$3.93 million has been allocated
for activities to be implemented in conjunction with APCP grants. RISP is providing
post-privatization support to increase rural incomes and living standards by promoting rural
entrepreneurship, agricultural production, economic diversification, and trade in the rural
areas. These objectives are sought to be achieved through the provision of technical and
financial assistance. The project comprises institutional beneficiaries, e.g. local NGOs of
advisory and extension agencies, service providers, etc. as well as a broad range of private
entrepreneurs in rural areas. RISP accords priority to high value commodities, such as fruits
and vegetables with export potential. RISP's four components include: (i) Rural Advisory
Services; (ii) Rural Business Development Services; (iii) Rural Finance; and (iv) Project
Management. The Rural Finance Component is providing two credit lines, namely: (a)
General Commercial Credit Line that is open to a broad range of rural entrepreneurs at
commercial terms and conditions through commercial banks; and (b) a Special Credit Line
with a matching grant targeted for newly formed farmer organizations and cooperatives, to
support "new clients" without past credit history to access commercial credits and to be
implemented through commercial banks. In addition, the component supports the provision
of technical assistance to participating financial institutions, State Supervisory Body, and
Savings and Credit Associations.
RISP-APCP Collaboration. APCP will comprise a GEF-funded environmental addition to the
RISP with the objective of mainstreaming environmental considerations into agricultural
activities undertaken by RISP. The RISP-APCP collaboration would broadly be on two
levels: (i) Provision of grants to implement mitigation measures for nutrient discharge
stemming from RISP-supported activities; and (ii) Training for rural advisory service
providers and RISP credit officers.
(i) Provision of Grants. Entrepreneurs/enterprises who borrow under RISP (individual
farmers, farmers organizations, co-operatives and agricultural processors) and wish to invest
in environmentally sustainable agricultural practices would receive a grant from the GEF fund
to offset the incremental cost of nutrient reduction investments. The GEF will provide grant
funds of up to US$2 million to support the Credit Line of the RISP, specifically to cover a
reasonable cost of mitigation measures required to reduce nutrient discharge. These grants are
to encourage and serve as a financial incentive for the installation of agricultural pollution
mitigation structures and procedures to protect Moldova's environmental resources while
encouraging agri-business development. The types of businesses that might benefit from this
component would include animal production businesses that produce animal wastes that are
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rich in nutrients, crop production of any kind that have a large nutrient discharge potential,
processing units for juice production, vegetable oil extraction, and wine production (vinery)
that may produce biomass waste requiring appropriate disposal methods, etc. The eligibility
criteria for the provision of a GEF grant will be primarily to support those activities that will
reduce nutrient loads to waterbodies. The APCP environmental mitigation grant application
and approval process would be conducted in two phases: phase I would determine the
eligibility of RISP Credit applicants for the mitigation grant, determine the mitigation strategy
to be implemented, and establish a cost basis for the grant. Phase II would involve signing of
the grant agreement, implementation of the mitigation procedures and milestone-based
disbursement of grant funds on a mutually-agreed schedule.
(ii) Training. The project will also train RISP-financed rural advisory service providers in
several nutrient reduction practices, including crop nutrient management, conservation tillage
practices, crop rotation and tree planting of buffer strips etc. Credit officers of the
participating banks and rural business developers will be trained in the mechanisms of grant
provision; the training will allow them to inform credit recipients of the availability of the
grants, the eligibility criteria and the application procedures for grant funds.
The mechanism for APCP support and the eligibility criteria for the provision of a GEF grant
are detailed in an Operational Manual and available with the Project Management Unit.
(b) Promotion of Improved Watershed Management Practices
This component would prepare and implement improved watershed management practices for
the Lapusna basin in eleven communes of the Hincesti and Leova raions, with the objective of
reducing nutrient loads into the Prut River. The project will provide for investments in:
l
Manure Management Practices. This sub-component will finance and provide incentives
for the installation of up to 8 improved manure storage facilities and equipment for
manure collection and application in the eleven communas at both the household and
communa level. Villages and households wishing to participate in the investment
program would be selected against agreed criteria and cost-sharing arrangements.
Community training and awareness on good practices for waste collection and manure
management including composting, testing, and field application would be provided.
(Details in Working Paper 5).
l
Promotion of Environmentally-friendly Agricultural Practices. This sub-component will
promote the adoption of environmentally friendly agricultural practices that would
improve agricultural production while reducing nutrient discharge into waterbodies.
Technical assistance and incremental operating costs will be provided for sustainable
agricultural practices, including: (i) nutrient management ­ the application of animal
waste materials on agricultural land areas at rates determined by the nutrient needs of
crops and nutrient content of the waste; (ii) conservation tillage- crop production in
which the crop residues from the previous crop remain on the soil surface to provide
erosion protection; (iii) integrated cropping management ­ the use of crop rotations and
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strip cropping to prevent erosion and provide adequate supplies of animal feed and
forages in integrated farming systems; (iv) vegetated buffer areas ­ permanent vegetated
strips would be established at field and stream riparian boundaries and in water courses
that will reduce and help prevent soil loss and its associated nutrient loss loads, and (v)
promotion of organic farming ­ as soon as organic farming certification procedures are
defined at national level, small organic farming areas would be established in villages
throughout the two raions to demonstrate and help educate farmers on appropriate
procedures for the production of organic fruits and vegetables. (Details in Working
Paper 4)
l
Shrub and Tree Planting. This sub-component will support the development of a shrub
& tree planting program that includes: (i) planting of forest belts for the protection of
water bodies; (ii) anti-soil erosion forest belts; (iii) ecological reconstruction of forests;
and (iv) agro-forestry practices. The APCP assistance would primarily consist of
providing planting material, appropriate equipment and technical assistance. The
program will be implemented by the State Forestry Service "Moldsilva" with significant
contributions from local communities (Details in Working Paper 6).

l
Wetland Restoration and promotion of sustainable management practices. This
sub-component will enhance the nutrient filtration capacity of the wetland at the
intersection of the Lapusna and Prut rivers and help to restore the degraded wetland to
its former natural state. Activities under the sub-component include: (i) forestry
activities such as planting of forest vegetation with species that have high capacity for
nitrate uptake and retention both in floodplain areas and terraces exposed to erosion;
(ii) hydrologic enhancement practices, such as embankment reinforcements for the
stabilization of water level, small bridges to provide access to different parts of the
wetland, etc. (iii) sanitation activities; and (iv) public awareness activities to educate
local inhabitants of the importance and fragility of wetland ecosystems. (Details in
Working Paper 7)
l
Monitoring soil, water quality and environmental impacts. An extensive soil and water
quality testing program will be established for the proposed pilot area to monitor the
changing quality of surface and groundwater bodies (in response to the implementation
of the new and better agricultural and livestock practices) that eventually drain into the
Danube River. This sub-component will strengthen the capacity of MECTD (water
quality laboratory and hydrological department of the Hydrometereology State Service)
as well as the central and regional laboratories of the State Environmental Inspectorate
and Institute for Pedology and Soil Science to carry out comprehensive soil and water
quality testing and monitor environmental requirements. Internationally approved
monitoring procedures will be employed that will include the use of paired-watershed
and upstream-downstream hydrologic and soil and water quality monitoring designs. A
modeling sub-component will extend lessons learned from Lapusna basin to other
watersheds in the country. (Details in Working Paper 8)
(ii) Strengthening National Policy, Regulatory Enforcement and National Capacity. The
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project will also support strengthening of the national legislative, regulatory and institutional
capacity of the government of Moldova in agricultural pollution control. It will assist MECTD
and MAFI in developing the Code of Good Agricultural Practices and strengthening the capacity
of the Government of the Republic of Moldova in its efforts to promote scientifically grounded
organic farming and land use management. Certification procedures for internal and external
marketing will also be developed under this component. Activities under this component would
increase capacity of the government for addressing agricultural pollution control measures and
honoring its international commitments to reduce pollution to the Danube River and Black Sea.
(iii) Public Awareness and Replication Strategy. A local and nationwide public information
campaign will be undertaken to disseminate the benefits of proposed project activities and achieve
replicability of the same. At the local level, the main audience will be the direct stakeholders of
the project (local and county officials, farmers, community groups and NGOs). The efforts at the
national level would concentrate on institutions and groups (Government agencies, national
environmental or professional associations, academia, NGOs, etc.) and the population at large.
The aim would be to familiarize the population with the project and its benefits and thereby raise
the interest of potential future clients. Leveraging RISP project funds would improve the
replicability of these practices among agricultural enterprises and small farmers nation-wide. The
project will draw on the Agency for Consultancy and Training in Agriculture, entrusted with
specific extension activities under RISP, to undertake a nation-wide public awareness campaign to
disseminate information on proven low-cost, environmentally-sound technologies provided under
APCP. The project will provide for the organization of national and regional workshops, field
trips, visits, training, publication in international agriculture and environmental journals and other
activities to promote replication of project activities in other similar areas of Moldova as well as
Black Sea riparian countries. Watershed modeling based on developing management strategies
from experience in the pilot watershed area, would be a component of the replication strategy.
The project will work closely with ongoing similar efforts in Georgia, Bulgaria, Poland, Romania,
Turkey and Ukraine, and the exchange of experiences will help in contributing significant
reductions in the nutrient loads entering the Danube River and Black Sea.
(iv) Project Implementation Unit. The project would support a Project Implementation Unit
(PIU) that will report directly to MECTD. The existing Project Preparation Unit, already
established in the MECTD offices, would evolve into the PIU. GEF funds would provide support
for hiring relevant staff to implement APCP activities who will work closely with the RISP
implementing staff. The PIU staff for APCP will include: a Project Manager, Technical Specialist
(who would also handle project monitoring/evaluation), Financial Management Specialist,
Procurement Specialist, Accountant, Secretary/Translator and Drivers. The Consolidated
Agricultural Projects Management Unit (CAPMU) will provide fiduciary support and the payment
for services provided by CAPMU, including procurement and financial management, will be
shared by APCP. The PIU will coordinate project implementation by the different implementing
agencies, and will be responsible for procurement, financial management and
monitoring/evaluation of the project.

Indicative
Bank
% of
GEF
% of
Component
Costs
% of
financing
Bank
financing
GEF
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(US$M)
Total
(US$M)
financing
(US$M)
financing
Promotion of mitigation measures for reducing
9.66
89.9
3.93
100.0
4.19
84.5
nutrient loads in water bodies
- grant for agro-industries supported by RISP
- training for RISP farm advisors
- pilot watershed interventions
National Level Strengthening of Policy and
0.09
0.8
0.00
0.0
0.07
1.4
Regulatory Capacity
Public Awareness, Capacity Building &
0.37
3.4
0.00
0.0
0.28
5.6
Replication Strategy
Project Management Unit
0.62
5.8
0.00
0.0
0.42
8.5
Total Project Costs
10.74
100.0
3.93
100.0
4.95
100.0
Total Financing Required
10.74
100.0
3.93
100.0
4.95
100.0
Figures may slightly differ due to rounding
A PDF-B grant for project preparation in the amount of US$300,000 was approved and successfully
implemented towards project preparatory activities.
The total project cost is US$10.74 million with contributions towards this as follows:
Source
Total (US$ million)
Government of Moldova
1.04
Local Communities
0.72
Rural Investment Services Project (RISP)
3.93
Global Environment Facility
4.95
Local governments of Moldova
0.10
Total
10.74
2. Key policy and institutional reforms supported by the project:
The APCP component will complement actions of the RISP in assisting with the completion of
sector reforms. In particular, the policy reforms sought under the APCP seek to create the
enabling policy environment for commitment to environment-friendly agricultural practices on
the part of both the local as well as national governments. Policies effected by APCP would
relate to the strengthening of national capacity for enforcement of existing environmental laws.
Also, Moldova has ratified the Partnership and Cooperation Agreement (PCA) with the EC and
its member states in 1998. According to Article 50 of the PCA, Moldova shall endeavor to
ensure that its legislation will be made compatible with that of the Community, in fields including
environment. Towards this, a Code of Good Agricultural Practices will also be prepared. An
issue of particular interest to MAFI is to harness the country's potential for organic farming. The
project will assist in the development of standards and certification procedures for organic
products.
Institutional reforms under the project emphasize the ongoing decentralization process in the
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country by ensuring full local participation in the preparation and execution of project activities.
The project would seek the commitment and direct engagement of local communities in the
operation and maintenance of project supported investments. In order to build local ownership
and capacity, and to be able to effectively monitor and evaluate the impact of project activities,
implementation of project activities will be entrusted to relevant local institutions. Training will
be provided to the staff of these entities as necessary to ensure effective planning and
implementation of resource management activities under the project.
3. Benefits and target population:
The project will yield benefits at the local, national and international level:
Locally benefits will accrue as follows: (i) at the farm level, additional income from effective use
of organic waste (manure as fertilizer), crop rotations, and improved livestock grazing practices;
(ii) in the crop sector, outcomes will include improved production efficiency through
cost-effective inputs and better farm management; (iii) in the health sector, there will be
improvements in health and sanitation as there will be an improvement in the drinking water and
general hygiene of the villages; and (iv) through terrestrial and aquatic habitat enhancement,
increased populations of flora and fauna of local economic and social importance.
Reducing nutrient run-off into surface and groundwater, protecting long-term fertility of soils by
maintaining organic matter levels, fostering soil biological activity through use of legumes and
vegetables in crop rotation, as well as effective recycling of organic materials, including crop
residues and livestock wastes, is expected to raise income and reduce the need for purchased
inputs.
Nationally, the country will benefit through: (i) improved quality of surface and underground
water in the watershed pilot area and consequently in the River Prut; (ii) improved agricultural
productivity through better agricultural practices; (iii) progress towards compliance with EU
Directives; (iv) increased capacity building of local institutions, such as State Ecological
Inspectorate and Public Health Ministry; and (v) sustainable rural growth and development
through environmentally sound agricultural practices. The proposed project is the first instance
where the Government of the Republic of Moldova is mainstreaming environmental
considerations in agricultural practices. The synergy of such an approach will bring about greater
benefits globally, regionally and locally vis-à-vis independent, discrete agricultural and
environmental projects.
Internationally, benefits will accrue through: (i) a continual reduction in the discharge of nutrients
and sediments into Danube River and Black Sea and the accompanying improvements in the local
and Black Sea water quality; (ii) broad-based stakeholder participation that will increase public
awareness and demand-driven approaches for protecting the Black Sea;(iii) improving habitat for
migratory waterfowl and a variety of endangered species; and (iv) sequestering carbon in the
grasslands, cropland and forests.
Target Population: (i) All agro-industrial enterprises benefiting from RISP credit lines and the
farm households expected to obtain technical advice through RISP's rural services advisory
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component; and (ii) the 45,000 rural inhabitants in the eleven communes of the Hincesti and
Leova raions where the pilot watershed area is located. The proposed project is a demonstration
activity that may be replicated in other similar areas of Moldova and countries of the Black Sea
region. Thus, the project will have a larger geographic impact and benefit populations beyond
Moldova.
4. Institutional and implementation arrangements:
The MECTD and MAFI would be the main agencies responsible for project implementation;
MECTD has been designated by the Ministry of Finance as the line ministry responsible for
preparation and management of the proposed project.
Project Steering Committee (PSC): Co-ordination at the national level would be ensured by a
Steering Committee established by the Government (Decision nr. 529, from 28.06.2001) that is in
charge of supervising CAPMU activities. The Steering Committee comprises representatives
from Ministry of Agriculture and Food Industry, Ministry of Ecology, Construction and
Territorial Development, Ministry of Finance, National Bank of the Republic of Moldova, and
National Association of Food Production and Processing. The Minister of Agriculture and Food
Industry, who is also the country's Prime vice-minister is the chair of the Steering Committee. The
Committee will be responsible for providing project oversight advice and assistance in resolving
issues associated with project implementation, and will ensure commitment of the concerned
Ministries.
Project Co-ordination Committee (PCC) at Raion-level: Co-ordination in the raions will be
ensured by a Project Co-ordination Committee. The PCC will provide technical oversight and
ensure cooperation and coordination of the implementing institutions at the local level, including
local offices of Ministry of Agriculture, Ministry of Health, State Forestry Service "Moldsilva",
State Concern "Apele Moldovei" (Moldovan Waters), County Agencies, and other central and
local institutions (See Annex 2, Table 1 for detailed implementation responsibilities by
component).
The PCC will be chaired by the Prefect of Hincesti raion with the Head of Executive Council as
vice-chair. Membership of the PCC will include Department for Agriculture and Food Industry,
Department for Financial and Cadastral Relationships, Country Center for Preventive Medicine,
Department for Education and Sports, Department for Environmental Protection and Natural
Resource Utilization, Lapusna Territorial Ecological Agency, Regional Center for Consultancy
and Scholarship in Agriculture and Mayors of the eleven communas. The Prefect would ensure
coordination of local government agencies, while the Head of the Executive Council would ensure
coordination of all communes participating in the project. The Project Manager will be the
ex-officio Secretary of the PCC. The Project Co-ordination Committee was established in April
2002.
Project Management: The existing Project Preparation Unit, already established in the MECTD
offices, would evolve into the Project Implementation Unit (PIU). It will comprise: a Project
Manager, Technical Specialist (who would also handle project monitoring/ evaluation), Financial
Management Specialist, Procurement Specialist, Accountant, Secretary/ Translator and Drivers.
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The Project Implementation Unit will be entrusted with the responsibilities for assuring that GOM
and World Bank procedures are followed in project implementation, provide financial
management and procurement services, report on project activities, overall project monitoring
against agreed performance indicators, and evaluation of the project's impact on beneficiaries.
Responsibility for the technical monitoring of the impact on nutrient load reduction would be the
responsibility of the Environmental Protection Inspectorate and the Public Health Directorate.
The Consolidated Agricultural Project Management Unit (CAPMU) will provide fiduciary
support to APCP and payment for such services will be provided by APCP. The role of each
existing agency that will implement one or more project activities is set out in Annex 2.
At the national level, the Project Manager will report to the Minister (or his designated
representative), MECTD; at the local level, the Project Manager will report to the Prefect of
Hincesti who is the Head of PCC.
Project financial management arrangements: As it is mentioned in the project management part
the fiduciary support will be provided by CAPMU team.
Funds flow
There are two part of the funds flow scheme that should be considered at the project. The first
part relates to the general scheme of the project financing and assumes that project funds will flow
from: (i) the Bank, either via a single Special Account which will be replenished on the basis of
SOEs or accompanied by supporting documentation for expenditures related to procurement
requiring Bank prior review/approval; (ii) the Government, via the Treasury at the Ministry of
Finance (MOF) on the basis of payment requests approved by the Foreign Debt Department of the
MOF.
Sub-grant funds will be disbursed only to bank account in the name of the Grantee that has been
opened and is utilized by the Grantee solely for the purpose of the grant on terms and conditions
satisfactory to the PIU. Grant participants' accounts will be credited on the amount of Matching
Grant advance in amount of about 30% with will be disbursed at loan approval under the RISP
project; the second payment, in amount of 30% of the grant, will be provided following inspection
and approval of the completion of the tasks set as conditions to the advance payment; the third
and final payment will be provided following inspection and approval of second stage actions
completion.
Audit arrangements
CAPMU's previous and current auditing arrangements and findings are satisfactory to the Bank.
The audit of the project will be conducted by the independent private auditor, acceptable to the
Bank on terms of reference acceptable to the Bank. The annual audited project financial
statements will be provided to the Bank within six months of the end of each fiscal year and also
at the closing of the project. The contract for the audit awarded during the first year of project's
implementation and thereafter is to be extended from year-to-year with the same auditor, subject
to satisfactory performance. The cost of the audit will be financed from the proceeds of the
Grant. TORs for the project audit has been drafted and agreed.
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An audit opinion on the projects financial statements, statements of expenditures and Special
Account will be required within six months to the end of the fiscal year and also of the closing of
the project. The first audit report is planned to be provided by the 31 June 2005.
Project Monitoring and Evaluation: A well-designed monitoring and evaluation system will be
critical for ensuring the project's timely and successful implementation, and enhancing its impact
by a systematic analysis of lessons learned and their effective dissemination. Project monitoring
and evaluation would be the responsibility of the PIU. Monitoring will be based on the baseline
survey undertaken during preparation of the project. The Project Preparation Unit has developed
performance indicators based on Annex 1. The PIU would annually monitor and evaluate project
performance through conducting beneficiary surveys. The results of M&E activities will be fed
back into the implementation process as improved practices.
The PIU will design a simple Management Information System for M&E, reporting formats for
each component, including targeted annual performance objectives and monitoring indicators
using Annex 1 details as the basis. These indicators include evaluating the project's impact by
monitoring soil and water quality. Quarterly reports will cover progress in physical
implementation, the use of project funds and project impact. The Quarterly reports will be
consolidated by the PIU into half-yearly progress reports to be submitted through MWEP to the
Bank within two months of the end of each six-month reporting period. These half-yearly
progress reports will also include an implementation plan and work program for the next six
months following the reporting period. The format of reports will be agreed with the Bank.
A mid-term review will be carried out to assess overall progress. Lessons learned, with
recommendations for any improvements, would be used in restructuring the project, if necessary.
D. Project Rationale
1. Project alternatives considered and reasons for rejection:
Alternatives considered were to: (i) develop the APCP as a component of the RISP rather than as separate
project; and (ii) to select more than one pilot watershed area for development.
With regard to (i), the preparation of the APCP did not start until most of the detailed preparation for the
RISP had been completed. Nevertheless, preparation of the APCP started in January 2002 with the
expectation that it would become a component of RISP, should final processing of the latter be delayed
(which at the time was a strong possibility). However, the expected delays in the processing of RISP did
not occur and negotiations were completed in May 2002. While APCP is now being prepared as a separate
project, in view of the considerable synergies between the two projects it will be implemented in close
association with RISP. This close association will be a key factor in promoting strong collaboration
between MECTD and MAFI and mainstreaming environmental considerations in agriculture. With RISP
becoming effective in August 2002, the first tranche of the APL has been approved and fully committed; in
light of this, the timing of the APCP is extremely appropriate as it could now step in and provide grants to
meet reasonable costs of mitigation measures for environmental concerns of agro-processors using the
RISP credit line as well as provide funds for training RISP-financed rural advisory service providers in
several nutrient reduction practices, including crop nutrient management, conservation tillage practices,
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crop rotation and tree planting of buffer strips etc. RISP activities already undertaken and completed by
the time of the GEF grant effectiveness would also qualify for the grant funds.
In respect of option (ii), it was concluded that associating APCP activities with RISP would make for a
good balance of actions at the national level, while a package of investments in environment-friendly
practices implemented in one select, well-defined pilot watershed would enable effective quantification and
demonstration of the efficacy of project interventions on nutrient reduction from agricultural sources to
surface and groundwater. Also, given the lack of experience in promoting and quantifying the impact of
environmentally friendly agricultural practices, it was decided to target a select area of Moldova where the
impact of the practices on reducing nutrient discharge could be demonstrated. As local and national
capacity increased, project activities could then be replicated in other watersheds of the country.
2. Major related projects financed by the Bank and/or other development agencies (completed,
ongoing and planned).
Latest Supervision
Sector Issue
Project
(PSR) Ratings
(Bank-financed projects only)

Implementation
Development
Bank-financed
Progress (IP)
Objective (DO)
Agriculture
Agriculture I (completed)
S
S
Agriculture
Rural Finance (completed)
S
S
Agriculture
Agriculture Sectoral
S
S
Adjustment Loan, Credit I and
II (Completed)
Agriculture
SAC III
U
S
Social
Social Investment Fund
S
S
Public Sector Management
Private Sector Development I
S
S
Multisector
Private Sector Development II
S
S
Urban Development
First Cadastre
S
S
Biodiversity (GEF)
Biodiversity Conservation in the
Lower
Dniester Delta Ecosystem
Environment Management Capacity
IDF Grant (IDA)
Other development agencies
Dniester Delta Ecosystem
Land Privatization;
Agricultural Service Centers;
Farm Shops; Post privatization
Support
EU TACIS
Export Promotion; Agricultural
Marketing; Development of
Agricultural Machinery Supply
and Services, Advice Centers;
Reform of Agricultural
Education, Training and
Research
Japanese
Agricultural Equipment and
Leasing
British Know-How Fund
TA for Farmers Associations;
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Rural Livelihood Project;
Support for SCAs/SSB
IFC
INCON Project
EBRD
Vininvest
GTZ
ProComerz Technical
Assistance Project
Soros Foundation
MMA Project; Farm Shops
Foundation Project
IP/DO Ratings: HS (Highly Satisfactory), S (Satisfactory), U (Unsatisfactory), HU (Highly Unsatisfactory)
3. Lessons learned and reflected in the project design:
Key lessons learned from rural environmental and agricultural operations in the regions and reflected in the
Proposed Project include:
l
the early involvement of local administrations, communities and key decision makers in project
preparation, is essential in order to ensure ownership and successful project implementation;
l
successful investment in support services requires a strong Government commitment and the financial
and operational sustainability of service providers with a gradually increasing self-financing ratio, and
the strong participation by farmers' organizations from the planning phase;
l
adoption of mitigation measures to reduce nutrient load should yield tangible benefits for key the
expected users, specifically local communities, in order to ensure adoption;
l
effective monitoring and evaluation mechanisms need to be developed and applied to measure project
impact and feed lessons leant into project design;
l
decentralized responsibility for financial and project management (e.g., as in the Romania Danube
Delta Biodiversity Project) builds local ownership and sustainability of project activities; and
l
dissemination of information is critical to the widespread adoption of new technologies and practices.
The project will incorporate these experiences and build on them through a participatory and transparent
approach to project preparation and implementation.
4. Indications of borrower and recipient commitment and ownership:
The successful launch of the RISP in 2002 demonstrates the Government of Moldova's strong commitment
to addressing the development issues in the agriculture sector. The Government created the Consolidated
Agricultural Project Management Unit to coordinate the experiences gained from a decade of loan support
by various donors, and to maximize the effectiveness of future support. To actively supervise project
preparation activities, the Government also established the Steering Committee, with representations from
the key Ministries of Agriculture, Finance, and Economy, from non-governmental agencies, and from
private organizations that support farmers. Further, the Government obtained and effectively used a
Project Preparation Facility (PPF) to implement pilot operations of the rural business development,
advisory services, and pilot credit line components, including the matching grant support. The Ministry of
Finance has confirmed its commitment to make available the necessary government contribution to project
costs upon project effectiveness.
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With regard to the APCP component, the Government considers agricultural pollution control and wetland
ecosystem protection as priorities and has committed itself internationally to reducing nutrient loads to the
Danube River and the Black Sea from its territory. It has signed several international agreements to that
effect and has developed the National Environment Action Plan to provide backing for the necessary
actions. The Ministries of Ecology and Agriculture have confirmed their strong support for the project and
are actively supporting the Project Preparation Unit established under CAPMU. Furthermore, the local
officials in the Hincesti and Leova raions including the Prefects, as well as all eleven mayors of the project
communes, are fully committed to the project and a Local Consultative Committee has been established to
coordinate the various local agencies.
The Ministry of Agriculture (MAFI) has confirmed its wish to mainstream environmental concerns in the
sector and use the linkages between the RISP and APCP to promote a healthier agro-industry and products
that can be sold on the international market.
5. Value added of Bank and Global support in this project:
Bank and GEF support for the Project will assist in synergizing efforts of the Danube River and Black Sea
riparian countries to reduce nutrient loads from agricultural sources flowing into the Danube and Black
Sea. The Agricultural Research, Extension and Training (ARET) Project in Georgia and the Agricultural
Pollution Control Project in Romania are already implementing GEF-funded investment and training
programs for the promotion of environmentally friendly agricultural practices to reduce nutrient loads to
the Black Sea. Turkey and Russia are in the process of preparing similar investment and training
programs. Several Bank projects under the Danube River Basin Environment Program and the Danube
Pollution Reduction Program are also under currently implementation. The additional value added of Bank
and GEF support will help facilitate regional workshops and study tours to allow the sharing of
experiences, identification of common issues and constraints, possible remedial / mitigation measures to
address transboundary water problems. The exchange of such information and lessons learned would help
in establishing "good practices" for nutrient discharge measures and create a store of global knowledge that
would be of much benefit to countries seeking to address nutrient reduction concerns.
E. Summary Project Analysis (Detailed assessments are in the project file, see Annex 8)
1. Economic (see Annex 4):
Cost benefit
NPV=US$ million; ERR = % (see Annex 4)
Cost effectiveness
Incremental Cost
Other (specify)
An Incremental Cost Analysis has been undertaken for the project which compares the baseline
scenario with the GEF Alternative scenario. The baseline scenario includes activities undertaken
by the country to promote the adoption of mitigation measures for reducing nutrient loads from
agricultural sources without GEF support. The GEF Alternative would provide the means (above
and beyond the baseline scenario) for meeting the proposed project's goals. The difference
between the total project cost (US$10.74 million) and the cost of the baseline scenario (US$5.74
million) provides the incremental cost of US$4.95 million which would be funded by the GEF.
The project would benefit the farmers by promoting yield-enhancing agricultural practices by
using inter alia, low-cost inputs (such as using manure as fertilizers) that will improve
productivity and overall agricultural production. Such cost-effective project interventions will
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have a favorable economic impact as they will assist in raising farm and household incomes and
improving the standard of living in the project area.

2. Financial (see Annex 4 and Annex 5):

NPV=US$ million; FRR = % (see Annex 4)

Fiscal Impact:
The government of Moldova is in full support of the project and has assured that counterpart
funds would be made available during the life of the project. Since government contribution to
the project is estimated at US$1.0 million over the life of the project (a large percentage of which
will be used to cover taxes) the fiscal impact is envisaged as low.
3. Technical:
The project will establish a model of good practices to reduce nutrient run-off from agricultural
practices and build national capacity to replicate these practices in other parts of Moldova. Initial
studies in the pilot watershed have identified problems with livestock waste management, absence
of crop nutrient management, soil erosion (a significant to phosphate loss) on valley slopes
cultivated with field crops, and the summer grazing pressures in the valley close to the water
table. A menu of improved agricultural practices have been selected for testing and
demonstration in 11 fields in three communes: Pascani, Negrea and Tochile Raducani. These
practices include: nutrient management, which includes crop rotation and other elements,
conservation tillage, integrated cropping management, buffer strips in vineyards, vegetated buffer
areas, organic farming practices, and grazing management. These practices were selected as they
met certain criteria, including inter alia, cost effectiveness, low input, and readily transferable
technology. These are "tried and tested" effective solutions that are showing good results in other
riparian countries such as Romania and Georgia where similar practices are under implementation.
4. Institutional:
4.1 Executing agencies:
The Ministry of Finance has designated the Ministry of Ecology and Territorial Development as
the line Ministry responsible for implementation.
The Bank assessed the implementational capacity of the MECTD as well as MAFI and it was
concluded that although such capacity was limited, it was sufficient for implementation of project
activities. As in-house experience and capacity of the MECTD to address environmental issues
was greater than that of the MAFI, it was agreed to designate MECTD as line ministry with
overall responsibility for project implementation. MAFI, having greater experience with
agricultural matters relating to organic farming, would be responsible for the organic farming
aspects under the project. During project implementation, capacity of both ministries will be
strengthened through relevant training programs and study tours.
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4.2 Project management:
Day-to-day project management will be the task of the Project Implementation Unit (PIU)
established under the umbrella of the CAPMU. The Steering Committee which has overall
supervisory responsibility for the RISP would also supervise the APCP so as to facilitate the close
association within the two projects. The Committee will be responsible for providing project
oversight advice and assistance in resolving issues associated with project implementation, and
will ensure commitment of the concerned Ministries. Co-ordination among the implementing
institutions at the local level will be ensured by the Project Co-ordination Committee. The Project
Manager will be the ex-officio Secretary of the PCC.
4.3 Procurement issues:
See Annex 6.
4.4 Financial management issues:
The financial management arrangements within the CAPMU will be assessed as acceptable to the
Bank when CAPMU accounting system will be adjusted to provide accounting and reporting
under the project.
CAPMU has an extensive experience in the WB project implementation and it has well-developed
fiduciary functions that have been assessed as satisfactory during preparation for implemenation of
other projects. CAPMU's previous and current project audited financial statements are
satisfactory and it has been agreed that such arrangements will be replicated for APCP project as
well. The CAPMU has prepared financial reporting forms for the project (FMRs), prepared chart
of account, terms of references for the audit.
5. Environmental:
Environmental Category: B (Partial Assessment)
5.1 Summarize the steps undertaken for environmental assessment and EMP preparation (including
consultation and disclosure) and the significant issues and their treatment emerging from this analysis.
The environmental assessment was prepared which included undertaking visits to project sites and
holding consultative discussions with stakeholders within the project area. The environmental
situation in the project area is summarized in the EA which notes that poor agricultural practices
are exacerbating soil and water erosion and a lack of appropriate fertilizers is depressing
productivity. Organic fertilizers, which could replace up to a third of chemical fertilizers, are not
being used because of a lack of transport and spreading equipment or because of poor
organization to use existing equipment. Manure is being dumped along roads, rivers and streams
due to an absence of such facilities. The concentrations of organic fertilizers are leaching into
surface water and increasing the amount of N and P in the Danube Delta, thus intensifying
eutrophication rates. Also, N and P from dung is percolating into groundwater and then into well
water, causing potential health hazards. Also, existing animal numbers are greater than the
carrying capacity of the land and pastures and woodland resources are being over-used. In
addition, because `commercial' fuel availability has decreased, wood and residues are being used
as substitutes. This is further degrading forest areas and affecting the amount of residues being
returned to the soil. Vineyards and orchards are also suffering due to lack of inputs and
depressed producer prices. Agro-industries are experiencing declining profits as factories receive
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poor quality or a lower volume of deliveries. These factories are also unable to afford proper
disposal of effluents from (reduced) outputs and much effluent is being disposed of in
inappropriate ways, although there are (environmental) laws that govern such disposals.
The EA determined that the impacts of the proposed project are overwhelmingly positive
as it would reduce the amount of nutrients leaching into the surface and groundwater
flowing directly into the river systems and subsequently into the Black Sea. All the project
activities that may have direct environmental implications concern Component 1: Promotion of
Mitigation Measures to Reduce Nutrient Load in Surface and Ground Water. (Component 2:
National Level Strengthening of Policy and Regulatory Capacity and Component 3: Public
Awareness and Replication Strategy will be used to facilitate and expand Component 1 activities).
Therefore, only activities under Component 1 will be dealt with in detail in relation to the
Environmental Management Plan. The EMP has been designed to monitor the soil and water
quality and erosion so that immediate mitigation measures could be taken if the potential for
environmental damage occurs. The environmental issues that are likely to require special
attention include: leakage of the manure from the village-level storage facilities (if construction is
not made according to specifications), inappropriate manure spreading in the fields and improper
cleaning of the individual manure storage tanks and large manure platforms.
A comprehensive soil and water quality monitoring program has been developed to provide
decision-makers and the public officials with reliable data on problems and trends in the quality of
drinking water supplies and the Lapusna River and its tributaries. The project will monitor: (i)
stream water quality and quantity at 4 measuring stations; (ii) groundwater with 18 piezometers
to determine the trends in subsurface water; (iii) drinking water with the help of 12 piezometers;
(iv) pollution (if any) from platforms using 32 piezometers; (v) soil monitoring [erosion and
nutrient loss]; (vi) changes in woody biomass; and (vii) wetland through biomass changes, water
quality analysis and sediment quality analysis. In addition climatic data will be recorded daily.
Data from piezometers and surface water bodies will help the project in quantifying the reduction
in nutrient loads entering the Prut river, a tributary of the Danube. Soil monitoring will be
undertaken on seven farm practices and soil nutrient loss and erosion will be undertaken on five
fields in the project area. The quality of manure will be determined from platform samples and
plant growth will be analysed from demonstration plots. Environmental evaluation indicators
have been reflected in the EMP, which meet the objectives and goals of this project.
5.2 What are the main features of the EMP and are they adequate?
The main feature of the EMP is to implement a comprehensive soil and water monitoring
programme in the project area in order to evaluate the effects of different project activities on
nutrient reduction to surface runoff and groundwater sources. Standardized soil and water quality
monitoring tests have been developed by Moldova's scientific and government agencies. These
tests will provide decision-makers and public officials reliable data on problems and trends of N, P
and faecal quantities in:
§
surface water, particularly the tributaries of the Danube River; and
§
ground water, especially in relation to the quality of drinking water.
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In addition information will be provided on the amount and type of soil particles being eroded
from the project land and their mineral and humus content. Some of these efforts are hampered
by the lack of adequate field, laboratory and monitoring equipment and chemicals for the
operation and maintenance of soil and water quality monitoring laboratories of the Soil Institute,
the MECTD (water quality laboratory and hydrological department of the Hydro-meteorology
Service, central and regional laboratories of State Environmental Inspectorate) and the Institute of
Forest Research and Forestry Planning and the `Hydrometeo' service. The project will provide
additional laboratory equipment, chemicals and supplies, and training to build capacity of the SEI.
The project would fund a comprehensive soil and water quality monitoring plan for collecting data
from fields, wells, piezometers, streams, rivers and the proposed wetland that drain nutrient loads
into the Danube River and the Black Sea. These data will be analysed and made available to all
stakeholders in a usable form. The project will develop and evaluate a watershed scale computer
simulation model to predict and quantify the effects of agricultural activities in the watershed on
the reduction of nutrients moving to the Danube River. The monitoring plan will be implemented
by the PMU with technical assistance and equipment provided by the SEI, the Soil Institute, the
Institute of Forest Research and Forestry Planning and the `Hydrometeo' service.
Most of the actions of the EMP will be implemented in the first year of the project.
Environmental evaluation indicators have been reflected in the EMP, which meet the objectives
and goals of this project.
5.3 For Category A and B projects, timeline and status of EA:
Date of receipt of final draft: May 2003


5.4 How have stakeholders been consulted at the stage of (a) environmental screening and (b) draft EA
report on the environmental impacts and proposed environment management plan? Describe mechanisms
of consultation that were used and which groups were consulted?

The project preparation team ensured that all relevant stakeholders were regularly consulted and
involved during the environmental screening process, Stakeholders agreed that interventions
proposed in this project would be very useful for the region. All communas have signed up for
communal platforms and many farmers agreed to have individual platforms. Some of the
stakeholders have offered their fields for demonstrations and monitoring purposes and mayors in
selected villages have agreed that specific wells should be sampled for water quality. The draft
EMP has been discussed with MECTD, MAFI, and Moldsilva, the Prefects of Hincesti and Leova
and their staff and Mayors/vice Mayors of the communas. The draft EMP was widely circulated
to all interested parties for comments and inputs before finalization in line with the Government
Regulation on Public Participation in Environmental Decision Making (January 2000). The EMP
was translated into Moldovian in early May 2003.
5.5 What mechanisms have been established to monitor and evaluate the impact of the project on the
environment? Do the indicators reflect the objectives and results of the EMP?
A comprehensive soil and water monitoring programme has been developed for implementation.
Project activities will be intensively monitored to determine the impact of the project interventions
on soil and water quality. The project will strengthen the capacity of the MECTD (water quality
laboratory and hydrological department of the Hydro-meteorology Service, central and regional
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laboratories of State Environmental Inspectorate) as well as the Soil Institute to carry out water
and soil quality testing and monitor environmental requirements. It will support the incremental
costs of:
l
selecting and maintaining a set of water and soil quality monitoring sites in the project area;
l
upgrading the equipment for monitoring of water and soil quality; and
l
additional operating expenses for monitoring activities.
Stream water quality and quantity, groundwater, drinking water, pollution from platforms soil,
tree planting and management, wetland restoration will be monitored and results evaluated.
Details are provided in the EA and EMP on files.
International Waterways.
The World Bank's OP/BP 7.50 applies to this project as project interventions will be carried out
in selected watershed areas of the Prut river which is an important tributary of the Danube river
which drains into the Black Sea (international water body).
However, the proposed project falls within the exemption to the notification requirement under
paragraph 7(a) of OP 7.50 due to the following reasons:
(i) project interventions will not engender extractaction of water or alteration in the volume of
waters of the Danube River and Black Sea. On the contrary, the project is designed to improve
the quality of these international water bodies by reducing nutrient loads entering these water
bodies.
(ii) The international arrangements that exist between Moldova and other riparians of the
international waterways include the 1994 Convention on Cooperation and Sustainable Use of the
Danube River (Danube River Protection Convention). It was determined that the agreement
would not require notification for the activities envisaged under the project.
(ii) The Black Sea and Danube Commissions have identified excessive nutrient discharge as a
major problem facing the Danube River and Black Sea. A Strategic Action Plan (SAP) has been
developed by the Commissions to improve the waters of the Danube river and Black Sea which
has been signed by all riparian countries. Towards this, the riparian countries have agreed to
implement projects that specifically seek to reduce nutrient loads entering surface and
groundwater bodies stemming from agricultural sources within their countries. To address the
problem of nutrient discharge as outlined in the SAP, the World Bank and GEF established the
GEF Strategic Partnership Program for the Danube and Black Sea Basin which has been
endorsed by all riparian countries of the Danube River and Black Sea. The proposed project has
been prepared under the umbrella of this Strategic Partnership which is essentially a tool to
implement agricultural nutrient pollution control measures outlined in SAP in the Danube and
Black Sea riparian countries. All riparian countries are kept regularly informed on ongoing
activities/projects on agricultual nutrient control projects through GEF progress reports as well as
Commission meetings.
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6. Social:
6.1 Summarize key social issues relevant to the project objectives, and specify the project's social
development outcomes.
A baseline household survey of 341 households and a less-formal needs assessment were prepared
as a first step in identifying key social issues in the pilot watershed area. The survey highlighted
the following:
l
the high level of poverty in the area and agriculture geared primarily towards subsistence;
l
about one third of farmers worked their land in association; about one quarter leased out their
land holding;
l
unauthorized dumping of household and livestock waste was considered the main
environmental problem in the villages followed by pollution of drinking water;
l
responsibility for resolving these problems was considered to lie with the Mayor and
community;
l
the village population had little appreciation of the range of environmental issues influencing
their daily life; and
l
with regard to sources of information, television featured prominently;
While the project focuses on reducing nutrient discharge, proposals will be aimed at introducing
practices that will lead to more sustainable agricultural systems and higher farm incomes. Social
development outcomes will also include improved health as the quality of drinking water wells is
improved.
6.2 Participatory Approach: How are key stakeholders participating in the project?
Various stakeholders of the project have been consulted frequently during project preparation.
These include small farmers, members of farming organizations, agro-processing factory
managers, NGOs such as ACSA, and REC, the Prefects of Hincesti and Leova and their staff,
Mayors and Vice Mayors of the eleven communes, officials of MECTD, MAFI, Moldsilva,
Agency of Geology (AgeoM) the Meteorological Department, and international agencies like the
EU and UNDP. These stakeholders were visited individually or in groups and `village meetings'
were held. A baseline survey and needs assessment program was undertaken (document available
with Project Preparation Unit) where respondents were asked about their agricultural practices,
livestock numbers, accessibility to markets, health issues, etc. The purpose of the project was
explained and the need to address the ongoing soil and water quality problems in the region and
their effect on the river system and the Danube Delta. A record of these visits and discussions are
on the project files and in the various World Bank documents, including the Aide-memoires,
Environmental Assessment and Baseline Household Survey.
6.3 How does the project involve consultations or collaboration with NGOs or other civil society
organizations?
Project preparation is being undertaken with the full involvement and participation of government
counterparts, various research institutions, NGOs and relevant civil society organizations. A
program of regular consultation has been initiated and the conclusions of local consultants' initial
recommendations were presented at a stakeholder consultative workshop held on April 29 ­ 30,
2002 in Chisinau. The Baseline Household Survey and Needs Assessment was prepared by the
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local NGO, Independent Sociological and Information Service - Opinia.
6.4 What institutional arrangements have been provided to ensure the project achieves its social
development outcomes?
The Project Management Unit will ensure full participation of beneficiaries in the implementation
of the project. Proposals will be developed for the PMU to (a) annually monitor and evaluate
project progress and measure the impact of project activities against the socio-economic baseline
survey undertaken during project preparation; and (b) undertake a systematic analysis of the
impact and achievements of project activities and the results of the M&E activities which will be
fed back into the implementation process as improved practices.
6.5 How will the project monitor performance in terms of social development outcomes?
Monitoring will be based on the baseline survey undertaken during preparation phase of the
project. Extensive data from communes and villages has been collected and the Project
Preparation Unit will develop performance indicators based on Annex 1. A well-designed
monitoring and evaluation system that will include social indicators will be developed by the PMU
with assistance from international consultants who have worked on similar projects in other Black
Sea riparian countries such as Romania.
7. Safeguard Policies:
7.1 Are any of the following safeguard policies triggered by the project?
Policy
Triggered
Environmental Assessment (OP 4.01, BP 4.01, GP 4.01)
Yes
No
Natural Habitats (OP 4.04, BP 4.04, GP 4.04)
Yes
No
Forestry (OP 4.36, GP 4.36)
Yes
No
Pest Management (OP 4.09)
Yes
No
Cultural Property (OPN 11.03)
Yes
No
Indigenous Peoples (OD 4.20)
Yes
No
Involuntary Resettlement (OP/BP 4.12)
Yes
No
Safety of Dams (OP 4.37, BP 4.37)
Yes
No
Projects in International Waters (OP 7.50, BP 7.50, GP 7.50)
Yes
No
Projects in Disputed Areas (OP 7.60, BP 7.60, GP 7.60)*
Yes
No
7.2 Describe provisions made by the project to ensure compliance with applicable safeguard policies.
Environmental assessment carried out and an EMP developed. See Annex 11.
F. Sustainability and Risks
1. Sustainability:
Institutional sustainability - The PIU, which will be established under the overall umbrella of the CAPMU,
will work closely with the RISP-supported agencies in the implementation of components at the national
level. With regard to interventions in the pilot watershed area, PIU will work with a Project Consultative
Committee which comprises key local officials and stakeholders. The MOF, MECTD and MAFI at the
national level as well as the local government agencies, communa Mayors and farming communities are in
full support of the project. The project will provide assistance for capacity building in policy and
regulatory matters which will enable MECTD and MAFI to establish a sound basis for overall management
of the project.
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Social sustainability - the project has emphasized the early involvement of key stakeholders in project
preparation and implementation, including policy makers, local public officials and community leaders,
farmers, their associations, NGOs. Such involvement will create a sense of ownership and contribute to
social sustainability.
Financial Sustainability - The project would benefit the farmers by promoting yield-enhancing agricultural
practices that will improve productivity and overall agricultural production. Also, the promotion of organic
farming has the potential to open new markets for the local farmers. Such project interventions will assist
in raising farm and household incomes and improving the standard of living in the project area.
Sustainability of funding for watershed management operations after the life of the project will be ensured
once the long-term economic benefits of project interventions become evident to the local and national
populations and government.
1a. Replicability:
Project's activities have been developed to maximize the potential for replicability. A specific component
on replication strategy has been developed under the project whereby a public awareness and
communication campaign on project activities and benefits will be undertaken to generate interest for
replication of project interventions both within and outside Moldova and in other riparian countries. This
will be achieved through national and regional workshops, field trips, training, publication in international
agriculture and environmental journals, participation in Global Distance Learning programs and other
similar activities. In addition the location of the pilot watershed area makes it easily accessible for
demonstrations which will help increase potential for replication of project activities.
2. Critical Risks (reflecting the failure of critical assumptions found in the fourth column of Annex 1):
Risk
Risk Rating
Risk Mitigation Measure
From Outputs to Objective
Low/inadequate commitment from
N
National public awareness program will be
national and local governments and
targeted at key audience, including policy
institutes for project activities leading to
makers to mobilize support for improving water
increased pollution of the rivers draining
quality. Participatory approach in developing
into the Danube River and Black Sea, and
plans and staff training
failure of national and local authorities to
avert further damage.
Implementing agencies may be unable to
N
RISP project covers cost of farm advisors.
attract and retain qualified staff.
Project will provide training and career
development benefits.
Lack of fiscal resources may preclude
S
Project benefits will demonstrate efficacy and
replication of project activities in other
broader long-term benefits as well as need for
similar sites of Moldova.
replication which will help in garnering
government support; exploration of possible
donors.
Agro-processors & farmers don't have
M
Agro-processors will receive 25 ­ 50% grant for
access to credit, machinery and inputs that
costs of measures. Villages will receive grants
would enable them to practice mitigation
for construction of solid waste manure
measures.
stores. Cost sharing in kind by farmers will be
encouraged, thus reducing the need for cash
contributions.
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From Components to Outputs
Farmers are less willing to accept
N
Regular social assessment; participatory
improved, environment-friendly
approach to project implementation; careful
agricultural practices.
validation of proposed environment -friendly
practices and staff and farmer training;
on-location advice; and advocacy of immediate
and long-term benefits of project activities.
Public awareness campaign to disseminate
information on the benefits and results of
environment-friendly agricultural practices.
Beneficiaries cannot develop new manure
S
Early designs and pilots will be implemented to
handling and storage systems that are
develop low-cost manure handling and storage
financially attractive.
systems that are financially attractive to
farmers.
Overall Risk Rating
M
Risk Rating - H (High Risk), S (Substantial Risk), M (Modest Risk), N(Negligible or Low Risk)
3. Possible Controversial Aspects:
There are no controversial aspects.
G. Main Conditions
1. Effectiveness Condition
None
2. Other [classify according to covenant types used in the Legal Agreements.]
MECTD will maintain PIU with resources, composition and under terms of reference satisfactory to the
Bank until project completion.
Any changes to the composition of the PIU will be undertaken upon agreement with Bank.
H. Readiness for Implementation
1. a) The engineering design documents for the first year's activities are complete and ready for the start
of project implementation.
1. b) Not applicable.
2. The procurement documents for the first year's activities are complete and ready for the start of
project implementation.
3. The Project Implementation Plan has been appraised and found to be realistic and of satisfactory
quality.
4. The following items are lacking and are discussed under loan conditions (Section G):
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I. Compliance with Bank Policies
1. This project complies with all applicable Bank policies.
2. The following exceptions to Bank policies are recommended for approval. The project complies with
all other applicable Bank policies.
Aleksandar Nacev
Marjory-AnneBromhead
Luca Barbone
Team Leader
Sector Manager/Director
Country Manager/Director
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Annex 1: Project Design Summary
MOLDOVA: AGRICULTURAL POLLUTION CONTROL PROJECT
\
Key Performance
Data Collection Strategy
Hierarchy of Objectives
Indicators
Critical Assumptions
Sector-related CAS Goal:
Sector Indicators:
Sector/ country reports:
(from Goal to Bank Mission)
Improve economic growth and
Agricultural statistics
Improved practices in
reduce poverty and social
Increased awareness of threats
agro-industry and on-farm
hardship by promoting
to pollution of trans-boundary Periodic data collection on
contribute to national
macroeconomic stability and water bodies from nutrients,
soil and water quality of
economy through an increase
growth, private sector
from animal waste and
major water bodies.
in average incomes, and
development and public sector agricultural chemicals
environmental enhancement.
reform. Sustainable private
sector development in
agriculture with protection of
natural resources, including
reduced nutrient discharge.
Assist Moldova in
Progress towards meeting
National reports
Policy standards adopted meet
implementing the National
environmental compliance
EU requirements
Environment Strategy Plan
targets with EU nitrates
1995 -2020
legislation.
GEF Operational Program:
Outcome / Impact
Indicators:
The Project's objective of
Agricultural Statistics
Government's ability to
reducing nutrient discharge to
Regional Surveys and
mobilize resources to reduce
the water bodies feeding into
collection of periodic data on threats to water bodies and
the Danube river and Black
water quality from major
build institutional capacity for
Sea is consistent with OP No. Gradual Improvements in soil water bodies.
future environmental
8, Water body based
and water quality
challenges
Operational Program which
Regional Surveys
focuses mainly on threatened
Sustained effort to raise the
water bodies and the most
public awareness and demand
important trans-boundary
for protection and
threats to their ecosystems.
improvement to
Project goals are also
environmental factors
consistent with OP No. 9,
Integrated Land and Water
Multiple Focal Area which
supports comprehensive
approaches for restoring and
protecting the international
waters environment.
Global Objective:
Outcome / Impact
Project reports:
(from Objective to Goal)
Indicators:
The Project's development
Agricultural statistics
Project-developed
objective is to significantly
Improved water quality (N&P
interventions are replicated on
increase the use of mitigation levels will be measured and
a wide scale.
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measures by agro-industry
compared against baseline
Social Survey/Assessment
and farmers to reduce
data gathered during initial
nutrient discharge into the
project implementation)
surface and ground water
bodies in Moldova.
Improved soil quality through Annual regional and national
erosion control
reports
Improved quality of drinking
water
Enhanced biodiversity
through the establishment of
improved habitat through tree
planting and sustainable
wetland management
Increased awareness of
environmental issues in
agro-industry and among
farmers
Increased number of
agro-processors adopting
mitigation measures, and
increased area of agricultural
land with resource
conservation technologies,
and increased production of
organically-certified products.
The global environmental
Interviews with
Adoption of improved
goal is to reduce, over the
High satisfaction rate among agro-processors, farmer
environmental policies by
long-term, the discharge of
participating agro-processors groups and local governments government to address
nutrients and other
and farmers.
non-point agricultural
agricultural pollutants into the
pollution control.
Danube River and Black Sea
through (i) collaboration with Demand for project
agro-industry and farmers
interventions by farmers
benefiting from RISP and (ii) outside pilot watershed area
interventions in a pilot
and from other riparian
watershed area.
countries.
Output from each
Output Indicators:
Project reports:
(from Outputs to Objective)
Component:
1. Implementation of
8 commune/village stores
Quarterly reports
Technologies respond to
Mitigation Measures for
constructed together with
agro-processors' and farmers'
reducing nutrient load
1200 household stores
needs.
Development and provision of 60% of farmers trained in
mitigation measure packages application of
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for agro-processing plants
environmentally friendly
agricultural practices
Development and provision of
environmentally friendly
2 embankments reinforced in
agricultural practices for pilot wetland area; 3 concrete and
watershed area.
10 wooden bridges installed to
provide access.
Training of agricultural
extension staff
Installation of 18 piezometers
to determine trends in surface
and ground water quality as it
moves from communal,
residential and agricultural
land towards Lapusna river.
255 hectares of forests
rehabilitated with species that
have high capacity for nitrate
uptake; 50 hectares of pasture
lands brought under
controlled management to
restrict cattle access to water,
thus reducing the impact of
grazing on existing pastures.
Increased number of
agro-processors adopting
mitigation measures and
increased area of agricultural
land with resources
conservation technologies
Increased production of
organically-certified products.
Local people aware and
broadly involved in project
interventions. Packages
developed and
tested/demonstrated in
outreach program
A monitoring system to
determine the impact of
project interventions on soil
quality installed. Relevant
laboratory staff trained.
2. Development and
Continued support and
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Implementation of National
Supervision Reports
enforcement of policy
Policy, Increased Regulatory Policy framework for
Enforcement and
non-source pollution meeting
Institutional Capacity
EU criteria in place.
Support to MECTD for work
on application of EU Nitrates
Directive
Provide resources to monitor
and regulate standards.
Stricter enforcement of
legislation related to
non-source pollution control
Adoption of code of good
Agricultural practices.
Development of Code of Good
Agricultural
Standards developed,
certification process
Strengthening of institutional established and legislation in
arrangements for Organic
place.
farming
3. Increased Public
Awareness & Development
of Replication Strategy
Public awareness and
Farmers and leaders in other
Increased knowledge &
adoption of
countries become interested in
awareness of ways to reduce
environment-friendly
reducing non-point source
nutrient pollution of water
agricultural practices
pollution from agriculture and
body at local and national
allocate resources to replicate
level
project activities.
Public and farmers aware of
Increased Awareness and
the potential to improve
demand for replication in the income while protecting the
region.
environment.
Workshops, field visits, study
tours to pilot area and other
Black Sea riparian countries
already implementing similar
projects to share experiences
and promote replication.
4. Project Management
Continued support from the
Adequate availability of
Well-managed project.
Project Steering Committee
necessary institutional support
government agencies
Project incentives are
sufficient to motivate farmers
to participate in the project
Enforcement of land-use plan
Implementing agencies may
be unable to attract and retain
qualified staff, inadequate
laboratory facilities
Continued support and will
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for enforcing policy
Timely availability of
counterpart funds
Project Components /
Inputs: (budget for each
Project reports:
(from Components to
Sub-components:
component)
Outputs)
1. Promotion of Mitigation
US$9.66 million
Progress reports
measures for Reducing
Nutrient Loads in
Waterbodies
2. Strengthening National
US$0.09 million
Progress reports
Policy, Regulatory
Enforcement and Institutional
capacity
3. Public Awareness and
US$0.37 million
Progress reports
Replication Strategy
4. Project Implementation
US$0.62 million
Unit
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Annex 2: Detailed Project Description
MOLDOVA: AGRICULTURAL POLLUTION CONTROL PROJECT
Project Area:
The Agricultural Pollution Control Project (APCP) will be implemented at two levels:
At country level APCP will be closely associated with the IDA credit-financed Rural Investment
and Services Project (RISP), an Adjustment Lending Program (APL) for US$25.0 million. From
the already approved first tranche of US$10.5 million, an amount of US$3.93 million has been
allocated for APCP activities. RISP provides post privatization support to increase rural incomes
and living standards by promoting rural entrepreneurship, agricultural production, economic
diversification, and trade in the rural area. These objectives are sought to be achieved by
providing two credit lines: (a) General Commercial Credit Line opened to a broad range of rural
entrepreneurs at commercial terms and conditions through commercial banks; and (b) a Special
Credit Line with a matching grant targeted for newly formed farmer organizations and
cooperatives, to support "new clients" without past credit history to access commercial credits
and to be implemented through commercial banks. Entrepreneurs/enterprises who borrow under
RISP (individual farmers, farmers organizations, cooperatives and agricultural processors) and
wish to invest in environmentally sustainable agricultural practices, would receive a grant from the
GEF fund to offset the incremental cost of nutrient reduction investments.
At a selected pilot watershed area in the Hincesti and Leova raions that lie in central Moldova
within the basin of River Lapusnita, a main tributary of River Prut which in turn is a large
tributary of the Danube River. The two raions were selected as the pilot watershed areas as they
met the following criteria: (a) country representativeness in terms of agro-industrial practices as
well as soil, climate and other geo-ecological conditions; (b) catchments represent national
agricultural patterns - arable lands, grasslands, vineyards, orchards, processing industry (vine
factories, mill processing, etc.); (c) nutrient pollution of ground and surface water excessive and
typical of most streams in Moldova - studies revealed that nitrates pollute over 65% of the
shallow wells within residential areas which exceeds national and international standards; (d) local
authorities/communities aware and concerned about environmental problems and actively
motivated to address these; (e) accessible road network and communication necessary for
replication of project activities.
The pilot watershed area covers eleven communas and comprises about 50,000 hectares with a
population of more than 43,000, or 14,000 households, in 18 villages. Over 66% of the pilot area
is used for agricultural purposes. The principal activity of local farmers is crop farming; main
crops include grains (mainly wheat and maize), vegetables (cabbages, cucumbers, beets and
carrots) and fruits (grapes, tomatoes) grown on arable lands. Other important crops include
tobacco, sugarbeet and soya beans. Vineyards and orchards comprise a significant share of the
land: 17% and 7% respectively. Over 15% of the agricultural area comprises grasslands and
pastures used for livestock grazing. Most of the livestock is held by private individual owners.
Livestock in the watershed area include: cattle (over 5,000 heads); pigs (over 9,000 heads); sheep
and goats (15,000 heads); horses (1,000 heads); and poultry (166,000 heads). The principal
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agro-industrial activity in the region is associated with wine production and a number of important
wine making factories are situated within the pilot area. The agro-processing sector is also
characterized by small enterprises such as flour mills, oil pressing plants, fruit and vegetable
processing plants, canning factories, etc.
By Component:
Project Component 1: Promotion of Mitigation Measures for Reducing Nutrient Loads in Water bodies -
US$9.66 million

This component would be implemented at two levels: first, in close association with the Rural
Investment Services Project's components for business development in agriculture and/or
agro-industry, rural support services and rural finance; second, in a pilot watershed area
comprising part of the Lapusna tributary of the Prut River where an integrated watershed
management plan will be implemented for agricultural pollution control and nutrient reduction
investments.
A. Activities under RISP
Rural Investment and Services Project (RISP). The project would be closely associated with the
IDA credit-financed Rural Investment and Services Project (RISP) that has been negotiated as an
Adjustment Lending Program for a total amount of US$25.0 million IDA credit. The first tranche
of US$10.0 million has already been committed. The project is providing post-privatization
technical and financial support to increase rural incomes and living standards by promoting rural
entrepreneurship, agricultural production, economic diversification, and trade in the rural areas.
The project has both institutional beneficiaries, e.g. local NGOs of advisory and extension
agencies, service providers, etc. and a broad range of private entrepreneurs in rural areas. RISP
accords priority to high value commodities, such as fruits and vegetables with export potential.
RISP's four components include: (i) Rural Advisory Services; (ii) Rural Business Development
Services; (iii) Rural Finance; and (iv) Project Management. The Rural Finance component is
providing two credit lines, namely: (a) General Commercial Credit Line that will be open to a
broad range of rural entrepreneurs at commercial terms and conditions through commercial banks;
and (b) a Special Credit Line with a matching grant targeted for newly formed farmer
organizations and cooperatives, to support "new clients" without past credit history to access
commercial credits and to be implemented through commercial banks. In addition, this
component would support the provision of technical assistance to participating financial
institutions, State Supervisory Body, and Savings and Credit Associations
APCP Support under RISP: Entrepreneurs/enterprises who borrow under RISP (individual
farmers, farmers organizations, cooperatives and agricultural processors) and wish to invest in
environmentally sustainable agricultural practices, would receive a grant from the GEF fund to
offset the incremental cost of nutrient reduction investments. Thus the purpose of the APCP
Environmental Mitigation Grant Program is to provide supplemental nutrient discharge mitigation
grants which will serve as a financial incentive to borrowers under RISP to implement agricultural
pollution mitigation structures and procedures with the aim of protecting Moldova's
environmental resources while encouraging agribusiness development.
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The GEF facilities will provide grant funds of up to US$2 million in support of the Special Credit
Line of the RISP, specifically to cover most of the cost of mitigation measures required to reduce
nutrient discharge. These grants are to encourage and serve as a financial incentive for the
installation of agricultural pollution mitigation structures and procedures to protect Moldova's
environmental resources while encouraging agri-business development. The types of facilities that
might benefit from this component would include wineries, livestock slaughter houses, meat
packaging plants, chicken units, animal feed processing plants, etc. The credit-grant package
would be administered by the local commercial credit institutions that participate in the RISP. The
project will train RISP-financed rural advisory service providers in several nutrient reduction
practices, including crop nutrient management, conservation tillage practices, crop rotation and
tree planting of buffer strips etc. Credit officers of the participating banks and rural business
developers will be trained in the mechanisms of grant provision; the training will allow them to
inform credit recipients of the availability of the grants, the eligibility criteria and the application
procedures for grant funds.
The eligibility criteria for the provision of a GEF grant will be primarily to support those activities
that will reduce nutrient loads to waterbodies. Briefly, the eligibility criteria for the APCP
Environmental Mitigation Grants are as follows:

A: Businesses with potential nutrient discharge may be those projects having the following
characteristics or be the following types:
1) Animal production (milk, meat, etc);
2) Crop production (orchards, vineyard, vegetables, flowers (horticultural), etc.)
3) Processing units/mils/or plants for agricultural products (juice production, vegetable oil
extraction, wine production, etc.);
4) Irrigation projects that will introduce water as a nutrient transport medium;
5) Green house projects that introduce nutrient leaching below the organic bed.
B: Adaptability for the implementation of the mitigation measure:
1) Availability of existing mitigation measures;
2) Applicability of nutrient mitigation measures to the project site.
The APCP Environmental Mitigation Grant application and approval process will be conducted in
two phases. Phase I will determine the eligibility of RISP Credit applicants for an Environmental
Mitigation Grant, determine the mitigation strategy to be implemented, and establish a cost basis
for the APCP grant. Phase II will involve the disbursement of the grant, determination of design
criteria for the mitigation procedures, and implementation of the mitigation. These phases are
briefly summarized in the following two sections.
Phase I: The Agricultural Pollution Control Project Grant Application will be initiated
concurrently with the RISP Business Sub-loan Credit Application with assistance to grant
applicants provided by trained members of the RISP preparation teams. An easy-to-use APCP
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Environmental Eligibility Questionnaire will facilitate the initial determination of APCP eligibility.
After completion, the RISP team will forward the Eligibility Questionnaire form to the APCP
office. The APCP team and their specialists will review the responses on the questionnaire form
and check them against designated Environmental Mitigation Eligibility Criteria (EMEC). If the
applicant does not meet EMEC and qualify for the APCP grant program, the RISP team will be
notified immediately. Projects meeting the EMEC will be reviewed further to identify proper
nutrient discharge mitigation measures. A site visit will likely be necessary to evaluate needs for
manure storage facilities, soil and water conservation measures, and nutrient management
planning. A section in the Environmental Mitigation Grant Guidelines Operational Manual is
composed of cost evaluation tables that may be used to estimate costs associated with
implementation of the nutrient discharge control measures. The cost evaluation tables and unit
rate descriptions will help provide a cost basis for the APCP Environmental Mitigation Grant. The
detailed grant documentation (including detailed design, bill of quantities and cost estimates),
developed with assistance of technical experts, will be reviewed by the Grants Evaluation
Committee (GEC). The GEC is assigned to review grant applications, prioritize the applications,
and agree on the final list of grant recipients. The GEC will comprise of: APCP PIU staff, RISP
PMU staff, CAPMU staff and an independent Environmental Expert.
Phase II: The grant would be disbursed to the applicant at three separate stages of the
implementation period:
(a)
An initial payment totaling an agreed percentage of the APCP grant would be disbursed at
grant signing (no more than 30%). This disbursement would pay for the initial cost of the
mitigation measures implementation including tendering, purchase of the required materials, and
initiation of the work.
(b)
Following APCP inspection and approval of the tasks described in item (a), a second
payment would be disbursed in an amount equal to an agreed percentage of the total APCP grant.
Upon receipt of the second payment, the applicant should start construction and/or field
implementation of the mitigation measures. Definite progress should be made towards
implementing the identified mitigation measure(s).
(c)
Following APCP inspection and approval of the tasks described in item (b), the last
payment in an amount of the balance percentage of the total APCP grant would be dispersed. The
APCP appointed specialist should verify that the two previous payments have been used to
accomplish the tasks related to the implementation of the mitigation measure(s).
Failure to complete the mitigation implementation would generate a warning letter from either the
commercial bank or the APCP Project Management Unit and sent to the grantee. This letter will
provide a warning and notify the grantee that he/she has an additional six months to initiate the
mitigation measures. If the mitigation is not initiated within six months and completed within
twelve months, the grant would be terminated and the grantee would be required to return the
amount of the grant plus the accrued interest (at the rate of the RISP loan) to the designated
account by the APCP Project Management Unit. Amount accumulated in this account would be
granted to other RISP sub-loan applicants who meet the nutrient discharge eligibility criteria using
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the standard procedures described in this document.
If based on the demand for RISP credit, the total demand for APCP grants is less then US$2.0
million, the balance funds would be used for other activities within the general framework of
APCP.
B. Activities in Pilot Watershed Area.
Manure Management Practices. This sub-component will provide grants for the installation of up
to 8 communal and 1200 household platforms and equipment for manure collection,
transportation and application. Grants on a cost-sharing basis of about 70% of total costs would
be provided for the construction of village-level manure facilities and small storage bunkers with
effluent collection facilities at the household level, as well as supply of equipment for manure
handling and spreading. Villages and households wishing to participate in the investment program
would be selected against agreed criteria and cost-sharing arrangements. The project would
provide for materials for the construction of village and household platforms, equipment (loader,
tractor, spreader, trailer, tanker, shredder), technical assistance and training while the Government
contribution would consist of exemption from taxes and fees as well as salaries for environmental
inspectorate agencies and other governmental staff, who would be involved in evaluation and
monitoring activities. The community would contribute in particular with labor, improving the
access roads to the platforms and circulation of the necessary documents.
The project will provide for a training program for mayors, farmers, householders and operational
staff before any investments in materials or equipment will be authorized. The training program
would seek to: (i) educate the public that have made appropriate investments in changing their
practices and improving the quality of life for their communities; (ii) achieve a high level of
participation in household and commune level platform use; (iii) encourage recycling of wastes to
the land for improved crop production; (iv) promote the correct use of the facilities; (v) maximize
the number of households served; (vi) safeguard the quality of materials for recycling; (vii) ensure
sufficient land will be made available for the recycling of stored waste materials; (viii) encourage
responsible recycling.
Promotion of Environmentally Friendly Agricultural Practices.
This sub-component will promote the adoption of environment-friendly agricultural practices that
will improve agricultural production while reducing nutrient discharge into waterbodies. Technical
assistance and financial support will be provided for sustainable agricultural practices, including:
(i) nutrient management ­ the application of annual waste materials on agricultural land areas at
rates determined by the nutrient needs of crops and nutrient content of the waste; (ii)
conservation tillage ­ crop production in which the crop residues from the previous crop remain
on the soil surface to provide erosion protection; (iii) integrated cropping management ­ the use
of crop rotations and strip cropping to prevent erosion and provide adequate supplies of animal
feed and forages in integrated farming systems; (iv) vegetated buffer areas ­ permanent vegetated
strips would be established at field and stream riparian boundaries and in water courses that will
reduce and help prevent soil loss and its associated nutrient loss loads, and (v) promotion of
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organic farming ­ as soon as organic farming certification procedures are defined at national
level, small organic farming areas would be established in villages throughout the two raions to
demonstrate and help educate farmers on appropriate procedures for the production of organic
fruits and vegetables.
Agro-Forestry Practices

This sub-component mainly would invest in:
(i)
Planting of forest belts for the protection of water bodies;
(ii)
Tree planting on degraded land;
(iii)
Ecological reconstruction of forests ­ 255 ha;
(iv)
Agro-forestry practices - 53 ha.
Shrub and tree planting will primarily be done by the State Forestry Service "Moldsilva" as the
only agency which has the necessary technical facilities. It will contribute with equipment,
samples, and other reproductive material as well as technical assistance. The communes will
mainly contribute with labor and other available means as necessary. The Mayors will be
responsible for the organization of planting on commune land. The supervision and general
technical assistance will be performed by an agro-forest engineer contracted by PIU in accordance
with State Forestry Service "Moldsilva."
Silvo-pastoral activities: These activities include planting of shrub and trees inside and on the
perimeter of the pasture as green hedge in the scope to restrict cattle access to the water, thus
reducing the impact of grazing on existing pastures. The proposed total surface area of pasture to
be properly managed is of 50 hectares.
Wetland Restoration. This sub-component will enhance the nutrient filtration capacity of the
wetland at the intersection of the Lapusna and Prut rivers and help to restore the degraded
wetland to its former natural state. Activities under the sub-component include: (i) forestry
activities such as planting of forest vegetation with species that have high capacity for nitrate
uptake and retention both in floodplain areas and terraces exposed to erosion; (ii) hydrologic
enhancement practices, such as embankment reinforcements for the stabilization of water level,
three concrete and ten wooden bridges to provide access to different parts of the wetland, etc. (iii)
sanitation activities, including removal of the existing waste dump to the commune platforms; and
(iv) public awareness activities to educate local inhabitants of the importance and fragility of
wetland ecosystems.
Soil and Water Quality Monitoring in the Hincesti and Leova Raions: This project will strengthen
the capacity of the Ministry of Ecology, Construction and Territorial Development (water quality
laboratory and hydrological department of the Hydrometeorology State Service, central and
regional laboratories of State Environmental Inspectorate) as well as Institute for Pedology and
Soil Science to carry out water and soil quality testing and monitor environmental requirements.
The project will support the incremental costs of:
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(i) selecting and maintaining a set of water and soil quality monitoring sites in the project area;
(ii) upgrading the equipment for monitoring of water and soil quality; and
(iii) incremental operating expenses for monitoring activities.
Two paired watersheds, named Balceana and Old Negrea, have been selected for small watershed
monitoring scheme. The Balceana tributary will serve as a control sub-basin, which is associated
with the control segment of the Lapusna catchment (Sofia commune). The Old Negrea tributary
will be used as a treated sub-basin.
Soil and Water Monitoring Program: An extensive soil and water quality testing program will be
established for the proposed project area consisting of eight communes to monitor the changing
quality of surface and ground water bodies (in response to the implementation of new and better
management practices in the project area) that eventually are draining into the Danube River.
Taking into consideration the balance between advantages and disadvantages for various
monitoring strategies, number of local and site specific conditions, and the guidelines provided by
the US Environmental Protection Agency (Spooner, et. al., 1985), Paired-Watershed and
Upstream/Downstream designs will be used under the project. A combination of these two
designs should provide appropriate data for determining the effects of the improved
environmentally-sound agricultural practices as well as watershed-level trend analyses for
identifying the severity of the pollution problem.
Groundwater Monitoring: Groundwater quality monitoring scheme is designed to include three
transects of wells (piezometers). Each transect will consist of 6 piezometers (3 piezometers to the
left and 3 piezometers to the right of the river bank). These piezometers will be installed
up-gradient from the edge of the river to the edge of the village or to the edge of agricultural
fields. A total of 18 piezometers will be constructed to determine the trends in the subsurface
water quality as it moves from the communal residential and agricultural land towards the
Lapsuna river. Samples collected from these piezometers will be used to determine the trend of
pollutant transport via subsurface flow, thus helping to assess the impact of the pasture area on
the quality of base-flow entering the Lapsuna river. In addition, the piezometer data will enable
the project to determine the beneficial impact of combined practices on reducing the pollutant
levels in the river.
In addition to the 18 monitoring piezometers constructed along the river basin, a set of
piezometers also will be used to assess the impacts of nutrient and bacteriological pollution
sources on the existing drinking water wells situated within the residential areas. The goal of this
monitoring scheme is to identify the pathways and sources of pollution to the shallow drinking
water wells. It is hypothesized that drinking water wells in the residential areas are contaminated
either at the well head area (by yard runoff or by direct polluted water dump near the well) or via
subsurface movement of pollutants from the pollution sources such as animal waste storage pile,
livestock stable area, and outhouse toilets. Two piezometers will be installed in the direction of
the groundwater flow near an existing shallow drinking water well (one near the pollution source
and another near the drinking water well). Drinking water well, selected in the lower part of
village, will also serve as an additional sampling point. This monitoring scheme will be replicated
three times in the communes selected in the control portion of the pilot watershed (Balceana or
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Sofia) and three times in the treated portion of the pilot watershed (Negrea). In all, 12
constructed piezometers and 6 existing drinking water wells will be monitored to assess the
seriousness and sources of contamination to the drinking water at the households and villages.
Project Component 2: Strengthening National Capacity, Regulatory Enforcement and
Institutional Capacity (US$0.09 million).
The project will assist the Ministry of Ecology, Construction and Territorial Development
(MECTD) and Ministry of Agriculture and Food Industry (MAFI) in: (i) developing the Code of
Good Agricultural Practices; and (ii) strengthening the capacity of the Government of the
Republic of Moldova in its efforts to promote scientifically grounded organic farming and land use
management.
The Republic of Moldova ratified the Partnership and Cooperation Agreement (PCA) with the
European Community and its member states in 1998. According to Article 50 of the PCA,
Moldova shall endeavor to ensure that its legislation will gradually be made compatible with that
of the Community, with regard to several sectors, including the environmental sector. The project
will also provide technical assistance to MAFI and logistical support for the preparation of a Code
of Good Agricultural Practices. MAFI will be the responsible agency for the development of the
Code in close cooperation with MECTD.
Organic farming. The project will assist the Government of Moldova in its efforts to promote
organic farming, including production, certification and marketing. Moldova has the necessary
pre-requisites for promotion of organic farming such as warm climate, fertile soils, and traditional
knowledge on avoiding excessive use of fertilizers, pesticides and herbicides, etc. However,
farmers encounter problems related to the export of ecologically clean products in the EC market.
Recently, the Government received a grant within TACIS Program for a pilot project which aims
to prepare recommendations for strengthening the policy and regulatory capacity at the national
level for promoting organic agriculture, including production, certification and marketing of
organic products. APCP will help the government in these efforts and define the necessary
timing, costs and institutional responsibilities in the preparation and implementation of these
recommendations which will assist in the strengthening of the policy and regulatory system at the
national level and a sound strategy for the marketing of organically produced goods.
Project Component 3: Public Awareness and Replication Strategy - US$ 0.37 million
The project will support public awareness efforts at the local, national and regional level to
disseminate benefits of project interventions and promote replication of the pilot activities in
similar areas of Moldova and other Black Sea riparian countries.
Local Level - Hincesti and Leova raions. The objectives of the public awareness campaign at
local level are to familiarize the population and help induce the behavioral changes necessary to
the success of the project (use of household manure storage bunkers and village-level livestock
waste stores, respecting the environment-friendly agricultural practices, etc.) in the eight selected
communes and support the replication of this component in Lapusna Judet.
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The project will develop a three-step approach to the public communication strategy and a
layering of the message so that the targeted audiences recognize the effects of agricultural
pollution and the importance of environment-friendly practices for the life of their communities.
The first step will be the preparation of the campaign, involving the identification and recruiting of
experts, preparation of materials, etc. The second step will be an informational campaign aimed to
raise the interest of the target groups, while the third step will reinforce and consolidate the
behaviors suggested and concentrate on replication efforts based on the results achieved.
National Level. The Lapusna pilot area would serve as a model for practical development of
environment-friendly agricultural practices to be replicated in other similar regions of the country.
A broad, nationwide public information campaign will be undertaken to disseminate the benefits
of proposed project activities. One of the objectives of the public awareness campaign would be
to have relevant entities buy into the project concept and activities and disseminate beneficial
results of project interventions through their communication efforts. This is an essential strategy
of the campaign, as the interests and efforts of others can naturally extend the impact and overall
effectiveness of the project. Activities under this sub-component will include:
(i)
public awareness programs on the need for and menu of environment-friendly agricultural
practices;
(ii)
promoting cooperation with national and local NGOs in order to support the objectives of
the APCP;
(iii)
broadcasting the "APCP one step forward" advertisement during the launching stage of
the project at prime-time viewing and listening hours on national TV and radio;
(iv)
purchasing time slots at the national level (printed press, radio and national TV) for short
programs related to APCP objectives, rationale and benefits;
(vi)
producing and launching a special monthly issue at the national level - "NATURE AND
AGRICULTURE".
The efforts at national level will be concentrated on institutions and groups (Government
agencies, national environmental or professional associations, academia etc.) that may influence
the replication of the project in other areas. Information will be delivered (as a public service or
sponsored programs) through the public broadcasting institutions, including a regular supply of
information to the mass media on the progress of the project. This approach will build a general
goodwill for the project and its benefits, and will raise the interest of potential future clients. The
delivery of the national media campaign will be done by a specialized PR/Media Agency to be
contracted under the grant, which in addition to the campaign will also deliver capacity building
programs within the Ministry of Ecology, Construction and Territorial Development (MECTD).
Replication Strategy
APCP replication at the national and regional level is a complex process based on identification of
zones, regions and ecosystems with characteristics similar to the Hincesti and Leova raions as well
as interest of local communities and authorities to initiate similar projects in their areas. In the
second year of project implementation, a series of informational massages related to the project
will be intensely disseminated to generate interest of the population, NGOs and authorities in the
identified ecosystems for replication of APCP activities. At the national level, replication would
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include: (i) three demonstrative seminars (PY2-4) organized on certain aspects of APCP (e.g.
nutrient reduction as a health factor, ecological manure management, environment friendly
agricultural practices); (ii) a scientific conference (PY4), which would synthesize APCP
experiences over four years of implementation and offer recommendations for the project
replication in all regions of Moldova (participants: local and central authorities, farmers,
managers, researches, NGOs, mass media, etc); (iii) distribution of informational materials to
agricultural NGOs with branches all over the country (PY 2-4); (iv) demonstration and exhibition
of APCP-funded environment-friendly agricultural practices at annual international and republican
exhibitions in the field of agriculture and environment which will be organized in Chisinau; (v) a
regional meeting for the exchange of experiences between neighboring countries that have similar
project; (vi) establishment of web-site that would be updated quarterly as well as the production
and launch of a CD-ROM about the Website and other related informational and educational
materials (end of PY-2).
At the regional level: (i) connect Moldova APCP to the regional informational network of similar
GEF projects; (ii) launch and regularly update a website on the proposed project activities; (iii)
produce a CD-ROM that provides informational, educational and instructive materials on the
project's activities; (iv) organize a study-tour within the countries of the Black Sea basin that have
experience in nutrient discharge reduction and environment-friendly agricultural practices; (v)
organize a regional meeting for the exchange of experiences with the countries of the Black Sea
basin that have similar projects; and (vi) exchange of informational literature, press releases, photo
library.
The project would thus provide assistance in conducting regional workshops, field trips, training,
publication in international agriculture and environmental journals and other activities to promote
replication of project activities in other Black Sea riparian countries. The pilot activity will aim to
serve as a model to be replicated in these countries, which will help contribute to significant
reductions in the nutrient loads entering the Danube River and Black Sea. The organization of
these international events will be a part of the assignment of a PR/Media Agency contracted for
the purpose.
Project Component 4: Project Management Unit. - US$0.62 million
The existing Project Preparation Unit, already established in the MECTD offices, would evolve
into the Project Implementation Unit (PIU) and will comprise: a Project Manager, Technical
Specialist (who would also handle project monitoring/evaluation), Financial Management
Specialist, Procurement Specialist, Accountant, Secretary/Translator and Drivers. Payment for
fiduciary services provided by CAPMU, including procurement and financial management, will be
shared by APCP. The Project Implementation Unit will be entrusted with responsibilities for
ensuring that GOM and World Bank procedures are followed in project implementation, provide
financial management and procurement services, report on project activities, overall project
monitoring against agreed performance indicators, and evaluation of the project's impact on
beneficiaries. Responsibility for the technical monitoring of the impact on nutrient load reduction
would be the responsibility of the Environmental Protection Inspectorate and the Public Health
Directorate.
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At the national level, the Project Manager will report to the Minister (or his designated
representative), MECTD; at the local level, the Project Manager will report to the Prefect of
Hincesti who is the Head of the Project Coordination Committee.
Implementation Arrangements
FUNCTION/COMPONENT
IMPLEMENTION RESPONSIBILITIES'
1. Hincesti and Leova raions:
PIU of APCP in close conjunction with PMU of RISP has
1.1. Activities under RISP
prepared an Operational Manual for APCP Matching Grants for
the applicants of RISP Special Credit Line. The program will
encompass a cooperating mechanism between the two projects,
including:
(i) selecting criteria for GEF funds accession;
(ii) official documentation to circulate (business plan,
environmental protection/mitigation plan; etc.);
(iii) implementation procedures (responsibility of each part
involved);
(iv) monitoring and evaluation mechanism;
(v) reporting procedures (MF, MECTD, MAFI, World Bank)
A representative selecting commission would be established to
consider and recommend to PIU the requests for GEF grants.
1.2. Manure Management Practices
PIU working with the Hincesti and Leova prefects and County
Council would provide for final design of waste stores, would
contract with commune Mayors'/councils' wishing to install
waste stores and would handle procurement through national
competitive bidding (stores) and national shopping (building
materials for household bunkers). The Mayors' office would be
responsible for overseeing construction of household livestock
waste bunkers and for operating the platform once constructed.
Householders would provide labor for building livestock waste
bunkers and would be responsible for segregating waste and
delivering solid livestock waste to the platform.
1.3. Promotion of Environment-friendly PIU would contract an agency to take responsibility for
Practices
implementing the component, contract participating farmers to
implement demonstrations on their own and other farms, and
carry out procurement and overall m/e of component
performance. The Contracted Agency would provide design,
day-to-day supervision of implementation and m/e of results at
demonstration and farm level.
1.4. Promotion of Environment-Friendly Communes would contract with PIU to undertake tree planting
Agro-forestry Practices
in fragile areas. Technical supervision would be provided by the
State Forestry Service "Moldsilva". Planting material
(production to be tendered) and a tractor-mounted planting tool
would be provided by the project. All labor and other costs
would be provided in kind by beneficiaries.
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1.5. Wetlands Restoration
PIU will provide partial financial assistance from GEF funds to
cover expensive for civil work (e.g. construction of dams;
concrete and wood bridges) as well as procurement of
necessary samplings for ecological reconstruction of the
existing forests. GEF funds will be also used for purchasing of
monitoring equipment and assisting of public awareness
activities (e.g. information boards; workshops; education
leaflets; and environmental oriented lectures).
Mayor of Tochile-Raducani, will provide the labor and will
assist PIU in getting the necessary legal arrangements for
program implementation, including adoption of local regulation
of grazing, public access to the area, etc. The Mayoralty will
also mobilize its available means for cleaning up of the area as
well as rehabilitation of roads and other access facilities.
The ecological reconstruction of forests and their maintenance
will be technically supervised by the State Forestry Service
"Moldsilva".
1.6. Monitoring of Soil and Water Quality PIU will provide equipment for strengthening the capacity of
and Environmental Impacts
Hydrometeorology Service and Institute of Soil for water and
soil quality monitoring.
The laboratories of Hydrometeorology Service will deal with
water and sediment sampling and analysis. The soil sampling
and analysis will be performed by the Institute of Soil. These
institutions will be contracted following the national procedures
and in full compliance with World Bank's rules.
The State Ecological Inspectorate (Lapusna Territorial
Ecological Agency) will be involved in samples collection and
their transportation to the laboratories. Some periodical
monitoring could be done by the laboratories of local
environmental protection agency as well as Judet Public Health
Department as necessary.
The Ministry of Health would be involved in monitoring
program through the Department for Preventive Medicine as
required.
2. Strengthening National Policy & Designated units in MECTD and MAFI.
Regulatory Capacity
3. Public Awareness Activities & PIU would contract NGO to implement the program.
Replication Strategy
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Annex 3: Estimated Project Costs
MOLDOVA: AGRICULTURAL POLLUTION CONTROL PROJECT
Local
Foreign
Total
Project Cost By Component
US $million
US $million
US $million
Promotion of mitigation measures for reducing nutrient loads in
5.97
2.84
8.81
water bodies
National Level Strengthening of Policy and Regulatory Capacity
0.02
0.06
0.08
Public Awareness, Capacity Building and Replication Strategy
0.14
0.18
0.32
Project Management Unit
0.45
0.10
0.55
Total Baseline Cost
6.58
3.18
9.76
Physical Contingencies
0.18
0.01
0.19
Price Contingencies
0.57
0.22
0.79
1
Total Project Costs
7.33
3.41
10.74
Total Financing Required
7.33
3.41
10.74
Local
Foreign
Total
Project Cost By Category
US $million
US $million
US $million
Goods
1.07
0.39
1.46
Works
0.82
0.23
1.05
RISP - grants
3.30
2.20
5.50
Training
0.20
0.06
0.26
Technical Assistance
0.37
0.28
0.65
Operating Costs
0.82
0.02
0.84
Physical Contingencies
0.18
0.01
0.19
Price Contingencies
0.57
0.22
0.79
1
Total Project Costs
7.33
3.41
10.74
Total Financing Required
7.33
3.41
10.74
1 Identifiable taxes and duties are 0.68 (US$m) and the total project cost, net of taxes, is 10.06 (US$m). Therefore, the project cost sharing ratio is 39.06% of
total project cost net of taxes.
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Annex 4: Incremental Cost Analysis
MOLDOVA: AGRICULTURAL POLLUTION CONTROL PROJECT
Overview.
The global environmental objective of the GEF Alternative is to protect the quality of the Black Sea by
reducing the discharge of nutrients (nitrogen and phosphorous) and other agricultural pollutants from the
Lapusna tributary catchment area situated in the Lower Prut River basin, which flows into the Danube.
The proposed project aims to significantly increase the adoption of environmentally-friendly agricultural
practices and promote ecologically sustainable land use in the project area and thereby reduce pollution
from agricultural sources including erosion in the Lapusna River basin and hence into to the Danube and
the Black Sea. Towards this end, the project will:
§
Promote the adoption of environmentally-friendly agricultural practices by individual farmers and
farmers' associations in eleven communes of the Hincesti and Leova raions (counties).
§
Convert a floodplain in Tochile-Raducani commune between the Lapusna and Prut Rivers back to
its former wetland status.
§
Protect the fragile soils including riparian areas through planting of perennials and grasses.
§
Strengthen national policy and local regulatory capacity.
§
Promote a broad public awareness campaign to disseminate the benefits of project activities.
§
Promote regional collaboration.
Thus, the GEF funding will remove institutional, financial, market and knowledge barriers, which currently
act as disincentives to the adoption of environmentally-friendly agricultural practices, protect fragile
riparian, pasture and forest areas and rejuvenate a wetland. The GEF Alternative intends to achieve this at
a total incremental cost of US$4.95 million.
Context and Development Goals.
During the past few decades, the Black Sea has suffered severe environmental damage, mainly due to
coastal erosion, eutrophication, insufficiently treated sewage, introduction of exotic species, and inadequate
resource management, all of which led to a decline of its biological diversity, loss of habitat and long-term
ecological changes. There is broad agreement that eutrophication, caused by an increase in nutrient flux
down the major rivers in the late 1960s, through poor management of animal waste and a marked increase
in mineral fertilizer and chemical use, is the most serious problems facing Danube River and the Black Sea
over the medium to long-term. The effect of eutrophication on the north-western shelf of the Black Sea is
generally recognized as disastrous and is primarily related to nutrient loads carried by Danube River. A
GEF Partnership on Black Sea and Danube Basin was established in May 2001 to take coordinated action
for the rehabilitation of the Danube/Black Sea environment. The Partnership is led by the GEF and its
implementing agencies, the World Bank, UNDP and UNEP and funded with a US$95 million GEF grant
over several tranches. The WB executed US$70 million Investment Fund for Nutrient Reduction in the
Danube Basin/Black Sea is financing investments to improve agricultural practices, wastewater treatment
and wetland restoration as well as policy and legal revisions and capacity building for enhancing
monitoring and enforcement.
Nutrient flow from the Danube River. The Black Sea Environmental Programme (BSEP) Studies
revealed that 58% of the total dissolved nitrogen and 66 % of the total dissolved phosphorous flowing into
the Black Sea come from the Danube basin. More than half of all nutrient loads into the Danube River
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originate from agriculture, about one fourth from private households and about 10 ­ 13 % from industry.
The most important pathways into the Danube basin for phosphorous are direct discharges (33% of the
total flow, predominantly from agriculture), erosion/runoff (31%, mainly agriculture) and sewage treatment
plant effluents (30%). Nitrogen loads come from: direct discharges (35%), erosion/runoff and sewage
treatment plant effluents in more or less equal shares, again agriculture being the source for more than half
the total nitrogen run-off in many countries.
Nutrient flow from Moldova. The Trans-boundary Diagnostic Analysis carried out on the basis of a
pollution source inventory for the BSEP reveals that Moldova only plays a modest role in nutrient
discharge (about 2%) into the Black Sea. Principally, this is because its surface area is only 1.6% of the
`Danube River' countries. However, agriculture in Moldova contributes significantly to N and P emission,
accounting for about 90% of its total discharge. In addition, because much agriculture is undertaken on
hilly land with poor soil conservation techniques, erosion is significant with some of the topsoil being
carried by the river system into the delta area.
Agriculture is the mainstay of the Moldova's economy, primarily due to its fertile soils. Seventy percent of
the land is under agriculture of which 81% are arable, 10% vineyards and orchards and 9% pastures.
Groundwater polluted with nitrates and microbial organisms from agriculture has social significance from
the point of view of drinking water supply for rural settlements in Moldova. Also, low levels of sanitation
and lack of hygiene are increasing the transmission of enteric germs, a principal cause of bowel diseases
including acute diarrhoeic disease (ADD).
Following the political and social upheaval caused by the transition to a market economy, and the
accompanying economic decline in the region, riparian countries have reduced the overall discharge of
nutrients into the Danube River and the Black Sea. Largely because of this, and also because of the
success of nutrient load reduction programmes, particularly in the upper Danube countries, there has been
a partial recovery of coastal ecosystems. Nevertheless, the overall discharge of nutrients is still higher than
what it was in the 1960s. The economic downturn in the coastal countries is temporary; this offers a
window of opportunity for actions aimed at improving the marine ecosystems and avoiding the return to the
previous situation of chronic eutrophication.
Government Strategy. The project will assist Moldova in meeting its international commitments to reduce
nutrient loads to the Danube River and the Black Sea. Moldova has assumed its international obligations
under the Convention on Co-operation or the Protection and Sustainable Use of the Danube River (Sofia
1994). It is signature to the Statement on the Lower Danube Green Corridor (Bucharest 2000), is a
member of the Danube Commission for the Protection of the Danube River and is moving towards
compliance with the European Union Directives. In addition, as a member, Moldova is committed to the
overall goals of the joint Danube-Black Sea Working Party to reduce nutrient and hazardous substances to
such levels necessary to permit the Black Sea eco-system recovery to similar conditions as those observed
in the 1960s.
Agricultural pollution control, especially nutrient run-off into the Danube and Black Sea has been identified
as a Government priority as well as being an essential part of the Black Sea and Danube River Basin
Strategic Action Plans. Wetland restoration in proximity to the Danube River has been identified as one of
the most effective ways to reduce nutrient loads into the Danube and Black Sea. The project's selected site
for promoting ecologically sustainable land use, the Tochile-Raducani floodplain will demonstrate the
effectiveness of such an initiative: this is also in line with the governments strategy of wetland ecosystem
protection. In addition, the project will protect riparian areas and fragile lands through planting of trees,
shrubs and grasses and the improved management of pastures and forests. The Ministry of Ecology,
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Construction and Territorial Development (MECTD) is in the process of harmonizing the environmental
legislation with that of the EU and is paying particular attention to the Nitrates Directive which is one of
the most important Directives under the EU accession process. On-farm environmental management is an
integral part of the Government's overall strategy for the agricultural sector, which is aimed at creating
enabling conditions to fully realize the sector's yet unfulfilled potential. A key part of the government's
overall strategy for agriculture is the development of post-privatisation agricultural support services as well
as on-farm environmental management aimed at creating enabling circumstances to realize fully the
sector's potential. To this end, MECTD and the Ministry of Agriculture and Food Industries (MAFI)
support the Agricultural Pollution Control Project (APCP) as strongly complementing the Rural Investment
Services Project (RISP). The combined program of grants through APCP and credits through RISP will
allow the government to mainstream environmental and public health considerations into the agricultural
sector and the synergy of such an approach will bring greater benefits locally, regionally and globally.
Baseline Scenario.
The baseline scenario includes activities that will promote Moldova's agricultural sector without GEF
support. The Government's agricultural strategy has significant implications for the organization and
management of an improved agricultural sector. Farmers and processing industries have witnessed a sharp
decline in viability since privatization through the reduction of inputs, especially fertilizers and machinery.
However, it is essential that if they are going to compete on the world market, farmers must have access to
appropriate knowledge, skills and technologies. Only then will Moldova's agriculture be competitive and
efficient. However, as only a few of the new farm owners have management skills, and even fewer have
access to capital, measures are included under the on-going Bank's Rural Investment Services Project
(RISP) to strengthen the extension and training system. RISP will make the entities delivering these
services more responsive to the needs of farmers, including access to information and cost effective
agricultural technologies and practices, which, while increasing productivity, promote conservation and
sustainable use of the country's natural resource base. However, this could encourage non-point source
pollution through increased agricultural productivity, contributing additional nutrients loads into the Black
Sea that may lead to increased eutrophication and the ecological damage and economic losses associated
with this process. The long-term implication will be continued degradation of a globally significant
international water body and its associated bio-diversity in the shared coastal and marine environment of
the Black Sea. The Baseline Scenario does not include an effective mechanism to address this issue even
though on paper it is the policy of government.
The GEF Alternative would go beyond the Baseline Scenario by allowing the project to establish a
mechanism for coordinating the approach, funding and support of activities designed to reduce non-point
source pollution from agriculture and advise on the reduction of point source pollution from
agro-industries. This alternative while promoting increased productivity will do so without the concurrent
increase of pollution into ground and surface water by promoting environmentally friendly practices.
Costs. The total cost of the project is US$10.74 million. The total expenditure under the Baseline Scenario
is estimated at US$5.79 million. The Incremental Costs are estimated to be US$4.95 million.
Global Environmental Objective.
The global environmental objective of the project is to promote the adoption of environmentally-friendly
on-farm agricultural practices to reduce nutrient loads entering the Black Sea. The dissemination and
outreach features of the project will contribute to its replicability. The role of the GEF in this project is to
reduce farmers' perceived risks in adopting environmentally-friendly agricultural practices and remove
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barriers for their adoption. The project will demonstrate that farmers who adopt these measures are able to
maximize outputs and minimize negative environment impacts, while improving the health of the Black Sea
ecosystem. In addition a wetland will be rejuvenated and fragile riparian systems, pastures and forests will
be protected and better managed for the benefit of the environment and to the well-being of the people.
This should lead to a sustainable increase in economic activities such as increase agricultural output,
improve fishing and tourism in the wetland and surrounding areas and to a healthier and wealthier
population. At the same time, the project should enhance bio-diversity and facilitate carbon sequestration.
But above all, the activities promoted under the GEF Alternative will facilitate the sharing of experiences
for feasible and affordable solutions to deal with point and non-point sources of pollution to surface and
ground water and hence to international water bodies from agro-industries and agriculture.
Scope. Above and beyond the Baseline Scenario, the GEF Alternative will provide the means to meet the
proposed project's goals. Specifically, the project will:
§
Install improved manure storage facilities and equipment for manure collection, storage and
application.
§
Provide manure spreaders/applicators for efficient and cost-effective use of manure on croplands,
together with judicious use of mineral fertilizers.
§
Conduct on-farm trials and demonstrations to promote the use of improved sustainable agricultural
practices, including reduced tillage, better chemical management systems, terracing, contour ploughing and
buffer strips for water quality benefits.
§
Develop a specific land use management plan for the integrated management of the reopened
Tochile-Raducani wetland between the Lapusna and Prut Rivers.
§
Strengthen national policy and regulatory capacity to address agricultural pollution control.
§
Promote regional collaboration.
§
Undertake a broad public awareness campaign to disseminate benefits of the project activities.
Benefits.
Domestic and International Benefits. The GEF Alternative would go beyond the Baseline Scenario by
allowing the project to promote environmentally friendly agricultural and rural practices. These will reduce
non-point (and point) pollution sources to the Black Sea as well improving groundwater, biodiversity and
carbon sequestration all of which have strong benefits for the global climate and human health. Given the
country's precarious budgetary situation, the government can ill-afford to spend scarce funds as financial
incentives to farmers to reduce nutrient loads for regional and global gains. The GEF funds will allow
additional investments in sustainable farm management practices and manure storage etc. in the selected
project area of Lapusna Judet that will have an impact on the Black Sea and provide willing farmers with
sustainable alternate technologies. Under the GEF Alternative, the promotion of improved sustainable
agricultural practices and a decrease of manure leaching into water systems will provide greater
environmental benefits and augment the demonstration potential of the exercise. It should also improve
farm profitability. The GEF Alternative will promote a public awareness program to effectively explain
the benefits of improved environmental practices at farm level. It will also allow the development of a
strategy for project replication within Moldova and internationally.
The proposed project is a demonstration activity in the South-western part of Moldova, close to the
Romania border. The eleven communes in the project area have about 21,360 ha of arable land out of a
total area of 41,600 ha. It has a total population in 2000 of 43,230 in 14,740 households. The project will
support activities for nutrient reduction and monitoring in 16 villages, as well as to reopen
Tochile-Raducani wetland between the Lapusna and Prut Rivers. This wetland of about 130 ha comprises
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a former floodplain area, drained and transformed into agricultural land in the late sixties. The plants have
the capacity to absorb minerals from the water and the flora and fauna could reduce faecal and colloidal
substances.
Through improved farming practices, there will be an annual saving of dissolved nutrients flowing into the
Black Sea. It is assumed that in the project area, about 50,000 t of wet manure out of an estimated current
annual production of 86,000 t will be collected in platforms through manure management in place of being
dumped by the road and riverside. This 50,000 t contains an estimated 280 t of N and 70 t P and it will be
judiciously spread on about 5,000 ha of agricultural land (out of 21,400 ha). In addition the correct
dosages of chemical fertilizers will be applied to the various annual and perennial crops. Thus, once the
project is fully operational up to 280 t of N and 70 t P could be taken up by plants and saved from being
flushed into the river systems and hence into the Black Sea. Also, the plants will absorb most chemical
fertilizers. Even if some of this N & P from manure and mineral fertilizer finds its way into the river
system, the Tochile-Raducani the flora and fauna of the wetland has the capacity to absorb up to 100 kg N
and 10 kg P per hectare each year. More detailed assessment will be undertaken in quantifying accrued
environmental (social and economic) benefits during project implementation (and beyond). Such
quantifiable benefits include the reduction of minerals and other pollutants in surface and ground water,
erosion reduction, increase in biodiversity and perhaps additional carbon sequestration.
Incremental Costs.
The difference between the cost of the Baseline Scenario of US$5.79 million and the cost of the GEF
Alternative of US$10.74 million is US$4.95 million. This amount represents the incremental cost of
achieving the global environmental benefits of reduced degradation of local and international waters,
decreased erosion, more appropriate land use and increased biodiversity.
Incremental Cost Matrix
Component
Cost
US$
Domestic Benefit
Global Benefits
Category
(M).
1. Promotion of
Improved local capacity Reduced nutrient loads
Mitigation Measures for
Baseline
5.47
and knowledge to
into the Black Sea
Reducing Nutrient Loads
respond to the need for
in Water Bodies
environmentally sound
Protection of natural
- RISP-supported
agricultural practices
habitat.
activities
- Promotion of Improved
Improved land-use
Increased biodiversity
Watershed Management
practices and water
Practices (manure
quality.
management; promotion
of environmentally
Reduced soil erosion.
friendly agricultural
practices; shrub and
Increased profitability
tree-planting; wetland
of agriculture
restoration; monitoring
production.
soil and water quality
Increased rural
incomes.
With GEF
9.66
Incremental
4.19
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2. Strengthening National
Strengthened policy
Reduced nutrient loads
Policy, Regulatory
Baseline
0.02
and structural
due to compliance with
Enforcement and
framework for
regulatory and
National Capacity
agricultural practices
enforcement measures
designed to reduce
nutrient loads to Black
Sea
With GEF
0.09
Incremental
0.07
3. Public Awareness and
Increased potential to
High potential to
Replication Strategy
Baseline
0.09
replicate project
replicate project

activities in similar
activities outside
areas of Moldova
Moldova, in other Black
Sea, Danube river and
Baltic Sea riparian
countries
With GEF
0.37
Incremental
0.28
4. Project Management n
Increased capacity for
Unit
Baseline
0.20
successful project
management and
implementation
With GEF
0.62
Incremental
0.42
Total
Baseline
5.79
With GEF
10.74
Incremental
4.95
The proposed project is closely linked with the US$25.0 million Rural Investment and Services Project and
permits activities under this project to result in trans-boundary as well as local benefits.
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Annex 5: Financial Summary
MOLDOVA: AGRICULTURAL POLLUTION CONTROL PROJECT
Years Ending
IMPLEMENTATION PERIOD
Year 1
Year 2
Year 3
Year 4
Year 5
Year 6
Year 7
Total Financing
Required
Project Costs
Investment Costs
1.6
2.0
2.1
2.4
1.6
0.0
0.0
Recurrent Costs
0.2
0.2
0.2
0.2
0.2
0.0
0.0
Total Project Costs
1.8
2.2
2.3
2.6
1.8
0.0
0.0
Total Financing
1.8
2.2
2.3
2.6
1.8
0.0
0.0
Financing
IBRD/IDA
0.0
0.0
0.0
0.0
0.0
0.0
0.0
Government
0.3
0.3
0.2
0.2
0.1
0.0
0.0
Central
0.0
0.0
0.0
0.0
0.0
0.0
0.0
Provincial
0.0
0.0
0.0
0.0
0.0
0.0
0.0
Co-financiersGEF
0.5
1.0
1.2
1.3
1.0
0.0
0.0
User Fees/Beneficiaries
0.1
0.2
0.2
0.1
0.1
0.0
0.0
RISP
0.9
0.7
0.7
1.0
0.6
0.0
Total Project Financing
1.8
2.2
2.3
2.6
1.8
0.0
0.0
Main assumptions:
Figures may slightly differ due to rounding
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Annex 6(A): Procurement Arrangements
MOLDOVA: AGRICULTURAL POLLUTION CONTROL PROJECT
Procurement
A. Procurement Guidelines
The procurement of goods and works financed the World Bank shall be done in accordance with
the Bank's Guidelines for Procurement under IBRD Loans and IDA Credits, (issued in January
1995 and revised in January and August 1996, September 1997, and January 1999). Consulting
Services and Training contracts will be awarded in accordance with the provisions of the Bank's
Guidelines for the Selection and Employment of Consultants by World Bank Borrowers, (issued
in January of 1997 and revised in September 1997, in January, 1999 and in May 2002).
The Bank's Standard Bidding Documents and Standard Requests for Proposals etc. will be used.
A General Procurement Notice (GPN) will be published in the UN Development Business in
January 2004.

B. Implementation
The Ministry of Ecology, Construction and Territorial Development (MECTD) and Ministry of
Agriculture and Food Industries (MAFI) would be the main agencies responsible for project
implementation. (MECTD) has been designated by the Ministry of Finance as the line ministry
responsible for management of the project. These ministries will be the implementing agencies and
will manage the project through Project Management Unit (PMU) with a cross support on
fiduciary issues provided by already existing Consolidated Agricultural Projects' Management
Unit (CAPMU) which is experienced with the Bank's requirements.
The PMU would collect and record information regarding procurement administration, and would
send quarterly reports based on this information to the Bank. These reports would indicate:
(i)
status of procurement
(ii)
an updated procurement plan; and
(iii)
compliance with aggregate limits on specified procurement methods.
CAPMU's existing computerized procurement monitoring system will be expanded for tracking
procurement actions as well as to prepare periodic progress reports.
C. Procurement Arrangements
The project includes procurement of the following civil works, goods and services :
·
Civil works for manure management structures, including manure pits for private farms
and communes' manure platforms that will be scattered in terms of location and timing, small
structures for wetlands restoration, and installation of piezometers for monitoring water quality;
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·
Goods will include agricultural machinery, field and laboratory equipment for
testing/demonstration of new practices as well as monitoring their impact on the environment,
vehicles, and various types of agricultural and forestry inputs and planting materials;
·
Consulting services and training will include several contracts with agencies to provide
implementation services for new practices and subsequent monitoring of impact, for individual
local and international consultants to provide specific technical advise, for training programs and
for monitoring overall project impact.
The following procurement arrangements will apply for the procurement of goods, works and
services:
Procurement of Civil Works:
International Competitive Bidding (ICB): Works contracts estimated to cost US$200,000 each or
more shall be procured through ICB in accordance with the Guidelines.
National Competitive Bidding (NCB): The contracts for procurement of construction works
estimated to cost less than US$200,000 equivalent per contract but more than US$50,000, would
be procured under contracts awarded in accordance with the provisions of paragraph 3.3 of the
Guidelines. Rehabilitation and construction works will be grouped into regional lots as much as
possible considering the economies of scale.
Minor Works: Civil Works estimated to cost less than $50,000 equivalent per contract may be
procured under lump-sum, fixed-price contracts awarded on the basis of quotations obtained from
three (3) qualified domestic contractors in response to a written invitation. The invitation shall
include a detailed description of the works or services, including basic specifications, the required
completion date, a basic form of agreement acceptable to the Bank, and relevant drawings, where
applicable. The award shall be made to the contractor who offers the lowest price quotation for
the required work, and who has the experience and resources to complete the contract
successfully.
Procurement of Goods:
International Competitive Bidding (ICB): Goods and equipment estimated to cost US$100,000
each or more shall be procured through ICB in accordance with the Guidelines.
International Shopping (IS): Readily available off-the-shelf goods and equipment estimated to
cost less than US$100,000 equivalent per contract may be procured under contracts awarded on
the basis of international shopping procedures in accordance with paragraphs 3.5 and 3.6 of the
Guidelines.
National Shopping (NS): Locally available off-the-shelf goods and equipment estimated to cost
less than US$50,000 equivalent per contract may be awarded on the basis of national shopping
procedures in accordance with paragraphs 3.5 and 3.6 of the Guidelines. Items covered by NS
procedures would include office furniture, office equipment, minor supplies and vehicles as well
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as small field and laboratory equipment.
Procurement of Consultants' Services and Training:
Quality- and Cost-based Selection (QCBS): Consultant services shall be procured under contracts
awarded in accordance with the provisions of the Bank's Consultant Guidelines. Assignments
estimated to cost less than US$100,000 equivalent can be procured based on shortlists comprising
entirely national firms.
Least Cost Selection (LCS): Auditing services and project monitoring estimated to cost less than
$100,000 equivalent per contract may be procured under contracts awarded in accordance with
the provisions of paragraphs 3.1 and 3.6 of the Consultant Guidelines.
Selection based on Consultants Qualifications (CQ): Contracts for consulting services, such as
preparation of management plans, assistance for soil and water monitoring, etc., estimated to cost
less than US$50,000 equivalent per contract may be procured using selection based on
consultants' qualifications in accordance with paragraphs 3.1 and 3.7 of the Guidelines.
Individual Consultants: Services of individual consultants for tasks that meet the requirements
set forth in paragraph 5.1 of the Consultant Guidelines shall be procured under contracts awarded
in accordance with the provisions of paragraphs 5.1 through 5.3 of the Consultant Guidelines.
For individual consultants to be hired for more than six months duration, the positions will be
advertised for expressions of interest in international and/or national media depending on the
expertise required and selection will be based on comparison of those expressing interest.
Single Source Selection (SS): The consulting services which: (i) would be a natural continuation
of work carried out by the firm; (ii) must be selected rapidly due to an emergency need, (iii) has
an exceptional nature where only one firm is qualified or has experience of exceptional worth for
the assignment, (iv) is estimated to cost less than US$50,000 equivalent per contract, may, with
the Bank's prior agreement, be procured in accordance with the provisions of paragraph 3.8
through 3.11 of the Consultant Guidelines.
Procurements under Sub-grants:
Commercial Practices: Works and goods required for implementation of the environmental
mitigation sub-grants to be financed in conjunction with the RISP credit line supported
investments and estimated to cost less than US$50,000 equivalent per contract may be procured
at competitive prices in accordance with commercial practices of the respective beneficiaries, per
paragraph 3.12 of the Guidelines. Provided that such practices involve obtaining quotations from
more than one supplier or contractor; and with due account being taken, in addition to prices, of
other relevant factors such as delivery and efficiency and reliability thereof and availability of
maintenance and spare parts. Sub-borrowers shall use the World Bank's standard and sample
bidding documents, evaluation reports, contracts etc., wherever possible, with the necessary
modifications agreed with the PMU. Works and goods estimated to cost US$50,000 or more per
contract shall be procured in accordance with the procurement procedures set forth above for civil
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works and for goods and equipment, in accordance with the cost of the contract.
Procurement from Government-Owned Agencies:
Under the scope of this project, some services and agricultural inputs will be procured from
government-owned agencies, because of the following reasons: a) lack of private sector in these
fields in the country, b) the estimated cost of these contracts are relatively small and may not
attract foreign companies or institutions, c) the nature of services such as water quality
monitoring or supply of seedlings require the well establishment of the service providers at the
regional and local level, in order words any centrally located institution can not perform the
required services. Therefore, the below named government-owned agencies will be directly
contracted for the implementation of components for promotion of environmentally friendly
practices, shrub and tree planting, wetland rehabilitation and monitoring the impact of these
measures on water and soil quality.
Moldsilva (State Forestry Services) is the central authority responsible for the forestry in Moldova
and directly subordinated to the Government. It is the only Moldovan institution with relevant
capacity for afforestation works and it consists of 15 state forestry enterprises, which cover 69
forest districts and 1068 forest cantons. Moldsilva will be responsible to carry out tree planting
program and it will supply seedlings for the project activities estimated to cost about $130,000.
The price quotations will be collected from number of district nurseries located in the vicinity of
the project area and seedlings will be procured from the lowest priced nursery meeting the
requirements.
Soil Science Institute is a state entity with number of technically qualified researchers with many
specialized laboratories and research stations at the district level. It is subordinated to the Ministry
of Agriculture, but operating on a self financing basis. It has its own laboratory and it is the only
institution which has experience and capacity in conducting various soil analysis including
soil/manure nutrient content, monitoring soil quality, measuring nutrient loss and soil erosion
which are the key activities under the implementation of improved watershed management
practices and its monitoring. The cost of its services to be awarded under direct contracting
procedures will be about $80,000.
Hydrometeorology Service Center is a central agency operating as a department under the
Ministry of Ecology, Construction and Territorial Development (MECTD) and it is responsible
for the monitoring of all ecosystem medias in order to assess their general status and trends in
water quality and quantity. The laboratories of Hydrometeorology Service Center will carry out
water quality monitoring and meteorological data collection and cost of these services will be
about $125,000, which will be awarded under direct contracting procedures.
For all of the these above mentioned agencies, annual service/supply contracts will be signed and
will be renewed every year upon satisfactory performance.
Training, Workshops and Study Tour Expenditure:
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The PMU shall prepare a detailed training program for every six months in consultation with the
implementing agencies. The training program shall contain time schedules for workshops,
seminars, study tours and travels etc., including detailed information on the content, itinerary,
location, number of beneficiaries, cost estimates for each activity etc. These training programs
shall be submitted to the Bank for review and clearance before implementation. After the Bank's
clearance the training, workshops and study tours shall be carried in accordance with the agreed
procedures without requiring Bank's clearance of each sub-component of the training program.
The status of the training program will be included as part of progress reports and will be updated
and/or modified as agreed with the Bank.
Incremental Operating Costs:
The operating costs for APCP covering staff salaries (excluding Government employees), staff
travel costs, supplies, utilities, and equipment maintenance etc. would be procured on the basis of
annual budgets to be agreed with the World Bank.
Procurement methods (Table A)
Table A: Project Costs by Procurement Arrangements
(US$ million equivalent)

1
Procurement Method




Expenditure Category
ICB

2
NCB
Other
N.B.F.
Total Cost
1. Works
0.00
1.00
0.04
0.04
1.08
(0.00)
(0.72)
(0.03)
(0.00)
(0.75)
2. Goods
0.58
0.00
0.47
0.37
1.42
(0.46)
(0.00)
(0.38)
(0.00)
(0.84)
3. Services
0.00
0.00
1.50
0.00
1.50
and Training
(0.00)
(0.00)
(1.20)
(0.00)
(1.20)
4. Grants to support credit line
0.00
0.00
6.00
0.00
6.00
under RISP
(0.00)
(0.00)
(2.00)
(0.00)
(2.00)
5. Operating Costs
0.00
0.00
0.35
0.40
0.75
(0.00)
(0.00)
(0.20)
(0.00)
(0.20)
Total
0.58
1.00
8.36
0.81
10.75
(0.46)
(0.72)
(3.81)
(0.00)
(4.99)
1/ Figures in parentheses are the amounts to be financed by the Bank Credit/Grant. All costs include
contingencies.
2/ Includes civil works and goods to be procured through national shopping, consulting services, services of
contracted staff of the project management office, training, technical assistance services, and incremental operating
costs.
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Table A1: Consultant Selection Arrangements (optional)
(US$ million equivalent)
Selection Method
Consultant Services
Expenditure Category
QCBS
QBS
SFB
LCS
CQ
Other
N.B.F.
1
Total Cost
A. Firms
0.30
0.00
0.00
0.03
0.64
0.20
0.00
1.17
(0.25)
(0.00)
(0.00)
(0.02)
(0.51)
(0.16)
(0.00)
(0.94)
B. Individuals
0.00
0.00
0.00
0.00
0.00
0.40
0.00
0.40
(0.00)
(0.00)
(0.00)
(0.00)
(0.00)
(0.35)
(0.00)
(0.35)
Total
0.30
0.00
0.00
0.03
0.64
0.60
0.00
1.57
(0.25)
(0.00)
(0.00)
(0.02)
(0.51)
(0.51)
(0.00)
(1.29)
1\ Including contingencies
Note: QCBS = Quality- and Cost-Based Selection
QBS = Quality-based Selection
SFB = Selection under a Fixed Budget
LCS = Least-Cost Selection
CQ = Selection Based on Consultants' Qualifications
Other = Selection of individual consultants (per Section V of Consultants Guidelines),
Commercial Practices, etc.
N.B.F. = Not Bank-financed
Figures in parentheses are the amounts to be financed by the Bank Credit/Grant.
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Prior review thresholds (Table B)
D. Procurement Review.
Prior Review: The following procurement action and documentation would be subject to Prior
Review by the World Bank:
Goods, Works and Technical Services: Prior review of all International Competitive Bidding,
first National Competitive Bidding and first Minor Works contracts for works, first International
Shopping, and first National Shopping contracts for goods and technical services.
Consulting Service: With regard to consultant services and training, prior Bank review will be
required for all Terms of Reference, irrespective of contract value. For contracts with firms
estimated to cost US$50,000 or more and for contracts with individuals estimated to cost
US$25,000 or more, the qualifications, experience, terms of reference and terms of employment
shall be furnished to the Bank for its review and approval prior to contract signature.
Post Review: Contracts not subject to Bank's prior review will be reviewed ex-post by Bank
supervision missions on sampling basis, i.e. 1 out of every 5 contracts. The frequency of
procurement supervision should be every twelve months.
Table B: Thresholds for Procurement Methods and Prior Review1
Contract Value
Contracts Subject to
Threshold
Procurement
Prior Review
Expenditure Category
(US$ thousands)
Method
(US$ millions)
1. Works
<200
NCB
1/200
<50
MW
1/50
2. Goods
>100
ICB
3/583
<50-<100
IS
1/100
<50
NS
1/50
3. Services
>200
QCBS
1/300
<100
LCS
1/30
<50
CQ
1/50
<25
Individual
2/50
Total value of contracts subject to prior review:
US$1,413
Overall Procurement Risk Assessment:
Average
Frequency of procurement supervision missions proposed:
One every six months
(includes special procurement supervision for
post-review/audits)
E. Procurement Monitoring and Reporting
The PMU will keep a complete and up-to-date record of all procurement documentation and
relevant correspondence in its files, which will be reviewed by the Bank staff during supervision
missions. The
Procurement Plan for the project shall be prepared by the PMU and furnished to the Bank for its
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review and approval in accordance with the provisions of the Bank's Procurement Guidelines.
The Procurement Plan, which indicates the procurement arrangements, contract packaging,
applicable procurement method, scheduling of procurement process, estimated cost etc, will be
updated annually by the PMU. All procurements shall be undertaken in accordance with the
Procurement Plan. Monitoring reports on procurement progress will be submitted as part of
progress reports on program implementation. The report shall include all information related with
the completed, on-going and planned contracts.
F. Action Plan to Build up Agencies Capacity
The Consolidated Agricultural Projects Management Unit (CAPMU) was created in 1999 as the
result of the consolidation of the project implementation units in charge of the prior agricultural
projects. CAPMU is currently in charge of managing Rural Investment Services Project in the
agriculture sector, and will be managing Youth Inclusion Project after its effectiveness. CAPMU
will also started to work for the preparation of APCP and will be responsible for its management.
CAPMU has developed considerable experience in the procurement of works, goods and services
in accordance with Bank procedures.
The following actions need to be taken in the given order to alleviate the risks for poor
implementation of procurement under the project:
- The procurement file containing up to date procurement documents (guidelines, manuals,
templates of procurement notices, standard bidding documents for procurement of goods and
works, standard request for proposal documents for consultants services, evaluation report
formats, regional and simplified procurement documents etc.) shall be prepared by the Bank and
provided to PMU at the time of Project Launch Workshop. The PMU is recommended to visit the
Bank's web-site frequently to ensure using the most updated procurement documents.
- CAPMU will provide assurance that the procurement specialist will devote at least 30% of his
time for APCP procurement activities, especially at the early stages of the project.
- The work load of procurement specialist shall be assessed for a period of 6 months after the
effectiveness of the project. In case of shortcomings, two options will be considered i) a new
full-time procurement specialist will be hired who will be working solely for APCP, or ii) a
full-time procurement assistant will be hired to assist the part-time procurement specialist.
The procurement specialist of CAPMU, had some training on Bank's procurement procedures
given by ILO in Turin. However, he has a limited experience on procurement of civil works
contracts. To gain knowledge on procurement of civil works project, he will attend related
procurement courses provided by ILO in Turin.
- Bank procurement specialist will be a member of the project team throughout the project cycle.
During project implementation, the Bank procurement specialist should be involved in the
supervision missions.
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Overall Procurement Risk Assessment
Section 1: Capacity of the Implementing Agency in Procurement and Technical Assistance
requirements
The capacity of the implementing agency to conduct procurements has been assessed. The overall
procurement assessment is high-risk. The following action plan is recommended as a result of this
assessment. a) CAPMU will provide assurance that the procurement specialist will devote at least
30% of his time for APCP procurement activities, especially at the early stages of the project. b)
The work load of procurement specialist shall be assessed for a period of 6 months after the
effectiveness of the project. In case of shortcomings, two options will be considered i) a new
full-time procurement specialist will be hired who will be working solely for APCP, or ii) a
full-time procurement assistant will be hired to assist the part-time procurement specialist. c) The
procurement specialist, who is currently working in CAPMU, had some training on Bank's
procurement procedures given by ILO in Turin. To gain knowledge on procurement of works
project, he will attend procurement trainings provided by ILO in Turin for procurement of works.
Country Procurement Assessment Report or Country Procurement Are the bidding documents for the
Strategy Paper status: The CPAR is finalized in June 2003
procurement actions of the first year ready by
negotiations YES NO X
Section 2: Training, Information and Development on Procurement
Estimated date of
Estimated date of
Indicate if there is
Domestic Preference Domestic Preference
Project Launch
Publication of General procurement subject to for Goods:
for Works, if
Workshop:
Procurement Notice: mandatory SPN in
Yes X No
applicable.
May/June 2004
5/15/2004
Development Business
Yes No X
Yes X No
Explain briefly the Procurement Monitoring System: Procurement implementation progress will
be monitored through progress reports and supervision missions. Each supervision mission will
include the project procurement specialist for updating the procurement plan and conducting post
review.
Co-financing: None
Section 3: Procurement Staffing
Indicate name of Procurement Staff or Bank's staff part of Task Team responsible for the procurement in the
Project:
Elmas Arisoy (ECSPS)
Explain briefly the expected role of the Field Office in procurement: There is no procurement specialist in the
Country Office. Procurement supervision shall be handled by HQ based PAS.
_______________________________________________________________________________________________________________
1\ Thresholds generally differ by country and project. Consult "Assessment of Agency's Capacity to Implement
Procurement" and contact the Regional Procurement Adviser for guidance.
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Annex 6(B): Financial Management and Disbursement Arrangements
MOLDOVA: AGRICULTURAL POLLUTION CONTROL PROJECT
Financial Management
1. Summary of the Financial Management Assessment
The financial management arrangements within the CAPMU will be assessed as acceptable to the
Bank when CAPMU accounting system will be adjusted to provide accounting and reporting
under the project.
CAPMU has an extensive experience in the WB project implementation and it has well-developed
fiduciary functions that have been assessed as satisfactory during preparation for implemenation of
other projects. CAPMU's previous and current project audited financial statements are
satisfactory and it has been agreed that such arrangements will be replicated for APCP project as
well. The CAPMU has prepared financial reporting forms for the project (FMRs), prepared chart
of account, terms of references for the audit.
The annual audited project financial statements will be provided to the Bank within six months of
the end of each fiscal year and also at the closing of the project period.
Project Special Account will be opened before project effectiveness by the CAPMU in the
commercial bank acceptable to the World bank.
Grant Matching Scheme that represents a part of actions provided in line with a RISP project will
be administered by the PIU working under CAPMU. These Grants will be provided on the basis
of eligibility criteria and for the participants credited under RISP project. Each Grant will be
financed on a conditional basis and assumes 3 step financing that should allow to provide control
over conditions execution and eligibility of expenses provided.
Funds flow
There are two part of the funds flow scheme that should be considered at the project. The first
part relates to the general scheme of the project financing and assumes that project funds will flow
from: (i) the Bank, either via a single Special Account which will be replenished on the basis of
SOEs or accompanied by supporting documentation for expenditures related to procurement
requiring Bank prior review/approval; or (ii) the Government, via the Treasury at the Ministry of
Finance (MOF) on the basis of payment requests approved by the Foreign Debt Department of the
MOF.
Sub-grant Disbursements
Sub-grant funds will be disbursed only to bank account in the name of the Grantee that has been
opened and is utilized by the Grantee solely for the purpose of the grant on terms and conditions
satisfactory to the PMU. Payments out of the bank account shall be made exclusively for eligible
expenditures for the work determined in the sub-grant agreements.
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The grants to RISP credit recipients will be disbursed in tranches. The first tranche payment will
be made immediately upon signing of the sub-grant agreement by the parties. Disbursements will
be made on the basis of tranche disbursement requests (invoices) that the Grantee will send to the
PMU when the milestone for the particular tranche has been met. The Grantee shall also provide
the PMU any documents that they may require to ascertain whether the expenditure incurred
under the previous tranche is reasonable. The PMU may withhold scheduled payments in the
event that the Grantee's expenditure reports show a large cash balance in the sub-grant account,
or may delay the next scheduled grant payment(s).
Expenditure of sub-grant funds must adhere to the specific line items in the approved budget.
Transfers among line items of the approved budget are restricted to a cumulative total of 20% of
the item. If a transfer in excess of this restricted level becomes necessary, or the Grantee wishes
to establish a new line item, the Grantee shall promptly request authorization from the PMU by
letter.
Only incremental operating costs incurred for execution of the sub-project will be financed by the
grant funds and existing operating costs of the Grantee can not be financed by grant funds. All
interest generated by sub-grant activities shall be applied to the project funded by the sub-grant or
other similar activities conducted by the Grantee.
Sub-grant participants' accounts will be credited on the amount of Matching Grant advance in
amount of about 30% with will be disbursed at loan approval under the RISP project; the second
payment, in amount of 30% of the sub-grant, will be provided following inspection and approval
of the completion of the tasks set as conditions to the advance payment; the third and final
payment will be provided following inspection and approval of second stage actions completion.
Accounting policies and procedures
The accounting books and records are maintained on a cash basis and project financial statements
are presented in United States dollars (and MDL as necessary). CAPMU has instituted a set of
appropriate accounting procedures and internal controls including authorization and segregation
of duties.
Accounting policies that to be applied on the project will include the following major
assumptions:
- cash accounting as the basis for recording transactions;
- reporting should be done in US dollars;
- consolidated financial reports should be prepared for all components;
- reports to be prepared are FMRs, the format of which should be developed and agreed;
- reports to be submitted to the WB on a quarterly basis
- all counterpart funds should be reflected in the financial statements
The CAPMU should adjust their accounting software to reflect the APCP project specifics. as
well as to adjust a chart of accounts appropriate for the project.Chart of accounts for the project
as well as financial reporting forms have been developed and have been agreed.
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CAPMU's produces all financial reports and SOEs directly from the project accounting software
1C. CAPMU has demonstrated in its previous projects that it is able to report on project
expenditures with this system and it was assessed that the system works fine but this accounting
system require minor adjustments to be capable to provide reporting forms for the APCP.
Project management-oriented Financial Monitoring Reports (FMRs) will be used for project
financial reporting, monitoring and supervision and the indicative formats of these reports has
been developed and found acceptable. These reporting forms are included in the CAPMU
accounting manual designed for the APCP project needs. CAPMU will produce a full set of
FMRs every three months throughout the life of the project.
2. Audit Arrangements
CAPMU's previous and current auditing arrangements and findings are satisfactory to the Bank.
The audit of the project will be conducted by the independent private auditor, acceptable to the
Bank on terms of reference acceptable to the Bank. The annual audited project financial
statements will be provided to the Bank within six months of the end of each fiscal year and also
at the closing of the project. The contract for the audit awarded during the first year of project's
implementation and thereafter is to be extended from year-to-year with the same auditor, subject
to satisfactory performance. The cost of the audit will be financed from the proceeds of the
Grant. TORs for the project audit has been drafted and agreed.
An audit opinion on the projects financial statements, statements of expenditures and Special
Account will be required within six months to the end of the fiscal year and also of the closing of
the project. The first audit report is planned to be provided by the 31 June 2005.
In addition, the Moldovan Court of Accounts, the country's supreme audit institution will provide
control over the project according to their plans. The usual practice assumes one audit of the
project per year.
3. Disbursement Arrangements
Allocation of credit/grant proceeds (Table C)
The allocation of Grant proceeds is given in Table C, which also indicates the GEF financing by
expenditure category. The project will be executed over a period of five years during which the
full Grant amount of US$4.95 million will be disbursed. Activities under the Project are expected
to be completed by June 30, 2009 and the expected closing date for the project will be December
31, 2009 after which no disbursements will be made.
The project will initially use transaction-based disbursement procedures (direct payments,
reimbursements and replenishments to the Special Account with full documentation or SOEs) and
produce FMRs for reporting and management information only and not for disbursement
purposes.
The FM System will be assessed in end 2004 for the eligibility for FMR-based disbursements.
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Subsequently the Recipient and the Bank will review the possibility of disbursing on the basis of
the FMRs.
Table C: Allocation of Credit/Grant Proceeds
Expenditure Category
Amount in US$million
Financing Percentage
1. Works
0.75
100%
2. Goods
0.84
100% of foreign expenditures; 100% of
local expenditures (ex-factory)
3. Consulting Services and Training
0.67
100% of foreign firms and foreign
individual consultants; 96% of local
firms and local individual consultants
4. Grants to support credit line of RISP
2.00
100%
5. Incremental Operating Costs
0.40
(a) Salaries of PIU staff --80%
(b) Other -- 97%
6. Unallocated
0.29
Total Project Costs with Bank
4.95
Financing
Total
4.95
Figures may slightly differ due to rounding.
* GEF grant will finance 90% of the mitigation measure to be undertaken by the RISP-credit recipients.
The Project is exempted from VAT under Moldovan law. The disbursement percentages applicable to
local expenditures have been calculated on the basis of the VAT exemption and include an assumed 5%
import duty for category 2 and 3% import duty for category 5(b).
Use of statements of expenditures (SOEs):
Statement of Expenditure (SOE) would be used for all expenditures on procurements not
requiring Bank prior review/approval as follows:
(i)
goods estimated to cost less than US$100,000 per contract;
(ii) firms contracts costing less than US$50,000;
(iii) individual consultant contracts costing less than US$25,000;
(iv) training;
(v) incremental recurrent costs; and
(vi) all grants to support credit line of RISP.
Full documentation to support expenditures would be retained by the PMU for the life of the
project. This information would be available for review during supervision by Bank staff, and
for annual audits, which will be required to specifically comment on the propriety of SOE
disbursements and the quality of the associated record keeping. Invoices supporting
disbursements against SOEs should be kept for at least one year after the Bank has received the
last audit report under the grant.
Special account:
In order to facilitate disbursements, the Recipient will open and maintain a Special Account
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(SA), with an acceptable bank in Moldova on terms and conditions acceptable to the Bank. The
Special Account will be drawn upon to meet payments to contractors, suppliers and consultants
under the project. The initial allocation to the SA would be US$300,000 and the ceiling in the
SA would be limited to US$500,000. Funds from the Special Account will be disbursed by
submitting the relevant withdrawal applications. Replenishment applications should be submitted
monthly or at the latest once every three months and must include reconciled bank statements as
well as other appropriate supporting documents.
Supervision plan
During project implementation, the Bank will supervise the project's financial management
arrangements in two main ways: (i) review the project's six-monthly financial management reports
as well as the project's annual audited financial statements and auditor's management letter; and
(ii) during the Bank's supervision missions, review the project's financial management and
disbursement arrangements (including a review of a sample of SOEs and movements on the
Special Account) to ensure compliance with the Bank's minimum requirements. As required, a
Bank-accredited Financial Management Specialist will assist in the supervision process.
Action plan
Actions required
Responsibility
Deadline
Integrate the FMRs and CAPMU financial manager Before board presentation.
chart of accounts in the (accountant)
current Financial information
System developed in
CAPMU
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Annex 7: Project Processing Schedule
MOLDOVA: AGRICULTURAL POLLUTION CONTROL PROJECT
Project Schedule
Planned
Actual
Time taken to prepare the project (months)
24

First Bank mission (identification)
09/15/2000
09/20/2000
Appraisal mission departure
10/15/2003
10/01/2003
Negotiations
12/17/2003
Planned Date of Effectiveness
03/31/2004
Prepared by:
Aleksander Nacev, Jitendra Srivastava, Meeta Sehgal, Rohan Selvarathnam, Alexander Jolondovich,
Sergiu Magdil, John Cole, Keith Openshaw
Preparation assistance:
Sharifa Kalala
Bank staff who worked on the project included:
Name
Speciality
Aleksander Nacev
Technical
Jitendra Srivastava
Technical
Meeta Sehgal
Technical
Doina Rachita
Technical
Rohan Selvarathnam
Project Costs
Nora Dudwick
Social Specialist
Elmas Arisoy
Procurement
Bogdan Contantinescu
Financial Management
Nadim Khouri
Peer Reviewer
Jacob Kampen
Peer Reviewer
Majory-Anne Bromhead
Quality Assurance
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Annex 8: Documents in the Project File*
MOLDOVA: AGRICULTURAL POLLUTION CONTROL PROJECT
A. Project Implementation Plan
Draft prepared - to be finalized after negotiations.
B. Bank Staff Assessments
C. Other
Working Paper 1:
Basic Data on Pilot Watershed Area
Working Paper 2:
Community Needs Assessment
Working Paper 3:
Baseline Household Survey / Social Assessment
Working Paper 4:
Test and Demonstration Program for Soil Management Program
Environment-friendly
Agricultural Practices
Working Paper 5:
Manure Management System
Working Paper 6:
Shrub & Tree Planting Program
Working Paper 7:
Wetlands Management Program
Working Paper 8:
Water and Soil Quality Monitoring Program
Working Paper 9:
National Level Strengthening of Policy & Regulatory Capacity
Working Paper 10:
Public Awareness Program
Working Paper 11:
Legislative and Certification Arrangements for Promoting Organic Farming
(TACIS)
Working Paper 12:
Project Cost Tables
Working Paper 13:
Project Procurement Plan
Working Paper 14:
Financial Management System
Working Paper 15:
Project Monitoring & Evaluation System
Working Paper 16:
Environmental Assessment & Mitigation Plan; Incremental Cost Analysis
*Including electronic files
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Annex 9: Statement of Loans and Credits
MOLDOVA: AGRICULTURAL POLLUTION CONTROL PROJECT
27-Oct-2003
Difference between expected
and actual
Original Amount in US$ Millions
disbursementsa
Project ID
FY
Purpose
IBRD
IDA
Cancel.
Undisb.
Orig
Frm Rev'd
P073626
2003 TRADE & TRANS FACIL IN SE EUR
0.00
7.21
0.00
7.51
0.00
0.00
P074122
2003 AIDS CONTROL
0.00
0.00
0.00
5.88
0.21
0.00
P074469
2003 WS & SAN
0.00
12.00
0.00
12.58
0.00
0.00
P060434
2002 RURAL INV & SERVS (APL #1)
0.00
10.50
0.00
2.27
-7.35
0.00
P051174
2001 HEALTH INVST FUND
0.00
10.00
0.00
8.80
3.87
0.24
P044840
1999 SIF
0.00
15.00
0.00
0.91
-0.08
0.00
P051173
1999 SOC PROT
0.00
11.10
0.00
7.63
6.57
0.00
P035771
1998 FIRST CADASTRE
0.00
15.90
0.00
5.10
5.07
-0.32
P035811
1997 PSD 2
0.00
9.00
0.00
2.33
2.48
0.00
P008558
1997 GEN EDUC
16.80
0.00
5.53
2.47
3.31
-0.43
Total:
16.80
90.71
5.53
55.47
14.10
-0.51
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MOLDOVA
STATEMENT OF IFC's
Held and Disbursed Portfolio
June 30 - 2003
In Millions US Dollars
Committed
Disbursed
IFC
IFC
FY Approval
Company
Loan
Equity
Quasi
Partic
Loan
Equity
Quasi
Partic
2000
FinComBank
1.50
0.00
0.00
0.00
1.50
0.00
0.00
0.00
1997
INCON
4.93
2.00
0.00
0.00
4.93
2.00
0.00
0.00
2002
MEC Bank Moldova
0.00
1.37
0.00
0.00
0.00
0.00
0.00
0.00
2000
MEC Moldova
0.00
0.10
0.90
0.00
0.00
0.10
0.90
0.00
2000
Moldindconbank
2.44
0.00
0.00
0.00
2.44
0.00
0.00
0.00
2001
UF Moldova
25.00
0.00
0.00
0.00
10.00
0.00
0.00
0.00
2001
Victoriabank
4.00
0.00
0.00
0.00
4.00
0.00
0.00
0.00

VoxTel
0.00
0.00
0.13
0.00
0.00
0.00
0.13
0.00
1999/00/01
Total Portfolio:
37.87
3.47
1.03
0.00
22.87
2.10
1.03
0.00
Approvals Pending Commitment
FY Approval
Company
Loan
Equity
Quasi
Partic
Total Pending Commitment:
0.00
0.00
0.00
0.00
- 75 -

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Annex 10: Country at a Glance
MOLDOVA: AGRICULTURAL POLLUTION CONTROL PROJECT
Europe &

POVERTY and SOCIAL

Central
Low-
Moldova
Asia
income
Development diamond*
2001
Population, mid-year (millions)
4.3
475
2,511
Life expectancy
GNI per capita (Atlas method, US$)
400
1,960
430
GNI (Atlas method, US$ billions)
1.5
930
1,069
Average annual growth, 1995-01
Population (%)
-0.3
0.1
1.9
Labor force (%)
-1.8
0.6
2.3
GNI
Gross
per
primary
Most recent estimate (latest year available, 1995-01)
capita
enrollment
Poverty (% of population below national poverty line)
55
..
..
Urban population (% of total population)
45
63
31
Life expectancy at birth (years)
66
69
59
Infant mortality (per 1,000 live births)
16
20
76
Child malnutrition (% of children under 5)
..
..
..
Access to improved water source
Access to an improved water source (% of population)
56
90
76
Illiteracy (% of population age 15+)
2
3
37
Gross primary enrollment (% of school-age population)
92
102
96
Moldova
Male
90
103
103
Low-income group
Female
93
101
88
KEY ECONOMIC RATIOS and LONG-TERM TRENDS
1981
1991
2000
2001
Economic ratios*
GDP (US$ billions)
..
..
1.3
1.5
Gross domestic investment/GDP
..
29.0
23.9
20.1
Trade
Exports of goods and services/GDP
..
32.4
50.0
50.0
Gross domestic savings/GDP
..
27.4
-1.4
-4.4
Gross national savings/GDP
..
..
15.7
12.7
Current account balance/GDP
..
..
-8.2
-7.3
Domestic
Interest payments/GDP
..
..
3.6
3.2
Investment
savings
Total debt/GDP
..
..
96.7
82.9
Total debt service/exports
..
..
18.0
17.4
Present value of debt/GDP
..
..
91.7
79.9
Present value of debt/exports
..
..
153.4
127.3
Indebtedness
1981-91
1991-01
2000
2001
2001-05
(average annual growth)
GDP
1.6
-7.0
2.1
6.1
5.0
Moldova
GDP per capita
0.7
-6.8
2.4
6.5
8.7
Low-income group
Exports of goods and services
..
1.2
9.5
14.7
7.8
STRUCTURE of the ECONOMY
1981
1991
2000
2001
Growth of investment and GDP (%)
(% of GDP)
20
Agriculture
..
42.7
29.0
26.0
Industry
..
33.3
21.7
24.1
0
Manufacturing
..
..
16.3
18.2
96
97
98
99
00
01
Services
..
23.9
49.2
49.8
-20
Private consumption
..
57.1
91.1
92.1
-40
General government consumption
..
15.1
10.3
12.3
GDI
GDP
Imports of goods and services
..
34.0
75.4
74.4
1981-91
1991-01
2000
2001
Growth of exports and imports (%)
(average annual growth)
Agriculture
..
-9.5
2.3
4.3
40
Industry
..
-11.5
6.6
17.5
20
Manufacturing
..
-3.4
15.9
17.8
Services
..
0.3
-3.8
-0.5
0
96
97
98
99
00
01
-20
Private consumption
..
9.1
18.3
8.2
General government consumption
..
-11.4
2.0
15.6
-40
Gross domestic investment
..
-14.1
11.9
-8.8
Exports
Imports
Imports of goods and services
..
5.6
32.6
10.9
Note: 2001 data are preliminary estimates.
* The diamonds show four key indicators in the country (in bold) compared with its income-group average. If data are missing, the diamond will be incomplete.
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Moldova
PRICES and GOVERNMENT FINANCE
1981
1991
2000
2001
Inflation (%)
Domestic prices
(% change)
50
Consumer prices
..
..
31.3
9.8
40
Implicit GDP deflator
..
142.8
27.3
11.9
30
20
Government finance
10
(% of GDP, includes current grants)
0
Current revenue
..
24.7
30.7
29.1
96
97
98
99
00
01
Current budget balance
..
3.1
-0.7
1.7
GDP deflator
CPI
Overall surplus/deficit
..
0.4
-2.9
-0.5
TRADE
1981
1991
2000
2001
Export and import levels (US$ mill.)
(US$ millions)
Total exports (fob)
..
..
477
569
1,500
Live animals and animal products
..
..
23
18
Vegetable products
..
..
66
79
1,000
Manufactures
..
..
106
115
Total imports (cif)
..
..
793
882
Food
..
..
26
38
500
Fuel and energy
..
..
192
201
Capital goods
..
..
97
120
0
95
96
97
98
99
00
01
Export price index (1995=100)
..
..
266
275
Import price index (1995=100)
..
..
237
245
Exports
Imports
Terms of trade (1995=100)
..
..
112
112
BALANCE of PAYMENTS
1981
1991
2000
2001
Current account balance to GDP (%)
(US$ millions)
Exports of goods and services
..
..
644
739
0
Imports of goods and services
..
..
971
1,101
95
96
97
98
99
00
01
Resource balance
..
..
-327
-362
-5
Net income
..
..
63
101
-10
Net current transfers
..
..
157
152
-15
Current account balance
..
..
-106
-108
-20
Financing items (net)
..
..
153
118
Changes in net reserves
..
..
-47
-10
-25
Memo:
Reserves including gold (US$ millions)
..
..
218
229
Conversion rate (DEC, local/US$)
..
..
12.4
12.9
EXTERNAL DEBT and RESOURCE FLOWS
1981
1991
2000
2001
(US$ millions)
Composition of 2001 debt (US$ mill.)
Total debt outstanding and disbursed
..
..
1,246
1,226
IBRD
..
..
191
181
G: 23
IDA
..
..
103
113
A: 181
Total debt service
..
..
139
162
IBRD
..
..
16
17
B: 113
IDA
..
..
1
1
Composition of net resource flows
F: 518
Official grants
..
..
75
132
C: 151
Official creditors
..
..
36
3
Private creditors
..
..
80
-4
Foreign direct investment
..
..
143
149
Portfolio equity
..
..
3
0
D: 117
E: 123
World Bank program
Commitments
..
..
10
5
A - IBRD
E - Bilateral
Disbursements
..
..
36
18
B - IDA
D - Other multilateral
F - Private
Principal repayments
..
..
5
7
C - IMF
G - Short-term
Net flows
..
..
31
11
Interest payments
..
..
12
11
Net transfers
..
..
19
0
Development Economics
9/19/02
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Additional GEF Annex 3: Summary of Environmental Assessment
and Environmental Management Plan
MOLDOVA: AGRICULTURAL POLLUTION CONTROL PROJECT
A. Environmental Assessment
The environmental assessment was prepared in 2003 through visits to project sites and intense consultative
discussions with stakeholders within the project area. The environmental situation in the project area,
which is detailed in the Environmental Assessment Report on files, may be summarized thus: Poor
agricultural practices are exacerbating soil and water erosion and a lack of appropriate fertilizers is
depressing productivity. Organic fertilizers, which could replace up to a third of chemical fertilizers, are
not being used because of a lack of transport and spreading equipment or because of poor organization to
use existing equipment. Manure is being dumped along roads, rivers and streams due to an absence of such
facilities. The concentrations of organic fertilizers are leaching into surface water and increasing the
amount of N and P in the Danube Delta, thus intensifying eutrophication rates. Also, N and P from dung is
percolating into groundwater and then into well water, causing potential health hazards. Also, existing
animal numbers are greater than the carrying capacity of the land, especially as feed and fodder from
outside are no longer available or affordable. Pastures and woodland resources are being over-used to the
detriment of the quality of the soil. In addition, because `commercial' fuel availability has decreased, wood
and residues are being used as substitutes. This is further degrading forest areas and affecting the amount
of residues being returned to the soil. Apart from arable agriculture being adversely affected, vineyards
and orchards are also suffering due to lack of inputs and depressed producer prices. The resultant loss in
the volume and quality of crops is also having repercussions on the existing agro-industries that are
experiencing declining profits as factories receive poor quality or a lower volume of deliveries. These
factories are also unable to afford proper disposal of effluents from (reduced) outputs. Much effluent is
being disposed of in inappropriate ways, although there are (environmental) laws that govern such
disposals. Some of this untreated or partially treated effluent finds its way into surface and ground water,
adding to the pollution problem.
Agricultural areas within the country are on a downward economic and environmental spiral. But with
some external assistance, coupled with the proper use of existing resources, improved arable, pasture and
forestry practices, better co-operation with agro-industries and the full co-operation of local people,
assisted by local and central government, there is good potential to stem and reverse this downward trend.
The principal thrust of the APCP is to demonstrate how this can be achieved.
The EA determined that the impacts of the proposed project are overwhelmingly positive as it would reduce
the amount of nutrients leaching into the surface and groundwater flowing directly into the river systems
and subsequently into the Black Sea. All the project activities that may have direct environmental
implications concern Component 1: Promotion of Mitigation Measures to Reduce Nutrient Load in
Surface and Ground Water. (Component 2: National Level Strengthening of Policy and Regulatory
Capacity and Component 3: Public Awareness and Replication Strategy will be used to facilitate and
expand Component 1 activities). Therefore, only activities under Component 1 are dealt with in detail in
relation to the Environmental Management Plan. The EMP has been designed to monitor the soil and water
quality and erosion so that immediate mitigation measures could be taken if the potential for environmental
damage occurs. The environmental issues that are likely to require special attention include: leakage of the
manure from the village-level storage facilities (if construction is not made according to specifications),
inappropriate manure spreading in the fields and improper cleaning of the individual manure storage tanks
- 78 -

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and large manure platforms.
- 79 -

---

B. Environmental Management Plan for Moldova APCP Project
Issues
Anticipated/Potential
Effects on Environment
Actions or Mitigation
Environmental Impacts
Measures
Surface water
i) Surface water quality will improve i) Increased quality and
i) Develop and implement
quality
with the reduction in nitrogen and availability of Danube River improved manure
phosphorus from cattle, pigs,
water and Black Sea coastal management and
sheep/goats and poultry manure
waters will result in
environmentally sound
disposal sites. Agricultural areas
increased use of beaches by agricultural management
treated with organic and inorganic public and increased harvest practices in Hincesti and
fertilizers, as better nutrient
of better quality fish.
Leova counties of the
management practices will be
Lapusna River basin.
implemented by the project.
ii) Increased utility of water
for downstream users and ii) Undertake a rigorous
ii) Water draining into Lapusna,
fisheries if any.
surface water quality
Prut and Danube Rivers improves.
monitoring programme for
Lapusna River and other
iii) Overall effects on the quality of
surface water bodies that
Danube river will be positive.
drain into Danube River to
Probability of occurrence: High
establish a baseline database
of the quality of surface
waters, lakes, wetlands and
the Danube River as
affected by better
agricultural and manure
management practices.
Ground-water
i) Reduction in nutrient leaching to i) Increased quality and
i) Implement
groundwater quality will occur with availability of groundwater environmentally sound
the introduction of better manure
for human and animal
agricultural and manure
storage and handling, and nutrient consumption.
management practices in
management practices.
the project area.
ii) Groundwater is the main
ii) Quality of drinking water
source of drinking water for ii) Implement wellhead
supplies will improve with the
rural population and
protection programmes for
reduction of nitrate and bacteria in decreased levels of nitrate rural drinking wells.
groundwater as a result of collecting and bacteria in water will
manure from individual farmer's
reduce water borne diseases iii) Establish extensive
homesteads and storing in
in Lapusna region such as groundwater monitoring
communal platforms.
nitrate poisoning and acute programme in the highly
diarrhoea.
intensive agricultural and
Probability of occurrence: High
animal production areas to
determine the effect of
better nutrient management
practices.
iii) Monitor groundwater
quality in piezometers and
wells in areas with
improved agriculture and
animal waste management
systems
Soil Quality
With the introduction of better
Better productive lands with Undertake soil monitoring
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farming systems, soil quality will
increased organic matter
of selected areas to establish
improve, erosion decreased
and carbon sequestration, the effect of better farming
reduce humus and soil loss. systems on soil erosion and
Probability of occurrence: High
soil and water quality.
Wetland
With the re-establishment of a
Decrease of N & P, and
Undertake monitoring of
establish-ment
wetland in the lower reaches of the faecal matter flowing into water quality and flora and
Lapusna and Prut rivers will act as a the Danube basin.
fauna.
filter for chemical and faecal
More sustainable use of
material. Increase in the flora/fauna habitat.
Probability of occurrence: High
Bio-diversity
Increased biodiversity will occur
Increased biodiversity and Observe impact on new
because of better manure
migratory bird population. plant and animal
management systems, introduction
populations, and soil worm
of conservation tillage systems,
and microbial activity.
forest areas, buffer strips etc.
Measure effects on soil
organic matter and carbon
Probability of occurrence: High
contents, and possibly water
quality.
C. INSTITUTIONAL STRENGTHENING
1.
Equipment Purchases. (Justification is Included in the Project documents)
Field equipment is to be purchased for soil erosion monitoring and chemical analysis, ($5,300), ground and
surface water monitoring for nutrient faecal content and leaching ($92,549), and wetland monitoring
($2,255). In addition there will be purchases of other equipment not specified above. A cost breakdown is
as follows.
Type of Equipment
Number of
Unit cost
Total Cost
Purchase:
units
US$
US$
Local or
International
Equipment for recording soil and
10
530
5,300
Local
run-off losses (sets)
Equipment for wetlands monitoring
Primary Analysis Devices (Microscope,
1
506
506
Local
Dendrometer etc.)
Equipment for Collection and Store Water
1
424
424
Local
and Sediment Samples
Weather Data Collecting Devices
1
265
265
Local
Computer
1
795
795
Local
Printer
1
265
265
Local
Total
2,255
Equipment for surface and ground
water sampling and analyses
Manual Pump for Ground Water
1
320
320
Local
Sampling
Equipment for Meteorological Post
3
427
1,281
Local
Automatic Flow Meter and Sampler
4
10,680
42,723
Local
Equipment for Manual Hydrological Post
1
1,068
1,068
Local
Equipment for Microbial Analyses
1
1,602
1,602
Local
Vacuum Filtration
1
107
107
Local
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Bi-distiller
1
53
53
Local
Field pH meter
1
534
534
Local
Automatic Ion Analyser (Lachet Type)
1
37,384
37,384
Local
Laboratory Consumables and Reagents
Lump sum
7,477
7,477
Local
Standards
Total
92,549
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Apart from the above costs, there are costs for equipment installation, technical services and other
activities. The total cost of monitoring and evaluation is given as US$ 637,000. A breakdown of the costs
is as follows:
Item
Equipment
Civil works
Technical
Technical
PMU and
Total
US$
US$
Services $
Assistance $ Miscellaneous
US$
Soil Institute
5,300
5,300
75,725
58,300
Wetland
2,255
12,180
12,035
(national)
Soil/Water
92,549
10,672
254,736
26,500 (int.)
Total
100,104
28,152
342,496
84,800
81,448
637,000
D. SCHEDULE
The various mitigation & monitoring plans are described in detail in the PIP and the working papers. All
mitigation activities will commence in year 1 and continue to year 5. Similarly monitoring activities well
start when the project commences. It is recommended that monitoring should continue beyond the lifetime
of the project, because it may take ten years or more before meaningful results are obtained for some of the
activities. These is little training, most of it is on-the-job. This will start in year 1 and continue as
necessary. The GIS training will be in year 1.
E. INSTITUTIONAL ARRANGEMENTS
The PMU is in overall charge of monitoring and evaluation. However, the institutions responsible for
undertaking much of the field and laboratory work and analysing the data are:
1. MECTD (The Water Quality Laboratory and Hydrological Department of the Hydro-meteorological
Service, and the Central and Regional Laboratories of the State Environmental Inspectorate).
2. The Soil Institute.
3. Moldsilva.
4. Institute of Forest Research and Forest Planning.
5. Hydrometeo service.
These institutions have developed an implementation plan and are ready to start as soon as the project is
approved. The monitoring and mitigation plans outlined above documented 10 monitoring activities. In
addition, there is going to be continual collection of meteorological data for the use of project staff and
beneficiaries.
The various institutions undertaking the monitoring and evaluation shall produce quarterly progress reports
detailing past activities and future plans. All information will be kept in the PMU office and be available in
written form and on line. As relevant monitoring information becomes available it will be conveyed to the
field staff and the beneficiaries. Such information could alter or reinforce certain initiatives of the
programme. This information will also be conveyed to GEF and the World Bank who could use it in other
projects. If certain initiatives give poor results, then the PMU could take a decision to terminate this
particular activity. Thus, monitoring and evaluation is a most useful tool in determining if the
environmental response is as predicted.
At the end of each year, all monitoring data will be summarised in usable form for the benefit of
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stakeholders including the World Bank, MECTD, MAFI, LDPH, Moldsilva, NSCPM, other interested
parties within Moldova and other Black Sea countries. The MECTD (SEI) will have the authority to shut
down/change operations to facilitate the implementation of a mitigation plan in case problems arise or a
change of course is warranted.
F. CONSULTATION WITH LOCAL NGOs AND PROJECT-AFFECTED GROUPS
Various stakeholders of the project have been consulted frequently. These include small farmers, members
of farming organisations, agro-processing factory managers, NGOs such as ACSA, and REC, the Prefects
of Hincesti and Leova raions and their staff, Mayors and Vice Mayors of the 11 communes, officials of
MECTD, MAFI, Moldsilva, Agency of Geology (AgeoM) the Meteorological Department, and
international agencies like the EU and UNDP. These stakeholders were visited individually or in groups
and `village meetings' were held. The purpose of the project was explained and the individual functions
elaborated, especially in relation to the ongoing soil and water quality problems in the region and its effect
on the river system and the Danube Delta. The record of these visits are on the project files and in the
various World Bank documents, especially the Aide-memoires of the Bank's Task Manager/Environmental
Expert. Both conducted missions where they met people from many concerned agencies including
ministries, departments, scientific institutes and NGOs as well as officials and farmers in Lapusna Judet.
All the stakeholders agreed that interventions of proposed in this project were necessary for the region. All
the communes have signed up for communal platforms and many farmers agreed to have individual
platforms. Some of the stakeholders have offered their fields for demonstrations and monitoring and
mayors in selected villages have agreed on the specific wells that would be sampled for water quality. The
draft EMP was discussed with MECTD, MAFI, and Moldsilva, the Prefects of Hincesti and Leova raions
and their staff and Mayors/vice Mayors of the communes. The final product has been widely circulated to
all interested parties within the country.
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Additional GEF Annex 4: STAP Roster Technical Review
MOLDOVA: AGRICULTURAL POLLUTION CONTROL PROJECT
Scientific and technical soundness
The scientific and technical basis of the project is sound. The objective is to reduce nutrient pollution of
the Danube River system and the Black Sea. The implementation of the proposed is linked to and
complements a larger IDA funded Rural Investment and Service Project and would be a key Moldovan
contribution to the regional "Strategic Action Plan for the Protection and Rehabilitation of the Black Sea"
(BSSAP), formulated with the assistance of the Global Environment Facility (GEF).

The proposal builds upon and extends the practical demonstration of implementation and benefits of
pollution reduction in a number of projects in the Baltic and Danube/Black Sea areas. It seeks to introduce
and expand a number of agricultural pollution reduction methods and technologies that have been tested
and successfully introduced in other programs in the region and elsewhere. The use of practical peer to peer
communication through site visits to areas where similar techniques have been implemented elsewhere is
particular welcomed.
Global environment benefits and costs
Nutrient pollution of the Black Sea has been identified as an environmental issue of global significance. If
this project achieves its objectives it will have clear benefits in addressing a source of nutrient pollution of
the Black Sea. Although the Moldovan agricultural lands in the Danube catchment comprise 1.67% of the
total the proposal indicates that they contribute more than 2% of the nutrient pollution reaching the Black
Sea through the Danube.
Implemented successfully and with success in comparable projects being undertaken in other country
catchments draining into the Black Sea this project will contribute substantially to the global goals of
reduced agricultural pollution of the Black Sea
The context of GEF goals and guidelines
The project clearly addresses the objectives of the integrated land and water and water quality within the
context of watershed agricultural and environmental management. It addresses the objectives of providing a
basis for achieving sustainability and it applies the guidelines with respect to incremental costs and the
log-frame. GEF Operational Program
Number 8, "Waterbody Based Operational Program", which focuses "on seriously threatened
water-bodies and the most important trans-boundary threats to their ecosystems". The Project is also
consistent with GEF Operational Programs 12 "Integrated Ecosystem Management" and 9 "Integrated
Land and Water Multiple Focal Areas Operational Program".
Regional Context
Discussed above. The project is important in the context of the rehabilitation of the Black Sea.
- 85 -

---

Replicability
This project builds on experience of projects addressing agricultural pollution and watershed rehabilitation
of major river systems draining into the Baltic Black and Mediterranean Seas. It replicates many aspects
of those projects and should in turn be readily replicable in other Judet of Moldova and elsewhere
Sustainability
This is a key element of project design. The ongoing sustainability will depend on demonstration of
benefits, on community adoption of the better practices demonstrated and particularly on appreciation by
local people and decision-makers of the economic, environmental and social benefits of alternative
agricultural methods and on a reasonably equitable flow-on of those benefits to the various sectors of the
agricultural community..
Contribution to future strategies and policies
Success with this project should contribute to the broader adoption of pollution minimising agricultural
practices in the catchments of the Black Sea.
Involvement of stakeholders
The project proposal has relatively little discussion of stakeholder involvement but the design indicates that
there will be reasonable levels of take up by and involvement of the community in manure management and
tree planting activities. The extent of investment in this component is not indicated because the proposal
lumps most of the activities including manure management grants, promotion of organic farming, tree
planting and wetland restoration into a single line item which accounts for $9.95million of a total $10.95
million budget. Given that this encompasses grants to RISP loan recipients, who are likely to be formally
constituted businesses, as well as communal manure management grants more likely to be given to more
traditionally organised village communities it is difficult to evaluate clearly the likely involvement of the
various stakeholder sectors. Similarly, I am not aware of socio-economic and labour force conditions in the
area and I could not gain a clear understanding of the allocation of work. Specifically, the extent to which
the work of construction of manure management facilities, tree planting or wetland restoration would be
done broadly by community members or on a specialist basis by employees of participating agencies was
not clear to me.
I consider that further consideration of the proposal would be helped by a breakdown of figures to indicate
the proportions likely to be allocated to the various activities and some indication of likely community
participation in activities and the employment opportunities these might provide.
My specific concern is to be clear that there is some rationale to ensure that there are not disproportionate
benefits to organised businesses capable of achieving RISP loans at the cost of activities in more
traditionally organised rural activities.
Conclusion
This is a soundly designed project drawing on the experience of similar projects to tackle critical issues of
agricultural pollution in ways that appear to be appropriate to the target area. Subject to satisfaction with
a specific budgetary breakdown for the main project activities and an understanding of community
participation in activities I recommend that it should proceed.
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R A Kenchington
RAC Marine Pty Ltd
2 November 2003
Bank Response to Comments Received from STAP Reviewer
The project preparation team was pleased to receive comments from the STAP Reviewer that
endorsed the technical and scientific soundness of the project. Three issues were raised by the
reviewer which have been addressed below:
Issue 1. "The project proposal has relatively little discussion of stakeholder involvement..."
Bank Response. Various stakeholders of the project have been consulted frequently during
project preparation. These include small farmers, members of farming organizations,
agro-processing factory managers, NGOs such as ACSA, and REC, the Prefects of Hincesti and
Leova raions and their staff, Mayors and Vice Mayors of the eleven communes, officials of
MECTD, MAFI, Moldsilva, Agency of Geology, the Meteorological Department, and
international agencies like the EU and UNDP. These stakeholders were visited individually or in
groups and `village meetings' were held. A baseline survey and needs assessment program was
undertaken (document available with Project Preparation Unit) by the local NGO, Independent
Sociological and Information Service - Opinia. where respondents were asked about their
agricultural practices, livestock numbers, accessibility to markets, health issues, etc. The purpose
of the project was explained and the need to address the ongoing soil and water quality problems
in the region and their effect on the river system and the Danube Delta. A record of these visits
and discussions are on the project files and in the various World Bank documents, including the
Aide-memoires, Environmental Assessment and Baseline Household Survey.
Issue 2. "...breakdown of figures to indicate the proportions likely to be allocated to the various
activities and some indication of likely community participation in activities and the employment
opportunities these might provide".

Following is the breakdown of allocations under Component 1- Promotion of Mitigation
Measures for Reducing Nutrient Loads in Water Bodies:
Amount (US$million)
Activity
Total
GEF
l
RISP-supported activities
6.0
2.0
l
Improved Watershed Management Practices
Manure Management Practices
2.20
1.31
Promotion of Environmentally-friendly agricultural practices0.50
0.31
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Wetland restoration
0.16
0.05
Monitoring soil, water quality and environmental impacts
0.74
0.42
Implementational arrangements under the project have been designed to ensure
stakeholder/community involvement throughout the life of the project through the instrumentality
of which project beneficiaries would be provided gainful employment. For example, project
beneficiaries would be key participants in the implementation of manure management practices,
including provision of their labor for building livestock waste bunkers, storage and handling. The
Project Implementation Unit will contract participating farmers to implement on-farm
demonstrations of environmentally friendly agricultural practices and carry out procurement and
overall M&E of such activities. An NGO would be contracted to undertake public awareness
activities and implement the replication strategy. These are just some of the activities designed
under the project to ensure beneficiary participation and provide opportunities for raising
household incomes.
Issue 3. "ensure that there are not disproportionate benefits to organised businesses capable of
achieving RISP loans at the cost of activities in more traditionally organised rural activities".
On an average, the percentage of APCP grants provided to the "smaller beneficiaries" is nearly
double than that to the Rural Investment Services Project (RISP) credit recipients. Under RISP,
grants of approximately 36% of the total cost of the mitigating measure(s) will be provided to the
credit recipient. For activities undertaken by non-RISP recipients, for example for manure
management practices, GEF will provide a grant of up to 70% to cover cost of construction of
manure facilities.
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