PROJECT EXECUTIVE SUMMARY

REQUEST FOR Council Work Program Inclusion

UNDER THE GEF Trust Fund


FINANCING PLAN ($)
GEFSEC PROJECT ID: 2688
PPG
Project*
IA/ExA PROJECT ID: RS-X1019
GEF Total
600,000
5,000,000
COUNTRY: El Salvador, Honduras, Nicaragua
Co-financing
(provide details in Section
PROJECT TITLE: Integrated Management of the
b: Co-financing)
Ecosystems of the Gulf of Fonseca
GEF IA/ExA

GEF IA/ExA: IADB
Government 90,000
1,990,000
OTHER PROJECT EXECUTING AGENCY(IES): N/A
Others 300,000
19,336,000
DURATION: 5 years
Co-financing
GEF FOCAL AREA: International Waters
390,000 21,326,000
Total
GEF STRATEGIC OBJECTIVES: IW-1 and IW-2
GEF
Total 990,000
26,326,000
OPERATIONAL PROGRAM: OP9 - Integrated
Land and Water Multiple Focal Area
Financing for Associated Activities If Any:

PIPELINE ENTRY DATE: March 2005

EXPECTED STARTING DATE: FEBRUARY 2008

EXPECTED CEO ENDORSEMENT: NOVEMBER 2007

IA/ExA FEE: US$ 560,000




CONTRIBUTION TO KEY INDICATORS IDENTIFIED IN THE FOCAL AREA STRATEGIES: The
project will contribute to the following targets and performance indicators established for
International Waters: (i) The Gulf of Fonseca, the only multi-national maritime body along
Central America's Pacific coast (3,200km2) and its tributary watersheds (21,000km2) will have a
trinational pollution and sediment control strategy agreed upon by governments and stakeholders
in El Salvador, Honduras and Nicaragua and measurable results in its implementation. Two of the
tributary watersheds are transboundary; (ii) strategic partnerships between the three countries,
including a Trinational Commission for the integrated management of the Gulf's ecosystems, and
financing institutions (Spanish International Cooperation Agency, Millennium Challenge
Corporation, Japanese International Cooperation Agency, IDB) will be in operation; (iii) 22% of
the entire area of mangroves and six major estuaries and deltas, including two Ramsar sites
contributing to the productivity of the Pacific Central-American Coastal Large Marine Ecosystem
(LME) under a locally-driven and nationally endorsed action plan contributing towards the targets
of the World Summit on Sustainable Development; and (iv) El Salvador, Honduras and
Nicaragua with innovative demonstration projects in fisheries and mangrove co-management,
cleaner production (including from shrimp aquaculture) and sediment control.
Approved on behalf of the Inter American Development 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.







Michele Lemay
Janine Ferretti
Project Contact Person
ExA Executive Coordinator
Date: March 22, 2007
Email: michelel@iadb.org
Phone: 202 ­623-1838

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1.
PROJECT SUMMARY

a) PROJECT RATIONALE, OBJECTIVES, OUTCOMES/OUTPUTS, AND ACTIVITIES.
1.1. Project rationale
The Gulf of Fonseca is situated along the Central American Pacific coast, bordering the Republic
of Honduras to the North, the Pacific Ocean to the South, the Republic of El Salvador to the west;
and the Republics of Nicaragua and Honduras to the east. It is a tropical estuarine system
belonging to the Pacific Central-American Coastal Large Marine Ecosystem and made up of a set
of interrelated ecosystems, such as interior estuaries, mangroves, and continental and island
coasts encompassing an area of 3,200 km2. Mangroves occupy 1,100 km2, accounting for
approximately 22% of the entire area of mangroves along the Pacific coast of Central America.
Six main tributary watersheds and other smaller ones cover an area of approximately 21,000 km2.
The Goascorán and Río Negro watersheds are transboundary, the first shared by El Salvador and
Honduras, the second by Honduras and Nicaragua. Along with the Gulfs of Guayaquil, Nicoya,
Chiriqui and Panama, the Gulf of Fonseca is one of the most important tropical coastal systems
along the Eastern Pacific Ocean in Latin America due to the size of the estuarine complex and
mangrove belt and its proximity to areas with high concentrations of nutrients such as seasonal
upwellings and seamounts. Similarly, it is also considered as one of the most biologically rich
maritime areas of Central America and provides spawning, nursery and feeding areas for a range
of species of fish, shellfish, including stocks that have traditionally supported the most productive
artisanal fisheries in the region. Given its physical and ecological characteristics, the Gulf also
accounts for a significant share of shrimp farmed in Central America, an important source of
revenue for all three countries.
There are two Ramar sites in the Gulf of Fonseca. The mangrove portion of the Mesoamerican
Biological Corridor in Honduras (69,711 ha) was designated Ramsar site #10001 in 1999 due to
its importance as shelter to migratory and resident birds, and as spawning, reproduction, and
feeding areas for turtles, crustaceans, mollusks, and fish. In 2001, the Estero Real and Llanos de
Apacunca deltas in Nicaragua (81,700 ha) were also designated Ramsar site #11362, as they were
considered crucial for conserving the water resources of the region and habitats for species whose
conservation is of global importance. The mangroves, in addition to work as a mean of economic
sustenance, serve as filters as they retain contaminants from the mainland, retain sediments, and
provide a first line of protection against coastal erosion and the impacts of tropical storms which
are frequent in the Gulf region.
The area of the Gulf of Fonseca includes ten Protected Natural Areas under co-management
agreements in Honduras, four in the coastal marine zone of Nicaragua, and two in El Salvador.
The integrity of the Gulf's coastal and marine ecosystems and the tributary watersheds to which
they are directly linked, contribute to regional and global benefits. They also raise complex
transboundary considerations for sustainable fisheries, pollution and sediment control that call for
a vision shared among all three countries of the Gulf's future development and innovative action
at the local level to attain that goal.
The estimated population of the Gulf of Fonseca region is more than 750,000 persons, distributed
across 19 coastal municipalities. To a large extent, local residents meet their needs by directly
using the goods and services provided by the Gulf. Indeed, the majority of the economically
active population in the Gulf's region3 depends on primary sectors, with subsistence agriculture

1 http://www.ramsar.org/sitelist_order.pdf
2 Ibid.
3 Honduras 180,000 persons, Nicaragua 84,400 persons, El Salvador 45,600 persons.

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and artisanal fishing in the coastal zones being the leading sources of employment. During the
last decades, new productive activities such as small factories and agro-industries have developed
with a focus on production of non-traditional exports such as shrimp farming, the production of
watermelon, melon, and cashews. Commerce and services' sectors have been showing a steady
growth rate in recent years, with significant increases in maritime shipping and overland
commercial transportation expected with the construction of the megaport of La Union ­ Cutuco,
El Salvador. The Transboundary Diagnostic Analysis (TDA) (Annex G) conducted for the project
confirms that: (a) most of the employment generated in non-traditional sectors are either
temporary or unstable with persistent high poverty levels reported that signify high dependence
on resources such as mangroves for fuelwood and fisheries for food security, and (b) agricultural
production systems (either subsistence or intensive) need to improve sustainable land
management practices and reduce agrochemical run-off, in light of their existing and potential
impacts on the Gulf's ecosystems.
There are approximately 20,000 artisanal fishers harvesting stocks of shrimp and finfish shared
by all three countries of the Gulf. In addition to traditional fishing practices, fishing for shrimp
post-larvae has increased in the last decade. This activity involves the use of toxics during the
process of collecting and sorting larvae to eliminate the accompanying by-catch, placing stocks
under additional pressure. As fisheries in the Gulf are market-driven with primarily open access
conditions, overexploitation is common. As a result, stocks of fishes and crustaceans are reported
to be declining based on volumes of catch, catch per unit effort (as well as the size of
individuals), while fishing pressure as determined by the size of the fishing fleet and number of
licensed and unlicensed fishers has increased. Shrimp aquaculture employs over 50,000 people,
primarily in Honduras and El Salvador, and its export value exceeded US$175 million in 2005.
While its economic relevance is undeniable, there is concern that the development and operation
of shrimp farms could cause negative effects on the carrying capacity of the estuarine
ecosystems4.
Despite the many existing national laws regulating activities that could affect the Gulf's
ecosystems, there are some gaps that need to be taken into consideration with a view of moving
towards legal frameworks that support effective, integrated management of the Gulf in a
trinational manner. These are related to: (i) the absence of either laws or regulations for land use
planning and management; (ii) overlapping and/or contradictory regulations for watershed
management; (iii) weaknesses in national Fisheries Laws that are often outdated and that fail to
incorporate the foundation for managing sustainable fisheries consistent with the FAO Code-of-
Conduct for Responsible Fisheries and international best practice for regulating coastal
aquaculture; and (iv) the lack of regulations on the coastal-marine zone (pollution, sedimentation,
dredging, filling).
In addition to the overlaps, contradictions and gaps, there are other factors that prevent the three
countries from working in a more effective manner in promoting compliance and enforcing the
legal framework relevant to the management of the Gulf's ecosystems. The main issues can be
summarized as follows: (i) limited institutional and financial capacity from key institutions for
promoting compliance (i.e., through economic and other incentives) and enforcing existing laws;
(ii) despite the existence of regulations, environmental infractions are not adequately penalized
due to poor monitoring and control given the scarce personnel for these duties; (iii) environmental
audits as well as environmental impact assessments for developments in the coastal zone do not
have a clear procedural framework for their application; and (iv) although there are existing
regional agreements between the three countries reflecting their commitment to cooperate in

4 Ward (n.y.) Evaluation of the shrimp farming impacts in the Gulf of Fonseca Region. See
http://pdacrsp.oregonstate.edu/pubs/technical/17tch/8HR2-2.pdf

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managing the Gulf's ecosystems, there is no existing regional cooperation framework in place
that can support coordinated action to address key threats within the Gulf.
1.2. Project strategy and approach
Based on the TDA and other complementary analyses undertaken for the project5, a series of
emerging and interconnected problems affecting the marine and coastal resources are threatening
the medium and long-term functional integrity of the Gulf's ecosystems. Some of these threats
appear to be relatively localized whereas others are common to the three countries or
transboundary in nature. These main threats are as follows:
Pollution. Organic matter derived from human and animal wastes without proper wastewater
treatment and contaminants from agrochemicals, aquaculture effluents and industrial wastes are
being discharged into the waters of the Gulf of Fonseca in significant amounts.6 Although data
comparable across the Gulf are limited, there is evidence of reduced dissolved oxygen levels
mainly in the estuaries during the dry season. Studies confirm that hydrodynamic conditions
along with trends in dissolved oxygen levels7, suspended sediments, nutrients, pathogens and
other contaminants are such that the farmed shrimp industry itself recognizes the need for auto-
regulation. As for other pollutants, the presence of residual pesticides and heavy metals in the
tissues of fish and other living organisms has been reported as a result of agricultural run-off. As
pollutants are transported downstream, they accumulate in coastal sediments and food chains,
affect the health of ecosystems such as wetlands and mangroves, and are carried across
boundaries by currents within the Gulf. They also have a direct impact on human health.
Sedimentation. Processes in the Gulf are closely linked to its tributary watersheds in all three
countries, and some processes have transboundary implications requiring regional cooperation.
One of these processes is sedimentation in coastal and marine ecosystems originating from severe
erosion upstream. The sediment loads discharged into the Gulf per watershed are correlated with
their stream flow, population, economic activity and land use. Based on results from other
watershed management projects in the Gulf region, deforestation in the tributary watersheds of
the Gulf is one of the main causes of severe erosion, soil loss and downstream sedimentation but
there are likely to be other physiographic and land use conditions contributing to the problem.
Although very limited monitoring has taken place, a model run in preparing the project indicates
that erosion potential may be higher in the low-lying sectors of the watersheds due to intensive
agriculture and limited vegetation combined with the higher precipitation intensities characteristic
of the Gulf's coastal zone. Applied research undertaken in similar circumstances indicates that
sedimentation can have several direct consequences on the Gulf's marine and coastal ecosystems,
many with transboundary implications. For example, increasing turbidity and reducing light
penetration in coastal waters can impede the development of submerged grasses that are critical
for the reproduction of marine fauna, including commercial fish stocks that are shared by all three
countries. Excessive sedimentation in nearshore areas can also lead to changes in the hydrology
of mangroves and eventual die-off. Very limited field data exist to help understand what portion
of sedimentation is human-induced rather than natural, to pinpoint those critical sub- and micro
watersheds contributing excessive sediment loads that affect the Gulf's ecosystems and to proceed
with a cost-effective approach where all three countries can tackle the problem in a cooperative

5 (http://envr.abtassoc.com/fonseca unsername: golfo; password fonseca
6 In rural areas only 10 - 20% of the houses have sewage treatment and solid waste is burned, buried,
dumped at unauthorized trash heaps, or disposed in the mangroves.
7 Persistent low dissolved oxygen levels result in the elimination or reduction of aerobic organisms,
particularly species with limited horizontal mobility such as post-larvae, interrupting their natural
maturation and interrupting the biological food chain.

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manner in an area covering approximately 21,000 square kilometers (total estimated area of all
tributary watersheds).
Overexploitation of fish and shellfish. Most of the living marine resources (shrimp and fish
species) are overexploited at levels ranging from 31% to 178% of the reference value used in a
detailed study of fisheries in the Gulf. The catch of wild shrimp post-larvae and the associated by-
catch above recruitment rates have placed significant pressure on all juveniles stocks in the
estuaries as well as stocks at sea. In the Gulf of Fonseca many species of mollusks and
crustaceans associated with the estuaries, mangroves and rocky reefs have been overexploited by
artisanal fishing, and have also been affected by the loss of habitats, sedimentation and pollution.
There are indications that artisanal fishing of shark is leading to their depletion, especially species
such as the black tip hammerhead sharks. In addition, the harvest of the most common fishes for
domestic consumption is above sustainable yields.
Transboundary conflicts among fishers. The depletion of coastal stocks within the Gulf has
translated to increasing disputes among artisanal fishers of the three countries who, to maintain
their capture levels, cross international boundaries, leading to the seizure of their product and
fishing gear. The unit of effort per catch has increased significantly in recent years, and fishers
are forced to invest more hours for the same catch and more money in fuel to reach fishing waters
further and further from the coast. Other confrontations are caused by the entry of commercial
(industrial) fishing boats in artisanal fishing areas and their use of drift nets, which reduce the
overall available catch.
Overuse of water resources. The agricultural and agroindustrial sectors make more intense use of
water during the dry season, placing pressure on surface and groundwater resources. For example,
in the lower part of the Choluteca river watershed, large tracts of land planted in melon for
export, watermelon, and sugarcane are irrigated, leading the surface and groundwater flows at the
mouth to be reduced considerably. In the mangroves and estuaries, fresh water flows maintain salt
concentrations at levels required for the survival and reproduction of species dependent on those
ecosystems. When freshwater flows are diminished due to the reduction of infiltration, overuse of
the resource, or both at the same time, higher salt concentrations have a negative impact on
productivity.
Habitat degradation. The coastal zone of the Gulf of Fonseca has been undergoing a process of
rapid land use change in the last several decades.8 A loss of at least 50% of mangrove forests
since the 1960s has been documented in the Gulf of Fonseca and is considered a priority threat.
The destruction of mangroves has resulted mainly from the construction of shrimp ponds (both
industrial and artisanal), uncontrolled exploitation for fuelwood, urban growth, and the expansion
of facilities for salt production. According to some studies, the largest-scale losses of mangrove
occurred in the 1960s and 1970s, mainly due to areas given over salt production, whereas those
occurred in the 1980s and 1990s were due to the establishment of shrimp farming. In relation to
the extraction of mangrove timber, studies done in the Gulf region have confirmed that the
poorest communities depend more on wood as a fuel. While encroachment of mangroves for
farmed shrimp production has slowed considerably, trends in mangrove deforestation persist due
to the increasing fuelwood demands of a growing population on a declining forest stock.9 Studies
have concluded that the mangroves of the Gulf of Fonseca are a shared resource crossing national
boundaries that requires coordinated efforts to allocate resource use rights, enforcement and the

8 See project document for summary tables of land use change.
9 Centro de Estudios Ambientales y Sociales para el Desarrollo Sostenible, CODDEFFAGOLF,
International Center for Research on Women, 2000. A Platform for action for the sustainable management
of mangroves in the Gulf of Fonseca.

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promotion of alternative to fuelwood. Mangrove and wetland losses across the Gulf translate to
losses in habitat for migratory bird species as well as species that use the entire Gulf as shelter.
The main root causes contributing to the deterioration of the trinational water body include:
Poor coordination between the involved countries, limited capacities and the absence of common
tools in order to co-manage the Gulf's resources with a regional perspective. While there have
been projects promoting initiatives across the Gulf, none to date have resulted in a functional tri-
national institutional framework that incorporates relevant national agencies, local governments,
civil society organizations and the private sector. Capacities for integrated coastal resource
management at the local, national and regional levels are limited, which is aggravated due to the
fact that El Salvador, Honduras and Nicaragua are at distinct stages of devolution of
environmental and natural resources management responsibilities to local governments. In most
cases, municipal responsibilities in coastal resource management (CRM) in the Gulf of Fonseca
are incipient. One of the challenges is to develop local capacities in step with the decentralization
process currently in progress in each of the three countries. The other challenge is to promote this
increased local responsibility in CRM while respecting considerations that are of national interest.
Common tools, such as information systems, monitoring networks and regional models are
lacking. Technical and operational capacities at all levels for using these tools for integrated
ecosystem management and planning in a coordinated and participatory manner, are incipient.
Absence of harmonized legal/financial mechanisms and planning instruments for guaranteeing
the sustainability of the Gulf's marine and coastal ecosystems. Although there are some
instruments for regulating human activities that affect the ecosystems within the Gulf, these are
limited primarily to the national level with little buy in locally, inconsistent across countries, are
not financially sustainable in the long term, and their enforcement is incipient. In addition,
incentive schemes for promoting compliance locally are lacking. This is the case, for example, for
open access artisanal fisheries and harvesting mangrove wood for fuel where there are no
incentives for producers to adhere to co-management plans without clarification of resource use
rights. Few common policies, plans or strategies have been agreed upon or implemented in order
to effectively address pollution control, sedimentation, transboundary conflicts that exacerbate
land and marine resource overuse, and habitat degradation. In part, none of these instruments
have been developed due to lack of opportune and updated environmental information about the
Gulf of Fonseca and its tributary watersheds, its trends, and current and future impacts under
different development and land use scenarios.
Limited sustainable alternative livelihoods. The Gulf of Fonseca is one of the poorest regions in
the Central American isthmus. Its population density is greater than the national average in the
three countries, and the majority of the inhabitants are settled either on the adjacent zones of the
main tributary river basins that drain the Gulf, or along its shores. As the majority of the
economically active population is dedicated to subsistence activities and is dependent on scarce
natural resources for food safety, fuel and other basic needs, poverty is widespread throughout the
Gulf in the three countries. Subsistence level users groups are poorly organized and have limited
opportunities to participate in the management of the resources they depend on such as in the case
of fisheries. Poor coastal communities and households have limited access to government
services, including support to enhance in a sustainable manner productivity and
commercialization. Improved markets, alternatives such as tourism are unlikely without a
coordinated effort to manage resources across the region.
The threats and root causes identified above point to the need for integrated coastal resource
management (CRM) of the Gulf of Fonseca. In this context, integration refers to the biophysical
and socio-economic linkages between the tri-national water body, the coastal zone and its
tributary watersheds upstream as well as the coordination (or vertical integration) between

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regional, national, and local governments and organizations. Under these circumstances, the
project's strategy for intervention considers factors crucial for sustainability including the
following: (a) it must build on a common understanding of the Gulf of Fonseca as a system,
shared by the three countries locally and nationally, with the purpose of ensuring that the existing
working relationships are strengthened over the course of the project. To that end, the project
incorporates two highly complementary features: (i) activities that build local capacities for CRM
across the three countries, with an emphasis on municipal governments and organizations; and (ii)
a high-level trinational decision-making process that strives for regional consensus and
cooperation for the integrated management of the Gulf as a means of addressing transboundary
environmental considerations10; (b) it must genuinely engage and promote ownership in the
project among actors involved in the three countries11 by means of practical activities that can
attain measurable field results that translate to both socio-economic and environmental benefits
in terms of sustainable, productive uses of coastal and marine resources and preventing
contamination and excessive sedimentation in the Gulf. In this regard, the project proposes to
work with the national environmental authorities and through the 19 municipalities and their
associations, civil society organizations, and educational institutions to carry out co-management
arrangements, demonstrate environmentally-friendly technology and best practices as well as
promoting an innovative model linking applied research, education and extension (see below); (c)
it must base concerted management decisions on scientific knowledge of both the tributary
watersheds and the Gulf's waterbody dynamics. The strategy thus incorporates Gulf-wide
decision tools that enable the three governments and stakeholders to pinpoint where scarce
financial and human resources are best invested.
The project intervention has emphasized cost-effectiveness by: (a) capitalizing on local resources
(i.e., existing entities located in and involved with the Gulf region, existing local facilities) and on
the consolidation of existing networks (i.e., for monitoring) and management tools (i.e.,
municipal development plans) thereby avoiding a more expensive intervention based
predominantly the creation of new entities and networks; (b) improving trinational coordination
and harmonization of management practices within the scope of existing agreements while taking
a phased, progressive approach to the formulation and negotiation of new agreements; (c)
directing measures and investments for sediment and pollution from the project as well as from
private, public and international cooperation stakeholders to those sectors and locations most
likely to have a positive measurable impact on the Gulf's ecosystems.
The project includes several features that are innovative regionally and for IW projects. These
include: (a) capacity building and the consolidation of tri-national alliances of coastal
municipalities (mancomunidades) and user organizations (e.g., fishers and aquaculture producers)
to facilitate interchanges, joint priority setting and participation in the regional policy-making and
planning initiatives (including the first multi-national coastal management plan for Central
America formulated through a process that is locally driven and nationally endorsed; (b)
development of a Gulf-wide fisheries policy with ecosystem-based fisheries assessment and co-
management as driving principles. Partnerships with specialized institutions such as the National
Oceanic and Atmospheric Administration (NOAA), the French Research Institution for
Exploitation of the Sea (IFREMER) and others are being sought to give the initiative
sustainability and ensure its scientific soundness. IDB has had successful experience in involving
IFREMER in sustainable fisheries initiatives elsewhere in Honduras; (c) a regional institutional
structure for implementation that promotes the integration of applied inter-disciplinary research,

10 This is coupled with a commitment that: (a) the negotiation of all formal agreements involve relevant parties including the
Ministries of External Affairs of each respective country; and (b) the trinational project will not address boundary
considerations.
11 Including stakeholders (inhabitants, mancomunidades, NGOs, among others) from the 19 coastal municipalities in the three
countries.

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field extension in coastal and marine resources management, and education as an adaptation of
the successful U.S. Sea Grant model. This would be the first pilot effort in Latin America; and
(d) development of a regional, interactive decision support model that links policy and investment
scenarios in the tributary watersheds with risk scenarios in the Gulf that can be used for various
regional applications including Strategic Environmental Assessments. Finally, the development
of the financial plan as a unified sustainable financing mechanism will ensure the sustainability of
the program.
While important funds have been invested in the Gulf, there has been a tendency to focus on
single productive sectors from a country-based perspective and not taking fully into consideration
the interrelated nature of the problems in the Gulf. In this context, cooperative and integrated
management of the Gulf can only be achieved by building a shared vision of the Gulf of Fonseca
as a maritime body linked to its tributary watersheds with coastal and marine resources
collectively used by the three countries locally and nationally, by engaging and promoting
ownership in the project among actors involved in the three countries by means of practical
activities that can attain quantifiable benefits, and by basing concerted management decisions on
scientific data of both the tributary watersheds and the Gulf's waterbody dynamics. Therefore,
this project responds to a series of agreements signed by the Governments of El Salvador,
Honduras and Nicaragua. Among others, in the context of Plan Puebla Panamá (PPP), the three
countries also selected the Gulf of Fonseca as a priority area for regional integration, and in 2004
asked the IDB to support the preparation of a GEF project that would promote the integrated
management of its ecosystems

1.2 Project goal, objectives outputs and activities
The global objective of the full GEF project is to contribute to the health of the trinational coastal
and marine ecosystems of the Gulf of Fonseca, one of the most important tropical coastal systems
and the only multi-national Gulf along the Eastern Pacific coast of Latin America. The objective
of the Project is to foster the sustainable use of the Gulf of Fonseca's marine and coastal
resources and the integrated management of its ecosystems through the support of a trinational
framework for cooperation.
The specific objectives are to: (i) establish and strengthen institutional arrangements for an
effective and participatory management of the Gulf's ecosystems; (ii) foster integrated planning
and regulatory management of coastal and marine resources in the Gulf of Fonseca; (iii) establish
decision-making systems for pollution and sediment monitoring, prevention, and control; and (iv)
support the promotion of livelihoods compatible with the sustainable use of the Gulf's resources.
The following results are expected from the proposed project:
Incremental result 1 - Institutional frameworks and technical capacities for regional
management strengthened: the Project will have the following main results: (i) technical and
operational capacities of key institutions and actors in the three countries that have
responsibilities and interests in the Gulf's coastal and marine ecosystems and tributary watersheds
strengthened in coastal resources management (CRM), monitoring, pollution and sediment
control and other key competencies for trinational cooperation; (ii) effective mechanisms for
cooperation at the trinational level established, including a functioning Trinational Commission
for integrated management the Gulf's ecosystems. This also includes the Gulf-wide Federation of
municipalities (MUGOLFO); (iii) local civil society networks spanning the Gulf strengthened to
ensure effective involvement in the project's activities and long-term cooperation; (iv)
information node for monitoring the Gulf of Fonseca consolidated.
Incremental result 2 - Effective coastal and marine ecosystem management measures endorsed
and implemented: the Project will have the following main results: (i) a plan for trinational

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coastal resource management (CRM) endorsed by all three countries and implemented under
local leadership. This will be the first such plan in Central America and it will include a `CRM
benchmark system' enabling local and national governments to gauge progress in CRM in the
Gulf region; (ii) specific policy for fisheries and aquaculture in the Gulf endorsed and
implemented by all three countries and artisanal fisheries co-management in place with at least
three cooperatives including voluntary by-catch reduction; (iii) sustainable financing mechanisms
designed; (iv) co-management arrangements for sustainable use of mangrove ecosystems in place
and mangrove ecosystems restored.
Incremental result 3 ­ Decision-making models for preventing / controlling pollution and
sedimentation in operation: the Project will have the following main results: (i) hydrometric and
water quality (including suspended sediment) monitoring network in the tributary watersheds
expanded, with data collection protocols harmonized in all three countries; (ii) bathymetric
information and monitoring of the atmosphere, the hydrodynamics and water quality information
within the Gulf updated; (iii) hydrological model of the tributary watersheds implemented and
enabling the countries have a common understanding of the relative contribution of pollutants and
sediments from distinct watersheds and micro-watersheds; (iv) hydrodynamics and water quality
model implemented and enabling countries to have a common understanding of the circulation of
pollutants and sediments in the Gulf; (v) pollution and sediment control regional strategy
designed and executed, with national and local investments in wastewater treatment, clean
production and watershed management aligned with agreed upon priorities.
Incremental result 4 ­ Sustainable livelihoods promoted: the Project will have the following
main results: (i) alternative income sources for local communities based on sustainable use of
natural resources and environmental services; (ii) demonstration projects to facilitate the adoption
and replication of sustainable production practices / alternative livelihoods; (iii) enhanced
knowledge in local communities on natural resource conservation and sustainable production
methods; (iv) awareness among the target industries of the competitive advantages of clean
production and sound environmental management (v) targeted sectors and industries adopt clean
productive practices.
To achieve the indicated results, the project includes the following components and activities:
Component 1: Institutional Strengthening for Regional Management of the Gulf. This
component will be achieved through the following activities: (i) strengthening the technical and
operational capacities of key stakeholders in regional and local institutions, as well as social
actors; (ii) reinforcement of the trinational coordination framework; (iii) enhancement of the
mechanisms for the involvement of the civil society in the Gulf's management; and (iv)
consolidation of the information node for monitoring the Gulf of Fonseca by linking in the local
and national information systems with a Regional one.
Component 2: Management of Coastal and Marine Ecosystems. This component consists of
the following activities: (i) design and implement a trinational coastal management plan for the
Gulf of Fonseca as a foundation for effective local Coastal Resource Management (CRM); (ii)
develop fisheries and aquaculture policy and co-management for the Gulf among the three
countries; (iii) enhancing the financial sustainability for the management and co-management of
the Gulf's resources; (iv) environmental restoration of mangrove ecosystems.
Component 3: Pollution and Sediment Prevention and Control /Decision-making Models. This
component will be achieved through the following activities: (i) expansion of the hydrometric and
water quality monitoring network in the tributary watersheds of the Gulf of Fonseca; (ii) update
of bathymetric information and establishment of monitoring the atmosphere, the hydrodynamics,
and water quality within the Gulf of Fonseca; (iii) implementation and start-up of a hydrological
model in the tributary watersheds of the Gulf of Fonseca; (iv) implementation and start-up of a

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hydrodynamic and water quality model for the Gulf of Fonseca; and (v) designing and execution
of a regional strategy for pollution and sediment control in the Gulf of Fonseca.
Component 4: Promotion of sustainable livelihoods. This component consists of: (i) sustainable
use of natural resources and development of alternative livelihoods; and (ii) support the adoption
of cleaner production in targeted sectors and industries.

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

In accordance with the Logical Framework (see Annex B), the outcome indicators to measure the
level of Project success at the Goal and Purpose level are described below:
Goal: Contribute to the health of the trinational coastal and marine ecosystems of the Gulf of
Fonseca, as well as the well-being of the population settled along its coastal zone and lower
binational tributary watersheds.
Outcome indicators three years after the end of the project:
The coverage of the mangroves is the same or has expanded compared to the current
extension (Baseline: Mangroves: 57,400 ha).
Land-based pollution is controlled or reduced as measured by Biological Oxygen Demand
(BOD) at the mouths of the major tributary watersheds (Baseline: estimated total BOD
170,000 kg/day at the mouths of the watersheds based on TDA).
Sedimentation in the Gulf of Fonseca is controlled or reduced compared with the current
estimated amount (Baseline: estimated total sediment discharges 23,000 ­ 116,000 tons/day
at the mouths of the watersheds).
The number of inhabitants living in the Gulf's area deriving at least 50% of their income
from environmentally sustainable activities and / or alternative livelihoods linked to the use
of marine and coastal resources has increased by 10%, compared to a baseline to be updated
through a survey in Year 1 (Baseline:20,000 artisanal fishers; 53,000 persons dedicated to
aquaculture; to be refined during year 1).
Purpose: To foster the sustainable use of the Gulf of Fonseca's marine and coastal resources and
the integrated management of its ecosystems through the support of a trinational framework for
cooperation.
Outcome indicators by the end of the project:
The Trinational Commission for managing the ecosystems of the Gulf of Fonseca is operating
efficiently as a participatory and representative regional cooperation structure (Baseline:
Amapala Agreement of 1993 calling for the establishment of a Trinational Commission is not
implemented)
Based on the Transboundary Diagnosis Analysis, the regional information node and its
models, the countries share systematically scientific information on the environmental status
and trends of the Gulf's tributary watersheds as well as its waterbody, so as to make it
possible to agree upon strategies/actions for pollution and sediment control prevention and
adaptive ecosystem management. (Baseline: In 2006 there is no harmonized monitoring
network or systematic exchange of data on water quality and sedimentation processes in the
Gulf or its tributaries, and existing information systems have limited coverage).
A set of policies, norms and procedures for the use of coastal-marine resources of the Gulf
will have been harmonized based on consensus, and their implementation will be monitored
using a common CRM benchmark system. (Baseline: in 2006 no specific policies by
consensus have been harmonized nor enforced between the three countries).

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Co-management plans for at least two overexploited shared resources (shrimp and fish) are
being implemented with fisher associations, local governments and organizations of each
country. (Baseline: There are no co-management plans for fisheries resources).
Assumptions: the project was designed under the assumptions that: (i) the governments from the
three countries cooperate in the development and enhancement of the legal framework, policies
and regulations for the integrated management of the Gulf.; (ii) there is political will in the three
countries to sign the Trinational Agreement and ensure the Commission's continuity; (iii) the
priority of the key stakeholders in the three countries is maintained with regard to the sustainable
development of the Trinational Gulf of Fonseca; (iv) there is sociopolitical stability in the Gulf of
Fonseca region, that enables to improve the conditions for integrated ecosystem management; and
(v)
the trinational agreements established for the joint management of the ecosystems of the
Gulf of Fonseca remain in place.
Risks: The success of the project in achieving its global objectives faces three risks: (i) a political
risk associated with boundary considerations between the three countries which could cause
delays in execution and affect activities aimed at harmonizing policies, norms and procedures for
ecosystem management. This risk was recognized at the outset during the preparation process,
and the three governments agreed that the project's scope would not encompass or intervene in
boundary considerations. All three Ministries of Environment have undertaken to ensure that the
appropriate national entities are consulted in a timely manner on any consideration of concern
deemed to be beyond the scope of the project. In addition, several formal agreements exist
between all three countries that recognize the need for trinational cooperation in managing the
Gulf of Fonseca. Despite these measures however, the risk is considered on-going; (ii) a risk
associated with large infrastructure developments in the coastal zone (both planned and in
construction) such as the new Port of La Unión-Cutuco, that may lead to increased immigration,
commercial maritime and land-based transport, and associated industries which, if not planned.
These could trigger increased maritime traffic and rapid land use changes that exceed the gradual
capacity building of national and local governments in coastal resources management financed by
the project, possibly causing unforeseen local and transboundary impacts on the Gulf'
ecosystems. Hence, the importance of project activities in Component 1, such as the
enhancement of mechanisms for the involvement of the civil society in the Gulf's management,
as well as those considered in Component 4, which seek to work in coordination with the
different productive actors in the zone to secure their commitment to conservation of the Gulf's
ecosystems; (iii) finally, to a large extent, the success of the project will depend on the
availability of the co-financing resources and the commitment of the national governments in
allocating their human resources at the right time. The national governments have pledged their
support to the project's activities. Additionally, negotiations with other potential donors took
place during project preparation and final commitments will be received by all the involved
institutions by the time of CEO Endorsement.

2.
COUNTRY OWNERSHIP
a) COUNTRY ELIGIBILITY
El Salvador, Honduras and Nicaragua ratified the Convention on Biological Diversity on 18
September 1994, 31 July 1995 and 20 November 1995 respectively. All three countries are
eligible for GEF financing.
b) COUNTRY DRIVENNESS
This project responds to a series of agreements signed by the Governments of El Salvador,
Honduras and Nicaragua. In 1993, the Presidents of the three countries signed the Amapala

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Agreement, where they affirmed their interest in conserving and preserving the Gulf due to its
importance for each country. In 1999, the Regional Environmental Plan for Central America
(PARCA) was approved as a result of the ALIDES12, and the objectives and components of this
project coincide with the thematic and instrumental lines of the new PARCA for the period 2005-
2010. In 2002, El Salvador, Honduras and Nicaragua were among the seven countries that signed
the Convention for Cooperation in the Protection and Sustainable development of the Marine and
Coastal Environmental of the Northeast Pacific under the Regional Seas Program. Signatory
countries recognized as priority problems many of the threats being addressed by this project.
In the context of Plan Puebla Panamá (PPP), the three countries also selected the Gulf of Fonseca
as a priority area for regional integration, and in 2004 asked the IDB to support the preparation of
a GEF project that would promote the integrated management of its ecosystems. As a part of
developing the present proposal, a donor roundtable for the Gulf of Fonseca was held at Zacate
Grande Island, Honduras in 2005. The Ministers of the MARN, SERNA, and MARENA signed
the Declaration of Zacate Grande, where they agreed to push forward a trinational coordination
initiative for the integrated management of the Gulf, with the aim of managing this important
ecosystem in a sustainable manner as a means of enhancing their countries' development with a
regional perspective. The Declaration recognizes that the achievement of this goal will require a
consolidated effort on the part of all donors, including complementary financing for the non-
reimbursable GEF funding. Finally, again in the context of the Puebla-Panamá Plan, in April
2006 these countries ­alongside the rest of the Central American Countries-- signed the
Voluntary Agreement for Sustainable Environmental Conduct, that in relation to international
waters, stated that the projects, plans and programs that can affect these transboundary bodies
must ensure the establishment of agreements or understanding among the parties, as is the case of
this initiative. With the endorsement of the involved Governments and in cooperation with the
Central American Commission on Environment and Development (CCAD), the IDB agreed to
support the formulation of a trinational initiative for the Gulf of Fonseca.
The proposed project is also consistent with national strategies, policies, regulations and action
plans in the three countries. In Honduras, the project is in line with several of the guidelines
presented in the National Environment Policy with regards to the ecosystem conservation
objective, which stipulates that water resources should be managed in an integrated, decentralized
and participatory manner. Additionally, the National Watershed Management Strategy, the
National Poverty Reduction Strategy, the General Environment Law, the Water Law and the
Poverty Reduction and National Sustainable Development Plan (2006­2010) also support the
activities to be developed by the project. In relation to sectoral policies that look for regulating
the pesticides run-off from the agricultural practices, the project is aligned with what is included
within Priority Measures of the Agroforestry Sector 2004­2008 and the Agro-Nutritional and
Rural Areas Policy. In El Salvador, the project objectives are consistent with the National
Environment Policy and the Environmental Law, which promotes the sustainable management of
natural resources. The National Action Plan to Combat Desertification and Drought has
highlighted the Governmental responsibilities in promoting the development of rural areas,
supporting farmers and agricultural enterprises in accomplishing efficiency and sustainability in
productive sectors, as well as the Law for the Control of Pesticides, Fertilizers and Agrochemicals
aims to promote the regulation in the use these type of substances. In Nicaragua, the Government
promulgated the Environmental Policy which serves as a frame fro the Environmental Plan 2001­
2005, that promotes the integrated management of critical areas that embraces several resources,
such as is the case of the Gulf. Additionally, the National Plan for Water Resources, Development
and Territorial Planning which involves the rational use of land and water resources, whereas the
General Environment and Natural Resources Law alongside the Soil Protection and Erosion

12 Central American Alliance for Sustainable Development.

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Control Law make reference to the need of supporting actions that will result in mitigation
measures related to the causes the of environmental degradation.
The Ministry of Environment and Natural Resources of El Salvador (Carlos José Guerrero
Contreras) signed the Letter of Endorsement dated on January 22, 2007.
The Ministry of Environment and Natural Resources of Nicaragua (Cristóbal Sequeira González)
signed the Letter of Endorsement dated on January 5, 2007.
The Secretariat of Environment and Natural Resources of Honduras (Patricia Panting G.) signed
the Letter of Endorsement at pipeline entry dated on November 1, 2004. Additionally, the
operational focal point indicated in an official communication to the Bank dated on March 22,
2007, their agreement with the technical content of the project. The Letter of Endorsement was
pending clearance from the Ministry of External Relations on a matter not directly related to the
project.
3.
PROGRAM AND POLICY CONFORMITY

a) FIT TO GEF FOCAL AREA STRATEGIC OBJECTIVES AND OPERATIONAL PROGRAM

The project has been formulated in accordance with the GEF Operational Program 9
Integrated Land and Water Multiple Focal Area, through the implementation of a more
comprehensive, ecosystem-based approach in managing the Gulf and their drainage basins, by
establishing and strengthening regional policies, institutional arrangements and capacity building
for its integrated management as a tri-national estuarine and marine system, improving the
management of tributary watersheds for pollution control and prevention, and supporting the
generation of environmental goods and services that can contribute to regional economic
development. The project will also contribute to two of the three GEF Strategic Objectives for
GEF-4 within this focal area: (a) the one related to catalyze implementation of agreed reforms
and on-the-ground stress reduction investments to address transboundary water concerns (IW-1),
via the implementation of the established Central American Regional Environmental Plan, the
Amapala Agreement (signed by the three countries), the regional fisheries policy and other
regional agreements by supporting harmonization of national policies and regulations, promoting
regional planning instruments, and leveraging investments in the recovery of regional fisheries
and other coastal resources and pollution control, and (b) the other related to expand foundational
capacity building to a limited number of new transboundary systems through integrated
approaches and foster replication through targeted learning for the IW portfolio (IW-2) by
means of promoting the dissemination and adoption of emerging issues for managing
transboundary waters in a cross-sectoral manner, and the establishment of the Tri-national
Commission for the Integrated Ecosystem Management of the Gulf of Fonseca, that, with the
support of the Central American Commission for Environment and Development (CCDA), will
serve as a first step towards establishing a permanent high-level institutional arrangement for
regional policy coordination and management of the Gulf.

b) SUSTAINABILITY (INCLUDING FINANCIAL SUSTAINABILITY)

In relation to the institutional sustainability, at the local level, the presence of a strong set of civil
society organizations in each country creates opportunities for local participation in the integrated
management of ecosystems and ownership of the activities promoted by the GEF IW Project. For
example, the Asociación Civil Trinacional del Golfo de Fonseca (ACTRIGOLFO) has laid the
groundwork for cooperative partnerships to attain local sustainable development. The institutional
assessment conducted during project preparation indicates that the 19 local governments of the

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Gulf have varying levels of capacity in local CRM. Nonetheless, most have municipal
environmental units and have had prior involvement with environmental management activities.
They will be the recipient of much of the capacity building to ensure their effective participation.
Institutional challenges arise in the consolidation of the Mancomunidad de Municipalidades del
Golfo de Fonseca (MUGOLFO), a process initiated previously by the PROGOLFO Project, but
which requires the support that this GEF Project plans to provide. At the national level, SERNA,
MARENA, and MARN have actively accompanied the process of designing the project and have
expressed their interest in working together to carry it out through their regional offices in the
Gulf area, and also with technical liaisons for the Project. The Ministries of Environment of the
three countries have expressed their interest in signing a high-level trinational agreement that
would constitute a platform for the Project's actions and for designing collaborative actions in the
long run for the coordinated management of the Gulf's ecosystems. The identification of CCAD
as the execution institution by the three ministries of environment was made based on the
regional political legitimacy and sustainable development mandate this institution has and its'
previous successful experiences with project execution supported by the execution unit. CCAD
has a unit for Coordination of Projects in Execution, that has implemented several projects
financed by multilateral and bilateral institution (USAID, SIDA, CIDA, DANIDA, Netherlands,
IDB, CABEI, WWF, FAO, Spain, UNEP and UNDP) including GEF projects (Reserva de
Biosfera Transfronteriza Corazón del Corredor Biológico Mesoamericano GEF/WB). The
institutional analysis of CCAD undertaken as part of the project preparation shows that CCAD
has adequate systems to manage funds and procurement processes.
The assessment made during preparation of the Project of the feasibility of attaining financial
sustainability ­so as to guarantee the long-term impacts-- indicates that there are major
challenges in connection with this task, as in the case of many GEF IW Projects (see Annex F).
Nonetheless, if the Project succeeds in diversifying the sources of financing so as to include self-
generated, external, as well as private sources, donors and the public sector, its financial viability
may be feasible. In this regard, one of the activities of the project includes the design of a
business plan for the Full-scale GEF Project, and the creation and operation of a unit to support
the investment that will undertake to raise resources for the project from potential private
investors and/or donors. The presence of consolidated industry in the region (such as aquaculture
in Honduras and Nicaragua) and of large-scale port infrastructure projects and associated
developments (such as the Port of La Unión in El Salvador) generate significant opportunities for
establishing partnerships between the public and private sectors for attaining environmental
objectives such as reducing pollution and sedimentation.
In terms of social and environmental sustainability, positive global environmental impacts are
anticipated, associated with the improvement in the quality of the surface waters in tributary
watersheds and coastal zones of the Gulf, as well as the conservation and restoration of critical
coastal and marine ecosystems such as estuaries and mangroves. In addition, the institutional
strengthening of the public entities at the national and local levels, as well as of the civil society
organizations involved in the Gulf's environmental management will have positive long-term
impacts. Local residents will also benefit from improved environmental conditions and enhanced
opportunities for sustainable livelihoods, augmenting the general wellbeing of the population.
Additionally, the involvement of key productive sectors and industries in the adoption of cleaner
technologies will help mainstream ecological considerations in the development agenda of the
Gulf. The inclusion of targeted groups such as women, youths and artisanal producers generates
conditions for increase the equity for minorities. It is important nonetheless, to note that the
current levels of poverty and unmet basic needs of the population pose major challenges in the
task of reducing pressures on the Gulf's ecosystems. Thus the Project's long-term success also
rests on its capacity for reinforcing economic incentives for environmentally-sustainable
productive activities that make it possible to improve the population's incomes.

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c) REPLICABILITY
Replication is an essential feature of the project, particularly given its connection with larger
scale projects in tributary watersheds of the Gulf such as the IDB-financed MARENA project in
Honduras and Millennium Challenge Corporation project in Nicaragua. In these two instances
the objective is to transfer successful technological solutions for pollution and sediment control
demonstrated at a small scale to a much wider portion of the watersheds with a view of
reinforcing the linkages between decisions made in the upper parts of watersheds with processes
in the Gulf. Lessons learned on innovative methodologies can also be applied to other multi-
national coastal areas in Latin America such as: (i) institutional arrangements that promote the
involvement of municipalities and their federations in the integrated management of
transboundary watersheds and waterbodies of particular interest at the global and regional levels;
(ii) incentives to promote sustainable production and financial schemes / co-management
agreements for managing resources in a sustainable manner, with the involvement of the civil
society, of particular interest at a national level; (iii) support to the creation of innovative /
alternative livelihoods and ecosystem restoration, of particular interest at the local level.
Additionally, the project replication strategy will respond to the following intentions as follows:
(i) all the demonstration projects supported by the Project will be selected through criteria that
promote and ensure the replicability of the interventions; (ii) the models for pollution and
sediment prevention and control in the tributary watersheds will be disseminated through
international and regional working groups and forums, with the support of academic and research
institutions; (iii) the results of the feasibility for the Sea Grant model for the Gulf of Fonseca will
be the subject of a special event to discuss its applicability in others parts of Latin America; (iii)
the project will promote direct exchanges with other IW projects in Latin America (such as the
Uruguay/Argentina Environmental Protection of the Rio de la Plata and Its Maritime Front:
Pollution Prevention and Control and Habitat Restoration) and through IW:LEARN in order to
facilitate horizontal learning; (iv) the involvement of the public schools will be used as a means
of divulgating information and lessons derived from the project's execution within the
appropriate targeted population; (v) the project will proactively engage in dialogue with
legislation and policy makers at different levels, public / private institutions and productive
associations, as well as with community based organizations, with the view of examining
experiences in establishing multi-national coordination mechanisms that consider an ecosystem-
based approach.
d) STAKEHOLDER INVOLVEMENT
The process of designing this project involved a broad range of stakeholders who participate
actively in, and/or have an impact on the environmental management of the Gulf of Fonseca.
While the consultations carried out sought to reach out and involve the groups that participated
during implementation of the PROGOLFO Project, new actors were added based on the needs
identified. Three trinational workshops were held, one in each country, which included
representatives of the environmental authorities from the national and local levels, the productive
sectors, and the non-governmental organizations that work in the Gulf of Fonseca. In addition, a
trinational workshop was held focused on the local governments of the Gulf, which included the
participation of the mayors and/or persons in charge of the environmental units from 18 of the 19
coastal municipalities of the project's area of influence. To supplement that workshop, focus
group consultations were held to consult with local actors in each country, and two regional tours
in the context of which representatives of municipalities, non-governmental organizations, and
productive sectors were interviewed. Information dissemination and consultation will continue
during project implementation through the social communication strategy and environmental
education activities included in Component 1(c) as well as the Project website. Effective local
participation in Project activities is a cross-cutting element of each Component. For example, in

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Component 1, the Trinational Advisory Forum will provide a local venue for discussing and
providing feedback on project implementation. The formulation of the coastal management plan
(Component 2 (a), will use a participatory mapping technique that will directly involve local
governments. The CRM benchmark system will remain as a local tool for municipalities to
monitor progress and share experience in coastal management in the Gulf region. Co-
management of fisheries and mangroves offers multiple opportunities for producers to take active
part in activities such as inventories, registries, and restoration (Components 2 (b) and (c). In
Component 3, local governments will participate in collecting data for the models and in
assessing their results. Finally, Component 4 provides incentives for micro, small and medium
enterprises and industry to take an active role in maintaining the Gulf's ecosystems.

e) MONITORING AND EVALUATION

Throughout its lifetime, the impacts of the project intervention will be monitored using the
indicators generated by the TDA and described in the logical framework matrix (Annex B).
Within the first year of the project execution, the complete baseline of outcome and output
indicators will be consolidated and the detailed M&ES will be made operational (see Annex E).
The system will include three types of indicators: (i) process outcomes indicators such as the
publication of the Trinational Cooperation Agreement and the conformation of the Trinational
Commission for the Management of the Gulf of Fonseca Ecosystems; (ii) stress reduction
outcomes indicators such as those that reflect amounts of pollutants phased out, improved policies
/ regulations and progress in local CRM as measured by the CRM benchmark system; and (iii)
environmental / water resources status outcomes indicators, such as annual changes in water
quality measures at the hydrometric stations by the mouths of the respective watersheds. The
M&ES will be build on existing initiatives that have been developed by different stakeholders,
and will be located within the UCPR. Therefore, it is expected that the system will be internalized
in the existing institutions, involving their staff and other local organizations, in order to ensure
continuity after the life of the project. As indicated in Table 1 in Annex E, the total estimated
costs for monitoring and evaluation are US$ 400,000.

A mid-term evaluation will be carried out when 50% of the GEF resources have been disbursed
or after 30 months after the project contract goes into effect, whichever comes first. This review
will determine if the project strategy is performing according to the established objectives, or if
adjustments are necessary. In addition, a final evaluation is to take place when 90% of the GEF
resources have been disbursed to determine, among others, the extent to which the project
objectives have been reached, the level of stakeholder participation in decision-making, positive
changes in beneficiaries and practices due to the intervention, as well as sustainability and cost-
effectiveness. Both evaluations will place special emphasis on certain critical issues such as: (1)
how effective are the cooperation agreements and the process of designing and implementing the
coastal-management plan and the regional pollution control strategy, for bringing about a
consensus among the three countries on the strategic guidelines for the integrated management of
the Gulf?; (2) have the capacities for management and co-management of coastal-marine
resources been improving in the Gulf area?; (3) to what extent have the industries adopted clean
production technologies, and the communities internalized / diversified the sustainable use of the
ecosystems of Gulf of Fonseca and good practices in their productive activities, and what types of
socioeconomic benefits are being generated?; (4) has there been an improvement in the
dissemination of information, awareness-raising, and scientific knowledge of the Gulf of Fonseca
as a regional ecosystem, so that management decisions are being made on the basis of the best
available and accurate information?; (5) what are the trends observed in the ecological integrity of
the ecosystems of Gulf of Fonseca and how is the Project contributing to maintaining them?. The

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results of the evaluations, the lessons learned, and the good practices will be widely disseminated
and shared among the local and national governments, strategic local allies, co-financing
agencies, and other relevant actors nationally, regionally, and internationally, including efforts
financed by the GEF, through the Project's website and IW:Learn.

4.
FINANCING (for all tables, expand or narrow table lines as necessary)
a) PROJECT COSTS
Project Components/Outcomes
Co-financing ($)
GEF ($)
Total ($)
1. Institutional Strengthening for Regional
240,000 1,120,000
1,360,000
Management of the Gulf
2. Management of Coastal and Marine
1,589,000 1,666,000
3,255,000
Ecosystems
3. Pollution and Sediment Prevention and
6,756,000 1,380,000
8,136,000
Control /Decision-making Models
4. Promotion of sustainable livelihoods
11,751,000
500,000 12,251,000
5. Project management budget/cost
990,000
334,000
1,324,000
Total project costs
21,326,000 5,000,000 26,326,000

b) PROJECT MANAGEMENT BUDGET/COST*
Estimated
GEF($) Other
sources
Project total
Component
Staff
($)
($)
Weeks
Locally
recruited
personnel**
1,320
382,000 382,000
Nationally and internationally
520 334,000 197,000 531,000
recruited consultants***

Office facilities, equipment,

251,000 251,000
vehicles and communications
Travel

75,000 75,000
Miscellaneous

85,000 85,000
Total

334,000 990,000
1,324,000

* It is expected that a Project Executing Unit will be established with the following staff: Project
Coordinator, specialized in coastal and marine (including fisheries) management (260 weeks to be
funded by GEF***) with overall responsibility for project execution; pollution marine control and
prevention expert (260 weeks to be funded by GEF***) and national coordinators (660 weeks on
detail from SERNA, MARENA and MARN**) with technical responsibilities for components 1 and
2; monitoring and evaluation/social communications expert (220 weeks to be funded by co-
financing***); financial/administration manager (220 weeks to be funded by co-financing***) and a
project assistant (220 weeks to be funded by co-financing***). These are indicative figures and for
cost-effectiveness reasons, opportunities will be explored during project design to both take
advantage of existing structures and facilities (for example within the University of Zamorano).

** Refers to personnel on detail from SERNA, MARENA, and MARN and/or other participating
institution(s).

*** Although participation of national consultants will be promoted, IDB procurement policies does
not provide for ex-ante restrictions with regards to national vs international consultants to be
contracted with the GEF funds, but rather distinguishes between publication at the national and
international levels, depending on the amounts of the service contracts.




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C) CONSULTANTS WORKING FOR TECHNICAL ASSISTANCE COMPONENTS:
Estimated

Other sources
Project total
Component
Staff weeks
GEF($)
($)
($)
Personnel*
1,320
Local / international
1,432 1,177,000 608,000 1,785,000
consultants**
Total
2,752 1,177,000 608,000 1,785,000
* In the case of personnel it refers to the staff time of SERNA, MARENA, and MARN and other
participating institutions to accompany the technical assistance.

** These are estimated costs for the consultants required to provide technical assistance under the four
Project components. These will likely be a combination of individual consultants, firms and/or
specialized institutions that will be hired during Project execution. Although participation of national
consultants will be promoted, IDB procurement policies does not provide for ex-ante restrictions
with regards to national vs. international consultants, but rather distinguishes between publication at
the national and international levels, depending on the amounts of the service contracts. The specific
roles and functions of each consultant will be specified in the respective detailed terms of reference
and the Project's annual operational plans to be prepared during Project preparation and execution.

d) CO-FINANCING SOURCES13 (expand the table line items as necessary)
Co-financing Sources
Name of co-financier



Type
(source)
Classification
Amount ($)
Status
Governments
Nat'l Gov
In cash/in kind
1,990,000
Confirmed
MCC
Bilat. Agency
In cash
14,400,000
Confirmed
AECI
Bilat. Agency
In cash
4,000,000
Confirmed
JICA
Bilat. Agency
In cash
936,000
Confirmed
Sub-total co-financing
21,326,000


5.
INSTITUTIONAL COORDINATION AND SUPPORT

a) CORE COMMITMENTS AND LINKAGES

In addition to being aligned with the Bank's new Environment and Safeguards Compliance
Policy and its strategy for coastal and marine resources management, the Project is consistent
with the IDB's countries strategies for El Salvador, Honduras and Nicaragua. The main purpose
of the Bank's Country Strategy with El Salvador for the 2005-2009 term is to reduce poverty. In
order to achieve this goal, the strategy proposes two interrelated strategic objectives that are
consistent with the project: (i) To promote sustainable economic growth by increasing
competitiveness; and (ii) to strengthen human capital and improve opportunities for the poorest
segments of the population. It recognizes that it is necessary to foster a sustained acceleration in
economic growth, while at the same time improving access by the very poor to basic services and
optimizing the quality of these services, so as to provide the population with opportunities that
enable them to benefit more from the country's economic growth. This core commitment of the
IDB along with its investment program complements the proposed project in that it addresses
rural poverty, one of the fundamental causes of the degradation of the Gulf.

The Bank's strategy for Honduras is also focused on: (i) increasing the competitiveness of
productive activities; (ii) enhancing the development of human capital; (iii) strengthening

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


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governance. These three strategic areas are closely intertwined insofar as governance,
institutional development, and human capital development are crucial factors for increasing
competitiveness and sustainable growth that, in the case of Honduras is closely dependent on
natural resources.

The Bank's strategy for Nicaragua is founded on three strategic approaches. Under economic
growth, the strategy calls for promoting competitiveness and sustainable production. Under
governance, the Bank's strategy for achieving this objective covers three areas, all consistent with
the project: (i) establishing a suitable legal foundation for effective and efficient government; (ii)
undertaking sweeping actions to modernize and reform the three branches of government; and
(iii) making full use of technology. Under the third strategic area of productivity of the very
poor, top priority is attached to social and productive investments to benefit the very poor,
particularly under programs with very positive impacts in the short term.

The IDB is also financing projects that complement the Gulf of Fonseca project. For example, in
Honduras, the Natural Resources Management Program (MARENA), project in which IDB is
currently supporting the Government of Honduras in addressing land degradation through a
national watershed management program. The Reitoca and Verdugo sub-watersheds (located in
the upper parts of the Naocome watershed -- one of the main contributors of contaminants and
sediments to the Gulf) are included in the area of intervention. Actions that are being
implemented relate to forest fire control, soil and water conservation, including good agricultural
practices (see http://www.marena.hn for more information). This is a multi-phase loan and,
following the results of an evaluation expected in May, discussions are foreseen on a possible
second phase. In addition, the Bank is financing sanitation projects in some of the municipalities
of the Gulf of Fonseca (e.g., San Lorenzo and Choluteca) that are consistent with the project's
objective for pollution control from tributary watersheds.

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

The GEF Project Integrated Ecosystem Management of the Gulf of Fonseca has objectives that
complement other initiatives have been implemented, are currently being carried out in its area of
influence, or that are being drawn up, and therefore, it will seek both, to build on the existent
results and to generate synergies and complementarities, in an effort to have greater impacts.
These include the following projects. TheCoastal Ecosystem Conservation in the Gulf of
Fonseca Project (PROGOLFO), a joint regional initiative financed by the Danish Agency for
International Development (DANIDA), and carried out by the governments of El Salvador,
Honduras, and Nicaragua from 1999 to 2003 through MARN, SERNA and MARENA. This
Project sought to foster the sustainable development of the natural, socioeconomic, and
institutional resources of the Gulf by preparing a strategic framework for management and
development aimed at addressing the key environmental problems. One of the major
contributions of this effort was to generate a significant amount of information on the coastal
marine zone of the Gulf of Fonseca, that has been used as a basis for developing this new project.
Additionally, it helped to strengthen the involvement of governmental institutions, local
governments, NGOs in the participative design of a regional strategy for the Gulf's integrated
management. In 2003, the Regional Strategy for the Integrated Management of the Coastal and
Marine Resources in the Gulf of Fonseca (PROGOLFO) was signed by the three countries. This
Strategy has four priorities, which are coherent with the specific objectives of this proposal. The
priorities are: (i) strengthening of institutional capacity; (ii) coastal and marine resources
management; (ii) exogenous impacts mitigation (tributary watersheds); and (iv) economic and
social well-being. In 2004, the Strategy was endorsed by El Salvador, Honduras and Nicaragua.

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That year, the Governments requested the IDB's support for preparing a GEF project consistent
with the Strategy. The Environmental Regional Program for Central America (PROARCA),
through its component of Coastal Zone Management (PROARCA / Costas) executed its first
phase from 1996 to 2001, with resources from USAID. This component fostered the effective
management of marine and coastal resources in some Central American specific areas,
developing and sharing information, tools and methods for the integrated management of coastal
zones, at the time that it strengthened the international collaboration for the effective management
of transboundary coastal areas; Project for the Conservation of Coastal Ecosystems in the
Gulf of Fonseca, with funds from AECI-ARAUCARIA, with a period of execution from 2005 to
2010. At present, the project is performing baseline studies. Among its objectives, the present
initiative looks for complements the one related to foster the sustainable management, in an
integral and participatory manner of the ecosystems of the Gulf of Fonseca, so as to reduce
degradation and contamination, improve the availability and management of the natural
resources, resolve conflicts over access to and management of the natural resources, and ensure
access to natural resources so as to benefit the various sectors of the population". The Secretariat
of Agriculture is carrying out the Gulf of Fonseca Mangrove Management and Conservation
Project (PROMANGLE ­ Valle and Choluteca) and the Forest and Water Project (Choluteca); the
United States Millennium Account (MCC), through its agreements with each country, will be
carrying out activities for the productive sector and watershed management in the Gulf's area.
For example, in Nicaragua, the Millennium Account has accorded priority to the departments of
León and Chinandega for implementing the productive projects and management of watersheds
that include the Estero Real watershed.

c) PROJECT IMPLEMENTATION ARRANGEMENT

The framework for implementing the Project will seek to involve all relevant agencies and
organizations in all three countries involved in the management of the Gulf of Fonseca's
ecosystems, relying on temporary arrangements while progress is made towards establishing a
permanent framework for cooperation. The intent is to establish a Trinational Commission as
part of the project through a Cooperation Agreement. In the interim, the implementation structure
will consist of two parts: (i) the formal arrangements for project execution, including all
administrative and financial aspects which are not intended to exist beyond the period of
execution of the project; and (ii) the decision-making and participatory structure which is
intended to transform itself into a permanent framework for trinational cooperation for integrated
management of the Gulf's ecosystems (see attached diagram). The execution structure would
consist of CCAD through its Executive Secretariat, a Regional Project Coordination Unit and
Program Participating Agencies in all three countries. The decision-making and participation
structure would consist of a Regional Executive Committee, whose responsibilities would be
assumed by the Trinational Commission once established, a Trinational Advisory Forum, a
Regional Technical Committee and ad hoc committees are required and national supervision
units. The arrangements proposed will facilitate ongoing consultation and dialogue among the
government institutions, local governments, NGOs, scientific community, private organizations,
and civil society for decision-making regarding the project activities. Based on an analysis of
different options for trinational execution schemes and consistent with the Zacate Grande
Declaration, the three Ministries of Environment (MARN, MARENA and SERNA) have
identified CCAD as the regional institution that would take on a transitory role in the integrated
management of the Gulf of Fonseca while the trinational scheme is consolidated.14



14 This implementation framework is subject to final confirmation by all three countries during the appraisal mission.

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ANNEXES
Annex A:
Incremental Cost Analysis
Annex B:
Logical Framework
Annex C:
GEF STAP Roster Review
Annex C1:
IDB Response to STAP Review
Annex D:
Letters of Endorsement
Annex E:
Monitoring and Evaluation Plan
Annex F:
Financial Sustainability Analysis
Annex G:
Transboundary Diagnosis Analysis (in Spanish)
Annex H:
Commitment Communications
Annex I:
Aide Memoire of Consultations (in Spanish)


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