FUND EXECUTIVE SUMMARY
REQUEST FOR GEF COUNCIL SUBMISSION
GEFSEC PROJECT ID: 3025
FINANCING PLAN (US$)
IA/EXA'S ID: N/A
FIRST TRANCHE OF FUND
COUNTRY: East Asia Region
Proposed first tranche ................35,000,000
PROJECT TITLE:
Approved by Council.................25,000,000
World Bank/GEF Partnership Investment Fund
Additional financing requested..10,000,000
for Pollution Reduction in the Large Marine
PDF
Project
Ecosystems of East Asia (Tranche 1, 2nd
PDF A
Installment)
PDF B
10,000,000
PDF C
GEF IA/EXA: World Bank
GEF Total
10,000,000
OTHER PROJECT EXECUTING AGENCY(IES):
Co-financing*
National / local governments of East Asia,
GEF IA/ExA
48,600,000
World Bank, PEMSEA Regional Programme
Government
32,270,000
Office, Financial Institutions.
Bilateral
DURATION: 10 years
NGOs
GEF FOCAL AREA: IW
GEF STRATEGIC OBJECTIVES: Catalyze
Others
implementation of agreed reforms and on-the-
Co-financing Total
80,870,000
ground stress reduction investments to address
Total
90,870,000
transboundary water concerns
Financing for associated activities if any:
GEF OPERATIONAL PROGRAM: Contaminant-
Based Operational Program (OP10)
Pipeline Entry Date: 3/18/2004
IA / EXA FEE: $1,000,000
CONTRIBUTION TO KEY INDICATORS IDENTIFIED IN THE FOCAL AREA STRATEGIES: One of nine
planned GEF initiatives to catalyze finance for implementation of agreed actions in Strategic Action
Programs.
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.
Steve Gorman
Contact Person
GEF Executive Coordinator, World Bank
Mr. Robin A. Broadfield
Date: March 21, 2007
Tel. and email: 202-473-4355
rbroadfield@worldbank.org
1
FUND SUMMARY
a) Fund rationale, objectives, outputs, and activities.
Process
Further to successful application for work program entry for the World Bank/GEF Partnership
Investment Fund for Pollution Reduction in the Large Marine Ecosystems of East Asia (the
Fund) at the November 2005 GEF Council Meeting, the GEF Council is requested to approve the
balance of Tranche 1, in the amount of US$10 million:
Tranche 1 Total
US$ 35 m
Amount committed in Nov 2005
(US$ 25 m)
Amount outstanding and requested US$ 10 m
Progress of projects under the Fund
Since the initial submission (Nov 2005), the Fund has achieved considerable progress in
pursuing its overarching aim, which is to reduce land-based marine pollution of the large marine
ecosystems of East Asia, by cofinancing incremental activities within World Bank pollution-
related projects that demonstrate innovative approaches, disseminate lessons learned from them,
and promote replication of best practice. The Fund program has developed rapidly, and the first
instalment of the first tranche (US$ 25 million) is now fully committed as follows:
Table 1: Status of Projects under Tranche 1, First Installment
Project
Pipeline entry date Board date
GEF
Co-
financing
financing1
(US$ M)
(US$ M)
China Ningbo
5/1/05
6/29/06
$ 5
$ 140.10
China Shandong II
12/6/05
2/27/07
$ 5
$ 201.89
Philippines Manila
5/2/05
6/14/07
$ 5
$ 84.46
China Liaoning
11/16/05
6/14/07
$ 5
$ 187.502
Vietnam Coastal Cities
5/5/05
3/2/08
$ 5
$ 89.00
Total
$ 25
$ 704.46
Two of the above projects (China Ningbo and Shandong) have received Bank Board approval,
and are under implementation, while two projects are projected to be approved, and start being
implemented, in 2007 (Manila and Liaoning). One project (Vietnam) has started preparation
early in 2007, and is programmed for Board approval and implementation early in 2008.
1 According to Project Appraisal Document, if available, otherwise according to Project Concept Note. Represents
amount invested in wastewater and sanitation only.
2 Also includes solid waste component, as project will address water pollution caused by leachate from solid waste.
2
For the second instalment of the first tranche, for which this submission is made, two projects are
in the pipeline for preparation:
Table 2: Status of Projects under Tranche 1, Second Installment
Project
Pipeline entry date Board date
Second
Co-
Instalment financing
(US$ M)
(US$ M)
China Shanghai
9/18/06
6/1/08
$ 5
$ 26.87
Indonesia East Java
1/12/06
6/1/08
$ 5
$ 54.00
Total
$ 10
$ 80.87
Preparation of the China Shanghai project has begun, and the design of the East Java project is
under discussion with the client. Approval of the second instalment of the first tranche of the
Fund is therefore a priority so that GEF resources are available to co-finance these two projects.
The eventual GEF investment in the Fund is proposed to be $80 million over 10 years, and the
second and third tranches expected to be requested in FY08 and FY10. The GEF Council will be
asked to approve subsequent tranches subject to the Fund's fulfillment of its reporting and sub-
project processing requirements.
The Fund is conceptually modelled on the WB/GEF Nutrient Reduction Investment Fund for the
Black Sea/Danube Strategic Partnership, which was approved by the GEF Council on May 9,
2001 (GEF/C.17/7), and whose second and third tranches were approved in May 2002 and May
2003 respectively. The GEF allocated a total of US$70 million to the Black Sea/Danube fund
over six years.
Strategic Background
The Sustainable Development Strategy for the Seas of East Asia
In 1995, in light of the rapid but environmentally unsustainable economic development of the
East Asia region, and the equally rapid degradation of their marine resources, twelve East Asian
countries came together with a common vision to ensure the sustainable development of their
shared waters.3 This partnership of governments, with the support of the Global Environment
Facility (GEF), the United Nations Development Program (UNDP), and the International
Maritime Organization (IMO), created the Regional Programme on Building Partnerships in
Environmental Management for the Seas of East Asia (PEMSEA), a collaborative organization
of representatives of the coastal governments of East Asia.
One of the main achievements of the countries through their contribution to PEMSEA has been
the development and adoption of the Sustainable Development Strategy for the Seas of East Asia
(SDS-SEA), which was endorsed by each of the twelve countries in the Putrajaya Declaration on
December 12, 2003. The SDS-SEA is significant as it is the first, and the broadest, partnership
agreement in the region centered on the issue of managing the regional seas. SDS-SEA
attributes values to the seas of East Asia, identifies threats to the maintenance of these values,
3 The original twelve countries included Brunei Darussalam, Cambodia, China, Indonesia, Japan, DPR Korea, RO
Korea, Malaysia, Philippines, Singapore, Thailand and Vietnam. Two additional countries joined in 2005 (Lao PDR
and Timor-Leste) making a current total of 14.
3
and has developed a shared vision of actions that would serve to sustain, preserve and protect
these values for the future. While the SDS-SEA addresses priority issues in several sectors, it
has identified land-based pollution (particularly in hotspots) as the primary threat to the seas of
East Asia.
The impact of land-based pollution in the East Asia Seas is recognized as having regional and
transboundary significance because the ocean is a medium through which pollutants are
relatively easily transmitted. The impacts of land-based pollution, such as widespread
eutrophication, red tides, health hazards, and degradation of fisheries and spawning grounds, are
felt by all countries in the region.4 Furthermore, insofar as the seas of East Asia are a major
source of the world's demand for fishery and aquaculture products, and a major natural heritage
and biodiversity resource for the people of the world, these impacts have global significance.
The conclusion drawn by the countries of East Asia in the SDS-SEA that land-based pollution is
the primary threat to the sustainable management of the seas of East Asia is supported by other
analyses, including those of the World Bank and the region's Global International Waters
Assessment (GIWA), which was completed in 2005.
A large and diverse group of stakeholders each have a role to play in ensuring that the required
actions to reduce land-based pollution in East Asia's seas take place. These include: citizens and
civil society, national and local governments, the private sector, financial institutions and donors,
and international organizations. The first step in developing the necessary collaboration between
stakeholders has been led by the governments of the region, with the support of international
organizations such as the GEF, the World Bank, UNDP, the United Nations Environment
Programme (UNEP), and IMO. This intergovernmental collaboration has been exercised
through a series of regional projects that have focused primarily on analysis of the problems
facing the seas of East Asia, and planning for the necessary responses. Many of these initial
efforts have been supported by GEF, for example through the PEMSEA program and other sub-
regional, national and sub-national initiatives such as the UNEP/GEF South China Sea Project
and the UNDP/GEF Yellow Sea Project.
All of the existing regional, sub-regional and national efforts represent a significant step forward
for addressing the ever-worsening situation in the seas of East Asia. However, these existing
efforts have one limitation: a strong emphasis on the diagnosis of pollution problems, and
planning for the future, but very limited focused, coordinated, strategic physical investment.
A call to action the opportunity provided by GEF's Strategic Partnership modality
The countries of East Asia have recognized that a more coordinated and innovative approach,
which includes a strong focus on implementation and investment, is urgently needed. The
establishment a new GEF operational modality in its third and fourth replenishment period5 the
International Waters Strategic Partnership provides East Asia with an opportunity to undertake
the necessary actions. As defined by GEF, an IW Strategic Partnership consists of a major
component, the Investment Fund (hosted by a multilateral bank), complemented by a parallel
4 World Bank, 2005. Environment Strategy for the World Bank in the East Asia and Pacific Region, World Bank:
Washington D.C.
5 GEF-4, implemented from 2006-2010.
4
project for regional capacity building, coordination and replication. The WB/GEF Nutrient
Reduction Investment Fund for the Black Sea/Danube Strategic Partnership, is a good example
of the GEF investment fund modality.
The countries of East Asia, in collaboration with the GEF, the World Bank, and UNDP, have
replicated the Danube model and established a Strategic Partnership to catalyze and scale up
investment in land-based pollution reduction in coastal areas in East Asia. The Strategic
Partnership comprises two parallel components, a Financing Component (i.e., the Investment
Fund), and a Regional Component, both of which have achieved GEF pipeline entry 6 and, in the
case of Fund, also Council approval of a $25 million contribution to its first tranche.
·
The Strategic Partnership's Financing Component - the World Bank/GEF Partnership
Investment Fund for Pollution Reduction in the Large Marine Ecosystems of East Asia (the
Fund) is the primary financing arm of the new land-based pollution reduction initiative proposed
in the SDS-SEA.
·
The Regional Component, which will be supported through the proposed UNDP/GEF
Implementation of the Sustainable Development Strategy for the Seas of East Asia Project will
be implemented in parallel with the Fund, and will be responsible for stakeholder coordination,
dissemination of lessons learned, replication of good practice, and capacity building. This
UNDP project is also being submitted to the GEF Council for work program entry in June 2007.
The support provided by GEF to catalyze new investment through the WB/GEF Partnership
Fund will be limited to a ten-year period, after which the countries of East Asia will have
developed a supportive policy and investment environment that will allow them to mobilize
significant investment on their own account. Moreover, it is intended that by the end of the
implementation period of the Partnership, the objectives of the SDS-SEA would be firmly
mainstreamed into the operations of the World Bank and other participating organizations.
Objective of the Fund
The long-term goal of the Partnership Fund is to reduce pollution of the seas of East Asia. The
contributing objective of the Fund is to leverage new, innovative and cost-effective investments
in land-based pollution reduction through the removal of technical, institutional, and financial
barriers. Expected outcomes of the Fund would be: new innovative investment in activities that
reduce land-based pollution; removal of technical, institutional and financial barriers that
currently limit investment in pollution reduction; and, replication of the cost-effective pollution
reduction technologies and techniques demonstrated by the Fund.
Rationale for Bank and GEF involvement
The strategic impact of the Fund will be significant, because this collaboration between the GEF
and the World Bank will catalyze a new partnership of global strength. The land-based pollution
challenges facing the countries of East Asia to which it is directed are significant, and removing
the barriers to them requires new political, technical, institutional and financial capacity.
Similarly, innovation and the testing of new technologies and techniques involves a level of risk
6 The Partnership Investment Fund achieved GEF pipeline entry in March 2004, while the Regional Component
achieved pipeline entry in April 2005.
5
that the countries could not bear on their own. Without GEF support, the Fund's innovations
will not be attempted with either conventional loans or budgetary resources. GEF grant financing
therefore provides countries with a unique opportunity to tackle these difficult challenges. The
involvement and leadership of the World Bank in the Fund brings its global and regional
influence and technical capacity to fully support countries in this task. In essence, the Fund
partnership between GEF and the World Bank provides a strong, supportive, lower-risk enabling
environment within which the countries can finally begin to more actively address the challenges
and barriers to achieving the pollution-related objectives of the SDS-SEA.
Furthermore, with GEF support and the involvement of the World Bank's knowledge sharing
capabilities, the Fund will facilitate global and regional capacity building and scaling up through
policy dialogue and support for policy change, the replication of success stories, the promotion
of learning, and the dissemination of information and lessons learned.
The Bank's East Asia and Pacific (EAP) Region is well placed to manage and contribute to the
Fund. Land-based pollution reduction is a key priority of the Bank in East Asia, so the policy
and capacity building activities of the EAP Region and the objectives of the Fund are fully
consistent with the Bank's corporate and regional environment strategies. Moreover, IBRD and
IDA lending for environmental management in the EAP region is currently about $1 billion per
year, which provides a strong base for leveraging significant new investment through the Fund.
Individual GEF sub-projects supported by the Fund will be implemented by selected agencies
within the recipient countries. World Bank task teams would be responsible for appraising and
supervising each sub-project and for coordinating with the Fund on sub-project results.
Co-financing and processing
The target co-financing rate for the Fund is a minimum 1:10 (GEF:IBRD/IDA/other). Lower
targets may be accepted on individual sub-projects on an exceptional basis if the expected
benefits of the activity warrant it. However, every activity must have a minimum leveraging
ratio of 1:3. The sub-projects already under preparation indicate that a higher leveraging ratio
than 1:10 will be achieved. Currently it is expected that the total co-financing for the full first
tranche of $35 million ($25 million already approved, plus the additional $10 million requested
by this submission) would be at least US$785 million from IBRD, IDA, international donor
sources, private sector investment and other co-financing. It is hoped that total GEF financing
over three tranches of the Fund combined will be US$80 million, with cofinancing investment of
between US$800 million and US$1.5 billion.
Sub-projects under the Fund are processed according to streamlined WB/GEF procedures, and
are submitted first to Council for review, then to the GEF CEO for endorsement. The GEF CEO
approves the individual sub-projects on a rolling basis, based on the Fund eligibility criteria
previously approved by GEF Council, until the limit of each tranche had been reached.
Types of sub-projects
The types of sub-projects eligible for financing under the Fund are World Bank projects that
demonstrate innovative, cost-effective solutions for reducing land-based pollution and/or remove
6
significant barriers to investments in land-based pollution reduction of the marine environment.
Each sub-project includes investments in one or more of the following types of activities:
·
Innovative financing mechanisms: improving access to finance for rural and urban
land-based pollution reduction projects through implementation of revolving funds, cross-
sectoral financing, and other financing innovations;
·
Wastewater and sanitation management and treatment: demonstration and use of
innovative technology and innovative methods for wastewater and sanitation management
(e.g., construction of engineered wetlands, construction of combined wastewater/septage
treatment plants, enhancements to existing infrastructure and systems to improve their
efficiency; improvements in the efficiency of septage collection services; community-based
wastewater collection and treatment);
·
Water-borne pollution from solid waste: leachate control programs for landfills and
dump closures;
·
Pollution control in rural and peri-urban areas: treatment of livestock waste, cost-
effective approaches to agricultural and aquaculture pollution control, innovative management
systems for collection and treatment of waste from agro-industries;
·
Coastal ecosystem management: wetland creation, restoration, and preservation;
education and awareness projects; information exchange and sharing;
·
Institutional reform: utility reform, institutional rationalization, establishing links and
creating opportunities for collaboration between NGOs, government agencies, and private
companies;
·
Capacity building: consultancies, training programs, dissemination of best practices;
·
Policy and planning improvements: improving the legal, regulatory, and policy climate
for pollution reduction investment;
·
Management reforms: establishment of public-private partnerships and private sector
management concessions for pollution control.
Where appropriate, cross-sectoral approaches are encouraged, such as integrated water
resource management and environment protection, especially in land-based pollution hotspots.
Sub-project eligibility criteria
A set of eligibility criteria has been developed for the Fund which the GEF CEO uses to assess
the eligibility of each sub-project proposed by the World Bank for financing under the Fund.
A proposed World Bank project is eligible to request GEF co-financing from the Fund for a
specific proposed investment if all of the following seven conditions are met:
·
located within the coastal watersheds of one of the six East Asian LMEs: East China Sea,
South China Sea, Yellow Sea, Sulu-Celebes Sea, Gulf of Thailand, and the Indonesian Seas;
·
demonstrates an innovative technical, institutional, or financial mechanism to combat
land-based water pollution, and/or removes a significant technical, institutional, or financial
barrier that reduces cost-effective investments in pollution control in that location;
7
·
has high likelihood of replication and/or scalability in that country and/or more widely in
East Asia coastal regions;
·
is unlikely to proceed unless grant financing from GEF were allocated to it;
·
the necessary co-financing is available;
·
has been endorsed by the proposing country's GEF focal point.
·
meets all relevant World Bank appraisal criteria.
b) Key indicators, assumptions, and risks (from Logframe)
To measure progress in achieving the Fund's targets, quantitative and qualitative indicators are
used. These include, but are not limited to, reduction in the discharge of BOD, P and N, the level
of replication of pollution-reducing sub-projects, the degree of awareness of environmental
issues (e.g. as measured by the number of visitors to environmental centers, the amount of
coverage of environmental issues by the press), and the amount of financing and rate of
disbursement secured for replicated environmental projects.
A detailed set of monitoring and evaluation criteria have been prepared for the Fund in the World
Bank logical framework format (refer Annex B). This format facilitates the application of the
relevant criteria to each sub-project, thereby providing a consistent approach to monitoring the
outcomes of the Fund. Sub-projects develop additional specific outcome objectives and
monitoring indicators which address their characteristics and local priorities and needs.
The following risks and mitigation measures have been identified and adopted:
Risk Mitigation
Failure of the Regional Component to be approved Ensure participation and collaboration by
by GEF or failure of the Regional Component to Bank staff with PEMSEA in Regional
undertake the activities assigned to it in support of Component formation and implementation
the Fund
Failure of sub-projects to comply with replication Include replication and dissemination as
and dissemination requirements
legal covenantsunder Grant Agreements;
encourage close collaboration between
Fund and Bank teams on replication and
dissemination
Sub-project level governance issues
Ensure close supervision of fiduciary and
safeguard issues
Slow implementation of sub-project due to lack of Ensure thorough financial analysis during
counterpart funding
appraisal
Difficulty in replication of results
Encourage early consultation within region
and between sub-projects
Overall risk rating is Modest.
8
2.
COUNTRY OWNERSHIP
a) COUNTRY ELIGIBILITY
Only countries eligible for GEF financing under para. 9(b) of the GEF Instrument and eligible
for IBRD and/or IDA financing, would also be eligible to receive financing from the Partnership
Investment Fund. These are Cambodia, China, Indonesia, Laos PDR, Malaysia, Philippines,
Thailand, Timor Leste, and Vietnam.
b) COUNTRY DRIVEN-NESS
Commitment by fourteen coastal states of the East Asia region to addressing environmental
issues was demonstrated by the preparation of the SDS-SEA and the signing of the Putrajaya
Declaration. The countries have steadily progressed in building the Strategic Partnership,
endorsing the concept first at the 10th PEMSEA Project Steering Committee Meeting held in
Xiamen, China from 25-29 October 2004, and endorsing the concept of the Fund, at the 11th
Project Steering Committee meeting held at Siem Reap, Cambodia, 3 August 2005.
3.
PROGRAM AND POLICY CONFORMITY
a) FIT TO GEF STRATEGIC PRIORITY AND OPERATIONAL PROGRAM
The Fund conforms to GEF's Contaminant-Based Operational Program (OP10) within the
International Waters Focal Area, in that it supports projects that demonstrate ways of
overcoming barriers that prevent the adoption of practices that reduce contamination of
international water systems. Activities under the Fund contribute to global knowledge sharing in
the sustainable management of international waters.
The Fund, when developed in 2005, was designed to meet GEF-3 Strategic Priorities (SP) 1
(catalyse financial resources) and 3 (undertake innovative demonstrations), established for the
period FY0306, as outlined below. The Fund is also consistent with the proposed Strategic
Objectives for GEF-4.
Strategic Objective 1: Catalyze implementation of agreed reforms and stress-reduction
investments on-the-ground to address transboundary water concerns. The Fund is
structured as a financing mechanism with the ultimate objective of reducing land-based pollution
discharges that have an impact on the seas of East Asia. It achieves this by leveraging
investments in pollution reduction through the removal of technical, institutional, and financial
barriers. The Fund demonstrates innovative pollution-reducing activities and replicates best
practice and lessons learned throughout the region. The GEF-funded demonstrations are linked
to mainstream World Bank lending in fields such as wastewater treatment and sanitation, urban
and peri-urban environment, municipal governance, solid waste management and utility
management. The Fund will achieve a target co-financing ratio of 1:10 (GEF:IBRD/IDA/other
financing).
Strategic Objective 3: Undertake innovative demonstrations addressing key program gaps
(groundwater, IWRM, SIDS, persistent toxic substances (PTS)) in IW. The Fund will
provide cofinancing for innovative land-based marine pollution reduction. This includes
condominial sewerage collection and treatment in dense peri-urban zones (East Java), landfill
leachate treatment (Liaoning), partnership strengthening (Manila), wastewater treatment through
artificial wetlands (Ningbo), septic tank management (Manila and Shandong), agricultural and
9
non-point source pollution (Shanghai, in preparation), chemically enhanced primary treatment
(Vietnam), and a Project Preparation Revolving Fund (regional).
b) SUSTAINABILITY (INCLUDING FINANCIAL SUSTAINABILITY)
The Fund's monitoring and evaluation strategy addresses three aspects of sustainability: (1)
financial; (2) stakeholder ownership; and (3) institutional framework and governance. With the
aim of addressing sustainability early in the project cycle, the Fund focused on these three
aspects from inception. Given the importance of ensuring the sustainability of outcomes beyond
the implementation period, the Regional Component will monitor the long-term effects of the
Fund after the ten-year implementation period.
Each sub-project under the Fund will achieve environmental and social sustainability through
application of the World Bank Safeguards Policies.
Financial sustainability will be achieved through ensuring that appropriate financial analysis is
conducted during sub-project preparation according to World Bank financial appraisal
procedures. For technology investments, this would ensure that the sub-project proponent has
sufficient cost recovery to ensure sustainable operation.
Implementation sustainability will be achieved through embedding each sub-project within a
larger World Bank project to ensure the continuity of the implementation arrangements.
Finally, the Fund would be incorporated into CASs, included in country dialogue, and integrated
into the lending program of each participating country, to ensure long-term sustainability of the
objectives of the SDS-SEA.
c) REPLICATION
The Fund finances new technologies and techniques in East Asian coastal areas that demonstrate
appropriate and cost-effective solutions for reducing land-based marine pollution. As a result,
the potential of any sub-project activity to be replicated within the country and region is
extremely important to the overall success of the Fund and its ability to meet its objectives.
Replication potential is therefore listed as one of the eight eligibility criteria for a sub-project's
inclusion for financing under the Fund. Moreover, one of the primary methods through which
replication is expected to occur is the series of revolving fund sub-projects to be implemented
under the Fund.
Responsibilities for replication are shared between the individual sub-projects and the Fund.
Individual sub-projects are required to prepare a replication strategy (including workshops,
presentations, technical publications) that are legally binding under the sub-project's legal
agreement. Each sub-project further: develops its own website; provides case study information
to the Fund; and participates in a tri-annual East Asia Seas Congress through a poster display and
workshop presentation.
The World Bank is responsible for assessing the replication potential of each sub-project.
During sub-project implementation, it will cordinate each sub-project's contribution to regional
and international workshops and conferences. The World Bank is responsible for distributing
10
information to IW:LEARN; monitoring IW:LEARN to ensure that sub-project information
remains up to date; and, coordinating sub-project participation in the East Asia Seas Congress.
d) STAKEHOLDER INVOLVEMENT
Stakeholder involvement is an extremely important part of the Fund and is embedded in all
activities conducted under it. Each sub-project is responsible for conducting stakeholder
consultation on the proposed investments, in accordance with World Bank Operational Policies;
and for preparing a stakeholder consultation plan during sub-project preparation and
implementing the plan during sub-project implementation. The World Bank is responsible for
consulting with target countries during the tri-annual CAS process on the higher-level objectives
of the Fund and its proposed investments in that country.
e) MONITORING AND EVALUATION
All sub-projects co-financed by the Fund are required to adopt consistent monitoring and
evaluation, replication and information dissemination protocols so that the regional benefits of
the Fund can be fully realized. Monitoring and evaluation is conducted in conformity with GEF
International Waters guidance against three sets of indicators: those embedded in the SDS-SEA
which are relevant to the Fund, those specifically developed for the Fund, and those developed at
sub-project level. The responsibilities for monitoring and evaluation are established as described
below.
Each sub-project financed under the Fund is responsible for: adopting monitoring & evaluation
(M&E) indicators consistent with the Fund's M&E criteria; developing an M&E plan during
project preparation; establishing baseline data during project preparation; providing M&E data
on an annual basis to the Fund. The World Bank's Fund management team is responsible for the
following: collating monitoring and evaluation results from sub-projects; and, reporting results to
GEF and the Regional Component on an annual basis.
It is anticipated that a Regional Resource Facility will be established under the proposed
Regional Component. This will provide the opportunity to significantly scale up the Fund's
monitoring and evaluation, replication, and dissemination efforts. The Fund will work closely
with the Regional Component to ensure maximum scaling up of the monitoring, evaluation and
dissemination efforts.
4.
FINANCIAL MODALITY AND COST EFFECTIVENESS
The Fund is the Investment Financing Component of the SDS-SEA Strategic Partnership. The
Fund has requested US$35 million from the GEF for its first tranche, which it will invest in
projects with a target leveraging ratio of at least 1:10 (GEF: IBRD/IDA/other). The first tranche
sub-projects currently under preparation involve total co-financing projected of at least US$785
million and will thus achieve a much higher leveraging ratio than this. Most of this co-financing
will be provided by the IDA, IBRD, counterpart governments, private sources, and, to a lesser
degree, other donors. It is hoped that the total GEF financing over three tranches will total
US$80 million with an expected total co-investment approaching US$1.5 billion.
GEF financing would only be used for incremental activities that would not occur if it were not
for its availability. GEF financing also targets the most cost-effective activities. A pragmatic
11
approach to cost-effectiveness, bearing in mind the difficulty in measuring the outcomes of GEF-
funded activities, which often include capacity building and policy changes, would be employed.
The table below summarizes the expected financing sources of the first tranche of the Fund.
A. CO-FINANCING SOURCES
Name of Co-
Classification Type Amount
(US$)
financier
Status
(source)
IDA / IBRD
IFI
Loans / grants
459,000,000
Committed to each
sub-project through
Bank lending program
Government /
Public
Loans / grants /
325,000,000
Committed to each
Public Banks
finance
budgetary
sub-project through
allocation
Bank lending program
Other Private/
Grant/Loan
Not yet defined Would be sourced as
bilateral or
needed by each sub-
multilateral
project
donors
Sub-Total Co-financing (expected)
784,000,000
B. ADMINISTRATIVE BUDGET
N/A7
5.
INSTITUTIONAL COORDINATION AND SUPPORT
a) CORE COMMITMENTS AND LINKAGES
The Fund provides incremental GEF co-financing for World Bank-facilitated land-based
pollution reduction projects in the East Asia Region. Sub-projects under the Fund are consistent
with the relevant World Bank Country Assistance Strategy, and, in most cases, the GEF
financing is processed concurrently with the IBRD/IDA financing, and funds parallel activities
within the same project. The links between the Fund activities and the individual countries'
development and World Bank country assistance programs are therefore very strong.
Through its management of the Fund, the World Bank mainstreams activities that support the
implementation of SDS-SEA into its regular lending and capacity building programs. Through
the Fund, the World Bank commits to: promoting SDS-SEA objectives and Fund activities in
country dialogues; promoting inclusion of the objectives of the SDS-SEA in World Bank
Country Assistance Strategies; and, being a champion for land-based pollution reduction in the
seas of East Asia.
b) CONSULTATION, COORDINATION AND COLLABORATION BETWEEN IAS, AND IAS AND
EXAS, IF APPROPRIATE
The Fund is one of the two components of the GEF-catalyzed Strategic Partnership for Land-
based Pollution Reduction in the Large Marine Ecosystems of East Asia. The other major
component, the complementary GEF Regional Component, is managed by UNDP. UNDP and
7 The Strategic Partnership Investment Fund is not a project, and therefore does not have a budget for personnel,
consultants, training, etc.
12
the World Bank will coordinate and collaborate closely on the implementation of the Fund and
the Regional Component, in particular for disseminating lessons learned and replication potential
of sub-projects. The two institutions will establish a joint technical team which will (a) maintain
regular internet contact and meet either by video conference or face-to-face at least twice yearly
to review the Strategic Partnership's progress and agree initiatives to strengthen its impacts; (b)
promote awareness of the partnership's activities, lessons learned and results; and (c) assess the
replication potential of possible Fund investment projects and promote the replication of the
projects it supports. Moreover, the Strategic Partnership will liaise closely with the other related
GEF regional projects, including the UNEP/GEF South China Sea/Gulf of Thailand LME, the
UNDP/GEF Yellow Sea LME, and the UNDP/GEF Sulu-Celebes Sea LME.
C) PROJECT IMPLEMENTATION ARRANGEMENT
The World Bank is the implementing agency for the Fund, through its East Asia and Pacific
Region. Sub-projects are implemented by World Bank partner agencies within the recipient
countries. World Bank project task teams are responsible for appraising and supervising each
sub-project and for coordinating with the Fund management team on sub-project results.
As summarized above, the World Bank's Fund management team liaises on a regular basis with
the Regional Component through its meetings, and through consultation with the Regional
Resource Facility under the Regional Component.
ANNEX A: INCREMENTAL COST ANALYSIS
N/A
13
ANNEX B: LOGICAL FRAMEWORK OF FUND
The objective of the WB/GEF Strategic Partnership Investment Fund for Pollution Reduction in
the Large Marine Ecosystems of East Asia is to reduce pollution discharges that have an impact
on the seas by leveraging investments in pollution reduction through the removal of technical,
institutional, and financial barriers. The outcomes of the Fund will be increased investment in
activities that reduce land-based pollution and the replication of cost-effective pollution
reduction technologies and techniques demonstrated by the Fund.
To measure progress in achieving the Fund's targets, quantitative and qualitative indicators will
be used. These include, but are not limited to, reduction in the discharge of BOD, P and N, the
level of replication of pollution-reducing sub-projects, the degree of awareness of environmental
issues (e.g. as measured by the number of visitors to environmental centers, the amount of
coverage of environmental issues by the press), and the amount of financing and rate of
disbursement secured for replicated environmental projects.
A detailed set of monitoring and evaluation criteria have been prepared for the Fund in the World
Bank logical framework format (refer below). The use of this format facilitates the adoption of
the relevant criteria by each sub-project, thereby providing a consistent approach to monitoring
the outcomes of the Fund. Sub-projects are encouraged to develop additional criteria where
necessary to address any additional local objectives and monitoring needs.
TABLE 3: INDICATORS AT THE LEVEL OF THE FUND
Objective of Fund
Outcome Indicators
Use of Outcome Information
Leverage new innovative,
Increased investment in
Facilitate faster pollution reduction
cost-effective investments in new policy, technical and
for all regional stakeholders
pollution reduction
institutional mechanisms
Reduce pollution discharges Key parameters include
Evaluate progress towards the
that impact on the seas of
BOD, N and P.
Fund's contribution to Strategic
East Asia
Partnership objectives and country
progress in meeting agreements
under Strategic Partnership
Intermediate results
Results Indicator
Use of Results Monitoring
Result One
Remove technological,
Feasibility and cost-
Facilitate pollution reduction for
technical, policy and
effectiveness of new
all stakeholders
institutional barriers to
technology and techniques
pollution reduction
proven through
demonstration
Regulatory reforms
introduced and planning
capacities strengthened
Governance enhanced
through institutional
14
strengthening and
improved organization
Result Two
Result Indicator
Use of Result Indicator
Attract additional financing
Increase in sustainable
Broader access to funding for
in a sustainable and cost
cost-effective financing for environmental infrastructure
effective manner (e.g.
environmental
through revolving funds) for infrastructure in coastal
environmental infrastructure urban areas in East Asia
in coastal urban areas in
East Asia
The leveraging capacity
and turnover ratio of
financial mechanism/
revolving fund are
increased.
N° of countries /lending
institutions that have
adopted revolving funds
has increased
Result Three
Result Indicator
Use of Result Indicator
Replication/adoption of new Increase in the number of
Wider accessibility to innovative
pilot technologies,
technologies/techniques
technology
techniques, and institutional tested/successfully piloted
mechanisms
Increased number of
technologies / techniques
replicated throughout East
Asian LMEs
15
Result Four
Result Indicator
Use of Result Indicator
Best practices and lessons
Dissemination of
Raise awareness in the region on:
learnt from piloting of new
information measured
technologies/techniques/
through an increase in:
pollution issues
institutional mechanisms
effectively disseminated
The number of workshops
successful innovations
The number of participants
at workshops
The number of information
documents on GEF's
International Waters web
resource IW:LEARN
The number of times
documents at IW:LEARN
accessed online
The number of participants
at the tri-annual East Asian
Congress organized by the
Strategic Partnership.
Source: modified from Monitoring the Strategy, SDS-SEA (pemsea.org)
Monitoring and evaluation of the activities and investments carried out under the Fund will also
be conducted against the set of indicators embedded in the SDS-SEA, taking into consideration
the sub-set of objectives of the SDS-SEA that are also the underlying objectives of the
Investment Fund.
TABLE 2: INDICATORS AT THE LOCAL LEVEL
SDS-SEA Objective 10
Outcome Indicators
Use of Outcome Information
Coastal urban population
Increase in the percentage
with sewage treatment
of coastal urban population
facilities
with treatment facilities
SDS-SEA Objective 11
Outcome Indicators
Use of Outcome Information
Coastal urban population
Increase in the percentage
serviced with waste
of population with waste
collection and licensed
collection service
disposal facilities
Source: modified from Monitoring the Strategy, SDS-SEA (pemsea.org)
16
Arrangements for results monitoring at the level of the Fund
Target indicators
Project reporting to Fund
Fund reporting to GEF
Responsibi
Frequency
Frequency and
Data Collection
Responsibility for
lity for
Outcome Indicators
2010
2015
and
Reports
Instruments
Data Collection
Data
Reports
Collection
Annual project
Project
PMO project
350
800
progress report
Management
Increased investment in pollution reduction
implementation
to
to
(PPR) and Bank
Office
($ million)
records, Bank
500
1,500
disbursement
(PMO); Bank task
disbursement data
reports
team
Measurements by
Reduction in discharge of BOD to seas of
project implementing
PMO; Bank task
150,000 300,000 Annual
PPR
East Asia (tons/yr)
units, government
team
statistics
Result Indicators
Removal of barriers to pollution reduction:
Number of cost-effective technologies/
Commissioning
PMO; Bank task
techniques demonstrated in specific
5 12
Annual
PPR reports on
team
country contexts
investments
Report
Fund Mgmt
annually to
Number of institutional and/or
Register of
Government
Team with
GEFSEC;
regulatory reforms approved and
4 10
Annual
PPR government
agencies, PMO,
data
Report to
implemented
regulations/decrees
Bank task team
derived
GEF
Financing through revolving funds:
from World
Council at
Bank
Number of countries that have
time of
1 4
PMO project
project task
established a revolving fund
PMO; Bank task
request for
Annual PPR
implementation
team
Minimum amount of capital invested in
team
subsequent
15 60
records
reporting
revolving funds ($ million)
tranche
Dissemination and replication of demonstrated technologies, techniques and mechanisms:
Products: Number of publications
6
12
Products: Number of project websites
6
12
PMO project
PMO; Bank task
Events: Number of country workshops
6
12
Annual PPR
implementation
team
Events: Number of regional
records
2 5
conferences/workshops participated in
Mainstreaming of SDS-SEA in World Bank EAP operations:
Number of Strategic Partnership Council
meetings participated in by World Bank
2 2
staff (events/year)
N/A N/A N/A
Number of World Bank CAS which
3 5
include Fund
17
ANNEX C: RESPONSE TO REVIEWS OF THE FUND
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
d) GEF Council Members
RESPONSE TO GEF SECRETARIAT REVIEW
The following items were listed as expected at Work Program Entry:
Project Design
1. Review requested that Fund be fully developed, and that it be designed in tranches. Each
tranche would include specific benchmarks.
Response: [Refer Section 9, page 13 of the Fund Brief] The Fund design is fully
developed in the Fund Brief, including typology of sub-projects, eligibility criteria
for sub-projects, strategies for replication, dissemination, monitoring and
evaluation. Fund is designed in three tranches with benchmarks clearly defined
for moving from one tranche to the next.
Sustainability
2. Review requested that there be a full description of sustainability in the proposal.
Response: [Refer Section 20, page 22 of the Fund Brief] Fund Brief includes
details of operational, institutional, and financial sustainability. Sustainability
would be guaranteed through the application of World Bank procedures, and the
embedding of the Fund sub-projects within larger World Bank projects.
Replicability
3. Review requested that there be a full description of the Fund replicability strategy in the
proposal.
Response: [Refer Section 17, page 20 and Section 14, page 18 of the Fund Brief]
Fund Brief includes details of activities that would be undertaken to promote
dissemination and replication, and clearly defines responsibilities for each
activity. This strategy is already being used in the first three sub-projects
currently under preparation. Moreover, the first revolving fund, that forms part of
the Fund replication strategy, has achieved pipeline entry and is under
preparation. This is described in the Brief.
Stakeholder involvement
4. Review requested that there be a full description of the Fund stakeholder involvement
strategy in the proposal.
Response: [Refer Section 22, page 23 of the Fund Brief] Fund Brief includes
details of activities that would be undertaken to ensure stakeholder involvement
within each sub-project. In addition, the Fund Brief clearly describes the
relationship between the Fund and the other proposed component of the Strategic
Partnership, the Regional Component, which would be responsible for much of
the stakeholder involvement at the regional level through its Steering Committee.
Finally, the Fund Brief describes the ways in which the World Bank would
18
include the Fund in its country dialogues and assistance strategies, thereby
ensuring that activities carried out under the Fund fully met the objectives of each
country.
Monitoring and Evaluation
5. A full description of the Fund M&E plan should be included in the proposal.
Response: [Refer Section 16, page 19 of the Fund Brief] Fund Brief includes
details of M&E activities, provides key indicators to be used by the Fund and the
sub-projects, and clearly defines responsibilities. This strategy is already being
used in the first three sub-projects currently under preparation.
Financing Plan
6. Review requested that the proposal define targets to be achieved in moving from one
tranche to the next and seek commitment to the first tranche.
Response: Fund Brief specifies that the total financing for the Fund would be
$80 million, which would be committed by GEF to the Fund in three tranches,
subject to the availability of resources. Reporting and sub-project progress
requirements that would be met prior to a request being submitted for a
subsequent tranche are specified in the Brief. The first tranche of $35 million has
been requested in the Brief.
Summary
7. Review requested that all recommendations in review be addressed and incorporated.
Response: Please see comments above.
RESPONSE TO GEF COUNCIL MEMBERS REVIEW
France
8. France expressed a favorable opinion of the project [Fund].
Response: N/A
Germany
9. Germany made comments and recommendations:
Comments
224. For reasons of measuring sustainability, it should be ensured that monitoring of the
long-term effects of the Fund after the ten-year implementation period takes place from
the very beginning. Furthermore, the proposal should elaborate further on the regional
benefits of the fund. As to the cooperation between the proposed fund and the regional
component, the proposal should stress the need for close coordination with respect to the
implementation of the two major components, especially concerning the dissemination of
the lessons learned and the replication potential of sub-projects. Close coordination with
other regional projects should also be secured. With regard to stakeholder involvement,
the proposal should state that the principle applies to each of the sub-projects. Finally,
we would like to emphasize that it will be a big challenge to secure the commitment of
the fourteen coastal states of the East Asia region to address environmental issues, to
develop more supportive policies and to develop a positive investment environment.
Recommendation
225. Taking into account the above comments, Germany supports the proposal. Changes
should be made during further planning steps and project implementation.
19
Response: monitoring of the long-term effects of the Fund (10 yrs +) would be
covered by the regional component of the Strategic Partnership, and implemented
by PEMSEA. The Investment Fund would monitor the results of its subprojects
during the lifetime of the subprojects. Longer-term monitoring would be
conducted by PEMSEA through the implementing mechanism of the Regional
Component, which will be presented to GEF Council for approval in November
2006. Close coordination between PEMSEA and the Bank started almost two
years ago and the Fund Brief includes a detailed breakdown of the roles and
responsibilities of the Fund and PEMSEA's Regional Component, including for
monitoring and evaluation.
As regards the regional benefit of the Fund, these would mainly be in the long-
term improvement of water quality. Dissemination of lessons learned and best
practice would be assured by Bank/PEMSEA coordination and the funding for
regional dissemination activities under each of the Fund's sub-projects and the
Regional Component's dissemination strategy; each Bank subproject would
prepare results to be disseminated, and PEMSEA would help disseminate them
through regional workshops, IW:LEARN and the triennial East Asian Seas
Congress.
Finally, the text of the current document has been amended to mention that
stakeholder participation would be ensured at subproject level by complying with
Bank safeguards and disclosure policies (see p. 3).
Switzerland
10. Switzerland made several general comments, expressed main concerns and offered
conclusions and recommendations:
General Comments
The long-term goal of the proposed Partnership Investment Fund is to reduce pollution in
the seas of East Asia and to promote their sustainable development. To contribute to this
overall goal, the stated immediate objective of the proposed Fund is to reduce land-based
pollution discharges that have an impact on the seas of East Asia by leveraging
investments in land-based pollution reduction through the removal of technical,
institutional, and financial barriers. Expected outcomes of the Fund shall be: increased
investment in activities that reduce land based pollution; removal of technical,
institutional, and financial barriers that currently limit investment in pollution reduction;
and, replication of cost-effective pollution reduction technologies and techniques
demonstrated by the Fund.
The Partnership Investment Fund would be the primary financing arm of the land-based
pollution reduction activities proposed in the Sustainable Development Strategy for the
Seas of East Asia (SDS-SEA) which was developed by the Partnerships in Environmental
Management for the Seas of East Asia (PEMSEA), the latter being a collaborative
organization of representatives of the coastal governments of East Asia, supported by
GEF, UNDP, and IMO.
20
The Partnership Investment Fund is thought of as one of two parallel components, the
other being a Regional Component entitled the UNDP/GEF Implementation of the
Sustainable Development Strategy for the Seas of East Asia Project. This second
component would be responsible for stakeholder coordination, dissemination of lessons
learned, replication of good practice, and capacity building. It is expected that this
second component would be submitted to the GEF Council for work program entry in
mid-2006. The two components together are thought to form a Strategic Partnership.
It is intended that the support provided by GEF would be limited to a ten-year period,
after which the countries of East Asia will have developed a more supportive policy and
investment environment so that significant investment would occur on its own.
Moreover, it is intended that by the end of the implementation period of the Strategic
Partnership, the objectives would be firmly mainstreamed into the operations of the
World Bank and other participating organizations.
A proposed World Bank project would be eligible to request GEF co-financing from the
Fund for a specific proposed investment if all of the following seven conditions are met.
The investment (i) would be located within the coastal watersheds of one of the six East
Asian Large Marine Ecosystems (East China Sea, South China Sea, Yellow Sea, Sulu-
Celebes Sea, Gulf of Thailand, and the Indonesian Seas); (ii) would demonstrate an
innovative technical, institutional, or financial mechanism to combat land-based water
pollution, and/or would remove a significant technical, institutional, or financial barrier
that reduces cost-effective investments in pollution control in that location; (iii) would
have high likelihood of replication and/or scalability in that country and/or more widely
in East Asia coastal regions; (iv) would be unlikely to proceed unless grant financing
from GEF were allocated to it; (v) would have necessary co-financing available; (vi)
would have been endorsed by the proposing country's GEF focal point; and (vii) would
meet all relevant World Bank appraisal criteria.
The Partnership Investment Fund seems to conform well to GEF's Contaminant-Based
Operational Program (OP10) within the International Waters Focal Area. Furthermore,
the Fund would invest in projects that meet criteria under GEF Strategic Priorities (SP) 1
(catalyze financial resources) and 3 (undertake innovative demonstrations), established
for the period FY03 - 06.
We recognise that the Partnership Investment Fund intends to address a central issue for
the large marine ecosystems of East Asia, namely the land-based pollution of the East
Asia Seas such as widespread eutrophication, health hazards, and degradation of fisheries
and spawning grounds. The impacts of this pollution are felt by all countries in the
region. As the seas of East Asia are a major economic resource for the world's demand
for fishery and aquaculture products, and a major natural heritage and biodiversity
resource for the people of the world, these impacts have also a global significance. We
also feel that having the World Bank manage the Partnership Investment Fund and by
applying all relevant World Bank appraisal criteria to the sub-projects under the
Partnership Investment Fund, powerful implementation arrangements will be ensured,
21
given the fact that the World Bank already invests roughly USD 1 billion per year in the
East Asia and Pacific Region for environmental management.
Within this framework, however, we see some formal shortcomings in the project
documentation and feel some uncertainty on the role of the Partnership Investment Fund
within the Strategic Partnership. These concerns are formulated below.
Main Concerns
Our main concerns are summarized as follows:
· Annex A: Incremental Cost Analysis: In the project executive summary, the
Incremental Cost Analysis is stated as not being applicable, without giving a motivation
for this statement. It remains open whether individual sub-projects under the Partnership
Investment Fund will be required to perform and submit individual incremental costs
analyses in the project proposals. If that is the intent, it is unclear which approval
procedure will apply to ensure satisfactory incremental cost analysis.
· Annex C: Response to Project Reviews: In the project executive summary,
comments and reviews are given only in a short and fragmentary way. Given the
succinct form of the project document, this makes an appraisal of the project's intended
outcomes, outputs, and institutional arrangements difficult.
· Role of Partnership Investment Fund: The project document states that investment
in World Bank projects is sought with a target co-financing ratio of 1:10
(GEF:IBRD/IDA/other financing forms); the financing ratio foreseen with the project
budget is even 1:18. The first objective of the Partnership Investment Fund according to
the logical framework (Annex B) is to effect investments in pollution reduction. Given
that the Fund will contribute only 10% or even less to overall financing of World Bank
projects in an already established World Bank domain with a yearly lending sum of
around USD 1 billion, leveraging seems hardly the appropriate term to characterize the
Fund's role. It rather would have an add-on effect on already existing projects which
could bring additional benefits, e.g. removing barriers for pollution reduction for specific
stakeholder categories, promoting replicability of and accessibility to appropriate
technologies, and increasing dissemination of best practices, etc. Such contents are also
foreseen in the UNDP/GEF component. The sharing of tasks between the two
components is not clear and in this context, it is unfortunate that the two components are
not submitted to the Council at the same time.
· Coherence of Sub-Projects: The Fund is thought to be the financing arm of the
Strategic Partnership. According to the project executive summary, the existing regional,
sub-regional and national efforts have limitations: there has been a strong emphasis on
the diagnosis of pollution problems, and planning for the future, but very limited focus on
coordinated, strategic physical investment. The Strategic Partnership Resolution given in
the project document mentions among others that small cities and peri-urban
communities need support to gain access to financing sources for pollution reduction
facilities and services. A lack in physical investment in spite of existing problem analysis
and planning calls for a clear investment strategy for specific stakeholder categories. In
this context, it is unclear whether the Fund will contribute to the development of such an
22
investment strategy and whether it would seek coherence of its sub-projects within such
an investment strategy.
Conclusions and Recommendations
We recognise the importance of the targeted ecosystems, their extensive transboundary
character and the relevance of the issues at stake.
We feel that the project proposal needs some more formal clarity, including the role of
the proposed Partnership Investment Fund. In particular, we suggest that (i) the
procedures for obtaining satisfactory incremental cost analyses are documented, (ii) the
reviews and comments and the response hereto are reproduced in full form, (iii) the
Fund's objectives in the logical framework are reviewed in the light of the above main
concerns, and (iv) the Fund's intent regarding coherence of sub-projects and targeting to
specific stakeholder categories is clarified.
We suggest that the GEF Council makes its approval of the project proposal subject to
satisfactory additional information on these issues.
Response: in response to the main concerns from Switzerland, and in order to
clarify the role of the Strategic Partnership Investment Fund, this is as a principal
funding modality in a regional effort to reduce land-based marine pollution. The
Strategic Partnership addresses the most urgent, and the most easily addressed, of
the environmental problems facing the region: land-based pollution reduction.
GEF asserts that "Strategic Partnerships are proving to be an effective funding
modality for implementation of agreed action programs for transboundary water
systems within GEF. A Strategic Partnership (SP) consists of a major component,
the Investment Fund (with a multilateral Bank), often accompanied by a parallel
project for regional capacity building, coordination and replication purposes."
(i) Incremental cost analysis: under Bank project processing guidelines,
individual subprojects necessarily rationalize the choice of project, and explore
the "no project" alternative. Individual subprojects are also obliged to present the
"baseline" situation i.e. IBRD or IDA funding only, and assess the difference
between "baseline" project impact and "baseline + GEF" project impact, i.e.
determine the incremental cost and incremental benefit of GEF financing. In the
case of subprojects so far approved under the Strategic Partnership Investment
Fund, the Borrower would not undertake activities in the baseline scenario that it
accepts to undertake with GEF finance i.e. the Fund is promoting activities in
pollution reduction that would otherwise not take place. The project documents of
all sub-projects under the Fund would include incremental cost analysis.
(ii) In response to Switzerland's wish to see reviews and comments included in
full, the (present) Council Members' comments are reproduced in full (France,
Germany, Switzerland); the comments from the US Council Member are also
included in full (see "USA" below); and the text from the Joint Summary of
Chairs is also reproduced below in full. Additionally the comments from the
UNDP to the three subprojects submitted for approval in Oct 2005 (Liaoning,
23
Shandong, East Java) are included in the executive summaries of the individual
subprojects.
(iii) In response to Switzerland's wish to review the objective of the Fund, it
must be noted that the Fund was designed with the knowledge that resources
available are not sufficient to fully address the pollution problems of the seas of
East Asia, let alone the other environmental problems of the region (habitat
destruction, overfishing, climate change). The Fund is therefore designed to
leverage the World Bank's robust pipeline of activities and the Bank's excellent
relationships with clients, especially at the subnational level (provincial,
municipal etc). Blending the GEF funds with World Bank financing is a positive
way to ensure that the GEF funds will be utilized as part of a robust lending
operation which will ensure implementation effectiveness, efficiency and
sustainability. However, at the same time, the funds will only be used for
activities that will promote new, more efficient pollution reduction techniques,
and which have significant potential for replication. The fundamental objective of
the Fund is to leverage third-party funds. Using the mechanism as designed, it
will not only leverage World Bank financing but also will increase government
and private counterpart financing on pollution reduction issues. This will be
achieved with sustainability and implementation quality guaranteed through the
World Bank's lending program.
(iv) Finally, in response to Switzerland's concern of whether the Fund would
contribute to the development of an investment strategy for specific stakeholder
categories: no, the Fund would not aim to develop such a strategy; the Fund
follows GEF Contaminant-Based Operational Policy 10, which stresses barrier
removal, and GEF Strategic Priorities 1 (catalyze financial resources) and 3
(undertake innovative demonstrations). The Fund is the logical next step in
GEF's activities in the East Asia Seas Region, which have included the
development of the Sustainable Development Strategy for the Seas of East Asia.
All projects under the Fund will conform to this existing strategy.
USA
11. The USA (11/01/2005) raised a number of questions and concerns:
"Dear Colleagues:
We are still going through the November 2005 work program, but have a number of
questions and concerns about several projects, and would appreciate your reactions and
responses to help us develop our position for the Council discussion of these projects.
1. International waters projects: Strategic Partnership for a Sustainable Fisheries
Investment Fund in the Large Marine Ecosystems of Sub-Saharan Africa; and Partnership
Investment Fund for Pollution Reduction in the Large Marine Ecosystems of East Asia.
Clearly, the need is great, and regional collaboration in these areas is essential. However,
the model being used (patterned after the Black Sea/Danube Strategic Partnership) is a
pilot; its outcome has not yet been discussed by the Council; and there is not a Council
approved policy on the use of this form of project support. In particular, we do not
support delegation of authority to the CEO to approve the subprojects, certainly not on
the basis of the information provided in the project document.
24
Moreover, since the initial Black Sea Danube project approval (2001), the Council has
approved stronger monitoring and evaluation requirements (effective July 28, 2003) to
ensure, among other things, quality at entry of all GEF projects. The two investment
fund projects do not appear to meet those standards, which include: "definition of
performance indicators and unit of measurement; description of the data source(s) for the
indicator; identification of baseline data and methods for data collection and processing;
scheduling frequency of data collection and designating officials responsible for ensuring
data availability. Performance indicators need to be specific, measurable, achievable,
relevant and time bound. The data should be available on a timely basis at intervals
consistent with management requirements (at least annually) ....I1 Under the M&E terms
of reference, the Secretariat is responsible for ensuring that projects meet the minimum
standards BEFORE putting projects into the work program. Therefore, it would appear
that these projects should not have been put forward. We would appreciate your response
to these concerns. [...]"
Response: Because the above comments from the US were submitted before the
Nov 05 Council Meeting, the response to the need for stronger monitoring and
evaluation was integrated into the Brief and the Executive Summary as a modified
Results Framework prior to the November Council Meeting (see also Response 5.
to Monitoring and Evaluation above). As regards modeling the East Asia
Strategic Partnership on the Black Sea Danube example, the latter (i) is the only
strategic partnership to have been approved by Council; (ii) has proved to be a
good working example of a model to leverage GEF funding, and (iii) has
successfully reduced pollution in the basin. This point was addressed by the GEF
secretariat during the November Meeting. As regards delegation of authority to
the CEO, the Council has agreed to "request the Secretariat to arrange for Council
Members to receive draft final subproject documents and to transmit to the CEO
within four weeks any concerns they may have prior to CEO endorsement of the
subprojects", thus ensuring that Council members have prior review of
subprojects (see also "Joint Summary of Chairs" below).
Joint Summary of Chairs
12. In the Joint Summary of Chairs, the Council unambiguously states its approval of the
East Asia Strategic Partnership:
"24. With respect to the World Bank/GEF Partnership Investment Fund for Pollution
Reduction in the Large Marine Ecosystems of East Asia (Tranche 1 of 3 tranches) (World
Bank), the Council approves with the revised arrangements for results monitoring. The
Council finds that the project presented to it as part of the work program to be consistent
with the Instrument and GEF policies and procedures. Council requests the Secretariat to
arrange for Council Members to receive draft final subproject documents and to transmit
to the CEO within four weeks any concerns they may have prior to CEO endorsement of
the subprojects."
Response: N/A
25