THE WORLD BANK/IFC/M.I.G.A.
OFFICE MEMORANDUM

DATE:
September 27, 2001


TO:
Mr. Ken King, Assistant CEO, GEF Secretariat
Att: GEF PROGRAM COORDINATION

FROM:
Lars Vidaeus , GEF Executive Coordinator



EXTENSION:
8-2685


SUBJECT:
Regional (Argentina, Brazil, Paraguay and Uruguay):


Environmental Protection and Sustainable Development of the
Guarani Aquifer System


Submission for Work Program Inclusion


Please find enclosed the electronic attachment of the above mentioned project
brief for work program inclusion. We would appreciate receiving any comments by
October 9, 2001.

The proposal is consistent with the Criteria for Review of GEF Projects as
presented in the following sections of the project brief:

· Country Drivenness: Section 4 (p 20) for the Project Brief describes the
commitment of all four countries at the national, sub-national, and non-
governmental levels.
· Endorsement: Endorsement letters have been provided by all countries and the
endorsement letters by each GEF operational focal point is annexed to the project
brief
· Program Designation & Conformity: Section B1?? Of the document describes that
the concept conforms with OP8 objectives and eligibility criteria.
· Project Design: Section B2 ­ p. 9 provides the summary project description,
Annex 2 provides a detailed project description and Annex 1 presents the Logical
Framework of the project. Annex 7 includes the Root Cause Analysis, Annex 4
the Incremental Cost analysis and the project's contributions in terms of Global
Benefits are outlined in Section E1 ­ p. 22.
· Sustainability: Section F1 ­ p. 32 describes the strategy for sustainability of
project process and results, both from a policy, financial and participation
perspectives.
· Replicability: Replicability Strategy for the project is an integral part of project
component 4, which is described in Section C1 ­ p. 13 and in Annex 2 (p. 55).
· Stakeholder Involvement: Section E 6 (p. 29) describes the stakeholder process
already conducted during preparation and the process that will be followed during
project implementation. The public involvement plan summary for project
preparation activities is provided in Annex 10.

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Mr. Ken King
-2-
September 27, 2001

· Monitoring & Evaluation: The project incorporates lessons learned as described in
Section D.3 ­ p.18. Project Component 4 focuses specifically on Monitoring and
Evaluation (Section C1 ­ p.13 and Annex 2 p.55). The Logframe in Annex 1
provides all project benchmarks and output indicators. The cost of Project
Component for is US$750,000.
· Financing Plan: Project Budget and Sources of Financing are included in Annex 3
­ p. 60.
· Cost-effectiveness: [identify section] [note: estimate of cost-effectiveness if
feasible]
· Core Commitments and Linkages: : Please see Sections B1 ­ p.6, Sector-related
Country Assistance Strategy (CAS) goal supported by the project, and D4 ­ p. 20,
Indications of borrower commitment and ownership.
· Consultation, Coordination and Collaboration between IAs: Section D 3 refers to
this aspect. In addition to the GEF International Waters Conference at which all
IAs were present, direct coordination has primarily taken place with UNEP
projects through the OAS, which is the Executing Agency both for UNEP
International Waters projects in the Region and for the preparation of the present
project. The team leader for the present project also recently participated in a first
identification meeting regarding a planned La Plata GEF project, let by UNEP
and the OAS.
·
Response to Reviews: (GEFSEC comments at time of pipeline entry):

Indicators ­ It is recommended to include the establishment of standard IW M&E
indicators (process indicators, stress reduction indicators and environmental status
indicators. Budget should be provided in project to establish and agree on them
among the 4 countries: Provision has been made to develop such indicators, which will
be included in the Strategic Action Plan. Preliminary indicators are mentioned in Section
A.2.
A stakeholder identification survey might be needed during the Block B to identify
users of the aquifer (as well as those affected by byproducts of aquifer use ­ waste
sites at industries, discharges of wastewater within groundwater sources) and to
involve them in the design and conduct of the project: An overall stakeholder
identification survey was carried out for all four countries and results were taken into
account for the design of the institutional framework for project implementation. In
addition, events were held in Brazil with stakeholder sub-groups such as the private
sector and indigenous representatives in order to better inform about the project and
identify more stakeholders. Annex 10 shows the large number of government, non-
government, municipal, state, provincial, academic, water utility, private company, etc.
stakeholders from all four countries that have participated in project preparation. It is
clear, however, that due to the size of the Guarani Aquifer System, further users and
stakeholders will have to be identified during project implementation. This is foreseen in
Component 3, Public and stakeholder participation, education and social
communication.
Emphasis should be placed in the proposal on the identification and protection of
recharge areas, possibly the most effective preventive measure: Component 1 and
parts of Component 5 are designed to better identify recharge areas and to develop

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Mr. Ken King
-3-
September 27, 2001

measures for their protection. In Component 5 specifically, the recharge area in Eastern
Paraguay will be addressed through pilot activities for better identification and modeling.
Current critical transboundary issues are, however, also in the confined areas between for
instance Uruguay/Argentina and Uruguay/Brazil, which are therefore also specifically
addressed in the project.
The Guarani Aquifer represents a huge low enthalpy geothermal resource. This
aspect is mentioned in the proposal only in relation to present balneotherapic uses.
The proposal would greatly benefit from the introduction of a component dealing
with the assessment of the overall energy potential, the inventorying of possible
economically viable direct uses (refrigeration, electricity generation through binary
cycles, agroindustry etc.), identification and implementation of pilot demonstrations,
etc.: A specific consultancy was undertaken during preparation to assess the energy
potential of the Guarani Aquifer System. Potential for the above-mentioned activities
seems to exist in Argentina, Uruguay and Brazil and to a much lesser extent in Paraguay.
A specific project component has been developed (Component 6), which will address the
geothermal energy potential. A four-country task force will be created in the second year
of the project and, also using on relevant results of Component 1, quantify and determine
the potential value of the Guarani Aquifer System as a source of clean geothermal
energy, to communicate this assessment and appropriate guidelines with respect to
sustainable development and utilization of the potential geothermal energy output. This
will include analyses of socio-economic, financial and environmental feasibility of
possible future geothermal activities and areas and the conceptual identification of
possible pilot projects as well as their prefeasibility.
Rather than develop a Strategic Action PLAN as noted in 6 (b), the GEF OS
recommends a Strategic Action PROGRAMME of activities over a period of time
that are in the expected baseline as well as additional policy/legal/institutional
reforms/investments. In addition, consistent with IW practice in the multicountry
SAP should also include country by country annexes with the expected baseline
activities that will be undertaken along with those additional ones that others
(including GEF) might fund due to transboundary implications: A Strategic Action
Program along the lines suggested is included in the project.

Please let me know if you require any additional information to complete your
review prior to inclusion in the work program. Many thanks.

Distribution:
Mmes./ Messrs.:
E. Torres, UNDP



A. Djoghlaf, UNEP (Nairobi)



K. Elliott, UNEP (Washington, DC)



M. Gadgil, STAP



M. Griffith, STAP (Nairobi)







cc: Messrs./Mmes. K. Kemper, T. Serra, K. Shepardson, T. Bradley, R. Khanna, D. Aryal
(ENV); ENVGC ISC, IRIS1

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Mr. Ken King
-4-
September 27, 2001

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PROJECT BRIEF

1. IDENTIFIERS:

PROJECT NUMBER:
P068121
PROJECT NAME:
Regional (Argentina, Brazil, Paraguay,
Uruguay): Environmental Protection And
Sustainable Development of the Guarani
Aquifer System
DURATION:
4 Years
IMPLEMENTING AGENCY:
World Bank
EXECUTING AGENCY:
Organization of American States
REQUESTING COUNTRY OR COUNTRIES: Argentina, Brazil, Paraguay, and Uruguay
ELIGIBILITY:
All 4 countries are eligible for GEF resources
GEF FOCAL AREA:
International Waters
GEF PROGRAMMING FRAMEWORK:
Operational Program 8
2. SUMMARY:
The Guarani Aquifer Project is a first step toward achieving the long-term objective of
sustainable, integrated management and use of the Guarani Aquifer System, which is
situated in the eastern and south central portions of South America, and underlies parts of
Argentina, Brazil, Paraguay, and Uruguay. The project will support the four countries in
jointly elaborating and implementing a common institutional and technical framework for
managing and preserving the Guarani Aquifer System for current and future generations.
To provide such support, seven project components are envisaged: (i) expansion and
consolidation of the current scientific knowledge base regarding the Guarani Aquifer
System; (ii) joint development and implementation of a Guarani Aquifer System
Management Framework, based upon an agreed Strategic Program of Action; (iii)
enhancement of public and stakeholder participation, social communication and
environmental education; (iv) evaluation and monitoring of the project and dissemination
of project results; (v) development of regionally-appropriate groundwater management
and mitigation measures in identified "Hot Spots"; (vi) cons ideration of the potential to
utilize the Guarani Aquifer System's "clean" geothermal energy; and, (vii) project
coordination and management.
3. COSTS AND FINANCING (MILLION US$):

GEF:
Project 13.400
PDF B .543
Subtotal GEF: 13.943

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Co-financing:
Government of Brazil: 5.800
Government of Uruguay: 2.100
Government of Argentina: 2.600
Government of Parguay: 1.600
Other (Bundesanstalt fuer Geowissenschaften
und Rohstoffe; International Atomic
Energy Agency; Bank-Netherlands Water
Partnership Program; local beneficiaries): 1.200
Subtotal Co-Financing: 13.360
TOTAL PROJECT COST: 27.300
4. Operational Focal Point endorsement:
Argentina: Embassy of the Republic of Argentina, Washington D.C. ­ 10/1/01
Brazil: Dante Coelho de Lima, Secretario de Asuntos Internacionais, Ministerio do
Palejamento, Orcamento e Gestao ­ 9/28/01
Paraguay: Ing. Luis A. Meyer, Ministro, Secretario Ejecutivo, Presidencia de la
Republica ­ 9/25/01
Uruguay: Luis Alberto Santos, Operational Focal Point, Ministerio de Vivienda
Ordenamiento Territorial y Medio Ambiente ­ 9/26/2001
5. IA Contact: Karin J. Shepardson
Latin America and Caribbean Region
Tel. # 202- 473-8954
Fax: 202- 522-2090
Internet: Kshepardson@worldbank.org

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LATIN AMERICA

Project for the Environmental Protection and Sustainable Development
of the Guarani Aquifer System
GEF PROJECT BRIEF
Latin America and the Caribbean
LCSES
Date: October 01, 2001



Team Leader: Karin Erika Kemper
Country Manager/Director: Vinod Thomas

Sector Manager/Director: John Redwood
Project ID: P068121




Sector(s): VM ­ Management of Natural Resources

Theme(s): Environment, Water
Focal Area: I ­ International Waters


Poverty Targeted Intervention: N


Project Financing Information
[ ] Loan

[ ] Credit
[X] Grant [ ] Guarantee [ ] Other:
For Loans/Credits/Other:
Total Project Cost (US$m):


Cofinancing: Yes
Total Financing by the IBRD (US$M): 0
Has there been a discussion of the IBRD financial product menu with the borrower? _ Yes x No


Financing Plan: Sources
Total

US$ Million
Recipients
12.10
Global Environment Fund
13.40
Co-Financing: IAEA, BGR, Bank-Netherlands Water Partnership Program




(BNWPP), Beneficiaries
1.26
TOTAL IMPLEMENTATION:
26.76

Preparation: GEF/Block B
0.54
Recipients
1.03
OAS
0.08
BNWPP
0.25


Borrower/Recipient: Multi-Country Project : Argentina ­ Brazil ­ Paraguay - Uruguay.
Total:
28.66

Responsible Agency:
ARGENTINA
Address: Ministerio de Infraestructura y Vivienda, Subsecretaría de Recursos Hídricos, Hipólito Yrigoyen 250,
piso 11, Of. 1128, C1086AAB Buenos Aires, Argentina
Contact Person: Victor Pochat, Director
Tel: +54-11-4349 7427 Fax: +54-11-4349 7427 Email: vpochat@mecon.gov.arg
BRAZIL
Address: Ministério do Meio Ambiente, Secretaria de Recursos Hidricos; CODEVASF, SGAN Quadra 601, lote
1, Edificio 7 Quarto andar. CEP 70.830-90. Brasília, Brazil
Contact Person: Raymundo José Santos Garrido, Secretário
Tel: +55-61-224 1004, Fax: +55-61-225 4760, Email: raymundo-jose.garrido@mma.gov.br
PARAGUAY
Address: Dirección General de Recursos Hídricos - Secretaria del Ambiente (SEAM), Avenida Madame Lynch
3500, Asunción, Paraguay
Contact Perso n: Celso Velázquez, Director Nacional
Tel: +595-21-615 811, Email: vcelso@telesurf.com.py
URUGUAY
Address: Ministerio de Transportes y Obras Públicas, Dirección Nacional de Hidrografía, Rincón 575 2º P.,
Montevideo 11000, Uruguay
Contact Person: Luis Enrique Loureiro, Director Nacional
Tel: +598-2-916 4783/84, Fax:+598-2-916 4667, Email:dnh@uyweb.com.uy

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Estimated Disbursements ( Bank FY/US$M):
FY
02/03
03/04
04/05
05/06




Annual
7835.9
8680.5
6427.9




Cumulative 3812.3
11648.2
20328.7
26756.6




Project Implementation Period: 4 years
OCS PAD Form: Rev. March, 2000


2

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Table of Contents


List of Acronyms
4

A - Project Development Objective
6

B - Strategic Context
7

C - Summary Description of the Project
13

D - Project Rationale
17

E - Summary Project Analysis
22

F - Sustainability and Risks
34

G - Main Conditions
36

H - Readiness for Implementation
36

I - Compliance with Bank Policies
37

List of Annexes
38

Annex 1 - Project Design Summary
39
Annex 2 - Detailed Project Description
51
Annex 3 ­ Project Budget and Sources of Financing
62
Annex 4 - Incremental Costs
63
Annex 5 - Institutional Arrangements for Project Implementation
70
Annex 6 - Description of the Guarani Aquifer System
71
Annex 7 - Root Cause Analysis
74
Annex 8 - Strategic Action Program
79
Annex 9 - Available Reference Documents
82
Annex 10 - Public Involvement Plan Summary
86
Annex 11 - Letters of Endorsement
92
Annex 12 - GEF STAP Review and IA Comments
93
Annex 13 - Map
101








3

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LIST OF ACRONYMS

ABAS

Brazilian Groundwater Association
ABRH

Brazilian Water Resources Association
BNWPP

Bank Netherlands Water Partnership Program
BGR
Bundesanstalt fuer Geowissenschaften und Rohstoffe ­ German
Federal Institute for Geosciences and Natural Resources

CC


Coordination Group ­ Coordenación Colegiada

CAS

Country Assistance Strategy (World Bank)

CORPOSANA
National Corporation for Water Supply and Sanitation (Paraguay)

CSDP

Guarani Project Steering Committee

CSO

Civil Society Organizations

DINAMIGE
National Directorate for Mining and Geology (Uruguay)

DNH

National Hydrographical Directorate (Uruguay)

EMBRAPA
Brazilian Corporation fo r Agro-Pastoral Research (Brazil)

IA


GEF Implementing Agency

IAEA

International Atomic Energy Agency

IBRD
International Bank for Reconstruction and Development/ The World
Bank

INA

National Institute for Water (Argentina)

IW


GEF International Waters Program

GEF

Global Environment Facility

GIS

Geographic Information System

IAEA

International Atomic Energy Agency

IWRN

Inter-American Water Resources Network


4

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MERCOSUR
Southern Common Market [Argentina, Brazil, Paraguay, and
Uruguay]

MMA

Ministry of Environment (Brazil)

NGO

Nongovernmental organization

OAS

General Secretariat of the Organization of American States

OP


Operational Program

OSE

National Sanitation Service (Uruguay)

PDF/B

Project Development Facility, Block B

REA

Regional Environmental Assessment

SAP

Strategic Action Program

SG


Secretariat for the Guarani Project

SEAIN

Secretariat for International Affairs (Brazil)

SENASA

National Sanitation Service (Paraguay)

SRH

Secretariat for Water Resources (Brazil)

TDA

Transboundary Diagnostic Analysis

UNEP

National Coordinating Unit for Project Execution

WB

World Bank





5

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A. Project Development Objective

1. Project Development Objective: (see Annex 1)

The long-term objective is the sustainable, integrated management and use of the Guarani
Aquifer System. The Guarani Aquifer System is situated in the eastern and south central
portions of South America, and underlies parts of Argentina, Brazil, Paraguay, and
Uruguay. This project is a first step toward achieving the long-term objective. It is to
support the four countries in jointly elaborating and implementing a common institutional
and technical framework for managing and preserving the Guarani Aquifer System for
current and future generations. To provide such support, seven project components are
envisaged: (i) expansion and consolidation of the current scientific knowledge base
regarding the Guarani Aquifer System; (ii) joint development and implementation of a
Guarani Aquifer System Management Framework, based upon an agreed Strategic Program
of Action; (iii) enhancement of public and stakeholder participation, social communication
and environmental education; (iv) evaluation and monitoring of the project and
dissemination of project results; (v) deve lopment of regionally-appropriate groundwater
management and mitigation measures in identified "Hot Spots"; (vi) consideration of the
potential to utilize the Guarani Aquifer System's "clean" geothermal energy; and, (vii)
project coordination and management. These are elaborated in Annex 2.

2. Key performance indicators: (see Annex 1)

The principal performance indicator against which the Project will be measured is the
existence of an overall Guarani Aquifer System Management Framework (Strategic Action
Program), including technical, scientific, institutional, financial, and legal aspects, for the
sustainable management and protection of the Guarani Aquifer System in the four
countries. Key performance indicators with regard to this overall framework will include
process indicators, stress reduction indicators, and environmental status indicators:

Process Indicators
· the existence of a multi-country agreement on the institutional and technical
framework for the management of the Guarani Aquifer System;
· the existence of a Transboundary Diagnostic Analysis, identifying the primary threats
to the structure, function, and sustainable use of the Guarani Aquifer System,
including the location of areas under current threat and in need of immediate attention
(i.e., "hot spots");
· the existence of a Strategic Action Program for the sustainable management of the
aquifer, including programs for:
§ the operation and maintenance of the data acquisition and monitoring system
§ the implementation and sustainable operation of the le gal-institutional
framework once such a framework is approved and adopted by the countries
§ investments in pollution prevention and mitigation measures
§ investments in geothermal energy use
§ the resolution or mitigation of existing and potential conflicts;

6

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· the existence of a consensus proposal for a joint legal framework for the management
of the Guarani Aquifer System;
· the existence of a functioning monitoring network.

Stress Reduction Indicators
· an operational communications campaign, with a defined percentage of the target
population reached;
· identified and quantified water quality threats and their evolution;
· existence of norms for well design, construction and maintenance at a regional scale,
taking into account sub-regional variations;
· identified and documented pollution mitigation and groundwater depletion together
with management measures implemented and monitored in specific "hot spots".

Environmental Status Indicators
· agreed goals, criteria and standards for the transboundary diagnostic analysis and
sustainable management of the Guarani Aquifer System, including quantitative and
qualitative indicators upon which priority actions can be identified and implemented;
· defined western and southern boundaries of the aquifer system, as well as defined
recharge and discharge areas, surgence zones as well as vulnerable areas, including
those with higher degrees of environmental risk;
· completed conceptual and mathematical models of the aquifer system, including
elements its water quality, quantity, and hydrodyna mic behavior;
· implementation of an up-to-date, functioning Information System, shared among the
four countries, as a mechanism for transboundary information-dissemination,
decision-making support, and management of the Guarani Aquifer System.

B. Strategic Context

1. Sector-related Country Assistance Strategy (CAS) goal supported by the project:
(see Annex 1)
Document number:
Date of latest CAS discussion:
Argentina

CAS 20354-AR


09/08/00
Brazil

CAS 20160-BR


03/06/00
Paraguay

CAS 16346-PA


03/06/97
Uruguay

CAS 20355-UR


05/05/00

Water resources management issues are prominent in the four Country Assistance
Strategies (CASs). For each country, the water sub-sectors (water supply and sanitation,
irrigation, etc.) are recognized as being sustainable in the long run only if the resource base
itself is managed sustainably. The World Bank and respective governments recognize this,
within an appropriate context for each country, through the respective CASs. This project,
through its catalytic effect, will incorporate groundwater issues into the water resources
management agendas of the four countries, including specific steps with regards to the
Guarani Aquifer System. The integration of the proposed project into the CAS objectives
for each country is highlighted below.

7

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Argentina CAS: One of the main development challenges within Argentina is water
resources management. Serious water quality problems are emerging due to aquifer
"mining" and vertical contamination of water tables that could have economic
consequences within the next 15 to 25 years. The World Bank CAS gives special attention
to water resources management and envisages future support that will focus initially on
institutional capacity building, including development of tradable water rights with
incentives for efficient and sustainable water use, and a watershed approach to the
integrated management of water, soils, and cultivation. The CAS also specifically states
that the World Bank will continue to seek opportunities to expand the use of GEF grants as
a complement to national programs and stimulate innovation with respect to global water
resources issues. In a recent Water Resources Sector Study, groundwater was identified as
one of the critical water resource issues in Argentina. The Guarani Project would contribute
to capacity building in the fields of both groundwater management and sustainable
management of water resources in the country, as envisaged in the CAS.

Brazil CAS: The World Bank would continue its strong involvement in water resources
management. This involvement aims to support ongoing development of the legal and
institutional framework for efficient, integrated, and decentralized water resources
management in Brazil. In this context, however, groundwater has been largely neglected.
The proposed project, in addition to addressing an important aquifer system (providing
water for domestic and industrial purposes to more than 500 municipalities in eight states),
is expected to contribute to the integration of groundwater management issues into Brazil's
overall water resources agenda of Brazil and to foster an integrated water resources
management and protection vision.

Paraguay CAS: The World Bank has agreed to prepare a Natural Resources and
Environmental Management Strategy for Paraguay in order to increase the likelihood of
sustainable economic growth. This Strategy will assist in defining priority environmental
pollution problems, and suggest possible policies for reducing pollution from the industrial,
transportation, and water and sanitation sectors. It also will reassess priorities for natural
resources management and prioritize future assistance for environmental management.Such
actions will definitely strengthen the rather weak water management scenario that prevails,
where groundwater plays a low-key role. In addition, the Government has expressed an
interest in preparing a GEF country program to enhance capacity building within the water
resources sector, with an emphasis on groundwater and natural resources management.

Uruguay CAS: The CAS identifies a number of local and global environmental issues on
the policy agenda. Inadequate natural resource management could jeopardize the otherwise
promising performance within the livestock and agricultural sectors. Poor water resource
management is widespread, leading to inefficient water use and increased pressure on water
resources. There are water quality problems in some sub-sectors. For these reasons, water
resources management is a priority of the Government. The World Bank CAS identifies
water resources management as a cross-cutting theme, extending across the agricultural and
livestock sectors, the marine fisheries sector, and the tourism sector, particularly in the
coastal zone. The Guarani Aquifer System underlies about 25% of Uruguay and constitutes
about 40% of the country's groundwater resources. It is of importance to the different

8

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water-using sectors identified in the CAS. The on-going Uruguay water resources sector
study complements the proposed project which would contribute to groundwater
conservation in Uruguay.

1a. Global Operational Strategy/Program objective addressed by the project:

The Guarani Aquifer System is a strategic water resource within the MERCOSUR region
(see Annex 6). It can be preserved if adequately protected and managed. The main threats
to the resource stem from uncontrolled abstraction, and pollution in the extraction and
recharge areas. Given that groundwater recharge is restricted, and that groundwater
pollution is reversible only at very high cost, if at all, there is considerable merit in
protecting the Guarani Aquifer System for current and future generations.

The Guarani Aquifer System is a clear example of an international (transfronterizo)
waterbody threatened by environmental degradation through over use and pollution, as
defined and included in the GEF Operational Program Number 8. In the absence of a
strategic intervention, supported by the GEF, the likelihood of "business-as-usual"
prevailing in the four countries is high. At the aquifer's current rate of use, and considering
the growing use of groundwater for human consumption, it is easy to foresee an increasing
threat of pollution and depletion in the not too distant future. Uncontrolled use, without
rules or regulatio n, can alter the status of the Guarani Aquifer System from that of a
strategic reserve of drinking water to that of a degraded waterbody that is the source of
conflict among the countries. If nothing is done, the future of the Guarani Aquifer System
could be the same as that of other shallow aquifers that have tended to become both
polluted and over-exploited, at least in certain areas.

The global benefit of the proposed project is in terms of the preservation of this
transboundary resource for current and future generations. In the specific case of the
Guarani Aquifer System, there is the opportunity to exploit the advantages of preventive
activity. The project would ensure that, in the face of increasing scarcity and pollution of
surface water sources in the beneficiary countries, this resource is managed today so as to
be available as a strategic reserve when needed in the future. An important issue to be
considered in this regard is the fact that an international legal framework for the
management of transboundary groundwater resources currently does not exist. Annex 7 sets
forth a consideration of the potential root causes of the issues facing the Guarani Aquifer
System, based on information gathered during project formulation. This latter assessment
will be refined through the development of a Transboundary Diagnostic Analysis under
Component II of the proposed project (see Annex 8 for a description of the GEF process).

It should also be noted that the World Bank, for example, does not have a specific policy on
groundwater resources. This issue is being addressed in the ongoing evaluation of the
World Bank Water Resources Policy Paper of 1993. It is generally recognized that
transboundary groundwater issues need to be addressed, as projects are often proposed and
implemented in areas where a situation of scarcity and competition for groundwater
resources already exists (e.g., in North Africa and the Middle East). In the case of the
Guarani Aquifer System of South America, the World Bank, through the GEF, could make
a significant contribution to shaping an institutional framework regarding transboundary

9

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groundwaters that could serve as a replicable model in other countries and regions. In
addition, the experience derived from this project would be expected to contribute to GEF
and World Bank policy with regard to transboundary groundwater issues.

2. Main sector issues and Government strategy:

The importance of groundwater, especially of large, deep aquifers, stems mainly from the
fact that these resources constitute a strategic reserve for water supply. Such groundwaters
rarely need to be treated prior to consumption. Natural biogeochemical filtering processes
within the aquifers generally achieve a quality far beyond that which could be obtained, in
technical or economic terms, by the available water treatment methods applied to waters
withdrawn from rivers, lakes, or impoundments. Groundwater is frequently the most viable
water supply alternative, especially where surface waters are polluted by domestic and
industrial effluents, solid wastes, or contaminated agricultural runoff. Consequently,
sustainable use, development and recharge, and diligent conservation, consistent with the
protection of the aquifers from pollution, should be important concerns. As a transboundary
aquifer with thermal qualities, the Guarani Aquifer System touches upon three sectoral
areas; namely, sustainable water management (of groundwater in particular), transboundary
water management, and energy use. These areas are elaborated below.

Sustainable (Ground)water Management: In the four countries overlying the Guarani
Aquifer System, water sector issues include: institutional arrangements for integrated water
resources management, and investments in water infrastructure and sustainable
management of that infrastructure. An important issue in all four countries is water
pollution. With respect to groundwater, this issue translates into a package of topics related
to: (i) the recognition of groundwater as a resource in need of far more attention than it has
been given to date; (ii) integration of groundwater management concerns into overall water
resources legislation (which tends to focus on surface water); (iii) assessment of
groundwater availability (related to quantification and modeling of the resource, including
availability and demand scenarios); and (iv) groundwater protection measures (zoning,
water rights, anddesign, construction, extraction and pollution controls). Overall, these
issues have not been adequately addressed in any of the countries, although the
governments are now moving toward completing an assessment.

Transboundary Waters: The beneficiary countries have long-standing experience in
collaborating on transboundary water issues, most notably with regard to the Plata River
basin which has had a general treaty and an Intergovernmental Committee since the 1960s.
In addition, bilateral projects and specific treaties exist with respect to other water systems,
such as the Uruguay River (Uruguay and Argentina), and the Paraná River (Brazil and
Paraguay). To date, the success of these agreements has been mixed, especially with respect
to hydrological allocation and pollution control issues. The countries do recognize,
however, the importance of cooperation in transboundary waters issues. The attempt to
reach an agreement on groundwater is a historical first and will certainly enhance the
dialogue on other waterbodies within the region and may contribute to improve water
management at a transboundary level.


10

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Energy Use: In the context of this project, aspects related to energy use are of relevance.
First, the four countries use different types of resources to satisfy their energy needs,
ranging from hydropower to petroleum and gas. With increasing economic growth in the
Region, energy demands are rising, too, leading the countries ­ to varying degrees ­ to look
for more efficiency in the use of their current sources and also for substitutes. This is
especially the case for heavily hydropower-dependent Brazil, which is currently passing
through an energy crisis due to drought and increased energy demands. Concurrently, all
four countries are signatories of the Kyoto Protocol for Global Warming, and, as such, have
made commitments to look for alternative, "clean" energy sources. In this context, a careful
assessment of the potential for the use of the Guarani Aquifer System waters for low-
enthalpy energy may provide alternatives to fossil-fuel based energy sources, and
opportunities for local energy savings for industry, irrigation, and/or domestic hot water
supply.

3. Sector issues to be addressed by the project and strategic choices: (see also Annex 7:
Root Cause Annex)

The available reference documents,including those prepared during the project preparation
phase and summarizing the available knowledge on the Guarani Aquifer System, are listed
in Annex 9. The importance of, and current knowledge about, the Guarani Aquifer System
in the four countries is summarized in Table 1. Table 1 shows that actions in one country
may have effects in the other countries. For example, uncontrolled drilling and extraction in
one country, combined with pollution, may affect not only that country but also its
neighbors. Therefore each country needs to jointly participate in the sustainable
management of the resource to preserve its own share for the future.

Table 1: Current Knowledge and Importance of the Guarani Aquifer System in Argentina, Brazil,
Uruguay, and Paraguay


Characteristic
Argentina
Brazil
Paraguay
Uruguay

Approximate
Extent of the
225,500
839,800
71,700
45,000
Aquifer (km 2)

Percent of
Territory Occupied
6
10
18
25.3
Characteristics of
Supply source
Recharge and
Recharge and
Recharge and
the Aquifer
supply area
supply area
supply area
Extent of
9 deep wells for
300 to 500 cities About 200
135 wells for
Exploitation
thermal use
partially or
wells, mainly for public water
entirely supplied domestic water
supply, 7 of
by the Aquifer
supply
which are for
System (70% of
thermal use
use); industrial
uses (25%),
irrigation and
recreational
uses (5%)


11

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Principal
1. Potentially
1. Point and
1. Point and
1. Point and
Environmental
uncontrolled
nonpoint source nonpoint source nonpoint source
Issues
drilling and
pollution
pollution
pollution
extraction




2. Uncontrolled
2. Uncontrolled
2. Uncontrolled
2. Subject to
drilling and
drilling and
drilling and
pollution from
extraction
extraction
extraction
other countries




3. Subject to
3. Subject to
pollution from
pollution from
other countries
other countries

Level of
Limited
Considerable
Limited
Considerable
Information
information
information
information
information
available,
available but
available
available
especially about dispersed in
the western
different states
extent of the
and institutions
Guarani Aquifer
System

Sustainable (Ground)water Management: The general sector issue affecting all four
countries is the current lack of a management and administrative mechanism governing
groundwater in the region. Recommendations for controlling drilling, extraction, and
pollution would be an outcome of this project. Sub-sectoral issues relate to water supply,
industry, and tourism, as well as environmental management within recharge areas. To
manage these issues, both over-utilization and pollution of groundwater will need to be
addressed.

The extent of available technical information, legal instruments, and institutional planning
is very uneven within the four countries. Brazil is the only country that has legislation
relating to the sustainable use of water resources, including groundwater. However, the
legal basis is still relatively fragile and needs to be further developed together with
improving law enforcement. Uruguay is operating under its 1979 Water Code, which does
not include an economic value for water. In Argentina, the federal Constitution explicitly
reserves ownership of natural resources within their jurisdictions to the provinces. The
Argentine institutional framework, therefore, distributes responsibilities and decision-
making authorities at different levels, creating significant overlaps between provincial
authorities. In Paraguay, the situation is similar, although some attempts are being made by
the Ministry of Planning (STP) to improve the coordination and regulatory framework for
water resources management generally. Thus, not only must the sectoral issues be
addressed in terms of the lack of a transboundary framework for groundwater management,
but also jurisdictional issues must be clarified with respect to transboundary groundwaters
in Brazil and Argentina. In addition, groundwater management arrangements at the national
and subnational level must be addressed.

This project is expected to contribute to better groundwater management by raising
awareness regarding groundwater issues, building local capacity for groundwater
management, and strengthening national legislation for groundwater management. In the
case of Brazil, a specific outcome of the project preparation activities has been the creation,

12

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during June 2000, of the Permanent Technical Committee for Groundwater (Câmara
Técnica Permanente de Águas Subterrâneas) within the National Water Resources Council.
Subsequently, the Council adopted a resolution establishing guidelines for the inclusion of
groundwater within Brazil's Integrated Water Resources Management System. As a
complement, the Brazilian Government launched a National Groundwater Program in early
2001. In Argentina, as a specific outcome of the project preparation, the National
Government solemnly created the Interministeral Committee for Groundwaters, to help
improve integrated water management. In the case of Uruguay, the Government issued a
decree controlling the drilling of wells in the Guarani Aquifer System area, providing a
basis for management activities once the proposed project is underway. These actions show
both the commitments of the countries to integrate groundwater into their overall water
resources legislation, and the impact that this high-profile project is having on an otherwise
largely neglected resource.

Transboundary Waters : The proposed project should be viewed not only within the
context of the previously mentioned agreements on surface water resources, but also with
regard to their future. Early actions to address issues such as pollution, communications,
conflict management, and water allocation, among others, are priorities in the context of the
Guarani Aquifer System. These preventive actions will take advantage of the joint water
resources agreements and treaties that currently exist, while adding the groundwater
perspective. A consequent light but effective, joint management framework will provide a
basis for transboundary collaboration between the countries concerned.

Energy: The project will consider the thermal characteristics of the waters of the Guarani
Aquifer System. Based upon current information, the thermal waters are located within
pockets in some localities. Current indications are that these thermal waters are unlikely to
provide significant energy generating potential due to their relatively low temperature (less
than 50oC). However, a variety of other uses may be possible, ranging from district heating
and provision of warm tap water, to thermal tourism (already highly important in
northwestern Uruguay), to industrial uses. The proposed project will review alternatives for
the use of thermal waters as a "clean" energy source, and, depending on the outcome of
these investigations, will identify opportunities to modify local energy use and policies so
as to substitute for the use of fossil fuels.

C. Summary Description of the Project

1. Project Components (see Annex 2 for detailed descriptions and costs):

The project is comprised of six components, supported by an administrative component.
GEF: US $ 13.40 million; co-funding: US $ 13.36 million; total: US $ 26.76 million.

COMPONENT I: Expansion and Consolidation of the Current Scientific and
Technical Knowledge Base on the Guarani Aquifer System
Component I develops a sound scientific and technical basis for the determination of the
priority transboundary issues and associated strategic remedial actions for the protection of
the Guarani Aquifer System. It is essential for the determination of an appropriate joint

13

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management framework. GEF: US $ 4.78 million; co-funding: US $ 5.73 million; total: US
$ 10.51 million.

COMPONENT II: Joint Development and Implementation of the Guarani Aquifer
System Management Framework
Component II is the core of the project and provides for an agreed technical, institutional,
financial, and legal framework for management of the Guarani Aquifer System. Component
II includes (i) harmonization and enhancement of data gathering networks, (ii) creation of a
data management system serving the Guarani Aquifer System, (iii) development of joint
institutional arrangements for the management of the Guarani Aquifer System, and (iv)
formulation of strategic actions leading to the integration and optimization of development
initiatives and proposals within the Guarani Aquifer System region. GEF: US $ 3.60 million;
co-funding: US $ 3.54 million; total: US $ 7.14 million.

COMPONENT III: Public and Stakeholder Participation, Education and
Communication
Component III provides for the practical involvement of stakeholders in decision-making
affecting the Guarani Aquifer System through both formal and informal educational and
informational programming. A Guarani Aquifer System Citizens' Fund designed to provide
cost-sharing funding to NGOs and academic institutions is an integral feature of this
Component. GEF: US $ 0.56 million; co-funding: US $ 0.55 million; total: US $ 1.11
million.

COMPONENT IV: Project Monitoring and Evaluation, and Dissemination of Project
Results
Component IV consists of: (i) development agreed GEF-IW process, stress reduction, and
environmental status indicators--comprised of goals, criteria, and standards, and
implementation of a monitoring and evaluation system to track Project progress in
addressing the abovementioned process, stress reduction, and environmental status
indicators; and (ii) dissemination of project results within and outside of the Guarani
Aquifer System region, including the implementation of measures for consultation and
coordination between GEF-IW project managers working in the Latin American region.
GEF: US $ 0.48 million; co-funding: US $ 0.27 million; total US $ 0.75 million.

COMPONENT V: Development of Management and Mitigation Measures
within Identified "Hot Spots"
Component V develops practical mechanisms and measures for the mitigation of current
priority problems in 4 Hot Spots: (i) two identified transboundary localities within the
Guarani Aquifer System area; (Argentina/Uruguay and Uruguay/Brazil); (ii) one
recharge/discharge area of the Guarani Aquifer System (Paraguay); and (iii) a heavily
urbanized area of the Guarani Aquifer System (Brazil), supporting ongoing mitigation and
protection measures being undertaken by the Government of Brazil and State of São Paulo.
The objective of Component V is to determine effective means and costs of quantifying,
analyzing, managing, and remediating the impacts of known threats affecting specific,
representative areas within the Guarani Aquifer System region. GEF: US $ 2.18 million;
co-funding: US $ 1.32 million; total US $ 3.50 million.


14

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COMPONENT VI: Assessment of Geothermal Energy Potential
Component VI explores potential future geothermal energy uses of the Guarani Aquifer
System. The objective of Component VI is to quantify and determine the potential value of
the Guarani Aquifer System as a source of "clean" geothermal energy, and to communicate
this assessment and appropriate guidelines with respect to sustainable development and
utilization of any potential geothermal energy output of the Guarani Aquifer System to the
respective stakeholders, including the energy ministries within the Guarani Aquifer System
region. GEF: US $ 0.21 million; co-funding: US $ 0.04 million; total US $ 0.25 million.

COMPONENT VII: Project Coordination and Management
Component VII supports project management and coordination. Component VII facilitates
the liaison activities to be carried out by the Guarani Secretariat and the operational
activities of the coordinating and executing units in the respective countries, as described in
Section E.4. GEF: US $ 1.59 million; co-funding: US $ 1.91 million; total US $ 3.50
million.

Table 2: Guarani Project costs and financing mechanisms

Indicative
Co-
GEF
Component
% of
% of total
% of total
Cost
Financin
Total
financing
financing
g
financing
Sector
(US$M)
(US$M)
(US$M)








1) Expansion of the Knowledge
10.51
39.3
5.05*
48.1
4.78
45.5
Base


0.50**
4.8





0.14***
1.4





0.03****
0.3









2) Development of a Joint
7.14
26.7
3.33*
46.6
3.60
50.5
Management Framework


0.13***
1.9





0.07****
1.0









3) Public and Stakeholder
1.11
4.1
0.50*
45.0
0.56
50.6
Participation


0.048*****
4.3









4) Monitoring, Evaluation and
0.75
2.8
0.27*
36.0
0.48
64.0
Dissemination













5) Development of
3.50
13.1
1.00*
28.7
2.18
62.1
Management and Mitigation


0.32***
9.3


Measures in Hot Spots













6) Assessment of Geothermal
0.25
0.9
0.04*
1.1
0.21
85.0
Energy Potentials













7) Project Coordination and
3.50
13.1
1.91*
54.6
1.59
45.4
Management
Total Cost of the Project

26.76
100.0
13.36
49.9
13.40
50.1
*Co-financing provided by the governments of the four participating countries
** Co-financing provided by the IAEA
***Co-financing provided by the BGR (still under discussion)
****Co-financing provided by the Netherlands-World Bank Water Partnership
*****Co-financing provided by Beneficiaries

15

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2. Key policy and institutional reforms supported by the project:

The key policy and institutional reforms specifically sought with regard to the Guarani
Aquifer System are: (i) recognition of the Guarani Aquifer System as a valuable
transboundary resource; and (ii) creation of a framework for the shared management of the
Guarani Aquifer System, including joint institutional-legal arrangements and data sharing.
The proposed project would contribute to advancing policies relating to transboundary
groundwaters in the four countries, especially with respect to an internationala
transboundary legal and institutional framework that is currently lacking, and national
groundwater institutional and legal frameworks that are rather disparate or missing.
Specifically, the project will elaborate a Strategic Action Program encompassing, inter alia,
a specific management and institutional framework for the Guarani Aquifer System. This
framework could be expected to influence legislation regarding groundwater resources at
the national level­ and will eventually influence provincial or state levels, where applicable
-- within the participating countries and give impetus to improved groundwater
management generally. In developing the institutional framework the particular
characteristics of the four countries' political organization will be taken into account.

3. Benefits and target population:

About 15 million people live in the Guarani Aquifer System region. While not all of these
are supplied with Guarani Aquifer waters, increasing numbers of users can be anticipated to
utilize this resource as a result of population growth and increased industrial consumption.
This trend will be enhanced as a result of the increasing pollution of surface waters, which
makes water from the Guarani Aquifer System more attractive. Therefore, target
beneficiaries are the current and future populations within the Guarani Aquifer System
region in the four countries.

In the long term, the expected benefits include: (i) a sustainable supply of safe water for
human populations; (ii) high-quality water for industry; and (iii) a sustainable supply of
thermal water for tourism, industrial, and municipal uses.

In the short and medium terms, beneficiaries also are the individuals and institutions who
are active in the management of the Guarani Aquifer System. Through training and
educational programs their capacity to contribute to the sustainable management of the
Guarani Aquifer System will be greatly enhanced. The project is designed to internalize the
experience generated by the project into the know-how of the four countries.

Global benefits to be derived from the improved management of the Guarani Aquifer
System relate to the integrated management and use of this transboundary resource in a
sustainable manner. Without this GEF-financed project, it is highly likely that the countries
would not take measures at this stage to protect the transboundary water resources of the
Guarani Aquifer System. Use of water resources at the national and sub-national levels
would most likely continue until a crisis arises, at which point, the reversal of negative
effects would be difficult and costly. Actions taken jointly at this stage by all four countries
will provide a basis for considerable global (transboundary) benefit through effective
pollution and overdrafting controls, especially in recharge and abstraction areas, and

16

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improved land management, including, for instance, erosion control. In this regard, the
development of specific, land use-related management and mitigation measures (through
the targeted pilot demonstration projects), contributing to both global benefits and specific
target groups, forms an important output of this project.

4. Institutional and implementation arrangements:

Given the multinational character of the proposed project, institutional and implementation
arrangements were discussed in detail during project preparation. These are elaborated in
Section E4. Since the project is intended to bring about significant institutional change
(from the current lack of coordinated management of the Guarani Aquifer System to its
sustainable long-term management), the future institutional arrangements to be developed
as a component of this project are an essential element that will determine its long-term
success. All the proposed activities will be driven by a Project Steering Committee (CSDP:
Consejo Superior de Direccion del Proyecto), with coordination of the technical aspects of
the project being provided by a Coordinating Council (CC: Coordinacion Colegiada). The
day-to-day activities of the Project will be managed by the Guarani Secretariat (SG:
Secretaria General del Proyecto Sistema Acuifero Guarani) under the direction of the
OAS, with oversight from the CC. Activities within each country will be carried out by
country-based project executing units (UNEP: Unidad Nacional para la Ejecucion del
Proyecto), the heads of which (the four National Technical Coordinators, one from each
country) will form the CC.

D. Project Rationale

1. Project alternatives considered and reasons for rejection:

Project alternatives considered were: (i) to do nothing (laissez-faire), or (ii) to carry out the
project in only one or two countries. Alternative (i) was rejected due to the fact that the
Guarani Aquifer System is clearly showing signs of initial stress. Thus, by taking
preventive measures now, negative effects on groundwater quality and quantity can be
mitigated and, perhaps, largely avoided. Given that groundwater pollution is very expensive
and in some cases almost impossible to reverse, this opportunity to prevent damage to the
aquifer obviates the do nothing alternative. By completing a relatively low-cost preventive
project, embodied within a Strategic Action Program, the longer-term costs can be
minimized in an effective manner. Similarly, groundwater overdrafting severely endangers
any aquifer's sustainability, may reduce its capacities, affect present uses and restrain future
developments as well. Again, a low-cost preventive water management framework, within
the SAP, may prove to be crucial in solving or mitigating such problems. Likewise,
Alternative (ii) was rejected because of the transboundary nature of the waterbody, which,
by definition, implies that degradation of the resource in one country will have an impact
on the other riparian countries. Agreements to preserve this type of waterbody need to be
mutual and mutually enforced. Work within one or two countries to create a management
system for the Guarani Aquifer System, therefore, was deemed to be suboptimal.




17

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2. Major related projects financed by the Bank and/or other development agencies
(completed, ongoing and planned).

Table 3: Major related projects financed by the World Bank and other agencies in Argentina, Brazil,
Uruguay, and Paraguay

Latest Supervision
Sector Issue Project
Project
(PSR) Ratings
(Bank-financed projects only)
Bank-financed

Implementation
Development


Progress (IP)
Objective (DO)

Irrigation
Uruguay Loan 3697:

S

Irrigation and Natural
S


Resources Project






Water Supply, Sanitation and
Brazil Loan 3505 (Paraná):
S
S
Water Resources Management
Water Quality and Pollution



Control






Natural Resources Management
Paraguay Loan 3708:
S
S

Natural Resource



Management I






Water Supply and Sanitation
Paraguay Loans 4222 and
S
S

4223: 4th Rural Water



Supply and Sanitation






Natural Resources Management
Paraguay ­ Mbaracayu
- -
- -

Biodiversity (under



preparation - no ratings



available yet)





S
Natural Resources Management
Brazil Loan 4060: Rural
S


Poverty ­ Paraná Land



Management





S
Natural Resources Management
Brazil Loan 3160: Land
S


Management II ­ Santa



Catarina





S
Natural Resources Management
Brazil Loan 4148: Natural
S
Resources Management
Other development agencies



Transboundary Water Resources Implementation of the
-
-
-
-
Management
Strategic Action Program for



the Bermejo River Binational



Basin (Argentina and



Bolivia), GEF/OAS/UNEP






Transboundary Water Resources Implementation of Integrated
-
-
- -
Management
Watershed Management



Practices for the Pantanal



and Upper Paraguay River



Basin, GEF/OAS/UNEP







18

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Transboundary Aquifer Research UNESCO
- -
- -
Project (includes Guarani Aquifer
System)
IP/DO Ratings: HS (Highly Satisfactory), S (Satisfactory), U (Unsatisfactory), HU (Highly Unsatisfactory)


3. Lessons learned and reflected in proposed project design:

The Project incorporates lessons learned in two strategic ways: first, by using experience
gained in the water and related sectors within each of the four countries, and, second, by
using the lessons learned by the World Bank and OAS with regard to GEF International
Waters Projects.

National experience in the countries. Good institutional policies are essential to good
water resources management, be they surface or ground waters. Experience in Brazil,
particularly in recent years, has illustrated that policy dialogue is especially fruitful in the
context of the preparation of specific projects (e.g., the Pollution Control Projects in Minas
Gerais, Paraná and São Paulo, which have led to significant institutional change in each
State; in Ceará where PROURB was a major catalyst in the implementation of the State's
Water Resources Law; and in PROAGUA, which uses a two-tracked approach of
demonstration projects and institutional change). Notwithstanding, groundwater has been
largely neglected in all four countries, in spite of its overriding importance for water
supply, especially in Uruguay and in certain regions of Argentina, Brazil and Paraguay. In
Paraguay, the World Bank-financed 4th Water and Sanitation Project relies exclusively on
groundwater. In this sense, the Guarani Project can have, and already has had, a catalytic
effect on groundwater management in the countries in general. In this context, ongoing
projects in the region and the furtherance of the sectoral dialogue on (ground)water
resources management will be taken into consideration.

GEF International Waters Projects. A number of issues relating to GEF International
Waters Projects were highlighted at two recent events: the World Bank stakeholder
consultation held during June 2000, and the GEF International Waters Conference held
during October 2000. The latter event included the then three GEF Implementing Agencies
(IAs: the World Bank, United Nations Development Programme, and United Nations
Environment Programme) as well as project staff and policy makers from around the world.
The messages emerging from these events underlined the need for commitment from the
countries and local demand for the project, both of which exist with respect to the proposed
project. In addition, it was deemed essential that other agencies (multilateral and donors),
having a stake or on-going projects in the region, be involved. In the case of the Guarani
Project:
· the General Secretariat of the Organization of American States (OAS), which has been
active as Executing Agency for UNEP-implemented GEF International Waters Projects,
including projects on the Bermejo, Upper Paraguay, and San Juan River Basins, served
as the executing agency for the preparation of this project;
· the United Nations Education, Scientific, and Cultural Organization (Unesco), under the
auspices of their Transboundary Aquifer Project, participated in Guarani workshops
during the project formulation period;

19

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· the International Atomic Energy Agency (IAEA), which has previously been active in
all of the four countries, will contribute to the geohydrological aspects of the Guarani
Project at the invitation of the participating countries; and,
· the German Government, which has provided long-standing support to groundwater
research in the Paraguayan Chaco and, recently, also in the Zona Oriental, is
considering the provision of technical and institutional development assistance to the
Paraguayan portion of the project through the German Geological Survey
(Bundesanstalt fuer Geowissenschaften und Rohstoffe).

An important aspect of project design is the multilateral agreement on the institutional
framework for the conduct of the transboundary waterbody project and Strategic Action
Program formulation. Communication among the different parties is essential, and the
project coordination units in each country (UNPPs: Unidades Nacionales de Preparación
del Proyecto), created during project preparation, are proposed to be continued as a
mechanism by which stakeholders from governments, subnational-level governments, and
civil society (including NGOs and universities) will participate in the project. A number of
workshops at both the national and regional level are included as a means of bringing
together the actors from the four countries. The regional level meetings will be facilitated
by the Project Steering Committee (CSDP: Consejo Superior de Dirección del Proyecto).
Use will be made of World Bank multi-country video facilities, as a practical means of
bringing stakeholders to the table without incurring high transaction and financial costs of
international travel. The hitherto positive experience in this regard will continue to be
reflected in the design of the institutional arrangements for project implementation.

GEF experience shows that reliance on heavy administrative structures for the management
of GEF International Waters Projects is not necessary, and may even be counterproductive
due to the elevated recurrent cost. In elaborating the institutional framework for the
management of the Guarani Project, institutional arrangements have been designed to be as
pragmatic and light as possible. To this end, the day-to-day execution of the project will be
undertaken by a small but effective Guarani Secretariat, which will serve as the executive
element of the CSDP and coordinate the activities carried out by the UNEPs (Unidades
Nacionales de Ejecución del Proyecto).

The Project proposed herein also includes a number of pilot projects. Experience in other
World Bank projects has shown that such projects, to serve their purpose, need good
baseline data and well-designed monitoring and evaluation, and complementary
Components to accommodate this need have been designed.

Finally, GEF experience has indicated that a significant lag time may occur between the
preparation of the Strategic Action Program (SAP) and its implementation. For this reason,
this project has been designed as the first phase of a larger Program for the Protection and
Sustainable Management of the Guarani Aquifer System. Therefore, the elaboration of
projects to implement the SAP will take place during the last year of the proposed project.
Such implementation projects may be financed from a variety of sources, including national
governments, the World Bank, other multilateral banks, and donors.


20

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4. Indications of borrower and recipient commitment and ownership:

Annex 10 provides a list of the stakeholders that participated in the preparation of this
project. Their participation is summarized below. (For document to be submitted to GEF
Council: In addition, Letters of Endorsement of the project from the designated GEF
country-based Focal Points are appended hereto as Annex 11).

National level. At the national level the project has received strong support from
governmental institutions that have actively participated in project preparation activities
and workshops. The Secretariat of Water Resources (SRH), Brazilian Ministry of
Environment, sponsored, with its own resources, the meeting held in Foz do Iguaçu
(Brazil), where the Guarani Project was first identified and discussed with the different
partners as a project concept for GEF support. Subsequently, the Secretariat of Water
Resources of Arge ntina, the National Hydrographic Directorate of Uruguay, and the
Ministry of Energy and Mining and the Ministry of Public Works of Paraguay as well as
the recently-created Paraguayan Ministry of Environment have sponsored project
workshops in Santa Fé (Argentina), Asunción (Paraguay), and Salto (Uruguay),
respectively. In addition, staff from all four countries have participated in project
preparation activities. All four governments have created and staffed their respective
project preparation units using local financial resources. Representation of the national
governments in official meetings has been strong, including representation at the secretarial
and ministerial levels. The preparation of the project, using PDF/B funds, received the full
endorsement of the GEF focal points in all four countries during 2000 and, most recently,
during March 2001 with respect to complementary PDF/B funding.

Subnational/non-governmental level. At the subnational and/or non-governmental levels,
the project has received support from state governments in Brazil and provincial
governments in Argentina (e.g., inter alia, the State of São Paulo, the State of Paraná, and
the Province of Santa Fé). Strong support and full collaboration also has been forthcoming
from the universities in the region (e.g., Universidad Nacional del Litoral and Universidad
de Buenos Aires, Argentina; Universidade Federal do Paraná, Brazil; Universidad Nacional
de Asunción, Paraguay; and Universidad de la República Oriental del Uruguay). Similarly,
the project has been supported by a number of nongovernmental organizations (NGOs) that
have been actively involved in the project preparation activities (e.g., Brazilian
Groundwater Association - ABAS, Brazilian Water Resources Association - ABRH, among
others). Information-sharing, collaboration, and involvement by large numbers of
stakeholders (which have often exceeded all expectations) have generated many quality
interventions and suggestions which have contributed to project preparation. Social interest
and support for the project was equally high, as demonstrated by the large number of
articles published in national magazines, newspapers and on-line within the region, and
extensive number of special television reports. The high level of interest of stakeholders at
the local level provides positive evidence of the commitment of the four governments at
national and local levels. Awareness by all of the governments that transaction costs of this
project are relatively high has not been a major obstacle to project preparation.

Supranational level. Both MERCOSUR--the Southern Common Market--through its
Subgroup 6 (Environment), and the OAS, have supported project preparation.

21

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5. Value added of Bank and Global support in this project:

The World Bank has operations and long-standing policy dialogues regarding different
aspects of water management in each of the four countries. A large number of water
projects have been implemented with World Bank support in the region. In Brazil, the
World Bank has conducted an extensive review of the water resources, irrigation, and water
supply and sanitation sectors, leading to the development of an integrated water supply and
water resources management strategy for its operations in Brazil. Jointly with the
Government of Argentina, the World Bank has recently completed a comprehensive review
of the water sector, and the final report of this study is being disseminated. During 2001,
the World Bank is conducting a similar comprehensive review of the water sector together
with the Government of Uruguay. The combination of the sectoral knowledge of the World
Bank and its experience in financing projects in the region is particularly supportive of this
project.

The recent First Biennial GEF International Waters Conference, held in Budapest
(Hungary) between October 14-18, 2000, demonstrated the World Bank to be a leading
agency in implementing GEF International Waters Projects. Considerable in-house
expertise and internationally-based knowledge of the main issues relating to such initiatives
has been developed. Currently, the World Bank is involved in the implementation and/or
preparation of some twenty-three GEF International Waters Projects in Latin America,
Europe, Africa, South East Asia, and the Middle East. In addition, the World Bank is
involved in fifteen other, related GEF projects dealing with coastal and marine issues, and
nine aquatic biodiversity projects, having International Waters aspects.

Global support to the Project is essential due to the nature of transboundary waterbodies.
The Guarani Aquifer System is unique in the world due to its size, good water quality, and
thermal energy potential. The Guarani Aquifer System, therefore, constitutes an important
strategic transboundary reserve in the region. Nevertheless, without global support for this
project, short-term needs may supersede the strategic, integrated management of the
resource, and the countries might decide to continue unilateral exploitation of the resource.
To address this concern, GEF support, in this case, should focus primarily on the
development and implementation of mechanisms and an institutional framework to prevent
over-exploitation and degradation of this transboundary resource--the preventive focus of
this project is unique within the GEF International Waters Program. In addition, this project
would be the first groundwater project supported by the World Bank and GEF, further
contributing to the global importance of this initiative.

E. Summary Project Analysis (Detailed analyses are in the project file; see Annex 9)

1. Economic (see Annex 4):

? Cost benefit NPV=US$ million; ERR = % (see Annex 4)
? Cost effectiveness
? Incremental Cost
? Other (specify)

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The economic evaluation methodology is the GEF incremental cost analysis. Although a
number of baseline activities touch upon the proposed project, the incremental costs are
substantial. Project investment will generate and bring together new data of interest to all
four countries, and would put in place a joint institutional arrangeme nt for aquifer
management that would otherwise not exist. It is highly unlikely that the individual
countries would take action independently to preserve a resource that will be available for
other, neighboring countries to use. Thus, baseline investment is limited to some
monitoring activities currently in place in Brazil and Uruguay, and nonpoint source
pollution control activities and the implementation of groundwater legislation in Brazil.

The benefits to be expected from the project are of both a national and global nature, and
mainly relate to the avoidance of future costs. Groundwater pollution is extremely costly
and difficult to remediate. By putting in place a preventive mechanism, damage, and, thus,
clean-up costs, can be avoided. A further benefit would be the preservation of a strategic
reserve to supplement other water supply options within the region. This benefit is
transboundary in that the preservation and rational use of the Guarani Aquifer System will
preserve a multi-national natural resource for future generations, of apparently `unlimited'
quantity and high quality. Groundwater overdrafting effects are also extremely difficult to
remediate. Implementing water management specific schemes as a preventive mechanism
is very cost effective. It will contribute to preserve the Guarani Aquifer System as a
strategic reserve, its benefits are of transboundary nature, helping preserve and rationalizing
water abstractions from the Guarani Aquifer System. Although its actual capacity is
currently unknown, the studies supported by this project will form the basis for establishing
the capacity of the Guarani Aquifer System and rationally planning its future potential uses
on a sustainable basis. Preliminary investigations suggest that, in the absence of the
proposed project, the countries are not taking, or planning to take, any specific actions with
regard to preservation of the Guarani Aquifer System.

All four countries currently benefit from its use. All four countries use its waters for human
consumption. More than 300 cities use the Guarani Aquifer waters for domestic supply
(Table 1). In this regard, the Uruguayan Water and Sanitation Agency (OSE) estimates, for
example, that it is cheaper to pump clean Guarani Aquifer water from significant depths
than to abstract and treat contaminated water from surface sources.waters. It can be
expected that, as other sources become more polluted, the Guarani Aquifer System will
increasingly become the economically viable source of choice. Likewise, all four countries
make limited use its waters for agricultural irrigation purposes. Uruguay also uses its
thermal waters for tourism, and Argentina has recently started using its waters for the same
purpose. As these uses intensify, conflicts are likely to result in the absence of an agreed
transboundary water management framework. For example, the Uruguayan authorities have
already expressed concern that the availability of thermal waters on the Uruguayan side
may have been reduced since the opening of the Argentina thermal site. Most of the
possible associated benefits, which might ultimately be found to be substantial, are
considered to be incremental for the four countries, given the current state of knowledge of
the Guarani Aquifer System.



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2. Financial:

An important financial issue to be addressed is the sustainability of project intervention.
While the project will have very limited infrastructure investments, a monitoring system
and database will be designed and implemented. To be of use in the monitoring and
management of the Guarani Aquifer System, the monitoring and management systems will
have to be adequately maintained. In addition, it is anticipated that a long term coordinating
mechanism, such as the proposed Guarani Secretariat, would be sustained. The recurrent
cost of such a structure would have to be financed in a sustainable manner. To this end,
Component II, Creation of a Joint Management Framework for the Guarani Aquifer
System, includes a specific activity aimed at the definition of a sustainable financing
mechanism for the long-term management of the Guarani Aquifer System, including
consideration of water and concession fees.

Fiscal Impact:

The fiscal impact of the project is estimated as the cash contribution of the four countries to
the project minus taxes. The total counterpart contributions by the countries to the project
are estimated to be about US $ 11.71 million, as both cash and in-kind contributions. Of
these, US $ 3.71 are taxes, leaving a total fiscal impact of US $ 8 million assuming that also
in-kind contribution are financed by the countries.


3. Technical: (see Annex 12: GEF STAP Review)

On the scientific and technical front, the activities and tasks selected are designed to
generate that information regarded as essential to underpin effective groundwater
management and to guide sustainable resource development and aquifer protection
requirements. It must be recognized that some of this information is more efficiently
acquired at local scale through pilot sub-projects (Compone nt V), whilst other parts have to
be generated at sub-regional (aquifer) scale (Component I). It will be essential to achieve a
careful balance and close coordination between these two components. In addition,
Component I is relatively large, containing numerous, closely-linked sub-components and
tasks. These will require integrated planning and sensitive supervision by the Guarani
Secretariat to ensure on-time completion of the main deliverables of these Components--
key hydrogeological information and the numerical models of the Guarani Aquifer System
-- needed to formulate the Strategic Action Program and Management Framework.

It is also important to recognize that groundwater investigations and development best
proceed as a phased and iterative processes, and that close monitoring of aquifer response
to water-supply development is normally the most cost-effective way of reducing
uncertainty in numerical modeling of aquifers and groundwater resource estimation.
Therefore, Components I and V are deliberately phased to allow an element of re-focusing
and prioritization, in the light of the results generated during the first 18 to 24 months, at
the time of the mid-project review.



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4. Institutional:

A four-country, transboundary project has high transaction costs, and an appropriate
mechanism for implementation is required. It is anticipated that the project will utilize a
similar management mechanism to that employed during project preparation. For project
preparation, one national project coordination unit (UNPP) was created in each country,
supported by eight State-level units (UEPPs) in the case of Brazil. These Units functioned
as technical entities. Overall policy-level decision-making was through the Steering
Committee (CSPP), comprised of representatives of the respective national agencies with
responsibility for water resources, foreign affairs, and environment, as well as
representatives of the Organization of American States (OAS) and the World Bank. During
the project preparation phase, the four countries indicated the OAS as the executing agency
for the project, due to the multi-country character of the project. The OAS supported the
project from its Washington Headquarters and through its country-based offices, as well as
through contracted staff, including a Project Coordinator (Secretario General) and two
technical staff, funded with GEF project preparation funds. The Government of Uruguay
placed offices in Montevideo at the disposition of the project.

Since these arrangements worked well for project preparation, few changes will be made
during project implementation. As shown diagrammatically below, the Project Steering
Committee (CSDP: Consejo Superior de Direccion del Proyecto) is anticipated to have
overall charge of the project, supported by a Coordination Group (CC: Coordinacion
Colegiada) comprised of the four National Technical Coordinators appointed to head the
four country-based Project Executing Units (UNEP: Unidad Nacional para la Ejecucion del
Proyecto). This Coordination Group would provide oversight and direction to the Project
Coordinator (Secretario General) and Guarani Secretariat (SG) staff, who would serve as
liaison on a day-to-day basis between the UNEPs, the OAS and the World Bank.

A further institutional issue is the development of an operational institutional and legal
framework for Guarani Aquifer System management. An operational institutional
framework will be an output of the project. An appropriate process to arrive at a commonly
agreed technical proposal for such a framework will be part of project documentation.
Partners and countries are aware, however, that the final framework to be proposed would
need to be light in order to be efficient and sustainable in the long run.




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Donors/Coop.
Steering
GEF/WB
Agencies
Committee
Coordination Group
Guarani Secretariat/
Executing Agency
UNEP
UNEP
UNEP
UNEP
Argentina
Brazil
Paraguay
Uruguay



4.1 Executing agencies:

The OAS will be the Executing Agency for the project.1 The OAS will act on behalf of the
four countries, and be responsible to the World Bank (as Implementing Agency) and GEF
to ensure that applicable rules and procedures are adhered to. In addition, the OAS will ­
with prior agreement by the CSDP ­ contract the Project Coordinator (Secretario General),
the technical support team of three professionals, and an office manager to staff the Guarani
Secretariat, and provide general administrative oversight.

In addition to the OAS, national (local) executing agencies will be confirmed in each of the
four countries. The national executing agencies for the project will be the Subsecretariat for
Water Resources in Argentina, the Secretariat for Water Resources in Brazil, the Secretariat
for Environment in Paraguay, and the National Directorate for Hydrography in Uruguay.
These local executing agencies will assist the National Technical Coordinators in the
conduct of the project activities, and assist the national project executing units (UNEP:
Unidad Nacional para la Ejecucion del Proyecto) through provision of office space and
support services to the extent that these are required. Such support is considered within the
counterpart contributions to the project. Representatives of the local executing agencies will
also serve on the CSDP as indicated below.

4.2 Project management:

All the proposed activities will be driven by a Project Steering Committee (CSDP: Consejo
Superior de Direccion del Proyecto). The Project Steering Committee will be comprised of

1 A Procurement Assessment to this effect will be carried out by the World Bank.

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four members from each country. These will be representatives of the respective national
agencies with responsibility for foreign affairs, water resources, and environment. The
fourth representative will be selected by the countries in order to adequately reflect the
institutional set-up of each country. The four National Coordinators will participate ex officio
in the meetings of the CSDP. In addition, one representative each of the World Bank and
OAS may be invited to participate in meetings of the CSDP. The other GEF Implementing
Agencies, and participating donor countries and agencies, will be informed of, and may
participate in, meetings of the Project Steering Committee in an ex officio capacity. The
Project Steering Committee will meet at least two times per year; the Committee may make
use of the World Bank video-conferencing facilities for additional meetings as may be
necessary. In addition, the CSDP may consider the formation of a Citizen Advisory
Committee comprised of stakeholder representatives, NGOs and CSOs, as one means of
encouraging broad-based community participation in the project as envisioned in Component
III.

The technical program of the project will be supervised by a Coordination Group (CC:
Coordinacion Colegiada) comprised of the four National Technical Coordinators appointed
to head the four country-based Project Executing Units (UNEP: Unidad Nacional para la
Ejecucion del Proyecto). This Coordination Group will provide oversight and technical
direction, as agreed by the CSDP and through the work plans elaborated in the project
operational program, to the Project Coordinator (Secretario General) and Guarani
Secretariat (SG) staff, who will serve as liaison on a day-to-day basis between the UNEPs
and the OAS and the World Bank.

A Guarani Secretariat, comprised of the General Secretary, technical staff members, their
support staff, and the Executing Agency, will manage the day-to-day operations of the
project, as agreed by the CC and elaborated in the project operational program. The General
Secretary and Guarani Secretariat staff will be contracted by the OAS and will coordinate the
conduct of project activities through the UNEPs. The Guarani Secretariat will endeavor to
ensure the technical quality of the project, prepare project documents and reports, and support
the monitoring and evaluation and reporting requirements of the World Bank. The Guarani
Secretariat will also be responsible for drafting the TDA and SAP, with inputs from the
UNEPs and project consultants. Further, the Guarani Secretariat will facilitate the flow of
information and inputs from stakeholders with respect to the project at the regional level, and
coordinate the activities of the Citizen Advisory Committee (if such a body is formed by the
CSDP). In particular, the Guarani Secretariat will ensure that adequate attention is given to
the views and concerns of indigenous community organizations and other CSOs active at the
regional level. In addition, utilizing the IWRN and related mechanisms, the Guarani
Secretariat will participate in regional communication and coordination opportunities among
GEF-IW projects and programs being executed within the Latin American region.

Within each of the participating countries, a project executing unit (UNEP: Unidad Nacional
para la Ejecucion del Proyecto) will be established by each country according to country
priorities and rules. The national Technical Coordinator for each country will manage the
activities of the project executing units in each country. These units will be responsible for
recommending short-listed nominees for consultancies and the conduct of the project
activities to the OAS. In addition, during project execution, the UNEPs will provide general

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oversight and assistance to the consultants so as to facilitate on-time completion of project
activities and the necessary degree of quality control/quality assurance with respect to the
conduct of project tasks. The UNEPs will also facilitate the flow of information and inputs
from stakeholders with respect to the project at the national and subnational levels. In
particular, the UNEPs will ensure that adequate attention is given to the views and concerns
of indigenous community organizations and other CSOs active at the national and
subnational levels as envisioned in Component III of the project.

At the first meeting of the Project Steering Committee, the Project Steering Committee will
adopt operating procedures for the conduct of Project Steering Committee meetings. The
Project Steering Committee will agree administrative and reporting procedures consistent
with World Bank standards and operating procedures as set forth in the Project
Implementation Plan (PIP). Finally, the Project Steering Committee, at its inaugural meeting,
shall conduct any other such business as may be required to initiate project Components, and
set a date for the second meeting of the Project Steering Committee. Subsequent meetings of
the Project Steering Committee shall be scheduled by the Project Steering Committee but
shall be at least every six months during the project period.

Activities of national personnel, with the support of the national executing agencies, will be
based upon preparatory work and Terms of Reference agreed with and approved by the
Project Steering Committee, and consistent with the bidding and other procurement practices
of the World Bank. The General Secretary and OAS will coordinate field activities, as
directed by the Project Steering Committee and supported by the Guarani Secretaria t. All
project activities will be conducted within the Guarani Aquifer System area.

4.3 Procurement issues:

A procurement capacity assessment will be carried out by a Procurement Specialist of the
World Bank prior to appraisal of the project by the World Bank.

4.4 Financial management issues:

A financial management assessment will be carried out by a World Bank Financial
Management Specialist prior to appraisal of the project by the World Bank.

5. Environmental: Environmental Category: B

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.

This is an environmental project. The objective of the project is to ensure the sustainable
management of the extensive Guarani Aquifer System. The project seeks to prevent the
environmental damage, linked to groundwater pollution and depletion, that would
otherwise come about because of poor knowledge and lack of policy coordination between
the four countries (and their local governments) which share the aquifer. In addition to
improving planning and policy formulation, the project supports specific environmental

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protection measures, including: (i) improved control of water pollution (from point and
nonpoint sources); and (ii) designation of critical groundwater recharge areas requiring
conservation or other special management. Although some future uses of the water
resources of the Guarani Aquifer System might involve adverse environmental impacts, the
project would study these potential impacts and promote plans and policies to adequately
control them. The project is expected to be highly positive from an environmental
standpoint.

The project itself will not include any infrastructure investments. It may take advantage of
some wells to be constructed by private or public utilities for other purposes. However, the
location of any such wells to be used for project scientific purposes would be chosen in the
context of promoting the environmentally sustainable use of the aquifer.

Likewise, Component VI is designed to assess the potential economic uses of the thermal
waters of the Guarani Aquifer System. Depending upon the results of this assessment,
concepts for future utilization of these thermal waters may be designed. The potential post-
project development of thermal water resources might require mitigation of possible
adverse environmental effects related to access road construction, thermal and chemical
discharges, and noise. Additional measures to protect specialized aquatic biodiversity in
thermal springs or pools may be required.

Key stakeholders--the national and sub-national governments in the four countries, the
population in the Guarani Aquifer System region, local communities, NGOs, and academic
institutions interested in sustainable groundwater use in the region--have been, and
continue to be, involved in the project design and institutional arrangements for project
implementation (see Section 6). Provision is made within the project management process
to continue to engage key stakeholders in the SAP formulation process.

5.2 What are the main features of the EMP and are they adequate?

Prior to appraisal, an Environmental Analysis of this project will be prepared and
incorporated into the PAD. This Analysis will include draft terms of reference for a
Regional Environmental Assessment (REA) of thermal water development, which would
be carried out as part of Component VI.

5.3 For Category A and B projects, timeline and status of EA:
Date of receipt of final draft:

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?

Key stakeholders include: the national and sub-national governments of the four countries,
the population in the Guarani Aquifer System region, farmers (from the perspective of the
generation of nonpoint source pollution from agrochemicals), industries (from the
perspective of the generation of point source pollution), water supply companies, local

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communities, environmental NGOs, and academic institutions interested in groundwater
management and research. These stakeholders were, and will continue to be, involved in
the project through the appropriate design of institutional arrangements for project
implementation.

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?

Component I of the project is designed to strengthen and harmonize the monitoring and
information systems for the Guarani Aquifer System, includ ing the creation of a shared data
network between the four countries. The project itself is not expected to have an impact on
the aquifer system, rather it is designed to provide the monitoring capacity (in technical,
social and human resources terms) with which to assess the possible impacts of other
activities on the environment. In addition, Component IV of the project is designed to
provide for the monitoring and evaluation of project progress, and disseminate the results of
the project.

With regard to the management and mitigation projects to be completed under Component
V, the measures developed and implemented will have the objective of improving the
management within specific, vulnerable local and sub-regional areas within the aquifer
system. These measures will initiate a process of mitigating negative impacts from land use
activities and industrial pollution. It will be important to monitor their effectiveness in order
to determine if the measures developed and implemented are feasible and cost-effective,
and worthy of dissemination more widely throughout the region. Monitoring systems, and
appropriate indicators, to be developed under Components I, II, IV and V will contribute to
this assessment activity.

6. Social: (see Annex 10: Public Involveme nt Plan Summary)

6.1 Summarize key social issues relevant to the project objectives, and specify the project's
social development outcomes.

The primary aim of the project is to develop a sustainable management framework for the
Guarani Aquifer System, given its importance as a water source for current and future
generations. The social development outcome consists of preserving the natural resource
base, rather than encouraging its immediate exploitation and use. Complementary
interventions to improve soil and water utilization and management in its recharge areas,
for example, will have relevance to the social development objective of benefiting local
populations through these interventions. For these pilot projects, social assessments would
be carried out as part of their preparation. Further, Component III is designed to provide a
practical mechanism to develop, disseminate, and deliver appropriate informational
programming to youth and communities to facilitate social communication, public
participation and sustainable involvement in this project.





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6.2 Participatory Approach: How are key stakeholders participating in the project?

Key stakeholders in the project are the national governments and sub-national entities in the
four countries, universities, and local communities (especially in the pilot project areas). In
terms of the institutional framework for project implementation, it will be important to
ensure that key stakeholders have a voice. The conduct of frequent workshops is seen as an
important means of bringing the different stakeholders together. Governments, through
their relevant ministries and agencies, will continue to be represented on the Project
Steering Committee and local executing agencies, while nongovernmental organizations
and individuals will be integrated into the project through participation in the UNEPs and
possible citizen advisory committees at national levels. (see point 6.3)

6.3 How does the project involve consultations or collaboration with NGOs or other civil
society organizations?

Academic institutions and NGOs are involved in the project through their respective
national coordinating units. Since they constitute a self-selected group of stakeholders, a
number of workshops are proposed to be organized to bring together NGOs that are active
in the water/environment nexus in the four countries. During project preparation, NGOs
from the four countries were invited to an NGO-organized water event in Caxambú, Brazil,
in order to receive information about the project and provide input to the project
preparation process. The NGOs participating in this meeting were requested also to identify
other NGOs that might be interested in the project. This was followed-up by a specific
consultancy to identify key civil society stakeholders, as part of the project development
activities. The stakeholder participation plan is appended hereto as Annex 10.

During the execution of the Project, provision has been made to engage key national
stakeholders through their inclusion on a Citizens Advisory Committee to be convened by
the SC at the regional level and replicated by the UNEPs at the national level. These fora
are planned in order to receive specific input from the private sector, and to encourage and
facilitate participation by, inter alia, indigenous community organizations. In addition, the
inclusion of a special, small grants fund to support small projects related to the Guaraní
Aquifer, to be implemented by NGOs, is included within Component III. Important
activities in this regard would be community-based public education and awareness
campaigns.

Key universities form an important nongovernmental constituency within the Guarani
Aquifer System region. The project concept initially was identified within the four
countries by academic institutions. Due to their extensive research experience, these
organizations are anticipated continue providing vital knowledge about the aquifer. It is
anticipated that the components related to the expansion of the knowledge base,
development of monitoring systems, and capacity building activities will strongly involve
the academic community. The participation of the academic community in these portions of
the project is critical to ensuring the sustainability of the project in the longer term, through
their role in providing trained professionals to communities and the regulatory agencies
within the region. Therefore it is expected that key universities, as well as other academic

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and research institutions that have carried out investigations on the Guarani Aquifer
System, will continue to be involved in the project during implementation.

Indigenous communities were specifically considered during project preparation following
their expressed wish to be informed and incorporated into the project. A consultation
process has been specifically designed into part of Component III to both inform
indigenous groups in the Guarani Aquifer System region and seek appropriate mechanisms
to best incorporate their voice and views into the project. Since the project does not include
any investments, it would not have any physical impacts on indigenous communities.
However, as a stakeholder group with an interest in the preservation of the Guarani Aquifer
System, the project intends to ensure their adequate representation.

6.4 What institutional arrangements have been provided to ensure the project achieves its
social development outcomes?

The implementation arrangements for the project include regular meetings of the project
Steering Committee. These meetings are intended to provide the Governments, World Bank
and other co-financiers with information on the progress of the project, and to provide them
with the opportunity to modify project activities to best accomplish the overall project
goals. As noted, one of these goals is community empowerment through appropriate
informational programming, as embodied in Component III.

6.5 How will the project monitor performance in terms of social development outcomes?

Component IV is designed to provide information on project progress and success in
achieving project outcomes through the regular and ongoing monitoring and evaluation of
the project. The key performance indicators, set forth above, include an operational
communications campaign designed to facilitate public involvement in the management of
the Guarani Aquifer System.

7. Safeguard Policies:

7.1 Do any of the following safeguard policies apply to the project?

Table 4 presents a summary of the applicable World Bank policy safeguards.

Table 4: Applicability of the World Bank Policy Safeguards to the Guarani Aquifer System

Policy
Applicability
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 (OD 4.30)
? 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

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7.2 Describe provisions made by the project to ensure compliance with applicable
safeguard policies.

Safeguard policies which could potentially be applicable are: (i) environmental assessment;
(ii) indigenous peoples; (iii) projects in international waters; (iv) involuntary resettlement;
and (v) projects in disputed areas. Upon examination, the three first-named policies are
applicable, as outlined below:

(i) Environmental assessment: As outlined in Section 5, the project aims to prevent future
degradation of the Guarani Aquifer System through improved information, policies,
planning, and development of specific pollution control measures. The project does not
include infrastructure investments. However, the activities of Component VI might lead to
post-project energy development or other thermal water use investments, which could have
as yet unquantified environmental impacts requiring specific mitigation measures in the
future. Accordingly, this project is classified as Category B.

(ii) Indigenous peoples: Given that the project area encompasses 1.2 million square
kilometers, a number of indigenous groups living in the region are potentially affected by
the project. The project will not have any infrastructure or investment components that
would affect these indigenous groups. Some groups, however, have indicated their interest
in being incorporated into project implementation as stakeholders. As part of the
consultancies related to stakeholder identification and incorporation of stakeholders into
project implementation, these groups will be taken into account. The principal indigenous
peoples organizations will be specifically consulted during the project period, and specific
recommendations on how to best incorporate indigenous peoples as stakeholders will be
included in the SAP so as to ensure their adequate inclusion in the management of the
Guarani Aquifer System.

(iii) International Waters: The guidelines referring to International Waters aim at
identifying instances in which activities within a transboundary waterbody in one country
would or could have effects on another country. In the case of this project the four riparian
countries sharing the body of water are represented on the Project Steering Committee and
have collectively submitted this project proposal. While the policy applies, separate
notification of any one country is, therefore, not necessary.

(iv) Involuntary resettlement: Due to the nature of the project (e.g., involving no
infrastructure investments), no involuntary resettlement will take place. Such wells as may
be included within the project will be solely for research purposes, and the drilling sites
would be chosen in such a manner that no involuntary resettlement was necessary.

(v) Disputed areas: There are no disputed areas in the project region.







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F. Sustainability and Risks

1. Sustainability:

Sustainability of the project will be facilitated by involving stakeholders in the project
activities from the beginning. As previously mentioned, the demand for this project
originated in the countries. By building human capacities and strengthening institutions,
and further sensitizing stakeholders, including those within civil society, it is expected that
the collaborative framework built up by the project will be sustainable after the end of the
project. Certain costs of the project, such as maintaining the information system, are of a
recurrent nature and would require continuing financing by the governments and other
stakeholders after project completion. These costs, including the costs of human resources
and institutions, will have to be borne by the countries within the Guarani Aquifer System
region.

As recently articulated at the previously referenced GEF first Biannual Conference on
International Waters, the preparation of the Strategic Action Program, required by the GEF,
constitutes the first phase of a project involving international (transboundary) waterbodies.
It also implies that, in order to provide the project (and the process of better managing
transboundary waters) with the necessary sustainability, a second phase needs be
contemplated during which the Strategic Action Program would be implemented. As the
Strategic Action Program is the principal output of this project, the need for follow-up will
be taken into account by including planning for the second, implementation phase of the
project into the last year of the current project. In the case of the Guarani Aquifer System, a
second phase would imply investments in the protection of recharge areas, in the prevention
and mitigation of point-source pollution, and in measures to reduce overdrafting of the
Guarani Aquifer System in specific localities, as well as development of activities related to
the thermal characteristics of its waters. Financing of the second phase might imply country
resources, GEF, World Bank, and /or other multi- or bilateral funding.


2. Critical Risks (reflecting the failure of critical assumptions found in the fourth column
of Annex 1):

Critical risks likely to influence the project outcome are summarized in Table 5. These risks
reflect uncertainties identified within the Logical Framework Analysis set forth in Annex 1,
and are generally related to the complexities involved in creating and implementing a joint
management framework for the Guarani Aquifer System by the four countries sharing this
transboundary water resource.








34

---

Table 5: Risks and mitigation measures associated with the proposed Guarani Aquifer System
Project activities

Risk
Risk Rating
Risk Mitigation Measure
From Outputs to Objective





Countries discontinue agreement to
N
Build a strong climate of collaboration
assess, create and share data about the

through frequent and transparent
aquifer; relevant data and information is

communication during project
not available or shared

preparation and implementation



Institutional arrangements cannot be
M
Build a strong climate of collaboration
agreed or do not function; compatible

through frequent and transparent
protocols, methodologies, processes and

communication during project
organizations fail to be agreed

preparation and implementation






Counterpart funding not available
M
Use discussions in Steering


Committee to resolve issue



Capacity building measures do not
M
Monitor quality of inputs from all four
produce quality contributions from all

countries and strengthen where
countries

needed






Agreement on light and fair administrative
M
Start discussions early in the process
structure for aquifer management cannot

and take into account interests of the
be reached

four countries



Local stakeholders, communities (CSOs)
M
Disseminate information to civil
and NGOs are not appropriately involved

society and design institutional
in project implementation

arrangements to include


organizations



Institutional roles not clarified or
M
Build a strong climate of collaboration
supported, politically or financially,

through frequent and transparent
especially at the sub-national government

communication during project
levels

preparation and implementation





Use Steering Committee mechanism
Countries fail to carry out their obligations
N
and communication to resolve
under regional agreements and plans






From Components to Outputs


Collaboration between partners in the
M
Build a process of continued
four countries weakens

interaction as well as adequate


monitoring of joint project results



Investigations are not carried out in a
M
Monitor input continuously and
timely manner leading to partial slippage

strengthen where needed



Governments and the public do
N
Involve civil society from the
not remain interested in broad

beginning and inform them of options
participation in the project

for participation to foster inclusion




35

---

Local interest in pilot measures is low;
N
Provide information to local
public does not participate in the project

stakeholders and incorporate


concerns into design from beginning



Aquifer management system is not
M
Build a strong climate of collaboration
agreed or established

through frequent and transparent


communication during project


preparation and implementation



Timely follow-up is not achieved
M
Encourage local ownership of the


project through workshops and


seminars; prepare the


implementation strategy during the


project period and secure funding for


implementation



Collaboration between partners,
M
Disseminate information to civil
stakeholders, governmental units, and

society and design institutional
NGOs is not possible or fails

arrangements to include


organizations; build a strong climate


of collaboration





Overall Risk Rating
M

Risk Rating - H (High Risk), S (Substantial Risk), M (Modest Risk), N(Negligible or Low Risk)


3. Possible Controversial Aspects:


G. Main Conditions

1. Effectiveness Condition

tbd

2. Other [classify according to covenant types used in the Legal Agreements.]

tbd

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):
tbd


36

---

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. N/A




37

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LIST OF ANNEXES


Annex 1: Project Design Summary (Logical Framework)

Annex 2: Detailed Project Description

Annex 3: Project Budget and Sources of Financing

Annex 4: Incremental Costs

Annex 5: Institutional Arrangements for Project Implementation

Annex 6: Description of the Guarani Aquifer System

Annex 7: Root Cause Analysis

Annex 8: Strategic Action Program

Annex 9: Available Reference Documents

Annex 10: Public Involvement Plan Summary

Annex 11: Letters of Endorsement

Annex 12: GEF STAP Review and IA Comments

Annex 13: Map

38

---

ANNEX 1: PROJECT DESIGN SUMMARY
I.1.1
LATIN AMERICA: Guarani Aquifer Project - International Waters Mercosul





Hierarchy of Objectives
Key Performance
Monitoring & Evaluation Critical Assumptions
Indicators
Sector-related CAS Goal :
Sector Indicators:
Sector/ country reports:
(from Goal to Bank Mission)




Improved groundwater
Institutional and legal
Benchmark reviews of
Enduring political
resources management
frameworks for groundwater Country Assistance
commitment to improve water
within the overal1
resources management
Strategies
resources management and
framework of improved
established and implemented
protection
water resources and natural



resources management in



the respective countries:



Argentina, Brazil, Paraguay

Economic Sector Work in

and Uruguay
Quality of polluted
water, groundwater, and
Enduring political

waterbodies improved or
natural resources
commitment to take
stabilized
management
preventive measures for


environmental sustainability


Groundwater overdraft
Environmental analyses
mitigated or exploitation

stabilized

Water allocation efficiency,
equitability, productivity and
sustainability improved







GEF Operational Program:







Initiate actions toward
Transboundary environmental
Project reports and documents Political commitment among the
resolving transboundary
analysis carried out, identifying

four countries continues high
environmental concerns for the
top -priority multi-country


Guarani Aquifer System within environmental concerns


an improved joint groundwater



management framework











Derive lessons learned from
Strategic action program
Monitoring and dissemination
Coordinated activities and joint
experiences in using various
elaborated, consisting of
workshops
efforts among the four countries
types of institutional
expected baseline and

are undertaken; Stakeholders are
arrangements at the national
additional actions needed to

adequately involved in all
and regional levels for
resolve transboundary concerns

countries
collaboration in addressing



priority transboundary


environmental concerns




Lessons learned disseminated,
Supervision missions
monitoring systems developed

and implemented, and positive
Guarani Secretariat/ Steering
improvements in process
Committee reports and
indicators, stress reduction
minutes
indicators and environmental

status indicators documented


39

---

Key Performance


Hierarchy of Objectives
Indicators
Monitoring & Evaluation
Critical Assumptions




Global Objective :
Outcome / Impact Indicators:


Project reports:
(From Objective to Goal)




Sustainable use and
Pollution risks diminished or
Strategic Action Program
Continued political commitment
management of the Guarani
controlled
documentation
by countries to agree on a
Aquifer System in Argentina,


common aquifer management
Brazil, Paraguay and Uruguay
Overdraft risks diminished or
Specific scientific, legal,
framework
for current and future
stabilized
technical, and institutional

generations, supported by the

documentation
Counterpart funding, sufficient
joint development and
Risk of future inter-country

financial resources available
implementation of an adequate,
groundwater conflicts
Operational manuals

functioning aquifer
diminished

management framework, based

Mid-term evaluation studies
on sustainable technical,
Future mitigation and

scientific, institutional, legal,
stabilization costs reduced
Periodic monitoring and
financial, political, and
.
evaluation system reports
environmental grounds


Opinion surveys
Output from each
Output Indicators
Project reports:
(from Outputs to Objective)
Component:











1. Expansion and



consolidation of current


scientific and technical



knowledge base of



the Guarani Aquifer System







1.1 Thorough survey of all
1.1.a) A database with
A periodic, basic
Continued agreement by
existing wells, public and
integrated information readily Comprehensive Assessment
countries to assess, create,
private
available for water managers
Report on wells, their
enhance, and share data and

and for public informational
distribution and impacts
information

use




Periodic publication of relevant
Institutional arrangements

1.1.b) At least 70% of all
maps and accompanying
between country and external

wells assessed in terms of use
descriptive written and digital
partners functioning

and water availability,
materials


quantity, and quality




Published sampling, analytical,
Compatible protocols, processes,


and quality control/quality
methodologies and organizations
1.2 Geophysical / geological
1.2.a) Aquifer's western
assurance manual and reports
are being used
studies carried out and
and southern limits defined;


disseminated; geometric and
knowledge of boundary
Reports and proceedings from
Relevant data, information and
structural features, including
conditions improved
seminars and workshops
documentation are readily
boundaries, are defined and


available and shared
made readily available to
1.2.b) A regional geological
Supervision / monitoring

improve basic knowledge and
map, as well as specific maps
Reports
Studies are adequately
enhance sustainable
on geometric features such as:
coordinated in terms of timing
development of the aquifer
isopacs, aquifer strata depths,
Evaluation mission reports
and mutual contributions

general aquifer structural map (mid-term evaluation)


including its main



compartments, is produced
Periodic Technical Assistance
Guarani Aquifer System Project


visits and Reports
coordinates well with contributing

1.2.c) A preliminary

agencies staff, such as IAEA and

conceptual aquifer model is
Progress reports from the
BGR.
readily available to help
different UNEPs and the

40

---

readily available to help
different UNEPs and the


improve understanding of its
Guarani Secretariat


principal features










1.3 Hydrodynamic features of
1.3.a) A general, regional
Reports from participating

the aquifer are better defined to
hydrogeologic map, as well as agencies

improve decision making on
thematic maps on


water allocation and protection; potentiometry with network


and the complex interactions
flows, surveys of recharge
Guarani Aquifer Project

between aquifer and surface
and discharge areas,
Website

waterbodies are gradually
isotransimissivity and


clarified, with special emphasis
isoproductivity, is available


on recharge/discharge areas,

Monitoring and Evaluation

particularly those related to

reports

wetlands and to sustainable



development of the aquifer











1.4 Water quality is assessed
1.4.a) Definition of specific


and pollution patterns
areas with differential


distinguished in terms of the
physical-chemical water


origin, impacts and ways to
quality of special interest such

remediate the pollutants;
as areas of high salinity, high


specific isotope studies are
fluoride content, low


carried out to support a better
enthalpy, and anthropogenic


understanding on Guarani
pollution


Aquifer System's origin and



age, evolution, hydrodynamic
1.4.b) Thematic Maps of


behavior, boundary conditions,
isoconcentration lines and


recharge-discharge
basic ionic relationships, as


relationships, and geothermal
well as typical, descriptive


character
hydrogeochemical diagrams



such as Piper, Schöeller and



Stiff, are available







1.4.c) A comprehensive



hydrochemical database is



created and periodically



updated to support further



scientific and technical



analysis, and to improve



decision making on water



allocation and protection







1.4.d) At least 600 isotope



analyses are carried out yearly


with stable isotopes, and 500



specific isotope



determinations and



conclusions produced to



improve understanding of the



aquifer







1.4.e) Two workshops on the



isotope investigations held







1.4.f) A specific module on



isotope investigations of



aquifers is included in the



biennial Unesco



(Montevideo) training


program on aquifers

41

---

program on aquifers






1.5 Different water uses are
1.5.a) Conceptual and digital


assessed, including forecasts
hydrologic models are


relying on alternative scenarios
developed and used to support

simulated through digital
a better understanding of the


aquifer modeling, to support
Guarani Aquifer System's


direct decision making
main features and behavior,


models
as well as to simulate



alternative scenarios as a



valuable water management



tool







1.5.b) Descriptive maps of the


aquifer showing present



development and abstractions,


including water uses,



geographic distribution, and



socio-economic and



environmental data, as well



as typical well productivity,



are available







1.5.c) Regional technical



rules and legal instruments



are defined to control well



design, construction and



operation







1.5.d) General groundwater



technology assessment



undertaken and cost effective



actions taken to improve the



state of the art







1.5.e) Regional aquifer



vulnerability is clarified and



derived risks assessed, to



support further analysis



related to critical areas, with



emphasis on transboundary



problems and possible means



towards their solution






1.6 Technical ­ scientific
1.6.a) Systematic exchange of


knowledge about the aquifer is
relevant information within


updated, increased,
specific activities occurs with


strengthened, and shared
respect to basic scientific and


among the four countries
technical knowledge on the



aquifer system







1.6.b) Periodic meetings and



seminars are held to improve



understanding the aquifer as a



system and to gradually tap



base knowledge for better



water management























42

---

2. Joint development and



implementation of a






Management Framework for



the Guarani Aquifer System,



including SAP











2.1 Monitoring network for the
2.1.a) Permanent monitoring
Periodic data reports and
Continued agreement by the four
aquifer system implemented,
network comprised of at least
published information on the
countries to jointly elaborate a
functioning and regularly
184 wells (5% of total
dimensions of the Guarani
Guaraní Aquifer Management
assessed, to support scientific,
number of known wells) in
Aquifer System; supporting
Framework and start parts of its
technical and managerial
place; adequate equipment,
information published through
implementation at a regional level
activities regarding the
sampling procedures and
Guarani Aquifer System

protection and sustainable
frequencies, analytical
(SISAG ­ Sistema de
Consensus among country
development of the Guarani
methods, and sample
Información del Sistema
governments and between
Aquifer System
management protocols are
Acuífero Guaraní)
these and civil society

available

stakeholders


Annual progress reports on


2.1.b) Monitoring network
progress toward formulation of


and equipment set up,
the TDA and SAP, and the
Technical agreement can be

adequately maintained, and
Guarani Aquifer System
reached on light and fair

sustainably financed
management framework
administrative structure for



the Guaraní Aquifer System

2.1.c) Samples taken
Supervision/monitoring


periodically and analyzed
Reports
CSOs are constructively

with regard to pre-determined

participating in policy

water quantity and quality

discussion and formulation

parameters and performance



indicators
Evaluation mission reports
Transboundary groundwater


(mid-term)
related institutional roles and

2.1.d) Information flow

responsibilities, with strong legal,

mechanisms, continuity

political and financial support,

procedures, and expansion
Periodic Technical Assistance
are clarified at national, state /

provisions for future network
visits and reports
provincial / departmental levels,

improvement are available

as applicable


Progress reports from the



Project Implementation Units



according to institutional



arrangements









2.2 Guarani Aquifer
2.2 a) A highly efficient
Assessment reports on the

Comprehensive Geographic
Information and
results of capacity building and

Information and
Documentation System
institutional

Documentation System
network implemented
strengthening/twinning

simultaneously implemented,
primarily via Internet, set up,
measures, donor/partner

shared, and regularly
and adequately operated and
involvement, and distance

functioning in the four
maintained with sustainable
education

countries
financing identified and



available




Guaraní Aquifer Project


2.2.b) Wide-ranging scientific
Website


and technical information



dissemination, and debate



within discussion groups on
Protocols for the operation and


pertinent topics via the project expansion of the GIS and web-


website
based information systems



implemented and sustained











43

---

2.3 Multi-country institutional
2.3. a) Multi-country
An agreement or an intention

framework for long-term
agreement on an institutional,
protocol by the four countries as
sustainable management of the
financial, and technical
a paramount step toward a

Guarani Aquifer System
framework to jointly
coordinated, sustainable

established, with sufficient long
manage the Guarani Aquifer
management system for the

term political and financial
System exists and is under
aquifer

support agreed
implementation




Progress reports and minutes of


2.3.b) Specific support to
the Steering Committee


water managers and
meetings and other diplomatic


strengthened institutional
initiatives


frameworks by means of



consulting services on



demand, technical exchanges,



and twinned institutions







2.3.c) At least 8 events ­



seminars, meetings,



workshops ­ to be held to



improve water management,



with benefit to at least 25



organizations active in the



groundwater field










2.4 Strategic Action Program
2.4 a) Documentation
Monitoring and Evaluation

prepared, comprising at least
containing the Strategic
Reports

plans for: (i) medium and
Action Program for the


long-term actions with regard
four countries, including a


to the management of the
Transboundary Diagnostic


Guaraní Aquifer System at the
Analysis, legal and


local, regional, national and
institutional frameworks, and


supranational levels, (ii)
accompanying material


investments for pollution and
relevant to decision making


overdrafting prevention and
such as regional mapping,


mitigation measures, especially diagrams and tables related to


in transboundary problems, by the state of the aquifer system

public and/or private sectors,



(iii) investments in geothermal
2.4 b) At least 16 workshops


energy use and other potential
and meetings held between


groundwater uses, (iv) and
stakeholders of multiple


conflict resolution mechanisms
levels, nationally and



internationally, to arrive at



sustainable technical,



scientific, legal, institutional



and political ­ diplomatic



agreements







2.4.c) SAP formulated on a
Strategic Action Program and


participatory and consensus
Transboundary Diagnostic


basis, to support actions
Analysis documents


beyond the this first program



phase, including identification


of financing agencies and



donors, and future



information needs







2.4.d) Technical consensus
Legal proposal document


proposal for a Legal



Framework to manage the



Guarani Aquifer System



elaborated



44

---

2.4 e) Technical, scientific,
Survey


legal, institutional and



managerial capacity built in
Supervision missions


all four countries to



adequately carry out strategic



actions


3. Public and stakeholder



participation, Education and



Social Communication







3.1 Public awareness among
3.1 a) Regional Public
Supervision / monitoring
Standardized criteria for
the population living in the
Communication and
reports
Monitoring and Evaluation
Guarani Aquifer System region
Participation Plans

indicators are agreed with the
exists and gradually improves
implemented and evaluated

four countries and being

contributing to increased

implemented

awareness and education of
Evaluation mission reports


the population within the
(mid-term and final)


aquifer region

Capacity-building measures



and Technical Assistance

3.1 b) 10% of the people in
Periodic Technical Assistance


the aquifer region reached;
visits and Reports


their awareness of the



Guarani Aquifer System

Commitment remains high to

existence and importance is

integrate civil society into the

raised and gradually

process of designing a

improved

sustainable management


Progress and Goal Achievement framework for the Guaraní

3.1 c) Information
reports from the Project
Aquifer System

dissemination campaigns
Implementation Units,


carried out
according to institutional



arrangements for the project
Each country carries out its

3.1 d) Information and

campaigns according to agreed

document dissemination is

regional Plans

continuously provided by the
Workshop reports


Guarani Aquifer Geographic



Information System,
Newspaper articles and


especially via its Website
TV / Radio coverage





3.2 Participatory arrangements
3.2 a) Relevant civil society
Manual on Regional and Local
CSOs are interested in
for civil society participation
groups and organizations are
Social Communications
participating
(NGOs, indigenous groups,
granted participatory roles
published

private sector stakeholders, and
within Guarani advisory


the scientific community) in
committees, according to
Environmental education

aquifer management agreed
institutional arrangements for
materials published

and implemented (a strong
the project


interrelationship exists with



component 5)
3.2.b) Relevant stakeholders
Specific project documents,


participate and commit in the
papers and reports made


Strategic Action Program
available by specialized and


formulation, including water
nonspecialized regional and


users, water management
international magazines, and


institutions, water utilities and other brochures and


suppliers, NGOs, academic
informational materials


groups, individuals, private
published and distributed


sector entrepreneurs, and



minority groups such as



indigenous communities
Guarani Aquifer Website






3.2.c) Pertinent public
Reports on public participation


communication materials
considered in the preparation of


produced to enhance
the legal framework

dissemination of information

45

---

dissemination of information
Guarani Aquifer System image


and knowledge about the
library created and maintained


Aquifer System and the
on the website


project











3.2 d) At least bi-annual



workshops (by country) held



for technical discussions,



consultations and project



progress information and



feedback







3.2 e) Private sector partners



gradually increasing their



participation and commitment


with specific activities to



develop and protect the



Guarani Aquifer System







3.2 f) The Fondo Guarani de
Regulations for the Guarani


la Ciudadanía established and
Aquifer System Citizens' Fund


US$ 200,000 in grants
published and disseminated


awarded to CSOs






4. Project monitoring and



evaluation, and dissemination


of project results







4.1 Information is accessible
4.1 a) Project monitoring and
Supervision / monitoring

in a timely manner to
evaluation system is
reports
Sufficient capacity is created
stakeholders in the four
implemented and functioning

to enable high-quality
countries and other interested


monitoring, processing,
partners and parties
4.1 b) Monitoring information Evaluation mission reports
evaluation and feedback of

and performance indicators
(mid-term)
project results

assessed periodically



according to predefined



parameters and processes.
Periodic Technical Assistance
Healthy project performance


visits and Reports
helps keep counterpart funding

4.1 c) Achievements are

available

systematically evaluated




Progress reports from the


4.1 d) At least four public
Project Implementation Units,
Stakeholders are flexible to

monitoring workshops carried
according to institutional
adjust course if necessary, derived

out
arrangements
from periodic project assessments



and feedback recommendations

4.1 e) Feedback and remedial
Monitoring and Evaluation


actions taken if necessary
reports









4.2 Dissemination of project
4.2 a) Comprehensive
Progress and Workshop reports

results
progress reports, together



with project result and
Guarani Aquifer System


performance reports,
Website


generated and disseminated at


least once per year






4.3 Project results are
4.3 a) Project/country
Guarani Secretariat participates

internationally shared and
stakeholders participate
in regional GEF-IW meetings

validated
in at least four relevant,
and events using the IWRN and


international events
other media






46

---

4.3 b) Annual workshops



held, from year 2 until project


conclusion














5. Development of



Management and Mitigation



Measures within identified



"Hot Spots"







5.1 4 subregional areas of the
5.1.a) Stakeholder
Supervision / monitoring

aquifer system are defined in
assessments carried out,
reports

hydrogeological,
including their interactions

Local buy-in and active
socioeconomic, and
and information exchange, are Periodic basic Comprehensive
Participation, involvement and
environmental terms for
implemented; local awareness
Assessment reports on the pilot
commitment
piloting improved local and
raised; strong public
demonstration projects

subregional groundwater
participation and involvement
Studies and analyses provide
management and public
in water resources
Pilot project design and
sufficient basis/background for
participation for aquifer
management and decision
operation manual published
the preparation of the pilots
protection and sustainable
making is fostered


development

Field visits to pilot areas
Information is generated and

5.1.b) Institutions, users, and

improved, methodologies tested

communities contribute
Evaluation mission reports
and results / conclusions at sub-

jointly to improving the
(mid-term and final)
regional level help improve joint

management of the aquifer

development and implementation

under transboundary
Periodic Technical Assistance
of water management framework

conditions within the pilot
visits and reports


project areas

Aquifer water management and


Progress reports from the
protection experience and lessons
5.2 Technical ­ scientific
5.2.a) Scientific studies
Project Implementation Unit
learned are available for sharing
knowledge about the aquifer at
executed within the pilot

and replication
the subregional and local levels
project areas to enrich
Guaraní Aquifer Website

updated, increased,
knowledge of the aquifer and


strengthened and shared
improve its management, as
Periodic publication of relevant
Different partner agencies
among neighboring countries in well as to help identify
maps and accompanying
work together
the shared pilot project areas
critical areas where existing
descriptive written and digital


groundwater related
materials
Collaboration across agencies

transboundary environmental

exists

problems are currently being
Published sampling, analytical,


mitigated or resolved
and quality control/quality



assurance manual and reports


5.2.c) Geological,



hydrogeological, and
Reports and proceedings of


hydrogeochemical thematic
seminars and workshops


maps, tables, and diagrams



are readily available and
Reports on the status, cost and


periodically updated; data
feasibility of the various


bases on wells, water uses,
mitigation and management


and aquifer parameters are
measures, including an


available via SISAG and local
assessment of public acceptance

information networks
and participation





5.3 At least 2 pilot management 5.3.a) Specific subregional
Preparation and promulgation

plans developed and under
digital hydrogeological
of local regulations for

implementation
models are available to
groundwater protection and


support decision making on
management


water allocation, groundwater



regulation, and dispute
Final assessmentr reports on the

resolution among water users
costs, feasibility, lessons


and institutions
learned, and recommended



future actions published


47

---

5.3.b) Implementation of



community communication



programs to increase



knowledge, interest,



participation, and



commitment of stakeholders



in aquifer mamagement






5.4) Implementation of a
5.4.a) Well permits and
Land use and planning

specific transboundary
concessions assigned within a
guidelines and ordinances at the
management framework to
solid management
local and subregional levels

allowed testing and assessment
framework; well and recharge
prepared and promulgated

of specific strategies, tools and
protection areas created and


actions to solve problems,
enforced; subregional


utilize opportunities, and
monitoring networks


regionally replicate actions to
strengthened; vulnerability


help accomplish the overall
maps used as management
Monitoring and Evaluation

project objective
tools; and minimum distance
Reports


criteria for well construction



and operation established







5.4.b) At least 33% of all



adults and 75% of students



within the pilot project area



are aware of ongoing actions



and efforts related to the



Aquifer and the Pilot Projects;


at least one fourth of them



have participated or are



willing to participate in



ongoing activities







5.4.c) Replicable institutional,


legal, managerial, social, and



environmental experiences



obtained in multinational



transboundary groundwater



management schemes







5.4.d) Process and results



documented and fed back into



the overall Project










6. Assessment of Geothermal


Energy Potential







6.1 Aquifer's geothermal
6.1 a) Geothermal data and
Supervision / monitoring
Task force successfully
potential assessed in its
pertinent information
reports
Established and relevant
geohydrological,
updated and new

stakeholders included
socio-economic, and
thematic maps produced
Evaluation mission reports

environmental dimensions
(in connection with
(mid-term and final)
Development possibilities derived

Component 1)

from newly acquired information,


Periodic Technical Assistance
methodologies and experiences,

6.1 b) Four-country task
visits and reports
assessed in hydrogeological,

force created to undertake

socio-economic and

scientific assessment jointly
Progress reports from the
environmental terms

with international experts and
Project Implementation Unit


agencies




Workshop reports
Development perspectives and



guidelines available for future
6.2 Specific recommendations
6.2 a) Analyses of socio-
Guarani Aquifer Website
partners
for activities to be executed in
economic, financial, and

48

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for activities to be executed in
economic, financial, and


future endeavours, concrete
environmental feasibility
Periodic publication of relevant

proposals for possible
of possible future geothermal
maps and accompanying

geothermal development areas,
activities and areas carried out descriptive written and digital

and future geothermal project

materials

frameworks defined
6.2 b) Conceptual



identification of possible pilot Compilation Report on all


projects as well as their
pertinent existing information


prefeasibility in the four
and strategy definition with a


countries is available
local / subregional approach

















7. Project Coordination
Project well managed and
Project Progress Reports
Counterpart funding, including
and Management
objectives reached

for country coordinators, is


Supervision Missions
available


Steering Committee meetings
Implementation arrangement

adequately designed to deal with
inherent project complexity due
to the project's multinational
character


49

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Project Components /
Inputs: (budget for each
Project reports:
(from Components to
Sub-components:
component)

Outputs)



1. Expansion and
US $ 10.51 million
Collaboration between
consolidation of current

partners in the four countries
scientific and technical

remains high
knowledge base of the


Guarani Aquifer System




Research and development is
2. Joint development and
US $ 7.14 million
carried out in a timely manner,
implementation of a

with high quality and
Management Framework for

compatible methodologies
the Guarani Aquifer System

Political commitment to the


project remains high
3. Public and stakeholder


participation, education and
US $ 1.11 million
Process to develop and
social communication

implement the joint


management framework is


well designed and responds


to stakeholders' needs
4. Project monitoring and


evaluation and dissemination
US $ 0.75 million
Governments and the public
of project results

remain interested in broad


participation in the Guarani


Aquifer System



5. Development of
US $ 3.50 million
Aquifer System management
Management and Mitigation

definition and implementation
Measures within identified


"Hot Spots"

Good baseline and timely


follow-up





Local interest in measures is
6. Assessment of Geothermal
US $ 0.25 million
high and public involvement
Energy Potential

gradually grows






Experience is increased and


lessons learned are readily
7. Project Coordination and
US $ 3.50 million
available for sharing and
Management

replication in similar projects




Partners from different sectors
Total project Cost


US $ 26.76 million
and origins, including water
and energy, collaborate

Rational implementation of
potential uses promote better
perspectives for future regional
water resources development


50

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ANNEX 2: DETAILED PROJECT DESCRIPTION

1. Objective

The long-term objective of the process started through the proposed Project is the
sustainable management and use of the Guarani Aquifer System. The Guarani Aquifer
System is situated in the eastern and south central portions of South America, and underlies
parts of Argentina, Brazil, Paraguay and Uruguay. This project is a first step toward
achieving the long-term objective. The purpose of the proposed project is to support the
four countries in jointly elaborating and implementing a common institutional, legal and
technical framework for managing and preserving the Guarani Aquifer System for current
and future generations. To achieve this, seven project components are envisaged: (i)
expansion and consolidation of the current scientific knowledge base regarding the Guarani
Aquifer System; (ii) joint development and implementation of a Guarani Aquifer System
Management Framework, based upon an agreed Strategic Program of Action; (iii)
enhancement of public and stakeholder participation, social communication and
environmental education; (iv) evaluation and monitoring of the project and dissemination
of project results; (v) development of regionally-appropriate groundwater management and
mitigation measures in identified "Hot Spots"; (vi) consideration of the potential to utilize
the Guarani Aquifer System's "clean" geothermal energy; and, (vii) project coordination
and management.

2. Approach

The joint development and implementation of the Guarani Aquifer Management
Framework is the core of the Project. The other project components are designed to provide
the scientific, technical, social, legal, institutional, financial and economic basis for the
Framework, as illustrated in Figure 1. The proposed GEF project is comprised of six
components, supported by a seventh administrative component. The specific objectives,
estimated costs, and GEF financing for these seven components are briefly described
below.



Geothermal

Expansion of
Joint Guarani Aquifer Management
Scientific and
Energy Use

Framework
Technical
Assessment
(including legal and institutional arrangements,

Knowledge
Base
monitoring system, GIS, and Strategic

Action Program)

Stakeholder

participation,
Pilot projects in
education, and
identified
"Hot

communication
Monitoring,
evaluation and
Spots " to test

dissemination
management
measures



51

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3. Project Components

The project has seven interrelated components that quantify the state of the aquifer in terms
of its morphology and behavior, its use and conservation, it relationships to communities
and institutions, and its planning and organizational needs for improving coordinated
management of its waters. This knowledge will provide a scientifically-sound and well-
documented base for establishing a framework for the coordinated and consensual
management of the Guarani Aquifer System, capable of providing for the environmental
protection, and integrated and sustainable development of the aquifer. The project will
identify and test key management elements (including policies, mechanisms, and
instruments) that will facilitate the sustainable and coordinated management of the Guarani
Aquifer System. The resulting management framework will provide the means to mitigate
and/or resolve the most pressing transboundary environmental problems that threaten the
aquifer. In addition, this framework will provide a means to address local conflicts arising
from the use of the waters of the aquifer system (especially those related to water pollution
and over exploitation to provide a long-term strategy for risk mitigation), and assess its
potential to provide "clean" geothermal energy to communities within the region.

COMPONENT I: Expansion and consolidation of the current scientific and technical
knowledge base of the Guarani Aquifer System

The objective of this Component is to synthesize, analyze, and expand the existing
knowledge base related to the Guarani Aquifer System in the four countries. A sound
scientific and technical understanding of the aquifer is essential to the development of an
articulated, consensual and effective management framework that facilitates the sustainable
development of the aquifer within its regional setting, while providing a necessary measure
of environmental protection for the shared resource. The Component will also seek to
expand and improve the understanding of the potential and threats facing this body of
water. In so doing, this Component will identify institutional actors, water users, and social
groups whose actions impinge upon the Guarani Aquifer System. There are two sub-
components:

1.a) Consolidation and expansion of the scientific knowledge base, in order to quantify
and disseminate scientific knowledge on the geometry, structure and hydrodynamic
behavior of the aquifer, and to synthesize and expand the existing knowledge base in
order to meet specific objectives (including determination of the southern and western
boundaries of the aquifer within Paraguay, Argentina and Uruguay) ­ A thorough
inventory of public and private wells will be undertaken. The determination of the
characteristics and magnitude of the Guarani Aquifer System, the extent of existing
levels of pollution of the aquifer within the countries, and identification of the areas of
recharge and discharge, including the hydrogeology and dynamics of the Guarani
Aquifer System, are important, basic characteristics of the system that must be known
prior to any attempt to manage the system.

1.b) Development of a suite of relevant groundwater models, accurately reflecting the
characteristics of the aquifer ­ Based upon the knowledge base assembled during the
previous sub-component, the technical knowledge of the Guarani Aquifer System will

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be used to develop techniques to (i) conduct an appraisal of the present uses and
anticipated future uses of the aquifer under a variety of foreseeable scenarios, (ii) assess
the interactions between these various uses and the cumulative impact of the Guarani
Aquifer System, and (iii) appraise the available technologies for surveying, extracting,
and using the waters of the Guarani Aquifer System.

The results and products of the two sub-components will establish the parameters within
which the Guarani Aquifer System can be sustainably exploited, without damage to the
underlying structure and function of the aquifer system, within an objective technical and
scientific framework. These results, in combination with the practical outcomes of the pilot
projects in identified Hot Spots to be completed under Component V, are of fundamental
importance for supporting decision making with respect to the management and protection
of the Guarani Aquifer System.

The International Atomic Energy Agency (IAEA) will support a portion of this Component
insofar as it relates to the application of isotope methodologies for determining, among
other phenomena, the conditions and limits of groundwater flow within the Guarani
Aquifer System. The IAEA will provide funds and in-kind support to the use of isotopes to
delineate the extent and character of the aquifer, and, through these activities, contribute to
building capacity and strengthening institutions in the countries in this region. The IAEA
will also ensure the quality of the analyses and the consistency and reliability of laboratory
results based upon the isotopes. Meetings are presently taking place to reach agreement on
key points, with a view to specifying the level of support and commitments of the parties.

In addition, the Government of Paraguay is currently in discussion with the Bundesanstalt
fuer Geowissenschaften und Rohstoffe ("German Geological Survey" ­ BGR) with regard
to the provision of technical assistance in support of this Component. The BGR would
provide in-kind support contributing to capacity building and institutional strengthening in
Paraguay, and support the acquisition and management of geohydrological data within that
portion of the aquifer.

GEF: US $ 4.78 million; co-funding: US $ 5.73 million; total: US $ 10.51 million. Co-
funding is expected to include contributions from the IAEA in the amount of US $ 0.50
million, from the BGR in the amount of US $ 0.14 million, and from the World Bank
Netherlands Water Partnership Program (BNWPP) in the amount of US $ 0.30 million.

COMPONENT II: Joint development and implementation of the Guarani Aquifer
System Management Framework

As outlined in the introduction, this component constitutes the core of the project, with
other components feeding into it. The objective of this component is to develop a
framework for the coordinated management (technical, institutional, financial and legal) of
the Guarani Aquifer System, taking into account the principles of sustainable integrated
development, the problems and potential of the Guarani Aquifer System, and
environmental protection concerns. This framework will be established within a Strategic
Action Program (SAP) to be implemented in the Guarani Aquifer System region. The SAP
will articulate, in a logical and comprehensive manner, in both space and time, the principal

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lines of action necessary for achieving the project's long term objective. There are four
sub-components:

2. a) Refinement and implementation of a monitoring network that provides results
early in the execution phase to support efforts to implement and strengthen the
knowledge base on the Guarani Aquifer System ­ This network is an essential tool for
providing basic data and information necessary for the coordinated management and
administration of the Guarani Aquifer System, and monitoring the behavior of the
Guarani Aquifer System in space and time.

2. b) Development and integration of an Information System (SISAG - Sistema de
Información del Acuífero Guaraní) for the Guarani Aquifer System that facilitates the
management, standardization, dissemination, and utilization of data, information, and
documents, in order to enhance coordinated management, based upon a sound
knowledge of the Guarani Aquifer System ­ This system, including a GIS, will provide
the technical basis for decision making relating to the aquifer. This system will provide
the basic knowledge necessary for resolving present and emerging problems, and
ensuring the sustainable use of the aquifer's potential.

2. c) Formulation of a Strategic Program of Action (SAP) ­ The SAP will provide a
strategic framework for the coordinated management of the Guarani Aquifer System.
Such a framework will facilitate and support solutions to the current and emerging
problems of pollution and over-exploitation of the Guarani Aquifer System, as well as
resolution of other transboundary environmental problems that may threaten its
sustainable development.

A core piece of the SAP process will be to develop an institutional framework for the
management of the Guarani Aquifer System. In addition, a sequence of activities is
planned to arrive at a technically agreed consensus proposal for a legal Guarani Aquifer
System management framework.

The SAP process also contributes to identifying and managing the potential uses of the
Guarani Aquifer System through a process that encourages the participation of different
stakeholders in the conduct of a prioritized, core group of activities for the coordinated
management of the Guarani Aquifer System in a manner consistent with the purposes of
the GEF and the interests of the four countries.

The SAP will enrich, diversify and disseminate knowledge, information, visions, and
documentation on the Guarani Aquifer System, so as to promote sustainable, integrated
management and environmental protection.

2. d) Improvement of institutional arrangements ­ Development of groundwater
management expertise and strengthening the institutional base within the Guarani
Aquifer System region is the basic building block upon which the transboundary
management of the Guarani Aquifer System will be supported. Appropriate and
relevant means of strengthening agencies, in order to support the management
framework, to be further elaborated during the subsequent implementation phases of the

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project, will promote a solid basis for the joint management of subterranean waters of
the Guarani Aquifer System. These means include twinning arrangements between
agencies involved in Guarani Aquifer System manage ment in the different countries, a
suite of groundwater management courses, short-term Technical Assistance, and study
tours of managers and decision makers to other relevant transboundary (ground-)water
institutions.

The mix of approaches adopted under this Component will not only contribute to the
formulation of the SAP, but will also result in a comprehensive Transboundary Diagnostic
Analysis (TDA) that represents the first step toward defining the underlying, root causes to
be addressed during a program of active management of the aquifer. Given the technical
capacities of the countries, it is important that the TDA be completed in such a way as to
provide for the ongoing monitoring of the resource. This is particularly the case vis-à-vis
the implementation of a monitoring system linked to an Information System, and the
preparation and implementation of a shared GIS, which has been designed to support
decision making for the management and protection of the Guarani Aquifer System. The
Information System then becomes an essential element in the dissemination of knowledge
on the aquifer and its different interrelationships. The nature of subterranean waters makes
it possible to establish a monitoring system early on in the project. In addition, the volume
and dispersion of the existing information on the aquifer requires a special informatics
effort to organize and disseminate the information by means of a practical, operational
information system during the early stages of project execution phase. By providing a
working data and monitoring system early in the project, this Component can contribute to
maintaining the interest of relevant groups of stakeholders.

GEF: US $ 3.60 million; co-funding: US $ 3.54 million; total: US $ 7.14 million. Co-
funding is expected to include contributions from the BGR in the amount of US $ 0.13
million, and from the World Bank Netherlands Water Partnership Program (BNWPP) in the
amount of US $ 0.07 million.


COMPONENT III: Public and stakeholder participation, education and
communication

The objective of this Component is to promote, support, and enrich the participation and
involvement of the public, and to foster environmental and water education, social
communication, and the dissemination of knowledge on the project and the Guarani
Aquifer System, its management and conservation, within stakeholder communities. It
includes strategies, programs, and actions, as well as support for the pilot projects in the
identified Hot Spots to be conducted under Component V. This Component will involve: (i)
the design and implementation of a Regional Communications Plan that will contribute to
sensitizing and educating people in the Guarani Aquifer System region, and (ii) ensuring
that relevant stakeholders are involved in preparing and executing the SAP. The
stakeholders identified to date, through the project development phase activities, include
water users, resource management institutions, water service providers in both rural and
urban areas, NGOs, academics, the private sector, and minority groups. Three sub-
components are proposed:

55

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3. a) Preparation and implementation of a Regional Communications and Public
Participation Plan ­ Periodic reviews of the status of information dissemination, and
of the participation of the population in the region, including public servants, water
users, academics, professional groups, business persons, indigenous groups and leaders,
in developing and implementing the project, and in formulating the SAP will be
undertaken. These reviews will contribute to an evaluation of results achieved at the end
of the project in the areas of communications, education and public participation. A key
element in achieving a high degree of public participation in the project will be the
preparation of a Social Communications Manual for the project. The manual will
outline ways and means of promoting events that will enhance the "image" of the
project among stakeholder groups. It is anticipated that activities will include: the
periodic preparation of an electronic "newsletter" to be distributed over Internet,
targeting specific groups of stakeholders; circulation of an informational bulletin on the
project, likewise over the Internet, as well as through other media; conduct of
institutional-based information campaigns; design and implementation of a distance
learning curriculum for youth, to be disseminated through radio/television and the
press; and creation of a project image bank of digital photographs relating to aspects of
aquifer protection and management.

3. b) Development of strategies and concrete actions for spurring and strengthening
environmental education and education on the Guarani Aquifer System waters ­
Community-level dissemination of information and knowledge on the Guarani
Aquifer System, its management and conservation, is an essential element for ensuring
the sustainability of this project. Participation of community-based NGOs will be
facilitated through a proposed Guarani Aquifer System Citizens' Fund, the purpose of
which is to support, in part, activities that encourage public participation,
communication, and community education. This fund will be subject to implementation
regulations that will govern the submission and funding of proposals from, inter alia,
NGOs, community organizations, and universities operating in the Guarani Aquifer
System region. It is anticipated that grants, up to US$10,000 in value, will be awarded
on a competitive basis, with a matching requirement of 20 percent applicant share and
80 percent Citizens' Fund grant. The applicant share can be in-kind, with human
resources valued at a standard rate to be determined as part of the grant regulations.

3. c) Creation and dissemination of instruments to increase awareness, interest,
and commitment among stakeholders ­ Measures to involve children and youth in
the Guarani Aquifer System project will not only enhance the project's "corporate
image", but also result in a widespread and long term awareness and commitment to
protecting and preserving the aquifer. Lessons learned from similar efforts within the
Latin American region suggest that young people will carry the message of sustainable
and responsible use of the aquifer from their classrooms to their homes, and that their
parents will be engaged in the process of protection and sustainable utilization as a
result. Thus, an important element of this sub-component will be development and
dissemination of a school booklet and atlas of the aquifer. In addition, other activities
envisioned include, inter alia, the preparation and dissemination of an environmental
manual and a manual on the Guarani Aquifer System for teachers and community

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leaders; sponsorship of contests and sports awards; conduct of radio and television
campaigns; creation of reference centers and a mobile Guarani Aquifer System
classroom; convening of workshops and seminars on the Guarani Aquifer System; and
the production of supporting materials such as brochures, posters, and videos. Given
the extent of the Guarani Aquifer System, these activities initially will be prepared as
pilot demonstration projects, targeted to specific locations, which will facilitate testing
of the materials and programs prior to later expansion to the regional level during
subsequent phases of the project.

Specifically, the results of this Component will: (i) foster greater participation by interested
parties in the project; (ii) expand the regional dissemination of knowledge on subterranean
waters and the Guarani Aquifer System; (iii) enhance integration among project
participants; (iv) produce promotional materials for disseminating information on the
aquifer and the project; and (v) promote activities to awaken an interest in the economics of
water and conservation of water quality. This Component will furnish the greatest number
of people in the region­including minority cultures and groups­with information so as to
promote their greater participation and involvement in the project. Stakeholder
participation, especially in the formulation of the SAP, pilot projects in the Hot Spots, and
the evaluation and monitoring of the project, will improve the likelihood of its
sustainability.

GEF: US $ 0.56 million; co-funding: US $ 0.55 million; total: US $ 1.11 million. Co-
funding includes matching grants from beneficiaries representing US $ 0.048 million.

COMPONENT IV: Project monitoring and evaluation, and dissemination of project
results

The objective of this Component is to create and implement a system for recording and
analyzing progress achieved during the project period. This system will allow early
detection of potential problems, and provide feedback to the participants on the experiences
gained and lessons learned. This Component will include the dissemination of information,
results and lessons learned, with a view to possibly replicating project results under similar
conditions and circumstances elsewhere in the Guarani Aquifer System region. It has three
sub-components:

4. a) Development and implementation of a monitoring, evaluation and feedback
system for the Guarani Project ­ Based upon agreed management and performance
indicators that reflect the project objectives, consistent with the logical framework
analysis (see Annex 1), periodic evaluations of project progress will be conducted by
the Executing and Implementing Agencies. In addition, the Steering Committee, at its
semi-annual meetings, will review the degree to which the project has fulfilled the key
performance indicators. The Guarani Secretariat will also monitor project results on a
regular basis. Goals, criteria and standards to measure and monitor project performance
will be developed and agreed using the GEF-IW process indicators.

4. b) Dissemination of project results throughout the region and beyond ­ The
results of the project and lessons learned will be disseminated through reports, the

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Internet, international conferences, workshops and meetings, and direct exchange of
experiences to other existing or potential groundwater management and protection
projects. The Guarani Secretariat will act as a focal point fo r the interaction of the
Guarani Project with other GEF-IW projects in the Latin American region. Using the
IWRN and other media, the project staff will communicate and coordinate activities
between GEF-IW projects to facilitate information-sharing and dissemination of project
approaches and results.

Creation of capacity (human resources) within local and regional government
institutions ­ In order to contribute to institutional development and to ensure
widespread implementation of the lessons learned through the conduct of the Guarani
Project, governmental stakeholders at the local and sub-national levels will be provided
with specific information on the results of the project. In this way, the project will
promote sustainable follow-up activities at the community level, and facilitate local
ownership of the project findings.

The results of this Component will assist the Executing and Implementing Agencies to
appropriately track project progress. This Component will also provide specific information
to the Guarani Secretariat and project Steering Committee to facilitate their participation in
the project and in ensuring the direction of the project, based upon regular reports and
agreed progress indicators. Specific progress measures, in addition to the key performance
indicators identified in the PAD and consistent with the GEF-IW process indicators, will be
developed and agreed under this Component.

GEF: US $ 0.48 million; co-funding: US $ 0.27 million; total US $ 0.75 million.

COMPONENT V: Development of management and mitigation measures within
identified "Hot Spots"

The objective of this Component is to design, apply, and evaluate the costs and feasibility
of good management practices at specific sites within the Guarani Aquifer System region.
Appropriate management and mitigation measures to address specific threats facing the
sustainable utilization of the Guarani Aquifer System will be developed for demonstration
purposes. Dissemination of information on successful management and mitigation
measures will be likely to spur concrete actions in areas currently under threat and/or where
existing or emerging conflicts occur, especially in border areas. The pilot projects will
focus on the prevention and mitigation of specific point and nonpoint sources of pollution,
as well as overdrafting of the aquifer in critical recharge and discharge areas, or in confined
areas of the aquifer, where there is a high concentration of uses and users.

It has been established through technical studies that clear transboundary issues exist in the
border areas of Argentina/Uruguay (well yields are diminishing and some cross border
disputes are apparent due to the importance of these geothermal wells for tourism) and
Uruguay/Brazil (pollution between sister cities across the border). The nature of the aquifer
system, i.e. very large volumes of mainly confined aquifer storage compared to significant
­ but smaller and much more localized ­ volumes of active recharge, mean that there is a
possibility that major development could provoke large drawdowns with the potential for

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conflict between competing users. This is the more significant, given the fact that the most
valued exploitation is in the form of `overflowing geothermal wells' and conservation of
such artesian heads is managerially more demanding than normal aquifer management.
Furthermore, the recharge area in Paraguay, bordering Brazil and Argentina, is a potential
area for transboundary impact. These three areas have been included as Hot Spots with a
transboundary focus to be addressed by the project.
In addition, the area of São Paulo is the one experiencing the most extraction and pollution
in the entire aquifer system area. While it is highly unlikely that pollution in São Paulo
would reach the other countries, the technical and institutional assessments have shown that
this area can provide important lessons in terms of decentralized management and
monitoring approaches. All four countries agree that the institutional management
framework for the Guarani Aquifer System needs to be as light as possible, precisely due to
its size. Therefore it will be necessary to test which types of measures will work in border
areas and also in areas of significant national importance.

This component thus comprises two transboundary pilot projects associated with existing
and emerging uses of groundwater, one border area pilot project associated with developing
and understanding of aquifer characteristics, and one pilot project in a heavily urbanized
area. In detail those are:

5. a) Concordia (Argentina) / Salto (Uruguay) ­ This area of the Guarani Aquifer
System is currently experiencing concerns of a transboundary nature related to the
exploitation of the waters of the Guarani Aquifer System for thermal tourism within a
confined portion of the aquifer. This pilot demonstration project will develop a local
understanding of the behavior and joint sustainable management of the thermal waters
of the Guarani Aquifer System aimed at the sustainable utilization of these waters. (As
noted elsewhere, this activity will also contribute to the studies and investigations
proposed under Component I, and will also contribute to the assessment of the thermal
energy potential of the Guarani Aquifer System waters to be conducted under
Component VI).

5. b) Rivera (Uruguay) / Santana do Livramento (Brazil) ­ This transboundary
demonstration project is designed to assess mechanisms relating to the management and
protection of subterranean waters within an unconfined portion of the aquifer.
Specifically, this sub-component will address the increasing concerns identified within
geographic areas devoted to agricultural development and rural activities with relevant
joint growth patterns observed during the past few years.

5. c) Eastern Paraguay ­ The border corridor between Paraguay and Brazil/Argentina is
a recharge/discharge area of the Guarani Aquifer System. This Pilot Project will
provide critical information regarding such areas in the Guarani Aquifer System and
address concerns with regard to its vulnerability to human disturbance. The exact area
will be defined by project start.

5. d) Ribeirão Preto (Brazil) ­ In addition to the foregoing, localized contamination and
overdrafting of the aquifer from urban land uses in densely populated portions of the
aquifer is another threat facing the Guarani Aquifer System. Strategic interventions in

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the heavily urbanized area of Ribeirão Preto will be supported by the Project. They will
leverage current activities by the Government of Brazil regarding groundwater
protection and management measures in this area.

These sub-components will involve scientific and technical activities to clarify the
hydrogeology, geophysics, hydrogeochemistry, and hydrodynamics of specific areas within
the Guarani Aquifer System, and, in general, better define the morphology and dynamics of
the Guarani Aquifer System at specific sites of critical importance. The selected, land use-
related demonstration projects are strongly oriented toward identifying, implementing, and
evaluating concrete and sustainable management measures relevant to the aquifer, and in
resolving existing and potential transboundary environmental and water quantity threats as
they apply to the Guarani Aquifer System. Thus, while these pilot projects include an
element of local/subregional modeling, they focus primarily on the determination and
implementation of measures to mitigate problems and sustainably tap the existing potential
of the aquifer. The projects directly involve local stakeholders and interested parties in the
assessment and decision-making pertaining to the management, administration, and local
protection of the aquifer. The results of this Component will be tried and tested
applications, procedures, methodologies, and legal and fiscal instruments, designed to meet
the project objectives, that can be replicated elsewhere in the Guarani Aquifer System
region or beyond where similar threats occur. The recharge/discharge area pilot project
focuses more on developing an understanding of aquifer behavior in these critical areas,
contributing basic information to, and complementing, the activities being conducted under
Components I and II, and developing a methodology for assessing human impacts in these
critical areas.

GEF: US $ 2.18 million; co-funding: US $ 1.32 million; total US $ 3.50 million. Within the
co-funding, a BGR contribution in the amount of US $ 0.3 million is tentatively included.

COMPONENT VI: Assessment of Geothermal Energy Potential

The objective of this Component is to evaluate the geothermal potential of the Guarani
Aquifer System in scientific, technical, economic, financial, and environmental terms, and
to provide this evaluation to the relevant ministries, including energy, within the
participating countries. The thermal waters of the aquifer are currently being exploited on a
limited basis for thermal tourism, primarily in Uruguay and, to a lesser degree, Argentina.
Favorable conditions for the occurrence of thermal waters are likely to exist in Paraguay
and in certain places in Brazil. In addition to the use of these waters for thermal tourism,
the possibility exists that these thermal waters could also be used in industrial processes
and for the generation of energy as a substitute for fossil fuels. In particular, there is a clear
interest in tapping the low enthalpy supply of the aquifer. However, given existing concerns
regarding the sustainability of these thermal waters, the energy-related options will have to
be evaluated in technical, economic, social, and environmental terms. Depending on the
results of such an evaluation, pilot activities could be developed to make use of this
potential, and perhaps spur the development of new projects that could be of interest to the
countries. This Component has of two phases:


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6. a) Phase one ­ During the first year of project execution, existing geohydrological
data will be compiled and evaluated. Data to be used in the evaluation will be acquired
under Component I of the project. These data will provide information on the extent of
the thermal waters of the aquifer, and, through specific modeling activities, permit an
assessment of the sustainability of proposals for exploiting such waters for geothermal
energy production.

6. b) Phase two ­ During the second year of project execution, a task force comprised of
representatives of the four countries, supported by world experts in the study and the
use of the enthalpic energy, will be created. This task force will conduct a scientific
evaluation of the geothermal potential of the Guarani Aquifer System based upon the
data acquired during Phase one. The task force also will evaluate the technical
feasibility of using geothermal energy, conduct financial and economic analyses based
on economic and environmental impact studies of possible future energy production
activities, and, depending upon the outcome of these actions, and taking into account
technical, economic and environmental considerations, identify and prioritize areas for
possible geothermal development. This latter activity, the results of which will be
communicated to the energy ministries in the participating countries, will include
specific recommendations for future works and the preparation of thermal projects at
the conceptual level in the four countries, insofar as they are likely to be sustainable.

The results of the Component will be specific recommendations for future works, including
proposed areas for possible geothermal development, and concept level proposals for the
formulation of such projects. These results, together with the appropriate guidelines to be
developed as part of the SAP, will be shared with the energy ministries of the participating
countries and used to guide decision-making with respect to the future development of this
potential. Based upon these results and recommendations of the task force, each country
will be able to consider what steps to take to further develop identified potentials, including
undertaking pilot projects in their territory should the results warrant.

GEF: US $ 0.21 million; co-funding: US $ 0.04 million; total US $ 0.25 million.

COMPONENT VII: Project coordination and management

The objective of this Component is to provide organizational and administrative support to
the project. This Component will include the incremental elements of activities associated
with project leadership and coordination within the regional context, together with
analytical capacity and production of specific material and documents. As noted under
Component IV, the Guarani Secretariat will act as a focal point for the dissemination of
project results, and coordination with, and communication between, other GEF-IW projects
within the Latin American region. The IWRN and related communication media and
mechanisms will be utilized to facilitate this interaction.

The results of this Component will be an agreed framework within which the institutional
arrangements and agreements to sustainably manage the Guarani Aquifer System can be
completed.
GEF: US $ 1.59 million; co-funding: US $ 1.91 million; total US $ 3.50 million.

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ANNEX 3: Project Budget and Sources of Financing



Project Budget and Sources of Financing
External Contribution (US$ x 1000)
Countries' Contribution (US$ x1000)
GEF
Other Sources1
Subtotal
Subtotal
Uruguay
Argentina
Brasil
Paraguay
Amount
%
Amount
%
Amount
%
Amount
%
A. Expansion and Consolidation of the Current Scientific
and Technical Knowledge Base of the Guarani Aquifer System
4778.2
45.5
675.5
6.4
5453.7
51.9
677.5
1173.7
2518.8
682.2
5052.2
48.1
B. Joint Development and Impl. of a Mngmt. Framework
3604.5
50.5
206.6
2.9
3,811.1
53.4
418.6
526.7
2003.5
381.1
3,329.9
46.6
C. Public Participation and Communication
560.8
50.6
48.0
4.3
608.8
55.0
47.7
117.2
260.3
73.8
499.0
45.0
D. Project Monitoring, Evaluation and Dissemination
479.9
64.0
-
-
479.9
64.0
143.5
22.8
86.8
17.4
270.4
36.0
E. Pollution Control and Mitigation Pilots
2,175.6
62.1
324.4
9.3
2,500.0
71.3
422.2
210.5
331.6
40.1
1,004.3
28.7
F. Development of Geothermal Energy Potentials
213.3
85.0
-
-
213.3
85.0
-
12.5
18.8
6.3
37.6
15.0
G. Project Management
1,588.6
45.4
-
-
1,588.6
45.4
367.9
524.0
593.7
422.0
1,907.6
54.6
TOTAL
13,400.9
50.1
1,254.5
4.7
14,655.5
54.8
2,077.4
2,587.4
5,813.5
1,622.9
12,101.1
45.2
1 Contributions by IAEA, BGR, Beneficiaries and WB/Netherlands Water Partnership Program

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ANNEX 4: INCREMENTAL COSTS


1. Broad Development Goals The long-term objective is the sustainable management and
use of the Guarani Aquifer System. The Guarani Aquifer System is situated in the eastern
and south central portions of South America, and underlies parts of Argentina, Brazil,
Paraguay, and Uruguay. This project is a first step toward achieving the long-term
objective. The purpose of the proposed project is to support the four countries in jointly
elaborating and implementing a common institutional and technical framework for
managing and preserving the Guarani Aquifer System for current and future generations.
To achieve this purpose, seven project components are envisaged: (i) expansion and
consolidation of the current scientific knowledge base regarding the Guarani Aquifer
System; (ii) joint development and implementation of a Guarani Aquifer System
Management Framework, based upon an agreed Strategic Program of Action; (iii)
enhancement of public and stakeholder participation, social communication and
environmental education; (iv) evaluation and monitoring of the project and dissemination
of project results; (v) development of regionally-appropriate groundwater management and
mitigation measures in identified "Hot Spots"; (vi) consideration of the potential to utilize
the Guarani Aquifer System's "clean" geothermal energy; and, (vii) project coordination
and management.

2. Baseline Situation. Relatively few investments have been made to date in the project
area and surrounding environs. Notwithstanding, the countries have acknowledged the
increasing pressures upon the Guarani Aquifer System, and have recently increased their
levels of investment in this system. These consist of: (1) ongoing and long term
development projects for the lands overlying the Guarani Aquifer System, and (2)
environmentally related activities associated with development programs or executed
independently by federal/national, state/provincial, and local authorities. Most of the
projects tend to be within the latter category of investment, and are almost exclusively
financed by national agencies. These agencies include the Subsecretariats for Water
Resources, for Planning and Social Environment, and for Environment, provincial
directorates for public works and water/water resources, and universities in Argentina. In
Brazil, these agencies include various national institutes, corporations and universities, the
Secretariat for Water Resources, and the National Water Agency, and state directorates for
water and environment. In Paraguay, the agencies include the Secretariat for Environment,
the National Environmental Health Service, the Asuncion Sanitation Corporation, and the
national university. In Uruguay, these agencies include the National Directorates for
Hydrography, for Minerals and Geology, and for Environment, the National Sanitation
Administration, and national university. The studies undertaken by these agencies are
almost exclusively aimed at data acquisition for specific research projects, are largely
uncoordinated, and are designed to fulfill specific national or local purposes. While many
of these projects are relatively uncoordinated, it is anticipated that direct benefits for the
formulation of the Strategic Action Program (SAP) can be realized during the conduct of
this project. Therefore, these investments represent viable in-country programs and
activities within the region that may have impacts on the project activities.


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3. Other baseline activities, which have largely domestic or local impacts, include local
development and water supply works being conducted by the federal and national
governments, provinces, states, and local governments within the region. Notwithstanding,
data gathered under these programs will be available to, and used in, the preparation of the
SAP to address environmental and developmental concerns within the Guarani Aquifer
System region. With the exception of the harmonization of the hydrogeological monitoring
network and other coordination activities noted above, no additional efforts are proposed.
Conservatively, these costs have not been considered in extenso in the calculations
presented in Table 7.

4. GEF Alternative Scenario. The alternative scenario consists of the implementation of
those actions needed to both introduce the principles of environmentally friendly
management and sustainable development into development projects in the Guarani
Aquifer System region. These actions are designed to achieve global/transboundary
environmental benefits by providing a framework for the sustainable development and
management of groundwater resources, and by addressing transboundary concerns
identified through a rigorous program of data gathering and analysis. The elements of this
program will be transferable to similar situations worldwide. The costs of the actions are
those necessary to include sustainable development considerations into development
projects within the region over and above the requirements of the regular environmental
impact assessments and mitigation measures required to be completed under existing
national, federal, provincial and state environmental laws and regulations.

5. Water resources management in the Guarani Aquifer System basin will be directed and
coordinated by the relevant national and federal agencies, as set forth in specific national
and federal laws. Harmonization and compatibilization of these legal systems, and existing
national and federal programs, in the context of the Guarani Aquifer System is an important
element of this project. To achieve this result, the agencies managing the water resources of
the Guarani Aquifer System, inter alia, will require strengthening both in terms of
institutional functioning and human resource capacity.

6. Reduced contamination, improved public health, and more effective and sustainable use
of available water resources are national benefits to be expected as a result of the activities
of this project. Notwithstanding, these outcomes also have significant impacts in
maintaining the Guarani Aquifer System and, therefore, have additional benefit for the
globally significant resources within the region. However, the full extent of localized
benefits cannot be estimated at this time. Thus, it is assumed that the domestic funding
provided is equivalent to the national costs and will adequately compensate for the
domestic benefits achieved.

7. Global Benefits. The global benefit arising from the GEF intervention will be the
formulation of a comprehensive management program to reduce contamination and
pollution that will not only have significant human benefit in the surrounding countries, but
also could have benefit to regionally significant wetlands, coastal areas, and riverine
systems. A strategic program of activities will be conducted within the Guarani Aquifer
System region, which will demonstrate an approach to groundwater management that could
reduce contamination, minimize overconsumption, and promote sustainable utilization of

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groundwater systems worldwide. A breakdown of expected global benefits, by component,
follows.

Component I, Expansion and Consolidation of the Current Knowledge Base. The activities
set forth under this component are designed to assess and quantify specific issues of
concern within the Guarani Aquifer System basin identified during the GEF-PDF activities.
These issues, to be quantified within a Transboundary Diagnostic Analysis (TDA), include
the identification of the actual extent and geology of the Guarani Aquifer System; the
quality of the waters contained within the Guarani Aquifer System; aspects of the
hydrology, recharge and utilization of the waters of the Guarani Aquifer System; and the
development of a model or suite of models, to be used in the management of the resource,
that describe the Guarani Aquifer System. The proposed project considers means for
identifying and quantifying risks of contamination and overuse of the Guarani Aquifer
System, known to be currently occurring. The baseline costs cover existing infrastructure,
monitoring activities, and investments in the Guarani Aquifer System region, as well as the
estimated US $ 5.73 million counterpart contributions from the national and federal
governments, and local governmental and nongovernmental (NGOs) organizations,
including educational institutions. The alternative project costs are US $ 10.51 million.
GEF incremental funding is US $ 4.78 million.

Component II, Joint Development and Implementation of a Guarani Aquifer System
Management Framework. The rational use of water and other natural resources within the
Guarani Aquifer System region is limited by several existing and potential uses of water
within the region that are competing for increased shares of groundwater. This competition
can influence the quality and quantity of groundwater as well as potentially influence
ecosystem structure and functioning where the groundwater system interacts with the land
surface. Given the intensity of existing and potential demands upon this system,
development of an integrated program of water resource management could provide for a
significant improvement in the decision-making ability of regulatory agencies in the region
that would result in both global and domestic benefits. Such an improvement would
contribute to achievement of an optimal mix of different groundwater uses, based upon the
corresponding costs and benefits of each use, including, inter alia, environmental uses,
which could support negotiated allocations among the different stakeholders and related
water pricing decisions. Knowledge of the critical factors influencing groundwater
behavior, and experience with methods of negotiation and agreement among competitive
users of water, to be acquired under Components I, III, and V, as well as elements of this
Component, will be used for improving management of natural resources in the basin. This
management framework could be transferred to other international groundwater systems
where complex mixes of competitive water uses exist. The baseline cost of this Component
is US $ 3.54 million, representing investments in operating the existing
geohydrometeorological networks and other counterpart government contributions. The
alternative project cost is US $ 7.14 million. GEF incremental funding is US $ 3.60 million.

Component III, Public and Stakeholder Participation. The baseline costs of this component
represent completed and ongoing activities by the governments, provinces, and states for
engaging a variety of stakeholders in the design and implementation of on-the-ground
management activities. The national, federal, and local governments, and NGOs, will

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contribute US $ 0.55 million to cover ongoing educational and information programming
within the Guarani Aquifer System region. The alternative project cost is US $ 1.11
million. The actions proposed to be undertaken will expand and enhance public
involvement and stakeholder participation, including indigenous groups, through broadly-
based formal, institution-based as well as informal, community-based educational and
informational opportunities. GEF incremental funding is US $ 0.56 million.

Component IV, Project Monitoring and Evaluation, and Dissemination of Results. Together
with the monitoring and management activities set forth in Components I through III, this
Component will strengthen institutional capacities to monitor and manage the groundwater
resources of the Guarani Aquifer System, to increase and enhance the human resource
capabilities necessary to carry out a program of strategic activities within the Guarani
Aquifer System region, and reinforce the capacities of the institutions working in the
Guarani Aquifer System region to collaborate in data-sharing and analytical activities
essential for the sustainable, shared utilization of the resource. The baseline cost of this
Component is US $ 0.27 million. The alternative project cost is US $ 0.75 million. GEF
incremental funding is US $ 0.48 million.

Component V, Development of Management and Mitigation Measures. Based upon
information gathered during the GEF-PDF activities, together with the monitoring and
management activities set forth in Components I through III, this Component will result in
the development of measures to quantify, analyze, and mitigate the impacts of human use
of the Guarani Aquifer System in up to four specific geographic areas overlying the aquifer.
These areas represent current occurrences of groundwater management issues of concern
that are likely to recur within the Guarani Aquifer System basin; namely, areas of
exploitation of the aquifer for geothermal water use, for urban and industrial water use, and
for agricultural water use, and areas of overexploitation of groundwater resources. The
project will focus on two transboundary areas, one vulnerable recharge and discharge area
in Paraguay and one heavily urbanized area in Brazil. The baseline cost of this Component
is US $ 1.32 million. The alternative project cost is US $ 3.50 million. GEF incremental
funding is US $ 2.18 million.

Component VI, Assessment of Geothermal Energy Potential. This Component is designed
to assess the potential utilization of the Guarani Aquifer System for geothermal energy
production. Such utilization is an emerging use that has the potential to conflict with the
current use of these waters for tourism. Nevertheless, geothermal energy production has the
potential to provide a source of "clean energy", which is, as yet, undeveloped and
underutilized. The baseline cost of this Component is minimal, US $ 0.04 million, given the
limited current usage of geothermal energy potentials. The alternative project cost, to
consider the future utilization of this energy source, is US $ 0.25 million. GEF incremental
funding is US $ 0.21 million.

Component VII, Project Coordination and Management. In order to ensure a coordinated
and focused approach to the conduct of this project, this Component provides incremental
funding for the management activities of the Guarani Secretariat and national executing
agencies responsible for the day-to-day activities to be carried out by the project
participants. Incremental costs of the activities of the Steering Committee are also included

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within this Component. The baseline cost, incurred by the national, federal, state,
provincial, and local governments, universities, stakeholders and NGOs currently active in
the Guarani Aquifer System region, is US $ 1.91 million. The alternative project cost,
adding the transboundary consideration to the current governmental and stakeholder
activities, is US $ 3.50 million. GEF incremental funding is US $ 1.59 million.

8. Part of the baseline contributing to all project components includes project preparation
activities funded through the World Bank, OAS, government counterparts, of US $ 1.07
million. Associated financing from the IAEA (International Atomic Energy Agency), BGR
(German Geological Survey), and World Bank Netherlands Water Partnership Program
(BNWPP) in the amount of US $ 1.26 million is to be made available for this project.

9. It should be noted that specific expenditures for activities may be initiated at any time
during the six-month period preceding the indicated date, as human and financial resources,
and prerequisite information availability, warrant. Further, it is anticipated that each
component within the principle activities is likely to be executed over the period of up to
one year, with the SAP formulation occurring over the four-year period of the project.

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Table 7: Incremental Cost Matrix (US $M)

Component
Category
Amount Domestic Benefits
Global Benefits
Expansion and
Baseline
5.73
Information on the quality

Consolidation of the
and availability of
Knowledge Base
groundwater resources in
the Guarani Aquifer
System
Alternative
10.51
Same as above, with
Increased protection and
additional information
sustainable use of a
supporting the sustainable
globally significant
use of the resource and
groundwater system
overlying lands
Increment
4.78


Development and
Baseline
3.54
Geohydrometeorological

Implementation of a
monitoring data
Management
Alternative
7.14
Same as above, with added
Positive impacts of
Framework
capacity for improved,
coordinated groundwater
sustainable groundwater
management, and
management and decision-
development of
making
methodologies able to be
applied to other
international basins
Increment
3.60


Public and
Baseline
0.55
Public awareness of water

Stakeholder
conservation and public
Participation
health issues
Alternative
1.11
Same as above, with public Positive impacts of
support for appropriate
coordinated groundwater
development, utilization
management, and
and conservation of
development of programs
groundwater
able to be applied to
other international basins
Increment
0.56


Project Monitoring
Baseline
0.27
Monitoring and regulation

and Evaluation
of groundwater quality
Alternative
0.75
Same as above, with added
Increased protection of
capacity to regulate
groundwater quality and
groundwater uses in a
quantity with resultant
coordinated and sustainable potential benefit to
manner
regional biological
diversity and
maintenance of surface
water resources
Increment
0.48



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Component
Category
Amount Domestic Benefits
Global Benefits
Development of
Baseline
1.32
Monitoring and regulation

Management and
of land use, energy, and
Mitigation Measures
economic development
in Identified Hot
Alternative
3.50
Same as above, with added
Increased protection of
Spots
capacity to monitor and
groundwater quality and
regulate the use and
quantity with resultant
potential impacts of land
potential benefit to
use on groundwater quality sustainable development
and quantity, and promote
and human utilization of
sustainable economic
transboundary
development
underground water
resources
Increment
2.18


Assessment of
Baseline
0.04
Development of tourism

Geothermal Energy
potential, "spas"
Potentials
Alternative
0.25
Same as above, with
Development of
additional potential for the
methodologies for the
development of "clean
integrated development
energy" sources
and sustainable
utilization of geothermal
energy resources
Increment
0.21


Project Coordination Baseline
1.91
Maintenance of basic

and Management
monitoring and
management functions
Alternative*
3.50
Same as above, with
Development of
improved decision-making
methodologies for
capabilities
coordination of
management and
monitoring of
multinational
groundwater systems
Increment
1.59


TOTAL
Baseline
13.36


(Including

Cofinancing*)


Alternative*
26.76



Increment
13.40


PDF Preparation

0.54


Total Increment

13.94



* Includes the World Bank-Netherlands Water Partnership (US $ 0.10 M), the IAEA (US $ 0.50), and the BGR (US $ 0.60 M).



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ANNEX 5: INSTITUTIONAL ARRANGEMENTS FOR PROJECT
IMPLEMENTATION

Donors/Coop.
Steering
GEF/WB
Agencies
Committee
Coordination Group
Guarani Secretariat/
Executing Agency
UNEP
UNEP
UNEP
UNEP
Argentina
Brazil
Paraguay
Uruguay


Steering Committee ­ Consejo Superior de Direccion del Proyecto

Coordination Group ­ Coordinación Colegiada

Guarani Secretariat ­ Secretaria General del Proyecto Sistema Acuífero Guarani

Executing Agency ­ OAS

UNEP ­ National Project Executing Unit ­ Unidad Nacional de Ejecución del
Proyecto

GEF/WB ­ Global Environment Facility ­ World Bank

Donors/Cooperating Agencies ­ includes IAEA, BGR, OAS. These and other agencies
may be invited to Steering Committee meetings.









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ANNEX 6: DESCRIPTION OF THE GUARANI AQUIFER SYSTEM

The Guarani Aquifer System, named in honor of the Guarani Indigenous Nation, is one of
the largest groundwater reservoirs in the world. It is located under the four MERCOSUR
countries: Argentina, Brazil, Paraguay and Uruguay. Until recently, the Guarani Aquifer
System was known as the Botucatu Aquifer in Brazil, the Tacuarembó Aquifer in Uruguay
and Argentina, and the Misiones Aquifer in Paraguay.

The Guarani Aquifer System extends from the central-west region of Brazil into Paraguay
and the southeastern and southern regions of Brazil, and into northeastern Argentina and
central and western Uruguay. (See Annex 13 for area map). The Guarani Aquifer System
has an estimated total surface area of approximately 1.2 million square kilometers (839,800
km2 in Brazil, 225,500 km2 in Argentina, 71,700 km2 in Paraguay, and 45,000 km2 in
Uruguay). The portion within Brazil encompasses about two-thirds of the total areal extent
of the System, and included portions of eight Brazilian states--an area equal to that of
England, France and Spain combined. An estimated fifteen million people live within the
Aquifer's area of surface influence.

About 40,000 km3 of freshwater are contained within the Aquifer. About 90% of this
volume is estimated to be potable, although, locally, potability can be reduced due to
salinity and elevated fluoride content (affecting less than 10% of the volume). The volume
of water in the Guarani Aquifer System is equivalent to the total volume of water conveyed
by the Paraná River over a period of almost 20 years (based upon a median flow rate of
10,000 m3/sec). It is estimated that the Aquifer could meet the water demands of 360
million people on a sustainable basis, based on a per capita water use of 300 liters/day--
only about 10% of the total freshwater reserves would be depleted after a period of 100
years. Current usage, from deep wells, sustains a per unit rate of abstraction of up to 1
million liters/hour. The Guarani Aquifer System has an average thickness of 250 meters
varying from lenses of a few meters at the borders of the groundwater basin to about 600 m
in its central parts, such as in the northern parts of the States of São Paulo, Paraná and the
southern parts of Mato Grosso do Sul in Brazil. Its depth below the land surface varies from
zero in outcropping areas and their vicinity to more than 1,000 meters in Argentina.

Besides the excellent quality of the water (which is very suitable for consumption) another
important characteristic of the Guarani Aquifer is the thermal quality of the waters. In a
number of regions, the water emerges naturally at temperatures of between 33 and 50
degrees Celsius, at a flow rate of about 100,000 liters/hour. At present, this water is used
principally for water supply and tourism, although it could potentially be exploited as an
alternative energy source, substituting for non-renewable energy sources in the project area.

Despite large surface water reserves, the drinking water supply in this heavily populated
region of the MERCOSUR is increasingly dependent on groundwater. Future problems
may occur if groundwater use is not managed in a sustainable manner or if the groundwater
becomes polluted. In São Paulo State, Brazil, more than 60% of the water supply needs in
urban centers are served totally or partially from groundwater sources, supplying a
population of about 5.5 million people. Demands for groundwater are increasing, due to

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both demographic growth and economic expansion, and as a consequence of the pollution
of surface water sources.

Legal and regulatory mechanisms for the management of groundwater resources are
lacking throughout the MERCOSUR region. Both in Argentina and Brazil, for instance,
significant pollution of shallow groundwater resources is occurring.

However, also the use of the Guarani Aquifer System's water has increased significantly,
in the last decades, as a consequence of the extreme urbanization pattern of some areas on
one hand and developments in large scale agriculture schemes on the other. In some areas
of the aquifer system there is a high concentration of wells whose water is used for different
purposes. The assessments of the preparation phase have resulted in maps showing the
spatial distribution of water uses (77% urban drinking purposes, 11,5% industrial use and
11,5% agriculture use), as well as maps with location of wells and the ir respective depths.

Some of the conflicts related to water quantity are already well identified. These include,
among others, the reduction of potentiometric and phreatic levels, and the interference
between wells experienced in the highly urbanized areas around Ribeirão Preto and Bauru,
in São Paulo State (Brazil) and the transboundary thermal sites between Uruguay and
Argentina, particularly in the area of Salto (Uruguay) and Concordia (Argentina).

Preliminary studies carried out during project preparation estimated that water abstractions
in the Brazilian states of Minas Gerais, São Paulo and Paraná ­ if not managed - will
surpass the aquifer's local recharge rates by 2025. Some regions in Argentina and
Paraguay, where the aquifer's potential has only recently been discovered, are now
undergoing groundwater exploitation with an increasing number of wells being drilled. The
actual number of wells tapping the aquifer system in those regions is still unknown. It is
important to keep in mind that due to the remedial and anticipatory character of the present
project, data on the aquifer system are scarce. One of the major activities will be to collect
and analyze data for the Guarani Aquifer System.

As in the MERCOSUR region in general, in most areas of the aquifer system, the countries'
legal frameworks for managing and monitoring groundwater use have not accompanied the
rates of extraction and expansion of groundwater use. The lack of control over the quality
design of the wells seems to have caused wells to have acted in some cases as drainage
channels for surface contamination.

In regions of the aquifer system where water quality monitoring data are being collected
systematically (like in CETESB's well-functioning monitoring network in São Paulo State),
some cases of organic contamination (high nitrate content) and anomalous pesticide traces
have been detected. This is also assumed to be occurring in other regions of the aquifer,
particularly in recharge areas showing high natural vulnerability, and in semi-confined
areas which show an effective connection with underlying unconfined and contaminated
aquifers.



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The Hot Spot area of Santana do Livramento ­ Rivera, at the Brazil/Uruguay border, is a
case in point, with one of the largest urban concent rations in the southern aquifer system's
outcropping area (around 200.000 inhabitants), and with a water supply system that relies
almost entirely on groundwater extracted from about 160 tube wells with depths between
40 m and 160 m. Here, the aquifer faces the threats of lacking sanitation infrastructure
(60% of the population served by inadequate sanitation schemes­ fossas negras e
sumidouros), industrial plants, and an increased use of pesticides and fertilizers in
agriculture.

A similar situation applies to the Eastern Paraguay region, a vulnerable non-confined area
that is experiencing booming urban and agricultural expansion. Particularly in this region
the stratigraphy of the aquifer formations is not very well defined, which makes the task
even more challenging.

In Ribeirão Preto, Brazil, a city with 421,000 inhabitants mainly using Guarani waters, 12%
of water users do not have access to the sewage system, generating a potential nitrate load
of 200,000 tons per year, which is considered rather elevated. A comprehensive and
detailed survey about the groundwater's chemistry, considering regional potential
contaminants is one of the main tasks of Component 1 of the project. It will be a guide for
further activities such as the-set up of a water quality monitoring network and advanced
hydro chemical research.

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ANNEX 7: ROOT CAUSE ANALYSIS


1. Background. The Guarani Aquifer System is one of the largest groundwater reservoirs
in the world. It is located under the four MERCOSUR countries: Argentina, Brazil,
Paraguay and Uruguay. The Guarani Aquifer System extends from the central-west region
of Brazil into Paraguay and the southeastern and southern regions of Brazil, and into
northeastern Argentina and central and western Uruguay. The Guarani Aquifer System has
an estimated total surface area of approximately 1.2 million square kilometers (839,800
km2 in Brazil, 225,500 km2 in Argentina, 71,700 km2 in Paraguay, and 45,000 km2 in
Uruguay). The portion within Brazil encompasses about two-thirds of the total areal extent
of the System, and included portions of eight Brazilian states--an area equal to that of
England, France and Spain combined. An estimated fifteen million people live within the
Aquifer's area of surface influence. See Annex 13 for area maps).

2. Issues. Legal and regulatory mechanisms for the management of groundwater resources
are lacking throughout the MERCOSUR region. Both in Argentina and Brazil, for instance,
significant pollution of shallow groundwater resources is occurring, although, due to its
significant average depth, the Guarani Aquifer System is not significantly affected by this
type of degradation. However, in areas where the Guarani Aquifer System is close to the
land surface, there are pollution threats posed by the use of the Guarani Aquifer System
waters in irrigation schemes and potential leaking of agrochemicals in highly mechanized
intensive agriculture areas. In addition, it is being potentially overdrafted with consequent
negative impacts on its quality.

The Guarani Aquifer System is a strategic water resource within the MERCOSUR region.
It can be preserved if adequately protected and managed. The main threat to the resource
stems from uncontrolled pollution in extraction and recharge areas. Given that groundwater
pollution is reversible only at very high costs, if at all, there is considerable merit in
protecting the Guarani Aquifer System for current and future generations.

3. Problems and Symptoms. The Guarani Aquifer System is a clear example of an
international (transfronterizo) waterbody threatened by environmental degradation through
pollution, as defined and included in the GEF Operational Program Number 8. In the
absence of a strategic intervention supported by the GEF, the likelihood of "business-as-
usual" prevailing in the four countries is high. At the aquifer's current rate of use, and
considering the growing use of groundwater for human consumption, it is easy to foresee
an increasing threat of pollution in the not too distant future. The uncontrolled use of the
Guarani Aquifer System, without rules or regulation, can alter its status from that of a
strategic reserve of drinking water for the population in portions of Argentina, Brazil,
Paraguay and Uruguay, to that of a degraded waterbody that is the source of conflict among
the countries. If nothing is done, the future of this underground treasure could be the same
as that of other aquifers that have tended to become both polluted and over-exploited, at
least in certain areas. The global benefit of the proposed project is in terms of the
preservation of this transboundary resource for current and future generations. In the

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specific case of the Guarani Aquifer System, there is the opportunity to exploit the
advantages of preventive activity. The project would ensure that, in the face of increasing
scarcity and pollution of surface water sources in the beneficiary countries, this resource
will be managed today so as to be available as a strategic reserve when needed in the future.
An important issue to be cons idered in this regard is the fact that an international legal
framework for the management of transboundary groundwater resources currently does not
exist.

To this end, it should be noted that the World Bank, for example, does not have a specific
policy on groundwater resources. This issue is being addressed in the ongoing evaluation of
the World Bank Water Resources Policy Paper of 1993. It is generally recognized that
transboundary groundwater issues need to be addressed, as projects are often proposed and
implemented in areas where a situation of scarcity and competition for groundwater
resources already exists (e.g., in North Africa and the Middle East). In the case of the
Guarani Aquifer System of South America, the World Bank, through the GEF, could make
a significant contribution to shaping an institutional framework regarding transboundary
groundwaters that could serve as a replicable model in other countries and regions. In
addition, the experience derived from this project would be expected to cont ribute to GEF
and World Bank policy with regard to transboundary groundwater issues.

3.1 Problems related to poorly quantified environmental impacts. As noted above, the
actual configuration and extent of the Guarani Aquifer System remains largely unknown.
Notwithstanding, problems related to the contamination of portions of the groundwater
reservoir are known to exist, particularly in those areas where the aquifer is at or near the
land surface. In addition, in those areas where the aquifer is being heavily utilized for
water supply purposes, localized problems with overdrafting of the water resource are
presumed to exist, with concomitant potential impacts on economic activities and surface
ecosystems that are intimately linked with the groundwater system.

3.2 Problems related to stakeholder involvement. Problems related to stakeholder
involvement historically have been related to the utilization of groundwater as an
alternative water source for human economic activities, especially in areas where sur face
water resources are lacking or contaminated from human activities. As noted above, the
Guarani Aquifer System is viewed by the countries as a reserve of potable freshwater to be
utilized primarily for the future economic development of the basin count ries.
Notwithstanding, concerns have been identified within the basin with respect to the
utilization of the waters of the Guarani Aquifer System to support tourism, particularly in
the vicinity of western Uruguay and northeastern Argentina. Such concerns impact the
sustainable utilization of the resources, and indicate a need to sensitize stakeholders with
respect to the nature, attributes, behavior, and hydrology of the Guarani Aquifer System.

3.3 Problems related to economic development. Problems related to economic
development include the lack of appropriate regulations governing the exploitation of
groundwater resources for human purposes. Because of the strategic nature of the Guarani
Aquifer System within the context of the MERCOSUR region, the need to develop an
appropriate framework within which to support sustainable economic activities, including
both current uses and potential future uses of the Guarani Aquifer System, forms an

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important issue to be addressed by this project. Such concerns are best addressed in a
sectoral context, with the participation of key stakeholders.

3.4 Problems related to institutions, human resources, and the lack of a holistic
management approach. Problems related to institutions and human resources include the
lack of a comprehensive framework of data acquisition and data-sharing within the Guarani
Aquifer System region. This lack contributes to difficulties in developing and
implementing an appropriate legal and regulatory framework within which to manage the
resources of the Guarani Aquifer System. Related to the lack of institutional capacity are
emerging problems related to the lack of authority to control environmental problems, and
fragmented and locally focused jurisdictions that have failed to bring a comprehensive and
cohesive approach to water management in the Guarani Aquifer System region. Further,
some management and development-related actions are fragmented among agencies and
between local jurisdictions. As a consequence, potential problems relate to the lack of a
unified vision of the Guarani Aquifer System as an integrated whole are likely to occur in
the absence of further interventions in the region. Potential problems include inter-sectoral
conflicts over water usage, competing rather than complementary demands for water, and a
piecemeal approach to water resources development in the basin.

3.5 Problems of water quality. Problems related to water quality include localized
bacteriological contamination and contamination by synthetic organic (agro-) chemicals.
These problems are currently localized to specific areas of the Guarani Aquifer System
region, especially with respect to those wells that lack effective casings.

3.6 Problems of water quantity. Problems related to water quantity are highly localized
within the Guarani Aquifer System, and are related to localized overdrafting of the
resource.

4. Root Causes. Despite the apparent proliferation of problems in the Guarani Aquifer
System region, there would appear to be relatively few root causes that contribute to the
majority of the potential problems likely to be observed or to occur in the future in the
absence of further interventions to protect the resource. The root causes of existing and
potential problems will be identified during this project.

4.1 Anthropogenic causes. People almost exclusively have the potential to degrade the
Guarani Aquifer System. Although increased economic development in the region has
succeeded in improving the quality of life for many of the citizens of the region (as
intended), rates of exploitation of the natural resource base have increased. In the first
instance, the redistribution of population in the region has led to increased urbanization,
which in turn has the potential to contribute untreated human wastes and other
contaminants to the system. These populations have also created an increased demand for
water and food, both of which affect the potential for overdrafting the Aquifer--the water
being used primarily for potable purposes. Superimposed on these causative factors are
modifications of the natural hydrological regime caused by the imposition of impervious
surfaces on recharge areas, and modifications affecting natural discharge areas of the
Guarani Aquifer System. In addition, emerging demands for "clean" energy for use by the
people and industries of the basin constitute an emerging challenge related to the extraction

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and disposal of thermal waters. Currently, many of the potential impacts are highly
localized, and there is an opportunity to put into place mechanisms to mitigate and manage
many of these threats.

4.2 Legal and institutional causes. While human land use activities have the potential to
contribute significantly to the potential degradation of the Guarani Aquifer System, legal
and institutional shortcomings may exacerbate these problems by failing to control or
regulate human actions in the area. Existing mechanisms fail to view the Aquifer as a unit,
in which actions taken at specific sites have a cumulative effect throughout the sys tem.
While the consequences of such fragmented institutional mechanisms are currently quite
minor, should the situation not be remedied, substantial and costly actions may be needed
in the future to overcome this lack of regulation, and lack of a holistic approach to
ecosystem and economic development.

5. Actions Identified to Address Root Causes. To help in overcoming the historical
inertia inherent in the causative factors identified above, emphasis in project design has
been given to those actions which address root causes that can best be humanly managed;
i.e., those anthropogenic causes and legal and institutional causes that can be modified
through planning and subsequent implementation of corrective actions. Natural root causes
generally cannot be effectively controlled by human actions and hence are of lesser
importance from a groundwater management perspective (although knowledge of these
causes is an essential starting point from which to implement interventions to address
human and institutional causes). The following actions have been proposed to address the
human causative factors of potential environmental degradation of the Guarani Aquifer
System.

5.1 Acquisition of basic scientific information and dissemination of knowledge. Project
activities have been developed to acquire and disseminate supplementary baseline
information to support determination of root causes (Components I and II), and investigate
alternative courses of action to ensure sustainable use practices (Component V). In
addition, a further group of activities has been proposed as a means of synthesizing and
disseminating information gathered through diagnostic studies. These include, inter alia,
activities which demonstrate ways in which citizens can contribute to the protection of
community water resources, which address the need for public informational programming
to enhance citizen participation in the decision-making process, and which train
community-based extension agents to disseminate information on issues and mitigation
measures to citizens (Component III).

5.2 Development of a holistic institutional management framework. Project activities
have been developed to provide an integrated management framework within which
groundwater protection and management activities can be identified and carried out
(Component II). Project activities in this category include, inter alia, activities which
address the needs to harmonize technical approaches for data acquisition and share
information within the Guarani Aquifer System region. These activities also encompass the
synthesis and integration of the strategic elements of the foregoing project activities in the
SAP, or Strategic Action Program.


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5.3 Support to groundwater management and regulatory agencies. Project activities
have been developed to provide directed support to create and strengthen the operational
capabilities of institutions, committees, and related civic organizations within the Guarani
Aquifer System region. These activities include, inter alia, activities which promote the
establishment of a framework to promote stakeholder involvement and participation
(Component III), and refine and strengthen the role of the existing agencies within the basin
through twinning and other capacity building activities (Component II).

5.4 Assessment of emerging concerns. Finally, project activities have been developed to
provide a thorough consideration of the use of the Aquifer for geothermal energy
production, an emerging issue that is related to human use of the Guarani Aquifer System
and its water reserves (Component VI). These activities will inform decisions relating to the
potential future development and use of the Guarani Aquifer System for human purposes,
including their economic, technical, and environmental dimensions.

6. Concluding remarks. Significant progress has been made in the definition of issues and
problems (and their root causes in some instances) within the Guarani Aquifer System
region during the project preparation phase. Work proposed under the GEF International
Waters focal area builds on this progress in seeking to extend region-wide actions to the
local community. This work is predicated upon the principles of civic involvement, public
participation, and responsible governmental action at all levels of government, and
embodies a comprehensive program of research, demonstration projects, and information
dissemination designed to identify a framework for subsequent preventive and remedial
measures and management actions that will result in the sustainable economic development
of this region.

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ANNEX 8: STRATEGIC ACTION PROGRAM


1.
The GEF Process. The GEF International Waters (IW) Projects often follow a
logical sequence of diagnosis and analysis, culminating in the preparation of an agreed
program of strategic actions to address common transboundary issues of concern. To this
end, GEF IW projects often begin with the GEF Implementing Agencies assisting the
cooperating countries in undertaking strategic work that focuses on joint fact-finding.
Consistent with the Operation Strategy (OP), the joint fact-finding encourages collaborating
countries to institute interministerial technical teams to assemble information on water-
related problems and conflicts in the basin, and to share this information with counterparts
from other countries within the multinational basin. Such information forms the basis for
defining and quantifying shared, transboundary concerns. Such concerns are documented
in a Transboundary Diagnostic Analysis (TDA) that contains the facts of the actual or likely
future issues of concern, conflicts, and problems. These facts and the associated diagnostic
analysis facilitate identification of the root causes of the concerns, conflicts, and problems,
and enables actions to resolve shared issues of concern. A key element in developing
actions to resolve water-related conflicts, disputes, and problems is the involvement of
stakeholders; the principal actors involved in water use and management having been
identified as an element of the TDA. This collaborative, factual analysis is essential to the
process of determining priorities for action, and is the first step in formulating a Strategic
Program of Actions (SAP) designed to address the root causes of the concerns in an
effective and collaborative manner. The TDA-SAP process has been adopted by the GEF
Council as the basis for GEF IW projects.

2.
Transboundary Diagnostic Analysis. The process of developing the TDA enables
countries to learn how to exchange information and work together. Interministerial
committees often are established in each country to assemble and provide factual
information on the country-portion of shared waterbodies. By reviewing and analyzing the
data and information provided by each country, the transboundary nature, magnitude, and
significance of water quality, biological, habitat or other land use-related conflicts,
degradation or threats can be determined and prioritized. This review and analysis provides
an objective basis for the countries to jointly assign relative degrees of concern to the issues
identified, and separate those issues that are of joint concern from those that are of national
concern. In addition, the root causes of the conflicts or degradation, and relevant social
issues, can be identified. This analysis will also enable the identification of key
stakeholders and communities. While social and societal concerns are identified and
quantified to the extent possible, the TDA is intended to be a technical document, prepared
by the scientific community within the countries participating in the GEF IW project.

3.
The TDA process provides the opportunity for the countries to identify and
understand the linkages between problems and their root causes. By categorizing these
causes within specific economic sectors, this analysis permits the active participation and
engagement of key stakeholders. This enables the preparation of holistic, comprehensive,
cost-effective solutions for complex transboundary problems. It also enables these
problems to be defined in terms of manageable elements, linked to specific and identifiable

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geographic localities, or "hot spots", that can be readily prioritized in terms of an agreed
system of prioritization developed by the collaborating countries.

4.
Strategic Action Program. The resulting actions required to address priority
transboundary issues of concern, identified through the TDA process, are further developed
and articulated within the Strategic Action Program. This program sets out a series of
agreed actions needed to minimize or mitigate identified water quality, biological, habitat
or other land use-related conflicts, degradation or threats within specific economic sectors
and in specific geographic locations. These actions generally include specific policy, legal,
and institutional actions, reforms and investments on a multicountry and national basis.
These specific actions generally are developed at the country level, often through the
interministerial committees with the active participation of stakeholders at the national and
subnational levels, that are subsequently compiled and agreed at the multicountry level. In
most cases, the development of multicountry strategic action programs complement
specific action plans developed by the collaborating countries. These latter plans, individual
national action plans (NAPs), form the national commitment of the countries to the
implementation of strategic actions necessary to bring about the sustainable development
and utilization of shared, transboundary resources. Such country-level actions, in turn, may
be eligible for additional GEF assistance in the implementation of those additional, or
incremental, actions necessary to give effect to the agreed transboundary benefits identified
in the SAP. These incremental costs reflect the various states of economic development
within the collaborating countries, and serve as the basis for GEF IW implementation
projects.

5.
Enabling Activity. In essence, this multicountry process of issue identification,
quantification, prioritiza tion, and action planning constitute the equivalent of the "enabling
activities" identified within the other GEF focal areas. Enabling activities are those
fundamental steps that must be taken in order for collaborating countries to address priority
concerns established by the conventions. To this end, the SAP forms an important and
essential step in identifying country-driven commitments to action that may reduce the risk
of failure of subsequent GEF interventions that assist in the implementation of country-
driven actions.

6.
Monitoring and Evaluation. A final step in the GEF process is that of monitoring
of project implementation, which allows project management to take appropriate corrective
actions during the course of the conduct of project activities, and evaluation, which
measures project performance, efficiency, and impact against pre-determined milestones or
indicators. Evaluation indicators are generally set forth in the Logical Framework as a part
of project design.

7.
Guarani Aquifer System Project. As noted previously, the primary outcome of the
project will be an agreed Strategic Action Program, consistent with the GEF process
outlined above. This program will be based upon a sound technical and scientific process
of data acquisition, sharing, and analysis, setting forth issues of transboundary concern.
To this end, an operational system of data acquisition and data-sharing is an integral part
of the Guarani Project--contained within Components I and II of the proposed GEF IW
project. Because of the close linkage between the technical analysis (TDA) and the

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resultant priority, strategic actions necessary to address the root causes of agreed
multicountry concerns, the identification of regionally-appropriate, cost-effective
mitigation and management measures (Component V), acceptable to basin communities
and key stakeholders (see Component III), also form critical elements of the Guarani
Aquifer System project. In order to ensure the sustainability of these management and
mitigation measures, and data acquisition and sharing mechanisms, the Guarani Project
also includes institutional strengthening and capacity building (Component IV) as
important activities within the project framework. Finally, the proposed project activities
also recognize emerging issues related to the Guarani Aquifer System, and specific
investigations with respect to the potential development of the Aquifer for geothermal
energy, are also included within the framework of the project (Component VI). All of
these activities cont ribute to the development of a sustainable multicountry framework for
the sustainable management and development of the Guarani Aquifer System.


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ANNEX 9. AVAILABLE REFERENCE DOCUMENTS


1. This annex presents a list of the publications on the Guarani Aquifer System that were
prepared as a result of the project formulation (PDF/B) activities. These documents
form the documented basis for the formulation of the Transboundary Diagnostic
Analysis (TDA) and Strategic Action Plan (SAP) for the Guarani Aquifer System
proposed as the outcome of this project.

2. Work Products by Work Program Element.

I.1 COMPONENT I. Expansion and Consolidation of the Current Knowledge Base on
the Guarani Aquifer System

Activity 1. Survey of all existing technical data
· FUNPAR, Informe Final de la Consultoría: Expansión y consolidación de la base
actual de conocimiento básico; Estudios Básicos del Acuífero, February 2001.

Activity 3. Study of the actual and potential uses of the aquifer
· Jorge de los Santos and Chang Kiang, Informe Final de la Consultoría: Estudio del uso
actual y potencial del Acuífero Guaraní, March 2001.

I.2 COMPONENT II. Joint Development and Implementation of the Guarani Aquifer
System Management Framework

Activity 2. Definition of relevant information for aquifer monitoring network
· Albert Mente, Informe Final de la Consultoría: Definición de información relevante
para la red de monitoreo del acuífero, January 2001.

Activity 4. Technical and conceptual design of the information system
· Noemi Tardivo, Informe Final de la Consultoría: Sistema integral de información
geográfica para la cogestión del agua del Sistema Acuífero Guaraní, March 2001.

Activity 5. Survey of existing legal-institutional framework
· Corina Fernández, Informe Final de la Consultoría: Levantamiento y análisis del Marco
jurídico-institucional y aspectos legales en la materia hídrica ambiental de Argentina,
March 2001.

· Cid Tomanik Pompeu, Informe Final de la Consultoría: Levantamiento y análisis del
Marco jurídico-institucional y aspectos legales en la materia hídrica ambiental de
Brasil, March 2001.


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· Lauro Ramírez, Informe Final de la Consultoría: Levantamiento y análisis del Marco
jurídico-institucional y aspectos legales en la materia hídrica ambiental de Paraguay,
April 2001.

· Arturo Navarro, Informe Final de la Consultoría: Levantamiento y análisis del Marco
jurídico-institucional y aspectos legales en la materia hídrica ambiental de Uruguay,
February 2001.

Activity 6. Preparation of TOR for a Strategic Action Plan
· Jorge Rucks, Stephen Foster, Roberto Ronchietto, Luiz Noronha, Eduardo Mestre,
Roberto Kirchheim, Griselda Castagnino, Informe Final del PEA : Programa
Estratégico de Acción: Resumen Ejecutivo, Descripción y Términos de Referencia,
March 2001.

Activity 11. Institutional assessment of involved agencies
· Luiz Noronha, Informe Final de la Consultoría: Propuesta de Desarrollo Institucional y
de Arreglos Institucionales, April 2001.

I.3 COMPONENT III. Public Participation

Activity 7. Identification of stakeholders, education and communication needs, and pilot
projects for public participation
· María Elena González Pioli, Informe Final de la Consultoría: Necesidades de educación
ambiental y del agua, comunicación social y proyectos piloto para la participación e
involucramiento público, March 2001.

Activity 8. . Definition of mechanisms for communication and public participation in
decision making
· Mario Bernalt, Informe Final de la Consultoría : Identificación de actores, definición de
mecanismos para comunicación y participación pública que se requerirán durante el
proceso de ejecución del proyecto, March 2001.

· Proceedings of the Seminar on the Guarani Aquifer, Foz do Iguaçu; January 31 ­
February 1, 2000.

· Reports of the Public Participation Workshops:
a. July 12-14, 2000 - Santa Fe, Lanzamiento del Proyecto, implementación de
arreglos institucionales y definición de marco Lógico y aspectos técnico-
científicos del Programa del PSAG
b. November 28-29, 2000 - Asunción, Revisión de Avances del Proyecto y
Reorientaciones de Aspectos Técnicos, Científicos y Legales -
Institucionales para apoyar la Preparación del Proyecto;
c. March 14-17, 2001 - Montevideo, Propuesta de PEA, incluyendo TORs;
definición de Bases de las Componentes 1 y 5 del Documento de Proyecto
d. April 3-4, 2001 - Montevideo, Académicos, Revisión de Componentes 1, 5 y
6 de la Descripción del Proyecto

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e. April 23-24, 2001 - Montevideo; Revisión de la Estructura y contenidos de
la Descripción del Proyecto;
f. May 7-8, 2001 - Asunción; Revisión y contrapropuesta de Arreglos
Institucionales; Revisión de las bases de Costos del Proyecto;
g. May 28-30, 2001 - Salto; Revisión y Consenso de la Documentación
resultante de la Fase de Preparación del Proyecto; para la Protección
Ambiental y Desarrollo Sostenible del Sistema Acuífero Guaraní

I.4 COMPONENT IV. Project Monitoring and Evaluation, and Dissemination of
Project Results

Activity 10. Elaboration of project evaluation plan
· Álvaro Soler. Informe Final de la Consultoría : Sistema de Seguimiento, Evaluación y
Retroalimentación del Proyecto y diseminación de sus resultados / productos, June
2001.

I.5 COMPONENT V. Development of Management and Mitigation Measures within
Identified "Hot Spots"

Activity 9. Identification of possible pilot areas for implementation of programs and
development of TORs for pilot programs
· Alberto Calcagno, Informe Final de la Consultoría : identificación de áreas para la
ejecución de programas y acciones piloto y definición de términos de referencia, March
2001.

I.6 COMPONENT VI. Development of Geothermal Energy Potentials

· Hydrothermalism. Lars Tallbacka, Informe Final de la Consultoría : Geothermal
Project Component, June 2001.

I.7 COMPONENT VII. Project Coordination and Management

Activity 12. Technical Editing SAP
· Jeffrey A. Thornton, Informe Final de la Consultoría : Formulación Final del PAD
(Project Appraisal Document), June 2001.

Activity 13. Incremental cost analysis
· Roberto Ronchietto, Informe Final de la Consultoría : Análisis de Costos Incrementales
del Proyecto. June 2001.

Activity 14. Project Coordination and Technical-Administrative Support
· Eduardo Mestre, General Secretary: Monthly Progress Reports on the Guarani Aquifer
System Project, Preparation Phase; July, 2000 ­ June, 2001; SG Final Appraisal
Report, June, 2001
· Roberto Kirchheim and Griselda Castagnino, Informes Finales de la Consultoría :
Apoyo técnico, científico y administrativo a la Operación del Secretaría General del
PSAG, June 2001.

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I.8 Complementary Activities

· Indigenous Groups. Esther Prieto, Informe Final de la Consultoría : Preparación de
las Bases para la Participación e Involucramiento de las Comunidades Indígenas en
las actividades de Gestión Sostenible e Integrada, y Protección Ambiental del Sistema
Acuífero Guaraní, June 2001.




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ANNEX 10: PUBLIC INVOLVEMENT PLAN SUMMARY

1. The formulation of the proposal for the Environmental Protection and Sustainable
Development of the Integrated Management of the Guarani Aquifer System, including its
proposed GEF components, has involved extensive and broad-based participation by
representatives of the municipal/departmental, state/provincial, and national/federal
governments, academic and research institutions, private sector representatives and
nongovernmental organizations. The participation process was facilitated by a series of
consultative workshops, conducted in Foz do Iguaçu (Brazil) during January 2000, Santa
Fe (Argentina) during July 2000, Asunción (Paraguay) during November 2000,
Montevideo (Uruguay) during March and April 2001, Asunción during May 2001, and
Salto (Uruguay) during May 2001. In addition, a number of focus group sessions were held
to solicit sectoral input from NGOs, in Garopaba and Caxambú (Brazil) during November
2000, and in Rio Grande do Sul (Brazil) during May 2001; from the private sector, in
Brasilia (Brazil) during March 2001 and Florianópolis during May 2001; and, from the
indigenous peoples groups in Brazil during May 2001 and in Paraguay during June 2001.

2. Approximately 200 persons representing more than 100 institutions, government
agencies, and NGOs, participated in the public meetings and provided inputs in drafting
this proposal, many of which are expected to participate in the implementation of the
project.

3. A list of those institutions that participated in the public meetings convened prior to the
preparation of this project document, and which are expected to participate in project
implementation as well as subsequent public meetings, is presented below. Governmental
organizations are categorized as national/federal or as provincial/state government
agencies. Nongovernmental organizations and other governmental bodies are also listed,
including state- (Brazil) and provincial- (Argentina) level governmental agencies. Where
the participating organizations are known by an acronym, the acronym is also shown.

4. NATIONAL AND FEDERAL GOVERNMENTAL ORGANIZATIONS

Argentina
· Ministerio de Relaciones Exteriores y Culto
· Subsecretaría de Recursos Hídricos -Sistema Nacional de Información - SNIH/SRH
· Secretaría de Desarrollo Sustentable y Política Ambiental- SDSPA
· Instituto Nacional del Agua y del Ambiente - INA

Brazil
· Ministério de Relações Exteriores - MRE
· Ministério do Meio Ambiente ­ MMA
Secretaria de Recursos Hídricos ­ SRH
Secretaria de Qualidade Ambiental ­SQA
Secretaria Executiva - SECEX
Mercosul ­ SGT-6
· Ministério de Minas e Energia - MM

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Departamento Nacional da Produção Mineral ­DNPM
Companhia de Pesquisa de Recursos Minerais ­ CPRM
Secretaria de Energia
· Agencia Nacional da Água ­ ANA
· Instituto Brasileiro de Meio Ambiente e Recursos Naturais Renováveis ­ IBAMA
· Ministério da Saúde MS
· Fundação Nacional da Saúde ­ FUNASA
· Agência Nacional de Vigilância Sanitária - ANVISA
· Ministério da Integração Nacional -MI
· Ministério do Planejamento, Orçamento e Gestão
Secretaria de Assuntos Internacionais- SEAIN
· Ministério da Agricultura ­ MA
· Empresa Brasileira de Pesquisas Agropecuárias ­ EMBRAPA
· Fundação Nacional do Índio ­ FUNAI
· Ministério da Ciência e Tecnologia - MCT
· Ministério da Defesa - MR
· GSI / Presidência da República

Paraguay
· Secretaría Medio Ambiente - SEAM
· Secretaría Técnica de Planificación - STP
· Ministerio de Salud Pública y Bienestar Social- SENASA - Servicio Nacional de
Saneamiento Ambiental
· Ministerio de Obras Públicas y Comunicaciones ( M.O.P.C.) ­ Viceministerio de Minas
y Energía
· Ministerio de Relaciones Exteriores
· Cooperativa Nacional de Aguas y Saneamiento - CORPOSANA
· Secretaría del Ambiente - Proyecto Saro - Sistema Ambiental de la Región Oriental
· Programa Regional. Piloto Uft
· Servicio Geológico Geotécnico
· Ente Binacional Yaciretá-Itaipu

Uruguay
· Ministerio de Relaciones Exteriores
· Ministerio de Transporte y Obras Públicas - Dirección Nacional de Hidrografía ­
MTOP -DNH
· Ministerio de Vivienda, Ordenamiento Territorial y Medio Ambiente - Dirección
Nacional de Medio Ambiente ­ MVOTMA-DINAMA
· Ministerio de Ganadería Agricultura y Pesca ­ Programa Prenader
· Ministerio de Industria, Energía y Minería - Dirección Nacional de Minería y Geología
-DINAMIGE
· Obras Sanitarias del Estado ­ OSE




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5. PROVINCIAL AND STATE GOVERNMENTAL ORGANIZATIONS

Argentina
· Dirección Provincial de Obras Hidráulicas de Santa Fé - SPAR
· Dirección de Hidráulica Provincia de Entre Ríos - Ministerio de Obras Públicas
· MOSRV
· Administración Provincial del Agua - APA - Provincia del Chaco
· Instituto Misionero de Agua y Saneamiento - IMAS - Provincia de Misiones

Brazil
· Agência Goiana de Meio Ambiente e Recursos Naturais
· Fundação Ecológica de Mineiros - FEMAS
· Fundação Estadual do Meio Ambiente de Mato Grosso ­ FEMA
· Companhia de Saneamento do Estado do Mato Grosso ­ SANEMAT
· Companhia Matogrossense de Mineração­ METAMAT
· Secretaria de Estado de Meio Ambiente e Desenvolvimento Sustentável do Mato
Grosso do Sul - SEMA
· Secretaria de Estado de Planejamento e de Ciência e Tecnologia do Mato Grosso do
Sul­ SEPLANCT
· Companhia de Saneamento do Estado do Mato Grosso do Sul ­ SANESUL
· Fórum Permanente de Meio Ambiente e Desenvolvimento Sustentável do Mato Grosso
do Sul ­ FORMADS
· Conselho de Desenvolvimento e Integração ­ COSESUL/MS
· Instituto Mineiro de Gestão de Águas ­ IGAM
· Centro de Desenvolvimento de Tecnologia Nuclear ­ CDTN
· Companhia de Saneamento do Estado de Minas Gerais ­ COPASA
· Fundação Centro Tecnológico de Minas Gerais ­ CETEC
· Secretaria de Estado do Meio Ambiente e Desenvolvimento Sustentável­ SEMAD
· Secretaria de Planejamento e Coordenaçao Geral do Estado do Paraná ­ SEPL/CCPG
· Secretaria de Estado de Meio-Ambiente e Recursos Hídricos do Estado do Paraná
· Superintendência de Desenvolvimento de Recursos Hídricos e Saneamento Ambiental -
SUDERHSA/PR
· Secretaria Estadual de Meio Ambiente do Estado do Rio Grande do Sul- DRH/SEMA
· Companhia de Saneamento do Rio Grande do Sul ­ CORSAN
· Secretaria de Obras Públicas e Saneamento do Rio Grande do Sul ­ SOPS
· Secretaria de Coordenação e Planejamento Estado do Rio Grande do Sul
· Secretaria de Desenvolvimento Urbano e Meio Ambiente do Estado de Santa Catarina -
SDM
· Secretaria de Estado do Desenvolvimento Econômico e Integração Ao Mercosul do
Estado de Santa Catarina ­ SDE
· Departamento de Águas e Energia Elétrica -Secretaria de Recursos Hídricos
Saneamento e Obras do Estado de Sao Paulo ­ DAEE SRHSO
· Secretaria do Meio Ambiente do Estado de Sao Paulo - SMA
Instituto Geológico ­ IG/SMA
Secretaria do Meio Ambiente do Estado de Sao Paulo - Instituto Florestal ­ IF/SMA

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· Companhia de Saneamento Básico do Estado de São Paulo - SABESP
· Companhia Tecnologia e Saneamento Ambiental ­ CETESB
· Departamento de Água e Energia Elétrica ­ DAAE ­ Marília -SP
· Instituto de Pesquisa Tecnológica ­ IPT
· Instituto Geográfico e Cartográfico - IGC

6. LOCAL GOVERNMENTAL ORGANIZATIONS

Paraguay -- Gobiernos de los Departamentos Alto Paraná-Itapúa-Caaguazú-Concepción
Uruguay -- Intendencias de los Departamentos de Salto y Paysandú

7. UNIVERSITIES

Argentina
· Universidad de Buenos Aires - UBA
· Universidad Nacional del Litoral - UNL/FICH
· Universidad del Centro - Instituto de Hidrología de Llanuras - UNICEN/IHL
· Universidad de la Plata - CISABA
· Universidad Católica de Santa Fe

Brazil
· Universidade Federal de Minas Gerais - UFMG
· Universidade Federal de Mato Grosso -UFMT
· Universidade Federal de Mato Grosso do Sul -UFMS
· Universidade Federal do Paraná ­UFPR
· Universidade Federal do Rio Grande do Sul -UFRGS
· Universidade Federal de Santa Catarina ­ UFSC
· Universidade Federal de Goias - UFG
· Universidade de São Paulo - USP
· Universidade Federal de Uberlándia ­ UFU
· Universidade Federal de Santa Maria - UFSM
· Universidade Estadual Paulista "Júlio de Mesquita Filho" - UNESP
· Universidade do Vale dos Sinos - UNISINOS
· Universidade Estadual de Mato Grosso do Sul - UEMS
· Universidade Católica Dom Bosco - UCDB
· Universidade para o Desenvolvimiento Regional do Pantanal - UNIDERP
· Universidade de Caxias do Sul - UCS
· Universidade de Campinas - UNICAMP

Paraguay
· Universidad Nacional de Asunción

Uruguay
· Universidad de la República


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8. NONGOVERNMENTAL ORGANIZATIONS (NGOs)

Argentina
· Asociación Latinoamericana de Hidrología Subterránea
· Instituto de Estudios e Investigaciones para el Medio Ambiente
· Comisión Desarrollo Sustentable Cuenca del Plata
· Fundación Ambiente e Recursos Naturales

Brazil
· Fórum Meio Ambiente
· Consórcio Intermunicipal para o Desenvolvimento Integrado das Bacias Dos Rios
Mirandas e Apa ­ CIDEMA
· Associação Brasileira de Águas Subterrâneas ­ ABAS/MG
· Associação Brasileira de Engenharia Sanitária ­ Regional de Minas Gerais -
ABES/MG
· Associação Brasileira de Recursos Hídricos ­ Regional de Minas Gerais - ABRH/MG
· Comitê de Bacia Hidrográfica do Rio Araguari
· Comitê de Bacia Hidrográfica do Rio Taquari-Antas
· Associação Brasileira de Águas Subterrâneas ­ ABAS/PR
· Associação Brasileira de Águas Subterrâneas ­ ABAS/RS
· Conselho Regional de Engenharia e Agronomia - CREA/RS
· Fórum ­ Comitês de Bacias
· Instituto Biguá
· ONG Grito das Águas
· Ecologia e Ação
· Instituto Guacuí Sos Rio das Velhas
· Sociedade de Defesa Regional do Meio Ambiente
· Grupo Ambientalista Ibty Caray
· Fundação Emas
· Coalisão Rios Vivos

Paraguay
· Ceamso
· Alter Vida
· Asociación de Geólogos del Paraguay
· Sociedad Paraguaya de Agua Subterránea
· Sobrevivencia ­ Apoyo Integral a Comunidades Nativas y Ecosistemas

Uruguay
· Associación Soriano para la Defensa de los Recursos Naturales
· Centro Interdisciplinar de Estudio Sobre el Desarrollo
· Grupo Ñangapire
· Instituto de Ecología del Río Uruguay
· Comisión Técnica Mixta de Salto Grande


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9. PRIVATE SECTOR ORGANIZATIONS

Paraguay
· Grupo Minero Guaraní
· Hidrógeno
· Sociedad de Estudios de la Tierra (SETI)



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ANNEX 11: LETTERS OF ENDORSEMENT

The Letters of Endorsement by the four countries' GEF Focal Points will be included in the
final document to be submitted to the GEF Council.



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ANNEX 12: GEF STAP REVIEW AND IA RESPONSE



TECHNICAL REVIEW

" Project for the Environmental Protection and Sustainable Development
of the Guarani Aquifer System"

Review carried out by:

Edwin D. Ongley PhD.
Emeritus Scientist, National Water Research Institute
Environment Canada

August 4, 2001


The response to the STAP Reviewer's comments is presented below in italics and is
organized according to numbering in the Reviewer's submission.


1. General Comments and Overview

This Project Brief (PB) is especially well prepared, comprehensive, and contains all the
information that one would expect in a GEF application. In some respects, the PB is
perhaps too comprehensive as it tends to be repetitive. Also, certain points tend to get lost
in the text. Given the size of the PB (88 pages), it would be improved with a Table of
Contents.

A Table of Contents has been included in this Project Brief.

This technical review includes a focus on certain aspects that, in the opinion of this
reviewer, require some brief explanation and which may serve to clarify these issues in the
mind of the GEF Council.

The only significant deficiency in this PB is the absence of hard data on the problems of the
aquifer. This leads to certain technical questions raised below. Recognising that the TDA
will deal with this in greater detail, one might, however, expect a brief technical summary
of what is known (and not known) about the aquifer, as a basis for justifying some of the
actions proposed. (refer to section 4 below).


2. Relevance to GEF

This project clearly fall within that set of criteria defined by International Waters. It is
particularly gratifying to see a project come forward that is anticipatory rather than

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remedial in its major dimensions. This should be encouraged where important
transboundary issues are in play.


3. Objectives

The proposed objective are clearly stated and are entirely appropriate to the nature of the
issue and the range of solutions that are realistic and implementable.

The objectives are well focused in the PB, and are certainly achievable given the caveats
and implementation schedule proposed. The PB is particularly well focused on the
scheduling of related activities and has a realistic view of what is achievable in the
timeframe available. The Project proponents clearly have much experience in this area.
There are no objectives that should be changed and none of consequence that should be
added.


4. Approach

The approach to this project (the six [+ administrative] components) is clearly defined and
appears to be technically sound (given the absence of ha rd technical information in the PB).
The implementation steps and related technical detail outlined in Annexes 1 and 2 seem
reasonable.

As noted below, certain aspects of this approach would benefit from some explanation.

a) The fact that the TDA is not listed in Annex 1 as a major activity seems strange
(compare with the SAP which is clearly noted).

b) It is not clear to this reviewer how the project components are sequenced relative to the
production of the TDA and the SAP (ref. Annex 2, Component 2) which are, it seems,
major outcomes of this project (one learns this on page 33).

c) It would be useful to have an explanation of how the substantive components of this
project differ from (or link to) what would be recommended in the SAP (once it is
developed). In other words, some of the components are what one would expect to see
in the SAP, but appear here to be implemented prior to development of the SAP.

For example:
Component One presumably, is critical to both the TDA and SAP, yet neither are
mentioned on page 12.

Component Two: how does this differ from what one would expect as a
recommendation of the SAP, when it is developed.

4.a),b),c) One of the innovative concepts of this project is related to the fact that it does not only
focus on studies and preparatory activities during the four years of its implementation, but that
it provides some action from the beginning in order to maintain and maximize stakeholders'

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interest. This is in line with the recommendations at the First GEF International Waters
Conference in Budapest in October 2000 during which it was pointed out that SAP and TDA
formulation periods have been too long in a number of GEF-supported International Waters
projects. It is especially reflected in components 1 and 5, which will provide more information
about the aquifer system and help implement pilot activities. At the same time, it cannot be
expected that within four years everything would be known about this large groundwater body,
nor that a full institutional/legal framework would be in place. In fact, the project explicitly
states that the objective is to reach a consensus proposal for such framework. Therefore the
SAP will have to make use of the results of the different components, which will provide both
lessons learned, identification of knowledge and action gaps, as well as needs for future
financing of identified activities. The TDA is considered a part of the SAP process and therefore
does not appear as a separate component in Annex 1. It is mentioned as a part of the SAP in
both Annexes 1 and 2. It will, however, constitute a monitorable line item of its own in the terms
of reference for the SAP.

d. Transboundary Issue : The transboundary nature of this project seems to be based
mainly on the fact that the aquifer is shared by four countries. However the project
document does not demonstrate that there is, in fact, a transboundary threat or to what
extent a common approach to management is essential. The real question, and which
presumably will be answered in the TDA will be the extent to which threats in one
country (e.g. groundwater contamination around Sao Paulo) have the potential to
damage quality and quantity in adjacent countries. This seems to be assumed in the PB.
A common management approach is only required when it can be demonstrated that a
threat in one country constitutes a threat in adjacent countries. If this cannot be
established, then a common approach to monitoring and evaluation would be the main
focus.

4 d) It has been established through technical studies that clear transboundary issues exist in
the border areas of Argentina/Uruguay (well yields are diminishing and some cross border
disputes are apparent due to the importance of these geothermal wells for tourism) and
Uruguay/Brazil (pollution between sister cities across the border). The nature of the aquifer
system, i.e. very large volumes of mainly confined aquifer storage compared to significant ­ but
smaller and much more localized ­ volumes of active recharge, mean that there is a possibility
that major development could provoke large drawdowns with the potential for conflict between
competing users. This is the more significant, given the fact that the most valued exploitation is
in the form of `overflowing geothermal wells' and conservation of such artesian heads is
managerially more demanding than normal aquifer management.
In addition, the recharge area in Paraguay, bordering Brazil and Argentina, is a potential area
for transboundary impact. These three areas have been included as Hot Spots to be addressed
by the project. In addition, the area of São Paulo is the one experiencing the most extraction
and pollution in the entire aquifer system area. While it is highly unlikely that pollution in São
Paulo would reach the other countries, the technical and institutional assessments have shown
that this area can provide important lessons in terms of decentralized management and
monitoring approaches. All four countries agree that the institutional management framework
for the Guarani Aquifer System needs to be as light as possible, precisely due to its size.
Therefore it will be necessary to test which types of measures will work in border areas and
also in areas of significant national importance. This information has been added to the Project
Brief.



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Other related environmental issues:

e. Surface and Groundwater linkage : The linkage between this project and surface water
management is important, especially in the context of an absence of common
management practices (especially in water quality management) for the Paraná River
Basin which is also common to all four countries and overlies, more or less, the Guarani
Aquifer. Also, some countries, such as Argentina, have very poorly developed legal
approaches to water quality objectives or standards for controlling effluents for surface
water. How will this lack of a legal framework for surface water management affect
this much more complex task of developing legal criteria for managing groundwater?
Have the proponents of this project considered what linkages are necessary between
surface and groundwater management at the transboundary scale in order to ensure
success of this particular project? More pointedly, can the groundwater component
proceed in the absence of a suitable parallel framework for surface water quality
management? The linkage between this and other CAS projects has not been made.

A related issue is the linkage between increasing use of groundwater when, in fact,
there is much surface water. Is better surface water management part of the solution?
It seems hard to image that surface water management will not be part of the overall
management plan.

4 e) 90% of the Guarani Aquifer System is confined and 10% constitute recharge areas. Thus,
given the geomorphology and hydrogeology of the area there are few locations where surface
watercourses are recharging the unconfined aquifer system. For this reason the interaction
between ground- and surface water is strongly limited in most of its reach. It means that
management can be tackled semi-independently of that of surface water. One of the results of
the project, especially Component 1, will be a clearer knowledge about the recharge areas,
which are not completely defined as yet. A major effort will be made, for instance, in the border
area in Eastern Paraguay to model surface/subsurface interactions. It is anticipated that these
results will provide the information necessary to design appropriate mechanisms for the
interaction with relevant surface water areas. ­ An issue of importance is the role and
significance of the aquifer system in providing baseflow to river systems (especially the Rio
Uruguay) and sustaining wetleands in Misiones and Corrientes Provinces of Argentina, which
is an important unknown in terms of international waters, but will be under investigation in the
project. .

f. Perhaps I missed it, but I do not see reference to the determination of allowable
(sustainable) yield as one of the main technical outputs.

4 f) Given the complexity of this aquifer system, quantity is an issue in some parts (e.g.
Uruguay/Argentina; São Paulo), but less in other ­ less developed ­ parts. Based on the
technical assessments to be carried out during the project, sustainable yield estimates would be
one of the outputs for subareas of concern.

g. The reference to a GIS system (e.g Annex 2 : Component 2b) should focus on an
Information System and not a GIS system. GIS is only one of the necessary tools in
such a system. For example, GIS does not handle documents (required in this project);
GIS does not do decision-support (undoubtedly will be required). GIS systems are poor
at numerical analysis and numerical modelling (required for this project).

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4 g) In Spanish/Portuguese, the Information System will actually be called SISAG (Sistema de
Información del Sistema Acuífero Guaraní), for the reasons correctly pointed out by the
reviewer. This has been adjusted in the Project Brief.

h. Beneficiaries: I did not see any reference to use of the aquifer for agricultural
(irrigation) purposes. Perhaps there is no such use. If there is, then this use should be
identified and quantified, as it may be the most intractable management issue. A related
issue is the contamination of groundwater by agriculture, especially by nitrogen which
is usually the most widespread of groundwater contaminant in America and Europe.

4 h). This issue will be addressed in Component 1.4 (see Annex 1) "Water quality is assessed
and pollution patterns distinguished in terms of the origin, impacts and ways to remediate
pollution". As mentioned in the same paragraph, this will also include recharge/discharge
areas where irrigation may play a major role.

i. Annex 7 ­ Root Cause - issue is not that WB has/has not a policy on groundwater, but
what are the institutional frameworks that already exist elsewhere and which may work
here. Reference to the UN's transboundary water convention would be useful.

4 i) The fact that the World Bank does not have a policy on groundwater was mentioned in the
context of useful lessons to be learned from this project as to future endeavors in other
countries, in which the World Bank may be involved. It is not mentioned as a root cause. As to
general international legal frameworks, the UN transboundary water convention is only of
limited use, given that it does not include confined aquifers. As previously noted, the Guarani
Aquifer System is 90% confined and only 10% free, thus constituting a hybrid case, for which
innovative measures will have to be sought. The guidance from the Convention will be taken
into account as appropriate.

Root Causes (Para 4) : these are almost never quantifiable and it would be unwise to
offer this as an output. In some respects, the "root cause" analysis is less appropriate for
this study, than a "threat analysis" in that the system seems to be not yet severely
impacted.

4 i) The correct wording should have been "The root causes of existing and potential problems
will be identified during this project." The sentence has been corrected in the present Project
Brief.

j. Transboundary Diagnostic Analysis (TDA). This is a key activity that is too often done
poorly. A high degree of rigour, discipline, and technical oversight, needs to be brought
to bear on this activity. This activity should lead to a "threat analysis" and not solely to
a diagnostic analysis (what, where, when).

4 j) See response to comments 4 a),b),c)

k. Process Indicators:

· What is the probability of obtaining a four-country agreement on management of
the Aquifer?

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· "the existence of a functioning monitoring network" - this needs to include an
harmonized monitoring network based upon agreed priorities and using modern
principles of groundwater quality monitoring. (not so easy as it sounds as it
includes, amongst other things, international acceptance of a common standard for
data quality).
· While a legal framework is required, an indicator should reflect the willingness of
the participants to enforce this legal framework (legal frameworks are common in
Latin America, but willingness or ability to enforcement is less so).
· Following the TDA there needs to be some assessment of the capacity (technical
and institutional) of each country to carry out the work that is identified, and what
capacity development may be necessary to overcome any identified deficiencies.
As an example, Brazil is said to have the technical capacity to analyze only 30% of
the active ingredients of pesticides used in that country.

4 k) The probability that the countries will come to a consensus proposal is high. Given that
the final adoption of any legal framework is dependent on the governments and legislature of
each country, the project does not have the actual adoption as one of its outputs. It will be one
of the challenges of the project to design a framework that is light and therefore feasible in
order to increase the likelihood that legal and institutional agreements are followed up in
practice. An important design feature of the project is to include subnational levels of
government as well as other stakeholders (academia and other civil society groups). This is
expected to help disseminate project results and hopefully generate pressure to comply with
jointly agreed actions, such as joint monitoring standards. A capacity assessment was carried
out during project preparation and a more in-depth assessment will be part of project
implementation.

l. Stress Reduction Indicators
"identified and quantified water quality threats and their evolution" - should this not be
"evaluation" rather than evolution?

4 l) Evolution in this context refers to forecasts about the future developments of these threats
(stable, increasing, etc.)

m. Environmental Status Indicators:
"implementation of an up-to-date, functioning GIS..." This should focus on an
"information system" and not GIS per se. (or a GIS-based information system)

4 m) See response to comment 4 g)



5. Background Information


Annex 6 (Aquifer Description) ­ more detail would have been useful. This is very short
and not very complete. Eg. in Annex 6 and 7, and elsewhere, document says that
"significant pollution" is occurring -- A fuller description would have been useful. Eg.
what is known about pollution of aquifer ­ microbiological (municipal, animal wastes)?
industrial contaminants? (See para. 3.5.) Agricultural (especially N); etc. Root Cause
analysis focuses on pollution status and degradation potential (Para. 3). Is this hearsay

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evidence or hard evidence? Or does it fall into the category that it has been said so
many times that everyone believes it.

Generally, the PB provides little technical information nor cites informed sources to
justify some of the central claims. This is NOT a major oversight insofar as detailed
technical information is usually lacking in such situations, however something MUST
be known about the aquifer in order to initiate country actions to involve the GEF on
this issue.

5. Further information on the aquifer characteristics has been added to Annex 6 of the Project
Brief in response to this comment.

6. Funding Level

Relative allocation of funds amongst the various components seems reasonable, although I
personally believe that not more than 10% of the total should be devoted to project
management per se (here, 13%). The total amount seems reasonable given the major
activities anticipated.

6) Given the regional nature of this project (and large geographical area that it covers, with
numerous local stakeholders) the project coordination activities are considered both critical to the
project's success and necessary to be well funded in order to achieve their objectives. We feel that
the proposed allocation is well justified based on the needs of this type of project.

What is the potential of default by Argentina on promised counterpart funding under this
economic climate?

The project will be included in the national budget. In addition, a significant part of Argentina's
contribution will be in kind.


7. Innovation

The action of developing an international management plan for a major aquifer will be truly
innovative, and will provide a useful example for other similar problems world-wide.

The fact that the GEF does not fund research, the need to gather information and carry out
investigations is an ESSENTIAL part of this project. It is this reviewer's opinion that many
GEF projects suffer because of an assumption that new knowledge is not needed to bring
the project to a successful conclusion. It is gratifying to see that a significant proportion of
the budget is targeted to this activity.

(This summarizes comments which have been responded to above).

8. Strengths/Weaknesses

The greatest strength of this project is the ability to take proactive action against future
degradation threats.


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In my view, the PB is mainly weakened by the lack of evidence to support the supposition
that there are threats (especially contamination issues) which are transboundary in nature.
Also, the lack of linkage with surface water quality management would appear to be a
weakness. Neither of these are, however, reason to cause the proponents to develop a new
strategy ­ only that some explanation would improve the quality of this proposal.


9. Conclusion

This is thoughtful, comprehensive, and well designed project. The proponents are to be
congratulated. The risks are transparent and manageable. While some limited weaknesses
are apparent it is highly likely that a brief explanation will put these matters to rest. This is
an excellent example of use of the GEF for pro-active purposes and should be greatly
encouraged.


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ANNEX 13 MAP




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