PROJECT EXECUTIVE SUMMARY

REQUEST FOR Council Work Program Inclusion

UNDER THE GEF Trust Fund

GEFSEC
FINANCING PLAN ($)
PROJECT ID: P084605
IA/ExA
PPG
Project*
PROJECT ID: 2133
COUNTRY: Regional:Albania and Montenegro
GEF Total
450,000
4,550,000
PROJECT TITLE: Lake Skadar-Shkodra Integrated Co-financing
(provide details in Section b: Co-
financing)
Ecosystem Management
GEF IA/ExA


GEF IA/ExA: WB
Government

10,700,000
OTHER PROJECT EXECUTING AGENCY(IES): Others

460,000

Co-financing
DURATION: 4 years
11,160,000
Total
GEF FOCAL AREA: International Waters
Total

15,710,000
GEF STRATEGIC OBJECTIVES: SP-3; IWrev-1;
Financing for Associated Activities If
IWrev-2
Any: 30,942,000
GEF OPERATIONAL PROGRAM: OP 9

PIPELINE ENTRY DATE: June 16, 2003
** For multi-focal projects, indicate agreed split between
EXPECTED STARTING DATE: JANUARY 2008
focal area allocations
EXPECTED CEO ENDORSEMENT: DECEMBER
FOR JOINT PARTNERSHIP**
2008
GEF PROJECT/COMPONENT ($)
IA/ExA FEE: $450,000
(Agency Name)
(Share)
(Fee)
(Agency Name)
(Share)
(Fee)
*
(Agency Name)
(Share)
(Fee)
*
* Projects that are jointly implemented by more
than one IA or ExA

CONTRIBUTION TO KEY INDICATORS IDENTIFIED IN THE FOCAL AREA STRATEGIES:
The project will add a new regional/basin Agreement (bilateral Agreement prepared with
PDF-B assistance) and will put in place the institutions required to implement it. The
project will also support the implementation of national IWRM and water resource
policies and legislation, as both Governments are in the process of approving new Water
Laws which are harmonized with the EU Water Framework Directive and this project
will support application of those principles to the Lake Skadar-Shkoder basin
Approved on behalf of the World Bank. This proposal has been prepared in accordance with GEF
policies and procedures and meets the standards of the GEF Project Review Criteria for work
program inclusion.

Emilia Battaglini, GEF Regional Coordinator
(202)-473-3232 ebattaglini@worldbank.org
Steve Gorman


GEF Executive Coordinator
Agi Kiss, Task Team Leader
The World Bank
(202)-458-7180akiss@worldbank.org


Date: May 8, 2007

---

1. PROJECT SUMMARY
a) PROJECT RATIONALE, OBJECTIVES, OUTCOMES/OUTPUTS, AND ACTIVITIES.


Objectives and Rationale

The objective of the project is to enhance transboundary cooperation for managing the
sources and impacts of potentially conflicting development objectives and activities
affecting the waters of the Lake Skadar-Shkoder basin. This will be achieved through
direct interventions to reduce sources of pollution and by building political commitment
and capacity at transboundary, national and local levels for maintaining the lake as a
healthy and productive natural ecosystem.

Lake Skadar-Shkoder, the largest lake on the Balkan peninsula, is located on the border
between Montenegro and Albania, south of the Dinaric Alps. It is a particularly
vulnerable water body due to its shallowness and the karstic geology of its basin: the
lake's water quality and ecology are highly sensitive to the quality and volume of inflow
from numerous rivers/streams and groundwater. Therefore, any upstream or nearby
abstraction or pollution of surface or ground waters represents a direct threat to the lake's
ecology and productivity. On the other hand, the lake has a frequent flushing cycle (up to
three times a year), so water quality can improve quickly if the pollution sources are
eliminated. The lake has its outlet to the Adriatic Sea through the Buna-Bojana River.
Due to the flat topography and shallowness of both lake and river, when the river is
particularly high as a result of heavy rains the flow reverses temporarily and it becomes
an inlet rather than outlet of the lake. Numerous springs located around the periphery of
the lake and hydrologically connected to it are used for drinking water and irrigation in
surrounding areas

A severe economic decline in both countries during the 1990s included the collapse of
many industries and large agricultural enterprises within the Lake Skadar-Shkoder
watershed. While creating hardships for the population, this has had a positive impact on
the lake ecology through decreased pollution, as demonstrated by a comparison of water
quality monitoring data from the 1970's/1980's and the early 2000's. There are, however,
some pollution "hotspots" at the mouths of inflowing rivers and near lakeside settlements
and enterprises. Furthermore, ongoing economic recovery in both countries, including
efforts to revive both industrial and large-scale agricultural enterprises creates the
possibility of a return to higher pollution levels unless measures are put in place to
monitor and prevent it. Both countries have identified Lake Skadar-Shkoder as a priority
area for tourism development. This can provide a positive incentive for maintaining it in
a positive natural state, but at present ongoing tourism development is largely unplanned
and unregulated and is having a negative rather than positive impact.

There is at present an important window of opportunity to put in place strategic,
coordinated planning for the Lake Skadar-Shkoder basin. Both Governments have
indicated their commitment to the protection and sustainable development of the lake
and its resources on a sustainable basis, and to strengthen transboundary cooperation for

2

---

this purpose. For example, both halves of the lake (and immediately surrounding areas)
have been established as Protected Areas and designated as RAMSAR sites. The
respective Environment Ministries signed an Memorandum of Understanding in 2003 and
the two Governments are now in the final stages of approving a bilateral Agreement
which will serve as the legal instrument for formal cooperation for environmental
protection and sustainable management of the lake.

A Transboundary Diagnostic Analysis (TDA) carried out in 2006-2007, indicated that:

·
Prior to the 1990's the lake water had excessive levels of numerous pollutants,
including heavy metals, PCBs, nitrates, etc., but today these levels have fallen to
acceptable or even undetectable levels in the lake as a whole. Unacceptable levels of
some pollutants are still found at some locations near pollution sources, including the
mouth of the Moraca River, which collects groundwater from the KAP aluminum plant);
·
Economic development proposals in both countries which involve alternative uses
of the waters of the lake basin present major potential threats to the lake ecosystem.
These include proposals for hydropower development in Montenegro and for dredging
the Buna-Bojana River to increase its navigability. Such developments could seriously
affect the lake level and hydrology, including its characteristic rapid flushing, and
undermine its ecological integrity and functionality
·
Some of Lake Skadar-Shkoder's historically rich fish and bird populations appear
to be declining, perhaps due to a combination of over-exploitation and ecological
degradation at key sites. This represents an important threat to the long-term economic
and ecological value of the lake.
·
There is as yet little practical cooperation between the two countries in relation to
lake management or information exchange, despite the intentions reflected in the 2003
MOU.

The TDA concluded that priorities for Lake Skadar-Shkoder are preventive action to
counteract the potential impacts of expected economic development in the lake basin,
including the prospects for hydropower expansion and river dredging, as well as
improving the sustainable management of its biological resources.

A Strategic Action Plan (SAP) based on the TDA has been approved by both
Governments following a long consultative process. It dentifies five strategic goals:

(i) reduction and prevention of the lake water, and pollution control systems to
maintain EU water quality standards;
(ii) establish a joint monitoring system covering all elements of the ecosystem;
(iii) establish effective systems for sustainable management and local use of natural
and cultural resources, by strengthening the two Protected Areas;
(iv) promote sustainable and joint tourism development;
(v) strengthen the legal and institutional framework for environmental protection,
sustainable natural resource management and transboundary cooperation and exchange.


3

---

The SAP includes ongoing and proposed activities funded by both Governments and by a
number of donors, mainly for national level spatial planning, ecological research and
monitoring, management of the two Protected Areas which together comprise the entire
lake and its surrounding areas, sustainable tourism development, wastewater treatment
for large urban areas (Shkoder, Podgorica, etc.) and solid waste management. The
proposed GEF project aims to fill gaps, particularly in relation to strengthening
transboundary cooperation and joint action.


Project Description: Outcomes/Outputs and Activities

The project aims to deal with current and imminent threats to the lake's water and
ecosystem in two key ways: first, by building political commitment for sustainable
management at national and local levels, and second, through direct interventions to
reduce pollution from point and non-point sources. In both cases, the project will build
upon and supplement existing initiatives of the two governments and other donors,
primarily by strengthening the transboundary dimension.

The long-term quality and sustainability of the Lake Skadar-Shkoder ecosystem
ultimately depends on there being sufficient interest and commitment at both national and
local levels to invest in protective measures and to counter-act pressures for incompatible
development. In order to build this commitment, the environmental services provided by
a healthy lake ecosystem must be well understood and must be seen to generate concrete
and meaningful benefits for local and national stakeholders. It is also important for the
lake to be recognized as a bilateral and regional asset, whose status and management are
issues that supercede local and national interests, making decision-makers accountable to
a wider constituency. In order for the commitment to be translated into effective action,
institutional mechanisms must be put in place to enable the diverse water
users/stakeholders in both countries to coordinate and cooperate to manage the water
resources in the most widely beneficial and sustainable way. Finally, direct investment is
needed to reduce existing and expected sources of pollution and other ecological
degradation.

These considerations are reflected in the project design, which is based on four pillars:

·
Better information and understanding of the lake's ecosystem and of the current
and potential impacts of developments in the lake basin which can affect the quality and
quantity of inflowing ground and surface waters;

·
Strengthening institutional mechanisms for coordination and cooperation among
all stakeholders/water users, particularly for transboundary linkages;

·
Reducing existing pollution sources through direct investment, by providing
demonstrations and incentives and by strengthening regulation; and


4

---

·
Promoting sustainable use of the lake and its natural resources, as a preferred
alternative to existing non-sustainable practices and to potential incompatible
development.

The project is based upon the joint Strategic Action Plan (SAP) for Lake Skadar-Shkoder,
which represents a long-term program of ongoing and proposed activities financed by the
two governments and by external donors.

Component 1: Understanding and Managing the Lake Skadar Ecosystem (Total:
US$ 3.36; GEF: US$ 2.04 million)

This component will support:

(i) institutional strengthening for implementation of the bilateral Agreement, specifically
the high level Bilateral Lake Management Committee and its Secretariat/technical
support units and bilateral/multi-stakeholder Working Groups which will be responsible
for coordinating activities in priority areas such as planning, coordinated monitoring and
data management, tourism development, communications and outreach, etc;

(ii) targeted research and monitoring, focused on understanding the existing and likely
impacts of changing water conditions (quality and quantity) on the Lake Skadar
ecosystem and its environmental and economic values; and

(iii) implmenetation of selected joint activities identified in the SAP (studies, planning,
communications, etc.) under the supervision of the BLMC and Working Groups.

GEF funding will be incremental to existing activities which are carried out by the two
Governments, such as routine water quality monitoring. Some key outputs from this
component include: a predictive hydrological model of the lake basin (to be used to
analyze the likely impacts of development proposals and policies), a jointly managed and
publicly accessible database a jointly approved lake-wide management plan which will
be integrated into the relevant national level plans which form the legal basis for
regulating land and water use (e.g. detailed urban plans, Protected Area Management
Plans, Municipal Development Plans, etc.). Indicators for this component relate to the
establishment , operation and sustainability of the transboundary institutions,

implementation of joint activities and adoption of resulting plans and programs.

Component 2: Enhancing Sustainable Use of the Lake Ecosystem (Total: US$ 5.14;
GEF US$ 0.86 million)

This component aims to promote the adoption of more sustainable approaches to
economic development of the lake and its natural resources, to counteract current, non-
sustainable trends. It focuses on two aspects (tourism and fishing) where there is
significant potential for sustainable development, but where current unsustainable
practices represent a threat to the lake's ecological integrity and long-term economic
value. Ensuring the economic viability of environmentally sustainable uses of the lake is

5

---

essential to counterbalance pressure for incompatible development in the lake basin and
watershed

(i) sustainable tourism development: Governments and local residents in both countries
look towards tourism as the main engine for economic development of the Lake Skadar-
Shkoder area,and national strategies identify it as a priority for nature, culture, and
recreation-based tourism development. This is a positive factor as such tourism depends
on environmental quality as a key part of the tourism "product." Properly planned and
regulated tourism can therefore be both economically rewarding and environmentally
sustainable, having much lower impacts on the lake ecosystem than many alternative
economic activities. At present, however, tourism is growing rapidly in the Lake
Skadar-Shkoder area in an unplanned and unregulated way which makes it an
increasingly serious threat to the lake, through inappropriate construction, untreated
wastewater, poor solid waste management, etc. The project will support development of
more environmentally and socially sustainable tourism by: improving nature- and
culture-based facilities and attractions (e.g. hiking trails, cultural sites); public
awareness-raising and providing information and Technical Assistance to local residents
to help them engage in appropriate tourism enterprises; and strengthening regulatory
capacity to stop illegal construction and other negative practices. Investments under this
sub-component will be guided by joint tourism development planning coordinated by the
Working Groups on Planning and Tourism. The GEF funds will complement substantial
Government and other donor-funded programs in both countries, by emphasizing support
for transboundary coordination and joint action.

(ii) sustainable natural resource management: focusing particularly on fish, which are
very important in the local economies, are currently threatened by over-exploitation and
habitat degradation, and are mobile and therefore requiring transboundary coordination
for sustainable management. Both Governments have institutions and personnel in place
to regulate fishing, but there is a lack of information, mechanisms and capacity to manage
the fisheries on a lake-wide basis. The GEF funds will address these gaps through:
support for joint studies and research,; providing support and incentives for illegal
fishermen to become licensed and join local associations; and strengthening regulatory
and enforcement capacity to stop unlicensed boats and the use of illegal fishing methods.
Long term objectives include increases in local incomes from tourism and stabilization of
fish populations, but it is unrealistic to expect measurable changes in such parameters
over the short time-frame of the project. Therefore, indicators for this component
include increase in the number of local community members engaged in sustainable
tourism activities, decrease in illegal construction and decrease in numbrs of unlicensed
fishermen and use of illegal fishing equipment.

Component 3: Investments to Protect Water Quality (Total: US$ 7.21 million ;
GEF: US$ 1.65 million)

This component will support on-the-ground investments to target current sources of
pollution which were identified in the TDA. GEF funds will complement investments by

6

---

the two governments and other donors, and will focus on transboundary issues and
innovative approaches, in three areas:

(i): Governments and local stakeholders in both countries identified a stockpile of
hazardous wastes at the KAP aluminum plant in Montenegro (heavy metals, PCBs,
PAHs, etc. leaching into the groundwater and then to the Moraca River) as among the
most serious and urgent sources of pollution of the lake. The KAP was privatized in
2005, under a contract which splits responsibility for dealing with this and environmental
issues between the Government and the purchaser. The agreement commits both parties
to making very substantial investments over the next five years. The project would help
the Government to fulfill its responsibility to stop toxic materials accumulated from past
materials from contaminating surrounding areas, including Lake Skadar-Shkoder. GEF
funds would support a categorization and inventory of the waste in the stockpile and a
feasibility study to explore options including converting the existing dumpsite into an
EU-standard hazardous waste landfill. The feasibility study would also identify specific
investments for which additional GEF funds (approximately $400,000) could be used in
order to have the greatest impact on stopping these materials from entering the lake.
Monitoring wells will be installed to track impacts in the form of groundwater from KAP
entering the Moraca River. However, given the technical complexities involved and the
time-frame of the project, the measurable outcomes are likely to be in the form of
completing the protective investments.

Subcomponent (ii): Sewage represents another important source of pollution of Lake
Skadar-Shkoder. Other donors (e.g. EU, German and Austrian Governments) are
assisting the Governments to provide better sewage collection and wastewater treatment
for the larger urban areas whose wastes currently contaminate the lake (e.g. Podgorica ,
Shkodra), but smaller villages and individual homes and tourism facilities (e.g.
restaurants) scattered along the lake's are also a problem. Appropriate solutions must be
found for dealing these small but numerous "pollution point sources," in a context which
presents a number of challenges (e.g., scattered facilities, highly permeable substrate;
aged infrastructure; low income levels). The GEF project will support one pilot project
on each side of the lake to demonstrate feasible and sustainable approaches. In
Montenegro the priority that has been identified is a small scale communal collection and
treatment system for the village of Vranjina on the northern shore of the lake; in Albania
it is a program to assist private enterprises (mainly restaurants) to install individual units.
The project will also support exchange visits and other dissemination activities to ensure
that both pilot projects serve as demonstrations for stakeholders from countries, both
from the Lake Skadar-Shkoder area and from other areas with similar problems (e.g.
Lake Ohrid, shared between Albania and Macedonia). Indicators for this subcomponent
include reduced nitrites/nitrates and Biological Oxygen Demand in lake water at the pilot
project sites and, in future, replication of the demonstrated technologies at other sites.

Subcomponent (iii): Pilot buffer vegetation restoration: Excessive tree cutting, over-
grazing and destructive construction practices have eroded the vegetative buffer (e.g.
willow groves, marshes, stream bank cover) that helps to protect Lake Skadar-Shkoder
from non-point-source pollution and siltation from adjacent and upstream agricultural

7

---

areas. Several areas have been identified for pilot ecological restoration activities,
including (in Albania) erosion control measures on inflowing streams of Taraboshi
Mountain and strips of wetland vegetation around key fish nursery sites in Kamic and
Shiroke, and (in Montenegro) controlled grazing in lakeside grasslands around Virpazar.
Again, because the time frame of the project is not sufficient to expect measurable
changes in water quality, the indicators are in the form of areas of critical buffer areas
replanted or restored.

b) KEY INDICATORS, ASSUMPTIONS, AND RISKS (FROM LOGFRAME)

Key Indicators:

·
Bilateral Lake Management Committee and Working Groups are established and
operating, with costs increasing met by Governments
· Predictive
hydrological
model of Lake Skadar-Shkoder is completed and being
used by decision-makers in both countries to analyze likely impacts of policies
and proposed investments;
·
Coordinated monitoring underway, providing information into a publicly
accessible database
·
Successful completion/water quality impacts of priority interventions to reduce
surface and groundwater sources of pollution in the lake (specifics to be
confirmed at Appraisal)
·
Four pilot projects for ecological restoration of lake buffer areas successfully
completed
·
At least a 20% increase in the number of project area residents earning $ 1000 or
more/year from lake-based tourism enterprises


The main assumption is that the two governments are committed to working together to
preserve the lake ecosystem and to ensure sustainable management of its natural
resources. The 2003 MoU, the bilateral preparation and approval of the SAP, and the
advanced stage of bilateral Agreement are positivie indicators, as is the fact that both
governments have enlisted their portions of the lake as Ramsar sites and have initiated a
transboundary annual "Day of the Lake" to spotlight and celebrate the importance and
value of the lake. More broadly, both countries have demonstrated environmental
awareness and commitment in various ways. For example, the constitution of
Montenegro declares the country to be an ecological state, and Albania is investing
considerable resources in large scale environmental protection measures including
community-based natural resource management and integrated coastal zone management
programs. Albania is also actively pursuing transboundary cooperation in the sustainable
management of Lakes Ohrid and Prespa, and both Governments are signatories to the
Athens Convention for the Protection of the Mediterranean Sea Against Pollution. Other
key assumptions include continued baseline support by both governments for monitoring
and PA protection and management activities, and a continuing positive environment for
sustainable tourism development in the region (political security, continued
improvements in infrastructure and services, favorable economic policies, improving
enforcement of land use and other relevant regulations, etc.).

8

---

The main risks identified include:

(i) lack of governments' commitment to protecting the lake ecosystem in the face of
pressure for non-compatible economic development, and/or to transboundary
cooperation;

(ii) lack of tourism growth at national level, translating to the same at local level and
therefore to reduced incentives for nature protection and sustainable natural resource use
(or, alternatively rapid and environmentally unsustainable tourism growth with negative
environmental impacts);

(iii) weak implementation capacity in both countries

Mitigating these risks are the following factors and actions:

(i) both governments have made national and international commitments to preservation
of the lake and sustainable use of its natural resources, have demonstrated the willingness
to apply EIA requirements even when thi;s has conflicted with short-term economic
interests, and have demonstrated interest in transboundary cooperation. The project itself
will also elevate the national and international visibility of Lake Skadar-Shkoder and
reinforce the accountability of the governments to maintain this resource

(ii) both governments have prioritized tourism development as an economic growth
sector, and identified the Lake Skadar-Shkoder area as a priority for nature- and culture-
based tourism;

(iii) the project mainly supports existing agencies and actors, providing them additional
resources and incentives to bring a collaborative, transboundary element to their usual
activities and responsibilities. The project will provide incremental operational support
through the BLMC Secretariat and technical consultants, mainly for implementation of
joint activities.

2.
COUNTRY OWNERSHIP
a) COUNTRY ELIGIBILITY


Albania and Montenegro are both members of the GEF and the World Bank.
Both countries are signatories to key international conventions relating to coordination
and cooperation for protection and management of transboundary waterbodies and
watersheds, including: including: the Barcelona Convention and its protocols and have
developed programs within the framework of the Mediterranean Action Plan (relevant
because Lake Skadar-Shkoder drains directly into the Adriatic Sea through the Buna-
Bojana River) and the Espoo Convention on Environmental Impact Assessment in a
Transboundary Context and the Helsinki Convention on the Protection and Use of
Transboundary Watercourses and International Lakes. (Again, in the case of Montenegro,
the signatory was the Union of Serbia and Montenegro). A 2003 Memorandum of

9

---

Understanding signed by the respective Ministries responsible for environmental
protection provides a specific framework for cooperation for protection and sustainable
development of Lake Skadar-Shkoder. The next step, finalization and approval of a
formal bilateral Agreement is in process. A Transboundary Diagnostic Analysis (TDA)
completed during project preparation identified objectives and high priority issues on a
lake-wide basis, and a joint Strategic Action Plan based on the TDA has been approved
by both Governments.


b) COUNTRY DRIVENNESS

Both countries have identified the Lake Skadar-Shkoder area as a priority for
environmental protection, sustainable natural resource management and nature/culture-
based tourism development, in a number of national and local strategies and plans (e.g. in
Montenegro the Environmental Action Plan, the Strategy for Sustainable Development,
the draft National Spatial Plan, the Master Plan for Tourism; in Albania the National
Environmental Action Plan, the National Strategy for Socio-Economic Development
(2003), the National Biodiversity Strategy and Action Plan, the Shkodra Region Area
Based Development Program, and the Law on the Protection of Transboundary Lakes).
They have also recognized the need for transboundary coordination to achieve these
objectives, as reflected in the MOU signed in 2003, the SAP approved by both
Governments in April, 2007, and the draft bilateral Agreement which is being finalized.
The proposed project would support selected activities from the SAP, based on the
agreement of both Governments that these are the priority activities for GEF support.
Both sides of the lake have been designated by the respective governments as wetlands of
international importance under the Ramsar Convention, and both countries are signatories
to a number of relevant international agreements and conventions (see above). This
project directly supports the realization of these national strategies and plans and
fulfillment of these international obligations as well as implementation of the MoU.
The project also contributes to the countries' common objective of harmonizing policy,
legislation and practice with the European Union environmental acquis, particularly the
Water Framework Directive, which calls for cooperation in managing transboundary
water bodies and resources through a coordinated, integrated watershed level approach.


3.
PROGRAM AND POLICY CONFORMITY

a) FIT TO GEF FOCAL AREA STRATEGIC OBJECTIVES AND OPERATIONAL
PROGRAM
The project is presented under OP9 to assist Albania and Montenegro in
accelerating the implementation of the Strategic Action Program for the protection of
Lake Shkodra, which the two countries have recently adopted. As such, the project is
fully consistent with Strategic Objective 1 of the IW 2007-2010 Interim Strategy: to
catalyze implementation of agreed reforms and on-the-ground stress reduction
investments to address transboundary water concerns. The project can also be considered
on the whole consistent with the draft IW Strategy for GEF 4, in particular with Strategic

10

---

Objective 2 (SO-2: To play a catalytic role in addressing transboundary water concerns
by assisting countries to utilize the full range of technical assistance, economic, financial,
regulatory and institutional reforms that are needed), and the IW Strategic Program 3
(Balancing over-use and conflicting uses of water resources in transboundary surface and
groundwater basins). The project in fact attempts to introduce ecosystem-based
approaches and Integrated Water Resources Management to help reconcile development
needs (e.g.: increased tourism, hydropower) with ecosystem sustainability. Large
freshwater lakes such as Lake Skadar-Shkoder deliver a large number of environmental
services which are dependent upon sufficient "environmental flow" of water, in terms of
both quality and quantity. Both excessive withdrawal and pollution of surface and
groundwater sources which feed the lake represent conflicting uses of the water because
they undermine the potential for delivering these environmental services. Lake Shkodra,
because of its shallowness and of the karstic geology of its basin, is particularly
vulnerable to the impacts of conflicting uses of the surrounding land (recharge areas of
the karstic aquifers feeding the Lake), and of the waters flowing into the Lake.



b) SUSTAINABILITY (INCLUDING FINANCIAL SUSTAINABILITY)

Both countries have policies and recently adopted/enacted laws which directly
support the objectives of this project, have national strategies and plans which identify
environmental preservation and sustainable development as the primary management
objectives for Lake Skadar-Shkoder, and have made related international commitments.
The countries are also placing a high political priority on harmonizing their respective
legal and institutional frameworks with the EU environmental acquis and Directives,
including adoption of a coordinated, integrated watershed approach to managing
transboundary water bodies. Finally, both countries are committing substantial budgetary
resources and assistance from other donors for activities that directly support the project's
activities and objectives. Component 1 will help to establish institutional structures and
mechansims which are called for in a (soon to be adopted) formal bilateral Agreement,
and will cover associated costs on a declining basis in order to enhance sustainability.One
frequent issue for projects involving environmental protection and management is
whether monitoring activities carried out under the project will continue over the longer
term, when incremental project support ends. In this case, the project will support the
inclusion of specific parameters which are particularly significant in a transboundary
context, but the annual costs of carrying out monitoring will continue at approximately
the current levels rather than being artificially increased for the life of the project.
Component 2 aims to promote more sustainable tourism and natural resource use, in
contrast to current unsustainable practices. Component 3 will help the Government of
Montengro to find a permanent solution for the problem of KAP legacy wastes, will
demonstrate economically and environmentally sustainable small scale stewater treatment
approaches, and restore degraded buffer habitats which will then be self-sustaining. For
all these reasons, the likelihood of project outputs and outcomes continuing beyond the
life of the project is high.


11

---

c) REPLICABILITY

There are a growing number of examples around the world of international
cooperation for managing transboundary water bodies and their watersheds. While each
situation has its own particular features, there is a great deal of interest and value in
testing new models and exchanging experiences. For example, Albania's experience
with initiating cooperation with Macedonia for Lake Ohrid, ongoing initiatives to
develop integrated management of the Adriatic coast, and a brief study tour during
project preparation to Lake Neusiedl-Ferto (Austria/Hungary border) provided important
lessons and ideas for this project. Lake Skadar-Shkoder in turn will provide useful
lessons for other transboundary initiatives both for the participating countries and
elsewhere in the region and in the world. Participation of involved agencies and
stakeholders in the Petersberg Process on Transboundary Water Management in
Southeastern Europe will be one important mechanism for disseminating experiences.

d) STAKEHOLDER INVOLVEMENT

An ongoing project of the Regional Environment Center initiated in 2000
(under the REC Program for Transboundary Cooperation through the Management of
Shared Natural Resources) has contributed greatly to local public awareness regarding
the reasons and means for improving protection and sustainable natural resource
management of the lake, as well as facilitating communication and information exchange
between lakeside communities and local organiziations in Albania and Montenegro.
REC has been a key partner in developing the proposed GEF project, which built upon
the information, connections and relationships that have been built during that period.
Preparation of the Transboundary Diagnostic Analysis , a Social Assessment and a
Resource Access Restriction Process Framework in each country involved numerous
public meetings and interviews with local residents and other stakeholders in most of the
villages in the project area. These meetings identified both concerns and priorities of
these communities, which have been important inputs for project preparation. The joint
Strategic Action Plan (SAP) was prepared by large teams from both countries
representing leading scientific and environmental organizations and went through a
public review/consultation process. The project Environmental Impact Assessment also
involved extensive stakeholder consultations and will be publicly disclosed in keeping
with Government and World Bank requirements. For the implementation phase, one of
the initial six Working Groups of the Bilateral Lake Management Committee will be
devoted to developing and overseeing the implementation of a joint communication and
outreach program, which will include both dissemination of educational and information
materials through diverse media outlets and exchange visits and events to maximize the
engagement of local stakeholders in the project's objectives and activities.

e) MONITORING AND EVALUATION

Monitoring of project implementation will be the responsibility of the Project
Coordinators in MTEP and MEFWA and of the Secretariat for the bilateral Lake
Management Committee (for joint activities under Component 1). Data collection on

12

---

water quality and other ecological paramters will largely be done by existing scientific
institutions in each country which have ongoing monitoring programs and responsibilities
and by the staff of agencies responsible for management of the lake and its resources. In
some cases (e.g. groundwater entering Moraca River from KAP site; discharge sites for
small-scale wastewater treatment pilots) measurable changes in chemical/physical
parameters may be anticipated. However, significant changes at a lake-wide level would
not be expected in this time frame. Therefore, most monitoring indicators focus on the
establishment and activities of bilateral institutional structures and on progress in the
completion of the various activities and investments.


A Monitoring and Evaluation Plan for the project, reflecting the above elements and the
Results Framework, will be included in the Project Operational Manual. It will provide
specific responsibilities, timeframes and reporting formats. Project supervision will
monitor implementation of mitigation measures identified in the Environmental
Assessment/Environmental Mitigation Plan

4.
FINANCING (for all tables, expand or narrow table lines as necessary)
a) PROJECT COSTS
Project Components/Outcomes
Co-financing ($)
GEF ($)
Total ($)
1. Understanding/Managing Lake Ecosystem
1,320,000
2,040,000
3,360,000
2. Enhancing Sustainable Development
4,280,000
860,000
5,140,000
3. Water Protection Investments
5,560,000
1,650,000
7,210,000
5. Project management budget/cost*
included in above


components
Total project costs
11,150,000
4,550,000
15,700,000
* This item is an aggregate cost of project management; breakdown of this aggregate amount should
be presented in the table b) below.

b) PROJECT MANAGEMENT BUDGET/COST1
Estimated
GEF
Other sources
Project total
Component
staff/weeks
($)
($)
($)
Locally recruited personnel*
430
80,000
50,000
130,000
Internationally recruited
30
70,000 70,000
consultants*
Office facilities, equipment,

50,000
80,000
130,000
vehicles and communications
Travel

20.000 20,000 40,000
Miscellaneous




Total

150,000 220,000 370,000
* Local and international consultants in this table are those who are hired for functions related to the
management of project. For those consultants who are hired to do a special task, they would be
referred to as consultants providing technical assistance. For these consultants, please provide details
of their services in c) below:



1 For all consultants hired to manage project or provide technical assistance, please attach a description in terms of
their staff weeks, roles and functions in the project, and their position titles in the organization, such as project
officer, supervisor, assistants or secretaries.

13

---

C) CONSULTANTS WORKING FOR TECHNICAL ASSISTANCE COMPONENTS:
Estimated
GEF
Other sources
Project total
Component
staff/weeks
($)
($)
($)
Personnel




Local consultants
3250
980,000
160,000
1,140,000
International consultants
185
490,000
20,000
510,000
Total

1,470,000
180,000
1,650,000

d) CO-FINANCING SOURCES2 (expand the table line items as necessary)
Co-financing Sources
Name of co-



Type
financier (source)
Classification
Amount ($)
Status*
Government of
Nat'l Gov't
in kind
4,500,000 Estimated annual budget
Montenegro
allocations over life of project
Government of
Nat'l Gov't
in cash
5,162,500 Contractual and legal
Montenegro
obligation; budgetary
commitment
Government of
Nat'l Gov't
in kind
918,000 Estimated annual budget
Albania
allocations over life of project
Government of
Nat'l Gov't
in cash
120,000 To be confirmed
Albania
Govt. of
Nat'l Gov't
in cash
112,500 US$41,000 approved and
Netherlands
ongoing during preparation;
(through SNV)
remainder indicated but to be
confirmed at appraisal
Other donors
Others (specify)
in cash
350,000 To be identified


Sub-total co-financing
11,163,000
* Reflect the status of discussion with co-financiers. If there are any letters with expressions of
interest or
commitment, please attach them.


5.
INSTITUTIONAL COORDINATION AND SUPPORT
a) CORE COMMITMENTS AND LINKAGES

The project supports Country Assistance Strategies and ongoing programs of the
World Bank in both countries. In Albania this includes: the Fishery Development project
which supports improved fish management with local participation in both marine and
lake ecosystems; the Natural Resources Development project, aims to reduce erosion in
upper watershed areas to reduce downstream sedimentation and to enhance the
sustainability and productivity of agriculture through participatory pasture and forest
management; the Integrated Water and Ecosystems Management project, which is using
constructed wetlands as one method to manage wastewater in coastal cities; and the
Coastal Zone Management Project which is promoting an integrated ecosystem approach
on the Adriatic coast. In Montenegro, ongoing activities and projects under preparation
include solid waste management under the Environmentally Sustainable Tourist Areas
project; the Tourism Development project, which will include wastewater management

2 Refer to the paper on Cofinancing, GEF/C.206/Rev. 1


14

---

and protection of natural areas; the Tara and Lim River Basin Management project,
which will introduce integrated watershed management; and ongoing capacity building
for Strategic Environmental Assessment. There are particularly direct linkages to the
Albania Coastal Zone Management and Montenegro Tourism Development projects both
because of Lake Skadar-Shkoder's close connection to the Adriatic Sea through the
Buna-Bojana River and because the lake is the source for the regional water supply
component of the Tourism Development project. More generally, the Bank is actively
supporting transboundary cooperation for nature protection, natural resource
management and tourism development in numerous countries in the ECA Region and
elsewhere in the world.

A number of other donors are also assisting the Governments of Montenegro and Albania
(separately or jointly) to improve environmental management and sustainability of
natural resource use in Lake Skadar-Shkoder. Only those which are being directly
leveraged as co-financing for the GEF project are listed as co-financers in Section 4. At
present this is limited to the two national governments and SNV, but discussions are
ongoing with others (e.g. KFW, GTZ), which may be identified as additional co-financers
at project Appraisal. The Government of Albania will provide $718,000 in counterpart
funding from government budget allocations for salaries and operating costs of ecological
monitoring and of protecting and managing the Shkoder Lake Managed Natural Reserve.
The Government of Montenegro will provide US$ 1.375 million as counterpart funding
for the same costs (monitoring, SLNP management) plus $5.16 million for removal and
safe disposal of legacy hazardous wastes at the KAP aluminum plant site. This is a legal
obligation of government under a recent sale of the company, which must be met by
2010. GoM is allocating the necessary budgetary funds but will also seek assistance from
other donors.

Other ongoing or already approved government and donor-financed activities which
directly support GEF project activities and objectives are identified as "associated
financing," (totalling about US $34.3 million. These all address priorities identified in
the Transboundary Diagnostic Analysis and the Strategic Action Plan for Lake Skadar-
Shkoder. The major activities included in this total are:

- Government of Montenegro $1.875: to build a border post, marina and other
infrastructure at Virpazar to facilitate transboundary tourism;
- Germany (KFW) ca. US$ 8.75 million, and Austria (ADA) ca. US$ 20.0 m: for
rehabilitation of water supply and wastewater treatment infrastructure for Shkodra city
(reducing a major source of pollution into Lake Skadar-Shkoder);
- European Agency for Reconstruction $200,000: for rehabilitation of existing
Podgorica wastewater treatment plant, reducing pollution of the Moraca River and
therefore Lake Skadar (GoM counterpart funding $100,000);
- Regional Environment Center $170,000: for ca. 30% of ongoing $600,000 multi-
faceted program to raise public awareness, improve cross-border communication and
partnership and develop tourism opportunities at the local/community level (also includes
small amount of equipment for SLNP) (percentage reflects estimate of funds to be spent
during the project period);

15

---

- Germany (GTZ) $ 850,000 for two projects concerning the lake and surrounding
communities: Physical Planning and Transboundary Management, and Improving the
Touristic Offer of SLNP;
- German (GTZ) and Austria (ADA) $312,500: for project supporting small/medium
tourism related infrastructure around Lake Skadar-Shkoder
- Italy and World Bank (IDA) $350,000: for construction of a headquarters building for
the Administration of SLMNR in Albania (the same projects also include funding for
support for local fishermens' associations and improved fisheries management, which
were not quantified and not included in the calculation of associated financing)
- Norwegian Research Council (NIVA) $87,500: for a research program on nutrient
inflows and sedimentation issues affecting the Lake Skadar-Shkoder ecosystem (a
$150,000 research program of the Heidelberg University on toxicity of contaminated
sediments to fish was not counted as it is nearing conpletion)
- World Bank (IDA) $ 310,000: 10% of planned expenditure under Montenegro
Environmentally Sensitive Tourism Areas Project for construction of solid waste landfill
for Bar and Ulcinje Municipalities (reflecting estimated 10% of total benefit will be in
lakeshore areas) (GoM counterpart funding estim. $20,000);
- USA (USAID) $ 137,500: for community level grants in Lake Skadar area for bird
conservation, ecotourism, etc. under Montenegro-wide Community Revitalization
through Democratic Action (CRDA) program;
- UNDP $113,750: representing estimated proportion of $512,500 nation-wide GIS
capacity building program which will contribute to monitoring in and around Lake
Skadar-Shkoder

b) CONSULTATION, COORDINATION AND COLLABORATION BETWEEN IAS, AND IAS
AND ExAs, IF APPROPRIATE.

No other IAs and ExAs are currently engaged in significant on-the-ground
activities in the project area. However, the project directly supports the Framework for
Sustainable Tourism Development in Northern and Central Montenegro, which was
financed by UNDP. UNDP also has an ongoing program to build GIS systems and
capacity across the country, which will contribute substantially to facilitating lake
monitoring and management objectives.

C) PROJECT IMPLEMENTATION ARRANGEMENT
The Albanian Ministry of Environment, Forests and Water Administration
(MEFWA) and the Montenegrin Ministry of Tourism and Environmental Protection
(METP) will have overall responsibility for implementation of the project, in
coordination with partners including sectoral Ministries, local governments and
Universities. METP and MEFWA are the parent Ministries for the PAs which together
comprise the entire project area, and are also responsible for most aspects of
environmental protection, management and monitoring in their respective countries. In
Montenegro, the implementing agency is expected to be the new Environmental
Protection Agency (EPA) under METP, expected to be established in early 2007. METP
and MEFWA will each establish offices or units within their existing structure to
coordinate and administer the project. The project will finance consultants to provide

16

---

incremental support for these units as required (e.g. assistance with procurement).
Depending on the specific activities, departments or responsible agencies under these
Ministries will either implement them directly, provide other government units with
resources to implement them on the basis of Memoranda of Understanding, or contract
implementation to specialized institutes, NGOs or private companies. Both Ministries
have experience with such contracting arrangements. (e.g., in Montenegro activities such
as ecological monitoring and research are commonly implemented by local universities
or institutes contracted by government). Most of these partners are already engaged in
the activities which they will implement on a larger scale or with new approaches under
the project. The aim of the project is to introduce the element of transboundary
cooperation and to strengthen systems and capacity at the national level.

There will be separate GEF Grants to each country, and each of the two Ministries will
coordinate implementation of activities financed by the respective grant. Funds to
finance jointly implemented activities will be included in the Grant to whichever country
hosts the Secretariat which will be established under Component A. A project
Operational Manual, to be completed prior to project effectiveness, will provide details of
implementation and reporting processes and responsibilities. This will include details
regarding implementation and monitoring of project- and activity-level Environmental
Management Plans and the Process Framework.

Component A: The bilateral Working Groups (WG) will design and provide technical
oversight for joint programs (e.g. the lake-wide monitoring system, public education and
outreach, etc.), while implementation of these programs will be carried out by national
agencies under other project components. A joint Secretariat hosted by one of the
countries will support the WGs and will also be responsible for implementing some joint
activities (e.g. procurement of automatic monitoring stations to be used by both
countries). Funds for the WGs and Secretariat will be channeled and accounted through
the budget of the host Ministry, while technical oversight will be provided by both METP
and MEFWA.

Component B: Implementation of the lake-wide joint monitoring program designed by
the WG for Monitoring and Research will be the overall responsibility of the Shkodra
District Regional Environment Agency under the MEFWA in Albania, and the
Environmental Protection Agency in Montenegro. Data collection will largely be done
by existing scientific institutions in each country, such as the Center for Eco-
toxicological Research, the Republican Hydro-Meteorological Institute, Institute for
Protection of Cultural Monuments, Nature Protection Institute and the University of
Montenegro (Montenegro), and the Hydro-meteorological Institute, Natural Sciences
Museum and Fishery Research Institute and University of Shkodra (Albania), among
others.

Component C will be implemented in Montenegro by the Public Enterprise for National
Parks (PENP), specifically by the staff of the LSNP under the direction of the LSNP
Director. In Albania Component C will be implemented by the soon-to-be established
Administration for SLMNR. Staffing for the SLMNR is expected to be drawn mainly

17

---

from the Fishery Inspectorate and from the Directorate of Forest Services. The project
will provide technical assistance and material support to strengthen these PA
administrations, particularly in areas in which they have limited experience such as
community participation and tourism development. The PA Administrations will seek to
collaborate with local community organizations and NGOs, particularly in areas such as
preparation of zoning and management plans, public outreach and education, and tourism
development.

Component D: Implementation responsibility will depend on the specific activities and
sites selected for investments. For example, wastewater and solid waste management fall
under the responsibility of local (municipal and commune) governments in both
countries, although this responsibility is shared with the PA Administrations. Removal
or containment of hazardous wastes in Montenegro is the responsibility of METP, and is
expected to fall under the new EPA.

MEFWA and METP will also coordinate with a number of other institutions which will
not have a direct role in implementation but are important actors and stakeholders. For
example the Drin­ Bunė River Basin Administration (chaired by the Prefect of Shkodra)
covers the entire Lake Shkoder watershed in Albania, and under the new water law in
Montenegro the Water Administration Agency will have a lead role in implementing
integrated water management in line with the EU Water Framework Directive. The
specific division of responsibilities among these various institutions will be clarified
through an institutional analysis to be completed during project preparation.

18

---

ANNEX A: INCREMENTAL COST ANALYSIS


Project Development Objective and Baseline Scenario

1.
The project development objective is to maintain and enhance the long-term economic
value of Lake Skadar-Skhoder and its natural resources. The baseline funding in support of the
project amounts to $40.2 million. The baseline scenario and corresponding funding with regards
to each project component are described below.


LAKE ECOSYSTEM MONITORING AND MANAGEMENT

2.
In the past, both Montenegro and Albania have pursued lake management from a
predominantly national perspective. Little transboundary environmental co-operation took place.
There is no institutional structure for co-ordinating protection and management. As such, under a
forward-looking baseline scenario, it would prove increasingly difficult for managers to address
mounting challenges to lake sustainability during the planned project period.

3.
This situation began to change with the creation of a project involving the two
Governments together with the Regional Environment Center (REC) and with the move to
develop a GEF project. Launched in 2000, the REC project has a total budget of $600,000, of
which $170,000 will be spent during the project period. REC project activities include: (i)
institutional capacity building to promote cross-border communication and collaboration
(especially for communities and NGOs), (ii) public awareness activities, including preparation of
promotional materials for ecotourism, (iii) a small amount of equipment for Skadar Lake NP.

4.
While the REC project focuses on community/local communication, it does not support
high-level government coordination, nor does it implement activities on the ground to make the
cooperation concrete. Thus, while the REC project continues to be very valuable in instilling the
idea of transboundary cooperation, it cannot fund its realization.

5.
A fair amount of environmental quality monitoring within the lake basin currently takes
place in both countries and will continue at a similar rate of expenditure under the baseline
scenario. However, this scenario has the following shortcomings: (i) the same monitoring
approaches and data collection methods are not being used by each country, which means that the
data gathered are not inter-comparable; (ii) there is no common database with open and efficient
exchange of information; (iii) data gathering and analysis is not necessarily being carried out
based on priorities concerning the lake as a whole; (iv) the parameters measured are not
necessarily those which will provide the greatest utility for underpinning lake-wide management
decisions; (v) research is somewhat donor-driven, reflecting the priorities of the respective
funders, (vi) data are not readily available within either country because data collection is done by
semi-autonomous institutions which often charge high fees for it, and; (vi) technical capacities to
analyze and interpret data are limited, particularly in the case of Albania.

6.
As a result of the above, it is currently very difficult, if not impossible, to obtain accurate
and up-to date information on the status and trends of key elements of the lake's ecosystem.
However, such information is essential for effective management and to achieve both national
and transboundary priorities. These drawbacks tend to limit both national and transboundary
benefits from monitoring.

19

---

7.
Estimated baseline spending for environmental monitoring in the lake area during the
project period is $675,000 in the case of Montenegro3 and $68,000 for Albania. The nature and
purpose of some of this spending will be reoriented under the GEF Alternative in order to
increase and capture transboundary benefits.

8.
As part of baseline funding, data from a transformed programme of monitoring will be
complemented by a transboundary research project funded by the Norwegian Research Council
(NIVA). The three-year DRIMON project involves Montenegro, Albania and Macedonia and
covers Lakes Skadar-Shkoder and Prespa. Total funding for Lake Skadar-Shkoder is estimated at
$237,500. Project activities include: (i) establishing nutrient budgets and addressing siltation
challenges for the lake basins, (ii) assessing the status of the lakes through dose-response
relationships between nutrients and sediment inputs and their effects; (iii) suggesting
environmental goals for the lakes, based on information on their trophic status and evidence of
their reference (or natural) conditions, in dialogue with stakeholders. This study will provide
essential management-related data which would otherwise need to be obtained through GEF
support, were it not being financed by NIVA.

9.
In addition, GTZ will finance complementary activities under the "Physical Planning and
Transboundary Management" project that covers both Montenegro and Albania. The project,
which has been approved and is expected to begin shortly, will provide $625,000 over 18 months
for preparation of detailed urban plans for six pilot lakeside villages (needed to reduce illegal
building, support well regulated residential and tourism development), some small ecotourism-
related infrastructure.4 The province of Pisa, Italy is also financing urban planning activities in
cooperation with the Municipality of Shkodra for approximately $612,000.


LAKE SKADAR-SKHODER WATER AND NATURAL RESOURCES MANAGEMENT

10.
At present, there is no zoning or management plan in the areas surrounding the lake, with
the result that most areas are legally accessible to tourists and fishermen. Local and commercial
use of the lake natural resources is allowed everywhere, including fishing, hunting, recreation
(boating, hiking, etc.). Ensuring that these resources are used sustainably and limiting their
ecological impacts is an essential and challenging part of lake management. However, realization
of these objectives is undermined by capacity constraints in both countries, as evidenced by
problems such as high levels of illegal fishing and hunting and by pressure from alternative uses
of the lake waters that promise localized short-term gains. Local authorities have limited
experience with modern, integrated and participatory approaches to management of natural
resources.

11.
In the case of Montenegro, an estimated $1,875,000 in baseline support will be provided
during the full project period,5 to cover the annual operational budget of the project
implementation entity (the Lake Skadar National Park administration), awareness raising and
government counterpart funding for USAID and Council of Europe (CoE) projects.

3 Based on an annual figure of 1.6 million Euro for country-wide environmental monitoring and an estimate that 10%
of spending takes place within the lake basin and is therefore relevant to the lake's environmental quality.
4 An additional activity under this project is considered as incremental support and is presented below under the
Alternative GEF Scenario.
5 During the PDF-B Phase, $225,000 was invested by GoM in PA infrastructure to rehabilitate the National Parks HQ
and visitor center at Lake Skadar. This investment was made in conjunction with, the PDF-B Phase and is reflected as
such in the attached incremental cost matrix.

20

---

12.
In the case of Albania, the lake area received area status only in 2006, near the end of the
project preparation period. The move to initiate transboundary co-operation, including the
anticipation of international (GEF and others') support for this objective, has been an important
impetus underlying the establishment of the PA and the creation of an associated budget. In the
absence of GEF support, baseline spending by Albania under this component would have been
zero.

13.
The following donor support is being provided under the baseline scenario for natural
resource management in the project area:

GTZ is working in Montenegro supporting the "Improving Touristic Offer of LSNP" project and
is financing small tourism-related infrastructure such as signs, trails, promotional materials, etc
The total financing is estimated at $225,000. GTZ, together with Austrian Aide (ADA), is
providing $340,000 to support small/medium infrastructure to make the area more tourist-
friendly, e.g. rehabilitation of Virpazar market in Montenegro.

USAID, Council of Europe and Government of Montenegro: Together these donors are
providing financing for various activities aimed at tourism development based on natural and
cultural heritage, including bird watching tourism, a lake clean-up project, construction of
thematic visitor centers at Bar and Cetinje, and activities supporting cultural heritage & local
traditions, with special emphasis on promoting social inclusion. Total financing: $340,000

UNDP: UNDP does not support on-the-ground activities at Lake Skadar, but does have a
national project to develop GIS for natural resource management. A three-phase project totaling
$512,500, it is expected to provide $50,000 of geographically relevant support during the project
period.


WATER QUALITY PROTECTION INVESTMENTS

14.
Important baseline investments are being made to control pollution within the lake
watershed, much of which has hitherto been reaching the lake. These include hazardous wastes,
solid wastes and wastewater.

15.
In the area of wastewater collection and treatment, there remain up till now major
challenges, particularly on the Albanian side where wastewater from the city of Shkodra flows
largely untreated into the lake. Overall baseline financing includes the following:

·
$17 million from KfW and Austria to Albania to help provide Shkodra city with
wastewater collection and treatment facilities
·
$200,000 from the European Agency for Reconstruction (EAR) to assist Montenegro
with the rehabilitation of an existing wastewater treatment plant for Podgorica (presently
a significant source of pollution through the Moraca River).
·
$100,000 from the government of Montenegro for piloting small-scale wastewater
treatment along the side of the lake. Some of this financing will be re-directed towards
innovative approaches under the GEF Alternative.

16.
In the area of hazardous wastes, the contract for privatization of Montenegro's State-
owned KAP aluminum plant was awarded to RUSAL, a private Russian company. This contract
includes a requirement that "legacy" hazardous and non-hazardous waste on the KAP grounds

21

---

must either be removed or contained in EU-standard sanitary land fill by 2010. Under the
agreement, RUSAL is responsible for non-hazardous wastes (with an estimated financing of $10
million), while GoM is responsible for the hazardous waste component.

Hazardous waste from KAP presents a particular threat to Lake Skadar as it is contaminating
groundwater which enters the lake, primarily through the Moraca River. Addressing the KAP
hazardous waste issue will have important national and transboundary benefits by removing a
significant threat to lake environmental quality. In conjunction with GEF support, the
Government of Montenegro is providing baseline financing of $100,000 for the feasibility study
and $5.16 million to clean up the site.6

17.
Management of solid waste represents an important task for lake managers and local
governments in both countries. Domestic solid waste is recognized as a serious and growing
problem in many parts of the lake basin. Wastes from settlements and tourism facilities near the
lake and in river basins are blown into the lake and collect at the mouths of rivers, where it
interferes with ecological functions, have negative impacts on local health, and undermine
tourism prospects by diminishing the aesthetic appeal of the area. Shkodra city has an established
(though inadequate) waste collection system, but there are none in villages and communes on
either side of the lake.

18.
Baseline spending in this area includes the following:

·
IDA-financed Montenegro Environmentally Sensitive Tourism Project (MESTAP) is
funding two regional municipal solid waste landfills, one of which covers Bar
municipality which borders the Lake, and is therefore significant for Lake Skadar.
Relevant baseline costs at this site are estimated at $300,000.7
·
Baseline spending for the city of Shkodra in Albania is estimated based on an ongoing
$500,000 annual contract for solid waste collection and disposal. It is estimated that some
10% of that contract is collecting waste from areas in close proximity to the lake, and
therefore reducing the risk of solid waste entering the lake. Thus, $200,000 of baseline
spending is estimated over the four-year life of the project.


Global Environmental Objective and Alternative Scenario

19.
The project global environmental objective is to enhance transboundary cooperation for
managing the sources and impacts of potentially conflicting development objectives and activities
affecting the waters of the Lake Skadar-Shkoder basin.

20.
The total cost of the alternative scenario is $46.6 million. This consists of $ 40.2 million
of baseline investments and $6.5 million in incremental finance. The proposed project, with a
total financing of $15.7 million including a GEF contribution of $5 million, covers all
incremental activities as well as key baseline activities financed by the two governments. It
addresses major gaps in baseline activities and is aimed at achieving a variety of global,
transboundary and national benefits.


COMPONENT 1: UNDERSTANDING/MANAGING THE LAKE ECOSYSTEM

6 The GEF incremental cost contribution of $1.2 million to the KAP cleanup is described below in para. 35.
7 This figure is based on an estimate that 10% of the total spending is relevant for the lake.

22

---

21.
Under the alternative GEF scenario, $2.8 million of incremental support will be provided
to enhance and solidify a long-term programme of integrated environmental management of the
lake. This represents a key step towards the establishment and operation of a permanent
institutional structure for lake management. The additional support will support for the
establishment of a Bilateral Lake Management Committee (BLMC) and several bilateral Working
Groups to coordinate implementation of key actions called for in the Strategic Action Plan.
Working Groups will be set up for:

(i)
coordinating legal and institutional frameworks;
(ii)
coordinated planning, including development of a lake-wide zoning and management
plan (to be integrated into relevant national and local spatial and Protected Area plans);
(iii)
designing and overseeing a lake-wide research and water quality monitoring program;
(iv)
coordination and conflict resolution relating to water management issues;
(v)
developing and overseeing a joint public awareness-raising and education program; and
(vi)
preparing a coordinated strategy and plan to promote sustainable tourism development.

22.
The project will also finance a small Secretariat to support the BLMC and Working
Groups and to coordinate and facilitate implementation of joint project activities.8

23.
Accurate and up-to date information on the status and trends of key elements of the lake's
ecosystem is essential for effective protection and management. For a transboundary lake it is
important that the same monitoring approaches and data collection methods are used by each
country, that a common database is established with open and efficient exchange of information,
and that analysis is carried out based on priorities concerning the lake as a whole.

24.
Incremental support under this component leveraged by the GEF is as follows:

(i)
Government of Montenegro will provide $160,000 for the BLMC and Working Groups;
$25,000 for public outreach and communication, and $67,000 for monitoring
(ii)
Government of Albania will provide $100,000 for the BLMC and Working Groups and
$7,000 for monitoring.
(iii)
SNV Netherlands, which is providing $112,500 for institutional strengthening,
stakeholder participation and co-operation between the two countries.
(iv)
GTZ will provide approximately $20,000 in technical assistance to develop a framework
strategy for preparation of the Lake-wide Management Plan.

25.
In addition to the above, $2,330,000 in incremental support is being requested from the
GEF for the following elements:

(i)
Technical assistance, training, equipment and support for incremental operating costs (on
a declining basis) will be provided to support the establishment of the BLMC and
Working Groups to enable them to carry out their responsibilities. This includes the
establishment of a small Secretariat for the BLMC and 1-person technical support units in
each country, as well as the costs of regular meetings and communications.
(ii)
Technical assistance, equipment and support for incremental operating costs will be
provided for implementation of joint activities designed and overseen by the Working
Groups. These will mainly consist of studies, targeted research and monitoring, and

8 Implementation of the programs developed by the WGs will mainly be financed through other
components.

23

---

preparation of spatial and development plans, as well as the development and
implementation of a public outreach and education program. Lead responsibility for
implementation of these joint activities will be assigned to either Montenegro or Albania,
based on the capacity of their implementing agencies and their priorities. An important
part of the monitoring program will be to establish and maintain a common, publicly
accessible data base and networks for information exchange. .

COMPONENT 2: ENHANCING SUSTAINABLE USE OF THE LAKE SKADAR-SHKODER ECOSYSTEM

26.
The total cost of the GEF Alternative under Component 2 is $6.4 million. This total
consists of $4.9 million in baseline support and $1.5 million in incremental support. Incremental
support from GEF totalling $1.025 million will include the following:

·
Technical assistance, training, equipment and materials, and some incremental operating
costs to strengthen the capacity of the local administrations responsible for management
of the lake and its natural resources, including both improved communication and
partnership with local governments and communities and more effective enforcement of
regulations (e.g. against illegal construction and illegal fishing).

·
Technical assistance, civil works and equipment and materials to support development of
of sustainable tourism as the best alternative for the use of the lake ecosystem. This
includes small scale infrastructure such as hiking trails and signage, birdwatching
platforms, rehabilitation of cultural heritage sites to enhance their touristic and
educational value;

·
Technical assistance and equipment and materials to build capacity and provide
incentives for sustainable use of natural resources. This may include, for example, legal
and technical assistance for local fishermens' and other resource users' associations,
improved market facilities accessible to registered fishermen, training in handicrafts
based on local resources, etc. .

27.
An incremental budget of $420,000 is leveraged from the government of Montenegro and
$60,000 from the government of Albania in support of this component.


COMPONENT 3: URGENT INVESTMENTS TO PROTECT WATER QUALITY

28.
The total cost of the GEF Alternative under Component 3 is $34.7 million. It includes
$32.5 million in baseline support and $2.2 million in incremental support. The incremental
support of GEF is estimated at $1.6 million and will be directed towards addressing urgent
pollution hot-spots, as follows:

·
Hazardous waste: GEF will provide incremental support for addressing the hazardous
waste problem at KAP. GEF funding of $ 1 million is requested for: carrying out an
initial inventory and categorization of the wastes; co-financing of a feasibility study; and
on-ground investment -- either as co-financing for a secure landfill or to implement other
measures to prevent movement of toxic materials through the groundwater and into the
Moraca River (depending on the findings of the feasibility study). .
·
Wastewater treatment: GEF support is being requested to help address the growing
problem of untreated domestic wastewater flowing directly into the lake from lakeside

24

---

villages and communes, and private residences and touristic facilities (e.g. restaurants)
which have been built on the lakeshore during the past few years. Specifically, based on
the priorities identified in the SAP, GEF would contribute to the installation of a small
scale, environmentally and economically sustainable wastewater collection and treatment
system in one village on the Montenegro side and appropriate waste treatment of
containment facilities for about 30 restaurants on the Albania side . The proposed GEF
contribution to this effort is $365,000
·
Lake buffer vegetation restoration: GEF will finance TA and various investments
(equipment, materials, labor) to restore tree groves, control stream bank erosion and fish
nursery buffer vegetation at priority sites on both sides of the lake for an estimated cost of
$ 280,000.

29.
An incremental budget of $520,000 is leveraged from the government of Montenegro and
$20,000 from the government of Albania in support of this component.



25

---

Incremental Cost Analysis Matrix

Component
Category
Amount
Domestic Benefits
Global Benefits

USD




-
1. Understanding/
Baseline
2,743,200
Updated national and local environmental policies
Managing the Lake Skadar
and laws and efforts to harmonize policies,
Ecosystem

legislation and practices with EU instruments, but
little coordination for lake management
2003 MOU for cooperation is followed by a
bilateral agreement but no concrete measures taken
to implement agreements in MOU.
Some ecological monitoring done in both countries
separately but no mechanism in place to foster
transboundary institutional and technical
cooperation. Decisions concerning the future of the
lake driven more by local short-term economic gain
than basin-wide, long-term environmental and
economic sustainability




Alternative
5,545,000
Institutions responsible for lake basin planning and
Governments coordinate and cooperate across
management are strengthened and their decisions
the border to jointly address the lake's
are based on understanding the impacts of changing
transboundary environmental and
water conditions of the lake and their costs and
socioeconomic issues
benefits in the short- medium and long terms both
Systems for coordination and cooperation at
for environmental sustainability and economic
basin level are operational and sustainable to
development.
secure an integrated approach to environment
Monitoring plans and databases are managed with
and water issues that takes into account long-
input from both countries and accessible to the
term environmental benefits against short-
public.
term economic gains.
Governments and scientific institutions
recognize the importance and value in
establishing and share information, allowing
them to cooperatively develop and


transboundary ecosystem-based lake
Increment
2,801,800
management.

26

---

Component
Category
Amount
Domestic Benefits
Global Benefits

USD





2. Enhancing Sustainable
Baseline
4,895,500
Economic growth linked to tourism potential of the
Use of the Lake
lake basin and watershed with limited public
Ecosystem
understanding and appreciation of the importance of
environmentally sustainable management of the lake
and its resources and of their role in achieving long-
term environmental and economic sustainability.




Alternative
6,395,5000
Public education and public information increases
Environmentally sustainable tourism
awareness on sustainable use of the lake resources
development and effective implementation of
including tourism development that improves
the zoning and resource management plans,
socio-economic conditions in the lake basin while
including sustainable use of land and fish
maintaining ecological systems and quality
resources in the lake basin will reduce water
quality degradation and improve the
transboundary ecosystem health and value.


Increment
1,499,500





3. Investments to Protect
Baseline
32,524,000
Some pollution `hotspots' have been identified as
Water Quality
existing or developing problems and both
governments are making effort to remediate and
mitigate the sources with donor support especially
in sewage collection and waste water treatment and
hazardous waste management




Alternative
34,705,000
Government and donor support is complemented
Interventions for water pollution control,
and extended with innovative and low-cost
chemicals and hazardous waste management
environmentally-friendly solutions that address
and erosion control will reduce the
unsafe and unsightly localized conditions.
environmental stress on the lake ecosystem



and improve water quality
Increment
2,181,000

27

---

Component
Category
Amount
Domestic Benefits
Global Benefits

USD



Baseline Total
40,162,700
Increment Total
6,482,300

GEF Increment
4,550,000

Non-GEF Increment
1,932,300




Total Project 15,710,000


GEF financing
4,550,000

Co-financing 11,160,000 From Government of Montenegro and Albania, SNV, Others (tbd)
Associated financing 30,942,000 From REC, NIVA, GTZ, Italy-Pisa province, ADA, USAID, COE, GOM, WB, KFW, EAR,

RUSAL, IDA


28

---

ANNEX B: RESULTS FRAMEWORK

PDO
Project Outcome Indicators
Use of Project Outcome
Information



To maintain and enhance the Lake water quality and
Data from national-level and
long-term economic value and ecological indicators are
maintained or improve in
joint lake monitoring will
environmental services of the context of continued
indicate whether project-
Lake Skadar-Shkoder and its economic development
financed and complimentary
natural resources

investments are on track to



succeed in protecting lake

waters and natural resources

from contamination and over-
utilization. Data and analyses
will be presented to the
bilateral Lake Management
Committee, which will report
to the respective
Governments, and will be
made publicly available
through the Committee
website.
Indications of continuing
decline in key parameters will
trigger renewed efforts to
identify causes and build
commitment for resolving
them.

GO


To enhance transboundary Development and water use
The Joint Strategic Action
cooperation for managing the decisions and actions affecting Plan, Bilateral Agreement
sources and impacts of Lake Skadar-Shkoder
specifying Governments'
potentially conflicting
ecosystem are guided by
responsibilities and
development objectives and bilateral objectives,
Commitments, lake-wide
activities affecting the waters agreements and institutional
management plans and other
of the Lake Skadar-Shkoder structures
key documents will be
basin.
available to the public through
website and other media,
increasing the accountability
of decision makers to a wide
range of stakeholders in both
countries and internationally
Intermediate Outcomes
Intermediate Outcome
Use of Intermediate
Indicators
Outcome Monitoring
Component 1: Bilateral Lake Predictive
hydrological
model The hydrological model of the

29

---

Management Committee and
of Lake Skadar-Shkoder
lake will be used to analyze
Working Groups are
completed
the likely impacts of various
operational and implementing
proposed development
priority joint activities
Lake-wide monitoring data
projects and investments in the
identified in SA).
base established, operational
lake basin, making it possible

and readily accessible to all
to engage in informed debate
stakeholders
about trade-offs at both

national and
Lake-wide zoning and
transboundary/regional levels
management plan approved by
both Governments according
Publicly accessible monitoring
to their respective laws
data will enable all
Joint tourism development
stakeholders to track progress
plan approved by both
and impacts of
Governments
implementation of the

Strategic Action Plan and to
identify and raise issues. It
will also indicate willingness
on the part of the
Governments and
research/monitoring
institutions to place
transboundary cooperation
above short-term commercial
interests.

Lake-wide zoning and
management plan will provide
the legal basis for controlling
and regulating development,
natural resource use and
pollution sources in and
around the lake; bilateral
approval of the plan by local
and national authorities will
demonstrate their commitment
to long-term protection and
sustainable use.


Component 2. Infrastructure, Targeted tourism
Data on numbers of new
regulatory capacity and
infrastructure renovations and illegal construction sites will
community awareness in place construction completed
demonstrate whether public
to support sustainable tourism (visitor centers, cultural sites,
awareness/outreach activities
development and natural
trails, etc.)
and enhanced enforcement are
resource utilization

succeeding in creating

Reduction in new illegal
support for SAP objectives

30

---

lakeside construction starts,
and an enhanced "culture of
and any new starts halted at
compliance."
early stage


A good record in stopping
Reduction in numbers of
illegal construction at an early
unlicensed fishermen and use
stage, reduction in unlicensed
of illegal fishing methods
and illegal fishing, and

increased local participation in
Socio-economic/attitude
sustainable tourism
surveys indicate increased
development will be
local understanding of, and
important indicators of the
engagement in, sustainable
effectiveness of the capacity
tourism and natural resource
building element of the
management
project. Failure to achieve
these goals would highlight
the need to re-assess the
capacity building strategy.
Component 3: Decrease in
Reduction in toxic substances
GEF-supported monitoring
toxic and non-toxic pollutants in ground water at KAP site
activities will be designed to
entering into Lake Skadar-

determine whether project
Shkoder
Reduction in BOD, NO2 and
interventions are effective in

NO3 in water entering lake at
improving quality of water
pilot wastewater treatment
entering the lake through
sites
surface and underground

routes and in alleviating
Area of water
specific problems and
protection/buffer vegetation
"hotspots" identified in the
restored in pilot areas
SAP. If the problems persist

despite implementation of

Component 3 activities, it

would indicate the need for
further research to identify
priority pollution sources.




31

---

ANNEX C: RESPONSE TO PROJECT REVIEWS

a) Convention Secretariat comments and IA/ExA response
b) STAP expert review and IA/ExA response
c) GEF Secretariat and other Agencies' comments and IA/ExA response

b) STAP Expert Review and IA Response


STAP ROSTER TECHNICAL REVIEW OF THE PROPOSED GEF-IW PROJECT: "LAKE
SKADAR-SHKODRA INTEGRATED ECOSYSTEM MANAGEMENT"
(ALBANIA, MONTENEGRO)
by J. A. Thornton PhD PH CLM
Managing Director
International Environmental Management Services Ltd ­ United States of America

Introduction

This review responds to a request from The World Bank (WB) to provide a technical review of
the proposed International Waters project entitled Lake Skadar-Shkodra Integrated Ecosystem
Management.

I note that I am a designated expert on the STAP Roster of Experts with particular experience
and knowledge concerning watershed management and land-ocean interactions. I have served as
Government Hydrobiologist with the Zimbabwe Government, Chief Limnologist with the South
African National Institute for Water Research, Head of Environmental Planning for the City of
Cape Town (South Africa), and, most recently, as Principal Environmental Planner with the
Southeastern Wisconsin Regional Planning Commission (USA), a position that I hold concurrent
with my position as Managing Director of International Environmental Management Services
Ltd, a not-for-profit corporation providing environmental education and planning services to
governments worldwide. In each of these positions, I have had oversight of projects and
programs designed to assess contaminant loads to aquatic ecosystems from land-based activities,
and to develop appropriate and affordable mitigation measures to reduce such loads and
minimize their impacts on the aquatic environment, both freshwater and marine.

This review is based upon a thorough review of the project document, consisting inter alia of the
Project Document (22 pages plus Annexes 1, 3-5, 8 and 17); the Project Executive Summary and
GEF Council Work Program Submission inclusive of Annex A; and, the (Draft) Lake Shkoder
Transboundary Diagnostics Analysis (TDA). Other, relevant documents served as reference
sources, including the GEF Operational Strategy, Agenda 21, and related materials establishing
the necessity and priority of land-based activities to control marine pollution as set forth in the
Global Program of Action for the Protection of the Marine Environment from Land-Based
Activities.

Scope of the Review

This review addresses, seriatim, the issues identified in the Terms of Reference for Technical
Review of Project Proposals.

32

---

Key Issues

Key issue 1. Scientific and technical soundness of the project. Overall, the project appears to be
scientifically and technically sound. The approach proposed, which includes an on-going
diagnostic and demonstration project-based program, adequately addresses the needs to initiate
actions to (1) create a binational mechanism to jointly manage the shared water resources of
Lake Skadar-Shkodra, (2) quantify the risks associated with a legacy of historic water quality
degradation and current threats to the biodiversity and ecology of the Lake, (3) strengthen the
existing national mechanisms for management of land- and water-based activities within the
drainage basin tributary to the Lake, and (4) encourage implementation of urgent environmental
management actions through provision of incremental financing of remedial actions to address
identified "hotspots". The need for both a land- and water-based approach is documented in the
Lake Shkoder Transboundary Diagnostics Analysis that was completed during the preparation of
this project. The TDA also identified a number of priority interventions that could be considered
as recipient activities under Component 4, targeting priority environmental concerns within the
Lake Skadar-Shkodra Basin.

A review of the Components set forth in the project document suggests that the primary focus of
this proposed project will be on capacity building and institutional strengthening; to wit,
Component 1 focuses on the institutional and human resources necessary to manage and monitor
the water resources of Lake Skadar-Shkoder at the binational level, Component 2 focuses on
research and monitoring necessary to complete and refine the data available to substantiate the
management measures employed, and Component 3 primarily focuses on the human resources
necessary to undertake the management of the resource at the national level. In addition,
Component 4 will provide important "on-the-ground" experience in problem solving. These
needs are adequately documented in the TDA, especially for management actions at both the
national and binational levels where the countries appear to have utilized a primarily passive and
country-based management strategy, rather than a holistic approach to managing the shared
resources of the Lake.

From a scientific standpoint, providing a framework within which the two countries can
assemble a shared data base comprised of similar variables, measured in a consistent manner,
and stored in an accessible form is an essential first step toward creating the baseline from which
disturbances can be measured and assessed. Such a data base will also facilitate both individual
and joint enforcement of regulations and standards by the countries within the shared basin. In
addition, disseminating these data to interested parties, including citizens, nongovernmental
organizations, and corporations, through an accessible data base will help to ensure timely action
to correct problems, be they concerns regarding overexploitation of the living resources of the
Lake, pollution from lakeshore development, or impacts related to human activities within the
drainage basin tributary to the Lake.

With regard to creating an appropriate regulatory framework, an understanding of the current
status of the Lake waters is also useful in determining whether or not conditions of impairment
continue to exist, and in identifying emerging issues that could potentially adversely affect the
Lake ecosystem. Appropriate data will permit a realistic evaluation of the standards likely to be
applied by regulators at the country and local government levels. Further, the upgrading of the
laboratories and enhancing of the institutional capacities to utilize shared methodologies,

33

---

implemented by trained and competent staff in the Basin countries, is a necessary element in the
shared enforcement process. Joint action of this nature can overcome the possibility that
operations could be shifted between Basin countries in order to avoid regulations at the country
and local levels.

Key issue 2. Identification of global environmental benefits and/or drawbacks of the project, and
consistency with the goals of the GEF. The proposed project establishes a framework within
which to address the major causes of environmental stress within the aquatic environment of
Lake Skadar-Shkodra; namely, the historic legacy of contamination, the current threat of
overexploitation of aquatic resources, and the likely future risk of uncontrolled development in
the drainage area, including the inputs of contaminants washed off the land surface and into the
aquatic ecosystem.

The legacy of contamination stems from the presence of aluminium and steel plants in the
drainage basin, as well as from ongoing discharges of wastewater from the human settlements in
the Basin. While the data gathered during the TDA suggest that the legacy of the aluminium and
steel processing plants has been mitigated by the rapid flushing rate of the Lake, the threat of
ongoing degradation from wastewater discharges from urban and agricultural operations within
the drainage basin remains. If unchecked, these discharges threaten the globally significant
ecosystems of the Lake, including Ramsar sites in both countries, and downstream areas of the
Adriatic Sea. These ecosystems, in addition to be transboundary aquatic systems in their own
rights, are either directly or indirectly connected to the transboundary waters of the
Mediterranean Large Marine Ecosystem (LME). Consequently, true global benefit is presumed
as a result of the connection of the Mediterranean Sea with the North Atlantic Oceanic
circulation.

The project is consistent with the goals and objectives of OP 8, contributing to the global effort
to address environmental concerns arising from industry, agriculture, fishing, and exploitation of
the natural environment for tourism and recreation insofar as it relates to Lake Skadar-Shkodra.
A regional approach is essential, and provides the basis for GEF participation, given that each
country may need to engage in an additional level of effort beyond that required under their
current national legal framework.

In this regard, the participation of a broad cross-section of governmental, nongovernmental and
civil organizations with interests in the Lake and its drainage basin would be an important
element in ensuring the implementation of the project outcomes, even though the outcomes, in
the global sense, are environmental in nature. Currently, this participation is provided through
the relevant national agencies. Establishment of the various working groups and secretariat, and
the stakeholder involvement, as proposed in the project document, will contribute to achieving
this objective, and add the necessary community and transboundary dimensions to the
management of this resource. Unfortunately, the civil society organizations are not listed in the
project document, so it is not possible to gain a full understanding of the extent or nature of the
proposed stakeholder involvement in the project.

This project is complementary to other GEF initiatives within the eastern Mediterranean region,
including the Lake Ohrid project. Given the GEF aim of incrementally funding projects that
contribute to sustainable economic development in a replicable manner, the current proposal and
its companion proposal would seem to be well-suited to achieving such an aim.

34

---

Key issue 3. Regional context. The participation in this project of the two countries in the Lake
Skadar-Shkodra Basin argues persuasively that adequate and appropriate consideration has been
given to the regional context of the project. Notwithstanding, the project team noted that a
Basin-wide approach to water resources management, which would have significantly increased
the area of influence of the project, was discounted due to the size of this larger geographic unit
and the fact that the available financial resources would be insufficient to bring about meaningful
change in such a large area. It was noted, however, that one reason for discounting this larger
project area was the fact that the Basin would be incorporated into the River Basin planning and
management program mandated by the European Union (EU) Water Framework Directive.
Further, this larger drainage basin was included in the TDA and resultant Strategic Action
Program (SAP), which should ensure that actions undertaken within the Lake Skadar-Shkodra
ecosystem management project are fully integrated into this larger Basin framework.

Actions proposed to better integrate the national regulatory initiatives into a regional program are
fully consistent with the development of a sustainable regional approach to managing this
waterway. These actions are supported within the proposed project by complementary actions to
strengthen the national regulatory programs and institutions. To this end, however, this reviewer
notes that the project funds are expected to be allocated to each country as well as to the regional
working group. It would seem advantageous, however, to further strengthen the binational entity
by channeling the funds to each country through the binational organization. This would provide
greater surety that the projects undertaken are truly regional in scope, even if located within the
national territory of one or other of the Basin countries. By so doing, this financial management
mechanism also would create a more substantial role for the binational authority and potentially
accelerate the creation of a permanent binational commission tasked with jointly managing the
shared water and ecological resources of Lake Skadar-Shkodra.

The proposal clearly indicates an intention to disseminate information and results on a regional
basis, both within the Basin and elsewhere in the region. Such a regional (European) effort has
been initiated during the project development process through the exchange visits to Lake
Geneva and Lake Constance, amongst others. In part, this dissemination process will utilize the
proposed binational secretariat as a repository and focal point for information on the protection
and conservation of the ecosystem. As suggested above with respect to the fiscal arrangements
for the project, delegation of such responsibilities to the Secretariat should help to hasten and
strengthen the process of formation of a truly binational commission for the management of the
Lake.

Key issue 4. Replicability. The implementation of demonstration projects as a key feature of this
project clearly contributes to the potential for replication of beneficial practices and techniques.
Further, the inclusion of mechanisms for disseminating information and results achieved fosters
replication of effective and successful measures throughout the region, and especially within the
participating countries. As identified through the Global International Waters Assessment
process and related initiatives such as the Lake Basin Management Initiative of the International
Lake Environment Committee Foundation (ILEC), GEF International Waters projects are a
primary means by which basin-scale management practices are being developed and
implemented through the world. These initiatives have endorsed the development and
implementation of information sharing mechanisms at both the regional and global scales--in
part, through the global IW-LEARN initiative. This endorsement underlines the importance of

35

---

information sharing and dissemination between projects, a fact that is adequately and clearly
identified within the project brief for this project. Nevertheless, it is recommended that this
project seek to ensure the dissemination of lessons-learned in the broadest possible manner.

The project document suggests that the proposed activities will continue to embrace the concept
of project twinning as one mechanism to enhance exchange of knowledge and experience. As
recognized within the project brief for this project, there is considerable complementarity
between this project and the projects currently being implemented in the eastern Mediterranean
Basin. The inclusion within the Project Document of establishment of explicit linkages between
projects is wholly consistent with this concept. Such communication will enhance the
replicability of the project outputs and the results of the project, significantly contributing to the
coordinated and comprehensive management of the Aegean Sea and Mediterranean Sea basins.

Key issue 5. Sustainability of the project. The project executive summary indicates that a
significant element of the sustainability of the project supported interventions rests upon the
implementation of the EU Water Framework Directive and related initiatives. In addition,
country-level actions in support of the project are identified as indicative of a commitment to
ongoing support of project actions and activities, beyond the immediate period of project
implementation with GEF support. The project brief acknowledges a number of incentives for
the participating countries to provide the necessary resources beyond the project period,
including their participation as signatories to the Ramsar Convention. Further, the project
proposes to address another key element in the provision of adequate resources to ensure the
future sustainability of the project-supported interventions; that is, the availability of
information, the development of a trained cadre of individuals, and the strengthening of
appropriate institutions with the knowledge and ability to implement actions to protect the Lake
environment. To this end, the project document sets forth an array of financial and other
mechanisms, both in-hand and proposed, to ensure the sustainability of the land- and water-based
elements proposed to be developed during the project. These mechanisms include various
bilateral financing arrangements as well as grass roots activities designed to sustain the project
actions beyond the period of application of GEF funds. To a great extent, the to-be-determined
stakeholder participation element will be critical to the long-term sustainability of the project,
particularly those relating to future environmental challenges and threats.

Key issue 6. Targeted Research Projects. Targeted technical demonstration and capacity building
projects are key features envisioned within the GEF International Waters Waterbody-based
Operational Program. These activities are clearly included as major elements of this proposed
project, primarily under Component B which is focused on the use of targeted surveys as the
means of determining and identifying appropriate and applicable management measures to
quantify emerging issues (such as avian influenza that is in part spread by waterfowl), and
Component C which is focused on improved environmental management.

There is also provision within the project brief for creating and implementing an on-demand
small-grant program that would support creation of capacity and strengthening of academic and
research institutions in the Basin. Implementation of these provisions is strongly recommended.
The interventions, funded in part by the GEF, strive for sustainability and the continuation of
successful interventions beyond the project period. For this reason, it is most important that the
lake and watershed management measures identified by the project be internalized within the
appropriate ministries such that they continue to be implemented over the longer term. Likewise,

36

---

it is equally important that the demonstration projects continue to be monitored, and the results
reported using the information dissemination mechanisms previously identified, beyond the
project period. Such continuity is totally consistent with the catalytic nature of the GEF, and an
essential element to the sustainability of the project. Capacity building and trainer training,
envisioned in the project brief, thus become the basic building blocks upon which this project
will succeed or fail, both from the point of view of its sustainability and from its scientific and
technical integrity.


Secondary Issues

Secondary issue 1. Linkage to other focal areas. This project is formulated as an International
Waters project under OP 8 of the GEF Operational Strategy. While no specific cross-cutting
areas are identified, the project clearly has linkages to the cross-cutting area of land degradation
in terms of its focus on land-based activities and to the protection of aquatic biodiversity in terms
of its focus on fisheries.

Secondary issue 2. Linkages to other proposals. The project recognizes the complementarities
between the management of Lake Skadar-Shkodra and other GEF-related initiatives in the
region. Indeed, actual linkages were explored and strengthened during the period of project
formulation. Specific linkages with these projects are proposed and identified in the project brief.
Where such linkages are based upon project development initiatives, this reviewer recommends
that the project team seek to maintain ongoing contacts with relevant sister institutions during the
period of project implementation and beyond. As noted above, such linkages include contacts
with the Lake Geneva and Lake Constance organizations, among others.

In addition, the project proposes to make use of IW-LEARN. Such an overt linkage provides a
high degree of sustainability and connectivity to this project, and contributes to the likelihood
that lessons learned can and will be transferred beyond the project boundaries to other, similar
situations and locations within the Mediterranean region and beyond.

Secondary issue 3. Other beneficial or damaging environmental effects. The project has no
known or obvious damaging environmental impacts associated with the activities proposed to be
executed. The beneficial impacts of the project have been fully articulated above, and include the
identification of alternative methods for achieving a high quality lake environment through
targeted interventions that address both chronic land-based sources and catastrophic lake-based
events that contribute to the degradation of the Lake and its resources. The provision of trained
staff and institutional capacities needed to enforce and enhance existing environmental
protection regulations, and the dissemination of successful management measures further
contribute to the benefit of the Lake and its drainage basin. All of these benefits accrue not only
within the project area, but, as a result of their wider dissemination using the electronic and other
media provided, also to the wider river basin and beyond.

Secondary issue 4. Degree of involvement of stakeholders in the project. Component C of the
project is geared toward the involvement of stakeholders. Involvement of the wider public is
catered for through an information system established by the Regional Environment Center and
other media. Active stakeholder participation is encouraged through the committee and working
group structure to be created under Component A. Unfortunately, there are few additional details

37

---

as to the participants proposed to be included. That said, the project brief does allude to the
participation of the relevant regulatory agencies and ministries in the execution and
implementation of the project activities, and the project explicitly indicates support for capacity
building and institutional strengthening with respect to these organizations. Such involvement is
in addition to the current level of involvement of the country- and local-level institutions, and is
critical to the sustainability of the project and its expansion into areas not specifically involved in
the demonstration projects.

Secondary issue 5. Capacity building aspects. Components A through C are aimed in part at the
acquisition and dissemination of information on the successful measures to protect the Lake
environment through the creation of appropriate institutions (Component A), conduct of targeted
research and monitoring (Component B), and the training of agency staff and strengthen
institutions (Component C). In addition, Component A, in part, seeks to encourage dissemination
of lessons learned with respect to lake and watershed management practices. These elements
should be implemented in conjunction with complementary GEF International Waters initiatives,
including the best practices data base being compiled by the United Nations Environment
Programme (UNEP) and the IW-LEARN initiatives being executed by the United Nations
Development Programme (UNDP). These efforts will enable wider dissemination of knowledge
of practices that have positive effects. Such knowledge is an essential element in building
capacity and strengthening institutions in the region.

In addition to the dissemination of knowledge and information, the proposed development of
standard methods for analysis and impact assessment will benefit institutions and staff
throughout the region. In this regard, Component B contains work elements that are likely to be
aimed at establishing a certification process for laboratories, common standards, and reenforced
institutional capacity within the region. Maintaining such standards and certification requires
trained individuals, actively and conscientiously applying their knowledge and skills for the
public good.

Secondary issue 6. Innovativeness. Development of appropriate management practices governing
the protection of the Lake environment, within the context of an integrated land- and water-based
management program, demonstrates a strong desire that the results and outputs of this project
reflect the state-of-the-art with respect to the integration of lake management and economic
development in transboundary inland lakes. By creating and strengthening the appropriate human
resources, institutions, data acquisition and dissemination systems, and shared management
mechanisms, the project team has clearly attempted to develop a management program that will
be accepted by the basin governments and stakeholders. While many of the actions and
approaches reflect state-of-the-art practice, their application in the Lake Skadar-Shkodra Basin
will significantly advance current practice in that specific Basin as well as within the region as a
whole. In this manner, the project promotes innovation and development of regionally applicable
remedial practices and experiences.

General Conclusion and Recommendations

Overall, it is the conclusion of this reviewer that the proposed project, with the goal of "Lake
Skadar-Shkodra Integrated Ecosystem Management", is wholly consistent with the GEF
International Waters operational program, its broader philosophy, and funding criteria.
Consequently, this project is recommended for funding.

38

---

In completing the Project Executive Summary and GEF Council Work Program Submission, the
reviewer recommends that each of the Components be elaborated so as to clearly summarize the
following elements of each activity; namely, (1) the objectives of the Component, (2) the results
or outcomes that this Component is intended to achieve, (3) the outputs or deliverables to be
generated by the activities carried out under the Component, (4) indicative activities to be
conducted, (5) the costs broken out as GEF funds requested, local share provided, and total cost
of the Component, and (6) an indication of the likely stakeholders targeted to be participants in
executing the activities. This information, to the extent that it is presented, is currently scattered
throughout the document or indicated as an expected outcome of the project Appraisal process.
The likely participants are not clearly identified, and the activities and component costs are
shown in some detail only in Annex A, the Incremental Cost Analysis.

In implementing this project, the GEF Implementing Agency is enjoined to give consideration to
strengthening the role of the binational Secretariat by centering project management, including
financial management, and monitoring within this Committee. Such strengthening could
accelerate the ability of the countries to create a River Basin Authority, pursuant to the EU Water
Framework Directive, and contribute to the creation of lasting working relationships between the
binational entity and the national ministries having responsibilities for the management of Lake
Skadar-Shkodra.


IA Response to STAP Review:

1. The above STAP review relates to an earlier version of the project and some aspects are no
longer directly relevant to the current project proposal. The following responses to the STAP
review also pre-dated the redesign of the project.

2. The STAP Reviewer's main suggestion is that all GEF funds should be channeled through the
binational Secretariat, rather than just the funds that will finance jointly implemented activities.
The proposal is that this would strengthen the Secretariat and potentially accelerate the creation
of a permanent transboundary institution. While the objective is good, the proposal to channel
all funds through the Secretariat is not realistic. This Secretariat does not currently exist and it is
not certain what legal standing it will have, particularly during the early part of the project.
During project preparation it has been agreed that establishment of transboundary institutional
structures needs to be done through a phased approach, giving them successively greater
mandate and responsibilities as their specific roles are clarified, agreed and approved by the two
Governments. It should also be borne in mind that the permanent institutional structure may be a
formal coordination mechanism, rather than an implementing body. Finally, it is now Bank
policy to mainstream project implementation responsibilities within regular government
structures and to avoid the creation of independent "Project Implementation Units." We believe
we can make a successful case for giving the bilateral Secretariat responsibility for
implementing some activities in order to achieve coordination and efficiency (e.g. procurement
of equipment which will be the same for both countries), but according to WB policy the bulk of
national level activities should be implemented by the respective responsible government
agencies.


39

---

3. The STAP Reviewer also noted that the PAD could include more information regarding civil
society organizations and other stakeholders which will participate in the project. We have
included some more information on this aspect in Sections 3B and 4D of the PAD, to reflect
some of the information from the Social Assessments already carried out in both countries during
preparation. These assessments provided a starting point by identifying some relevant formal
and informal local organizations (e.g. fishermen's associations, religious organizations), and by
raising awareness about the project through public meetings and focus group interviews. The
PAD will be further strengthened based on the continued public discussions of the proposed
project, which will take place prior to Appraisal.

4. We note that the "small grants program" referred to on p. 6 of the STAP Review is actually
the competitive research grants program under Component B.

5. We have revised the Project Description section and the Results Framework to more clearly
identify the objectives, outputs, deliverables, activities and financing (GEF vs. other) for each
component, as indicated on p. 8 of the Review. However, we note that in keeping with WB
procedures, the PAD includes a Results Framework rather than a LogFrame, and that the former
does not call for a detailed breakdown of project activities. Detailed activity and cost
breakdowns are not normally part of a WB PAD, but they have been prepared and were used as
the basis for the more general descriptions and aggregate project cost tables presented in the
PAD.



c) GEF Secretariat Comments and IA Response

GEFSEC Comments October 21, 2003 ("Expected at Work Program Inclusion"):

GEFSEC Comments: The full project design, particularly Component 2, will take into account
the priority actions agreed in the SAP. The two documents (TDA, SAP) will be attached to the
brief.... The full project will implement actions to address the major transboundary concerns
identified during PDF-B (TDA). These actions will be part of the SAP ageed upon by the
countries also during PDF-B. The brief will clearly reflect this rationale, and include the TDA
and SAP as annexes.

Response: The completed TDA is being provided together with the Project Brief (main text
only; numerous detailed Annexes are available on request). The SAP is at an advanced stage of
preparation, and should be completed within 4-6 weeks. The project has been designed directly
to follow the priorities identified in the draft SAP (summary of strategic objectives and main
elements of SAP are being provided with the Project Brief. Draft SAP available on request).

GEFSEC Comment: Full project will provide assurances of the sustainability of (i) the joint
management institutional framework; (ii) the specific demonstrations
(Component 2).

(1) Based on project preparation work it has been agreed that the creation of a joint management
institutional framework should be a phased process, in order to ensure that it has wide support
and is sustainable. As a first step, the project will support the establishment of bilateral Working

40

---

Groups (WGs) focusing on several key objectives identified in the SAP, and a joint Secretariat to
support the WGs and the implementation of joint activities. One of the WGs will focus on
developing and putting in place a permanent institutional structure for joint management of the
lake basin. As indicated in the Results Framework and Monitoring Table, the two governments
will take over financial responsibility for this institutional structure by the end of the project.

(2) The comment regarding Component 2 is no longer relevant. While project objectives have
remained the same, there has been some evolution in the project design based on findings of the
TDA and the strategic objectives defined through the SAP process, as well as the declaration of
the Shkoder Lake Managed Natural Reserve in Albania to parallel the Skadar Lake National Park
in Montenegro. The original Component 2 ("Enhanced Integrated Natural Resources
Management and Biodiversity Conservation") now forms the main element of Component C
("Protected Area and Natural Resources Management"), which focuses on improving
effectiveness of planning and management of the two PAs and their biological resources, with
participation of local communities and other stakeholders. Public awareness and information
dissemination and exchange remain an important element as well, while ecological monitoring ­
essential for enhanced natural resources management and biodiversity conservation--has been
established as a separate Component B to facilitate transboundary joint design and coordinated
implementation. As explained in the Project Brief (Section 2 F), it is no longer proposed to
achieve these objectives through competitive small grants for demonstration projects. Economic
benefits for local communities will be supported through training and capacity building aimed at
giving people the knowledge and skills they need to obtain employment or to start up enterprises
relating to tourism and other sustainable use of the lake and its natural resources. A small grants
program is still under consideration, but will be included only if sufficient co-financing can be
identified prior to appraisal to bring the program up to a scale which would justify the expected
administration costs.

GEFSEC Comments: The full project will include specific mechanisms, and resources, for the
coordination with the other lake projects in the region (Ohrid, Prespa) and for the replication of
the pilot demonstrations (Component 2)... Coordination and exchange mechanisms among the
three Balkan Lakes GEF projects (Ohrid, Prespa, Shkoder) will be fully developed...
Consultation and coordination with UNDP (Prespa) will be established... The full project will
provide a better developed rationale for the whole "Balkan Lakes Program" highlighting the
many synergies to be achieved, and providing assurances that overlaps and duplications will be
avoided.

Coordination with other projects relating to transboundary lakes in the region is being achieved
through the "Petersberg Process," a joint initiative of the World Bank and the German
Government launched in 1998. The objective of the Petersberg Process is to facilitate an open
debate on the problems of transboundary water management and the development of an
integrated approach to resolving them. Phase I supported a series of Round Tables. Phase II
(launched in December 2005) will focus on cooperative operationally oriented activities,
particularly focus on cooperative operationally oriented activities in smaller catchment basins of
South Eastern Europe (see Section III A of the Project Brief). The Lake Skadar-Shkoder project
clearly falls within this framework. Other relevant ongoing processes to coordinate and ensure
exchange of experience among transboundary lake management initiatives in the region include
the Athens Declaration, the Global Water Partnership - Mediterranean (GWP-MED) and the
European Union Water Initiative/Mediterranean Component.

41

---

GEF comment: The project will adopt the IW indicators: process, stress reduction,
Env. Status, and report on them periodically.

Response: This will be addressed through the lake-wide joint ecological monitoring program
(Component B).

GEF comment: Full project will present a financing plan based on sound incremental
reasoning. Given the major domestic benefits that will be derived from the project, co-financing
will be substantially increased with respect to what indicated in the concept.

Financing plan and incremental cost analysis have been completed, although additional co-
financing may still be identified prior to project Appraisal. US$ 8.14 million of co-financing and
over $34 million of associated financing are being provided to achieve the important domestic
benefits


GEFSEC Comments April 24, 2007 ("Expected at Work Program Inclusion")

GEFSec Comment: The project does not fall within the GEF 4 draft strategic programs of the IW
focal area. Key indicators/outputs do not correspond to the draft strategic programs. There are a
number of budget items and activities which are not eligible under the IW focal area

Response: The project rationale and design, including key indicators/outputs have been modified
to better reflect the strategic objectives and focus of the revised IW strategy for GEF-4. The
project aims to assist Albania and Montenegro in accelerating the implementation of the
Strategic Action Program for the protection of Lake Shkodra, which the two countries have
recently adopted. As such, the project is consistent with Strategic Objective 1 of the IW 2007-
2010 Interim Strategy "to catalyze implementation of agreed reforms and on-the-ground stress
reduction investments to address transboundary water concerns". The project is also consistent
with the Strategic Objective 2 of the draft IW Strategy for GEF 4 "SO-2: To play a catalytic role
in addressing transboundary water concerns by assisting countries to utilize the full range of
technical assistance, economic, financial, regulatory and institutional reforms that are needed",
and the IW Strategic Program 3 "Balancing over-use and conflicting uses of water resources in
transboundary surface and groundwater basin". . The project supports the introduction of
ecosystem-based approaches and Integrated Water Resources Management to help reconcile
development needs (e.g.: increased tourism, hydropower, navigation and agriculture expansion)
with ecosystem sustainability. Excessive withdrawal and/or pollution of surface and groundwater
sources which feed the lake caused by increased economic development represent conflicting
uses of the water because they undermine the potential for delivering the lake environmental
services. The project aims to deal with current and imminent threats to the lake's water and
ecosystem in two key ways: first, by building political commitment for sustainable management
at national and local levels, and second, through direct interventions to reduce pollution from
point and non-point sources. In both cases, the project will build upon and supplement existing
initiatives of the two governments and other donors, primarily by strengthening the
transboundary dimension. Specific budget items/activities which were identified in upstream
meeting as not eligible under IW Focal Area have been removed from proposed GEF funding.


42

---

GEFSec Comment: The situation described in the TDA does not warrant placing a priority on
this project now... There is little urgency for action expressed in the TDA and SAP (status of
approval is unknown)... The potential competition seems to be off in the future and not
substantiated as being urgent

Response: The TDA indicates that the water quality of the lake has improved over the last 15
years due in great part to the collapse of most industry and commercial agriculture in the lake
basin during the economic and political transition period of early 1990s. However, the TDA also
indicates that the rapid and uncontrolled growth in residential and tourism facilities on the lake
shore and the revitalization and expansion of agriculture and industry of the recent years are
quickly reverting the trend towards water quality degradation (with increasing nitrate heavy
metals and other pollutants loads already reported from some locations). The TDA stresses the
urgency of putting in place preventive measures to prevent degradation that is already emerging
and is on the rise. Prevention is a valid strategy, is innovative, effective and efficient. The
project supports an integrated strategy that combines prevention with urgent investments in hot
spots to tackle both present and imminent threats.

The TDA also indicates that the greatest threats to the lake ecosystem come from proposed large-
scale infrastructure development that are under consideration in both countries, for hydropower
generation and navigation that would substantially and permanently lower the lake level and dry
out large natural wetlands. Approving the project at this time will reinforce for decision makers
the significance of the lake and the importance and value of maintaining its ecosystem. As both
countries are seeking rapid economic development opportunities, competition for water in the
form of pollution of inflowing waters and destruction of lakeside habitats is already going on and
rapidly growing. The TDA does stress that it is urgent to intervene now to support the two
countries in making choices for the use of the lake that maintain its environmental services in the
long run.


GEFSec Comment: ...little commitment for joint action is expressed in the SAP ­ for example a
joint basin institution or a treaty committing to join action like in other IW operations.

Bank Response: Both governments have recently approved the SAP and are in the process of
signing a Transboundary Agreement, which will be a legal instrument that commits both
countries to establish a joint Lake Management Committee and associated joint Working Groups
as a key implementation measure of the SAP. The proposed project will support the
establishment and operations of these joint institutions.

GEFSec Comment: There still seems to be a focus on biodiversity aspects and preventive work
in the project, with monitoring that is not normally funded by GEF unless there is some priority
transboundary concern identified and a measure is undertaken to address that. The monitoring
then becomes a case of monitoring the results of stress reduction.

Bank Response: The project has been designed to focus on the protection of the lake ecosystems
from pollution and unsustainable use. Protected Areas are inevitably mentioned in the Project
Brief because of the fact that the entire lake together with its shoreline areas is encompassed by
two legally protected areas (one in Montenegro, one in Albania), which are also both Ramsar
sites. This is clearly a positive factor as for sustainability of the project's impacts as it underlines

43

---

the commitment of both governments for protection and sustainable management of the lake. It
also simplifies project implementation because the respective PA Management Units have the
legal authority for planning, implementation and regulatory enforcement within the PA
boundaries (in consultation and cooperation with others such as Municipal governments,
Regional Environment Units, private landowners/residents, etc). The basic costs of PA
management and biodiversity protection support activities are included as government
contribution (mainly counted as baseline cost with a small percentage counted as project co-
financing), not for GEF Funding. GEF funding will be used to enhance the capability of the
lake's managers to carry out specific activities which are needed to counter identified threats to
the lake's water and ecosystem, and to achieve the project's objectives.

Similarly, costs of routine monitoring are government contribution (mostly baseline; small
percentage counted as project co-financing). GEF will support additional monitoring focused on
measuring identified stress reduction indicators (nutrients and heavy metals) and providing
mechanisms for transboundary coordination of monitoring and information exchange.

GEFSec Comment: The QER transmittal noted that there is less emphasis on the normal IW
components (less action is now included by the WB on legal and institutional frameworks).
Also... participatory protected area management at the village/community level is supported
which suggests this proposal should be submitted in the Biodi focal area.

Bank Response: The Quality at Entry Review carried out by the Bank as part of project
preparation suggested to shift some resources from capacity building towards direct investments
in water resource management and protection to make the project more result-oriented. This was
agreed with the governments and is reflected in the revised Project Brief. The project still
supports a significant amount of legal and institutional strengthening for transboundary
cooperation and we consider the shift towards on-ground investments a positive development in
line with the GEF IW strategy and our comparative advantage as a GEF implementing agency.
As indicated above, aspects related to biodiversity protection have not been included in the
project.

GEFSEC Comments April 30 2007 (Expected at Work Program Inclusion)

GEFSec Comment: The project is recommended for work program inclusion provided that the
proposal is resubmitted with a GEF allocation reduced to $4.55 million in consideration of the
fact that the notional allocation of $5 million included the agency fee, and is presented in OP9.

Bank Response: The financing plan has been revised to show a GEF contribution of $4.55
million.
The project is presented under OP9 to assist Albania and Montenegro in accelerating the
implementation of the Strategic Action Program for the protection of Lake Shkodra, which the
two countries have recently adopted.

GEFSEC Comments April 30 2007 (Expected at Endorsement)

GEFSec Comment: For appraisal consideration there should be greater emphasis on a joint
institutional framework for management of the lake basin. Also an indicator should be

44

---

established for developing such an institutional arrangement... to ensure an organization will
sustain joint management of the basin after GEF completes its work.

Bank Response: The joint management of the lake basin, including the joint institutional
framework, is a core element of the project. Through Component 1 the project supports the
establishment and operational functioning of a Bilateral Lake Management Committee (BLMC)
and bilateral Working Groups, and the respective indicator is shown in the Results Framework
and Monitoring Arrangements table. Key elements for the long-term sustainability of this body
will be evaluated as part of project appraisal and incorporated in the project design as
appropriate. This includes confirming the Governments' commitments to take on an increasing
share of its operational costs over the life of the project.

GEFSec Comment: The final project design will include an activity/component aimed at
establishing exchange and replication mechanisms among the three Balkan lakes GEF projects
(Shkodra, Ohrid and Prespa) including relevant issues in the Drin Basin...funding to Albania to
achieve coordination, replication and Drin basin management arrangements should be added and
included with funding and indicators for success in the final logframe.

Bank Response: The project could support the participation of the bilateral Lake Skadar-Shkoder
institutions in a Balkan Lakes network. Creation of the network itself and coverage of other
Balkan lakes however would need to be considered under a separate project.

GEFSec Comment: Support for national inter-ministry committees should be included and an
indicator regarding their effectiveness should be included as part of the new results management
framework for GEF IW. Likewise, cooperation with IW:LEARN, resources for participation in
IW:LEARN events and a website consistent with IW:LEARN guidance should be included in the
final logframe and budget.

Bank Response: The project already foresees the support of inter-sectoral, bilateral Working
Groups associated with the Bilateral Lake Management Committee, and this is reflected in an
indicator. Linkages with IW-LEARN will also be ensured as suggested.

GEFSec Comment: Monitoring related only to parameters associated with demonstration
interventions should be included to determine the water-related results of stress reduction
measures included in the project... Stress reduction demos from joint fisheries management and
toxics pollution reduction from a waste site are priorities according to the TDA and should be
subject of interventions in the final project.

Bank Response: Agreed about the monitoring indicators relating to stress reduction, but the
specific indicators and targets to be confirmed during appraisal. Interventions for fisheries
management and reduction of toxic pollution from the KAP waste site are included in the project
(under Components 2 and 3, respectively)

.

45

---