Annex 1A: Incremental Cost Narrative
BROAD DEVELOPMENT GOALS
The Black Sea has suffered at least three decades of severe environmental degradation, mainly as a consequence of eutrophication but also through irrational exploitation of its ecosystem, destruction of landscapes and habitats and pollution from domestic, industrial and agricultural sources and shipping. Earlier GEF interventions led to the development of a Black Sea Strategic Action Plan that gives the coastal countries a blueprint for tackling many of these problems. The countries have also established a regional institutional framework for joint management of the Black Sea’s transboundary issues. These interventions however, lacked the scope and timeframe to deal with some of the main underlying problems, many of which require co-operation amongst the 17 countries of the wider Black Sea Basin:
1. The large load of nutrients, from agriculture, industry and municipal sources, causing eutrophication in the Sea;
2. The high risk of contamination from certain toxic substances including oil;
3. The unregulated and depleted fisheries that make it difficult to restore ecosystems in an effective manner.
The present project focuses on resolving these three transboundary issues as part of a Black Sea Basin Strategic Approach. It places particular emphasis on the issue of eutrophication that is perceived to be the most serious threat to the present and future integrity of the Black Sea Ecosystem.
Control of eutrophication is a particularly difficult task as the origins of the nutrients precipitating the problem are intimately associated with rural and urban economy, practices and lifestyle. Measures to resolve the problem cannot be unilateral and require the sustained cooperation of all 17 countries and the full support of all stakeholders, including the general population. If the problem is not tackled however, economic scenarios predict that nutrient loads will soon begin to rise in pace with economic growth and the Black Sea ecosystem will deteriorate further with regional and global consequences.
The project seeks to assist the countries to strengthen their cooperative institutions; develop and implement new regional and national tools (instruments, laws, policies, indicators, investments) for regulating nutrient discharge, improve public participation; increase the level of understanding of the phenomenon itself and ensure that exploitation of natural resources is at a level that allows key habitats to recover.
Baseline
Governments are fully aware of the problems afflicting the Black Sea but do not feel fully empowered to resolve them. Since the early 1990s, economies have collapsed in all countries except Turkey and much of the infrastructure has deteriorated due to the need to spend limited revenues on other immediate priorities. Even routine monitoring of the Black Sea ceased from the late 1980s in all countries except Romania. However, the previous GEF interventions helped to keep protection of the Black Sea firmly on the international and national agenda and led to a number of positive actions. These included the establishment of a new policy and institutional framework, a very large capacity-building effort and pilot studies and investments (very significant ones in the case of Romania and to a lesser degree Bulgaria and Georgia). Work to support public involvement and the diffusion of information also continued. These interventions helped to raise the baseline from the 1993 inception level to the present one. They have also led to “buy in” by the governments to the Bucharest Convention Secretariat and other measures to afford better protection to the Sea itself.
Despite the previous projects however, the thorny central issue of eutrophication control remains. The “business as usual” development scenario would, inter alia, include projects to invest in more cost-effective agriculture and to develop waste treatment to a level that would satisfy the immediate imperative of improving public health, econcourage economic recovery and protect adjacent natural areas. Such projects would be unlikely to mitigate eutrophication; indeed that would probably exacerbate it.
At the same time, it should be noted that economic decline has brought temporary relief to the Black Sea since the discharge of nutrients and certain hazardous substances has also decreased. There is an unprecedented opportunity to adopt a new development approach working from the current very low baseline. This window of opportunity will most likely be a very small one.
The baseline described in Table 2 reflects the current commitment of the countries and their international partners to protecting the Black Sea. It does not include the costs of wider infrastructure and personnel involved in environmental protection or non targeted research but has been strictly limited to the personnel and infrastructure engaged in work directly related to the implementation of the Bucharest Convention or the Black Sea Strategic Action Plan. It is presented as a realistic measure of current country commitment to the Black Sea.
Global Environmental Objective
The global environmental objective of the proposed project is: Reduction of eutrophication in the Black Sea in order to protect the Biological Diversity and functions of its ecosystem, to reduce the risk to adjacent transboundary systems and to protect the interests of current and future human generations. The project should be replicable and serve as a case study for the reduction of eutrophication worldwide.
The GEF intervention in the Black Sea is based on the following main assumptions:
· That the national, regional and global benefits of co-operation developed in the project will act as an incentive for sustaining the work in the future.
· Even if countries were to take unilateral action, they could not ensure the protection of biological diversity in the marine and coastal areas of the Black Sea .
· High transactions costs and insufficient cooperation with non-coastal riparians have impeded regional co-operation to address environmental externalities;
· Increased awareness of the problem and positive examples for resolving it will help to achieve longer-term sustainability of proposed measures;
· Current donors supporting bilateral and multilateral programmes in the region will be willing and able to co-operate with the GEF in implementing this project.
The potential global and regional benefits that will accrue if these problems are comprehensively addressed will likely be substantial. The protection of one of the most immediately threatened systems in the world will stimulate confidence in the regional co-operative approach to adaptive management of marine and coastal catchments.
GEF Alternative
The project is an integral part of the GEF Danube/Black Sea Basin Programmatic Approach. This enables a process of goal setting and adaptive management for the entire 17 country 2 million square kilometres Black Sea Catchment area. The approach is fully consistent with the guidance for GEF Operational Programme Number 8, “Waterbody-based Operational Programme.” The goal of this Operational Programme is to assist countries in making changes in the ways that human activities are conducted in different sectors so that the particular waterbody and its multi-country drainage basin can sustainably support the human activities. Projects in this OP focus mainly on seriously threatened waterbodies and the most imminent transboundary threats to their ecosystems as described in the Operational Strategy. Consequently, priority is placed on changing sectoral policies and activities responsible for the most serious root causes needed to solve the top priority transboundary environmental concerns.
The GEF alternative consists of practical steps towards:
(a) better understanding of the situation at all levels;
(b) common environmental objectives;
(c) a reappraisal of values, both economic and ethical;
(d) the availability of cost-effective practical alternatives to current practices;
(e) their institutionalisation in education, policy and law,
(f) effective structures for implementation; and
(g) statutory procedures for monitoring compliance, trends and emerging issues.
This would be accomplished through GEF support to key measures that would be unachievable without the active co-operation of the six countries in the region, the seventeen countries in the wider basin and of the wider international community. The way in which these measures build upon the national baseline is outlined in the incremental cost table (Annex 1B). The GEF alternative would achieve its global and regional objectives through the following short-term objectives:
1. Support the integration of a sustainable Secretariat for the Bucharest Convention
2. Regional actions for improving LBA legislation to control eutrophication and for tackling emergent problems
3. Assist countries to improve their knowledge of the process of eutrophication in the Black Sea
4. Introduce new sectoral policies and a system of process, stress reduction and environmental status indicators for monitoring the effectiveness of measures to control eutrophication (and hazardous substances where appropriate)
5. Support the Commission in their periodic review of Adaptive Management objectives.
6. Assist the public in implementing activities to reduce eutrophication through a programme of grants for small projects and support to regional NGOs.
7. Formulate proposals for market-based or alternative economic instruments for limiting nutrient emissions and establish private-public sector partnerships for environmental protection in the Black Sea.
8. A fishery exploited within its maximum sustainable yield and incorporating measures to protect ecologically sensitive areas.
The Black Sea project is highly replicable. Eutrophication is a problem common to all enclosed and semi-enclosed seas and is one that is likely to increase in the future if measures are not taken to adopt practices that result in decreased nutrient discharges to rivers and the atmosphere.
System Boundary (Scope of the intervention)
The project will inevitably result in a large number of downstream impacts and benefits and care has been taken to include these within the system boundary. The Black Sea is a traditional tourist destination for countries throughout eastern and central Europe and the number of beneficiaries from a cleaner sea is likely to be much larger than the coastal population itself. For most purposes however, the entire system is neatly defined by its catchment area boundaries. Because of the size of the overall catchment however, it was decided to implement the Black Sea Basin Programmatic Approach as a series of closely co-ordinated projects covering the Danube Basin, the Dnipro Basin and the remaining areas of the Black Sea Basin (including the sea and its coastal areas) respectively. The present project thus covers the Black Sea proper, its coastal areas, the river basins of the Dniester, (Moldova/Ukraine), Don (Russia/Ukraine), Kuban, (Russia), Rioni (Georgia), Choroki (Georgia/Turkey), Yesilirmak (Turkey), Kizilirmak (Turkey) and Ropotamo (Bulgaria) and intermediate basins. It will obviously require very close policy co-ordination with the Danube and Dnipro Programmes in order to avoid duplication of discussions/activities with individual governments. A forum for ensuring this coordination is included in the project design (paragraph 56).
Incidental Domestic Benefits
Over the long-term, a variety of domestic benefits would accrue through implementation of the proposed project. The most economically valuable short-term domestic benefits to be gained from the project are identified in Table 2 and are associated with the attractiveness of cleaner seas for tourism and the benefits to human health. There will also be benefits from substantially strengthened institutional and human capacity, increased technical knowledge and public awareness of Black Sea environmental issues, and improved national capacities in environmental legislation and enforcement as well as in fisheries management. The domestic benefit of no-fish zones (likely recovery of high value species) is considered a longer-term one, beyond the time frame of the project itself. Bilateral aid programmes focused on domestic improvements to the environment have been included within the baseline in order to clearly distinguish between actions most likely to result in domestic benefits (baseline bilateral projects) from those that will mainly result in regional and global ones (the present project).
Costs (not including PDF-B)
Baseline: $10,149,920
Alternative: $18,444,840
Increment: $ 8,294,920
GEF Financing:
PDF-B: $ 349,920
Project: $3,703,700
Project Support Costs: $ 296,300
Total GEF: $4,349,920