BULGARIA
Wetlands Restoration and Pollution Reduction Project (GEF)
Project Appraisal Document
Europe and Central Asia Region
Environmentally and Socially Sustainable Development Department
Date: February 26, 2002
Team Leader: Rita E. Cestti
Country Manager/Director: Andrew Vorkink
Sector Manager/Director: Marjory-Anne Bromhead
Project ID: P068858
Sector(s): VM - Natural Resources Management
Theme(s): Environment
Focal Area: I - International Waters
Poverty Targeted Intervention: N
Program Financing Data
[ ] Loan [ ] Credit [X] Grant [ ] Guarantee [ ] Other:
For Loans/Credits/Others:
Amount (US$m): $7.50
Financing Plan (US$m): Source
Local
Foreign
Total
BORROWER/RECIPIENT
2.04
0.00
2.04
LOCAL COMMUNITIES
0.15
0.00
0.15
EC: PHARE
0.44
1.92
2.35
AUSTRIA, GOV. OF (EXCEPT FOR FED
0.19
0.19
0.38
CHANCELLERY-DG DEV COOP)
GLOBAL ENVIRONMENT FACILITY
3.33
4.17
7.50
BILATERAL AGENCIES (UNIDENTIFIED)
0.38
0.48
0.86
Total:
6.53
6.75
13.28
Borrower/Recipient: GOVERNMENT OF BULGARIA
Responsible agency: MINISTRY OF ENVIRONMENT AND WATER
Wetlands Restoration and Pollution Reduction Project - Project Coordination Unit
Address: 22 Maria Luisa Blv.

Sofia, Bulgaria
Contact Person: Ms. Marietta Stoimenova, Project Manager
Ministry of Environment and Water
Tel: 3592 940-6551 Fax: 3592 980-5561 Email: Wetlands_Ppu@
Moew.Govrn.Bg
Estimated disbursements ( Bank FY/US$m):
FY
2003
2004
2005
2006
2007
2008
Annual
0.68
1.73
2.28
1.81
0.86
0.14
Cumulative
0.68
2.41
4.69
6.50
7.36
7.50
Project implementation period: 5 years (from October 2002 to September 2007)
OCS PAD Form: Rev. March, 2000

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A. Project Development Objective
1. Project development objective: (see Annex 1)
The project development objective is that local communities and local authorities in the Persina Nature
Park and Kalimok/Brushlen Protected Site areas adopt sustainable natural resources management
practices. The project will help demonstrate how environmentally-friendly rural development activities can
improve livelihoods.
The global environmental objective is to demonstrate and provide for replication of reduction of
transboundary nutrient loads and other agricultural pollution flowing into the Danube River and the Black
Sea Basins while at the same time conserving key target threatened species in the project areas through: (i)
wetlands restoration and protected areas management programs, and (ii) support for stakeholders to adopt
environmentally-friendly economic activities in the two project areas.
In support of these objectives, the project will assist in: (i) the restoration of critical priority wetlands in the
Danube River basin and piloting the use of riparian wetlands as nutrient traps; (ii) the establishment of
comprehensive monitoring systems for water quality and ecosystem health; (iii) support for protected areas
planning in Persina Nature Park and Kalimok/Brushlen Protected Site; (iv) strengthening capacity to
protect and manage biodiversity and natural resources; (v) building public awareness of sustainable natural
resources management and biodiversity conservation; and (vi) promoting and supporting entrepreneurial
and agricultural activities within the project region which ensure the sustainability of natural resources and
are compatible biodiversity conservation objectives.
2. Key performance indicators: (see Annex 1)
Progress towards the project objective will be measured by the following key performance indicators:
l
Gradual improvement in ecosystem health of restored wetlands, i.e., a percentage reduction in nutrient
loads between water entering and leaving the restored wetlands, an increase in the presence and
numbers of formerly inhabitant species (list of birds and fish to be decided upon results of the baseline
surveys) returning to restored habitat, percentage increase in fish spawning and catch in local areas,
percentage increase in flora diversity (list to be decided upon results of the baseline surveys).
l
Effective control structures and monitoring systems; staff knowledgeable in their operations and
maintenance.
l
Protected areas administrations able to implement protected areas management plans on 27,000 ha with
the support and participation of local communities.
l
Improved agricultural nutrient reduction measures under implementation in Persina Nature Park and
Kalimok/Brushlen Protected Site;
l
Increased local awareness and support for biodiversity conservation, marked by the increased
participation of local communities in protected areas management and conservation activities and
increased public knowledge of the importance of the restored wetlands and protected areas ecosystems.
l
Increased dialogue on transboundary water quality and regional natural resources management issues
through partnerships with Bulgarian and regional scientific communities.
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B. Strategic Context
1. Sector-related Country Assistance Strategy (CAS) goal supported by the project: (see Annex 1)
Document number: tbd Date of latest CAS discussion: 04/25/2002
Main development challenges of Bulgaria, as identified in the recent (draft) CAS, includes the need to
ensure an optimal path toward environmentally sustainable development. Ensuring prudent and rational
utilization of natural resources and a prudent path toward compliance with EU environmental directives,
while at the same time reducing poverty levels, are over-arching goals.
The Project helps meet the objectives of the CAS in the following ways:
l
Sustainable natural resources management: The Project will help local communities and local
authorities in the Project region to adopt sustainable natural resources management practices. The
project will help demostrate the use of wetlands as nutrient sinks, thus contributing to address pollution
problems of the Danube River and Black Sea; conserve Bulgaria's globally significant biodiversity;
and demonstrate how ecologically sustainable agricultural activities can improve livelihoods.
l
Strengthening Implementation and Compliance with EU Environmental Directives: The Project
focuses on helping the Government of Bulgaria implement the Protected Areas Law and the Water Act,
which are harmonized with the EU Water Management Framework Directive, the Nitrates Directive
and the Habitats and Protection of Wild Birds Directives. The technical assistance provided by the
Project will assist the country towards EU accession and institutional building.
l
Poverty-Environmental Link: This project also demonstrates a clear poverty/environment link. The
region along the Danube coast is one of the poorest areas in Bulgaria, mainly related to the decreased
economic productivity of the Danube River, which has seen a tenfold drop in fishery catch since the
late 1960's, seriously affecting rural incomes and livelihoods. One of the underlying causes of the
decrease is the destruction of riverine wetlands necessary for fish spawning. Hence, linking wetland
restoration with the sustainable use of natural resources in the region will help increase the well-being
of the local population by enabling them to increase their economic opportunities for fishery,
agriculture, eco-tourism as well as by allowing downstream communities to enjoy cleaner water
supplies.
1a. Global Operational strategy/Program objective addressed by the project:
The project is fully consistent with Global Environment Facility (GEF) Operational Program No. 8 under
the International Waters Operational Strategy regarding water bodies. The project addresses the highest
priority transboundary problem identified in the Strategic Action Plans of both the Black Sea and the
Danube River Basins. Under the WRPRP, the Government of Bulgaria (GOB) will develop comprehensive
guidelines for nutrient reduction that will fit into the nation-wide nutrient reduction strategy. It will also
implement innovative pilot activities in wetland restoration, and accelerate the introduction of nutrient
friendly agricultural practices which have clear transboundary (global) as well as national benefits. The
incremental costs associated with these benefits are additional to other actions which will be taken and
which have clear domestic benefits (such as the construction of wastewater treatment plants).
The project also has significant biodiversity conservation benefits, consistent with eligibility criteria
outlined in the GEF Operational Strategy No. 2 on the conservation of coastal, marine, and freshwater
biodiversity. Restoration of wetlands and strengthening protected areas in the Danube floodplain will help
restore and conserve natural habitats in critical ecosystems with globally significant biodiversity.
Bulgaria's National Biodiversity Strategy (1994) identifies the Danube wetland complex targeted by the
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project as the most representative of riverine wetlands and of international importance for waterfowl
habitat. It has been proposed as a Ramsar site. Similarly, the "National Action Plan for the Conservation
of the Most Important Wetlands in Bulgaria" (1995) considers Belene Island and the Kalimok/Brushlen
Marshes as high priority areas for restoration. Belene Island is of particular international importance as
breeding habitat for the endangered white-tailed eagle and nesting herons, cormorants (Phalacrocorax
carbo), glossy ibises (Plegadis falcinellus) and spoonbills (Platalea leucorodia). The two sites also serve
as nesting places for the Ferruginous Duck (Aythya nyroca) and the endangered Dalmatian Pelican (
Pelecanus crispus).
Consistency with the Strategic Action Plan for the Protection and Rehabilitation of the Black Sea
(BSSAP) and the Black Sea/Danube Strategic Partnership. The BSSAP, formulated with the assistance of
GEF, has identified nutrient discharge as the most serious problem facing the Black Sea. The GOB has
requested assistance from the GEF/World Bank to undertake an innovative approach to wetland/floodplain
restoration which links land use change with sustainable use and economic development. Floodplains and
wetlands are high efficiency water purifiers during both flood and dry periods. The self-purification action
is a complex interaction of physical (sedimentation, filtration, absorption), microbiological (denitrification)
and biological processes (nutrient reduction through aquatic micro and macrophytes and the roots of
terrestrial vegetation). According to several studies in similar ecological conditions, floodplains can retain
up to 90% of nitrates and up to 50% of phosphorous which pass through. The proposed project is the first
of its kind under the umbrella of the Black Sea/Danube Strategic Partnership -- Nutrient Reduction
Investment Fund, a program which intends to help riparian countries undertake investments to control or
mitigate nutrient inflow to the Black Sea. As the first wetlands restoration project to be proposed under the
Strategic Partnership, the Bulgaria WRPRP will play a critical demonstration role within the region and
help promote similar cost-effective investments for nutrient reduction in the region. The Strategic
Partnership framework will ensure lessons learned during implementation of this project will be
disseminated to enhance future project designs.
2. Main sector issues and Government strategy:
Background. Bulgaria is situated in the heart of southeast Europe, and lies in the eastern part of the
Balkan Peninsula. Its climate ranges from continental in the north and west to Mediterranean in the east
and south. The average annual precipitation is 640 millimeter (mm), but ranges from 480 mm on the Black
Sea coast to 1800 mm in the mountains. The average annual temperature is 10oC, but varies from -2oC in
winter to 25oC in summer. In general. Bulgaria is well endowed with natural resources. The wide range of
soils is conductive to a diversified agriculture and forestry. About 56% of the total area is agricultural land,
about 35% is covered by forests, and 5% is covered by water.
Radical economic and structural reforms were introduced in 1997. They resulted in a dramatic fall in the
inflation rate, acceleration in the privatization of state owned enterprises and the return to modest economic
growth. The economic changes, however, led to widening regional disparities in living standards and
infrastructure, particularly in rural areas. During the 1990s, the privatization of agricultural land, which
look place mainly via the restitution process, resulted in fragmentation in land ownership. Many of the
small private farms that emerged from the land restitution are subsistence in nature. Poverty rates are
higher among rural areas. In 1997, over 41% of rural residents were poor compared to 33% in urban areas.
Main Sector Issues. The Black Sea, a critical regional resource, suffers severe environmental damage
from eutrophication (i.e., the collapse of food chains due to loss of life-giving oxygen), the introduction of
exotic species, inadequate resource management, and loss of habitat -- all of which have led to long-term
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ecological change and a decline of its biological diversity. In-depth analytical work points to an increase in
nutrient flux down the major rivers, as the most serious problem facing the Danube River and the Black
Sea over the medium to long-term. The effects of eutrophication on the northwestern shelf of the Black Sea
at the mouth of the Danube have had particularly disastrous impacts to water quality, natural habitat, and
fish populations on which both biodiversity and human populations depend.
The Danube River is one of the continent's largest and most important rivers linking Central and Eastern
Europe. It flows approximately 2900 kilometers through thirteen countries from Germany to the Black
Sea, includes 300 tributaries and drains 817,000 square kilometers. The Danube contributes
approximately 60% of the nutrient load to the Black Sea, with approximately 60% of the nitrogen
compounds and about 66% of the phosphorous compounds originating from non-point sources within the
Danube watershed.
Regional action to clean up the Danube/Black Sea. In response to growing concerns about Danube
pollution, and in recognition of the fact that significant nutrient reduction requires regional commitment, the
Danube River riparian countries drew up the Convention on the Cooperation for the Protection and
Sustainable Use of the Danube River, signed in 1994 and entering into force in 1999. Monitoring of the
implementation of the Convention is the responsibility of the International Commission for the Protection of
the Danube River (ICPDR), located in Vienna. Similarly, the six countries bording the Black Sea decided
that joint action to save the Black Sea was urgently needed, and in 1992, signed the Bucharest Convention
for the Protection of the Black Sea Against Pollution (ratified in early 1994). The Bucharest Convention
was given additional impetus in 1993 by the Odessa Ministerial Declaration on the Protection of the Black
Sea Environment, also endorsed by Bulgaria. Nutrient reduction is the highest priority issue for both
programs.
Role of Bulgaria. The Danube River forms the border between Bulgaria and its northern neighbor
Romania for 472 kilometers (km) before continuing alone through Romania to the Black Sea. More than
half the area on the Bulgarian bank of the Danube is floodplain, covering 1280 square km. Over the years,
the wetlands and floodplain have been drained or dyked to create arable land or as an anti-malaria
measure, such that today's wetlands cover only about 10% of the area that existed at the turn of the century
and hence cannot perform their original ecological function. Although about half of the country drains into
the Danube River, Bulgaria is currently not the largest contributor of nutrient loads to the river. The
Transboundary Diagnostic Analysis (TDA) undertaken under the Black Sea Environmental Program
between 1993-99, indicates that Bulgaria places third of the Black Sea riparian countries in terms of the
nitrogen (N) and phosphorous (P) contributions to the Sea.
Actions which Bulgaria might take to address the issue of transboundary pollution have to be matched
with a program addressing real national priorities with national benefits in order to be politically and
financially justified. Government and local officials are eager to integrate interventions which address
transboundary pollution and global biodiversity with efforts that help Bulgaria meet EU environmental
acquis. Other identified national benefits include opportunities for the sustainable use of aquatic resource,
providing income for local communities. An approach which integrates global and national development
objectives increases the likelihood of long-term project success.
Bulgaria faces a number of issues as it attempts to meet its international commitments to reduce nutrients
and generally clean up the Danube/Black Sea, and to comply with EU environmental acquis. These
include:
Water quality and nutrient reduction. Water in Bulgaria is a scarce resource, with per capita endowment
less than half the average for European countries. One third of the country faces permanent or seasonal
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water shortages. Nitrogen content exceeds drinking water standards in a number of rural settlements. The
water scarcity problem is aggravated by pollution from various sources, especially agricultural run-off,
inadequately treated urban waste waters, changes in hydrological conditions and the decline of both quality
and quality of aquatic ecosystems. The underlying causes of the pollution include lack of financial
resources for the construction and operation of wastewater treatment plants with tertiary treatment capacity
in a number of Bulgarian towns, inappropriate agricultural practices, industrial pollution, and to a lesser
extent to the present economic situation, low household incomes and poor financial situation of wastewater
companies. About 49% of all wastewater generated (including 43% of industrial wastewater) is discharged
directly into the environment without any preliminary treatment. Nationwide, half of the towns with
population over 50,000, and about 75% of the towns with population over 10,000 people have no
wastewater treatment plants (WWTP). According to the TDA, Bulgaria contributes approximately 7,500
tons of N and 720 tons of P per year into the Danube. For the Black Sea, the numbers are significantly
higher: 2,480 tons of N and 693 tons of P from domestic sources, and an additional 2,000 tons of N and
432 tons of P from its rivers flowing into the Black Sea. Wetlands, in turn, can results in retention and
recycling of nutrients found in surface water flows, and can offer cost-effective solutions for abatement of
nitrogen and phosphorus loads.
Biodiversity conservation and wetland restoration. Bulgaria is one of the most biodiversity-rich countries
on the Danube. It is the third richest European country from the point of view of animal and plant diversity.
The National Biodiversity Strategy (1994) as well as the National Action Plan for the Conservation of the
Most Important Wetlands (1995) have identified priority areas for conservation and restoration of
wetlands, including areas of international importance such as a nesting sites of the Ferruginous Duck and
the endangered Dalmatian Pelican. In its efforts to develop a wetlands strategy consistent with EU
directives on habitats and the protection of wild birds, the Government has faced opposition from some
local community members who do not always appreciate the importance of wetlands for conserving
globally significant biodiversity, for maintaining water quality, flood control and a variety of other
environmental services. In general, public opinion has favored the draining of wetlands for other land uses
-- Government's policy from the 1950s to the 1980s.
Protected areas management. Activities related to nature protection are regulated by the Environmental
Protection Law, Forestry Law, the Protected Area Law (PAL), and the Hunting Law. While the PAL
stipulates procedures to prepare protected areas management plans, development of these plans will require
the integration of biodiversity conservation with economic development with a participatory planning
process. Similarly, in order to gain acceptance from poor local communities to reduce pressure on nature
resources, there is a clear need to identify and implement alternative income generating activities, to
undertake awareness raising programs, and to have park administrations proactively foster sustainable
economic activities within the project region.
Government Strategy. Bulgaria's strategy for nutrient reduction, biodiversity protection and agriculture
and rural development has the following objectives:
l
Compliance with EU Water Framework Directive. The country will be required to achieve "good
status" for the all surfaces waters ­ measured not only by the water quality of its water bodies, but also
by the healthy functions of natural water ecosystems (including transboundary river basins).
l
Fulfill obligations under several international agreements to which the county is a signatory. The
country has committed itself to implement the Strategic Action Plans of the Black Sea and Danube
Conventions, which includes participating in the development of a common Danube River Basin
Management Plan in the framework of the Danube Convention. Efforts to restore water quality and
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water ecosystems are also relevant to the Ramsar Convention on Wetlands of International Importance,
especially as waterfowl habitat, encouraging sustainable development and wise use of natural resources
in wetland areas. The Danube wetland complex within the project sites is the most representative of
riverine wetlands and of international importance for waterfowl habitat.
l
Achieve sustainable rural development. The National Agriculture and Rural Development Plan
2000-06 aims for sustainable rural development consistent with the best environmental practices, and
calls for the promotion of environmentally-friendly farming and environmental protection.
Recent and Planned Government Actions. The Government of Bulgaria has demonstrated a commitment
to improving nature protection and water quality.
Water quality and management. In 1999, the Bulgarian Parliament adopted a new Water Act that reflects
to a large extent the requirements of the EU Water Framework Directive. The Water Act includes the
elements on the planning, study and management of the national and river basins levels and the
administrations that will be established to carry out these management responsibilities. It introduces a more
integrated approach to water management based on river basin principles -- to ensure common management
of surface and groundwater according to quality and quantity, in order to achieve sustainable use and
protection of waters, water ecosystems, and wetlands. Implementation of the Water Acts requires
institutional changes and new skills to carry out modelling, planning and increased monitoring.
Investments in point-source pollution. The government has planned investments from the National
Environmental Protection Fund for a small number of priority wastewater treatment plans, identified
according to a set of criteria. Virtually all cities on Danube tributaries are included in the
National Program for priority construction of urban wastewater treatment plants for cities above 10,000
inhabitants. Financial resources, however are far from sufficient to cover investment costs. Nutrient
reduction investments are not addressed specifically by the plan. The Government will rely heavily on
grants or soft loans from international donors for the construction of wastewater treatment plans, in
particular the EU pre-accession funds -- Instrument for Structural Policies for Pre-Accession (ISPA). The
high operation and maintenance costs, which are rarely financed from outside sources, is a constraint for
the implementation of this program. Hence the government is very interested in looking at low-cost
technologies such as wetland restoration as a means of reducing nutrient loads and meeting water quality
standards.
Wetland restoration for biodiversity conservation and nutrient reduction. The Government recognizes the
multiple benefits of wetland restoration : first, as a way to decrease transboundary pollution; second, as a
means of preserving globally significant biodiversity; and third, as a possible source of revenue for local
communities living in the poorer regions of Bulgaria. By restoring the spawning grounds for fish, the
expectation is that the local fishing industry will make a comeback.
3. Sector issues to be addressed by the project and strategic choices:
The WRPRP will extend and deepen the ongoing Government actions by addressing the following issues:
l
Undertaking an innovative and potentially high-impact wetland restoration program which combines
conservation of biodiversity values, nutrient reduction, and sustainable management and use of aquatic
resources.
l
Developing opportunities for promoting protected areas management and sustainable use of natural
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resources that is politically and financially justified and socially sustainable.
l
Helping develop a program for nutrient reduction strategy in the Danube/Black Sea Basin consistent
with new policies and legislation.
l
Developing capacity of farmers to use environmental-friendly agriculture practices and resources
management.
l
Building national, regional and local capacity in assisting the GOB in meeting its international
obligations on transboundary pollution and biodiversity conservation .
l
Fully integrating interventions that address transboundary pollution and global benefits with efforts
towards complying with EU environmental acquis, in particular those requirements related to EU
Water Framework Directive and Directives on Habitat and Protection of Wild Birds.
l
Moving towards compliance with EU Environmental acquis.
Originally considered a candidate for a Learning Innovation Loan (LIL), a strategic choice made before
proceeding with project preparation was to carry out the necessary technical, social and environmental
studies for wetlands restoration during preparation -- resulting longer preparation period.
C. Project Description Summary
1. Project components (see Annex 2 for a detailed description and Annex 3 for a detailed cost
breakdown):
The project will assist the Government of Bulgaria to: (i) restore critical priority wetlands in the Danube
river basin and make use of the wetlands in riparian zones as nutrient traps; and (ii) promote protected
areas management and the sustainable use of natural resources, through management planning, monitoring
of water quality and ecosystem health, public awareness/participation programs and environmental
education. Although the project only directly addresses the restoration of selected priority wetlands in
Bulgaria, these activities will play a critical demonstration role within the region, promoting nutrient
reduction investments in other parts of Bulgaria and neighboring countries. The table below summarizes
the project cost estimates by component.

Indicative
Bank
% of
GEF
% of
Component
Sector
Costs
% of
financing
Bank
financing
GEF
(US$M)
Total
(US$M)
financing
(US$M)
financing
1. Wetlands Restoration
Natural Resources
5.14
38.7
0.00
0.0
3.42
45.6
Management
2. Protected Areas
Natural Resources
7.04
53.0
0.00
0.0
3.16
42.1
Management
Management
3. Project Coordination,
Institutional
1.10
8.3
0.00
0.0
0.92
12.3
Management and Monitoring
Development
Total Project Costs
13.28
100.0
0.00
0.0
7.50
100.0
0.00
0.0
0.00
0.0
0.00
0.0
Total Financing Required
13.28
100.0
0.00
0.0
7.50
100.0
The following paragraphs provide a brief description of each component:
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Component 1: Wetlands Restoration (Total: US$5.14 million, GEF: US$3.42 million, Others (TBI):
US$0.86 million). The most innovative aspect of the proposed project, this component -- if successful --
has a high replication value throughout Bulgaria and the region. In the initial phase of this component,
2,340 ha of former marshes will be restored in two already identified sites, Belene Island within Persina
Nature Park and Kalimok/Brushlen Marshes within Kalimok/Brushlen Protected Site, to demonstrate the
use of wetlands as nutrient sinks. Additional sites are expected to be identified and restored later during
project implementation. Selection criteria for these additional sites will include: ecological potential,
floodplain type, current land use, and nutrient reduction potential.
The GEF funds will finance consultancy services for the elaboration of detailed engineering designs,
baseline surveys, and the supervision of construction as well as the civil works themselves. The civil works
will include both construction and rehabilitation activities of small infrastructure which will regulate
waterflows through the wetlands at the Belene Island and Kalimok/Brushlen sites -- allowing for controlled
flooding that optimizes nutrient trapping, biodiversity restoration, fish production while minimizing the risk
of impacts to agricultural areas.
The Danish Cooperation for Environment in Eastern Europe (DANCEE) under the Ministry of
Environment and Energy of Denmark has expressed interest to finance activities related to the second set of
wetland sites to be restored: consultant services for additional site identification, pre-feasibility and
feasibility studies, design of restoration activities, and the necessary civil works (and supervision of their
construction). [Due to the recent reorganization at the Danish Government, all DANCEE funds have been
moved to a reserve budget line, and the future of DANCEE is uncertain at present. Given the uncertainty
on the Danish support, the Government of Bulgaria is looking for alternative funding sources.] Other than
the two sites already selected for restoration under the Project, the Bulgarian "National Action Plan for the
Conservation of the Most Important Wetlands in Bulgaria" (1995) as well as the UNDP/GEF/WWF
"Evaluation of Wetlands and Floodplain Areas in the Danube River Basin" (1999) have identified other
critical wetland sites in need of restoration and protection based on predominately their biodiversity value.
The Project will assist the GoB to undertake a re-assessment of identified priority wetlands, using a broader
range of criteria developed as "lessons learned" from the preparation phase of the original two restoration
sites, such as nutrient-uptake potential and marginal cost (linking to the Nutrient Reduction Strategy
Guidelines Component) as well as social indicators (current land-use and ownership patterns).
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Component 2: Protected Areas Management (Total: US$7.04 million, GEF: US$3.16 million,
PHARE: US$2.35 million, Austria:US$0.38 million). This component will support the next step towards
the sustainable resource management and protection within the two protected sites, Persina Nature Park
(22,000 ha) and Kalimok/Brushlen Protected Site (6,000 ha). Starting with the preparation of protected
areas management plans at the two sites, the component will then move on to support the implementation of
priority actions identified within the management plan framework. Both the wetlands restoration and
protected areas management regimes will integrate needs of the local communities with the biodiversity
objectives of the two protected areas. This component will include: (i) the development of protected areas
management plans in Persina Nature Park and Kalimok/Brushlen Protected Site; (ii) the implementation of
priority actions identified in these plans, including the management of the restored wetlands and
surrounding land (including the operation and maintenance of the flood control infrastructure),
establishment of a contingency relief fund, establishment of a support program to assist farmers in
transitioning to environmentally-friendly agricultural practices, and the provision of technical support for
development of "green" business; (iii) strengthening monitoring programs for water quality, biodiversity
and social indicators within the protected areas, (iv) a public awareness and environmental education
program, including a small grant scheme for activities that promote biodiversity conservation; (v)
institutional strengthening for entities responsible for land/water management to ensure sustainable
management of the restored sites and surrounding landscape, and (vii) developing strategic guidelines to
support the preparation of a nation-wide nutrient reduction strategy.
The GEF funds will finance consultancy services for the preparation of nutrient reduction strategy
guidelines, development of the contingency relief and farmer transition funds; study tours and training on
wetlands restoration and management; equipment needs for the operation and maintenance of the restored
wetlands and the two park administrations; civil works for the construction or rehabilitation of the park
infrastructure (administration and visitor center(s), trails, interpretation points); the demarcation of park
boundaries; and the organization of field visits to disseminate project progress. In addition, the GEF will
capitalize the grant scheme for biodiversity conservation, and the contingency relief and the farmer
transition support funds.
PHARE, through its National Environmental Program, will finance technical assistance for the preparation
of protected areas management plans in Persina Nature Park (PNP) and Kalimok/Brushlen Protected Site
(KBPS), the environmental education program, and the strengthening of institutions relevant to protected
areas and wetlands restoration. In addition, it will finance consultant services for the design and supervision
of the monitoring system as well as the training of Bulgarian technicians to use it; training of protected
areas administration staff, local authorities, local communities, and NGOs on issues relevant to protected
areas management; and equipment needed for the monitoring system; and study tours and field visits to
exchange experiences in protected areas and wetlands management and sustainable development.
The Austrian Government, through the Ministry of Foreign Affairs, will provide financial support to the
Russe Business Support Center (BSC) for Small and Medium Enterprises, with the expectation that two
branches in the two project sites will be established. This will allow the BSC to support the development of
green-business proposals compatible with biodiversity conservation. The BSC will target its support to
rural and urban clients located within the boundaries of the two project sites. In addition to advice on
business plan development, three forms of support are expected: a machine leasing fund program, a small
loans fund program, and an investment fund program. In addition, the Austrian Government will finance
consultancy services to carry out feasibility studies of "green business" concepts and ideas.
Component 3: Project Coordination, Management and Monitoring (Total: US$1.10 million, GEF
US$0.92 million). This component will support a tripartite Project Coordinating Unit (PCU) located within
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the Ministry of Environment and Water (MoEW). A unit in Sofia will be responsible for central and/or
larger procurement and financial management activities, disbursement, reporting, coordination with central
ministries and the monitoring/evaluation of overall project implementation. Each of the protected areas
administrations will be served by a Local Coordinator and a technical expert, responsible for small
procurement, local coordination associated with project implementation and reporting to the PCU-Sofia.
The project will provide funds to meet the salaries and operating costs of the PCU; design and install a
monitoring program for the evaluation of project impacts; engage consultants to carry out impact
evaluation studies over the life of the project; and to finance auditing services over the life of the project.
The project will also provide funds for an initial project launch workshop, followed by two procurement
workshops, and other workshops over the project period.
2. Key policy and institutional reforms supported by the project:
As discussed in the Section B.3, the Government of Bulgaria has made considerable efforts in developing
laws and regulations covering water resources, natural habitats and protection of wild birds, and
harmonizing them with EU directives. However, a number of requirements and procedures remain to be
transposed. The Project will assist the GoB to make the improve the ability within the MoEW, the Ministry
of Agriculture and Forestry (MoAF) and the two protected area administrations to implement the new laws
-- such as the adaptation of improved institutional structures and procedures, increased management
capacity, and the standardization of monitoring and reporting procedures.
Improved cooperation between relevant agencies and different levels of government in the areas of
planning, programming, monitoring, and control processes is paramount to reaching compliance with the
EU environmental directives. The project will help to improve coordination between the central, regional
and local governments, local communities, and municipalities on issues such as land use policy and
development planning; raise inter-sectoral and public awareness about the need to integrate environmental
and socio-economic development objectives; and help develop processes to better involve the public in the
decision-making process related to not only project activities but also sustainable resources management
within the project sites.
3. Benefits and target population:
The proposed project will bring about global, national and local benefits.
At the global level, benefits will accrue through the reduction of transboundary pollution into the Danube
River and the Black Sea. Based on a recent technical assessment of the nutrient trapping capacity of the
wetlands to be restored in Belene Island and Kalimok/Brushlen marshes, between 218-810 tons of nutrients
and 23-37 tons of phosphorous could be reduced annually. This accounts for approximately 5% of
Bulgaria's total nutrient contribution to the Danube. The primary beneficiaries from the demonstration of
nutrient reduction benefits in the Danube are Bulgarians living downstream from the wetlands, other
downstream riparians, and the littoral states of the Black Sea who will benefit from cleaner water.
Significant global biodiversity benefits are also expected. The wetland complexes and related protected
sites are of international importance as a nesting place of the Ferruginous Duck (Aythya nyroca) and
Dalmatian Pelican (Pelecanus crispus). Habitats for migratory birds and a variety of endangered species
will be enhanced and improved. The Project is also expected to have demonstration effects that would in
time allow the restoration and management of additional wetlands along the Danube and Black Sea region.
At the regional level, Bulgaria and other riparian countries will benefit from collaborative efforts to share
experiences on the use of wetlands as nutrient sinks and protected areas and wetlands management, develop
regional natural resources management strategies and regional tourism opportunities, to promote
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international and local tourism, and carry out joint training and monitoring program. At the national level,
Bulgaria will benefit from improved ecosystem productivity within PNP and KBPS; improved agricultural
productivity due to better agriculture practices, progress towards compliance with EU directives, and
increased capacity of existing central, regional and municipal institutions to protect and manage the
Danube coastal landscape (protected areas, wetlands/ aquatic ecosystems).
At the local level, the main beneficiaries will be communities who will benefit from increased fishery
production, and those downstream from the wetlands who will enjoy cleaner water. Fishing has
traditionally been the mainstaple for communities along the Danube, but the deterioration of water quality
and the destruction of breeding sites for fish has deprived a significant part of the local population from
their main source of food and living. Where 60 years ago 5,000 fishermen operated in the areas, now only
60 remain. The restoration of the wetland sites is expected to increase fish populations and hence increase
local fishermens' incomes. Fish production is estimated to reach between 800-1,000 kg in Belene Island
and 4,500-5,000 kg in the Kalimok marshes, compared to the present situation where these marshes have
virtually no fish fauna. Farmers will also experience additional income from effective use of organic waste,
improved grazing practices, crop rotation, and the sale of organic produce. Small entrepreneurs interested
in establishing "green" businesses compatible with biodiversity conservation objectives will also experience
additional income. Local institutions, namely protected areas administrations and regional environmental
inspectorates, will be strengthened.
The private farmers and rural households in PNP and KBPS are the primary beneficiaries of the project.
However, the proposed project will have larger geographic impacts. It is a demonstration project that may
be replicated in other areas of Bulgaria as well as other Danube / Black Sea riparian countries.
4. Institutional and implementation arrangements:
Project Steering Committee. During Project preparation, the MoEW coordinated the establishment of a
high level Project Steering Committee (PSC), which served as the principal forum for addressing
inter-sectoral issues relevant to project preparation activities. The PSC, which worked well during project
preparation, will continue operating through out project implementation and will be responsible for
providing overall project oversight, advice and a bridge between the various agencies and ministries --
ensuring coherence between the Project and existing/planned activities of the various agencies. The PSC
will also help to resolve any issues wish may arise during implementation. The PSC comprises
representatives from the MoEW, MoAF, Ministry of Justice, Ministry of Industry, Ministry of Public
Health, Ministry of Regional Development and Public Works, municipalities within project sites, and
NGOs. The Deputy Minister of Environment and Water will continue chairing the PSC, and the PCU will
continue providing secretarial support. The PSC might need to be formally appointed to serve during
project implementation.
Consultative Councils in Persina Nature Park and Kalimok/Brushlen Protected Site. According to the
Law on Protected Areas's regulations and the Management Concept for both protected areas, Consultative
Councils (CCs) will be established at the two protected areas sites to: (i) discuss issues and formulate
proposals concerning the state of the park and its development, (ii) coordinate and ensure the compatibility
of the management plans with regional economic development plans, (iii) ensure the interests of the local
communities are represented during both the planning and implementation of the protected areas
management regimes, (iv) discuss annual plans and accounts about activities of the park directorates for the
implementation of the protected areas management regimes, and (v) assist in searching for funding sources
for financing nature-protection activities compatible with the management regime. They will provide
oversight and reinforce coordination at the local level during the preparation of the protected areas
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management plans, but will also serve as a permanent mechanism for conflict-resolution of natural resource
management issues within the protected area landscape.
The regulations suggest that the CCs include representatives from the regional administrations, the
Regional Forestry Board, the Regional Inspectorates of Environment and Water, municipalities, Forestry
Units, scientific and academic institutions and NGO, unions of land and forest owners, and local media.
They also suggest to appoint the Park Director as the chairman of the CC with the functions to convene and
direct the work of the CC, to sign proceedings and other documents related to the work of the CC, and to
organize the CC recommendations. Representation and chairmanship of the CCs will be formalized before
project effectiveness.
Project Coordinating Unit. A Project Preparation Unit (PPU) under the supervision of the MoEW was
established during Project preparation to handle day-to-day coordination and administration of the Project's
preparatory GEF. The PPU is now fully operational and will become a unit -- the Sofia Unit -- of the
tripartite Project Coordinating Unit (PCU) once the implementation phase begins. The Sofia Unit will be
responsible for overall project coordination and management, financial management activities as well as for
implementation of the Environmental Management Plan and Process Framework. All financial
management, procurement, disbursement procedures for the proposed project will be implemented in
accordance with the relevant Bank guidelines. The PCU will also be responsible for establishing and
maintaining a comprehensive Project monitoring and evaluation system during the life of the project. The
monitoring will be based in the significant amounts of baseline data collected during the preparatory phase.
The Sofia Unit will comprise a Project Manager, a Financial Management Specialist, a Procurement
Specialist, a Database Management Specialist, Technical Experts (on demand), a Translator/Interpreter,
and a Driver. Each of the protected areas administrations will be served by a Local Coordinator and a
local Technical Expert, which will conform the Local Coordinating Units (LCUs). The LCUs will work
closely with the Persina Nature Park and Kalimok/Brushlen Protected Site administrations, and will be
responsible for small procurement, local coordination associated with project implementation and reporting
to the Sofia Unit.
Institutional Arrangements for Project Implementation. In order to ensure project sustainability and
capacity building, the project will be implemented by existing entities acting at the local or regional levels.
An implementation matrix, which clearly identifies functions and responsibilities for project
implementation, has been developed and is included in the Project Implementation Plan (PIP). In brief, the
protected areas management planning activities as well as the operation and maintenance of restores
wetlands and related sites and the public awareness and education program activities will be the direct
responsibility of the protected areas administrations of Persina Nature Park and Kalimok/Brushlen
Protected Site in close coordination with the Ministry of Environment and Water, the Ministry of
Agriculture and Forestry, the National Forestry Board, local municipalities (Nikopol, Belene, Svishtov,
Tutrakan, Slivo Pole), the Belene Prison Administration and the Regional Forestry Boards (Lovech, Veliko
Turnovo and Ruse) . The Regional Inspectorates of Water and Environment (Pleven, Veliko Turnovo and
Russe) will be responsible for the monitoring program in close coordination with the protected areas
management administrations, the irrigation and drainage enterprises of Pleven and Russe, and the Academy
of Science (Zoological Institute and Hydrometeorological Institute) and the Executive Agency for
Environmental Protection. The Russe Business Support Center will be responsible for the Eco-Business
Development Support program. The Ministry of Agriculture and Forestry will be responsible through the
its Regional Extension Services, Agriculture and Forestry Directorates and the National Agriculture
Advisory Services for implementation of the Farm Transition Fund Program. The Ministry of Environment
and Water in close coordination with the Belene Prison Administration, the protected areas administrations,
and the local municipalities will be responsible for the wetlands restoration component.
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Financial Management. The PCU Sofia Unit will be responsible for all financial management aspects of
the Project. All financial management and disbursement procedures will be in accordance with the relevant
World Bank guidelines. The Bulgarian Government, through the PCU, will establish and will maintain
through the project life a project financial management system (FMS) in a format acceptable to the Bank
and in accordance with OP/BP 10.02. Before project appraisal, a World Bank accredited Financial
Management Specialist performed a detailed assessment of the system in accordance with the Bank's
OP/BP 10.02 and the World Bank project financial management requirements. The result of the assessment
is that the Project arrangements meet the minimum World Bank financial management requirements.
Additional actions and steps agreed with the borrower to strengthen the system are included in the Financial
Management Action Plan.

With regard to financial accounting and Reporting, the PCU will keep separate project accounts, by each
financing source and by each project component and activity. The project accounts will then be
consolidated in the accounting records of the MoEW, by reporting to the MoEW accounting department.
The PCU will prepare quarterly Project Management Reports (PMRs) for the Project in accordance with
formats to be agreed with the Bank during negotiations. The PMRs will be submitted to the World Bank
no later than 45 days after each quarter's end. The first quarterly PMRs will be submitted after the end of
the quarter in which disbursements commence.
With regard to audit arrangements, the project annual financial statements will be audited each fiscal year
in accordance with Bank guidelines, by independent auditors acceptable to the Bank, based on terms of
reference agreed with the World Bank. Conclusion of a contract with selected auditors, satisfactory to the
Bank, will be a condition of effectiveness in the Grant Agreement. Copies of the audit reports will be
submitted to the Bank within six months after the close of the fiscal year (calendar year). The audit reports
will cover the Project Financial Statements, Special Account, as well as all the Statement of Expenses
(SOEs).
Disbursements from the Grant be made based on traditional disbursement methods (i.e., from the Special
Account with reimbursements made based on Statements of Expenditures (SOEs) and full documentation,
and direct payments from the Grant Account). The Government, through the MoEW will establish,
maintain and operate, under terms and conditions acceptable to the Bank, a Special Account (SA)
denominated in the Grant currency. The borrower decided that the SA will be opened at the Central Bank,
as it is currently the case with the SA used for the preparatory grant. The PCU will also use local project
accounts for local contributions to the Project.
A detailed description of the financial management and accounting system that will be used for the project
is presented in Annex 6.
Project Monitoring and Evaluation. In order to ensure timely and successful project implementation and
to enhance project's impacts, a well-designed monitoring and evaluation system will be put in place.
Monitoring and evaluation will be the responsibility of the PCU. Monitoring will be based on the baseline
surveys (i.e., environmental, socio-economic) carried out during project preparation, the results of the
monitoring system to be established under the Project, additional surveys to be carried out as part of the
baseline studies, as well as annual impact evaluation studies to be carried out during the life of the project.
A simple management information system for project's monitoring and evaluation will be designed by the
PCU, including reporting formats for both the wetlands restoration and the protected areas management
components and the monitoring indicators listed in Annex 1. Quarterly and consolidated annual reports
including the use of project funds and project impacts will be prepared by the PCU. Significant supervision
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by qualified Bank staff will be conducted during the start-up phase. A mid-term review will be carried out
to assess overall project progress, identify lessons learned and disseminate good practices. This process will
be closely coordinated with the review of similar projects in the Danube and Black Sea Programs to allow
for maximum benefits and sharing of knowledge.
D. Project Rationale
1. Project alternatives considered and reasons for rejection:
Pilot project approach. The option of limiting the scope of the project to pilot wetlands restoration for
nutrient trapping was abandoned in favor of a more comprehensive approach in line with the Government
strategy to reduce transboundary nutrient loads, to conserve biodiversity and achieve sustainable rural
development through improved management and sustainable use of natural resources that is socially
sustainable. The project will focus on testing nutrient trapping potential of restored wetlands, supporting
critical steps to towards sustainable restoration and protection of project sites, including protected areas
management planning, introduction of agriculture friendly agriculture practices and support for alternative
income generating activities. Although support for introducing low-impact farming and other more
environment-friendly agricultural practices and developing alternative income generating activities are
being supported through the Special Accession Program for Agriculture and Rural Development
(SAPARD), the level of funding is very limited to ensure farmers in the two project sites will benefit from
the program.
Addressing point-source versus non-point source pollution. A second alternative was to focus on
point-source pollution such as waste water treatment and industrial discharge. GEF funds would be
available to finance incremental costs of nutrient removal technology if governments were willing to borrow
for baseline costs to the level (at least secondary treatment) where nutrient removal could be added. This
option is unaffordable by the GoB in its current economic situation. However, the current project offers a
relatively low-cost opportunity to address water quality issues for small settlements along the Danube and
its tributaries. Wetland restoration requires significantly lower construction and maintenance costs than
wastewater treatment plans with capacity to reduce concentrations of total nitrogen and total phosphorus,
while at the same time providing a very effective system for of the removal of nutrients from large
quantities of water. The on-going Bank-funded Water Companies Restructuring and Modernization Project
in Bulgaria is facing difficulties to obtain nutrient reduction through it.
Selection of sites. The two restoration sites selected for the initial phase of the Project were carefully
considered in consultation with the MoEW. A wealth of analytical work exists on both the Danube and
Black Sea, making decisions easier in some ways, but more difficult in others. Both the Bulgarian National
Wetland Strategy and the Biodiversity Strategy identify key wetlands from a biodiversity perspective. In
consultation with the Government and the Danube River Pollution Reduction Programme, specific criteria
were established and each wetland site measured against these. Criteria included: nutrient reduction
potential (based on their size and hydrological characteristics), current land use, and demonstration value.
Several promising sites from a biodiversity perspective were not selected for some of the following reasons:
limited nutrient reduction capacity, conflict over land use, or technical implementation difficulties.
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2. Major related projects financed by the Bank and/or other development agencies (completed,
ongoing and planned).
Latest Supervision
Sector Issue
Project
(PSR) Ratings
(Bank-financed projects only)

Implementation
Development
Bank-financed
Progress (IP)
Objective (DO)
Environmental regulations and
Bulgaria: Environmental and
S
S
incentives
Privatization Support Project
(IBRD Ln. No. 45380)
Water supply and sewerage
Bulgaria: Water Companies
S
S
infrastructure
Restructuring and
Modernization Project (IBRD
Ln. No. 37390/3739A/3739S)
Environmental regulations
Bulgaria: Environmental
S
S
Remediation Pilot Project
(IBRD Ln. No. 43210)
Cadastre and real estate property
Bulgaria: Registration and
S
S
registration systems to improve natural Cadastre Project (IBRD Ln.
resources management
No.46190)
Protected areas management
Ukraine: Danube Delta
S
S
institutions
Biodiversity Project (GEF
Grant 28654)
Agriculture credit
Bulgaria: Rural Finance APL
(FY05 under preparation)
Forestry sector
Bulgaria: Forestry (FY04 under
preparation)
Development of an efficient and
Bulgaria: Agriculture Sector
S
S
responsive agricultural sector
Adjustment Loan II (IBRD
Loan No. 46300)
Other development agencies
Create a network of protected areas
Lower Green Danube Corridor
wetlands along the Danube.
Program/Strategy for
Restoration of Bulgarian
Floodplain Islands (WWF)
Support for sustainable management of Joint Action Program for the
terrestrial ecosystems and wetlands
Danube River Basin - ICPDR
directly depending on them
Strategy for protection and restoration Floodplain Forest Restoration
of floodplain forests
on the Bulgarian Danube
Islands, 2000-2001 (WWF)
Implement the national biological
Bulgaria: Biodiversity
biodiversity conservation strategy
Conservation and Economic
Growth Project (USAID)
IP/DO Ratings: HS (Highly Satisfactory), S (Satisfactory), U (Unsatisfactory), HU (Highly Unsatisfactory)
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3. Lessons learned and reflected in the project design:
Experience from wetlands restoration and pollution abatement programs in Europe and around the world
suggest that:
l
The early involvement in project concept design of key stakeholders from across the water, agriculture,
and environment sectors as well as of local communities is essential in order to ensure ownership, build
lasting commitment and achieve successful project implementation.
l
The rationale, benefits and objectives of the project should be made known to all stakeholders, if not
through active participation, on through effective public awareness programs. The benefits of
sustainable land use needs to be demonstrated and the results widely disseminated.
l
Problems should be solved jointly with clients and not for them. Capacity and skills transfer can only
be achieved by working with clients, to do otherwise is to leave solutions that are unsustainable.
l
Maintaining support for central governmental units, but emphasizing decentralized responsibility for
financial and project management (e.g. Romania's Danube Delta Biodiversity and Agricultural
Pollution Control Projects) helps to build local ownership and sustainability of project activities.
l
Socio-economic and regional development issues need to be carefully considered in the design of the
project, which in turn should provide support for the integration of environmental and sustainable
development principles into regional planning exercises.
l
Early on, the project needs to focus on activities which promote replication, sustainability and resource
mobilization beyond the life of the project.
l
Continuity in supervision responsibility contributes greatly the relationship between the Bank and its
client.
World Bank experience with the Bulgaria country portfolio indicates that:
l
In order to avoid delays in disbursements, forward planning of budget needs to be ensured early in
project preparation and carefully monitored during each of Bulgaria's budget years.
l
Significant effort must be undertaken to ensure project management capacity is adequate to permit
implementation of complex activities and policy measures with efficacy and speed.
l
While direct participation of sector ministries is essential for the implementation of individual projects,
successful implementation relies heavily on good relationships and cooperation from central units such
as the Ministry of Finance when it comes to dealing with issues such as counterpart funding, VAT,
financial management, approval processes and procedures, technical exchange of views on legislation.
The proposed program will incorporate these experiences and build on them, specifically by: (i) continuing
the inclusive and participatory approach; (ii) effectively communicating the purpose and progress of the
program to stakeholders through a public awareness campaign; and (iii) building national and local
capacity for sustainable management of wetlands.
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4. Indications of borrower and recipient commitment and ownership:
The Government of Bulgaria has taken a lead role in efforts to establish a network of wetland and
floodplain sites in the Lower Danube. In 1999, the MoEW, the MoAF and the Ministry of Regional
Development and Public Works signed a declaration on wetlands in the Bulgarian part of the Danube
Basin, which recognized the importance of the Danubian wetlands as unique habitat and a valuable
resource under threat, and identified measures were needed for wetland protection and restoration. In April
2001, the Government took an active role in the Danube-Carpathian Heads of State Summit convened by
the Government of Romania, where the Heads of States adopted a Declaration on Environment and
Sustainable Development in the Carpathian and Danube Region. This collaboration continues today with
periodic inter-governmental meetings. Throughout, the MoEW, which represents Bulgaria on the Danube
Commission, has worked closely with World Wildlife Fund for Nature (WWF) Danube-Carpathian Office
(DCPO). Over the past ten years, the WWF-DCPO has assisted the GoB in developing the Bulgarian
wetland protection and restoration program to prepare its wetland restoration program which has, to some
extent, culminated in the declarations mentioned above and the request for the current GEF Project. In
1999, the Bank joined the MoEW and WWF-DCPO to move forward on this investment operation which
met the criteria for inclusion in the GEF/Bank Strategic Partnership for Nutrient Reduction.
The project scope expanded from the original request focussed on wetland restoration to include national
level activities for improved water resources management, assistance in developing national restoration
and rehabilitation strategies and policy formulation/implementation for nutrient reduction. The
Government views these as an integrated package of measures needed to address water and land-use issues
at their interface, and has asked the Bank, through the GEF, for assistance.
There are already written agreements between the Ministry of Environment and Water/Ministry of
Agriculture and Forestry and respective local municipalities about the allocation of land/building for the
construction/ refurbishing for the administration buildings and visitor centers and rights of use.
5. Value added of Bank and Global support in this project:
The Bank has assisted the Government formulate a strategy to comply with EU environment
legislation--and to meet the expected high costs. The main issue involves financing. The proposed project
may provide an alternative to high-cost investment in infrastructure if the expected improvements in water
quality from non-point source pollution are forthcoming. The Bank is in a unique position to help the
government synthesize experiences and lessons learned from this project and from several other related
projects in the water and agriculture sectors (Agriculture Structural Adjustment Loan, Land Cadastre), as
well as its considerable experience in regional integrated river basin planning and management, to help
implement the new water policy and assist the Government in its negotiations with the EU.
Secondly, the Bank plays an important role in helping coordinate donor assistance. Given the number of
donors assisting Bulgaria, this role is needed to coordinate investments, technical assistance, and policy
advice. The Bank can do this within the context of the CAS and through its regular participation in donor
coordination dialogue.
In addition, the World Bank/GEF has built experience over the past decade involving numerous coastal
zone, wetland, water quality and protected areas management projects related to the Black Sea and Danube
River. Experience garnered through such projects as the Ukraine Danube Biodiversity Project, the Romania
Danube Delta and Georgia Integrated Coastal Management Projects and coordination with the Black Sea
Environment, Danube River Basin Environment and Danube Pollution Reduction Programs is being shared
with newly started projects.
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E. Summary Project Analysis (Detailed assessments are in the project file, see Annex 8)
1. Economic (see Annex 4):
Cost benefit
NPV=US$ million; ERR = % (see Annex 4)
Cost effectiveness
Incremental Cost
Other (specify)
Two economic analyses have been carried out to demonstrate that this project is a worthwhile
investment to be funded by the Global Environmental Facility: (i) an incremental cost analysis, and
(ii) a cost-effectiveness analysis.
The first analysis utilizes the typical incremental cost assessment to demonstrate the project meets
the GEF requirement. The incremental cost of achieving global benefits in this project has been
estimated at US$11.95 million of a total project costs of $13.28 million. This total cost is restricted
to those expenditures directly related to the nutrient reduction program focusing on wetlands
restoration and nutrient-friendly agriculture and supporting protected areas management activities.
The Government of Bulgaria has committed to financing US$2.03 million for the GEF alternative;
US$0.15 will be leverage from local municipalities and communities; US$2.35 from the EU
PHARE national program; US$0.38 million from the Austrian Government; and US$0.84 million
from other bi-lateral donors (probably the Danish Government through their DANCEE program).
The GEF grant contribution towards the GEF alternative would be US$7.5 million.
The second analysis compares the cost-effectiveness ratios of removing nitrates and phosphorous
flowing into the Black Sea, defined as the ratio of the discounted cost (capital and operation and
maintenance costs discounted at 10 percent) to the discounted volume of nitrogen and phosphorous
(also discounted at 10 percent) removed during the life of the project (a conservative value of 12
years has been assumed), with those ratios used in the benefit-cost analysis of the Danube/Black
Sea Strategic Partnership, which were defined on the basis of international benchmarks. The
estimates of the cost-effectiveness ratios are presented in the table below. The cost-effectiveness
ratios, based on the assumptions presented in Annex 4, were found in the order of US$1.3 - 5.0 per
kilogram of nitrogen removed and US$28.9 - 46.2 per kilogram of phosphorous removed. Since the
costs per kilogram of nutrients removed for this project are expected to be lower that those
acceptable under the Strategic Partnership, it is safe to say that the restoration of Belene Island and
Kalimok marshes will be highly cost-effective for nitrogen and phosphorous reduction into the
Black Sea.
Item
Wetlands Restoration
Partnership
a
b
Annual volume of nitrogen (N) removed (kg/year)
241,400 - 850,400
Annual volume of phosphorous (P) removed (kg/year)
23,400 - 37,400
Total capital costs (US$ million)
4.53
Annual operation and maintenance cost (US$)
60,000
Net present value of costs at 10% (US$ million)
5.0
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Cost-effectiveness ratio - nitrogen removed
1.3 - 5.7
5.8 - 8.75
(US$/kg)
Cost-effectiveness ratio - phosphorous removed (US$/kg)
26.1 - 53.8
58.00 - 88.0
Notes:
a. A general estimation of nitrogen and phosphorous retention in wetlands based on extensive
literature research. The monitoring component of the project is particularly important since the
monitoring information gathered will serve as one of main sources of data to derive an exact
measure of nutrient retention in restored wetlands. Total capital costs include all restoration
work and estimated losses resulting from indirect flooding.
b. The ratios presented in the "Strategic Partnership for Nutrient Reduction in the Danube River
Basin and Black Sea - Benefit-Cost Analysis, prepared by Tijen Arin, only include annualized
capital cost. Inclusion of annual operation and maintenance costs would increase these ratios.
It should also be noticed that the leveraging ratio for this project is about 1.0:0.8. Thus, the project
meets the minimum Danube/Black Sea Strategic Partnership leveraging requirement for wetlands
restoration projects set at 1.0:0.5.

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

NPV=US$ million; FRR = % (see Annex 4)
No detailed financial analysis was undertaken since the WRPRP is a non-revenue generating
project. The objective of the project of removing nutrients flowing into the Bank Sea may not be
achieved if the Government of Bulgaria does not commit adequate resources for the operation and
maintenance of the restored wetlands as well as for the operation and maintenance of the monitoring
system. The project will finance these incremental expenditures for 5 years on a declining basis.
Government budgetary contribution to the project is not expected to significantly exceed current
budgetary allocations to the sector.
The proposed project will be co-financed by the EU PHARE national program and bilateral grants.
Co-financing arrangements are currently being finalized by the MoEW. Final details will be
incorporated after negotiations.

Fiscal Impact:
Total government financing during the project implementation period is estimated at US$2.1 million --
US$1.7 million represents taxes, about US$170,000 represents counterpart funds for the PHARE grant,
and US$230,00 represents counterpart funds for the GEF grant. The Government has committed to provide
counterpart funds in its budget. Of the total project cost (US$13.3 million), about 3.4 percent represents
recurrent costs for the monitoring system, management of restored wetlands and protected areas
management administrations. The annualized costs have been estimated at around US$100,000, inclusive
of taxes. These costs will be financed by the project on a declining basis: 90 percent first year, 85 percent
second year, 75 percent third year, 50 percent fourth year, and 25 percent fifth year. The fiscal impact of
the project is expected to be around 0.001 percent of GDP.
3. Technical:
During the preparatory phase, a technical assessment at the pre-feasibility level for the restoration of the
two already identified sites was carried out. The assessment found that the restoration of 1,290 hectares of
former marshes in Belene Island and 1,050 hectares of former marshes in Kalimok is technically feasible
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and that private land will not be directly impacted by the restoration and management of wetlands.
Emphasis was placed on ensuring that the restoration of wetlands can be met under the current hydrological
regime in the Danube river, and that the proposed restoration measures indeed maximize the water flow
through the system in order to optimize nutrient trapping, promote biodiversity restoration, and increase
fish production. Restoration to former natural dynamic wetland system conditions is not feasible because
the hydrological regime of the Danube (in terms of river flows and water levels) has changed considerably
over the past 30 years as a result of the construction of the Iron Gate Dams I and II and the lower average
annual precipitation since 1970 than in the period 1900-1970. The project involves the intake of about 10
cubic meters per second, which is a fraction of a percent of the minimum flow of the Danube (0.4%), and
the return of 8 cubic meters per second of water of improved quality. The maximum evapo-transpiration
rate from the restored wetlands is estimated at 2 cubic meters per second during the summer months.
Feasibility and detailed design of control structures will be done in the course of project implementation
following detailed field surveys and investigations, for which provisions have been made under the project.
The detailed design for the restoration of Belene and Kalimok marshes will observe the following
conditions: (i) at Belene, the maximum flooding level to be achieved in wetland would be 20 meter and at
Kalimok 14 meters; (ii) flooding levels in the wetlands would not adversely affect private or state land to
remain under agriculture production; (iii) necessary margins of safety would be included in the
infrastructure design to comply with international and Bulgarian standards; (iv) inlet and outlet structures
would be easily accessible and operated manually; (v) all structures would be designed to protect or be
protected against undesirable erosion and excessive sedimentation deposition; (vi) dike crests would be used
as access roads; and (vii) access to the Danube would be provided at few strategic points. Project
implementation would need to be approached with a reasonable level of flexibility given the uncertainty
associated with cost estimates.
Estimation of the nutrient reduction potential was carried out on the basis of international experience in
other regions and extensive literature research, with data adapted to the size and general characteristics of
the selected restoration sites (e.g., permanent water bodies, water depth, timing of flooding, vegetation) and
local experience in Lake Srebarna ecosystems, a wetland on the righ bank of the Danube. Experience in
Denmark and Sweden achieved annual reductions of 400 kilogram per hectare of nitrogen and 40 kilograms
per hectare of phosphorous. In the case of Bulgaria, expected annual nutrient reduction, as shown in tables
below, ranges between 218,000 - 813,000 kilograms of nitrogen and 23,400-37,400 kilogram of
phosphorous, i.e., 93-347 kilogram per hectare per year of nitrogen and 10-26 kilogram per hectare of
phosphorous.
Habitat in Belene
Total Area (ha)
Nitrogen (kg)
Phosphorous (kg)
Reed/lesser reed mace
211
32,000 ­ 41,000
1,700 ­ 2,300
community a
Flooded forests
223
8,900 ­ 13,000
1,300 ­ 1,600
Flooded meadow
271
30,000 ­ 51,000
1,900 ­ 4,000
Area with
353
3,500 ­ 20,4000
active denitrification
Total
74,000-310,000
7,800-12,000
Habitat in Kalimok
Total Area (ha)
Nitrogen (kg)
Phosphorous (kg)
Reed/lesser reed mace
420
63,000 ­ 81,000
3,400 ­ 4,600
community a
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Flooded forests
130
5,200 ­ 7,800
740 - 910
Flooded meadow
650
71,000 ­ 124,000
5,000 ­ 10,600
Area with
500
5,000 ­ 290,000
active denitrification
Total
144,000 ­ 503,000
15,600 ­ 25,400
Note:
a. Wetland plants, such as reeds, filter nutrients and other pollutants and precipitate them from the water,
transfer atmospheric oxygen down to the root zone creating aerobic and anaerobic soil conditions, and
assimilate, process and store nutrients. While nitrogen is removed through nitrification and
denitrification in the oxygenated and anoxic areas of the roots, phosphates are mostly absorbed by the
roots. Nutrients are not only stored in the reeds, but are degraded into harmless components.
4. Institutional:
While the Ministry of Environment and Water is the lead implementation agency, the active participation of
several other Ministries, agencies, local government, NGOs and scientists will be critical to its success.
Thus, the role, composition and mandate of the Project Steering Committee is extremely important.
The management of wetlands, natural resources and protected areas is responsibility of the Ministry of
Environment and Water and the Ministry of Agriculture and Forestry. Staff from these two organizations
are well educated, technically trained, and highly committed to their jobs. Although no major issue is
foreseen with regard to their capacity to implement the project, some of the local implementing agencies
faced limited operational budgets, limited skills on wetlands management and public education and
involvement, and limited exposure to international experience, in particular the protected areas park
administrations. The project provides for filling these gaps during project implementation period and for
putting in place proper conditions for the Government and local administrations to ensure proper operation
and management of the restored wetlands and protected areas thereafter. The project will help to build staff
skills that are needed to achieve project objectives, and will promote collaboration and partnerships on
wetlands and protected areas management with colleagues and organizations elsewhere in central and
western Europe. As the management of the Kalimok/Brushlen Protected Site will be done by a new and
innovative structure -- a Noncommercial Association to be legally established before project effectiveness,
there will be a close supervision by the MoEW staff as well as by the Bank supervision missions.
4.1 Executing agencies:
The Ministry of Environment and Water will be the line Ministry with overall responsibility of project
implementation, and will be in close coordination with other stakeholder agencies and beneficiaries groups.
Project activities will be implemented by existing entities at the local or regional levels, assisted by the
central ministries in Sofia as needed.
4.2 Project management:
The Project Steering Committee has been established for the preparatory phase and will continue
functioning during project implementation and will be maintained throughout the project with composition
and functions satisfactory to the Bank. The Steering Committee will be chaired by the Minister of
Environment and Water. Project coordination, management, and monitoring will be handled by a tripartite
body, with a unit in Sofia Project Coordination Unit (PCU) responsible for procurement, financial
management, disbursement, reporting, and coordination with central ministries, and each of the protected
areas administrations serving as units as well functioning not just as a directorate of protected area, but
also as Local Coordinating Units, responsible for small procurement, local coordination associated with
project implementation and reporting to the Sofia Unit. The current staff of the Project Preparation Unit
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(PPU), established under the Ministry of Environment and Water, which includes a Project Manager, a
Procurement Specialist, a Financial Management Specialist, and a Database Management Specialist, is
adequately familiar with Bank procurement, disbursement, and financial management requirements. The
PPU will form the Project Coordination Unit following effectiveness. Additional staff to serve the
protected areas administrations, i.e., Local Project Coordinator and Local Technical Specialist, will be
recruited after project effectiveness.
4.3 Procurement issues:
An ongoing Joint Portfolio Review Procurement reveals that the major procurement processing issues
encountered in 2001 mainly take the form of delays in processing procurement actions and securing all the
needed approvals. Generally, PIUs have sufficient knowledge and capacity for handling procurement under
World Bank guidelines and procedures. However, this knowledge needs to be matched by equal
understanding of the process by those in the respective line ministries who have decision-making and
approval responsibilities.
An assessment of the capacity of the PCU (currently PPU) to implement the project procurement plan was
carried out in November 2001. A copy of the assessment report is included in the Project Implementation
Plan. The review addressed legal and regulation aspects, procurement cycle management, organization and
functions, support and control systems, record keeping, staffing issues, general procurement environment,
private sector assessment, and made a general risk assessment. The main findings of the assessment were:
(i) the wording of the laws and ordinances is not sufficiently clear and comprehensive; (ii) the operational
rules for various procurement methods are not clearly established and therefore are subject to
interpretation; (iii) although the PCU has acquired good experience in carrying out Bank-financed
procurement, the local staff and the park administrations have no experience; and (iv) the PCU will
operated in a public procurement environment, which is not transparent and competitive.
The assessment also identified that the lengthy and cumbersome contract approval procedures within the
Ministry of Environment and Water is a risk to conduct procurement in a timely and efficient manner. The
assessment rated the overall project's risk from the point of view of procurement as high. During project
preparation, it was agreed that the following action plan will be implemented to mitigate the risk: (i) the
PCU project manager and procurement specialist would receive procurement training at the ILO, Turin,
Italy, as soon as the Grant becomes effective; (ii) around the Grant effectiveness period, a three-day
procurement launch workshop will be held for the staff involved in implementing the project, including
protected areas management administration and local municipalities; (iii) the MoEW will streamline the
contract approval procedures; (iv) pior to Board approval, the Bank staff will prepare a procurement book
containing all procurement related documents, including Standard Bidding Documents, both in hard and
soft copies, and send it to PCU; (v) one year after Grant effectiveness, the conduct of procurement under
the project would be reviewed in light of the potential procurement risks, and recommendations made if
necessary, to improve the procurement process; and (vi) carry out intensive supervision during the first
three supervision missions. A computerized procurement monitoring system, identified during the
assessment as a Board condition, has already been established.
4.4 Financial management issues:
The first Country Financial Assessment Audit for Bulgaria will be carried out after 2002. When finalized,
the document will present in detail the financial management risks for the country and the implications for
the World Bank operations. From the financial management perspective, the Project is considered a
substantial-risk operation and major risks in the financial management area are presented below:
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Country generic risks. The key country financial management issues in Bulgaria are as follows: (i) there
have been some reforms in the public sector financial management of Bulgaria; (ii) the state budgets are not
very realistic and not well managed (both in terms of revenue forecasts and expenditure management), and
there would be significant variances between actual and budgeted revenues and expenditure for the year
ending 31 December 2001; (iii) the accounting standards have been modified to adhere closely to
International Accounting Standards (IAS); (iv) the macroeconomic situation has generally improved after
the financial crisis of 1996 ­ 1997. GDP growth was recorded yearly since 1998 -- inflation has been
brought down to single digits figures, the currency is pegged to the Dutch Mark following the introduction
in 1997 of a Monetary Council, but unemployment and total foreign debt as a % of GDP remain at very
high levels; (v) the Supreme Audit Institution (SAI) in Bulgaria is undergoing a reform process that will
improve its capacity to carry out an independent external audit on the Government accounts, but there is
still limited transparency and financial accountability over the use of public finances.
Project specific risks. One risk is the PPU assuming the authority and responsibility for every aspect of
the project, thereby exposing it to possible risks of collusion and corruption. To address this risk: (i) all
payment orders will be signed jointly by the PPU director and a high level officer (such as the General
Secretary or Chief Accountant of the MoEW), and (ii) the beneficiaries' representatives will certify the
acceptance of the works done, goods delivered and services rendered before the payments are made by the
PPU. Moreover, the complete segregation of duties amongst PPU staff members will have to be achieved,
i.e. the functions of implementing and overseeing will not reside with the same PPU staff member. In
addition, the project financial statements will be audited by an external auditor, acceptable to the World
Bank.
The second risk is that the project is exposed to delays in payments to suppliers: (i) due to the signatures
required on both GEF Grant funds and Government contribution, and (ii) inadequate counterpart funds in
the Government project account. The signing mechanism proposed for the operation the above accounts is
perceived as acceptable, and since the PPU is located within the MoEW, all the signatures required will be
obtained in a timely manner. The experience so far on the preparatory grant demonstrated that the signing
mechanism does not pose significant delay risks.
The amounts to be used as local contribution to the project for the year 2002 will have to be included in the
2002 budget. The amounts for the year 2002 (first year of the Project implementation) will be limited, as
the project will most likely become effective on or about September 30, 2002. The borrower stated that the
amounts for 2002 will not constitute a issue, as sufficient amounts are already included as own funds
available in the budget of the MoEW and also as contributions to the project during 2002 are relatively
limited in size. Then, the local annual contributions for 2003 and thereafter will be requested and allocated
in advance, as a separate budget line, within the MoEW budget, by the time when the yearly budget is
prepared and submitted for approval. So far, the contributions from the Government in respect of the
preparatory grant were received broadly on time and in line with the amounts requested.
Overall, the above mentioned risks are considered as manageable due to the various risk mitigations
measures proposed. Annex 6 presents in detail the full description of the risk mitigation measures.
5. Environmental:
Environmental Category: B (Partial Assessment)
5.1 Summarize the steps undertaken for environmental assessment and EMP preparation (including
consultation and disclosure) and the significant issues and their treatment emerging from this analysis.
The project will finance the restoration of former marshes along the Danube. The major environmental
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objective of the Project is to reduce the amount of nutrients flowing into the Black Sea. The Project is
expected to be environmentally beneficial. No new structure of significant size will be built under the
project and no major adverse environmental impacts are expected. Given the nature of the restoration
work, the project has been classified as environmental category "B." This classification is consistent with
Bulgarian environmental impact assessment regulations and the requirements of the World Bank outlined in
Operational Policy (OP) 4.01 on Environmental Assessment. Consistent with the provisions of OP 4.01 and
Bulgarian environmental legislation, notably the Protected Areas Act (1998, 1999, 2000), the Regulation
No 4/2001 on Environmental Impact Assessment, the Water Act (1999), an Environmental Assessment
(EA) was carried out during the preparation phase based on the technical information provided by the
Project Preparation Unit of the Ministry of Environment and Water and its consultants. A combination of
quantitative and qualitative assessment techniques, ranging from desk-based analysis, to water and social
surveys, have been undertaken. The conclusions of the environmental impact assessment are that provided
mitigation measures described in the Environmental Management Plan, the proposed project is in
compliance with the environmental requirements of both the Government of Bulgaria and the World Bank
with respect to restoration developments of this nature.
The Environmental Assessment contains a description of existing environmental conditions at the two
project sites, including climate, hydrology, soil and water quality, groundwater and biodiversity and
assesses the impacts on these conditions from implementation of the project, during the construction and
operation phases. A number of mitigation and monitoring activities have been identified as part of an
environmental management plan, in order to address these impacts and to provide adequate safeguards for
the environment. A brief analysis was conducted of a number of technical alternatives to the proposed
restoration schemes, including the non-restoration alternative. The no-restoration alternative was found to
be nonviable from an environmental point of view. Other technical alternatives were founded nonviable
from a technical point of view.
Five restoration alternatives were assessed for Belene Island. In general, the idea of regulating the proposed
level of flooding of this project area at 20 meters above sea level, as is provided for 4 of the proposed
technical alternatives, is supported by the environmental assessment. Although a higher level (21 m) would
be desirable to provide a much larger wetland area (2,070 ha, compared with only 1,290 ha), high flood
levels are available for only a few days of the year. Pumping would be excessively costly and, in fact,
unable to maintain such a level in view of the porous nature of the subsoil. The proposed level of flooding
of 20 m would ensure a flooding duration of 50-60 days annually, which is entirely sufficient from an
ecological point of view. Two of the analyzed technical alternatives propose to intake water from the
southern part of the Belene island, which is not desirable from an environmental point of view because of
the potential hot water emission in the future from the Belene Nuclear Power Plant, whose construction was
initiated and stopped. Any of the other two alternatives that propose the entry of water from the northern
part of the island will be a preferred option. The environmental assessment supports the northern
alternatives, but with additional internal dykes protecting agricultural lands to the west of the wetlands.
This recommendation should be supported with a much more detailed technical design in order to evaluate
the risk of bogging and salinization of agricultural land. An evaluation should be made of the way in which
the draining system should function in the western part of the island, which is used for economic activities
and of the risk for the existing infrastructure and buildings.
Three restoration alternatives were assessed for Kalimok marshes. The recommendation of flooding to 14
m above the sea level is accepted by the environmental assessment, which would ensure a flooding duration
of 60 days annually. Artificial maintenance of the level of the marshes by means of pumps (as is proposed
for both alternative) will be unsustainable. The assessment supports that most of the existing dykes should
be kept in their current position, so that the flooding regime will be mostly controlled by the sluices. The
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sluices should be designed taking into account the possibility for migration of fish species from the lower
stretch of the Danube. If needed, they should be equipped with adequate fish ladders.
The EA identified the following potential negative impacts of the project: (i) there is a risk that reduced
pollution and increased fish stocks as a result of wetland restoration activities will not materialized; (ii)
there is risk of indirect flooding and raising groundwater levels on arable and non-arable land, buildings,
irrigation and drainage structures, roads, and other infrastructure; (iii) there is a health risk associated with
the potential increase in mosquito population, malaria risk and fish contamination; and (iv) disposing of
excavated soils. Other issues relate to the impacts on biodiversity, habitats and rare species caused by
contractors during the construction phase.
As part of the environmental assessment process, public consultations were held during the preparation of
the EA with several stakeholders at the local levels in three phases. First, consultation with stakeholders
were organized during the initial stage, which helped to identify key social/environmental issues and
provided information on stakeholders' concerns about, and views of, potential environmental impacts.[The
same team that conducted the environmental assessment also conducted the social assessment.] Prior to the
public disclosure of the draft EIA, the second phase of consultation consisted of public meetings at the two
project sites, to share with all interested stakeholders the key findings of the assessment and the proposed
mitigation and management options. Upon the public disclosure of the draft final EIA, public hearings were
organized in the two project sites. During the consultation process, local populations did not voice any
major concerns about the project.
5.2 What are the main features of the EMP and are they adequate?
The detailed Environmental Management Plan (EMP), included as an annex in the Project Implementation
Plan, includes monitoring and mitigation activities for two restoration sites at different stages during project
preparation and implementation. The EMP includes: (i) the elaboration of a manual for sustainable
management of the water regimes in the wetlands, such as procedures in the event of accidental pollution,
sharp changes in water levels, floods, consideration of the breeding requirements of fish, birds, provision of
optimal treatment capacity; (ii) removal of top soil before starting civil works; (iii) a specialized study for
evaluation of the risk from flooding and negative impact on the ground water; (iv) the elaboration of a
mosquito management plan; (v) the elaboration of environmental management guidelines for constructors;
(vi) the selection of suitable landfills for disposal of waste from the construction phase; (vii) the
establishment of a comprehensive monitoring program for nutrient trapping, groundwater level and quality,
biodiversity, fishery, soil, and mosquito population to measure project impacts on the environment; (viii)
the training of PCU, Regional Environmental Inspectorates, Park Administrations staff on monitoring
program. Implementation of the EMP will be discussed and agreed with the Government during
negotiations.
5.3 For Category A and B projects, timeline and status of EA:
Date of receipt of final draft: 02/14/2002


An environmental Assessment (EA) has been carried out and mitigation measures have been proposed to
address possible environmental impacts. The EA reveals that the Project will have positive effects on the
environment. The draft EA report was submitted to the Bank in December 2001. It was reviewed and
commented on by the ECA Safeguard Compliance Unit. The final EA report, which has taken into
account all comments, was submitted to the Bank's Infoshop on February 14, 2002, and the Executive
Summary was sent to the Board of Executive Directors on February 14, 2002.
5.4 How have stakeholders been consulted at the stage of (a) environmental screening and (b) draft EA
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report on the environmental impacts and proposed environment management plan? Describe mechanisms
of consultation that were used and which groups were consulted?

As indicated above, local stakeholders were consulted during the EA preparation process. Consultations
were carried with local government organizations, farmers, fishermen, local NGOs working in the project
areas, and potentially affected nearby villages. The Draft EA report prepared in Bulgarian was made
available through local municipalities prior to public hearings organized in Tutrakan and Belene on January
30-21, 2002.
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?
The monitoring of the EMP will be the responsibility of the Ministry of Environment and Water through
the PCU. The Regional Environmental Inspectorates will be responsible to monitor the impacts of the
project. Environmental consultants will help to identify and quantify all environmental indicators early on
during project implementation. The baseline information obtained during the preparation of the EA will be
updated regularly by the PCU in order to assess that the project is fulfilling its requirements according to
the EMP.
6. Social:
6.1 Summarize key social issues relevant to the project objectives, and specify the project's social
development outcomes.
Annex 11 summarizes the results of the Social Assessment, including description of data and methods used,
public attitude towards the project, socioeconomic conditions of the population in the area surrounding the
project, expected project impacts, expected social impacts and mitigation measures, participation activities
and stakeholder analysis.
The socioeconomic assessment was undertaken during project preparation in three stages between July and
November 2001. The first stage consisted of primary and secondary data collection. Two focus group
discussions with 10 participants each were undertaken at Kalimok-Brushlen. Thirty-five in-depth
interviews were undertaken at both sites. This information was used to design a household survey
instrument. Secondary data on the socioeconomic condition of the project area was collected from relevant
government institutions. In the second stage household surveys were undertaken. In Kalimok/Brushlen
Protected Sites (hereafter KBPS) a 1,282 household survey, representative of the population in the
protected area, was completed. In Persina Nature Park (hereafter PNP), a 550 household survey,
representative of the town of Belene, was completed. The third stage consisted of data analysis and
consultations with stakeholders. In particular stakeholders were consulted on project alternatives and then
the social assessment team worked with the Project Preparation Unit to include the results of these
consultations in the project design. The social assessment has had a significant impact on project design.
The socioeconomic assessment reveals that there is an overwhelming expectation of positive impacts from
the project, with more than half of the survey respondents indicating that it would be beneficial for their
region. The benefits people feel will accrue to them include improvement in the water quality of the
Danube, conservation and protection of natural resources, improvement in the natural fishery, and general
economic revitalization from an increased flow of visitors. There will also be direct benefits from the
creation of new jobs associated with the civil works activities, maintenance, guarding and monitoring of the
wetlands and protected sites.
The project may result in some negative impacts on the population. In particular there may be limitations
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placed on resource extraction in the protected areas and there may, at KBPS, be indirect impacts on
municipal/private land from wetland restoration although this is not expected. These impacts and how the
project addresses them are discussed in detail in Annex 11. At both sites the population raised the issue that
restoring wetlands will exacerbate mosquito population. While this is not expected to occur, the
environmental management plan has taken this into account and explored options for mitigating this
impact. (Increasing stagnant water surfaces could significantly increase mosquito breeding grounds and
insect populations. Increasing fish, bird and populations of beneficial insects that feed on mosquito larvae
and insects would offset this. Also, cycling water through the wetlands would help limit insect breeding)
In terms of social development outcome, the project will support the engagement of local communities in
sustainable management and use of natural resources and environmental protection, by promoting
community involvement in the preparation of the protected areas management plans; providing access to
financial resources and technical assistance for supporting environmentally friendly agricultural practices
and piloting eco-business projects; providing small grants for promoting biodiversity conservation.
6.2 Participatory Approach: How are key stakeholders participating in the project?
The project has been developed in a participatory manner and these activities will serve as a template for
implementation (see table below). Key stakeholders consulted during preparation include villagers and their
representatives in local government, Government staff involved in implementing the project, and
environmental Non-Government Organizations. Feedback from stakeholders during these participatory
activities was incorporated into project design.
Stakeholder
Identification and
Implementation
Operation/
Preparation
Maintenance and
Monitoring
Beneficiaries,
IS/COM
IS/COM/COL
IS/COM/COL
Communities Groups,
and Associations.
Central Government
IS/COM
IS/COM/COL
IS/COM/COL
Regional Government
IS/COM
IS/COM/COL
IS/COM/COL
Local Government
IS/COM
IS/COM/COL
IS/COM/COL
Academy of Sciences
IS/COM
IS/COM/COL
IS/COM/COL
NGOs
IS/CON
IS/COL
IS/COL
EC and other Donors
IS/CON
IS/CON/COL
IS/CON/COL
Legend: IS=Information sharing; COM=Consultation; COL: Collaboration
Villagers will continue to participate in the project throughout implementation, contributing to the
development of protected area management plans and identifying impact mitigation measures. Staff of the
protected areas administrations will participate in implementation and will receive training on methods to
encourage and manage community involvement. Local and national NGOs will be involved in monitoring
implementation.
6.3 How does the project involve consultations or collaboration with NGOs or other civil society
organizations?
The Project has a strong history of active collaboration with NGOs, in particular WWF-DCPO and Green
Balkans, a Bulgarian NGO. In 1997, Green Balkans in cooperation with WWF-DCPO initiated a program
for the restoration and sustainable development project in the region. Based on the project results, the
Kalimok marshes were selected as a priority restoration and management site, and highlighted options for
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restoration. Later, this initial program was adopted into the Project, and expanded upon. Once full Project
preparation began, the Project scope expanded from this original request focussed on wetland restoration to
include broader concepts of sustainable landscape management within the two protected areas. Civil society
organizations and representatives of local communities (e.g. mayors) are currently actively engaged, and
will continue to be throughout project implementation. For example, the protected areas administrations
will be overseen by an Advisory Committee; the development of the management plans is a 2-3 year
intensively consultative process.
6.4 What institutional arrangements have been provided to ensure the project achieves its social
development outcomes?
The PCU will ensure full participation of local communities, and villagers in the implementation of the
project. The project, through the Process Framework, which will be discussed and agreed with the
Government during negotiations, provides for extensive involvement of local communities in project
implementation.
6.5 How will the project monitor performance in terms of social development outcomes?
The PCU with the support of consultants will annually carry out socio-economic surveys to monitor
progress of the project and measure the impact of project activities against the initial socio-economic
baseline survey carried out during the preparatory phase.

7. Safeguard Policies:
7.1 Do any of the following safeguard policies apply to the project?
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 (OP/BP 4.12)
Yes
No
Safety of Dams (OP 4.37, BP 4.37)
Yes
No
Projects in International Waters (OP 7.50, BP 7.50, GP 7.50)
Yes
No
Projects in Disputed Areas (OP 7.60, BP 7.60, GP 7.60)*
Yes
No
7.2 Describe provisions made by the project to ensure compliance with applicable safeguard policies.
Environmental Assessment: The GEF Grant Agreement will include a covenant calling for the
implementation of the EMP. The Bank will monitor the adherence to the EMP as part of its supervision
activities.
Involuntary Resettlement: The Project has been and will continue to be specifically designed so that no
involuntary physical displacement or relocation of people would be necessary. Design parameters include
flood elevations that do not encroach on private lands and minimize impacts to groundwater (levels and
quality) and crops as well as road access. The management plans for the protected areas may identify the
need for new zoning and increased enforcement of existing laws within the protected areas to ensure
sustainability of natural resources. The Social Assessment confirms these findings. A Process Framework
(Annex 12) identifies how the Project will ensure compliance with this safeguard policy. The Bank will also
monitor the adherence to Process Framework as part of its supervision activities.
Projects on International Waters: As there will be no net extraction of waters from the Danube, and no
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negative impact on water quality (on the contrary, the project is designed to reduce the nutrient loads into
the Black Sea by about 220-810 tons of nitrogen and 24-37 tons of phosphorus per year), OP 7.05 on
Project on International Waters is not triggered.
As a good member of the International Commission for the Protection of the Danube River (ICPDR), and
since the Project is part of the Joint Action Program for the Danube River Basin (January 2001 - December
2005), the Government of Bulgaria has introduced the Project for discussion and approval by the ICPDR
(February 2002). The proposed project along other projects for wetlands restoration and floodplain
restoration has been approved by the Heads of delegations. The Heads have also stated their no-objection to
the Joint Action Program including the proposed projects.
F. Sustainability and Risks
1. Sustainability:
The long-term sustainability of project benefits is linked to the adequate management and maintenance of
the restored wetlands and associated protected areas. Such management and maintenance will require
sufficient institutional and financial resources. The project makes provisions for strengthening capacity of
local and regional implementing institutions as well as local administrations to ensure they acquire the
needed managerial and technical skills and capabilities. A provision is also made to support incremental
operation and maintenance costs of implementing agencies on a declining basis while developing financial
mechanisms to finance protected areas's basic maintenance costs. Project sustainability will be enhanced
by actively involving local institutions in project implementation and by supporting the development and
implementation of comprehensive management plans that link wetlands restoration and nature conservation
objectives with sustainable socio-economic development and tangible benefits for the local people.
2. Critical Risks (reflecting the failure of critical assumptions found in the fourth column of Annex 1):
Risk
Risk Rating
Risk Mitigation Measure
From Outputs to Objective
Transboundary nutrient load does not
M
Concerted action by all riparian countries,
decrease due to: (i) lack of serious effort
supported by Black Sea and Danube
from upstream riparian, and
Commissions, GEF Regional projects, and other
(ii) increases in agricultural activity in
donors to decrease nutrient pollution. Strong
Bulgaria as economy improves.
public awareness campaign aimed at informing
local farmers; incentives provided by Farm
Transition Support Fund and SAPARD; and
donor-financed projects in eco-farming.
Nutrient stripping potential of wetlands
S
Regardless of the nutrient reduction outcome,
not as great as originally expected.
the project will improve natural habitats for
important biodiversity. Project includes a
comprehensive nutrient trapping monitoring
system as well as technical assistance to identify
the role of wetlands restoration as a viable
measure to contribute to the reduction of
nutrients, and demonstrate what works and what
doesn't work. Intensive supervision from the
Bank, especially during the first year of project
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implementation.
Continuing commitment from the
N
Continuing dialogue between at the regional
Government of Bulgaria to project.
level on the benefits of nutrient reduction in the
Danube/Black Sea basins.
From Components to Outputs
Inadequate resources for management and
M
Government and local administrations have
maintenance of restored wetlands and
committed to fund incremental costs on an
associated protected areas.
increasing basis, while the project finances
incremental costs on a declining basis.
Inadequate donor co-financing of project
M
Firmed commitment from EU Phare and the
activities.
Austria Government to support project activities
has already been obtained. The project activities
to be supported by project's cofinanciers will not
have a bearing on the activities supported by the
GEF grant, but they are an integral part of the
project.
Lack of commitment of local communities
M
Comprehensive protected areas management
to protected areas regimes.
plans will be prepared following a participatory
planning approach and mechanisms will be
established for stakeholder's consultation.
Limited participation and adoption of
M
Financial resources will be made available for
nutrient friendly agriculture practice by
training of farmers and extension officers on
farmers
best agriculture practices and for sharing
experiences with neighboring Romania.
Overall Risk Rating
M
Risk Rating - H (High Risk), S (Substantial Risk), M (Modest Risk), N(Negligible or Low Risk)
3. Possible Controversial Aspects:
The project is not considered controversial, since the proposed project interventions build on international
and regional experience on wetlands restoration and protected areas management, and have the support
from local communities and authorities. One possible controversial aspect, which has been addressed in
project design, is the potential indirect impacts caused by the new flooding regimes in the restored wetlands
and the community perception of restricted access to resources in the protected areas. Both the detailed
design of the restoration work and the development of protected areas management regime will be done in
close consultation with local stakeholders. The participatory planning approach that started during the
preparatory phase will continue during project implementation. Another potential area of controversy is the
proximity of the Belene Nuclear Power plant, whose construction started in the 1980s, to the proposed
wetlands restoration site located in the Belene Island, and the inclusion in the project of some activities to
promote protected areas management in the Persina Nature Park. Commitment from the Government will
be obtained at the time of negotiations that if construction of the Plant is resumed (this is unlikely), the
impacts of the Belene Nuclear Power Plant on the project will be assessed in order to ensure that it will not
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directly adversely affect the benefits expected to be realized by the project. The potential negative impact
caused by the high temperature of the plant wastewater discharge has already been addressed by locating
the water inlets in the northern part of the island.
G. Main Grant Conditions
1. Effectiveness Condition
Conditions for Board Presentation
Formalization of the representation and chairmanship of the Consultative Councils; and
Written agreement between the Ministry of Environment and Water and the Ministry of Justice for the
restoration work to the carried out in the Belene Island and rights of access for project personnel and
contractors.
Condition of Effectiveness
A project auditor, acceptable to the Bank, must be selected;
The Recipient will provide evidence satisfactory to the Bank that the Project Steering Committee has
adopted the Project implementation arrangements; and
Establishment of the Noncommercial association for the management of the Kalimok/Brushlen
Protected Site.
2. Other [classify according to covenant types used in the Legal Agreements.]
Management and Implementation
The Recipient will maintain a Project Coordination Unit (Sofia Unit and well as the Local Units) under
terms of reference and qualifications satisfactory to the Bank;
The Recipient will maintain a Project Steering Committee with terms of reference satisfactory to the
Bank;
The Recipient will maintain a financial management system acceptable to the Bank and have the
financial records, accounts and financial statements for each fiscal year audited and submit a certified
audit report to the Bank commencing with the accounts for the period ending December 31, 2002
within six months after the end of each calendar year and also at the closing of the project;
Not later than November 30 of each year, the Government will furnish the Bank the annual project
implementation work programs for the project for the next year, including procurement and financing
plans, and will review these plans with the Bank before implementing them;
The Recipient will submit to the Bank, commencing upon Grant effectiveness, quarterly Project
Management Reports, not later that 45 days after the end of each quarter outlining progress made in
the implementation of each project component, as well as the problems encountered and how they are
being addressed;
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The Recipient will furnish to the Bank, on or about June 30, 2004, a report on the progress of the
project (incorporating the results of monitoring and evaluation activities) and sets out measures for
achievement of project objectives for rest of Project;
The Recipient will provide the funds, facilities, services, and other resources needed for the Project;
The Recipient will submit to the Bank detailed a operational manual for the administration and
implementation of the small competitive grants program for biodiversity conservation, the farmer
transition support program, and the grants under the contingency relief fund no later than one year after
effectiveness;
The Recipient will implement the Environmental Management Plan as well as the Process Framework.
The Recipient will maintain policies and procedures adequate to monitor and evaluate on an ongoing
basis, in accordance with indicators satisfactory to the Bank, the carrying out of the project and the
achievement of the project's objectives; and
The Recipient will prepare, on the basis of guidelines acceptable to the Bank, and furnish to the Bank
not later than six (6) months after the Closing Date or such later date as may be agreed for this purpose
between the Recipient and the Bank, a plan for the future operation of the Project.
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):
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.
Rita E. Cestti
Marjory-Anne Bromhead
Andrew Vorkink
Team Leader
Sector Manager/Director
Country Manager/Director
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Annex 1: Project Design Summary
BULGARIA: Wetlands Restoration and Pollution Reduction Project (GEF)
\
Key Performance
Data Collection Strategy
Hierarchy of Objectives
Indicators
Critical Assumptions
Sector-related CAS Goal:
Sector Indicators:
Sector/ country reports:
(from Goal to Bank Mission)
Protecting and enhancing the Acknowledgement that there Danube and Black Sea
Improved natural resources
environment
is a gradual improvements of Monitoring reports.
management and use
the Danube water quality and
contributes to achieve
biodiversity conservation
Government State of the
sustainable development and
objectives are integrated into Environment Reports.
to reduce poverty.
regional development plans.
Formal and informal
Acknowledgement that
assessment from the donor
essential functions of
community and NGOs.
damaged wetland and
protected areas in the
floodplain of the Danube
have been restored.
Acknowledgment that
Government personnel
responsible for natural
resources management and
environmental protection are
capable to implement the
Protected Area Management
Law and the Water Law.
.
GEF Operational Program:
International Waters
Increased awareness about
Danube and Black Sea water
Operational Program No. 8, threats to nutrient pollution of quality monitoring reports.
Water-body based Operational transboundary water bodies.
Program: Improve water
quality of the Danube and
Increased dialogue and
Black Sea Basin.
support for nutrient reduction
programs.
Operational Program No. 2,
Globally important
Periodic biodiversity
Biodiversity Conservation:
biodiversity conserved and /or monitoring reports.
Improve conservation of
sustainably used.
globally significant
biodiversity in selected
wetland sites through
sustainable management and
use.
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Key Performance
Data Collection Strategy
Hierarchy of Objectives
Indicators
Critical Assumptions
Global Objective:
Outcome / Impact
Project reports:
(from Objective to Goal)
Indicators:
Demonstrate and provide for Gradual improvement in
Environment and agriculture Continued commitment from
replication of reduction of
ecosystems of restored
statistics.
upstream riparian countries to
transboundary nutrient loads wetlands (i.e., percentage
water quality improvements in
and other agricultural
reduction in nutrient loads
Water quality reports.
the Danube and Black Sea
pollution flowing into the
between water coming and
Basins.
Danube River and the Black
leaving the restored wetlands, Monitoring activities of the
Sea Basins while at the same number of new species of
PCU.
Continued commitment from
time conserving key target
fish/birds using the restored
the Government of Bulgaria
threatened species in the
wetlands, percentage increase Project supervision reports.
to
project areas through
in fish spawning, percentage
natural resources management
wetlands restoration and
increase in fish catch in local Mid-term review report.
and environment policies and
protected areas management areas, percentage increase in
programs, including
programs, and support for
flora diversity).
protected areas management
stakeholders to adopt
and wetlands conservation.
environmentally-friendly
Control structures and
economic activities in the two monitoring system that work
Nutrient-stripping potential of
project areas.
and relevant staff know how
wetlands as good or better
to used them.
than similar wetlands in other
Project Development
parts of the world.
Objective:
Protected areas
Local communities and local administrations able to
Improved capacity to deal
authorities in the Persina
implement protected areas
with natural resources
Nature Park and
management plans on 27,000
management and protected
Kalimok/Brushlen Protected
ha with the support of local
area management will reduce
Site areas adopt sustainable
communities.
the threat to globally
natural resources management
significant biodiversity.
practices.
Improved agriculture nutrient
reduction measures under
Continued land used based on
implementation in Persina
protected areas management
Nature Park and
plans developed.
Kalimok/Brushlen Protected
Site.
Improved income of local
population will increase
Increased awareness and local
support for protected areas
involvement and support for
and wetlands restoration.
conservation of biodiversity
marked by increased
participation of local
communities in protected
areas management and
conservation activities and
increased public knowledge of
the importance of the restored
wetlands and protected areas
ecosystems.
Increased dialogue on
transboundary water quality
and regional natural resources
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management issues through
partnerships with Bulgarian
and regional scientific
communities.
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Key Performance
Data Collection Strategy
Hierarchy of Objectives
Indicators
Critical Assumptions
Output from each
Output Indicators:
Project reports:
(from Outputs to Objective)
Component:
1.1 Wetland restoration
1.1.1 Detailed design of
Project progress reports by
Wetlands potential as nutrient
investments made in Belene
restoration works completed PCU.
strippers consistent with
Island, Kalimok/ Brushlen
by end of 1st year.
estimates.
Marshes and other priority
Project mid-term review and
sites restored to promote
1.1.2 Number of ha of
final evaluation.
Future investments in
nutrient trapping.
restored wetlands by end of
irrigation and drainage do not
3rd year and 5th year.
Project impacts studies.
disrupted restored wetlands.
1.1.3 Cost-effectiveness of
Geographic information and
Future investments in
nutrient reduction of wetlands remote sensing systems.
agriculture are in compliance
restoration relative to other
with EU regulations.
measures.

New flooding regimes caused
limited or nil collateral
damage to surrounding
agricultural land and private
property.
2.1 Planning capacity for
2.1.1 Protected areas
Management plans available Government and local
protected areas management management plans for two
as a public document from
authorities remain committed
strengthened.
protected areas (Kalimok /
MOEW.
to provide effective operation
Brushlen Protected Site and
and maintenance of
2.2 Key priority protected
Persina Nature Park)
Minutes of workshops or
monitoring systems, assign
areas management activities
developed in a participatory
Memorandums of
and maintain protected area
implemented and natural
manner and adopted by
Understanding between
staff, and provide adequate
habitats improved and
government and local
Bulgarian and Romanian
financial support.
sustainably used by local
communities and authorities.
counterparts for actions to be
communities.
undertaken jointly or in
Economic activities supported
2.2.1 Critical protected areas parallel.
under the Farm Transition
2.3 Comprehensive and
management activities
Fund program contribute to
effective monitoring system
operational within protected
Monitoring and evaluation
long-term sustainability.
compatible with other systems areas.
reports.
in region established.
Wetlands begin to recover and
2.2.2 Percentage of farmers
World Bank and co-financiers undertake ecological functions
2.4 Awareness and
that have adopted nutrient
supervision reports.
quickly to local communities
appreciation by local
friendly agriculture practices.
can quickly see benefits.
communities of wetland and
World Bank Mid-term review
protected area functions and
2.2.3 Percentage of farmers
and final evaluation.
Local communities and
their economic value
that have secure access to
authorities remain committed
enhanced and efficient
Farm Transition Fund.
to implement protected areas
implementation of small grant
management plans.
program.
2.3.1 Monitoring system
designed according to agreed
Adequate monitoring and
2.5 Capacity of institutions
protected areas management
evaluation capacity.
involved in natural resource
plan.
management within the two
protected areas strengthened. 2.3.2 Park administrations,
local and regional authorities
2.6 Guidelines for nutrient
trained in operation of
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reduction on the basis of
monitoring program.
well-documented case studies
completed and evaluated for
2.4.1 Completion of
adoption.
biodiversity conservation
activities supported under the
small grant program
2.4.2 Educational materials
developed and in use in local
schools.
2.4.3 Percentage of
communities reached by
educational program.
2.4.4 Percentage of
communities understand
importance of biodiversity
conservation and wetlands
restoration.
2.5.1 Implementation of
institutional strengthening
activities at least 60% by the
3rd year and 90% by the end
of the 5th year.
2.5.2 Performance standards
for institutions met.
2.6.1 Implemented nutrient
reduction activities properly
evaluated and documented.
3.1 Project management
3.1.1 Staff trained in project Project Implementation Plan. Project Coordinating Unit
capacity within the park
management, financial
receives counterpart funding
administrations and the
management and
Annual work plans and
on time.
Ministry of Environment and procurement.
quarterly progress and
Water improved.
disbursement reports.
Smooth coordination between
3.1.2 Monitoring and
implementing agencies.
evaluation system established Supervision by World Bank
and functioning.
and co-financiers.
Smooth coordination between
line departments.
3.1.3 Inter-ministerial
Project Mid-term review and
committee and local advisory final evaluation.
boards established and
functioning.
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- 39 -

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Key Performance
Data Collection Strategy
Hierarchy of Objectives
Indicators
Critical Assumptions
Project Components /
Inputs: (budget for each
Project reports:
(from Components to
Sub-components:
component)
Outputs)
Wetlands Restoration
US$5.03 M
Inputs will be monitored and Central, regional and local
(US$3.36 M GEF)
evaluated through regular
authorities continue
monitoring, evaluation, audit, committed to restore wetlands
Protected Areas Management US$7.16 M
procurement and
and protect and management
(US$3.15 M GEF)
disbursement reports.
designated protected areas.
Project Management
US$1.18 M
Local communities participate
(US$0.99 M GEF)
in preparation of protected
areas management plans.
Counterpart funding is
sufficient and timely.
Institutional strengthening
activities can be carried out
within the project timeframe.
Protected areas
administrations are well
staffed.
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Annex 2: Detailed Project Description
BULGARIA: Wetlands Restoration and Pollution Reduction Project (GEF)
Objective
1.
The proposed project, expected to be implemented over a 5-year period, will promote adoption of
sustainable natural resources management practices among local communities and local authorities in the
Persina Nature Park and Kalimok/Brushlen Protected Site areas. The project will help demonstrate how
environmentally-friendly rural development activities can improve livelihoods. It will also reduce
transboundary nutrient and other agricultural pollution loads flowing into the Danube and the Black Sea
Basins and to conserve biodiversity in the project areas through wetlands restoration and protected areas
management programs, and support for stakeholders in two protected areas to adopt
environmentally-friendly agricultural practices. In support of these objectives, the project will assist in: (i)
restoring critical priority wetlands in the Danube River basin and piloting the use of riparian wetlands as
nutrient traps; (ii) establishing a comprehensive water quality and ecosystems monitoring system; (iii)
supporting protected areas planning in Persina Nature Park and Kalimok/Brushlen Protected Site; (iv)
strengthening capacity to protect and manage biodiversity and natural resources; (v) building public
awareness of biodiversity conservation; and (vi) promoting and supporting entrepreneurial and agricultural
activities within the two protected areas, which are compatible with biodiversity conservation and ensure
the sustainability of natural resources within the project region.
By Component:
Project Component 1 - US$5.14 million
Wetlands Restoration
Background
2.
A major report "Evaluation of Wetlands and Floodplain Areas in the Danube River Basin" was
commissioned by the United Nations development Programme (UNDP) and GEF as a part of the Danube
Pollution Reduction Programme. This report, published in May 1999, provided the first comprehensive and
systematic evaluation of the existing extent of natural floodplains in this international river basin. The
study found that out of a total historical floodplain area of 41,605 km2 only 7,845 km2 remained ­ a
remarkable loss of over 80%. Based on this evaluation the report recommended 17 wetland/floodplain sites
for rehabilitation taking into account their ecological importance, their nutrient removal capacity and their
role in flood protection. Only two of the sites fall within the Bulgarian sector, the Belene Island within the
Persina Nature Park and the Kalimok/Brushlen Marshes within the Kalimok/Brushlen Protected Site, and
both have been selected for restoration during the first phase of project implementation. These two sites
border larger potential restoration areas in neighboring Romania. Moreover, the two sites are part of the
"Green Corridor for the Danube" Initiative launched in June 2000, which aims to establish a network of
fully functioning wetland areas along the Danube in Romania, Bulgaria, Moldova and Ukraine.
3.
While this wetland restoration component is considered a pilot with important replication value for
other priority areas in the Danube / Black Sea Region, it builds on the ICPDR's Strategic Action Plan
Implementation Program (Danube SIP) for wetland restoration, and lessons learned from even earlier
restoration programs such as the EU-Phare Multi-Country Programm's 1997-1999 support two wetland
restoration projects in the Lower Morava-Dyke river system (Czech Republic, Austria and Slovakia),
which had the objective to reduce environmental pollution and riverine degradation. Recognizing the
importance of these first demonstration projects to other areas of the Danube, documents such as the
Dissemination fo Experiences and Results from the Phare Morava and Dyje Wetlands Rehabilitation
Projects and Key Elements of Successful Wetland Rehabilitation Projects provide important lessons
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learned, which this Project has built upon. The WWF-Danube-Carpathian Freshwater Program, which has
been active in these earlier programs, played a critical role in initiating support and technical studies for
restoration activities now espoused under the Project.
3.
Belene Island. One of the already identified sites sits within the Persina Nature Park covering
about 22,000 hectares (ha), located along the Svishtov ­ Belene lowlands, comprises five areas: the Belene
Island, other islands and floodplains, the eastern part of the former floodplain mainly under state and
municipal ownership, the western part for the former floodplain mainly under private ownership, and the
hilly landscape of Nikopol. The total population connected to the Persina Nature Park is about 49,970
inhabitants, including the municipalities of Nikopol (Nikopol town with 5,100 inhabitants and Dragash
Voyvoda village with 930 inhabitants), Belene (Belene town with 9,830 inhabitants) and Svishtov (Svishtov
town with 31,800 inhabitants and Oresh village with 2,310 inhabitants). A recent survey in the region has
revealed that approximately 22% of the population is over 60 years old, and 59% of the population is
between age 18 and 60 years. Unemployment reaches approximately 22%. Most of the land in the area,
regardless of ownership, is used for agriculture purposes. Other land uses are forestry and fishery. Within
Persina Nature Park, the project will support the wetland restoration on eastern Belene Island, a 15 km long
island, the western portion of which is currently under the jurisdiction of the Ministry of Justice which
operates a prison on this side, while the eastern portion is a managed Nature Reserve under the jurisdiction
of the Ministry of Environment and Water.
4.
Kalimok/Brushlen Marshes. The other identified site, within the Kalimok/Brushlen Protected Site
covering about 6,000 ha, is located 60 kilometers east of Ruse. The total population connected to the
Kalimok/Brushlen Marshes Protected Site is about 23,140, including the municipalities of Slivo Pole
(Ryahovo village with 2,250 inhabitants, Golyamo Vranovo village with 2,190 inhabitants, Bobovo village
with 710 inhabitants and Brushlen village with 560 inhabitants) and Tutrakan (Tzar Samuil village with
1,900 inhabitants, Novo Cherna village with 2,250 inhabitants, Staro Selo village with 1,480 inhabitants,
and Tutrakan town with 11,800 inhabitants). About 50% of the population is between age 18 and 60
years. Unemployment is high ­ about 17-32%. As on the case of Persina Nature Park, most of the land is
used for agriculture purpose, and the population is mainly employed in the agriculture sector. Up until the
1950's, the marsh complex was a key part of the region's valuable fish resources. In the 1950's, a dyke
was constructed between Ruse and Tutrakan for agricultural purposes, which cut off fish from their
historical spawning grounds. Fish ponds (encircling 560 ha of state-owned land) were constructed, but they
were declared bankrupt and abandoned after the collapse of the state farming system. Most of the original
marshlands proposed for restoration are state-owned, and have reverted to reed beds. Adjacent areas are
privately and municipality-owned and used for agriculture of varying productivity levels -- while western
part of the area is mainly in private or local government ownership, the eastern area is mainly in state
ownership.
Description
5.
This is the most innovative component to be included under the project, and if successful, will have
high replication value throughout Bulgaria and the region. This component expects to restore 2,340 ha of
former marshes in the two already identified sites. Additional sites are expected to be identified and restored
during project implementation. Selection criteria for site selection will include: ecological potential,
floodplain type and with, current land use, and nutrient reduction potential.
Proposed Sub-components
Restoration of Belene Island and Kalimok/Brushlen Wetlands (Total: US$4.11 million, GEF: US$3.42
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million)
6.
This sub-component expects to restore about 1,290 ha in Belene Island and about 1,050 ha in
Kalimok/Brushlen Marshes. Restored wetlands will only involve state or municipal land. No private land is
expected to be flooded. Existing dykes will be raised or new dykes will be built to protect private property.
This sub-component will support the elaboration of engineering design and supervision of civil works. It
will also support the construction and rehabilitation of small infrastructure needed for the restoration of
wetlands in Belene Island and Kalimok/Brushlen, including sluices, canals, protective dykes, and access
roads, to allow for controlled flooding that optimizes nutrient trapping, biodiversity restoration, and fish
production as well as to ensure sustainability of the wetland ecosystems.
Restoration of Additional Sites (Total: US$1.03 million, Bilateral Donor: US$0.86 million)
7.
This sub-component, which focuses specifically on the replication of wetland restoration activities
in other areas of Bulgaria, is expected to be financed by the Danish Cooperation for Environment in
Eastern Europe (DANCEE) under the Ministry of Environment and Energy of Denmark. [Due to the recent
reorganization at the Danish Government, all DANCEE funds have been moved to a reserve budget line,
and the future of DANCEE is uncertain at present. Given the uncertainty on the Danish support, the
Government of Bulgaria is looking for alternative funding sources.] Other than the two sites already
selected for restoration under the Project, the Bulgarian "National Action Plan for the Conservation of the
Most Important Wetlands in Bulgaria" (1995) as well as the UNDP/GEF/WWF "Evaluation of Wetlands
and Floodplain Areas in the Danube River Basin" (1999) have identified other critical wetland sites in need
of restoration and protection based on predominately their biodiversity value. The Project will assist the
GoB to undertake a re-assessment of identified priority wetlands, using a broader range of criteria
developed as "lessons learned" from the preparation phase of the original two restoration sites, such as
nutrient-uptake potential and marginal cost (linking to the Nutrient Reduction Strategy Guidelines
Component) as well as social indicators (current land-use and ownership patterns). This subcomponent will
finance consultant services for additional site identification, pre-feasibility and feasibility studies, design of
restoration activities, and the necessary civil works (and supervision of their construction).
Project Component 2 - US$7.04 million
Protected Areas Management
Background
8.
Persina Nature Park. The regime of use and management of Persina Nature Park is defined by the
Protected Areas Law, the Ordinance of the Minister of Environment and Water for the designation of the
Nature Park (No. RD ­ 648, dated December 4, 2000), and the Management Plan for the Nature Park.
Many bird species, some of which threatened on a European, as well as global scale, find nesting, wintering
or migrating habitats in Persina Nature Park. The area boasts a rich diversity of mammal, amphibian and
especially fish species. There are 21 species of the Red Data Book found in the Belene Island complex.
The site is an important habitat for the White-tailed Eagle and the Lesser Gray Shrike. The Ferruginous
Duck and the Corncrake, two globally threatened species, also breed on the site. Rare plant species of the
Red Data Book, like Water Lily, are present in the site. The Persina Nature Park with an area of about
22,000 ha includes lands from the areas of Nikopol, Dragash Voyvoda, Belene, Svishtov and Oresh. Lands
administratively belonging to these settlements and within the boundaries of the Nature Park are not part of
it. The designation of the Nature Park does not alter the ownership of forests, lands and water areas on its
territory, but the owners and users are obliged to observe the regime of protection. The division of
responsibilities for the management, security, conservation and restoration of the nature parks is defined
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mainly by the Protected Areas Law, the Forests Law and the regulations of the National Forestry Board for
the functioning of the Park Directorates. The Persina Nature Park Directorate was created by on April 1,
2001, by ordinance No. 258, dated May 10, 2001. It is subordinated directly to the National Forestry
Board. At present, the Directorate includes five staff: a Park Director, a Biodiversity Conservation Expert,
a Public Relations and Tourism Development Expert, a Chief Specialist on Ecological Agriculture and an
Accountant.
9.
Kalimok/Brushlen Protected Site. The regime of use and management of the Kalimok/Brushlen
Protected Site is regulated by the following documents: the Protected Areas Law, the Order of the Minister
of Environment and Water for the designation of the Protected Site (No. RD-451, dated July 4, 2001), and
the Management Plan for the Protected Site. The Kalimok/Brushlen Protected Site with an area of about
6,000 ha, includes lands from the area of the villages of Ryahovo, Golyamo Vranovo, Babovo and
Brushlen in the Municipality of Slivo Pole, as well as Zar Samuil, Nova Cherna, Staro Selo and Tutrakan
in the Municipality of Tutrakan. Lands administratively belonging to these settlements and within the
boundaries of the Protected Site are not part of it. The Kalimok marshes near the town of Tutrakan feature
a rich biological diversity and are declared an Internationally Important Bird Area by Bird Life
International. The site is also an internationally important site for waterfowl of which 30 species are listed
in the Red Data Book. The marshes serve as breeding sites for the Ferruginous Duck and as rest site for the
Dalmatian Pelican and during the winter for the Pygmy Cormorant and Red Breasted Goose. Breeding
species in this site include Little Bittern, Nigh Heron, Spoonbill and White-tailed Eagle. The Protected
Area covers various landscapes including agricultural lands and allows for a wide range of uses of these
lands. The designation of the protected area does no alter the ownership of lands, forests and water areas in
it, but their owners and users are obliged to observed the adopted regime in order to protect the habitats of
endangered, rare and vulnerable species and communities. The Protected Areas Law establishes that the
owners of land, forest and water areas in the protected area must realize the management of the protected
areas regime. So far, no specialized administrative unit for the site has been established. Discussions and
consultations are under way among owners of land, forest, and water areas within the site as well as the
Ministry of Environment and Water and the Ministry of Agriculture and Forestry to decide on the
management structure.
Description
10.
This component will support the next step towards sustainable restoration and protection of the
two protected sites. This component will support preparation of protected areas management plans as well
as implementation of priority actions within the framework of protected areas management regimes. The
wetlands restoration and management regime of both sites will incorporate the objectives of the local
communities as well as the biodiversity objectives of the nature park and protected site, respectively. This
component will include the following activities: (i) development of protected areas management plans in
each protected area; (ii) implementation of priority protected areas management actions, including
management, operation and maintenance of restored wetlands and associated protected areas, establishment
of a contingency relief fund, establishment of a farmer transition support program, provision of technical
support for development of "green" business; (iii) strengthening monitoring programs within the restored
wetlands systems, (iv) public awareness and education program, which includes a small grant scheme for
activities that promote biodiversity conservation and environmental education program; (v) institutional
strengthening program for entities responsible for land/water management to ensure sustainable
management and use of the restored sites, and (vii) developing strategic guidelines to support preparation of
a nation-wide nutrient reduction strategy.
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Proposed Sub-components
Protected Areas Management Planning (Total:US$0.59 million,PHARE: US$0.59 million)
11.
The Bulgarian Protected Areas Law stipulates the legal procedures to introduce the Management
Plan for both Persina Nature Park and Kalimok/Brushlen Protected Site. The management plan will
regulate all activities within the designated areas ­ including the demarcation of management zones for
multiple resources use and economic development. The management planning process is expected to cover
a period of two years, with the first year dedicated to fact-finding and establishment of consensus-building
process which will help guide the identification of zones and management protocols. Through a
well-designed participatory process, the management plans aim to gain public acceptance for not only the
natural resource management proscriptions identified in the management plan, but also possible restrictions
to resource use which may be necessary to ensure the long-term sustainability of these resources. The
protected areas management plan will identify not only the appropriate management prescriptions of the
protected areas' biological resources, but also processes by which the park administrations can pro-actively
foster local sustainable socio-economic activities. Efforts to keep Romanian counterpart aware of and to
some extent involved in the planning process will also be supported by the project.
Supporting Protected Areas Management Activities (US$2.60 million financed by GEF)
12.
The sub-component will finance implementation of key activities under the framework of protected
areas management:
(a)
Management and Maintenance of Restored Wetlands and Associated Protected Areas.
After the initial construction, the project will support management and maintenance of the
wetlands in order to optimize nutrient trapping and biodiversity habitat. For the latter, it is
expected that the first years, the restored wetlands will require more intensive management
until a dynamic ecological equilibrium is reached. Intensive management will include:
residual "clean-up" from the initial flood and extensive cutting of the reeds which have
accumulated in the fishponds, controlling natural succession of reeds, avoiding
decomposition of vegetation, ensuring free access of fish to the wetlands, controlling illegal
fishing practices. In subsequent years, management needs will be reduce to cutting of
annual growths, and managing of sluices. The project will also support restoration of
critical associated habitats within protected areas. While the management plan will detail
management regimes to be undertaken by the protected areas administrations, Regional
and State Forestry Boards and Regional Agriculture Offices, and a few activities ­ in
particular for the restoration of critical habitats and natural resources ­ can already be
identified. For example, the Action Plan for the restoration of Daubian island floodplain
forests off of Kalimok/Brushlen (managed by the State Forestry Board) will be complete
by Winter 2002. Technical assessments of restoration sites and restoration proscriptions
are ready. The project will also support border demarcation as well as the development of
tourism trials and interpretation points.
(b)
Establishing a Contingency Relief Fund. Wetlands restoration activities may have an
indirect effect on private lands. For example ground water levels may increase on private
land adjacent to the restored area. Wetland restoration may indirectly result in a change in
cropping patterns. Other potential indirect effects include changes in well water quality and
road access to privately held lands. The technical study will identify options that mitigate
- 45 -

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such impacts, however, it is recognized there may be unintended indirect effects.
Therefore the project will support the establishment of a Contingency Relief Fund that can
be used, if necessary, to provide relief to households that experience a temporary decrease
in income or quality of life as a result of restoration activities. Permanent relief is provided
through the Farmer Transition Support Fund, which gives priority support to long term
solutions that mitigate the negative indirect impacts of the flooding. The Farmer Transition
Fund also provides long term support to ecologically sustainable agricultural activities
which are not only in compliance with incoming environmental regulations for the region,
but also better adapted to wetter soil conditions.
The Contingency Relief Fund is capitalized at a level equal to an estimate of the maximum
potential marginal losses resulting from the restoration activities. Private farmers and
agriculture cooperatives in the KB protected area are eligible to apply for small grants
from the fund. The public information campaign will disseminate information on the
application process once a year. All applications will be reviewed by a panel including an
environmental expert (from a local NGO), an agricultural engineer (from the Ministry of
Agriculture and Forestry) and a representative from the Regional Directorate of Land Use.
The expert panel will review claims, submitted in a standard format developed and
disseminated by the Project Coordinating Unit, once a year. The evaluation will be made
on the basis of technical assessments of the affected area and average harvest over the past
three-five years. If losses claimed can be attributed to wetlands restoration activities, then
the applicant will be awarded grants sufficient to offset the losses. Some activities
supported by these grants include agriculture production (e.g., inputs, planting materials,
fertilizers, mobile pumps), training, food support, development of new groundwater wells.
Detailed mechanisms for drawing upon this fund, including establishing expert panel,
developing eligibility criteria, procedures for application and a monitoring system, will be
determined during first year of project implementation with the participation of local
stakeholders. The Borrower will obtain prior Bank approval before implementation of the
fund. The Project Coordinating Unit will be responsible for managing this fund.
(c)
Establishing a Farmer Transition Support Fund. The Persina Nature Park and
Kalimok/Brushlen Protected Site management plans are expected to support economic
activities compatible with conservation objectives and limit those that are not. The purpose
of this fund is to help farmers make the transition from activities that are not compatible
with project objectives. The fund will provide small grants to offset the one-time cost to
farmers of converting to compatible activities. Farmers will be given a menu of options of
compatible activities and be encouraged to apply for this funding by the local Regional
Agriculture Office. Possible options that could be supported under the fund may include:
(i) livestock waste treatment, (ii) agro-forestry, (iii) low-till cropping, (iv) low input
agriculture, (v) conversion of low category arable lands to pastures and meadows, and (vi)
restoration of fisheries. The local agriculture office jointly with local environment office
and municipalities will evaluate applications, provide technical assistance on project design
as needed, and disburse the grant money. This SAPARD agency and its regional
branches, which has recently launched the implementation of measure 1.3 of the National
Agriculture and Rural Development Plan for 2000-2006, on the development of
environmental friendly agricultural practices and activities, will be involved in the
- 46 -

---

implementation of this project activity.
The mechanisms for awarding these grants, including establishing grant committees and
developing eligibility criteria, procedures for application and a monitoring system, will be
determined within the first year of project implementation with the participation of local
stakeholders and will be submitted for the Bank's approval before implementation.
(d)
Providing Support for Eco-Business Development. The project will provide technical
assistance and grant financing to local communities and individual farmers to: (i) identify
existing sources of funds (i.e., EU programs PHARE, SAPARD, Cross-Border
Cooperation, USAID, Swiss bilateral program, etc.), (ii) developed marketable
"eco-friendly" business proposals, (iii) access grant funds, and (iv) support implementation
of a small number of pilot schemes to promote small-scale environmentally friendly income
generating initiatives. The Austrian Government, through the Ministry of Foreign Affairs,
will provide financial support to the Russe Business Support Center (BSC) for Small and
Medium Enterprises, with the expectation that two branches in the two project sites will be
established. This will allow the BSC to support the development of green-business
proposals compatible with biodiversity conservation. The BSC will target its support to
rural and urban clients located within the boundaries of the two project sites. In addition to
advice on business plan development, three forms of support are expected: a machine
leasing fund program, a small loans fund program, and an investment fund program. In
addition, the Austrian Government will finance consultancy services to carry out feasibility
studies of "green business" concepts and ideas.
Monitoring Program (Total: US$1.18 million, PHARE: US$0.97 million, GEF: US$6,000 )
13.
The project supports the establishment of a comprehensive monitoring program in each project site
to monitor and manage the ecosystem and biodiversity of the two restored wetlands and protected sites. The
program will monitor quality of Danube water, nutrient trapping within the restored wetlands, surface and
groundwater quality, groundwater water table, meteorological data, sedimentation, biodiversity, crop
yields, soil conditions, and public health impacts. The project also support the development of an integrated
geographic information/remote sensing system for assisting the two park administrations and Ministry of
Environment and Water (MoEW) to monitor progress and performance of the activities implemented under
the project. The capacity of the protected areas administrations and the Ministries of Environment and
Water, Agriculture and Forestry and Public Health will be considerable enhanced. To this end, consultant
services will be mobilized to support in the detailed design, procurement and supervision of the installation
of the monitoring system; equipment needed for the monitoring system will be procured; and appropriate
training, field visits, workshops and seminars will be organized for responsible institutions as well as
students and interested local individuals. In addition, activities to disseminate project results throughout the
Danube and Black Sea basins will be supported.
14.
During the preparation phase, a system to monitor the nutrient trapping of phosphates and nitrates
through different environmental media (soil, water, plants, etc.) of the wetland to be restored by the project
was designed. Taking into consideration the recent accidents with the Romanian tailing ponds upstream of
the Danube River and the heavily contaminated Timok River with heavy metals from Bor Mine, monitoring
heavy metal concentrations will also be included in the system. The Project Implementation Plan provides a
description of the monitoring program, including the parameters to be measured, sampling points and
frequency. The water quality monitoring system in the wetland areas is compatible with the existing water
quality monitoring system used by Bulgaria on the Danube River.
- 47 -

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Public Awareness and Environmental Education (Total: US$0.79 million, PHARE: US$0.46 million,
GEF: US$0.28 million)
15.
The project will enable protected areas administrations and municipalities to undertake a
comprehensive public awareness and environmental education program. This sub-component will support
the establishment of a small grant scheme for biodiversity conservation targeted to local groups. It will also
finance consultant services to develop an environmental education program targeted to schools, teachers,
hunters, etc. and to promote the role of wetlands management in reduction of nutrients, conservation of
biodiversity and restoration of fishery resources and to foster regional protected areas and wetlands
management cooperation with Romania and other Black Sea/Danube countries. Dissemination of project
activities and benefits will be undertaken at the national and regional levels in order to achieve replication
of project interventions. The project would provide for the organization of regional workshops, field visits
by interested parties, training and other activities to promote replication of project activities in other
Danube/Black Sea riparian countries. A specific plan for replication will be prepared in the context of the
UNDP/GEF Danube and Black Sea Program.
16.
The small grant scheme for biodiversity conservation will be administrated by the protected areas
administrations supported by the Local Coordinator and technical experts contracted by the PCU. The Park
Administration would: (i) prepare and disseminate the Small Grants Guidelines, including description,
scoring and selection criteria, and call for proposals; (ii) conduct workshops to disseminate the small grant
scheme; (iii) monitor implementation of individual grants contracts; (iv) publish annual summaries of the
results of the competition, including description of proposals received and select, and the basis for their
selection; and (v) organize two workshops (in year 2 and 3) to review results and disseminate lessons
learned. Eligibility criteria for individual projects would include direct support of protected areas
management objectives. Activities to be supported by the grant scheme should be within the two project
protected areas. Within the framework of the two Consultative Councils, advisory committees will be
established to oversee the implementation of the small grant scheme.
Nutrient Reduction Strategy Guidelines (Total: US$0.20 million, GEF: US$0.17 million)
17.
As a part of Bulgaria's strategy to meet its international obligations as well as to comply with the
EU Water Framework Directive and the new Water Law, the Government is preparing to establish river
basin authorities. This component will finance consulting services to assist the Government to identify the
role of wetlands restoration as a viable measure to contribute to the reduction of nutrients, to develop a
decision-support system application using Geographic Information System concepts for water quality and
nutrient control, and to draft strategic guidelines to support preparation of a nation-wide nutrient reduction
strategy.
Strengthening Implementing Agencies Capacity (Total: US$1.70 million, GEF: US$0.98 million,
PHARE: US$0.32 million)
18.
In order to manage the natural resources within the protected areas (including the flooded wetlands)
and promote environmentally-friendly economic development, local and regional institutions will need to be
supported with vehicles, office equipment and training ­ formal education programs, on the job training,
study tours, field visits, seminars, and exchange programs, and minimum incremental operating funds.
Limited civil works activities to renovate existing office buildings will also be supported under the project.
Incremental staffing will be funded by the Government..
- 48 -

---

Project Component 3 - US$ 1.10 million
Project Coordination, Management and Monitoring
19.
This component will support a tripartite Project Coordinating Unit (PCU) located within the
Ministry of Environment and Water. A unit in Sofia will be responsible for central and/or larger
procurement and financial management activities, disbursement, reporting, coordination with central
ministers and the monitor/evaluation of overall project implementation. Each of the protected areas
administrations will be served by a Local Coordinator and a technical expert, responsible for small
procurement, local coordination associated with project implementation and reporting to the PCU-Sofia.
The existing Project Preparation Unit will be transformed into the PCU. The Sofia Unit will be composed
of a full time Project Manager, a Financial Management Specialist, a Procurement Specialist, a Database
Management Specialist, Technical Experts (on demand), a Translator/Interpreter, and a Driver.
18.
In order to assist the PCU to carry out its responsibilities, the project will provide funds to meet the
staff salaries and operating costs of the PCU; to design and install a program for monitoring and evaluating
project impacts; to engage consultants to carry out impact evaluation studies over the life of the project;
and to finance auditing services over the life of the project. The project will also provide funds for an initial
project launch workshop, followed by two procurement guidelines workshop, and workshops over the
project period. This component will be funded by GEF.
- 49 -

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Annex 3: Estimated Project Costs
BULGARIA: Wetlands Restoration and Pollution Reduction Project (GEF)
Components by Financiers (in US$ '000)

GEF
GOB
PHARE
AUSTRIA
TDB
Municip. & Farm
Total
Amount
%
Amount
%
Amount
%
Amount
%
Amount
%
Amount
%
Amount
%
A. Wetlands Restoration

1. Restoration of Belene Island and K/B Marshes
3,422.5
83.3
684.7
16.7
-
-
-
-
-
-
-
-
4,107.2
30.9
2. Restoration of Additional Sites

-
-
171.8
16.7
-
-
-
-
858.8
83.3
-
-
1,030.6
7.8
Subtotal Wetlands Restoration
3,422.5
66.6
856.5
16.7
-
-
-
-
858.8
16.7
-
-
5,137.8
38.7
B. Protected Areas Management

1. Protected Areas Management Planning

-
-
0.0
-
594.6 100.0
-
-
-
-
-
-
594.6
4.5
2. Supporting Protected Areas Management Activities

O&M Restored Wetlands and Related Protected Sites

595.6
83.3
119.2
16.7
-
-
-
-
-
-
-
-
714.8
5.4
Contingency Relief Fund

406.1
83.3
81.2
16.7
-
-
-
-
-
-
-
-
487.4
3.7
Farmer Transition Support Fund

726.9
73.7
164.4
16.7
-
-
-
-
-
-
95.1
9.6
986.4
7.4
Eco-Business Development Support

-
-
-
-
-
-
380.7 100.0
-
-
-
-
380.7
2.9
Subtotal
1,728.6
67.3
364.8
14.2
-
-
380.7
14.8
-
-
95.1
3.7
2,569.3
19.3
3. Monitoring Program

Design and Supervision of Monitoring System

-
-
-
-
189.8 100.0
-
-
-
-
-
-
189.8
1.4
Procurement and Installation of Monitoring Systems

5.8
0.7
204.7
24.9
610.4
74.4
-
-
-
-
-
-
820.9
6.2
Training and Study Tours

-
-
-
-
173.3 100.0
-
-
-
-
-
-
173.3
1.3
Subtotal

5.8
0.5
1.2
0.1
973.5
82.2
-
-
-
-
-
-
1,184.0
8.9
4. Public Awareness and Environmental Education

Small Grant Scheme for Biodiversity Conservation

276.2
83.3
55.2
16.7
-
-
-
-
-
-
-
-
331.4
2.5
Environmental Education and Training Program

-
-
-
-
165.9 100.0
-
-
-
-
-
-
165.9
1.2
Regional Protected Areas Management Cooperation

-
-
-
-
296.2 100.0
-
-
-
-
-
-
296.2
2.2
Subtotal

276.2
34.8
55.2
7.0
462.1
58.2
-
-
-
-
-
-
793.5
6.0
5. Nutrient Reduction Strategy Guidelines

167.3
83.3
33.5
16.7
-
-
-
-
-
-
-
-
200.8
1.5
6. Strengthening Implementing Agencies Capacity

a. Support to Institutional Development

Technical Assistance, Training and Study Tours

-
-
-
-
319.9 100.0
-
-
-
-
-
-
319.9
2.4
Equipment, Vehicles and Supplies

257.9
83.3
51.6
16.7
-
-
-
-
-
-
-
-
309.5
2.3
Renovation of Existing Office Building

463.7
74.9
98.0
15.8
-
-
-
-
-
-
57.2
9.2
619.0
4.7
Subtotal Support to Institutional Development

721.6
57.8
149.6
12.0
319.9
25.6
-
-
-
-
57.2
4.6
1,248.4
9.4
b. Incremental Operating Expenses

Park Administrations

92.0
54.8
75.9
45.2
-
-
-
-
-
-
-
-
167.9
1.3
Managing Control Structures in Restored Wetlands

76.1
67.1
37.3
32.9
-
-
-
-
-
-
-
-
113.4
0.9
Monitoring System

92.0
54.8
75.9
45.2
-
-
-
-
-
-
-
-
167.9
1.3
Subtotal Incremental Operating Expenses

260.0
57.9
189.1
42.1
-
-
-
-
-
-
-
-
449.2
3.4
Subtotal

981.7
57.8
338.7
20.0
319.9
18.8
-
-
-
-
57.2
3.4
1,697.5
12.8
Subtotal Protected Areas Management
3,159.7
44.9
997.0
14.2
2,350.0
33.4
380.7
5.4
-
-
152.3
2.2
7,039.7
53.0
C. Project Management

1. Support for Project Coordination and Management

763.2
83.3
152.7
16.7
-
-
-
-
-
-
-
-
915.8
6.9
2. Monitoring and Evaluation

155.4
83.3
31.1
16.7
-
-
-
-
-
-
-
-
186.5
1.4
Subtotal Project Management

918.6
83.3
183.8
16.7
-
-
-
-
-
-
-
-
1,102.3
8.3
7,500.7
56.5
2,037.2
15.3
2,350.0
17.7
380.7
2.9
858.8
6.5
152.3
1.1 13,279.8 100.0
Disbursement Accounts by Financiers (in US$ '000)

GEF
GOB
PHARE
AUSTRIA
TDB
Munic. & Farm
Total
Amount
%
Amount
%
Amount
%
Amount
%
Amount
%
Amount
%
Amount
%
1. Works

3,822
69.6
915
16.7
-
-
-
-
728
13.3
26.1
0.5
5,491
41.3
2. Land

-
-
-
-
-
-
-
-
-
-
31.1 100.0
31
0.2
3. Goods

471
34.1
298
21.6
610
44.3
-
-
-
-
-
-
1,379
10.4
4. Consultancy Services

1,274
40.0
281
8.8
1,441
45.2
58
1.8
131
4.1
-
-
3,185
24.0
5. Training and Study Tours

150
31.4
30
6.3
299
62.3
-
-
-
-
-
-
479
3.6
6. Public Awareness Grants

276
83.3
55
16.7
-
-
-
-
-
-
-
-
331
2.5
7. Contingency Relief Fund Grants

377
83.3
75
16.7
-
-
-
-
-
-
-
-
452
3.4
8. Farm Transition Support Grants

697
73.3
159
16.7
-
-
-
-
-
-
95.1
10.0
951
7.2
9. Eco-Business Grants

-
-
-
-
-
-
322 100.0
-
-
-
-
322
2.4
10. Incremental Operating Costs

434
66.0
224
34.0
-
-
-
-
-
-
-
-
658
5.0
Total

7,501
56.5
2,037
15.3
2,350
17.7
381
2.9
859
6.5
152
1.1
13,280 100.0
- 50 -

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Project Components by Year -- Totals Including Contingencies (in US$ '000)

Totals Including Contingencies
2002
2003
2004
2005
2006
2007
Total
A. Wetlands Restoration

1. Restoration of Belene Island and K/B Marshes

217.5
1,274.9
1,763.1
851.7
-
-
4,107.2
2. Restoration of Additional Sites

-
10.2
121.7
442.7
456.0
-
1,030.6
Subtotal Wetlands Restoration

217.5
1,285.1
1,884.8
1,294.4
456.0
-
5,137.8
B. Protected Areas Management

1. Protected Areas Management Planning

144.4
206.8
243.4
-
-
-
594.6
2. Supporting Protected Areas Management Activities

O&M Restored Wetlands and Related Protected Sites

22.8
116.4
202.1
229.2
144.3
-
714.8
Contingency Relief Fund

12.0
12.3
134.8
183.8
73.4
71.1
487.4
Farmer Transition Support Fund

-
17.5
293.5
283.7
292.2
99.6
986.4
Eco-Business Development Support

48.3
156.5
176.0
-
-
-
380.7
Subtotal

83.1
302.7
806.3
696.7
509.9
170.7
2,569.3
3. Monitoring Program

Design and Supervision of Monitoring System

81.0
62.4
46.3
-
-
-
189.8
Procurement and Installation of Monitoring Systems

-
408.0
413.0
-
-
-
820.9
Training and Study Tours

16.3
80.9
76.1
-
-
-
173.3
Subtotal

97.3
551.3
535.4
-
-
-
1,184.0
4. Public Awareness and Environmental Education

Small Grant Scheme for Biodiversity Conservation

-
63.7
114.8
118.2
34.8
-
331.4
Environmental Education and Training Program

-
81.7
84.2
-
-
-
165.9
Regional Protected Areas Management Cooperation

-
145.9
150.3
-
-
-
296.2
Subtotal

-
291.3
349.2
118.2
34.8
-
793.5
5. Nutrient Reduction Strategy Guidelines

-
-
48.1
49.5
51.0
52.2
200.8
6. Strengthening Implementing Agencies Capacity

a. Support to Institutional Development

Technical Assistance, Training and Study Tours

-
157.6
162.3
-
-
-
319.9
Equipment, Vehicles and Supplies

-
135.4
139.5
34.7
-
-
309.5
Renovation of Existing Office Building

31.1
23.3
180.9
161.6
221.9
-
619.0
Subtotal Support to Institutional Development

31.1
316.3
482.7
196.3
221.9
-
1,248.4
b. Incremental Operating Expenses

Park Administrations

15.7
32.1
33.1
34.0
35.1
17.9
167.9
Managing Control Structures in Restored Wetlands

-
13.4
27.5
28.4
29.2
14.9
113.4
Monitoring System

15.7
32.1
33.1
34.0
35.1
17.9
167.9
Subtotal Incremental Operating Expenses

31.4
77.5
93.6
96.5
99.3
50.8
449.2
Subtotal

62.5
393.9
576.4
292.7
321.3
50.8
1,697.5
Subtotal Protected Areas Management

387.3
1,745.9
2,558.7
1,157.2
916.9
273.7
7,039.7
C. Project Management

1. Support for Project Coordination and Management

201.6
147.9
152.4
156.9
161.6
95.4
915.8
2. Monitoring and Evaluation

51.4
29.2
30.1
31.0
31.9
13.0
186.5
Subtotal Project Management

252.9
177.1
182.4
187.9
193.5
108.5
1,102.3
Total PROJECT COSTS

857.7
3,208.1
4,626.0
2,639.5
1,566.4
382.1 13,279.8
- 51 -

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Annex 4: Incremental Costs and Global Environmental Benefits
and Cost-Effectiveness Analysis
BULGARIA: Wetlands Restoration and Pollution Reduction Project (GEF)
INCREMENTAL COSTS AND GLOBAL ENVIRONMENTAL BENEFITS
Overview
1.
The general objective of the GEF Alternative is to help the Government of Bulgaria meet its
national and international commitments to reduce transboundary nutrient loads and conserve biodiversity in
the Danube and Black Sea Basins through the restoration of wetlands and improved management of natural
resources. The GEF Alternative will: (i) restore critical wetlands and the riverine landscape in the
Danube/Black Sea basin; and (ii) establish a foundation for sustainable natural resource use and
development within Persina Nature Park and Kalimok/Brushlen Protected Site. The administrations of
these two protected areas will be responsible for maintaining the restored wetlands and waterflows while
also protecting critical biodiversity habitats and mainstreaming environmentally-friendly principles into the
two areas' production landscapes. Specifically, the GEF Alternative will support protected areas
management planning and implementation, monitoring programs for natural resources within the project
site, public awareness and education, institutional strengthening, integrating water quality and biodiversity
objectives into the production landscape, and the establishment of guidelines for a Bulgarian nutrient
reduction strategy. The GEF Alternative intends to achieve these outputs at a total incremental cost of
approximately US$13.3 million, of which a grant of US$7.5 million is requested from the GEF. The
Government of Bulgaria (including local municipalities) has committed to financing US$2.18 million of its
resources. EU PHARE and the Danish and Austrian Governments are also expected to provide a total of
$3.59 million to complement GEF funding.
Context and Broad Development Goals
2.
The natural resources of the Black Sea suffer from eutrophication (i.e. choking and collapse of
food chains due to loss of oxygen), declining water quality, loss of habitat and the introduction of exotic
species ­ due to, inter alia, excessive agricultural run-off within the entire watershed, insufficiently treated
sewage, and inadequate resources management. In-depth analytical work points to eutrophication, caused
by an increase in nutrient flux down the major rivers, as the most serious problem facing the Danube River
and the Black Sea over the medium to long-term. The effects of eutrophication on the northwestern shelf of
the Black Sea at the mouth of the Danube have had particularly disastrous impacts to water quality,
natural habitat, and fish populations on which both biodiversity and human populations depend. The
Danube/Black Sea Basin Partnership Strategy Report outlines the most urgent actions needed to be adopted
by the countries of the region to fulfill their international legal obligations under the Danube and Black Sea
Conventions. It proposes measures to reduce excessive nutrient loads, mostly nitrogen and phosphorus, in
the rivers discharging into the Black Sea, particularly into the Danube.
3.
The Danube River is one of the continent's largest and most important rivers linking Central and
Eastern Europe. It flows about 2900 kilometers through ten countries including 300 tributaries, from
Germany to the Black Sea, draining 817,000 square kilometers. The lower Danube is also one of
Europe's most polluted rivers. It contributes approximately 60% of the nutrients of the Black Sea.
Approximately 60% of the nitrogen compounds and about 66% of the phosphorous compounds originate
from non-point sources within the Danube watershed.
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4.
The Danube forms the border between Bulgaria and its northern neighbor Romania for 472
kilometers before continuing through Romania to the Black Sea. More than half the area on the Bulgarian
bank of the Danube are former floodplains, covering 1280 square km. Over the years, the wetlands and
floodplain has been drained or dyked to create arable land or as an anti-malaria measure, such that today's
wetlands cover only about 10% of the area that existed at the turn of the century and hence cannot perform
their original ecological function. Although about half of the country drains into the Danube River,
Bulgaria is not the largest contributor of nutrient loads to the river. The Transboundary Diagnostic
Analysis (TDA) undertaken by the Black Sea 1993-99 indicates that Bulgaria places third of the Black
Sea states in terms of the nitrogen (N) and phosphorous (P) it contributes to the Sea, and accounts for
between 1%-5% of the total pollution.
5.
The proposed project sites are among 16 former floodplains with potentially high environmental
benefits recommended for restoration in the GEF-financed Pollution Reduction Program study of the
Danube Commission, based on the sites' ecological potential, floodplain type and width, current land use
and nutrient reduction potential. The project addresses the highest priority transboundary problem
identified in the Strategic Action Plans (financed by the GEF and the EU) of both the Black Sea and the
Danube River.Bulgaria's National Biodiversity Strategy (1994) identifies the Danube wetland complex
within the project site as the most representative of riverine wetlands and of international importance for
waterfowl habitat. Similarly, the Bulgarian National Plan for the Conservation of the Most Important
Wetlands (1995) considers two of the proposed sites as high priority areas for restoration. Both project
sites ­ Persina Marshes and Kalimok Marshes, are CORINE Biotope Sites and can become part of the
NATURA 2000 network upon EU accession of Bulgaria. One of the proposed project areas, Belene Island,
is of particular international importance such as a breeding habitat for the endangered white-tailed eagle
and nesting herons. The project sites also serve as nesting places for the Ferruginous Duck (Aythya nyroca)
and formerly for the endangered Dalmatian Pelican (Pelecanus crispus). These water and terrestrial
ecosystems and the flora and fauna within the Project sites are, however, under threat from disruptions to
natural waterflows and poor management of the region's natural resources. Establishing effective natural
resources management and drafting and implementing protected areas management plans for these areas
will be critical to halting these threats to the ecosystem.
7.
The broad development goals of Bulgaria focus on public sector management, private sector
development, social protection and poverty reduction, and environmental protection. One of the five pillars
of the Country Assistance Strategy is protecting and enhancing the environment and ensuring prudent and
rational utilization of natural resources. The Government of Bulgaria has taken important steps towards
improved environmental management in recent years, including the development of national strategies such
as the Bulgarian National Biodiversity Strategy and the recent Protected Area Law (PAL) and Strategy on
the Protection and Restoration of Floodplain Forests on the Bulgarian Danube Islands, endorsed by the
Ministry of Agriculture and Forests and the Ministry of Environment and Water in September 2001.
Government and local officials are eager to integrate interventions which address the issue of
transboundary pollution and global biodiversity benefits with efforts towards meeting EU Accession
requirements related to EU Directives on Water Policy and Environment. With World Bank, GEF and other
donor support, the Government aims to integrate environmental principles into other sectoral policies and
activities, build institutional capacity, and raise public awareness. The country's natural resources will need
to be appropriately managed in order to optimize the commercial, environmental and social benefits that
they can bring.
Baseline Scenario
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8.
Up until the 1950's, the marsh complex in Belene/Persina and Kalimok/Brushlen were a key part
of the region's valuable natural resources. The forested Danubian coastal islands and adjacent coast line
were a part of the yearly Danubian flood cycle which created critical habitat for birds and fish. By the
1950's, however, for agricultural purposes, a dyke was constructed along the Danubian coast between the
towns of Ruse and Tutrakan. Fish were cut from their historical spawning grounds, and the original
marshlands have been drying up. Fish ponds (encircling 560 ha of state-owned land) were constructed, but
they were declared bankrupt and abandoned after the collapse of the state farming and irrigation systems.
Many of the original marshlands have reverted to reed beds, with open water areas and biodiversity
diminishing every year. Adjacent areas are privately and municipality-owned and used for agriculture of
varying productivity levels. In addition, riverine forests along the coast and on the Danubian islands have
been converted to hybrid poplar plantations with negative environmental consequences and unclear
financial benefit. While the Bulgarian agricultural sector does not currently input heavy nutrient loads into
the Danube/Black Sea basin, signs of a revitalization large-scale dairy and pig-farming without associated
waste management could become a cause of water quality concern. Restoring portions of the original
wetlands and establishing a foundation for sustainable management of natural resources within the
protected areas (which cover a landscape of mixed use and ownership) will be critical restoring some of the
ecosystem functions and values of the Project region.
9.
Under the Baseline Scenario, it is expected that Government of Bulgaria and local municipal
expenditures related to nutrient reduction and wetland restoration, environmental monitoring and habitat
conservation programs in the project area over the life of the project will be US$0.86 million, mainly
through the Ministry of Environment and Waters and Ministry of Agriculture (State Forestry Board)
annual budgets.
10.
A number of wetland restoration, natural resources management and biodiversity conservation
activities in Bulgaria are being (or will be) financed by other international development agencies or NGOs.
These, plus Government of Bulgaria contributions are summarized in the Incremental Cost Analysis matrix
and are discussed below:
i. The approximate US$2.9 million Phare Integrated Monitoring of the Black Sea Coast will help
monitor Black Sea coastal pollution between Durankulak and Rezovo by strengthening the capacities
of institutions responsible for marine monitoring -- assisting in Bulgaria's overall ability to assist in the
reduction of nutrients in the Black Sea watershed (estimated US$100,000 related to project objectives
and region).
ii. International donor and governmental support for the Sreberna Nature Reserve, a wetland site
adjacent to the project area, will be approximately US$300,000 during the life of the Project.
iii. The WWF-International Danube-Carpatian Program Office has prepared a proposal for GEF MSP
(through UNDP) for US$750,000 to prepare the grounds for planned wetlands restoration and
sustainable management projects throughout the Lower Danube, by building capacities on the ground
and developing participatory approaches for these projects' planning and implementation. If funded, it
will also demonstrate how to prepare and integrate local stakeholder groups for large-scale wetland
restoration projects (estimated US$100,000 related to project region).
iv. The PHARE Cross Border Cooperation Program aims to contribute approximately $250,000 for
the assistance to both Bulgaria and Romania in fulfilling EU environmental requirements, specifically
by preparing a proposal for a Wetland Park in the Bulgarian Silistra District, and preparing a Joint
Control System for Emissions of VOC, PAH and heavy metals from stationary sources in the
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Bulgarian - Romanian regions (estimated US$100,000 related to project).
v. The ACCESS Parks in Bulgaria / Partnerships for Europe program can be expected to increase the
capacities of park administrations throughout Bulgaria, help disseminate successful practices, increase
public awareness and strengthen links and cooperation between protected areas and the local, regional
and national authorities. Total project costs are estimated at US$78,000, of which US$10,000 is
estimated to be relevant to the project.
vi. The US$54,000 Floodplain Forest Restoration Strategy and Action Plan for the Danube Islands,
under preparation by WWF and the Government of Bulgaria, will establish a basis for sustainable
forestry on the Bulgarian Danube islands, through the analysis of economically viable and
environmentally sound alternatives to poplar plantations, their incorporation into a Floodplain Forest
Restoration Strategy and Action Plan for the Danube islands, and the amendment of the current local
Forestry Plans in the project area. A US$2 million proposal for its implementation has been fielded.
vii. Under the Green Balkans Public Awareness Raising on the Lower Danube Green Corridor in
Bulgaria and Romania, the Danish Outdoor Council has made available US$27,000 for the
preparation public awareness campaign for local communities along the Danube about the ecological
importance of, and sustainable development opportunities provided by, healthy wetlands and for
promoting the Lower Danube Green Corridor initiative as a means to achieving sustainable wetlands
management (estimated US$10,000 relevant to project).
11.
Costs. Total expenditures under the Baseline Scenario are estimated at US$ 1.23 million including
US$0.86 million from the Government of Bulgaria, and US$0.37 million through international cooperation
(bilateral aid and NGOs).
12.
Benefits. Implementation of the Baseline Scenario will result in improved wastewater quality
discharged into the Black Sea, limited protection of biodiversity in coastal areas and limited public
awareness of the need for biodiversity conservation. Many of the initiatives listed under the Baseline
Scenario are, however, monitoring, public awareness and planning exercises, with little support for actual
implementation of the physical works required to restore and maintain wetlands and critical habitats which
will ultimately serve to reduce nutrient loads and protect globally significant biodiversity. Due to the
extensive investment needs, existing government and international financing efforts in the designated areas
will most likely not have a significant impact on the continuing damage to these fragile areas.
Global Environmental Objective
13.
As a consequence of the current course of action, regarded as the Baseline Scenario, the Danube
River / Black Sea corridor will likely continue to lose these wetland systems and the services and habitats
that they provide.
14.
Scope. The GEF Alternative would provide the means (above and beyond the Baseline Scenario) to
restore critical wetlands and the riverine landscape in the Danube/Black Sea basin and establish a
foundation for sustainable natural resource use and development within Persina Nature Park and
Kalimok/Brushlen Protected Site. The specific objectives of the Project are to: (i) restore wetlands along
the Danube and Black Sea coasts; (ii) establish and implement natural resources management within the
identified protected areas; (ii) monitor water quality and biodiversity health in the project region; (iii)
strengthen institutions responsible for natural resources within the project region; (iv) raise public
awareness; and (v) develop national nutrient reduction strategy guidelines.
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16.
Costs. The total cost of the GEF Alternative is estimated at US$13.28 million, detailed as follows:
i. Support for Wetland Restoration: Restoration of Belene Island and Kalimok/Brushlen marshes, as
well as additional sites to be identified during project implementation -- US$5.14 million (GEF
financing $3.42 million);
ii. Support for Protected Areas Management: (i) development of protected areas management plans
(US$0.6m); (ii) implementation of priority protected areas management activities (US$2.6 million);
(iii) monitoring of water quality and ecosystem / habitat health (US$1.2m); (iv) public awareness and
education (US$0.80m); (v) institutional strengthening (US$1.7m) and (vi) guidelines for nutrient
reduction programs (US$0.2m) -- US$7.04 million (GEF financing US$3.16 million).
iii. Project Management: Support for operating costs of a Project Management Unit, located with the
Ministry of Environment and Waters (central and regional offices) -- US$ 1.10 million (GEF financing
US$0.92 million).
17.
Benefits. Implementation of the GEF Alternative would provide the means for restoring high
priority wetlands, protect unique coastal landscapes and habitats for important bird species. Benefits
generated from the project would include those classified as "national" - protection of local and regional
environmental resources and increased public awareness of environmental issues - as well as those
considered "global" in nature. Global benefits would the reduction of nutrients in inflow waters and the
protection of a rare and unique ecosystem .
Incremental Costs
18.
The difference between the cost of the Baseline Scenario (US$1.23 million) and the cost of the
GEF Alternative (US$13.28 million) is estimated at US$11.95 million. This represents the incremental cost
for achieving sustainable global environmental benefits. Of this amount, the Government of Bulgaria
(including municipalities) has committed to financing US$2.18 million, US$3.60 million is leveraged from
EU PHARE and the Governments of Austria and Denmark, and US$7.5 million is requested from the GEF.
Incremental Cost Matrix
Component Sector
Cost Category
US$
Domestic Benefits
Global Benefits
Million
Wetland Restoration Baseline
0.05
No restored wetland
for Nutrient
ecosystems. Thus, no
Reduction and
reduction of nutrients in the
Biodiversity Habitat
Danube River / Black Sea,
and restoration of habitat
limited to the development
of a strategy for native
floodplain forests on
Danubian Islands (est'd
40,000 ha)
With GEF
5.14
Increased fishery
Restoration of wetland
Alternative
production; improved
ecosystems, with an
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water quality downstream
discernible reduction of
project sites; increased
nutrient loads to the Black
opportunities for biomass
Sea (218,000-813,000 kg of
production.
nitrates and 23,400-37,400
kg of phosphorus per year);
restoration of
internationally important
biodiversity habitat.
Incremental
4.99
Benefit
Protected Areas
Baseline
1.18
Limited capacity to plan
Management
and implement protected
Planning and
area management in
Implementation
wetland and protected
areas; limited public
awareness of
environmental issues and
the need for sustainable
natural resource
management; and no
comprehensive strategy for
nutrient reduction in the
nation's waterways.
With GEF
7.04
Increased opportunities for Sustainable integrated
Alternative
alternative income
conservation management at
generation in rural
priority sites of
communities based on
internationally important
sustainable management of biological diversity and
land and water resources;
buffer zones; meaningful
increased flow of goods
participation of local
and environmental services; stakeholders in protected
increased capacity to
area management activities;
manage protected areas.
increased awareness and
use of biodiversity-friendly
agricultural activities;
increased local, national and
international understanding
of threats to globally
significant biodiversity; and
a Bulgarian national
strategy for nutrient
reduction in the Danube
River/Black Sea watershed.
Increment
5.86
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Project management
Baseline
0.00
Not applicable
and information
dissemination
With GEF
1.10
Information sharing with
Alternative
other riparian countries
Increment
1.10
Totals
Baseline
1.23
With GEF
13.28
Alternative
Increment
11.95
COST-EFFECTIVENESS RATIOS
The main assumptions to estimate the cost-effectiveness ratios to remove one kilogram of nitrogen and
phosphorous are presented in the table below.
Nitrogen Phosphorous
Site
Units
Removal
Removal
Belene Island
Restored area: 1290
ha
Removal (kg/y)
74,000

310,000

7,800

12,000

Capital cost:
1.71
US$ M Removal (kg/ha)
57.4
240.3
6.0
9.3
O&M cost:
30000
US$/y
C-E ratio (US$/kg/y)
5.7
1.4
53.8
35.0
K/B Marshes
Restored area: 1050
ha
Removal (kg/y)
144,000

503,000

15,600

25,400

Capital cost:
2.82
US$ M Removal (kg/ha)
137.1
479.0
14.9
24.2
O&M cost:
30000
US$/y
C-E ratio (US$/kg/y)
4.4
1.3
42.5
26.1
Total
Restored area: 2340
ha
Removal (kg/y)
218,000

813,000

23,400

37,400

Capital cost:
4.53
US$ M Removal (kg/ha)
93.2
347.4
10.0
16.0
O&M cost:
60000
US$/y
C-E ratio (US$/kg/y)
5.0
1.3
46.2
28.9
Legend: O&M=Operation and maintenance; y=year; ha=hectare; C-E=Cost-effectiveness; M=million; N=nitrate;
P=Phosphorous.
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Annex 5: Financial Summary
BULGARIA: Wetlands Restoration and Pollution Reduction Project (GEF)
IMPLEMENTATION PERIOD
Year 1
Year 2
Year 3
Year 4
Year 5
Year 6
Total Financing Required
Project Costs
- Investment costs
759.5

3,007.1

4,405.2

2,412.1

1,332.3

257.4

- Recurrent costs
98.3

201.0

220.8

227.4

234.2

124.7

Total Project Costs
857.7

3,208.1

4,626.0

2,639.5

1,566.4

382.1

Total Financing
857.7

3,208.1

4,626.0

2,639.5

1,566.4

382.1

Financing
GEF
447.1

1,580.9

2,578.3

1,773.1

844.0

277.4

Government
89.5

426.2

662.9

461.3

302.5

94.8

Municipalities and Farmers
31.1

-
35.1

36.2

39.9

10.0

Co-financier EU PHARE
241.7

1,036.0

1,072.3

-
-
-
Co-financier Austria
48.3

156.5

176.0

-
-
-
Others
-
8.5

101.4

368.9

380.0

-
Total Project Financing
857.7

3,208.1

4,626.0

2,639.5

1,566.4

382.1

Notes:
1. Co-financiers have expressed a strong interest in contributing to project financing, and have made informal
committments.
2. Calender year starts on January 1 and ends on December 31
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Annex 6: Procurement and Disbursement Arrangements
BULGARIA: Wetlands Restoration and Pollution Reduction Project (GEF)
Procurement
1.
Procurement of goods and works financed by the Bank will be done in accordance with World
Bank Guidelines: Procurement under the IBRD Loans and IDA Credits (issued in January 1995, revised in
January and August 1996, September 1997, and January 1999). Consulting services, technical assistance
and training financed by the Bank will be procured in accordance with the Guidelines - Selection and
Employment of Consultants by World Bank Borrowers, issued in January 1997, revised in September 1997
and January 1999. The Bank's Standard Bidding Documents, Request for Proposals and Forms of
Consultants' Contract will be used. A General Procurement Notice (GPN) will be published in the UN
Development Business in June 2002.
Procurement Responsibilities
2.
The Ministry of Environment and Water (MOEW) is the executive agency for this project. Project
coordination and management including procurement will be handled by a tripartite Project Coordination
Unit (PCU), with a unit in Sofia and units at each of the two protected areas administrations. In Sofia, the
Project Preparation Unit (PPU) in the Ministry of Environment and Water, which is responsible for
preparing this project, would be renamed as the Project Coordination Unit (PCU). The PPU already
includes a Project Manager, a Procurement Specialist and a Financial Specialist. This core implementation
team has already acquired good experience in project management. Both the project manager and the
procurement specialist have become familiar with the Bank procurement guidelines.
3.
At the local levels, the two protected areas administrations, will function not just as a directorate of
protected area but also as Project Implementation Units for the project, responsible for small procurement.
Each of the protected areas administrations would have a local project coordinator manager and a technical
staff in addition to the core protected areas management staff. While the PCU procurement specialist
would have overall procurement responsibility under the project, procurement at the local level would be
conducted by the protected areas administration under the supervision of the PCU. Therefore, the local
project coordination, the technical staff and the protected areas director would be trained in procurement.
Initially, this training would be given by Bank staff and then by the PCU procurement specialist on a
continuous basis. The PCU Project Manager and the Procurement Specialist would both undergo in-depth
procurement training in ILO Turin, Italy, as soon as the grant becomes effectiveness.
Procurement Methods (Table A)
4.
The project includes procurement of civil works, goods, consultant services and training. A detailed
procurement plan for these needs has been prepared and included in the Project Implementation Plan (PIP).
During project implementation, the procurement plan will be updated every six months. The Project
procurement arrangements are shown in Table A below.
Procurement of Works
5.
Civil works are intended for wetlands restoration, restoration of priority protected areas,
construction/rehabilitation of park administration and visitor centers, border demarcation, vegetation and
sedimentation management, and tourism trail and interpretation points. The following procurement methods
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will be used: (i) International Competitive Bidding (ICB) will be applied to works contracts estimated to
cost US$1,000,000 or more per contract; (ii) National Competitive Bidding (NCB) will be applied for
works contracts estimated to cost bellow US$1,000,000 per contract; and (iii) Minor Civil Works (MCW)
will be applied to works contracts with an estimated cost below US$50,000 per contract.
6.
NCB would be acceptable subject to the following conditions: a point system of evaluation will not
be used; domestic preference will not be applied; international bidders will not be excluded from bidding;
and the draft NCB bidding documents will be prepared and submitted to the Bank for review and
no-objection before any NCB tender is issued. No bids will be rejected at the bid opening. All bids
submitted on or before the deadline for submission of bids will be opened and read out at public bid
opening; local bidders shall demonstrate availability of obtaining securities and reasonable access to credit;
bid evaluation criteria shall not be pre-disclosed to bidders; and technical specifications must be clearly
written. These conditions shall be discussed at the negotiations and made part of the Grant Agreement.
Procurement of Goods and Equipment
7.
Office equipment, vehicles, maintenance equipment for restored wetlands, field equipment and
supplies for park administrations will be procured under the project. The following procurement methods
will be used: (i) International Competitive Bidding (ICB) for goods contracts estimated to cost above
US$100,000 or more per contract; (ii) International Shopping (IS) for goods contracts estimated to cost
less than US$100,000 per contract (IS can be used to procure equipment, material or commodities which
are off the shelf. The award shall be made on the basis of obtaining and comparing quotations from at least
three suppliers from two countries); (iii) National Shopping (NS) for goods contracts estimated to cost
US$50,000 or less per contract; and (iv) National Shopping for technical services contracts estimated to
cost less than US$100,000 per contract (based on obtaining minimum three quotations from domestic
suppliers).
Procurement of Consulting Services
8.
Consultants' Services will be selected in accordance with the Bank Guidelines issued in January
1997 and revised in 1997 and 1999, and for this project will include Quality and Cost Based Selection
(QCBS), Selection Fixed Budget (SFB), Consultants Qualifications (CQ), Least Cost Selection (LCS), and
individual consultants (IC). QCBS and SFB selections over US$200,000 will be advertised in Development
Business and in a national newspaper for expressions of interest, from which a short list will be drawn. For
contracts estimated to cost less than US$200,000, short lists may be based solely on national firms. The
contract for auditing will be procured following the LCS method. Contracts estimated at less than
US$100,000 each will be procured following the CQ. Individual consultants will be selected in accordance
with Part V of the Consultants Guidelines. All individual contracts will be advertised. The aggregate
amounts for consultants services are shown in the footnotes to Table A.
9.
Government-owned research institutes and universities willing to participate in procurement of
consultant services financed by the Bank in this project should meet the Bank's eligibility criteria: they
should be financially and legally autonomous and operate under commercial law in Bulgaria. When
research institutes and universities do not meet one of the above criteria, guidelines specified in Office
Memorandum issued on August 19, 1999 should be followed.
Training and Study Tours
10.
A schedule for training activities will be prepared on an biannual basis as part of the annual work
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plan process and submitted to the Bank for no-objection.
Competitive Grants
11.
Small grants for biodiversity conservation and grants under the Farm Transition Support Program
will be awarded to project beneficiaries on a competitive basis at each of the project sites. The mechanisms
for awarding these grants, including establishing grant committees and developing eligibility criteria,
procedures for application and monitoring system, will be determined within the first year of project
implementation with the participation of local stakeholders and will be submitted for the Bank's approval
before implementation. For the implementation of these grants, a manual will be prepared. This manual will
include the selection process, the eligibility criteria and grant agreements. This will use the relevant
procurement procedures from the "Good Practices in Procurement, Disbursement, and Financial
Management for Competitive Grant Programs in ECA Countries (World Bank, 2002)".
Contingency Relief Fund
12.
Those farmers impacted indirectly by new flooding regimes will be entitled to compensation for
lost of income. The mechanisms for awarding compensation will be determined within the first year of
project implementation and will be submitted for the Bank's approval. The manual referred to in paragraph
11 will also include a section on the implementation of the grants under this fund.
Incremental Operating Costs
13.
The Grant will finance incremental operations costs. These costs will be incurred in accordance to
an annual budget that the PCU will prepare and submit to the Bank for its approval before any
expenditures are incurred.
Bank's Prior Review Thresholds (see Table B)
14.
The Bank's prior review thresholds are as follows: (i) Goods: All ICB, first IS and NS packages;
(ii) Works: All ICB, and first NCB and MCW; (iii) All consultant contracts with consulting firms
estimated to cost US$200,000 or more per contract (Full Review); (iv) All contracts with consulting firms
estimated to cost between US$100,000 and US$200,000 per contract (Partial Review); (v) All consultant
contract with individuals estimated to cost US$25,000 or more per contract; and (vi) Contracts less than
US$25,000 with individuals; terms of reference.
Post Review
15.
All contracts not subject to the Bank's prior review will be subject to ex-post review, on a selective
basis. One out of five contracts for goods, works, and consulting services will be subject to ex-post review.
Supervision missions will include a procurement specialist especially in the first year, whose main
responsibility will be to conduct ex-post reviews of the procurement process and documentation, and
provide his or her findings.
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Procurement methods (Table A)
Table A: Project Costs by Procurement Arrangements
(US$ million equivalent)

1
Procurement Method




Expenditure Category
ICB

2
NCB
Other
N.B.F.
Total Cost
1. Works
2.21
1.77
0.57
0.90
5.45
(1.84)
(1.44)
(0.48)
(0.00)
(3.76)
2. Goods
0.13
0.00
0.43
0.82
1.38
(0.11)
(0.00)
(0.36)
(0.00)
(0.47)
3. Services
0.00
0.00
1.60
1.46
3.06
(0.00)
(0.00)
(1.33)
(0.00)
(1.33)
4. Training and Study Tours
0.00
0.00
0.18
0.49
0.67
(0.00)
(0.00)
(0.15)
(0.00)
(0.15)
5. Competitive Grants and
0.00
0.00
1.73
0.32
2.05
Contingency Relief Fund
(0.00)
(0.00)
(1.35)
(0.00)
(1.35)
6. Incremental Operating
0.00
0.00
0.66
0.00
0.66
Expenses
(0.00)
(0.00)
(0.44)
(0.00)
(0.44)
Total
2.34
1.77
5.17
3.99
13.27
(1.95)
(1.44)
(4.11)
(0.00)
(7.50)
1/ Figures in parenthesis are the amounts to be financed by the Bank Grant. All costs include contingencies.
2/ Includes civil works procured under minor civil works (total aggregate US$570,000) and goods to be
procured through international shopping (total aggregate US$295,000) and national shopping (total
aggregate US$270,000), consulting services as per arrangements indicated in Table A1, services of
contracted staff of the project management office to be procured under individual consultants, training,
study tours, small grants and contingency relief fund, and incremental operating costs related to: (i)
managing the project, and (ii) carrying out monitoring activities, managing restored wetlands and
protected areas.
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Table A1: Consultant Selection Arrangements (optional)
(US$ million equivalent)
Selection Method
Consultant Services
Expenditure Category
QCBS
QBS
SFB
LCS
CQ
Other
N.B.F.
1
Total Cost
A. Firms
0.53
0.00
0.20
0.09
0.27
0.00
1.46
2.55
(0.44)
(0.00)
(0.17)
(0.07)
(0.23)
(0.00)
(0.00)
(0.91)
B. Individuals
0.00
0.00
0.00
0.00
0.00
0.51
0.00
0.51
(0.00)
(0.00)
(0.00)
(0.00)
(0.00)
(0.42)
(0.00)
(0.42)
Total
0.53
0.00
0.20
0.09
0.27
0.51
1.46
3.06
(0.44)
(0.00)
(0.17)
(0.07)
(0.23)
(0.42)
(0.00)
(1.33)
1\ Including contingencies
Note: QCBS = Quality- and Cost-Based Selection
QBS = Quality-based Selection
SFB = Selection under a Fixed Budget
LCS = Least-Cost Selection
CQ = Selection Based on Consultants' Qualifications
Other = Selection of individual consultants (per Section V of Consultants Guidelines),
Commercial Practices, etc.
N.B.F. = Not Bank-financed
Figures in parenthesis are the amounts to be financed by the Bank Grant.
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Prior review thresholds (Table B)
Table B: Thresholds for Procurement Methods and Prior Review 1
Contract Value
Contracts Subject to
Threshold
Procurement
Prior Review
Expenditure Category
(US$ millions)
Method
(US$ millions)
1. Works
> or equal to 1.00
ICB
3.20
<1.00
NCB
<0.050
MCW
2. Goods
> or equal to 0.100
ICB
0.13
< 0.100
IS
< 0.050
NS
3. Services
> or equal to 0.200
QCBS/SFB
1.33
< 0.200
LCS
< 0.100
CQ
Ind.
4. Competitive Grants
N/A
Based on guidelines for
N/A
and Contingency Relief
competitive grants and
Fund
contingency relief fund
5. Training and Study
N/A
Based on semi-annual
N/A
Tours
budgets
6. Incremental
N/A
Based on annual budgets
N/A
Operating Expenses
Total value of contracts subject to prior review:
US$4.66 million
Overall Procurement Risk Assessment
High
Frequency of procurement supervision missions proposed: One every 6 months (includes special
procurement supervision for post-review/audits)

16.
Procurement implementation progress will be monitored through progress reports and supervision
missions. At least one supervision mission per year will include a procurement specialist, who will be
responsible for updating the procurement plan, and conducting ex-post reviews. His/her findings will be
included in the supervision reports for monitoring their implementation. A project officer in the Sofia
Country Office will be responsible for supervising project implementation and provide procurement
support. A procurement capacity assessment of the Project Coordinating Unit (former Project Preparation
Unit) was carried out and it was decided to classify the PCU within the high risk zone. Because of high-risk
category, intensive procurement supervision will be essential during the first three supervision missions of
the project. A action plan to strengthen procurement capacity of the PCU has been identified and it includes
specialized procurement training at ILO, Turin, Italy, for the project manager and the procurement
specialist.
17.
It is expected that, by the time of GEF grant effectiveness, a three-day procurement launch
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workshop will be held for the staff involved in implementing the project, including the staff of the PCU,
Protected Areas Administration, and local municipalities. During this procurement launch workshop,
procurement arrangements will be discussed in detail, the PCU staff will be trained in the procurement
methods applicable to the project, and they will also be assisted in initiating the preparation of draft bidding
documents for each package on the procurement plan for the procurement to be conducted during the first
two years of the project. A computerized procurement monitoring system will be in place within six months
of Grant effectiveness. For this purpose, the PCU will use the procurement tracking module of the existing
Financial Management System. This would enable the procurement specialist to keep track of procurement
activities as well as to generate the procurement progress reports. Immediately after Board approval, the
Bank staff will prepare a procurement book containing all procurement related documents, including
Standard Bidding Documents, both in hard and soft copies, and send it to PCU. The contents of the
procurement book will be discussed during the project launch workshop.
_______________________________________________________________________________________________________________
1 Thresholds generally differ by country and project. Consult OD 11.04 "Review of Procurement
Documentation" and contact the Regional Procurement Adviser for guidance.
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Disbursement
Allocation of grant proceeds (Table C)
18.
Disbursement will follow normal Bank procedures and will be made against the categories of
expenditures indicated in Table C. The proceeds of the of the GEF grant are expected to be disbursed over
a period of five years. The anticipated completion date is September 30, 2007.
Table C: Allocation of Grant Proceeds
Expenditure Category
Amount in US$million
Financing Percentage
Works
3.77
80%
Goods
0.47
100% of foreign expenditures
100% of local expenditures (ex-factory
costs) and 80% of local expenditures for
other items procured locally
Consultant Services
1.33
100%
Training and Study Tours
0.15
100%
Small Competitive Grants for
0.28
100%
Biodiversity Conservation
Competitive Grants under Farmer
0.69
90%
Transition Support Program
Grants under Contingency Relief Fund
0.38
100%
Project Coordination and Management
0.17
100%
Incremental Operating Expenses
Other Incremental Operation and
0.26
90% until Sep 2003, 85% until Sep
Maintenance Cost (a)
2004, 75% until Sep 2005, 50% until
Sep 2006, 25% thereafter
Total Project Costs
7.50
Total
7.50
Note: (a) It includes the incremental expenses incurred by various institutions on account of implementation of
the project.
Use of statements of expenditures (SOEs):
19.
Project funds will be initially disbursed on the basis of the submission of Statements of
Expenditures (SOEs), until acceptable mechanisms for PMR-disbursement are in place. A move to
PMR-based disbursement will be made at the mutual agreement of the Government and the Bank, and will
be considered once the PCU is familiar with the project's monitoring aspects and is considered able to
produce sufficiently timely and reliable project management information.
20.
Withdrawal applications would be fully documented. The reimbursement of expenditures made
from the Special Account may be made on the basis of certified Statements of Expenditures (SOEs), for the
following items: (i) contracts for goods valued at less than US$100,000 equivalent each; (ii) contracts for
works less than US$100,000 equivalent each; and (iii) contracts for consulting firms costing less than
US$100,000 equivalent each, and contracts for individual consultants amounting less than US$25,000
equivalent each; (iv) all contracts for training; (v) all small grant contracts; and (vi) all incremental
operating costs. Expenditures above these thresholds will be fully documented.
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Special account:
21.
To facilitate timely project implementation, the PCU will establish, maintain, and operate, under
conditions acceptable to the Bank, a Special Account denominated in EUR in the Bulgarian National Bank.
The maximum authorized allocation of the Special Account (SA) will be limited to US$0.5 million
equivalent. However, during the initial stage of the project, an amount limited to US$0.3 million equivalent
will be deposited in the Special Account. When the amount disbursed reaches US$1 million, the amount
deposited in the SA will be increased to the full amount of US$0.5 million. Replenishment applications
should be submitted at least every two months and must include reconciled bank statements as well as other
appropriate supporting documents. The minimum amount of each application should be 20% of the
authorized allocation.
Financial Management:
Country Generic Risks
22.
After the extensive degree of restructuring and "cleaning" of the banking sector, that was carried
out following in the 1996 - 1997 banking system crisis, when an important number of banks were declared
bankrupt and others were restructured, the banking sector systemic risk is perceived as relatively low, as
only a few commercial banks are regarded as not very safe. In the past years, the privatization of the
banking sector recorded a certain progress. Major foreign banks, such as Unicredito, Bank Austria, etc.,
have entered the Bulgarian banking sector either by privatizing some Bulgarian banks, or by establishing
their own subsidiaries. It is perceived that by opening the Special Account at the National Bulgarian Bank
(Central Bank), acceptable to the World Bank, the banking risk is kept at an acceptable low level.
23.
Following the banking and economic crisis a monetary council was established in Bulgaria, and the
national currency was pegged to the German mark. The fixed exchange rate established in 1997 (1 lev = 1
DM) is still applicable. Following these measures, yearly inflation was cut drastically from 3 and 4 digit
figures (in 1996 and 1997) to a single digit figure in the period 1998-2001. In addition, the overall
macroeconomic situation in Bulgaria has improved substantially in the last 3 years, with solid economic
growth achieved, as opposed to several years of dramatic decline in GDP before 1997. It is thus perceived
that the macroeconomic risks are quite low.
24.
Bulgaria has a relatively weak public sector financial management, as little reforms have been
carried out in the public sector. There is some accountability in the Government's overall accounting and
reporting functions, but the Bulgarian Supreme Audit Institution (SAI) still has to undergo significant
reforms to fully perform its functions as a SAI in the Western sense. All these aspects lead to a substantial
risk in respect of the public sector financial management.
25.
Following recent allegations in the local press about mis-procurement and use of donor funds for
other purposes other than the ones intended for, significant protection measures must be taken to protect the
Project's assets against fraud, waste and abuse. The risk that the Bank's funds will not be used as intended
for financing the defined investment program is judged as acceptable by introducing several measures, in
principal the 'ring-fencing' of the project through the establishment of the project preparation unit, with a
comprehensive staff structure and segregation of duties within the unit, requiring the beneficiaries'
representatives to certify the works done, goods delivered and services rendered before payments are made
to the suppliers, proper supervision from the World Bank teams and an independent yearly audit of project
funds and of the entities' financial statements by a reputable audit firm, acceptable to the World Bank.
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Project Specific Risks
26.
One risk is the PPU assuming the authority and responsibility for every aspect of the project,
thereby exposing it to possible risks of collusion and corruption. To address this risk: (i) all payment
orders will be signed jointly by the PPU director and a high level officer (such as the General Secretary or
Chief Accountant of the MoEW), and (ii) the beneficiaries' representatives will certify the acceptance of the
works done, goods delivered and services rendered before the payments are made by the PPU. Moreover,
the complete segregation of duties amongst PPU staff members will have to be achieved, i.e. the functions
of implementing and overseeing will not reside with the same PPU staff member. In addition, the project
financial statements will be audited by an external auditor, acceptable to the World Bank.
27.
The second risk is that the project is exposed to delays in payments to suppliers: (i) due to the
signatures required on both GEF Grant funds and Government contribution, and (ii) inadequate counterpart
funds in the Government project account. The signing mechanism proposed for the operation the above
accounts is perceived as acceptable, and since the PPU is located within the MoEW, all the signatures
required will be obtained in a timely manner. The experience so far on the preparatory grant demonstrated
that the signing mechanism does not pose significant delay risks.
28.
The amounts to be used as local contribution to the project for the year 2002 will have to be
included in the 2002 budget. The amounts for the year 2002 (first year of the Project implementation) will
be limited, as the project will most likely become effective on or about June 30, 2002. The borrower stated
that the amounts for 2002 will not constitute a issue, as sufficient amounts are already included as own
funds available in the budget of the MoEW and also as contributions to the project during 2002 are
relatively limited in size. Then, the local annual contributions for 2003 and thereafter will be requested and
allocated in advance, as a separate budget line, within the MoEW budget, by the time when the yearly
budget is prepared and submitted for approval. So far, the contributions from the Government in respect of
the preparatory grant were received broadly on time and in line with the amounts requested.
29.
Overall, the above mentioned risks are considered as manageable due to the various risk
mitigations measures proposed. Annex 6b presents in detail the full description of the risk mitigation
measures.
Financial Management Assessment
30.
The latest assessment of the financial management arrangements for the Project was undertaken in
December ­ January 2001, during the appraisal mission. The result of the assessment is that the Project
financial management arrangements satisfy the World Bank minimum financial management requirements.
A financial management action plan was developed and agreed with the Borrower to enable the Project to
strengthen the financial management arrangements of the Project. A summary of financial management
assessment and conclusions are as follows:
Financial Management
Rating
Comments
Assessment
Implementing Entity
Satisfactory
PPU created over one year ago for the
preparatory grant within MoEW,
became fully familiar with World Bank
rules;
Funds Flow
Satisfactory
Simple funds flow in place
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Staffing
Satisfactory
PPU Financial Management Specialist
Accounting Policies and
Satisfactory
Detailed financial manual and internal
Procedures
control policies documented
Internal Audit
N/A
No reliance placed on internal audit
External Audit
Satisfactory
The project will be audited annually.
Appointment of auditors will be a Grant
effectiveness condition. Now, the
preparatory grant is being audited.
Reporting and Monitoring
Satisfactory
Customized reporting capacity
Information Systems
Satisfactory
Developed software system
Overall Financial Management
Satisfactory
Rating
Country Financial Management Issues
31.
A Country Financial Accountability Assessment for Bulgaria will be carried out by the Bank after
2002. When finalized, the document will detail issues on the financial management risks for the country
and the implications for the World Bank operations. A summary of key country financial management
issues in Bulgaria is given below:
l
There have been some reforms in the public sector financial management of Bulgaria.
l
The state budgets are not very realistic and not well managed (both in terms of revenue forecasts and
expenditure management), and there would be significant variances between actual and budgeted
revenues and expenditure for the year ending 31 December 2001.
l
The accounting standards have been modified to adhere closely to International Accounting Standards
(IAS).
l
The macroeconomic situation has generally improved after the financial crisis of 1996 ­ 1997. GDP
growth was recorded yearly since 1998. Inflation has been brought down to single digits figures. The
currency is pegged to the DM following the introduction in 1997 of a Monetary Council. However,
unemployment and total foreign debt as a % of GDP remain at very high levels.
l
The Supreme Audit Institution (SAI) in Bulgaria is undergoing a reform process that will improve its
capacity to carry out an independent external audit on the Government accounts. There is, therefore,
limited transparency and financial accountability over the use of public finances.
Financial Management System Assessment
32.
Project Management and Coordination. The PPU established in the MoEW includes all the key
staff agreed upon (project manager, financial management specialist, procurement specialist). The PPU
will draw upon the experience and expertise of the MoEW staff (a number of technical experts will provide
technical assistance in developing the technical specifications for procurement as well as actions related to
specific environment protection measures). It was agreed that the Government will establish and will
maintain a project financial management system (FMS) in a format acceptable to the Bank and in
accordance with OP/BP 10.02 and the World Bank Project Financial Management requirements. The PPU
will be responsible for the project's overall financial management system. All procurement, financial
management and disbursement procedures for the Project will be centralized at the PPU and be in
accordance with the relevant Bank guidelines.
33.
Staffing of the Accounting/Finance Function. The PPU has been operating for over one year in the
implementation of the preparatory grant. So far the overall activity and progress was satisfactory. The PPU
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financial management specialist handles all financial accounting records, ensures that accounting records
are kept up to date within the accounting software and is in charge of the petty cash arrangements. He is
also be responsible for the planning, budgeting, auditing and reporting aspects, reporting to the Project
Manager. The financial management specialist has also established permanent contacts with the
accounting department of the MoEW, auditors and the MOF.
34.
Accounting and Internal Controls. The PPU will maintain the project accounts in accordance with
International Accounting Standards (IAS) and the statutory requirements and will integrate the project
accounts within the MoEW accounts, reporting to the accounting department of MoEW and the World
Bank. The PPU will maintain all documentation related to project expenditures and keep financial records
in accordance with sound accounting practices. The PPU will be responsible for keeping the full
accounting records of the Project, in charge of all payments, operating the accounting software, handling
the Special Account (SA) and requesting payments from the Project Account (PA - local contributions),
prepare all bidding documents, reporting both to the Bank and Government, planning, budgeting,
disbursement and auditing.
35.
All the original project documents, contracts, payment orders, bank statements and all other
relevant accounting documents are to be kept by the PPU, filed on a timely basis and organized in a manner
to ensure the full audit trail with the accounting software records. The PPU staff are responsible for:
preparing the bidding documents; receive the offers and evaluate them in accordance with the World Bank
regulations; submit the evaluations to the World Bank for no objection; sign contracts in an acceptable
format; supervise the works performed by the contractors; certify (jointly with the beneficiaries'
representatives) the acceptance of the goods, works and services provided in accordance with the terms of
reference, contracts and the relevant technical specifications. The payment documents will be prepared by
the PPU only after the fulfillment of the above steps. No project funds may be passed over to any other
parties. The PPU is the only entity authorized to make payments to suppliers.
36.
The PPU has developed detailed financial statements, reporting formats and methods, internal
control procedures, disbursement and flow of funds arrangements, assigned staff responsibilities in order to
ensure a complete segregation of duties. Detailed accounts will be kept for each project component and its
sub-components. The accounts also reflect: the status of payment against each contract; utilization of the
Special Account (SA) and replenishments made by the Bank; utilization of the Government contribution
and uses of the funds. The PPU will prepare reports showing detailed budgeted and actual expenditures,
uses of funds by source, summary of withdrawals and forecasts, statements of progress achieved to date
and the objectives for the forthcoming quarter and semester.
37.
Computerized Accounting System. The existing accounting and reporting software system
developed in house by the financial management specialist is currently used for the preparatory grant and
will also be used for the main project. The system is also able to respond to the Bulgarian statutory
accounting and reporting. The system was designed to fully respond to the specifics of the preparatory
grant. Some changes and a certain degree of customization is needed to modify the software to respond to
the specifics of the Project. These changes will be performed in house by the financial management
specialist is accordance with the action plan. The system features a customized chart of accounts, detailed
financial statements, reporting formats and methods, etc. The system can produce a trial balance, balance
sheet, a statement of sources and uses of funds, income and expenditure statement, special and project
account statements. Usual journals and ledgers are also produced by the system, such as separate journals
for works, goods, consulting and training, and operating costs. The system also features the bank accounts
ledger, the accounts receivable and accounts payable ledgers, the general ledger and a fixed assets register.
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38.
The financial management specialist is the main operator of the software with the PPU Manager
responsible for authorizing all payments. The procurement specialist has limited rights to access the
software on procurement related aspects. The software system is able to produce the quarterly Project
Management Reports as requested by the Bank's Financial Management requirements. The format of the
PMRs was agreed with the PPU.
39.
Audit arrangements. The Project annual financial statements will be audited each fiscal year in
accordance with Bank guidelines, by independent auditors acceptable to the Bank. Conclusion of a
contract with selected auditors, satisfactory to the Bank, will be a condition of effectiveness in the Grant
Agreement. Copies of the audit reports will be submitted to the Bank within six months of the close of the
fiscal year (calendar year). The audit reports will cover the Project Financial Statements, Special Account
Statement, as well as all the Statement of Expenses (SOEs). In late 2001, the PPU has completed the
selection of auditors, in accordance with the World Bank requirements. Currently, the auditors
(PricewaterhouseCoopers Bulgaria) are performing the audit work and will issue the draft report shortly.
The report will cover the periods from the preparatory grant effectiveness until December 31, 2001.
40.
Planning and Budgeting. The PPU will prepare reports showing detailed budgeted and actual
expenditures, uses of funds by source, summary of withdrawals and forecasts, statements of progress
achieved and the objectives for the forthcoming quarter and semester. Detailed accounts will be kept for
each project component and its sub-components. The accounts also reflect: the status of payment against
each contract; utilization of the Special Account (SA) and replenishments made by the Bank; utilization of
the local contribution and uses of the funds. The Borrower has expressed the preference to continue with
preparing the Project Management Reports (PMRs), as the PPU became fully familiar with the PMRs
during the preparatory grant. The PPU will submit the quarterly PMRs to the Bank starting with the
period ended December 31, 2002 and quarterly thereafter, no later than 45 days after the relevant quarter's
end. The budgeting and financial forecasting are an integral part in the process of preparing the PMRs.
These activities will involve the PCU Manager, the financial management specialist and the procurement
specialist.
41.
Financial and Accounting Procedures Manual. The PCU will adhere to sound internal control
procedures and practices, to ensure that the Project funds are used with economy and efficiency and only
for the purposes intended. A Financial and Accounting Procedures Manual was developed by the PCU
staff members for the preparatory grant, documenting all the various types of financial transactions,
approval and authorization steps, the flow of documents within the PCU and between the PCU and the
accounting department of the MoEW, to the MOF, PCU's staff responsibilities and measures to ensure a
complete segregation of duties, as well as other internal control procedures. The manual also documents
the day-to-day internal procedures for each type of activity (such as correspondence handling, contracting
and payment procedures, operation of all bank accounts, petty cash, authorization mechanism, reporting,
budgeting, planning, filling, etc.). The manual will require a number of additions to cater for the specifics
of the Project.
42.
Conclusion. It is concluded that the financial management arrangements of the Project satisfy the
minimum World Bank financial management requirements because:
l
The PPU has implemented an acceptable computerized accounting and reporting system for the
Project;
l
The PPU has developed a detailed financial, accounting and internal control manual describing the
accounting policies and procedures, internal controls, delegation of responsibilities and authorities,
transaction flows, reporting, planning and budgeting;
l
The PPU has an experienced financial management specialist, acceptable to the Bank;
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l
The PPU will contract independent external auditors, acceptable to the World Bank (effectiveness
condition in the Grant Agreement).
Flow of Funds
43.
The Grant Agreement will be signed between the World Bank (GEF) and the MoWEP, through
the MoF. The MoF will authorize the MoEW, through the PCU to handle the Grant amounts through the
Special Account (SA). The PCU established within the MoEW will be in charge of operating the SA. The
SA is to be opened at the Central Bank, acceptable to the World Bank, in accordance with the World Bank
requirements. Government contributions will be received in separate project sub-account of the main
budgetary current account of MoEW, that will just be used specifically for the Bulgarian contribution to
the project. These contributions will be received monthly, directly from the MoEW budget. These
contributions will be reflected as a separate line in the budget of MoEW. The PCU will have full rights to
operate both the special and the project accounts. All documentation pertaining to the project (relating to
Grant funds, to the local contributions and other donors as applicable) will be kept at the PCU. All
payment requests, statements of expenditures, replenishment requests, payment orders will be
countersigned by high level official of the MoEW.
Financial Monitoring Reports
44.
The PCU will maintain accounts of the Project and will ensure appropriate accounting of the funds
provided. It has been agreed that the PCU will continue to keep the more detailed formats of Project
Management Reports, rather than the new Financial Monitoring Reports, and prepare those on a quarterly
basis. The PMRs include:
l
Project Sources and Uses of Funds
l
Uses of Funds by Project Activity
l
Project Balance Sheet
l
Special Accounts Statements Plus Local Bank Accounts Statements
l
Physical Progress Reports
l
Procurement Monitoring Reports
Financial Risk Analysis
45.
From the financial management perspective, the proposed project is considered a substantial - risk
project.
Costs and Financial Performance
46.
The project's financing plan, which includes the GEF grant, and the project's planned
expenditures, have been realistically estimated. In order to facilitate the implementation, the project's cost
tables include an appropriate cost matrix, which adequately shows the relationship between the Grant
agreement categories and project components.
Auditing Arrangements
47.
For Bank reporting purposes, the annual Project financial statements will be prepared in
accordance with the statutory requirements (Bulgarian Accounting Standards), which is a basis of
accounting similar to International Accounting Standards (IAS) and audited by independent auditors,
acceptable to the Bank, in accordance with the International Standards on Auditing (ISA) and the Bank
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guidelines on auditing and financial reporting such as the World Bank Financial Accounting Reporting and
Auditing Handbook and the World Bank Project Financial Management Manual. The cost of the audits are
to be financed from the Grant. The PPU is currently involved in the audit of the preparatory grant, covering
the period form the effectiveness of the preparatory grant until 31 December 2001. After the auditors will
finish the reports, the PPU will shortly start the procurement activities related to the selection of
independent auditors for the FY 2002 in accordance with the World Bank guidelines and with the Financial
management action plan (attached). All the `big­five' audit firms are present in Bulgaria and eligible for
auditing World Bank projects. Appointment of independent auditors acceptable to the World Bank will be
a condition of effectiveness specified in the Grant Agreement. The borrower (Government of Bulgaria) does
not have any audit reports overdue on the World Bank projects.
Financial Management Action Plan
Action
Responsibility
Due date
Changes to the existing financial management system
Final accounting manual documenting the project's
PPU
3/15/2002
accounting and internal controls procedures, to include
Project specifics in addition to the preparatory grant
Final customization of the accounting and reporting software PPU
3/15/2002
system, to include Project specifics
Audit arrangements
Conclude contract with selected auditors for FY 2002
PPU
6/30/2002
Grant Agreement Covenants
48.
The following are the covenants relating to financial management matters: (i) the Government will
complete the agreed financial action plan for strengthening the project financial management systems by
March 31, 2002; (ii) not later than September 30 of each year, the Government will furnish World
Bank/GEF the annual project implementation work programs for the project for the next year, including
procurement and financing plans, and will review these plans with World Bank/GEF before implementing
them; (iii) the Government will submit to World Bank/GEF, commencing upon Grant effectiveness,
quarterly Project Management Reports, not later that 45 days after the end of each quarter outlining
progress made in the implementation of each project component, as well as the problems encountered and
how they are being addressed; and (iv) the Government will cause the PCU to have the Project financial
statements audited each year, by independent auditors acceptable to the World Bank, commencing with the
accounts for the period ending December 31, 2002.
Supervision Plan
49.
The development for further strengthening the financial management system will be monitored of
procedures and staff development before effectiveness, during the first supervision missions and throughout
project implementation. The reports of the progress of the project implementation will be monitored in
detail during supervision missions. The PMRs will be reviewed on a regular basis by the field-based FMS
and the results or issues followed up during the supervision missions. Financial audit reports of the project
will be reviewed and issues identified and followed up. The field based FMS would monitor the agreed
action plan to ensure appropriate actions have been implemented by the PCU.
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Annex 7: Project Processing Schedule
BULGARIA: Wetlands Restoration and Pollution Reduction Project (GEF)
Project Schedule
Planned
Actual
Time taken to prepare the project (months)
27

First Bank mission (identification)
03/15/2000
03/15/2000
Appraisal mission departure
02/28/2002
02/28/2002
Negotiations
03/25/2002
Planned Date of Effectiveness
06/13/2002
Prepared by:
Project Preparation Team within the Ministry of Environment and Water conformed by: Ms. Marietta
Stoimenova (Project Manager, Consultant); Ms. Rayka Hauser (Technical Advisor, Consultant); Ms.
Elizaveta Matveeva (Environmental Expert, Consultant); Mr. Kiril Iliev (Financial Management Specialist,
Consultant); Ms. Violetta Ivanova (Procurement Specialist, Consultant); Mr. Nikolay Kouyumdzhiev,
Head Water Department; Mr. Michail Michailov, Chief Expert Protected Areas, National Nature
Protection Service; Mr. Svetoslav Apostolov, Junior Specialist National Nature Protection Service; and
Ms. Milena Rouseva, Junior Specialist Water Department. Valuable technical assistance was provided to
the Project Preparation Team by: Mr. Andreas Wurzer, WWF-Danube-Carpathian Office, Freshwater
Team Leader; Ms. Snejana Kostadinova, Social Scientist; Mr. Kurt Lonsway, Water Resources Specialist;
and Mr. Jim Orr, Wetlands Specialist.
Preparation assistance:
GEF Project Preparation Grant of US$350,000
Austria Consultant Trust Fund of US$55,000
Greece Consultant Trust Fund of US$40,000
Bank staff who worked on the project included:
Name
Speciality
Rita Cestti
Task Team Leader/Senior Water Resources Economist
Kerstin Canby
Environmental Specialist
Jocelyn Albert
Task Team Leader until 11/15/00
Marea Hatziolos
Senior Environmental Specialist
Robert Robelus
Senior Environmental/Social Specialist
Julian Lampietti
Social Development Specialist
Marjory-Anne Bromhead
Quality Assurance/Sector Leader
Naushad A. Khan
Senior Procurement Specialist
Bogdan Constantinescu
Senior Financial Management Specialist
Blaga Djourdjin
Procurement Officer
Daria Goldstain
Counsel
Nicholay Chistyakov
Disbursement Specialist
Sohaila Wali
Team Assistant
Stephen Lintner
Peer Reviewer
Isabel Braga
Peer Reviewer
- 75 -

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Stefan Schwager
Reviewer Environmental Safeguards
Stan Peabody
Reviewer Social Safeguards
- 76 -

---

Annex 8: Documents in the Project File*
BULGARIA: Wetlands Restoration and Pollution Reduction Project (GEF)
A. Project Implementation Plan
The PIP includes the following annexes:
1. Detailed cost tables.
2. Terms of reference for PCU staff
3. Procurement Capacity Assessment
4. Procurement Plan
5. Implementation Schedule
6. Implementation Arrangements Matrix
7. Draft Environmental Monitoring Plan
8. Environmetnal Management Plan (EMP)
9. Terms of Reference "Detailed Technical Design of Wetlands Restoration"
B. Bank Staff Assessments
Procurement Capacity Assessment *
Financial Management Assessment *
C. Other
1. Technical Analysis of Wetlands Restoration Options *
2. Protected Areas Management Planning Studies *
3. Environment Assessment Report and Summary Report *
4. Social Assessment *
5. Sustainable Livelihood Program -- Assessment and Recommended Activities *
6. Detailed maps (many GIS based)
*Including electronic files
- 77 -

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Annex 9: Statement of Loans and Credits
BULGARIA: Wetlands Restoration and Pollution Reduction Project (GEF)
06-Feb-2002
Difference between expected
and actual
Original Amount in US$ Millions
disbursementsa
Project ID
FY
Purpose
IBRD
IDA
Cancel.
Undisb.
Orig
Frm Rev'd
P064536
2001 CHILD WELFARE REF
8.00
0.00
0.00
7.45
4.87
0.00
P055158
2001 EDUC MOD (APL #1)
14.39
0.00
0.00
13.05
-0.58
0.00
P055021
2001 REG AND CADASTRE
30.00
0.00
0.00
29.11
-0.42
0.00
P057927
2000 ENV/PRIV SUPT SAL
50.00
0.00
0.00
30.88
16.55
0.00
P070086
2000 TRADE & TRANS FACIL IN SE EUR
7.40
0.00
0.00
6.48
1.96
0.00
P055157
2000 HEALTH SECT REF
63.30
0.00
0.00
53.38
-6.49
0.00
P033965
1998 ENV REM PILOT
16.00
0.00
0.00
3.07
3.07
-0.23
P008323
1997 SOC INS ADM
24.30
0.00
0.00
1.65
4.52
0.00
P008315
1996 RAILWAY REHAB
95.00
0.00
0.00
10.40
15.12
0.00
P008319
1994 WATER COMPANIES REST
57.00
0.00
41.00
8.86
57.35
16.35
Total:
365.39
0.00
41.00
164.34
95.95
16.12
- 78 -

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BULGARIA
STATEMENT OF IFC's
Held and Disbursed Portfolio
OCT-2001
In Millions US Dollars
Committed
Disbursed
IFC
IFC
FY Approval
Company
Loan
Equity
Quasi
Partic
Loan
Equity
Quasi
Partic
1999
BAC Bank
0.00
0.00
5.00
0.00
0.00
0.00
5.00
0.00
2001
Bulbank
0.00
17.47
0.00
0.00
0.00
17.47
0.00
0.00
1999
Celhart
13.90
1.50
0.00
0.00
13.90
1.50
0.00
0.00
1998
Devnya Cement
26.70
0.00
0.00
0.00
26.70
0.00
0.00
0.00
2001
Doverie
2.76
0.00
1.61
0.00
0.92
0.00
0.46
0.00
2001
EPIQ
8.09
0.00
0.00
0.00
0.00
0.00
0.00
0.00
1994
Euromerchant FND
0.00
5.00
0.00
0.00
0.00
5.00
0.00
0.00
2000
Florina
3.78
0.00
0.00
0.00
2.47
0.00
0.00
0.00
1996
Interlease Inc.
2.36
0.30
0.00
0.00
0.86
0.30
0.00
0.00
2000/01
Kronospan Group
6.29
0.00
0.00
2.70
6.29
0.00
0.00
2.70
2001
ProCredit Bank
0.00
1.05
0.00
0.00
0.00
1.05
0.00
0.00
1997
Sofia Hilton
10.80
0.00
2.00
9.26
10.80
0.00
2.00
9.26
2001
Sofia Med
12.13
0.00
0.00
0.00
0.00
0.00
0.00
0.00
Total Portfolio:
86.81
25.32
8.61
11.96
61.94
25.32
7.46
11.96
Approvals Pending Commitment
FY Approval
Company
Loan
Equity
Quasi
Partic
1999
BPBank
10.00
0.00
12.40
0.00
2000
Podem
3.10
2.00
0.00
0.00
Total Pending Commitment:
13.10
2.00
12.40
0.00
- 79 -

---

Annex 10: Country at a Glance
BULGARIA: Wetlands Restoration and Pollution Reduction Project (GEF)

Europe &
Lower-
POVERTY and SOCIAL

Central
middle-
Bulgaria
Asia
income
Development diamond*
2000
Population, mid-year (millions)
8.2
475
2,046
Life expectancy
GNI per capita (Atlas method, US$)
1,520
2,010
1,140
GNI (Atlas method, US$ billions)
12.4
956
2,327
Average annual growth, 1994-00
Population (%)
-0.5
0.1
1.0
Labor force (%)
-0.5
0.6
1.3
GNI
Gross
per
primary
Most recent estimate (latest year available, 1994-00)
capita
enrollment
Poverty (% of population below national poverty line)
..
..
..
Urban population (% of total population)
70
67
42
Life expectancy at birth (years)
71
69
69
Infant mortality (per 1,000 live births)
15
21
32
Child malnutrition (% of children under 5)
..
..
11
Access to improved water source
Access to an improved water source (% of population)
98
90
80
Illiteracy (% of population age 15+)
2
3
15
Gross primary enrollment (% of school-age population)
99
100
114
Bulgaria
Male
100
101
116
Lower-middle-income group
Female
98
99
114
KEY ECONOMIC RATIOS and LONG-TERM TRENDS
1980
1990
1999
2000
Economic ratios*
GDP (US$ billions)
20.0
20.7
12.4
12.0
Gross domestic investment/GDP
34.0
25.6
19.0
16.6
Trade
Exports of goods and services/GDP
35.7
33.1
44.1
58.5
Gross domestic savings/GDP
39.0
22.0
11.3
11.0
Gross national savings/GDP
..
..
12.2
10.7
Current account balance/GDP
4.8
-5.9
-5.3
-5.9
Domestic
Interest payments/GDP
..
2.2
2.7
3.7
Investment
savings
Total debt/GDP
..
52.4
79.6
86.5
Total debt service/exports
..
15.1
19.1
13.5
Present value of debt/GDP
..
..
76.7
..
Present value of debt/exports
..
..
156.9
..
Indebtedness
1980-90
1990-00
1999
2000
2000-04
(average annual growth)
GDP
3.4
-2.1
2.4
5.8
4.6
Bulgaria
GDP per capita
3.4
-1.5
3.0
6.3
5.3
Lower-middle-income group
Exports of goods and services
-3.5
2.2
-5.2
24.2
1.6
STRUCTURE of the ECONOMY
1980
1990
1999
2000
Growth of investment and GDP (%)
(% of GDP)
100
Agriculture
14.4
17.7
15.1
12.8
Industry
53.8
51.3
23.4
24.6
50
Manufacturing
..
..
14.5
15.4
Services
31.8
31.0
61.5
62.6
0
95
96
97
98
99
00
Private consumption
55.3
59.8
72.8
71.4
-50
General government consumption
5.6
18.2
15.9
17.7
GDI
GDP
Imports of goods and services
30.7
36.7
51.9
64.1
1980-90
1990-00
1999
2000
Growth of exports and imports (%)
(average annual growth)
Agriculture
-2.1
0.4
0.6
-10.1
30
Industry
5.2
-3.7
-4.4
15.3
15
Manufacturing
..
..
..
..
Services
4.5
-1.3
11.8
5.6
0
95
96
97
98
99
00
-15
Private consumption
2.5
-5.2
-4.9
11.7
General government consumption
9.1
-9.4
2.0
9.8
-30
Gross domestic investment
2.4
3.3
18.7
-7.7
Exports
Imports
Imports of goods and services
-3.3
0.5
5.1
14.6
Note: 2000 data are preliminary estimates.
* The diamonds show four key indicators in the country (in bold) compared with its income-group average. If data are missing, the diamond will
be incomplete.
- 80 -

---

Bulgaria
PRICES and GOVERNMENT FINANCE
1980
1990
1999
2000
Inflation (%)
Domestic prices
(% change)
1,500
Consumer prices
..
64.0
2.6
10.3
1,000
Implicit GDP deflator
..
26.2
3.1
5.6
500
Government finance
(% of GDP, includes current grants)
0
Current revenue
..
56.9
41.2
42.1
95
96
97
98
99
00
Current budget balance
..
-3.2
5.0
3.5
GDP deflator
CPI
Overall surplus/deficit
..
-7.7
1.5
0.4
TRADE
1980
1990
1999
2000
Export and import levels (US$ mill.)
(US$ millions)
Total exports (fob)
..
3,743
4,006
4,812
7,500
Consumer goods
..
1,380
1,343
1,437
Capital goods
..
890
214
215
5,000
Manufactures
..
..
660
655
Total imports (cif)
..
4,660
5,515
6,494
Food
..
150
165
175
2,500
Fuel and energy
..
1,392
1,235
1,768
Capital goods
..
1,706
1,492
1,590
0
94
95
96
97
98
99
00
Export price index (1995=100)
..
54
102
109
Import price index (1995=100)
..
28
101
113
Exports
Imports
Terms of trade (1995=100)
..
198
101
97
BALANCE of PAYMENTS
1980
1990
1999
2000
Current account balance to GDP (%)
(US$ millions)
Exports of goods and services
9,302
8,980
5,795
6,987
15
Imports of goods and services
7,995
5,165
6,561
7,657
Resource balance
1,308
3,815
-767
-670
10
Net income
-412
-613
-185
-321
5
Net current transfers
58
..
300
290
0
Current account balance
953
-1,231
-652
-701
94
95
96
97
98
99
00
-5
Financing items (net)
-718
820
1,017
975
Changes in net reserves
-235
411
-365
-273
-10
Memo:
Reserves including gold (US$ millions)
..
..
3,222
3,460
Conversion rate (DEC, local/US$)
0.0013
0.0022
1.84
2.12
EXTERNAL DEBT and RESOURCE FLOWS
1980
1990
1999
2000
(US$ millions)
Composition of 2000 debt (US$ mill.)
Total debt outstanding and disbursed
..
10,865
9,872
10,364
IBRD
..
0
829
823
G: 646
A: 823
IDA
..
0
0
0
Total debt service
..
1,374
1,156
989
C: 1,322
IBRD
..
0
64
75
IDA
..
0
0
0
Composition of net resource flows
D: 866
Official grants
..
4
80
74
Official creditors
..
57
199
12
Private creditors
..
-71
204
171
E: 930
F: 5,777
Foreign direct investment
..
..
802
1,003
Portfolio equity
..
0
-199
-179
World Bank program
Commitments
..
0
176
135
A - IBRD
E - Bilateral
Disbursements
..
0
221
71
B - IDA
D - Other multilateral
F - Private
Principal repayments
..
0
22
27
C - IMF
G - Short-term
Net flows
..
0
199
44
Interest payments
..
0
42
49
Net transfers
..
0
157
-5
Development Economics
9/5/01
- 81 -

---

Additional Annex 11
Social Assessment Summary
BULGARIA: Wetlands Restoration and Pollution Reduction Project (GEF)
This annex summarizes the social assessment of the communities surrounding Kalimok/Brushlen Protected
Site and Persina Nature Park. The complete social assessment is available in the background document
"Environmental and Social Assessment for Wetland Restoration and Pollution Reduction Project" prepared
by the Analytic Creative Group (ACG), December 2001. This annex has six sections. The first section
describes the data and methods that were used. The second section provides a synopsis of public attitudes
towards the project. The third section summarizes the socioeconomic condition of the population in the area
surrounding the project. The fourth section describes expected project impacts. The fifth section describes
the expected social impacts -- positive and negative -- as well as mitigating measures. The sixth and
seventh sections provide an overview of participation activities and an analysis of the stakeholders.
1. Data and Methods
The socioeconomic assessment was undertaken in three stages between July and November 2001. The first
stage consisted of primary and secondary data collection. Two focus group discussions with 10 participants
each were undertaken at Kalimok/Brushlen. Thirty-five in-depth interviews were undertaken at both sites.
This information was used to design a household survey instrument. Secondary data on the socioeconomic
condition of the project area was collected from relevant government institutions.
In the second stage household surveys were undertaken. In Kalimok/Brushlen Protected Sites (hereafter
KBPS) a 1,282 household survey, representative of the population in the protected area, was completed. In
Persina Nature Park (hereafter PNP), a 550 household survey, representative of the town of Belene, was
completed.
The third stage consisted of data analysis and consultations with stakeholders. In particular stakeholders
were consulted on project alternatives and then the social assessment team worked with the Project
Preparation Unit to include the results of these consultations in the project design. The social assessment
has had a significant impact on project design.
2. Public Attitudes Towards the Project
Traditionally nature plays an important role in the Bulgarian value system. This was confirmed by the
population's generally positive attitude towards the concept of wetland restoration. There are, however,
important differences in the population's perception of the project at the two sites. These are partly related
to physical differences in the sites. At KBPS, most of the original marshlands proposed for restoration are
state-owned, and have reverted to reed beds. Adjacent areas are privately and municipality-owned and used
for agriculture of varying productivity levels -- while western part of the area is mainly in private or local
government ownership, the eastern area is mainly in state ownership. The project will restore wetlands in
an area that is currently on short-term lease from local government to local farmers. At PNP, the project
will support the wetland restoration on eastern Belene Island, a 15 km long island, the western portion of
which is currently under the jurisdiction of the Ministry of Justice which operates a prison on this side,
while the eastern portion is a managed Nature Reserve under the jurisdiction of the Ministry of
Environment and Water. Local communities were never allowed access to this part of Belene Island due to
the security requirements of the Prison.
- 82 -

---

The total population connected to the KBPS is about 23,140, including the municipalities of Slivo Pole
(Ryahovo village 2,250 inhabitants, Golyamo Vranovo village 2,190 inhabitants, Bobovo village 710
inhabitants and Brushlen village 560 inhabitants) and Tutrakan (Tzar Samuil village 1,900 inhabitants,
Novo Cherna village 2,250 inhabitants, Staro Selo village 1,480 inhabitants, and Tutrakan town 1,800
inhabitants). Most of the land is used for agriculture purpose, and the population surrounding KBPS is
traditional and more dependent on agriculture. Most of the people in the KBPS have lived in their current
homes their entire lives. The protected area was not, at the inception of project preparation, perceived as
providing new economic opportunities. People were not interested in developing new skills such as tourism
and perceived the best way to improve their living standards as simply increasing existing activities.
However, as the project concept developed with their feedback, they became more aware of the potential
benefits and more supportive of the restoration objective.
The total population connected to the PNP is about 49,970 inhabitants, including the municipalities of
Nikopol (Nikopol town with 5,100 inhabitants and Dragash Voyvoda village with 930 inhabitants), Belene
(Belene town 9,830 inhabitants) and Svishtov (Svishtov town 31,800 inhabitants and Oresh village 2,310
inhabitants). Most of the land in the area, regardless of ownership, is used for agriculture purposes. Other
land uses are forestry and fishery. In contrast, the people of PNP are slightly less traditional. Also the local
economy is more active and diversified. They have high expectations of the nature park, hoping it will
create new cultural and natural tourism opportunities. At both sites the project will continue to build
support of the population through the public awareness and environmental education subcomponent.
3. Socioeconomic Characteristics of the Population
The people living in and around the two protected areas are older, less educated, and more diverse in terms
of religion than the rest of the country. Approximately 40% of survey respondents are over 60 years,
significantly more than the 27% nationwide. Thirty to 35% do not have more than an 8th grade education,
compared to 27% nationwide. In terms of religion, about 38% of PNP residents are Catholics and 12% of
KBPS are Muslims. Eighty four percent of Bulgarians are Eastern Orthodox.
Unemployment levels are high and cash incomes are low, particularly in the KBPS. Approximately 32% of
the labor force in KBPS is unemployed. The main sources of household income are pensions, wages
(including agricultural wage labor), self-production, and social assistance. The median monthly household
income is about 190 BGL, which is well below the national median of 259 BGL per household per month
(Table 1). This is consistent with respondent's self-assessment of welfare ­ 45% consider themselves worse
off than the rest of the population. By contrast, in PNP 22% of the labor force is unemployed and median
income is similar to that of the country as a whole.
Table 1: Median Household Incomes in Different Occupations (BGL per household per month)
Occupation
Kalimok Brushlen
Persina Belene
Nationwide
Agriculture
175
197
194
Self production
150
145
Wage labor
200
250
Education
200
350
248
Military/Police
240
325
321
Administration
200
250
260
Industry
300
-
360
Power energy
-
400
443
Median
190
245
259
- 83 -

---

Households engage in two main types of agricultural activities ­ self-production and wage labor.
Self-production takes place on small private farms (generally less than 1 hectare). It includes subsistence
production of vegetables and potatoes and some livestock. There are also some small farms that produce
high value irrigated crops such as vegetables, fruits, and tobacco. The majority of self-production in KBPS
is subsistence, with only limited amounts of high value production. Wage labor takes place on medium
(from 2 to 10 hectares) and large farms (greater than 10 hectares). Larger farms produce grain (mainly
corn and wheat) and industrial crops.
Household use of natural resources in the protected areas is very limited and almost never on a commercial
basis. In KBPS, 21% of the population report gathering some herbs and mushrooms, fishing, and/or
hunting, but these activities are all minor and do not contribute substantially to household income. In PNP,
only 8% of the population gather herbs and mushrooms from the protected area. Tourism related activities
are not very developed. Only 2% to 3% of the respondents in KBPS and 1% in PNP are either engaged or
know people who are engaged in tourism.
4. Expected Project Impacts
There is an overwhelming expectation of positive impacts from the project, with more than half of the
survey respondents indicating that it would be beneficial for their region. The benefits people feel will
accrue to them include improvement in the water quality of the Danube, conservation and protection of
natural resources, improvement in the natural fishery, and general economic revitalization from an
increased flow of visitors. There will also be direct benefits from the creation of new jobs associated with
the civil works activities, maintenance, guarding and monitoring of the wetlands and protected sites.
The project may result in some negative impacts on the population. In particular there may be limitations
placed on resource extraction in the protected areas and there may, at KBPS, be indirect impacts on private
land from wetland restoration although this is not expected. These impacts and how the project addresses
them are discussed in detail below in the section on social risks. At both sites the population raised the issue
that restoring wetlands will exacerbate mosquito population. While this is not expected to occur, the
environmental management plan has taken this into account and explored options for mitigating this
impact. (Increasing stagnant water surfaces could significantly increase mosquito breeding grounds and
insect populations. Increasing fish, bird and populations of beneficial insects that feed on mosquito larvae
and insects would offset this. Also, cycling water through the wetlands would help limit insect breeding)
5. Social Impacts (Negative and Positive)
There are several parties at risk from the project in KBPS. These include farmers in the protected area,
farmers renting state/municipal land in the restoration area, and private land owners adjacent to the
restoration area. Each of these risks and the mitigating measures are described below. These risks do not
apply to the restoration areas of Belene Island because it has always been state land where villagers have
historically not been allowed access because of security risks associated with the Belene Prison.
The protected area management plans are expected to support economic activities compatible with
biodiversity conservation objectives and limit those that are not. The plans are not expected to result in any
significant restrictions on land use or on the gathering of natural products from the wetlands. In order to
minimize the negative impacts on the population the plans will be developed in consultation with the local
population.
- 84 -

---

In addition to adopting a participatory approach in the development of the protected management plans,
Project Component 2 will support the establishment of a Farmer Transition Fund. The fund's purpose is to
provide farmers (both land owners and renters) with incentives to make the transition from activities that
are not compatible with the project conservation objectives to those that are. The fund will provide farmers
with one-time grants to the cost of converting to project compatible activities ­ and will be developed along
the lines of SAPARD Program measures on environmentally friendly agriculture and the sustainable
livelihood program assessment conducted during project preparation. A menu of options for these grants
will be determined during the first year of project implementation. In addition, Project Component 2 will
support the establishment of an eco-business support development program to provide technical assistance
and grant financing for the development of viable long-term business opportunities (green business)
compatible with conservation objectives.
The wetland restoration activity involves the flooding of 1,050 to 1,290 hectares of state/municipal land.
Flooding is expected to last one or two months. The exact extend of indirect impacts caused by the
restoration will remain uncertain pending completion of a detailed feasibility study of restoration activities
during the first year of implementation. The terms of reference for this study include specific language to
minimize the impact of restoration on local incomes and undertake regular consultations with local
communities and NGOs. The purpose of these consultations is to help the MoEW and the local populations
define and implement a jointly acceptable restoration plan.
Several large farmers (including the mayor of Nova Cherna) are leasing (on annual renewal basis)
state/municipal land that will be included in the restoration area. While restoration is expected to eliminate
crop farming (other than production of reed) within the restored wetland area, outside the wetland area,
farming may actually be improved by lengthening the cropping season. The final restoration plan will, by
improving drainage conditions, make equivalent amounts state land adjacent to the restoration area
available for lease. The farmers will be fully informed of all restoration activities and their timing through
the public information campaign. Thus the risk of negative impacts on these farmers is considered
minimal.
Another party at risk is private landowners that will be indirectly affected by wetlands restoration. While it
has been determined that restoration will not result in the direct loss of private land or displacement of
private housing, the MoEW's stated objective is not to have an impact on private land. The MoEW
recognizes that there is some uncertainly associated with restoration activities pending the outcome of the
feasibility study.
Restoration activities may also have an indirect impact on a small amount (less than 100 ha) of private
land adjacent to the restoration area. For example ground water levels may increase resulting in a longer
than normal period of soil saturation in the spring. Farmers may be forced to plant crops late which can
result in lower yields due to late harvest or poorer germination. Project component 2 includes a
Contingency Relief Fund to mitigate these circumstances. This fund will provide households with the
resources necessary to undertake mitigating measures. The institutional mechanism and criteria by which
affected parties can access the fund as well as a system for participatory monitoring of adverse impacts and
effectiveness of compensating measures will be completed during the first year of project implementation.
The terms of reference for this task are included in the Project Implementation Plan.
6. Participation
The project has been developed in a participatory manner and these activities will serve as a template for
implementation (Table 2). Key stakeholders consulted during preparation include villagers and their
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representatives in local government, Government staff involved in implementing the project, and
environmental Non-Government Organizations. Feedback from stakeholders during these participatory
activities was incorporated into project design.
Table 2: Participation
Stakeholder
Identification and
Implementation
Operation/
Preparation
Maintenance and
Monitoring
Beneficiaries, Communities
IS/COM
IS/COM/COL
IS/COM/COL
Groups, and Associations.
Central Government
IS/COM
IS/COM/COL
IS/COM/COL
Regional Government
IS/COM
IS/COM/COL
IS/COM/COL
Local Government
IS/COM
IS/COM/COL
IS/COM/COL
Academy of Sciences
IS/COM
IS/COM/COL
IS/COM/COL
NGOs
IS/CON
IS/COL
IS/COL
EU and other Donors
IS/CON
IS/CON/COL
IS/CON/COL
Legend: IS=Information sharing; COM=Consultation; COL: Collaboration
Villagers will continue to participate in the project throughout implementation, contributing to the
development of protected area management plans and identifying impact mitigation measures. Staff of the
protected areas administrations will participate in implementation and will receive training on methods to
encourage and manage community involvement. Local and national NGOs will be involved in monitoring
implementation.
6. Stakeholder Analysis
There are many stakeholders in the project, particularly in the Government. The stakeholders and their level
of interest in the project, ability to influence it, and support for it are summarized in Table 3. The most
important stakeholders at both sites are state institutions. They are the primary decisions makers concerned
with project design and implementation. Also the public perceives them as guaranteeing the success of the
project..
Table 3: Stakeholder Assessment
Stakeholder
Interest
Ability to Influence
Support
Total
Ministry of Environment
5
4
5
14
Bulgarian Academy of Science
3
5
5
13
Ministry of Agriculture and Forestry
4
5
3
12
Ministry of Justice
2
5
4
11
National Electricity Company
3
5
3
11
Fishermen
5
2
4
11
Natural product users
5
1
3
9
Local Government
2
4
2
8
Private land owners
1
5
1
7
Agricultural cooperatives
1
2
3
6
Land renters
1
1
2
4
NGO (Green Balkans)
5
2
5
12
Teachers
5
4
4
13
Note: Stakeholder assessment measured on a scale 1 (low) to 5 (high).
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Project success will depend on the involvement of local government, private business and teachers. Local
government will be partly responsible for implementation. Private business will play a key role in the
economic development of the region. Teachers are trusted by the population and can therefore play a key
role in disseminating accurate information about the project and raising environmental awareness. This has
been taken into account in project design.
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Additional Annex 12
Process Framework for Mitigating Potential Adverse Livelihoods Impacts
BULGARIA: Wetlands Restoration and Pollution Reduction Project (GEF)
Project Description. The Bulgaria Wetlands Restoration and Pollution Reduction Project aims to restore
and protect critical wetlands and the riverine landscape in the Danube / Black Sea basin in order to (a)
reduce transboundary nutrient loads, (b) conserve biodiversity, and (c) establish a foundation for
sustainable natural resource use and development within Persina Nature Park and the Kalimok / Brushlen
Protected Site. The Project has three main components:
Component 1: Support for Wetland Restoration. Restoration of approximately 2,340 hectares (ha) of
wetland ecosystems along the Danubian coast (Belene Island and Kalimok / Brushlen marshes) within
Persina Nature Park and Kalimok - Brushlen Protected Site respectively, as well as additional sites to be
identified during project implementation.
Component 2: Support for Protected Areas Management. Support for two protected areas covering
28,000 ha -- Persina Nature Park (PNP) and Kalimok/Brushlen Protected Site (KBPS) will include: (i)
development and implementation of protected areas management plans; (ii) monitoring of water quality,
ecosystem / habitat and socio-economic parameters; (iii) public awareness and education; (iv) institutional
strengthening; and (v) guidelines for a national nutrient reduction program.
Component 3: Project Coordination Management. Operating costs of a Project Coordinating Unit.
Component Description. Two components are of particular relevance to the Process Framework:
Component 1 on support for wetland restoration and Sub-Component 2a on development and
implementation of protected areas management plans. Benefits of the two include: the improved
productivity of ecosystems and critical natural habitats in the two protected areas; improved agricultural
productivity through better agriculture practices; development of small eco-enterprises; progress toward
compliance with EU directives; and increased capacity of existing institutions at the central, regional and
municipal level. Local communities will also benefit from improved fisheries along the Danube, and
possibly from the development of tourism.
Wetland Restoration Component: Both Belene Island and the Kalimok/Brushlen Marshes have been
selected for restoration during the first phase of project implementation on the basis of their potential for
nutrient trapping and value as biodiversity habitat. They are among the 17 former floodplains which
provide potentially high environmental services and recommended for restoration in the
UNDP/GEF-financed Pollution Reduction Program study of the Danube Commission. Additional sites are
expected to be identified and restored during project implementation.
Development and Implementation of Protected Areas Management Plans Sub-Component: This
sub-component supports the preparation and implementation of protected area management plans in PNP
and KBPS. The PNP covers about 21,000 hectares (ha) located along the Svishtov ­ Belene lowlands, and
comprises five areas: Belene Island, other islands and floodplains, the eastern part of the former floodplain
mainly under state and municipal ownership, the western part for the former floodplain mainly under
private ownership, and the hilly landscape of Nikopol. Most of the land in the area, regardless of
ownership, is used for agricultural purposes. Other resource uses include forestry and fishery. The KBPS
covers about 6,000 ha and is located 60 kilometers east of Ruse. As on the case of PNP, most of the land is
used for agricultural purposes, and the population is mainly employed in the agriculture sector. Up until
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the 1950's, the marsh complex was a key part of the region's valuable fish resources. In the 1950's, a dyke
was constructed between Ruse and Tutrakan for agricultural purposes, which cut off fish from their
historical spawning grounds. Fish ponds (encircling 560 ha of state-owned land) were constructed, but they
were declared bankrupt and abandoned after the collapse of the state farming system. Most of the original
marshlands proposed for restoration are state-owned, and have reverted to reed beds. Much of the adjacent
areas outside of the restoration sites are privately and municipality-owned and used for agriculture of
varying productivity levels.
Activities under the project relevant to the Process Framework include:
Protected Areas Management Planning: Management Plans (MP) for both PNP and KBPS will be
developed during a 2-3 year process. The MPs will regulate all activities within the designated areas ­
including the demarcation of management zones for multiple resources use and economic development. The
management planning process is expected to cover a period of two years, with the first year dedicated to
fact-finding and establishment of consensus-building process which will help guide the identification of
zones and management protocols.
Protected Areas Management Activities:
Land management activities: (i) operation and maintenance of the flooding infrastructure ­ such as the
opening / closing of the sluice gates and (ii) management and maintenance of the wetlands in order to
optimize nutrient trapping and biodiversity habitat.
Contingency Relief Fund: While the technical study, environmental and social assessments have identified
measures to mitigate potential negative indirect impacts from wetland restoration (e.g., raised groundwater
levels, changes in well water quality and road access to private lands), it is recognized that it is important to
"plan for the unexpected" in case there may be unexpected indirect effects. The Project's Contingency
Relief Fund will provide, if necessary, relief to households that experience a decrease in income, water
quality and quality of life as a result of restoration activities.
Farmer Transition Support Fund: The PNP and KBPS MPs are expected to support economic activities
compatible with conservation objectives and limit those that are not sustainable over the long-term. The
purpose of this fund is to help farmers make the transition from non-sustainable activities (many of which
are illegal) to those that are sustainable, with programs for activities such as livestock waste treatment,
agro-forestry, and low-till cropping. Households that experience a decrease in income or welfare as a result
of the indirect effects of the flooding will also be eligible to apply for grant resources from this fund.
Eco-Business Development: The project will provide assistance to local communities and individual
farmers to (i) identify existing sources of funds (loans and/or grants such as SAPARD), (ii) develop
marketable "eco-friendly" business proposals to access these funds, and (iii) support a small number of
pilot schemes.
Policy Trigger. This Process Framework will be implemented in accordance with the World Bank Policy
on Involuntary Resettlement. It covers restrictions of access to legally designated zones within PNP and
KBPS, and the possibility of negative externalities from floodwaters, which may have adverse impacts on
livelihoods of the affected persons. Good practice has demonstrated that the objectives of both the Project
and the Operational Policy can be better achieved through a participatory process similar to that outlined in
this Process Framework.
Wetland Restoration: The wetland restoration activities have been and will continue to be specifically
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designed so that no involuntary physical displacement or relocation of people would be necessary. Design
parameters include flood elevations that do not encroach on private lands and minimize impacts to
groundwater (levels and quality) and crops as well as road access. The wetland restoration activity will
only involve the flooding of 2,000-3,000 hectares, most of it state/municipal land, lasting one or two
months. While restoration is expected to eliminate farming (other than production of reed) within the
restored wetland area, outside the wetland area, farming may actually be improved by lengthening the
cropping season. The final restoration plan will, by improving drainage conditions, make equivalent
amounts state land adjacent to the restoration area available for lease. Existing dykes will be raised or new
dykes will be built to protect private property. The exact location and area of the restoration will remain
uncertain pending completion of a detailed feasibility study of restoration activities during the first year of
implementation. The terms of reference for this study include specific language to minimize the impact of
restoration on local incomes and undertake regular consultations with local communities and NGOs. The
purpose of these consultations is to help the MoEW and the local populations define and implement a
jointly acceptable restoration plan.
Despite the expectation that negative impacts will be minimal and the specific mitigation measures that
have been identified, the Project's Contingency Relief Fund will, if necessary, provide relief to households
that experience a temporary decrease in income or quality of life as a result of restoration activities.
Permanent relief is provided through the farmer transition fund, which gives priority support to long term
solutions that mitigate the negative indirect impacts of the flooding.
The fund is capitalized at a level equal to an estimate of the maximum potential marginal losses resulting
from the restoration activities. All households in the KB protected area are eligible to apply for the funds.
The public information campaign will disseminate information on the application process once a year. All
applications will be reviewed by a panel including an environmental expert (from a local NGO), an
agricultural engineer (from the Ministry of Agriculture) and a representative from the Regional Directorate
of Land Use. The expert panel will review claims, submitted in a standard format developed and
disseminated by the Project Coordinating Unit, once a year. If losses claimed can be attributed to wetlands
restoration activities, then the applicant will be awarded grants sufficient to offset the losses. The Project
Coordinating Unit will be responsible for disbursement of these grants.
Protected Areas Management Planning: In order to enhance the management of natural resources within
the two protected areas' landscapes, this component will support the development of protected area
management plans which will focus on key management activities to enhance conservation, such as habitat
restoration, increased monitoring and working with local communities to develop and implement
regulations and other measures to ensure sustainable use of natural resources. The MPs will not require
involuntary physical displacement or relocation of people. To the extent feasible, the MPs would avoid
including new restrictions or strict enforcement of current restricts which could adversely affect livelihoods,
beyond those needed to ensure the sustainability of the natural resource.
Nevertheless, the MPs process may identify the need for new zoning (with increased restrictions on access
to natural resources) and increased enforcement of existing laws within the protected area in order toe
ensure sustainability of the natural resource. For example, there may be various regulations for the types of
agricultural practices allowed, introduction of new species, forestry practices as well as hunting and
fishing. In some cases, this may adversely impact livelihoods. In other cases, the improved productivity of
the resource (e.g. fisheries) or business opportunities (e.g. tourism, eco-business development) may
increase opportunities for communities. However, increased restriction of access cannot be ruled out until
the MPs are developed during Years 1-3. at which time the nature of any proposed restrictions, as well as
the type of measures necessary to mitigate adverse impacts of those restrictions, would be determined in
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consultation with affected groups.
Process Framework. This Process Framework outlines the criteria and procedures which will be followed
as part of the Project, in cases where project-induced involuntary restriction of access to natural resources
within the protected areas, or involuntary damage from floodwaters, results in adverse livelihood impacts.
It will ensure that eligible, affected persons are assisted in their efforts to restore or improve their
livelihoods in a manner which maintains the environmental sustainability of the protected area in question.
More specifically, it describes the participatory process by which: (i) specific component of the Project
were prepared and will be implemented; (ii) the criteria for eligibility of affected persons will be
determined; (iii) measures to assist the affected persons in their efforts to improve or restore, in real terms,
the pre-displacement levels, their livelihoods (e.g., as appropriate, alternative agricultural or grazing areas,
cultivation of alternative crops, or investments in alternative-income generating activities) while
maintaining the sustainability of PNP and KBPS will be identified; and (iv) potential conflicts involving
affected persons will be resolved. It also provides a description of the arrangements for implementing and
monitoring the process.
Process Followed During Preparation. A full social assessment was conducted during Project preparation
which, while covering all aspects of the Project, focused on potential social and economic impacts due to
ecosystem restoration (flooding) and the enforcement of regulations associated with new protected areas
management plans. The objective of the SA was to: (i) assess general socio-economic conditions in the
region as well as public attitudes towards the project; (iv) identify potential positive and negative impacts
as well as mitigating measures; and (iii) inform ongoing Project design. The project was developed in a
participatory manner which serves as a model for implementation. Key stakeholders consulted during
preparation include villagers and their representatives in local government, Government staff involved in
implementing the project, and environmental Non-Government Organizations. Feedback from stakeholders
during these participatory activities was incorporated into project design. A full summary of the process
that was followed can be found in Annex 11 " Summary of Social Assessment."
The SA found that, in general, the local population is expects positive impacts from the project, with more
than half of the survey respondents indicating that it would be beneficial for the region.Benefits expected
include the conservation and protection of natural resources, improvements in the natural fisheries, and a
general economic revitalization (possibly from tourism and eco-business development). Nevertheless, the
Project may inadvertently adversely affect the livelihoods of persons living within the protected areas.
Many of these potential impacts were anticipated even before the Social Assessment was completed, and
TORs for design studies specifically called for these impacts to be minimized.
During Project preparation, new components were added specifically to assist local communities adjust not
only to potential restoration impact and changes in the land management regime of the area, but also to new
regulations that are expected to be adopted in the country anyway due to EU Accession requirements.
These include the Farmer Transition Fund, the Contingency Relief Fund and the Eco-Business
Development Program. The Terms of Reference for the MPs developed during preparation specifically
outline the participatory approach to be followed, in which the roles of local communities in the
management of natural resources would be strengthened. The role of an Advisory Committee during the
planning process was agreed upon.
Process to Be Followed During Implementation. Villagers and local authorities will continue to participate
in the project throughout implementation, contributing to the development of protected area management
plans and identifying impact mitigation measures. Staff of the protected areas administrations responsible
for implementation will receive training on methods to encourage and manage community involvement.
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Local and national NGOs will be involved in monitoring implementation. Specific processes to be followed
during project implementation would consist of the following steps:
(i) Local communities, authorities and farmers will be fully informed of all restoration activities and their
timing through the public information campaign. Thus the risk of negative impacts on these farmers is
considered minimal.
(ii) Through a well-designed participatory process, the management plans aim to gain public acceptance for
not only the natural resource management proscriptions identified in the management plan, but also
possible restrictions to resource use which may be necessary to ensure the long-term sustainability of these
resources. The protected areas management plan will identify not only the appropriate management
proscriptions of the protected areas' biological resources, but also processes by which the park
administrations can pro-actively foster local sustainable socio-economic activities.
(iii) If adverse impacts are unavoidable, the consultations will focus on identifying measures to assist
subsistence users to improve or restore their livelihoods while maintaining the sustainability of the two
protected areas. Particular emphasis will be placed on the consultation process that allows communities to
identify and choose among potential compensating measures.
(iv) The MPs will address mechanisms by which potential conflicts involving resource users will be
resolved. This includes working with community members to define criteria for eligibility for compensating
measures and identifying the relevant administrative jurisdictions and line ministries responsible for
implementing mitigating or compensating measures.
(v) Develop strategies for participatory monitoring of beneficial and adverse impacts within the PAs and
effectiveness of compensating measures.
The MPs will include a detailed write-up of the results of these consultations. The MPs will include
descriptions of the management zones and allowed uses; measures to assist affected person to improve or
restore their livelihoods while maintaining the sustainability of natural resources within the protected areas;
administrative procedures for how potential conflicts will be resolved; legal procedures for project
management; and monitoring arrangements.
Plan of Action: The MPs will serve as the Plan of Action required by the Bank's Operational Policy on
Involuntary Resettlement to be developed and submitted to the Bank during implementation and prior to
enforcement of existing of new laws and regulations governing access to resources.
Monitoring and Evaluation: As part of the monitoring of social development outcomes the PCU will hire
consultants that will carry out socio-economic surveys to monitor progress of the project. These surveys
will be tailored to measure the impact of the management plans against the initial socio-economic baseline
carried out during the preparatory phase.
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